NICE Reports Second Quarter 2011 Results; Record Revenues and Improved Profitability
RA'ANANA, Israel, July 27, 2011 /PRNewswire/ --
NICE Systems (NASDAQ: NICE), today announced results for the second quarter ending June 30, 2011.
Second Quarter 2011 non-GAAP Highlights Include:
- Record revenues at $197 million,16% up from the second quarter 2010
- Operating income increased 21% year-over-year; operating margins up at 18.3%
- Net income up 21.8% year-over-year, earnings per fully diluted share up 9 cents to $0.50
- Strong cash flow from operations of $28 million
- Book-to-bill ratio above 1
- Company raises its annual guidance
"We are pleased with our strong performance in the second quarter of 2011. NICE reached a new record high in revenues, demonstrated continued profit expansion, in line with the Company's profitability goals, and once again generated strong cash from operations. We continued to acquire new customers, expand our business with existing ones, grow our bookings and secure a solid backlog. During the quarter, we continued on the path of innovation and enhancement of our product portfolio," said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.
"Furthermore, we continue to benefit from the trends that fuel NICE's growth, including: the increased number of interactions between organizations and their customers through various communication channels, persistent security threats to people and assets, continuous financial crime attempts, as well as a growing focus on compliance with regulations. We believe that NICE is at the pole position to take advantage of these trends," Mr. Bregman concluded.
Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2011:
Revenues: Second quarter 2011 non-GAAP revenues reached a record $196.7 million, up 16.0% from $169.5 million in the second quarter of 2010.
Gross Profit: Second quarter 2011 non-GAAP gross profit and margin increased to $127.7 million and 64.9%, respectively, from $108.3 million and 63.9% in the second quarter of 2010.
Operating Income: Second quarter 2011 non-GAAP operating income and margin reached $36.1 million and 18.3%, respectively, increasing from $29.8 million and 17.6% in the second quarter of 2010.
Net Income: Second quarter 2011 non-GAAP net income and margin increased to $32.3 million and 16.4%, respectively, from $26.5 million and 15.6% in the second quarter of 2010.
Earnings per Fully Diluted Share: Second quarter 2011 non-GAAP earnings per fully diluted share increased to $0.50 up from $0.41 in the second quarter of 2010.
GAAP Financial Highlights for the Second Quarter Ended June 30, 2011:
Revenues: Second quarter 2011 revenues reached $195.5 million, up 16.0% from $168.5 million in the second quarter of 2010.
Gross Profit: Second quarter 2011 gross profit and margin increased to $118.7 million and 60.7%, respectively, up from $101.3 million and 60.1% in the second quarter of 2010.
Operating Income: Second quarter 2011 operating income increased to $15.1 million, up from $13.2 million in the second quarter of 2010. Operating margin in the second quarter of 2011 was 7.7%, compared with 7.8% in the second quarter of 2010.
Net Income: Second quarter 2011 net income and margin increased to $15.5 million and 8.0%, respectively, from $12.7 million and 7.5% in the second quarter of 2010.
Earnings per Fully Diluted Share: Earnings per fully diluted share in the second quarter 2011 increased to $0.24, from $0.20 in the second quarter of 2010.
Operating Cash Flow and Cash Balance: Second quarter 2011 operating cash flow was $27.7 million. As of June 30, 2011, total cash and equivalents were $658.5 million, with no debt. This follows share repurchases at a total amount of $28.8 million during the quarter.
Updated Fiscal Year and Introduction of Third Quarter Guidance:
Fiscal Year 2011: expected full year non-GAAP revenue is raised to the range of $785 and $805 million. Expected full year non-GAAP earnings per share, on a fully diluted basis, are raised to the range of $2.00 and $2.08.
Third Quarter 2011: non-GAAP revenue for the third quarter is expected to be between $197 and $203 million. Third quarter non-GAAP earnings per share, on a fully diluted basis, are expected to be in the range of $0.50 and $0.54.
Quarterly Results Conference Call
NICE management will host its earnings conference call at 8:30 AM EDT, 1:30 PM GMT, 3:30 PM Israel, to discuss the results and the company's outlook. To participate in the call, please dial the following dial-in numbers: United States 1-866-229-7198 or 1-888-668-9141, International +972-3- 9180609, United Kingdom 0-800-917-5108 Israel 03-9180609. The 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 1-888-782-4291, International +972-3-9255900, United Kingdom 0-800-917-4256 Israel 03-9255900.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share-based compensation 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 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. http://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.
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,
___________________ ___________________
2011 2010 2011 2010
Unaudited Unaudited Unaudited Unaudited
_________ _________ _________ _________
Revenue:
Product $ 87,852 $ 79,058 $169,154 $154,139
Services 107,599 89,471 211,594 174,311
_________ _________ _________ _________
Total revenue 195,451 168,529 380,748 328,450
Cost of revenue:
Product 28,732 27,500 55,735 53,541
Services 48,068 39,707 92,266 78,313
_________ _________ _________ _________
Total cost of revenue 76,800 67,207 148,001 131,854
_________ _________ _________ _________
Gross profit 118,651 101,322 232,747 196,596
Operating Expenses:
Research and development, net 26,853 23,239 52,754 45,466
Selling and marketing 48,608 41,944 98,979 84,535
General and administrative 22,013 18,200 46,090 37,852
Amortization of acquired
intangible assets 6,047 4,760 11,444 9,491
________ _________ _________ _________
Total operating expenses 103,521 88,143 209,267 177,344
________ _________ _________ _________
Operating income 15,130 13,179 23,480 19,252
Finance and other income, net 2,560 1,848 5,379 3,676
________ _________ _________ _________
Income before taxes on income 17,690 15,027 28,859 22,928
Taxes on income 2,141 2,318 5,163 4,141
________ _________ _________ _________
Net income $ 15,549 $ 12,709 $ 23,696 $ 18,787
======== ========= ========= =========
Basic earnings per share $ 0.24 $ 0.20 $ 0.37 $ 0.30
======== ========= ========= =========
Diluted earnings per share $ 0.24 $ 0.20 $ 0.36 $ 0.29
======== ========= ========= =========
Weighted average number of shares
outstanding used to compute:
Basic earnings per share 63,596 62,618 63,579 62,362
Diluted earnings per share 65,052 64,377 64,994 64,154
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,
___________________ ____________________
2011 2010 2011 2010
_________ _________ __________ _________
GAAP revenues $ 195,451 $ 168,529 $ 380,748 $ 328,450
Valuation adjustment on
acquired deferred product
revenue 897 450 2,403 941
Valuation adjustment on
acquired deferred
service revenue 310 565 503 2,752
_________ _________ __________ _________
Non-GAAP revenues $ 196,658 $ 169,544 $ 383,654 $ 332,143
========= ========= ========== =========
GAAP cost of revenue $ 76,800 $ 67,207 $ 148,001 $ 131,854
Amortization of acquired
intangible assets on cost
of product (7,279) (5,637) (14,007) (11,080)
Valuation adjustment on
acquired deferred cost
of services 145 216 333 435
Cost of product revenue
adjustment (1,2,4) (74) (100) (228) # (202)
Cost of services revenue
adjustment (1,2,3) (641) (397) (1,392) (1,016)
_________ __________ _________ __________
Non-GAAP cost of revenue $ 68,951 $ 61,289 $ 132,707 $ 119,991
========= ========== ========= ==========
GAAP gross profit $ 118,651 $ 101,322 $ 232,747 $ 196,596
Gross profit adjustments 9,056 6,933 18,200 15,556
_________ __________ _________ __________
Non-GAAP gross profit $ 127,707 $ 108,255 $ 250,947 $ 212,152
========= ========== ========= ==========
GAAP operating expenses $ 103,521 $ 88,143 $ 209,267 $ 177,344
Research and development (1,2,3) (1,064) (1,323) (2,281) (2,742)
Sales and marketing (1,2,3) (2,070) (1,073) (4,287) (2,823)
General and administrative (1,2,3) (2,694) (2,429) (5,077) (6,782)
Amortization of acquired
intangible assets (6,047) (4,760) (11,444) (9,491)
Acquisition related expenses (4) - (81) (5,406) (619)
_________ _________ _________ __________
Non-GAAP operating expenses $ 91,646 $ 78,477 $ 180,772 $ 154,887
========= ========= ========= ==========
GAAP taxes on Income $ 2,141 $ 2,318 $ 5,163 $ 4,141
Tax adjustments re
non-gaap adjustments 4,177 2,789 7,821 5,690
_________ _________ _________ __________
Non-GAAP taxes on income $ 6,318 $ 5,107 $ 12,984 $ 9,831
========= ========= ========= ==========
GAAP net income $ 15,549 $ 12,709 $ 23,696 $ 18,787
Valuation adjustment on
acquired deferred revenue 1,207 1,015 2,906 3,693
Valuation adjustment on acquired
deferred cost of services (145) (216) (333) (435)
Amortization of acquired
intangible assets 13,326 10,397 25,451 20,571
Share-based compensation (1) 5,335 4,553 10,988 10,258
Re-organization expenses (2) 709 458 910 2,971
Acquisition related compensation
expense (3) 499 311 1,361 622
Acquisition related expenses (4) - 81 5,412 619
Tax adjustments re non-gaap
adjustments (4,177) (2,789) (7,821) (5,690)
_________ _________ __________ _________
Non-GAAP net income $ 32,303 $ 26,519 $ 62,570 $ 51,396
========= ========= ========== =========
GAAP diluted earnings per share $ 0.24 $ 0.20 $ 0.36 $ 0.29
========= ========= ========== =========
Non-GAAP diluted earnings per share$ 0.50 $ 0.41 $ 0.96 $ 0.80
========= ========= ========== =========
Shares used in computing US GAAP
diluted earnings per share 65,052 64,377 64,994 64,154
Shares used in computing Non-
GAAP diluted earnings per share 65,052 64,377 64,994 64,154
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,
_______________________ ____________________
2011 2010 2011 2010
___________ ___________ __________ _________
Cost of product revenue $ (74) $ (100) $ (162) $ (202)
Cost of service revenue (619) (397) (1,292) (1,016)
Research and development (734) (1,012) (1,445) (2,120)
Sales and marketing (1,997) (1,073) (4,007) (2,316)
General and administrative (1,911) (1,971) (4,082) (4,604)
___________ ___________ __________ _________
$ (5,335) $ (4,553) $ (10,988)$ (10,258)
=========== =========== ========== =========
(2) Re-organization expenses
Quarter ended Year to date
June 30, June 30,
______________________ ____________________
2011 2010 2011 2010
__________ ___________ __________ _________
Cost of product revenue $ - $ - $ (60) $ -
Cost of service revenue - - - (286)
Research and development - - (141) -
Sales and marketing - - - (507)
General and administrative (709) (458) (709) (2,178)
__________ ___________ __________ _________
$ (709) $ (458) $ (910) $ (2,971)
========== =========== ========== =========
(3) Acquisition related compensation expense
Quarter ended Year to date
June 30, June 30,
______________________ ____________________
2011 2010 2011 2010
__________ ___________ __________ _________
Cost of service revenue $ (22) $ - $ (100) $ -
Research and development (330) (311) (695) (622)
Sales and marketing (73) - (280) -
General and administrative (74) - (286) -
__________ ___________ __________ _________
$ (499) $ (311) $ (1,361) $ (622)
========== =========== ========== =========
(4) Acquisition related expenses
Quarter ended Year to date
June 30, June 30,
______________________ ____________________
2011 2010 2011 2010
__________ ___________ __________ _________
Cost of product revenue $ - $ - $ (6) $ -
Research and development - (1) (32) (1)
Sales and marketing - - (2,207) -
General and administrative - (80) (3,167) (618)
__________ ___________ __________ _________
$ - $ (81) $ (5,412) $ (619)
========== =========== ========== =========
NICE SYSTEMS LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30, December 31,
2011 2010
__________ ___________
Unaudited Unaudited
__________ ___________
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 142,606 $ 109,526
Short-term investments 213,997 242,593
Trade receivables 112,783 99,257
Other receivables and prepaid expenses 38,212 31,924
Inventories 15,049 10,861
Deferred tax assets 6,850 6,798
__________ ___________
Total current assets 529,497 500,959
__________ ___________
LONG-TERM ASSETS:
Marketable securities 301,908 311,081
Other long-term assets 34,154 31,118
Property and equipment, net 25,025 22,014
Other intangible assets, net 140,947 141,632
Goodwill 573,260 527,614
___________ ___________
Total long-term assets 1,075,294 1,033,459
___________ ___________
TOTAL ASSETS $ 1,604,791 $ 1,534,418
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 18,548 $ 20,019
Accrued expenses and other liabilities 347,402 307,031
__________ ___________
Total current liabilities 365,950 327,050
__________ ___________
LONG-TERM LIABILITIES:
Deferred tax liabilities 19,971 19,705
Other long-term liabilities 29,086 26,903
__________ ___________
Total long-term liabilities 49,057 46,608
__________ ___________
SHAREHOLDERS' EQUITY 1,189,784 1,160,760
__________ ___________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,604,791 $ 1,534,418
========== ===========
NICE SYSTEMS LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter ended Year to date
June 30, June 30,
_______________________________________
2011 2010 2011 2010
Unaudited Unaudited Unaudited Unaudited
_________ _________ _________ _________
Operating Activities
Net income $ 15,549 $ 12,709 $ 23,696 $ 18,787
Adjustments to reconcile net
income to net cash from operations:
Depreciation, amortization and other 17,201 13,841 32,828 27,475
Stock based compensation 5,335 4,553 10,988 10,258
Excess tax benefit from share-based
payment arrangements (85) (8) (469) (195)
Net recognized losses on investments
and derivatives 1,048 1,555 1,287 1,020
Deferred taxes, net (4,177) (2,798) (6,925) (5,465)
Changes in operating assets
and liabilities
Trade Receivables (2,241) (4,821) (7,885) 11,387
Other receivables and prepaid
expenses 3,946 (7,601) (715) (9,031)
Inventories (1,924) 1,463 (2,626) 2,004
Trade payables 449 1,805 (2,999) (8,595)
Accrued expenses and other
current liabilites (8,274) 18,179 35,345 21,950
Other long-term liabilities 825 (78) 614 (438)
________ ________ ________ _________
Net cash provided by operating
activities 27,652 38,799 83,139 69,157
________ ________ ________ _________
Investing Activities
Purchase of property and equipment (4,304) (2,494) (7,492) (5,041)
Proceeds from sale of property
and equipment 19 10 19 8
Purchase of investments (68,535) (80,431) (119,243)(207,307)
Proceeds from investments 97,081 31,341 156,331 93,167
Capitalization of software
development costs (312) (432) (539) (738)
Payments for acquisitions,
net of cash acquired (49) (5,001) (64,947) (26,066)
________ ________ ________ _________
Net cash provided by (used in)
investing activities 23,900 (57,007) (35,871) (145,977)
________ ________ ________ _________
Financing Activities
Proceeds from issuance of shares
upon exercise of share options
and ESPP 8,105 2,541 14,981 11,673
Purchase of treasury shares (28,807) - (30,972) -
Excess tax benefit from share-based
payment arrangements 85 8 469 195
________ ________ ________ _________
Net cash provided by (used in)
financing activities (20,617) 2,549 (15,522) 11,868
________ ________ ________ _________
Effect of exchange rates on cash
and cash equivalents 934 (536) 1,334 (762)
________ ________ ________ _________
Net change in cash and
cash equivalents 31,869 (16,195) 33,080 (65,714)
Cash and cash equivalents,
beginning of period 110,737 165,292 109,526 214,811
_________ ________ ________ _________
Cash and cash equivalents,
end of period $ 142,606 $ 149,097 $142,606 $149,097
========= ======== ======== =========
Acquisition related expenses
Corporate Media
Galit Belkind
NICE Systems
[email protected]
+1-877-245-7448
Investors
Daphna Golden
NICE Systems
[email protected]
+1-877-245-7449
SOURCE Nice Systems Ltd.
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