NICE Systems Achieves Sequential Growth in Revenues and non-GAAP EPS in Third Quarter 2009

Backlog at all-time high; Book to bill greater than one for quarter and nine months

Ra’anana, Israel, November 02, 2009 - NICE Systems (NASDAQ: NICE), the global provider of advanced solutions that enable organizations to extract insight from interactions, transactions and surveillance to drive performance and prevent crime, today announced results for the third quarter of 2009.

Third quarter 2009 non-GAAP revenues were $146.1 million, up 4.0% from $140.5 million in the second quarter 2009 and 10.4% down from $163.0 million in the third quarter of 2008. Non-GAAP revenues for the first three quarters of 2009 were $425.7 million, 8.4% down from the first three quarters of 2008.

Non-GAAP gross profit was $91.8 million, or 62.9% gross margin in the third quarter of 2009, up from $88.4 million, or 62.9% in the second quarter 2009 and compared to $105.6 million, or 64.8%, in the third quarter of 2008. Non-GAAP operating margin in the third quarter of 2009 reached 17.0%, compared to 17.5% in the second quarter 2009 and 18.6% in the third quarter 2008. Non-GAAP operating profit was $24.9 million, up from $24.6 million in the second quarter of 2009 and compared to $30.3 million in the third quarter of 2008.

Third quarter 2009 non-GAAP net income was $24.0 million, or 16.4% of revenues, up from $22.1 million, or 15.7% in the second quarter 2009 and compared to $26.7 million, or 16.4% of revenues in the third quarter of 2008. Non-GAAP earnings per fully diluted share in the third quarter were $0.38, up from $0.36 in the second quarter 2009 and compared to $0.43 in the third quarter of 2008.

On a GAAP basis: Third quarter 2009 revenues were $144.7 million, compared to $140.5 million in the second quarter of 2009 and $162.5 million in the third quarter of 2008. Revenues for the first three quarters of 2009 were $424.3 million compared to $461.1 million in the first three quarters of 2008. Third quarter 2009 gross profit was $85.4 million, compared with $100.3 million in the third quarter of 2008; The company operating profit was $4.8 million, compared to $16.1 million, in the third quarter of 2008; and third quarter 2009 net income reached $7.8 million, or $0.12 per fully diluted share, compared to net income of $10.9 million, or $0.18 per share, on a fully diluted basis, for the third quarter of 2008. Net income for the first three quarters of 2009 increased to $30.0 million, up from $20.4 million in the first three quarters of 2008. Earnings per share on a fully diluted basis, for the first three quarters of 2009 increased to $0.48 from $0.33 in the first three quarters of 2008.

Third quarter 2009 operating cash flow was $28.3 million. Total cash and equivalents as of September 30, 2009 were $518.4 million, with no debt. This follows the approximately $85 million that were paid for the two acquisitions completed during the quarter and compares to $558.8 million as of June 30, 2009.

“We are satisfied with our performance in the third quarter , as bookings, revenues and non-GAAP profitability reached record levels for the year. Furthermore, our order intake continued to improve during the quarter, with book to bill ratio, on both a quarterly and yearly basis, exceeding one, resulting in the company’s backlog reaching an all-time record high. This quarter we continued to strengthen our market position with major wins such as the $55 million mega security deal from a government agency, as well as, several strategic deals in our enterprise business. Moreover, we continued to strengthen our Actimize business with the acquisition of Fortent, progressing on track with our plans, as we established Actimize as the industry’s largest and broadest financial crime solution provider,” commented Mr. Zeevi Bregman, President and Chief Executive Officer, NICE Systems Ltd. “Looking ahead, we are cautiously optimistic that these trends will continue to generate gradual growth for NICE in the fourth quarter and 2010,” Mr. Bregman concluded.

Conference Call
NICE management will host a teleconference, today, November 2, 2009, 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 first quarter 2009 call: United States + 1-888-668-9141 or + 1-888--281-1167, International + +972-3-9180610, Israel +972-3- 918-0610. 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 1-888-269-0005, International +972-3- 925-5921, Israel +972-3-925-5921.

on-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, settlement and related expenses, other than temporarily impairment on 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 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: 360° View, Alpha, ACTIMIZE, Actimize logo, Customer Feedback, Dispatcher Assessment, Encorder, eNiceLink, Executive Connect, Executive Insight, FAST, FAST alpha Blue, FAST alpha Silver, FAST Video Security, Freedom, Freedom Connect, IEX, Interaction Capture Unit, Insight from Interactions, Investigator, Last Message Replay, Mirra, My Universe, NICE, NICE logo, NICE Analyzer, NiceCall, NiceCall Focus, NiceCLS, NICE Inform, NICE Learning, NiceLog, NICE Perform, NiceScreen, NICE SmartCenter, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse Compact, NiceVision, NiceVision Alto, NiceVision Analytics, NiceVision ControlCenter, NiceVision Digital, NiceVision Harmony, NiceVision Mobile, NiceVision Net, NiceVision NVSAT, NiceVision Pro, Performix, Playback Organizer, Renaissance, Scenario Replay, ScreenSense, Tienna, TotalNet, TotalView, Universe, Wordnet are trademarks and/or registered trademarks of NICE Systems Ltd. All other trademarks are the property of their respective owners.
 

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.