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NICE Systems Achieves Record Second Quarter 2007 ResultsRA'ANANA, Israel --(Business Wire)-- NICE Systems (NASDAQ:NICE), the global provider of advanced solutions that enable organizations to extract Insight from Interactions(TM) to drive performance, today announced results for the second quarter of 2007. Second quarter 2007 non-GAAP revenue reached a record $127.1 million, representing a 30% increase from $97.7 million in the second quarter of 2006. Non-GAAP gross margin in the second quarter 2007 was 63.0%, or $80.1 million, up from 59.8%, or $58.4 million respectively, in the second quarter of 2006. Non-GAAP operating margin in the second quarter 2007 was 16.8%, up from 14.9% in the second quarter 2006. Operating income in the second quarter 2007 increased by 46% to $21.4 million from $14.6 million in the second quarter of 2006. Second quarter 2007 non-GAAP net income reached a record $19.7 million, representing a 35% increase from $14.6 million in the second quarter of 2006. Non-GAAP earnings per fully diluted share for the quarter were a record $0.36, up from $0.28 in the second quarter of 2006. Second quarter 2007 operating cash flow was $17.4 million. Total cash and equivalents as of June 30, 2007 reached $356.4 million, compared with $335.2 million as of March 31, 2007. Non-GAAP results for the second quarter 2007 exclude the fair value adjustment on acquired deferred revenues of $0.6 million net of taxes, the amortization of acquired intangible assets of $3.3 million, net of taxes and stock based compensation expenses of $4.7 million, net of taxes. On a GAAP basis: Second quarter 2007 revenue was $126.2 million, up from $97.7 million in the second quarter of 2006. Second quarter 2007 gross margin was 60.3%, compared with 58.2% in the second quarter of 2006; operating profit was $11.2 million, compared with operating profit of $9.8 million, in the second quarter of 2006; and second quarter 2007 net income was $11.2 million, or $0.21 per fully diluted share, compared with net income of $10.8 million, or $0.21 per share, on a fully diluted basis, for the second quarter of 2006. Commenting on the results, Haim Shani, Chief Executive Officer of NICE said, "NICE continued to generate record results in the second quarter, reflecting the ongoing and strong demand for our Insight from Interactions solutions, both in the enterprise and security sectors, demonstrating the successful execution of our growth strategy." Mr. Shani continued, "Last month we announced a major milestone in our growth strategy with the acquisition of Actimize. We are pioneering convergence of transaction and interaction analytics and spearheading a paradigm shift in how organizations mitigate risk and drive performance across the enterprise. Looking ahead, we intend to continue complementing NICE's organic growth with acquisitions, to further extend our global reach, expand our technology and solutions, broaden our customer base, and increase our distribution channels in the markets in which we operate." Guidance for third quarter and year 2007: Third quarter 2007 non-GAAP revenue is expected to be in the range of $127 - $131 million, and non-GAAP EPS is expected to be in the range of $0.36 - $0.40 per fully diluted share. The Company is raising previously announced full year guidance for 2007, with non-GAAP revenues in the range of $511 - $520 million, up from $497 - $514 million. The company is also raising annual non-GAAP EPS to the range of $1.36 - $1.44, up from $1.31 - $1.42 per fully diluted share. Guidance for year 2007 assumes consolidation of Actimize's financial results in the fourth quarter of 2007. 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). Participants may access the conference call by dialing US toll-free +1-888-281-1167 or +1-800-994-4498; international: +972-3-918-0610; Israel: 03-918-0610. The call will also 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, starting from three hours after the call, by dialing one of the following numbers: US Toll-free: + 1-888-326-9310; international: + 972-3-925-5930; Israel: 03-925-5930. Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, in-process research and development write-off, stock based compensation expenses, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigns to that liability should be based on its fair value at the date of acquisition. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statement of Operations. Reconciliation between the results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statement of Operations (Non-GAAP Basis). About NICE NICE Systems (NASDAQ:NICE) is the leading provider of Insight from Interactions(TM) solutions and value-added services, powered by advanced analytics of unstructured multimedia content -- from telephony, web, radio and video communications. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. NICE has over 24,000 customers in 100 countries, including over 85 of the Fortune 100 companies. More information is available at http://www.nice.com. Trademark Note: Insight from Interactions(TM), 360degree View(TM), Executive Connect(R), Executive Insight(TM)(a), Freedom(R), Investigator(R), Mirra(R), Universe(R), My Universe(TM), NICE(R), NiceCall(R), NiceCall Focus(TM), NiceCLS(TM), NICE Learning(TM), eNiceLink(TM), NiceLog(R), Playback Organizer(TM), Renaissance(R), ScreenSense(TM), NiceScreen(TM), NICE SmartCenter(TM), NICE Storage Center(TM), NiceTrack(TM), NiceUniverse(R), NiceVision(R), NiceVision Analytics(TM), NiceVision ControlCenter(TM), NiceVision Digital(TM), NiceVision Harmony(TM), NiceVision Mobile(TM), NiceVision Net(TM), NiceVision Pro(TM), NiceVision NVSAT(TM), NiceVision Alto(TM), Scenario Replay(TM), Tienna(R), Wordnet(R), NICE Perform(R), NICE Inform(TM), NICE Analyzer(TM), Last Message Replay(TM), NiceUniverse Compact(TM), Customer Feedback(TM), Interaction Capture Unit(TM), Dispatcher Assessment(TM), Encoder(TM), Freedom Connect(R), FAST(R), FAST Alpha Silver(TM), FAST Alpha Blue(TM) and Alpha(R), Emvolve Performance Manager(TM), Performix Technologies(TM), IEX(R), TotalView(R) 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) in Australia only 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.
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share amounts)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2006 2007 2006 2007
Unaudited Unaudited Unaudited Unaudited
---------- ---------- ---------- ----------
Revenue
Product $ 61,544 $ 76,299 $ 118,818 $ 149,501
Services 36,158 49,892 66,799 92,632
---------- ---------- ---------- ----------
Total revenue 97,702 126,191 185,617 242,133
Cost of revenue
Product 19,068 21,757 38,867 42,018
Services 21,759 28,384 42,160 55,452
---------- ---------- ----------
Total cost of revenue 40,827 50,141 81,027 97,470
---------- ---------- ---------- ----------
Gross Profit 56,875 76,050 104,590 144,663
Operating Expenses:
Research and
development, net 11,151 13,718 20,420 26,699
Selling and marketing 21,127 27,918 41,426 55,338
General and
administrative 14,151 21,345 26,149 40,543
Amortization of acquired
intangible assets 628 1,840 1,226 3,692
In-process research and
development - - 212 -
---------- ---------- ----------
Total operating expenses 47,057 64,821 89,433 126,272
---------- ---------- ---------- ----------
Operating income 9,818 11,229 15,157 18,391
Financial income, net 4,064 3,435 7,931 6,686
Other income, net 78 57 77 56
---------- ---------- ---------- ----------
Income before taxes on
income 13,960 14,721 23,165 25,133
Income tax expense 3,170 3,550 5,305 5,236
---------- ---------- ---------- ----------
Net income $ 10,790 $ 11,171 $ 17,860 $ 19,897
========== ========== ========== ==========
Basic income per share $ 0.22 $ 0.22 $ 0.36 $ 0.39
========== ========== ========== ==========
Diluted income per share $ 0.21 $ 0.21 $ 0.35 $ 0.37
========== ========== ========== ==========
Weighted average number of
shares outstanding used
to compute:
Basic income per share 49,300 51,938 48,985 51,668
Diluted income per share 51,708 53,922 51,549 53,802
NICE SYSTEMS LTD. AND SUBSIDIARIES
NON-GAAP NET INCOME AND EARNINGS PER SHARE
U.S. dollars in thousands (except per share amounts)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2006 2007 2006 2007
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
GAAP net income $ 10,790 $ 11,171 $ 17,860 $ 19,897
Adjustments
US GAAP valuation adjustment
on acquired deferred revenue
Product Revenue - 368 - 541
Service Revenue - 563 - 1,460
Amortization of acquired
intangible assets
included in cost of product 1,194 2,419 2,161 4,956
included in operating
expense 628 1,840 1,226 3,692
Compensation expense for stock
options
included in cost of product 74 153 130 320
included in cost of services 266 572 468 1,186
included in research &
development 339 638 585 1,232
included in sales &
marketing 788 1,310 1,345 2,741
included in general &
administrative 1,488 2,285 2,586 4,464
Write-off of acquired in-
process research &
development - - 212 -
Tax benefit associated with
amortization of acquired
intangible assets, FAS 123R
options compensation and
acquired deferred revenue (1,004) (1,570) (1,215) (4,111)
--------- --------- --------- ---------
Non-GAAP net income $ 14,563 $ 19,749 $ 25,358 $ 36,378
========= ========= ========= =========
Non-GAAP basic income per
share $ 0.30 $ 0.38 $ 0.52 $ 0.70
========= ========= ========= =========
Non-GAAP diluted income per
share $ 0.28 $ 0.36 $ 0.49 $ 0.67
========= ========= ========= =========
Weighted average number of
shares outstanding used to
compute:
Non-GAAP basic income per
share 49,300 51,938 48,985 51,668
Non-GAAP diluted income per
share (a) 51,708 54,398 51,549 54,189
(a) For Non-GAAP income per share the diluted weighted average number
of shares outstanding were calculated excluding the effects of
expensing stock options under Statement 123R
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December June
31, 30,
2006 2007
----------- ------------
Unaudited Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 67,365 $ 76,971
Short-term investments 92,989 100,117
Trade receivables 81,312 87,922
Other receivables and prepaid expenses 11,399 16,569
Inventories 18,619 13,580
Deferred tax assets 14,478 12,963
----------- ------------
Total current assets 286,162 308,122
----------- ------------
LONG-TERM ASSETS:
Marketable securities 135,810 179,268
Other long-term assets 12,030 12,960
Deferred Tax Assets 2,917 4,276
Property and equipment, net 15,813 15,750
Other intangible assets, net 111,182 102,450
Goodwill 220,430 221,590
----------- ------------
Total long-term assets 498,182 536,294
----------- ------------
TOTAL ASSETS $ 784,344 $ 844,416
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 22,845 $ 19,907
Accrued expenses and other liabilities 146,990 164,753
----------- ------------
Total current liabilities 169,835 184,660
----------- ------------
LONG-TERM LIABILITIES:
Deferred tax liabilities 33,130 30,497
Other long-term liabilities 11,805 13,571
----------- ------------
Total long-term liabilities 44,935 44,068
----------- ------------
SHAREHOLDERS' EQUITY 569,574 615,688
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 784,344 $ 844,416
=========== ============
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Three months ended Six months ended
June 30, June 30,
------------------- ---------------------
2006 2007 2006 2007
Unaudited Unaudited Unaudited Unaudited
--------- --------- ---------- ----------
Cash flows from operating
activities:
----------------------------[FEED_CRLF
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2006 2007 2006 2007
Unaudited Unaudited Unaudited Unaudited
---------- ----------- ------------ ---------
Cash flows from
financing activities:
----------------------
Proceeds from issuance
of shares and
exercise of share
options, net 4,028 4,328 12,711 11,741
Excess tax benefit
from share-based
payment arrangements 2,144 1,923 2,536 3,486
Decrease in accrued
expenses associated
with the 2005
offering (169) - (273) -
Decrease in short-term
bank credit assumed
in the acquisition of
Fast - - (785) -
---------- ----------- ------------ ---------
Net cash
provided by
financing
activities 6,003 6,251 14,189 15,227
---------- ----------- ------------ ---------
Effect of exchange
rate changes on cash 184 161 145 151
---------- ----------- ---------
Increase (decrease) in
cash and cash
equivalents 10,414 (2,441) (23,547) 9,606
Cash and cash
equivalents at
beginning of period 220,995 79,412 254,956 67,365
---------- ----------- ------------ ---------
Cash and cash
equivalents at end of
period $ 231,409 $ 76,971 $ 231,409 $ 76,971
========== =========== ============ =========
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