NICE Reports Record Fourth Quarter and Full Year 2010 Results; Quarterly Non-GAAP Revenues of $187 million and EPS of $0.51; Announces Share Repurchase Plan
RA'ANANA, Israel, February 15, 2011 /PRNewswire-FirstCall/ -- NICE Systems (NASDAQ: NICE), the worldwide leader of intent-based solutions that extract insight to impact business performance, reduce financial risk and ensure safety and security, today announced results for the fourth quarter and full year ending December 31, 2010.
Fourth Quarter 2010 non-GAAP Highlights Include: - Revenues at a new all time high of $187 million, up from $163 million in the fourth quarter of 2009 - Earnings per fully diluted share reached $0.51, up from $0.45 last year - Strong cash flow from operations of $44 million - Record bookings resulting in book to bill substantially greater than 1 Full Year 2010 non-GAAP Highlights Include: - Record revenues at $695 million, up from $589 last year - Earnings per fully diluted share of $1.75, up from $1.54 in 2009 - Backlog at year-end reaches an all-time high - Record cash generated from operations of $145 million
"The fourth quarter of 2010 was another strong quarter for NICE, in which bookings, backlog, revenues, gross profit, operating income, net income as well as earnings per fully diluted share, all on non-GAAP basis, reached all-time highs. During 2010, we expanded our offering with numerous new solutions across our businesses, achieved double digit growth worldwide and continued to enjoy healthy demand for our solutions. All of these developments and trends were reflected in record full-year revenues and profits as well as in robust cash generation," said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.
"We expect 2011 to be another year of growth. We are entering the year with strong backlog and pipeline, a comprehensive product portfolio and a business that is driven by multiple growth engines. We expect to continue to focus on innovating additional advanced applications. Furthermore, we intend to grow our business both organically and inorganically, as reflected in the CyberTech acquisition we announced today," Mr. Bregman concluded.
Share Repurchase Program
The Company also announced that its Board of Directors has authorized a program to repurchase up to $100 million of its issued and outstanding ordinary shares and ADRs. Repurchases may be made from time to time in the open market or in privately negotiated transactions and will be in accordance with applicable securities laws and regulations. The timing and amount of the repurchase transactions will be determined by management and may depend on a variety of factors, including market conditions, alternative investment opportunities and other considerations. The program does not obligate the Company to acquire any particular amount of ordinary shares and ADRs and the program may be modified or discontinued at any time without prior notice.
Zeevi Bregman, President and Chief Executive Officer, NICE Systems commented, "The share repurchase plan reflects our confidence in the future of our business and the sustainability of its strong cash generation. It further reflects a clear focus on shareholder value. We intend to fund the plan with our cash balance, while maintaining flexibility to pursue investments to support the company's growth, both organically and inorganically. We will continue to use our strong balance sheet for strategic acquisitions that advance our product portfolio, market position, and long-term profitable growth".
Non-GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2010:
Revenues: Fourth quarter 2010 non-GAAP revenues at a record of $186.9 million, up 14.8% from $162.8 million in the fourth quarter of 2009. Non-GAAP revenues for the year 2010 increased 18.1% to $695.3 million, from $588.6 million in 2009.
Gross Profit: Fourth quarter 2010 non-GAAP gross profit and margin increased, reaching a record $123.5 and 66.1%, respectively, from $102.9 million and 63.2% in the fourth quarter of 2009. Full year 2010 non-GAAP profit and margin increased, reaching $451.9 and 65%, respectively, from $371.1 million and 63.1% the previous year.
Operating Income: Fourth quarter 2010 non-GAAP operating income increased to $34.8 million, up from $30.7 million in the fourth quarter of 2009. Non-GAAP operating margin in the fourth quarter 2010 was 18.6%, compared with 18.9% in the previous year. Full year 2010 non-GAAP operating income and margin increased to $123.4 million and 17.8%, respectively, from $103.6 million and 17.6% in 2009.
Net Income: Fourth quarter 2010 non-GAAP net income increased to $32.7 million from $28.6 million in the fourth quarter of 2009. Full year 2010 non-GAAP net income increased to $112.1 million from $96.0 million in the previous year.
Earnings per Fully Diluted Share: Fourth quarter 2010 non-GAAP earnings per fully diluted share increased to a record $0.51 up from $0.45 in the fourth quarter of 2009. Full year 2010 non-GAAP earnings per fully diluted share increased to $1.75, up from $1.54 in 2009.
GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2010:
Revenues: Fourth quarter 2010 revenues increased 17.2% to a record $186.1 million from $158.8 million in the fourth quarter of 2009. Full year 2010 revenues increased 18.2% to a record $689.5 million from $583.1 million in 2009.
Gross Profit: Fourth quarter 2010 gross profit and margin increased to $115.9 million and 62.3%, respectively, up from $93.7 million and 59% in the fourth quarter of 2009. Full year 2010 gross profit and margin increased to $420.4 million and 61.0%, respectively, up from $345.9 million and 59.3% in the previous year.
Operating Income: Fourth quarter 2010 operating income increased to $17.2 million, up from $11.0 million in the fourth quarter of 2009. Full year 2010 operating income increased to $49.1 million, compared with $38.2 million in 2009.
Net Income: Fourth quarter 2010 net income increased to $17.4 million, compared with $12.7 million in the fourth quarter of 2009. Full year 2010 net income increased to $48.7 million, compared with $42.8 million in the previous year.
Earnings per Fully Diluted Share: Earnings per fully diluted share in the fourth quarter 2010 increased to $0.27, from $0.20 in the fourth quarter of 2009. Earnings per fully diluted share for the full year 2010 increased to $0.76, from $0.68 in the previous year.
Operating Cash Flow and Cash Balance: Fourth quarter 2010 operating cash flow was $44.1 million. As of December 31, 2010, total cash and equivalents were $663.2 million, with no debt.
Fiscal Year and First Quarter 2011 Guidance:
Guidance for the fiscal year and first quarter is introduced below and includes the impact of the CyberTech acquisition, announced earlier today, assuming closure in March 2011. The acquisition is expected to add approximately $25 million to NICE's 2011 non-GAAP revenues and be accretive to its non-GAAP fully diluted EPS.
Fiscal Year 2011: Full year non-GAAP revenue is expected to be between $775 and $800 million. Full year non-GAAP earnings per share, on a fully diluted basis, are expected to be in the range of $1.96 and $2.06.
First Quarter 2011: Non-GAAP revenue for the first quarter is expected to be between $179 and $183 million. First quarter non-GAAP earnings per share, on a fully diluted basis, are expected to be in the range of $0.43 and $0.47.
Quarterly Results Conference Call
NICE management will host a teleconference, today, February 15, 2011 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 1-866-229-7198or 1-888-668-9141, International +972-3- 9180609, Israel 03-9180609. This 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 1-888-326-9310, International +972-3-9255930, Israel 03-9255930.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, realized gain on previously impaired 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
NICE Systems 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 December 31, December 31, ------------------ ----------------- 2009 2010 2009 2010 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Revenue: Product $ 78,274 $ 87,734 $281,783 $325,429 Services 80,547 98,411 301,332 364,022 --------- -------- --------- --------- Total revenue 158,821 186,145 583,115 689,451 Cost of revenue: Product 24,707 27,587 88,030 107,190 Services 40,428 42,628 149,175 161,885 --------- -------- --------- --------- Total cost of revenue 65,135 70,215 237,205 269,075 --------- -------- --------- --------- Gross profit 93,686 115,930 345,910 420,376 Operating Expenses: Research and development, net 21,917 26,136 77,382 97,083 Selling and marketing 38,532 49,822 141,526 178,407 General and administrative 17,541 17,775 72,791 76,345 Amortization of acquired intangible assets 4,683 5,030 16,012 19,489 -------- -------- -------- -------- Total operating expenses 82,673 98,763 307,711 371,324 Operating income 11,013 17,167 38,199 49,052 Financial income, net 1,472 1,953 7,712 9,135 Other expense, net (15) (26) (115) (154) -------- -------- -------- -------- Income before taxes on income 12,470 19,094 45,796 58,033 Taxes on income (279) 1,711 3,040 9,326 -------- -------- -------- -------- Net income $ 12,749 $ 17,383 $ 42,756 $ 48,707 ======== ======== ======== ======== Basic earnings per share $ 0.21 $ 0.28 $ 0.70 $ 0.78 ======== ======== ======== ======== Diluted earnings per share $ 0.20 $ 0.27 $ 0.68 $ 0.76 ======== ======== ======== ======== Weighted average number of shares outstanding used to compute: Basic earnings per share 61,909 62,819 61,395 62,652 Diluted earnings per share 63,397 64,144 62,490 64,132 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 December 31, December 31, --------- --------- --------- --------- 2009 2010 2009 2010 --------- --------- --------- --------- GAAP revenues $ 158,821 $ 186,145 $ 583,115 $ 689,451 Valuation adjustment on acquired deferred product revenue 1,1 332 1,594 1,911 Valuation adjustment on acquired deferred service revenue 2,892 442 3,867 3,907 --------- --------- --------- --------- Non-GAAP revenues $ 162,827 $ 186,919 $ 588,576 $ 695,269 ========= ========= ========= ========= GAAP cost of revenue $ 65,135 $ 70,215 $ 237,205 $ 269,075 Amortization of acquired intangible assets on cost of product (5,128) (6,369) (17,557) (23,595) Valuation adjustment on acquired deferred cost of services 323 188 323 828 Cost of product revenue adjustment (1,2) (107) 60 (346) (255) Cost of services revenue adjustment (1,2) (345) (693) (2,187) (2,665) --------- --------- --------- --------- Non-GAAP cost of revenue $ 59,878 $ 63,401 $ 217,438 $ 243,388 ========= ========= ========= ========= GAAP gross profit $ 93,686 $ 115,930 $ 345,910 $ 420,376 Gross profit adjustments 9,263 7,588 25,228 31,505 --------- --------- --------- --------- Non-GAAP gross profit $ 102,949 $ 123,518 $ 371,138 $ 451,881 ========= ========= ========= ========= GAAP operating expenses $ 82,673 $ 98,763 $ 307,711 $ 371,324 Research and development (1,2,3) (1,530) (1,174) (5,391) (4,894) Sales and marketing (1,2) (1,588) (1,866) (6,560) (6,427) General and administrative (1,2,3) (2,650) (1,796) (8,163) (10,319) Amortization of acquired intangible assets (4,683) (5,030) (16,012) (19,489) Acquisition related expenses (4) - (158) (4,069) (1,757) -------- --------- --------- --------- Non-GAAP operating expenses $ 72,222 $ 88,739 $ 267,516 $ 328,438 ======== ========= ========= ========= GAAP finance & other income, net $ 1,457 $ 1,927 $ 7,597 $ 8,981 Realized gain on previously impaired marketable securities - - - (625) Re-organization expenses - - 52 - Acquisition related expenses (4) - - - 97 -------- --------- --------- --------- Non-GAAP finance & other income, net $ 1,457 $ 1,927 $ 7,649 $ 8,453 ======== ========= ========= ========= GAAP taxes on Income $ (279) $ 1,711 $ 3,040 $ 9,326 Tax adjustments re non-gaap adjustments 3,830 2,284 12,201 10,513 -------- --------- --------- --------- Non-GAAP taxes on income $ 3,551 $ 3,995 $ 15,241 $ 19,839 ======== ========= ========= ========= GAAP net income $ 12,749 $ 17,383 $ 42,756 $ 48,707 Valuation adjustment on acquired deferred revenue 4,006 774 5,461 5,818 Valuation adjustment on acquired deferred cost of services (323) (188) (323) (828) Amortization of acquired intangible assets 9,811 11,399 33,569 43,084 Share-based compensation (1) 5,298 5,158 18,237 21,054 Re-organization expenses (2) - - 2,213 2,262 Acquisition related compensation expense (3) 922 311 2,249 1,244 Acquisition related expenses (4) - 158 4,069 1,854 Realized gain on previously impaired marketable securities - - - (625) Tax adjustments re non-gaap adjustments (3,830) (2,284) (12,201) (10,513) -------- -------- -------- --------- Non-GAAP net income $ 28,633 $ 32,711 $ 96,030 $ 112,057 ======== ======== ======== ========= GAAP diluted earnings per share $ 0.20 $ 0.27 $ 0.68 $ 0.76 ======== ======== ======== ========= Non-GAAP diluted earnings per share $ 0.45 $ 0.51 $ 1.54 $ 1.75 ======== ======== ======== ========= Shares used in computing US GAAP diluted earnings per share 63,397 64,144 62,490 64,132 Shares used in computing Non-GAAP diluted earnings per share 63,715 64,144 62,550 64,132 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 December 31, December 31, ----------------- -------------------- 2009 2010 2009 2010 -------- -------- ---------- --------- Cost of product revenue $ (107) $ 60 $ (345) $ (255) Cost of service revenue (345) (693) (1,867) (2,379) Research and development (884) (863) (2,980) (3,650) Sales and marketing (1,588) (1,866) (5,759) (5,920) General and administrative (2,374) (1,796) (7,286) (8,850) -------- -------- --------- --------- $ (5,298) $ (5,158) $ (18,237) $ (21,054) ======== ======== ========= ========= (2) Re-organization expenses Quarter ended Year to date December 31, December 31, ----------------- -------------------- 2009 2010 2009 2010 -------- -------- ---------- --------- Cost of product revenue $ - $ - $ (1) $ - Cost of service revenue - - (320) (286) Research and development - - (991) - Sales and marketing - - (801) (507) General and administrative - - (48) (1,469) Other expense - - (52) - -------- -------- --------- -------- $ - $ - $ (2,213) $ (2,262) ======== ======== ========= ========= (3) Acquisition related compensation expense Quarter ended Year to date December 31, December 31, ----------------- -------------------- 2009 2010 2009 2010 -------- -------- ---------- --------- Research and development $ (646) $ (311) $ (1,420) $ (1,244) General and administrative (276) - (829) - -------- -------- --------- -------- $ (922) $ (311) $ (2,249) $ (1,244) ======== ======== ========= ========= (4) Acquisition related expense Quarter ended Year to date December 31, December 31, ----------------- -------------------- 2009 2010 2009 2010 -------- -------- ---------- --------- Research and development $ - $ - $ - $ (73) Sales and marketing - - - (77) General and administrative - (158) (4,069) (1,607) Other expense, net - - - (97) -------- -------- --------- -------- $ - $ (158) $ (4,069) $ (1,854) ======== ======== ========= ========= December 31, December 31, 2009 2010 ------------ ------------ Unaudited Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 214,811 $ 109,526 Short-term investments 108,850 242,593 Trade receivables 102,147 99,257 Other receivables and prepaid expenses 23,887 31,924 Inventories 14,445 10,861 Deferred tax assets 8,181 6,798 ------------ ------------ Total current assets 472,321 500,959 ============ ============ LONG-TERM ASSETS: Marketable securities 224,828 311,081 Other long-term assets 29,314 31,118 Property and equipment, net 22,052 22,014 Other intangible assets, net 156,664 141,632 Goodwill 494,498 527,614 ------------ ------------ Total long-term assets 927,356 1,033,459 ------------ ------------ TOTAL ASSETS $ 1,399,677 $ 1,534,418 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 26,342 $ 20,019 Accrued expenses and other liabilities 261,519 307,031 ------------ ------------ Total current liabilities 287,861 327,050 ------------ ------------ LONG-TERM LIABILITIES: Deferred tax liabilities 25,899 19,705 Other long-term liabilities 23,163 26,903 ------------ ------------ Total long-term liabilities 49,062 46,608 ------------ ------------ SHAREHOLDERS' EQUITY 1,062,754 1,160,760 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,399,677 $ 1,534,418 ============ ============ NICE SYSTEMS LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS U.S. dollars in thousands Quarter ended Year to date December 31, December 31, -------------------- --------------------- 2009 2010 2009 2010 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Cash flows from operating activities: Net income $ 12,749 $ 17,383 $ 42,756 $ 48,707 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,441 15,017 47,217 57,110 Stock based compensation 5,298 5,158 18,237 21,054 Excess tax shortfall (benefit) from share-based payment arrangements (337) 417 (968) 18 Accrued severance pay, net (186) (440) (1,534) (1,015) Amortization of discount (premium) and accrued interest on marketable securities 262 (151) 1,656 328 Loss (gain) on marketable securities sold, called or impaired - 7 (823) (1,197) Deferred taxes, net 111 1,595 (6,984) (4,862) Decrease (increase) in trade receivables (8,190) (2,548) 8,898 6,344 Decrease (increase) in other receivables and prepaid expenses 5,330 175 (2,265) (4,200) Decrease (increase) in inventories (3,815) 2,218 (531) 3,546 Increase (decrease) in trade payables 9,868 3,735 1,536 (7,136) Increase (decrease) in accrued expenses and other liabilities (5,509) 1,453 12,039 25,913 Other 341 60 453 410 ------- ------- ------- ------- Net cash provided by operating activities 29,363 44,079 119,687 145,020 ------- ------- ------- ------- Cash flows from investing activities: Purchase of property and equipment (2,835) (3,156) (8,851) (11,704) Proceeds from sale of property and equipment 34 - 70 13 Investment in marketable securities (73,980) (83,441) (197,499) (387,988) Proceeds from maturity, call and sale of marketable securities 48,150 57,000 197,790 136,568 Investment in short-term bank deposits - - (110,021) - Proceeds from short-term bank deposits 65,008 - 134,473 40,029 Capitalization of software development costs (372) (260) (1,315) (1,311) Purchase of intangible assets - - (1,000) - Payments for acquisitions (23) - (84,926) (52,267) ------- ------- ------- ------- Net cash provided by (used in) investing activities 35,982 (29,857) (71,279) (276,660) ------- ------- ------- ------- Cash flows from financing activities: Proceeds from issuance of shares upon exercise of share options and ESPP, net 4,398 10,827 19,948 25,984 Excess tax benefit (shortfall) from share-based payment arrangements 337 (417) 968 (18) ------- ------- ------- ------- Net cash provided by financing activities 4,735 10,410 20,916 25,966 ------- ------- ------- ------- Effect of exchange rate changes on cash 46 267 1,111 389 ------- ------- ------- ------- Increase (decrease) in cash and cash equivalents 70,126 24,899 70,435 (105,285) Cash and cash equivalents at beginning of period 144,685 84,627 144,376 214,811 ------- ------- ------- ------- Cash and cash equivalents at end of period $ 214,811 $ 109,526 $214,811 $109,526 Corporate Media Galit Belkind NICE Systems [email protected] +1-877-245-7448 Investors Anat Earon-Heilborn NICE Systems [email protected] +1-877-245-7449
SOURCE Nice Systems Ltd.
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