----

----

| o                                                                  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                               |
| OR                                                                 |
|                                                               |                                                                                           |
| x                                                                  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934           |
|                                                               | FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009                                                    |
|                                                               |
| OR                                                                 |
|                                                               |
| o                                                                  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934       |
|                                                               |                                                                                           |
|                                                               | For the transition period from ___________ to _____________                                    |
|                                                               |                                                                                           |
| OR                                                                 |
|                                                               |
| o                                                                  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    |
|                                                               |                                                                                           |
| Date of event requiring this shell company report ________________ |
|                                                               |                                                                                           |
| Commission file number 000-28584                                   |

| CHECK POINT SOFTWARE TECHNOLOGIES LTD.                                                  |
|-----------------------------------------------------------------------------------------|
| (Exact name of Registrant as specified in its charter)                                  |
|                                                                                    |
| ISRAEL                                                                                  |
| (Jurisdiction of incorporation or organization)                                         |
|                                                                                    |
| 5 Ha’Solelim Street, Tel Aviv 67897, Israel                                       |
| (Address of principal executive offices)                                                |
|                                                                                    |
| John Slavitt, Esq.                                                                      |
| General Counsel                                                                         |
| Check Point Software Technologies, Inc.                                                 |
| 800 Bridge Parkway                                                                      |
| Redwood City, CA 94065 U.S.A.                                                           |
| Tel: (650) 628-2110                                                                     |
| Fax: (650) 649-1975                                                                     |
|                                                                                    |
| (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |

| Title of each class                     |   | Name of exchange on which registered |
|-----------------------------------------|--------|--------------------------------------|
|                                    |   |                                 |
| Ordinary shares, NIS 0.01 nominal value |   | NASDAQ Global Select Market          |

----

----

----

| PART I    |                                                                         |   |
|-----------|------------------------------------------------------------------------------|--------|
|      |                                                                         |   |   |
| Item 1.   | Identity of Directors, Senior Management and Advisers                        |   |   4 |
| Item 2.   | Offer Statistics and Expected Timetable                                      |   |   4 |
| Item 3.   | Key Information                                                              |   |   4 |
| Item 4.   | Information on Check Point                                                   |   | 18 |
| Item 4A.  | Unresolved Staff Comments                                                    |   | 30 |
| Item 5.   | Operating and Financial Review and Prospects                                 |   | 31 |
| Item 6.   | Directors, Senior Management and Employees                                   |   | 51 |
| Item 7.   | Major Shareholders and Related Party Transactions                            |   | 62 |
| Item 8.   | Financial Information                                                        |   | 63 |
| Item 9.   | The Offer and Listing                                                        |   | 65 |
| Item 10.  | Additional Information                                                       |   | 65 |
| Item 11.  | Quantitative and Qualitative Disclosures about Market Risk                   |   | 79 |
| Item 12.  | Description of Securities Other than Equity Securities                       |   | 81 |
|      |                                                                         |   |
| PART II   |                                                                         |   |
|      |                                                                         |   |
| Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              |   | 82 |
| Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds |   | 82 |
| Item 15.  | Controls and Procedures                                                      |   | 82 |
| Item 16.  | Reserved                                                                     |   | 83 |
| Item 16A. | Audit Committee Financial Expert                                             |   | 83 |
| Item 16B. | Code of Ethics                                                               |   | 83 |
| Item 16C. | Principal Accountant Fees and Services                                       |   | 83 |
| Item 16D. | Exemptions from the Listing Standards for Audit Committees                   |   | 84 |
| Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |   | 84 |
| Item 16F. | Change in Registrant’s Certifying Accountant                           |   | 86 |
| Item 16G. | Corporate Governance                                                         |   | 86 |
|      |                                                                         |   |
| PART III  |                                                                         |   |
|      |                                                                         |   |
| Item 17.  | Financial Statements                                                         |   | 87 |
| Item 18.  | Financial Statements                                                         |   | 87 |
| Item 19.  | Exhibits                                                                     |   | 88 |

----

----

PART I

| ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
|---------|-------------------------------------------------------|

| ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
|---------|-----------------------------------------|

| ITEM 3.  | KEY INFORMATION |
|---------------|-----------------|

----

|                                                                                                   |   | Year Ended December 31,               |    |
|--------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                                   |   | 2005                                  |    |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
|                                                                                                   |   | (in thousands, except per share data) |    |
|                                                                                                   |   |                                  |    |
| Consolidated Statement of Income Data:                                                                 |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                               |   | $                                     | 579,350 |   |   | $ | 575,141 |   |   | $ | 730,877 |   |   | $ | 808,490 |   |   | $ | 924,417 |   |
| Operating expenses (*):                                                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenues                                                                                       |   |                                  | 30,540  |   |   |   | 36,431 |   |   |   | 82,301 |   |   |   | 92,609 |   |   |   | 133,270 |   |
| Research and development                                                                               |   |                                  | 50,542  |   |   |   | 62,210 |   |   |   | 80,982 |   |   |   | 91,629 |   |   |   | 89,743 |   |
| Selling and marketing                                                                                  |   |                                  | 142,336 |   |   |   | 157,114 |   |   |   | 217,491 |   |   |   | 214,439 |   |   |   | 220,877 |   |
| General and administrative                                                                             |   |                                  | 24,244  |   |   |   | 43,503 |   |   |   | 53,527 |   |   |   | 53,313 |   |   |   | 56,409 |   |
| Restructuring and other acquisition related costs                                                      |   |                                  | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 9,101 |   |
| Acquired in-process R&D                                                                            |   |                                  | – |   |   |   | 1,060 |   |   |   | 17,000 |   |   |   | – |   |   |   | – |   |
| Total operating expenses                                                                               |   |                                  | 247,662 |   |   |   | 300,318 |   |   |   | 451,301 |   |   |   | 451,990 |   |   |   | 509,400 |   |
| Operating income                                                                                       |   |                                  | 331,688 |   |   |   | 274,823 |   |   |   | 279,576 |   |   |   | 356,500 |   |   |   | 415,017 |   |
| Financial income, net                                                                                  |   |                                  | 54,177  |   |   |   | 63,647 |   |   |   | 49,725 |   |   |   | 40,876 |   |   |   | 32,058 |   |
| Other-than-temporary impairment, net of gain on sale of marketable securities previously impaired (**) |   |                                  | – |   |   |   | – |   |   |   | – |   |   |   | (11,221 | ) |   |   | (1,277 | ) |
| Income before taxes on income                                                                          |   |                                  | 385,865 |   |   |   | 338,470 |   |   |   | 329,301 |   |   |   | 386,155 |   |   |   | 445,798 |   |
| Taxes on income                                                                                        |   |                                  | 66,181  |   |   |   | 60,443 |   |   |   | 48,237 |   |   |   | 62,189 |   |   |   | 88,275 |   |
| Net income                                                                                             |   | $                                     | 319,684 |   |   | $ | 278,027 |   |   | $ | 281,064 |   |   | $ | 323,966 |   |   | $ | 357,523 |   |
| Basic earnings per share                                                                               |   | $                                     | 1.30    |   |   | $ | 1.18 |   |   | $ | 1.26 |   |   | $ | 1.51 |   |   | $ | 1.71 |   |
| Shares used in computing basic earnings per share                                                      |   |                                  | 245,520 |   |   |   | 235,519 |   |   |   | 222,548 |   |   |   | 214,361 |   |   |   | 209,371 |   |
| Diluted earnings per share                                                                             |   | $                                     | 1.27    |   |   | $ | 1.17 |   |   | $ | 1.25 |   |   | $ | 1.50 |   |   | $ | 1.68 |   |
| Shares used in computing diluted earnings per share                                                    |   |                                  | 251,747 |   |   |   | 236,769 |   |   |   | 225,442 |   |   |   | 216,668 |   |   |   | 212,208 |   |

| Amortization of intangible assets and acquisition related expenses |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| Cost of products and licenses                                      |   | $      | 5,414   |   |   | $      | 5,414  |   |   | $      | 27,724  |   |   | $      | 24,554 |   |   | $ | 28,224 |   |
| Selling and marketing                                              |   |   | 228     |   |   |   | 604    |   |   |   | 12,260  |   |   |   | 12,428 |   |   |   | 22,429 |   |
| General and administrative                                         |   |   | – |   |   |   | 927    |   |   |   | – |   |   |   |   |   |   |   | – |   |
| Total                                                              |   | $      | 5,642   |   |   | $      | 6,945  |   |   | $      | 39,984  |   |   | $      | 36,982 |   |   | $ | 50,653 |   |
| Stock-based compensation                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Cost of products and licenses                                      |   | $      | – |   |   | $      | 39     |   |   | $      | 65      |   |   | $      | 48     |   |   | $ | 47 |   |
| Cost of software updates, maintenance and services                 |   |   | 408     |   |   |   | 470    |   |   |   | 668     |   |   |   | 684    |   |   |   | 641 |   |
| Research and development                                           |   |   | 1,252   |   |   |   | 9,371  |   |   |   | 4,309   |   |   |   | 5,037  |   |   |   | 6,649 |   |
| Selling and marketing                                              |   |   | 1,825   |   |   |   | 7,997  |   |   |   | 8,780   |   |   |   | 6,855  |   |   |   | 5,032 |   |
| General and administrative                                         |   |   | 260     |   |   |   | 18,515 |   |   |   | 20,230  |   |   |   | 19,703 |   |   |   | 18,538 |   |
| Total                                                              |   | $      | 3,745   |   |   | $      | 36,392 |   |   | $      | 34,052  |   |   | $      | 32,327 |   |   | $ | 30,907 |   |

----

|                             |   | December 31,   |      |
|----------------------------------|--------|----------------|-----------|
|                             |   |  2005     |      |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
|                             |   | (in thousands) |      |
|                             |   |           |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Balance Sheet Data: |   |           |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Working capital                  |   | $              | 1,186,119 |   |   | $ | 967,805 |   |   | $ | 692,316 |   |   | $ | 791,976 |   |   | $ | 648,944 |   |
| Total assets                     |   |           | 2,092,495 |   |   |   | 2,080,793 |   |   |   | 2,368,575 |   |   |   | 2,593,616 |   |   |   | 3,069,594 |   |
| Shareholders’ equity       |   |           | 1,775,721 |   |   |   | 1,711,533 |   |   |   | 1,856,955 |   |   |   | 2,015,865 |   |   |   | 2,319,718 |   |
| Capital stock                    |   |           | 387,303   |   |   |   | 423,155 |   |   |   | 465,104 |   |   |   | 504,182 |   |   |   | 528,648 |   |

|   | § | the continued expansion of Internet usage and the number of organizations adopting or expanding intranets;                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                  |
|   | § | the ability of their respective infrastructures to support an increasing number of users and services;                                                |
|   |   |                                                                                                                                                  |
|   | § | the continued development of new and improved services for implementation across the Internet and between the Internet and intranets;                 |
|   |   |                                                                                                                                                  |
|   | § | the adoption of data security measures as it pertains to data encryption technologies;                                                                |
|   |   |                                                                                                                                                  |
|   | § | government regulation of the Internet and governmental and non-governmental requirements and standards with respect to data security and privacy; and |
|   |   |                                                                                                                                                  |
|   | § | general economic conditions in the markets in which we, our customers and our suppliers operate.                                                      |

----

----

----

|   | § | issue equity securities which would dilute current shareholders’ percentage ownership; |
|--------|--------|----------------------------------------------------------------------------------------------|
|   |   |                                                                                         |
|   | § | incur substantial debt;                                                                      |
|   |   |                                                                                         |
|   | § | assume contingent liabilities; or                                                            |
|   |   |                                                                                         |
|   | § | expend significant cash.                                                                     |

|   | § | unanticipated costs or liabilities associated with the acquisition;                                                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                       |
|   | § | incurrence of acquisition-related costs;                                                                                   |
|   |   |                                                                                                                       |
|   | § | diversion of management’s attention from other business concerns;                                                    |
|   |   |                                                                                                                       |
|   | § | harm to our existing business relationships with manufacturers, distributors and customers as a result of the acquisition; |
|   |   |                                                                                                                       |
|   | § | the potential loss of key employees;                                                                                       |
|   |   |                                                                                                                       |
|   | § | use of resources that are needed in other parts of our business;                                                           |
|   |   |                                                                                                                       |
|   | § | use of substantial portions of our available cash to consummate the acquisition; or                                        |
|   |   |                                                                                                                       |
|   | § | unrealistic goals or projections for the acquisition.                                                                      |

----

----

----

----

|   | § | technology import and export license requirements;                                                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                  |
|   | § | costs of localizing our products for foreign countries, and the lack of acceptance of localized products in foreign countries;                        |
|   |   |                                                                                                                                                  |
|   | § | trade restrictions;                                                                                                                                   |
|   |   |                                                                                                                                                  |
|   | § | imposition of or increases in tariffs or other payments on our revenues in these markets;                                                             |
|   |   |                                                                                                                                                  |
|   | § | changes in regulatory requirements;                                                                                                                   |
|   |   |                                                                                                                                                  |
|   | § | greater difficulty in protecting intellectual property;                                                                                               |
|   |   |                                                                                                                                                  |
|   | § | difficulties in managing our overseas subsidiaries and our international operations;                                                                  |
|   |   |                                                                                                                                                  |
|   | § | declines in general economic conditions;                                                                                                              |
|   |   |                                                                                                                                                  |
|   | § | political instability and civil unrest which could discourage investment and complicate our dealings with governments;                                |
|   |   |                                                                                                                                                  |
|   | § | difficulties in complying with a variety of foreign laws and legal standards;                                                                         |
|   |   |                                                                                                                                                  |
|   | § | expropriation and confiscation of assets and facilities;                                                                                              |
|   |   |                                                                                                                                                  |
|   | § | difficulties in collecting receivables from foreign entities or delayed revenue recognition;                                                          |
|   |   |                                                                                                                                                  |
|   | § | differing labor standards;                                                                                                                            |
|   |   |                                                                                                                                                  |
|   | § | potentially adverse tax consequences, including taxation of a portion of our revenues at higher rates than the tax rate that applies to us in Israel; |
|   |   |                                                                                                                                                  |
|   | § | fluctuations in currency exchange rates and the impact of such fluctuations on our results of operations and financial position; and                  |
|   |   |                                                                                                                                                  |
|   | § | the introduction of exchange controls and other restrictions by foreign governments.                                                                  |

----

|   | § | Monetary liability imposed on the director or senior officer in favor of a third party in a judgment, including a settlement or an arbitral award confirmed by a court.                                                                                                                                                                                                               |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                  |
|   | § | Reasonable legal costs, including attorneys’ fees, expended by a director or senior officer as a result of an investigation or proceeding instituted against the director or senior officer by a competent authority; provided, however, that such investigation or proceeding concludes without the filing of an indictment against the director or senior officer and either: |

|   | o      | No financial liability was imposed on the director or senior officer in lieu of criminal proceedings, or                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                           |
|   | o      | Financial liability was imposed on the director or senior officer in lieu of criminal proceedings, but the alleged criminal offense does not require proof of criminal intent. |

----

|   | § | Reasonable legal costs, including attorneys’ fees, expended by the director or senior officer or for which the director or senior officer is charged by a court: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o      | In an action brought against the director or senior officer by us, on our behalf or on behalf of a third party,                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                              |
|   | o      | In a criminal action in which the director or senior officer is found innocent, or                                                |
|   |   |                                                                                                                              |
|   | o      | In a criminal action in which the director or senior officer is convicted, but in which proof of criminal intent is not required. |

----

----

|   | § | Some programs may be discontinued,                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                        |
|   | § | We may be unable to meet the requirements for continuing to qualify for some programs,                                                                                                      |
|   |   |                                                                                                                                                                                        |
|   | § | These programs and tax benefits may be unavailable at their current levels,                                                                                                                 |
|   |   |                                                                                                                                                                                        |
|   | § | Upon expiration of a particular benefit, we may not be eligible to participate in a new program or qualify for a new tax benefit that would offset the loss of the expiring tax benefit, or |
|   |   |                                                                                                                                                                                        |
|   | § | We may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.                                                            |

----

| ITEM 4. | INFORMATION ON CHECK POINT SOFTWARE TECHNOLOGIES |
|---------|--------------------------------------------------|

----

----

| § | Firewall software blade – Inspects traffic as it passes through security gateways, classifying it based on various criteria, such as source and destination of connection, protocol, services and application used. This provides a means to allow, block and log each connection based on the enterprise’s security policy. Our firewall technology is based on several key differentiated technologies, including the patented Stateful Inspection technology that allows flexible and programmable classification of network traffic. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| § | Intrusion Prevention System (IPS) software blade – Monitors the network for malicious or unwanted traffic and is designed to be able to detect and block “known” and “unknown” attacks on the network or system. Our IPS software blade is supported by online security update services that provide the latest defense mechanisms, including “signatures” for the most recent attacks.                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| § | Virtual Private Networks (VPNs) software blade – Provides the means to enable private communication over a network by encrypting traffic between various sub-networks (site-to-site) or individual computers (such as laptops and other mobile devices) and the enterprise network.                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| § | Antivirus and Anti-Malware software blade – Stops viruses and other malware at the gateway before they affect users. Enables screening of specific application protocols such as Web traffic to allow/block access to specific Web addresses based on their content. It also includes screening for viruses to detect downloads of malicious applications.                                                                                                                                                                                     |

----

| § | Anti-Spam and Email Security software blade – Provides comprehensive protection for an enterprise’s messaging infrastructure. A multi-dimensional approach protects the email infrastructure, provides highly accurate spam protection, and defends organizations from a wide variety of virus and malware threats delivered within email. Continual updates though a Check Point software update service help to intercept threats before they spread. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| § | Web Security software blade – Protects users and enterprises by restricting access to an array of potentially dangerous sites and content, blocking inappropriate Web surfing to over 20 million URLs. Content profiles are updated continually through a Check Point software update service.                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| § | Acceleration & Clustering software blade – Delivers a set of patented security acceleration technologies, SecureXL and ClusterXL, that work together to optimize performance and increase security in high-performance environments. These technologies improve overall throughput and reduce latency through several different techniques, such as load balancing and sharing.                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| § | Advanced Networking software blade – Adds dynamic routing, multicast support and Quality of Service (QOS) to security gateways. This software blade makes it easier for administrators to deploy security within complex and highly utilized network environments where performance and availability are critical.                                                                                                                                            |

| § | Power-1 Appliances – Enable enterprises to increase security in high-performance environments, such as large campuses or data centers. Our appliances include, Firewall, IPsec VPN, IPS, Acceleration and Clustering, and Advanced Networking, to deliver a high-performance security platform for multi-Gbps environments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                              |
| § | IP Appliances – Proven for years in complex networking and high-performance environments, Check Point IP Appliances, formerly Nokia IP appliances, offer customers turnkey security functionality, such as firewall, VPN and Intrusion Prevention (IPS) across a wide range of models.                                      |
|   |                                                                                                                                                                                                                                                                                                                              |
| § | UTM-1 Appliances – Offer comprehensive all-in-one security designed to deliver out-of-box simplicity that is ideal for small and mid-sized businesses. Built-in security services include firewall, VPN, IPS, antivirus, anti-malware, anti-spam, email security and URL filtering across a wide range of models.           |

| § | VSX – Check Point gateways are available on a virtual security operations platform, enabling enterprises to consolidate multiple security gateways in a single hardware system and to secure virtual server environments. The VSX products that provide this capability are available on certain Check Point appliances – primarily Power-1 and IP Appliances and are also offered as software which can run on open servers. VSX has been available since 2002. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| § | Virtual Edition (VE) – VE enables the deployment of a Check Point security gateway within a virtualized server running the VMWare environment and provides security between the various virtual systems on that server as well as through the gateway to other parts of the network. VE was released in late 2008.                                                                                                                                                     |

----

| § | Firewall & Security Compliance software blade – Prevents network attacks on individual computers by blocking internal attacks and the proliferation of network “worms” within the enterprise IT network, as well as attacks on desktop and laptop computers that are connected to public networks. It also provides information on the compliance of individual computers to the enterprise’s security policy and allows selective connectivity of devices to the network based on their compliance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| § | Full Disk Encryption (FDE) software blade – Fully-encrypts all data stored on a PC, so that unauthorized parties cannot read any data even if they get physical access to the disk drive.                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| § | Media Encryption (ME) and Port Protection software blade – Enables encryption of data stored on mobile devices, such as CDs and DVDs and other external removable media and allows an organization to control the transfer of information from individual computers to external devices, such as USB memory devices and external hard drives.                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| § | Remote Access VPN software blade – Enables mobile devices to securely access the enterprise IT network by encrypting all traffic and ensuring mobile devices and users are properly authenticated.                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| § | WebCheck Secure Browsing software blade – Segregates corporate data from the Internet with browser virtualization technology and provides advanced heuristics to stop users from accessing dangerous websites.                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| § | Anti-Malware and Program Control software blade – Detects viruses and other malware that try to run on any device and/or circumvent its operation. Program control ensures that only legitimate and approved programs are allowed to run on the endpoint.                                                                                                                                                                                                                                                                  |

| § | Network Policy Management software blade – Provides comprehensive network security policy management via SmartDashboard, a single, unified console.                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                           |
| § | Endpoint Policy Managementsoftware blade – Enables central deployment, management, monitoring and enforcement of security policy for all endpoint devices across any sized organization. |
|   |                                                                                                                                                                                           |
| § | Logging & Statussoftware blade – Delivers comprehensive information in the form of logs and a complete visual picture of changes to gateways, tunnels, and users.                    |
|   |                                                                                                                                                                                           |
| § | Monitoringsoftware blade – Provides a complete view of network and security performance, enabling fast response to changes in traffic patterns and security events.                      |
|   |                                                                                                                                                                                           |
| § | Management Portalsoftware blade – Extends a browser-based view of security policies to outside groups, such as support staff, while maintaining central policy control.                  |

----

| § | User Directorysoftware blade – Enables Check Point gateways to leverage directory servers (LDAP) based user information stores, eliminating the risks associated with manually maintaining and synchronizing redundant data stores. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                      |
| § | IPS Event Analysissoftware blade – Provides a complete IPS event management system providing situational visibility, easy to use forensic tools, and reporting.                                                                     |
|   |                                                                                                                                                                                                                                      |
| § | SmartProvisioningsoftware blade – Provides centralized administration and provisioning of Check Point security devices via a single management console.                                                                             |
|   |                                                                                                                                                                                                                                      |
| § | SmartWorkflowsoftware blade – Delivers a formal process of policy change management that helps administrators reduce errors and enhance compliance.                                                                                 |
|   |                                                                                                                                                                                                                                      |
| § | Reportingsoftware blade – Turns vast amounts of security and network data into graphical, easy-to-understand reports.                                                                                                               |
|   |                                                                                                                                                                                                                                      |
| § | SmartEventsoftware blade – Centralized, real-time security event correlation and management for Check Point and third-party devices.                                                                                                |

| §       | Stateful Inspection technology – Our patented Stateful Inspection technology is a premier network security technology. In order to provide accurate and highly efficient traffic inspection, Stateful Inspection extracts and maintains extensive “state information,” i.e., data that provides context for future screening decisions, from all relevant communication layers. Stateful Inspection runs on a network gateway or an endpoint, such as a PC, and enables our products to inspect network traffic at high speed. Our Stateful Inspection technology can be adapted to new protocols, software applications, and security threats. It can be run on a wide range of operating systems.                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  § | Application Intelligence – Provides a set of advanced capabilities that prevents the exploitation of vulnerabilities in business applications, including vulnerabilities in the application code, communication protocols, and the underlying operating system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  § | Security Management Architecture (SMART) – A core component of our unified security architecture, SMART enables our customers to configure and manage security policies from a central administrative point. This technology enables the definition and ongoing management of security policies for enterprises of all sizes. This object-oriented architecture maps real-world entities, such as networks and users, to graphical representations that can be manipulated in a database. Integrated monitoring and reporting tools improve the manageability of the system by providing administrators with real-time information on the state of network and security systems. These tools also provide longer term trending information that is useful for periodic security management tasks, such as security audits. |

----

|  § | Security and Network Traffic Enforcement technologies – Based on our Stateful Inspection technology, the INSPECT engine scans all incoming and outgoing traffic at security enforcement points. These are typically located at the network perimeter as security gateways, on critical servers, or inside the network, dividing the network into separate segments. We have developed a broad range of technologies that can be implemented by our INSPECT engine. In addition, third party technologies can be implemented through our Open Platform for Security (OPSEC) framework.                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | SecurePlatform – Bundles the Check Point security solutions together with an operating system (OS) in a single package that is easy to deploy. It optimizes the performance of security and operating systems and includes a set of tools that ease setup and network configuration, thus reducing the total cost of ownership. SecurePlatform runs on a variety of open systems, i.e., systems whose key interfaces are based on widely supported standards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | ClusterXL – Provides high availability and load sharing to keep businesses running. It distributes traffic between clusters of redundant gateways so that the computing capacity of multiple machines may be combined to increase total throughput. If an individual gateway becomes unreachable, all connections are redirected to a designated backup without interruption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | CoreXL – Enables the intelligent balancing of security traffic loads between multiple cores on multi-core processors. It results in a higher level of performance for integrated intrusion prevention.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | SecureXL – A framework of software and hardware technologies, including third-party technologies, SecureXL is designed to increase performance. By using SecureXL, hardware vendors can accelerate the performance of appliances on which our software is installed. With SecureXL, our products can be integrated into high-performance networks typically found in large enterprises and service providers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | TrueVector – A patented, flexible and efficient software technology for enabling high-performance, scalable and robust Internet security of PCs. TrueVector stops attempts to send confidential data to unauthorized parties by malicious software, such as keystroke loggers and Trojan horses. It monitors all applications running on protected computers, allowing trusted applications to engage in network communications, while blocking network connections by untrusted applications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | Full Disk Encryption Secure Pre-Boot Environment – Full Disk Encryption (FDE) Secure Pre-Boot Environment (PBE) is a secure, proprietary operating program. PBE, along with FDE’s access control and authentication architecture and Multi-Factor Authentication Engine (MFAE), encrypts all information stored on a PC’s hard disk, i.e., delivers full-disk encryption. The full-disk encryption technology protects every sector of the computer’s hard drive, including the operating system files. This prevents successful attacks on the OS and attacks to gain access to sensitive data on the drive.                                                                                                                                                                                                                                                                                                                                                       |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|  § | Hybrid Detection Engine (HDE) – At the heart of the IPS software blade, the HDE utilizes multiple detection and analysis techniques to detect hostile or suspicious traffic. These techniques include the following: signature-based methods to detect known patterns of attacks targeted at the network and at vulnerabilities within the network; protocol analysis to validate that the traffic construct meets the expected standards; anomaly detection to identify instances where network traffic exhibits abnormal characteristics; OS fingerprinting to determine the OS type of the traffic destination, which ensures proper receipt and processing; multi-element correlation to detect widespread illicit activity launched from the same source address; dynamic worm mitigation whereby rapidly proliferating worms are detected and automatically blocked from spreading within the network; as well as other techniques to deliver comprehensive network protection. |

----

|  § | Intrusion Prevention with Confidence Indexing – Based on several analysis data points for every network traffic flow, the IPS software blade determines a level of confidence that a certain traffic flow is an attack. This function reduces the occurrence of false positives by enabling a more granular prevention policy, which allows exploits to be blocked, without the concern of blocking critical business traffic.                                                                                 |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  § | Precision Virtualization – Virtualizing or emulating a limited set of processes creates a secure segment of the network without the overhead of a full OS virtual machine. This allows powerful but lightweight security just for a targeted area that might otherwise be vulnerable to attacks. WebCheck Secure Browsing software blade utilizes this to provide powerful security for Web-browsing activities.                                                                                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  § | Open Platform for Security (OPSEC) – Our OPSEC framework provides a single platform that enables the integration and interoperability of multi-vendor information security products and technologies. The OPSEC framework allows certified third-party security applications to plug into our solutions through our published application programming interfaces. Products that carry the OPSEC Certified seal have been tested and certified for integration and interoperability within the OPSEC framework. |

|                                  |   | Year Ended December 31, |    |
|--------------------------------------------|--------|-------------------------|---------|
|                                       |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                       |   | (in thousands)          |    |
|                                       |   |                    |    |
| Category of Activity:                      |   |                    |    |
| Products and licenses                      |   | $                       | 309,785 |   |   | $ | 338,317 |   |   | $ | 361,633 |   |
| Software updates, maintenance and services |   |                    | 421,092 |   |   |   | 470,173 |   |   |   | 562,784 |   |
| Total revenues                             |   | $                       | 730,877 |   |   | $ | 808,490 |   |   | $ | 924,417 |   |

----

----

| NAME OF SUBSIDIARY                                             |   | COUNTRY OF INCORPORATION            |
|----------------------------------------------------------------|--------|-------------------------------------|
|                                                           |   |                                |
| Check Point Software Technologies, Inc.                        |   | United States of America (Delaware) |
| Check Point Software Technologies (Canada) Inc.                |   | Canada                              |
| Check Point Software Technologies (Japan) Ltd.                 |   | Japan                               |
| Check Point Software Technologies (Singapore) PTE Ltd. (1)     |   | Singapore                           |
| Check Point Software Technologies (Netherlands) B.V.           |   | Netherlands                         |
| Check Point Holding (Singapore) PTE Ltd.                       |   | Singapore                           |
| Check Point Holding (Singapore) PTE Ltd. – US Branch (2) |   | United States of America (New York) |
| Israel Check Point Software Technologies Ltd. China (3)        |   | China                               |
| Check Point Holding AB (4)                                     |   | Sweden                              |
| SofaWare Technologies Ltd. (5)                                 |   | Israel                              |

| (1)    | The company filed an application for striking off with the Accounting and Corporate Regulatory Authority in Singapore. |
|--------|------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                   |
| (2)    | Branch of Check Point Holding (Singapore) PTE Ltd.                                                                     |
|   |                                                                                                                   |
| (3)    | Representative office of Check Point Software Technologies Ltd.                                                        |
|   |                                                                                                                   |
| (4)    | Subsidiary of Check Point Holding (Singapore) PTE Ltd. (former name: Protect Data AB)                                  |
|   |                                                                                                                   |
| (5)    | We own 63% of the outstanding equity of SofaWare (61.3% on a fully diluted basis) as of December 31, 2009.             |

----

| NAME OF SUBSIDIARY                                                        |   | COUNTRY OF INCORPORATION |
|---------------------------------------------------------------------------|--------|--------------------------|
|                                                                      |   |                     |
| Check Point Software Technologies S.A.                                    |   | Argentina                |
| Check Point Software Technologies (Australia) PTY Ltd.                    |   | Australia                |
| Check Point Software Technologies (Austria) GmbH                          |   | Austria                  |
| Check Point Software Technologies (Belarus) LLC                           |   | Belarus                  |
| Check Point Software Technologies (Belgium) S.A.                          |   | Belgium                  |
| Check Point Software Technologies (Brazil) LTDA                           |   | Brazil                   |
| Check Point Software Technologies (Hong Kong) Ltd. (Guangzhou office) (1) |   | China                    |
| Check Point Software Technologies (Hong Kong) Ltd. (Shanghai office) (1)  |   | China                    |
| Check Point Software Technologies (Czech Republic) s.r.o.                 |   | Czech Republic           |
| Check Point Software Technologies (Denmark) ApS                           |   | Denmark                  |
| Check Point Software Technologies (Finland) Oy                            |   | Finland                  |
| Check Point Software Technologies SARL                                    |   | France                   |
| Check Point Software Technologies GmbH                                    |   | Germany                  |
| Check Point Software Technologies (Greece) SA                             |   | Greece                   |
| Check Point Software Technologies (Hungary) Ltd.                          |   | Hungary                  |
| Check Point Software Technologies (Hong Kong) Ltd.                        |   | Hong Kong                |
| Check Point Software Technologies (India) Private Limited                 |   | India                    |
| Check Point Software Technologies (Italia) Srl (2)                        |   | Italy                    |
| Check Point Software Technologies Mexico S.A. de C.V.                     |   | Mexico                   |
| Check Point Software Technologies B.V.                                    |   | Netherlands              |
| Check Point Software Technologies Norway A.S.                             |   | Norway                   |
| Check Point Software Technologies (Poland) Sp.z.o.o.                      |   | Poland                   |
| CPST (Portugal), Sociedade Unipessoal Lda.                                |   | Portugal                 |
| Check Point Software Technologies (RMN) SRL.                              |   | Romania                  |
| Check Point Software Technologies (Russia) OOO                            |   | Russia                   |
| Check Point Software Technologies (Korea) Ltd.                            |   | S. Korea                 |
| Check Point Software Technologies (Spain) S.A.                            |   | Spain                    |
| C.P.S.T. Sweden A.B.                                                      |   | Sweden                   |
| Check Point Software Technologies (Switzerland) A.G.                      |   | Switzerland              |
| Check Point Software Technologies (Taiwan) Ltd.                           |   | Taiwan                   |
| Check Point Yazilim Teknolojileri Pazarlama A.S. (3)                      |   | Turkey                   |
| Check Point Software Technologies (UK) Ltd.                               |   | United Kingdom           |

| (1)    | Representative office of Check Point Software Technologies (Hong Kong) Ltd.                                                                                                                                                                                                         |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                |
| (2)    | 97% owned by Check Point Software Technologies (Netherlands) B.V. and 3% owned by Check Point Software Technologies Ltd.                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                |
| (3)    | 96% owned by Check Point Software Technologies (Netherlands) B.V., 1% owned by Check Point Software Technologies Ltd., and 3% owned in trust by the directors of Check Point Yazilim Teknolojileri Pazarlama A.S. on behalf of Check Point Software Technologies (Netherlands) B.V. |

----

|   | Protect Data AB wholly owns the subsidiaries listed below, directly or through other subsidiaries: |
|--------|----------------------------------------------------------------------------------------------------|

| NAME OF SUBSIDIARY                            |   | COUNTRY OF INCORPORATION              |
|-----------------------------------------------|--------|---------------------------------------|
|                                          |   |                                  |
| Check Point Software Technologies (Sweden) AB |   | Sweden                                |
| Pointsec Norway AS                            |   | Norway                                |
| Oy Pointsec Finland AB (1)                    |   | Finland                               |
| Pointsec Mobile Technologies, Inc.            |   | United States of America (California) |
| Pointsec Mobile Technologies Ltd. (2)         |   | United Kingdom                        |
| Pointsec Mobile Technologies Pty Ltd. (3)     |   | Australia                             |
| Pointsec Mobile Technologies Limited (4)      |   | Hong Kong                             |
| Pointsec Mobile Technologies Pte Ltd. (5)     |   | Singapore                             |
| Reflex Software Ltd. (Jersey)                 |   | United Kingdom                        |
| Reflex Magnetics Ltd.                         |   | United Kingdom                        |
| Reflex Software Luxembourg SARL               |   | Luxembourg                            |

| NAME OF SUBSIDIARY                 |   | COUNTRY OF INCORPORATION              |
|------------------------------------|--------|---------------------------------------|
|                               |   |                                  |
| Pointsec Mobile Technologies, LLC. |   | United States of America (California) |
| NFR Security, Inc.                 |   | United States of America (Delaware)   |
| Zone Labs, L.L.C.                  |   | United States of America (California) |

| (1)    | The company is undergoing liquidation process.                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                   |
| (2)    | The company filed an application for striking off with the Companies House in the United Kingdom.                      |
|   |                                                                                                                   |
| (3)    | The company filed an application for deregistration with the Australian Securities and Investments Commission (ASIC).  |
|   |                                                                                                                   |
| (4)    | The company filed an application for deregistration with the Companies Registry in Hong Kong.                          |
|   |                                                                                                                   |
| (5)    | The company filed an application for striking off with the Accounting and Corporate Regulatory Authority in Singapore. |

----

| Location                 |   | Primary Usage                                          |   | Space (square feet) |
|--------------------------|--------|--------------------------------------------------------|--------|---------------------|
|                     |   |                                                   |   |                |
| Redwood City, California |   | U.S. Headquarters                                      |   | 73,127              |
| Irving, Texas            |   | Technical support, education and professional services |   | 26,725              |
| Stockholm, Sweden        |   | Research and development                               |   | 15,123              |

| Location               |   | Primary Usage                   |   | Space (square feet) |
|------------------------|--------|---------------------------------|--------|---------------------|
|                   |   |                            |   |                |
| EMEA                   |   | Sales, research and development |   |  53,118        |
| Americas               |   | Sales                           |   |  41,786        |
| Asia Pacific and Japan |   | Sales                           |   |  12,708        |

| ITEM 4A. | UNRESOLVED STAFF COMMENTS |
|----------|---------------------------|

----

| ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
|---------|----------------------------------------------|

----

|                           |   | Year Ended December 31, |
|--------------------------------|--------|-------------------------|
| Region:                        |   | 2007                    |   | 2008 |   | 2009 |
|                           |   |                    |   |   |   |   |
| Americas, principally U.S.     |   | 45%                     |   | 43% |   | 43% |
| Europe, Middle East and Africa |   | 44%                     |   | 45% |   | 44% |
| Asia Pacific and Japan         |   | 11%                     |   | 12% |   | 13% |

|   | § | Revenue recognition,                 |
|--------|--------|--------------------------------------|
|   |   |                                 |
|   | § | Business combinations,               |
|   |   |                                 |
|   | § | Goodwill,                            |
|   |   |                                 |
|   | § | Realizability of long-lived assets,  |
|   |   |                                 |
|   | § | Accounting for income taxes,         |
|   |   |                                 |
|   | § | Equity-based compensation expense,   |
|   |   |                                 |
|   | § | Allowances for doubtful accounts,    |
|   |   |                                 |
|   | § | Derivative and hedge accounting, and |
|   |   |                                 |
|   | § | Impairment of marketable securities. |

----

|   | § | Software products and combined hardware and software products; and |
|--------|--------|--------------------------------------------------------------------|
|   |   |                                                               |
|   | § | Software updates, maintenance and services.                        |

----

----

----

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Year Ended December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (in thousands)          |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    |    |   |   |   |   |   |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    |    |   |   |   |   |   |   |
| Products and licenses                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                       | 309,785 |   |   | $ | 338,317 |   |   | $ | 361,633 |   |
| Software updates, maintenance and services                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    | 421,092 |   |   |   | 470,173 |   |   |   | 562,784 |   |
| Total revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | 730,877 |   |   |   | 808,490 |   |   |   | 924,417 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating expenses (*) :                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    |    |   |   |   |   |   |   |   |   |   |
| Cost of products and licenses                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 27,191  |   |   |   | 34,648 |   |   |   | 61,495 |   |
| Cost of software updates, maintenance and services                                                                                                                                                                                                                                                                                                                                                                                                              |   |                    | 27,386  |   |   |   | 33,407 |   |   |   | 43,551 |   |
| Amortization of technology                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    | 27,724  |   |   |   | 24,554 |   |   |   | 28,224 |   |
| Total cost of revenues                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                    | 82,301  |   |   |   | 92,609 |   |   |   | 133,270 |   |
| Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    | 80,982  |   |   |   | 91,629 |   |   |   | 89,743 |   |
| Selling and marketing                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                    | 217,491 |   |   |   | 214,439 |   |   |   | 220,877 |   |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    | 53,527  |   |   |   | 53,313 |   |   |   | 56,409 |   |
| Acquired in process research and development                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 17,000  |   |   |   | – |   |   |   | – |   |
| Restructuring and other acquisition related costs                                                                                                                                                                                                                                                                                                                                                                                                               |   |                    | – |   |   |   | – |   |   |   | 9,101 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    | 451,301 |   |   |   | 451,990 |   |   |   | 509,400 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating income                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                    | 279,576 |   |   |   | 356,500 |   |   |   | 415,017 |   |
| Financial income, net                                                                        |   |                    | 49,725  |   |   |   | 40,876 |   |   |   | 32,058 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously impaired (**)                                                                                                                                                                                                                                                                                                                                                           |   |                    | – |   |   |   | (11,221 | ) |   |   | (1,277 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    |    |   |   |   |   |   |   |   |   |   |
| Income before taxes on income                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 329,301 |   |   |   | 386,155 |   |   |   | 445,798 |   |
| Taxes on income                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 48,237  |   |   |   | 62,189 |   |   |   | 88,275 |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                       | 281,064 |   |   | $ | 323,966 |   |   | $ | 357,523 |   |

| Amortization of intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Selling and marketing                                                                        |   | $      | 12,260 |   |   | $      | 12,428 |   |   | $ | 22,429 |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | 12,260 |   |   | $      | 12,428 |   |   | $ | 22,429 |   |

| Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Cost of products and licenses                                                                       |   | $      | 65     |   |   | $      | 48     |   |   | $ | 47 |   |
|  Cost of software updates, maintenance and services                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 668    |   |   |   | 684    |   |   |   | 641 |   |
|  Research and development                                                                            |   |   | 4,309  |   |   |   | 5,037  |   |   |   | 6,649 |   |
|  Selling and marketing                                                                               |   |   | 8,780  |   |   |   | 6,855  |   |   |   | 5,032 |   |
|  General and administrative                                                                          |   |   | 20,230 |   |   |   | 19,703 |   |   |   | 18,538 |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $      | 34,052 |   |   | $      | 32,327 |   |   | $ | 30,907 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Year Ended December 31, |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    |    |   |   |   |   |   |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    |    |   |   |   |   |   |   |
| Products and licenses                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    | 42      | % |   |   | 42 | % |   |   | 39 | % |
| Software updates, maintenance and services                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    | 58      |   |   |   | 58 |   |   |   | 61 |   |
| Total revenues                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 100     | % |   |   | 100 | % |   |   | 100 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Cost of products and licenses                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 3       |   |   |   | 4 |   |   |   | 6 |   |
| Cost of software updates, maintenance and services                                                                                                                                                                                                                                                                                                                                                                                               |   |                    | 4       |   |   |   | 4 |   |   |   | 5 |   |
| Amortization of technology                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    | 4       |   |   |   | 3 |   |   |   | 3 |   |
| Cost of revenues                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 11      |   |   |   | 11 |   |   |   | 14 |   |
| Research and development                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                    | 11      |   |   |   | 11 |   |   |   | 10 |   |
| Selling and marketing                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    | 30      |   |   |   | 27 |   |   |   | 24 |   |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    | 8       |   |   |   | 7 |   |   |   | 6 |   |
| Acquired in process research and development                                                                                                                                                                                                                                                                                                                                                                                                     |   |                    | 2       |   |   |   |   |   |   |   |   |   |
| Restructuring and other acquisition related costs                                                                                                                                                                                                                                                                                                                                                                                                |   |                    | – |   |   |   | – |   |   |   | 1 |   |
| Total operating expenses                                                                     |   |                    | 62      |   |   |   | 56 |   |   |   | 55 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating income                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 38      |   |   |   | 44 |   |   |   | 45 |   |
| Financial income, net                                                                        |   |                    | 7       |   |   |   | 5 |   |   |   | 3 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously written down                                                                                                                                                                                                                                                                                                                                             |   |                    | – |   |   |   | (1 | ) |   |   | – |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Income before taxes on income                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 45      |   |   |   | 48 |   |   |   | 48 |   |
| Taxes on income                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | 7       |   |   |   | 8 |   |   |   | 9 |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    | 38      | % |   |   | 40 | % |   |   | 39 | % |

----

----

----

----

----

|                                                                                                 |   | Year Ended December 31, 2008             |    |   | Year Ended December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------------|---------|--------|------------------------------|--------|
|                                                                                                      |   |  Q1                                 |    |   |  Q2                     |   |   |  Q3 |   |   |  Q4 |   |   |  Q1 |   |   |  Q2 |   |   |  Q3 |   |   |  Q4 |   |
|                                                                                                      |   | Unaudited                                |    |
|                                                                                                      |   | (in thousands, except per share amounts) |    |
|                                                                                                      |   |                                     |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues:                                                                                                 |   |                                     |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Products and licenses                                                                                     |   | $                                        | 77,379  |   |                         | $      | 84,973 |   |   | $ | 81,925 |   |   | $ | 94,040 |   |   | $ | 71,744 |   |   | $ | 82,801 |   |   | $ | 86,883 |   |   | $ | 120,205 |   |
| Software updates, maintenance and services                                                                |   |                                     | 114,218 |   |                         |   | 114,633 |   |   |   | 117,795 |   |   |   | 123,527 |   |   |   | 123,268 |   |   |   | 140,840 |   |   |   | 146,759 |   |   |   | 151,917 |   |
| Total revenues                                                                                            |   |                                     | 191,597 |   |                         |   | 199,606 |   |   |   | 199,720 |   |   |   | 217,567 |   |   |   | 195,012 |   |   |   | 223,641 |   |   |   | 233,642 |   |   |   | 272,122 |   |
| Operating expenses:                                                                                       |   |                                     |    |   |                         |   |
| Cost of products and licenses                                                                             |   |                                     | 7,549   |   |                         |   | 8,608 |   |   |   | 8,553 |   |   |   | 9,938 |   |   |   | 7,686 |   |   |   | 15,045 |   |   |   | 17,848 |   |   |   | 20,916 |   |
| Cost of software updates, maintenance and services                                                        |   |                                     | 8,194   |   |                         |   | 8,186 |   |   |   | 8,655 |   |   |   | 8,372 |   |   |   | 7,769 |   |   |   | 12,567 |   |   |   | 10,783 |   |   |   | 12,432 |   |
| Amortization of technology                                                                                |   |                                     | 7,154   |   |                         |   | 5,800 |   |   |   | 5,800 |   |   |   | 5,800 |   |   |   | 5,800 |   |   |   | 7,230 |   |   |   | 7,471 |   |   |   | 7,723 |   |
| Total cost of revenues                                                                                    |   |                                     | 22,897  |   |                         |   | 22,594 |   |   |   | 23,008 |   |   |   | 24,110 |   |   |   | 21,255 |   |   |   | 34,842 |   |   |   | 36,102 |   |   |   | 41,071 |   |
| Research and development                                                                                  |   |                                     | 22,745  |   |                         |   | 23,824 |   |   |   | 23,193 |   |   |   | 21,867 |   |   |   | 19,787 |   |   |   | 23,468 |   |   |   | 22,426 |   |   |   | 24,062 |   |
| Selling and marketing                                                                                     |   |                                     | 53,660  |   |                         |   | 56,588 |   |   |   | 50,796 |   |   |   | 53,395 |   |   |   | 47,072 |   |   |   | 56,939 |   |   |   | 56,379 |   |   |   | 60,487 |   |
| General and administrative                                                                                |   |                                     | 13,566  |   |                         |   | 13,005 |   |   |   | 12,294 |   |   |   | 14,448 |   |   |   | 14,617 |   |   |   | 12,680 |   |   |   | 13,190 |   |   |   | 15,922 |   |
| Restructuring and other acquisition related costs                                                         |   |                                     | – |   |                         |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 9,034 |   |   |   | 67 |   |   |   | – |   |
| Total operating expenses(*)                                                                               |   |                                     | 112,868 |   |                         |   | 116,011 |   |   |   | 109,291 |   |   |   | 113,820 |   |   |   | 102,731 |   |   |   | 136,963 |   |   |   | 128,164 |   |   |   | 141,542 |   |
| Operating income                                                                                          |   |                                     | 78,729  |   |                         |   | 83,595 |   |   |   | 90,429 |   |   |   | 103,747 |   |   |   | 92,281 |   |   |   | 86,678 |   |   |   | 105,478 |   |   |   | 130,581 |   |
| Financial income, net                                                                                     |   |                                     | 12,363  |   |                         |   | 7,949 |   |   |   | 10,039 |   |   |   | 10,525 |   |   |   | 8,413 |   |   |   | 8,130 |   |   |   | 7,825 |   |   |   | 7,690 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously written down (**) |   |                                     | – |   |                         |   | – |   |   |   | (2,288 | ) |   |   | (8,933 | ) |   |   | – |   |   |   | – |   |   |   | – |   |   |   | (1,277 | ) |
| Income before taxes on income                                                                             |   |                                     | 91,092  |   |                         |   | 91,544 |   |   |   | 98,180 |   |   |   | 105,339 |   |   |   | 100,694 |   |   |   | 94,808 |   |   |   | 113,303 |   |   |   | 136,993 |   |
| Taxes on income                                                                                           |   |                                     | 12,834  |   |                         |   | 12,371 |   |   |   | 18,119 |   |   |   | 18,865 |   |   |   | 19,773 |   |   |   | 19,205 |   |   |   | 21,839 |   |   |   | 27,458 |   |
| Net Income                                                                                                |   | $                                        | 78,258  |   |                         | $      | 79,173 |   |   | $ | 80,061 |   |   | $ | 86,474 |   |   | $ | 80,921 |   |   | $ | 75,603 |   |   | $ | 91,464 |   |   | $ | 109,535 |   |
|                                                                                                      |   |                                     |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per share                                                                                  |   | $                                        | 0.36    |   |                         | $      | 0.37 |   |   | $ | 0.37 |   |   | $ | 0.41 |   |   | $ | 0.39 |   |   | $ | 0.36 |   |   | $ | 0.44 |   |   | $ | 0.52 |   |
| Shares used in computing basic earnings per share                                                         |   |                                     | 217,065 |   |                         |   | 215,030 |   |   |   | 213,728 |   |   |   | 211,731 |   |   |   | 210,153 |   |   |   | 209,521 |   |   |   | 208,738 |   |   |   | 209,093 |   |
| Diluted earnings per share                                                                                |   | $                                        | 0.36    |   |                         | $      | 0.36 |   |   | $ | 0.37 |   |   | $ | 0.41 |   |   | $ | 0.38 |   |   | $ | 0.36 |   |   | $ | 0.43 |   |   | $ | 0.51 |   |
| Shares used in computing diluted earnings per share                                                       |   |                                     | 219,393 |   |                         |   | 217,951 |   |   |   | 216,567 |   |   |   | 212,874 |   |   |   | 212,083 |   |   |   | 211,615 |   |   |   | 211,688 |   |   |   | 213,469 |   |

----

|                                               |   | Year Ended December 31, 2008 |   |     | Year Ended December 31, 2009 |   |
|----------------------------------------------------|--------|------------------------------|--------|----------|------------------------------|--------|
|                                               |   |  Q1                     |   |  Q2 |                         |   |  Q3 |   |   |  Q4 |   |   |  Q1 |   |   |  Q2 |   |   |  Q3 |   |   |  Q4 |   |
|                                               |   | Unaudited                    |   |
|                                               |   | (in thousands)               |   |
|                                               |   |                         |   |     |                         |   |
| Amortization of intangible assets                  |   |                         |   |     |                         |   |
| Selling and marketing                              |   | $                            | 3,149  |     |                         | $      | 3,093 |   |   | $ | 3,093 |   |   | $ | 3,093 |   |   | $ | 3,093 |   |   | $ | 6,223 |   |   | $ | 6,830 |   |   | $ | 6,283 |   |
|                                               |   |                         |   |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   |                         | 3,149  |     |                         |   | 3,093 |   |   |   | 3,093 |   |   |   | 3,093 |   |   |   | 3,093 |   |   |   | 6,223 |   |   |   | 6,830 |   |   |   | 6,283 |   |
|                                               |   |                         |   |     |                         |   |
| Stock-based compensation                           |   |                         |   |     |                         |   |
| Cost of products and licenses                      |   | $                            | 12     |     |                         | $      | 15 |   |   | $ | 15 |   |   | $ | 6 |   |   | $ | 8 |   |   | $ | 13 |   |   | $ | 14 |   |   | $ | 12 |   |
| Cost of software updates, maintenance and services |   |                         | 183    |     |                         |   | 194 |   |   |   | 133 |   |   |   | 174 |   |   |   | 193 |   |   |   | 107 |   |   |   | 236 |   |   |   | 105 |   |
| Research and development                           |   |                         | 1,097  |     |                         |   | 1,204 |   |   |   | 1,364 |   |   |   | 1,372 |   |   |   | 1,258 |   |   |   | 1,515 |   |   |   | 1,998 |   |   |   | 1,878 |   |
| Selling and marketing                              |   |                         | 2,240  |     |                         |   | 1,926 |   |   |   | 1,696 |   |   |   | 993 |   |   |   | 1,740 |   |   |   | 976 |   |   |   | 1,769 |   |   |   | 547 |   |
| General and administrative                         |   |                         | 5,539  |     |                         |   | 5,046 |   |   |   | 3,649 |   |   |   | 5,469 |   |   |   | 4,604 |   |   |   | 4,660 |   |   |   | 3,678 |   |   |   | 5,596 |   |
| Total                                              |   | $                            | 9,071  |     |                         | $      | 8,385 |   |   | $ | 6,857 |   |   |   | 8,014 |   |   | $ | 7,803 |   |   | $ | 7,271 |   |   | $ | 7,695 |   |   |   | 8,138 |   |

----

|                                                                                                                                                                                                                                     |   | Year Ended December 31, 2008 |    |   | Year Ended December 31, 2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                     |   |  Q1                     |    |   |  Q2                     |   |   |  Q3 |   |   |  Q4 |   |   |  Q1 |   |   |  Q2 |   |   |  Q3 |   |   |  Q4 |   |
|                                                                                                                                                                                                                                     |   |                         |    |   |                         |   |
| Revenues:                                                                                                                                                                                                                                |   |                         |    |   |                         |   |
| Products and licenses                                                                                                                                                                                                                    |   |                         | 40      | %      |                         |   | 43 | % |   |   | 41 | % |   |   | 43 | % |   |   | 37 | % |   |   | 37 | % |   |   | 37 | % |   |   | 44 | % |
| Software updates, maintenance and services                                                                                                                                                                                               |   |                         | 60      |   |                         |   | 57 |   |   |   | 59 |   |   |   | 57 |   |   |   | 63 |   |   |   | 63 |   |   |   | 63 |   |   |   | 56 |   |
| Total revenues                                                                                                                                                                                                                           |   |                         | 100     |   |                         |   | 100 |   |   |   | 100 |   |   |   | 100 |   |   |   | 100 |   |   |   | 100 |   |   |   | 100 |   |   |   | 100 |   |
| Operating expenses:                                                                                                                                                                                                                      |   |                         |    |   |                         |   |
| Cost of products and licenses                                                                                                                                                                                                            |   |                         | 4       |   |                         |   | 4 |   |   |   | 4 |   |   |   | 5 |   |   |   | 4 |   |   |   | 7 |   |   |   | 8 |   |   |   | 8 |   |
| Cost of software updates, maintenance and services                                                                                                                                                                                       |   |                         | 4       |   |                         |   | 4 |   |   |   | 5 |   |   |   | 3 |   |   |   | 4 |   |   |   | 6 |   |   |   | 4 |   |   |   | 4 |   |
| Amortization of technology                                                                                                                                                                                                               |   |                         | 4       |   |                         |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |
| Total cost of revenues                                                                                                                                                                                                                   |   |                         | 12      |   |                         |   | 11 |   |   |   | 12 |   |   |   | 11 |   |   |   | 11 |   |   |   | 16 |   |   |   | 15 |   |   |   | 15 |   |
| Research and development                                                                                                                                                                                                                 |   |                         | 12      |   |                         |   | 12 |   |   |   | 12 |   |   |   | 10 |   |   |   | 10 |   |   |   | 10 |   |   |   | 10 |   |   |   | 9 |   |
| Selling and marketing                                                                                                                                                                                                                    |   |                         | 28      |   |                         |   | 28 |   |   |   | 25 |   |   |   | 24 |   |   |   | 24 |   |   |   | 25 |   |   |   | 24 |   |   |   | 22 |   |
| General and administrative                                                                                                                                                                                                               |   |                         | 7       |   |                         |   | 7 |   |   |   | 6 |   |   |   | 7 |   |   |   | 7 |   |   |   | 6 |   |   |   | 6 |   |   |   | 6 |   |
| Restructuring and other acquisition related costs                                                                                                                                                                                        |   |                         | – |   |                         |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 4 |   |   |   | – |   |   |   | – |   |
| Total operating expenses                                                                                                                                                                                                                 |   |                         | 59      |   |                         |   | 58 |   |   |   | 55 |   |   |   | 52 |   |   |   | 53 |   |   |   | 61 |   |   |   | 55 |   |   |   | 52 |   |
| Operating income                                                                                                                                                                                                                         |   |                         | 41      |   |                         |   | 42 |   |   |   | 45 |   |   |   | 48 |   |   |   | 47 |   |   |   | 39 |   |   |   | 45 |   |   |   | 48 |   |
| Financial income, net                                                                                                                                                                                                                    |   |                         | 7       |   |                         |   | 4 |   |   |   | 5 |   |   |   | 5 |   |   |   | 4 |   |   |   | 4 |   |   |   | 3 |   |   |   | 3 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously impaired                                                                                                                                         |   |                         | – |   |                         |   | – |   |   |   | (1 | ) |   |   | (4 | ) |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Income before taxes on income                                                                                                                                                                                                            |   |                         | 48      |   |                         |   | 46 |   |   |   | 49 |   |   |   | 49 |   |   |   | 52 |   |   |   | 42 |   |   |   | 48 |   |   |   | 50 |   |
| Taxes on income                                                                                                                                                                                                                          |   |                         | 7       |   |                         |   | 6 |   |   |   | 9 |   |   |   | 9 |   |   |   | 10 |   |   |   | 9 |   |   |   | 9 |   |   |   | 10 |   |
| Net Income                                      |   |                         | 41      | %      |                         |   | 40 | % |   |   | 40 | % |   |   | 40 | % |   |   | 41 | % |   |   | 34 | % |   |   | 39 | % |   |   | 40 | % |

----

----

----

----

|                             |   | Payments due by period |    |
|----------------------------------|--------|------------------------|---------|
|                             |   | Total                  |    |   | Less than 1 year |   |   | 1-3 years |   |   | 4-5 years |   |   | More than 5 years |   |
|                             |   | (in thousands)         |    |
|                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating lease obligations      |   | $                      | 12,186  |   |   | $ | 6,576 |   |   | $ | 5,523 |   |   | $ | 87 |   |   |   | – |   |
| Uncertain income tax position(*) |   | $                      | 132,908 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Severance pay(**)                |   | $                      | 11,061  |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
|                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                      | 156,155 |   |   | $ | 6,576 |   |   | $ | 5,523 |   |   | $ | 87 |   |   |   | – |   |

----

| ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
|---------|--------------------------------------------|

|  Name         |   |  Position                                    |   |  IndependentDirector (1) |   |  OutsideDirector (2) |   | Member ofAuditCommittee |   | Member ofCompensationCommittee |   | Member ofNominatingCommittee |
|--------------------|--------|---------------------------------------------------|--------|-------------------------------|--------|---------------------------|--------|-------------------------|--------|--------------------------------|--------|------------------------------|
|               |   |                                              |   |                          |   |                      |   |                    |   |                           |   |                         |
| Gil Shwed          |   | Chief Executive Officer and Chairman of the Board |   |                          |   |                      |   |                    |   |                           |   |                         |
| Marius Nacht       |   | Vice Chairman of the Board                        |   |                          |   |                      |   |                    |   |                           |   |                         |
| Jerry Ungerman     |   | Vice Chairman of the Board                        |   |                          |   |                      |   |                    |   |                           |   |                         |
| Tal Payne          |   | Chief Financial Officer                           |   |                          |   |                      |   |                    |   |                           |   |                         |
| Yoav Chelouche (3) |   | Director                                          |   | Ö                        |   | Ö                    |   | Ö                  |   |                           |   |                         |
| Irwin Federman (3) |   | Director                                          |   | Ö                        |   | Ö                    |   | Ö                  |   | Ö                         |   | Ö                       |
| Guy Gecht          |   | Director                                          |   | Ö                        |   | Ö                    |   | Ö                  |   | Ö                         |   |                         |
| Dan Propper        |   | Director                                          |   | Ö                        |   |                      |   |                    |   |                           |   |                         |
| Ray Rothrock       |   | Director                                          |   | Ö                        |   | Ö                    |   | Ö                  |   | Ö                         |   | Ö                       |
| David Rubner       |   | Director                                          |   | Ö                        |   |                      |   | Ö                  |   |                           |   | Ö                       |
| Tal Shavit         |   | Director                                          |   | Ö                        |   |                      |   |                    |   |                           |   | Ö                       |

| (1)    | “Independent Director” under the NASDAQ Global Select Market regulations (see explanation below).                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                     |
| (2)    | “Outside Director” as required by the Israeli Companies Law (see explanation below).                                                                                                                         |
|   |                                                                                                                                                                                                                     |
| (3)    | “Financial expert” as required by the Israeli Companies Law and NASDAQ requirements with respect to membership on the Audit Committee (see “Item 16A – Audit Committee Financial Expert”). |

----

----

----

----

----

|                                                        |   | As of December 31, |   |
|-------------------------------------------------------------|--------|--------------------|--------|
| Function:                                                   |   | 2007               |   |   | 2008 |   |   | 2009 |   |
|                                                        |   |               |   |   |   |   |   |   |   |
| Research, development and quality assurance                 |   |               | 673    |   |   |   | 678 |   |   |   | 740 |   |
| Marketing, sales and business development                   |   |               | 717    |   |   |   | 701 |   |   |   | 804 |   |
| Customer support                                            |   |               | 225    |   |   |   | 222 |   |   |   | 284 |   |
| Information systems, administration, finance and operations |   |               | 286    |   |   |   | 283 |   |   |   | 284 |   |
| Total                                                       |   |               | 1,901  |   |   |   | 1,884 |   |   |   | 2,112 |   |

|              |   | As of December 31 |   |
|-------------------|--------|-------------------|--------|
| Region:           |   | 2007              |   |   | 2008 |   |   | 2009 |   |
|              |   |              |   |   |   |   |   |   |   |
| Israel            |   |              | 797    |   |   |   | 812 |   |   |   | 866 |   |
| United States     |   |              | 615    |   |   |   | 617 |   |   |   | 675 |   |
| Rest of the World |   |              | 489    |   |   |   | 455 |   |   |   | 571 |   |
| Total             |   |              | 1,901  |   |   |   | 1,884 |   |   |   | 2,112 |   |

----

|  Name                                                                               |   | Number of shares beneficially owned (1) |   | % of class of shares (2) |   | Title of securities covered by the options |   |  Number of options (3) |   |  Exercise price |   |  Date of expiration |
|------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------------------------|--------|--------------------------------------------|--------|-----------------------------|--------|----------------------|--------|--------------------------|
|                                                                                     |   |                                    |   |                     |   |                                       |   |                        |   |                 |   |                     |   |   |   |   |
| Gil Shwed                                                                                |   | 32,363,600                              |   |                     | 14.9   | %                                          |   | Ordinary shares             |   | 7,400,000            |   |                     | $[16.80] - $[26.99] |   |   |  [06/29/2011-07/28/2016] |
| Marius Nacht (4)                                                                         |   | 19,101,796                              |   |                     | 9.1    | %                                          |   | Ordinary shares             |   | 600,000              |   |                     | $[23.19] - $[26.99] |   |   | [06/29/2011-09/26/2012] |
| All directors and officers as a group (11 persons including Messrs. Shwed and Nacht) (5) |   | 53,287,160                              |   |                     | 24.3   | %                                          |   | Ordinary shares             |   | 9,708,000            |   |                     | $[16.80] - $[79.79] |   |   |  [07/27/2010-07/28/2016] |

| (1)    | The number of ordinary shares shown includes shares that each shareholder has the right to acquire pursuant to stock options that are exercisable within 60 days after January 31, 2010 (as determined in accordance with footnote (3)).                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (2)    | If a shareholder has the right to acquire shares by exercising stock options (as determined in accordance with footnote (3)), these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder.                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (3)    | Number of options immediately exercisable or exercisable within 60 days from January 31, 2010. The exercise price of some of these options is greater than our current share market price.                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)    | In addition to the amount above for which Mr. Nacht claims beneficial ownership, Mr. Nacht is the beneficiary of a trust that holds 1,946,800 shares. The trust, which was initially established in May 2005, is irrevocable and is currently scheduled to expire in May 2011. Mr. Nacht does not control the trust and has limited access to information concerning activities and holdings of the trust. Mr. Nacht disclaims beneficial ownership of the shares held in the trust. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (5)    | Each of Messrs. Ungerman, Payne, Chelouche, Federman, Gecht, Propper, Rothrock, Rubner and Dr. Shavit beneficially owns less than one percent of our outstanding ordinary shares.                                                                                                                                                                                                                                                                                                    |

----

|  Plan                               |   | Share reserved |   | Option and RSUs grants net (*) |       | Outstanding options and RSUs |   | Options outstandingexercise price |   | Date of expiration |          | Options and RSUs exercisable |
|------------------------------------------|--------|----------------|--------|--------------------------------|------------|------------------------------|--------|-----------------------------------|--------|--------------------|---------------|------------------------------|
|                                     |   |           |   |                           |       |                         |   |                              |   |               |          |                         |   |   |   |   |   |
| 2005 United States Equity Incentive Plan |   | 28,000,000     |   |                           | 1,799,853  |                         |   | 1,338,094                         |   |               | $16.80-$32.31 |                         |   | 09/26/2012-11/10/2016 |   | 663,903 12 |   |
| 2005 Israel Equity Incentive Plan        |   | 42,000,000     |   |                           | 9,661,565  |                         |   | 8,909,912                         |   |               | $16.80-$26.77 |                         |   | 09/26/2012-08/05/2016 |   | 3,687,240 |   |
| 1996 United States Stock Option Plan     |   | 40,919,020     |   |                           | 40,919,020 |                         |   | 833,619                           |   |               | $15.99-$79.79 |                         |   | 04/28/2010-07/24/2012 |   | 828,619 |   |
| 1996 Israel Stock Option Plan            |   | 36,635,755     |   |                           | 36,635,755 |                         |   | 7,025,139                         |   |               | $16.45-$26.99 |                         |   | 07/30/2010-09/26/2012 |   | 5,183,612 |   |
| Zone Labs 1998 Stock Option Plan         |   | 2,461,943      |   |                           | 2,461,943  |                         |   | 50,270                            |   |               | $2.99-$6.08   |                         |   | 10/11/2010-02/16/2014 |   | 50,270 |   |
| Employee Stock Purchase Plan             |   | 6,000,000      |   |                           | 3,461,088  |                         |   |                              |   |               |          |                         |   |   |   |   |   |
| Pointsec Stock Option Plan               |   | 488,633        |   |                           | 488,633    |                         |   | 55,664                            |   |               | $7.43-$19.45  |                         |   | 05/13/2011-02/28/2012 |   | 55,664 |   |

----

----

----

----

| ITEM 7.   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
|---------------------|---------------------------------------------------|

| Name of Five PercentShareholders |   | No. of sharesbeneficiallyheld (1) |   | % of classof shares (2) |   | No. of sharesbeneficiallyheld (1) |   | % of classof shares (2) |   | No. of sharesbeneficiallyheld (1) |   | % of classof shares (2) |
|----------------------------------|--------|-----------------------------------|--------|-------------------------|--------|-----------------------------------|--------|-------------------------|--------|-----------------------------------|--------|-------------------------|
|                             |   | December 31, 2007                 |   | December 31, 2008       |   | December 31, 2009                 |
|                             |   |                              |   |                    |   |                              |   |                    |   |                              |   |                    |   |   |   |   |   |   |
| Gil Shwed                        |   | 33,309,822                        |   |                    | 14.7   | %                                 |   | 34,314,442              |   |                              | 15.6   | %                       |   | 32,763,434 |   |   | 15.1 | % |
| Marius Nacht (3)                 |   | 20,851,795                        |   |                    | 9.4    | %                                 |   | 20,253,945              |   |                              | 9.6    | %                       |   | 19,101,796 |   |   | 9.1 | % |
| Franklin Resources, Inc. (4).    |   | 34,573,925                        |   |                    | 15.8   | %                                 |   | 23,253,624              |   |                              | 11.1   | %                       |   | 12,232,744 |   |   | 5.9 | % |
|                             |   |                              |   |                    |   |                              |   |                    |   |                              |   |                    |   |   |   |   |   |   |
| Ameriprise Financial, Inc. (5)   |   |                              |   |                    |   |                              |   | 14,049,274              |   |                              | 6.7    | %                       |   | 11,759,204 |   |   | 5.6 | % |
| FMR LLC (6)                      |   |                              |   |                    |   |                              |   |                    |   |                              |   |                    |   | 10,756,471 |   |   | 5.2 | % |
|                             |   |                              |   |                    |   |                              |   |                    |   |                              |   |                    |   |   |   |   |   |   |

| (1)    | The amount includes ordinary shares owned by each of the individuals, directly or indirectly, and options immediately exercisable or that are exercisable within 60 days from December 31st, of each of the years shown in this table. The exercise price of some of these options is greater than our current share market price.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (2)    | If a shareholder has the right to acquire shares by exercising stock options exercisable within 60 days from December 31st, of each of the years shown in this table, these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3)    | In addition to the amount above for which Mr. Nacht claims beneficial ownership, Mr. Nacht is the beneficiary of a trust that holds 1,946,800 shares. The trust, which was initially established in May 2005, is irrevocable and is currently scheduled to expire in May 2011. Mr. Nacht does not control the trust and has limited access to information concerning activities and holdings of the trust. Mr. Nacht disclaims beneficial ownership of the shares held in the trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (4)    | As of December 31, 2007 and 2008 and 2009, based on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission. In the Schedule 13G/A filed on February 7, 2008, Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., Templeton Global Advisors Limited, Templeton Investment Counsel, LLC, Franklin Templeton Investments Corp., Franklin Templeton Portfolio Advisors, Inc., Franklin Templeton Investments (Asia) Limited, Franklin Templeton Investment Management Limited, Franklin Advisors, Inc., Franklin Templeton Investments Australia Limited, Templeton Asset Management, Ltd. and Franklin Templeton Investments Japan Limited disclaim any pecuniary interest in any of the securities. In the Schedule 13G/A filed on February 6, 2009, Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., Templeton Investment Counsel, LLC, Templeton Global Advisors Limited, Franklin Templeton Investments Corp., Franklin Templeton Portfolio Advisors, Inc., Franklin Templeton Investments (Asia) Limited, Franklin Templeton Investment Management Limited, Franklin Templeton Investments Australia Limited, Franklin Advisors, Inc., Templeton Asset Management, Ltd. and Fiduciary Trust Company International disclaim any pecuniary interest in any of the securities. In the Schedule 13G/A filed on January 27, 2010, Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., Templeton Global Advisors Limited, Templeton Investment Counsel, LLC, Franklin Templeton Investments Corp., Franklin Templeton Portfolio Advisors, Inc., Franklin Templeton Investments (Asia) Limited, Franklin Advisors, Inc., Franklin Templeton Investments Australia Limited, Franklin Templeton Investment Management Limited and Templeton Asset Management, Ltd. disclaim any pecuniary interest in any of the securities. The address for Franklin Resources, Inc. is One Franklin Parkway, San Mateo, California 94403. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (5)    | As of December 31, 2008 and 2009, based on information contained in a Schedule 13G filed jointly by Ameriprise Financial, Inc. and RiverSource Investments, LLC with the Securities and Exchange Commission on February 12, 2009 and in a Schedule 13G/A filed jointly by Ameriprise Financial, Inc. and RiverSource Investments, LLC with the Securities and Exchange Commission on February 12, 2010. Based on information available to us, as of December 31, 2007, Ameriprise Financial, Inc. did not beneficially own more than 5% of our outstanding ordinary shares. The address for the parties is c/o Ameriprise Financial, Inc., 145 Ameriprise Financial Center, Minneapolis, Minnesota 55474.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (6)    | As of December 31, 2009, based on information contained in a Schedule 13G filed FMR LLC with the Securities and Exchange Commission on February 16, 2010. Based on information available to us, as of December 31, 2007 and 2008, FMR LLC did not beneficially own more than 5% of our outstanding ordinary shares. The address for FMR LLC is 82 Devonshire Street, Boston Massachusetts 02109.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

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| ITEM 8.   | FINANCIAL INFORMATION |
|---------------------|-----------------------|

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----

| ITEM 9. | THE OFFER AND LISTING |
|---------|-----------------------|

|                                 |   | High   |   |   | Low    |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |
| Year                                 |   |   |   |   |   |   |
| 2005                                 |   | $      | 25.42  |   |   | $      | 19.57 |   |
| 2006                                 |   |   | 23.21  |   |   |   | 16.27 |   |
| 2007                                 |   |   | 26.79  |   |   |   | 20.47 |   |
| 2008                                 |   |   | 25.81  |   |   |   | 16.80 |   |
| 2009                                 |   |   | 34.57  |   |   |   | 18.94 |   |
|                                 |   |   |   |   |   |   |   |   |
| 2008                                 |   |   |   |   |   |   |   |   |
|                                 |   |   |   |   |   |   |   |   |
| First quarter                        |   |   | 24.25  |   |   |   | 20.00 |   |
| Second quarter                       |   |   | 25.81  |   |   |   | 20.84 |   |
| Third quarter                        |   |   | 25.74  |   |   |   | 21.32 |   |
| Fourth quarter                       |   |   | 23.00  |   |   |   | 16.80 |   |
|                                 |   |   |   |   |   |   |   |   |
| 2009                                 |   |   |   |   |   |   |   |   |
|                                 |   |   |   |   |   |   |   |   |
| First quarter                        |   |   | 23.55  |   |   |   | 18.94 |   |
| Second quarter                       |   |   | 25.44  |   |   |   | 21.78 |   |
| Third quarter                        |   |   | 28.73  |   |   |   | 22.01 |   |
| Fourth quarter                       |   |   | 34.57  |   |   |   | 27.88 |   |
|                                 |   |   |   |   |   |   |   |   |
| Most recent six months               |   |   |   |   |   |   |   |   |
| September 2009                       |   |   | 28.47  |   |   |   | 26.50 |   |
| October 2009                         |   |   | 32.49  |   |   |   | 27.88 |   |
| November 2009                        |   |   | 33.24  |   |   |   | 30.65 |   |
| December 2009                        |   |   | 34.57  |   |   |   | 31.65 |   |
| January 2010                         |   |   | 34.97  |   |   |   | 31.80 |   |
| February 2010                        |   |   | 33.24  |   |   |   | 31.41 |   |
| March 2010 (through March 22, 20010) |   |   | 34.96  |   |   |   | 32.48 |   |

| ITEM 10. | ADDITIONAL INFORMATION |
|----------|------------------------|

----

----

|   | (1)    | A special or extraordinary resolution (such as a resolution amending our memorandum of association or articles of association). A majority of at least 75% of the shares voting on the matter is needed.                                                                                                                                                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                           |
|   | (2)    | A voluntary liquidation process or a merger. A majority of at least 75% of the shares voting on the matter is needed.                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |
|   | (3)    | A compromise or arrangement between us and our creditors or shareholders, reorganization, stock split or reverse split. This has to be approved by a majority in the number of the persons participating in the vote (except for those abstaining) who together hold at least 75% of the value represented at the vote. In addition, court approval is needed. |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |
|   | (4)    | The nomination and dismissal of outside directors. Outside directors may be elected or removed by a majority vote at a shareholders’ meeting, as long as either:                                                                                                                                                                                         |

|   | (i)    | The majority of shares includes at least one-third of the shares of non-controlling shareholders voted at the meeting, or                |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                     |
|   | (ii)   | The total number of shares of non-controlling shareholders voted against the proposal does not exceed 1% of our aggregate voting rights. |

|   | (5) | Extraordinary transactions with a controlling shareholder (i.e., any shareholder that has the ability to direct our actions, including any shareholder who holds 25% or more of our voting rights if no other shareholder owns more than 50% of our voting rights), with another person in which the controlling shareholder has a personal interest; or a transaction with a controlling shareholder (or a relative of such controlling shareholder) concerning terms of compensation for service as an office holder. Following audit committee and board of directors approval, these transactions must be approved by a majority vote at a shareholders’ meeting, as long as either: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i)    | The majority of shares includes at least one-third of the shares of the voting shareholders who have no personal interest in the transaction, or                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                      |
|   | (ii)   | The total shareholdings of those who have no personal interest in the transaction and who vote against the transaction does not exceed 1% of our aggregate voting rights. |

----

|   | § | Discourage potential acquisition proposals,                                                   |
|--------|--------|-----------------------------------------------------------------------------------------------|
|   |   |                                                                                          |
|   | § | Delay or prevent a change in control,                                                         |
|   |   |                                                                                          |
|   | § | Limit the price that investors might be willing to pay in the future for our ordinary shares. |

----

|   | § | There is a limitation on acquisition of any level of control of the company, or                      |
|--------|--------|------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                 |
|   | § | The acquisition of any level of control requires the purchaser to make a tender offer to the public. |

|   | §                           | Prior to that date, the board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; or                                                  |
|--------|----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | Upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 75% of our voting shares outstanding at the time the transaction commenced. |
|   |                             |                                                                                                                                                                                                                            |
|   | A business combination includes: |
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | Any merger or consolidation between the interested shareholder and us;                                                                                                                                                          |
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | Any sale, transfer, pledge or other disposition of 10% or more of our assets in a transaction involving the interested shareholder;                                                                                             |
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | Subject to certain exceptions, any transaction that results in our issuance or transfer of any of our shares to the interested shareholder;                                                                                     |
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | Any transaction in which we are involved that has an effect of increasing the proportionate share of our shares, of any class or series, beneficially owned by the interested shareholder; or                                   |
|   |                             |                                                                                                                                                                                                                            |
|   | §                           | The receipt by the interested shareholder of the benefit of any loans, advances, guarantees, pledges, or other financial benefits provided by or through us.                                                                    |

----

----

|   | § | Any amendment to the articles of association,                                |
|--------|--------|------------------------------------------------------------------------------|
|   |   |                                                                         |
|   | § | An increase of the company’s authorized share capital,                 |
|   |   |                                                                         |
|   | § | A merger, or                                                                 |
|   |   |                                                                         |
|   | § | Approval of interested party transactions that require shareholder approval. |

|   | § | Monetary liability imposed on the office holder in favor of a third party in a judgment, including a settlement or an arbitral award confirmed by a court.                                                                                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                   |
|   | § | Reasonable legal costs, including attorneys’ fees, expended by an office holder as a result of an investigation or proceeding instituted against the office holder by a competent authority, provided that such investigation or proceeding concludes without the filing of an indictment against the office holder, and either: |

|   | o      | No financial liability was imposed on the office holder in lieu of criminal proceedings, or                                                                       |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                              |
|   | o      | Financial liability was imposed on the office holder in lieu of criminal proceedings, but the alleged criminal offense does not require proof of criminal intent. |

|   | § | Reasonable legal costs, including attorneys’ fees, expended by the office holder or for which the office holder is charged by a court: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | o      | In an action brought against the office holder by us, on our behalf or on behalf of a third party,                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                 |
|   | o      | In a criminal action in which the office holder is found innocent, or                                                |
|   |   |                                                                                                                 |
|   | o      | In a criminal action in which the office holder is convicted, but in which proof of criminal intent is not required. |

----

----

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| Percent ofForeign Ownership |   | Rate ofReduced Tax |   | Reduced Tax Period |   | Tax Exemption Period |
|-----------------------------|--------|--------------------|--------|--------------------|--------|----------------------|
|                        |   |               |   |               |   |                 |
| 0-25%                       |   | 25%                |   | 5 years            |   | 2 years              |
| 25-49%                      |   | 25%                |   | 8 years            |   | 2 years              |
| 49-74%                      |   | 20%                |   | 8 years            |   | 2 years              |
| 74-90%                      |   | 15%                |   | 8 years            |   | 2 years              |
| 90-100%                     |   | 10%                |   | 8 years            |   | 2 years              |

----

----

|   | § | A citizen or resident (as defined for U.S. federal income tax purposes) of the United States;                                                                                                                                          |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                   |
|   | § | A corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any of its states;                                                                                          |
|   |   |                                                                                                                                                                                                                                   |
|   | § | An estate, if the estate’s income is subject to U.S. federal income taxation regardless of its source; or                                                                                                                        |
|   |   |                                                                                                                                                                                                                                   |
|   | § | A trust, if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons (e.g., a U.S. citizen, resident, or corporation) have the authority to control all of its substantial decisions. |

----

|   | § | Aspects of U.S. federal income taxation relevant to U.S. Shareholders by reason of their particular circumstances (including potential application of the alternative minimum tax).                                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                       |
|   | § | U.S. Shareholders subject to special treatment under the U.S. federal income tax laws, such as financial institutions, insurance companies, broker-dealers, tax-exempt organizations, and foreign individuals or entities. |
|   |   |                                                                                                                                                                                                                       |
|   | § | U.S. Shareholders who own 10% or more of our outstanding voting shares, either directly or by attribution.                                                                                                                 |
|   |   |                                                                                                                                                                                                                       |
|   | § | U.S. Shareholders who hold our ordinary shares as part of a hedging, straddle, or conversion transaction.                                                                                                                  |
|   |   |                                                                                                                                                                                                                       |
|   | § | U.S. Shareholders who acquire their ordinary shares in a compensatory transaction.                                                                                                                                         |
|   |   |                                                                                                                                                                                                                       |
|   | § | U.S. Shareholders whose functional currency is not the U.S. dollar.                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                       |
|   | § | Any aspect of state, local, or non-U.S. tax law.                                                                                                                                                                           |

----

|   | § | 75% or more of our gross income in the taxable year is passive income, or                                                                   |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                        |
|   | § | 50% or more of the average percentage of our assets held during the taxable year, produce or are held for the production of passive income. |

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| ITEM 11.  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------------|------------------------------------------------------------|

----

|                                                          |   | Maturity       |    |   | Total Amortized cost |   |    | Fair Value at Dec. 31, 2009 |   |
|---------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|---------|-----------------------------|--------|
|                                                          |   | 2010           |    |   | 2011                 |   |    | 2012                        |   |   | 2013 |   |   | 2014 onwards |   |   |   |   |   |   |   |
|                                                          |   | (in thousands) |    |   |                 |   |    |                        |   |
|                                                          |   |           |    |   |                 |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures - fixed interest rates    |   | $              | 193,902 |   |                 | $      | 224,964 |                        |   | $ | 305,029 |   |   | $ | 144,719 |   |   | $ | 51,405 |   |   | $ | 920,019 |   |   | $ | 935,009 |   |
| US Agencies                                                   |   | $              | 239,609 |   |                 | $      | 60,147  |                        |   | $ | 12,952 |   |   | $ | 11,858 |   |   | $ | 8,092 |   |   | $ | 332,658 |   |   | $ | 333,985 |   |
| Structured note (*)                                           |   | $              | 12,128  |   |                 |   | – |                        |   |   | – |   |   |   | – |   |   |   | – |   |   | $ | 12,128 |   |   | $ | 12,090 |   |
| Auction rate securities(**)                                   |   |           | – |   |                 |   | – |                        |   |   | – |   |   |   | – |   |   | $ | 8,776 |   |   | $ | 8,776 |   |   | $ | 8,776 |   |
| Government and corporate debentures - floating interest rates |   | $              | 21,764  |   |                 | $      | 50,910  |                        |   | $ | 56,681 |   |   | $ | 6,284 |   |   | $ | 7,100 |   |   | $ | 142,739 |   |   | $ | 143,054 |   |
| Short-term deposit, money market instruments & cash       |   | $              | 414,085 |   |                 |   | – |                        |   |   | – |   |   |   | – |   |   |   | – |   |   | $ | 414,085 |   |   | $ | 414,085 |   |
| Total                                                         |   | $              | 881,488 |   |                 | $      | 336,021 |                        |   | $ | 374,662 |   |   | $ | 162,861 |   |   | $ | 75,373 |   |   | $ | 1,830,405 |   |   | $ | 1,846,999 |   |

----

| ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
|----------|--------------------------------------------------------|

----

PART II

| ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
|----------|-------------------------------------------------|

| ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
|----------|------------------------------------------------------------------------------|

| ITEM 15. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

----

| ITEM 16. | Reserved. |
|----------|-----------|

| ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
|-----------|----------------------------------|

| ITEM 16B. | CODE OF ETHICS |
|-----------|----------------|

| ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|-----------|----------------------------------------|

|                      |   |  Year Ended December 31, 2008 |    |   |  Year Ended December 31, 2009 |   |
|---------------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|
|                      |   | Amount                             |    |   | Percentage                         |   |   | Amount |   |   | Percentage |   |
|                      |   | (in thousands, except percentages) |    |
|                      |   |                               |    |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Audit fees (1)            |   | $                                  | 965     |   |                               |   | 75 | % |   | $ | 864 |   |   |   | 81 | % |
| Audit-related fees        |   |                               | – |   |                               |   | – |   |   |   | – |   |   |   | – |   |
| Tax fees (3)              |   |                               | 323     |   |                               |   | 25 | % |   |   | 198 |   |   |   | 19 | % |
| [All other fees (if any)] |   |                               |    |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                     |   | $                                  | 1,288   |   |                               |   | 100 | % |   | $ | 1,062 |   |   |   | 100 | % |

| (1) | “Audit fees” are fees for audit services for each of the years shown in this table, including fees associated with the annual audit (including audit of our internal control over financial reporting) and reviews of our quarterly financial results submitted on Form 6-K, consultations on various accounting issues and audit services provided in connection with other statutory or regulatory filings. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | “Tax fees” are fees for professional services rendered by our auditors for tax compliance, tax planning and tax advice on actual or contemplated transactions, tax consulting associated with international transfer prices and employee benefits. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
|-----------|------------------------------------------------------------|

| ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
|-----------|------------------------------------------------------------------------|

----

|  Period                     |   |  (a) Total Number of Ordinary Shares Purchased |      |   |  (b) Average Price per Ordinary Share |   |   | (c) Total Number of Ordinary Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | (d) Approximate Dollar Amount Available for Repurchase under the Plans or Programs |   |
|----------------------------------|--------|-----------------------------------------------------|-----------|--------|--------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------|--------|
|                             |   |                                                |      |   |                                       |   |   |                                                                                          |   |   | (in thousands)                                                                     |   |
|                             |   |                                                |      |   |                                       |   |   |                                                                                          |   |   |                                                                               |   |   |   |   |   |
| January 1 – January 31     |   |                                                | N/A       |   |                                       |   | N/A    |                                                                                          |   |   | N/A                                                                                |   |   | $ | 233,695 |   |
| February 1 – February 28   |   |                                                | 1,823,750 |   |                                       | $      | 22.7   |                                                                                          |   |   | 1,823,750                                                                          |   |   | $ | 192,453 |   |
| March 1 – March 31         |   |                                                | 497,600   |   |                                       | $      | 22.1   |                                                                                          |   |   | 497,600                                                                            |   |   | $ | 181,407 |   |
| April 1 – April 30         |   |                                                | N/A       |   |                                       |   | N/A    |                                                                                          |   |   | N/A                                                                                |   |   | $ | 181,407 |   |
| May 1 – May 31             |   |                                                | 1,860,000 |   |                                       | $      | 23.0   |                                                                                          |   |   | 1,860,000                                                                          |   |   | $ | 138,344 |   |
| June 1 – June 30           |   |                                                | 298,600   |   |                                       | $      | 23.2   |                                                                                          |   |   | 298,600                                                                            |   |   | $ | 131,409 |   |
| July 1 – July 31           |   |                                                | N/A       |   |                                       |   | N/A    |                                                                                          |   |   | N/A                                                                                |   |   | $ | 131,409 |   |
| August 1 – August 31       |   |                                                | 1,209,900 |   |                                       | $      | 27.6   |                                                                                          |   |   | 1,209,900                                                                          |   |   | $ | 97,758 |   |
| September 1 – September 30 |   |                                                | 585,769   |   |                                       | $      | 27.9   |                                                                                          |   |   | 585,769                                                                            |   |   | $ | 81,410 |   |
| October 1 – October 31     |   |                                                | N/A       |   |                                       |   | N/A    |                                                                                          |   |   | N/A                                                                                |   |   | $ | 81,410 |   |
| November 1 – November 30   |   |                                                | 1,161,621 |   |                                       | $      | 31.9   |                                                                                          |   |   | 1,161,621                                                                          |   |   | $ | 43,601 |   |
| December 1 – December 31   |   |                                                | 376,900   |   |                                       | $      | 32.3   |                                                                                          |   |   | 376,900                                                                            |   |   | $ | 31,411 |   |
| Total                            |   |                                                | 7,814,140 |   |                                       |   | 25.9   |                                                                                          |   |   | 7,814,140                                                                          |   |   |   | N/A |   |

----

| ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
|-----------|----------------------------------------------------|

| ITEM 16G. | CORPORATE GOVERNANCE |
|-----------|----------------------|

----

PART III

| ITEM 17. | FINANCIAL STATEMENTS |
|----------|----------------------|

| ITEM 18. | FINANCIAL STATEMENTS |
|----------|----------------------|

----

| ITEM 19. | EXHIBITS |
|----------|----------|

| 1      | Articles of Association of Check Point Software Technologies Ltd. (1)                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                      |
| 4.1    | Form of Director Insurance, Indemnification and Exculpation Agreement between Check Point Software Technologies Ltd. and its directors (2)                                                                |
|   |                                                                                                                                                                                                      |
| 4.2    | Check Point Software Technologies Ltd. 1996 Israel Stock Option Plan (3)                                                                                                                                  |
|   |                                                                                                                                                                                                      |
| 4.3    | Check Point Software Technologies Ltd. Restated and Amended 1996 Section 102 Share Option Plan (4)                                                                                                        |
|   |                                                                                                                                                                                                      |
| 4.4    | Addendum—Israel to the Check Point Software Technologies Ltd. Restated and Amended 1996 Section 102 Share Option Plan (5)                                                                           |
|   |                                                                                                                                                                                                      |
| 4.5    | Check Point Software Technologies Ltd. 1996 United Stated Stock Option Plan (6)                                                                                                                           |
|   |                                                                                                                                                                                                      |
| 4.6    | Check Point Software Technologies Ltd. 2005 Israel Equity Incentive Plan (7)                                                                                                                              |
|   |                                                                                                                                                                                                      |
| 4.7    | Check Point Software Technologies Ltd. 2005 United States Equity Incentive Plan (8)                                                                                                                       |
|   |                                                                                                                                                                                                      |
| 4.8    | Zone Labs, Inc. 1998 Stock Option Plan (9)                                                                                                                                                                |
|   |                                                                                                                                                                                                      |
| 4.9    | Pointsec Mobile Technologies Inc. 2003 Stock Option Plan (10)                                                                                                                                             |
|   |                                                                                                                                                                                                      |
| 4.10   | Pointsec Mobile Technologies Inc. 2005 Stock Option Plan (11)                                                                                                                                             |
|   |                                                                                                                                                                                                      |
| 4.11   | Pointsec Mobile Technologies Inc. 2006 Stock Option Plan (12)                                                                                                                                             |
|   |                                                                                                                                                                                                      |
| 4.12   | Check Point Software Technologies Ltd. Employee Stock Purchase Plan (13)                                                                                                                                  |
|   |                                                                                                                                                                                                      |
| 4.13   | A translation of an agreement between Tzlil Ad Ltd. and Check Point Software Technologies Ltd., for the purchase of the leasing rights of a building in Tel Aviv, Israel, dated as of March 19, 2006 (14) |
|   |                                                                                                                                                                                                      |
| 8      | List of subsidiaries (15)                                                                                                                                                                                 |
|   |                                                                                                                                                                                                      |
| 12.1   | Certification of the Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002                                                                                                      |
|   |                                                                                                                                                                                                      |
| 12.2   | Certification of the Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002                                                                                                      |
|   |                                                                                                                                                                                                      |
| 13     | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                   |
|   |                                                                                                                                                                                                      |
| 15     | Consent of Kost, Forer, Gabbay & Kasierer, a Member of Ernst & Young Global                                                                                                                       |

| (1)    | Incorporated by reference to Exhibit 1 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005.                                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                              |
| (2)    | Incorporated by reference to Exhibit 4.1 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005.                                                  |
|   |                                                                                                                                                                              |
| (3)    | Incorporated by reference to Exhibit 10.3 of Check Point’s Registration Statement on Form F-1 originally filed with the Securities and Exchange Commission on May 31, 1996. |
|   |                                                                                                                                                                              |
| (4)    | Incorporated by reference to Exhibit 4.6 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2004.                                                  |

----

| (5)    | Incorporated by reference to Exhibit 4.7 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2004.                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                               |
| (6)    | Incorporated by reference to Exhibit 4.8 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2004.                                                                   |
|   |                                                                                                                                                                                               |
| (7)    | Incorporated by reference to Exhibit 4.7 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005.                                                                   |
|   |                                                                                                                                                                                               |
| (8)    | Incorporated by reference to Exhibit 4.8 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005.                                                                   |
|   |                                                                                                                                                                                               |
| (9)    | Incorporated by reference to Exhibit 4.1 of Check Point Software Technologies Ltd.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 15, 2004. |
|   |                                                                                                                                                                                               |
| (10)   | Incorporated by reference to Exhibit 4.1 of Check Point Software Technologies Ltd.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 19, 2007. |
|   |                                                                                                                                                                                               |
| (11)   | Incorporated by reference to Exhibit 4.2 of Check Point Software Technologies Ltd.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 19, 2007. |
|   |                                                                                                                                                                                               |
| (12)   | Incorporated by reference to Exhibit 4.3 of Check Point Software Technologies Ltd.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 19, 2007. |
|   |                                                                                                                                                                                               |
| (13)   | Incorporated by reference to Exhibit 4.10 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005.                                                                  |
|   |                                                                                                                                                                                               |
| (14)   | Incorporated by reference to Exhibit 4.11 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2006.                                                                  |
|   |                                                                                                                                                                                               |
| (15)   | Incorporated by reference to “Item 4 – Information on Check Point – Organizational Structure” in this Annual Report on Form 20-F.                                          |

----

|                                                                   | Page                          |
|------------------------------------------------------------------------|-------------------------------|
|                                                                   |                          |
| Management’s Report on Internal Control Over Financial Reporting | F - 2                    |
|                                                                   |                          |
| Reports of Independent Registered Public Accounting Firm               | F - 3 – F - 5 |
|                                                                   |                          |
| Consolidated Balance Sheets                                            | F - 6 – F - 7 |
|                                                                   |                          |
| Consolidated Statements of Income                                      | F - 8                    |
|                                                                   |                          |
| Statements of Changes in Shareholders’ Equity                    | F - 9 – F - 10     |
|                                                                   |                          |
| Consolidated Statements of Cash Flows                                  | F - 11                   |
|                                                                   |                          |
| Notes to Consolidated Financial Statements                             | F - 12 – F - 50    |

----

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

| ● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets,                                                                                                                                                                      |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                  |   |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
|    |                                                                                                                                                                                                                                                                                                                  |   |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.                                                                                                                    |

----

|  |   | Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 67067, Israel Tel: 972 (3)6232525Fax: 972 (3)5622555www.ey.com/il |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------|

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

|             |                                 |
|------------------|--------------------------------------|
| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
| March 29, 2010   | A Member of Ernst & Young Global |

----

|  |   | Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 67067, Israel Tel: 972 (3)6232525Fax: 972 (3)5622555www.ey.com/il |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------|

----

|  |   | Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 67067, Israel Tel: 972 (3)6232525Fax: 972 (3)5622555www.ey.com/il |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------|

|             |                                 |
|------------------|--------------------------------------|
| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
| March 29, 2010   | A Member of Ernst & Young Global |

----

|                                             | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|--------------------------------------------------|----------------------------------------|
|                                             | AND ITS SUBSIDIARIES                   |
| CONSOLIDATED BALANCE SHEETS                      |
| U.S. dollars in thousands (except share amounts) |

|                                                                                                                                                       |   | December 31, |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|
|                                                                                                                                                       |   | 2008         |      |   | 2009 |   |
|                                                                                                                                                       |   |         |      |   |   |   |
| ASSETS                                                                                                                                                     |   |         |      |   |   |   |
|                                                                                                                                                       |   |         |      |   |   |   |
| CURRENT ASSETS:                                                                                                                                            |   |         |      |   |   |   |
| Cash and cash equivalents                                                                                                                                  |   | $            | 543,190   |   |   | $ | 414,085 |   |
| Short-term deposit                                                                                                                                         |   |         | 26,302    |   |   |   | – |   |
| Marketable securities                                                                                                                                      |   |         | 344,895   |   |   |   | 469,913 |   |
| Trade receivables (net of allowances for doubtful accounts and sales reserves of  $9,125 and $19,335 as of December 31, 2008, and 2009, respectively) |   |         | 251,771   |   |   |   | 283,668 |   |
| Prepaid expenses and other current assets                                                                                                                  |   |         | 28,372    |   |   |   | 34,544 |   |
|                                                                                                                                                       |   |         |      |   |   |   |   |   |
| Total current assets                                                                                                                                       |   |         | 1,194,530 |   |   |   | 1,202,210 |   |
|                                                                                                                                                       |   |         |      |   |   |   |   |   |
| LONG-TERM ASSETS:                                                                                                                                          |   |         |      |   |   |   |   |   |
| Marketable securities                                                                                                                                      |   |         | 529,445   |   |   |   | 963,001 |   |
| Property and equipment, net                                                                                                                                |   |         | 40,248    |   |   |   | 38,936 |   |
| Severance pay fund                                                                                                                                         |   |         | 5,817     |   |   |   | 6,314 |   |
| Deferred tax asset, net                                                                                                                                    |   |         | 19,003    |   |   |   | 16,307 |   |
| Other intangible assets, net                                                                                                                               |   |         | 123,151   |   |   |   | 114,192 |   |
| Goodwill                                                                                                                                                   |   |         | 664,602   |   |   |   | 708,458 |   |
| Other assets                                                                                                                                               |   |         | 16,820    |   |   |   | 20,176 |   |
|                                                                                                                                                       |   |         |      |   |   |   |   |   |
| Total long-term assets                                                                                                                                     |   |         | 1,399,086 |   |   |   | 1,867,384 |   |
|                                                                                                                                                       |   |         |      |   |   |   |   |   |
| Total assets                                                                                                                                               |   | $            | 2,593,616 |   |   | $ | 3,069,594 |   |

----

|                                             | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|--------------------------------------------------|----------------------------------------|
|                                             | AND ITS SUBSIDIARIES                   |
| CONSOLIDATED BALANCE SHEETS                      |
| U.S. dollars in thousands (except share amounts) |

|                                                                                                                                                                                                                          |   | December 31, |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|------------|
|                                                                                                                                                                                                                          |   | 2008         |       |   | 2009 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                    |   |         |       |   |   |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                          |   |         |       |   |   |   |
| Trade payables                                                                                                                                                                                                                |   | $            | 7,087      |   |   | $ | 8,860 |   |
| Employee and payroll accruals                                                                                                                                                                                                 |   |         | 47,004     |   |   |   | 67,167 |   |
| Deferred revenues                                                                                                                                                                                                             |   |         | 289,998    |   |   |   | 384,255 |   |
| Accrued expenses and other liabilities                                                                                                                                                                                        |   |         | 58,465     |   |   |   | 92,984 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| Total current liabilities                                                                                                                                                                                                     |   |         | 402,554    |   |   |   | 553,266 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| LONG-TERM LIABILITIES:                                                                                                                                                                                                        |   |         |       |   |   |   |   |   |
| Deferred revenues                                                                                                                                                                                                             |   |         | 40,799     |   |   |   | 41,005 |   |
| Income tax accrual                                                                                                                                                                                                            |   |         | 101,230    |   |   |   | 132,908 |   |
| Deferred tax liability                                                                                                                                                                                                        |   |         | 22,225     |   |   |   | 11,636 |   |
| Accrued severance pay                                                                                                                                                                                                         |   |         | 10,943     |   |   |   | 11,061 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
|                                                                                                                                                                                                                          |   |         | 175,197    |   |   |   | 196,610 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| Total liabilities                                                                                                                                                                                                             |   |         | 577,751    |   |   |   | 749,876 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| SHAREHOLDERS’ EQUITY:                                                                                                                                                                                                   |   |         |       |   |   |   |   |   |
| Share capital -                                                                                                                                                                                                               |   |         |       |   |   |   |   |   |
| Preferred shares, NIS 0.01 par value, 5,000,000 shares authorized, no shares issued                                                                                                                                           |   |         | –    |   |   |   | – |   |
| Deferred shares, NIS 1 par value, 10 shares authorized, 1 share issued and outstanding                                                                                                                                        |   |         | –    |   |   |   | – |   |
| Ordinary shares, NIS 0.01 par value, 500,000,000 shares authorized, 261,223,970 shares issued as of December 31, 2008 and 2009; 210,042,282 and 209,099,392 shares outstanding as of December 31, 2008 and 2009, respectively |   |         | 774        |   |   |   | 774 |   |
| Additional paid-in capital                                                                                                                                                                                                    |   |         | 503,408    |   |   |   | 527,874 |   |
| Treasury shares at cost - 51,181,688 and 52,124,578 Ordinary shares as of December 31, 2008 and 2009, respectively                                                                                                            |   |         | (1,105,250 | ) |   |   | (1,199,752 | ) |
| Accumulated other comprehensive income (loss)                                                                                                                                                                                 |   |         | (4,673     | ) |   |   | 12,555 |   |
| Retained earnings                                                                                                                                                                                                             |   |         | 2,621,606  |   |   |   | 2,978,267 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| Total shareholders’ equity                                                                                                                                                                                              |   |         | 2,015,865  |   |   |   | 2,319,718 |   |
|                                                                                                                                                                                                                          |   |         |       |   |   |   |   |   |
| Total liabilities and shareholders’ equity                                                                                                                                                                              |   | $            | 2,593,616  |   |   | $ | 3,069,594 |   |

----

|                                                 | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|------------------------------------------------------|----------------------------------------|
|                                                 | AND ITS SUBSIDIARIES                   |
| CONSOLIDATED STATEMENTS OF INCOME                    |
| U.S. dollars in thousands (except per share amounts) |

|                                                                                             |   | Year ended December 31, |    |
|--------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                             |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |
| Revenues:                                                                                        |   |                    |    |   |   |   |   |   |   |
| Products and licenses                                                                            |   | $                       | 309,785 |   |   | $ | 338,317 |   |   | $ | 361,633 |   |
| Software updates, maintenance and services                                                       |   |                    | 421,092 |   |   |   | 470,173 |   |   |   | 562,784 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                                                                                   |   |                    | 730,877 |   |   |   | 808,490 |   |   |   | 924,417 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating expenses: (*)                                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |
| Cost of products and licenses (**)                                                               |   |                    | 27,191  |   |   |   | 34,648 |   |   |   | 61,495 |   |
| Cost of software updates, maintenance and services (**)                                          |   |                    | 27,386  |   |   |   | 33,407 |   |   |   | 43,551 |   |
| Amortization of technology                                                                       |   |                    | 27,724  |   |   |   | 24,554 |   |   |   | 28,224 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total cost of revenues                                                                           |   |                    | 82,301  |   |   |   | 92,609 |   |   |   | 133,270 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Research and development                                                                         |   |                    | 80,982  |   |   |   | 91,629 |   |   |   | 89,743 |   |
| Selling and marketing                                                                            |   |                    | 217,491 |   |   |   | 214,439 |   |   |   | 220,877 |   |
| General and administrative                                                                       |   |                    | 53,527  |   |   |   | 53,313 |   |   |   | 56,409 |   |
| Restructuring and other acquisition related costs                                                |   |                    | – |   |   |   | – |   |   |   | 9,101 |   |
| Acquired in-process research and development                                                     |   |                    | 17,000  |   |   |   | – |   |   |   | – |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total operating expenses                                                                         |   |                    | 451,301 |   |   |   | 451,990 |   |   |   | 509,400 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Operating income                                                                                 |   |                    | 279,576 |   |   |   | 356,500 |   |   |   | 415,017 |   |
| Financial income, net                                                                            |   |                    | 49,725  |   |   |   | 40,876 |   |   |   | 32,058 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously impaired |   |                    | – |   |   |   | (11,221 | ) |   |   | (1,277 | ) |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Income before taxes on income                                                                    |   |                    | 329,301 |   |   |   | 386,155 |   |   |   | 445,798 |   |
| Taxes on income                                                                                  |   |                    | 48,237  |   |   |   | 62,189 |   |   |   | 88,275 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
| Net income                                                                                       |   | $                       | 281,064 |   |   | $ | 323,966 |   |   | $ | 357,523 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
|  Basic earnings per Ordinary share                                                          |   | $                       | 1.26    |   |   | $ | 1.51 |   |   | $ | 1.71 |   |
|                                                                                             |   |                    |    |   |   |   |   |   |   |   |   |   |
|  Diluted earnings per Ordinary share                                                        |   | $                       | 1.25    |   |   | $ | 1.50 |   |   | $ | 1.68 |   |

| Cost of products and licenses                      |   | $      | 65     |   |   | $      | 48     |   |   | $      | 47     |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost of software updates, maintenance and services |   |   | 668    |   |   |   | 684    |   |   |   | 641    |   |
| Research and development                           |   |   | 4,309  |   |   |   | 5,037  |   |   |   | 6,649  |   |
| Selling and marketing                              |   |   | 8,780  |   |   |   | 6,855  |   |   |   | 5,032  |   |
| General and administrative                         |   |   | 20,230 |   |   |   | 19,703 |   |   |   | 18,538 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Total stock-based compensation expenses            |   | $      | 34,052 |   |   | $      | 32,327 |   |   | $      | 30,907 |   |

----

|   CHECK POINT SOFTWARE TECHNOLOGIES LTD.       |
|-----------------------------------------------------|
|                                                | AND ITS SUBSIDIARIES |
| STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |
| U.S. dollars in thousands (except share amounts)    |

|                                                                                                                                                              |   |    |    |   |       |   |    |     |   |   | Accumulated   |   |   |     |    |   |          |   |      |                |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|---------|--------|------------|--------|---------|----------|--------|--------|---------------|--------|--------|----------|---------|--------|---------------|--------|-----------|---------------------|--------|
|                                                                                                                                                              |   |    |    |   | Additional |   |    | Treasury |   |   | other         |   |   |     |    |   | Total         |   |      | Total               |   |
|                                                                                                                                                              |   | Share   |    |   | paid-in    |   |    | shares   |   |   | comprehensive |   |   | Retained |    |   | comprehensive |   |      | Shareholders’ |   |
|                                                                                                                                                              |   | capital |    |   | capital    |   |    | at cost  |   |   | income (loss) |   |   | earnings |    |   | income        |   |      | equity              |   |
|                                                                                                                                                              |   |    |    |   |       |   |    |     |   |   |          |   |   |     |    |   |          |   |      |                |   |   |   |   |   |   |   |
| Balance as of December 31, 2006                                                                                                                                   |   | $       | 774     |   |       | $      | 422,381 |     |   | $      | (728,909      | )      |   | $        | (6,293  | )      |          | $      | 2,023,580 |                |   |   |   |   | $ | 1,711,533 |   |
| Tax benefit related to exercise of stock options                                                                                                                  |   |    | – |   |       |   | 6,828   |     |   |   | –       |   |   |     | – |   |          |   | –   |                |   |   |   |   |   | 6,828 |   |
| Issuance of treasury shares under stock plans, upon exercise of options and vesting of restricted stock units (1,885,379 Ordinary shares net of 16,578 for taxes) |   |    | – |   |       |   | – |     |   |   | 31,644        |   |   |     | – |   |          |   | (7,004    | )                   |   |   |   |   |   | 24,640 |   |
| Treasury shares at cost (9,021,500 Ordinary shares)                                                                                                               |   |    | – |   |       |   | – |     |   |   | (209,757      | )      |   |     | – |   |          |   | –   |                |   |   |   |   |   | (209,757 | ) |
| Stock-based compensation expense related to employees                                                                                                             |   |    | – |   |       |   | 34,052  |     |   |   | –       |   |   |     | – |   |          |   | –   |                |   |   |   |   |   | 34,052 |   |
| Issuance of stock options related to the acquisition of Protect Data                                                                                              |   |    | – |   |       |   | 1,069   |     |   |   | –       |   |   |     | – |   |          |   | –   |                |   |   |   |   |   | 1,069 |   |
| Comprehensive income, net of tax -                                                                                                                                |   |    |    |   |       |   |    |     |   |   |          |   |   |     |    |   |          |   |      |                |   |   |   |   |   |   |   |
| Reclassification adjustments to income on marketable securities                                                                                                   |   |    | – |   |       |   | – |     |   |   | –       |   |   |     | 983     |   |          |   | –   |                |   | $ | 983 |   |   |   | 983 |   |
| Unrealized gains on marketable securities, net of $ 2,430 tax                                                                                                     |   |    | – |   |       |   | – |     |   |   | –       |   |   |     | 6,543   |   |          |   | –   |                |   |   | 6,543 |   |   |   | 6,543 |   |
| Net income                                                                                                                                                        |   |    | – |   |       |   | – |     |   |   | –       |   |   |     | – |   |          |   | 281,064   |                |   |   | 281,064 |   |   |   | 281,064 |   |
| Total comprehensive income                                                                                                                                        |   |    |    |   |       |   |    |     |   |   |          |   |   |     |    |   |          |   |      |                |   | $ | 288,590 |   |   |   |   |   |
|                                                                                                                                                              |   |    |    |   |       |   |    |     |   |   |          |   |   |     |    |   |          |   |      |                |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2007                                                                                                                                   |   | $       | 774     |   |       | $      | 464,330 |     |   | $      | (907,022      | )      |   | $        | 1,233   |   |          | $      | 2,297,640 |                |   |   |   |   |   | $ | 1,856,955 |   |
|                                                                                                                                                              |   |    |    |   |       |   |    |     |   |   |          |   |   |     |    |   |          |   |      |                |   |   |   |   |   |   |   |   |
| Unrealized gains on marketable securities, net of $ 374 tax                                                                                                       |   |    |    |   |       |   |    |     |   |   |          |   |   | $        | 1,233   |   |          |   |      |                |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive gains as of December 31, 2007                                                                                                     |   |    |    |   |       |   |    |     |   |   |          |   |   | $        | 1,233   |   |          |   |      |                |   |   |   |   |   |   |   |   |

----

|   CHECK POINT SOFTWARE TECHNOLOGIES LTD.       |
|-----------------------------------------------------|
|                                                | AND ITS SUBSIDIARIES |
| STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |   |
| U.S. dollars in thousands (except share amounts)    |   |

|                                                                                                                                                              |   | Sharecapital |    |   | Additionalpaid-incapital |   |    | Treasurysharesat cost |   |   | Accumulatedothercomprehensiveincome (loss) |   |   | Retainedearnings |    |   | Totalcomprehensiveincome |   |      | Totalshareholders’Equity |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|--------------------------|--------|---------|-----------------------|--------|--------|--------------------------------------------|--------|--------|------------------|---------|--------|--------------------------|--------|-----------|--------------------------------|--------|
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |
| Balance as of December 31, 2007                                                                                                                                   |   | $            | 774     |   |                     | $      | 464,330 |                  |   | $      | (907,022                                   | )      |   | $                | 1,233   |   |                     | $      | 2,297,640 |                           |   |   |   |   | $ | 1,856,955 |   |
| Tax benefit related to exercise of stock options                                                                                                                  |   |         | – |   |                     |   | 13,019  |                  |   |   | –                                    |   |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | 13,019 |   |
| Issuance of treasury shares under stock plans, upon exercise of options and vesting of restricted stock units (2,402,792 Ordinary shares net of 29,383 for taxes) |   |         | – |   |                     |   | (6,268  | )                     |   |   | 41,314                                     |   |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | 35,046 |   |
| Treasury shares at cost (10,914,008 Ordinary shares)                                                                                                              |   |         | – |   |                     |   | – |                  |   |   | (239,542                                   | )      |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | (239,542 | ) |
| Stock-based compensation expense related to employees                                                                                                             |   |         | – |   |                     |   | 32,327  |                  |   |   | –                                    |   |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | 32,327 |   |
| Comprehensive income, net of tax -                                                                                                                                |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Reclassification adjustments to income on marketable securities, net of $403 tax                                                                                  |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | 1,091   |   |                     |   | –   |                           |   | $ | 1,091 |   |   |   | 1,091 |   |
| Other than temporary impairment on marketable securities, net of $2,272 tax                                                                                       |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | 8,949   |   |                     |   | –   |                           |   |   | 8,949 |   |   |   | 8,949 |   |
| Unrealized losses on marketable securities, net of $(4,304) tax                                                                                                   |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | (15,946 | )      |                     |   | –   |                           |   |   | (15,946 | ) |   |   | (15,946 | ) |
| Net income                                                                                                                                                        |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | – |   |                     |   | 323,966   |                           |   |   | 323,966 |   |   |   | 323,966 |   |
| Total comprehensive income                                                                                                                                        |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   | $ | 318,060 |   |   |   |   |   |
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2008                                                                                                                                   |   | $            | 774     |   |                     | $      | 503,408 |                  |   | $      | (1,105,250                                 | )      |   | $                | (4,673  | )      |                     | $      | 2,621,606 |                           |   |   |   |   |   | $ | 2,015,865 |   |
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Unrealized losses on marketable securities, net of $1,255 tax                                                                                                     |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   | $                | (4,673  | )      |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive loss as of December 31, 2008                                                                                                      |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   | $                | (4,673  | )      |                     |   |      |                           |   |   |   |   |   |   |   |   |
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2008                                                                                                                                   |   | $            | 774     |   |                     | $      | 503,408 |                  |   | $      | (1,105,250                                 | )      |   | $                | (4,673  | )      |                     | $      | 2,621,606 |                           |   |   |   |   |   | $ | 2,015,865 |   |
| Tax benefit related to exercise of stock options                                                                                                                  |   |         | – |   |                     |   | 7,502   |                  |   |   | –                                    |   |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | 7,502 |   |
| Issuance of treasury shares under stock plans, upon exercise of options and vesting of restricted stock units (6,871,250 Ordinary shares net of 43,805 for taxes) |   |         | – |   |                     |   | (13,943 | )                     |   |   | 107,783                                    |   |   |             | – |   |                     |   | (862      | )                              |   |   |   |   |   |   | 92,978 |   |
| Treasury shares at cost (7,814,140 Ordinary shares)                                                                                                               |   |         | – |   |                     |   | – |                  |   |   | (202,285                                   | )      |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | (202,285 | ) |
| Stock-based compensation expense related to employees                                                                                                             |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Comprehensive income, net of tax -                                                                                                                                |   |         | – |   |                     |   | 30,907  |                  |   |   | –                                    |   |   |             | – |   |                     |   | –   |                           |   |   |   |   |   |   | 30,907 |   |
| Reclassification adjustments to income on marketable securities, net of $(122) tax                                                                                |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | 104     |   |                     |   | –   |                           |   | $ | 104 |   |   |   | 104 |   |
| Other than temporary impairment, net of $669 tax                                                                                                                  |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | 2,523   |   |                     |   | –   |                           |   |   | 2,523 |   |   |   | 2,523 |   |
| Unrealized gain on marketable securities, net of $4,747 tax                                                                                                       |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | 14,601  |   |                     |   | –   |                           |   |   | 14,601 |   |   |   | 14,601 |   |
| Net income                                                                                                                                                        |   |         | – |   |                     |   | – |                  |   |   | –                                    |   |   |             | – |   |                     |   | 357,523   |                           |   |   | 357,523 |   |   |   | 357,523 |   |
|  Total comprehensive income                                                                                                                                  |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   | $ | 374,751 |   |   |   |   |   |
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2009                                                                                                                                   |   | $            | 774     |   |                     | $      | 527,874 |                  |   | $      | (1,199,752                                 | )      |   | $                | 12,555  |   |                     | $      | 2,978,267 |                           |   |   |   |   |   | $ | 2,319,718 |   |
|                                                                                                                                                              |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   |             |    |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Unrealized gain on marketable securities, net of $4,039 tax                                                                                                       |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   | $                | 12,555  |   |                     |   |      |                           |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive income as of December 31, 2009                                                                                                    |   |         |    |   |                     |   |    |                  |   |   |                                       |   |   | $           | 12,555  |   |                     |   |      |                           |   |   |   |   |   |   |   |   |

----

|   CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|-----------------------------------------------|
|                                          | AND ITS SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS         |
| U.S. dollars in thousands                     |

|                                                                                                                                      |   | Year ended December 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                                                                                      |   | 2007                    |     |   | 2008 |   |   | 2009 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                                     |   |                    |     |   |   |   |   |   |   |
| Net income                                                                                                                                |   | $                       | 281,064  |   |   | $ | 323,966 |   |   | $ | 357,523 |   |
| Adjustments required to reconcile net income to net cash provided by operating activities:                                                |   |                    |     |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization of property and equipment                                                                                   |   |                    | 8,541    |   |   |   | 8,648 |   |   |   | 8,885 |   |
| Amortization of marketable securities premium and (accretion of discount), net                                                       |   |                    | (247     | ) |   |   | 3,099 |   |   |   | 8,414 |   |
| Other than temporary impairment net of gain on sale of marketable securities previously impaired                                          |   |                    | –  |   |   |   | 11,221 |   |   |   | 1,277 |   |
| Realized loss on sale of marketable securities, net                                                                                       |   |                    | 983      |   |   |   | 1,494 |   |   |   | 1,896 |   |
| Acquisition of in-process research and development                                                                                        |   |                    | 17,000   |   |   |   | – |   |   |   | – |   |
| Amortization of intangible assets                                                                                                         |   |                    | 39,984   |   |   |   | 36,982 |   |   |   | 50,653 |   |
| Stock-based compensation                                                                                                                  |   |                    | 34,052   |   |   |   | 32,327 |   |   |   | 30,907 |   |
| Foreign currency on amount due to Protect Data shareholders                                                                               |   |                    | –  |   |   |   | (463 | ) |   |   | – |   |
| Deferred income taxes, net                                                                                                                |   |                    | (19,323  | ) |   |   | (14,034 | ) |   |   | (11,386 | ) |
| Increase in trade receivables, net of allowances for doubtful accounts and sales reserves                                                 |   |                    | (29,003  | ) |   |   | (50,256 | ) |   |   | (11,256 | ) |
| Decrease (increase) in prepaid expenses and other current assets and other assets                                                    |   |                    | 4,761    |   |   |   | (3,521 | ) |   |   | 1,285 |   |
| Increase (decrease) in trade payables                                                                                                     |   |                    | (3,929   | ) |   |   | 744 |   |   |   | (2,405 | ) |
| Increase (decrease) in employees and payroll accruals                                                                                     |   |                    | (977     | ) |   |   | 1,289 |   |   |   | 20,163 |   |
| Increase (decrease) in accrued expenses and other liabilities                                                                             |   |                    | (7,594   | ) |   |   | 38,423 |   |   |   | 63,026 |   |
| Increase in deferred revenues                                                                                                             |   |                    | 56,000   |   |   |   | 57,104 |   |   |   | 46,006 |   |
| Excess tax benefit from stock-based compensation                                                                                          |   |                    | (6,828   | ) |   |   | (13,019 | ) |   |   | (7,502 | ) |
| (Decrease) increase in accrued severance pay, net                                                                                         |   |                    | 521      |   |   |   | 25 |   |   |   | (379 | ) |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                                                                                 |   |                    | 375,005  |   |   |   | 434,029 |   |   |   | 557,107 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                     |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash paid in conjunction with acquisitions, net of acquired cash                                                                          |   |                    | (594,964 | ) |   |   | – |   |   |   | (58,787 | ) |
| Payments made in connection with prior years acquisitions                                                                                 |   |                    | (2,674   | ) |   |   | (8,579 | ) |   |   | – |   |
| Proceeds from maturity of marketable securities                                                                                           |   |                    | 345,389  |   |   |   | 311,134 |   |   |   | 427,660 |   |
| Proceeds from sale of marketable securities                                                                                               |   |                    | 250,201  |   |   |   | 259,803 |   |   |   | 27,006 |   |
| Investment in marketable securities                                                                                                       |   |                    | (187,720 | ) |   |   | (736,781 | ) |   |   | (1,002,305 | ) |
| Investment in short term deposits                                                                                                         |   |                    | –  |   |   |   | (26,302 | ) |   |   | – |   |
| Proceeds from maturity of short term deposits                                                                                             |   |                    | –  |   |   |   | – |   |   |   | 26,302 |   |
| Purchase of property and equipment                                                                                                        |   |                    | (16,727  | ) |   |   | (8,301 | ) |   |   | (4,283 | ) |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                                                                                                     |   |                    | (206,495 | ) |   |   | (209,026 | ) |   |   | (584,407 | ) |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                     |   |                    |     |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of shares under stock purchase plan and upon exercise of options                                                   |   |                    | 24,640   |   |   |   | 35,046 |   |   |   | 92,978 |   |
| Purchase of treasury shares at cost                                                                                                       |   |                    | (209,757 | ) |   |   | (239,542 | ) |   |   | (202,285 | ) |
| Excess tax benefit from stock-based compensation                                                                                          |   |                    | 6,828    |   |   |   | 13,019 |   |   |   | 7,502 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash used in financing activities                                                                                                     |   |                    | (178,289 | ) |   |   | (191,477 | ) |   |   | (101,805 | ) |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                                                          |   |                    | (9,779   | ) |   |   | 33,526 |   |   |   | (129,105 | ) |
| Cash and cash equivalents at the beginning of the year                                                                                    |   |                    | 519,443  |   |   |   | 509,664 |   |   |   | 543,190 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the end of the year                                                                                          |   | $                       | 509,664  |   |   | $ | 543,190 |   |   | $ | 414,085 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                                         |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash paid during the year for income taxes                                                                                                |   | $                       | 55,345   |   |   | $ | 63,251 |   |   | $ | 55,440 |   |
|                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures of non cash financing and investing activities                                                                   |   |                    |     |   |   |   |   |   |   |   |   |   |
|  Net change in unrealized gain (loss) on marketable securities                                                                       |   | $                       | 9,956    |   |   | $ | (7,535 | ) |   | $ | 22,521 |   |
|  Fair value of vested Protect Data’s options assumed                                                                           |   | $                       | 1,069    |   |   | $ | – |   |   | $ | – |   |
|  Amount due to shareholders in connection with Protect Data’s acquisition (see Note 3 for liabilities assumed in acquisitions) |   | $                       | 8,579    |   |   | $ | – |   |   | $ | – |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | a. | Check Point Software Technologies Ltd. (“Check Point Ltd.”), an Israeli corporation, and its subsidiaries (collectively, the “Company” or “Check Point”), are engaged in developing, marketing and supporting software and combined hardware and software products and services, by offering network security, data security and management solutions for enterprise networks and service providers. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | During 2009, approximately 35% of the Company’s revenues were derived from the same two channel partners, 18% from one channel partner and 17% from the other. During 2007 and 2008, approximately 30% of the Company’s revenues were derived from the same two channel partners, 16% from one channel partner and 14% from the other. Trade receivable balance from the two largest channel partners was $ 81,931 as of December 31, 2008, and $ 101,094 as of December 31, 2009. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Use of estimates: |
|--------|----|-------------------|

|   | b. | Financial statements in United States dollars: |
|--------|----|------------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | c. | Principles of consolidation: |
|--------|----|------------------------------|

|   | d. | Reclassifications: |
|--------|----|--------------------|

|   | e. | Cash equivalents: |
|--------|----|-------------------|

|   | f. | Short-term deposit: |
|--------|----|---------------------|

|   | g. | Investments in marketable securities: |
|--------|----|---------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | h. | Property and equipment: |
|--------|----|-------------------------|

|                               |   | %                                                                |   |
|------------------------------------|--------|------------------------------------------------------------------|--------|
|                               |   |                                                             |   |
| Computers and peripheral equipment |   | 33-50                                                            |   |
| Office furniture and equipment     |   | 10-20                                                            |   |
| Building                           |   | 4                                                                |   |
| Leasehold improvements             |   | The shorter of term of the lease or the useful life of the asset |   |

|   | i. | Goodwill and other intangible assets: |
|--------|----|---------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | j. | Research and development costs: |
|--------|----|---------------------------------|

|   | k. | Revenue recognition: |
|--------|----|----------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | l. | Cost of revenues: |
|--------|----|-------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | m. | Severance pay: |
|--------|----|----------------|

|   | n. | Employee benefit plan: |
|--------|----|------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | o. | Income taxes: |
|--------|----|---------------|

|   | p. | Advertising expenses: |
|--------|----|-----------------------|

|   | q. | Concentrations of credit risk: |
|--------|----|--------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | r. | Derivatives and hedging: |
|--------|----|--------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | s. | Basic and diluted earnings per share: |
|--------|----|---------------------------------------|

|   | t. | Accounting for stock-based compensation: |
|--------|----|------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                    |   | Year ended December 31, |   |
|-----------------------------------------|--------|-------------------------|--------|
| Employee Stock Options                  |   | 2007                    |   |   | 2008 |   |   | 2009 |   |
|                                    |   |                    |   |   |   |   |   |   |   |
|                                    |   |                    |   |   |   |   |   |   |   |
| Expected volatility                     |   |                    | 42.81  | % |   |   | 38.57 | % |   |   | 35.00 | % |
| Risk-free interest rate                 |   |                    | 4.60   | % |   |   | 3.05 | % |   |   | 2.61 | % |
| Dividend yield                          |   |                    | 0.0    | % |   |   | 0.0 | % |   |   | 0.0 | % |
| Expected term from vesting date (years) |   |                    | 3.24   |   |   |   | 3.55 |   |   |   | 3.62 |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |   |   |
| Employee Stock Purchase Plan            |   |                    |   |   |   |   |   |   |   |   |   |   |
| Expected volatility                     |   |                    | 22.78  | % |   |   | 31.15 | % |   |   | 46.90 | % |
| Risk-free interest rate                 |   |                    | 2.00   | % |   |   | 1.92 | % |   |   | 0.31 | % |
| Dividend yield                          |   |                    | 0.0    | % |   |   | 0.0 | % |   |   | 0.0 | % |
| Expected term (years)                   |   |                    | 0.5    |   |   |   | 0.5 |   |   |   | 0.5 |   |

|   | u. | Fair value of financial instruments: |
|--------|----|--------------------------------------|

|   | Level 1 - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--------|-----------|------------------------------------------------------------------------------------------------------------------|

|   | Level 2 - | Include other inputs that are directly or indirectly observable in the marketplace. |
|--------|-----------|-------------------------------------------------------------------------------------|

|   | Level 3 - | Unobservable inputs which are supported by little or no market activity. |
|--------|-----------|--------------------------------------------------------------------------|

|   | v. | Comprehensive income |
|--------|----|----------------------|

|   | w. | Treasury stock |
|--------|----|----------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | x. | Impact of recently issued accounting standards: |
|--------|----|-------------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | a. | On January 17, 2007, the Company completed the acquisition of 98.5% of shares of Protect Data AB (“Protect Data”) that at the time of the acquisition was a public company listed on the Stockholm Stock Exchange. During January 2007, the Company initiated a delisting of the shares in Protect Data from the Stockholm Stock Exchange. On February 13, 2007, Protect Data, in consultation with the Stockholm Stock Exchange, resolved to delist the shares in Protect Data from the Stockholm Stock Exchange. Protect Data’s last day of trading was February 12, 2007. As of December 31, 2007, the Company obtained legal ownership of all of the shares of Protect Data on a fully diluted basis and recorded a liability to Protect Data’s former shareholders in the amount of $ 8,579, which was fully paid in June 2008. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Cash paid                                          |   | $      | 613,361 |   |
|----------------------------------------------------|--------|--------|---------|--------|
| Amount paid to remaining shareholders in June 2008 |   |   | 8,579   |   |
| Fair value of vested Protect Data options assumed  |   |   | 1,069   |   |
| Acquisition related transaction costs              |   |   | 2,039   |   |
|                                               |   |   |    |   |
| Total purchase price                               |   | $      | 625,048 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

| Cash and cash equivalents                                               |   | $      | 20,436  |   |
|-------------------------------------------------------------------------|--------|--------|---------|--------|
| Accounts receivable                                                     |   |   | 31,179  |   |
| Other assets                                                            |   |   | 7,287   |   |
| Accounts payable and other liabilities                                  |   |   | (32,651 | )      |
| Deferred revenues                                                       |   |   | (13,315 | )      |
| Intangible assets                                                       |   |   | 177,000 |   |
| In process research and development                                     |   |   | 17,000  |   |
| Goodwill (Not tax deductible)                                           |   |   | 481,243 |   |
| Other accrued liabilities (including payable to remaining shareholders) |   |   | (13,571 | )      |
| Deferred tax liabilities                                                |   |   | (49,560 | )      |
|                                                                    |   |   |    |   |
| Total purchase price                                                    |   | $      | 625,048 |   |

|                       |   | Fair value |    | Useful life |
|----------------------------|--------|------------|---------|-------------|
|                       |   |       |    |        |
| Customer relationships (1) |   | $          | 52,000  |        | 5 years |
| Core technology (2)        |   |       | 107,000 |        | 5 years |
| Trade names (3)            |   |       | 18,000  |        | 15 years |
|                       |   |       |    |        |   |
| Total intangible assets    |   | $          | 177,000 |        | (*) |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

| Summary of the plan |   | Estimated costs |   |   | Cash payments |   |   | Accrued as of December 31, 2007 |   |   | Cash payments |   |   | Balance as of December 31, 2008 |   |
|---------------------|--------|-----------------|--------|--------|---------------|--------|--------|---------------------------------|--------|--------|---------------|--------|--------|---------------------------------|--------|
|                |   |            |   |   |          |   |   |                            |   |   |          |   |   |                            |   |
| Severance           |   | $               | 2,153  |   |          | $      | (1,258 | )                               |   | $      | 895           |   |   | $                               | (895   | ) |   | $ | – |   |
| Facilities          |   |            | 589    |   |          |   | (104   | )                               |   |   | 485           |   |   |                            | (485   | ) |   |   | – |   |
|                |   |            |   |   |          |   |   |                            |   |   |          |   |   |                            |   |   |   |   |   |   |
| Total restructuring |   | $               | 2,742  |   |          | $      | (1,362 | )                               |   | $      | 1,380         |   |   | $                               | (1,380 | ) |   | $ | – |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | b. | On April 14, 2009, the Company completed the acquisition of the security appliance business of Nokia Corporation (“Nokia”). Prior to the completion of the acquisition, Check Point had collaborated with Nokia’s security appliance business over the past decade to deliver enterprise security solutions. Since completing the acquisition, the Company has been building upon this collaboration and the synergies between the Company and Nokia’s security appliance business to provide an extended security appliance portfolio that is developed, manufactured and supported by Check Point. Total purchase price was $54,037. A significant amount of the acquisition was recorded as goodwill due to the synergies and previous collaboration with Nokia. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Accounts receivable                    |   | $      | 27,674  |   |
|----------------------------------------|--------|--------|---------|--------|
| Inventory                              |   |   | 7,575   |   |
| Other assets                           |   |   | 8,148   |   |
| Accounts payable and other liabilities |   |   | (21,703 | )      |
| Deferred revenues                      |   |   | (48,457 | )      |
| Intangible assets                      |   |   | 36,944  |   |
| Goodwill (tax deductible)              |   |   | 43,856  |   |
|                                   |   |   |    |   |
| Total purchase price                   |   | $      | 54,037  |   |

|                                    |   | Fair value |   |   | Useful life |      |
|-----------------------------------------|--------|------------|--------|--------|-------------|-----------|
|                                    |   |       |   |   |        |      |
| Customer relationships (1)              |   | $          | 11,909 |   |        | 2 years   |   |
| Core technology (2)                     |   |       | 20,058 |   |        | 3 years   |   |
| In-Process research and development (3) |   |       | 2,741  |   |        |  (*) |   |
| Backlog                                 |   |       | 1,280  |   |        | 0.5 years |   |
| Trade names (4)                         |   |       | 956    |   |        | 3 years   |   |
|                                    |   |       |   |   |        |      |   |
| Total intangible assets                 |   | $          | 36,944 |   |        |      |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                       |   | Year ended December 31, |      |
|----------------------------|--------|-------------------------|-----------|
|                       |   | 2008                    |      |   | 2009 |   |
|                       |   | Unaudited               |      |   | Unaudited |   |
|                       |   |                    |      |   |   |   |
| Revenues(*)                |   | $                       | 1,006,204 |   |   | $ | 971,993 |   |
|                       |   |                    |      |   |   |   |   |   |
| Net income                 |   | $                       | 355,035   |   |   | $ | 368,788 |   |
|                       |   |                    |      |   |   |   |   |   |
| Basic earnings per share   |   | $                       | 1.66      |   |   | $ | 1.76 |   |
|                       |   |                    |      |   |   |   |   |   |
| Diluted earnings per share |   | $                       | 1.64      |   |   | $ | 1.74 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                                               |   | December 31,   |    |
|--------------------------------------------------------------------|--------|----------------|---------|
|                                                               |   | 2008           |    |   | 2009 |   |
|                                                               |   | Amortized cost |    |   | Gross unrealized gains |   |   | Gross unrealized losses |   |   | Fair value |   |   | Amortized cost |   |   | Gross unrealized gains |   |   | Gross unrealized losses |   |   | Fair value |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures - fixed interest rate          |   | $              | 204,873 |   |   | $ | 264 |   |   | $ | (3,645 | ) |   | $ | 201,492 |   |   | $ | 193,902 |   |   | $ | 2,643 |   |   | $ | (134 | ) |   | $ | 196,411 |   |
| Government-sponsored enterprises                                   |   |           | 108,016 |   |   |   | 1,111 |   |   |   | (11 | ) |   |   | 109,116 |   |   |   | 239,609 |   |   |   | 605 |   |   |   | (562 | ) |   |   | 239,652 |   |
| Structured notes (*)                                               |   |           | 31,813  |   |   |   | 1,049 |   |   |   | (3,356 | ) |   |   | 29,506 |   |   |   | 12,128 |   |   |   | – |   |   |   | (38 | ) |   |   | 12,090 |   |
| Government and corporate debentures – floating interest rate |   |           | 4,771   |   |   |   | 1 |   |   |   | (15 | ) |   |   | 4,757 |   |   |   | 21,764 |   |   |   | 7 |   |   |   | (11 | ) |   |   | 21,760 |   |
| Mortgage and asset backed securities                               |   |           | 24      |   |   |   | – |   |   |   | (*** | )– |   |   | 24 |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | $              | 349,497 |   |   | $ | 2,425 |   |   | $ | (7,027 | ) |   | $ | 344,895 |   |   | $ | 467,403 |   |   | $ | 3,255 |   |   | $ | (745 | ) |   | $ | 469,913 |   |

|                                                               |   | December 31,   |    |
|--------------------------------------------------------------------|--------|----------------|---------|
|                                                               |   | 2008           |    |   | 2009 |   |
|                                                               |   | Amortized Cost |    |   | Gross unrealized gains |   |   | Gross unrealized losses |   |   | Fair value |   |   | Amortized Cost |   |   | Gross unrealized gains |   |   | Gross unrealized losses |   |   | Fair value |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures - fixed interest rate          |   | $              | 423,641 |   |   | $ | 3,514 |   |   | $ | (7,203 | ) |   | $ | 419,952 |   |   | $ | 726,117 |   |   | $ | 13,823 |   |   | $ | (1,342 | ) |   | $ | 738,598 |   |
| Government-sponsored enterprises                                   |   |           | 82,307  |   |   |   | 2,831 |   |   |   | – |   |   |   | 85,138 |   |   |   | 93,049 |   |   |   | 1,551 |   |   |   | (267 | ) |   |   | 94,333 |   |
| Government and corporate debentures – floating interest rate |   |           | 10,922  |   |   |   | – |   |   |   | (476 | ) |   |   | 10,446 |   |   |   | 120,975 |   |   |   | 459 |   |   |   | (140 | ) |   |   | 121,294 |   |
| Mortgage and asset backed securities                               |   |           | 1,991   |   |   |   | 8 |   |   |   | – |   |   |   | 1,999 |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Auction rate securities (**)                                       |   |           | 11,910  |   |   |   | – |   |   |   | – |   |   |   | 11,910 |   |   |   | 8,776 |   |   |   | – |   |   |   | – |   |   |   | 8,776 |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | $              | 530,771 |   |   | $ | 6,353 |   |   | $ | (7,679 | ) |   | $ | 529,445 |   |   | $ | 948,917 |   |   | $ | 15,833 |   |   | $ | (1,749 | ) |   | $ | 963,001 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                                               |   | December 31, 2009                                                          |    |
|--------------------------------------------------------------------|--------|----------------------------------------------------------------------------|---------|
|                                                               |   | Investments with continuous unrealized losses for less than 12 months |    |   | Investments with continuous unrealized losses for 12 months or greater |   |   | Total Investments with continuous unrealized losses |   |
|                                                               |   | Fair value                                                                 |    |   | Unrealized losses |   |   | Fair value |   |   | unrealized losses |   |   | Fair value |   |   | unrealized losses |   |
|                                                               |   |                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures – fixed interest rate    |   | $                                                                          | 260,225 |   |   | $ | (1,475 | ) |   |   | – |   |   |   | – |   |   | $ | 260,225 |   |   | $ | (1,475 | ) |
| Government-sponsored enterprises                                   |   |                                                                       | 155,577 |   |   |   | (830 | ) |   |   | – |   |   |   | – |   |   |   | 155,577 |   |   |   | (830 | ) |
| Structured note (*)                                                |   |                                                                       | 12,090  |   |   |   | (38 | ) |   |   | – |   |   |   | – |   |   |   | 12,090 |   |   |   | (38 | ) |
| Government and corporate debentures – floating interest rate |   |                                                                       | 45,107  |   |   |   | (151 | ) |   |   | – |   |   |   | – |   |   |   | 45,107 |   |   |   | (151 | ) |
|                                                               |   |                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | $                                                                          | 472,999 |   |   | $ | (2,494 | ) |   |   | – |   |   |   | – |   |   | $ | 472,999 |   |   | $ | (2,494 | ) |

|                                                               |   | December 31, 2008                                                     |    |
|--------------------------------------------------------------------|--------|-----------------------------------------------------------------------|---------|
|                                                               |   | Investments with continuous unrealized losses for less than 12 months |    |   | Investments with continuous unrealized losses for 12 months or greater |   |   | Total Investments with continuous unrealized losses |   |
|                                                               |   | Fair value                                                            |    |   | Unrealized losses |   |   | Fair value |   |   | unrealized losses |   |   | Fair value |   |   | unrealized losses |   |
|                                                               |   |                                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures – fixed interest rate    |   | $                                                                     | 374,248 |   |   | $ | (10,848 | ) |   |   | – |   |   |   | – |   |   | $ | 374,248 |   |   | $ | (10,848 | ) |
| Government-sponsored enterprises                                   |   |                                                                  | 15,431  |   |   |   | (11 | ) |   |   | – |   |   |   | – |   |   |   | 15,431 |   |   |   | (11 | ) |
| Structured notes (*)                                               |   |                                                                  | 9,903   |   |   |   | (1,912 | ) |   |   | 8,556 |   |   |   | (1,444 | ) |   |   | 18,459 |   |   |   | (3,356 | ) |
| Government and corporate debentures – floating interest rate |   |                                                                  | 14,022  |   |   |   | (491 | ) |   |   | – |   |   |   | – |   |   |   | 14,022 |   |   |   | (491 | ) |
| Asset backed securities                                            |   |                                                                  | 24      |   |   |   | (*** | )– |   |   | – |   |   |   | – |   |   |   | 24 |   |   |   | (*** | )– |
|                                                               |   |                                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | $                                                                     | 413,628 |   |   | $ | (13,262 | ) |   | $ | 8,556 |   |   | $ | (1,444 | ) |   | $ | 422,184 |   |   | $ | (14,706 | ) |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                                               |   | December 31, 2009                        |    |
|--------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                               |   | Fair value measurements using input type |    |
|                                                               |   | Level 1                                  |    |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Cash equivalents:                                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Money market funds                                                 |   | $                                        | 281,427 |   |   | $ | – |   |   | $ | – |   |   | $ | 281,427 |   |
| Commercial papers                                                  |   |                                     | – |   |   |   | 22,780 |   |   |   | – |   |   |   | 22,780 |   |
| Government and corporate debentures – fixed interest rate    |   |                                     | – |   |   |   | 6,004 |   |   |   | – |   |   |   | 6,004 |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketable securities:                                             |   |                                     | – |   |   |   |   |   |   |   | – |   |   |   |   |   |
| Government and corporate debentures – fixed interest rate    |   |                                     | – |   |   |   | 935,009 |   |   |   | – |   |   |   | 935,009 |   |
| Government-sponsored enterprises                                   |   |                                     | – |   |   |   | 333,985 |   |   |   | – |   |   |   | 333,985 |   |
| Structured notes                                                   |   |                                     | – |   |   |   | 12,090 |   |   |   | – |   |   |   | 12,090 |   |
| Government and corporate debentures – floating interest rate |   |                                     | – |   |   |   | 143,054 |   |   |   | – |   |   |   | 143,054 |   |
| Auction rate securities                                            |   |                                     | – |   |   |   | – |   |   |   | 8,776 |   |   |   | 8,776 |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency derivative contracts                              |   |                                     | – |   |   |   | 435 |   |   |   | – |   |   |   | 435 |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Financials Assets                                            |   | $                                        | 281,427 |   |   | $ | 1,453,357 |   |   | $ | 8,776 |   |   | $ | 1,743,560 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                                               |   | December 31, 2008                        |    |
|--------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                               |   | Fair value measurements using input type |    |
|                                                               |   | Level 1                                  |    |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Cash equivalents:                                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Money market funds                                                 |   | $                                        | 398,534 |   |   | $ | – |   |   | $ | – |   |   | $ | 398,534 |   |
| Commercial papers                                                  |   |                                     | – |   |   |   | 12,502 |   |   |   | – |   |   |   | 12,502 |   |
| Treasury notes                                                     |   |                                     | – |   |   |   | 13,998 |   |   |   | – |   |   |   | 13,998 |   |
| Short-term deposits                                                |   |                                     | – |   |   |   | 26,302 |   |   |   | – |   |   |   | 26,302 |   |
| Marketable securities:                                             |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government and corporate debentures – fixed interest rate    |   |                                     |    |   |   |   | 621,444 |   |   |   | – |   |   |   | 621,444 |   |
| Government-sponsored enterprises                                   |   |                                     | – |   |   |   | 194,254 |   |   |   | – |   |   |   | 194,254 |   |
| Structured notes                                                   |   |                                     | – |   |   |   | 29,506 |   |   |   | – |   |   |   | 29,506 |   |
| Government and corporate debentures – floating interest rate |   |                                     |    |   |   |   | 15,203 |   |   |   | – |   |   |   | 15,203 |   |
| Asset-backed securities                                            |   |                                     |    |   |   |   | 2,023 |   |   |   | – |   |   |   | 2,023 |   |
| Auction rate securities                                            |   |                                     | – |   |   |   | – |   |   |   | 11,910 |   |   |   | 11,910 |   |
| Foreign currency derivative contracts                              |   |                                     | – |   |   |   | 860 |   |   |   | – |   |   |   | 860 |   |
|                                                               |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Financials Assets                                            |   | $                                        | 398,534 |   |   | $ | 916,092 |   |   | $ | 11,910 |   |   | $ | 1,326,536 |   |

|                                                                    |   | Auction rate securities |    |
|-------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                    |   |                    |    |   |
| Balance at January 1, 2008                                              |   |                    | – |   |
| Transfer to Level 3                                                     |   | $                       | 18,920  |   |
| Unrealized losses included in earning (other than temporary impairment) |   |                    | (6,290  | ) |
| Balance at December 31, 2008                                            |   |                    | 11,910  |   |
| Unrealized losses included in earning (other than temporary impairment) |   |                    | (3,134  | ) |
|                                                                    |   |                    |    |   |
| Balance at December 31, 2009                                            |   | $                       | 8,776   |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                      |   | December 31, |   |
|-------------------------------------------|--------|--------------|--------|
|                                      |   | 2008         |   |   | 2009 |   |
|                                      |   |         |   |   |   |   |
| Cost:                                     |   |         |   |   |   |   |
| Computers and peripheral equipment        |   | $            | 46,578 |   |   | $ | 52,830 |   |
| Office furniture and equipment            |   |         | 5,063  |   |   |   | 5,311 |   |
| Building                                  |   |         | 32,025 |   |   |   | 32,201 |   |
| Leasehold improvement                     |   |         | 5,484  |   |   |   | 4,423 |   |
|                                      |   |         |   |   |   |   |   |   |
|                                      |   |         | 89,150 |   |   |   | 94,765 |   |
| Accumulated depreciation and amortization |   |         | 48,902 |   |   |   | 55,829 |   |
|                                      |   |         |   |   |   |   |   |   |
| Property and equipment, net               |   | $            | 40,248 |   |   | $ | 38,936 |   |

|   | a. | Goodwill: |
|--------|----|-----------|

|                                    |   | Year ended December 31, |    |
|-----------------------------------------|--------|-------------------------|---------|
|                                    |   | 2008                    |    |   | 2009 |   |
|                                    |   |                    |    |   |   |   |
| Goodwill, beginning of year             |   | $                       | 664,910 |   |   | $ | 664,602 |   |
| Acquisition of Nokia Appliance Business |   |                    | – |   |   |   | 43,856 |   |
| Adjustment                              |   |                    | (308    | ) |   |   | – |   |
|                                    |   |                    |    |   |   |   |   |   |
| Goodwill, end of year                   |   | $                       | 664,602 |   |   | $ | 708,458 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | b. | Other intangible assets, net |
|--------|----|------------------------------|

|                                |   |        |   |   | December 31, |    |
|-------------------------------------|--------|-------------|--------|--------|--------------|---------|
|                                |   | Useful life |   |   | 2008         |    |   | 2009 |   |
| Original amount:                    |   |        |   |   |         |    |   |   |   |
| Core technology                     |   | 2-5         |   |   | $            | 135,859 |   |   | $ | 139,008 |   |
| Trademarks and Trade names          |   | 3-20        |   |   |         | 25,660  |   |   |   | 26,476 |   |
| Customer relationship               |   | 2-5         |   |   |         | 53,580  |   |   |   | 65,489 |   |
| In process research and development |   | (*)         |   |   |         | – |   |   |   | 2,741 |   |
| Backlog                             |   | 0.5         |   |   |         | – |   |   |   | 1,280 |   |
| Contracts                           |   | 4           |   |   |         | 910     |   |   |   | – |   |
|                                |   |        |   |   |         |    |   |   |   |   |   |
|                                |   |        |   |   |         | 216,009 |   |   |   | 234,994 |   |
| Accumulated amortization:           |   |        |   |   |         |    |   |   |   |   |   |
| Core technology                     |   |        |   |   |         | 67,173  |   |   |   | 73,739 |   |
| Trademarks                          |   |        |   |   |         | 3,618   |   |   |   | 5,281 |   |
| Customer relationship               |   |        |   |   |         | 21,157  |   |   |   | 40,502 |   |
| Backlog                             |   |        |   |   |         | – |   |   |   | 1,280 |   |
| Contracts                           |   |        |   |   |         | 910     |   |   |   | – |   |
|                                |   |        |   |   |         |    |   |   |   |   |   |
|                                |   |        |   |   |         | 92,858  |   |   |   | 120,802 |   |
| Other intangible assets, net:       |   |        |   |   |         |    |   |   |   |   |   |
| Core technology                     |   |        |   |   |         | 68,686  |   |   |   | 65,269 |   |
| Trademarks                          |   |        |   |   |         | 22,042  |   |   |   | 21,195 |   |
| Customer relationship               |   |        |   |   |         | 32,423  |   |   |   | 24,987 |   |
| In Process Research and development |   |        |   |   |         | – |   |   |   | 2,741 |   |
|                                |   |        |   |   |         |    |   |   |   |   |   |
|                                |   |        |   |   | $            | 123,151 |   |   | $ | 114,192 |   |

| 2010                |   | $      | 48,311  |   |
|---------------------|--------|--------|---------|--------|
| 2011                |   |   | 42,504  |   |
| 2012                |   |   | 4,905   |   |
| 2013                |   |   | 1,576   |   |
| 2014                |   |   | 1,576   |   |
| 2015 and thereafter |   |   | 12,579  |   |
|                |   |   |    |   |
|                |   | $      | 111,451 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                  |   | December 31, |    |
|---------------------------------------|--------|--------------|---------|
|                                  |   | 2008         |    |   | 2009 |   |
|                                  |   |         |    |   |   |   |
| Income taxes payable                  |   | $            | 18,456  |   |   | $ | 24,851 |   |
| Accrued products and licenses costs   |   |         | 11,118  |   |   |   | 22,276 |   |
| Current deferred tax liability, net   |   |         | 7,238   |   |   |   | 7,420 |   |
| Marketing expenses payable            |   |         | 4,506   |   |   |   | 5,176 |   |
| Legal accrual                         |   |         | 3,383   |   |   |   | 11,025 |   |
| Purchase commitment to subcontractors |   |         | – |   |   |   | 4,486 |   |
| Accrued expenses                      |   |         | 13,764  |   |   |   | 17,750 |   |
|                                  |   |         |    |   |   |   |   |   |
|                                  |   | $            | 58,465  |   |   | $ | 92,984 |   |

| 2010   |   | $      | 6,576  |   |
|--------|--------|--------|--------|--------|
| 2011   |   |   | 3,427  |   |
| 2012   |   |   | 1,705  |   |
| 2013   |   |   | 391    |   |
| 2014   |   |   | 87     |   |
|   |   |   |   |   |
|   |   | $      | 12,186 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | a. | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: |
|--------|----|-------------------------------------------------------------------------------------------------|

|                                    |   | 2008   |    |   | 2009   |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|
|                                    |   |   |    |   |   |   |
| Beginning balance                       |   | $      | 78,545  |   |   | $      | 101,230 |   |
| Additions for prior year tax positions  |   |   | 18,736  |   |   |   | 28,264 |   |
| Additions for current year tax position |   |   | 3,949   |   |   |   | 3,414 |   |
|                                    |   |   |    |   |   |   |   |   |
| Ending balance                          |   | $      | 101,230 |   |   | $      | 132,908 |   |

|   | b. | Israeli taxation: |
|--------|----|-------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | 2. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Law”): |
|--------|----|--------------------------------------------------------------------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | 3. | Foreign Exchange Regulations: |
|--------|----|-------------------------------|

|   | 4. | Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969: |
|--------|----|-----------------------------------------------------------------------------|

|   | c. | Income taxes on non-Israeli subsidiaries: |
|--------|----|-------------------------------------------|

|   | d. | Deferred tax assets and liabilities: |
|--------|----|--------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                                            |   | December 31, |     |
|-------------------------------------------------|--------|--------------|----------|
|                                            |   | 2008         |     |   | 2009 |   |
|                                            |   |         |     |   |   |   |
| Carry-forward tax losses                        |   | $            | 276,724  |   |   | $ | 269,469 |   |
| Deferred revenues                               |   |         | 3,429    |   |   |   | 3,194 |   |
| Employee stock based compensation               |   |         | 15,344   |   |   |   | 14,316 |   |
| Accrued employees costs                         |   |         | 3,900    |   |   |   | 3,098 |   |
| Reserves and allowances                         |   |         | 2,984    |   |   |   | 4,137 |   |
| Unrealized losses on marketable securities, net |   |         | 1,255    |   |   |   | – |   |
| Fixed assets                                    |   |         | 2,566    |   |   |   | 3,070 |   |
| Intangible assets                               |   |         | –  |   |   |   | 2,314 |   |
| Tax credits                                     |   |         | 8,523    |   |   |   | 9,791 |   |
|                                            |   |         |     |   |   |   |   |   |
| Deferred tax assets before valuation allowance  |   |         | 314,725  |   |   |   | 309,389 |   |
| Valuation allowance                             |   |         | (280,393 | ) |   |   | (275,013 | ) |
|                                            |   |         |     |   |   |   |   |   |
| Deferred tax asset                              |   |         | 34,332   |   |   |   | 34,376 |   |
|                                            |   |         |     |   |   |   |   |   |
| Intangible assets                               |   |         | (34,058  | ) |   |   | (23,681 | ) |
| Unrealized gains on marketable securities, net  |   |         | –  |   |   |   | (4,039 | ) |
| Other                                           |   |         | (313     | ) |   |   | (604 | ) |
|                                            |   |         |     |   |   |   |   |   |
| Deferred tax liability                          |   |         | (34,371  | ) |   |   | (28,324 | ) |
|                                            |   |         |     |   |   |   |   |   |
| Deferred tax asset (liability), net             |   | $            | (39      | ) |   | $ | 6,052 |   |
|                                            |   |         |     |   |   |   |   |   |
|                                            |   | December 31, |     |
|                                            |   |         | 2008     |   |   |   | 2009 |   |
|                                            |   |         |     |   |   |   |   |   |
| Domestic:                                       |   |         |     |   |   |   |   |   |
| Current deferred tax asset, net                 |   | $            | 1,129    |   |   | $ | 634 |   |
| Non current deferred tax asset, net             |   |         | 9,502    |   |   |   | 9,772 |   |
|                                            |   |         |     |   |   |   |   |   |
|                                            |   |         | 10,631   |   |   |   | 10,406 |   |
| Foreign:                                        |   |         |     |   |   |   |   |   |
| Current deferred tax asset, net                 |   |         | 9,292    |   |   |   | 8,167 |   |
| Current deferred tax liability, net             |   |         | (7,238   | ) |   |   | (7,420 | ) |
| Non current deferred tax asset, net             |   |         | 9,501    |   |   |   | 6,535 |   |
| Non current deferred tax liability              |   |         | (22,225  | ) |   |   | (11,636 | ) |
|                                            |   |         |     |   |   |   |   |   |
|                                            |   |         | (10,670  | ) |   |   | (4,354 | ) |
|                                            |   |         |     |   |   |   |   |   |
|                                            |   | $            | (39      | ) |   | $ | 6,052 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | e. | Income before taxes on income is comprised of the following: |
|--------|----|--------------------------------------------------------------|

|     |   | Year ended December 31, |    |
|----------|--------|-------------------------|---------|
|     |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|     |   |                    |    |   |   |   |   |   |   |
| Domestic |   | $                       | 304,883 |   |   | $ | 350,963 |   |   | $ | 421,471 |   |
| Foreign  |   |                    | 24,418  | (*) |   |   | 35,192 |   |   |   | 24,327 |   |
|     |   |                    |    |   |   |   |   |   |   |   |   |   |
|     |   | $                       | 329,301 |   |   | $ | 386,155 |   |   | $ | 445,798 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | f. | Taxes on income are comprised of the following: |
|--------|----|-------------------------------------------------|

|                           |   | Year ended December 31, |    |
|--------------------------------|--------|-------------------------|---------|
|                           |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                           |   |                    |    |   |   |   |   |   |   |
| Current                        |   | $                       | 67,560  |   |   | $ | 76,223 |   |   | $ | 99,661 |   |
| Deferred                       |   |                    | (19,323 | ) |   |   | (14,034 | ) |   |   | (11,386 | ) |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   | $                       | 48,237  |   |   | $ | 62,189 |   |   | $ | 88,275 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Domestic                       |   | $                       | 45,015  |   |   | $ | 59,870 |   |   | $ | 85,626 |   |
| Foreign                        |   |                    | 3,222   |   |   |   | 2,319 |   |   |   | 2,649 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   | $                       | 48,237  |   |   | $ | 62,189 |   |   | $ | 88,275 |   |
| Domestic taxes:                |   |                    |    |   |   |   |   |   |   |   |   |   |
| Current                        |   | $                       | 47,512  |   |   | $ | 62,650 |   |   | $ | 88,398 |   |
| Deferred                       |   |                    | (2,497  | ) |   |   | (2,780 | ) |   |   | (2,772 | ) |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total domestic taxes           |   |                    | 45,015  |   |   |   | 59,870 |   |   |   | 85,626 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Foreign taxes - US:            |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Federal taxes:                 |   |                    |    |   |   |   |   |   |   |   |   |   |
| Current                        |   |                    | 8,205   |   |   |   | 7,101 |   |   |   | 7,166 |   |
| Deferred                       |   |                    | (4,160  | ) |   |   | (2,762 | ) |   |   | 1,281 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   |                    | 4,045   |   |   |   | 4,339 |   |   |   | 8,447 |   |
| State taxes:                   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Current                        |   |                    | 734     |   |   |   | 650 |   |   |   | 977 |   |
| Deferred                       |   |                    | (642    | ) |   |   | 226 |   |   |   | 423 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   |                    | 92      |   |   |   | 876 |   |   |   | 1,400 |   |
| Other international locations: |   |                    |    |   |   |   |   |   |   |   |   |   |
| Current                        |   |                    | 11,109  |   |   |   | 5,822 |   |   |   | 3,120 |   |
| Deferred                       |   |                    | (12,024 | ) |   |   | (8,718 | ) |   |   | (10,318 | ) |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   |                    | (915    | ) |   |   | (2,896 | ) |   |   | (7,198 | ) |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total foreign taxes            |   |                    | 3,222   |   |   |   | 2,319 |   |   |   | 2,649 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Taxes on income                |   | $                       | 48,237  |   |   | $ | 62,189 |   |   | $ | 88,275 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | g. | Reconciliation of the theoretical tax expenses: |
|--------|----|-------------------------------------------------|

|                                                                                                                           |   | Year ended December 31, |    |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                                           |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |
| Income before taxes as reported in the statements of income                                                                    |   | $                       | 329,301 |   |   | $ | 386,155 |   |   | $ | 445,798 |   |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Statutory tax rate in Israel                                                                                                   |   |                    | 29      | % |   |   | 27 | % |   |   | 26 | % |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Decrease in taxes resulting from:                                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Effect of “Approved and Privileged Enterprise” status (*)                                                          |   |                    | (14     | %) |   |   | (12 | %) |   |   | (13 | %) |
| Foreign exchange (see note h below)                                                                                            |   |                    | – |   |   |   | 1 | % |   |   | 1 | % |
| Stock based compensation – non deductible expense                                                                        |   |                    | – | )** |   |   | 2 | % |   |   | 1 | % |
| Others, net                                                                                                                    |   |                    | – | )** |   |   | (2 | %) |   |   | 5 | % |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Effective tax rate                                                                                                             |   |                    | 15      | % |   |   | 16 | % |   |   | 20 | % |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| (*) Basic earnings per share amounts of the benefit resulting from the “Approved and Privileged Enterprise” status |   | $                       | 0.21    |   |   | $ | 0.21 |   |   | $ | 0.27 |   |
|                                                                                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share amounts of the benefit resulting from the “Approved and Privileged Enterprise” status   |   | $                       | 0.20    |   |   | $ | 0.21 |   |   | $ | 0.27 |   |

|   | h. | Measurement of income tax in foreign subsidiaries: |
|--------|----|----------------------------------------------------|

|   | a. | General: |
|--------|----|----------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|   | b. | Deferred share: |
|--------|----|-----------------|

|   | c. | Employee Stock Purchase Plan (“ESPP”): |
|--------|----|----------------------------------------------------|

|   | d. | Stock options: |
|--------|----|----------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                             |   | Options (in thousands) |   |   | Weighted average exercise price |   |
|----------------------------------|--------|------------------------|--------|--------|---------------------------------|--------|
|                             |   | 2007                   |   |   | 2008                            |   |   | 2009 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
|                             |   |                   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at beginning of year |   |                   | 24,606 |   |                            |   | 24,156 |   |   |   | 21,582 |   |   | $ | 23.17 |   |   | $ | 22.02 |   |   | $ | 20.97 |   |
| Granted                          |   |                   | 2,927  |   |                            |   | 1,900 |   |   |   | 1,845 |   |   | $ | 21.29 |   |   | $ | 23.21 |   |   | $ | 25.86 |   |
| Exercised                        |   |                   | (1,339 | )      |                            |   | (1,713 | ) |   |   | (6,039 | ) |   | $ | 13.82 |   |   | $ | 16.41 |   |   | $ | 16.40 |   |
| Expired                          |   |                   | (1,043 | )      |                            |   | (1,761 | ) |   |   | (591 | ) |   | $ | 53.17 |   |   | $ | 41.89 |   |   | $ | 23.31 |   |
| Forfeited                        |   |                   | (995   | )      |                            |   | (1,000 | ) |   |   | (196 | ) |   | $ | 26.76 |   |   | $ | 21.45 |   |   | $ | 19.60 |   |
|                             |   |                   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding as of December 31,   |   |                   | 24,156 |   |                            |   | 21,582 |   |   |   | 16,601 | (*) |   | $ | 22.02 |   |   | $ | 20.97 |   |   | $ | 23.12 |   |
|                             |   |                   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable as of December 31,   |   |                   | 15,074 |   |                            |   | 14,629 |   |   |   | 10,469 |   |   | $ | 22.32 |   |   | $ | 20.47 |   |   | $ | 22.86 |   |

|   | (*) | As of December 31, 2009, approximately 16.4 million options were outstanding and expected to vest. Options expected to vest reflect an estimated forfeiture rate for purposes of determining related compensation expense. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|                             |   | Year endedDecember 31, 2009 |   |
|----------------------------------|--------|-----------------------------|--------|
|                             |   | Options                     |   |   | Aggregate intrinsic value |   |
|                             |   | (in thousands)              |   |
|                             |   |                        |   |   |   |   |
| Outstanding at beginning of year |   |                        | 21,582 |   |   | $ | 25,790 |   |
| Granted                          |   |                        | 1,845  |   |   |   | N/A |   |
| Exercised                        |   |                        | (6,039 | ) |   |   | 63,213 |   |
| Forfeited                        |   |                        | (787   | ) |   |   | N/A |   |
|                             |   |                        |   |   |   |   |   |   |
| Outstanding as of December 31,   |   |                        | 16,601 |   |   | $ | 181,798 | (**) |
|                             |   |                        |   |   |   |   |   |   |
| Exercisable as of December 31,   |   |                        | 10,469 |   |   | $ | 118,490 | (***) |

|   | (**) | Represents intrinsic value of 16,533 thousand outstanding options that are in-the-money as of December 31, 2009. The remaining 68 thousand outstanding options are out of the money as of December 31, 2009, and their intrinsic value was considered as zero. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (***) | Represents intrinsic value of 10,402 thousand exercisable options that are in-the-money as of December 31, 2009. The remaining 67 thousand exercisable options are out of the money as of December 31, 2009, and their intrinsic value was considered as zero. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | Year ended December 31, |   |
|----------------------------------|--------|-------------------------|--------|
|                             |   | 2007                    |   |   | 2008 |   |   | 2009 |   |
|                             |   | Number (in thousands)   |   |
|                             |   |                    |   |   |   |   |   |   |   |
| Outstanding at beginning of year |   |                    | 980    |   |   |   | 1,232 |   |   |   | 1,398 |   |
| Granted                          |   |                    | 593    |   |   |   | 676 |   |   |   | 755 |   |
| Vested                           |   |                    | (174   | ) |   |   | (245 | ) |   |   | (398 | ) |
| Forfeited                        |   |                    | (167   | ) |   |   | (265 | ) |   |   | (143 | ) |
|                             |   |                    |   |   |   |   |   |   |   |   |   |   |
| Outstanding as of December 31,   |   |                    | 1,232  |   |   |   | 1,398 |   |   |   | 1,612 |   |

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

|           |   | Outstanding                      |   |   | Exercisable                                        |   |
|----------------|--------|----------------------------------|--------|--------|----------------------------------------------------|--------|
| Exercise price |   | Number outstanding(in thousands) |   |   | Weighted average remaining contractual life(years) |   |   | Weighted average exercise price |   |   | Number exercisable(in thousands) |   |   | Weighted average remaining contractual life(years) |   |   |   | Weighted average exercise price |   |
| $              |   |                             |   |   |                                               |   |   | $ |   |   |   |   |   |   |   |   |   | $ |   |
|           |   |                             |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2.99-7.43      |   |                             | 57     |   |                                               |   | 1.53 |   |   |   | 5.97 |   |   |   | 57 |   |   |   | 1.53 |   |   |   |   | 5.97 |   |
| 15.99-16.80    |   |                             | 2,346  |   |                                               |   | 3.52 |   |   |   | 16.79 |   |   |   | 1,920 |   |   |   | 3.51 |   |   |   |   | 16.79 |   |
| 17.43-21.95    |   |                             | 2,555  |   |                                               |   | 2.67 |   |   |   | 20.06 |   |   |   | 1,353 |   |   |   | 1.70 |   |   |   |   | 19.85 |   |
| 22.41-23.46    |   |                             | 3,630  |   |                                               |   | 2.82 |   |   |   | 23.17 |   |   |   | 2,671 |   |   |   | 2.74 |   |   |   |   | 23.16 |   |
| 23.65-23.65    |   |                             | 2,125  |   |                                               |   | 4.67 |   |   |   | 23.65 |   |   |   | 1,325 |   |   |   | 4.67 |   |   |   |   | 23.65 |   |
| 24.01-26.77    |   |                             | 2,700  |   |                                               |   | 6.18 |   |   |   | 25.44 |   |   |   | 575 |   |   |   | 5.67 |   |   |   |   | 24.01 |   |
| 26.99-32.31    |   |                             | 3,120  |   |                                               |   | 1.53 |   |   |   | 27.02 |   |   |   | 2,500 |   |   |   | 1.49 |   |   |   |   | 26.99 |   |
| 79.79-79.79    |   |                             | 68     |   |                                               |   | 0.57 |   |   |   | 79.79 |   |   |   | 68 |   |   |   | 0.57 |   |   |   |   | 79.79 |   |
|           |   |                             |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2.99-79.79     |   |                             | 16,601 |   |                                               |   | 3.42 |   |   |   | 23.12 |   |   |   | 10,469 |   |   |   | 2.83 |   |   |   |   | 22.86 |   |

|   | e. | The Company’s board of directors approved five programs to repurchase Ordinary shares for a total of $ 1,600,000. The first program was announced on October 28, 2003, and ended on August 24, 2004, and authorized the repurchase of up to $ 200,000 of its Ordinary shares. The second program was announced on October 28, 2004, and ended on May 31, 2005, and authorized the repurchase of up to $ 200,000, of its Ordinary shares. The third program was announced on July 25, 2005, and ended on May 18, 2006, and authorized the repurchase of up to $ 200,000 of its Ordinary shares. The fourth program was announced on May 22, 2006, and ended on March 5, 2008, and authorized the repurchase of up to $ 600,000 of its Ordinary shares. The fifth program was announced on March 26, 2008, and as of December 31, 2009 is still in effect, and authorizes the repurchase of up to $ 400,000 of its Ordinary shares. Under the repurchase programs, share purchases may be made from time to time depending on market conditions, share price, trading volume and other factors and will be funded from available working capital. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

| NOTE 12:- | SHAREHOLDERS’ EQUITY (Cont.) |
|-----------|------------------------------------|

| NOTE 13:- | EARNINGS PER SHARE |
|-----------|--------------------|

|                                                                |   | Years ended December 31, |    |
|---------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                |   | 2007                     |    |   | 2008 |   |   | 2009 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |
| Net income                                                          |   | $                        | 281,064 |   |   | $ | 323,966 |   |   | $ | 357,523 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
| Weighted average Ordinary shares outstanding (in thousands)         |   |                     | 222,548 |   |   |   | 214,361 |   |   |   | 209,371 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
| Dilutive effect:                                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
| Employee stock options and RSUs (in thousands)                      |   |                     | 2,894   |   |   |   | 2,307 |   |   |   | 2,837 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
| Diluted weighted average Ordinary shares outstanding (in thousands) |   |                     | 225,442 |   |   |   | 216,668 |   |   |   | 212,208 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
| Basic earnings per Ordinary share                                   |   | $                        | 1.26    |   |   | $ | 1.51 |   |   | $ | 1.71 |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |
| Diluted earnings per Ordinary share                                 |   | $                        | 1.25    |   |   | $ | 1.50 |   |   | $ | 1.68 |   |

| NOTE 14:- | GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA |
|-----------|---------------------------------------------------------------|

|   | a. | Summary information about geographical areas: |
|--------|----|-----------------------------------------------|

----

|                                                           | CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
|----------------------------------------------------------------|----------------------------------------|
|                                                           | AND ITS SUBSIDIARIES                   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     |
| U.S. dollars in thousands (except share and per share amounts) |

| NOTE 14:- | GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Cont.) |
|-----------|-----------------------------------------------------------------------|

|                           |   | Year ended December 31, |    |
|--------------------------------|--------|-------------------------|---------|
|                           |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                           |   |                    |    |   |   |   |   |   |   |
| Americas, principally U.S.     |   | $                       | 329,681 |   |   | $ | 349,614 |   |   | $ | 395,835 |   |
| Europe, Middle East and Africa |   |                    | 319,871 |   |   |   | 360,161 |   |   |   | 405,334 |   |
| Asia Pacific and Japan         |   |                    | 81,325  |   |   |   | 98,715 |   |   |   | 123,248 |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |
|                           |   | $                       | 730,877 |   |   | $ | 808,490 |   |   | $ | 924,417 |   |

|              |   | December 31 |    |
|-------------------|--------|-------------|---------|
|              |   | 2008        |    |   | 2009 |   |
|              |   |        |    |   |   |   |
| U.S.              |   | $           | 196,739 |   |   | $ | 196,336 |   |
| Israel            |   |        | 52,182  |   |   |   | 118,827 |   |
| Sweden            |   |        | 594,513 |   |   |   | 561,128 |   |
| Rest of the world |   |        | 754     |   |   |   | 1,173 |   |
|              |   |        |    |   |   |   |   |   |
|              |   | $           | 844,188 |   |   | $ | 877,464 |   |

|   | b. | Financial income, net: |
|--------|----|------------------------|

|                                                                         |   | Year ended December 31, |    |
|------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                         |   | 2007                    |    |   | 2008 |   |   | 2009 |   |
|                                                                         |   |                    |    |   |   |   |   |   |   |
| Financial income:                                                            |   |                    |    |   |   |   |   |   |   |
| Interest income                                                              |   | $                       | 48,375  |   |   | $ | 51,776 |   |   | $ | 41,346 |   |
| Amortization of marketable securities premium and accretion of discount, net |   |                    | 247     |   |   |   | – |   |   |   | – |   |
| Realized gain on sale of marketable securities                               |   |                    | 867     |   |   |   | 125 |   |   |   | – |   |
| Foreign currency re-measurement gain and others                              |   |                    | 3,327   |   |   |   | – |   |   |   | 2,061 |   |
|                                                                         |   |                    |    |   |   |   |   |   |   |   |   |   |
|                                                                         |   |                    | 52,816  |   |   |   | 51,901 |   |   |   | 43,407 |   |
| Financial expense:                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |
| Amortization of marketable securities premium and accretion of discount, net |   |                    | – |   |   |   | 3,099 |   |   |   | 8,414 |   |
| Foreign currency re–measurement loss                                   |   |                    | – |   |   |   | 4,311 |   |   |   | – |   |
| Realized loss on sale of marketable securities                               |   |                    | 1,850   |   |   |   | 1,619 |   |   |   | 1,897 |   |
| Others                                                                       |   |                    | 1,241   |   |   |   | 1,996 |   |   |   | 1,038 |   |
|                                                                         |   |                    |    |   |   |   |   |   |   |   |   |   |
|                                                                         |   |                    | 3,091   |   |   |   | 11,025 |   |   |   | 11,349 |   |
|                                                                         |   |                    |    |   |   |   |   |   |   |   |   |   |
|                                                                         |   | $                       | 49,725  |   |   | $ | 40,876 |   |   | $ | 32,058 |   |

----

|   | CHECK POINT SOFTWARE TECHNOLOGIES LTD.            |
|--------|---------------------------------------------------|
|   |                                              |
|   | By:                                               |  /s/ Gil Shwed  |
|   | Gil Shwed                                         |
|   |                                              |   |
|   | Chief Executive Officer and Chairman of the Board |
|   |                                              |
|   | By:                                               | /s/ Tal Payne  |
|   | Tal Payne                                         |
|   | Chief Financial Officer                           |

----