NICE Reports Second Quarter 2013 Non-GAAP Revenues of $225 Million and Non-GAAP EPS of $0.61

PR Newswire

RA'ANANA, Israel, Aug. 7, 2013 /PRNewswire/ -- NICE Systems (NICE) today announced results for the second quarter ended June 30, 2013.

Second Quarter 2013 non-GAAP Financial Highlights Include:            

  • Revenues of $225 million, up 4% year over year
  • Gross margin at 66.9%, up from 66.1% for the second quarter of 2012
  • Operating margin at 19.4%, up from 18.8% for the second quarter of 2012
  • Fully diluted earnings per share increased 7% year over year to $0.61
  • Cash flow from operations of $35 million

"We reported solid results for the second quarter, which was marked by strong new bookings growth in our analytic-based advanced applications. As a result, we believe we are well positioned for a strong second half of the year," said Zeevi Bregman, President and CEO of NICE Systems. "The bookings growth of our advanced application is the result of the increasing demand from our customers to operationalize Big Data to help them ensure compliance, enhance operational efficiency, increase revenues, improve the customer experience and safeguard people and assets.  We continue to focus on innovation to further expand and enhance our Big Data platform and analytics and our portfolio of advanced applications so that we can continue to deliver great value to our customers. The acquisition of Causata announced earlier today further solidifies our strategy."

Dividend Declaration

In continuation of its previously announced dividend plan, the company announced that its Board of Directors, at its meeting on August 6, 2013, declared a cash dividend for the second quarter of 2013 of $0.16 per share. The record date will be August 22, 2013, and the payment date will be September 9, 2013. Tax will be withheld at a rate of 15%.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2013:

Revenues: Second quarter 2013 non-GAAP total revenues were $225.2 million, up 4% from $216.7 million for the second quarter of 2012.

Gross Profit: Second quarter 2013 non-GAAP gross profit and non-GAAP gross margin increased to $150.6 million and 66.9%, respectively, from $143.3 million and 66.1%, respectively, for the second quarter of 2012.

Operating Income: Second quarter 2013 non-GAAP operating income and non-GAAP operating margin increased to $43.8 million and 19.4%, respectively, from $40.8 million and 18.8%, respectively, for the second quarter of 2012.

Net Income: Second quarter 2013 non-GAAP net income and non-GAAP net margin increased to $37.5 million and 16.7%, respectively, from $35.7 million and 16.5%, respectively, for the second quarter of 2012.

Fully Diluted Earnings Per Share: Second quarter 2013 non-GAAP fully diluted earnings per share increased to $0.61, up 7% compared to $0.57 for the second quarter of 2012.

GAAP Financial Highlights for the Second Quarter Ended June 30, 2013:

Revenues: Second quarter 2013 total revenues increased 6% to $224.9 million compared to $212.1 million for the second quarter of 2012.

Gross Profit: Second quarter 2013 gross profit and gross margin increased to $138.9 million and 61.8%, respectively, compared to $125.5 million and 59.2%, respectively, for the second quarter of 2012.

Operating Income: Second quarter 2013 operating income and operating margin increased to $19.3 million and 8.6%, respectively, compared to $9.0 million and 4.3%, respectively, for the second quarter of 2012.

Net Income: Second quarter 2013 net income and net margin increased to $17.0 million and 7.5%, respectively, compared to $11.2 million and 5.3%, respectively, for the second quarter of 2012.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the second quarter of 2013 increased to $0.27 compared to $0.18 for the second quarter of 2012.

Operating Cash Flow and Cash Balance: Second quarter 2013 operating cash flow was $35 million. In the second quarter, approximately $15.3 million was used for share repurchases. As of June 30, 2013, total cash and cash equivalents, short term investments and marketable securities were $503 million, with no debt.

Third Quarter and Full Year 2013 Guidance:

Third Quarter 2013: Third quarter 2013 non-GAAP total revenues are expected to be in a range of $225 million to $240 million. Third quarter 2013 non-GAAP fully diluted earnings per share are expected to be in a range of $0.56 to $0.66.

Full Year 2013: Full year 2013 non-GAAP total revenues are expected to be in a range of $940 million to $970 million. Full year 2013 non-GAAP fully diluted earnings per share are expected to be in a range of $2.55 to $2.65.

Quarterly Results Conference Call

NICE management will host its earnings conference call today, August 7th, 2013 at 8:30 AM EDT, 13:30 GMT, 15:30 Israel, to discuss the results and the company's outlook. To participate in the call, please dial in to the following numbers: United States 1-866-804-8688 or +1-718-354-1175, International +44(0)1296-480-100, United Kingdom 0-800-783-0906, Israel 1-809-242-041. The Passcode is 173 286 00.  Additional access numbers can be found at http://www.btconferencing.com/globalaccess/?bid=54_attended. The call will be webcast live on the Company's website at http://www.nice.com/news-and-events/ir-events. An online replay will also be available approximately two hours following the call. A telephone replay of the call will be available for 2 days after the live broadcast, and may be accessed by dialing: United States 1-877-482-6144, International +44(0)20-7136-9233, United Kingdom 0-800-032-9687. The Passcode for the replay is 20187381.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share-based compensation, certain business combination accounting entries and the related tax effects thereon. 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. The intangible assets created in the acquisitions of Merced are preliminary and subject to further review and completion of valuation analyses.

About NICE
NICE (NICE) is the worldwide leader of software solutions that deliver strategic insights by capturing and analyzing mass quantities of structured and unstructured data in real time from multiple sources, including phone calls, mobile apps, emails, chat, social media, and video. NICE's solutions enable organizations to take the Next-Best-Action to improve customer experience and business results, ensure compliance, fight financial crime, and safeguard people and assets. NICE solutions are used by over 25,000 organizations in more than 150 countries, including over 80 of the Fortune 100 companies. 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

Investors       
Marty Cohen, +1 212 574 3635, ir@nice.com, ET

Anat Earon-Heilborn, +972 9 775-3798, ir@nice.com, CET

Media Contact    
Erik Snider, +1 877 245 7448, erik.snider@nice.com                                              

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



June 30,


June 30,



2013


2012


2013


2012



Unaudited


Unaudited


Unaudited


Unaudited










Revenue:









Product 

$ 83,965


$ 85,797


$174,768


$177,106


Services

140,909


126,309


274,434


245,362

Total revenue

224,874


212,106


449,202


422,468










Cost of revenue:









Product

27,182


30,482


56,504


62,387


Services

58,828


56,116


115,348


111,797

Total cost of revenue

86,010


86,598


171,852


174,184










Gross profit

138,864


125,508


277,350


248,284










Operating Expenses:









Research and development, net

31,438


28,594


63,061


58,816


Selling and marketing

59,871


57,043


118,502


110,221


General and administrative

20,101


22,617


41,601


49,463


Amortization of acquired intangible assets

8,121


8,236


16,275


16,139

Total operating expenses

119,531


116,490


239,439


234,639










Operating income

19,333


9,018


37,911


13,645










Finance and other income, net*

1,013


1,265


2,204


4,818










Income before taxes on income 

20,346


10,283


40,115


18,463

Taxes on income (tax benefit)*

3,380


(897)


5,348


(524)










Net income

$ 16,966


$ 11,180


$  34,767


$  18,987










Basic earnings per share

$     0.28


$     0.18


$     0.58


$     0.31










Diluted earnings per share

$     0.27


$     0.18


$     0.56


$     0.30










Weighted average number of shares








outstanding used to compute:

















Basic earnings per share

60,382


61,163


60,371


61,292

Diluted earnings per share

61,784


62,743


61,792


62,812










*Certain comparative figures have been reclassified to conform to the current year presentation.


 

 

 

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



June 30,


June 30,



2013


2012


2013


2012

GAAP revenues

$224,874


$212,106


$449,202


$422,468

Valuation adjustment on acquired deferred product revenue

30


1,737


107


3,701

Valuation adjustment on acquired deferred service revenue

271


2,862


594


5,688

Non-GAAP revenues

$225,175


$216,705


$449,903


$431,857



















GAAP cost of  revenue

$  86,010


$  86,598


$171,852


$174,184

Amortization of acquired intangible assets on cost of product

(9,387)


(11,069)


(18,806)


(21,189)

Amortization of acquired intangible assets on cost of services

(977)


(1,018)


(1,970)


(1,709)

Valuation adjustment on acquired deferred cost of services

-


14


9


96

Cost of product revenue adjustment (1,2,4)

(107)


(140)


(245)

-

(289)

Cost of services revenue adjustment (1,2,3,4)

(978)


(977)


(1,946)


(2,055)

Non-GAAP cost of  revenue

$  74,561


$  73,408


$148,894


$149,038



















GAAP gross profit

$138,864


$125,508


$277,350


$248,284

Gross profit adjustments

11,750


17,789


23,659


34,535

Non-GAAP gross profit

$150,614


$143,297


$301,009


$282,819



















GAAP operating expenses

$119,531


$116,490


$239,439


$234,639

Research and development (1,2,3)

(722)


(918)


(1,080)


(2,106)

Sales and marketing (1,2,3)

(2,022)


(2,517)


(4,287)


(4,646)

General and administrative (1,2,3)

(1,829)


(2,128)


(4,074)


(4,708)

Amortization of acquired intangible assets

(8,121)


(8,236)


(16,275)


(16,139)

Acquisition related expenses (4)

-


(208)


-


(4,348)

Non-GAAP operating expenses

$106,837


$102,483


$213,723


$202,692



















GAAP taxes on income

$    3,380


$     (897)


$    5,348


$     (524)

Tax adjustments re non-GAAP adjustments

3,882


7,326


9,064


14,196

Non-GAAP taxes on income

$    7,262


$    6,429


$  14,412


$  13,672



















GAAP net income

$  16,966


$  11,180


$  34,767


$  18,987

Valuation adjustment on acquired deferred revenue

301


4,599


701


9,389

Valuation adjustment on acquired deferred cost of services

-


(14)


(9)


(96)

Amortization of acquired intangible assets

18,485


20,323


37,051


39,037

Share-based compensation (1)

5,407


6,143


11,242


12,751

Re-organization expenses (2)

233


422


360


746

Acquisition related compensation expense (3)

18


115


30


263

Acquisition related expenses (4)

-


208


-


4,392

Tax adjustments re non-gaap adjustments

(3,882)


(7,326)


(9,064)


(14,196)

Non-GAAP net income

$  37,528


$  35,650


$  75,078


$  71,273




























GAAP diluted earnings per share 

$     0.27


$     0.18


$     0.56


$     0.30










Non-GAAP diluted earnings per share

$     0.61


$     0.57


$     1.22


$     1.13










Shares used in computing GAAP diluted earnings per share

61,784


62,743


61,792


62,812










Shares used in computing Non-GAAP diluted earnings per share

61,784


62,743


61,792


62,812




























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



June 30,


June 30,



2013


2012


2013


2012


Cost of product revenue

$     (102)


$     (140)


$     (240)


$     (284)


Cost of service revenue

(855)


(972)


(1,823)


(1,947)


Research and development

(707)


(791)


(1,051)


(1,712)


Sales and marketing

(1,947)


(2,112)


(4,161)


(4,100)


General and administrative

(1,796)


(2,128)


(3,967)


(4,708)



$   (5,407)


$   (6,143)


$ (11,242)


$ (12,751)



















(2)

Re-organization expenses










Quarter ended


Year to date



June 30,


June 30,



2013


2012


2013


2012


Cost of product revenue

$         (5)


$           -


$         (5)


$           -


Cost of service revenue

(123)


-


(123)


(52)


Research and development

-


(31)


-


(177)


Sales and marketing

(72)


(391)


(125)


(517)


General and administrative

(33)


-


(107)


-



$     (233)


$     (422)


$     (360)


$     (746)



















(3)

Acquisition related compensation expense










Quarter ended


Year to date



June 30,


June 30,



2013


2012


2013


2012


Cost of service revenue

$           -


$         (5)


$           -


$       (17)


Research and development

(15)


(96)


(29)


(217)


Sales and marketing

(3)


(14)


(1)


(29)



$       (18)


$     (115)


$       (30)


$     (263)



















(4)

Acquisition related expenses










Quarter ended


Year to date



June 30,


June 30,



2013


2012


2013


2012


Cost of product revenue

$         -


$         -


$         -


$         (5)


Cost of service revenue

-


-


-


(39)


Research and development

-


-


-


(31)


Sales and marketing

-


-


-


100


General and administrative

-


(208)


-


(4,417)



$         -


$     (208)


$         -


$   (4,392)










 

 






NICE SYSTEMS LTD. AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS




U.S. dollars in thousands 











June 30,


December 31,



2013


2012



Unaudited


Unaudited







ASSETS









CURRENT ASSETS:





Cash and cash equivalents 

$   117,750


$         98,596


Short-term investments

140,308


199,955


Trade receivables

151,867


155,426


Other receivables and prepaid expenses

42,577


37,626


Inventories

15,534


13,897


Deferred tax assets

15,718


15,564







Total current assets

483,754


521,064






LONG-TERM ASSETS:





Marketable securities

244,722


146,154


Other long-term assets

26,875


28,676


Property and equipment, net

40,819


41,278


Other intangible assets, net

187,611


228,746


Goodwill

687,165


695,027







Total long-term assets

1,187,192


1,139,881






TOTAL ASSETS

$1,670,946


$    1,660,945







LIABILITIES AND SHAREHOLDERS' EQUITY









CURRENT LIABILITIES:





Trade payables

$     25,403


$         20,553


Deferred revenues

175,560


150,424


Accrued expenses and other liabilities

192,315


212,452







Total current liabilities

393,278


383,429






LONG-TERM LIABILITIES:





Deferred tax liabilities

45,790


58,341


Other long-term liabilities

28,893


28,087







Total long-term liabilities

74,683


86,428






SHAREHOLDERS' EQUITY

1,202,985


1,191,088






TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$1,670,946


$    1,660,945






 

 

NICE SYSTEMS LTD. AND SUBSIDIARIES








CONSOLIDATED CASH FLOW STATEMENTS








U.S. dollars in thousands











Quarter ended


Year to date




June 30,


June 30,




2013


2012


2013


2012




Unaudited


Unaudited


Unaudited


Unaudited











Operating Activities


















Net income

$  16,966


$  11,180


$  34,767


$  18,987

Adjustments to reconcile net income to net cash provided by operating activities









Depreciation, amortization and other

23,268


24,654


46,370


47,465


Stock based compensation

5,407


6,143


11,242


12,751


Excess tax benefit from share-based payment arrangements

(45)


(27)


(10)


(62)


Net recognized losses (gains) on investments and derivatives

2,495


112


2,797


(949)


Gain on sale of intangible assets

-


-


-


(1,125)


Deferred taxes, net

(3,889)


(7,232)


(9,241)


(13,709)


Changes in operating assets and liabilities:

-









Trade Receivables

(1,903)


(862)


(5)


10,919



Other receivables and prepaid expenses

(1,887)


5,299


(5,353)


5,234



Inventories

(2,332)


1,147


(1,834)


1,901



Trade payables

5,437


3,485


4,942


7,139



Accrued expenses and other current liabilities*

(4,630)


(13,758)


(18,735)


(17,084)



Deferred revenue*

(3,510)


(18,177)


28,825


10,898



Other long-term liabilities

(231)


(186)


(406)


(397)













  Net cash provided by operating activities

35,146


11,778


93,359


81,968











Investing Activities



















Purchase of property and equipment

(4,189)


(7,067)


(8,326)


(13,678)


Proceeds from sale of property and equipment

-


37


4


1,007


Purchase of investments

(96,157)


(70,311)


(174,881)


(72,739)


Proceeds from investments

82,561


78,126


128,074


123,558


Capitalization of software development costs

(273)


(367)


(579)


(755)


Proceeds from sale of intangible assets, net

-


(375)


-


1,125


Payments for acquisitions, net of cash acquired

-


(20,000)


-


(155,503)













  Net cash used in investing activities

(18,058)


(19,957)


(55,708)


(116,985)











Financing Activities



















Proceeds from issuance of shares upon exercise of share options and ESPP

6,381


15,023


15,020


22,724


Purchase of treasury shares

(15,336)


(29,880)


(22,992)


(65,119)


Dividends paid

(9,656)


-


(9,656)


-


Excess tax benefit (shortfall) from share-based payment arrangements

45


27


10


62













  Net cash used in financing activities

(18,566)


(14,830)


(17,618)


(42,333)











Effect of exchange rates on cash and cash equivalents

(935)


(194)


(879)


(798)











Net change in cash and cash equivalents

(2,413)


(23,203)


19,154


(78,148)

Cash and cash equivalents, beginning of period

120,163


149,492


98,596


204,437











Cash and cash equivalents, end of period

$117,750


$126,289


$117,750


$126,289































*Certain comparative figures have been reclassified to conform to the current year presentation.

 

 

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