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NICE Posts Another Record Quarter With 2005 Third Quarter Earnings ResultsRA'ANANA, Israel --(Business Wire)-- Nov. 9, 2005 -- NICE Systems (NASDAQ:NICE): Highlights: -- Q3 record revenue at excess of $82.7 million -- Q3 pro-forma gross margin improved to 56.6% -- Q3 pro-forma operating margins improved to 11.5% -- Pro forma EPS was $0.43, up 48% from Q3 2004 -- Integration of Dictaphones CRS business successfully completed NICE Systems (NASDAQ:NICE), the global provider of advanced solutions that enable organizations to extract Insight from Interactions(TM), today announced record results for the third quarter ending September 30, 2005. Third quarter 2005 revenue was at a company record high of $82.7 million and represents a 30% increase over $63.5 million in the same quarter of 2004. Third quarter pro-forma gross margin, which excludes amortization of acquired intangible assets, was 56.6%, an improvement from the 55.0% reported in the third quarter of 2004. The company reported a third quarter pro forma operating profit of $9.5 million and operating margin of 11.5%, compared with $5.4 million and 8.4% in the third quarter of 2004. Pro-forma net income was $9.0 million or $0.43 per fully diluted share in the third quarter of 2005, up from $5.4 million or $0.29 per fully diluted share in the same quarter of 2004. On a GAAP basis: third quarter gross margin was 55.9%, compared with 54.7% in the third quarter of 2004; operating profit was $8.4 million and operating margin was 10.2%, compared with $5.1 million and 8.1%, respectively, in the third quarter of 2004; and third quarter net income was $7.9 million, or $0.38 per fully diluted share, compared with net income of $5.2 million, or $0.28 per share, on a fully diluted basis, in the third quarter of 2004. Total cash and equivalents at September 30, 2005, were at $184.9 million. DSO (days sales outstanding) for the second quarter stood at 70 days. Commenting on the quarter, Haim Shani, Chief Executive Officer of NICE, said, "Once again, our company showed an outstanding financial performance. After announcing record results last quarter, we are pleased to conclude Q3 with another exceptional achievement. These results and the other successes of the third quarter validate once again our vision for Insight from Interactions, our ability to deliver on that vision to the enterprise and public and security sectors, and also that the effective integration of the Dictaphone CRS business is delivering on its promise." "Due to the increasing demand for Insight from Interactions across the board and the strong momentum we have been seeing in both the enterprise and public and security sectors we are providing Q4 guidance for revenues of $87 - $90 million, and Q4 pro-forma EPS in the range of 53 - 57 cents. This implies that we are raising the guidance for year 2005 to revenues at $308 - $311 million, a 22 - 23% increase over 2004; and pro-forma EPS of $1.62 - 1.66, representing a 36-39% increase over 2004." "Looking forward to 2006 we expect to continue to enjoy the leverage of our business model, while improving margins and driving stronger bottom line growth. We introduce first time 2006 revenue guidance at $355 - $363 million; and first time pro-forma EPS guidance of $2.05 - $2.15, which represents a 24 - 33% increase." Conference Call NICE will host a conference call to discuss the results and its business outlook today at 8:30 a.m. EST (15:30 Israel). The call will be broadcast live on the internet via NICE's website at www.nice.com. A telephone replay will be available for up to 72 hours after the call. The replay information: US Toll-free: 1-866-276-1485; International: +972-3-925-5930; Israel: 03-925-5930. Pro forma basis results exclude the amortization of acquired intangible assets of $1.1 million in Q3 2005 and $0.2 million in Q3 2004. A reconciliation between results on a GAAP and pro forma basis is provided in a table immediately following the Consolidated Statement of Operations (Pro Forma Basis). About NICE NICE Systems (NASDAQ:NICE) is the leading provider of Insight from Interactions, based on advanced content analytics of telephony, web, radio and video communications. NICE's solutions improve business and operational performance, as well as security. NICE has over 23,000 customers in 100 countries, including the world's top 10 banks and over 75% of the Fortune 100 companies. More information is available at www.nice.com. Trademark Note: 360(degree) View, Agent@home, Big Picture Technology, Executive Connect, Executive Insight(a), Experience Your Customer, Investigator, Lasting Loyalty, Listen Learn Lead, MEGACORDER, Mirra, My Universe, NICE, NiceAdvantage, NICE Analyzer, NiceCall, NiceCLS, NiceCMS, NICE Feedback, NiceFix, NiceGuard, NICE Learning, NICE Link, NiceLog, NICE Perform, ScreenSense, NiceScreen, NiceSoft, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse LIVE, NiceVision, NiceVision Harmony, NiceVision Mobile, NiceVision Pro, NiceVision Virtual, NiceWatch, Renaissance, Secure Your Vision, Tienna, Wordnet and other product names and services mentioned herein are trademarks and registered trademarks of NICE Systems Ltd. All other registered and unregistered trademarks are the property of their respective owners. (a) Only in Australia This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations of the management of NICE Systems Ltd. (the Company) only, and are subject to a number of risk factors and uncertainties, including but not limited to changes in technology and market requirements, decline in demand for the Company's products, inability to timely develop and introduce new technologies, products and applications, difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel, loss of market share, pressure on pricing resulting from competition, and inability to maintain certain marketing and distribution arrangements, which could cause the actual results or performance of the Company to differ materially from those described therein. We undertake no obligation to update these forward-looking statements. For a more detailed description of the risk factors and uncertainties affecting the company, refer to the Company's reports filed from time to time with the Securities and Exchange Commission. -0- *T NICE SYSTEMS LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except per share amounts) Three months ended Nine months ended September 30, September 30, ------------------- ------------------- 2004 2005 2004 2005 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Revenue Product $45,667 $54,078 $131,221 $149,028 Services 17,845 28,639 51,903 72,041 --------- --------- --------- --------- Total revenue 63,512 82,717 183,124 221,069 Cost of revenue Product 16,112 18,077 46,728 48,980 Services 12,642 18,414 37,006 48,648 --------- --------- --------- --------- Total cost of revenue 28,754 36,491 83,734 97,628 --------- --------- --------- --------- Gross Profit 34,758 46,226 99,390 123,441 Operating Expenses: Research and development, net 6,084 7,771 18,517 21,527 Selling and marketing 15,699 19,247 46,102 53,226 General and administrative 7,769 10,245 23,453 27,486 Amortization of acquired intangible assets 87 545 263 789 --------- --------- --------- --------- Total operating expenses 29,639 37,808 88,335 103,028 --------- --------- --------- --------- Operating income 5,119 8,418 11,055 20,413 Financial income, net 693 1,257 2,771 3,554 --------- --------- --------- --------- Income before taxes on income 5,812 9,675 13,826 23,967 Taxes on income 630 1,806 1,525 3,521 --------- --------- --------- --------- Net income from continuing operations 5,182 7,869 12,301 20,446 Net income from discontinued operation - - 3,236 - --------- --------- --------- --------- Net income $ 5,182 $ 7,869 $ 15,537 $ 20,446 ========= ========= ========= ========= Basic income per share from continuing operations $ 0.29 $ 0.41 $ 0.71 $ 1.09 ========= ========= ========= ========= Basic income per share from discontinued operation - - $ 0.19 - ========= ========= ========= ========= Basic income per share $ 0.29 $ 0.41 $ 0.89 $ 1.09 ========= ========= ========= ========= Diluted income per share from continuing operations $ 0.28 $ 0.38 $ 0.66 $ 1.01 ========= ========= ========= ========= Diluted income per share from discontinued operation - - $ 0.17 - ========= ========= ========= ========= Diluted income per share $ 0.28 $ 0.38 $ 0.84 $ 1.01 ========= ========= ========= ========= Weighted average number of shares outstanding used to compute: Basic income per share 17,595 19,124 17,365 18,768 Diluted income per share 18,549 20,753 18,557 20,306 *T -0- *T NICE SYSTEMS LTD. AND SUBSIDIARIES FOR COMPARATIVE PURPOSES NET INCOME AND INCOME PER SHARE EXCLUDING DISCONTINUED OPERATION AND AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS U.S. dollars in thousands (except per share amounts) Three months ended Nine months ended September 30, September 30, ------------------- ------------------- 2004 2005 2004 2005 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- GAAP net income $5,182 $7,869 $15,537 $20,446 Adjustments: GAAP net income from discontinued operation - - (3,236) - Amortization of acquired intangible assets Included in gross profit 149 568 448 1,008 Included in operating expenses 87 545 263 789 --------- --------- --------- --------- Non-GAAP net income from continuing operations $5,418 $8,982 $13,012 $22,243 ========= ========= ========= ========= Non-GAAP basic income per share from continuing operations $ 0.31 $ 0.47 $ 0.75 $ 1.19 ========= ========= ========= ========= Non-GAAP diluted income per share from continuing operations $ 0.29 $ 0.43 $ 0.70 $ 1.10 ========= ========= ========= ========= *T -0- *T NICE SYSTEMS LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December September 31, 30, 2004 2005 --------- --------- Audited Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 26,579 $ 25,072 Short-term bank deposits 175 115 Marketable securities 24,348 35,708 Trade receivables 46,407 56,881 Other receivables and prepaid expenses 7,937 8,142 Inventories 12,615 22,304 Assets of discontinued operation 652 653 --------- --------- Total current assets 118,713 148,875 LONG-TERM INVESTMENTS: Long-term marketable securities 114,805 124,029 Other long-term investments 9,410 9,283 --------- --------- Total long-term investments 124,215 133,312 PROPERTY AND EQUIPMENT, NET 16,981 15,373 OTHER ASSETS, NET 12,665 25,452 GOODWILL 25,745 50,445 --------- --------- TOTAL ASSETS $298,319 $373,457 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 11,975 $ 17,209 Accrued expenses and other liabilities 55,302 90,410 Liabilities of discontinued operation 8 7 --------- --------- Total current liabilities 67,285 107,626 LONG-TERM LIABILITIES 8,163 8,497 SHAREHOLDERS' EQUITY 222,871 257,334 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $298,319 $373,457 ========= ========= *T -0- *T NICE SYSTEMS LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS U.S. dollars in thousands Three months ended Nine months ended September 30, September 30, ------------------- -------------------- 2004 2005 2004 2005 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- ---------- Cash flows from operating activities: Net income $ 5,182 $ 7,869 $ 15,537 $ 20,446 Less income for the period from discontinued operation - - (3,236) - Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,374 3,558 10,282 9,519 Accrued severance pay, net (58) 11 30 210 Amortization of discount (premium) and accrued interest on marketable securities 265 132 1,013 578 Decrease (increase) in trade receivables 44 (1,691) 79 (2,157) Decrease in other receivables and prepaid expenses (1,109) (53) (1,251) (131) Decrease (increase) in inventories 49 (1,458) 1,291 (2,811) Increase (decrease) in trade payables 500 11 (561) 4,734 Increase in accrued expenses and other liabilities 3,271 6,849 4,149 6,671 Other 26 134 - 206 --------- --------- --------- ---------- Net cash provided by operating activities from continuing operations 11,544 15,362 27,333 47,265 Net cash provided (used) by operating activities from discontinued operation (246) - 604 - --------- --------- --------- ---------- Net cash provided by operating activities 11,298 15,362 27,937 47,265 --------- --------- --------- ---------- Cash flows from investing activities: Purchase of property and equipment (1,970) (1,673) (5,159) (4,392) Proceeds from sale of property and equipment - 3 60 48 Investment in short-term bank deposits (33) (11) (72) (35) Proceeds from short-term bank deposits 45 23 116 90 Proceeds from maturity of short-term marketable securities 1,725 9,510 16,710 158,970 Investment in short-term marketable securities (1,000) (15,550) (3,000) (148,375) Proceeds of call of long- term held-to-maturity marketable securities 9,632 1,500 29,434 7,630 Investment in long-term held-to-maturity marketable securities (13,195) (21,089) (81,058) (39,387) Capitalization of software development costs (312) (140) (987) (567) Payment for acquisition of certain assets and liabilities of Dictaphone CRS Division - (781) - (39,720) Payment for acquisition of certain assets and liabilities of Hannamax Hi- Tech Pty. Ltd. (1,833) (1,833) Decrease in accrued acquisition costs - (75) - Payment in respect of terminated contract from TCS acquisition (1,364) - (2,847) - Proceeds from related party in respect of TCS acquisition - - 4,013 2,531 --------- --------- --------- ---------- Net cash used by investing activities from continuing operations (6,472) (30,041) (42,865) (65,040) Net cash provided by investing activities from discontinued operation - - 4,136 - --------- --------- --------- ---------- Net cash used by investing activities (6,472) (30,041) (38,729) (65,040) --------- --------- --------- ---------- Cash flows from financing activities: Proceeds from issuance of shares and exercise of share options, net 2,753 4,750 12,671 16,219 --------- --------- --------- ---------- Net cash provided by financing activities 2,753 4,750 12,671 16,219 --------- --------- --------- ---------- Effect of exchange rate changes on cash 20 48 (9) 49 --------- --------- --------- ---------- Increase (decrease) in cash and cash equivalents 7,599 (9,881) 1,870 (1,507) Cash and cash equivalents at beginning of period 24,130 34,953 29,859 26,579 --------- --------- --------- ---------- Cash and cash equivalents at end of period $ 31,729 $ 25,072 $ 31,729 $ 25,072 ========= ========= ========= ========== *T |
