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 | ||
☒ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
Auditor Firm Id: |
Auditor Name: |
• |
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 the global COVID-19 pandemic; |
• |
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 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 and the potential economic effects of “Brexit”; |
• |
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 |
||||||
Item 1. |
4 |
|||||
Item 2. |
4 |
|||||
Item 3. |
4 |
|||||
Item 4. |
18 |
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Item 4A. |
26 |
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Item 5. |
26 |
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Item 6. |
34 |
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Item 7. |
45 |
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Item 8. |
45 |
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Item 9. |
46 |
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Item 10. |
46 |
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Item 11. |
57 |
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Item 12. |
58 |
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PART II |
||||||
Item 13. |
58 |
|||||
Item 14. |
58 |
|||||
Item 15. |
58 |
|||||
Item 16A. |
60 |
|||||
Item 16B. |
6 0 |
|||||
Item 16C. |
6 0 |
|||||
Item 16D. |
6 2 |
|||||
Item 16E. |
6 2 |
|||||
Item 16F. |
6 2 |
|||||
Item 16G. |
6 2 |
|||||
Item 16H. |
63 |
|||||
Item 16I. |
63 |
|||||
PART III |
||||||
Item 17. |
63 |
|||||
Item 18. |
63 |
|||||
Item 19. |
63 |
• | 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 |
• | general economic conditions in either domestic or international markets, including inflation and fluctuations in supply chains and conditions resulting from geopolitical uncertainty and instability or war, including the significant military action against Ukraine launched by Russia. |
• | restricting our sales operations and marketing efforts, reducing the effectiveness of such efforts in some cases and delaying or lengthening our sales cycles; and |
• | delaying collections or resulting in an inability to collect accounts receivable, including as a result of customer insolvency. |
• | 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 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; |
• | declines in general economic conditions; |
• | 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. |
ITEM 4. |
INFORMATION ON CHECK POINT |
• | Generation 1 – Late 1980s, virus attacks on stand-alone PCs affected all businesses and drove the rise of anti-virus products. |
• | Generation 2 – Mid 1990s, attacks from the internet affected all business and drove the creation of the firewall. |
• | Generation 3 – Early 2000s, exploiting vulnerabilities in applications affected most businesses and drove the rise in intrusion prevention systems (IPS) products. |
• | Generation 4 – Approximately 2010, rise of targeted, unknown, evasive, polymorphic attacks affected most businesses and drove the increase in behavior analysis technologies such as sandboxing products. |
• | Generation 5 – Approximately 2018-2021, the large-scale and multi-vector mega attacks using advanced attack technologies. These are fast-moving attacks so detection-only is not enough. These attacks targeted traditional attack vectors and expanded to mobile and cloud. Advanced threat prevention is required. |
1. | Prevention-first approach |
2. | Strive for the Highest level of security |
3. | Gold Standard Management |
4. | Consolidated Solution |
1. | Quantum: Enterprise network security for perimeter and datacenter |
2. | CloudGuard: Automatically secure your cloud |
1. | Cloud Network Security: |
2. | Security and Posture Management: |
3. | Cloud Workload Protection: |
4. | Cloud Web Application Protection: |
3. | Harmony: Securing the User Environment |
• | Harmony Endpoint |
• | Harmony Mobile |
• | Harmony Email & Collaboration |
• | Secure Internet Browsing: |
• | Secure remote access to corporate applications: |
1. | AI technologies – Accurately block zero-day ransomware, sophisticated Trojans, and other advanced malware through a market leading malware analysis technology leveraging 30+ AI based machine and deep learning engines. |
2. | Big data threat intelligence – Aggregates and analyzes big data telemetry and millions of Indicators of Compromise (IoCs) every day. Its threat intelligence database is fed from 150,000 connected networks and millions of endpoint devices, as well as feeds from Check Point Research team (CPR). |
● | Leader for the 22nd time in Magic Quadrant for Network Firewalls |
● | Gartner Market Guide for Mobile Threat Defense |
● | Named a Worldwide Major Player in Modern Endpoint Security for Enterprise & SMB in latest IDC MarketScape Reports |
● | Harmony Mobile recognized as a Market Leader in Omdia’s Market Radar Mobile Security Management |
● | Forrester Now Tech Industrial Control Systems (ICS) Security. |
● | Leadership in Endpoint Security with 100% Detection across All Tested Unique ATT&CK Techniques |
● | Recognized as leader in nine Grid Reports for Firewall, Cloud, Endpoint and Mobile Data security |
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
(in millions) |
||||||||||||
Category of Activity: |
||||||||||||
Products and licenses |
$ | 513.9 | $ | 513.6 | $ | 510.8 | ||||||
Security subscriptions |
755.2 | 671.1 | 610.3 | |||||||||
Software updates and maintenance |
897.7 | 880.2 | 873.7 | |||||||||
Total revenues |
$ | 2,166.8 | $ | 2,064.9 | $ | 1,994.8 |
I. | Community |
• | Corporate Responsibility Policy |
• | Social Investment and Volunteer Statement |
II. | Human Resources – How we value ourselves |
• | Human Rights and Labor Policy |
• | Workforce Diversity and Equality Statement |
• | Training and Employee Development Policy |
• | Anti-Slavery Policy |
III. | Supply Chain |
• | Supply Chain Code of Conduct |
• | Supply Chain Policy |
IV. | Environment |
• | Environmental Policy |
• | Conflicts Minerals Policy |
V. | Corporate Governance |
• | Corporate Governance Guidelines |
• | Committee Charters |
VI. | Ethics How we value |
• | Code of Ethics and Business Conduct |
• | Privacy Policy |
• | Whistle Blower Procedure |
• | Insider Trading Policy |
• | Anti-Corruption, Bribery and Money Laundering Policy |
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. (1) |
Indonesia | |
Check Point Holding (Singapore) PTE Ltd. – U.S. Branch (2) |
United States of America (New York) | |
Israel Check Point Software Technologies Ltd. China (3) |
China | |
Check Point Holding AB (4) |
Sweden | |
Check Point Advanced Threat Prevention Ltd. |
Israel | |
Check Point Mobile Security Ltd. |
Israel | |
Check Point Software Technologies South Africa PTY. Ltd |
South Africa | |
Check Point Software (Kenya) Ltd. |
Kenya | |
Check Point Software Technologies B.V Nigeria Ltd. (5) |
Nigeria | |
Check Point Public Cloud Security Ltd. |
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. |
Israel | |
Check Point Email Security Ltd. (7) |
Israel | |
Avanan, Inc. |
United States of America (Delaware) | |
Check Point Developer Security Tools Ltd. |
Israel | |
Spectral Cyber Technologies. Inc. (8) |
United States of America (Delaware) (8) | |
Check Point Software Technologies (Sweden) AB. (9) |
Sweden | |
Zone Labs, L.L.C. (10) |
United States of America (California) |
(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 |
(7) | Subsidiary of Avanan, Inc. |
(8) | Subsidiary of Spectral Cyber Technologies Ltd. |
(9) | Subsidiary of Check Point Holding AB |
(10) | Subsidiary of Check Point Software Technologies Inc. |
NAME OF SUBSIDIARY |
COUNTRY OF INCORPORATION | |
Check Point Software Technologies S.A. |
Argentina | |
Check Point Software Technologies (Australia) PTY Ltd. |
Australia | |
Check Point Software Technologies (Austria) GmbH |
Austria | |
Check Point Software Technologies (Belarus) LLC |
Belarus | |
Check Point Software Technologies (Belgium) S.A. |
Belgium | |
Check Point Software Technologies (Brazil) LTDA |
Brazil | |
Check Point Software Technologies (Hong Kong) Ltd. (Guangzhou office) (1) |
China | |
Check Point Software Technologies (Hong Kong) Ltd. (Shanghai office) (1) |
China | |
Check Point Software Technologies (Czech Republic) s.r.o. |
Czech Republic | |
Check Point Software Technologies (Denmark) ApS |
Denmark | |
Check Point Software Technologies (Finland) Oy |
Finland | |
Check Point Software Technologies SARL |
France | |
Check Point Software Technologies GmbH |
Germany | |
Check Point Software Technologies (Greece) SA |
Greece | |
Check Point Software Technologies (Hungary) Ltd. |
Hungary | |
Check Point Software Technologies (Hong Kong) Ltd. |
Hong Kong | |
Check Point Software Technologies (India) Private Limited |
India | |
Check Point Software Technologies (Italia) Srl |
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) A.G. |
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 |
362,000*) | |
Americas |
132,000 | |
Europe, Middle East and Africa |
62,730 | |
Asia Pacific |
41,850 |
*) | We acquired ownership of our international headquarters located in Tel Aviv, Israel pursuant to a pre-paid 49 year long-term lease on the land with the City of Tel Aviv – Jaffa. No additional payments are due under such long-term lease. Our international headquarters building contains approximately 332,000 square feet of office space. In addition, we lease approximately 30,000 square feet of additional space substantially all in Tel Aviv, Israel. |
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Region: |
||||||||||||
Americas, principally U.S. |
43 | % | 45 | % | 46 | % | ||||||
Europe, Middle East and Africa |
45 | % | 43 | % | 42 | % | ||||||
Asia-Pacific |
12 | % | 12 | % | 12 | % |
• | Revenue recognition (including sales reserves), |
• | Realizability of long-lived assets (including intangible assets), |
• | Accounting for income taxes, |
• | Credit loss of trade receivables |
• | Impairment of marketable securities; and |
• | Loss Contingencies ; and |
• | Manufacturing Partner and Supplier Liabilities. |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in millions) |
||||||||
Revenues: |
||||||||
Products and licenses |
$ | 513.9 | $ | 513.6 | ||||
Security subscriptions |
755.2 | 671.1 | ||||||
Software updates and maintenance |
897.7 | 880.2 | ||||||
|
|
|
|
|||||
Total revenues |
2,166.8 | 2,064.9 | ||||||
|
|
|
|
|||||
Operating expenses (*): |
||||||||
Cost of products and licenses |
110.7 | 96.8 | ||||||
Cost of security subscriptions |
35.9 | 26.4 | ||||||
Cost of software updates and maintenance |
103.0 | 96.7 | ||||||
Amortization of technology |
8.5 | 6.6 | ||||||
|
|
|
|
|||||
Total cost of revenues |
258.1 | 226.5 | ||||||
|
|
|
|
|||||
Research and development |
292.7 | 252.8 | ||||||
Selling and marketing |
597.8 | 569.9 | ||||||
General and administrative |
110.7 | 111.5 | ||||||
|
|
|
|
|||||
Total operating expenses |
1,259.3 | 1,160.7 | ||||||
|
|
|
|
|||||
Operating income |
907.5 | 904.2 | ||||||
Financial income, net |
42.1 | 66.6 | ||||||
|
|
|
|
|||||
Income before taxes on income |
949.6 | 970.8 | ||||||
Taxes on income |
134.0 | 124.2 | ||||||
|
|
|
|
|||||
Net income |
$ | 815.6 | $ | 846.6 | ||||
|
|
|
|
(*) | Including pre-tax charges for stock-based compensation, amortization of intangible assets and acquisition related expenses in the following items: |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in millions) |
||||||||
Amortization of intangible assets and acquisition related expenses |
||||||||
Amortization of technology |
$ | 8.5 | $ | 6.6 | ||||
Research and development |
5.6 | 4.1 | ||||||
Selling and marketing |
7.3 | 7.3 | ||||||
|
|
|
|
|||||
Total amortization of intangible assets and acquisition related expenses |
$ | 21.4 | $ | 18.0 | ||||
|
|
|
|
|||||
Stock-based compensation |
||||||||
Cost of products and licenses |
$ | 0.4 | $ | 0.4 | ||||
Cost of software updates and maintenance |
4.4 | 4.1 | ||||||
Research and development |
31.8 | 23.5 | ||||||
Selling and marketing |
42.8 | 36.8 | ||||||
General and administrative |
40.9 | 47.7 | ||||||
|
|
|
|
|||||
Total stock-based compensation |
$ | 120.3 | $ | 112.5 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenues: |
||||||||
Products and licenses |
24 | % | 25 | % | ||||
Security subscriptions |
35 | 32 | ||||||
Software updates and maintenance |
41 | 43 | ||||||
|
|
|
|
|||||
Total revenues |
100 | % | 100 | % | ||||
|
|
|
|
|||||
Operating expenses: |
||||||||
Cost of products and licenses |
5 | 5 | ||||||
Cost of security subscriptions |
2 | 1 | ||||||
Cost of software updates and maintenance |
5 | 5 | ||||||
Amortization of technology |
— | *) | — | *) | ||||
|
|
|
|
|||||
Total cost of revenues |
12 | 11 | ||||||
|
|
|
|
|||||
Research and development |
13 | 12 | ||||||
Selling and marketing |
28 | 28 | ||||||
General and administrative |
5 | 5 | ||||||
|
|
|
|
|||||
Total operating expenses |
58 | 56 | ||||||
|
|
|
|
|||||
Operating income |
42 | 44 | ||||||
Financial income, net |
2 | 3 | ||||||
|
|
|
|
|||||
Income before taxes on income |
44 | 47 | ||||||
Taxes on income |
6 | 6 | ||||||
|
|
|
|
|||||
Net income |
38 | 41 | ||||||
|
|
|
|
*) | 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 | ✓ | ||||||||||
Tal Payne | Chief Financial and | |||||||||||
Operations Officer | ||||||||||||
Dorit Dor | Chief Product Officer | |||||||||||
Rupal Hollenbeck | Chief Commercial Officer | |||||||||||
Guy Gecht (3) | Lead Independent Director | ✓ | ✓ | ✓ | ✓ | |||||||
Yoav Chelouche (3) | Director | ✓ | ✓ | ✓ | ✓ | |||||||
Ray Rothrock (3) | Director | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||
Tal Shavit Shenhav | Director | ✓ | ✓ | |||||||||
Eyal Waldman (1) | Director | ✓ | ||||||||||
Shai Weiss | 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, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Function |
||||||||||||
Research, development and quality assurance |
1,677 | 1,500 | 1,515 | |||||||||
Marketing, pre sale, sales and business development |
2,509 | 2,317 | 2,335 | |||||||||
Customer support |
905 | 851 | 789 | |||||||||
Information systems, administration, finance and operation |
551 | 530 | 513 | |||||||||
|
|
|
|
|
|
|||||||
Total |
5,642 | 5,198 | 5,152 |
As of December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Function |
||||||||||||
Israel |
2,416 | 2,259 | 2,260 | |||||||||
Americas |
1,660 | 1,580 | 1,211 | |||||||||
Rest of the World |
1,566 | 1,359 | 1,681 | |||||||||
|
|
|
|
|
|
|||||||
Total |
5,642 | 5,198 | 5,152 |
Name |
Number of shares beneficially owned (1) |
% of class of shares (2) |
Title of securities covered by the options |
Number of options and RSUs (3) |
Exercise price of options |
Date of expiration of options |
||||||||||||||||||
Gil Shwed |
28,369,752 | 21.6 | % | Ordinary shares | 3,420,000 | $ | 114.23 - $123.05 |
06/06/2022-08/09/2028 |
||||||||||||||||
All directors and officers as a group (11 persons including Mr. Shwed)(4) |
30,172,811 | 22.7 | % | Ordinary shares | 5,052,189 | $ | 83.59 - $132.91 | 06/08/2022-08/09/2028 |
(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 restricted share units that vest within 60 days after February 28, 2022. |
(2) | If a shareholder has the right to acquire shares by exercising stock options (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 restricted share units that vest within 60 days from February 28, 2022. |
(4) | 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 |
Options outstanding exercise price |
Date of expiration of options |
Options exercisable |
||||||||||||
2005 United States Equity Incentive Plan |
1,444,559 | $82.01-$132.91 |
06/08/2022-08/09/2028 |
545,118 | ||||||||||||
2005 Israel Equity Incentive Plan |
9,055,789 | $72.76-$123.05 |
06/08/2022-11/17/2028 |
4,730,587 | ||||||||||||
Dome9 Equity Incentive Plan |
1,080 | $ 4.98-$ 21.97 |
05/03/2026-06/27/2028 |
1,080 |
Name of Five Percent Shareholders |
No. of shares beneficially held (1) |
% of class of shares (2) |
No. of shares beneficially held (1) |
% of class of shares (2) |
No. of shares beneficially held (1) |
% of class of shares (2) |
||||||||||||||||||
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
||||||||||||||||||||||
Gil Shwed |
28,369,738 | 21.4 | % | 28,704,010 | 20.4 | % | 29,163,983 | 19.5 | % | |||||||||||||||
Massachusetts Financial Services Company (3) |
7,470,150 | 5.79 | % | 8,084,127 | 5.89 | % | 8,764,230 | 5.76 | % |
(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 31 st , 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 31 st , 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) | As of December 31, 2021, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 2, 2022, as of December 31, 2020, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 11, 2021, and as of December 31, 2019, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 14, 2020. The address for Massachusetts Financial Services Company is 111 Huntington Avenue, Boston, Massachusetts 02199. |
• | 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, 2021 |
||||||||||||||||||||||||||
2022 |
2023 |
2024 |
2025 |
2026 |
||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||
Marketable securities: |
||||||||||||||||||||||||||||
Government and corporate debentures—fixed interest rate |
$ |
727.8 |
$ |
585.5 |
$ |
568.5 |
$ |
187.2 |
$ |
152.1 |
$ |
2,221.0 |
$ |
2,262.5 |
||||||||||||||
Government-sponsored enterprises debentures |
164.6 |
181.9 |
167.3 |
122.5 |
6.8 |
643.2 |
641.4 |
|||||||||||||||||||||
Government and corporate debentures—floating interest rate |
31.2 |
53.8 |
23.9 |
4.5 |
1.0 |
114.4 |
115.1 |
|||||||||||||||||||||
Cash equivalents: |
||||||||||||||||||||||||||||
Money market funds |
6.6 |
- |
- |
- |
- |
6.6 |
6.6 |
|||||||||||||||||||||
Short term deposits |
94.5 |
- |
- |
- |
- |
94.5 |
94.5 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ |
1,024.7 |
$ |
821.2 |
$ |
759.7 |
$ |
314.2 |
$ |
159.9 |
$ |
3,079.7 |
$ |
3,120.1 |
• | 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, 2021 |
Year Ended December 31, 2020 |
|||||||||||||||
Amount |
Percentage |
Amount |
Percentage |
|||||||||||||
(in millions, except percentages) |
||||||||||||||||
Audit fees (1) |
$ | 0.8 | 77% | $ | 0.8 | 77% | ||||||||||
Audit related fees (2) |
3% | * | ) | 3% | ||||||||||||
Tax fees (3) |
0.2 | 20% | 0.2 | 20% | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 1.0 | 100% | $ | 1.0 | 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 |
0.6 | $128 | $1,004 | |||
February 1 – February 28 |
1.6 | $119 | $820 | |||
March 1 – March 31 |
0.5 | $114 | $760 | |||
April 1 – April 30 |
0.9 | $118 | $656 | |||
May 1 – May 31 |
1.2 | $118 | $513 | |||
June 1 – June 30 |
0.7 | $118 | $435 | |||
July 1 – July 31 |
0.8 | $122 | $341 | |||
August 1 – August 31 |
1.3 | $125 | $2,175 | |||
September 1 – September 30 |
0.5 | $121 | $2,110 | |||
October 1 – October 31 |
0.8 | $119 | $2,010 | |||
November 1 – November 30 |
1.4 | $116 | $1,850 | |||
December 1 – December 31 |
0.6 | $112 | $1,785 | |||
|
|
|||||
Total |
10.9 | $119 | ||||
|
|
(1) | All the Ordinary Shares were purchased as part of publicly announced plans or programs. |
4.7 | Dome9 Security Ltd. 2011 Share Option Plan and the 2016 Equity Incentive Subplan (7) | |
4.8 | Check Point Software Technologies Ltd. Executive Compensation Plan (8) | |
8 | List of subsidiaries (9) | |
12.1 | Certification of the Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002 | |
12.2 | Certification of the Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002 | |
13.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | |
13.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | |
15 | Consent of Kost, Forer, Gabbay & Kasierer, a Member of EY Global | |
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 2.1 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2019. |
(3) | Incorporated by reference to Exhibit 4.1 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2005. |
(4) | 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. |
(5) | Incorporated by reference to Exhibit 4.5 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2017. |
(6) | Incorporated by reference to Exhibit 4.11 of Check Point’s Annual Report on Form 20-F for the year ended December 31, 2006. |
(7) | 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. |
(8) | Incorporated by reference to Annex A of Check Point’s Report on Form 6-K filed with the Securities and Exchange Commission on May 16, 2019. |
(9) | 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/ Tal Payne | |
Tal Payne | ||
Chief Financial Officer |
Page | ||
(PCAOB ID Number 1281) |
F-2 - F-6 | |
F-7 - F-8 | ||
F-9 | ||
F-10 | ||
F-11 | ||
F-12 - F-13 | ||
F-14 - F-44 |
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 Company’s revenue recognition 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 estimate 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 Matte 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. |
December 31, |
||||||||
2021 |
2020 |
|||||||
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 |
$ | |
$ | |
||||
|
|
|
|
December 31, |
||||||||
2021 |
2020 |
|||||||
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, r es at December 31, 2021 and 2020, respectively |
( |
) | ( |
) | ||||
Accumulated other comprehensive (loss) income |
( |
) | ||||||
Retained earnings |
|
|
||||||
|
|
|
|
|||||
Total shareholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ | $ | |
|||||
|
|
|
|
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Revenues: |
||||||||||||
Products and licenses |
$ | $ | $ | |||||||||
Security subscriptions |
||||||||||||
Software updates and maintenance |
||||||||||||
|
|
|
|
|
|
|
|
| ||||
Total revenues |
||||||||||||
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
||||||||||||
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 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|
|
| ||||
Diluted earnings per ordinary share |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|
|
|
*) | Not including amortization of technology shown separately. |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Net income |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|
|
| ||||
Other comprehensive income (loss) |
||||||||||||
Change in unrealized gains (losses) on marketable securities: |
||||||||||||
Unrealized gains (losses) arising during the period, net of tax |
( |
) | ||||||||||
Gains reclassified into earnings, net of tax |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|
|
| ||||
( |
) | |||||||||||
|
|
|
|
|
|
|
|
| ||||
Change in unrealized gains (losses) on cash flow hedges: |
||||||||||||
Unrealized gains (losses) arising during the period, net of tax |
( |
) | ||||||||||
Gains reclassified into earnings, net of tax |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|
|
| ||||
( |
) | |||||||||||
|
|
|
|
|
|
|
|
| ||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
| ||||
Comprehensive income |
$ | |
$ | |
$ | |
||||||
|
|
|
|
|
|
|
|
|
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, 2019 |
$ |
$ |
$ |
( |
) | $ |
( |
) | $ |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
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, 2019 |
( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
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, 2020 |
( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
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 Dece m ber 31, 2021 |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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 gain on sale of marketable securities, net |
( |
) | ( |
) | ( |
) | ||||||
Amortization of intangible assets |
||||||||||||
Stock-based compensation |
||||||||||||
Deferred income tax |
( |
) | ||||||||||
Increase in trade receivables, net |
( |
) | ( |
) | ( |
) | ||||||
Decrease in prepaid expenses and other assets |
||||||||||||
Increase (decrease) in trade payables |
( |
) | ( |
) | ||||||||
Increase (decrease) in employees and payroll accruals |
( |
) | ||||||||||
Increase 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 marke t able 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, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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 financ i ng 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 |
$ | $ | $ | |||||||||
NOTE 1:- |
GENERAL |
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. | During 2021, 2020 and 2019, approximately |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES |
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”. |
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 and carried at the original invoiced amount less an 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 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. |
Starting January 1, 2020, the Company is utilizing a current expected credit losses (CECL) model for financial instruments measured at amortized cost, including its accounts receivables. |
As of December 31, 2021 and 2020, trade receivable, net, were $ |
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. Bad debt and total write offs expenses during 2021, 2020 and 2019 were insignificant. |
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 and Equity 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 Available-for-sale |
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. |
Starting January 1, 2020, in accordance with Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, 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. 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. |
No credit losses were recorded for the years ended December 31, 2021 and 2020. |
h. | Property and equipment, net: |
Property and equipment are stated at cost, net of accumulated depreciation. |
% | ||
Computers and peripheral equipment |
||
Office furniture and equipment |
||
Building |
||
Leasehold improvements |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
i. | Leases: |
The company’s operating leases comprised of offices and equipment leases. |
The Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset. The Company elected to not recognize a lease liability or right-of-use non-lease components for its leases. |
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make minimum lease payments arising from the lease. ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs incurred. The lease liability is initially measured at lease commencement date based on the discounted present value of minimum lease payments over the lease term. The implicit rate within the operating leases is generally not determinable, therefore the Company uses its Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located. Certain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option. |
As of December 31, 2021 the Company recognized total of $ |
Rent expenses for the years ended December 31, 2021, 2020 and 2019, were $ |
j. |
Business combination: |
The Company applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to future expected cash flows from acquired technology and acquired trademarks and tradenames from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred (see also Note 3). |
k. | Goodwill: |
Goodwill has been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of identifiable net tangible and intangible assets acquired. Goodwill is not amortized, but rather is subject to an impairment test. |
ASC No. 350, “Intangibles—Goodwill and other” (“ASC No. 350”) requires goodwill to be tested for impairment at the reporting unit level at least annually or between annual tests in certain circumstances, and written down when impaired. |
ASC No. 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the quantitative goodwill impairment test is performed. Alternatively, ASC No. 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test. If the carrying value of a reporting unit exceeds its fair value, the Company recognizes an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. |
The Company operates in |
During the years 2021, 2020 and 2019, |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
l. | Intangible assets, net: |
Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives, which range from |
m. | Impairment of long-lived assets including intangible assets subject to amortization: |
The Company’s long-lived assets are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years 2021, 2020 and 2019, no impairment losses have been identified. |
n. | Manufacturing partner and supplier liabilities: |
The Company purchases manufactured products from its original design manufacture (“ODM”). The Company generally does not own the manufactured products. ODM’s provide services of design, manufacture, orders fulfillment and support with a full turn-key solution to meet the Company’s detailed requirements. If the actual demand is significantly lower than forecast, the Company records a liability for its commitment in excess of the actual demand. As of December 31, 2021 and 2020, the Company has |
o. | Research and development costs: |
Research and development costs are charged to the statements of income as incurred. ASC No. 985-20, “Software—Costs of Software to Be Sold, Leased, or Marketed”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. |
Based on the Company’s product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company between completion of the working models and the point at which the products are ready for general release, have been insignificant. Therefore, all research and development costs are expensed as incurred. |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
p. | Revenue recognition: |
The Company derives its revenues mainly from sales of products and licenses, security subscriptions and software updates and maintenance. The Company’s products are generally integrated with software that is essential to the functionality of the product. The Company sells its products primarily through channel partners including distributors, resellers, OEMs (Original Equipment Manufacturers), system integrators and MSPs (Managed Service Providers), all of whom are considered end-users. |
The Company’s security subscriptions provide customers with access to its suite of security solutions and is sold as a service. |
The Company’s software updates and maintenance provide customers with rights to unspecified software product upgrades released during the term of the agreement and include maintenance services to end-user customers, through primarily telephone access to technical support personnel as well as hardware support services. |
The Company recognizes revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers”. As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation. |
Revenues from sales of products and licenses are recognized upon shipment when control of the promised goods is transferred to the customer, or upon electronic transfer of the Certificate Key to the Customer. Revenues from security subscriptions and from software updates and maintenance are recognized ratably over the term of the agreement. |
The Company’s arrangements typically contain various combinations of its products and licenses, security subscriptions and software updates and maintenance, which are distinct and are accounted for as a separate performance obligations. The Company allocates the transaction price to each performance obligation based on its relative standalone selling price using the prices charged for a performance obligation when sold separately. |
Deferred revenues represent mainly the unrecognized revenue billed for security subscriptions and for software updates and maintenance. Such revenues are recognized ratably over the term of the related agreement. The amount of revenues recognized in the period that was included in the opening deferred revenues balance was $ |
Revenues expected to be recognized from remaining performance obligations were $ |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
The Company records a provision for estimated sales returns, rebates, stock rotations and other rights provided to customers on product and services based on historical sales returns, analysis of credit memo data, rebate plans, stock rotation arrangements and other known factors. This provision is accounted for as variable consideration that is deducted from revenue in the period in which the revenue is recognized. Such provision amounted to $ |
Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit which is typically over the term of the customer contracts as initial commission rates are commensurate with the renewal commission rates. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of income. If the amortization period of those costs is one year or less, the costs are expensed as incurred. As of December 31, 2021 and 2020, the amount of deferred commission was $ |
For information regarding disaggregated revenues, please refer to Note 14 below. |
q. |
Cost of revenues: |
Cost of products and licenses is comprised of cost of software and hardware production, manuals, packaging and shipping. |
Cost of security subscriptions is comprised of costs paid to third parties, hosting and infrastructure costs and cost of customer support related to these services. |
Cost of software updates and maintenance is mainly comprised of cost of post-sale customer support. |
Amortization of technology is comprised of amortization of core technology assets which are used in the Company’s operations, and is presented separately as part of cost of revenues. |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
r. | Severance pay: |
Effective January 1, 2007, the Company’s agreements with employees in Israel, are under Section 14 of the Severance Pay Law, 1963. The Company’s contributions for severance pay have extinguished its severance obligation. Upon contribution of the full amount based on the employee’s monthly salary for each year of service, no additional obligation exists regarding the matter of severance pay and no additional payments is made by the Company to the employee. Further, the related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheets, as the Company is legally released from the obligation to employees once the required deposit amounts have been paid. |
s. | Employee benefit plan: |
The Company has a 401(K) defined contribution plan covering certain employees in the U.S. The Company matches |
t. | Income taxes: |
The Company accounts for income taxes in accordance with ASC No. 740, “Income Taxes” (“ASC No. 740”). ASC No. 740 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined for temporary differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized. The Company accrues interest and indexation related to unrecognized tax benefits on its taxes on income. |
ASC No. 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. |
The second step is to measure the tax benefit as the largest amount that is more than |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
u. | Advertising costs: |
Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2021, 2020 and 2019, were $ |
v. | Concentrations of credit risk: |
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, marketable securities, trade receivables and foreign currency derivative contracts. |
The majority of the Company’s cash and cash equivalents and short-term bank deposits are deposited in major banks in the U.S., Israel and Europe. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be withdrawn upon demand and therefore bear low risk. Marketable securities are held mainly by Check Point Ltd., the Company’s Singaporean subsidiary, Canadian subsidiary and the U.S. subsidiary, and are invested in securities denominated in dollar. |
The Company’s marketable securities consist of investments in government, corporate and government sponsored enterprises debentures. The Company’s investment policy, approved by the Board of Directors, limits the amount that the Company may invest in any one type of investment, or issuer, thereby reducing credit risk concentrations. |
The Company’s trade receivables are geographically dispersed and derived from sales to channel partners mainly in the United States, Europe and Asia. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. |
w. | Derivatives and hedging: |
The Company accounts for derivatives and hedging based on ASC No. 815, “Derivatives and Hedging” (“ASC No. 815”). ASC No. 815 requires the Company to recognize all derivatives on the balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, as well as the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. If the derivatives meet the definition of a hedge and are designated as such, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings. |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
The Company entered into forward contracts to hedge the fair value of assets and liabilities denominated in several foreign currencies. As of December 31, 2021 and 2020, the Company had outstanding forward contracts that did not meet the requirement for hedge accounting, in the notional amount of $ |
The Company entered into forward contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses denominated in New Israeli Shekel and in Euro. As of December 31, 2021 and 2020, the Company had outstanding forward contracts in the notional amount of $ |
The Company measured the fair value of the contracts in accordance with ASC No. 820 (classified as level 2 of the fair value hierarchy). These contracts met the requirement for cash flow hedge accounting and, as such, gains (losses) on the contracts are recognized initially as component of Accumulated Other Comprehensive Income in the balance sheets and reclassified to the statements of income in the period the related hedged items affect earnings. |
During 2021, 2020 and 2019 gains in the amount of $ |
x. | Basic and diluted earnings per share: |
Basic earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares outstanding during the year, in accordance with ASC No. 260, “Earnings Per Share”. |
The total weighted average number of shares related to the outstanding options excluded from the calculations of diluted earnings per share, since it would have an anti-dilutive effect, was |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
y. | Accounting for stock-based compensation: |
Year ended December 31, | ||||||
Employee Stock Options |
2021 |
2020 |
2019 | |||
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) |
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: |
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ac. | Legal contingencies: |
ad. | Recently Adopted Accounting Pronouncements: |
NOTE 3:- |
ACQUISITIONS |
Weighted Average Useful Life |
Amount |
|||||||
Goodwill |
$ | |
||||||
Core technology |
||||||||
Customer relationship |
||||||||
Net assets assumed |
||||||||
|
|
|||||||
Total |
$ | |||||||
|
|
NOTE 4:- |
CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND MARKETABLE SECURITIES |
December 31, |
||||||||
2021 |
2020 |
|||||||
Cash and cash equivalents: |
||||||||
Cash |
$ | $ | ||||||
Money market funds |
||||||||
Short term deposits |
||||||||
|
|
|
|
|||||
Total Cash and cash equivalents |
||||||||
Short-term bank deposits: |
||||||||
Marketable securities: |
||||||||
Government and corporate debentures—fixed interest rate |
||||||||
Government-sponsored enterprises debentures |
||||||||
Government and corporate debentures—floating interest rate |
||||||||
|
|
|
|
|||||
Total Marketable securities |
||||||||
Total Cash and cash equivalents, short-term bank deposits and marketable securities |
$ | |
$ | |
||||
|
|
|
|
December 31, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
Fair Value |
Amortized Cost |
Fair Value |
Amortized Cost |
|||||||||||||
Contractual maturity year: |
||||||||||||||||
Within one year |
$ | $ | $ | $ | ||||||||||||
After one year through five years |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
NOTE 5:- |
FAIR VALUE MEASUREMENTS |
December 31, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
Fair value measurements using input type |
Fair value measurements using input type |
|||||||||||||||||||||||
Level 1 |
Level 2 |
Total |
Level 1 |
Level 2 |
Total |
|||||||||||||||||||
Cash equivalents |
||||||||||||||||||||||||
Money market funds |
$ | $ | - | $ | $ | $ | - | $ | ||||||||||||||||
Short term deposits |
- | - | ||||||||||||||||||||||
Short-term bank deposits |
- | - | ||||||||||||||||||||||
Marketable securities: |
||||||||||||||||||||||||
Government and corporate debentures - fixed interest rate |
- | - | ||||||||||||||||||||||
Government-sponsored enterprises debentures |
- | - | ||||||||||||||||||||||
Government and corporate debentures - floating interest rate |
- | - | ||||||||||||||||||||||
Foreign currency derivative contracts |
- | - | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total financial assets |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 6:- |
PROPERTY AND EQUIPMENT, NET |
December 31, | ||||||||
2021 |
2020 | |||||||
Cost: |
||||||||
Computers and peripheral equipment |
$ | $ | ||||||
Office furniture and equipment |
||||||||
Building |
||||||||
Leasehold improvements |
||||||||
|
|
|
|
|
| |||
|
|
|||||||
Accumulated depreciation |
||||||||
|
|
|
|
|
| |||
Property and equipment, net |
$ | $ | ||||||
|
|
|
|
|
|
NOTE 7:- |
GOODWILL AND INTANGIBLE ASSETS, NET |
a. | Goodwill: |
2021 |
2020 |
|||||||
Balance as of January 1 |
$ | |
$ | |
||||
Acquisitions |
||||||||
|
|
|
|
|||||
Balance as of December 31 |
$ | $ | ||||||
|
|
|
|
b. | Intangible assets, net: |
Useful |
December 31, | |||||||||||
Life |
2021 |
2020 | ||||||||||
Original amount: |
||||||||||||
Core technology |
$ | $ | ||||||||||
Trademarks and trade names |
||||||||||||
Customer relationship |
- | |||||||||||
|
|
|
|
|
| |||||||
|
|
|
|
|
| |||||||
Accumulated amortization: |
||||||||||||
Core technology |
||||||||||||
Trademarks and trade names |
||||||||||||
Customer relationship |
- | |||||||||||
|
|
|
|
|
| |||||||
|
|
|
|
|
| |||||||
Intangible assets, net: |
||||||||||||
Core technology |
||||||||||||
Trademarks and trade names |
||||||||||||
Customer relationship |
- | |||||||||||
|
|
|
|
|
| |||||||
$ | |
$ | |
|||||||||
|
|
|
|
|
|
2022 |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
|
|
|||
$ | |
|||
|
|
NOTE 8:- |
DEFERRED REVENUES |
December 31, |
||||||||
2021 |
2020 |
|||||||
Security subscriptions |
$ | $ | ||||||
Software updates and maintenance |
||||||||
Other |
||||||||
|
|
|
|
|||||
$ | |
$ | |
|||||
|
|
|
|
NOTE 9:- |
ACCRUED EXPENSES AND OTHER LIABILITIES |
December 31, | ||||||||
2021 |
2020 | |||||||
Accrued products and licenses costs |
$ | $ | ||||||
Marketing expenses payable |
||||||||
Income tax payable |
||||||||
Legal accrual |
||||||||
Other accrued expenses |
||||||||
|
|
|
|
|
| |||
$ | |
$ | |
|||||
|
|
|
|
|
|
NOTE 10:- |
COMMITMENTS AND CONTINGENT LIABILITIES |
NOTE 11:- |
TAXES ON INCOME |
a. | Israeli taxation: |
1. | Corporate tax: |
2. | Foreign Exchange Regulations: |
NOTE 11:- |
TAXES ON INCOME (Cont.) |
b. | Income taxes of non-Israeli subsidiaries: |
c. | Deferred tax assets and liabilities: |
December 31, |
||||||||
2021 |
2020 |
|||||||
Carry forward tax losses |
$ | $ | ||||||
Employee share based compensation |
||||||||
Deferred revenues |
||||||||
Tax credits |
||||||||
Other |
||||||||
|
|
|
|
|||||
Deferred tax assets before valuation allowance |
||||||||
Valuation allowance – mainly in respect to carryforward losses |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred tax asset |
||||||||
|
|
|
|
|||||
Intangible assets |
( |
) | ( |
) | ||||
Undistributed earnings of subsidiary |
( |
) | ( |
) | ||||
Other |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred tax liability |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred tax asset, net |
$ | |
$ | |
||||
|
|
|
|
NOTE 11:- |
TAXES ON INCOME (Cont.) |
d. | Income before taxes on income is comprised as follows: |
Year ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Domestic |
$ | $ | $ | |||||||||
Foreign |
||||||||||||
|
|
|
|
|
|
|||||||
$ | |
$ | |
$ | |
|||||||
|
|
|
|
|
|
e. | Taxes on income are comprised of the following: |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Domestic taxes: |
||||||||||||
Current |
$ | $ | $ | |||||||||
Deferred |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
| ||||
Foreign taxes: |
||||||||||||
Current |
||||||||||||
Deferred |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
| ||||
|
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| ||||
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. |
NOTE 11:- |
TAXES ON INCOME (Cont.) |
December 31, | ||||||||
2021 |
2020 | |||||||
Beginning balance |
$ | |
$ | |
||||
Increases related to tax positions taken during prior years |
||||||||
Decreases related to statute of limitations |
( |
) | ( |
) | ||||
Increases related to tax positions taken during the current year |
||||||||
|
|
|
|
|
| |||
Ending balance |
$ | *) |
$ | *) |
||||
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|
|
|
|
|
NOTE 11:- |
TAXES ON INCOME (Cont.) |
g. | Reconciliation of the theoretical tax expenses: |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Income before taxes as reported in the statements of income |
$ | |
$ | |
$ | |
||||||
|
|
|
|
|
|
|
|
| ||||
Statutory tax rate in Israel |
% | % | % | |||||||||
Decrease in taxes resulting from: |
||||||||||||
Effect of “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 |
$ | $ | $ | |||||||||
|
|
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|
|
|
|
NOTE 12:- |
SHAREHOLDERS’ EQUITY |
a. | General: |
NOTE 12:- |
SHAREHOLDERS’ EQUITY (Cont.) |
b. | Share repurchase: |
c. | Stock Options, RSUs and PSUs: |
NOTE 12:- |
SHAREHOLDERS’ EQUITY (Cont.) |
2021 |
||||||||||
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, 2021 |
||||||||||
Options |
Weighted average exercise price |
Aggregate intrinsic value |
||||||||||
2021 |
||||||||||||
Outstanding at beginning of year |
$ | $ | ||||||||||
Granted |
$ | |||||||||||
Exercised |
( |
) | $ | |||||||||
Forfeited |
( |
) | $ | |||||||||
Outstanding at December 31, 2021 |
$ | $ | ||||||||||
Exercisable at December 31, 2021 |
$ | $ | ||||||||||
NOTE 12:- |
SHAREHOLDERS’ EQUITY (Cont.) |
Year ended December 31, 2021 | ||||||||||||
RSUs |
PSUs |
Total | ||||||||||
Unvested at beginning of year |
||||||||||||
Granted |
||||||||||||
Vested |
( |
) | * | ) | ( |
) | ||||||
Forfeited |
( |
) | * | ) | ( |
) | ||||||
|
|
|
|
|
|
|
|
| ||||
|
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|
|
|
|
|
|
|
d. | Employee Stock Purchase Plan (“ESPP”): |
NOTE 12:- |
SHAREHOLDERS’ EQUITY (Cont.) |
e. | Stock-Based Compensation: |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Cost of revenues |
$ | |
$ | |
$ | |
||||||
Research and development |
||||||||||||
Selling and marketing |
||||||||||||
General and administrative |
||||||||||||
|
|
|
|
|
|
|
|
| ||||
$ | |
$ | |
$ | |
|||||||
|
|
|
|
|
|
|
|
|
NOTE 13:- |
EARNINGS PER SHARE |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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 |
$ | |
$ | |
$ | |
||||||
|
|
|
|
|
|
|
|
|
NOTE 14:- |
GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA |
a. | Summary information about geographical areas: |
1. | Revenues based on the channel partners’ location: |
Year ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Americas |
$ | $ | $ | |||||||||
Europe, Middle East and Africa |
||||||||||||
Asia Pacific |
||||||||||||
|
|
|
|
|
|
|||||||
$ | |
$ | |
$ | |
|||||||
|
|
|
|
|
|
*) | Starting 2019, Middle East and Africa are part of the “Europe Middle East and Africa” region, while before it was part of “Asia Pacific, Middle East and Africa” region. |
2. | Property and equipment, net: |
December 31, | ||||||||
2021 |
2020 | |||||||
Israel |
$ | |
$ | |
||||
U.S. |
||||||||
Rest of the world |
||||||||
|
|
|
|
|
| |||
$ | $ | |||||||
|
|
|
|
|
|
NOTE 14:- |
GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Cont.) |
b. | Summary information about product lines: |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
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 |
c. | Financial income, net: |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Financial income: |
||||||||||||
Interest income |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
|
|
| ||||
Financial expense: |
||||||||||||
Amortization of marketable securities premium and accretion of discount, net |
||||||||||||
Realized (gain) on sale of marketable securities, net |
( |
) |
( |
) |
( |
) | ||||||
Foreign currency re-measurement (gain) loss |
( |
) |
||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
| ||||
$ |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
NOTE 15:- |
SUBSEQUENT EVENTS |