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 |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
| ||||
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 |
$ | *) |
$ | *) |
||||
|
|
|
|
|
|
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 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|
|
|
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 |
( |
) | * | ) | ( |
) | ||||||
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
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 |
Exhibit 4.2
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
2005 ISRAEL EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Israel Equity Incentive Plan are:
| to attract and retain the best available personnel for positions of substantial responsibility, |
| to provide additional incentive to Service Providers, and |
| to promote our employees interest in the success of the Companys business. |
Awards granted under the Plan may be Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents, as determined by the Administrator at the time of grant.
Furthermore, the Plan is designed to benefit from, and is made pursuant to, the provisions of Section 102 of the Ordinance, with respect to Awards granted to Employees pursuant to the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) Administrator means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) Affiliate means an employing company as such term is defined in Section 102(a) of the Ordinance, other than the Company itself.
(c) Applicable Laws means the requirements relating to the administration of, or otherwise affecting, equity compensation plans under the Companies Law, the Securities Law, other applicable laws of Israel, U.S. federal and state securities laws, any stock exchange or quotation system on which the Shares are listed or quoted, U.S. state corporate laws, and any other country or jurisdiction where Awards are granted under the Plan or a sub-plan or addendum hereto.
(d) Approved 102 Award means an Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Participant.
(e) Award means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents.
(f) Award Agreement means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(g) Awarded Stock means the Shares subject to an Award.
(h) Board means the Board of Directors of the Company.
(i) Capital Gains Award (CGA) means an Approved 102 Award elected and designated by the Company to qualify for capital gains tax treatment in accordance with Section 102(b)(2) of the Ordinance.
(j) Change of Control means the occurrence of any of the following events, in one or a series of related transactions:
(i) any individual or entity, other than the Company, a subsidiary of the Company or a Company employee benefit plan, including any trustee of such plan acting as trustee, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Companys then outstanding securities entitled to vote generally in the election of directors; or
(ii) a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(iii) the sale or disposition by the Company of all or substantially all the Companys assets.
(k) Committee means a Committee appointed by the Board in accordance with Section 4 of the Plan.
(l) Companies Law means the Israeli Companies Law, 5759-1999.
(m) Company means Check Point Software Technologies Ltd.
(n) Consultant means any person, other than an Employee, engaged by the Company or any Affiliate to render services and who is compensated for such services.
(o) Continuous Status as a Director means that the Director relationship is not interrupted or terminated.
(p) Controlling Shareholder shall have the meaning ascribed to such term in Section 32(9) of the Ordinance.
(q) Deferred Stock Unit means a deferred stock unit Award granted to a Participant pursuant to Section 13.
(r) Director means a member of the Board.
- 2 -
(s) Disability means total and permanent disability as determined by the Administrator.
(t) Dividend Equivalent means a credit, payable in cash, made at the discretion of the Administrator, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant. The Dividend Equivalent for each Share subject to an Award shall only be paid to a Participant on the vesting date for such Share.
(u) Election means the Companys election of the type of Approved 102 Awards as set forth in Section 19(b)(iii).
(v) Employee means any person employed by the Company or any Affiliate of the Company, and includes Officers and Directors. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, any Subsidiary, or any successor.
(w) Fair Market Value means, as of any date, the value of Shares determined as follows:
(i) If the Shares are listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market of the National Association of Securities Dealers, Inc. Automated Quotation (Nasdaq) System, the Fair Market Value of a Share shall be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Shares) on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Shares are quoted on the Nasdaq System (but not on the Nasdaq National Market thereof) or are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Shares, the Fair Market Value shall be determined in good faith by the Administrator.
(x) ITA means the Israeli Tax Authorities.
(y) Non-approved 102 Award means an Award granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.
(z) Non-employee Director means a Director who is neither an Employee nor a Consultant, and who is a resident of Israel.
- 3 -
(aa) Notice of Grant means a written or electronic notice evidencing certain terms and conditions of an individual Award. The Notice of Grant is part of the Award Agreement.
(bb) Officer means, with respect to the Company and Affiliates that are Israeli companies, a person who is a nosei misra within the meaning of the Companies Law but is not a Director, and with respect to Affiliates that are not Israeli companies means a person who is an officer within the meaning of the applicable corporate law of the jurisdiction of incorporation of such Affiliate.
(cc) Option means an option to purchase Shares granted pursuant to the Plan.
(dd) Option Agreement means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.
(ee) Ordinance means the Israeli Income Tax Ordinance (New Version), 1961 as now in effect and as hereafter amended.
(ff) Ordinary Income Award (OIA) means an Approved 102 Award elected and designated by the Company to qualify for ordinary income tax treatment in accordance with Section 102(b)(1) of the Ordinance.
(gg) Ordinary Shares shall mean the Ordinary Shares of the Company, NIS 0.01 nominal value.
(hh) Participant means the holder of an outstanding Award granted under the Plan.
(ii) Performance Share means a performance share Award granted to a Participant pursuant to Section 11.
(jj) Performance Unit means a performance unit Award granted to a Participant pursuant to Section 12.
(kk) Plan means this 2005 Israel Equity Incentive Plan.
(ll) Restricted Stock means Shares granted pursuant to Section 9 of the Plan.
(mm) Restricted Stock Unit means an Award granted pursuant to Section 10 of the Plan.
(nn) Section 3(i) Award means an Award granted to a Consultant or a Controlling Shareholder in accordance with Section 3(i) of the Ordinance.
(oo) Section 102 means Section 102 of the Ordinance and any regulations, rules, and orders of procedures promulgated thereunder as now in effect or as hereafter amended.
- 4 -
(pp) Section 102 Shares means Shares issued under a Section 102 Award pursuant to Section 19(c)(i) below.
(qq) Section 102 Period shall have the meaning ascribed to such term in Section 19(c)(i) below.
(rr) Securities Law means the Israeli Securities Law, 57281968.
(ss) Service Provider means an Employee or Consultant.
(tt) Share means one Ordinary Share, as adjusted in accordance with Section 21 of the Plan.
(uu) Trustee means a trustee designated by the Board and approved by the ITA, pursuant to the requirements of Section 102 and a trust agreement to be entered into and between the Company and such Trustee and approved by the ITA.
3. Shares Subject to the Plan.
(a) Subject to the provisions of Section 21 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan and the Companys 2005 U.S. Equity Incentive Plan, as amended (the U.S. Plan, and collectively with the Plan, the Equity Plans)), is 19,000,000 Shares; provided, however, that on December 31st of each year, commencing December 31, 2018, the number of Reserved and Authorized Shares (as defined below) under the Equity Plans shall be automatically reset on such date to equal 10% of the sum of (A) the number of Shares issued and outstanding on such date and (B) the number of Shares reserved and authorized under the Equity Plans for outstanding Awards granted under the Equity Plans as of such date; provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of Shares reserved and authorized under the Equity Plans for Awards granted under the Plans that are outstanding as of such date. The number of Reserved and Authorized Shares under the Equity Plans shall equal the sum of (i) the number of Shares reserved and authorized under the Equity Plans for outstanding Awards granted under the Equity Plans as of such date, and (ii) the number of Shares reserved, authorized and available for issuance under the Equity Plans on such date.
(b) The Shares may be authorized but unissued, or reacquired, Shares.
(c) Intentionally omitted.
(d) If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Performance Shares or Restricted Stock Units, is forfeited to or repurchased by the Company at its original purchase price due to such Award failing to vest, the unpurchased Shares (or for Awards other than Options, the forfeited or repurchased shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan; provided, however, that if Shares of Restricted Stock, Performance Shares or Restricted Stock Units are repurchased by the Company at their original purchase price
- 5 -
or are forfeited to the Company due to such Awards failing to vest, such Shares shall become available for future grant under the Plan. Shares used to pay the exercise price of an Option shall not become available for future grant or sale under the Plan. Shares used to satisfy tax withholding obligations shall not become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than shares, such cash payment shall not reduce the number of Shares available for issuance under the Plan. Any payout of Dividend Equivalents or Performance Units, because they are payable only in cash, shall not reduce the number of Shares available for issuance under the Plan. Conversely, any forfeiture of Dividend Equivalents or Performance Units shall not increase the number of Shares available for issuance under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. The Plan may be administered by different Committees with respect to different groups of Service Providers.
(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Shares, in accordance with Section 2(w) of the Plan;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine whether and to what extent Awards or any combination thereof, are granted hereunder;
(iv) to determine the number of Shares or equivalent units to be covered by each Award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan and Awards;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans or Plan addendums, established for the purpose of qualifying for preferred tax treatment (e.g., Section 102);
- 6 -
(ix) to modify or amend each Award (subject to Section 23(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;
(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xi) to allow Participants to satisfy withholding tax obligations by electing to have the Company and/or its Affiliates and/or the Trustee withhold taxes in accordance with the Applicable Laws. The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(xii) to determine whether Dividend Equivalents will be granted in connection with another Award;
(xiii) to determine the terms and restrictions applicable to Awards;
(xiv) to determine the price per each Share to be issued under the Awards (excluding the Option exercise price to be set in accordance with Section 8(b) below). Shares to be issued under grants of Restricted Stock, RSUs, Performance Shares and Performance Units may be issued upon payment of their nominal value;
(ix) to make an election as to the type of 102 Approved Award; and
(xv) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect of Administrators Decision. The Administrators decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.
5. Eligibility. Awards may be granted to Service Providers, provided that Section 102 Awards may be granted only to Employees.
6. No Employment Rights. Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participants employment with the Company or its Affiliates, nor shall they interfere in any way with the Participants right or the Companys or Affiliates right, as the case may be, to terminate such employment at any time, with or without cause or notice.
7. Term of Plan. The Plan will become effective upon its adoption by the Board and will remain in effect until terminated pursuant to Section 23 of the Plan.
- 7 -
8. Options.
(a) Term. The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall be no more than seven (7) years from the date of grant or such shorter term as may be provided in the Notice of Grant.
(b) Option Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator and shall be no less than 100% of the Fair Market Value per share on the date of grant.
(c) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period or until performance milestones are satisfied. In any event, no Option granted hereunder shall vest until at least six months following the Option grant date.
(d) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of a Section 102 Award, the Administrator shall determine the acceptable form of consideration at the time of grant. Subject to Applicable Laws, such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Participant for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;
(iv) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company or Affiliate of the sale proceeds required to pay the exercise price;
(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.
(e) Exercise of Option; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
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An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant, provided however that Shares issued following the exercise of Options granted under Section 102(b) to the Ordinance shall be issued under the name of the Trustee for the benefit of the Participant and shall be held in trust by the Trustee. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the optioned stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 21 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.
9. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and conditions of the Plan, Restricted Stock may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on continued provision of services but may include a performance-based component, upon which is conditioned the grant, vesting or issuance of Restricted Stock; provided, however that no Restricted Stock Award shall vest until at least one year following the grant date.
(b) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Restricted Stock granted under the Plan. Restricted Stock grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock or the restricted stock unit is awarded. The Administrator may require the recipient to sign a Restricted Stock Award agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.
(c) Restricted Stock Award Agreement. Each Restricted Stock grant shall be evidenced by an agreement that shall specify the purchase price (if any) and such other terms and conditions as the Administrator, in its sole discretion, shall determine; provided; however, that if the Restricted Stock grant has a purchase price, such purchase price must be paid no more than ten (10) years following the date of grant.
10. Restricted Stock Units.
(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Stock Unit award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally
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or solely on continued service but may include a performance-based component, upon which is conditioned the grant or vesting of Restricted Stock Units. Restricted Stock Units shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the units to acquire Shares.
(b) Vesting Criteria and Other Terms. The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, Affiliate-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion; provided, however that no Restricted Unit Award shall vest until at least one year following the grant date.
(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award Agreement. The Administrator shall pay earned Restricted Stock Units in Shares.
(e) Cancellation. On the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company.
11. Performance Shares.
(a) Grant of Performance Shares. Subject to the terms and conditions of the Plan, Performance Shares may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the units to acquire Shares.
(b) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Shares granted under the Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator; provided, however that no Performance Share Award shall vest until at least one year following the grant date. The Administrator may require the recipient to sign a Performance Shares agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.
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(c) Performance Share Award Agreement. Each Performance Share grant shall be evidenced by an agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine.
12. Performance Units.
(a) Grant of Performance Units. Performance Units are similar to Performance Shares, except that they shall be settled in a cash equivalent to the Fair Market Value of the underlying Shares, determined as of the vesting date. Subject to the terms and conditions of the Plan, Performance Units may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Units. Performance Units shall be granted in the form of units to acquire Shares. Each such unit shall be the cash equivalent of one Share. No right to vote or receive dividends or any other rights as a shareholder shall exist with respect to Performance Units or the cash payable thereunder.
(b) Number of Performance Units. The Administrator will have complete discretion in determining the number of Performance Units granted to any Participant.
(c) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Units granted under the Plan. Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the grant is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign a Performance Unit agreement as a condition of the award. Any certificates representing the units awarded shall bear such legends as shall be determined by the Administrator.
(d) Performance Unit Award Agreement. Each Performance Unit grant shall be evidenced by an agreement that shall specify such terms and conditions as the Administrator, in its sole discretion, shall determine.
13. Deferred Stock Units. Deferred Stock Units shall consist of a Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator. Deferred Stock Units shall remain subject to the claims of the Companys general creditors until distributed to the Participant.
14. Automatic Stock Option and RSU Grants to Non-employee Directors.
(a) Procedure for Grants. All grants of Options and RSU to Non-employee Directors under this Section 14 shall be automatic and non-discretionary and shall be made strictly in accordance with the following provisions:
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(i) Each Non-employee Director shall be automatically granted (i) an Option to purchase 25,000 Shares, or a lesser amount determined by the Board, in its sole discretion (the First Option), and (ii) RSUs with a value of $200,000, or a lesser amount determined by the Board, in its sole discretion (the First RSU, and, together with the First Option, the First Awards), upon the date on which such person first becomes a Director, whether through election by the shareholders of the Company or appointment by the Board of Directors to fill a vacancy; provided, however, that a Non-employee Director who has previously been employed by the Company (or any Affiliate) shall not be eligible to receive a First Option or a First RSU.
(ii) At each of the Companys annual shareholder meetings, and commencing in 2020, each Non-employee Director shall be automatically granted (i) an Option to purchase 15,000 Shares, or a lesser amount determined by the Board, in its sole discretion (the Annual Option), and (ii) RSUs with a value of $50,000, or a lesser amount determined by the Board, in its sole discretion (the Annual RSU, and, together with the Annual Option, the Annual Awards), provided that such individual has served as an Non-employee Director for at least six months prior to the date of such annual meeting.
(iii) Notwithstanding the provisions of subsections (i) and (ii) hereof, in the event that an automatic grant hereunder would cause the number of Shares subject to outstanding Awards plus the number of Shares previously purchased upon exercise of Options or the vesting of other Awards to exceed the number of Shares available for issuance under the Plan, then each such automatic grant shall be for that number of Shares determined by dividing the total number of Shares remaining available for grant by the number of Non-employee Directors on the automatic grant date. Any further grants shall then be deferred until such time, if any, as additional Shares become available for grant under the Plan.
(iv) The terms of an Award granted hereunder shall be as follows:
(A) The term of the Option shall be seven (7) years.
(B) The Option shall be exercisable only while the Non-employee Director remains a Director of the Company, except as set forth in subsection (c) hereof.
(C) The exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the Option.
(D) The First Option shall become exercisable as to 25% of the covered Shares each year on the day prior to each years normally scheduled annual shareholders meeting, so as to become 100% vested on the day prior to the normally scheduled annual shareholders meeting occurring approximately four years following the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
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(E) The First RSU shall vest as to 25% of the covered Shares each year on the day prior to each years normally scheduled annual shareholders meeting, so as to become 100% vested on the day prior to the normally scheduled annual shareholders meeting occurring approximately four years following the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(F) The Annual Option shall become exercisable as to 50% of the covered Shares six months following the grant date, and as to an additional 25% of the covered Shares each three months thereafter, so as to be 100% vested on the first anniversary of the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(G) The Annual RSU shall vest as to 50% of the covered Shares six months following the grant date, and as to an additional 25% of the covered Shares each three months thereafter, so as to be 100% vested on the first anniversary of the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(b) Consideration for Exercising Non-employee Director Stock Options. The consideration to be paid for the Shares to be issued upon exercise of an automatic Non-employee Director Option shall consist of any consideration permitted under Section 8(d) hereof and as set forth in the Award Agreement.
(c) Post-Directorship Exercisability. If a Non-employee Director ceases to serve as a Director, he or she may, but only within one year after the date he or she ceases to be a Director, exercise his or her Option to the extent that he or she was entitled to exercise it at the date of such termination. To the extent that he or she was not entitled to exercise an Option at the date of such termination, or if he or she does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate.
(d) Limitation on Automatic Award Grants. The Directors serving immediately prior to the appointment or election of a new Non-employee Director, or prior to an annual shareholders meeting, as the case may be, shall determine as to each new Non-employee Director whether he or she shall be granted an Award under this Section 14 or under the comparable provisions of another incentive plan of the Company. A new Non-employee Director who receives an Award under this Plan shall not be eligible to receive a comparable automatic stock option or RSU grant under any other incentive plan of the Company. A Non-employee Director who receives an Award of an Annual Option under this Plan shall not be eligible to receive a comparable automatic stock option or RSU grant under any other incentive plan of the Company with respect to such fiscal year of the Company.
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15. Termination of Relationships, Death or Disability.
(a) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participants death or Disability, then (i) in the case of an Award that is an Option, the Participant may exercise any Options within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), and (ii) in the case of any Award other than an Option, the Participant shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of termination (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, an Option shall remain exercisable, and the Participant shall be entitled to the benefit conferred by an Award other than an Option, for three months following the Participants termination. If, on the date of termination, the Participant is not vested as to his or her entire Award, the Shares covered by the unvested portion of the Award shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option, or receive the benefit conferred by an Award other than an Option, within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
(b) Disability. If a Participant ceases to be a Service Provider as a result of the Participants Disability, then (i) in the case of an Award that is an Option, the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), and (ii) in the case of any Award other than an Option, the Participant shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of termination (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, an Option shall remain exercisable, and the Participant shall be entitled to the benefit conferred by an Award other than an Option, for twelve (12) months following the Participants termination due to Disability. If, on the date of termination, the Participant is not vested as to his or her entire Award, the Shares covered by the unvested portion of the Award shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option, or receive the benefit conferred by an Award other than an Option, within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
(c) Death of Participant. If a Participant dies while a Service Provider, then (i) in the case of an Award that is an Option, the Option may be exercised following the Participants death within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Option Agreement), by the Participants designated beneficiary, provided such beneficiary has been designated prior to Participants death in a form acceptable to the Administrator, and (ii) in the case of any Award other than an Option, the Participants designated beneficiary, provided such beneficiary has been designated prior to Participants death in a form acceptable to the Administrator, shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of death (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). If no such beneficiary has been designated by the Participant, then such Option may be exercised by, or the benefit conferred by such Award shall be provided to, the personal representative of the Participants estate or by
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the person(s) to whom the Award is transferred pursuant to the Participants will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option shall remain exercisable, or the benefit conferred by such Award shall be provided, for twelve (12) months following Participants death. If the Option is not so exercised or the benefit conferred by such Award is not provided within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
16. Leaves of Absence. Unless the Administrator provides otherwise or except as otherwise required by Applicable Laws, vesting of Awards granted hereunder shall cease commencing on the first day of any unpaid leave of absence and shall only recommence upon return to active service.
17. Part-Time Service. Unless the Administrator provides otherwise or except as otherwise required by Applicable Laws, any service-based vesting of Awards granted hereunder shall be extended on a proportionate basis in the event an Employee transitions to a work schedule under which they are customarily scheduled to work on less than a full-time basis, or if not on a full-time work schedule, to a schedule requiring fewer hours of service. Such vesting shall be proportionately re-adjusted prospectively in the event that the Employee subsequently becomes regularly scheduled to work additional hours of service.
18. Non-Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the recipient, only by the recipient. If the Administrator makes an Award transferable, it may only be transferable for no consideration to transferees permitted pursuant to a Form S-8 Registration Statement (such as family members or pursuant to a settlement of marital property rights) and such Award shall contain such additional terms and conditions as the Administrator deems appropriate.
19. Grant of Approved 102 Awards and Non-approved 102 Awards.
(a) Participants. Approved 102 Awards may only be granted to Employees who are residents of the State of Israel. Except as otherwise specifically approved by the ITA, a Controlling Shareholder or a Consultant shall not be eligible for grant of Approved 102 Awards or Non-approved 102 Awards, and shall only be eligible for grant of Section 3(i) Awards.
(b) Grant of Section 102 Awards.
(i) The Company may designate Awards granted to Employees pursuant to Section 102 as Non-approved 102 Awards or Approved 102 Awards.
(ii) The grant of Approved 102 Awards under the Plan shall be conditioned upon the approval of the Plan by the ITA.
(iii) Approved 102 Awards may either be classified as Capital Gains Awards (CGAs) or Ordinary Income Awards (OIAs). No Approved 102 Award may be granted under the Plan unless and until the Companys election of the type of Approved 102 Awards as CGA or OIA granted to Employees (the Election) is appropriately filed
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with the ITA. Such Election shall become effective beginning the first date of grant of an Approved 102 Award and shall remain in effect until the end of the year following the year during which Employees were first granted Approved 102 Awards. The Election shall obligate the Company to grant only the type of Approved 102 Awards it has elected, and shall apply to all Participants who were granted such Approved 102 Awards during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Administrator from granting Employees Approved 102 Awards and Non-approved 102 Awards simultaneously.
(iv) All Approved 102 Awards must be held in trust by a Trustee, as described in subsection (c) below.
(v) For the avoidance of doubt, the designation of Non-approved 102 Awards and Approved 102 Awards shall be subject to the terms and conditions of Section 102.
(vi) With respect to Non-approved 102 Award, if the Employee ceases to be employed by the Company or any Affiliate, the Employee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102.
(c) Trustee.
(i) All Approved 102 Awards granted under the Plan and any Shares allocated or issued upon exercise of such Approved 102 Awards (Section 102 Shares) or other shares received subsequently following any realization of rights, including bonus shares, shall be allocated or issued to the Trustee, and shall be held by the Trustee for the benefit of the Participants for such period of time as required by Section 102 (the Section 102 Period). In case the requirements for Approved 102 Awards are not met, then the Approved 102 Awards shall be regarded as Non-approved 102 Awards, all in accordance with the provisions of Section 102.
(ii) Notwithstanding anything to the contrary, the Trustee shall not release any Section 102 Shares or other Shares received subsequently following any realization of the Participants rights prior to the full payment of the Participants tax liabilities arising from the grant, exercise, release or transfer of the Approved 102 Award and any Section 102 Shares or other Shares received subsequently following any realization of rights.
(iii) With respect to any Approved 102 Awards, subject to the provisions of Section 102, a Participant shall not sell or release from trust any Section 102 Shares or any Shares received subsequently following any realization of rights, including bonus shares, until the lapse of the Section 102 Period. Notwithstanding the above, if any such sale or release occurs during the Section 102 Period, the sanctions under Section 102 shall apply to, and be borne by, such Participant.
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(iv) Upon receipt of an Approved 102 Award, the Participant will sign an Award Agreement under which the Participant will agree to be subject to the trust agreement between the Company and the Trustee, stating, among others, that the Trustee will be released from any liability in respect of any action or decision duly taken and bona fide executed in relation with the Plan, or any Approved 102 Award or Section 102 Share granted to him or her thereunder.
(v) As long as Approved 102 Awards granted, or Section 102 Shares are held by the Trustee, then all rights the Participant possesses over such Awards or Shares may not be transferred, assigned, pledged or mortgaged by the Participant, other than by will or laws of descent and distribution.
(vi) If dividends, whether cash, property or stock dividends, are declared on Section 102 Shares held by the Trustee, such dividends shall also be subject to the provisions of Section 102 and the provisions of this Section 19. The Section 102 Period for any such additional shares shall be equal to the Section 102 Period for the original Section 102 Shares.
(vii) At any time after the end of the Section 102 Period with respect to any Section 102 Awards or Section 102 Shares, the Participant may order (but shall not be obligated to order) the Trustee to sell or transfer to the Participant such Section 102 Awards or Section 102 Shares, provided that no securities shall be sold or transferred until all required payments have been fully made: (i) such Participant has deposited with the Trustee an amount of money which, in the Trustees opinion, is necessary to discharge such Participants tax obligations with respect to such Section 102 Awards or Section 102 Shares, or (ii) the receipt by the Trustee of an acknowledgment from the ITA that the Participant has paid any applicable tax due pursuant to the Ordinance, or (iii) the Company has made other arrangements for the deduction of tax at source acceptable to the Trustee, or (iv) upon the sale by the Trustee of any securities held in trust from the proceeds of which the Company or the Trustee has withheld all applicable taxes and has remitted the amount withheld to the appropriate Israeli tax authorities, has paid the balance thereof directly to such Participant, and has reported to such Participant the amount so withheld and paid to such tax authorities.
(d) Integration of Section 102 and Tax Assessing Officers Permit.
With regards to Approved 102 Awards, the provisions of the Plan and the Award Agreement shall be subject to the provisions of Section 102 of the Ordinance and the Tax Assessing Officers permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Award Agreement.
(e) Tax Consequences.
(i) Any and all tax consequences arising from the grant, exercise transfer, or sale of an Award or from the payment for Shares covered thereby or from any other event or act under the Plan (whether of a Participant and/or of the Company and/or a Affiliate and/or the Trustee) shall be borne solely by the Participant. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under
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the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Participant shall agree to indemnify the Company and the Trustee, if applicable, and hold them harmless against and from any and all liability for any tax or interest or penalty thereon, including (without limitation) liabilities relating to the necessity to withhold, or to have withheld, any tax from any payment made to the Participant.
(ii) The Company, or where applicable, the Trustee, shall not be required to release any share certificate to a Participant until all requirement payment have been fully made.
(iii) Without derogating from Section 2 above and solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the date of grant the Companys shares are listed on any established stock exchange or a national market system or if the Companys shares will be registered for trading within ninety (90) days following the date of grant of the Approved 102 Award, the Fair Market Value of the Shares at the date of grant shall be determined in accordance with the average value of the Companys Shares on the thirty trading days preceding the date of grant or the thirty trading days following the date of registration for trading, as the case may be.
20. Grant of Section 3(i) Awards. In the event that grants are made under Section 3(i) of the Ordinance, the Company may elect to enter into an agreement with a trustee concerning the administration of the exercise of Options, the purchase and sale of Shares, and the arrangements for payment of or withholding of taxes due in connection with such exercise, purchase and sale. The trust agreement may provide that the Company will issue the Shares to such trustee for the benefit of the Participants. The type of Section 3(i) Awards to be granted under the Plan shall be subject to the provisions of Section 3(i) to the Ordinance.
21. Adjustments Upon Changes in Capitalization, Dissolution or Liquidation or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Ordinary Shares covered by each outstanding Award, the number of shares of Ordinary Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted (including the automatic annual replenishment of three million Shares) or which have been returned to the Plan upon cancellation or expiration of an Award, as well as the price per Ordinary Shares covered by each such outstanding Award shall be proportionately adjusted for any increase or decrease in the number of issued Ordinary Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Ordinary Shares, or any other increase or decrease in the number of issued Ordinary Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Ordinary Shares subject to an Award.
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(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with respect to Options) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action.
(c) Change of Control.
(i) Options. In the event of a Change of Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a parent or Affiliate of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Administrator, in its sole discretion, may provide that either (i) all Options shall terminate immediately prior to the consummation of the Change of Control, or (ii) Participants shall fully vest in and have the right to exercise their Options as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change of Control, the Administrator shall notify the Participant in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the Change of Control, the option confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Ordinary Shares); provided, however, that if such consideration received in the Change of Control is not solely stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Awarded Stock subject to the Option, to be solely stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Ordinary Shares in the Change of Control.
(ii) Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Deferred Stock Units. In the event of a Change of Control, each outstanding Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award (and any related Dividend Equivalent), shall be assumed or an equivalent Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award substituted by the successor corporation or a parent or Affiliate of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit award, the
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Administrator, in its sole discretion, may provide either that (i) such Awards shall terminate immediately prior to the consummation of the Change of Control, or (ii) Participants shall fully vest in the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit Awards including as to Shares (or with respect to Performance Units, the cash equivalent thereof) which would not otherwise be vested. For the purposes of this paragraph, a Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award shall be considered assumed if, following the Change of Control, the award confers the right to purchase or receive, for each Share (or with respect to Performance Units, the cash equivalent thereof) subject to the Award immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Ordinary Shares); provided, however, that if such consideration received in the Change of Control is not solely stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received, for each Share and each unit/right to acquire a Share subject to the Award, to be solely stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Ordinary Shares in the Change of Control.
22. Date of Grant. The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.
23. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with the Applicable Laws and in such a manner and to such a degree as is required by the Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing (or electronic format) and signed by the Participant and the Company or its Affiliate.
24. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award or the issuance and delivery of such Shares (or with respect to Performance Units, the cash equivalent thereof) shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
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(b) Investment Representations. As a condition to the exercise or receipt of an Award, the Company may require the person exercising or receiving such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
(c) Tax Consequences. Any and all tax consequences arising from the grant or exercise, or otherwise relating to, an Award or from the payment for Shares covered thereby or from any other event or act under the Plan (whether of the Participant or of the Company or of a Affiliate) shall be borne solely by the Participant. The Company or its Affiliates shall withhold taxes according to the requirements under the Applicable Laws, including withholding taxes at source. Furthermore, the Participant shall agree to indemnify the Company and its Affiliates, if applicable, and hold them harmless from and against any and all liability for any tax, or interest or penalty thereon, including liabilities relating to the necessity to withhold, or to have withheld, any tax from any payment made to the Participant.
25. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Companys counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Awarded Stock covered by an Award exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, such Award shall be void with respect to such excess Awarded Stock, unless shareholder approval of an amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 23(b) of the Plan.
26. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
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Exhibit 4.3
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
2005 UNITED STATES EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Unites States Incentive Plan are:
| to attract and retain the best available personnel for positions of substantial responsibility, |
| to provide additional incentive to Service Providers, and |
| to promote the success of the Companys business. |
Awards granted under the Plan may be Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) Administrator means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) Applicable Laws means the requirements relating to the administration of, or otherwise affecting, equity compensation plans under Israeli corporate laws, U.S. state corporate laws, Israeli securities laws, U.S. federal and state securities laws, the Code and foreign tax laws, any stock exchange or quotation system on which the Shares are listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan or a sub-plan or addendum hereto.
(c) Award means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents.
(d) Award Agreement means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(e) Awarded Stock means the Ordinary Shares subject to an Award.
(f) Board means the Board of Directors of the Company.
(g) Change of Control means the occurrence of any of the following events, in one or a series of related transactions:
(i) any person, as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than the Company, a subsidiary of the Company or a Company employee benefit plan, including any trustee of such plan acting as trustee, is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Companys then outstanding securities entitled to vote generally in the election of directors; or
(ii) a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(iii) the sale or disposition by the Company of all or substantially all the Companys assets.
(h) Code means the Internal Revenue Code of 1986, as amended.
(i) Committee means a Committee appointed by the Board in accordance with Section 4 of the Plan.
(j) Company means Check Point Software Technologies Ltd.
(k) Consultant means any person, other than an Employee, engaged by the Company, or any Subsidiary to render services and who is compensated for such services.
(l) Continuous Status as a Director means that the Director relationship is not interrupted or terminated.
(m) Deferred Stock Unit means a deferred stock unit Award granted to a Participant pursuant to Section 13.
(n) Director means a member of the Board.
(o) Disability means total and permanent disability as defined in Section 22(e)(3) of the Code.
(p) Dividend Equivalent means a credit, payable in cash, made at the discretion of the Administrator, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant. The Dividend Equivalent for each Share subject to an Award shall only be paid to a Participant on the vesting date for such Share.
(q) Employee means any person, including Officers and Directors, employed by the Company or any Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company or its Subsidiary is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
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(r) Exchange Act means the Securities Exchange Act of 1934, as amended.
(s) Fair Market Value means, as of any date, the value of Ordinary Shares determined as follows:
(i) If the Ordinary Shares are listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market of the National Association of Securities Dealers, Inc. Automated Quotation (Nasdaq) System, the Fair Market Value of a Share of Ordinary Shares shall be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Ordinary Shares) on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Ordinary Shares are quoted on the Nasdaq System (but not on the Nasdaq National Market thereof) or are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of an Ordinary Share shall be the mean between the high bid and low asked prices for the Ordinary Shares on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Ordinary Shares, the Fair Market Value shall be determined in good faith by the Administrator.
(t) Incentive Stock Option means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(u) Non-Employee Director means a Director who is neither an Employee nor a Consultant and who is not a resident of Israel.
(v) Nonstatutory Stock Option means an Option not intended to qualify as an Incentive Stock Option.
(w) Notice of Grant means a written or electronic notice evidencing certain terms and conditions of an individual Award. The Notice of Grant is part of the Award Agreement.
(x) Officer means a person who is an officer of the Company or a Subsidiary within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(y) Option means a stock option granted pursuant to the Plan.
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(z) Option Agreement means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.
(aa) Ordinary Shares shall mean the Ordinary Shares of the Company., NIS 0.01 nominal value.
(bb) Participant means the holder of an outstanding Award granted under the Plan.
(cc) Performance Share means a performance share Award granted to a Participant pursuant to Section 11.
(dd) Performance Unit means a performance unit Award granted to a Participant pursuant to Section 12.
(ee) Plan means this 2005 United States Equity Incentive Plan.
(ff) Restricted Stock means Shares granted pursuant to Section 9 of the Plan.
(gg) Restricted Stock Unit means an Award granted pursuant to Section 10 of the Plan.
(hh) Service Provider means an Employee, Consultant or Non-Employee Director.
(ii) Share means a share of the Ordinary Shares, as adjusted in accordance with Section 19 of the Plan.
(jj) Subsidiary means a subsidiary corporation, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 19 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan and the Companys 2005 Israel Equity Incentive Plan, as amended (the Israel Plan, and collectively with the Plan, the Equity Plans)), is 19,000,000 Shares; provided, however, that on December 31st of each year, commencing December 31, 2018, the number of Reserved and Authorized Shares (as defined below) under the Equity Plans shall be automatically reset on such date to equal 10% the sum of (A) of the number of Shares issued and outstanding on such date and (B) the number of Shares reserved and authorized under the Equity Plans for outstanding Awards granted under the Equity Plans as of such date; provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of Shares reserved and authorized under the Equity Plans for Awards granted under the Plans that are outstanding as of such date. The number of Reserved and Authorized Shares under the Equity Plans shall equal the sum of (i) the number of Shares reserved and authorized under the Equity Plans for outstanding Awards granted under the Equity Plans as of such date, and (ii) the number of Shares reserved, authorized and available for issuance under the Equity Plans on such date.
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(b) The Shares may be authorized, but unissued, or reacquired Ordinary Shares.
(c) Intentionally omitted.
(d) If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Performance Shares or Restricted Stock Units, is forfeited to or repurchased by the Company at its original purchase price due to such Award failing to vest, the unpurchased Shares (or for Awards other than Options, the forfeited or repurchased shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan; provided, however, that if Shares of Restricted Stock, Performance Shares or Restricted Stock Units are repurchased by the Company at their original purchase price or are forfeited to the Company due to such Awards failing to vest, such Shares shall become available for future grant under the Plan. Shares used to pay the exercise price of an Option shall not become available for future grant or sale under the Plan. Shares used to satisfy tax withholding obligations shall not become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than stock, such cash payment shall not reduce the number of Shares available for issuance under the Plan. Any payout of Dividend Equivalents or Performance Units, because they are payable only in cash, shall not reduce the number of Shares available for issuance under the Plan. Conversely, any forfeiture of Dividend Equivalents or Performance Units shall not increase the number of Shares available for issuance under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. The Plan may be administered by different Committees with respect to different groups of Service Providers.
(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Ordinary Shares, in accordance with Section 2(s) of the Plan;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine whether and to what extent Awards or any combination thereof, are granted hereunder;
(iv) to determine the number of Ordinary Shares or equivalent units to be covered by each Award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
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(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Ordinary Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan and Awards;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans or Plan addendums established for the purpose of qualifying for preferred tax treatment under foreign tax laws;
(ix) to modify or amend each Award (subject to Section 21(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;
(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xi) to allow Participants to satisfy withholding tax obligations by electing to have the Company or its Subsidiary withhold from the Shares or cash to be issued upon exercise or vesting of an Award (or distribution of a Deferred Stock Unit) that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(xii) to determine whether Dividend Equivalents will be granted in connection with another Award;
(xiii) to determine the terms and restrictions applicable to Awards; and
(xiv) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect of Administrators Decision. The Administrators decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.
5. Eligibility. Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Deferred Stock Units, Dividend Equivalents and Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
6. No Employment Rights. Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participants employment with the Company or its Subsidiaries, nor shall they interfere in any way with the Participants right or the Companys or Subsidiarys right, as the case may be, to terminate such employment at any time, with or without cause or notice.
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7. Term of Plan. The Plan will become effective upon its adoption by the Board and will remain in effect until terminated pursuant to Section 21 of the Plan.
8. Stock Options.
(a) Term. The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall be no more than seven (7) years from the date of grant or such shorter term as may be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Notice of Grant.
(b) Option Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator and shall be no less than 100% of the Fair Market Value per share on the date of grant; provided, however, that in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(c) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period or until performance milestones are satisfied. In any event, no Option granted hereunder shall vest until at least six months following the Option grant date.
(d) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Subject to Applicable Laws, such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Participant for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;
(iv) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company or Subsidiary of the sale proceeds required to pay the exercise price;
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(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.
(e) Exercise of Option; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the optioned stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 19 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.
(f) ISO $100,000 Rule. Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value:
(i) of Shares subject to a Participants Incentive Stock Options granted by the Company or any Subsidiary, which
(ii) become exercisable for the first time during any calendar year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 8(i), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant.
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9. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and conditions of the Plan, Restricted Stock may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on continued provision of services but may include a performance-based component, upon which is conditioned the grant, vesting or issuance of Restricted Stock; provided, however that no Restricted Stock Award shall vest until at least one year following the grant date.
(b) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Restricted Stock granted under the Plan. Restricted Stock grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock or the restricted stock unit is awarded. The Administrator may require the recipient to sign a Restricted Stock Award agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.
(c) Restricted Stock Award Agreement. Each Restricted Stock grant shall be evidenced by an agreement that shall specify the purchase price (if any) and such other terms and conditions as the Administrator, in its sole discretion, shall determine; provided; however, that if the Restricted Stock grant has a purchase price, such purchase price must be paid no more than ten (10) years following the date of grant.
10. Restricted Stock Units.
(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Stock Unit award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on continued service but may include a performance-based component, upon which is conditioned the grant or vesting of Restricted Stock Units. Restricted Stock Units shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares.
(b) Vesting Criteria and Other Terms. The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, Subsidiary-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion; provided, however that no Restricted Unit Award shall vest until at least one year following the grant date.
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(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award Agreement. The Administrator shall pay earned Restricted Stock Units in Shares.
(e) Cancellation. On the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company.
11. Performance Shares.
(a) Grant of Performance Shares. Subject to the terms and conditions of the Plan, Performance Shares may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares.
(b) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Shares granted under the Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator; provided, however that no Performance Share Award shall vest until at least one year following the grant date. The Administrator may require the recipient to sign a Performance Shares agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.
(c) Performance Share Award Agreement. Each Performance Share grant shall be evidenced by an agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine.
12. Performance Units.
(a) Grant of Performance Units. Performance Units are similar to Performance Shares, except that they shall be settled in a cash equivalent to the Fair Market Value of the underlying Shares, determined as of the vesting date. Subject to the terms and conditions of the Plan, Performance Units may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete
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discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Units. Performance Units shall be granted in the form of units to acquire Shares. Each such unit shall be the cash equivalent of one Share of Ordinary Shares. No right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Performance Units or the cash payable thereunder.
(b) Number of Performance Units. The Administrator will have complete discretion in determining the number of Performance Units granted to any Participant.
(c) Other Terms. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Units granted under the Plan. Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the grant is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign a Performance Unit agreement as a condition of the award. Any certificates representing the units awarded shall bear such legends as shall be determined by the Administrator.
(d) Performance Unit Award Agreement. Each Performance Unit grant shall be evidenced by an agreement that shall specify such terms and conditions as the Administrator, in its sole discretion, shall determine.
13. Deferred Stock Units. Deferred Stock Units shall consist of a Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator. Deferred Stock Units shall remain subject to the claims of the Companys general creditors until distributed to the Participant.
14. Automatic Stock Option and RSU Grants to Non-employee Directors.
(a) Procedure for Grants. All grants of Options and RSU to Non-employee Directors under this Section 14 shall be automatic and non-discretionary and shall be made strictly in accordance with the following provisions:
(i) Each Non-employee Director shall be automatically granted (i) an Option to purchase 25,000 Shares, or a lesser amount determined by the Board, in its sole discretion (the First Option), and (ii) RSUs with a value of $200,000, or a lesser amount determined by the Board, in its sole discretion (the First RSU, and, together with the First Option, the First Awards), upon the date on which such person first becomes a Director, whether through election by the shareholders of the Company or appointment by the Board of Directors to fill a vacancy; provided, however, that a Non-employee Director who has previously been employed by the Company (or any Affiliate) shall not be eligible to receive a First Option or a First RSU.
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(ii) At each of the Companys annual shareholder meetings, and commencing in 2020, each Non-employee Director shall be automatically granted (i) an Option to purchase 15,000 Shares, or a lesser amount determined by the Board, in its sole discretion (the Annual Option), and (ii) RSUs with a value of $50,000, or a lesser amount determined by the Board, in its sole discretion (the Annual RSU, and, together with the Annual Option, the Annual Awards), provided that such individual has served as an Non-employee Director for at least six months prior to the date of such annual meeting.
(iii) Notwithstanding the provisions of subsections (i) and (ii) hereof, in the event that an automatic grant hereunder would cause the number of Shares subject to outstanding Awards plus the number of Shares previously purchased upon exercise of Options or the vesting of other Awards to exceed the number of Shares available for issuance under the Plan, then each such automatic grant shall be for that number of Shares determined by dividing the total number of Shares remaining available for grant by the number of Non-employee Directors on the automatic grant date. Any further grants shall then be deferred until such time, if any, as additional Shares become available for grant under the Plan.
(iv) The terms of an Award granted hereunder shall be as follows:
(A) The term of the Option shall be seven (7) years.
(B) The Option shall be exercisable only while the Non-employee Director remains a Director of the Company, except as set forth in subsection (c) hereof.
(C) The exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the Option.
(D) The First Option shall become exercisable as to 25% of the covered Shares each year on the day prior to each years normally scheduled annual shareholders meeting, so as to become 100% vested on the day prior to the normally scheduled annual shareholders meeting occurring approximately four years following the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(E) The First RSU shall vest as to 25% of the covered Shares each year on the day prior to each years normally scheduled annual shareholders meeting, so as to become 100% vested on the day prior to the normally scheduled annual shareholders meeting occurring approximately four years following the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(F) The Annual Option shall become exercisable as to 50% of the covered Shares six months following the grant date, and as to an additional 25% of the covered Shares each three months thereafter, so as to be 100% vested on the first anniversary of the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
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(G) The Annual RSU shall vest as to 50% of the covered Shares six months following the grant date, and as to an additional 25% of the covered Shares each three months thereafter, so as to be 100% vested on the first anniversary of the grant date, subject to the Participant maintaining Continuous Status as a Director on each vesting date.
(b) Consideration for Exercising Non-employee Director Stock Options. The consideration to be paid for the Shares to be issued upon exercise of an automatic Non-employee Director Option shall consist of any consideration permitted under Section 8(d) hereof and as set forth in the Award Agreement.
(c) Post-Directorship Exercisability. If a Non-employee Director ceases to serve as a Director, he or she may, but only within one year after the date he or she ceases to be a Director, exercise his or her Option to the extent that he or she was entitled to exercise it at the date of such termination. To the extent that he or she was not entitled to exercise an Option at the date of such termination, or if he or she does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate.
(d) Limitation on Automatic Award Grants. The Directors serving immediately prior to the appointment or election of a new Non-employee Director, or prior to an annual shareholders meeting, as the case may be, shall determine as to each new Non-employee Director whether he or she shall be granted an Award under this Section 14 or under the comparable provisions of another incentive plan of the Company. A new Non-employee Director who receives an Award under this Plan shall not be eligible to receive a comparable automatic stock option or RSU grant under any other incentive plan of the Company. A Non-employee Director who receives an Award of an Annual Option under this Plan shall not be eligible to receive a comparable automatic stock option or RSU grant under any other incentive plan of the Company with respect to such fiscal year of the Company.
15. Termination of Relationships, Death or Disability.
(a) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participants death or Disability, then (i) in the case of an Award that is an Option, the Participant may exercise any Options within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), and (ii) in the case of any Award other than an Option, the Participant shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of termination (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, an Option shall remain exercisable, and the Participant shall be entitled to the benefit conferred by an Award other than an Option, for three months following the Participants termination. If, on the date of termination, the Participant is not vested as to his or her entire Award, the Shares covered by the unvested portion of the Award shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option, or receive the benefit conferred by an Award other than an Option, within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
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(b) Disability. If a Participant ceases to be a Service Provider as a result of the Participants Disability, then (i) in the case of an Award that is an Option, the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), and (ii) in the case of any Award other than an Option, the Participant shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of termination (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, an Option shall remain exercisable, and the Participant shall be entitled to the benefit conferred by an Award other than an Option, for twelve (12) months following the Participants termination due to Disability. If, on the date of termination, the Participant is not vested as to his or her entire Award, the Shares covered by the unvested portion of the Award shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option, or receive the benefit conferred by an Award other than an Option, within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
(c) Death of Participant. If a Participant dies while a Service Provider, then (i) in the case of an Award that is an Option, the Option may be exercised following the Participants death within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Option Agreement), by the Participants designated beneficiary, provided such beneficiary has been designated prior to Participants death in a form acceptable to the Administrator, and (ii) in the case of any Award other than an Option, the Participants designated beneficiary, provided such beneficiary has been designated prior to Participants death in a form acceptable to the Administrator, shall be entitled to the benefit conferred by such Award during such period of time as is specified in the Award Agreement to the extent that the Award is vested on the date of death (but in no event later than the expiration of the term of such Award, if any, as set forth in the Award Agreement). If no such beneficiary has been designated by the Participant, then such Option may be exercised by, or the benefit conferred by such Award shall be provided to, the personal representative of the Participants estate or by the person(s) to whom the Award is transferred pursuant to the Participants will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option shall remain exercisable, or the benefit conferred by such Award shall be provided, for twelve (12) months following Participants death. If the Option is not so exercised or the benefit conferred by such Award is not provided within the time specified herein, the Award shall terminate, and the Shares covered by such Award shall revert to the Plan.
16. Leaves of Absence. Unless the Administrator provides otherwise or except as otherwise required by Applicable Laws, vesting of Awards granted hereunder shall cease commencing on the first day of any unpaid leave of absence and shall only recommence upon return to active service.
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17. Part-Time Service. Unless the Administrator provides otherwise or except as otherwise required by Applicable Laws, any service-based vesting of Awards granted hereunder shall be extended on a proportionate basis in the event an Employee transitions to a work schedule under which they are customarily scheduled to work on less than a full-time basis, or if not on a full-time work schedule, to a schedule requiring fewer hours of service. Such vesting shall be proportionately re-adjusted prospectively in the event that the Employee subsequently becomes regularly scheduled to work additional hours of service.
18. Non-Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the recipient, only by the recipient. If the Administrator makes an Award transferable, it may only be transferable for no consideration to transferees permitted pursuant to a Form S-8 Registration Statement (such as family members or pursuant to a settlement of marital property rights) and such Award shall contain such additional terms and conditions as the Administrator deems appropriate.
19. Adjustments Upon Changes in Capitalization, Dissolution or Liquidation or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Ordinary Shares covered by each outstanding Award, the number of Ordinary Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted (including the automatic annual replenishment of two million Ordinary Shares) or which have been returned to the Plan upon cancellation or expiration of an Award, the number of Ordinary Shares subject to automatic option grants to Non-Employee Directors under Section 14 hereof, as well as the price per Ordinary Share covered by each such outstanding Award shall be proportionately adjusted for any increase or decrease in the number of issued Ordinary Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Ordinary Shares, or any other increase or decrease in the number of issued Ordinary Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Ordinary Shares subject to an Award.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with respect to Options) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action.
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(c) Change of Control.
(i) Stock Options. In the event of a Change of Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Administrator, in its sole discretion, may provide that either (i) all Options shall terminate immediately prior to the consummation of the Change of Control, or (ii) Participants shall fully vest in and have the right to exercise their Options as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change of Control, the Administrator shall notify the Participant in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the Change of Control, the option confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Ordinary Shares); provided, however, that if such consideration received in the Change of Control is not solely stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Awarded Stock subject to the Option, to be solely stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Ordinary Shares in the Change of Control.
(ii) Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Deferred Stock Units. In the event of a Change of Control, each outstanding Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award (and any related Dividend Equivalent) shall be assumed or an equivalent Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award substituted by the successor corporation or a parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit award, the Administrator, in its sole discretion, may provide either that (i) such Awards shall terminate immediately prior to the consummation of the Change of Control, or (ii) Participants shall fully vest in the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit Awards including as to Shares (or with respect to Performance Units, the cash equivalent thereof) which would not otherwise be vested. For the purposes of this paragraph, a Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit award shall be considered assumed if, following the Change of Control, the award confers the right to purchase or receive, for each Share (or with respect to Performance Units, the cash equivalent thereof) subject to the Award immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Ordinary Shares); provided, however, that if such consideration received in the Change
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of Control is not solely stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received, for each Share and each unit/right to acquire a Share subject to the Award, to be solely stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Ordinary Shares in the Change of Control.
20. Date of Grant. The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.
21. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Section 422 of the Code (or any successor rule or statute or other Applicable Law). Such stockholder approval, if required, shall be obtained in such a manner and to such a degree as is required by Applicable Law.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing (or electronic format) and signed by the Participant and the Company or its Subsidiary.
22. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award or the issuance and delivery of such Shares (or with respect to Performance Units, the cash equivalent thereof) shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise or receipt of an Award, the Company may require the person exercising or receiving such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
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23. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Companys counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Awarded Stock covered by an Award exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without additional stockholder approval, such Award shall be void with respect to such excess Awarded Stock, unless stockholder approval of an amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 21(b) of the Plan.
24. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
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Exhibit 12.1
CERTIFICATION
I, Gil Shwed, certify that:
1. | I have reviewed this Annual Report on Form 20-F of Check Point Software Technologies Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: April 14, 2022 | By: | /s/ Gil Shwed | ||||
Gil Shwed | ||||||
Chief Executive Officer |
Exhibit 12.2
CERTIFICATION
I, Tal Payne, certify that:
1. | I have reviewed this Annual Report on Form 20-F of Check Point Software Technologies Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: April 14, 2022 | By: | /s/ Tal Payne | ||||
Tal Payne | ||||||
Chief Financial Officer |
Exhibit 13.1
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
TITLE 18, UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned Chief Executive Officer of Check Point Software Technologies Ltd., a company organized under the laws of the State of Israel (the Company), does hereby certify that the Annual Report on Form 20-F for the year ended December 31, 2021 (the Form 20-F) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 14, 2022 | By: | /s/ Gil Shwed | ||||
Gil Shwed | ||||||
Chief Executive Officer |
Exhibit 13.2
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
TITLE 18, UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned Chief Financial Officer of Check Point Software Technologies Ltd., a company organized under the laws of the State of Israel (the Company), does hereby certify that the Annual Report on Form 20-F for the year ended December 31, 2021 (the Form 20-F) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 14, 2022 | By: | /s/ Tal Payne | ||||
Tal Payne | ||||||
Chief Finance Officer |
Exhibit 15
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference, in the Registration Statements (Form S-8 Nos.333-132954, 333-207335, 333-211113, 333-228075, 333-235322 and 333-240141) of our reports dated April 14, 2022, with respect to the consolidated financial statements of Check Point Software Technologies Ltd. and the effectiveness of internal control over financial reporting of Check Point Software Technologies Ltd. included in this Annual Report (Form 20-F) for the year ended December 31, 2021.
Tel Aviv, Israel April 14, 2022 |
|
/s/ KOST FORER GABBAY & KASIERER A Member of EY Global |
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - ₪ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value | ₪ 0.01 | ₪ 0.01 |
Ordinary shares, shares authorized | 500,000,000.0 | 500,000,000.0 |
Ordinary shares, shares issued | 261,300,000 | 261,300,000 |
Ordinary shares, shares outstanding | 129,100,000 | 137,200,000 |
Treasury shares, shares | 132.2 | 124.1 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 815.6 | $ 846.6 | $ 825.7 |
Change in unrealized gains (losses) on marketable securities: | |||
Unrealized gains (losses) arising during the period, net of tax | (38.5) | 21.2 | 45.8 |
Losses (gains) reclassified into earnings, net of tax | (1.7) | (3.4) | (0.6) |
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Total | (40.2) | 17.8 | 45.2 |
Change in unrealized gains (losses) on cash flow hedges: | |||
Unrealized gains (losses) arising during the period, net of tax | (0.1) | 6.4 | 2.2 |
Losses (gains) reclassified into earnings, net of tax | (1.0) | (5.2) | (1.2) |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax, Total | (1.1) | 1.2 | 1.0 |
Other comprehensive income (loss), net of tax | (41.3) | 19.0 | 46.2 |
Comprehensive income | $ 774.3 | $ 865.6 | $ 871.9 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Statement of Stockholders' Equity [Abstract] | |||
Treasury shares | 10,900,000 | 11,400,000 | 11,200,000 |
Treasury stock reissued | 2,800,000 | 3,100,000 | 1,300,000 |
GENERAL |
12 Months Ended | |||||||||||
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Dec. 31, 2021 | ||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||
GENERAL |
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SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES |
The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”).
The Company accounts for stock-based compensation in accordance with ASC No. 718, “Compensation-Stock Compensation” (“ASC No. 718”). ASC No. 718 requires companies to estimate the fair value of equity-based payment awards on the grant date using an option-pricing model. The Company recognizes compensation expenses for the value of awards granted, based on the straight line method for service based awards and based on the accelerated method for performance-based awards. Compensation expense is recognized over the requisite service period of the awards. The Company recognizes forfeitures of awards as they occur. The Company selected the Black-Scholes-Merton option pricing model as the most appropriate model for determining the fair value for its stock options awards and Employee Stock Purchase Plan, whereas the fair value of restricted stock units is based on the closing market value of the underlying shares at the date of grant. The option-pricing model requires a number of assumptions, the most significant of which are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date, equal to the expected term of the options. The expected term of options granted is based upon historical experience and represents the period of time between when the options are granted and when they are expected to be exercised. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term to the expected term of the options. The Company has historically not paid dividends and has no plans to pay dividends in the foreseeable future. The fair value of options granted and Employee Stock Purchase Plan in 2021, 2020 and 2019 is estimated at the date of grant using the following weighted average assumptions:
The Company measures its investments in money market funds (classified as cash equivalents), short-term bank deposits, marketable securities and its foreign currency derivative contracts at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company accounts for comprehensive income in accordance with ASC No. 220, “Comprehensive Income”. Comprehensive income generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its items of other comprehensive income relate to gains and losses on hedging derivative instruments and unrealized gains and losses on available-for-sale
The Company repurchases its ordinary shares from time to time on the open market and holds such shares as treasury shares. The Company presents the cost to repurchase treasury stock as a separate component of shareholders’ equity. The Company reissues treasury shares under the stock purchase plan, upon exercise of options and upon vesting of restricted stock units. Reissuance of treasury shares is accounted for in accordance with ASC No. 505-30 whereby gains are credited to additional paid-in capital and losses are charged to additional paid-in capital to the extent that previous net gains are included therein; otherwise to retained earnings.
The Company is currently involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
In October 2021, the FASB issued ASU No. 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from ASC 606 rather than adjust them to fair value at the acquisition date. The Company early adopted this guidance in the fourth quarter of 2021, retroactively applying it to all business combinations since January 1, 2021. The adoption did not have a material effect on its consolidated financial statements. |
ACQUISITION |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION |
On September 17, 2020 the Company completed the acquisition of all outstanding shares of Odo Security Ltd., a privately-held Israeli-based company, and a developer of a cloud-based, clientless Secure Access Service Edge (SASE) technology that delivers secure remote access. On September 1, 2021 , the Company completed the acquisition of all outstanding shares of Avanan Inc. (“Avanan”), a privately-held US-based company providing cloud email security, and the developer of a patented application-programming interface (API) solution to stop email threats before arriving to the inbox (inline), for both internal and external emails using AI based engines. The Company acquired Avanan for total consideration of approximately $227.1. The purchase price for all the acquisitions mentioned was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values. In addition, the transactions included additional consideration related to compensation for post combination services which were recorded as prepaid expenses and other long term assets and will be recognized over the requisite service period. The Company accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on their estimated fair values, as presented in the following table:
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CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND MARKETABLE SECURITIES |
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Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents, and Short-term Investments [Text Block] |
The gross unrealized gains on the Company’s marketable securities were $14.2 and $51.4 as of December 31, 2021 and 2020, respectively. The gross unrealized losses on the Company’s marketable securities were $15.7 and $0.4 as of December 31, 2021 and 2020, respectively. All marketable securities in unrealized loss position are in continuous loss of less than 12 months or insignificant. The following table classifies the Company’s marketable securities by contractual maturities:
As of December 31, 2021 and 2020, interest receivable amounted to $15.3 and $19.5, respectively, and is included within prepaid expenses and other assets in the balance sheets.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
In accordance with ASC No. 820, the Company measures its money market funds, short-term bank deposits, marketable securities and foreign currency derivative contracts at fair value. Money market funds and marketable securities are classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The Company’s financial assets measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of the following dates:
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PROPERTY AND EQUIPMENT, NET |
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PROPERTY AND EQUIPMENT, NET |
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
Intangible assets which were fully amortized as of the prior year, are disposed from the original amount and the accumulated amortization balances. The estimated future amortization expense of Intangible assets as of December 31, 2021 is as follows:
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DEFERRED REVENUES |
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DEFERRED REVENUES |
Deferred revenues consisted of the following:
The majority of the deferred revenues are recognized within one year or less and presented as current deferred revenues in the balance sheets. Substantially all of the remaining deferred revenues are presented as long term deferred revenues and are recognized for a period greater than one year and up to five years. |
ACCRUED EXPENSES AND OTHER LIABILITIES |
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ACCRUED EXPENSES AND OTHER LIABILITIES |
The components of accrued expenses and other liabilities are as follows:
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COMMITMENTS AND CONTINGENT LIABILITIES |
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Commitments and Contingencies Disclosure [Abstract] | |||
COMMITMENTS AND CONTINGENT LIABILITIES |
Litigations: 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. |
TAXES ON INCOME |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TAXES ON INCOME |
Pursuant to Amendment 73 to the Investment Law adopted in 2017, a Company located in the Center of Israel that meets the conditions for “Preferred Technological Enterprises”, is subject to tax rate of 12% tax rate. The Company believes it meets those conditions. Income not eligible for Preferred Enterprise benefits is taxed at a regular rate of 23%. Prior to 2012, most of the Company’s income was exempt from tax or subject to reduced tax rates under the Investment Law. Upon distribution of exempt income, the distributing company will be subject to corporate reduced tax rates ordinarily applicable to such income under the Investment Law. Reduced income under the Investment Law including the Preferred Enterprise Regime and Preferred Technological Enterprise Regime will be freely distributable as dividends, subject to a 15% or 20% withholding tax (or lower rate for non-Israeli resident shareholder, under an applicable tax treaty). However, upon the distribution of a dividend from Preferred Income and Technological Preferred Enterprise to an Israeli company, no withholding tax will be remitted. Pursuant to a temporary tax relief initiated by the Israeli government, a company that elected by November 11, 2013, to pay a reduced corporate tax rate as set forth in the temporary tax relief with respect to undistributed exempt income generated under the Investment Law accumulated by the Company until December 31, 2011 (“Trapped Earnings”) is entitled to distribute a dividend from such income without being required to pay additional corporate tax with respect to such dividend. A company that has so elected must make certain qualified investments in Israel over five-year period. A company that has elected to apply the temporary tax relief cannot withdraw from its election. The Company has elected to apply the temporary tax relief by the respective date and believes it meets those conditions. Company’s tax assessments through 2015 tax year are considered final.
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.
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 $467.9 and unrecognized deferred tax liability related to such earning amounted to $83.6 as of December 31, 2021.
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, 2021 and 2020, the Company’s deferred taxes were in respect of the following:
*) As of December 31, 2021 and 2020 unrecognized tax benefit in the amounts of $14.6 and $20.0 was presented net from deferred tax asset. Through December 31, 2021, the U.S. subsidiaries had a U.S. federal loss carry-forward of approximately $307.1 expiring gradually beginning 2022, mainly resulting from tax benefits related to employees’ stock option exercises that can be carried forward and offset against taxable income. Through December 31, 2021, the U.S. subsidiaries had a U.S. state net loss carry forward of approximately $73.1, which expires between fiscal years 2022 and fiscal 2040, and is subject to limitations on their utilization. Through December 31, 2021, the U.S. subsidiaries had federal and states research and development tax credits of approximately $24.2, which expire between fiscal years 2022 and fiscal 2040 and are subject to limitations on their utilization.
A reconciliation of the beginning and ending amount of unrecognized tax benefits related to uncertain tax positions is as follows:
*) As of December 31, 2021 and 2020 unrecognized tax benefit in the amounts of $14.6 and $20.0 was presented net from deferred tax asset. Substantially all the balance of unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company adjusts the unrecognized tax benefit liability and income tax expense in the period in which the uncertain tax position is effectively settled, the statute of limitations expires or when new information is available. There is a reasonable possibility that $61.1 out of the unrecognized tax benefit liability will be adjusted within 12 months due to statute of limitations. During the years ended December 31, 2021, 2020 and 2019, the Company recorded $9.7, $(0.6) and $4.2, respectively for interest expense (income) related to uncertain tax positions. As of December 31, 2021 and 2020, the Company had accrued interest liability related to uncertain tax positions in the amounts of $44.1 and $34.3, respectively, which is included within income tax accrual on the balance sheets. The Company did not accrue penalties during the years ended December 31, 2021 and 2020. The Company files federal and state income tax returns in the U.S. All of the U.S subsidiaries’ tax years are subject to examination by the U.S. federal and most U.S. state tax authorities due to their carry-forward tax losses and overall credit carry-forward position, except for Check Point Software Technologies Inc. that the assessment statue period for tax years throughout 2016 have expired. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement. The final tax outcome of its tax audits could be different from that which is reflected in the Company’s income tax provisions and accruals. Such differences could have a material effect on the Company’s income tax provision and net income in the period in which such determination is made. The Company believes it had adequately provided for all of its uncertain tax positions, including those items currently under dispute.
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:
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SHAREHOLDERS' EQUITY |
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Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY |
Ordinary shares confer upon their holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends if declared. Dividends declared on ordinary shares will be paid in New Israeli Shekels. Dividends paid to shareholders outside Israel will be converted into dollars, on the basis of the exchange rate prevailing at the date of payment.
On August 5, 2021 the Company announced the expansion of the Company’s on-going share repurchase program by an additional $2,000. Under the share repurchase program, as extended, the Company is authorized to continue to repurchase up to $325 each quarter. As of December 31, 2021, the Company repurchased ordinary shares for an aggregate amount of $11,785.1. During 2021, 2020 and 2019 the Company repurchased 10.9, 11.4, and 11.2 shares for an aggregate amount of $1,299.5, $1,297.7 and $1,278.0, respectively.
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 RSUs (“PSUs”) and can also grant a variety of other equity incentives. Options granted under the Equity Incentive Plans generally vest over a period of four years of employment. Options, RSUs and PSUs that are cancelled or forfeited before expiration become available for future grants. The number of PSUs granted to sales employees is equal to the amount of compensation earned (based on the employee’s level) divided by the fair value of the ordinary share at the grant date. RSUs generally vest over a four years period of employment from the grant date while PSUs generally vest over a two years period of employment from the grant date. PSUs are subject to certain performance criteria; accordingly, compensation expense is recognized for such awards when it becomes probable that the related performance condition will be satisfied. 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 31st 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 10% of the sum of (i) the number of ordinary shares issued and outstanding on such date and (ii) the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date (provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date). The number of “Reserved and Authorized Shares” under the Equity Plans shall equal the sum of (i) the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding options, RSUs, PSUs and other awards granted under the Equity Incentive Plans as of such date, and (ii) the number of ordinary shares reserved, authorized and available for issuance under the Equity Incentive Plans on such date. As of December 31, 2021, the number of Reserved and Authorized Shares under the Equity Incentive Plans is as detailed below:
As of December 31, 2021 the aggregate amount of shares, stock options, RSU and PSU outstanding is 139.6. A summary of the Company’s stock option activity and related information is as follows:
The weighted average fair values at grant date of options granted for the years ended December 31, 2021, 2020 and 2019 with an exercise price equal to the market value at the date of grant were $25.9, $22.0 and $22.8 per share, respectively. The total intrinsic value of options exercised during the years 2021, 2020 and 2019 was $65.1, $81.7 and $25.4, respectively. The aggregate intrinsic value of the outstanding stock options as of December 31, 2021 and 2020, represents the intrinsic value of 6.5 and 9.4 outstanding options that are in-the-money out-of-the-money A summary of the Company’s RSUs and PSUs activity is as follows:
*) Represents an amount lower than 0.1 The weighted average fair values at grant date of RSUs granted for the years ended December 31, 2021, 2020 and 2019 were $120.1, $105.3 and $113.3 per share, respectively. The total fair value of shares vested during the years 2021, 2020 and 2019 was $66.8, $49.6 and $47.0, respectively. As of December 31, 2021, the Company had approximately $281.6 of unrecognized compensation expense related to non-vested stock options and non-vested RSU’s and PSU’s, expected to be recognized over a weighted average period of 2.0 years.
In 1996, the Company adopted an ESPP, which was subsequently amended in 2015. According to the amendments, commencing the purchase period that begins February 1, 2017, 0.5 ordinary shares are authorized for issuance under the US ESPP, and Commencing June 19, 2019 the Pool of shares for the US ESPP was set on 0.8 shares and 2.0 ordinary shares are authorized for issuance under the rest of the world (ROW). As of December 31, 2021, 1.9 ordinary shares had been issued under the amended ESPP plan. Eligible employees may use up to 15% of their salaries to purchase ordinary shares but no more than 1,250 single shares per participant on any purchase date. The ESPP is implemented through an offering every six months. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date During 2021, 2020 and 2019, employees purchased 0.4, 0.4 and 0.3 ordinary shares at average prices of $105.3, $95.4 and $95.2 per share, respectively. In accordance with ASC No. 718, the ESPP is compensatory and as such results in recognition of compensation cost. For the years ended December 31, 2021, 2020 and 2019, the Company recognized $10.9, $10.2 and $8.0, respectively, of compensation expense in connection with the ESPP.
Stock-based compensation expense related to stock options, RSUs and PSUs is included in the consolidated statements of income as follows:
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
The following table sets forth the computation of basic and diluted earnings per share:
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GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA |
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Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA |
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 for the years ended December 31, 2021, 2020 and 2019, by geographic area:
The Company’s products can be classified by three main product lines. The following table presents total revenues for the years ended December 31, 2021, 2020 and 2019 by product lines:
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SUBSEQUENT EVENTS |
12 Months Ended | ||
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Dec. 31, 2021 | |||
Subsequent Events [Abstract] | |||
Subsequent Events [Text Block] |
On February 3, 2022, the Company completed the acquisition of Spectral Cyber Technologies Ltd. (“Spectral”), a privately-held lightning-fast, developer-first cybersecurity solution that acts as a control-plane over source code and other developer assets
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates |
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Financial Statements in United States Dollars |
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Principles of Consolidation |
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Cash Equivalents |
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Short-Term Bank Deposit |
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Trade Receivables |
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Investments in Marketable Securities |
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Property and equipment, net |
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Leases |
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Business combination |
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Goodwill |
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Other Intangible Assets, Net |
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Impairment of long-lived assets including intangible assets subject to amortization |
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Manufacturing partner and supplier liabilities |
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Research and Development Costs |
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Revenue Recognition |
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Cost of Revenues |
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Severance Pay |
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Employee Benefit Plan |
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Income Taxes |
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Advertising Costs |
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Concentrations of Credit Risk |
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Derivatives and Hedging |
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Basic and Diluted Earnings per Share |
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Accounting for stock-based compensation |
The Company accounts for stock-based compensation in accordance with ASC No. 718, “Compensation-Stock Compensation” (“ASC No. 718”). ASC No. 718 requires companies to estimate the fair value of equity-based payment awards on the grant date using an option-pricing model. The Company recognizes compensation expenses for the value of awards granted, based on the straight line method for service based awards and based on the accelerated method for performance-based awards. Compensation expense is recognized over the requisite service period of the awards. The Company recognizes forfeitures of awards as they occur. The Company selected the Black-Scholes-Merton option pricing model as the most appropriate model for determining the fair value for its stock options awards and Employee Stock Purchase Plan, whereas the fair value of restricted stock units is based on the closing market value of the underlying shares at the date of grant. The option-pricing model requires a number of assumptions, the most significant of which are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date, equal to the expected term of the options. The expected term of options granted is based upon historical experience and represents the period of time between when the options are granted and when they are expected to be exercised. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term to the expected term of the options. The Company has historically not paid dividends and has no plans to pay dividends in the foreseeable future. The fair value of options granted and Employee Stock Purchase Plan in 2021, 2020 and 2019 is estimated at the date of grant using the following weighted average assumptions:
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Fair Value of Financial Instruments |
The Company measures its investments in money market funds (classified as cash equivalents), short-term bank deposits, marketable securities and its foreign currency derivative contracts at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
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Comprehensive Income |
The Company accounts for comprehensive income in accordance with ASC No. 220, “Comprehensive Income”. Comprehensive income generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its items of other comprehensive income relate to gains and losses on hedging derivative instruments and unrealized gains and losses on
available-for-sale |
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Treasury Shares |
The Company repurchases its ordinary shares from time to time on the open market and holds such shares as treasury shares. The Company presents the cost to repurchase treasury stock as a separate component of shareholders’ equity. The Company reissues treasury shares under the stock purchase plan, upon exercise of options and upon vesting of restricted stock units. Reissuance of treasury shares is accounted for in accordance with ASC No. 505-30 whereby gains are credited to additional paid-in capital and losses are charged to additional paid-in capital to the extent that previous net gains are included therein; otherwise to retained earnings. |
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Legal Contingencies |
The Company is currently involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
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Recently Adopted Accounting Pronouncements |
In October 2021, the FASB issued ASU No. 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from ASC 606 rather than adjust them to fair value at the acquisition date. The Company early adopted this guidance in the fourth quarter of 2021, retroactively applying it to all business combinations since January 1, 2021. The adoption did not have a material effect on its consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Annual Rate of Depreciation on Property and Equipment | Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
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Weighted Average Assumptions Used to Estimate the Fair Value of Employee Stock Purchase Plans | The fair value of options granted and Employee Stock Purchase Plan in 2021, 2020 and 2019 is estimated at the date of grant using the following weighted average assumptions:
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ACQUISITION (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Business Combination and Allocated the Purchase Consideration to Assets Acquired and Liabilities Assumed Based on Estimated Fair Values | The Company accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on their estimated fair values, as presented in the following table:
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CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND MARKETABLE SECURITIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash, Cash Equivalents and Investments |
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Summary of Contractual Obligation, Fiscal Year Maturity | The following table classifies the Company’s marketable securities by contractual maturities:
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FAIR VALUE MEASUREMENTS (Tables) |
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets Measured at Fair Value on Recurring Basis | The Company’s financial assets measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of the following dates:
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PROPERTY AND EQUIPMENT, NET (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net |
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Goodwill |
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Other Intangible Assets, Net |
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Estimated Future Amortization Expense of Other Intangible Assets | The estimated future amortization expense of Intangible assets as of December 31, 2021 is as follows:
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DEFERRED REVENUES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenues |
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ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) |
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Schedule of Accrued Expenses and Other Liabilities | The components of accrued expenses and other liabilities are as follows:
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TAXES ON INCOME (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of 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, 2021 and 2020, the Company’s deferred taxes were in respect of the following:
*) As of December 31, 2021 and 2020 unrecognized tax benefit in the amounts of $14.6 and $20.0 was presented net from deferred tax asset.
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Reconciliation Of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits related to uncertain tax positions is as follows:
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Schedule of Effective Income Tax Reconciliation |
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:
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SHAREHOLDERS' EQUITY (Tables) |
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Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Reserved and Authorized Shares Under the Equity Incentive Plans | As of December 31, 2021, the number of Reserved and Authorized Shares under the Equity Incentive Plans is as detailed below:
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Summary of Stock Option Activity and Related Information | As of December 31, 2021 the aggregate amount of shares, stock options, RSU and PSU outstanding is 139.6. A summary of the Company’s stock option activity and related information is as follows:
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Summary of Restricted Stock Units Activity | A summary of the Company’s RSUs and PSUs activity is as follows:
*) Represents an amount lower than 0.1
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Stock-based Compensation Expense Related to Stock Options, RSUs and PSUs | Stock-based compensation expense related to stock options, RSUs and PSUs is included in the consolidated statements of income as follows:
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share:
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GEOGRAPHIC INFORMATION AND SELECTED STATEMENTS OF INCOME DATA (Tables) |
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Summary of Revenue by Geographic Area |
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Property and Equipment, Net by Geographic Area |
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Total Revenues by Product Lines |
The Company’s products can be classified by three main product lines. The following table presents total revenues for the years ended December 31, 2021, 2020 and 2019 by product lines:
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Summary of Financial Income, Net |
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General - Additional Information (Detail) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021
USD ($)
Segment
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Dec. 31, 2020
USD ($)
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Dec. 31, 2019 |
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Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Number of operating segments | 1 | ||
Number of Reportable segment | 1 | ||
Trade receivables | $ | $ 271.8 | $ 236.6 | |
Revenue | Credit Concentration Risk | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Percentage of revenue derived from distribution channels | 40.00% | 39.00% | 37.00% |
Revenue | First Channel Partner | Credit Concentration Risk | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Percentage of revenue derived from distribution channels | 16.00% | 17.00% | 18.00% |
Revenue | Second Channel Partner | Credit Concentration Risk | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Percentage of revenue derived from distribution channels | 24.00% | 22.00% | 19.00% |
Summary of Annual Rate of Depreciation on Property and Equipment (Detail) |
12 Months Ended |
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Dec. 31, 2021 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Annual rate of depreciation on property and equipment | 4.00% |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Leasehold improvements | The shorter of term of the lease or the useful life of the asset |
Minimum | Computers and peripheral equipment | |
Property, Plant and Equipment [Line Items] | |
Annual rate of depreciation on property and equipment | 33.00% |
Minimum | Office furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Annual rate of depreciation on property and equipment | 10.00% |
Maximum | Computers and peripheral equipment | |
Property, Plant and Equipment [Line Items] | |
Annual rate of depreciation on property and equipment | 50.00% |
Maximum | Office furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Annual rate of depreciation on property and equipment | 20.00% |
Weighted Average Assumptions of Options Granted (Detail) |
12 Months Ended | ||
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Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
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Employee Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 25.28% | 23.63% | 20.78% |
Risk-free interest rate | 0.65% | 0.32% | 1.98% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected term (years) | 4 years 2 months 19 days | 4 years 1 month 24 days | 4 years 1 month 9 days |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 22.44% | 36.58% | 18.59% |
Risk-free interest rate | 0.24% | 0.05% | 0.80% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected term (years) | 15 days | 15 days | 15 days |
Acquisition - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
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Avanan Member | ||
Business Acquisition [Line Items] | ||
Acquisition date | Sep. 01, 2021 | |
Business combination, consideration transferred | $ 227.1 | |
Odo Security Ltd [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Sep. 17, 2020 |
Acquisition - Summary of Business Combination and Allocated the Purchase Consideration to Assets Acquired and Liabilities Assumed Based on Estimated Fair Values (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
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Business Acquisition [Line Items] | |||
Goodwill | $ 1,196.2 | $ 1,002.2 | $ 981.9 |
Avanan [Member] | |||
Business Acquisition [Line Items] | |||
Goodwill | 194.2 | ||
Core technology | 26.7 | ||
Customer relationship | 5.8 | ||
Net assets assumed | 0.4 | ||
Total | $ 227.1 | ||
Business combination core technology weighted average useful life | 8 years | ||
Business combination customer relationship weighted average useful life | 4 years |
Cash And Cash Equivalents, Short-Term Bank Deposits And Marketable Securities- Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
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Debt Securities, Available-for-sale [Line Items] | ||
Gross unrealized gains on the marketable securities | $ 15.7 | $ 0.4 |
Prepaid Expenses and Other Current Assets [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Interest receivable | 15.3 | 19.5 |
Marketable securites [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross unrealized gains on the marketable securities | $ 14.2 | $ 51.4 |
Property and Equipment Net (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements | $ 28.5 | $ 26.4 |
Property and equipment, gross | 181.2 | 175.0 |
Accumulated depreciation | 97.8 | 86.9 |
Property and equipment, net | 83.4 | 88.1 |
Computers and peripheral equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 66.8 | 61.3 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 7.4 | 8.4 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 78.5 | $ 78.9 |
Schedule of Goodwill (Detail) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance as of January 1 | $ 1,002.2 | $ 981.9 |
Acquisitions | 194.0 | 20.3 |
Balance as of December 31 | $ 1,196.2 | $ 1,002.2 |
Estimated Future Amortization Expense of Other Intangible Assets (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2022 | $ 12.1 | |
2023 | 10.5 | |
2024 | 10.2 | |
2025 | 9.7 | |
2026 | 7.6 | |
Thereafter | 10.9 | |
Other intangible assets, net | $ 61.0 | $ 38.5 |
Deferred Revenues (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue | $ 1,707.1 | $ 1,481.9 |
Security subscriptions | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue | 801.1 | 678.5 |
Software updates and maintenance | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue | 869.2 | 775.4 |
Other | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue | $ 36.8 | $ 28.0 |
Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued products and licenses costs | $ 102.5 | $ 96.4 |
Marketing expenses payable | 9.8 | 7.1 |
Income tax payable | 28.1 | 11.9 |
Legal accrual | 39.5 | 32.6 |
Other accrued expenses | 58.7 | 48.8 |
Accrued expenses and other liabilities total | $ 238.6 | $ 196.8 |
Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Carry forward tax losses | $ 83.7 | $ 81.5 |
Employee stock based compensation | 29,200,000 | 27,600,000 |
Deferred revenues | 5,600,000 | 10,500,000 |
Tax credits | 23.9 | 23.2 |
Other | 23,500,000 | 15,900,000 |
Deferred tax assets before valuation allowance | 165,900,000 | 158,700,000 |
Valuation allowance - mainly in respect to carryforward losses | (56,700,000) | (59,200,000) |
Deferred tax asset | 109,200,000 | 99,500,000 |
Intangible assets | (31,300,000) | (21,000,000.0) |
Undistributed earnings of subsidiary | (9,900,000) | (9,900,000) |
Other | (1,700,000) | (14,200,000) |
Deferred tax liability | (42,900,000) | (45,100,000) |
Deferred tax asset, net | $ 66.3 | $ 54.4 |
Income Before Taxes (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 917.9 | $ 896.8 | $ 881.1 |
Foreign | 31.7 | 74.0 | 81.3 |
Income before taxes as reported in the statements of income | $ 949.6 | $ 970.8 | $ 962.4 |
Components of Income Tax Expense (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Expense Benefit [Line Items] | |||
Taxes on income | $ 134.0 | $ 124.2 | $ 136.7 |
Domestic Tax Authority | |||
Income Tax Expense Benefit [Line Items] | |||
Current | 130.9 | 112.0 | 111.9 |
Deferred | (1.1) | 0.8 | 2.0 |
Domestic | 129.8 | 112.8 | 113.9 |
U.S. | |||
Income Tax Expense Benefit [Line Items] | |||
Foreign taxes, Current | 7.1 | 1.7 | 15.3 |
Foreign taxes, Deferred | (2.9) | 9.7 | 7.5 |
Foreign | $ 4.2 | $ 11.4 | $ 22.8 |
Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
||||
Income Tax Disclosure [Abstract] | |||||
Beginning balance | $ 442.8 | [1] | $ 412.9 | ||
Increases related to tax positions taken during prior years | 47.2 | 49.4 | |||
Decreases related to statute of limitations | (77.2) | (72.8) | |||
Increases related to tax positions taken during the current year | 56.7 | 53.3 | |||
Ending balance | [1] | $ 469.5 | $ 442.8 | ||
|
Reconciliation of Unrecognized Tax Benefits (Parenthetical) (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefit | $ 14.6 | $ 20.0 |
Effective Income Tax Reconciliation (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Income before taxes as reported in the statements of income | $ 949.6 | $ 970.8 | $ 962.4 |
Statutory tax rate in Israel | 23.00% | 23.00% | 23.00% |
Effect of "Preferred Enterprise" status | (11.00%) | (11.00%) | (11.00%) |
Others, net | 2.00% | 1.00% | 2.00% |
Effective tax rate | 14.00% | 13.00% | 14.00% |
Effective Income Tax Reconciliation (Parenthetical) (Detail) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Basic earnings per share amounts of the benefit resulting from the "Technological preferred or Preferred Enterprise" status | $ 0.80 | $ 0.73 | $ 0.66 |
Diluted earnings per share amounts of the benefit resulting from the "Technological preferred or Preferred Enterprise" status | $ 0.80 | $ 0.72 | $ 0.65 |
Number of Reserved and Authorized Shares Under the Equity Incentive Plans (Detail) - shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options outstanding | 8,200,000 | 9,400,000 |
Stock unit outstanding | 2,300,000 | 1,700,000 |
Ordinary shares available for issuance under the Equity Incentive Plans | 3.4 | |
Total Reserved and Authorized Shares as of December 31, 2019 | 13.9 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock unit outstanding | 2,200,000 | 1,700,000 |
Performance Stock Units PSU | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock unit outstanding | 100,000 | 0 |
Stock Option Activity and Related Information (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2019 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Options, Outstanding at beginning of year | 9.4 | |
Options, Granted | 1.0 | |
Options, Exercised | (1.9) | |
Options, Forfeited | (0.3) | |
Outstanding at December 31, 2020 | 8.2 | |
Options, Exercisable at December 31, 2020 | 5.3 | |
Weighted average exercise price, Outstanding at beginning of year | $ 106.99 | |
Weighted average exercise price, Granted | 121.59 | |
Weighted average exercise price, Exercised | 88.20 | |
Weighted average exercise price, Forfeited | 112.99 | |
Weighted average exercise price, Outstanding at December 31, 2020 | 113.07 | |
Weighted average exercise price, Exercisable at December 31, 2020 | $ 111.67 | |
Aggregate intrinsic value, Outstanding | $ 37.1 | $ 244.3 |
Aggregate intrinsic value, Exercisable as of December 31, 2020 | $ 27.6 |
Summary of Performance Stock Units Activity (Detail) shares in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2021
shares
| ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested at beginning of year | 1.7 | |||
Granted | 1.6 | |||
Vested | (0.6) | |||
Forfeited | (0.4) | |||
Unvested the end of the year | 2.3 | |||
Performance Stock Units PSU | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested at beginning of year | 0.0 | |||
Granted | 0.1 | |||
Vested | [1] | |||
Forfeited | [1] | |||
Unvested the end of the year | 0.1 | |||
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested at beginning of year | 1.7 | |||
Granted | 1.5 | |||
Vested | (0.6) | |||
Forfeited | (0.4) | |||
Unvested the end of the year | 2.2 | |||
|
Shareholders' Equity - Stock-based Compensation Expense Related to Stock Options, RSUs and PSUs (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | $ 120.3 | $ 112.5 | $ 106.7 |
Cost of Revenues | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 4.8 | 4.5 | 4.4 |
Research and Development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 31.8 | 23.5 | 18.9 |
Selling and Marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 42.8 | 36.8 | 28.8 |
General and Administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | $ 40.9 | $ 47.7 | $ 54.6 |
Computation of Basic and Diluted Earnings per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Earnings Per Share [Abstract] | |||
Net income | $ 815.6 | $ 846.6 | $ 825.7 |
Weighted average ordinary shares outstanding | 133.1 | 140.5 | 150.6 |
Employee stock options, RSUs and PSUs | 1.0 | 1.5 | 1.5 |
Diluted weighted average ordinary shares outstanding | 134.1 | 142.0 | 152.1 |
Basic earnings per ordinary share | $ 6.13 | $ 6.03 | $ 5.48 |
Diluted earnings per ordinary share | $ 6.08 | $ 5.96 | $ 5.43 |
Cash And Cash Equivalents, Short-Contractual Obligation Fiscal Year Maturity Schedule TableTerm Bank Deposits And Marketable Securities - (Detail) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Contractual Obligation Fiscal Year Maturity Schedule [Line Items] | ||
Fair value of marketable securities by contractual maturities | $ 3,019.0 | $ 3,529.4 |
Amortized Cost of marketable securities by contractual maturities | 3,020.5 | 3,478.4 |
Within One Year [Member] | ||
Contractual Obligation Fiscal Year Maturity Schedule [Line Items] | ||
Fair value of marketable securities by contractual maturities | 929.3 | 1,217.5 |
Amortized Cost of marketable securities by contractual maturities | 925.8 | 1,211.8 |
After One Year Through Five Years [Member] | ||
Contractual Obligation Fiscal Year Maturity Schedule [Line Items] | ||
Fair value of marketable securities by contractual maturities | 2,089.7 | 2,311.9 |
Amortized Cost of marketable securities by contractual maturities | $ 2,094.7 | $ 2,266.6 |
Revenue by Geographic Area (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Schedule Of Geographical Information [Line Items] | |||
Total revenues | $ 2,166.8 | $ 2,064.9 | $ 1,994.8 |
Americas | |||
Schedule Of Geographical Information [Line Items] | |||
Total revenues | 922.8 | 929.8 | 912.7 |
Europe, Middle East and Africa | |||
Schedule Of Geographical Information [Line Items] | |||
Total revenues | 980.8 | 891.4 | 849.9 |
Asia Pacific | |||
Schedule Of Geographical Information [Line Items] | |||
Total revenues | $ 263.2 | $ 243.7 | $ 232.2 |
Property and Equipment, Net by Geographic Area (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Schedule Of Geographical Information [Line Items] | ||
Property and equipment, net | $ 83.4 | $ 88.1 |
Israel | ||
Schedule Of Geographical Information [Line Items] | ||
Property and equipment, net | 73.2 | 76.8 |
U.S. | ||
Schedule Of Geographical Information [Line Items] | ||
Property and equipment, net | 5.3 | 5.4 |
Rest of the world | ||
Schedule Of Geographical Information [Line Items] | ||
Property and equipment, net | $ 4.9 | $ 5.9 |
Revenues by Product Lines (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Revenue from External Customer [Line Items] | |||
Total revenues | $ 2,166.8 | $ 2,064.9 | $ 1,994.8 |
Network Security Gateways | |||
Revenue from External Customer [Line Items] | |||
Total revenues | 480.5 | 472.4 | 455.9 |
Other | |||
Revenue from External Customer [Line Items] | |||
Total revenues | 33.4 | 41.2 | 54.9 |
Products and licenses | |||
Revenue from External Customer [Line Items] | |||
Total revenues | 513.9 | 513.6 | 510.8 |
Security subscriptions | |||
Revenue from External Customer [Line Items] | |||
Total revenues | 755.2 | 671.1 | 610.3 |
Software updates and maintenance | |||
Revenue from External Customer [Line Items] | |||
Total revenues | $ 897.7 | $ 880.2 | $ 873.7 |
Revenues by Product Lines (Parenthetical) (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Products and Licenses Revenues | Product Concentration Risk | Other | |
Revenue from External Customer [Line Items] | |
Concentration Risk, Percentage | 10.00% |
Geographic Information and Selected Statements of Income Data - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
Product
| |
Segment Reporting [Abstract] | |
Number of main product lines | 3 |
Financial Income, Net (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Amortization of marketable securities premium and accretion of discount, net | $ 21.0 | $ 9.4 | $ 2.0 |
Realized (gain) on sale of marketable securities, net | (1.4) | (4.5) | (0.7) |
Financial income, net | 42.1 | 66.6 | 80.6 |
Financial Income | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Interest income | 66.1 | 78.2 | 93.3 |
Financial Expense | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Amortization of marketable securities premium and accretion of discount, net | 21.0 | 9.4 | 2.0 |
Realized (gain) on sale of marketable securities, net | (1.4) | (4.5) | (0.7) |
Foreign currency re-measurement (gain) loss | (0.2) | 4.5 | 8.9 |
Others | 4.6 | 2.2 | 2.5 |
Total financial expense | $ 24.0 | $ 11.6 | $ 12.7 |