NICE Reports Third Quarter 2010 Results; Record Non-GAAP Revenues of $176 million, EPS up at $0.45

Ra’anana, Israel, Oct 27, 2010 - NICE Systems (NASDAQ: NICE), the worldwide leader of intent-based solutions that extract insight to impact business performance, reduce financial risk and ensure safety and security, today announced results for the third quarter ending September 30, 2010.

Third Quarter 2010 non-GAAP Highlights Include:

• Revenues at new all time high of $176 million, up 21% year-over-year
• Operating income at a record of $32 million, up 28% year-over-year
• Earnings per fully diluted share increased to $0.45 from $0.38 last year
• Strong cash flow from operations; crossed $100 million  in first three quarters
• Company increases its annual guidance for 2010

“We are pleased with our performance in both the third quarter and year-to-date. Our business continued to demonstrate growth and improved profitability.We ended the quarter with record revenues, record operating income, strong cash from operations, and healthy backlog and pipeline. These achievements, combined with our current forecast for a strong fourth quarter, lead us to update once again our guidance for the year,” said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.

“We continued to execute on our strategy to provide enterprise-wide intent-based solutions. Our customers use our analytics offerings to obtain insight on their business and transform it into impact. We believe that our ability to provide real-time impact solutions across our businesses is a clear differentiator of NICE. It enables our customers to significantly improve their business performance and customer experience and to ensure safety and compliance,” Mr. Bregman concluded.

Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:

Revenues: Third quarter 2010 non-GAAP revenues increased 21% to a record $176.2 million, up from $146.1 million in the third quarter of 2009.

Gross Profit: Third quarter 2010 non-GAAP gross profit and margin increased, reaching a record $115.9 and 65.8%, respectively, from $91.8 million and 62.9% in the third quarter of 2009.

Operating Income: Third quarter 2010 non-GAAP operating income and margin increased to $31.8 million and 18.1%, respectively, from $24.9 million and 17.0% in the third quarter of 2009. 

Net Income: Third quarter 2010 non-GAAP net income reached $28.7 million, up from $24.0 million in the third quarter of 2009.

Earnings per Fully Diluted Share: Third quarter 2010 non-GAAP earnings per fully diluted share increased to $0.45, up from $0.38 in the third quarter of 2009.

GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:

Revenues: Third quarter 2010 revenues increased 21% to $174.9 million from $144.7 million in the third quarter of 2009.

Gross Profit: Third quarter 2010 gross profit and margin increased to $107.9 million and 61.7%, respectively, up from $85.4 million and 59.0% in the third quarter of 2009.

Operating Income: Third quarter 2010 operating income increased to $12.6 million, compared with $4.8 million in the third quarter of 2009.

Net Income: Third quarter 2010 net income increased to $12.5 million, compared to $7.8 million in the third quarter of 2009.

Earnings per Fully Diluted Share: Earnings per fully diluted share in the third quarter 2010 increased to $0.20, from $0.12 in the third quarter of 2009.

Operating Cash Flow and Cash Balance: Third quarter 2010 operating cash flow was $30.9 million. As of September 30, 2010, total cash and equivalents were $611 million, with no debt. This follows the approximately $26 million that were paid for acquisitions and compares to $596 million as of June 30, 2010.

Updated Fiscal Year and Fourth Quarter 2010 Guidance:

Fiscal Year 2010: Non-GAAP revenue guidance for the full year is raised to be in the range of $685 and $690 million. Guidance for Non-GAAP EPS, on a fully diluted basis, is raised to be in the range of $1.71 and $1.75.

Fourth Quarter 2010: Non-GAAP revenue guidance for the fourth quarter isin the range of $177 and $182 million. Non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $0.47and $0.51.

Quarterly Results Conference Call
 

NICE management will host a teleconference, today, Oct 27, 2010 at 8:30 ET, 14:30 Israel, to discuss the results and the company's outlook. Please call the following dial-in numbers to participate in the call: United States +1-866-229-7198 or +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/news-and-events/ir-events. 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 1-888-269-0005, International +972-3-9255930, Israel 03-9255930.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, realized gain on previously impaired marketable securities 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
NICE Systems is the worldwide leader of intent-based solutions that capture and analyze interactions and transactions, realize intent, and extract and leverage insights to deliver impact in real time. Driven by cross-channel and multi-sensor analytics, NICE solutions enable organizations to improve business performance, increase operational efficiency, prevent financial crime, ensure compliance, and enhance safety and security. NICE serves over 25,000 organizations in the enterprise and security sectors, representing a variety of sizes and industries in more than 150 countries, and including over 80 of the Fortune 100 companies. 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/nice-trademarks. 

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.