FORM 20-F - Check Point

Our major shareholders do not have different voting rights from other shareholders with respect to our
ordinary shares.
According to our transfer agent, as of December 31, 2009, there were 206 holders of record of our ordinary
shares in the United States, representing approximately 85% of our outstanding shares. The number of record
holders in the United States is not representative of the number of beneficial holders nor is it representative of
where such beneficial holders are resident since many of these ordinary shares were held by brokers or other
nominees.
We are not controlled by another corporation or by any foreign government, directly or through any other
entity. Each of our outstanding ordinary shares has identical rights in all respects.
As of December 31, 2006, we had employee and payroll accrual for related parties, for the years 1999
through 2006, in a total amount of $8.9 million. As of December 31, 2007, we had employee and payroll accrual
for related parties in the amount of $7.9 million, for the years 1999 through 2007. As of December 31, 2008, this
accrual decreased to a total of $5.6 million, for the years 2001 through 2007. As of December 31, 2009, this accrual
decreased to a total of $5.3 million, for the years 2002 through 2005.
ITEM 8. FINANCIAL INFORMATION
Consolidated Financial Statements
You can find our financial statements in “Item 18 – Financial Statements.”
Dividend policy. Out of our retained earnings of $2,978 million as of December 31, 2009, approximately
$1,247 million are from tax-exempt income because they are attributable to our facilities’ status as Approved
Enterprises and Privileged Enterprises under the Law for the Encouragement of Capital Investments, 1959 (the
“Law”). Our board of directors has currently resolved not to distribute any dividend from our undistributed taxexempt
income. The undistributed tax-exempt income is currently expected to be essentially permanent by
reinvesting.
Legal Proceedings
We operate our business in various countries, and accordingly, attempt to utilize an efficient operating
model to optimize our tax payments based on the laws in the countries in which we operate. This can cause disputes
between us and various tax authorities in different parts of the world.
In particular, following audits of our 2002 and 2003 corporate tax returns, the Israeli Tax Authority (the
“ITA”) issued orders challenging our positions on several issues, including matters, such as the usage of funds
earned by our approved enterprise for investments outside of Israel, deductibility of employee stock options
expenses, percentage of foreign ownership of our shares, taxation of interest earned outside of Israel and
deductibility of research and development expenses. The largest amount in dispute relates to the treatment
of financial income on cash that is held and managed by our wholly-owned Singapore subsidiary, which the ITA is
seeking to tax in Israel. In an additional challenge to this amount, the ITA reclassified the transfer of funds from
Check Point to our subsidiary in Singapore as a dividend for purposes of the Law, which would result in tax on the
funds transferred. The ITA orders also contest our positions on various other issues. The ITA, therefore, demanded
the payment of additional taxes in the aggregate amount of NIS 963 million with respect to 2002 (assessment
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