Nice could raise dividend as "trapped profit" released

Reuters

* Q3 EPS ex-items $0.62 vs $0.62 forecast

* Revenue up 4.2 pct to $230.1 mln

* Sees Q4 revenue $260-$275 mln, adj EPS $0.72-$0.77

By Steven Scheer

TEL AVIV, Oct 30 (Reuters) - Israel-based software providerNice Systems said it could raise its dividend or buyback shares after its capital position improved during the thirdquarter.

In reporting quarterly results, Nice said it took advantageof a special Israeli government programme that allows localcompanies to release so-called "trapped profit" by paying adiscounted tax payment.

Trapped profit is profit earned by multinationals after theyhad been provided with tax incentives to invest in Israel. TheFinance Ministry is seeking to give the firms incentives torepatriate some of this profit and generate tax revenue for thegovernment.

One aim is to encourage Israeli companies to distribute adividend from undistributed profit that is tax exempt. Nice saidit could have continued to pay dividends from ongoing profit.

Chief Financial Officer Dafna Gruber said the money couldultimately be used for higher dividends, share buybacks, acquisitions or any type of capital distribution.

"There is no concrete plan to do it now but it will give usthe flexibility to do what we want in the future," she toldReuters.

In the third quarter, Nice reported a tax expense of $19.2million, or 31 cents a share. The total cash payment related tothe release of trapped profit as well as a tax audit settlementwas $30.9 million.

Excluding one-time items, Nice earned 62 cents per dilutedshare in the third quarter, down from 64 cents a year earlier,with higher operating expenses hurting the bottom line.

Revenue grew 4.2 percent to $230.1 million.

The company was forecast to earn 62 cents a share on revenueof $233.6 million, according to Thomson Reuters I/B/E/S. Niceprojected revenue of $225-$240 million and EPS of 55-66 cents.

Nice has benefited from growing demand for tools to delveinto large amounts of data as companies look to improve theirbusinesses, spot fraud and fend off security threats.

Nice says it helps call centres work efficiently, while itssystems aid in surveillance for security forces trying toprotect buildings and transport networks against attack.

Gruber said the strongest period of the year will be thefourth quarter. She said analytic-based applications generatednearly 50 percent of new business in the third quarter.

"This is our future, to expand our offerings ofanalytics-based applications that deal with big data," Grubersaid.

The company forecast fourth-quarter revenue of $260-$275million and adjusted EPS of 72 to 77 cents. Nice also loweredthe upper end of its 2013 expectations and now sees revenue of$940-$955 million and EPS ex-items of $2.55-$2.60.

Nice declared a quarterly dividend of 16 cents a share,unchanged from the first two quarters.

Its Nasdaq-listed shares were up 0.2 percent at $40.50 inmorning trade.

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