printmgr file

More documents

Recommendations

Info

CHECK POINT SOFTWARE FORM 20-F DFN ON-BOA ˆ200FDMqk04ivWZshHŠ 200FDMqk04ivWZsh RR Donnelley ProFile wcrdoc1 10.10.12 WCRjacis0in 26-Mar-2012 21:27 EST 229899 TX 36 5* PAL 09-Apr-2012 13:21 EST CURR PS PMT 1C Our revenue recognition policies provide that when a sales arrangement contains multiple elements, such as software and non-software components that function together to deliver the product’s essential functionality, we allocate revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE"), if available, third party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE or TPE is available. We apply software revenue recognition guidance, ASC 985-605, "Software Revenue Recognition", to all transactions entered into prior to January 1, 2011 involving the sale of software products and hardware products that include software and to all software arrangements not included in hardware products since January 1, 2011. Product and software license revenue is recognized when persuasive evidence of an arrangement exists, the software license has been delivered, there are no uncertainties surrounding product acceptance, there are no significant future performance obligations, the license fees are fixed or determinable and collection of the license fee is considered probable. For hardware transactions where software is essential to the functionality of the appliance, we do not separate the license fee and does not apply separate accounting guidance to the hardware and software elements. Fees for arrangements with payment terms extending beyond customary payment terms are considered not to be fixed or determinable, in which case revenue is deferred and recognized when payments become due from the customer or are actually collected, provided that all other revenue recognition criteria have been met. For arrangements subject to ASC 985-605, we determine the value of the software and hardware components (the delivered elements) of its multiple-element arrangements using the residual method when vendor specific objective evidence (VSOE) of fair value exists for the undelivered elements of the support and maintenance agreements. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. Our software updates and maintenance provides customers with rights to unspecified software product upgrades released during the term of the agreement.. The Company’s support offerings include multiple services to customers primarily telephone access to technical support personnel and hardware support services. Subscription includes other security solutions sold as a service or annuity. Revenues from software updates, maintenance and subscriptions are recognized ratably over the term of the agreement. Effective January 1, 2011, we determine the selling price in multiple-element arrangements subject to ASC 605 as follows: We determine the fair value of software updates and maintenance services based on the prices we charged for those services when sold separately. We offer several levels of services, classified by type of customer, services offered, response time, and availability. We have defined classes of customers, based on the total gross value of licensed software and hardware products the customer purchased from the Company. We price renewals for each service level and each class of customer as a fixed percentage of the total gross value of licensed software and hardware products the customer purchased. The Company determines the fair value of subscription based on the prices charged for those services when sold seperalty. The renewal prices are based on the Company’s price list. For products, we determine the selling price by reviewing historical transactions, and considering several other external and internal factors including, but not limited to, pricing models and practices including discounting, margin objectives, go-to-market strategies and competition. The determination of the estimated selling price ESP is made with the involvement and approval of management. Deferred revenues represent mainly the unrecognized revenue billed for subscription and unspecified software updates, maintenance. Such revenues are recognized over the term of the related arrangement. 36
CHECK POINT SOFTWARE FORM 20-F DFN ON-BOA ˆ200FDMqk04ivbfVh3Š 200FDMqk04ivbfVh RR Donnelley ProFile wcrdoc1 10.10.12 WCRjacis0in 26-Mar-2012 21:28 EST 229899 TX 37 4* PAL 09-Apr-2012 13:21 EST CURR PS PMT 1C We recognize revenues net of estimated amounts that may be refunded for sales returns and rebate arrangements with customers. Additionally, distributors may rotate our products, subject to varying limitations. We estimate and record these reductions based on our historical experience, analysis of credit memo data, stock rotation and other known factors. In each accounting period, we use judgments and estimates of potential future sales credits, returns, and stock rotation, related to current period revenue. These estimates affect our “net revenue” line item on our consolidated statements of income and affect our “accounts receivable, net” on our consolidated balance sheets. Business combinations We account for business combinations in accordance with ASC 805 “Business Combinations”, which requires that we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed, as well as to in-process research and development based on their estimated fair values. In addition, we expense acquisition-related expenses and restructuring costs as they are incurred. We engage thirdparty appraisal firms to assist management in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management makes estimates of fair value based upon assumptions it believes to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies and relevant market and industry data and are, inherently, uncertain. Critical estimates made in valuing certain of the intangible assets include, but are not limited to, the following: (i) future expected cash flows from license sales, maintenance agreements, customer contracts and acquired developed technologies and patents; (ii) expected costs to develop the in-process research and development into commercially viable products and estimated cash flows from the projects when completed; (iii) the acquired company’s brand and market position as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio; and (iv) discount rates. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. Changes to these estimates, relating to circumstances that existed at the acquisition date, are recorded as an adjustment to goodwill during the purchase price allocation period (generally within one year of the acquisition date) and as operating expenses, if otherwise. In connection with purchase price allocations, we estimate the fair value of the support obligations assumed in connection with acquisitions. The estimated fair value of the support obligations is determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The sum of the costs and operating profit approximates, in theory, the amount that we would be required to pay a third party to assume the support obligation. See Note 3 to our consolidated financial statements for additional information on accounting for our recent acquisitions. Goodwill Goodwill is measured as the excess of the cost of acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. We review goodwill for impairment annually on December 31st and whenever events or changes in circumstances indicate its carrying value may not be recoverable in accordance with ASC 350 “Intangibles – Goodwill and other”. Goodwill impairment is deemed to exist if the carrying value of a reporting unit exceeds its fair value. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. We operate in one operating segment, and this segment comprises our only reporting unit. In calculating the fair value of the reporting unit, we used our market equity capitalization. 37
Page 1 and 2: CHECK POINT SOFTWARE FORM 20-F DFN
Page 35: CHECK POINT SOFTWARE FORM 20-F DFN
Page 87 and 88:
CHECK POINT SOFTWARE FORM 20-F DFN
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
F-9 STATEMENTS OF CHANGES IN SHAREH
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139:
show all

printmgr file

Create successful ePaper yourself

Delete template?

Save as template?