NICE Posts Record Quarter with 2005 Third Quarter Earnings Results

RA'ANANA, Israel - NICE Systems, a global provider of advanced solutions that enable organizations to extract Insight from Interactions, today announced record results for the third quarter ending September 30, 2005.

Third quarter 2005 revenue was at a company record high of $82.7 million and represents a 30% increase over $63.5 million in the same quarter of 2004.

Third quarter pro-forma gross margin, which excludes amortization of acquired intangible assets, was 56.6%, an improvement from the 55.0% reported in the third quarter of 2004.

The company reported a third quarter pro forma operating profit of $9.5 million and operating margin of 11.5%, compared with $5.4 million and 8.4% in the third quarter of 2004.

Pro-forma net income was $9.0 million or $0.43 per fully diluted share in the third quarter of 2005, up from $5.4 million or $0.29 per fully diluted share in the same quarter of 2004.

On a GAAP basis: third quarter gross margin was 55.9%, compared with 54.7% in the third quarter of 2004; operating profit was $8.4 million and operating margin was 10.2%, compared with $5.1 million and 8.1%, respectively, in the third quarter of 2004; and third quarter net income was $7.9 million, or $0.38 per fully diluted share, compared with net income of $5.2 million, or $0.28 per share, on a fully diluted basis, in the third quarter of 2004.

Total cash and equivalents at September 30, 2005, were at $184.9 million. DSO (days sales outstanding) for the second quarter stood at 70 days.

Commenting on the quarter, Haim Shani, Chief Executive Officer of NICE, said, "Once again, our company showed an outstanding financial performance. After announcing record results last quarter, we are pleased to conclude Q3 with another exceptional achievement. These results and the other successes of the third quarter validate once again our vision for Insight from Interactions, our ability to deliver on that vision to the enterprise and public and security sectors, and also that the effective integration of the Dictaphone CRS business is delivering on its promise."

"Due to the increasing demand for Insight from Interactions across the board and the strong momentum we have been seeing in both the enterprise and public and security sectors we are providing Q4 guidance for revenues of $87 - $90 million, and Q4 pro-forma EPS in the range of 53 - 57 cents. This implies that we are raising the guidance for year 2005 to revenues at $308 - $311 million, a 22 - 23% increase over 2004; and pro-forma EPS of $1.62 - 1.66, representing a 36-39% increase over 2004."

"Looking forward to 2006 we expect to continue to enjoy the leverage of our business model, while improving margins and driving stronger bottom line growth. We introduce first time 2006 revenue guidance at $355 - $363 million; and first time pro-forma EPS guidance of $2.05 - $2.15, which represents a 24 - 33% increase."

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