REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Ltd. (+972) 3-753-4555Ha’SolelimShlomo Kaplan Street Tel Aviv 6789705,6789159, IsraelJohn Slavitt, Esq.Inc.959 Skyway Road, Suite 300San Carlos, CA 94070 U.S.A.(650) 628-2110Fax: (650) 649-1975
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Large Accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨
Large Accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Emerging growth company ☐ |
U.S. GAAP |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
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Auditor Firm Id: 1281 | Auditor Name: Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global | Auditor Location: Tel-Aviv, Israel |
Some of the statements contained in
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Item 19. | 70 |
ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Selected Financial Data
We prepare our historical consolidated financial statements in accordance with U.S. GAAP. The selected financial data, set forth in the table below, have been derived from our audited historical financial statements for each of the years from 2011 to 2015. The selected consolidated statement of income data for the years 2013, 2014 and 2015, and the selected consolidated balance sheet data at December 31, 2014 and 2015, have been derived from our audited consolidated financial statements set forth in “Item 18 – Financial Statements.” The selected consolidated statement of income data for the years 2011 and 2012, and the selected consolidated balance sheet data at December 31, 2011, 2012, and 2013, have been derived from our previously published audited consolidated financial statements, which are not included in this Annual Report on Form 20-F. These selected financial data should be read in conjunction with our consolidated financial statements, as set forth in Item 18, and are qualified entirely by reference to such consolidated financial statements.
Year ended December 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Consolidated Statements of Income Data: | ||||||||||||||||||||
Revenues | $ | 1,629,838 | $ | 1,495,816 | $ | 1,394,105 | $ | 1,342,695 | $ | 1,246,986 | ||||||||||
Operating expenses (*): | ||||||||||||||||||||
Cost of revenues | 189,057 | 176,541 | 162,634 | 159,161 | 175,683 | |||||||||||||||
Research and development | 149,279 | 133,300 | 121,764 | 111,911 | 110,147 | |||||||||||||||
Selling and marketing | 359,804 | 306,363 | 276,067 | 255,345 | 253,800 | |||||||||||||||
General and administrative | 91,981 | 78,558 | 72,735 | 69,743 | 65,182 | |||||||||||||||
Restructuring and other acquisition related costs | — | — | — | — | — | |||||||||||||||
Total operating expenses | 790,121 | 694,762 | 633,200 | 596,160 | 604,812 | |||||||||||||||
Operating income | 839,717 | 801,054 | 760,905 | 746,535 | 642,174 | |||||||||||||||
Financial income, net | 34,073 | 28,762 | 34,931 | 40,332 | 41,040 | |||||||||||||||
Income before taxes on income | 873,790 | 829,816 | 795,836 | 786,867 | 683,214 | |||||||||||||||
Taxes on income | 187,924 | 170,245 | 143,036 | 166,867 | 139,248 | |||||||||||||||
Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | $ | 620,000 | $ | 543,966 | ||||||||||
Basic earnings per ordinary share | $ | 3.83 | $ | 3.50 | $ | 3.34 | $ | 3.04 | $ | 2.63 | ||||||||||
Shares used in computing basic earnings per ordinary share | 179,218 | 188,487 | 195,647 | 203,918 | 206,917 | |||||||||||||||
Diluted earnings per ordinary share | $ | 3.74 | $ | 3.43 | $ | 3.27 | $ | 2.96 | $ | 2.54 | ||||||||||
Shares used in computing diluted earnings per ordinary share | 183,619 | 192,300 | 199,487 | 209,170 | 213,922 |
Amortization of intangible assets and acquisition related expenses |
| |||||||||||||||||||
Cost of revenues | $ | 1,808 | $ | 240 | $ | 612 | $ | 3,982 | $ | 31,171 | ||||||||||
Research and development | 6,146 | — | — | — | — | |||||||||||||||
Selling and marketing | 3,267 | 1,866 | 2,408 | 3,046 | 12,754 | |||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Cost of revenues | $ | 1,585 | $ | 1,090 | $ | 1,048 | $ | 829 | $ | 967 | ||||||||||
Research and development | 11,544 | 9,284 | 9,001 | 8,594 | 7,471 | |||||||||||||||
Selling and marketing | 16,351 | 13,339 | 11,193 | 9,677 | 7,888 | |||||||||||||||
General and administrative | 46,822 | 39,456 | 29,870 | 26,187 | 23,509 |
December 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Working capital | $ | 678,981 | $ | 780,825 | $ | 617,520 | $ | 1,061,143 | $ | 1,007,533 | ||||||||||
Total assets | 5,069,880 | 4,948,818 | 4,886,437 | 4,544,885 | 4,128,063 | |||||||||||||||
Shareholders’ equity | 3,531,866 | 3,637,559 | 3,602,097 | 3,346,309 | 3,073,091 | |||||||||||||||
Capital stock | 988,105 | 859,898 | 775,691 | 693,986 | 631,282 |
Point”.
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Factors”.
In addition, if we acquire additional businesses, we may not be able to integrate the acquired personnel, operations, and technologies successfully or effectively manage the combined business following the completion of theany future acquisition. Additionally, such integration may impact our revenue and operating results. We may also not achieve the anticipated benefits from the acquired businessbusinesses due to a number of factors, including:
Managing our supplier and contractor relationships is particularly difficult during time periods in which we introduce new products and during time periods in which demand for our products is increasing, especially if demand increases more quickly than we expect. We also have extended support contracts with these suppliers and arehave been dependent on their ability to perform over a period of years.
We are dependent on a limited number of product families
Currently, we derive the majority of our revenues from sales of integrated appliances and Internet security products, as well as related revenues from subscriptions and from software updates and maintenance. We expect that this concentration of revenues from a small number of product families will continue for the foreseeable future. Endpoint security products and associated software updates, maintenance and subscriptions represent an additional revenue source. Our future growth depends heavily on our ability to effectively develop and sell new and acquired products as well as add new features to existing products. For more details, see “Item 4 – Information on Check Point” and “Item 5 – Operating and Financial Review and Prospects.”
in the event that a claim of infringement is asserted against us, or they may be required to indemnify us only up to a maximum amount, above which we would be responsible for any further costs or damages. Any failure to obtain licenses to intellectual property or any exposure to liability as a result of incorporating third partythird-party technology into our products could materially and adversely affect our business, operating results and financing condition.
We incorporate open source technology in our products which may expose us to liability and have a material impact on our product development and sales
Some of our products utilize open source technologies. These technologies are licensed to us under varying license structures, including the General Public License. If we have improperly used, or in the future improperly use software that is subject to such licenses with our products, in such a way that our software becomes subject to the General Public License, we may be required to disclose our own source code to the public. This could enable our competitors to eliminate any technological advantage that our products may have over theirs. Any such requirement to disclose our source code or other confidential information related to our products could materially and adversely affect our competitive position and impact our business, results of operations and financial condition.
In 2015, the Organization for Economic Co-operationworld may disagree with our operating sale model. This may lead to disputes and Development, or OECD, published final proposals under its Base Erosion and Profit Shifting, or BEPS, Action Plan. The BEPS Action Plan includes fifteen Actions to address BEPS intax assessments, which can have a comprehensive manner and represents a significant change to the international corporatenegative effect on our tax landscape. These proposals, if adopted by countries, may increase tax uncertainty and adversely affect our provision for income taxes.
liabilities.
In November 2013, we reached a settlement agreementProceedings”.
tax burden and increased costs to us to comply with new laws and interpretations thereof and tax auditors. New taxes or reporting obligations could also result in additional costs necessary to collect the data required to assess these taxes and to remit them to the relevant tax authorities or to comply with these reporting obligations.
which could cause substantial harm to our business
of operations
The SEC has also adopted rules pursuant to Dodd-Frank setting forth new disclosure requirements concerning the use of certain minerals that are mined from the Democratic Republic of Congo and adjoining countries. We have incurred and expect to continue to incur costs associated with determining whether any of our products include materials that are covered by the conflict minerals rules. In the event that our products do contain materials covered by the conflict minerals rules, we would be required to comply with applicable disclosure requirements, including conducting diligence procedures to determine the sources of certain minerals that may be used or necessary to the production of our products and, if applicable, undertake potential changes to products, processes or sources of supply as a consequence of such verification activities. In addition, if our products do contain materials covered by the conflict mineral rules, these rules could adversely affect the sourcing, supply and pricing of materials used in our products, particularly if the number of suppliers offering the minerals identified as “conflict minerals” sourced from locations other than the Democratic Republic of Congo and adjoining countries is limited. It is also possible that we may face reputational harm if we determine that certain of our products contain minerals not determined to be conflict free and/or we are unable to alter our products, processes or sources of supply to avoid such materials.
If we fail to comply with new or changed laws or regulations, our business and reputation may be harmed.
We may be required to indemnify our directors and officers in certain circumstances
We have entered into agreements with each of our directors and senior officers to insure, indemnify and exculpate them against some types of claims, subject to dollar limits and other limitations. Subject to Israeli law, these agreements provide that we will indemnify each of these directors and senior officers for any of the following liabilities or expenses that they may incur due to an act performed or failure to act in their capacity as our director or senior officer:
Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest rates
Moreover, in case we would like to liquidate some of our investments into cash – we are dependent on market conditions and liquidity opportunities, which may be impacted by economic, social, or political conditions, including, without limitation, conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations, inflation, global pandemics such as the COVID-19 pandemic, global supply chain disruptions and conditions resulting from geopolitical uncertainty and instability or war, including the war and hostilities between Israel and Hamas and Israel and Hezbollah and the significant military action against Ukraine launched by Russia.
We
risks.
Our business and operations are subject to
Our headquarters in the United States, as well as certain of our research and development operations, are located in the Silicon Valley area of Northern California, a region known for seismic activity. We also have significant operations in other regions that have experienced natural disasters. A significant natural disaster occurring at our facilities in Israel or the U.S. or elsewhere, or where our channel partners are located,globe, could have a materialan adverse impact on our business operatingand results and financial condition. In addition, acts of terrorism could cause disruptionsoperations. These changes may have an impact on some of our expenses which are paid in local currencies (non US dollar), as well as an impact on our or our customers’ businesses or the economy as a whole. Further, we rely onnon-US customers which have their financials in non-US dollar currencies.
Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.
Weservices have been, and may continue to be, subject to various security threats
We may need to change our pricing models to compete successfully.
The intense competition we face in the sales of our products and services and general economic and business conditions can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, Further, we may needbe required or otherwise find it appropriate to lower pricesexpend significant resources, adapt our business activities and practices, or offermodify our operations or information technology in an effort to protect against security incidents and to mitigate, detect and remediate vulnerabilities, whether in connection with an actual or perceived security breach or incident or otherwise.
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.
Because we incorporate encryption technology into our products, certain of our products are subject to U.S. export controls and may be exported outside the U.S. only with the required export license or through an export license exception. If we were to fail to comply with U.S. export licensing requirements, U.S. customs regulations, U.S. economic sanctions, or other laws, we could be subject to substantial civil and criminal penalties, including fines, incarceration for responsible employees and managers, and the possible loss of export or import privileges. Obtaining the necessary export license for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products to U.S. embargoed or sanctioned countries, governments, and persons. Even though we take precautions to ensure that we comply with all relevant regulations, any failure by us or any partners to comply with such regulations could have negative consequences for us, including reputational harm, government investigations, and penalties.
In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our end-customers’ ability to implement our products in those countries. Changes in our products or changes in export and import regulations may create delays in the introduction of our products into international markets, prevent our end-customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our products to certain countries, governments, or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential end-customers with international operations. Any decreased use of our products or limitation on our ability to export to or sell our products in international markets would likely adversely affect our business, financial condition, and operating results.
pursue future plans.
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Nasdaq requirements
• | Comprehensive Real-time Threat Prevention: Real-time AI-powered comprehensive threat prevention across all attack vectors from code to cloud, networks, users, email and IoT. AI engines deliver industry leading threat prevention to stop the most sophisticated attacks including Zero Day Malware, Phishing and DNS. |
• | Consolidated Security Operations and Unified Management: Leverage a unified security management platform for efficient security operations to deliver threat prevention to seal security gaps and enable automatic, immediate threat intelligence sharing across all security environments. |
• | Collaborative True collaboration across the security platform is essential to gain advantage over attackers. Security that Automatically Responds to Every Threat: AI-powered security engines applied to any attack vector, shared real-time threat intelligence, and anomaly detection with ThreatCloud AI, automated threat response and orchestration with XDR and Playblocks, and API-based third-party integration. |
• | Secure the Workspace with Harmony Prevents sophisticated attacks across the IT workspace including emails, web applications, devices and remote corporate access. |
• | Quantum Security Gateways andfirewalls deliver comprehensive security beyond any Next Generation Firewall (NGFW) and are designed to manage the most complex security policy requirements and prevent the 5th generation of cyber-attacks. Quantum Security gateways are powered by over 60 security services, including the industry’s complete range of security capabilities including firewalling, intrusion prevention, application control, anti-malware, anti-phishing, DNS security, as well as sandboxing and file sanitization of email and web documents. All Check Point security gateways receive immediate threat data from Check Point’s ThreatCloud AI global threat intelligence system. |
• | Announcing Quantum Force AI-Powered Security Gateways In February 2024,Check Point introduced a major addition to its enterprise security gateway product line - the new Quantum Force series. This innovative lineup of ten high-performance security gateways and firewalls are designed to meet and exceed the stringent security demands of enterprise data centers, network perimeters, campuses, and organizations of all sizes and industries. |
• | Quantum Maestro: Hyper scalable security platform delivers on-demand scalability for requirements that range from 30 Gbps to over 1 Terabits per second of full threat prevention. Organizations of any size can benefit from Maestro’s intelligent load balancing firewall cluster design. |
• | Quantum Lightspeed: Data center firewalls, designed for the most demanding environments in the world. |
• | Quantum Titan (R81.20) (security operating system / software): All Quantum Force security gateways and firewalls share the same underlying security operating system. This latest threat prevention and security management release delivers top rated threat prevention, cloud services, and performance acceleration for Check Point firewalls. This industry-leading operating system provides security controls and management that are a foundational and integral part of today’s security infrastructure. The Quantum Titan release introduced three new software blades that leverage artificial intelligence (AI) and deep learning, to deliver advanced threat prevention against advanced domain name system exploits (DNS) and phishing, as well as autonomous IoT security. Check Point Quantum Titan platforms can provide both IoT device discovery and automatically apply zero-trust threat prevention profiles to protect IoT devices. |
• | Quantum Spark: This family of small/medium businesses (SMB) security gateways and firewalls feature best-in-class threat prevention performance up to 5 Gbps threat prevention. These firewalls are easy to deploy and manage, and they integrate communication and security into an “all in one” solution. Quantum Spark security gateways provide protection for businesses with 1 to 1000 employees, and they can be easily managed from a web portal and from a mobile app. Alternatively, Quantum Spark firewalls can be managed by local Managed Service Providers (MSPs) using Check Point’s specialized MSP management system. Quantum Spark firewalls also offer additional important features including 5G Cellular and Wi-Fi 6 connectivity as well as cloud services like SD-WAN and IoT security. |
• | Quantum IoT Protect: Enables Check Point Security Gateways to auto-discover all IoT devices in a customer’s environment. Automatically identifies and maps IoT devices and assesses the risk. Prevents unauthorized access to and from IoT/OT devices with zero-trust profiling and segmentation, and blocks zero-day IoT attacks. |
• | Quantum SD-WAN: Quantum SD-WAN is a new software blade in Check Point Quantum Gateways that extends Check Point’s marketing-leading threat prevention to Software Defined Wide Area Networks (SD-WAN) for optimized network performance and internet connectivity optimized connectivity. Quantum SD-WAN enables enterprises to leverage local internet service providers for faster, less expensive internet connectivity without compromising security. Check Point’s Quantum SD-WAN takes a security-first approach to networking by delivering advanced threat prevention along with optimized internet connectivity. |
• | Quantum Rugged (Industrial/OT): Quantum Rugged Security Gateways are specifically engineered to protect against attacks directed at Industrial Control Systems (ICS) and Operational Technology (OT) networks. These firewalls are purpose-built for industrial, manufacturing, and critical infrastructure environments. Check Point Quantum Rugged security gateways deliver proven, integrated AI security, high-speed secure 5G connectivity and more for deployments in harsh environments as part of a complex end-to-end ICS security solution. |
• | Cloud Network Security: advanced threat prevention and network security through a virtual security gateway—automated and unified across all multi-cloud and on-premises environments. |
• | Cloud Native Application Protection Platform (CNAPP): secure the entire application lifecycle from code-to-cloud. Manage your security posture, detect misconfigurations, enforce best practices, prevent threats, and prioritize risks. |
• | Pipeline Security: developer-centric security that seamlessly monitors, classifies, and protects codes, assets, and infrastructure. Protect against exposed API keys, tokens, and credentials, as well as identify and stop misconfigurations. |
• | Security and Posture Management: automates governance across multi-cloud assets and services including visualization and assessment of security posture, misconfiguration detection, and enforcement of security best practices and compliance frameworks. prevent threats and achieve high fidelity posture management. |
• | Cloud Identity and Entitlement: optimize user and workload access and privilege management to ensure a least privilege state and eliminate overly permissive roles. Gain visibility of effective permissions identify over permissive entitlements and implement suggested roles. |
• | Cloud Workload Protection: seamless vulnerability assessment and runtime protection of modern cloud workloads, including serverless functions and containers. |
• | Cloud Web Application Protection: powered by contextual-AI, protects web applications and APIs from the most sophisticated types of threats. |
• | Cloud Detection and Response: cloud native threat security forensics through rich machine learning visualization, giving real-time context of threats and anomalies across your multi-cloud environment. |
• | Harmony SaaS discovers all your SaaS services, reduces your attack surface and automatically prevents SaaS-based threats using machine learning engines. |
• | Harmony SASE converges network security capabilities into a single solution with unified management, internet security, and comprehensive Zero Trust network access. |
• | Harmony Endpoint protects users’ PCs from ransomware, phishing, and malware, and minimizes breach impact with autonomous detection and response capability. |
• | Harmony Mobile protects employees’ mobile devices against malicious apps and network or operating systems attacks. |
• | Harmony Email & Collaboration secures users’ email clients and gives protection for Microsoft Office 365, Exchange, Google G, and others. In 2021, we extended Harmony with cloud-email security with the acquisition of Avanan – a leading cloud-email security company. |
• | Secure Internet Browsing: Provides secure, fast, and private web browsing by inspecting all SSL traffic directly on the endpoint. |
• | Secure remote access to corporate applications: Harmony Connect provides Secure Access Service Edge (SASE) and provides secure and easy access to any corporate application. |
Check Point’s core competencies are developing security solutions to protect business and consumer transactions and communications over the Internet, and reducing the complexity in Internet security. We strive to solve the security maze by bringing “more, better and simpler” security solutions to our customers.
Check Point develops, markets and supportsCloudGuard.
Check Point was an industry pioneer with our FireWall-1 and our patented Stateful Inspection technology. Check Point extended its IT security innovation with the development of our Software Blade architecture. Our dynamic Software Blade architecture delivers secure, flexible and simple solutions that can be customized to meet the security needs of any organization or environment.
Our products and services are sold to enterprises, service providers, small and medium sized businesses and consumers. Our Open Platform for Security framework allows customers to extend the capabilities of our products and services with third-party hardware and security software applications. Our products are sold, integrated and serviced by a network of partners worldwide. Check Point customers include tens of thousands of businesses and organizations of all sizes. Check Point’s award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft.
Business Highlights
Detailsexternal emails using AI based engines.
“Overview”.
Report.
ir@checkpoint.com.
Cyber Security Industry Today
Organizations of all sizes will continue to face a challenging threat landscape. With countless new connections formed every day, the world is more globally linked than ever. Cloud, mobility, virtualization and the Internet of Things (“IoT”) are changing the way customers deploy and consume technology. Enterprises have more opportunities than ever before to innovate and compete more effectively and efficiently. However, the network edges in their infrastructure are blurring and boundaries between entities are disappearing, which increases the risk of cyberattacks. Specific trends within this dynamic include:
Growth in Remote Connectivity. The proliferation of smartphones and the growing number of people who work remotely and conduct business through mobile devices has expanded the need to safeguard and manage the access to information. Whether remote or mobile, workers need constant connectivity to the enterprise network. In 2015, Check Point discovered significant vulnerabilities in applications such as WhatsApp and in the Android operating system which allowed applications to gain illegitimate privileged access rights within hundreds of millions of mobile devices. Because of this trend toward remote connectivity, enterprises will need to ensure security across all points of their infrastructure and deploy mobile-specific security solutions.
Cloud Computing and Network Virtualization. Cloud computing, or Internet-based computing, provides shared servers which provide resources, software and data storage to computers and other devices on demand, and drives the need for enterprise security for both on-premises and in-the-cloud infrastructures. New virtual environments and public and private clouds jeopardize enterprises’ overall security posture if they are not deployed within the appropriate security infrastructure. These are complex environments to manage and secure due to multiple network layers. Deploying virtualized security solutions are crucial to ensuring that attacks are immediately contained before they spread across virtualized server and network environments.
Overall Complexity within the Enterprise IT infrastructure. Another key trend affecting IT security is the increasing complexity of deploying, managing and monitoring the many technologies needed to fully secure the enterprise IT network. This trend creates two challenges for enterprises: how to cost-effectively manage a patch-work of point product solutions, and how to ensure that no gaps are left in the infrastructure. To solve these problems, enterprises seek out single-architecture solutions with simplified management in an effort to keep the security infrastructure robust, yet simple to manage and adaptable to on-going changes.
Increased Data Privacy and Compliance Regulation. The increasing number of governmental regulations around the world regarding data privacy and compliance is also impacting enterprise security. Enterprises need to put in place data security technologies to prevent violations of applicable laws regarding data privacy and protection and to avoid experiencing data loss or data theft, which could cause enterprises to suffer reputational harm and governmental sanctions, fines and penalties. Data has long been a prime target for hackers seeking financial information, intellectual property, and insider business information and authentication credentials. In 2015, we saw attacks on BlueCross, Morgan Stanley and Anthem . These attacks exposed personal health and financial data on millions of consumers.
Emergence of Social Engineering. As security solutions improve and are more thoroughly deployed throughout enterprises, attackers attempt to bypass security mitigations and restrictions by “hacking” the human mind , in other words, by deceiving employees into providing credentials, sending infected files or clicking on an infected link. Many of the attacks in 2015 have taken root within the attack’s target through social engineering and phishing techniques. Specific security policies, increased segmentation of the infrastructure and multi-layer defense solutions will be needed to prevent these types of attacks.
Increase in Sophistication of Threats and Attacks. Today’s threats use sophisticated technology, the internet and deception to acquire sensitive information and to disrupt business operations. Many of these threats contain new, unknown signatures when they reach their targets. These new unknown signatures deploy and cause damage to their target immediately. Commonly called “zero-day threats”, these threats present unique challenges to the enterprise. Enterprises need to put in place multi-layer defenses to prevent, detect and extract threats before they cause damage.
Increase in the Number of Attacks and Potential Targets.By 2020, estimates indicate that there will be one billion smart meters, over one million smart light bulbs, over 50% of the consumers will utilize wearable technology and more than five major car manufacturers will have smart, driverless cars. Wearables can be hacked to record conversations, cars can be hacked to compromise safety and smart meters can be hacked to access information. Critical infrastructures such as SCADA and IOS are increasingly targeted as they are older infrastructures not originally designed with cybersecurity in mind. Manufacturers of these products will need more robust security solutions, and enterprises that are connected to these types of products through the ecosystem will need to consider how to prevent these devices might be leveraged to gain access to their infrastructure.
Check Point Legacy and Vision
Since its inception, Check Point’s pure focus has been on IT security. Adapting to customers’ changing needs, the company has developed numerous technologies to secure the use of the Internet by corporations and consumers when transacting and communicating. Today, Check Point is the largest pure security vendor globally. Making Internet communications and critical data secure, reliable and available everywhere has been and continues to be our ongoing vision. We are committed to staying focused on real customer needs and to developing new and innovative security solutions that redefine the security landscape. An interconnected, digital economy is here to stay, empowering business leaders to invent, to inspire and to drive positive change throughout the world.
Innovative leaders seize opportunities that emerge from change. They constantly question every assumption. These leaders rely on the latest SaaS or IoT platforms to speed their time to market. They add partners from around the world to their supply chain to ensure they get the best suppliers and the best prices. They deploy beta applications in mobile environments to speed time to market. These leaders push the envelope, but not at the expense of security, performance, or their ability to compete in the market.
The ecosystem is rapidly changing, and is less and less controlled. Digital assets are harder to track and control. Infrastructure is no longer in one place as boundaries disappear. Hackers are innovating just as quickly as enterprises are and are finding new ways to attack our connected world. More and more malware is being put into our ecosystem that traditional security techniques are powerless to prevent. Increasingly, vulnerabilities are exploited, brands are damaged, assets are stolen, and our personal safety is at risk.
Business leaders today must stay “One Step Ahead” of things they cannot see, know or control. To be one step ahead, enterprises must have visibility to tomorrow’s threats, not just the threats of today. They can no longer rely on continuously integrating layers of point solutions that result in complex mosaics that still contain gaps in the infrastructure. Enterprises need to be able to prevent attacks at every stage, from start to finish. They need to contain threats and extract them the second they are detected. To be One Step Ahead they need access to a global intelligence network and leverage it for real-time protection. These leaders need to protect every point in the infrastructure, from mobile to cloud to virtual and physical, from one location, while being flexible and adapting to change.
Organizations around the world rely on Check Point to protect their brand, assets and data from cyberattacks. For more than 20 years, Check Point’s single architecture, comprehensive management and integrated threat intelligence, combined with the most advanced prevention and extraction solutions, have yielded the highest malware catch rate in the industry, thereby enabling millions of users to safely and productively accelerate their businesses.
With a legacy of industry firsts and continuous innovation, Check Point gives business leaders the freedom to invent, inspire and compete securely in the ever changing digital economy.
Check Point Technology Leadership in 2015
Gartner
Number One Worldwide Firewall Equipment Market Share 2014
Leader Enterprise Network Firewall Market Quadrant 2015
Leader Unified Threat Management Magic Quadrant 2015
Leader Mobile Data Protection Magic Quadrant 2015
Number One Worldwide Firewall Equipment Market Share 2015 1st. 2nd, 3rd Quarter
IDC
Top Position Worldwide Combined Firewall & UTM Appliance Market 2014
Top Position Worldwide Combined Firewall and UTM Appliance Market 2015 1st. 2nd, 3rd Quarter
NSS Breach Detection Systems Results: Check Point’s Next Generation Threat Prevention Solution received a “recommended” rating in the NSS Labs Breach Detection Systems (BDS) group test. Check Point received a 100 percent catch rate of HTTP, 100 percent catch rate for email and 100 percent catch rate for drive by malware.
Common Criteria Certification: Check Point was awarded Common Criteria (CC) certification for R77.30, following a rigorous third-party evaluation and testing process.
Best Product of 2015: Check Point SandBlast was named ‘Coolest Security Product of 2015’ byCRN Magazine.
Product Strategy
In an effort to simultaneously address the need for scalable security solutions and the retention of initial investments, Check Point introduced the Software Blade architecture in February 2009. The architecture provides customers with the ability to tailor their security gateways based on their specific needs at any time. It offers enterprises a common platform to deploy independent, modular and interoperable security applications or “Software Blades” such as firewall, virtual private network (VPN), intrusion prevention system (IPS), Application Control, Anti-Bot, antivirus, data loss prevention (DLP), policy management, event analysis, or multi-domain management. The new architecture allows customers to select the exact security they need from a library of over 20 Software Blades, and to combine these blades into a single, centrally-managed solution. Customers can easily extend their security solutions by adding new Software Blades without the need to purchase additional hardware. This allows our customers to deploy security dynamically, when needed, with lower total cost of ownership, full integration, and on a single management console. Check Point also offers these software blades grouped into functional packages to address specific security issues. The four packages offered are Next Generation Firewall, Next Generation Threat Prevention, Next Generation Secure Web Gateway and Next Generation Data Protection.
Threat Prevention software blades are fed by a cloud based threat intelligence knowledge base, introduced in 2012, the Check Point ThreatCloud™. The ThreatCloud, the first collaborative network to fight cybercrime, gathers threat data from an innovative worldwide network of threat sensors and distributes threat intelligence to security gateways around the globe. Today, ThreatCloud scans more than 250 million addresses for bot discovery, keeps track of over 11 million malware signatures and has detected over 5.5 million malware infested sites. On average, thousands of Check Point gateways detect more than 700,000 malwares every day. The ThreatCloud powers the Threat Prevention software blades by feeding threat updates directly to customers’ gateways, enabling them to enforce pre-emptive protection against advanced threats, such as bots, Advanced Persistent Threats (APTs) and other forms of sophisticated malware.
In 2015, Check Point continued its track record of innovation through strategic acquisitions and new product introductions:
Check Point continued its commitment to inspecting and discovering vulnerabilities that exist in various platforms, applications and devices for the sole purpose of ensuring that all consumers of technology, whether they are currently Check Point customers or not, have important information regarding security vulnerabilities. In 2015, we published a number of vulnerability reports, including:
Volatile Cedar:Campaign allowing attackers to monitor a victim’s actions and steal data.
2015 Check Point Security Report: Report revealed that 96% of organizations are using high-risk applications and that there was an increase in security incidents across all categories.
Magento eCommerce Platform: Critical RCE (remote code execution) vulnerability found in eBay’s Magento web ecommerce platform, affecting nearly 200,000 online shops.
WhatsApp Web Vulnerabilities: Vulnerabilities discovered that exploit the WhatsApp Web logic and put up to 200 million users at risk.
Certifi-gate Vulnerability in Android: Allows applications to gain illegitimate privileged access rights and exists in hundreds of millions of devices.
BrainTest related Mobile Malware: Malware, packaged within an Android game app called BrainTest, affected between 200,000 and one million users.
EZCast Vulnerability: HDMI dongle-based TV streamer that converts non-connected TVs into smart TVs allowing hacker’s ability to gain unauthorized access to an EZCast subscriber’s home network.
Rocket Kitten: Uncovered Iranian-linked cyber-espionage global campaign.
Check Point Product Offerings
Check Point continues to develop new innovations based on the Software Blade Architecture, providing customers with flexible and simple solutions that can be fully customized to meet the exact security needs of any organization. Check Point 3D Security uniquely combines policy, people and enforcement for greater protection of information assets and helps organizations implement a blueprint for security that aligns with business needs. Our products provide end-to-end security from the enterprise to the cloud to your mobile worker’s personal devices. We prevent and mitigate cyber-attacks and limit the data theft that often results from these threats. Our unified security management solution delivers extensibility and ease of use. Check Point keeps customers one step ahead with industry leading security products for Threat Prevention, Mobility, Firewalls, Security Management and more. Our products protect individuals, SMBs and large data center enterprises.
Next Generation Firewalls. Check Point provides customers of all sizes with the latest data and network security protection in an integrated next generation firewall platform, reducing complexity and lowering the total cost of ownership. Offerings include the following:
Enterprises deploy security along well defined boundaries at the perimeter and internally within software defined data centers. Our next generation firewall solutions for protecting both north-south and east-west traffic include:
Check Point has an affordable, easy to use and effective solution to secure small businesses and branch offices. This includes turn-key appliances and a Cloud Managed Security Service option, giving you the freedom to focus on growing your business.
Check Point’s ZoneAlarm products are used by more than 90 million people to provide integrated threat protection to safeguard all of their PCs and mobile devices. Offerings include an a fully integrated Extreme Security Suite, an Internet Security Suite, AV + Firewall or PRO Firewall option so consumers choose the level of protection they need.
Next Generation Threat Prevention. The growing frequency and sophistication of cyber security threats makes protecting organizations more important than ever. Check Point Next Generation Threat Prevention delivers a multi-layered line of defense and extensive security intelligence coverage to help combat threats of today, and tomorrow. Our Threat Prevention products fall into the following five categories:
Security Management.As network complexity grows, so does the difficulty of applying complete, consistent security management policies and efficient processes to investigate events and oversee resolution. Check Point offers a variety of smart management solutions designed to tackle the security management challenges of today and tomorrow.
Mobile Security.Today every business is a mobile business, with requirements to safeguard business data, provide secure mobile access to business documents and keep mobile devices safe from threats. Use of mobile devices and apps has introduced a wide range of new attack vectors and new data security challenges for IT. Mobile technology has made the network security challenge much bigger and more diverse - cybercriminals frequently optimize their attacks to exploit the technologies that people use the most. Document protection is limited on mobile devices. Employees use a wide variety of personal devices on the job, but few users realize the importance of preventing third parties from accessing their devices. Check Point Enterprise Mobile Security solutions provide the widest range of products to help secure the mobile world. Our offerings include:
Endpoint Security. Check Point Endpoint Security combines data security, network security, threat prevention technologies and remote access VPN into one package for complete Windows and Mac OS X protection. This integrated suite allows you to manage security protection in a single console.
Revenues by Category of Activity
Year Ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
(in thousands) | ||||||||||||
Category of Activity: | ||||||||||||
Products and licenses | $ | 555,792 | $ | 520,312 | $ | 496,930 | ||||||
Subscriptions | $ | 318,624 | $ | 265,021 | $ | 217,088 | ||||||
Software updates and maintenance | $ | 755,422 | $ | 710,483 | $ | 680,087 | ||||||
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Total revenues | $ | 1,629,838 | $ | 1,495,816 | $ | 1,394,105 | ||||||
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Our revenues for the last three fiscal years by geographic area are set out in “Item 5 – Operating and Financial Review and Prospects” under the caption “Overview.”
Year Ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
(in millions) | ||||||||||||
Category of Activity: | ||||||||||||
Products and licenses | $ | 497.4 | $ | 554.9 | $ | 513.9 | ||||||
Security subscriptions | $ | 981.2 | $ | 858.0 | $ | 755.2 | ||||||
Software updates and maintenance | $ | 936.1 | $ | 917.0 | $ | 897.7 | ||||||
Total revenues | $ | 2,414.7 | $ | 2,329.9 | $ | 2,166.8 |
We drive awareness and preference for Check Point solutions through global media campaigns, thought leadership programs, digital marketing, social media, as well as press and analyst relations. We accelerate our innovation and technology agenda globally through frequent product launches and associated demand generation programs. In addition to our annual Check Point User Conference we host C-level, strategic IT and technical decision makers at a variety of custom events such as Cyber Day, CISO Roundtables, and local seminars. We also participate in targeted industry events such as RSA, CyberTech and Black Hat.
marketing.
marketing support located in various jurisdictions.
implementation; and (iii) certification and educational training on Check Point products.
Our support solutions include both indirect and direct offerings. Channel partners provide customers with installation, training, maintenance and support, while we provide high-level technical support to our channel partners. Alternatively, our customers may elect to receive support directly from us. As part of our pre-sale support to our channel partners, we employ technical consultants and systems engineers who work closely with our channel partners to assist them with pre-sale configuration, use and application support. In addition, because of the increased demand for our portfolio of security gateway appliances, from small office locations to telco grade and capacity infrastructure platforms, we have expanded our technical support offerings around the world. This includes same and next business day replacements, on-site support availability and device pre-configuration. We have also added new ThreatCloud Managed Security Services and Incident Response. These new services are focused on helping our partners and customers maximize the effectiveness of advanced protections and mitigate and remediate critical security events quickly.
organization.
compete, which could adversely affect our business and results of operations”.
I. | Community – How we value each other – We believe in creating a more sustainable future for our stakeholders and for the world. We are extremely involved in the community and we invest greatly in volunteering and donations activities in an attempt to make the world a better place. |
• | Corporate Responsibility Policy – Check Point strongly believes that creating a positive economic, social and environmental impact advances its mission of developing security solutions to protect business and consumer transactions, and creating a more sustainable future for its stakeholders and the for the world. As part of Check Point’s corporate responsibility guidelines, Check Point identified ESG issues that are of highest relevance to its business activity and its stakeholders. These essential issues are addressed and managed constantly to ensure that they remain up to date and optimized to address the relevant concerns. |
• | Social Investment and Volunteer Statement – Check Point invests in its worldwide volunteering and donations activities as it is committed to making the world a safer and a better place in order to achieve a more sustainable future for all, and is committed to the social needs of the communities we live and operate in. |
• | Human Resources – How we value ourselves – The most important asset of our company is our human capital. We are committed to creating a diverse, healthy, and supportive work environment where our employees can grow and learn together. |
• | Human Rights and Labor Policy – Check Point strives to treat its employees, contractors and suppliers with dignity and respect. Check Point promotes a safe, healthy, and supportive work environment and condemns modern slavery and human trafficking in any form. Check Point’s commitment includes closely monitoring its compliance with international standards and local laws in all of our locations around the world to ensure that the rights of our employees are protected. |
• | Workforce Diversity and Equality Statement –As a leading cyber security company, we are committed to nurturing diversity and equality while breaking the bias in the workplace when hiring, training, and evaluating our employees. Our teams are committed to creating a conscious culture that promotes open communication with the goal of a more equitable outcome for all. We believe that a diverse workforce encourages a wider variety of skills, talents, and viewpoints, leading to further creativity and innovation. |
• | Training and Employee Development Policy –Investing in the training and development of our employees, managers and groups within the company contributes not only to them, but also to Check Point as a whole. By providing our employees and managers with learning and development activities, we enable the company to achieve its business targets, and the people to constantly grow professionally. |
• | Anti-Slavery Policy – Check Point has zero tolerance towards modern slavery. |
II. | Supply Chain – How we value the process – We assure the high standards of our supply chain conduct by ensuring that the working conditions in our operations and supply chain are safe and that business operations are conducted ethically |
• | Supply Chain Code of Conduct –We demand our suppliers of products and services to comply with our high standards and values. |
• | Supply Chain Policy – Check Point considers honesty, integrity, transparency and open communication core values of our business and operations. |
• | Conflicts Minerals Policy – In certain conflict areas around the world, such as the Democratic Republic of the Congo and adjoining countries, the trade of certain minerals and derivative metals can be used to support corruption, money laundering and human rights abuses. In order to eradicate such behavior, Check Point has adopted a Conflicts Minerals Policy. |
III. | Environment – How we value our surroundings – We take an active part in helping to ensure the sustainability of the world’s resources and environment. |
• | Environmental Policy – Check Point understands that climate change and the global warming have observable effects on the environment. Check Point’s impact on the environment is generally through our products, services and facilities. We comply with the applicable environmental laws and regulations and strive to be a leader in the environmental sustainability field. |
• | Board oversight - Our board of directors has a dedicated committee for overseeing environmental, social, and governance (ESG) matters (the Nominating, Sustainability and Corporate Governance Committee), which is responsible for ensuring that our environmental policies and practices are consistent with our overall business strategy. The committee reviews our environmental performance on a periodic basis. |
IV. | Corporate Governance – How we value our method – We have adopted corporate governance guidelines to assist our Board in carrying out its responsibilities and serving the interests of our company and its shareholders. |
• | Corporate Governance Guidelines – Our board of directors has adopted Corporate Governance Guidelines to assist the board of directors in carrying out its responsibilities and serving the interests of the Company and its shareholders in a manner that is consistent with the board of director’s fiduciary duties. |
• | Committee Charters – We have adopted written charters specifying the duties and responsibilities of each of our Audit Committee, Compensation Committee and Nominating, Sustainability and Corporate Governance Committee to assist the committee members in carrying out their responsibilities. |
V. | Ethics – How we value what is right – Check Point promotes core values of honest and ethical conduct, integrity, open communication, equal opportunity and diversity. |
• | Code of Ethics and Business Conduct – Check Point is a worldwide leader in developing security solutions to protect business and consumer transactions, and communications over the internet. Our goodwill and reputation are affected by what we do every day. By putting our commitment in writing we clearly set out the business practices that we follow and set clear standards of behavior for everyone associated with our organization. |
• | Privacy Policy – Our Privacy Policy explains how Check Point treats personal information that Check Point collects or generates both in relation to the Check Point website (www.checkpoint.com) and our products and services. |
• | Whistle Blower Procedure – Check Point strives to promote its values and establish uniformity within the company. Check Point’s employees and business partners are expected to adhere to and follow the standards and principles we set. In order to support the adherence to our Code of Ethics and Business Conduct as well as other policies, we provide different channels for reporting, which include the Whistle Blower Procedure. This is crucial for our high standards and values. |
• | Insider Trading Policy – This policy provides guidelines to employees, consultants, contractors, officers and directors of Check Point with respect to transactions in Check Point’s securities. |
• | Anti-Corruption, Bribery and Money Laundering Policy – Check Point’s goodwill and reputation are affected by what we do every day. Check Point clearly sets out the business practices that we follow and set clear standards of behavior for everyone associated with our organization. Our culture and values help us build trust with our customers, business partners, investors, other organizations and governments, and trust and integrity is the core of our business and operations. |
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programs”.
NAME OF SUBSIDIARY | COUNTRY OF INCORPORATION | |
Check Point Software Technologies, Inc. | United States of America (Delaware) | |
Check Point Software (Canada) Technologies Inc. | Canada | |
Check Point Software Technologies (Japan) Ltd. | Japan | |
Check Point Software Technologies (Netherlands) B.V. | Netherlands | |
Check Point Holding (Singapore) PTE Ltd. | Singapore | |
Check Point Holding (Singapore) PTE Ltd. | ||
Check Point Holding (Singapore) PTE Ltd. | ||
Israel Check Point Software Technologies Ltd. China | China | |
Check Point Holding AB | Sweden | |
Check Point Advanced Threat Prevention Ltd. (12) | Israel | |
Check Point Mobile Security Ltd. (12) | Israel | |
Check Point Software Technologies South Africa PTY. Ltd | South Africa | |
Check Point Software (Kenya) Limited | Kenya | |
Check Point Software Technologies B.V Nigeria Ltd. (5) | Nigeria | |
Check Point Public Cloud Security Ltd. (12) | Israel | |
Check Point Web Applications and API Protection Ltd. | Israel | |
Protego Labs, Inc. | United States of America (Delaware) | |
Check Point IOT Security Ltd. | Israel | |
Check Point Serverless Security Ltd. (6) | Israel | |
Check Point Secure Remote Access Ltd. (12) | Israel | |
Check Point Email Security Ltd. (7) | Israel | |
Avanan, Inc. | United States of America (Delaware) | |
Check Point Developer Security Tools Ltd. (12) | Israel | |
Check Point Software Technologies (Sweden) AB. (8) | Sweden | |
Check Point Software Technologies (Sweden) AB. – Dubai Branch (9) | Sweden | |
Zone Labs, L.L.C. (10) | United States of America (California) | |
R&M Computer Consultants, Inc. (10) | United States of America (North Carolina) | |
RM Source Australia PTY Ltd. (11) (13) | Australia | |
Check Point SAAS Security Ltd. (12) | Israel | |
Atmosec, Inc. (13) | United States of America (Delaware) | |
Check Point SSE Solutions Ltd.(12) | Israel | |
Perimeter 81 LLC (13) | United States of America (Delaware) |
(1) | Representative office of Check Point Holding (Singapore) PTE Ltd. |
(2) | Branch of Check Point Holding (Singapore) PTE Ltd. |
Representative office of Check Point Software Technologies Ltd. |
Subsidiary of Check Point Holding (Singapore) PTE Ltd. (former name: Protect Data AB) |
(5) | Subsidiary of Check Point Holding (Singapore) PTE Ltd. and Check Point Yazilim Teknolojileri Pazarlama A.S. |
(6) | Subsidiary of Protego Labs, Inc |
(8) | Subsidiary of Check Point Holding AB |
(9) | Branch of Check Point Software Technologies (Sweden) AB. |
(10) | Subsidiary of Check Point Software Technologies Inc. |
(11) | Subsidiary of R&M Computer Consultants, Inc. |
(12) | Under intercompany merger process into Check Point Software Technologies Ltd. |
(13) | Under intercompany transfer and/or merger processes. |
NAME OF SUBSIDIARY | COUNTRY OF INCORPORATION | |
Check Point Software Technologies S.A. | Argentina | |
Check Point Software Technologies (Australia) PTY | Australia | |
Check Point Software Technologies (Austria) GmbH | Austria | |
Check Point Software Technologies | Belarus | |
Check Point Software Technologies (Belgium) | Belgium | |
Check Point Software Technologies (Brazil) LTDA | Brazil | |
Check Point Software Technologies (Hong Kong) Ltd. (Guangzhou office) (1) | China | |
Hong Kong SAR 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 | 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) | Hong Kong | |
Check Point Software Technologies | India | |
Check Point Software Technologies (Italia) | Italy | |
Check Point Software Technologies Mexico S.A. de C.V. | Mexico | |
Check Point Software Technologies | ||
Check Point Software Technologies (New Zealand) Limited | New Zealand | |
Check Point Software Technologies Norway A.S. | Norway |
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Check Point Software Technologies (Poland) Sp.z.o.o. | Poland | |
CPST (Portugal), Sociedade Unipessoal Lda. | Portugal | |
Check Point Software Technologies (RMN) | Romania | |
Check Point Software Technologies (Russia) OOO | Russia | |
Check Point Software Technologies (Korea) Ltd. | ||
Check Point Software Technologies (Spain), S.A. | Spain | |
Check Point Software Technologies (Switzerland) | Switzerland | |
Check Point Software Technologies (Taiwan) Ltd. | Taiwan | |
Check Point Yazilim Teknolojileri Pazarlama A.S. | Turkey | |
Check Point Software Technologies (UK) Ltd. | United Kingdom |
(1) | Representative office of Check Point Software Technologies (Hong Kong) Ltd. |
Check Point Holding AB wholly owns the subsidiaries listed below, directly or through other subsidiaries:
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Check Point Software Technologies Inc. wholly owns the subsidiaries listed below:
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Our international
We lease 92,601 square feet in various locations in the United States. Examples of principal office locations in the U.S. are as follows:
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Outside of Israel and the U.S., we lease offices in various locations throughout the world. Our primary locations are set forth below:
Location |
Space (square feet) | ||||
Israel |
| 413,000 | *) | ||
Americas | 135,000 | ||||
Europe, Middle East and | 61,000 | ||||
Asia | 43,000 | ||||
Year Ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Region: | ||||||||||||
Americas, principally U.S. | 48 | % | 49 | % | 47 | % | ||||||
Europe | 37 | % | 37 | % | 38 | % | ||||||
Asia, Middle East and Africa | 15 | % | 14 | % | 15 | % |
Year Ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Region: | ||||||||||||
Americas, principally U.S. | 43 | % | 43 | % | 43 | % | ||||||
Europe, Middle East and Africa | 46 | % | 45 | % | 45 | % | ||||||
Asia-Pacific | 11 | % | 12 | % | 12 | % |
On February 17, 2015, we completed the acquisition of Hyperwise Ltd, a privately-held Israeli-based company. Hyperwise Ltd. has developed a unique and cutting-edge CPU-level threat prevention engine that eliminates threats at the point of pre-infection. The unrivaled exploit prevention technology provides a higher catch rate of threats and provides organizations an unmatched level of protection against attackers.
On April 2, 2015, we completed the acquisition of Lacoon Mobile Security, a privately held Israeli based company. Lacoon provides a comprehensive solution for iOS and Android, delivering real-time mobile security and intelligence to an organization’s existing security and mobility infrastructure.
Risk”.
Subscriptions includeits suite of security solutions that areand is sold as a service or annuity.
service.
Ourtypically contain multiple deliverables, such as products and services generally qualify as separate units of accounting. As such, revenues from multiple element arrangements that include products,licenses, security subscriptions and software updates and maintenance, which are separated into their various elements usinggenerally capable of being distinct and accounted for as separate performance obligations. We evaluated the relative selling price. The estimated selling price for each deliverable is based on its vendor specific objective evidence (“VSOE”), if available, third party evidence (“TPE”) if VSOE is not available, or best estimated selling price (“BESP”) if neither VSOE nor TPE is available.
Forcriteria to be distinct under Topic 606, and concluded that the products we determinedand the fair value based on BESP by reviewing historical transactions,licenses were distinct and considering several other externaldistinct in the context of the contract from the security subscription and internal factors including, but not limited to, our pricing practices.
We established VSOE of fair value for subscriptions and forthe software updates and maintenance, as the customer can benefit from the products and licenses without the services and the services are separately identifiable within the arrangement. We allocate the transaction price to each performance obligation based on relative standalone selling price basis, by using the renewal prices charged for such services.
a performance obligation when sold separately.
Goodwill
Goodwill is measured as the excess of the cost of acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. We have one operating segment, and this segment comprises our only reporting unit.
We review goodwill for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate its carrying value may not be recoverable in accordance with ASC 350 “Intangibles – Goodwill and other”. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. Goodwill impairment is deemed to exist if the carrying value of a reporting unit exceeds its fair value. In such cases, we then calculate the goodwill’s implied fair value by performing a hypothetical allocation of the reporting unit’s fair value to the underlying assets and liabilities, with the residual being the implied fair value of goodwill. This allocation process involves using significant estimates, including estimates of future cash flows, future short-term and long-term growth rates, weighted average cost of capital and assumptions about the future deployment of the long-lived assets of the reporting unit. Other factors we consider are the brand awareness and the market position of the reporting unit and assumptions about the period of time we will continue to use the brand in our product portfolio. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for our goodwill.
We perform the first step of the quantitative goodwill impairment test during the fourth quarter of each fiscal year, or more frequently if impairment indicators are present and compare the fair value of the reporting unit with its carrying value. Our annual goodwill impairment analysis did not result in impairment. As of December 31, 2015, the market capitalization of the Company was significantly higher than the equity book value.
Realizability of long-lived assets (including intangible assets)
We are required to assess the impairment of tangible and intangible long-lived assets subject to amortization, under ASC 360 “Property, Plant and Equipment”, on a periodic basis, when events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment indicators include any significant changes in the manner of our use of the assets or the strategy of our overall business, significant negative industry or economic trends and significant decline in our share price for a sustained period.
Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows from the use of the asset or asset group to the carrying amount of the asset, an impairment charge is recorded for the excess of carrying amount over the fair value. We measure fair value using discounted projected future cash flows. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for our tangible and intangible long-lived assets subject to amortization. No impairment charges were recognized during 2015, 2014 and 2013.
Although we believe we have adequately reserved for our uncertain tax positions,reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different.different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate, or changes in tax laws.upon lapse of statute of limitations. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impactaffect the provision for income taxes in the period in which such determination is made. The
Accountinginvestment until a forecasted recovery occurs. Allowance for tax positions requires judgments, including estimating reserves for potential uncertainties. While we believe the resulting tax balancescredit losses on AFS debt securities are appropriately accounted for, the ultimate outcome of such matters could resultrecognized in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material. See Note 12 to our Consolidated Financial Statements for further information regarding income taxes. We have filed or are in the process of filing local and foreign tax returns that are subject to audit by the respective tax authorities. The amount of income, tax we pay is subject to ongoing audits by the tax authorities, which often resultand any remaining unrealized losses, net of taxes, are included in proposed assessments. We believe that we have adequately provided for any reasonably foreseeable outcomes related to tax audits and settlements. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, audits are closed or when statutes of limitation on potential assessments expire. See: “Item 3 – Key Information – Risk Factors – Risks Related to Our Business and Our Market”.
Equity-based compensation expense
We account for equity-based compensation in accordance with ASC 718 “Compensation – Stock Compensation.” Under the fair value based measurement approach of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service periods. Determining the fair value of stock-based awards at the grant date as well as the determination of the amount of stock-based awards that are expected to be forfeited requires the exercise of judgment. If actual forfeitures differ from our estimates, equity-based compensation expense and our results of operations would be impacted. Performance restricted share units are subject to certain performance criteria. We recognized compensation expense for such awards when we determine it is probable that the related performance condition will be satisfied.
We estimate the fair value of employee stock options and employee stock purchase plan using a Black-Scholes-Merton valuation model. The fair value of an award is affected by our stock price on the date of grant as well as other assumptions, including the estimated volatility of our stock price over the expected term of the awards, and the estimated period of time that we expect employees to hold their stock options. The risk-free interest rate assumption is based upon United States treasury interest rates appropriate for the expected life of the awards. We use the historical volatility of our publicly traded shares in order to estimate future stock price trends. In order to determine the estimated period of time that we expect employees to hold their stock options, we use historical exercise rates of employee groups by job classification. Our expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future. We base the fair value of restricted stock units on the market value of the underlying shares at the date of grant.
Allowance for doubtful accounts
We maintain an allowance for doubtful accounts for losses that may result from the failure of our channel partners to make required payments. We estimate this allowance based on our judgment as to our ability to collect outstanding receivables. We form this judgment based on factors that may affect a customers’ ability to pay, such as age of the receivable balance and past experience. If the financial condition of our channel partners were to deteriorate, resulting in their inability to make payments, we would need to increase the allowance for doubtful accounts.
Derivative and Hedge Accounting
Approximately 59% of our operating expenses were denominated in U.S. dollars or linked to the U.S. dollar. In 2015, 2014 and 2013, we entered into foreign exchange forward contracts to hedge our balance sheet items and significant portion of our future cash flow from payments of payroll and related expenses, in order to reduce the impact of foreign currency on our results. These foreign exchange forward contracts are mainly denominated in Israeli Shekel. Our cash flow from operations could be affected from the outcome of these instruments.
The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. If the derivatives meet the definition of a hedge and are so designated, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized inaccumulated other comprehensive income until the hedged item is recognized(loss) in earnings. The ineffective portion of a derivative’s change in fair value is recognized immediately in earnings. We estimate the fair value of such derivative contracts based on forward and spot rates quoted in active markets.
Establishing and accounting for foreign exchange contracts involve judgments, such as determining the fair value of the contracts, determining the nature of the exposure, assessing its amount and timing, and evaluating the effectiveness of the hedging arrangement.
Although we believe that our estimates are accurate and meet the requirement of hedge accounting, actual results could differ from these estimates, and such difference could cause fluctuation in our recorded operating expenses.
Impairment of Marketable Securities
Our marketable securities are classified as available-for-sale securities. We assess our available-for-sale marketable securities on a regular basis for other-than-temporary impairment. Pursuant to the accounting guidance in ASC 320 “Investments- Debt and Equity Securities”, if we have a security with a fair value less than its amortized cost and we intend to sell the security or it is more likely than not we will be required to sell the security before it recovers, an other-than temporary impairment has occurred and we must record the entire amount of the impairment in earnings. If we do not intend to sell the security or it is not more likely than not we will be required to sell the security before it recovers in value, we must estimate the net present value of cash flows expected to be collected. If the amortized cost exceeds the net present value of cash flows, such excess is considered a credit loss and an other-than-temporary impairment has occurred. The credit loss component is recognized in earnings and the residual portion of the other-than-temporary impairment is recorded in other comprehensive income. The determination of credit losses requires significant judgment and actual results may be materially different than our estimate. We consider the likely reason for the decline in value, the period of time the fair value was below amortized cost, changes in and performance of the underlying collateral, the ability of the issuer to meet payment obligations, changes in ratings and market trends and conditions.
stockholders’ equity.
Year Ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Products and licenses | $ | 555,792 | $ | 520,312 | $ | 496,930 | ||||||
Subscriptions | 318,624 | 265,021 | 217,088 | |||||||||
Software updates and maintenance | 755,422 | 710,483 | 680,087 | |||||||||
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Total revenues | 1,629,838 | 1,495,816 | 1,394,105 | |||||||||
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Operating expenses(*): | ||||||||||||
Cost of products and licenses | 101,158 | 95,868 | 88,862 | |||||||||
Cost of subscriptions | 7,623 | 5,626 | 5,480 | |||||||||
Cost of software updates and maintenance | 78,468 | 74,807 | 67,680 | |||||||||
Amortization of technology | 1,808 | 240 | 612 | |||||||||
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Total cost of revenues | 189,057 | 176,541 | 162,634 | |||||||||
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Research and development | 149,279 | 133,300 | 121,764 | |||||||||
Selling and marketing | 359,804 | 306,363 | 276,067 | |||||||||
General and administrative | 91,981 | 78,558 | 72,735 | |||||||||
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Total operating expenses | 790,121 | 694,762 | 633,200 | |||||||||
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| |||||||
Operating income | 839,717 | 801,054 | 760,905 | |||||||||
Financial income, net | 34,073 | 28,762 | 34,931 | |||||||||
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Income before taxes on income | 873,790 | 829,816 | 795,836 | |||||||||
Taxes on income | 187,924 | 170,245 | 143,036 | |||||||||
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Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | ||||||
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Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
(in millions) | ||||||||
Revenues: | ||||||||
Products and licenses | $ | 497.4 | $ | 554.9 | ||||
Security subscriptions | 981.2 | 858.0 | ||||||
Software updates and maintenance | 936.1 | 917.0 | ||||||
Total revenues | 2,414.7 | 2,329.9 | ||||||
Operating expenses (*): | ||||||||
Cost of products and licenses | 99.3 | 145.6 | ||||||
Cost of security subscriptions | 57.0 | 41.4 | ||||||
Cost of software updates and maintenance | 112.3 | 105.5 | ||||||
Amortization of technology | 14.0 | 11.9 | ||||||
Total cost of revenues | 282.6 | 304.4 | ||||||
Research and development | 368.9 | 349.9 | ||||||
Selling and marketing | 747.1 | 675.2 | ||||||
General and administrative | 117.0 | 116.1 | ||||||
Total operating expenses | 1,515.6 | 1,445.6 | ||||||
Operating income | 899.1 | 884.3 | ||||||
Financial income, net | 76.5 | 44.0 | ||||||
Income before taxes on income | 975.6 | 928.3 | ||||||
Taxes on income | 135.3 | 131.4 | ||||||
Net income | $ | 840.3 | $ | 796.9 |
(*) | Including pre-tax charges for stock-based compensation, amortization of intangible assets and acquisition related expenses in the following items: |
Amortization of intangible assets and acquisition related expenses | ||||||||||||
Amortization of technology | $ | 1,808 | $ | 240 | $ | 612 | ||||||
Research and development | 6,146 | — | — | |||||||||
Selling and marketing | 3,267 | 1,866 | 2,408 | |||||||||
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Total amortization of intangible assets and acquisition related expenses | $ | 11,221 | $ | 2,106 | $ | 3,020 | ||||||
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Stock-based compensation | ||||||||||||
Cost of products and licenses | $ | 65 | $ | 66 | $ | 77 | ||||||
Cost of software updates and maintenance | 1,520 | 1,024 | 971 | |||||||||
Research and development | 11,544 | 9,284 | 9,001 | |||||||||
Selling and marketing | 16,351 | 13,339 | 11,193 | |||||||||
General and administrative | 46,822 | 39,456 | 29,870 | |||||||||
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Total stock-based compensation | $ | 76,302 | $ | 63,169 | $ | 51,112 | ||||||
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Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
(in millions) | ||||||||
Amortization of intangible assets and acquisition related expenses | ||||||||
Amortization of technology | $ | 14.0 | $ | 11.9 | ||||
Research and development | 7.0 | 7.1 | ||||||
Selling and marketing | 13.7 | 4.2 | ||||||
Total amortization of intangible assets and acquisition related expenses | $ | 34.7 | $ | 23.2 | ||||
Stock-based compensation | ||||||||
Cost of products and licenses | $ | 0.4 | $ | 0.4 | ||||
Cost of software updates and maintenance | 7.3 | 5.0 | ||||||
Research and development | 48.7 | 42.0 | ||||||
Selling and marketing | 56.3 | 43.2 | ||||||
General and administrative | 32.6 | 40.8 | ||||||
Total stock-based compensation | $ | 145.3 | $ | 131.4 |
Year Ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Revenues: | ||||||||||||
Products and licenses | 34 | % | 35 | % | 36 | % | ||||||
Subscriptions | 20 | 18 | 16 | |||||||||
Software updates and maintenance | 46 | 47 | 48 | |||||||||
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Total revenues | 100 | % | 100 | % | 100 | % | ||||||
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Operating expenses: | ||||||||||||
Cost of products and licenses | 6 | 6 | 6 | |||||||||
Subscriptions | 1 | 1 | 1 | |||||||||
Cost of software updates and maintenance | 5 | 5 | 4 | |||||||||
Amortization of technology | — | — | — | |||||||||
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Total cost of revenues | 12 | 12 | 11 | |||||||||
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Research and development | 9 | 9 | 9 | |||||||||
Selling and marketing | 22 | 20 | 20 | |||||||||
General and administrative | 5 | 5 | 5 | |||||||||
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Total operating expenses | 48 | 46 | 45 | |||||||||
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Operating income | 52 | 54 | 55 | |||||||||
Financial income, net | 2 | 2 | 2 | |||||||||
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Income before taxes on income | 54 | 56 | 57 | |||||||||
Taxes on income | 12 | 12 | 10 | |||||||||
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Net income | 42 | 44 | 47 | |||||||||
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Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Revenues: | ||||||||
Products and licenses | 20 | % | 24 | % | ||||
Security subscriptions | 41 | 37 | ||||||
Software updates and maintenance | 39 | 39 | ||||||
Total revenues | 100 | % | 100 | % | ||||
Operating expenses: | ||||||||
Cost of products and licenses | 4 | 6 | ||||||
Cost of security subscriptions | 2 | 2 | ||||||
Cost of software updates and maintenance | 5 | 5 | ||||||
Amortization of technology | 1 | — | *) | |||||
Total cost of revenues | 12 | 13 | ||||||
Research and development | 15 | 15 | ||||||
Selling and marketing | 31 | 29 | ||||||
General and administrative | 5 | 5 | ||||||
Total operating expenses | 63 | 62 | ||||||
Operating income | 37 | 38 | ||||||
Financial income, net | 3 | 2 | ||||||
Income before taxes on income | 40 | 40 | ||||||
Taxes on income | 6 | 6 | ||||||
Net income | 35 | % | 34 | % |
*) | Less than 1%. |
2022.
Total revenues in 2014 grew by 7% compared to 2013. Product and license revenues increased by $23 million, or 5%, from $497 million in 2013 to $520 million in 2014, which was attributed primarily to growth in sales of our security solutions products. Subscription revenues increased by $48 million, or 22%, from $217 million in 2013 to $265 million in 2014, which was driven by continuing shift toward Blade Packages which include our Next Generation Firewall and Next Generation Threat Prevention. In 2014, product and license and subscription revenues as a percentage of total revenues were 53%, compared to 51% in 2013. Software updates and maintenance revenues increased by $30 million, or 4%, from $680 million in 2013 to $710 million in 2014, primarily as a result of renewals of existing and new sales of maintenance contracts.
Cost of subscriptions was $8 million in 2015, $6 million in 2014 and $5 million in 2013, and represented 2%, 2% and 3% of subscription revenues in 2015, 2014 and 2013, respectively. The reduction in the percentage of these costs is attributable to the reduced cost of license fees.
2022.
In 2015,2023, amortization of technology increased from $0.2was $14 million compared to $12 million in 2014 to $1.8 million.2022. The increase in 2023 is attributed to the acquisitionacquisitions made during the year.
2023 and 2022.
U.S. dollar against the Israeli Shekel, which mitigated the gross increase.
costs in 2023 primarily stems from rises in compensation expenses for personnel and marketing activities. This rise was partially offset by a $4 million benefit due to fluctuations of various currencies against the U.S. dollar, which mitigated the gross increase.
Operating Income Margin
We had operating margin of 52% in 2015, 54% in 2014 and 55% in 2013. Our operating margin decreased by 2% and 1% in 2015 and 2014, respectively, due to the increase in compensation expense related to the growth in headcount during these years.
our acquisitions.
Market”.
We review various factors in determining whether we should recognize an impairment charge for our marketable securities including whether the Company intends to sell, or if it is more likely than not that the Company will be required to sell before recovery of the amortized cost basis of, such marketable securities, the length of time and extent to which the fair value has been less than its cost basis in such marketable securities, the credit ratings of such marketable securities, the nature of underlying collateral as applicable and the financial condition, expected cash flow and near-term prospects of the issuer. In evaluating when declines in fair value are other-than-temporary, we considered all available evidence, including market declines subsequent to the end of the period. We may recognize additional losses in the future should the prospects of the issuers of these securities continue to deteriorate. In 2015, no other-than-temporary impairment was recorded.
taxes”.
Netlast year.
requirements.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements. In addition, we have no unconsolidated special purpose financing or partnership entities that are likely to create contingent obligations.
Tabular Disclosure of Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2015:
Payments due by period | ||||||||||||||||
Total | Less than 1 year | 1-3 years | 4-5 years | |||||||||||||
(in thousands) | ||||||||||||||||
Operating lease obligations | $ | 18,554 | $ | 8,889 | $ | 8,491 | $ | 1,174 | ||||||||
Uncertain income tax positions(*) | $ | 284,108 | — | — | — | |||||||||||
Severance pay(**) | $ | 9,451 | — | — | — | |||||||||||
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Total | $ | 312,113 | $ | 8,889 | $ | 8,491 | $ | 1,174 | ||||||||
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Name |
| Independent Director (1) | Outside Director (2) | Member of Audit Committee | ||||||||||||||||||
| Member of Compensation Committee | Member of Nominating, Sustainability and Corporate Governance Committee | ||||||||||||||||||||
Gil Shwed | Chief Executive Officer | |||||||||||||||||||||
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and Director | ||||||||||||||||||||||
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Jerry Ungerman | Chairman of the Board | ✓ | ||||||||||||||||||||
Dorit Dor | Chief Technology Officer | |||||||||||||||||||||
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Nataly Kremer | Chief Product Officer and Head of Research and Development | |||||||||||||||||||||
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Roei Golan | Chief Financial Officer | |||||||||||||||||||||
| Lead Independent Director | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
Yoav Chelouche (3) | Director | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
Tzipi Ozer-Armon | Director | ✓ | ✓ | |||||||||||||||||||
Ray Rothrock (3) | Director | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
Tal Shavit Shenhav | Director | ✓ | ✓ | |||||||||||||||||||
Shai Weiss | Director | ✓ | ||||||||||||||||||||
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Jill Smith | Director | ✓ | ✓ |
(1) | “Independent Director” under the |
(2) | “Outside Director” as required by the Israeli Companies Law (see explanation below). |
(3) | “Financial expert” as required by the Israeli Companies Law and |
In 2019 Dr. Dor was named as one of Israel’s most influential women by Forbes Israel, for her leadership role in one of the world’s leading tech industries. Dr. Dor is a board member of Redis Ltd. Harvard Business School. MDA Space. Transactions”. and (ii) to our non-executive directors. year-end and were paid in 2024 with respect to compliance with pre-determined 2023 performance metrics. each annual general meeting of shareholders, each non-employee director who is to continue to serve as a non-employee director after the annual meeting is granted an option to purchase an additional the closing price of the ordinary shares on the Nasdaq Global Select Market on the applicable date of grant. of Directors compensation committee), and at least one outside director must serve on each committee of the board of directors. As of December 31, 2026. 6,450 employees as well as 277 subcontractors (194 subcontractors in 2022, 163 subcontractors in 2021) Over the past three years, the number of our employees by function was as follows: Research, development and quality assurance Marketing, sales and business development Customer support Information systems, administration, finance and operation Total Israel United States Rest of the World Total Name Gil Shwed Marius Nacht All directors and officers as a group (14 persons including Messrs. Shwed and Nacht) (4)Marius Nacht, one In 2018, Gil was awarded the prestigious Israel Prize for his contributions to the Israeli technology industry.Check Point’s founders, has served as Chairman of ourthe board of directors since September 2015 andAugust 2020, after serving as Vice Chairman of our board of directors from 20012005 until September 2015. Mr. Nacht has also served as one of our directors since we were incorporated in 1993. From 1999 through 2005, Mr. Nacht held Senior Vice President roles at Check Point. Mr. Nacht earned a B.S. (cum laude) in Physics and Mathematics from the Hebrew University of Jerusalem in 1983, and an M.S. in Electrical Engineering and Communication Systems from Tel Aviv University in 1987.Jerry Ungerman has served as Vice Chairman of our board of directors since 2005.August 2020. From 2001 to 2005, Mr. Ungerman served as our President and before that, from 1998 until 2000, he served as our Executive Vice President. Prior to joining us, Mr. Ungerman accumulated more than 30 years ofextensive experience in high-tech sales, marketing and management experience at Hitachi Data Systems (HDS), a data storage company and a member of the Hitachi, Ltd. group. He began his career with International Business Machines Corp. (IBM), a global technology products and services company, after earning a B.A. in Business Administration from the University of Minnesota.Amnon Bar-Lev, President at Check Point, is responsible for worldwide sales, global partner programs, business development and technical services for the company. Mr. Bar-Lev joined Check Point in 2005 and brings more than 15 years of high-tech sales, marketing and management experience to the organization. Prior to joining Check Point, Mr. Bar-Lev was founder and CEO of Xpert Integrated System Ltd., a leading provider of security, business-continuity and infrastructure platforms and solutions. Before forming Xpert, Mr. Bar-Lev began his career in the Israeli Air Force where he held several positions within the operational and administration units. Mr. Bar-Lev holds a B.A. in Computer Science (HONS) and Management (HONS) from Tel-Aviv University.Tal Paynebrings over 15 years of financial management experience, serving as Financial Officer of Check Point since joining in 2008 and as Chief Financial and Operations Officer since 2015. Ms. Payne oversees Check Point’s global operations and finance, including investor relations, legal, treasury, purchasing and facilities. Prior to joining Check Point, Ms. Payne served as Chief Financial Officer at Gilat Satellite Networks, Ltd., where she held the role of Vice President of Finance for over five years. Ms. Payne began her career as a certified public accountant at PricewaterhouseCoopers. Ms. Payne holds a B.A. in Economics and Accounting and an Executive M.B.A., both from Tel Aviv University. Ms. Payne is a certified public accountant.Julie Parrish, Chief MarketingTechnology Officer at Check Point, since December 2015, is responsible for leading the company’s global marketing team, overseeing strategic initiatives to drive awareness and demand forspearheads Check Point solutions. Prior to joining Check Point, Ms. Parrish was the Chief Marketing Officer at NetApp, Inc., where she had also served as senior vice president of worldwide channel sales. She has held numerous senior leadership positions in marketing and channel sales at Fortune 1000 companies including Symantec, Veritas, Nokia and 3Com (now part of HP). Ms. Parrish holds a Bachelor of Science degree in Decision Information Science from the University of Santa Clara.Dr. Dorit Dor, Vice President of Products at Check Point, manages all product and development functions for both the enterprise and consumer divisions of the company. Her core responsibilities include leading the company’s product management, research and development (R&D) and quality assurance (QA) initiatives from concept to delivery.Point’s rocket initiatives. Since joining the company in 1995, Dr. Dor has served in several pivotal roles in Check Point’s R&D organization.organization over the years, including Chief Product Officer. She has been instrumental to the organization’s growth and managed many successful product releases. Dr. Dor holds a Ph.D. and M.S degree in computer science from Tel-Aviv University, in addition to graduating cum laude for her B.S. SheDr. Dor has been published in several influential scientific journals for her research on graph decomposition, median selection and geometric pattern matching in d-dimensional space. In 1993, she won the Israel National Defense Prize.directorboard member of Arava Bio-TechTower Semiconductor Ltd. He is also, Malam Team Ltd., and until February 2024 served as an external director of the Tel Aviv Stock Exchange (TASE). Mr. Chelouche earned a B.A. in Economics and Statistics from Tel Aviv University, and an M.B.A. from INSEAD University in Fontainebleau, France.Irwin Federman1995. Mr. Federman has also served2006 and as one of our outside directors under the Israeli Companies LawLead Independent Director since 2000. Mr. Federman has been a General Partner of U.S. Venture Partners, a venture capital firm, since 1990. Mr. Federman serves as director of SanDisk Corp., Mellanox Technologies Ltd., Intermolecular, Inc. and a number of private companies. Mr. Federman received a B.S. in Economics from Brooklyn College.Guy Gecht has served on our board of directors since 2006.August 2020. Mr. Gecht has also served as one of our outside directors under the Israeli Companies Law since 2006. Mr. Gecht served as Logitech’s interim CEO from June to December 2023, and has been a member of Logitech’s board of directors since September 2019, chairing the Technology and Innovation Committee. He is the Chief Executive Officerformer co-CEO of E.Merge Technology Acquisition Corp., a SPAC focused on Cyber Security, AI, and Enterprise Software, a role he held from 2020 to October 2022. Prior to co-founding E.Merge, Mr. Gecht was CEO of Electronics Forfor Imaging Inc. (EFI), a company that providesspecializing in digital imagingprinting technologies, from 2000 to 2018. Joining EFI in 1995, he also held roles as president, vice president, general manager of Fiery products, and print management solutions for commercial and industrial applications and has served in this position since January 2000. From October 1995 until January 2000,director of software engineering. Earlier, Mr. Gecht held variousmanagement positions with EFI, including Presidentat Interro Systems and Apple Israel. Additionally, he was an officer in the Israeli Defense Forces, leading an engineering team in one of the company. Prior to joining EFI, Mr. Gecht held various software engineering positions with technology companies.IDF high-tech divisions. Mr. Gecht holds a B.S. degree in Computer Sciencecomputer science and Mathematicsmathematics from Ben-GurionBen Gurion University in Israel.Dan Propper2006. Mr. Propper is the Chairman of the Board for the Osem Group, a leading Israeli manufacturer of food products. Mr. Propper servedJanuary 2023. Ms. Ozer- Armon serves as the Chief Executive Officer of Osem for 25 years until April 2006. In addition to his role at Osem, from 1993 until 1999, Mr. Propper served as PresidentLumenis Ltd. Since May 2012. Before joining Lumenis, Ms. Ozer- Armon headed the Japanese market activities of Israel’s Manufacturers’ Association, an independent umbrella organization representing industrial enterprises in Israel, and as Chairman of the Federation of Economic Organizations in Israel, which unites economic and business organizations that represents all business sectors in Israel. Mr. Propper has received numerous awards for his contributions to the Israeli industry and economy, including an honorary Doctorate from the Technion – Israel Institute of Technology in 1999. Mr. Propper serves as a member of the board of directors of Osem Investments Ltd., Teva Pharmaceutical Industries Ltd. and served as Senior Vice President of Sales and Marketing at SanDisk Corporation. Previously, Ms. Ozer-Armon also served as VP & General Manager of MSystems Ltd. Ms. Ozer-Armon is a numberdirector of private companies. Mr. PropperStrauss Group Ltd., Similarweb Ltd., and ICL Group Ltd. Ms. Ozer-Armon holds a B.A. magna cum laude in Economics and an M.B.A. degree majoring in Finance and Marketing from Tel Aviv University and she is also a memberan AMP graduate of the board of governors of the Technion, the Weizmann Institute of Science, TA University and Ben-Gurion University in Israel. Mr. Propper earned a B.Sc. (summa cum laude) in Chemical Engineering and Food Technology from the Technion. From October 2011 to September 2014, Mr. Propper served as the Chairman of the Supervisory Council of the Bank of Israel.2000.2000 and as a director under Roku, Inc. Mr. Rothrock is a Partner emeritus at Venrock, a venture capital firm, where he was a member since 1988 and a general partner since 1995. He retired from Venrock in 2013. Presently, Mr. Rothrock is the Chairman and Chief Executive Officer of RedSeal, Inc., a cybersecurity analytics company. Mr. Rothrock served as the Chief Executive Officer of RedSeal, Inc. from February 2014 until May 2020. Mr. Rothrock is also a director of Nasdaq-listed Roku, Inc, and a number of private companies. Mr. Rothrock is a member of the Massachusetts Institute of Technology Corporation, and a Trustee of the University of Texas and Texas A&M Investment Management Company. Mr. Rothrock received a B.S. in Engineering from Texas A&M University, an M.S. from the Massachusetts Institute of Technology and an M.B.A. from the Harvard Business School.David Rubner1999. Mr. Rubner is ChairmanNovember 2023. Ms. Smith brings more than 25 years of international leadership experience, including 17 years as chief executive officer of private and public companies in the technology and information services markets. Most recently, Ms. Smith served as the President and Chief Executive Officer of Rubner Technology Ventures Ltd.Allied Minds, an IP commercialization company, from March 2017 through June 2019, and prior to that she served as Chairman, Chief Executive Officer and President of DigitalGlobe Inc., a venture capital firm,global provider of satellite imagery products and isservices. Ms. Smith started her career as a general partnerconsultant at Hyperion Israel Advisors Ltd., a venture capital fund. PriorBain & Company, where she rose to founding Rubner Technology Ventures, Mr. Rubner servedbecome Partner. She subsequently joined Sara Lee as Vice President, and went on to serve as President and Chief Executive Officer of ECI Telecommunications Ltd.,eDial, a providerVoIP collaboration company, and of telecommunications networking infrastructure solutions from September 1991 to February 2000. Prior to his appointmentSRDS, a business-to-business publishing firm. She also served as PresidentChief Operating Officer of Micron Electronics, and Chief Executive Officer, Mr. Rubner held various management positions at ECI Telecom. Mr. Rubnerco-founded Treacy & Company, a consulting and boutique investment business. Ms. Smith currently serves as a memberdirector of the boards of directors of Messaging International Ltd.Aspen Technology, Inc., Radware Ltd., Eltek Ltd.,R1 RCM Inc. and a number of private companies. Mr. Rubner is also a member of the Board of Trustees of Jerusalem College of Technology and Shaare Zedek Hospital. Mr. Rubner holds a B.S. in Engineering from Queen Mary College, University of London and an M.S. in Electrical Engineering from Carnegie Mellon University, and he was a recipient of the Industry Prize in 1995.thesuch company’s activities. She consults with companies undergoing structural change with emphasis on organizational growth through effective mergers and acquisitions and a redefining of management roles in order to meet market changes. and Marius Nacht owned more than one percent of our outstanding shares as of December 31, 2015.2023. Additional details are provided in this Item 6, under the caption “Share ownership” and in “Item 7 – Major Shareholders and Related Party Transactions.”Marius Nacht, Jerry Ungerman, Dan Propper, David Rubner and Dr. Tal Shavit Shenhav, Tzipi Ozer-Armon, Jill Smith and Shai Weiss will expire at our 20162024 annual meeting of shareholders. The termsterm of Irwin Federman and Ray Rothrock will expire at our 20172026 annual meeting of shareholders and the terms of Yoav Chelouche and Guy Gecht will expire at our 20182024 annual meeting of shareholders.$2.5$3.7 million for the year ended December 31, 2015.2023. These amounts include $0.15$0.3 million that were set aside or accrued to provide for severance and retirement insurance policies in 2015.2023. These amounts do not include amounts accrued for expenses related to business travel, professional and business association dues and other business expenses reimbursed to officers. We do not have any agreements with our directorsdirector who areis also officersan officer that provide for benefits upon termination of employment, except for severance payments mandated by Israeli law for all employees employed in Israel.in 2015 (in thousands of U.S dollars) (referred to as the “Covered Executives”“Covered Executives”):Director. Director. Cash compensation expenses recorded in 20152023 consisted of $14.0$19.4 thousands in salary expenses, and $12.7$5.8 thousands in benefit costs. Mr. Shwed requested to forego his salary and bonus for 2015,2023, as he has done forin the past several years.past. Following consideration of Mr. Shwed’s request, our compensation committee and board of directors have determined that Mr. Shwed will not receive a bonus for 2015,2023, and willdid not receive any cash compensation for 20152023 except for an amount equal to the minimum wage required under Israeli law.Mr. Amnon Bar-Lev, President. 20152023 included $384.4$374.9 thousands in salary expenses and $85.7$87.4 thousands in benefit costs.Dr. Dorit Dor, Vice President, Products. 20152023 included $305.0$232.7 thousands in salary expenses and $70.4$63.3 thousands in benefit costs.Ms. Tal Payne,FinancialServices Officer,. Compensation expenses recorded in 20152023 included $368.0$265.9 thousands in salary expenses and $84.7$66.7 thousands in benefit costs.Miryam Steinitz, Head of Human Resources. Rupal Hollenbeck, President. Compensation expenses recorded in 20152023 included $180.9$688.0 thousands in salary expenses and $45.8$85.0 thousands in benefit costs.to our Covered Executives (other than the Chief Executive Officer) upon compliance with predetermined 20152023 performance parameters set by the Compensation Committee and the Board of Directors. The 20152023 cash bonus expenses for Mr. Bar-Lev, Dr. Dor, Ms. PayneMr. Greenberg, Mr. Schusheim and Ms. SteinitzHollenbeck were $413.9, $267.8, $359.8$322.8 thousands, $119.7 thousands, $140.4 thousands, and $128.1,$467.3 thousands, respectively. TheAs noted above, Mr. Shwed did not receive a cash bonus for 2023. For the non-U.S. executives, the cash compensation amounts paid were denominated in Israeli Shekels and converted into U.S. Dollars at the exchange rate as of year-end.$40,000$40.0 thousands for the services provided to our board of directors and an annual cash retainer of $7,500$7.5 thousands for each committee membership. In addition, we pay the chairman of our board of directors and the lead independent director an annual cash retainer of $20.0 thousands, the chair of our audit committee an annual cash retainer of $7,500$7.5 thousands and the chair of each of our nominating, sustainability and corporate governance committee and compensation committee an annual cash retainer of $2,500.$2.5 thousands. Only directors who are not officers receive compensation for serving as directors.50,00025,000 ordinary shares and restricted share units (RSUs) with a value of $200.0 thousands on the date of the initial election or appointment, vesting in equal annual installments over a four-year period. On the date of25,0005,000 ordinary shares and RSUs with a value of $150.0 thousands, of which 50% vest six months after the grant date, 25% vest nine months after the grant date, and another 25% vest a year after the grant date, provided that the director has served as a non-employee director for at least six months prior to the date of the annual meeting. The directors in office immediately prior to the date of initial appointment or election, or of the annual meeting, as applicable, may determine to reduce the initial or annual grant to all non-employee directors or specific non-employee directors.All options to directors are at an exercise price equal to 100% of the closing price of the ordinary shares on the NASDAQ Global Select Market on the date of grant.In line with our goal of aligning the compensation of Mr. Gil Shwed, our Chief Executive Officer and Director, with the objectives of our shareholders, on June 9, 2015, we granted Mr. Shwed options to purchase 1.60.5 million ordinary shares at an exercise price equal to 100% of the closing price of the ordinary shares on the NASDAQNasdaq Global Select Market on the date of the grant, vesting gradually over a period of 4 years.Asfour years with the vesting of December 31, 2015, our executive officers and directors held options to purchase an aggregate0.2 million ordinary shares (40% of approximately 12.23 million shares and held 96,486 restricted stock units under our stock option and equity incentive plans. The exercise prices of these options range between $ 26.47 and $ 83.59, and their expiration dates range between July 2016 and June 2022. the grant) also subject to long-term company performance goals.2015,2023, we granted our executive officers and directors options to purchase an aggregate of approximately 2.350.6 million shares and approximately 32.23 thousand0.07 million RSUs and PSUs under our equity incentive plans. The exercise price of these options was $80.67-range between $126.16-$83.59,136.26, and their expiration is January 2022-June 2022. Other than as specified in the share ownership table under the caption “Share ownership” below, none of ourdates range between December 2029 and October 2030.holds more than 1%in 2023 were granted with an exercise price equal to 100% of our outstanding shares.20152023 for Mr. Shwed, Mr. Bar-Lev, Dr. Dor, Ms. PayneMr. Greenberg, Mr. Schusheim and Ms. Steinitz,Hollenbeck of $35,717.1, $4,028.3, $2,932.7, $2,499.7$17.9 million, $5.4 million, $1.4 million, $1.3 million and $576.1,$1.7 million, respectively. Assumptions and key variables used in the calculation of such amounts are described in Note 2 u.2y to our audited consolidated financial statements included in Item 18 of this Annual Report. All equity-based compensation grants to our Covered Executives were made in accordance with the parameters of our company’s executive compensation policy and were approved by the company’s Compensation Committee and Board of Directors, and, in the case of the equity-based compensation granted to the Chief Executive Officer, also by the company’s shareholders in accordance with Israel’sthe Israeli Companies Law.Practicesten members.eight members, including three outside directors in accordance with the requirements of the Israeli Companies Law. See “Outside and Independent Directors”. Under our articles of association, the number of directors on our board is to consist of betweenbe no less than six and twelve members.no more than twelve. Each director (other than an outside director as described below) is elected to serve until the next annual general meeting of shareholders and until his or her successor has been elected. Each executive officer is elected by the board of directors and serves at the discretion of the board. All of our executive officers and directors, other than non-employee directors, devote substantially all of their working time to our business. There are no family relationships among any of our directors, officers or key employees.OurIrwin Federman, Guy Gecht and Ray Rothrock has “financial and accounting expertise,” and each of Guy Gecht and Ray Rothrock has “professional expertise”.2015,2023, Yoav Chelouche, Irwin Federman, Guy Gecht and Ray Rothrock are our outside directors under the Israeli Companies Law. Yoav Chelouche’s and Guy Gecht’s term of office will expire in 2018, and Irwin Federman’s2024, and Ray Rothrock’s term of office will expire in 2017.NASDAQNasdaq Global Select Market, requires issuers to comply with various corporate governance practices. Under the rules applicable to us as a foreign private issuer, we are required to have a majority of independent directors within the meaning of the applicable NASDAQNasdaq regulations. Our board of directors complies with these requirements by including a majority of members who are independent directors within the meaning of the applicable NASDAQNasdaq regulations.constituteconsist of individuals complying with certain independence criteria prescribed by the Israeli Companies Law, as well as certain other recommended corporate governance provisions. Although we have not included these provisions in our articles of association because our board of directors already complies with the independence requirements and the corporate governance rules of the NASDAQNasdaq Global Select Market, as described below, a majority of our board of directors and all the members of our audit committee, compensation committee and nominating, sustainability and corporate governance committee are directors who comply with the independence criteria prescribed by the Israeli Companies Law.AsDecember 31, 2015,directors has determined that each of Yoav Chelouche, Irwin Federman, Guy Gecht, Dan Propper,Tzipi Ozer-Armon, Ray Rothrock, David Rubner and Tal Shavit are ourShenhav, Jill Smith, Jerry Ungerman, and Shai Weiss is an independent directorsdirector under the applicable NASDAQNasdaq regulations and the Israeli Companies Law. Our independent directors have regularly held meetings at which only independent directors are present.committeeCommittee. Under the Israeli Companies Law, the board of directors of any public company must establish an audit committee. The audit committee must consist of at least three directors, must include all of the outside directors (including one outside director serving as the chair of the audit committee), and a majority of the committee members must comply with the director independence requirements prescribed by the Israeli Companies Law.NASDAQNasdaq regulations also require us to maintain an audit committee consisting of at least three directors, all of whom must be independent under the NASDAQNasdaq regulations applicable to audit committee members. Irwin Federmanmembers and each of whom is financially literate and one of whom has accounting or related financial management expertise. Yoav Chelouche is the chairman of the audit committee. Yoav Chelouche, Guy Gecht, Tzipi Ozer-Armon and Ray Rothrock serve as the other members of our audit committee. The audit committee has adopted ana written audit committee charter as required by the NASDAQNasdaq regulations. is required to monitor whether there are any deficiencies in the administration of our company, including by consulting with the internal auditor and independent accountant, to review, classify and approve related party transactions and extraordinary transactions, to review the internal auditor’s audit plan and to establish and monitor whistleblower procedures.committeeCommittee. Under the Israeli Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee must consist of at least three directors, include all of the outside directors (including one outside director serving as the chair of the compensation committee), and a majority of the committee members must comply with the director independence requirements prescribed by the Israeli Companies Law.committeecommittee’s members may not participate in the committee’s meetings other than to present a particular issue; provided, however, that an employee that is not a controlling shareholder or its relative may participate in the committee’s discussions but not in any vote, and thevote. The company’s legal counsel and corporate secretary may participate in the committee’s discussions and votes if requested by the committee.NASDAQ regulationsNasdaq rules also require us to maintain a compensation committee consisting of at least two independent directors. Each of the members of the compensation committee is required to be independent under Nasdaq rules relating to compensation committee members, which are different from the general test for independence of board and committee members. Each of the members of our compensation committee satisfies those requirements. Ray Rothrock is the chairman of the compensation committee. Yoav Chelouche Irwin Federman and Guy Gecht serve as the other members of our compensation committee. The compensation committee has adopted a written compensation committee charter.committeeSustainability and Corporate Governance Committee. The nominating, sustainability and corporate governance committee identifies prospective board candidates, recommends nominees for election to our board of directors, develops and recommends board member selection criteria, considers committee member qualification, supervises the selection and composition of committees of our board of directors, and provides oversight in the evaluation of our board of directors and each committee. David Rubnercommittee, oversees our policies, programs and strategies related to environmental, social and governance (ESG) matters and develops and recommends to the board a set of corporate governance guidelines. Shai Weiss is the chairman of the nominating, sustainability and corporate governance committee. Irwin Federman, Ray Rothrock and Tal Shavit Shenhav and Jill Smith serve as the other members of our nominating, sustainability and corporate governance committee. The nominating, sustainability and corporate governance committee has adopted a written nominating committee charter.New Israeli RegulationsOn March 30, 2016, the Israeli Companies Law Regulations were amended to reduce certain duplicative regulatory burden to which Israeli companies publicly-traded on NASDAQ, such as Check Point, are subject to.Generally, pursuant to the new regulations, an Israeli company traded on NASDAQ that does not have a “controlling shareholder” (as defined in the Israeli Companies Law) will be able to elect not to appoint Outside Directors to its Board of Directors and not to comply with the Audit Committee and Compensation Committee composition and chairman requirements of the Israeli Companies Law (as described above under the headings “—Outside and Independent Directors” and “—Committees of our Board of Directors”);provided, the company complies with the applicable NASDAQ independent director requirements and the NASDAQ Audit Committee and Compensation Committee composition requirements.Accordingly, Check Point will be eligible to benefit from the relief provided by the new amended Israeli regulations.We are currently evaluating the effect the new regulations will have on our Board of Directors and Board committees. At this time, we do not expect any changes to the composition of the Audit Committee and Compensation Committee and we expect that our four Outside Directors (Yoav Chelouche, Irwin Federman, Guy Gecht and Ray Rothrock) will transition in due course to become regular independent directors.2015,2023, we had 3,898 employees. As of December 31, Function 2015 2014 2013 1,296 1,048 1,055 1,650 1,252 1,158 558 504 436 394 354 341 3,898 3,158 2,990 From time to time, we also engage a limited number of subcontractors. As of December 31, 2015, we had 76 contractors. Research, development and quality assurance 1,889 1,807 1,677 Marketing, pre sale, sales and business development 2,869 2,678 2,509 Customer support 1,027 926 905 Information systems, administration, finance and operation 665 615 551 Total 6,450 6,026 5,642 As of December 31, Function 2015 2014 2013 1,803 1,486 1,437 926 776 712 1,169 896 841 3,898 3,158 2,990 Israel 2,672 2,525 2,416 Americas 1,973 1,813 1,660 Rest of the World 1,805 1,688 1,566 Total 6,450 6,026 5,642 2016.2024. Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission.2016.2024. Number of
shares
beneficially
owned (1) % of
class of
shares (2) Title of securities
covered by the
options Number of
options
and RSUs (3) Exercise price of
options Date of expiration of
options 31,263,878 17.5 % Ordinary shares 6,300,000 $ 29.49 - $83.59 06/28/2017-06/08/2022 21,214,986 12.3 % Ordinary shares 54,242,118 30.0 % Ordinary shares 7,952,500 $ 26.47 - $83.59 07/28/2016-06/08/2022 Name
shares
beneficially
owned (1)(5)
class of
shares
covered by the
options, RSUs and PSUs
options, RSUs, and PSUs (3)
options
optionsGil Shwed 29,804,551 25.6 %(4) Ordinary shares 4,920,000 $ 114.23-$131.96 06/06/2024-08/02/2030 All directors and officers as a group (13 persons including Mr. Shwed)(5) 30,851,436 26.2 % Ordinary shares 5,854,148 $ 91.78-$131.96 06/06/2024- 10/31/2030 (1) restricted share unitsRSUs and PSUs that vest within 60 days after February 29, 2016.2024.(2)
(3) | Number of options immediately exercisable or exercisable and |
(4) | The share amount and holding percentage includes unexercised stock options. Without such unexercised stock options, the 24,884,551 issued ordinary shares held by Gil Shwed represented 22.0% of |
(5) | Other than Mr. Shwed, none of our executive officers and directors beneficially |
Plan | Outstanding options, RSUs & ESPP Shares | Options outstanding exercise price | Date of expiration | Options exercisable | ||||||||||||
2005 United States Equity Incentive Plan | 1,002,467 | $ | 26.47-$83.59 | 07/28/2016-06/08/2022 | 561,750 | |||||||||||
2005 Israel Equity Incentive Plan | 12,704,750 | $ | 26.47-$83.59 | 07/28/2016-07/28/2022 | 7,236,250 | |||||||||||
Employee Stock Purchase Plan | 476,717 |
Total shares reserved for outstanding options, RSU and for future grants under the amended equity incentive plans is 17,490,152, which is 9.1% of (i) our total outstanding ordinary shares, plus (ii) our ordinary shares reserved for issuance under our amended equity incentive plans, in each case as of December 31, 2015.
2023:
Plan | Outstanding options, RSUs & PSUs | Options outstanding exercise price | Date of expiration of options | Options exercisable | |||||||||
2005 United States Equity Incentive Plan | 1,219,079 | $97.61-$136.26 | 06/06/2024-10/31/2030 | 370,436 | |||||||||
2005 Israel Equity Incentive Plan | 8,781,708 | $91.78-$131.96 | 06/06/2024-08/02/2030 | 5,532,046 | |||||||||
Dome9 Equity Incentive Plan | 226 | $12.99 | 12/21/2027 | 226 |
under the Equity Plans combined.
event
Name of Five Percent Shareholders | No. of shares beneficially held (1) | % of class of shares (2) | No. of shares beneficially held (1) | % of class of shares (2) | No. of shares beneficially held (1) | % of class of shares (2) | ||||||||||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||
Gil Shwed | 31,263,862 | 17.3 | % | 31,385,828 | 16.5 | % | 31,436,485 | 15.8 | % | |||||||||||||||
Marius Nacht | 21,214,986 | 12.1 | % | 21,214,986 | 11.5 | % | 21,214,986 | 11 | % |
Name of Five Percent Shareholders | No. of shares beneficially held (1)(3) | % of class of shares (2) | No. of shares beneficially held (1) | % of class of shares (2) | No. of shares beneficially held (1) | % of class of shares (2) | ||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Gil Shwed | 29,744,539 | 25.3 | %(3) | 29,149,766 | 23.3 | % | 28,369,738 | 21.4 | % |
(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. |
(2) | If a shareholder has the right to acquire ordinary shares by exercising stock options exercisable within 60 days from December 31st, of each of the years shown in this table, these Ordinary 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) | The share amount and holding percentage includes the unexercised stock options. Without such unexercised stock options, the 24,884,539 issued ordinary shares held by Gil Shwed represented 22.0% of the outstanding ordinary shares and voting rights as of December 31, 2023. |
As of December 31, 2014, we had employee and payroll accrual for related parties in total of $3 million, for the years 2002 through 2007. As of December 31, 2015, the accrual amounted to a total of $2.6 million for the years 2002 through 2007.
Statements”.
In November 2013, we reached a settlement agreement (the “Settlement Agreement”), withparticular, following audits of the Company’s 2016 through 2020 corporate tax returns, the Israeli Tax Authorities (“ITA”Authority (the “ITA”) issued in January 2023 orders for the years 20022016 through 2011 and accordingly, we and2019 challenging our positions on several issues, including matters such as our position to claim a tax credit made for foreign taxes withheld on income payments that was due to us outside of Israel, taxation of interest earned outside of Israel by a wholly-owned Singapore subsidiary which the ITA notifiedis seeking to tax in Israel and deductibility of expenses attributed to employee stock options. The ITA orders also contest our positions on various other issues. The ITA therefore demanded the courtpayment of additional taxes in the aggregate amount of NIS 479 million (approximately $132 million), not including an amount of NIS 421 million (approximately $116 million) related to expenses that will be deductible in future years, with respect of these four tax years (these amounts include interest and indexation through December 31, 2023). We believe we have reachedgood arguments against these orders and on November 29, 2023, filed an agreement outsideappeal to the District Court of Tel Aviv against these orders.
Further, wepositions on the matters raised and, if it does not, the ITA may also issue an order with respect to the 2020 tax year.
The following table lists the high and low prices of the ordinary shares on the NASDAQ Global Select Market for the periods indicated:
High | Low | |||||||
Year | ||||||||
2011 | 61.60 | 43.20 | ||||||
2012 | 65.00 | 40.60 | ||||||
2013 | 64.95 | 44.41 | ||||||
2014 | 80.82 | 60.50 | ||||||
2015 | 88.49 | 65.09 | ||||||
2014 | ||||||||
First quarter | 69.92 | 62.31 | ||||||
Second quarter | 68.50 | 60.50 | ||||||
Third quarter | 72.78 | 63.70 | ||||||
Fourth quarter | 80.82 | 65.27 | ||||||
2015 | ||||||||
First quarter | 86.00 | 75.35 | ||||||
Second quarter | 88.49 | 78.12 | ||||||
Third quarter | 86.71 | 65.09 | ||||||
Fourth quarter | 87.98 | 77.74 | ||||||
Most recent six months | ||||||||
September 2015 | 81.25 | 76.31 | ||||||
October 2015 | 85.14 | 77.74 | ||||||
November 2015 | 87.30 | 80.31 | ||||||
December 2015 | 87.98 | 80.54 | ||||||
January 2016 | 80.53 | 71.64 | ||||||
February 2016 | 84.63 | 75.20 | ||||||
March 2016 | 85.52 | 81.77 |
On March 31, 2016, the last reported sale price of our ordinary shares on the NASDAQ Global Select Market was $87.47 per share.
Exhibits”.
Description of ordinary shares
All of the issued
Dividend and liquidation rights. The holders of our ordinary shares will be entitled to their proportionate share of any cash dividend, share dividend, or dividend in kind distributed with respect to our ordinary shares. This right may be changed if shares with special dividend rights are authorized in the future. Under the Israeli Companies Law, we may declare dividends out of the higher of retained earnings and earnings generated over the two most recent years (the profits test), in either case, provided that our board of directors reasonably believes that the dividend will not render us unable to meet our current or foreseeable obligations when due (the solvency test). Even if we do not comply with the profits test, a court may allow us to distribute a dividend as long as the court is convinced that the solvency test is fulfilled.
Our articles of association provide that the board of directors may declare and distribute interim dividends without the approval of the shareholders. Shareholder approval is required for the payment of a final dividend proposed by the board of directors, but shareholders cannot approve a final dividend that is greater than the board’s proposal. In addition, once an interim dividend has been declared and paid, it cannot be affected by any subsequent resolution of the shareholders or the shareholders’ failure to approve a final dividend.
In the event of our liquidation, holders of our ordinary shares have the equal right to participate in the distribution of assets remaining after payment of liabilities. This right may be changed if shares with special liquidation or dividend rights are issued in the future.
Voting, shareholder meetings and resolutions. Holders of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. This right may be changed if shares with special voting rights are issued in the future.
Under the Israeli Companies Law, we must hold an annual meeting of our shareholders once every calendar year and not more than 15 months from the date of the previous annual shareholders’ meeting. The board of directors determines the location of the meeting, which can be in Israel or elsewhere. In addition, our board of directors may, in its discretion, convene additional meetings as “special shareholders’ meetings.” The board of directors is also required to convene a special shareholders’ meeting upon the demand of any of the following: (i) two directors; (ii) one quarter of the directors in office; (iii) the holder or holders of 5% of our outstanding share capital and 1% of our voting power; or (iv) the holder or holders of 5% of our voting power. Our articles of association provide that each shareholder of record is entitled to receive prior notice of any shareholders’ meeting in accordance with the requirements of the Israeli Companies Law. The law currently provides for at least 21 days’ notice, with certain specified matters requiring at least 35 days’ notice. For purposes of determining the shareholders entitled to notice and to vote at such meeting, the board of directors may fix a record date, which shall be between 4 and 40 days prior to the date of the meeting.
The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy and holding more than 50% of the voting power. The chairman of the board of directors presides at each of our shareholders’ meetings. The chairman of the meeting does not have an additional or casting vote. A meeting adjourned for lack of a quorum will be adjourned to the same day in the following week, at the same time and place, or to the day, time and place that the chairman determines, with the consent of the holders of a majority of the shares present in person or by proxy and voting on the question of adjournment. At the reconvened meeting, the required quorum consists of any two shareholders, regardless of the number of shares they hold or represent.
The Israeli Companies Law requires that shareholders approve certain transactions, actions and arrangements, as described below under the caption “Approval of certain transactions; obligations of directors, officers and shareholders.”
Shareholders’ resolutions will be deemed adopted if approved by the holders of a majority of the voting power voting at a shareholders’ meeting, except for the following decisions which require a different majority:
Generally, the approval of such a transaction may not extend for more than three years, except that in the case of an extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest that does not concern terms of compensation for service as an office holder, or as a service provider to the company, the transaction may be approved for a longer period if the audit committee determines that the approval of the transaction for a period longer than three years is reasonable under the circumstances.
Transfer of shares. Fully paid ordinary shares are issued in registered form and, subject to applicable securities laws, may be transferred freely.
Election of directors. Our ordinary shares do not have cumulative voting rights in the election of directors. Therefore, the holders of shares representing more than 50% of the voting rights at the shareholders’ meeting, voting in person or by proxy, have the power to elect any or all of the directors whose positions are being filled at that meeting, subject to the special approval requirements for outside directors described above.
Chairman of the Board. Under the Israeli Companies Law, the general manager of a company (or a relative of the general manager) may not serve as the chairman of the board of directors, and the chairman of the board of directors (or a relative of the chairman of the board of directors) may not serve as the general manager, unless approved by the shareholders by a special majority vote prescribed by the Israeli Companies Law. In any event, the shareholder vote cannot authorize the appointment for a period longer than three years, which period may be extended from time to time by the shareholders with a similar special majority vote. The chairman of the board of directors shall not hold any other position with the company (except as general manager if approved in accordance with the above procedure) or in any entity controlled by the company, other than as chairman of the board of directors of a controlled entity, and the company shall not delegate to the chairman duties that, directly or indirectly, make him or her subordinate to the general manager.
Transfer agent and registrar. The transfer agent and registrar for our ordinary shares is American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 10038 U.S.A., Tel.: 718-921-8124.
Description of preferred shares
We have 5,000,000 preferred shares authorized. Our articles of association provide that the board of directors has the authority to issue the preferred shares in one or more series and to fix the rights, preferences, privileges and restrictions of the preferred shares, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series, without further vote or action by the shareholders. If this provision withstands judicial scrutiny under the Israeli Companies Law, the issuance of preferred shares may have the effect of delaying, deferring or preventing a change in control of us without further action by the shareholders. For example, the board of directors could issue preferred shares with voting and conversion rights that may adversely affect the voting power of the holders of ordinary shares, including the loss of voting control to others.
Anti-takeover measures
Some of the provisions of our articles of association and Israeli law could, together or separately:
Israeli corporate law regulates acquisitions of shares through tender offers and mergers; requires special approvals for transactions involving directors, officers or significant shareholders; and regulates other matters that may be relevant to these types of transactions.
Under the Israeli Companies Law, in the case of a merger, the shareholders and board of directors of each of the merging companies generally need to approve the merger. Shares held in one of the merging companies by the other merging company (or certain of its affiliates) are not counted toward the required approval. If a merging company has different classes of shares, the approval of each class may be required. Under the Israeli Companies Law, a merger of our company requires the approval of a supermajority of at least 75% of our shares that are voted on the merger. A merger cannot be completed until 30 days have passed after shareholder approval of each of the merging companies, all approvals have been submitted to the Israeli Registrar of Companies and 50 days have passed from the time that a proposal for approval of the merger is filed with the Registrar of Companies. In addition, a creditor can seek to block a merger on the ground that the surviving company will not be able to meet its obligations.
The Israeli Companies Law also provides that an acquisition of shares in a public company, such as our company, must be made by means of a tender offer, if as a result of the acquisition, the purchaser would become the holder of 25% or more of the voting rights in the company (unless there is another 25% shareholder of the company, or the shares are acquired from another 25% shareholder). Similarly, the Israeli Companies Law provides that an acquisition of shares in a public company, such as our company, must be made by means of a tender offer, if as a result of the acquisition the purchaser would hold more than 45% of the shares of the company (unless there is another holder of more than 45% of the shares of the company, or the shares are acquired from another holder of more than 45% of the shares of the company). These rules do not apply if the acquisition takes the form of a merger.
Regulations promulgated under the Israeli Companies Law provide that these tender offer requirements do not apply to companies whose shares are listed for trading outside of Israel if, according to the law in the country in which the shares are traded or the rules and regulations of the stock exchange on which the shares are traded:
The Israeli Companies Law provides specific rules and procedures for the acquisition of shares held by minority shareholders if the majority shareholder holds more than 90% of the outstanding shares. Israeli tax law treats specified acquisitions, including a stock-for-stock swap between an Israeli company and a foreign company, less favorably than does U.S. tax law.
In addition, our articles of association contain certain provisions that may make it more difficult to acquire us, such as the ability of our board of directors to issue preferred shares, as described above under the caption “Description of preferred shares.”
Our articles of association provide that we may not engage in any business combination with an interested shareholder for a period of three years after the date that the shareholder became an interested shareholder, unless:
A business combination includes:
In general, the articles of association define an interested shareholder as any entity or person that beneficially owns 15% or more of our outstanding voting shares and any entity or person affiliated with, controlling or controlled by such entity or person.
In addition, our shareholders are not able to cumulate votes at a meeting, which may require the acquirer to hold more shares to gain representation on the board of directors than if cumulative voting were permitted.
Approval of certain transactions; obligations of directors, officers and shareholders
required as well.
Approval
schools.
power
23% since 2018.
Technological preferred enterprise.
The Company elected
We have derived, and expect to continue to derive, a substantial portion of our operating income from our Preferred Enterprise facilities. We are, therefore, eligible for reduced tax rates for an unlimited period.
January 1, 2017.
Prior
and accounting purposes.
Pursuant to a temporary
On November 11, 2013, the Company reached a settlement agreement with the ITA which provided (i) the full settlement of all disputes with the ITA with respect to the tax years 2002 through 2011, and (ii) the release of all the Company’s Trapped Earningsassessments through the 2015 tax year ended December 31, 2011. In accordanceare considered final.
guidance becomes available.
Effective from January 1, 2003, the Tax Reform Legislation
exceeded NIS 698,280.
exceeded NIS 698,280.
exceeded NIS 698,280.
rate can reach 50%.
residence.
Capital
taxpayer.
We refer to any of the above as a “U.S. Shareholder”. If a partnership owns the ordinary shares, the U.S. federal income tax consequences relating to an investment in the ordinary shares will depend in part upon the status of the partner and the activities of the partnership. Such a partner or partnership should consult its tax advisor regarding the U.S. federal income tax considerations of owning and disposing of the ordinary shares in its particular circumstances.
Non-corporate
A 10% or more U.S. shareholder may have additional concerns not noted here.
Securities and Exchange Commission
100 F Street, NE
Public Reference Room
Washington, D.C. 20549
For further information on the operation of the public reference room and copy charges, the Securities and Exchange Commission may be contacted at 1-800-SEC-0330.
The Securities and Exchange Commission maintains a Web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the Securities and Exchange Commission using its EDGAR system.may be accessed at the Securities and Exchange Commission’s website, www.sec.gov. We intend to post our Annual Report on Form 20-F on our website (www.checkpoint.com) promptly following the filing of our Annual Report on Form 20-F with the Securities and Exchange Commission.
or below.
Government and corporate debentures - fixed interest rates U.S. Agencies Government and corporate debentures - floating interest rates Short-term deposits, money market instruments & cash Total Maturity Total
Amortized
cost Fair
Value at
Dec. 31, 2015 2016 2017 2018 2019 2020 (in thousands) $ 994,600 $ 863,965 $ 623,612 $ 319,016 $ 140,995 $ 2,942,188 $ 2,937,309 46,230 114,341 139,929 45,740 66,690 412,930 411,804 41,690 13,281 11,025 997 — 66,993 66,955 199,346 — — — — 199,346 199,346 $ 1,281,866 $ 991,587 $ 774,556 $ 365,7530 $ 207,685 $ 3,621,457 $ 3,615,414
2023:
Maturity | Total Par Value | Fair Value at Dec. 31, 2023 | ||||||||||||||||||||||||||
2024 | 2025 | 2026 | 2027 | 2028 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other U.S. government agencies | $ | 308.3 | $ | 198.4 | $ | 114.1 | $ | 11.4 | $ | 43.5 | $ | 675.7 | $ | 661.2 | ||||||||||||||
Debt securities issued by other governments | 41.3 | 20.3 | - | - | - | 61.6 | 60.3 | |||||||||||||||||||||
Corporate debt securities | 605.4 | 416.9 | 398.9 | 201.0 | 72.3 | 1,694.5 | 1,648.0 | |||||||||||||||||||||
Cash | 79.8 | 79.8 | 79.8 | |||||||||||||||||||||||||
Short-term bank deposits | 52.5 | 52.5 | 52.5 | |||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||||
Money market funds | 175.4 | - | - | - | - | 175.4 | 175.4 | |||||||||||||||||||||
Short term deposits | 282.5 | - | - | - | - | 282.5 | 282.5 | |||||||||||||||||||||
Total | $ | 1,545.2 | $ | 635.6 | $ | 513.0 | $ | 212.4 | $ | 115.8 | $ | 3,022.0 | $ | 2,959.7 |
The Company’s
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment in marketable securities. Our marketable securities portfolio includes government and government agencies debt instruments (U.S., European and other) and corporate debt instruments. By policy, we limit the amount of credit exposure to any one issuer.
Investments in both fixed rate and floating rate interest bearing securities carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors, our income from investments may decrease in the future in the event that interest rates fluctuate.
Internal Control Over Financial Reporting
2023.
Report.
In March 2004, our
Year Ended December 31, 2015 | Year Ended December 31, 2014 | |||||||||||||||
Amount | Percentage | Amount | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Audit fees (1) | $ | 742 | 80 | % | $ | 740 | 78 | % | ||||||||
Tax fees (2) | 180 | 20 | % | 210 | 22 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 922 | 100 | % | $ | 950 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||||
Amount | Percentage | Amount | Percentage | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Audit fees (1) | $ | 0.8 | 66 | % | $ | 0.8 | 67 | % | ||||||||
Audit related fees (2) | 0.1 | 10 | % | * | ) | 3 | % | |||||||||
Tax fees (3) | 0.3 | 24 | % | 0.3 | 30 | % | ||||||||||
Total | $ | 1.2 | 100 | % | $ | 1.1 | 100 | % |
*) | Represents an amount lower than $0.1 million. |
(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) | “Audit-related fees” are fees for professional services related to information systems audits. |
(3) | “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. |
Period January 1 – January 31 February 1 – February 28 March 1 – March 31 April 1 – April 30 May 1 – May 31 June 1 – June 30 July 1 – July 31 August 1 – August 31 September 1 – September 30 October 1 – October 31 November 1 – November 30 December 1 – December 31 Total20152023 and 2014,2022, and will receive during 20162024 for non-audit services in certain categories.ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES2015,2023 and since we started repurchases programs, we repurchased the Company repurchasedcompany’s ordinary shares for an aggregate amount of $4,823$14,373 million. On January 29, 2015,February 13, 2023 the Company announced the expansion of the Company’s boardon-going share repurchase program by an additional $2 billion. Under the current plan, the Board of directors approved andDirectors authorized repurchases of ordinary shares at the repurchasepace of up to additional $1,500$325 million of the Company’s ordinary shares and not more than $250 million pera quarter. 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.2015,2023, we used $986$1,288 million to repurchase approximately 129.9 million ordinary shares, which were repurchased under our tenthrepurchase program. The table below provides detailed information. (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 341,904 $ 80 341,904 1,472,794,767 1,766,646 $ 79 1,766,646 1,333,486,445 904,858 $ 83 904,858 1,258,314,528 941,860 $ 85 941,860 1,178,599,081 1,239,578 $ 86 1,239,578 1,071,743,941 696,738 $ 84 696,738 1,013,317,886 1,457,580 $ 80 1,457,580 896,409,605 1,062,102 $ 80 1,062,102 811,551,426 612,113 $ 79 612,113 763,555,116 774,315 $ 80 774,315 701,610,133 1,386,446 $ 83 1,386,446 586,361,036 848,759 $ 85 848,759 514,265,206 12,032,899 $ 82 12,032,899
of Ordinary
Shares
Purchased (1)
per Ordinary
Share
Dollar Amount
Available for
Repurchase
under the Plans
or Programs January 1 – January 31 0.8 $ 128 $ 385 February 1 – February 28 0.8 $ 125 $ 2,289 March 1 – March 31 1.0 $ 126 $ 2,160 April 1 – April 30 0.6 $ 131 $ 2,086 May 1 – May 31 1.3 $ 121 $ 1,928 June 1 – June 30 0.7 $ 126 $ 1,836 July 1 – July 31 0.7 $ 127 $ 1,749 August 1 – August 31 1.1 $ 131 $ 1,610 September 1 – September 30 0.7 $ 135 $ 1,511 October 1 – October 31 0.7 $ 134 $ 1,411 November 1 – November 30 0.7 $ 140 $ 1,315 December 1 – December 31 0.8 $ 150 $ 1,198 Total 9.9 $ 131 ITEM 16F.(1)CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
- - ITEM 17.FINANCIAL STATEMENTS
1 |
4.9 | ||
97.1 | ||
101 | Inline XBRL (Extensible Business Reporting Language) The following materials from Check Point Software Technologies Ltd.’s Annual Report on Form 20-F for the fiscal year-ended December 31, | |
(i) | Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Shareholders’ Equity/(Deficit) and Comprehensive Income/(Loss) (iv) Consolidated Statements of Cash Flows, (v) Notes to the Consolidated Financial Statements, | |
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
(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 4.1 of Check Point’s Registration Statement on Form S-8 (No. 333-207355) filed with the Securities and Exchange Commission on October 8, 2015. |
Incorporated by reference to Exhibit 4.5 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2017. |
(5) | Incorporated by reference to Exhibit 4.11 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2006. |
Incorporated by reference to Exhibit |
Incorporated by reference to Annex A of Check Point’s Report on Form 6-K filed with the Securities and Exchange Commission on |
Incorporated by reference to “Item 4 – Information on Check Point – Organizational Structure” in this Annual Report on Form 20-F. |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2015
IN U.S. DOLLARS
CHECK POINT SOFTWARE TECHNOLOGIES LTD. | |||
By: | /s/ Gil Shwed | ||
Chief Executive Office |
By: | /s/ Roei Golan | ||
Roei Golan | |||
Chief Financial Officer |
Page | ||
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 1281) | F-2 - F-7 | |
F-8 - F-9 | ||
F-10 | ||
F-11 | ||
F-12 | ||
F-13 - F-14 | ||
F-15 - |
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Check Point Software Technologies Ltd. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. COSO criteria. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.CHECK POINT SOFTWARE TECHNOLOGIES LTD.(the “Company”) and subsidiaries (the Company) as of December 31, 20152023 and 2014, and2022, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2015. 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.thesethe Company’s financial statements based on our audits.Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.the financial statements referred to above present fairly,Check Point Software Technologies Ltd. and subsidiaries (the Company) maintained, in all material respects, the consolidatedeffective internal control over financial position of the Company and subsidiariesreporting as of December 31, 2015 and 2014, and2023, based on the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.Company’s internal control over financial reportingconsolidated balance sheets of the Company as of December 31, 2015, based on criteria established2023 and 2022, the related consolidated statements of income, comprehensive income, changes in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizationsshareholders’ equity and cash flows for each of the Treadway Commission (2013 framework) (the COSO criteria),three years in the period ended December 31, 2023, and the related notes and our report dated April 28, 2016,2, 2024 expressed an unqualified opinion thereon.Tel-Aviv, IsraelKOST FORER GABBAY & KASIERERApril 28, 2016A Member of EY GlobalKost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 6706703, IsraelTel: +972-3-6232525Fax: +972-3-5622555ey.comREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMON INTERNAL CONTROL OVER FINANCIAL REPORTINGTo the Shareholders and Board of Directors ofCHECK POINT SOFTWARE TECHNOLOGIES LTD.We have audited Check Point Software Technologies Ltd.’s (the “Company”) internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). management’s reportManagement’s Report on internal control over financial reporting.Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
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In our opinion, the Company maintained in all material respects, effective internal control over financial reporting as
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2015, and our report dated EY Global
| ||
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2, 2024
U.S. dollars in thousands
December 31, | ||||||||
2015 | 2014 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 192,312 | $ | 261,970 | ||||
Short-term bank deposits | 7,034 | 7,343 | ||||||
Marketable securities | 1,084,881 | 1,043,149 | ||||||
Trade receivables (net of allowances for doubtful accounts and sales reserves of $ 16,231 and $ 18,546 at December 31, 2015 and 2014, respectively) | 410,763 | 366,700 | ||||||
Prepaid expenses and other current assets | 40,844 | 34,498 | ||||||
|
|
|
| |||||
Total current assets | 1,735,834 | 1,713,660 | ||||||
|
|
|
| |||||
LONG-TERM ASSETS: | ||||||||
Marketable securities | 2,331,187 | 2,370,471 | ||||||
Property and equipment, net | 48,692 | 41,549 | ||||||
Severance pay fund | 5,262 | 5,491 | ||||||
Deferred tax asset, net | 65,711 | 48,543 | ||||||
Other intangible assets, net | 26,008 | 14,085 | ||||||
Goodwill | 812,012 | 727,875 | ||||||
Other assets | 45,174 | 27,144 | ||||||
|
|
|
| |||||
Total long-term assets | 3,334,046 | 3,235,158 | ||||||
|
|
|
| |||||
Total assets | $ | 5,069,880 | $ | 4,948,818 | ||||
|
|
|
|
December 31, | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 537.7 | $ | 196.0 | ||||
Short-term bank deposits | 52.5 | 431.1 | ||||||
Marketable securities | 939.8 | 1,010.5 | ||||||
Trade receivables, net | 657.7 | 644.2 | ||||||
Prepaid expenses and other assets | 70.0 | 50.0 | ||||||
Total current assets | 2,257.7 | 2,331.8 | ||||||
LONG-TERM ASSETS: | ||||||||
Marketable securities | 1,429.7 | 1,865.6 | ||||||
Property and equipment, net | 80.4 | 82.8 | ||||||
Deferred tax asset, net | 81.8 | 77.6 | ||||||
Intangible assets, net | 194.1 | 58.8 | ||||||
Goodwill | 1,554.4 | 1,236.7 | ||||||
Other assets | 97.4 | 71.5 | ||||||
Total long-term assets | 3,437.8 | 3,393.0 | ||||||
Total assets | $ | 5,695.5 | $ | 5,724.8 |
CONSOLIDATED BALANCE SHEETS (CONT’D)
U.S. dollars in thousands
December 31, | ||||||||
2015 | 2014 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 17,833 | $ | 12,586 | ||||
Employees and payroll accruals | 134,505 | 117,807 | ||||||
Deferred revenues | 717,528 | 651,281 | ||||||
Accrued expenses and other current liabilities | 186,987 | 151,161 | ||||||
|
|
|
| |||||
Total current liabilities | 1,056,853 | 932,835 | ||||||
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| |||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues | 188,255 | 132,732 | ||||||
Income tax accrual | 283,215 | 235,705 | ||||||
Deferred tax liability, net | 240 | 504 | ||||||
Accrued severance pay | 9,451 | 9,483 | ||||||
|
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|
| |||||
Total long-term liabilities | 481,161 | 378,424 | ||||||
|
|
|
| |||||
Total liabilities | 1,538,014 | 1,311,259 | ||||||
|
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|
| |||||
SHAREHOLDERS’ EQUITY: | ||||||||
Share capital - | ||||||||
Preferred shares, NIS 0.01 par value, 5,000,000 shares authorized at December 31, 2015 and 2014; no shares issued and outstanding at December 31, 2015 and 2014 | — | — | ||||||
Ordinary shares, NIS 0.01 par value, 500,000,000 shares authorized at December 31, 2015 and 2014; 261,223,970 shares issued at December 31, 2015 and 2014; 174,901,523 and 183,790,953 shares outstanding at December 31, 2015 and 2014, respectively | 774 | 774 | ||||||
Additional paid-in capital | 987,331 | 859,124 | ||||||
Treasury shares at cost – 86,322,447 and 77,433,017 ordinary shares at December 31, 2015 and 2014, respectively | (4,043,271 | ) | (3,126,685 | ) | ||||
Accumulated other comprehensive loss | (4,250 | ) | (1,070 | ) | ||||
Retained earnings | 6,591,282 | 5,905,416 | ||||||
|
|
|
| |||||
Total shareholders’ equity | 3,531,866 | 3,637,559 | ||||||
|
|
|
| |||||
Total liabilities and shareholders’ equity | $ | 5,069,880 | $ | 4,948,818 | ||||
|
|
|
|
December 31, | ||||||||
2023 | 2022 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 48.3 | $ | 29.6 | ||||
Employees and payroll accruals | 241.8 | 223.7 | ||||||
Deferred revenues | 1,413.8 | 1,363.4 | ||||||
Accrued expenses and other liabilities | 212.2 | 222.5 | ||||||
Total current liabilities | 1,916.1 | 1,839.2 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues | 493.9 | 514.4 | ||||||
Income tax accrual | 436.1 | 419.7 | ||||||
Other liabilities | 28.4 | 22.2 | ||||||
Total long-term liabilities | 958.4 | 956.3 | ||||||
Total liabilities | 2,874.5 | 2,795.5 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Ordinary shares, NIS 0.01 par value, 500,000,000 shares authorized at December 31, 2023 and 2022; 261,223,970 shares issued at December 31, 2023 and 2022; 112,906,427 and 120,761,971 shares outstanding at December 31, 2023 and 2022, respectively | 0.8 | 0.8 | ||||||
Additional paid-in capital | 2,732.5 | 2,500.7 | ||||||
Treasury shares at cost, 148,317,543 and 140,461,999 ordinary shares at December 31, 2023 and 2022, respectively | (13,041.2 | ) | (11,802.1 | ) | ||||
Accumulated other comprehensive loss | (39.2 | ) | (97.9 | ) | ||||
Retained earnings | 13,168.1 | 12,327.8 | ||||||
Total shareholders’ equity | 2,821.0 | 2,929.3 | ||||||
Total liabilities and shareholders’ equity | $ | 5,695.5 | $ | 5,724.8 |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Revenues: | ||||||||||||
Products and licenses | $ | 555,792 | $ | 520,312 | $ | 496,930 | ||||||
Subscriptions | 318,624 | 265,021 | 217,088 | |||||||||
Software updates and maintenance | 755,422 | 710,483 | 680,087 | |||||||||
|
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|
|
|
| |||||||
Total revenues | 1,629,838 | 1,495,816 | 1,394,105 | |||||||||
|
|
|
|
|
| |||||||
Operating expenses: | ||||||||||||
Cost of products and licenses *) | 101,158 | 95,868 | 88,862 | |||||||||
Cost of subscriptions *) | 7,623 | 5,626 | 5,480 | |||||||||
Cost of software updates and maintenance *) | 78,468 | 74,807 | 67,680 | |||||||||
Amortization of technology | 1,808 | 240 | 612 | |||||||||
|
|
|
|
|
| |||||||
Total cost of revenues | 189,057 | 176,541 | 162,634 | |||||||||
Research and development | 149,279 | 133,300 | 121,764 | |||||||||
Selling and marketing | 359,804 | 306,363 | 276,067 | |||||||||
General and administrative | 91,981 | 78,558 | 72,735 | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 790,121 | 694,762 | 633,200 | |||||||||
|
|
|
|
|
| |||||||
Operating income | 839,717 | 801,054 | 760,905 | |||||||||
Financial income, net | 34,073 | 28,762 | 34,931 | |||||||||
|
|
|
|
|
| |||||||
Income before taxes on income | 873,790 | 829,816 | 795,836 | |||||||||
Taxes on income | 187,924 | 170,245 | 143,036 | |||||||||
|
|
|
|
|
| |||||||
Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | ||||||
|
|
|
|
|
| |||||||
Basic earnings per ordinary share | $ | 3.83 | $ | 3.50 | $ | 3.34 | ||||||
|
|
|
|
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| |||||||
Diluted earnings per ordinary share | $ | 3.74 | $ | 3.43 | $ | 3.27 | ||||||
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Revenues: | ||||||||||||
Products and licenses | $ | 497.4 | $ | 554.9 | $ | 513.9 | ||||||
Security subscriptions | 981.2 | 858.0 | 755.2 | |||||||||
Software updates and maintenance | 936.1 | 917.0 | 897.7 | |||||||||
Total revenues | 2,414.7 | 2,329.9 | 2,166.8 | |||||||||
Cost of products and licenses *) | 99.3 | 145.6 | 110.7 | |||||||||
Cost of security subscriptions *) | 57.0 | 41.4 | 35.9 | |||||||||
Cost of software updates and maintenance *) | 112.3 | 105.5 | 103.0 | |||||||||
Amortization of technology | 14.0 | 11.9 | 8.5 | |||||||||
Total cost of revenues | 282.6 | 304.4 | 258.1 | |||||||||
Research and development | 368.9 | 349.9 | 292.7 | |||||||||
Selling and marketing | 747.1 | 675.2 | 597.8 | |||||||||
General and administrative | 117.0 | 116.1 | 110.7 | |||||||||
Total operating expenses | 1,515.6 | 1,445.6 | 1,259.3 | |||||||||
Operating income | 899.1 | 884.3 | 907.5 | |||||||||
Financial income, net | 76.5 | 44.0 | 42.1 | |||||||||
Income before taxes on income | 975.6 | 928.3 | 949.6 | |||||||||
Taxes on income | 135.3 | 131.4 | 134.0 | |||||||||
Net income | $ | 840.3 | $ | 796.9 | $ | 815.6 | ||||||
Basic earnings per ordinary share | $ | 7.19 | $ | 6.37 | $ | 6.13 | ||||||
Number of shares used in computing basic earnings per share | 116,913,913 | 125,205,504 | 133,121,763 | |||||||||
Diluted earnings per ordinary share | $ | 7.10 | $ | 6.31 | $ | 6.08 | ||||||
Number of shares used in computing diluted earnings per share | 118,347,749 | 126,338,989 | 134,110,048 |
*) | Not including amortization of technology shown |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | ||||||
|
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| |||||||
Other comprehensive loss | ||||||||||||
Change in unrealized losses on marketable securities: | ||||||||||||
Unrealized losses arising during the period, net of tax benefit of $2,032, $271 and $3,369, respectively | (5,209 | ) | (604 | ) | (9,685 | ) | ||||||
Gains reclassified into earnings, net of tax expense (benefits) of $(3), $84 and $300, respectively | (19 | ) | (204 | ) | (2,011 | ) | ||||||
|
|
|
|
|
| |||||||
(5,228 | ) | (808 | ) | (11,696 | ) | |||||||
|
|
|
|
|
| |||||||
Change in unrealized gains (losses) on cash flow hedges: | ||||||||||||
Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $(136), $882 and $(452), respectively | 716 | (4,629 | ) | 704 | ||||||||
Losses (gains) reclassified into earnings, net of tax benefit (expense) of $(254), $(471) and $592, respectively | 1,332 | 2,528 | (1,775 | ) | ||||||||
|
|
|
|
|
| |||||||
2,048 | (2,101 | ) | (1,071 | ) | ||||||||
|
|
|
|
|
| |||||||
Other comprehensive loss, net of tax | (3,180 | ) | (2,909 | ) | (12,767 | ) | ||||||
|
|
|
|
|
| |||||||
Comprehensive income | $ | 682,686 | $ | 656,662 | $ | 640,033 | ||||||
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Net income | $ | 840.3 | $ | 796.9 | $ | 815.6 | ||||||
Other comprehensive income (loss) | ||||||||||||
Change in unrealized gains (losses) on marketable securities: | ||||||||||||
Unrealized gains (losses) arising during the period, net of tax | 49.1 | (93.4 | ) | (38.5 | ) | |||||||
Losses (gains) reclassified into earnings, net of tax | 5.2 | * | ) | (1.7 | ) | |||||||
54.3 | (93.4 | ) | (40.2 | ) | ||||||||
Change in unrealized gains (losses) on cash flow hedges: | ||||||||||||
Unrealized losses arising during the period, net of tax | (12.0 | ) | (25.4 | ) | (0.1 | ) | ||||||
Losses (gains) reclassified into earnings, net of tax | 16.4 | 21.5 | (1.0 | ) | ||||||||
4.4 | (3.9 | ) | (1.1 | ) | ||||||||
Other comprehensive income (loss), net of tax | 58.7 | (97.3 | ) | (41.3 | ) | |||||||
Comprehensive income | $ | 899.0 | $ | 699.6 | $ | 774.3 |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
Share capital | Additional paid-in capital | Treasury shares at cost | Accumulated other comprehensive income (loss) | Retained earnings | Total shareholders’ equity | |||||||||||||||||||
Balance as of January 1, 2013 | $ | 774 | $ | 693,212 | $ | (1,955,328 | ) | $ | 14,606 | $ | 4,593,045 | $ | 3,346,309 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Excess Tax benefit from stock-based compensation | — | 35,345 | — | — | — | 35,345 | ||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (3,382,608 ordinary shares, net of 42,623 shares for taxes) | — | (4,752 | ) | 71,879 | — | — | 67,127 | |||||||||||||||||
Treasury shares at cost (10,148,834 ordinary shares) | — | — | (537,829 | ) | — | — | (537,829 | ) | ||||||||||||||||
Stock-based compensation | — | 51,112 | — | — | — | 51,112 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | (12,767 | ) | — | (12,767 | ) | ||||||||||||||||
Net income | — | — | — | — | 652,800 | 652,800 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of December 31, 2013 | 774 | 774,917 | (2,421,278 | ) | 1,839 | 5,245,845 | 3,602,097 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Excess Tax benefit from stock-based compensation | — | 11,669 | — | — | — | 11,669 | ||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (2,735,516 ordinary shares, net of 33,748 shares for taxes) | — | 11,130 | 59,136 | — | — | 70,266 | ||||||||||||||||||
Treasury shares at cost (11,207,320 ordinary shares) | — | — | (764,543 | ) | — | — | (764,543 | ) | ||||||||||||||||
Stock-based compensation | — | 61,408 | — | — | — | 61,408 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | (2,909 | ) | (2,909 | ) | |||||||||||||||||
Net income | — | — | — | — | 659,571 | 659,571 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of December 31, 2014 | 774 | 859,124 | (3,126,685 | ) | (1,070 | ) | 5,905,416 | 3,637,559 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Excess Tax benefit from stock-based compensation | — | 19,376 | — | — | — | 19,376 | ||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (3,143,469 ordinary shares, net of 34,660 shares for taxes) | — | 33,703 | 69,149 | — | — | 102,852 | ||||||||||||||||||
Treasury shares at cost (12,032,899 ordinary shares) | — | — | (985,735 | ) | — | — | (985,735 | ) | ||||||||||||||||
Stock-based compensation | — | 74,005 | — | — | — | 74,005 | ||||||||||||||||||
Replacement of restricted share units upon acquisitions | — | 1,123 | — | — | — | 1,123 | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | (3,180 | ) | — | (3,180 | ) | ||||||||||||||||
Net income | — | — | — | — | 685,866 | 685,866 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of December 31, 2015 | $ | 774 | $ | 987,331 | $ | (4,043,271 | ) | $ | (4,250 | ) | $ | 6,591,282 | $ | 3,531,866 | ||||||||||
|
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|
|
|
|
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|
|
|
and per share data)
Accumulated | ||||||||||||||||||||||||
Additional | Treasury | other | Total | |||||||||||||||||||||
Ordinary | paid-in | shares | comprehensive | Retained | shareholders’ | |||||||||||||||||||
shares | capital | at cost | income (loss) | earnings | equity | |||||||||||||||||||
Balance as of January 1, 2021 | $ | 0.8 | $ | 2,028.4 | $ | (9,319.0 | ) | $ | 40.7 | $ | 10,715.3 | $ | 3,466.2 | |||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units and performance share units (2,872,272 ordinary shares) | - | 126.2 | 67.8 | - | - | 194.0 | ||||||||||||||||||
Treasury shares at cost (10,900,938 ordinary shares) | - | - | (1,299.5 | ) | - | - | (1,299.5 | ) | ||||||||||||||||
Stock-based compensation | - | 120.3 | - | - | - | 120.3 | ||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | (41.3 | ) | - | (41.3 | ) | ||||||||||||||||
Fair value of awards attributable to pre-acquisition services | - | 1.8 | - | - | - | 1.8 | ||||||||||||||||||
Net income | - | - | - | - | 815.6 | 815.6 | ||||||||||||||||||
Balance as of December 31, 2021 | $ | 0.8 | $ | 2,276.7 | $ | (10,550.7 | ) | $ | (0.6 | ) | $ | 11,530.9 | $ | 3,257.1 | ||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (2,094,108 ordinary shares) | - | 92.6 | 48.5 | - | - | 141.1 | ||||||||||||||||||
Treasury shares at cost (10,324,181 ordinary shares) | - | - | (1,299.9 | ) | - | - | (1,299.9 | ) | ||||||||||||||||
Stock-based compensation | - | 131.4 | - | - | - | 131.4 | ||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | (97.3 | ) | - | (97.3 | ) | ||||||||||||||||
Net income | - | - | - | - | 796.9 | 796.9 | ||||||||||||||||||
Balance as of December 31, 2022 | $ | 0.8 | $ | 2,500.7 | $ | (11,802.1 | ) | $ | (97.9 | ) | $ | 12,327.8 | $ | 2,929.3 | ||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (2,001,548 ordinary shares) | - | 85.2 | 48.5 | - | - | 133.7 | ||||||||||||||||||
Treasury shares at cost (9,857,092 ordinary shares) | - | - | (1,287.6 | ) | - | - | (1,287.6 | ) | ||||||||||||||||
Stock-based compensation | - | 145.3 | - | - | - | 145.3 | ||||||||||||||||||
Other comprehensive income, net of tax | - | - | - | 58.7 | - | 58.7 | ||||||||||||||||||
Fair value of awards attributable to pre-acquisition services | - | 1.3 | - | - | - | 1.3 | ||||||||||||||||||
Net income | - | - | - | - | 840.3 | 840.3 | ||||||||||||||||||
Balance as of December 31, 2023 | $ | 0.8 | $ | 2,732.5 | $ | (13,041.2 | ) | $ | (39.2 | ) | $ | 13,168.1 | $ | 2,821.0 |
U.S. dollars in thousands
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | ||||||
Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation of property and equipment | 10,358 | 9,178 | 8,545 | |||||||||
Amortization of premium and accretion of discount on marketable securities, net and revaluation of short-term bank deposits | 29,611 | 33,021 | 22,389 | |||||||||
Realized gain on sale of marketable securities, net | (16 | ) | (288 | ) | (2,311 | ) | ||||||
Amortization of intangible assets | 3,612 | 2,106 | 3,020 | |||||||||
Stock-based compensation | 76,302 | 63,169 | 51,112 | |||||||||
Deferred income tax expense (benefit) | (15,847 | ) | (12,292 | ) | 28 | |||||||
Excess tax benefit from stock-based compensation | (19,376 | ) | (11,669 | ) | (35,345 | ) | ||||||
Accrued severance pay, net | 197 | (407 | ) | 158 | ||||||||
Decrease (increase) in trade receivables | (43,384 | ) | 12,948 | (5,893 | ) | |||||||
Increase in prepaid expenses and other current assets and other assets | (21,404 | ) | (8,613 | ) | (816 | ) | ||||||
Increase in trade payables | 5,183 | 1,879 | 1,287 | |||||||||
Increase in employees and payroll accruals | 13,835 | 2,698 | 22,404 | |||||||||
Increase (decrease) in income tax accrual and accrued expenses and other current liabilities | 101,235 | (77,809 | ) | 11,975 | ||||||||
Increase in deferred revenues | 120,559 | 112,390 | 81,933 | |||||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 946,731 | 785,882 | 811,286 | |||||||||
|
|
|
|
|
| |||||||
Cash flows from investing activities: | ||||||||||||
Proceeds from maturity of marketable securities | 1,479,241 | 1,233,866 | 1,110,176 | |||||||||
Proceeds from sale of marketable securities | 109,735 | 75,910 | 21,716 | |||||||||
Proceeds from short-term bank deposits | 321 | — | 248,571 | |||||||||
Investment in marketable securities | (1,628,287 | ) | (1,535,800 | ) | (1,916,832 | ) | ||||||
Investment in short-term bank deposits | — | (7,343 | ) | — | ||||||||
Cash paid in conjunction with acquisitions, net of acquired cash | (96,544 | ) | — | — | ||||||||
Purchase of property and equipment | (17,348 | ) | (12,736 | ) | (9,563 | ) | ||||||
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|
|
|
|
| |||||||
Net cash used in investing activities | $ | (152,882 | ) | $ | (246,103 | ) | $ | (545,932 | ) | |||
|
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|
|
|
|
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 840.3 | $ | 796.9 | $ | 815.6 | ||||||
Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation of property and equipment | 23.1 | 22.7 | 20.6 | |||||||||
Amortization of premium and accretion of discount on marketable securities, net | 3.1 | 18.5 | 21.0 | |||||||||
Realized loss (gain) on sale of marketable securities, net | 6.7 | - | (1.4 | ) | ||||||||
Amortization of intangible assets | 24.3 | 13.5 | 10.1 | |||||||||
Stock-based compensation | 145.3 | 131.4 | 120.3 | |||||||||
Deferred income tax benefit | (9.5 | ) | (0.5 | ) | (4.0 | ) | ||||||
Increase in trade receivables, net | (9.9 | ) | (46.1 | ) | (51.6 | ) | ||||||
Decrease (increase) in prepaid expenses and other assets | (51.1 | ) | 0.1 | 1.2 | ||||||||
Increase (decrease) in trade payables | 17.9 | 19.8 | (7.7 | ) | ||||||||
Increase (decrease) in employees and payroll accruals | 26.7 | 26.3 | (8.9 | ) | ||||||||
Increase (decrease) in income tax accrual and accrued expenses and other liabilities | (0.9 | ) | (54.6 | ) | 66.4 | |||||||
Increase in deferred revenues | 21.8 | 170.3 | 216.8 | |||||||||
Other | 0.1 | 0.2 | 5.5 | |||||||||
Net cash provided by operating activities | 1,037.9 | 1,098.5 | 1,203.9 | |||||||||
Cash flows from investing activities: | ||||||||||||
Proceeds from short-term bank deposits | 510.6 | 538.4 | 214.5 | |||||||||
Proceeds from maturity of marketable securities | 1,022.9 | 1,056.6 | 1,551.7 | |||||||||
Proceeds from sale of marketable securities | 491.9 | 9.1 | 184.1 | |||||||||
Investment in marketable securities | (947.3 | ) | (1,063.1 | ) | (1,297.5 | ) | ||||||
Investment in short-term bank deposits | (132.0 | ) | (477.0 | ) | (492.5 | ) | ||||||
Cash paid in conjunction with acquisitions, net of acquired cash | (458.8 | ) | (48.3 | ) | (219.7 | ) | ||||||
Purchase of property and equipment | (18.6 | ) | (22.1 | ) | (15.9 | ) | ||||||
Net cash provided by (used in) investing activities | $ | 468.7 | $ | (6.4 | ) | $ | (75.3 | ) |
U.S. dollars in thousands
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of treasury shares upon exercise of options | $ | 102,852 | $ | 70,266 | $ | 67,127 | ||||||
Purchase of treasury shares at cost | (985,735 | ) | (768,176 | ) | (534,196 | ) | ||||||
Excess tax benefit from stock-based compensation | 19,376 | 11,669 | 35,345 | |||||||||
|
|
|
|
|
| |||||||
Net cash used in financing activities | (863,507 | ) | (686,241 | ) | (431,724 | ) | ||||||
|
|
|
|
|
| |||||||
Decrease in cash and cash equivalents | (69,658 | ) | (146,462 | ) | (166,370 | ) | ||||||
Cash and cash equivalents at the beginning of the year | 261,970 | 408,432 | 574,802 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents at the end of the year | $ | 192,312 | $ | 261,970 | $ | 408,432 | ||||||
|
|
|
|
|
| |||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the year for taxes on income | $ | 123,944 | $ | 239,245 | $ | 173,234 | ||||||
|
|
|
|
|
| |||||||
Supplemental disclosure of non-cash activities: | ||||||||||||
Replacement of restricted share units upon acquisitions | $ | 1,123 | $ | — | $ | — | ||||||
|
|
|
|
|
| |||||||
Accrued liability with respect to treasury shares | $ | — | $ | — | $ | 3,633 | ||||||
|
|
|
|
|
|
(CONT’D)
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of treasury shares upon exercise of options | $ | 133.7 | $ | 141.2 | $ | 194.0 | ||||||
Purchase of treasury shares at cost | (1,287.6 | ) | (1,299.9 | ) | (1,299.5 | ) | ||||||
Payments related to shares withheld for taxes | (11.0 | ) | (9.3 | ) | (6.9 | ) | ||||||
Net cash used in financing activities | (1,164.9 | ) | (1,168.0 | ) | (1,112.4 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 341.7 | (75.9 | ) | 16.2 | ||||||||
Cash and cash equivalents at the beginning of the year | 196.0 | 271.9 | 255.7 | |||||||||
Cash and cash equivalents at the end of the year | $ | 537.7 | $ | 196.0 | $ | 271.9 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the year for taxes on income | $ | 118.7 | $ | 113.5 | $ | 101.0 | ||||||
Non-cash investing activity | ||||||||||||
Fair value of awards attributable to pre-acquisition services | 1.3 | - | 1.8 | |||||||||
Operating lease liabilities arising from obtaining right of use assets | $ | 2.3 | $ | 8.0 | $ | 1.4 |
U.S. dollars in thousands
a. | Check Point Software Technologies Ltd., an Israeli corporation (“Check Point Ltd.”), |
The Company operates in one operating and reportable segment and its revenues are mainly derived from the sales of its network and data security products, including licenses, related software updates, maintenance and security subscriptions. The Company sells its products worldwide primarily through multiple distribution channels (“channel partners”), including distributors, resellers, system integrators, Original Equipment Manufacturers (“OEMs”) and Managed Security Service Providers (“MSPs”). |
b. | In each 2023, 2022 and |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”). |
The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”).
a. | Use of estimates: |
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
b. | Financial statements in United States dollars: |
Most of the Company’s revenues and costs are denominated in United States dollar (“dollar”). The Company’s management believes that the dollar is the primary currency of the economic environment in which the Company and each of its subsidiaries operate. Thus, the dollar is the Company’s functional and reporting currency. | |
Accordingly, non-dollar denominated transactions and balances have been re-measured into the functional currency in accordance with Accounting Standard Code (“ASC”) No. 830, “Foreign Currency Matters”. | |
Most of the Company’s revenues and costs are denominated in United States dollars (“dollars”). The Company’s management believes that the dollar is the primary currency of the economic environment in which Check Point Ltd. and each of subsidiaries operate. Thus, the dollar is the Company’s functional and reporting currency.F - 15
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Accordingly, non-dollar denominated transactions and balances have been re-measured into the functional currency in accordance with Accounting Standard Code (“ASC”) No. 830, “Foreign Currency Matters”. All transaction gains and losses of the re-measured monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate.
All transaction gains and losses from the re-measured monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate. |
c. | Principles of consolidation: |
The consolidated financial statements include the accounts of Check Point Ltd. and subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.
The consolidated financial statements include the accounts of Check Point Ltd. and subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. |
d. | Cash equivalents: |
Cash equivalents are short-term unrestricted highly liquid investments that are readily convertible to cash and with original maturities of three months or less at acquisition.
Bank deposits with maturities of more than three months at acquisition but less than one year are included in short-term bank deposits. Such deposits are stated at cost which approximates fair values.
Short-term bank deposits: |
Bank deposits with maturities of more than three months at investment but less than one year are included in short-term bank deposits. Such deposits are stated at cost which approximates fair values. |
The Company accounts for investments in marketable securities in accordance with ASC No. 320, “Investments
f. | Trade Receivables: |
Trade receivables are recorded net of credit losses allowance for any potential uncollectible amounts. |
The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon its assessment of various factors, including historical collectability experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. | ||
As of December 31, 2023 and 2022, the allowances for credit losses of trade receivable were insignificant. | ||
The Company writes off receivables when they are deemed uncollectible, having exhausted all collection efforts. Actual collection experience may not meet expectations and may result in increased bad debt expense. Allowance for credit losses and total write offs expenses during 2023, 2022 and 2021 were insignificant. |
F - Debt and Equity Securities”.16
Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date.
The Company classifies all of its marketable securities as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in financial income, net.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
The Company’s securities are reviewed for impairment in accordance with ASC 320-10-65. If such assets are considered to be impaired, the impairment charge is recognized in earnings when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company’s intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis. For securities with an unrealized loss that the Company intends to sell, or it is more likely than not that the Company will be required to sell before recovery of their amortized cost basis, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet these criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while declines in fair value related to other factors are recognized in other comprehensive income (loss).
g. | Investments in marketable securities: |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
The Company accounts for investments in marketable securities in accordance with ASC No. 320, “Investments - Debt Securities”. |
Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date. The Company classifies all of its debt securities as available-for-sale (“AFS”). Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold. | ||
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in financial income, net. |
At each reporting period, the Company evaluates whether declines in fair value below amortized cost are due to expected credit losses, as well as the company’s ability and intent to hold the investment until a forecasted recovery occurs in accordance with ASC 326, Financial Instrument- Credit losses. Allowance for credit losses on AFS debt securities are recognized in the Company’s consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity. |
The credit losses recorded for the years ended December 31, 2023, 2022 and 2021 were insignificant. |
h. | Property and equipment, net: |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates: |
% | ||
Computers and peripheral equipment | 33 | |
Office furniture and equipment | 10 | |
Building | 4 | |
Leasehold improvements | The shorter of term of the lease or the useful life of the asset |
F - 17
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Leases: |
j. | Business combination: |
F - 18
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
k. | Goodwill: |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
If the carrying value of a reporting unit exceeds its fair value, the Company recognizes an impairment of goodwill for the amount of this excess.
F - 19
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Intangible assets, net: |
Impairment of long-lived assets including intangible assets subject to amortization and ROU assets: |
Manufacturing partner and supplier liabilities: |
o. | Research and development costs: |
F - 20
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Revenue recognition: |
service.
The Company determinesusing the fair value of products based on BESP by reviewing historical transactions, and considering several other external and internal factors including, but not limited to, pricing practices.
The Company established VSOE of fair value for subscriptions and for software updates and maintenance based on the renewal prices charged for such services.
a performance obligation when sold separately.
F - 21
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Cost of revenues: |
parties, hosting and infrastructure costs and costs of customer support related to these services.
F - 22
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
The Company’s liability for severance pay for periods prior to January 1, 2007, is calculated pursuant to Israeli severance pay law based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date. The Company recorded as expenses the increase in the severance liability, net of earnings (losses) from the related investment fund. Employees were entitled to one month’s salary for each year of employment, or a portion thereof. Until January 1, 2007, the Company’s liability was partially funded by monthly payments deposited with insurers; any unfunded amounts are covered by a provision established by the Company.
The carrying value of deposited funds in respect to the severance liability for services prior to January 1, 2007, includes profits (losses) accumulated up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israeli severance pay law or labor agreements.
r. | Severance pay: |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Employee benefit plan: |
Income taxes: |
The Company accrues interest and indexation related to unrecognized tax benefits on its taxes on income.
F - 23
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
u. | Advertising costs: |
Concentrations of credit risk: |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
The Company utilizes forward contracts to protect against the risk of overall changes in exchange rates. The derivative instruments hedge a portion of the Company’s non-dollar currency exposure. Counterparties to the Company’s derivative instruments are all major financial institutions.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Derivatives and hedging: |
F - 24
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
2022 was insignificant.
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Cost of revenues | $ | 1.2 | $ | 1.7 | $ | (0.1 | ) | |||||
Research and development | 13.9 | 13.3 | (0.6 | ) | ||||||||
Selling and marketing | 0.5 | 6.6 | (0.3 | ) | ||||||||
General and administrative | 3.0 | 2.8 | (0.1 | ) | ||||||||
$ | 18.6 | $ | 24.4 | $ | (1.1 | ) |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Basic and diluted earnings per share: |
F - 25
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Accounting for stock-based compensation: |
as they occur.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Employee Stock Options | ||||||||||||
Expected volatility | 25.71 | % | 25.56 | % | 25.28 | % | ||||||
Risk-free interest rate | 4.24 | % | 3.16 | % | 0.65 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected term (years) | 5.45 | 4.75 | 4.22 | |||||||||
Employee Stock Purchase Plan | ||||||||||||
Expected volatility | 19.66 | % | 22.16 | % | 22.44 | % | ||||||
Risk-free interest rate | 5.35 | % | 2.56 | % | 0.24 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected term (years) | 0.5 | 0.5 | 0.5 |
F - 26
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Employee Stock Options | ||||||||||||
Expected volatility | 25.14 | % | 29.30 | % | 30.14 | % | ||||||
Risk-free interest rate | 1.59 | % | 1.48 | % | 1.72 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected term (years) | 5.59 | 5.51 | 6.00 | |||||||||
Employee Stock Purchase Plan | ||||||||||||
Expected volatility | 21.89 | % | 21.47 | % | 26.98 | % | ||||||
Risk-free interest rate | 0.07 | % | 0.06 | % | 0.06 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected term (years) | 0.5 | 0.5 | 0.5 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
z. | Fair value of financial instruments: |
Level 1 - | Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
Level 2 - | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Comprehensive income: |
The following table shows the components of accumulated other comprehensive income (loss), net of taxes, for the year ended December 31, 2015:
Year ended December 31, 2015 | ||||||||||||
Unrealized gains (losses) on marketable securities | Unrealized gains (losses) on cash flow hedges | Total | ||||||||||
Beginning balance | $ | 969 | $ | (2,039 | ) | $ | (1,070 | ) | ||||
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Other comprehensive loss before reclassifications | (5,209 | ) | 716 | (4,493 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | *)(19) | **)1,332 | 1,313 | |||||||||
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Net current-period other comprehensive income (loss) | (5,228 | ) | 2,048 | (3,180 | ) | |||||||
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Ending balance | $ | (4,259 | ) | $ | 9 | $ | (4,250 | ) | ||||
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Treasury shares: |
F - 27
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Legal contingencies: |
Recently Issued Accounting Pronouncements, not yet adopted: |
In November 2015, the FASB issued ASU No. 2015-17 related to balance sheet classification of deferred taxes. The new guidance requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company early adopted this guidance on a retrospective basis as of December 31, 2015. As a result, the Company’s current deferred tax assets as of December 31, 2014 in an amount of $34,175 were reclassified to noncurrent assets to conform to the current year presentation.
February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), whereby, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Companies may not apply a full retrospective transition approach. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted. The Company is evaluating the potential impact of this pronouncement.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-092023-07 is effective for fiscal years beginning after December 15, 2016,2023, and for interim periods within those fiscal years. Earlyyears beginning after December 15, 2024, with early adoption is permitted. We areThe Company is currently evaluating the potential impact of adopting this guidanceASU 2023-07.
NOTE 3:- | ACQUISITIONS |
On February 17, 2015,
On April 2, 2015,
a. | On September 1, 2021, the Company completed the acquisition of all outstanding shares of Avanan Inc. (“Avanan”), a privately-held US-based company providing cloud email security, and the developer of a patented application-programming interface (API) solution to stop email threats before arriving to the inbox (inline), for both internal and external emails using AI based engines. The Company acquired Avanan for total consideration of approximately $227.1. |
b. | On February 3, 2022, the Company completed the acquisition of all outstanding shares of Spectral Cyber Technologies Ltd. (“Spectral”), a privately-held Israeli-based company, is a key innovator in developer security with a thriving open-source community. Spectral’s developer-first approach to security focuses on code safety and trust, fast code scanning and simple and cool developer experience. |
c. | On September 11, 2023, the Company completed the acquisition of all outstanding shares of Atmosec Ltd. (“Atmosec”), a privately-held Israeli-based company, An early-stage start-up, Atmosec specializes in the rapid discovery and disconnection of malicious SaaS applications, preventing risky third party SaaS communications, and rectifying SaaS misconfigurations. |
d. | On September 13, 2023, the Company completed the acquisition of all outstanding shares of Perimeter 81 Ltd. (“Perimeter 81”), a privately-held Israeli-based company, recognized as a leader in the Forrester Zero Trust Wave, brings an innovative approach to security service edge (SSE) that combines cloud and on-device protection. Perimeter 81 is offering a unique suite of capabilities, including Zero Trust Access, full mesh connectivity between users, branches and applications. The Company acquired Perimeter 81 for total consideration of approximately $503.1. |
These acquisitions were not significant individually or in the aggregate.
Marketable securities with contractual maturities of up to one year after the close of the transaction as additional information is obtained. Any adjustments to the preliminary purchase price allocation identified during the measurement period are as follows:recognized in the period in which the adjustments are determined.
F - 28
December 31, | ||||||||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||||||||
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 | $ | 994,600 | $ | 3,088 | $ | (752 | ) | $ | 996,936 | $ | 882,051 | $ | 3,433 | $ | (141 | ) | $ | 885,343 | ||||||||||||||
Government-sponsored enterprises debentures | 46,230 | 25 | (17 | ) | 46,238 | 154,619 | 183 | (5 | ) | 154,797 | ||||||||||||||||||||||
Government and corporate debentures - floating interest rate | 41,690 | 24 | (7 | ) | 41,707 | 3,001 | 8 | — | 3,009 | |||||||||||||||||||||||
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$ | 1,082,520 | $ | 3,137 | $ | (776 | ) | $ | 1,084,881 | $ | 1,039,671 | $ | 3,624 | $ | (146 | ) | $ | 1,043,149 | |||||||||||||||
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CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 3:- | ACQUISITIONS (Cont.) |
Weighted Average Useful Life | Amount | |||||
Goodwill | $ | 314.9 | ||||
Core technology | 8 Years | 99.6 | ||||
Customer relationship | 2 Years | 57.0 | ||||
Net assets assumed | 31.6 | |||||
Total | $ | 503.1 |
e. | On October 17, 2023, the Company completed the acquisition of all outstanding shares of R&M computer consultants, Inc. (“rmsource”), a privately-held US-based company, rmsource is a provider of managed cybersecurity services, cloud security and cloud migration and IT management. |
F - 29
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTE 4:- MARKETABLE SECURITIES (Cont.)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
Marketable
NOTE 4:- | CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND MARKETABLE SECURITIES |
December 31, | ||||||||
2023 | 2022 | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 79.8 | $ | 65.8 | ||||
Money market funds | 175.4 | 95.5 | ||||||
Short term deposits | 282.5 | 34.7 | ||||||
Total Cash and cash equivalents | 537.7 | 196.0 | ||||||
Short-term bank deposits: | 52.5 | 431.1 | ||||||
Marketable securities: | ||||||||
Debt securities issued by the U.S. Treasury and other U.S. government agencies | 661.2 | 819.3 | ||||||
Debt securities issued by other governments | 60.3 | 118.3 | ||||||
Corporate debt securities | 1,648.0 | 1,938.5 | ||||||
Total Marketable securities | 2,369.5 | 2,876.1 | ||||||
Total Cash and cash equivalents, short-term bank deposits and marketable securities | $ | 2,959.7 | $ | 3,503.2 |
December 31, 2023 | ||||||||||||||||
Amortized Cost | Gross unrealized gain | Gross unrealized loss | Fair Value | |||||||||||||
Contractual maturity year: | ||||||||||||||||
Within one year | $ | 956.6 | $ | - | $ | (16.8 | ) | $ | 939.8 | |||||||
After one year through five years | 1,465.4 | 3.0 | (38.7 | ) | 1,429.7 | |||||||||||
Total | $ | 2,422.0 | $ | 3.0 | $ | (55.5 | ) | $ | 2,369.5 |
December 31, 2022 | ||||||||||||||||
Amortized Cost | Gross unrealized gain | Gross unrealized loss | Fair Value | |||||||||||||
Contractual maturity year: | ||||||||||||||||
Within one year | $ | 1,024.9 | $ | - | $ | (14.4 | ) | $ | 1,010.5 | |||||||
After one year through five years | 1,974.5 | 0.1 | (109.0 | ) | 1,865.6 | |||||||||||
Total | $ | 2,999.4 | $ | 0.1 | $ | (123.4 | ) | $ | 2,876.1 |
December 31, | ||||||||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||||||||
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 | $ | 1,947,588 | $ | 1,439 | $ | (8,654 | ) | $ | 1,940,373 | $ | 1,916,756 | $ | 2,905 | $ | (4,519 | ) | $ | 1,915,142 | ||||||||||||||
Government-sponsored enterprises debentures | 366,700 | 109 | (1,243 | ) | 365,566 | 390,468 | 256 | (990 | ) | 389,734 | ||||||||||||||||||||||
Government and corporate debentures - floating interest rate | 25,303 | 11 | (66 | ) | 25,248 | 65,512 | 102 | (19 | ) | 65,595 | ||||||||||||||||||||||
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$ | 2,339,591 | $ | 1,559 | $ | (9,963 | ) | $ | 2,331,187 | $ | 2,372,736 | $ | 3,263 | $ | (5,528 | ) | $ | 2,370,471 | |||||||||||||||
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Investments withof December 31, 2023 and 2022, $41.9 and $87.3 were in continuous unrealized lossesloss for lessmore than 12 months, respectively. The unrealized losses are mainly driven by the higher interest rate environment and 12 months or greater and their relatedthe recent interest rate hikes by global central banks during 2022-2023, which was due mainly to elevated inflation rates, therefore negatively impacted the fair values were as follows:
December 31, 2015 | ||||||||||||||||||||||||
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 | $ | 2,138,546 | $ | (9,027 | ) | $ | 68,084 | $ | (379 | ) | $ | 2,206,630 | $ | (9,406 | ) | |||||||||
Government-sponsored enterprises debentures | 308,026 | (1,252 | ) | 5,992 | (8 | ) | 314,018 | (1,260 | ) | |||||||||||||||
Government and corporate debentures - floating interest rate | 26,688 | (73 | ) | — | — | 26,688 | (73 | ) | ||||||||||||||||
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$ | 2,473,260 | $ | (10,352 | ) | $ | 74,076 | $ | (387 | ) | $ | 2,547,336 | $ | (10,739 | ) | ||||||||||
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December 31, 2014 | ||||||||||||||||||||||||
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 | $ | 1,199,879 | $ | (2,994 | ) | $ | 257,258 | $ | (1,666 | ) | $ | 1,457,137 | $ | (4,660 | ) | |||||||||
Government-sponsored enterprises debentures | 177,953 | (487 | ) | 89,350 | (508 | ) | 267,303 | (995 | ) | |||||||||||||||
Government and corporate debentures - floating interest rate | 17,102 | (14 | ) | 5,003 | (5 | ) | 22,105 | (19 | ) | |||||||||||||||
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$ | 1,394,934 | $ | (3,495 | ) | $ | 351,611 | $ | (2,179 | ) | $ | 1,746,545 | $ | (5,674 | ) | ||||||||||
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value of securities in the Company’s portfolio.
F - 30
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 5:- | FAIR VALUE MEASUREMENTS |
December 31, | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||
Fair value measurements using input type | Fair value measurements using input type | |||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||||
Cash | $ | 79.8 | $ | - | $ | 79.8 | $ | 65.8 | $ | - | $ | 65.8 | ||||||||||||
Cash equivalents | ||||||||||||||||||||||||
Money market funds | 175.4 | - | 175.4 | 95.5 | - | 95.5 | ||||||||||||||||||
Short term deposits | 282.5 | - | 282.5 | 34.7 | - | 34.7 | ||||||||||||||||||
Short-term bank deposits | 52.5 | - | 52.5 | 431.1 | - | 431.1 | ||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other U.S. government agencies | - | 661.2 | 661.2 | - | 819.3 | 819.3 | ||||||||||||||||||
Debt securities issued by other governments | - | 60.3 | 60.3 | - | 118.3 | 118.3 | ||||||||||||||||||
Corporate debt securities | - | 1,648.0 | 1,648.0 | - | 1,938.5 | 1,938.5 | ||||||||||||||||||
Foreign currency derivative contracts | - | 1.3 | 1.3 | - | (3.6 | ) | (3.6 | ) | ||||||||||||||||
Total financial assets | $ | 590.2 | $ | 2,370.8 | $ | 2,961.0 | $ | 627.1 | $ | 2,872.5 | $ | 3,499.6 |
December 31, 2015 | ||||||||||||
Fair value measurements using input type | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 21,085 | $ | — | $ | 21,085 | ||||||
Marketable securities: | ||||||||||||
Government and corporate debentures - fixed interest rate | — | 2,937,309 | 2,937,309 | |||||||||
Government-sponsored enterprises debentures | — | 411,804 | 411,804 | |||||||||
Government and corporate debentures - floating interest rate | — | 66,955 | 66,955 | |||||||||
Foreign currency derivative contracts | — | (44 | ) | (44 | ) | |||||||
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Total financial assets | $ | 21,085 | $ | 3,416,024 | $ | 3,437,109 | ||||||
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December 31, 2014 | ||||||||||||
Fair value measurements using input type | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 107,400 | $ | — | $ | 107,400 | ||||||
Marketable securities: | ||||||||||||
Government and corporate debentures - fixed interest rate | — | 2,800,485 | 2,800,485 | |||||||||
Government-sponsored enterprises debentures | — | 544,531 | 544,531 | |||||||||
Government and corporate debentures - floating interest rate | — | 68,604 | 68,604 | |||||||||
Foreign currency derivative contracts | — | (2,942 | ) | (2,942 | ) | |||||||
|
|
|
|
|
| |||||||
Total financial assets | $ | 107,400 | $ | 3,410,678 | $ | 3,518,078 | ||||||
|
|
|
|
|
|
December 31, | ||||||||
2023 | 2022 | |||||||
Cost: | ||||||||
Computers and peripheral equipment | $ | 91.0 | $ | 78.1 | ||||
Office furniture and equipment | 12.2 | 7.8 | ||||||
Building | 78.7 | 78.7 | ||||||
Leasehold improvements | 32.1 | 30.9 | ||||||
214.0 | 195.5 | |||||||
Accumulated depreciation | 133.6 | 112.7 | ||||||
Property and equipment, net | $ | 80.4 | $ | 82.8 |
F - 31
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
December 31, | ||||||||
2015 | 2014 | |||||||
Cost: | ||||||||
Computers and peripheral equipment | $ | 53,937 | $ | 48,159 | ||||
Office furniture and equipment | 7,332 | 6,636 | ||||||
Building | 46,707 | 39,935 | ||||||
Leasehold improvements | 8,769 | 7,977 | ||||||
|
|
|
| |||||
116,745 | 102,707 | |||||||
Accumulated depreciation | 68,053 | 61,158 | ||||||
|
|
|
| |||||
Property and equipment, net | $ | 48,692 | $ | 41,549 | ||||
|
|
|
|
a. | Goodwill: |
2023 | 2022 | |||||||
Balance as of January 1 | $ | 1,236.7 | $ | 1,196.2 | ||||
Acquisitions | 317.7 | 40.5 | ||||||
Balance as of December 31 | $ | 1,554.4 | $ | 1,236.7 |
b. | Intangible assets, net: |
Useful | December 31, | ||||||||||
Life | 2023 | 2022 | |||||||||
Original amount: | |||||||||||
Core technology | 8 | $ | 195.0 | $ | 93.5 | ||||||
Trademarks and trade names | 15–20 | 7.5 | 25.5 | ||||||||
Customer relationship | 2-4 | 63.9 | 5.8 | ||||||||
266.4 | 124.8 | ||||||||||
Core technology | 53.6 | 39.6 | |||||||||
Trademarks and trade names | 6.9 | 24.5 | |||||||||
Customer relationship | 11.8 | 1.9 | |||||||||
72.3 | 66.0 | ||||||||||
Intangible assets, net: | |||||||||||
Core technology | 141.4 | 53.9 | |||||||||
Trademarks and trade names | 0.6 | 1.0 | |||||||||
Customer relationship | 52.1 | 3.9 | |||||||||
$ | 194.1 | $ | 58.8 |
2024 | $ | 53.9 | ||
2025 | 44.8 | |||
2026 | 21.8 | |||
2027 | 18.7 | |||
2028 | 17.5 | |||
Thereafter | 37.4 | |||
$ | 194.1 |
December 31, | ||||||||
2015 | 2014 | |||||||
Goodwill, beginning of the year | $ | 727,875 | $ | 727,875 | ||||
Acquisitions | 84,137 | — | ||||||
|
|
|
| |||||
Goodwill, end of the year | $ | 812,012 | $ | 727,875 | ||||
|
|
|
|
F - 32
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
Net other intangible assets consisted of the following:
Useful | December 31, | |||||||||||
life | 2015 | 2014 | ||||||||||
Original amount: | ||||||||||||
Core technology | 8 | $ | 17,464 | $ | 1,929 | |||||||
Trademarks and trade names | 15 - 20 | 25,520 | 25,520 | |||||||||
Customer relationships | 5 - 6 | 2,097 | 2,097 | |||||||||
|
|
|
| |||||||||
45,081 | 29,546 | |||||||||||
|
|
|
| |||||||||
Accumulated amortization: | ||||||||||||
Core technology | 2,560 | 753 | ||||||||||
Trademarks and trade names | 14,510 | 12,934 | ||||||||||
Customer relationships | 2,003 | 1,774 | ||||||||||
|
|
|
| |||||||||
19,073 | 15,461 | |||||||||||
|
|
|
| |||||||||
Other intangible assets, net: | ||||||||||||
Core technology | 14,904 | 1,176 | ||||||||||
Trademarks and trade names | 11,010 | 12,586 | ||||||||||
Customer relationships | 94 | 323 | ||||||||||
|
|
|
| |||||||||
$ | 26,008 | $ | 14,085 | |||||||||
|
|
|
|
The estimated future amortization expense of other intangible assets as of December 31, 2015 is as follows:
2016 | $ | 3,853 | ||
2017 | 3,759 | |||
2018 | 3,759 | |||
2019 | 3,734 | |||
2020 | 3,518 | |||
Thereafter | 7,385 | |||
|
| |||
$ | 26,008 | |||
|
|
As of December 31, 2015 and 2014, employees and payroll accruals include a total amount of $ 2,568 and $ 3,214, respectively, related to payroll accrued for the benefit of certain related parties since 2002 until 2007.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
December 31, | ||||||||
2015 | 2014 | |||||||
Subscriptions | $ | 285,998 | $ | 227,610 | ||||
Software updates and maintenance | 607,153 | 546,998 | ||||||
Other | 12,632 | 9,405 | ||||||
|
|
|
| |||||
$ | 905,783 | $ | 784,013 | |||||
|
|
|
|
December 31, | ||||||||
2023 | 2022 | |||||||
Security subscriptions | $ | 970.2 | $ | 932.1 | ||||
Software updates and maintenance | 904.1 | 904.7 | ||||||
Other | 33.4 | 41.0 | ||||||
$ | 1,907.7 | $ | 1,877.8 |
December 31, | ||||||||
2023 | 2022 | |||||||
Accrued products and licenses costs | $ | 73.9 | $ | 84.4 | ||||
Marketing expenses payable | 4.7 | 8.7 | ||||||
Income tax payable | 40.7 | 34.3 | ||||||
Legal accrual | 27.8 | 32.0 | ||||||
Other accrued expenses | 65.1 | 63.1 | ||||||
$ | 212.2 | $ | 222.5 |
F - 33
December 31, | ||||||||
2015 | 2014 | |||||||
Income taxes payable | $ | 17,388 | $ | 6,559 | ||||
Accrued products and licenses costs | 44,417 | 36,907 | ||||||
Marketing expenses payable | 19,208 | 12,703 | ||||||
Legal accrual | 57,970 | 50,416 | ||||||
Other accrued expenses | 48,004 | 44,576 | ||||||
|
|
|
| |||||
$ | 186,987 | $ | 151,161 | |||||
|
|
|
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
Litigations:
a. | The Company is the defendant in various lawsuits, including employment-related litigation claims, construction claims and other legal proceedings in the normal course of its business. Litigation and governmental proceedings can be expensive, lengthy and disruptive to normal business operations, and can require extensive management attention and resources, regardless of their merit. While the Company intends to defend the aforementioned matters vigorously, it believes that a loss in excess of its accrued liability with respect to these claims is not probable. |
Certain facilities of the Company are rented under operating lease agreements, which expire on various dates, the latest of which is in 2020. The Company recognizes rent expense under such arrangements on a straight-line basis.
Aggregate minimum lease commitments under non-cancelable operating leases as of December 31, 2015, were as follows:
2016 | $ | 8,889 | ||
2017 | 5,087 | |||
2018 | 3,404 | |||
2019 | 1,074 | |||
2020 | 100 | |||
|
| |||
$ | 18,554 | |||
|
|
Rent expenses for the years ended December 31, 2015, 2014 and 2013, were $ 8,287, $ 6,570 and $ 6,224 respectively.
b. | In particular, following audits of the Company’s 2016 through 2020 corporate tax returns, the Israeli Tax Authority (the “ITA”) issued in January 2023 orders for the years 2016 through 2019 challenging the Company’s positions on several issues, including matters such as our position to claim a tax credit made for foreign taxes withheld on income payments that was due to the Company outside of Israel, taxation of interest earned outside of Israel by a wholly-owned Singapore subsidiary which the ITA is seeking to tax in Israel and deductibility of expenses attributed to employee stock options. The ITA orders also contest the Company’s positions on various other issues. The ITA therefore demanded the payment of additional taxes in the aggregate amount of NIS 479 (approximately $132), not including an amount of NIS 421 (approximately $116) related to expenses that will be deductible in future years, with respect of these four tax years (these amounts include interest and indexation through December 31, 2023). The Company believes it has good arguments against these orders and on November 29, 2023, filed an appeal to the District Court of Tel Aviv against these orders. In addition, the ITA has issued tax assessment for the 2020 tax year, presenting similar arguments as those in the orders for the tax years 2016-2019, in which it demanded the payment of additional taxes in the aggregate amount of NIS 84 (approximately $23), not including an amount of NIS 95 (approximately $26) related to expenses that will be deductible in future years, with respect to this year (these amounts include interest and indexation through December 31, 2023). On December 31, 2023 we submitted an initial stage tax appeal against the 2020 tax assessment to the ITA (the Company may appeal such order to the district court). There is no assurance that the ITA will accept our positions on the matters raised and, if it does not, the ITA may also issue an order with respect to the 2020 tax year. |
The Company operates its business in various countries, and accordingly attempts to utilize an efficient operating model to structure its tax payments based on the laws in the countries in which the Company operates. This can cause disputes between the Company and various tax authorities in different parts of the world.
Further, the Company is the defendant in various other lawsuits, including employment-related litigation claims, construction claims and other legal proceedings in the normal course of its business. Litigation and governmental proceedings can be expensive, lengthy and disruptive to normal business operations, and can require extensive management attention and resources, regardless of their merit. While the Company intends to defend the aforementioned matters vigorously, it believes that a loss in excess of its accrued liability with respect to these claims is not probable.F - 34
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
a. | Israeli taxation: |
1. | Corporate tax: Pursuant to Amendment 73 to the Investment Law adopted in 2017, a Company located in the Center of Israel that meets the conditions for “Preferred Technological Enterprises”, is subject to tax rate of 12%. The Company believes it meets those conditions. Income not eligible for Preferred Enterprise benefits is taxed at a regular rate of 23%. Reduced income under the Investment Law including the Preferred Enterprise Regime and Preferred Technological Enterprise Regime will be freely distributable as dividends, subject to a 15% or 20% withholding tax (or lower rate for non-Israeli resident shareholder, under an applicable tax treaty). However, upon the distribution of a dividend from Preferred Income and Technological Preferred Enterprise to an Israeli company, no withholding tax will be remitted. Pursuant to a temporary tax relief initiated by the Israeli government, a company that elected by November 11, 2013, to pay a reduced corporate tax rate as set forth in the temporary tax relief with respect to undistributed exempt income generated under the Investment Law accumulated by the Company until December 31, 2011 (“Trapped Earnings”) is entitled to distribute a dividend from such income without being required to pay additional corporate tax with respect to such dividend. A company that has so elected must make certain qualified investments in Israel over five-year period. A company that has elected to apply the temporary tax relief cannot withdraw from its election. The Company has elected to apply the temporary tax relief by the respective date and believes it meets those conditions. In particular, following audits of the Company’s 2016 through 2020 corporate tax returns, the Israeli Tax Authority (the “ITA”) issued in January 2023 orders for the years 2016 through 2019 challenging the Company’s positions on several issues, including matters such as our position to claim a tax credit made for foreign taxes withheld on income payments that was due to the Company outside of Israel, taxation of interest earned outside of Israel by a wholly-owned Singapore subsidiary which the ITA is seeking to tax in Israel and deductibility of expenses attributed to employee stock options. The ITA orders also contest the Company’s positions on various other issues. The ITA therefore demanded the payment of additional taxes in the aggregate amount of NIS 479 (approximately $132), not including an amount of NIS 421 (approximately $116) related to expenses that will be deductible in future years, with respect of these four tax years (these amounts include interest and indexation through December 31, 2023). The Company believes it has good arguments against these orders and on November 29, 2023, filed an appeal to the District Court of Tel Aviv against these orders. In addition, the ITA has issued tax assessment for the 2020 tax year, presenting similar arguments as those in the orders for the tax years 2016-2019, in which it demanded the payment of additional taxes in the aggregate amount of NIS 84 (approximately $23), not including an amount of NIS 95 (approximately $26) related to expenses that will be deductible in future years, with respect to this year (these amounts include interest and indexation through December 31, 2023). On December 31, 2023 we submitted an initial stage tax appeal against the 2020 tax assessment to the ITA (the Company may appeal such order to the district court). There is no assurance that the ITA will accept our positions on the matters raised and, if it does not, the ITA may also issue an order with respect to the 2020 tax year. |
The Company elected to apply the Preferred Enterprise regime under the Law for the Encouragement of Capital Investment (the “Investment Law”). Under the Preferred Enterprise regime, the Company’s entire preferred income is subject to tax rates as follows: 2013F - 12.5% and 2014 and thereafter - 16%. The election is irrevocable.35
Income not eligible for Preferred Enterprise benefits are taxed at a regular rate, as follows: 2015 and 2014 – 26.5% and for 2013 - 25%.
On January 4, 2016, an amendment to the Israeli tax ordinance was enacted such that commencing January 1, 2016, the Israeli regular tax rate will be reduced from 26.5% to 25%. The effect of the change in tax rates will result in a decrease in deferred tax balances in immaterial amounts.
Prior to 2012, most of the Company’s income was exempt from tax or subject to reduced tax rates under the Investment Law. Upon distribution of exempt income, the distributing company will be subject to corporate reduced tax rates ordinarily applicable to such income under the Investment Law.
Reduced income under the Investment Law including the Preferred Enterprise Regime will be freely distributable as dividends, subject to a 15%-20% withholding tax (or lower, under an applicable tax treaty). However, upon the distribution of a dividend from Preferred Income to an Israeli company, no withholding tax will be remitted.
Pursuant to a temporary tax relief initiated by the Israeli government, a company that elected by November 11, 2013 to pay a reduced corporate tax rate as set forth in the temporary tax relief with respect to undistributed exempt income generated under the Investment Law accumulated by the company until December 31, 2011 (“Trapped Earnings”) is entitled to distribute a dividend from such income without being required to pay additional corporate tax with respect to such dividend. A company that has so elected must make certain qualified investments in Israel over five-year period. A company that has elected to apply the temporary tax relief cannot withdraw from its election.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 11:-TAXES ON INCOME (Cont. |
On November 11, 2013, the Company reached a settlement agreement with the Israeli Tax Authorities (“ITA”) which provided (i) the full settlement of all disputes with the ITA with respect to the tax years 2002 through 2011, and (ii) the release of all the Company’s Trapped Earnings through the year ended December 31, 2011. In accordance with the Investments Law and the temporary tax relief, the Company is obligated to invest approximately $ 111,000 during five years period in the following forms (i) production assets (as defined therein), (ii) research and development activities in Israel and/or (iii) employment payments for new employees (other than office holders) added after 2011. Any amount not invested in the five years period, should be paid at the end of the 5 years, linked to the Israeli CPI and bears 4% annual interest since the election date.
2. | Foreign Exchange Regulations: Under the Foreign Exchange Regulations, Check Point Ltd. and its Israeli subsidiaries calculate their tax liability in dollar according to certain orders. The tax liability, as calculated in dollar is translated into New Israeli Shekels according to the exchange rate as of December 31, of each year. |
Under the Foreign Exchange Regulations, Check Point Ltd. calculates its tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars is translated into New Israeli Shekels according to the exchange rate as of December 31st of each year.
b. | Income taxes of non-Israeli subsidiaries: Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence. The Company does not provide deferred tax liabilities when it intends to reinvest earnings of foreign subsidiaries indefinitely or if distributed, no tax liability will be imposed. Undistributed earnings of foreign subsidiaries that are not distributed amounted to $546.9 and unrecognized deferred tax liability related to such earning amounted to $89.6 as of December 31, 2023. |
c. | Deferred tax assets and liabilities: Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2023 and 2022, the Company’s deferred taxes were in respect of the following: |
December 31, | ||||||||
2023 | 2022 | |||||||
Carry forward tax losses | $ | 36.2 | $ | 38.7 | ||||
Employee stock based compensation | 30.3 | 34.9 | ||||||
Deferred revenues | 3.0 | 3.5 | ||||||
Tax credits | 32.5 | 29.8 | ||||||
Unrealized loss on marketable securities, net | 11.8 | 29.6 | ||||||
Accrued employee costs | 13.2 | 11.3 | ||||||
Other | 17.3 | 16.3 | ||||||
Deferred tax assets before valuation allowance | 144.3 | 164.1 | ||||||
Valuation allowance – mainly in respect to carryforward losses | (16.7 | ) | (17.5 | ) | ||||
Deferred tax asset | 127.6 | 146.6 | ||||||
Intangible assets | (13.4 | ) | (32.8 | ) | ||||
Deferred commission | (9.3 | ) | (3.8 | ) | ||||
Other | (6.1 | ) | (15.8 | ) | ||||
Deferred tax liability | (28.8 | ) | (52.4 | ) | ||||
Deferred tax asset, net | $ | 98.8 | $ | 94.2 |
Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence.F - 36
The Company does not provide deferred tax liabilities when it intends to reinvest earnings of foreign subsidiaries indefinitely. Undistributed earnings of foreign subsidiaries that are considered to be permanently reinvested amounted to $ 178,636 and unrecognized deferred tax liability related to such earning amounted to $ 27,909 as of December 31, 2015.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
*) As of December 31, 2023 and 2022 unrecognized tax Through December 31, 2023, the U.S. subsidiaries had a U.S. federal loss carry-forward of approximately $75.1 expiring gradually beginning 2023 mainly resulting from tax benefits related to employees’ stock option exercises that can be carried forward and offset against taxable income. Through December 31, 2023, the U.S. subsidiaries had a U.S. state net loss carry forward of approximately $38.1, expiring gradually beginning 2023 and is subject to limitation on their utilization. Through December 31, 2023, the U.S. subsidiaries had federal and states research and development tax credits of approximately $26.8, which expire between fiscal years 2023 and fiscal 2042 and are subject to limitations on their utilization. |
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2015 and 2014, the Company’s deferred taxes were in respect of the following:
December 31, | ||||||||
2015 | 2014 | |||||||
Carry forward tax losses | $ | 191,561 | $ | 213,880 | ||||
Employee stock based compensation | 27,517 | 23,950 | ||||||
Other | 60,887 | 46,356 | ||||||
|
|
|
| |||||
Deferred tax assets before valuation allowance | 279,965 | 284,186 | ||||||
Valuation allowance | (192,332 | ) | (213,690 | ) | ||||
|
|
|
| |||||
Deferred tax asset | 87,633 | 70,496 | ||||||
|
|
|
| |||||
Intangible assets | (8,045 | ) | (7,901 | ) | ||||
Undistributed earnings of subsidiary | (11,435 | ) | (11,435 | ) | ||||
Other | (2,682 | ) | (3,121 | ) | ||||
|
|
|
| |||||
Deferred tax liability | (22,162 | ) | (22,457 | ) | ||||
|
|
|
| |||||
Deferred tax asset, net | $ | 65,471 | $ | 48,039 | ||||
|
|
|
|
The Company’s subsidiaries in the U.S. have provided valuation allowance in respect of deferred tax assets resulting from carry forward of net operating loss related to excess tax benefits from options exercised prior to the adoption of ASC No. 718.
Through December 31, 2015, the U.S. subsidiaries had a U.S. federal loss carry-forward of approximately $ 531,643 expiring beginning 2018, mainly resulting from tax benefits related to employees’ stock option exercises that can be carried forward and offset against taxable income. Excess tax benefits related to employee stock option exercises for which no compensation expense was recognized will be credited to additional paid-in capital when realized. Through December 31, 2015, the U.S. subsidiaries had a U.S. state net loss carry forward of approximately $ 96,955, which expire between fiscal 2016 and fiscal 2024, and are subject to limitations on their utilization. Through December 31, 2015, the U.S. subsidiaries had research and development tax credits of approximately $ 15,924, which expire between fiscal 2019 and fiscal 2034 and are subject to limitations on their utilization.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
d. | Income before taxes on income is comprised as follows: |
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Domestic | $ | 817,164 | $ | 784,710 | $ | 743,125 | ||||||
Foreign | 56,626 | 45,106 | 52,711 | |||||||||
|
|
|
|
|
| |||||||
$ | 873,790 | $ | 829,816 | $ | 795,836 | |||||||
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Domestic | $ | 901.6 | $ | 897.4 | $ | 917.9 | ||||||
Foreign | 74.0 | 30.9 | 31.7 | |||||||||
$ | 975.6 | $ | 928.3 | $ | 949.6 |
e. | Taxes on income are comprised of the following: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Domestic taxes: | ||||||||||||
Current | $ | 140.6 | $ | 117.7 | $ | 130.9 | ||||||
Deferred | (23.0 | ) | (1.3 | ) | (1.1 | ) | ||||||
117.6 | 116.4 | 129.8 | ||||||||||
Foreign taxes: | ||||||||||||
Current | 13.1 | 12.7 | 7.1 | |||||||||
Deferred | 4.6 | 2.3 | (2.9 | ) | ||||||||
17.7 | 15.0 | 4.2 | ||||||||||
Taxes on income | $ | 135.3 | $ | 131.4 | $ | 134.0 |
f. | The Company operates its business in various countries, and accordingly attempts to utilize an efficient operating model to structure its tax payments based on the laws in the countries in which the Company operates. This can cause disputes between the Company and various tax authorities in different parts of the world. |
F - 37
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Current | $ | 203,771 | $ | 182,537 | $ | 143,008 | ||||||
Deferred | (15,847 | ) | (12,292 | ) | 28 | |||||||
|
|
|
|
|
| |||||||
$ | 187,924 | $ | 170,245 | $ | 143,036 | |||||||
|
|
|
|
|
| |||||||
Domestic | $ | 170,883 | $ | 154,921 | $ | 130,109 | ||||||
Foreign | 17,041 | 15,324 | 12,927 | |||||||||
|
|
|
|
|
| |||||||
$ | 187,924 | $ | 170,245 | $ | 143,036 | |||||||
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Domestic taxes: | ||||||||||||
Current | $ | 175,828 | $ | 165,476 | $ | 124,522 | ||||||
Deferred | (4,945 | ) | (10,555 | ) | 5,587 | |||||||
|
|
|
|
|
| |||||||
170,883 | 154,921 | 130,109 | ||||||||||
|
|
|
|
|
| |||||||
Foreign taxes: | ||||||||||||
Current | 27,943 | 17,061 | 18,486 | |||||||||
Deferred | (10,902 | ) | (1,737 | ) | (5,559 | ) | ||||||
|
|
|
|
|
| |||||||
17,041 | 15,324 | 12,927 | ||||||||||
|
|
|
|
|
| |||||||
Taxes on income | $ | 187,924 | $ | 170,245 | $ | 143,036 | ||||||
|
|
|
|
|
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
December 31, | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 235,705 | $ | 205,420 | ||||
Increases (decreases) related to tax positions taken during prior years | 12,051 | (14,550 | ) | |||||
Increases related to tax positions taken during the current year | 36,352 | 44,835 | ||||||
|
|
|
| |||||
Ending balance | $ | 284,108 | *) | $ | 235,705 | |||
|
|
|
|
December 31, | ||||||||
2023 | 2022 | |||||||
Beginning balance | $ | 436.3 | $ | 469.5 | ||||
Decrease related to tax positions taken during prior years | (35.2 | ) | (85.4 | ) | ||||
Increase related to tax positions taken during the current year | 51.9 | 52.2 | ||||||
Ending balance | $ | *) 453.0 | $ | *) 436.3 |
The Company’s U.S. subsidiaries fileCompany did not accrue penalties during the years ended December 31, 2023, 2022 and 2021.
F - 38
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
g. | Reconciliation of the theoretical tax expenses: Reconciliation between the theoretical tax expenses, assuming all income is taxed at the statutory rate in Israel and the actual income tax as reported in the statements of income is as follows: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Income before taxes as reported in the statements of income | $ | 975.6 | $ | 928.3 | $ | 949.6 | ||||||
Statutory tax rate in Israel | 23 | % | 23 | % | 23 | % | ||||||
Decrease in taxes resulting from: | ||||||||||||
Effect of “Technological preferred or Preferred Enterprise” status *) | (8) | % | (13) | % | (11) | % | ||||||
Others, net | (1) | % | 4 | % | 2 | % | ||||||
Effective tax rate | 14 | % | 14 | % | 14 | % | ||||||
*) Basic earnings per share amounts of the benefit resulting from the “Technological preferred or Preferred Enterprise” status | $ | 0.66 | $ | 0.95 | $ | 0.80 | ||||||
*) Diluted earnings per share amounts of the benefit resulting from the “Technological preferred or Preferred Enterprise” status | $ | 0.65 | $ | 0.94 | $ | 0.80 |
Reconciliation between the theoretical tax expenses, assuming all income is taxed at the statutory rate in Israel and the actual income tax as reported in the statements of income is as follows:
a. | General: Ordinary shares confer upon their holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends if declared. |
F - 39
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Income before taxes as reported in the statements of income | $ | 873,790 | $ | 829,816 | $ | 795,836 | ||||||
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Statutory tax rate in Israel | 26.5% | 26.5% | 25% | |||||||||
Decrease in taxes resulting from: | ||||||||||||
Effect of “Preferred Enterprise” status *) | (7%) | (5%) | (6%) | |||||||||
Others, net | 2% | (1%) | (1%) | |||||||||
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Effective tax rate | 21.5% | 20.5% | 18% | |||||||||
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*) Basic earnings per share amounts of the benefit resulting from the “Preferred Enterprise” status | $ | 0.31 | $ | 0.22 | $ | 0.24 | ||||||
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Diluted earnings per share amounts of the benefit resulting from the “Preferred Enterprise” status | $ | 0.30 | $ | 0.22 | $ | 0.24 | ||||||
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Share repurchase: On February 13, 2023 the Company announced the expansion of the Company’s on-going share repurchase program by an additional $2,000. Under the share repurchase program, as extended, the Company is authorized to continue to repurchase up to $325 each quarter. As of December 31, 2023, the Company repurchased ordinary shares for an aggregate amount of $14,372.7. During 2023, 2022 and 2021 the Company repurchased 9,857,092, 10,324,181, and 10,900,938 shares for an aggregate amount of $1,287.6, $1,299.9 and $1,299.5, respectively. |
Ordinary shares confer upon their holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends if declared.
Dividends declared on ordinary shares will be paid in New Israeli Shekels. Dividends paid to shareholders outside Israel will be converted into U.S. dollars, on the basis of the exchange rate prevailing at the date of payment.
On January 29, 2015, the Company’s board of directors approved and authorized the repurchase of up to additional $ 1,500,000 of the Company’s ordinary shares and not more than $250,000 per quarter. Under the share 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 by available working capital. As of December 31, 2015, the Company repurchased ordinary shares for an aggregate amount of $ 4,822,805. During 2015, 2014 and 2013 the Company repurchased 12,032,899, 11,207,320 and 10,148,834 shares for an aggregate amount of $ 985,735, $ 764,543 and $ 537,829, respectively.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Stock Options, RSUs and PSUs: |
In 2005, the Company adopted two new equity incentive plans, which were subsequently amended in January 2014: the 2005 United States Equity Incentive Plan and the 2005 Israel Equity Incentive Plan together are referred to as the Equity Incentive Plans.
Under the Equity Incentive Plans, the Company may grant options to employees, officers and directors at an exercise price equal to at least the fair market value of the ordinary shares at the date of grant and are granted for periods not to exceed seven years. The Company grants under the Equity Incentive Plans options, Restricted Stock Units (“RSUs”) and Performance RSUs
F - 40
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
Underissuance under the Equity Incentive Plans the Company’s non-employee directors receive an automatic annual option grant.
Following the amendments to the Equity Incentive Plans in January 2014, on such date.
Stock Options outstanding | 7,233,044 | |||
RSU outstanding | 2,459,201 | |||
PSU outstanding | 308,768 | |||
Ordinary shares available for issuance under the Equity Incentive Plans | 2,289,731 | |||
Total Reserved and Authorized Shares as of December 31, 2023 | 12,290,744 |
stock options, RSU and PSU outstanding is 122,907,440.
Options in thousands | Weighted average exercise price | Aggregate intrinsic value | ||||||||||
2015 | 2015 | 2015 | ||||||||||
Outstanding at beginning of year | 12,928 | $ | 47.72 | $ | 398,893 | |||||||
Granted | 2,425 | $ | 82.90 | |||||||||
Exercised | (2,614 | ) | $ | 31.74 | ||||||||
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Outstanding at December 31, 2015 | *)12,739 | $ | 57.69 | $ | 305,810 | |||||||
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Exercisable at December 31, 2015 | 7,798 | $ | 50.82 | $ | 239,202 | |||||||
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CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
The total intrinsic value of options exercised during the years 2015, 2014 and 2013 was $ 131,603, $ 89,957 and $ 90,352, respectively.
Number of options | Weighted average exercise price | Aggregate intrinsic value | ||||||||||
2023 | ||||||||||||
Outstanding at beginning of year | 7,778,108 | $ | 115.05 | $ | 82.5 | |||||||
Granted | 585,000 | $ | 131.90 | |||||||||
Exercised | (920,253 | ) | $ | 110.12 | ||||||||
Forfeited | (209,811 | ) | $ | 127.22 | ||||||||
Outstanding at December 31, 2023 | 7,233,044 | $ | 117.50 | $ | 255.3 | |||||||
Exercisable at December 31, 2023 | 5,902,708 | $ | 115.74 | $ | 218.7 |
F - 41
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
Outstanding | Exercisable | |||||||||||
Exercise price | Number of options (in thousands) | Weighted average (years) | Weighted average | Number of options (in thousands) | Weighted average (years) | Weighted average | ||||||
$ | $ | $ | ||||||||||
26.47-35.79 | 1,718 | 1.47 | 29.65 | 1,688 | 1.47 | 29.54 | ||||||
42.85-49.50 | 1,829 | 4.43 | 49.31 | 1,159 | 4.42 | 49.29 | ||||||
51.98-53.67 | 3,625 | 2.89 | 53.31 | 3,305 | 2.84 | 53.27 | ||||||
55.15-74.51 | 3,142 | 4.95 | 63.52 | 1,226 | 5.01 | 63.77 | ||||||
80.67-83.59 | 2,425 | 6.35 | 82.90 | 420 | 6.44 | 83.59 | ||||||
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26.47-83.59 | 12,739 | 4.09 | 57.69 | 7,798 | 3.31 | 50.82 | ||||||
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of such dates. As of December 31, 2023 all outstanding options are in-the-money. As of December 31, 2022, the remaining 126,250 outstanding options are out-of-the-money, and their intrinsic value was considered as zero.
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CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Year ended December 31, 2023 | ||||||||||||
RSUs | PSUs | Total | ||||||||||
Unvested at beginning of year | 2,219,853 | 188,493 | 2,408,346 | |||||||||
Granted | 1,251,505 | 159,170 | 1,410,675 | |||||||||
Vested | (752,783 | ) | (10,365 | ) | (763,148 | ) | ||||||
Forfeited | (259,374 | ) | (28,530 | ) | (287,904 | ) | ||||||
2,459,201 | 308,768 | 2,767,969 |
A summary of the Company’s PSUs activity is as follows:
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The weighted average fair values at grant date of PSUs granted for the year ended December 31, 2015 and 2014 were $ 83.48 and $64.03, respectively.
The total fair value of shares vested during 2015 was $ 1,523. During 2014 and 2013 no PSUs were vested.
As of December 31, 2015,2023, the Company had approximately $ 120,717$311.7 of unrecognized compensation expense related to non-vested stock options and non-vested RSUsRSU’s and PSUs,PSU’s, expected to be recognized over a weighted average period of 1.82 years and $ 9,879 of unrecognized compensation expense related to PSUs that will be fixed in number during 2016.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
d. | Employee Stock Purchase Plan (“ESPP”): |
The
F - 42
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
In 1996, the Company adopted an ESPP, which was subsequently amended in 2015. According to the amendments, commencing the purchase period that begins February 1, 2016, 500,000 ordinary shares are authorized for issuance under the US ESPP and 1,000,000 ordinary shares are authorized for issuance under the rest of the world (ROW) ESPP.
e. | Stock-Based Compensation: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Cost of revenues | $ | 7.7 | $ | 5.4 | $ | 4.8 | ||||||
Research and development | 48.7 | 42.0 | 31.8 | |||||||||
Selling and marketing | 56.3 | 43.2 | 42.8 | |||||||||
General and administrative | 32.6 | 40.8 | 40.9 | |||||||||
$ | 145.3 | $ | 131.4 | $ | 120.3 |
The following table sets forth the computation of basic and diluted earnings per share: |
The following table sets forth the computation of basic and diluted earnings per share:
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Net income | $ | 840.3 | $ | 796.9 | $ | 815.6 | ||||||
Weighted average ordinary shares outstanding | 116,913,913 | 125,205,504 | 133,121,763 | |||||||||
Dilutive effect: | ||||||||||||
Employee stock options, RSUs and PSUs | 1,433,836 | 1,133,485 | 988,285 | |||||||||
Diluted weighted average ordinary shares outstanding | 118,347,749 | 126,338,989 | 134,110,048 | |||||||||
Basic earnings per ordinary share | $ | 7.19 | $ | 6.37 | $ | 6.13 | ||||||
Diluted earnings per ordinary share | $ | 7.10 | $ | 6.31 | $ | 6.08 |
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Net income | $ | 685,866 | $ | 659,571 | $ | 652,800 | ||||||
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Weighted average ordinary shares outstanding (in thousands) | 179,218 | 188,487 | 195,647 | |||||||||
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Dilutive effect: | ||||||||||||
Employee stock options, RSUs and PSUs (in thousands) | 4,401 | 3,813 | 3,840 | |||||||||
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Diluted weighted average ordinary shares outstanding (in thousands) | 183,619 | 192,300 | 199,487 | |||||||||
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Basic earnings per ordinary share | $ | 3.83 | $ | 3.50 | $ | 3.34 | ||||||
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Diluted earnings per ordinary share | $ | 3.74 | $ | 3.43 | $ | 3.27 | ||||||
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F - 43
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
Unrealized Gains (losses) on marketable securities | Unrealized Gains (losses) on cash flow hedges | Total | ||||||||||
Beginning balance | $ | (94.6 | ) | $ | (3.3 | ) | $ | (97.9 | ) | |||
Other comprehensive income (loss) before reclassifications | 49.1 | (12.0 | ) | 37.1 | ||||||||
Amounts reclassified from accumulated other comprehensive income | 5.2 | 16.4 | 21.6 | |||||||||
Net current period other comprehensive income | 54.3 | 4.4 | 58.7 | |||||||||
Ending balance | $ | (40.3 | ) | $ | 1.1 | $ | (39.2 | ) |
a. | Summary information about geographical areas: The Company operates in one reportable segment (see Note 1 for a brief description of the Company’s business). The total revenues are attributed to geographic areas based on the location of the Company’s channel partners which are considered as end customers, as well as direct customers of the Company. The following table presents total revenues and property and equipment, net, by geographic area: |
1. | Revenues based on the channel partners’ location: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Americas | $ | 1,025.7 | $ | 991.1 | $ | 922.8 | ||||||
Europe, Middle East and Africa | 1,116.7 | 1,049.5 | 980.8 | |||||||||
Asia Pacific | 272.3 | 289.3 | 263.2 | |||||||||
$ | 2,414.7 | $ | 2,329.9 | $ | 2,166.8 |
The Company operates in one reportable segment (see Note 1 for a brief description of the Company’s business). The total revenues are attributed to geographic areas based on the location of the Company’s channel partners which are considered as end customers, as well as direct customers of the Company.F - 44
The following table presents total revenues for the years ended December 31, 2015, 2014 and 2013, and property and equipment, net as of December 31, 2015 and 2014, by geographic area:
1. Revenues based on the channel partners’ location:
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Americas, principally U.S. | $ | 791,568 | $ | 729,933 | $ | 647,533 | ||||||
Europe | 595,850 | 550,811 | 533,717 | |||||||||
Asia, Middle-East and Africa | 242,420 | 215,072 | 212,855 | |||||||||
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$ | 1,629,838 | $ | 1,495,816 | $ | 1,394,105 | |||||||
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2. Property and equipment, net:
December 31, | ||||||||
2015 | 2014 | |||||||
Israel | $ | 44,138 | $ | 37,455 | ||||
U.S. | 3,005 | 2,857 | ||||||
Rest of the world | 1,549 | 1,237 | ||||||
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$ | 48,692 | $ | 41,549 | |||||
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CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 15:-GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Cont.)
Property and equipment, net and ROU assets: |
December 31, | ||||||||
2023 | 2022 | |||||||
Israel | $ | 78.4 | $ | 73.9 | ||||
U.S. | 8.9 | 12.8 | ||||||
Rest of the world | 14.6 | 16.8 | ||||||
$ | 101.9 | $ | 103.5 |
b. | Summary information about product lines: The Company’s products can be classified by three main product lines. The following table presents total revenues for the years ended December 31, 2023, 2022 and 2021 by product lines: |
The Company’s products can be classified by three main product lines. The following table presents total revenues for the years ended December 31, 2015, 2014 and 2013 by product lines:
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Product and licenses: | ||||||||||||
Network security Gateways | $ | 485,778 | $ | 469,097 | $ | 441,805 | ||||||
Other *) | 70,014 | 51,216 | 55,125 | |||||||||
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555,792 | 520,312 | 496,930 | ||||||||||
Subscriptions: | ||||||||||||
Network security Gateways | 318,624 | 265,021 | 217,088 | |||||||||
Software updates and maintenance | 755,422 | 710,483 | 680,087 | |||||||||
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Total revenues | $ | 1,629,838 | $ | 1,495,816 | $ | 1,394,105 | ||||||
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Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Product and licenses: | ||||||||||||
Network security Gateways | $ | 452.0 | $ | 507.8 | $ | 480.5 | ||||||
Other *) | 45.4 | 47.1 | 33.4 | |||||||||
497.4 | 554.9 | 513.9 | ||||||||||
Security subscriptions | 981.2 | 858.0 | 755.2 | |||||||||
Software updates and maintenance | 936.1 | 917.0 | 897.7 | |||||||||
Total revenues | $ | 2,414.7 | $ | 2,329.9 | $ | 2,166.8 |
*) | Comprised of Endpoint security, Mobile security and Security management products, each |
F - 45
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousandsIn millions (except share and per share data)
NOTE 15:-GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Cont.)
c. | Financial income, net: |
Year ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Financial income: | ||||||||||||
Interest income | $ | 67,581 | $ | 65,497 | $ | 71,107 | ||||||
Realized gain on sale of marketable securities | 16 | 288 | 2,311 | |||||||||
Foreign currency re-measurement gain and others | — | — | 893 | |||||||||
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67,597 | 65,785 | 74,311 | ||||||||||
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Financial expense: | ||||||||||||
Amortization of marketable securities premium and accretion of discount, net | 29,622 | 33,021 | 37,903 | |||||||||
Foreign currency re-measurement loss | 485 | 1,844 | — | |||||||||
Others | 3,417 | 2,158 | 1,477 | |||||||||
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33,524 | 37,023 | 39,380 | ||||||||||
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$ | 34,073 | $ | 28,762 | $ | 34,931 | |||||||
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
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Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Financial income: | ||||||||||||
Interest income | $ | 92.4 | $ | 67.6 | $ | 66.1 | ||||||
Financial expense: | ||||||||||||
Amortization of marketable securities premium and accretion of discount, net | 3.1 | 18.5 | 21.0 | |||||||||
Realized loss (gain) on sale of marketable securities, net | 6.7 | - | (1.4 | ) | ||||||||
Foreign currency re-measurement (gain) loss | 3.8 | 3.3 | (0.2 | ) | ||||||||
Others | 2.3 | 1.8 | 4.6 | |||||||||
15.9 | 23.6 | 24.0 | ||||||||||
$ | 76.5 | $ | 44.0 | $ | 42.1 |
Date: April 28, 2016F - 46