NICE Systems Reports Second Quarter 2009 Results

Second Quarter 2009 non-GAAP highlights included:

• $140.5 million in revenues, up from $139.2 million in the first quarter
• Earnings per fully diluted share reached $0.36, up from $0.35 sequentially
• Operating margin increased to 17.5%
• Book to Bill ratio of 1
• Net cash generated from operations $29.2 million

Ra’anana, Israel, July 29, 2009 - NICE Systems (NASDAQ: NICE), the global provider of advanced solutions that enable organizations to extract Insight from Interactions to drive performance, today announced results for the second quarter of 2009.

Second quarter 2009 non-GAAP revenue was $140.5 million, 9.6% down from $155.3 million in the second quarter of 2008 and up 0.9% from $139.2 million in the first quarter. First half 2009 non-GAAP revenue was $279.7 million, 7.4% lower than $302.0 million in the first half 2008.

Non-GAAP gross margin in the second quarter of 2009 reached 62.9%, or $88.4 million gross profit, compared to 65.5%, or $101.7 million respectively, in the second quarter of 2008.

Non-GAAP operating margin in the second quarter of 2009 reached 17.5%, up from 16.5% in the second quarter 2008 and from 16.8% in the first quarter. Non-GAAP operating profit was $24.6 million, compared to $25.7 million in the second quarter of 2008 and up from $23.3 million in the first quarter of 2009.

Second quarter 2009 non-GAAP net income was $22.1 million, or 15.7% of revenues, compared to $24.0 million, or 15.4% of revenues in the second quarter of 2008. Second quarter 2009 non-GAAP net income was up from $21.4 million in the first quarter 2009. Non-GAAP earnings per fully diluted share in the second quarter were $0.36, compared to $0.39 in the second quarter of 2008. Non-GAAP earnings per fully diluted share were up from $0.35 in the first quarter 2009.

On a GAAP basis: Second quarter 2009 revenue was $140.5 million, compared to $154.1 million in the second quarter of 2008. First half 2009 revenue was $279.6 million, compared to $298.6 million in the first half 2008. Second quarter 2009 gross margin was 59.6%, compared with 62.0% in the second quarter of 2008; The company achieved operating profit of $12.2 million, up from an operating loss of $0.2 million, in the second quarter of 2008; and second quarter 2009 net income increased to $11.6 million, or $0.19 per fully diluted share, up from net income of $1.5 million, or $0.02 per share, on a fully diluted basis, for the second quarter of 2008.

Second quarter 2009 operating cash flow was $ 29.2 million. Total cash and equivalents as of June 30, 2009 were $558.8 million, with no debt, up from $529.9 million as of March 31, 2009.

“In the second quarter we started to see improvement, with bookings, revenues, operating margins, and profitability coming in higher than the first quarter.  Business improved in both the Americas and APAC, in the different product lines.  Looking ahead, we believe that these trends and the strong pipeline of large security projects will translate into top and bottom line growth in the second half of 2009, compared to the first half of the year,“ said Haim Shani, Chief Executive Officer, NICE Systems Ltd.

Conference Call
NICE management will host a teleconference, today, July 29, 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 + 1-888-407-2553 or + 1-888-281-1167, International +972-3- 918-0610, Israel +972-3- 918-0610. This call will be webcast live on http://www.nice.com/. 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 + 888-782-4291, International +972-3- 925-5954, Israel +972-3-925-5954.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, termination expenses and other related costs, stock based compensation expenses, settlement and related 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
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.