FORM 20-F - Check Point

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share amounts)
NOTE 3:- ACQUISITIONS (Cont.)
The fair value of the vested option assumed was determined using a Black-Scholes-Merton
valuation model with the following assumptions: expected life of 3 years, risk-free interest
rate of 4.69%, expected volatility of 31% and no dividend yield. The fair value of unvested
Protect Data options related to future service is being amortized on a straight-line basis
over the remaining service period, while the value of vested options is included in total
purchase price.
Acquisition related transaction costs include investment banking fees, legal and accounting
fees and other external costs directly related to the acquisition.
Purchase Price Allocation
Under business combination accounting, the total purchase price was allocated to Protect
Data’s net tangible and identifiable intangible assets based on their estimated fair values as
set forth below. The excess of the purchase price over the net tangible and identifiable
intangible assets was recorded as goodwill.
Cash and cash equivalents $ 20,436
Accounts receivable 31,179
Other assets 7,287
Accounts payable and other liabilities (32,651)
Deferred revenues (13,315)
Intangible assets 177,000
In process research and development 17,000
Goodwill (Not tax deductible) 481,243
Other accrued liabilities (including payable to remaining
shareholders) (13,571)
Deferred tax liabilities (49,560)
Total purchase price $ 625,048
Intangible Assets
In performing the purchase price allocation, the Company considered, among other factors,
the intention for future use of acquired assets, analyses of historical financial performance
and estimates of future performance of Protect Data’s products. The fair value of
intangible assets was based on a valuation completed by a third party valuation firm using
an income approach and estimates and assumptions provided by management. The
following table sets forth the components of intangible assets associated with the Protect
Data acquisition:
F-24
Fair value Useful life
Customer relationships (1) $ 52,000 5 years
Core technology (2) 107,000 5 years
Trade names (3) 18,000 15 years
Total intangible assets $ 177,000 (*)
(*) Weighted average amortization period of 6 years.