NICE Systems Reports Fourth Quarter 2009 and Full Year Results; Fourth Quarter Bookings and Backlog Reach All-Time High
RA'ANANA, Israel, February 17, 2010 /PRNewswire-FirstCall/ -- NICE Systems (NASDAQ: NICE), a leading global provider of advanced solutions that enable enterprises and security organizations to extract Insight from Interactions, transactions and surveillance to drive business performance, reduce risk and ensure safety, today announced results for the fourth quarter and full year ending December 31, 2009.
Fourth Quarter 2009 non-GAAP Highlights Include:
- Revenues increased 11% from third quarter to $163 million
- Record operating margins at 18.9%
- Earnings per fully diluted share of $0.45, up from $0.38 in third
quarter
- Record bookings; book-to-bill substantially greater than 1
- Strong performance across all businesses
Fiscal Year 2009 non-GAAP Highlights Include:
- Revenues at $589 million; earnings per fully diluted share of $1.54
- Record annual operating margins at 17.6%
- Backlog at all-time high
- Cash generated from operations $120 million
Zeevi Bregman, President and Chief Executive Officer, NICE Systems commented: "We are pleased with our performance in the fourth quarter and year 2009. The fourth quarter of 2009 set new records on many levels - bookings, backlog, non-GAAP operating profit and margins all reached an all-time high. Our bookings in the fourth quarter were strong across almost all businesses and regions we operate in, with book-to-bill ratio substantially greater than one. NICE achieved these results by solidifying our market leadership position and further increasing our market share. We are also very pleased with the smooth integration of the four acquisitions announced in 2009 and the market traction they are generating. Furthermore, our key growth engines - analytics based business applications, solutions for financial crime prevention and advanced security solutions - all recorded accelerated growth in 2009."
Mr. Bregman continued, "We are confident that these achievements, coupled with our superior technology, products, and excellent team, will drive NICE's growth in 2010 and beyond."
Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2009:
Revenues: Fourth quarter 2009 non-GAAP revenues reached $162.8 million, up 11.5% from $146.1 million in the third quarter 2009 and 0.3% down from $163.3 million in the fourth quarter of 2008. Non-GAAP revenues for the year 2009 were $588.6 million, 6.3% down from in 2008.
Gross Profit: Fourth quarter non-GAAP gross profit increased to $102.9 million, or 63.2% gross margin, up from $91.8 million, or 62.9% in the third quarter 2009 and compared to $106.8 million, or 65.4%, in the fourth quarter of 2008. Non-GAAP gross profit for the year 2009 was $371.1 million, or 63.1% gross margin, compared to $409.4 million, or 65.1% gross margin in 2008.
Operating Income: Fourth quarter non-GAAP operating income increased to $30.7 million, or a record 18.9% operating margin, up from $24.9 million, or 17.0% in the third quarter 2009 and from $30.1 million, or 18.4%, in the fourth quarter of 2008. Non-GAAP operating income for the year 2009 was $103.6 million, or a record of 17.6% operating margin on an annual basis, compared to $109.4 million, or 17.4% operating margin in 2008.
Net Income: Fourth quarter 2009 non-GAAP net income was $28.6 million, up from $24.0 million, in the third quarter 2009 and compared to $30.6 million in the fourth quarter of 2008. Full year 2009 non-GAAP net income was $96.0 million, or 16.3% of revenues, compared to $103.2 million, or 16.4% in 2008.
Earnings Per Fully Diluted Share: Non-GAAP earnings per fully diluted share in the fourth quarter were $0.45, up from $0.38 in the third quarter 2009 and compared to $0.50 in the fourth quarter of 2008. Non-GAAP earnings per fully diluted share for the full year 2009 were $1.54, compared to $1.67 in 2008.
GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2009:
Revenues: Fourth quarter 2009 revenues increased to $158.8 million, up 9.8% from $144.7 million in the third quarter of 2009 and 2.6% down from $163.1 million in the fourth quarter of 2008. GAAP revenues for the year 2009 were $583.1 million, 6.6% down from $624.2 million in 2008.
Gross Profit: Fourth quarter gross profit increased to $93.7 million, or 9.7%, up from $85.4 million, in the third quarter 2009 and compared to $101.7 million, or 7.9% down from the fourth quarter of 2008; Gross profit for the year 2009 was $345.9, or 59.3% gross margin, compared to $385.4 million, or 61.7% gross margin in 2008.
Operating Income: Fourth quarter operating income increased to $11.0 million, or 6.9% operating margin, up from $4.8 million, or 3.3% in the third quarter of 2009 and compared to $15.8 million, or 9.7%, in the fourth quarter of 2008; Operating income for the year 2009 was $38.2 million, or 6.6% operating margin on an annual basis, up from $37.4, or 6.0% operating margin in 2008.
Net Income: Fourth quarter 2009 net income increased to $12.7 million, from $7.8 million in the third quarter 2008, and compared to $18.7 million in the fourth quarter 2008. Net income for the year 2009 increased to $42.8 million, up from $39.1 million in 2008.
Earnings Per Fully Diluted Share; Earnings per fully diluted share in the fourth quarter were $0.20, compared to $0.12 per share, for the third quarter of 2009 and $0.31 in the fourth quarter 2008. Earnings per share on a fully diluted basis, for the year 2009 increased to $0.68 from $0.64 in 2008.
Operating Cash Flow and Cash Balance:
Fourth quarter 2009 operating cash flow was $29.4 million. 2009 operating cash flow was $119.7 million. Total cash and equivalents as of December 31, 2009 were $548.5 million, with no debt.
Guidance for Fiscal Year and First Quarter 2010
The Company introduces for the first time guidance for fiscal year 2010 and first quarter 2010. Non-GAAP revenue for the full year is expected to be between $652 and $670 million, and non-GAAP EPS guidance, on a fully diluted basis, is expected to be in the range of $1.66-$1.74. Non-GAAP revenue for the first quarter 2010 is expected to be between $153 and $160 million, and non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $0.35 - $0.39.
Conference Call
NICE management will host a teleconference, today, February 17, 2010 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 +1-888-407-2553 or +1-888-668-9141, International +972-3-9180610, Israel 03-9180610. This call will be webcast live on http://www.nice.com at http://www.nice.com/investor_relations/calendar.php. 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 +972-3-9255925, Israel 03-9255925.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, settlement and related expenses, other than temporary impairment on 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 (NASDAQ: NICE) is the leading provider of Insight from Interactions solutions and value-added services, powered by advanced analytics of unstructured multimedia content - from telephony, web, radio and video communications. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. NICE has over 24,000 customers in more than 150 countries, including more than 85 of the Fortune 100 companies. More information is available at http://www.nice.com/.
Trademark Note: 360degrees View, Alpha, ACTIMIZE, Actimize logo, Customer Feedback, Dispatcher Assessment, Encorder, eNiceLink, Executive Connect, Executive Insight, FAST, FAST alpha Blue, FAST alpha Silver, FAST Video Security, Freedom, Freedom Connect, IEX, Interaction Capture Unit, Insight from Interactions, Investigator, Last Message Replay, Mirra, My Universe, NICE, NICE logo, NICE Analyzer, NiceCall, NiceCall Focus, NiceCLS, NICE Inform, NICE Learning, NiceLog, NICE Perform, NiceScreen, NICE SmartCenter, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse Compact, NiceVision, NiceVision Alto, NiceVision Analytics, NiceVision ControlCenter, NiceVision Digital, NiceVision Harmony, NiceVision Mobile, NiceVision Net, NiceVision NVSAT, NiceVision Pro, Performix, Playback Organizer, Renaissance, Scenario Replay, ScreenSense, Tienna, TotalNet, TotalView, Universe, Wordnet are trademarks and/or registered trademarks of NICE Systems Ltd. All other trademarks are the property of their respective owners.
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 Messr 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)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2008 2009 2008 2009
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Revenue
Product $ 91,568 $ 78,274 $351,680 $281,783
Services 71,520 80,547 272,482 301,332
--------- --------- --------- ---------
Total revenue 163,088 158,821 624,162 583,115
Cost of revenue
Product 25,430 24,707 95,861 88,030
Services 35,945 40,428 142,885 149,175
--------- --------- --------- ---------
Total cost of revenue 61,375 65,135 238,746 237,205
--------- --------- --------- ---------
Gross profit 101,713 93,686 385,416 345,910
Operating Expenses:
Research and
development, net 20,749 21,917 78,445 77,382
Selling and marketing 37,195 38,532 147,879 141,526
General and administrative 24,277 17,541 97,378 72,791
Amortization of acquired
intangible assets 3,672 4,683 14,493 16,012
Settlement and related
expenses - - 9,870 -
--------- --------- --------- ---------
Total operating expenses 85,893 82,673 348,065 307,711
--------- --------- --------- ---------
Operating income 15,820 11,013 37,351 38,199
Financial income, net 5,152 1,472 11,289 7,712
Other expenses, net (21) (15) (53) (115)
--------- --------- --------- ---------
Income before taxes
on income 20,951 12,470 48,587 45,796
Taxes (tax benefit)
on income 2,211 (279) 9,480 3,040
--------- --------- --------- ---------
Net income $ 18,740 $ 12,749 $ 39,107 $ 42,756
========= ========= ========= =========
Basic earnings per share $ 0.31 $ 0.21 $ 0.65 $ 0.70
========= ========= ========= =========
Diluted earnings per share $ 0.31 $ 0.20 $ 0.64 $ 0.68
========= ========= ========= =========
Weighted average number of
shares outstanding used to compute:
Basic earnings per share 60,518 61,909 60,088 61,395
Diluted earnings per share 61,209 63,397 61,268 62,490
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,
2008 2009 2008 2009
--------- --------- --------- ---------
GAAP revenues $ 163,088 $ 158,821 $ 624,162 $ 583,115
--------- --------- --------- ---------
Valuation adjustment on
acquired deferred
product revenue - 1,114 1,945 1,594
Valuation adjustment on
acquired deferred
service revenue 253 2,892 2,267 3,867
--------- --------- --------- ---------
Non-GAAP revenues $ 163,341 $ 162,827 $ 628,374 $ 588,576
========= ========= ========= =========
GAAP cost of revenue $ 61,375 $ 65,135 $ 238,746 $ 237,205
Amortization of aquired
intangible assets on
cost of product (4,080) (5,128) (16,541) (17,557)
Valuation adjustment on
acquired deferred cost
of services - 323 - 323
Cost of product revenue
adjustment (1,2) (84) (107) (359) (346)
Cost of services revenue
adjustment (1,2) (633) (345) (2,851) (2,187)
--------- --------- --------- ---------
Non-GAAP cost of revenue $ 56,578 $ 59,878 $ 218,995 $ 217,438
========= ========= ========= =========
GAAP gross profit $ 101,713 $ 93,686 $ 385,416 $ 345,910
Gross profit adjustments 5,050 9,263 23,963 25,228
--------- --------- --------- ---------
Non-GAAP gross profit $ 106,763 $ 102,949 $ 409,379 $ 371,138
========= ========= ========= =========
GAAP operating expenses $ 85,893 $ 82,673 $ 348,065 $ 307,711
Research and
development (1,2,3) (1,129) (1,530) (5,871) (5,391)
Sales and
marketing (1,2) (1,606) (1,588) (6,804) (6,560)
General and
administrative (1,2,3) (2,785) (2,650) (11,021) (8,163)
Amortization of acquired
intangible assets (3,672) (4,683) (14,493) (16,012)
Acquisition related expenses - - - (4,069)
Settlement and related expenses - - (9,870) -
--------- --------- --------- ---------
Non-GAAP operating
expenses $ 76,701 $ 72,222 $ 300,006 $ 267,516
========= ========= ========= =========
GAAP finance & other
income (expense) $ 5,131 $ 1,457 $ 11,236 $ 7,597
Other than temporary
impairment on
marketable securities - - 4,512 -
Re-organization expenses - - - 52
--------- --------- --------- ---------
Non-GAAP finance & other
income (expense) $ 5,131 $ 1,457 $ 15,748 $ 7,649
========= ========= ========= =========
GAAP taxes (tax benefit)
on Income $ 2,211 $ (279) $ 9,480 $ 3,040
Tax adjustments re
non-gaap adjustments 2,412 3,830 12,442 12,201
--------- --------- --------- ---------
Non-GAAP taxes $ 4,623 $ 3,551 $ 21,922 $ 15,241
========= ========= ========= =========
GAAP net income $ 18,740 $ 12,749 $ 39,107 $ 42,756
Valuation adjustment on
acquired deferred revenue 253 4,006 4,212 5,461
Valuation adjustment on
acquired deferred cost
of sales - (323) - (323)
Amortization of acquired
intangible assets 7,752 9,811 31,034 33,569
Acquisition related
compensation expense (3) 305 922 1,589 2,249
Share-based compensation (1) 5,932 5,298 25,317 18,237
Re-organization expenses (2) - - - 2,213
Acquisition related expenses - - - 4,069
Settlement and related expenses - - 9,870 -
Other than temporary impairment
on marketable securities - - 4,512 -
Tax adjustments re
non-gaap adjustments (2,412) (3,830) (12,442) (12,201)
--------- --------- --------- ---------
Non-GAAP net income $ 30,570 $ 28,633 $ 103,199 $ 96,030
========= ========= ========= =========
GAAP diluted earnings
per share $ 0.31 $ 0.20 $ 0.64 $ 0.68
========= ========= ========= =========
Non-GAAP diluted earnings
per share $ 0.50 $ 0.45 $ 1.67 $ 1.54
========= ========= ========= =========
Shares used in computing US
GAAP diluted earnings per
share (in thousands) 61,209 63,397 61,268 62,490
Shares used in computing
Non-GAAP diluted earnings
per share (in thousands) 61,426 63,715 61,699 62,550
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,
2008 2009 2008 2009
------- ------- ------- -------
Cost of product revenue $ (84) $ (107) $ (359) $ (345)
Cost of service revenue (633) (345) (2,851) (1,867)
Research and development (961) (884) (5,000) (2,980)
Sales and marketing (1,606) (1,588) (6,804) (5,759)
General and administrative (2,648) (2,374) (10,303) (7,286)
------- ------- ------- -------
$ (5,932) $ (5,298) $ (25,317)$ (18,237)
======= ======= ======= =======
(2) Re-organization expenses
Quarter Ended Year to Date
December 31, December 31,
2008 2009 2008 2009
------- ------- ------- -------
Cost of product revenue $ - $ - $ - $ (1)
Cost of service revenue - - - (320)
Research and development - - - (991)
Sales and marketing - - - (801)
General and administrative - - - (48)
Other expense - - - (52)
------- ------- ------- -------
$ - $ - $ - $ (2,213)
======= ======= ======= =======
(3) Acquisition related compensation expense
Quarter Ended Year to Date
December 31, December 31,
2008 2009 2008 2009
------- ------- ------- -------
Research and development $ (168) $ (646) $ (871) $ (1,420)
General and administrative (137) (276) (718) (829)
------- ------- ------- -------
$ (305) $ (922) $ (1,589) $ (2,249)
======= ======= ======= =======
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2008 2009
------------ ------------
Unaudited Unaudited
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 144,376 $ 214,811
Short-term investments 186,072 108,850
Trade receivables 104,115 102,147
Other receivables and prepaid 21,378 23,887
expenses
Inventories 13,235 14,445
Deferred tax assets 8,400 8,181
------------ ------------
Total current assets 477,576 472,321
------------ ------------
LONG-TERM ASSETS:
Marketable securities 170,923 224,828
Other long-term assets 17,949 23,726
Deferred tax assets 2,267 5,588
Property and equipment, net 23,394 22,052
Other intangible assets, net 145,402 156,664
Goodwill 445,504 494,498
------------ ------------
Total long-term assets 805,439 927,356
------------ ------------
TOTAL ASSETS $ 1,283,015 $ 1,399,677
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Trade payables $ 23,060 $ 26,342
Accrued expenses and other
liabilities 237,005 261,519
------------ ------------
Total current liabilities 260,065 287,861
------------ ------------
LONG-TERM LIABILITIES:
Deferred tax liabilities 31,954 25,899
Other long-term liabilities 20,174 23,163
------------ ------------
Total long-term liabilities 52,128 49,062
------------ ------------
SHAREHOLDERS' EQUITY 970,822 1,062,754
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 1,283,015 $ 1,399,677
============ ============
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2008 2009 2008 2009
Unaudited Unaudited Unaudited Unaudited
----------------------------------------------
Cash flows from
operating activities:
Net income $ 18,740 $ 12,749 $ 39,107 $ 42,756
Adjustments required to
reconcile net income to
net cash provided by
operating activities:
Depreciation and
amortization 11,116 13,441 42,740 47,217
Stock based compensation 5,938 5,298 25,321 18,237
Excess tax shortfall
(benefit) from share-based
payment arrangements 116 (337) (638) (968)
Accrued severance pay, net 282 (186) 1,506 (1,534)
Amortization of discount
(premium) and accrued interest
on marketable securities 122 262 1,504 1,656
Loss (gain) on marketable
securities sold, called
or impaired 42 - 4,924 (823)
Deferred taxes, net (1,936) 111 (5,554) (6,984)
Decrease (increase) in
trade receivables 77 (8,190) (232) 8,898
Decrease (increase) in
other receivables and
prepaid expenses 714 5,330 (1,450) 54
Decrease (increase) in
inventories (456) (3,815) 300 (2,266)
Increase in trade payables 2,054 9,868 189 1,536
Increase (decrease) in
accrued expenses and
other liabilities 5,471 (5,509) 28,352 11,455
Other (306) 341 (359) 453
--------- --------- --------- ---------
Net cash provided by
operating activities 41,974 29,363 135,710 119,687
--------- --------- --------- ---------
Cash flows from investing
activities:
Purchase of property
and equipment (3,798) (2,835) (15,454) (8,851)
Proceeds from sale
of property and equipment 1 34 20 70
Investment in marketable
securities (83,271) (73,980) (231,057) (197,499)
Proceeds from maturity, call
and sale of marketable
securities 68,290 48,150 176,551 197,790
Investment in short-term
bank deposits (20,408) - (64,448) (110,021)
Proceeds from short-term
bank deposits 21 65,008 39,095 134,473
Capitalization of software
development costs (127) (372) (1,278) (1,315)
Purchase of intangible assets (31) - (3,533) (1,000)
Payments for acquisitions (5) (23) (21,679) (84,926)
Received upon the realization
of investment in an affiliate - - 964 -
--------- --------- --------- ---------
Net cash provided by (used in)
investing activities (39,328) 35,982 (120,819) (71,279)
--------- --------- --------- ---------
Cash flows from
financing activities:
Proceeds from issuance of
shares upon exercise of
share options and ESPP, net 1,266 4,398 15,282 19,948
Excess tax benefit (shortfall)
from share-based payment
arrangements (116) 337 638 968
--------- --------- --------- ---------
Net cash provided by
financing activities 1,150 4,735 15,920 20,916
--------- --------- --------- ---------
Effect of exchange rate
changes on cash (1,105) 46 (3,054) 1,111
--------- --------- --------- ---------
Increase in cash and
cash equivalents 2,691 70,126 27,757 70,435
Cash and cash equivalents
at beginning of period 141,685 144,685 116,619 144,376
--------- --------- --------- ---------
Cash and cash equivalents
at end of period $ 144,376 $ 214,811 $144,376 $214,811
========= ========= ========= =========
NICE Systems Limited, T 972-9-775-3777, F 972-9-743-4282, E [email protected], 8 Hapnina Street POB 690, Ra'anana 43107, Israel
Corporate Media
Galit Belkind
NICE Systems
+1-877-245-7448
[email protected]
Investors
Daphna Golden
NICE Systems
+1-877-245-7449
[email protected]
SOURCE NICE Systems
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