NICE Reports Second Quarter 2014 Non-GAAP revenue of $239 Million and Non-GAAP EPS of $0.57

Jul 30, 2014, 05:33 ET from NICE Systems Ltd.

RA'ANANA, Israel, July 30, 2014 /PRNewswire/ -- NICE Systems (NASDAQ: NICE) today announced results for the second quarter ended June 30, 2014.

"I'm pleased to report revenues of $239 million for the second quarter of 2014.  During the quarter, we continued to see strong demand for our analytic applications from both existing and new customers," said Barak Eilam, CEO of NICE. 

Mr. Eilam continued, "We continue to execute on our short and long term initiatives which include: focusing on driving innovation with clear value to our customers, further defining NICE's long-term growth strategy, reviewing our operational model, and committing to flawless execution that will drive growth in an efficient, effective, and profitable manner. As we step into the second half of the year, we believe that our robust pipeline, solid execution, the demand we see for our new products, and our market opportunities position us well for a strong finish to the year."

Dividend Declaration   

The company declared a cash dividend for the second quarter of 2014 of $0.16 per share. The record date will be August 12th, 2014 and the payment date will be August 26th, 2014. Tax will be withheld at a rate of 15%.

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

Revenues: Second quarter 2014 non-GAAP total revenues were $239.3 million, up 6.3% from $225.2 million for the second quarter of 2013.

Gross Profit: Second quarter 2014 non-GAAP gross profit and non-GAAP gross margin were $156.0 million and 65.2%, respectively, compared to $150.6 million and 66.9%, respectively, for the second quarter of 2013.

Operating Income: Second quarter 2014 non-GAAP operating income and non-GAAP operating margin were $41.1 million and 17.2%, respectively, compared to $43.8 million and 19.4%, respectively, for the second quarter of 2013.

Net Income: Second quarter 2014 non-GAAP net income and non-GAAP net margin were $34.7 million and 14.5%, respectively, compared to $37.5 million and 16.7%, respectively, for the second quarter of 2013.

Fully Diluted Earnings per Share: Second quarter 2014 non-GAAP fully diluted earnings per share reached $0.57, compared to $0.61 for the second quarter of 2013.

GAAP Financial Highlights for the Second Quarter Ended June 30:

Revenues: Second quarter 2014 total revenues increased 6.3% to $239.0 million compared to $224.9 million for the second quarter of 2013.

Gross Profit: Second quarter 2014 gross profit and gross margin were to $144.9 million and 60.6%, respectively, compared to $138.9 million and 61.8%, respectively, for the second quarter of 2013.

Operating Income: Second quarter 2014 operating income and operating margin were $12.2 million and 5.1%, respectively, compared to $19.3 million and 8.6%, respectively, for the second quarter of 2013.

Net Income: Second quarter 2014 net income and net margin were $10.4 million and 4.3%, respectively, compared to $17.0 million and 7.5%, respectively, for the second quarter of 2013.

Fully Diluted Earnings per Share: Fully diluted earnings per share for the second quarter of 2014 were $0.17 compared to $0.27 for the second quarter of 2013.

Operating Cash Flow and Cash Balance: Second quarter 2014 operating cash flow was $25.9 million. In the second quarter, $25.1 million was used for share repurchases and $9.6 million for dividends. As of June 30, 2014, total cash and cash equivalents, and short and long term investments were $462 million, with no debt.

Third Quarter and Full Year 2014 Guidance:

Third Quarter 2014: Third quarter 2014 non-GAAP total revenues are expected to be in a range of $240 million to $248 million. Third quarter 2014 non-GAAP fully diluted earnings per share are expected to be in a range of $0.59 to $0.67

Full Year 2014: Full year 2014 non-GAAP total revenues are expected to be in a range of $995 million to $1,025 million. Full year 2014 non-GAAP fully diluted earnings per share are expected to be in a range of $2.68 to $2.80.

Quarterly Results Conference Call

NICE management will host its earnings conference call today, July 30th, 2014 at 8:30 AM EDT, 13:30 GMT, 15:30 Israel, to discuss the results and the company's outlook. To participate in the call, please dial in to the following numbers: United States 1-866-804-8688 or +1-718-354-1175, International +44(0)1296-480-100, United Kingdom 0-800-783-0906, Israel 1-809-242-041. The Passcode is 249 317 29.  Additional access numbers can be found at http://www.btconferencing.com/globalaccess/?bid=54_attended. The call will be webcast live on the Company's website at http://www.nice.com/news-and-events/ir-events. An online replay will also be available approximately two hours following the call. A telephone replay of the call will be available for 2 days after the live broadcast, and may be accessed by dialing: United States 1-877-482-6144, International +44(0)20-7136-9233, United Kingdom 0-800-032-9687. The Passcode for the replay is 45565530.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, restructuring expenses, share-based compensation, certain business combination accounting entries, and tax adjustments re Non-GAAP adjustments. 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. The intangible assets created in the acquisitions of Merced are preliminary and subject to further review and completion of valuation analyses.

About NICE NICE Systems (NASDAQ: NICE) is the worldwide leading provider of software solutions that enable organizations to take the next best action in order to improve customer experience and business results, ensure compliance, fight financial crime, and safeguard people and assets. NICE's solutions empower organizations to capture, analyze, and apply, in real time, insights from both structured and unstructured Big Data. This data comes from multiple sources, including phone calls, mobile apps, emails, chat, social media, video, and transactions. NICE solutions are used by over 25,000 organizations in more than 150 countries, 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

Investors Marty Cohen, +1 212 574 3635, ir@nice.com, ET Yisca Erez, +972 9 775-3798, ir@nice.com, CET

Media Contact Erik Snider, +1 877 245 7448, erik.snider@nice.com                                                

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 Eilam, 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.

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars in thousands (except per share amounts)

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Unaudited

Unaudited

Unaudited

Unaudited

Revenue:

Product 

$   85,970

$    83,965

$ 164,940

$174,768

Services

153,038

140,909

302,641

274,434

Total revenue

239,008

224,874

467,581

449,202

Cost of revenue:

Product

30,109

27,182

58,226

56,504

Services

63,957

58,828

125,506

115,348

Total cost of revenue

94,066

86,010

183,732

171,852

Gross profit

144,942

138,864

283,849

277,350

Operating Expenses:

Research and development, net

37,035

31,438

73,563

63,061

Selling and marketing

64,209

59,871

124,146

118,502

General and administrative

23,041

20,101

41,943

41,601

Amortization of acquired intangible assets

5,400

8,121

11,840

16,275

Restructuring expenses

3,060

-

3,376

-

Total operating expenses

132,745

119,531

254,868

239,439

Operating income

12,197

19,333

28,981

37,911

Finance and other income, net

474

1,013

1,302

2,204

Income before taxes on income 

12,671

20,346

30,283

40,115

Taxes on income

2,279

3,380

4,175

5,348

Net income

$   10,392

$    16,966

$   26,108

$  34,767

Basic earnings per share

$       0.17

$        0.28

$      0.44

$     0.58

Diluted earnings per share

$       0.17

$        0.27

$      0.43

$     0.56

Weighted average number of shares

outstanding used to compute:

Basic earnings per share

59,676

60,382

59,786

60,371

Diluted earnings per share

61,210

61,784

61,284

61,792

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

U.S. dollars in thousands (except per share amounts)

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

GAAP revenues

$               239,008

$              224,874

$      467,581

$      449,202

Valuation adjustment on acquired deferred product revenue

-

30

-

107

Valuation adjustment on acquired deferred service revenue

258

271

645

594

Non-GAAP revenues

$               239,266

$              225,175

$      468,226

$      449,903

GAAP cost of  revenue

$                 94,066

$                86,010

$      183,732

$      171,852

Amortization of acquired intangible assets on cost of product

(8,858)

(9,387)

(17,722)

(18,806)

Amortization of acquired intangible assets on cost of services

-

(977)

(327)

(1,970)

Valuation adjustment on acquired deferred cost of services

-

-

-

9

Cost of product revenue adjustment (1,2)

(4)

(107)

(197)

(245)

Cost of services revenue adjustment (1,2,3)

(1,911)

(978)

(3,042)

(1,946)

Non-GAAP cost of  revenue

$                 83,293

$                74,561

$      162,444

$      148,894

GAAP gross profit

$               144,942

$              138,864

$      283,849

$      277,350

Gross profit adjustments

11,031

11,750

21,933

23,659

Non-GAAP gross profit

$               155,973

$              150,614

$      305,782

$      301,009

GAAP operating expenses

$               132,745

$              119,531

$      254,868

$      239,439

Research and development (1,2,3)

(1,254)

(722)

(1,928)

(1,080)

Sales and marketing (1,2,3)

(3,492)

(2,022)

(7,243)

(4,287)

General and administrative (1,2,3)

(4,488)

(1,829)

(7,209)

(4,074)

Amortization of acquired intangible assets

(5,400)

(8,121)

(11,839)

(16,275)

Acquisition related expenses (4)

(220)

-

(220)

-

Restructuring expenses

(3,060)

-

(3,376)

-

Non-GAAP operating expenses

$               114,831

$              106,837

$      223,053

$      213,723

GAAP finance & other income, net

$                     474

$                  1,013

$          1,302

$          2,204

Amortization of an investment in affiliate

181

-

181

-

Non-GAAP finance & other income, net

$                     655

$                  1,013

$          1,483

$          2,204

GAAP taxes on income

$                  2,279

$                  3,380

$          4,175

$          5,348

Tax adjustments re non-GAAP adjustments

4,823

3,882

10,562

9,064

Non-GAAP taxes on income

$                  7,102

$                  7,262

$        14,737

$        14,412

GAAP net income

$                 10,392

$                16,966

$        26,108

$        34,767

Valuation adjustment on acquired deferred revenue

258

301

645

701

Valuation adjustment on acquired deferred cost of services

-

-

-

(9)

Amortization of acquired intangible assets

14,258

18,485

29,888

37,051

Share-based compensation (1)

7,218

5,407

14,908

11,242

Re-organization expenses (2)

3,931

233

4,711

360

Acquisition related compensation expense (3)

-

18

-

30

Acquisition related expenses (4)

220

-

220

-

Restructuring expenses

3,060

-

3,376

-

Amortization of an investment in affiliate

181

-

181

-

Tax adjustments re non-GAAP adjustments

(4,823)

(3,882)

(10,562)

(9,064)

Non-GAAP net income

$                 34,695

$                37,528

$        69,475

$        75,078

GAAP diluted earnings per share 

$                    0.17

$                    0.27

$            0.43

$            0.56

Non-GAAP diluted earnings per share

$                    0.57

$                    0.61

$            1.13

$            1.22

Shares used in computing GAAP diluted earnings per share

61,210

61,784

61,284

61,792

Shares used in computing Non-GAAP diluted earnings per share

61,210

61,784

61,284

61,792

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)

U.S. dollars in thousands

(1)

Share-based Compensation

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Cost of product revenue

$                        (4)

$                    (102)

$            (197)

$            (240)

Cost of service revenue

(1,331)

(855)

(2,406)

(1,823)

Research and development

(1,196)

(707)

(1,870)

(1,051)

Sales and marketing

(3,446)

(1,947)

(6,624)

(4,161)

General and administrative

(1,241)

(1,796)

(3,811)

(3,967)

$                 (7,218)

$                 (5,407)

$       (14,908)

$       (11,242)

(2)

Re-organization expenses

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Cost of product revenue

$                          -

$                        (5)

$                  -

$                (5)

Cost of service revenue

(580)

$                    (123)

(636)

(123)

Research and development

(58)

-

(58)

-

Sales and marketing

(46)

(72)

(619)

(125)

General and administrative

(3,247)

(33)

(3,398)

(107)

$                 (3,931)

$                    (233)

$         (4,711)

$            (360)

(3)

Acquisition related compensation expense

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Research and development

$                         -

$                     (15)

$               -

$             (29)

Sales and marketing

-

(3)

-

(1)

$                         -

$                     (18)

$               -

$             (30)

(4)

Acquisition related expenses

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Sales and marketing

$                        (9)

$                         -

$               (9)

$                 -

General and administrative

(211)

-

(211)

-

$                    (220)

$                         -

$            (220)

$                 -

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands 

June 30,

December 31,

2014

2013

Unaudited

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents 

$         125,631

$      119,545

Short-term investments

86,565

82,826

Trade receivables

174,339

189,323

Other receivables and prepaid expenses

42,636

39,849

Inventories

15,396

13,448

Deferred tax assets

15,807

15,625

Total current assets

460,374

460,616

LONG-TERM ASSETS:

Long-term investments

249,788

240,782

Other long-term assets

39,898

33,253

Property and equipment, net

43,886

44,343

Other intangible assets, net

141,628

170,125

Goodwill

711,429

707,939

Total long-term assets

1,186,629

1,196,442

TOTAL ASSETS

$      1,647,003

$   1,657,058

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables

$           23,704

$        25,962

Deferred revenues and advances from customers

178,562

144,536

Accrued expenses and other liabilities

189,839

213,693

Total current liabilities

392,105

384,191

LONG-TERM LIABILITIES:

Deferred tax liabilities

30,105

37,841

Other long-term liabilities

32,356

30,230

Total long-term liabilities

62,461

68,071

SHAREHOLDERS' EQUITY

1,192,437

1,204,796

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$      1,647,003

$   1,657,058

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

Quarter ended

Year to date

June 30,

June 30,

2014

2013

2014

2013

Unaudited

Unaudited

Unaudited

Unaudited

Operating Activities

Net income

$   10,392

$   16,966

$   26,108

$  34,767

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Depreciation and amortization

19,395

23,264

40,080

46,369

Stock based compensation

7,216

5,407

14,904

11,242

Excess tax benefit from share-based payment arrangements

(163)

(45)

(288)

(10)

Amortization of premium and discount and accrued interest on marketable securities*

519

2,587

1,017

2,984

Deferred taxes, net

(4,824)

(3,889)

(10,562)

(9,241)

Changes in operating assets and liabilities:

Trade Receivables

(7,120)

(1,903)

16,085

(5)

Other receivables and prepaid expenses

3,185

(1,887)

(423)

(5,353)

Inventories

(1,231)

(2,332)

(1,959)

(1,834)

Trade payables

(11)

5,437

(2,247)

4,942

Accrued expenses and other current liabilities

495

(4,630)

(30,371)

(18,735)

Deferred revenue

(1,642)

(3,510)

32,635

28,825

Other*

(264)

(319)

(632)

(592)

  Net cash provided by operating activities

25,947

35,146

84,347

93,359

Investing Activities

Purchase of property and equipment

(4,718)

(4,189)

(9,055)

(8,326)

Proceeds from sale of property and equipment

4

-

20

4

Purchase of Investments

(72,309)

(96,157)

(85,583)

(174,881)

Proceeds from Investments

58,897

82,561

73,488

128,074

Capitalization of software development costs

(234)

(273)

(476)

(579)

Payments for other investments

(14)

-

(901)

-

  Net cash used in investing activities

(18,374)

(18,058)

(22,507)

(55,708)

Financing Activities

Proceeds from issuance of shares upon exercise of share options and ESPP

3,082

6,381

11,830

15,020

Purchase of treasury shares

(22,699)

(15,336)

(49,179)

(22,992)

Dividends paid

(9,558)

(9,656)

(19,264)

(9,656)

Excess tax benefit from share-based payment arrangements

163

45

288

10

  Net cash used in financing activities

(29,012)

(18,566)

(56,325)

(17,618)

Effect of exchange rates on cash and cash equivalents

333

(935)

571

(879)

Net change in cash and cash equivalents

(21,106)

(2,413)

6,086

19,154

Cash and cash equivalents, beginning of period

146,737

120,163

119,545

98,596

Cash and cash equivalents, end of period

$ 125,631

$ 117,750

$ 125,631

$117,750

*Certain comparative figures have been reclassified to conform to the current year presentation.

 

 

SOURCE NICE Systems Ltd.



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