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Nice could raise dividend as "trapped profit" released

* 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 provider Nice Systems said it could raise its dividend or buy back shares after its capital position improved during the third quarter.

In reporting quarterly results, Nice said it took advantage of a special Israeli government programme that allows local companies to release so-called "trapped profit" by paying a discounted tax payment.

Trapped profit is profit earned by multinationals after they had been provided with tax incentives to invest in Israel. The Finance Ministry is seeking to give the firms incentives to repatriate some of this profit and generate tax revenue for the government.

One aim is to encourage Israeli companies to distribute a dividend from undistributed profit that is tax exempt. Nice said it could have continued to pay dividends from ongoing profit.

Chief Financial Officer Dafna Gruber said the money could ultimately 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 us the flexibility to do what we want in the future," she told Reuters.

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

Excluding one-time items, Nice earned 62 cents per diluted share 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 revenue of $233.6 million, according to Thomson Reuters I/B/E/S. Nice projected revenue of $225-$240 million and EPS of 55-66 cents.

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

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

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

"This is our future, to expand our offerings of analytics-based applications that deal with big data," Gruber said.

The company forecast fourth-quarter revenue of $260-$275 million and adjusted EPS of 72 to 77 cents. Nice also lowered the 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 in morning trade.