{"url_path":"/sec/chkp/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","accession_number":"0001178913-26-001932","cik":"0001015922","ticker":"CHKP","issuer_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","primary_entity_key":"0001015922","primary_entity_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD"},"word_count":926,"has_tables":true,"body_markdown":"ITEM 11.     \nQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\n\n \n\nWe are exposed to market risks that result primarily from weak\neconomic conditions in the markets in which we sell our products, and from changes in exchange rates or in interest rates.\n\n \n\nInterest Rate Risk\n\n \n\nOur exposure to market risk for changes in interest rates relates\nprimarily to our investment in fixed maturity marketable securities, and short-term bank deposits. Our marketable securities portfolio\nincludes mainly government and government agencies debt instruments (U.S., European and other) and corporate debt instruments, which are\nexposed to changes in short-term interest rates. By policy, we limit the amount of credit exposure to any single debt issuer.\n\n \n\nInvestments in both fixed rate and floating rate interest bearing\nsecurities carry a degree of interest rate risk. Fixed rate securities may have their fair market value impacted due to a rise or fall\nin interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due in part to these\nfactors, our income from investments may change in the future in the event that interest rates fluctuate.\n\n \n\nThe yield on new investments in our investment portfolio and\nour interest income was positively impacted by several years of rising interest rates. From the second half of 2024 interest rates started\nto fall as the Federal Reserve bank cut the Federal Funds Rate, and so did other central banks, which negatively affected the yield on\nnew investments in our investment portfolio.\n\n \n\nAs of December 31, 2025 securities representing 5% of our investments\nportfolios are rated as AAA; securities representing 42% of the portfolio are rated between AA- and AA+; securities representing 53% of\nthe portfolio are rated between A- and A+; securities representing 1% of the portfolio are rated as BBB+ or below.\n\n \n\nThe table below provides information regarding our investments\nin cash, cash equivalents, short-term bank deposits and marketable securities, as of December 31, 2025:\n\n \n\n \n\nMaturity\n\n \n \n\nTotal\nPar\nValue\n\n \n \n\nFair\nValue\nat\nDec. 31, 2025\n\n \n\n \n\n \n\n2026\n\n \n \n\n2027\n\n \n \n\n2028\n\n \n \n\n2029\n\n \n \n\n2030\n\n \n \n \n \n \n\n \n\n \n\n(in millions)\n\n \n\nMarketable securities:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nDebt securities issued by the U.S. Treasury and other U.S. government\nagencies\n\n \n\n$\n\n177.6\n\n \n \n\n$\n\n74.0\n\n \n \n\n$\n\n98.2\n\n \n \n\n$\n\n81.1\n\n \n \n\n$\n\n44.4\n\n \n \n\n$\n\n475.3\n\n \n \n\n$\n\n474.3\n\n \n\nDebt securities issued by other governments\n\n \n \n\n9.4\n\n \n \n \n\n11.7\n\n \n \n \n\n10.8\n\n \n \n \n\n7.0\n\n \n \n \n\n-\n\n \n \n \n\n38.9\n\n \n \n \n\n39.3\n\n \n\nCorporate debt securities\n\n \n \n\n504.8\n\n \n \n \n\n394.2\n\n \n \n \n\n265.2\n\n \n \n \n\n211.6\n\n \n \n \n\n130.0\n\n \n \n \n\n1,505.8\n\n \n \n \n\n1,502.4\n\n \n\nCash\n\n \n \n\n109.8\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n109.8\n\n \n \n \n\n109.8\n\n \n\nShort-term bank deposits\n\n \n \n\n525.7\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n525.7\n\n \n \n \n\n525.7\n\n \n\nCash equivalents:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nMoney market funds\n\n \n \n\n1,464.5\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n1,464.5\n\n \n \n \n\n1,464.5\n\n \n\nShort term deposits\n\n \n \n\n225.7\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n225.7\n\n \n \n \n\n225.7\n\n \n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal\n\n \n\n$\n\n3,017.5\n\n \n \n\n$\n\n479.9\n\n \n \n\n$\n\n374.2\n\n \n \n\n$\n\n299.7\n\n \n \n\n$\n\n174.4\n\n \n \n\n$\n\n4,345.7\n\n \n \n\n$\n\n4,341.7\n\n \n\n \n\n66\n\nForeign Currency Risk\n\n \n\nMost of our sales are denominated in U.S. dollars, and we incur\nmajority of our expenses in U.S. dollar, Israeli Shekel and Euro currencies. According to the factors indicated in ASC 830, “Foreign\nCurrency Matters”, our cash flow, sale price, sales market, expense, financing and inter-company transactions, and arrangement indicators,\nare predominantly denominated in U.S. dollars. In addition, the U.S. dollar is the primary currency of the economic environment in which\nwe operate, and thus, the U.S. dollar is our functional and reporting currency.\n\n \n\nOn our balance sheet, we convert into U.S. dollars all monetary\naccounts (principally liabilities) that are held in other currencies. For this conversion, we use the relevant foreign currency exchange\nrate at the balance sheet date. Any gain or loss that results from this conversion is reflected in the statement of income as financial\nincome or financial expense, as appropriate.\n\n \n\nWe measure and record non-monetary accounts in our balance sheet\nin U.S. dollars. For this measurement, we use the U.S. dollar value in effect at the date that the asset or liability was initially recorded\nin our balance sheet (the date of the transaction).\n\n \n\nWe entered into forward contracts to hedge the foreign currency\nexchange impacts on assets and liabilities denominated in various foreign currencies. As of December 31, 2025, the total amount of\noutstanding forward contracts that did not qualify for hedge accounting was $196.0 million. These contracts were for a period of\nup to twelve months. The net amount of gains and losses recognized in “financial income, net” during 2025 was a gain of $30.3 million.\n\n \n\nDuring 2025, we entered into forward contracts to hedge against\nthe risk of overall changes in foreign currency exchange rates on future cash flow from payments of payroll and related expenses denominated\nin Israeli Shekel and Euro. These contracts qualified for cash flow hedge accounting and as such the net amount of gains and losses of\n$29.1 million in gain was recognized when the related expenses were incurred, and classified in operating expenses during 2025. As of\nDecember 31 2025, the notional amount of outstanding forward contracts that qualified for cash flow hedge accounting was $328.8 million\nand their fair value gain amount was $29.8 million.\n\n \n\nOur operating expenses may be affected by fluctuations in the\nvalue of the U.S dollar as it relates to foreign currencies; with Israeli Shekel and Euro having the greatest potential impact. In managing\nour foreign exchange risk, we periodically enter into foreign exchange hedging contracts. Our goal is to mitigate the potential exposure\nwith these contracts. By way of example, a 10% weakening in the value of the dollar relative to the currencies in which our operating\nexpenses are denominated in 2025 would result in an increase in operating expenses of $79.5 million for the year ended December 31,\n2025. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar."}