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BUSINESS NEWS

NICE Systems Reports Fourth Quarter 2009 and Full Year Results; Fourth Quarter Bookings and Backlog Reach All-Time High

Ra’anana, Israel, November 02, 2009 - NICE Systems (NASDAQ: NICE), a leading global provider of advanced 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 fourth quarter and full year ending December 31, 2009.

Fourth Quarter 2009 non-GAAP Highlights Include :

  • Revenues increased 11% from third quarter to $163 million
  • Record operating margins at 18.9%
  • Earnings per fully diluted share of $0.45, up from $0.38 in third quarter
  • Record bookings; book-to-bill substantially greater than 1
  • Strong performance across all businesses

Fiscal Year 2009 non-GAAP Highlights Include :

  • Revenues at $589 million; earnings per fully diluted share of $1.54
  • Record annual operating margins at 17.6%
  • Backlog at all-time high
  • Cash generated from operations $120 million

Zeevi Bregman , President and Chief Executive Officer, NICE Systems commented: “We are pleased with our performance in the fourth quarter and year 2009. The fourth quarter of 2009 set new records on many levels – bookings, backlog, non-GAAP operating profit and margins all reached an all-time high. Our bookings in the fourth quarter were strong across almost all businesses and regions we operate in, with book-to-bill ratio substantially greater than one. NICE achieved these results by solidifying our market leadership position and further increasing our market share. We are also very pleased with the smooth integration of the four acquisitions announced in 2009 and the market traction they are generating. Furthermore, our key growth engines – analytics based business applications, solutions for financial crime prevention and advanced security solutions – all recorded accelerated growth in 2009.“

Mr. Bregman continued, “We are confident that these achievements, coupled with our superior technology, products, and excellent team, will drive NICE’s growth in 2010 and beyond.”

Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2009:

Revenues: Fourth quarter 2009 non-GAAP revenues reached $162.8 million, up 11.5% from $146.1 million in the third quarter 2009 and 0.3% down from $163.3 million in the fourth quarter of 2008. Non-GAAP revenues for the year 2009 were $588.6 million, 6.3% down from in 2008.

Gross Profit: Fourth quarter non-GAAP gross profit increased to $102.9 million, or 63.2% gross margin, up from $91.8 million, or 62.9% in the third quarter 2009 and compared to $106.8 million, or 65.4%, in the fourth quarter of 2008. Non-GAAP gross profit for the year 2009 was $371.1 million, or 63.1% gross margin, compared to $409.4 million, or 65.1% gross margin in 2008.

Operating Income : Fourth quarter non-GAAP operating income increased to $30.7 million, or a record 18.9% operating margin, up from $24.9 million, or 17.0% in the third quarter 2009 and from $30.1 million, or 18.4%, in the fourth quarter of 2008. Non-GAAP operating income for the year 2009 was $103.6 million, or a record of 17.6% operating margin on an annual basis, compared to $109.4 million, or 17.4% operating margin in 2008.

Net Income : Fourth quarter 2009 non-GAAP net income was $28.6 million, up from $24.0 million, in the third quarter 2009 and compared to $30.6 million in the fourth quarter of 2008. Full year 2009 non-GAAP net income was $96. 0 million, or 16.3% of revenues, compared to $103.2 million, or 16.4% in 2008.

Earnings Per Fully Diluted Share: Non-GAAP earnings per fully diluted share in the fourth quarter were $0.45, up from $0.38 in the third quarter 2009 and compared to $0.50 in the fourth quarter of 2008. Non-GAAP earnings per fully diluted share for the full year 2009 were $1.54, compared to $1.67 in 2008.

GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2009:

Revenues: Fourth quarter 2009 revenues increased to $158.8 million, up 9.8% from $144.7 million in the third quarter of 2009 and 2.6% down from $163.1 million in the fourth quarter of 2008. GAAP revenues for the year 2009 were $583.1 million, 6.6% down from $62 4 . 2 million in 2008.

Gross Profit: Fourth quarter gross profit increased to $93.7 million, or 9.7%, up from $85.4 million, in the third quarter 2009 and compared to $101.7 million, or 7.9% down from the fourth quarter of 2008; Gross profit for the year 2009 was $345.9, or 59.3% gross margin, compared to $385.4 million, or 61.7% gross margin in 2008.

Operating Income: Fourth quarter operating income increased to $11.0 million, or 6.9% operating margin, up from $4.8 million, or 3.3% in the third quarter of 2009 and compared to $15.8 million, or 9.7%, in the fourth quarter of 2008; Operating income for the year 2009 was $38.2 million, or 6.6% operating margin on an annual basis, up from $37.4, or 6.0% operating margin in 2008.

Net Income: Fourth quarter 2009 net income increased to $12.7 million, from $7.8 million in the third quarter 2008, and compared to $18.7 million in the fourth quarter 2008. Net income for the year 2009 increased to $42.8 million, up from $39.1 million in 2008.

Earnings Per Fully Diluted Share; Earnings per fully diluted share in the fourth quarter were

$0.20, compared to $0.12 per share, for the third quarter of 2009 and $0.31 in the fourth quarter 2008. Earnings per share on a fully diluted basis, for the year 2009 increased to $0.68 from $0.64 in 2008.

Operating Cash Flow and Cash Balance:
Fourth quarter 2009 operating cash flow was $29.4 million. 2009 operating cash flow was $119.7 million. Total cash and equivalents as of December 31, 2009 were $548.5 million, with no debt.

Guidance for Fiscal Year and First Quarter 2010
The Company introduces for the first time guidance for fiscal year 2010 and first quarter 2010. Non-GAAP revenue for the full year is expected to be between $652 and $670 million, and non-GAAP EPS guidance, on a fully diluted basis, is expected to be in the range of $1.66-$1.74. Non-GAAP revenue for the first quarter 2010 is expected to be between $153 and $160 million, and non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $0.35 – $0.39.

Conference Call
NICE management will host a teleconference, today, February 17, 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 +1-888-407-2553 or +1-888-668-9141, International +972-3-9180610, Israel 03-9180610. 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 +972-3-9255925, Israel 03-9255925.

Non-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 temporary 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.

Corporate Media:
Galit Belkind NICE Systems +1 877 245 7448
 
Investors:
Daphna Golden NICE Systems +1 877 245 7449

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.

Financial Tables

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