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Press release from PR Newswire

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

Wednesday, August 07, 2013

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

05:30 EDT Wednesday, August 07, 2013

RA'ANANA, Israel, Aug. 7, 2013 /PRNewswire/ -- NICE Systems (NASDAQ: 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 NICENICE (NASDAQ: 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.

 

 

SOURCE NICE

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