FORM 20-F - Check Point

Overview
We develop, market, and support a wide range of software and combined hardware and software products
and services for information technology (IT) security, and offer our customers an extensive range of network
security, data security and management solutions. A broad range of our network security solutions operate under a
unified security architecture, with central management and enforcement of security policy, and with centralized,
real-time security updates. Our Open Platform for Security (OPSEC) framework, allows customers to extend the
capabilities of our products and services, enabling integration with leading hardware appliances and third-party
security software applications. Our products and services are sold to enterprises, service providers, small and
medium-sized businesses and consumers. Our products are sold, integrated and serviced by a network of partners
around the world.
In January 2007, we completed a tender offer for the outstanding shares and warrants of Protect Data AB
(“Protect Data”), which at the time was a public company listed on the Stockholm Stock Exchange. As of
December 31, 2007, we had acquired the rights to all of the shares and warrants of Protect Data, on a fully diluted
basis, and completed the integration of Protect Data into Check Point’s business. Protect Data operates its
business through its wholly owned subsidiary, Pointsec Mobile Technologies AB, a worldwide provider of mobile
data protection. Pointsec delivers solutions for automatic data encryption that keeps the sensitive information
stored on mobile computing devices, such as laptops, PDAs, smartphones, and removable media (e.g., USB
devices), confidential and secure. With the acquisition of Protect Data, Check Point entered the data security
market.
Our business is subject to the effects of general global economic conditions and, in particular, market
conditions in the IT, Internet security, and data security industries. If general economic and industry conditions
fail to improve, or if they deteriorate, demand for our products could be adversely affected.
We derive most of our revenues from sales of Internet security products primarily under our VPN-1 and
related brands, as well as related revenues from software updates, maintenance and other services. We expect this
to continue to be the case in the foreseeable future. Following the acquisition of Protect Data in 2007, we expect
to derive revenues also from data security products and associated software updates, maintenance and support
services.
We derive our sales primarily through indirect channels. During 2007, we derived approximately 49% of
our sales from our ten largest distributors (compared to 48% in 2006), with the largest distributor accounting for
approximately 16% of our sales, and the second largest distributor accounting for approximately 14% of our sales.
During 2006, these two distributors accounted for approximately 26% of our sales with the largest distributor
accounting for approximately 15% of our sales, and the second largest distributor accounting for approximately
11% of our sales.
40