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
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Emerging growth company
|
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☐
|
Other ☐
|
Auditor Firm Id:
|
Auditor Name:
|
Auditor Location: Tel-Aviv, Israel
|
• |
our expectations for our business, trends related to our business and the markets in which we operate and into which we sell products;
|
• |
uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which may impact demand and supply
of our products; |
• |
the effects of increased competition in our market; |
• |
our ability to timely and effectively scale and adapt our existing technology and infrastructure to meet current and future market
demands; |
• |
the effects on our business of global pandemics, such as COVID-19; |
• |
our ability to develop or acquire new and more technologically advanced products, and to successfully commercialize these products;
|
• |
our ability to protect our proprietary technology and intellectual property; |
• |
our ability to protect our information technology systems, networks and products and services from various security threats;
|
• |
our ability to increase adoption of our products and to maintain or increase our market share; |
• |
our ability to maintain our growth; |
• |
future amounts and sources of our revenue; |
• |
our future costs and expenses; |
• |
the adequacy of our capital resources; |
• |
our expectations to provide security for all organizations; |
• |
our expectations with respect to share repurchases by us and dividend payments by us; |
• |
the effects on our business of evolving laws and regulations, including government export or import controls and U.S. tax regulations;
|
• |
the effects of the current terrorist attacks by Hamas, and the war and hostilities between Israel and Hamas and Israel and Hezbollah;
|
• |
the impact of the significant military action against Ukraine launched by Russia and any related political or economic responses
and counter-responses or otherwise by various global actors; |
• |
our ongoing relationships with our current and future customers and channel partners, suppliers, contract manufacturers and distributors;
and |
• |
our other expectations, beliefs, intentions and strategies. |
|
PART I |
|
3 | ||
|
|
|
3 | ||
|
|
|
3 | ||
|
|
|
22 | ||
|
|
|
33 | ||
|
|
|
33 | ||
|
|
|
41 | ||
|
|
|
52 | ||
|
|
|
52 | ||
|
|
|
53 | ||
|
|
|
53 | ||
|
|
|
63 | ||
|
|
|
64 | ||
|
|
|
|
PART II |
|
|
|
|
64 | ||
|
|
|
64 | ||
|
|
|
64 | ||
|
|
|
65 | ||
|
|
|
65 | ||
|
|
|
66 | ||
|
|
|
66 | ||
|
|
|
66 | ||
|
|
|
67 | ||
|
|
|
67 | ||
|
|
|
68 | ||
68 | ||
68 | ||
68 | ||
|
PART III |
|
|
|
|
70 | ||
|
|
|
70 | ||
|
|
|
70 |
• |
If the market for information and network security solutions does not continue to grow, our business will be adversely affected.
|
• |
We may not be able to successfully compete, which could adversely affect our business and results of operations. |
• |
If we fail to enhance our existing products, develop or acquire new and more technologically advanced products, or fail to successfully
commercialize these products, our business and results of operations will suffer. |
• |
We may need to change our pricing models to compete successfully. |
• |
Our business, results of operations and financial condition are subject to the risks of earthquakes, fire, floods, pandemics such
as COVID 19 pandemic and other natural events, as well as manmade problems such as power disruptions or terrorism or war, such as the
war and hostilities between Israel and Hamas and Israel and Hezbollah have been and may continue to be adversely affected. |
• |
Prolonged economic uncertainties or downturns, globally or in certain regions or industries, could materially adversely affect our
business. |
• |
If our products fail to protect against attacks and our customers experience security breaches, our reputation and business could
be harmed. |
• |
Product defects may increase our costs and impair the market acceptance of our products and technology. |
• |
We are subject to risks relating to acquisitions. |
• |
We are dependent on a limited number of product families. |
• |
Competition for highly skilled personnel is intense. |
• |
We are dependent on a small number of distributors. |
• |
We purchase several key components and finished products from limited sources, and we are increasingly dependent on contract manufacturers
for our hardware products. |
• |
We incorporate third-party technology in our products, which may make us dependent on the providers of these technologies and expose
us to potential intellectual property claims. |
• |
Failures of the third-party servers, cloud service providers and other third-party hardware, software and infrastructure on which
we rely could adversely affect our business. |
• |
We are the defendants in various lawsuits and have been subject to tax disputes and governmental proceedings, which could adversely
affect our business, results of operations and financial condition. |
• |
Uncertainties in the interpretation and application of worldwide tax reforms, complex tax laws and regulations could materially affect
our tax obligations and effective tax rate. |
• |
Class action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert
our management’s attention and resources. |
• |
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in
international markets. |
• |
We may not be able to successfully protect our intellectual property rights, which could cause substantial harm to our business.
|
• |
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. |
• |
If a third-party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly
and time-consuming litigation or expensive licenses, which could harm our business. |
• |
Due to the global nature of our business, we must comply with various anti-bribery regimes and any failure to do so could adversely
affect our business. |
• |
We are exposed to various legal, business, political, economic, health-related and other risks associated with our international
operations; these risks could increase our costs, reduce future growth opportunities and affect our results of operations. |
• |
Our actual or perceived failure to adequately protect personal data could subject us to sanctions and damages and could harm our
reputation and business. |
• |
Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies
and increases our costs of compliance. |
• |
A small number of shareholders own a substantial portion of our ordinary shares, and they may make decisions with which you or others
may disagree. |
• |
Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest
rates. |
• |
Currency fluctuations may affect the results of our operations or financial condition. |
• |
Our information technology systems, networks and products and services have been, and may continue to be, subject to various security
threats. |
• |
We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract
and retain other highly skilled employees could adversely affect our business. |
• |
The ongoing war and other potential political, economic and military instability in Israel, where our principal executive offices
and our principal research and development facilities are located, may adversely affect our results of operations. |
• |
Our operations may be disrupted by the obligations of our personnel to perform military service. |
• |
The tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would
increase our taxes. |
• |
Your rights and responsibilities as a shareholder are, and will continue to be, governed by Israeli law which differs in some material
respects from the rights and responsibilities of shareholders of U.S. companies. |
• |
Provisions of Israeli law and our articles of association may delay, prevent or make difficult an acquisition of us, prevent a change
of control, and negatively impact our share price. |
• |
As a foreign private issuer we are not subject to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing
certain Exchange Act reports. |
• |
As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we may follow certain home country corporate
governance practices instead of certain Nasdaq requirements. |
• |
the continued expansion of Internet usage and the number of organizations adopting or expanding intranets; |
• |
the continued adoption of “cloud” infrastructure by organizations; |
• |
the ability of the infrastructures implemented by organizations to support an increasing number of users and services; |
• |
the continued development of new and improved services for implementation across the Internet and between the Internet and intranets;
|
• |
the adoption of data security measures as it pertains to data encryption and data loss prevention technologies; |
• |
continued access to mobile API’s, APPs and application stores with Apple, Google and Microsoft; |
• |
government regulation of the Internet and governmental and non-governmental requirements and standards with respect to data security
and privacy; and |
• |
economic, social, or political conditions, including 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, the Russia-Ukraine armed conflict and the tension between China and Taiwan. |
• |
issue equity securities which would dilute the current shareholders’ percentage of ownership; |
• |
incur substantial debt; |
• |
assume contingent liabilities; or |
• |
expend significant cash. |
• |
unanticipated costs or liabilities associated with the acquisition; |
• |
incurrence of acquisition-related costs; |
• |
diversion of management’s attention from other business concerns; |
• |
harm to our existing business relationships with manufacturers, distributors and customers as a result of the acquisition;
|
• |
the potential loss of key employees; |
• |
use of resources that are needed in other parts of our business; |
• |
use of substantial portions of our available cash to consummate the acquisition; or |
• |
unrealistic goals or projections for the acquisition. |
• |
technology import and export license requirements; |
• |
costs of localizing our products for foreign countries, and the lack of acceptance of localized products in foreign countries;
|
• |
varying economic and political 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; |
• |
potential tariffs, sanctions, fines or other trade restrictions, including any political or economic responses and counter-responses
or otherwise by various global actors to the significant military action against Ukraine launched by Russia; |
• |
imposition of or increases in tariffs or other payments on our revenues in these markets; |
• |
greater difficulty in protecting intellectual property; |
• |
difficulties in managing our overseas subsidiaries and our international operations; |
• |
economic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising
interest rates, exchange rate fluctuations and inflation; |
• |
political instability and civil unrest which could discourage investment and complicate our dealings with governments; |
• |
widespread health emergencies or pandemics, such as the COVID-19 pandemic; |
• |
difficulties in complying with a variety of foreign laws and legal standards and changes in regulatory requirements; |
• |
expropriation and confiscation of assets and facilities; |
• |
difficulties in collecting receivables from foreign entities or delayed revenue recognition; |
• |
recruiting and retaining talented and capable employees; |
• |
differing labor standards; |
• |
increased tax rates; |
• |
potentially adverse tax consequences, including taxation of a portion of our revenues at higher rates than the tax rate that applies
to us in Israel; |
• |
fluctuations in currency exchange rates and the impact of such fluctuations on our results of operations and financial position;
and |
• |
the introduction of exchange controls and other restrictions by foreign governments. |
• |
Some programs may be discontinued, |
• |
We may be unable to meet the requirements for continuing to qualify for some programs, |
• |
These programs and tax benefits may be unavailable at their current levels, or |
• |
We may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.
|
• |
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. |
• |
Comprehensive enterprise-grade security across the data center, network, cloud, branch office, and remote users with unified management.
|
• |
A simplified and consolidated approach to securing their entire IT infrastructure with organizations of all sizes. |
• |
Secure Mesh Networks with Quantum |
• |
Secure the Cloud with CloudGuard |
• |
Secure the Workspace with Harmony Prevents sophisticated attacks across the IT workspace including
emails, web applications, devices and remote corporate access. |
• |
Collaborative Security Operations with Infinity Core Services |
• |
Quantum: Secure Your Network and Data Center security for perimeter and datacenter |
• |
Quantum Security Gateways and firewalls 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. |
• |
CloudGuard: Prevention-First Cloud Security |
• |
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: Securing the Workspace |
• |
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. |
• |
Accelerate security administration |
• |
Increase security effectiveness |
• |
Improve incident mitigation and response |
• |
The Forrester Wave™: Zero Trust Platform Providers, Q3 2023 |
• |
The Forrester Wave™: Enterprise Email Security, Q2 2023 |
• |
Company of The Year Award 2023 “Best In Class Global Next Generation Firewall Industry |
• |
Radar for Cloud Native Protection Platform 2023 |
• |
Radar for Cloud Workload Protection Platforms 2023 |
• |
Radar for Endpoint Security 2023 |
• |
Radar Extended Detection & Response 2023 |
• |
Next Generation Firewall Radar |
• |
Radar for Cloud Security Posture Management 2023 |
• |
Radar for Cloud Network Security, 2023 |
• |
Radar for Ransomware Prevention 2023 |
• |
Radar for Endpoint Detection & Response (EDR) 2023 |
• |
Universal Radar for Email Security 2023 |
• |
For the second consecutive year, Check Point attained Secure Certification with its #1 position in Miercom’s 2024 Security
Benchmark Report. Miercom lab tests showed 99.8% prevention of unknown attacks and 100% of phishing attacks. The average malware block
rate for Check Point competitors was 69.2%. |
|
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 |
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. |
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. – Rep office Indonesia
(1) |
Singapore | |
Check Point Holding (Singapore) PTE Ltd. –US, NY Branch (2)
|
Singapore | |
Israel Check Point Software Technologies Ltd. China (3) |
China | |
Check Point Holding AB (4) |
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. |
(3) |
Representative office of Check Point Software Technologies Ltd. |
(4) |
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 Limited
|
Australia | |
Check Point Software Technologies (Austria) GmbH |
Austria | |
Check Point Software Technologies Belarus LLC |
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 Eurl |
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) Limited |
Hong Kong | |
Check Point Software Technologies India Private Limited |
India | |
Check Point Software Technologies (Italia) S.r.l |
Italy | |
Check Point Software Technologies Mexico S.A. de C.V. |
Mexico | |
Check Point Software Technologies (Beijing) Co., Ltd. |
China | |
Check Point Software Technologies (New Zealand) Limited |
New Zealand | |
Check Point Software Technologies Norway A.S. |
Norway | |
Check Point Software Technologies (Philippines) Inc. |
Philippines | |
Check Point Software Technologies (Poland) Sp.z.o.o. |
Poland | |
CPST (Portugal), Sociedade Unipessoal Lda. |
Portugal | |
Check Point Software Technologies (RMN) SRL |
Romania | |
Check Point Software Technologies (Russia) OOO |
Russia | |
Check Point Software Technologies (Korea) Ltd. |
South Korea | |
Check Point Software Technologies (Spain), S.A. |
Spain | |
Check Point Software Technologies (Switzerland) AG |
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. |
Location
|
Space (square feet) |
|||
Israel |
413,000 |
*) | ||
Americas |
135,000 |
|||
Europe, Middle East and Africa |
61,000 |
|||
Asia Pacific |
43,000 |
|
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 |
% |
• |
Revenue recognition; |
• |
Accounting for income taxes; |
• |
Impairment of marketable securities; |
• |
Loss Contingencies; and |
• |
Manufacturing Partner and Supplier Liabilities. |
|
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: |
|
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,
|
|||||||
|
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%. |
Name |
|
Position
|
|
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 |
|
|
|
|
|
|||||
|
and Director |
|
|
|
|
|
||||||
Jerry Ungerman |
|
Chairman of the Board |
|
✓ |
|
|
|
|
||||
Dorit Dor |
|
Chief Technology Officer |
|
|
|
|
|
|||||
Nataly Kremer |
|
Chief Product Officer and Head of Research and Development |
|
|
|
|
|
|||||
Rupal Hollenbeck |
|
President |
|
|
|
|
|
|||||
Roei Golan |
|
Chief Financial Officer |
|
|
|
|
|
|||||
Guy Gecht (3) |
|
Lead Independent Director |
|
✓ |
|
✓ |
|
✓ |
|
✓ |
|
|
Yoav Chelouche (3) |
|
Director |
|
✓ |
|
✓ |
|
✓ |
|
✓ |
|
|
Tzipi Ozer-Armon |
|
Director |
|
✓ |
|
|
|
✓ |
|
|
||
Ray Rothrock (3) |
|
Director |
|
✓ |
|
✓ |
|
✓ |
|
✓ |
|
|
Tal Shavit Shenhav |
|
Director |
|
✓ |
|
|
|
|
✓ | |||
Shai Weiss |
|
Director |
|
✓ |
|
|
|
|
✓ | |||
Jill Smith |
Director |
✓ |
✓ |
(1) |
“Independent Director” under the Nasdaq Global Select Market regulations and the Israeli Companies Law (see explanation
below). |
(2) |
“Outside Director” as required by the Israeli Companies Law (see explanation below). |
(3) |
“Financial expert” as required by the Israeli Companies Law and Nasdaq requirements with respect to membership on the
audit committee (see “Item 16A – Audit Committee Financial Expert”). |
|
As of December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Function: |
||||||||||||
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,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Function: |
||||||||||||
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 |
Name |
Number of
shares beneficially owned (1)(5) |
% of
class of shares (2)
|
Title of securities covered by the options, RSUs and PSUs |
Number of
options, RSUs, and PSUs (3) |
Exercise price of
options |
Date of expiration of options | ||||||||||||
Gil 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) |
The number of ordinary shares shown includes shares that each shareholder has the right to acquire pursuant to stock options that
are exercisable and RSUs and PSUs that vest within 60 days after February 29, 2024. |
(2) |
If a shareholder has the right to acquire shares by exercising stock options or has RSUs and PSUs (as determined in accordance with
footnote (1)), these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that
is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage
owned by any other shareholder. |
(3) |
Number of options immediately exercisable or exercisable and RSUs and PSU that vest within 60 days from February 29, 2024.
|
(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 the outstanding ordinary shares and voting rights as of February 29, 2024.
|
(5) |
Other than Mr. Shwed, none of our executive officers and directors beneficially own more than 1% of our outstanding ordinary shares.
|
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 |
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.
|
• |
any amendment to the articles of association, |
• |
an increase of the company’s authorized share capital, |
• |
a merger, or |
• |
approval of interested party transactions that require shareholder approval. |
• |
the majority includes at least a majority of the shares voted by shareholders other than our controlling shareholders or shareholders
who have a personal interest in the adoption of the compensation policies; or |
• |
the total number of shares held by non-controlling shareholders and disinterested shareholders that voted against the adoption of
the compensation policies, does not exceed 2% of the aggregate voting rights of our company. |
• |
Monetary liability imposed on the office holder in favor of a third party in a judgment, including a settlement or an arbitral award
confirmed by a court. |
• |
Reasonable legal costs, including attorneys’ fees, expended by an office holder as a result of an investigation or proceeding
instituted against the office holder by a competent authority, provided that such investigation or proceeding concludes without the filing
of an indictment against the office holder, and either: |
• |
no financial liability was imposed on the office holder in lieu of criminal proceedings, or |
• |
financial liability was imposed on the office holder in lieu of criminal proceedings, but the alleged criminal offense does not require
proof of criminal intent. |
• |
Reasonable legal costs, including attorneys’ fees, expended by the office holder or for which the office holder is charged
by a court: |
• |
in an action brought against the office holder by us, on our behalf or on behalf of a third party, |
• |
in a criminal action in which the office holder is found innocent, or |
• |
in a criminal action in which the office holder is convicted, but in which proof of criminal intent is not required. |
• |
An individual citizen or resident (as defined for U.S. federal income tax purposes) of the United States; |
• |
A domestic partnership; |
• |
A corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any of
its states; |
• |
An estate, if the estates income is subject to U.S. federal income taxation; or |
• |
Aspects of U.S. federal income taxation relevant to U.S. Shareholders by reason of their particular circumstances (including potential
application of the alternative minimum tax); |
• |
U.S. Shareholders subject to special treatment under the U.S. federal income tax laws, such as banks, financial institutions, insurance
companies, broker-dealers or traders in securities; |
• |
U.S. Shareholders that are tax-exempt organizations and pension funds; |
• |
U.S. Shareholders that are former citizens or long-term residents of the United States; |
• |
U.S. Shareholders that are partnerships or entities treated as partnerships or other pass-through entities and persons who own our
shares through such entities, and non-U.S. individuals or entities; |
• |
U.S. Shareholders that are real estate investment trusts or regulated investment companies; |
• |
U.S. Shareholders who own 10% or more of our outstanding voting shares, either directly or by attribution; |
• |
U.S. Shareholders who hold our shares as part of a hedging, straddle, integrated, or conversion transaction; |
• |
U.S. Shareholders who acquire their shares of our capital stock in a “compensatory transaction”; |
• |
U.S. Shareholders whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar; and
|
• |
Any aspect of U.S. estate, gift, state, or local tax law, or any non-U.S. tax law. |
• |
75% or more of our gross income in the taxable year is passive income, or |
• |
50% or more of the average percentage of our assets held during the taxable year produce or are held for the production of passive
income. |
|
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 |
• |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets, |
• |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations
of our management and directors, and |
• |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the financial statements. |
|
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
|
Total Number
of Ordinary Shares Purchased (1) |
Average Price
per Ordinary Share |
Approximate
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 |
(1) |
All the Ordinary Shares were purchased as part of publicly announced plans or programs. |
- |
A “cybersecurity incident” means an unauthorized occurrence, or a series of related unauthorized occurrences, on or conducted
through Check Point’s information systems that jeopardizes the confidentiality, integrity, or availability of a registrant’s
information systems or any information residing therein. |
- |
A “cybersecurity threat” means any potential unauthorized occurrence on or conducted through a registrant’s information
systems that may result in adverse effects on the confidentiality, integrity, or availability of Check Point’s information systems
or any information residing therein. |
- |
“Information systems” means electronic information resources, owned or used by Check Point, including physical or virtual
infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance,
use, sharing, dissemination, or disposition of Check Point’s information to maintain or support Check Point’s operations.
|
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, 2020, formatted in Inline XBRL:
|
(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, (vi) Schedule II — Valuation and Qualifying Accounts and Reserves, and (vii) Cover
Page |
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. |
(4) |
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. |
(6) |
Incorporated by reference to Exhibit 4.2 of Check Point’s Registration Statement on Form S-8 (No. 333-228075) filed with the
Securities and Exchange Commission on October 31, 2018. |
(7) |
Incorporated by reference to Annex A of Check Point’s Report on Form 6-K filed with the Securities and Exchange Commission
on July 27, 2022. |
(8) |
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. |
|||
By: |
/s/ Gil Shwed |
||
|
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 - F-46
|
Description of the Matter
|
As described in Note 2 to the consolidated financial statements, the Company primarily derives revenues from sales of products and licenses, security subscriptions and software updates and maintenance. The Company’s contracts with customers often contain multiple goods and services which are accounted for as separate performance obligations when they are distinct. The Company allocates the transaction price to the distinct performance obligations on a relative standalone selling price.
Auditing the management’s determination of the standalone selling price required challenging and subjective auditor judgment due to the subjective assumptions used to establish the standalone selling price for each performance obligation. Standalone selling price for goods and services can evolve over time due to changes in the Company’s pricing practices that are influenced by intense competition, changes in demand for products and services, and economic factors, among others. This in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s determination of the standalone selling price.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s revenue process, including controls over the development and review of assumptions used to determine the standalone selling prices.
Our substantive audit procedures included testing management’s determination of standalone selling prices for each performance obligation, including, among others, assessing the appropriateness of the methodology applied, testing mathematical accuracy of the underlying data and evaluated the sources of the historical data and assumptions that the Company used by considering their reliability. We also performed sensitivity analyses over key assumptions to assess the impact on revenue recognition that could result from changes to the Company’s assumptions. We also evaluated the Company’s disclosures included in notes to the consolidated financial statements.
|
Description of the Matter
|
As discussed in Note 11 to the consolidated financial statements, 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. The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more-likely-than-not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition.
Auditing management’s analysis of the Company’s uncertain tax positions was especially subjective and complex due to the significant judgments made by management to determine the provisions for tax uncertainties. These provisions are based on interpretations of complex tax laws and determination of arm’s length pricing for certain intercompany transactions. The assumptions underlying the provisions for uncertain tax positions include the potential tax exposure resulting from management’s interpretations and the determination of the cumulative probability that the uncertain tax position will be upheld upon regulatory examination.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to assess and review their uncertain tax positions. For example, we tested the controls over the review of assumptions used in the estimation calculation such as the Company’s review over existing and potential tax controversies and tax audit results, and the computation of the impact to uncertain tax positions and tax reserves.
Our audit procedures included, among others, evaluating the assumptions the Company used to develop its uncertain tax positions and related unrecognized income tax benefit amounts by jurisdiction and testing the completeness and accuracy of the underlying data used by the Company to calculate its uncertain tax positions. Our audit procedures also included, with the assistance of our tax professionals, evaluating the technical merits of the Company’s tax positions and the amounts recorded for uncertain tax positions. This included assessing the Company’s correspondence with the relevant tax authorities and evaluating income tax opinions or other third-party advice obtained by the Company based on our knowledge of, and experience with, the application of international and local income tax laws by the relevant income tax authorities. We also evaluated the Company’s financial statement disclosures related to these tax matters.
|
Description of the Matter
|
As described in Note 3 to the consolidated financial statements, on September 13, 2023, the Company acquired 100% of the equity shares of Perimeter 81 Ltd. (Perimeter 81) for a total consideration of $503.1 million (the “Perimeter 81 Acquisition”). The Perimeter 81 Acquisition was accounted for as a business combination in accordance with ASC 805 “Business Combinations”.
Auditing the Company's accounting for the Perimeter 81 Acquisition was complex due to the significant estimation uncertainty in determining the fair values of identified intangible assets, which consisted of technology of $ 99.6 million and customer relationships of $57.0 million.
The significant estimation uncertainty in determining the fair values of identified intangible assets was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business. The significant assumptions used to estimate the fair value of the technology and customer relationships intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, such as revenue growth rates, profitability margins and estimated costs. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
|
|
|
How We Addressed the Matter in Our Audit
|
In our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Perimeter 81 Acquisition. This included testing controls over the estimation process supporting the recognition and measurement of identified intangible assets, and management's judgment and evaluation of underlying assumptions and estimates with regards to the fair values of the identified intangible assets.
To test the estimated fair value of the technology and customer relationships intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. For example, we compared the revenue growth rates and expected costs to historical financial information, comparable companies and market and economic trends. We also performed a sensitivity analysis of the discount rate, profit margins, revenue projections and estimated expected costs to evaluate the change in the fair value resulting from changes in the assumptions.
|
CONSOLIDATED BALANCE SHEETS
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
ASSETS
|
||||||||
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Short-term bank deposits
|
|
|
||||||
Marketable securities
|
|
|
||||||
Trade receivables, net
|
|
|
||||||
Prepaid expenses and other assets
|
|
|
||||||
|
||||||||
Total current assets
|
|
|
||||||
|
||||||||
LONG-TERM ASSETS:
|
||||||||
Marketable securities
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Deferred tax asset, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Other assets
|
|
|
||||||
|
||||||||
Total long-term assets
|
|
|
||||||
|
||||||||
Total assets
|
$
|
|
$
|
|
CONSOLIDATED BALANCE SHEETS (CONT’D)
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
|
$
|
|
$
|
|
||||
Employees and payroll accruals
|
|
|
||||||
Deferred revenues
|
|
|
||||||
Accrued expenses and other liabilities
|
|
|
||||||
|
||||||||
Total current liabilities
|
|
|
||||||
|
||||||||
LONG-TERM LIABILITIES:
|
||||||||
Deferred revenues
|
|
|
||||||
Income tax accrual
|
|
|
||||||
Other liabilities
|
|
|
||||||
|
||||||||
Total long-term liabilities
|
|
|
||||||
|
||||||||
Total liabilities
|
|
|
||||||
|
||||||||
SHAREHOLDERS’ EQUITY:
|
||||||||
Ordinary shares, NIS
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury shares at cost,
December 31, 2023 and 2022, respectively |
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Retained earnings
|
|
|
||||||
|
||||||||
Total shareholders’ equity
|
|
|
||||||
|
||||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF INCOME
|
Year ended
December 31, |
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Revenues:
|
||||||||||||
Products and licenses
|
$
|
|
$
|
|
$
|
|
||||||
Security subscriptions
|
|
|
|
|||||||||
Software updates and maintenance
|
|
|
|
|||||||||
|
||||||||||||
Total revenues
|
|
|
|
|||||||||
|
||||||||||||
Cost of products and licenses *)
|
|
|
|
|||||||||
Cost of security subscriptions *)
|
|
|
|
|||||||||
Cost of software updates and maintenance *)
|
|
|
|
|||||||||
Amortization of technology
|
|
|
|
|||||||||
|
||||||||||||
Total cost of revenues
|
|
|
|
|||||||||
|
||||||||||||
Research and development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
|
||||||||||||
Total operating expenses
|
|
|
|
|||||||||
|
||||||||||||
Operating income
|
|
|
|
|||||||||
Financial income, net
|
|
|
|
|||||||||
|
||||||||||||
Income before taxes on income
|
|
|
|
|||||||||
Taxes on income
|
|
|
|
|||||||||
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Basic earnings per ordinary share
|
$
|
|
$
|
|
$
|
|
||||||
Number of shares used in computing basic earnings per share
|
|
|
|
|||||||||
|
||||||||||||
Diluted earnings per ordinary share
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Number of shares used in computing diluted earnings per share
|
|
|
|
*) |
Not including amortization of technology shown separately.
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
Year ended
December 31, |
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Other comprehensive income (loss)
|
||||||||||||
|
||||||||||||
Change in unrealized gains (losses) on marketable securities:
|
||||||||||||
Unrealized gains (losses) arising during the period, net of tax
|
|
(
|
)
|
(
|
)
|
|||||||
Losses (gains) reclassified into earnings, net of tax
|
|
|
)
|
(
|
)
|
|||||||
|
|
(
|
)
|
(
|
)
|
|||||||
Change in unrealized gains (losses) on cash flow hedges:
|
||||||||||||
Unrealized losses arising during the period, net of tax
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Losses (gains) reclassified into earnings, net of tax
|
|
|
(
|
)
|
||||||||
|
|
(
|
)
|
(
|
)
|
|||||||
Other comprehensive income (loss), net of tax
|
|
(
|
)
|
(
|
)
|
|||||||
Comprehensive income
|
$
|
|
$
|
|
$
|
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
|
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
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||||
|
||||||||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units and performance share units (
|
-
|
|
|
-
|
-
|
|
||||||||||||||||||
Treasury shares at cost (
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
-
|
-
|
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
(
|
)
|
-
|
(
|
)
|
||||||||||||||||
Fair value of awards attributable to pre-acquisition services
|
-
|
|
-
|
-
|
-
|
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
|
||||||||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (
|
-
|
|
|
-
|
-
|
|
||||||||||||||||||
Treasury shares at cost (
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
-
|
-
|
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
(
|
)
|
-
|
(
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance as of December 31, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
|
||||||||||||||||||||||||
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (
|
-
|
|
|
-
|
-
|
|
||||||||||||||||||
Treasury shares at cost (
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
-
|
-
|
|
||||||||||||||||||
Other comprehensive income, net of tax
|
-
|
-
|
-
|
|
-
|
|
||||||||||||||||||
Fair value of awards attributable to pre-acquisition services
|
-
|
|
-
|
-
|
-
|
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance as of December 31, 2023
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|
Year ended
December 31, |
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Cash flows from operating activities:
|
||||||||||||
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation of property and equipment
|
|
|
|
|||||||||
Amortization of premium and accretion of discount on marketable securities, net
|
|
|
|
|||||||||
Realized loss (gain) on sale of marketable securities, net
|
|
|
(
|
)
|
||||||||
Amortization of intangible assets
|
|
|
|
|||||||||
Stock-based compensation
|
|
|
|
|||||||||
Deferred income tax benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase in trade receivables, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Decrease (increase) in prepaid expenses and other assets
|
(
|
)
|
|
|
||||||||
Increase (decrease) in trade payables
|
|
|
(
|
)
|
||||||||
Increase (decrease) in employees and payroll accruals
|
|
|
(
|
)
|
||||||||
Increase (decrease) in income tax accrual and accrued expenses and other liabilities
|
(
|
)
|
(
|
)
|
|
|||||||
Increase in deferred revenues
|
|
|
|
|||||||||
Other
|
|
|
|
|||||||||
|
||||||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
|
||||||||||||
Proceeds from short-term bank deposits
|
|
|
|
|||||||||
Proceeds from maturity of marketable securities
|
|
|
|
|||||||||
Proceeds from sale of marketable securities
|
|
|
|
|||||||||
Investment in marketable securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investment in short-term bank deposits
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash paid in conjunction with acquisitions, net of acquired cash
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
Net cash provided by (used in) investing activities
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Year ended
December 31, |
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
|
||||||||||||
Proceeds from issuance of treasury shares upon exercise of options
|
$
|
|
$
|
|
$
|
|
||||||
Purchase of treasury shares at cost
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payments related to shares withheld for taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
Increase (decrease) in cash and cash equivalents
|
|
(
|
)
|
|
||||||||
Cash and cash equivalents at the beginning of the year
|
|
|
|
|||||||||
|
||||||||||||
Cash and cash equivalents at the end of the year
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
|
||||||||||||
Cash paid during the year for taxes on income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Non-cash investing activity
|
||||||||||||
|
||||||||||||
Fair value of awards attributable to pre-acquisition services
|
|
|
|
|||||||||
Operating lease liabilities arising from obtaining right of use assets
|
$
|
|
$
|
|
$
|
|
a. |
Check Point Software Technologies Ltd., an Israeli corporation (“Check Point Ltd.”), and subsidiaries (collectively, the “Company” or “Check Point”), develop, market and support wide range of products and services for IT security, by offering a multilevel security architecture that defends enterprises’ cloud, network and mobile device held information.
|
The Company operates in
|
b. |
In each 2023, 2022 and 2021, approximately
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
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.
|
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”.
|
|
F - 15
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.)
|
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.
|
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 investment.
|
e. |
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.
|
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 - 16
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.)
|
g. |
Investments in marketable securities:
|
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
|
|
Office furniture and equipment
|
|
Building
|
|
Leasehold improvements
|
|
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.)
|
i. |
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:
|
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.)
|
l. |
Intangible assets, net:
|
m. |
Impairment of long-lived assets including intangible assets subject to amortization and ROU assets:
|
n. |
Manufacturing partner and supplier liabilities:
|
o. |
Research and development costs:
|
F - 20
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.)
|
p. |
Revenue recognition:
|
F - 21
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.)
|
q. |
Cost of revenues:
|
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.)
|
r. |
Severance pay:
|
s. |
Employee benefit plan:
|
t. |
Income taxes:
|
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:
|
v. |
Concentrations of credit risk:
|
w. |
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.)
|
|
Year ended
December 31, |
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
|
|
(
|
)
|
||||||||
|
|
|
(
|
)
|
||||||||
|
|
|
(
|
)
|
||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
(
|
)
|
x. |
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.)
|
y. |
Accounting for stock-based compensation:
|
|
Year ended December 31,
|
|||||||||||
2023
|
2022
|
2021
|
||||||||||
Employee Stock Options
|
||||||||||||
Expected volatility
|
|
%
|
|
%
|
|
%
|
||||||
Risk-free interest rate
|
|
%
|
|
%
|
|
%
|
||||||
Dividend yield
|
|
%
|
|
%
|
|
%
|
||||||
Expected term (years)
|
|
|
|
|||||||||
|
||||||||||||
Employee Stock Purchase Plan
|
||||||||||||
Expected volatility
|
|
%
|
|
%
|
|
%
|
||||||
Risk-free interest rate
|
|
%
|
|
%
|
|
%
|
||||||
Dividend yield
|
|
%
|
|
%
|
|
%
|
||||||
Expected term (years)
|
|
|
|
F - 26
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.)
|
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.
|
aa. |
Comprehensive income:
|
ab. |
Treasury shares:
|
F - 27
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.)
|
ac. |
Legal contingencies:
|
ad. |
Recently Issued Accounting Pronouncements, not yet adopted:
|
NOTE 3:- |
ACQUISITIONS |
a. |
On
|
b. |
On
|
c. |
On
|
d. |
On
|
F - 28
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 3:- |
ACQUISITIONS (Cont.) |
Weighted
Average Useful
Life
|
Amount
|
|||||
Goodwill
|
$
|
|
||||
Core technology
|
|
|
||||
Customer relationship
|
|
|
||||
Net assets assumed
|
|
|||||
Total
|
$
|
|
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 4:- |
CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND MARKETABLE SECURITIES |
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
Cash and cash equivalents:
|
||||||||
Cash
|
$
|
|
$
|
|
||||
Money market funds
|
|
|
||||||
Short term deposits
|
|
|
||||||
|
||||||||
Total Cash and cash equivalents
|
|
|
||||||
|
||||||||
Short-term bank deposits:
|
|
|
||||||
Marketable securities:
|
||||||||
Debt securities issued by the U.S. Treasury and other U.S. government agencies
|
|
|
||||||
Debt securities issued by other governments
|
|
|
||||||
Corporate debt securities
|
|
|
||||||
|
||||||||
Total Marketable securities
|
|
|
||||||
Total Cash and cash equivalents, short-term bank deposits and marketable securities
|
$
|
|
$
|
|
|
December 31, 2023
|
|||||||||||||||
Amortized Cost
|
Gross unrealized
gain
|
Gross unrealized loss
|
Fair Value
|
|||||||||||||
Contractual maturity year:
|
||||||||||||||||
Within one year
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
After one year through five years
|
|
|
(
|
)
|
|
|||||||||||
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
December 31, 2022
|
|||||||||||||||
Amortized Cost
|
Gross unrealized
gain
|
Gross unrealized loss
|
Fair Value
|
|||||||||||||
Contractual maturity year:
|
||||||||||||||||
Within one year
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
After one year through five years
|
|
|
(
|
)
|
|
|||||||||||
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
F - 30
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 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
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
||||||||||||
Cash equivalents
|
||||||||||||||||||||||||
Money market funds
|
|
-
|
|
|
-
|
|
||||||||||||||||||
Short term deposits
|
|
-
|
|
|
-
|
|
||||||||||||||||||
Short-term bank deposits
|
|
-
|
|
|
-
|
|
||||||||||||||||||
Marketable securities:
|
||||||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other U.S. government agencies
|
-
|
|
|
-
|
|
|
||||||||||||||||||
Debt securities issued by other governments
|
-
|
|
|
-
|
|
|
||||||||||||||||||
Corporate debt securities
|
-
|
|
|
-
|
|
|
||||||||||||||||||
Foreign currency derivative contracts
|
-
|
|
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||||
Total financial assets
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
Cost:
|
||||||||
Computers and peripheral equipment
|
$
|
|
$
|
|
||||
Office furniture and equipment
|
|
|
||||||
Building
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
|
||||||||
|
|
|
||||||
Accumulated depreciation
|
|
|
||||||
|
||||||||
Property and equipment, net
|
$
|
|
$
|
|
F - 31
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
a. |
Goodwill:
|
|
2023
|
2022
|
||||||
Balance as of January 1
|
$
|
|
$
|
|
||||
Acquisitions
|
|
|
||||||
|
||||||||
Balance as of December 31
|
$
|
|
$
|
|
b. |
Intangible assets, net:
|
|
Useful
|
December 31,
|
|||||||||
|
Life
|
2023
|
2022
|
||||||||
Original amount:
|
|||||||||||
Core technology
|
|
$
|
|
$
|
|
||||||
Trademarks and trade names
|
|
|
|
||||||||
Customer relationship
|
|
|
|
||||||||
|
|||||||||||
|
|
|
|||||||||
|
|||||||||||
Core technology
|
|
|
|||||||||
Trademarks and trade names
|
|
|
|||||||||
Customer relationship
|
|
|
|||||||||
|
|||||||||||
|
|
|
|||||||||
Intangible assets, net:
|
|||||||||||
Core technology
|
|
|
|||||||||
Trademarks and trade names
|
|
|
|||||||||
Customer relationship
|
|
|
|||||||||
|
|||||||||||
|
$
|
|
$
|
|
2024
|
$
|
|
||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
Thereafter
|
|
|||
|
$
|
|
F - 32
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
Security subscriptions
|
$
|
|
$
|
|
||||
Software updates and maintenance
|
|
|
||||||
Other
|
|
|
||||||
|
||||||||
|
$
|
|
$
|
|
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
Accrued products and licenses costs
|
$
|
|
$
|
|
||||
Marketing expenses payable
|
|
|
||||||
Income tax payable
|
|
|
||||||
Legal accrual
|
|
|
||||||
Other accrued expenses
|
|
|
||||||
|
||||||||
|
$
|
|
$
|
|
F - 33
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 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.
|
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
In addition, the ITA has issued tax assessment for the
|
F - 34
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 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
Income not eligible for Preferred Enterprise benefits is taxed at a regular rate of
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
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
|
F - 35
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
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.
|
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 $
|
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
|
$
|
|
$
|
|
||||
Employee stock based compensation
|
|
|
||||||
Deferred revenues
|
|
|
||||||
Tax credits
|
|
|
||||||
Unrealized loss on marketable securities, net
|
|
|
||||||
Accrued employee costs
|
|
|
||||||
Other
|
|
|
||||||
|
||||||||
Deferred tax assets before valuation allowance
|
|
|
||||||
Valuation allowance – mainly in respect to carryforward losses
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Deferred tax asset
|
|
|
||||||
|
||||||||
Intangible assets
|
(
|
)
|
(
|
)
|
||||
Deferred commission
|
(
|
)
|
(
|
)
|
||||
Other
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Deferred tax liability
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Deferred tax asset, net
|
$
|
|
$
|
|
F - 36
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
*) As of December 31, 2023 and 2022 unrecognized tax benefit in the amounts of $
Through December 31, 2023, the U.S. subsidiaries had a U.S. federal loss carry-forward of approximately $
Through December 31, 2023, the U.S. subsidiaries had federal and states research and development tax credits of approximately $
|
d. |
Income before taxes on income is comprised as follows:
|
|
Year ended
December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
|
e. |
Taxes on income are comprised of the following:
|
|
Year ended
December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
Domestic taxes:
|
||||||||||||
Current
|
$
|
|
$
|
|
$
|
|
||||||
Deferred
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
|
|
|
|
|||||||||
Foreign taxes:
|
||||||||||||
Current
|
|
|
|
|||||||||
Deferred
|
|
|
(
|
)
|
||||||||
|
||||||||||||
|
|
|
|
|||||||||
|
||||||||||||
Taxes on income
|
$
|
|
$
|
|
$
|
|
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
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
Beginning balance
|
$
|
|
$
|
|
||||
Decrease related to tax positions taken during prior years
|
(
|
)
|
(
|
)
|
||||
Increase related to tax positions taken during the current year
|
|
|
||||||
|
||||||||
|
||||||||
Ending balance
|
$
|
*)
|
$
|
*)
|
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
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Statutory tax rate in Israel
|
|
%
|
|
%
|
|
%
|
||||||
|
||||||||||||
Decrease in taxes resulting from:
|
||||||||||||
Effect of “Technological preferred or Preferred Enterprise” status *)
|
(
|
%
|
(
|
%
|
(
|
%
|
||||||
Others, net
|
(
|
%
|
|
%
|
|
%
|
||||||
|
||||||||||||
Effective tax rate
|
|
%
|
|
%
|
|
%
|
||||||
|
||||||||||||
*) Basic earnings per share amounts of the benefit resulting from the “Technological preferred or Preferred Enterprise” status
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
*) Diluted earnings per share amounts of the benefit resulting from the “Technological preferred or Preferred Enterprise” status
|
$
|
|
$
|
|
$
|
|
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
In millions (except share and per share data)
b. |
Share repurchase:
On February 13, 2023 the Company announced the expansion of the Company’s on-going share repurchase program by an additional $
As of December 31, 2023, the Company repurchased ordinary shares for an aggregate amount of $
|
c. |
Stock Options, RSUs and PSUs:
In 2005, the Company adopted two new equity incentive plans, which were subsequently amended in January 2014 and in July 2018: 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 stock units (“PSUs”) and can also grant a variety of other equity incentives. Options granted under the Equity Incentive Plans generally vest over a period of
Under the Equity Incentive Plans, the Company’s non-employee directors receive on an annual basis options and RSUs grant. Following the amendments to the Equity Incentive Plans in July 2018, commencing December 31, 2018, on December 31 of each year, the number of Reserved and Authorized Shares (as defined below) under both Equity Incentive Plans together shall be annually reset on such date to equal
|
F - 40
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
Stock Options outstanding
|
|
|||
RSU outstanding
|
|
|||
PSU outstanding
|
|
|||
Ordinary shares available for issuance under the Equity Incentive Plans
|
|
|||
|
||||
Total Reserved and Authorized Shares as of December 31, 2023
|
|
|
Number of
options
|
Weighted
average
exercise
price
|
Aggregate
intrinsic
value
|
|||||||||
|
2023
|
|||||||||||
|
||||||||||||
Outstanding at beginning of year
|
|
$
|
|
$
|
|
|||||||
Granted
|
|
$
|
|
|||||||||
Exercised
|
(
|
)
|
$
|
|
||||||||
Forfeited
|
(
|
)
|
$
|
|
||||||||
|
||||||||||||
Outstanding at December 31, 2023
|
|
$
|
|
$
|
|
|||||||
|
||||||||||||
Exercisable at December 31, 2023
|
|
$
|
|
$
|
|
F - 41
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
|
Year ended
December 31, 2023
|
|||||||||||
|
RSUs
|
PSUs
|
Total
|
|||||||||
|
||||||||||||
Unvested at beginning of year
|
|
|
|
|||||||||
Granted
|
|
|
|
|||||||||
Vested
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Forfeited
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
||||||||||||
|
|
|
|
d. |
Employee Stock Purchase Plan (“ESPP”):
|
F - 42
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
e. |
Stock-Based Compensation:
|
|
Year ended
December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
Cost of revenues
|
$
|
|
$
|
|
$
|
|
||||||
Research and development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
|
The following table sets forth the computation of basic and diluted earnings per share:
|
|
Year ended
December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Weighted average ordinary shares outstanding
|
|
|
|
|||||||||
|
||||||||||||
Dilutive effect:
|
||||||||||||
Employee stock options, RSUs and PSUs
|
|
|
|
|||||||||
|
||||||||||||
Diluted weighted average ordinary shares outstanding
|
|
|
|
|||||||||
|
||||||||||||
Basic earnings per ordinary share
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Diluted earnings per ordinary share
|
$
|
|
$
|
|
$
|
|
F - 43
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
|
Unrealized
Gains (losses) on marketable securities
|
Unrealized
Gains (losses) on cash flow hedges
|
Total
|
|||||||||
|
||||||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Other comprehensive income (loss) before reclassifications
|
|
(
|
)
|
|
||||||||
Amounts reclassified from accumulated other comprehensive income
|
|
|
|
|||||||||
Net current period other comprehensive income
|
|
|
|
|||||||||
Ending balance
|
$ | ( |
) | $ | $ | ( |
) |
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
|
$
|
|
$
|
|
$
|
|
||||||
Europe, Middle East and Africa
|
|
|
|
|||||||||
Asia Pacific
|
|
|
|
|||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
|
F - 44
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In millions (except share and per share data)
NOTE 15:- GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Cont.)
2. |
Property and equipment, net and ROU assets:
|
|
December 31,
|
|||||||
|
2023
|
2022
|
||||||
|
||||||||
Israel
|
$
|
|
$
|
|
||||
U.S.
|
|
|
||||||
Rest of the world
|
|
|
||||||
|
||||||||
|
$
|
|
$
|
|
b. |
Summary information about product lines:
The Company’s products can be classified by
|
|
Year ended
December 31,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
|
||||||||||||
Product and licenses:
|
||||||||||||
Network security Gateways
|
$
|
|
$
|
|
$
|
|
||||||
Other *)
|
|
|
|
|||||||||
|
||||||||||||
|
|
|
|
|||||||||
Security subscriptions
|
|
|
|
|||||||||
Software updates and maintenance
|
|
|
|
|||||||||
|
||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
*) |
Comprised of Endpoint security, Mobile security and Security management products, each comprising of less than
|
F - 45
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 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,
|
|||||||||||
|
2023
|
2022
|
2021
|
|||||||||
Financial income:
|
||||||||||||
Interest income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Financial expense:
|
||||||||||||
Amortization of marketable securities premium and accretion of discount, net
|
|
|
|
|||||||||
Realized loss (gain) on sale of marketable securities, net
|
|
|
(
|
)
|
||||||||
Foreign currency re-measurement (gain) loss
|
|
|
(
|
)
|
||||||||
Others
|
|
|
|
|||||||||
|
||||||||||||
|
|
|
|
|||||||||
|
||||||||||||
|
$
|
|
$
|
|
$
|
|
F - 46