NICE Reports Second Quarter 2010 Results; Achieves 21% Growth Year-over-Year in Revenue; Record Revenue and Backlog

Ra’anana, Israel, August 03, 2010 - NICE Systems (NASDAQ: NICE), a leading a leading global provider of intent-based solutions that enable enterprises and security organizations to extract Insight from Interactions, transactions and surveillance to drive business performance, reduce risk and ensure safety, today announced results for the second quarter ending June 30, 2010.

Second Quarter 2010 non-GAAP and Business Highlights Include:

• Revenues at new record of $170 million, up 21% year-over-year
• Operating margin reached 17.6%, net income increased to $26.5 million
• Earnings per fully diluted share increased to $0.41 from $0.36 last year
• Book-to-bill greater than 1; backlog reaches new record
• Company generated $39 million cash from operations in the quarter
• Enhanced visibility; Company updates annual guidance provided in May 2010

“We are pleased with our performance in the second quarter. Our business continued to demonstrate positive growth momentum and improved profitability, complemented by substantial cash from operations during the quarter. Our book-to-bill ratio was once again greater than one, and we ended the quarter with record revenues and a record backlog. These achievements lead us to update our guidance for the second time this year,” said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.

“NICE’s growth continues to be driven by the various market trends we have identified - the increasing number of interactions between enterprises and their end-customers across various channels of communications; a growing number of fraud threats; enhanced demand for our holistic and unified, analytics-based integrated security solutions; and compliance with regulations, which is a major growth driver for NICE. All of these needs are addressed by our intent-base business solutions.”

“We also announced the recently completed acquisition of eglue, which is highly strategic and complements our business applications offering. Since we closed the transaction, we have announced new integrated solutions for contact centers and back office operations, including the most recent announcement from earlier today. We believe that these new and innovative solutions will constitute additional growth engines for NICE,” Mr. Bregman concluded.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2010:

Revenues: Second quarter 2010 non-GAAP revenues increased 21% to $169.5 million from $140.5 million in the second quarter of 2009.

Gross Profit: Second quarter 2010 non-GAAP gross profit and margin increased to $108.3 and 63.9%, respectively, from $88.4 million and 62.9% in the second quarter of 2009.

Operating Income: Second quarter 2010 non-GAAP operating income and margin reached $29.8 million and 17.6%, respectively, up from $24.6 million and compared with 17.5% in the second quarter of 2009.

Net Income: Second quarter 2010 non-GAAP net income increased to $26.5 million, up from $22.1 million in the second quarter of 2009.

Earnings per Fully Diluted Share: Second quarter 2010 non-GAAP earnings per fully diluted share increased to $0.41, up from $0.36 in the second quarter of 2009.

GAAP Financial Highlights for the Second Quarter Ended June 30, 2010:

Revenues: Second quarter 2010 revenues increased 20% to $168.5 million from $140.5 million in the second quarter of 2009.

Gross Profit: Second quarter 2010 gross profit and margin increased to $101.3 million and 60.1%, respectively, up from $83.7 million and 59.6% in the second quarter of 2009.

Operating Income: Second quarter 2010 operating income increased to $13.2 million, compared with $12.2 million in the second quarter of 2009.

Net Income: Second quarter 2010 net income increased to $12.7 million, compared to $11.6 million in the second quarter of 2009.

Earnings per Fully Diluted Share: Earnings per fully diluted share in the second quarter 2010 increased to $0.20, from $0.19 in the second quarter of 2009.

Operating Cash Flow and Cash Balance: Second quarter 2010 operating cash flow was $38.8 million. As of June 30, 2010, total cash and equivalents were $596 million, with no debt.

Updated Fiscal Year 2010 and Introduction of Third Quarter Guidance:

Taking into account the business momentum, record backlog and improved visibility, as well as the completion of the eglue acquisition in mid July, the company is updating its full year 2010 guidance and introducing third quarter guidance as follows:

Fiscal Year 2010: Non-GAAP revenue guidance for the full year is raised to be in the range of $675 and $685 million. Non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $1.67 and $1.75.

Third quarter 2010: Non-GAAP revenue for the third quarter 2010 is expected to be in the range of $171 and $175 million; and non-GAAP EPS, on a fully diluted basis, is expected to be between $0.41 and $0.45.

Quarterly Results Conference Call
NICE management will host a teleconference, today, Aug 3, 2010 at 8:30 ET, 15:30 Israel , to discuss the results and the company's outlook. Please call the following dial-in numbers to participate in the call: United States +1-866-229-7198or +1-888-668-9141, International +972-3- 9180609, Israel 03- 9180609. This call will be webcast live on http://www.nice.com at http://www.nice.com/investor_relations/calendar.php . An online replay will also be available approximately three hours following the call. A telephone replay of the call will be available for 72 hours after the live broadcast, and may be accessed by dialing: United States +1-888- 326 - 9310 , International +972-3-9255927, Israel 03-925 5927.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share 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 assigned 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 Statements of Income.

About NICE Systems
NICE Systems (NASDAQ: NICE) is the leading provider of Insight from Interactions 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 more than 150 countries, including more than 85 of the Fortune 100 companies. More information is available at http://www.nice.com/.
 

Trademark Note: NICE and the NICE logo are trademarks or registered trademarks of NICE Systems.  All other marks are trademarks of their respective owners.  For a full list of NICE Systems' marks, please see: http://www.nice.com/NICETrademarks.html .

Forward Looking Statements: This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including the statements by Messer Bregman, are based on the current expectations of the management of NICE-Systems Ltd. (the Company) only, and are subject to a number of risks and uncertainties that could cause the actual results or performance of the Company to differ materially from those described herein, including but not limited to the impact of the global economic environment on the Company’s customer base (particularly financial services firms) and the resulting uncertainties; 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. 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, including the Company’s Annual Report on Form 20-F. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company undertakes no obligation to update or revise them, except as required by law.