NICE Systems Delivers Strong Q1 Results

Ra’anana, Israel - 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 first quarter of 2006.

Highlights of the first quarter 2006 include:

- Growing number of repeat orders for NICE Performâ„¢, crossing 10% mark of enterprise business - Record revenues and bookings in Public Safety and Security business - Strong results from video security business include contribution from completion of FAST integration

First quarter 2006 revenue was $87.9 million, representing a 33.0% increase from $66.1 million in the first quarter of 2005.

Pro-forma gross margin in the first quarter was $48.9 million, or 55.7%, up from $36.7 million, or 55.5% in the first quarter 2005.

The company also reported first quarter 2006 pro-forma operating profit of $9.3 million and operating margin of 10.5%, compared with $5.6 million and 8.5%, respectively, in the first quarter of 2005.

First quarter 2006 pro-forma net income was $10.8 million, up 80.9% from $6.0 million in the first quarter of 2005. Pro-forma earnings per fully diluted share were at $0.42 up from $0.30 in the same quarter of 2005.

On a GAAP basis: first quarter 2006 gross margin was 54.3%, compared with 55.3% in the first quarter of 2005; operating profit was $5.3 million and operating margin was 6.1%, compared with $5.4 million and 8.2%, respectively, in the first quarter of 2005; and first quarter 2006 net income was $7.1 million, or $0.28 per fully diluted share, compared with net income of $5.8 million, or $0.29 per share, on a fully diluted basis, for the first quarter of 2005.

Total cash and equivalents at March 31, 2006 rose to $420.1 million compared with $411.6 million at December 31, 2005. The net increase of $8.5 million after payment of approximately $21 million in cash for the FAST acquisition.

Commenting on the results, Haim Shani, Chief Executive Officer of NICE said, "The first quarter of 2006 was a very strong quarter for NICE, following another record year in 2005. With the momentum of NICE Perform, our next generation security solutions, and our leadership of the burgeoning market for Contact Center Business Management and Analytics with the announced acquisitions of IEX and Performix, this has been a very exciting year so far.”

Mr. Shani continued, “We are proud to head these new paradigm shifts in the way organizations make critical business decisions and improve performance, whether their operation is a contact center, a commercial enterprise, or is focused on public safety and security.”

Ran Oz, NICE’s Corporate Vice President and Chief Financial Officer, stated, “Once again we have demonstrated the leverage of our business model, translating top line growth into much greater bottom line growth.“

Mr. Oz continued, “As we remain confident about the increasing demand for our Insight from Interactions solutions and given our strong visibility, we provide first time Q2 2006 guidance as follows: we expect revenue to be between $89 and $92 million, and pro-forma EPS per fully diluted share in the range of $0.44 – $0.48. We reiterate recently announced full year guidance for 2006, with revenues at $395 - $405 million, and pro-forma EPS at a range of $2.00 – $2.12 per fully diluted share.”