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Nice Ltd. Earnings Release 2005

Feb 2, 2005

6950_ffr_2005-02-02_bcb8e58b-0db3-4b33-a6da-4bd7789da113.zip

Earnings Release

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON , D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUA NT TO RULE 13A-16 OR 15D-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For February 2, 2005

NICE-SYSTEMS LTD .

(Translation of Registrant's Name into English)

8 Hapnina Street, P.O. Box 690 , Ra'anana, Israel

(Address of Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F X Form 40-F ___

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as

permitted by Regulations S-T Rule 101(b)(1):

Yes ____ No X

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as Created Using Viltech Software

permitted by Regulation S-T Rule 101(b)(7):

Yes ____ No X

Indicate by check mark whether by fur-nishing the information contained in this Form 6-K, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ____ No X

If "Yes" is marked, indicate below the file number as-signed to the Registrant in connection with Rule 12g3-2(b): 82- _ N/A __

Page 1 of 10 Pages

THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO NICE-SYSTEMS LTD.S ("NICE") REGISTRATION STATEMENTS ON FORM F-3 (REGISTRATION STATEMENT NOS. 333-12350 AND 333-12996) AND NICES REGISTRATION STATEMENTS ON FORM S-8 (REGISTRATION STATEMENT NOS. 333-6784, 333-8146, 333-9350, 333-11842, 333-7414, 333-9352, 333-11154 , 333-13686, 333-111112 ,333-111113 AND 333-109766), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

CO NT E NT S

This Report on Form 6-K of NICE consists of the following documents, which are attached hereto and incorporated by reference herein:

Press Release : Nice Systems Reports Record Fourth Quarter and Full Year 2004 Results.

_ 1 _

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

NICE-SYSTEMS LTD.

By: /s/ Ran Oz

Name: Ran Oz

Title: Corporate Vice President

And Chief Financial Officer Created Using Viltech Software

Dated: February 2, 2005

_ 2 _

Created Using Viltech Software

Nice Systems Reports Record Fourth Quarter and Full Year 2004 Results Created Using Viltech Software

Highlights:

  • Q4 record revenue up 13% year over year; 9% sequential increase
  • Q4 gross margin improved to 56%
  • Q4 GAAP EPS of $0.47
  • FY 2004 revenue increased 13% to a record of $252.6 million
  • FY 2004 GAAP EPS of $1.14
  • Year-end 2004 cash and equivalents of $165.9 million

Ra`anana, Israel, February 02, 2005 - NICE Systems (NASDAQ: NICE) , the global provider of advanced solutions that enable organizations to extract insight from interactions to drive performance, today announced results for the fourth quarter and full year ending December 31, 2004. Fourth quarter GAAP revenue was $69.5 million at the upper end of the Company's guidance range. Fourth quarter GAAP revenue represents a 13% increase from $61.7 million in the fourth quarter of 2003, and a 9% sequential increase from $63.5 million in the third quarter of 2004. Revenues for the year reached a record high of $252.6 million, a 13% increase from $224.3 million in 2003. Gross margin in the fourth quarter reached a record 56%, up from 54.7% in the third quarter of 2004 and 55.5% in the fourth quarter a year ago. Gross margin for the year reached 54.8% compared with 52.6% achieved for the year 2003.

Operating expenses from continuing operations, excluding restructuring and settlement costs, increased slightly to $30 million but declined as a percent of revenue to 43.1% compared with 46.7% in the third quarter of 2004 and 44.6% in the fourth quarter of 2003. Operating margin increased to 12.9% from 8.1% in the third quarter of 2004 and 10.9% in the fourth quarter of 2003. For the year, operating margin increased to 7.9% from 5.2% in 2003.

2003 figures are reported both on a GAAP basis, which include a $7.1 million one-time restructuring and settlement costs, and on a non-GAAP basis excluding this charge, to make year-on-year comparisons more meaningful.

On a GAAP basis, fourth quarter net income from continuing operations was $9 million, or $0.47 per fully diluted share, compared with net income of $5.2 million, or $0.28 per share, on a fully diluted basis, in the third quarter of 2004. In the fourth quarter of 2003, GAAP net income from continuing operations was $1.6 million, or $0.09 per share. Excluding restructuring and settlement charges, non-GAAP net income from continuing operation in the fourth quarter of 2003 was $6.7 million, or $0.37 per fully diluted share.

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Net income from continuing operations for the year was $21.3 million or $1.14 per fully diluted share, compared with net income from continuing operations of $5.6 million or $0.33 per fully diluted share for 2003. Excluding restructuring and settlement charges, non-GAAP net income from continuing operations for 2003 was $12.4 million or $0.74 per fully diluted share.

Total cash and equivalents at December 31, 2004 rose to $165.9 million compared with $146 million at September 30, 2004 and with $107.3 million at the end of 2003. DSOs at year-end stood at 67 days compared with 68 days at the end of the third quarter and 74 days at the end of 2003. The improvement during the year reflects aggressive working capital management.

Commenting on the quarterly results, Haim Shani, president and CEO of NICE said, "We had a strong finish to 2004, with revenue and net income reaching record levels. The 9% sequential increase in Q4 revenue represents growth in all parts of our business and across all regions. Our continued improvement in gross margin reflects improvement in both product and services margins." "2004 was a pivotal year for NICE, with record results in all the performance parameters", said Mr. Shani, "We grew our revenue by 13% and reported a gross margin that was more than 220 basis points higher than 2003. We achieved record profitability, and generated more than $44 million in operating cash flow for the year."

"In 2004 we strengthened our leadership position in our core recording and quality monitoring business, and continued to lead the VoIP market for contact centers and trading floors. We also made good progress in shifting from a product-focused company to a solution- focused company. Towards this end we successfully introduced our advanced content analytics applications for performance improvement and security enhancement. Our enterprise interaction solution NICE Perform has already been adopted by 15 different customers, and has been instrumental both in winning competitive situations and in replacing existing competitive products."

"We leveraged our TCS acquisition to grow EMEA market share, and advanced cooperation with our strategic partners for the enterprise and public sectors, achieving significant wins with Avaya, IPC, Motorola and IBM. Overall we finished 2004 well positioned to continue to reward shareholders in the future."

Created Using Viltech Software

"For 2005 we reiterate our previous guidance and expect to see 9 - 11% growth in revenues from the $252.6 million reported in 2004 to between $275 and $280 million and a 23 - 32% increase from 2004 EPS of $1.14 to between $1.4 and $1.5 per share for 2005. We expect normal seasonality in Q1 2005 with revenue of between $63.5 and $66.5 million, a 9 - 14% increase from $58.3 million in Q1 2004, with EPS between $0.24 and $0.29, a 71 - 109% increase from $0.14 in Q1 2004. This demonstrates the Company`s strong business model that leverages its operational platform, which translates into greater bottom line growth and higher profitability."

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Conference Call

NICE will host a conference call to discuss the results and its business outlook today at 8:30 a.m. EST (15:30 Israel). The call will be broadcast live on the internet via NICE's website at www.nice.com. A telephone replay will be available for up to 72 hours after the call. The replay information: US Toll-free: 1-866-276-1485; International: ++ 972-3-925-5930; Israel: 03-925-5930.

About NICE Created Using Viltech Software

NICE Systems (NASDAQ: NICE) headquartered in Ra'anana, Israel, is the global provider of advanced solutions that enable organizations to extract the value hidden within multimedia interactions. NICE solutions sharpen the awareness of organizations to help them generate insight from interactions for improved decision-making, better performance and enhanced security. NICE has more than 15,000 customers in over 100 countries, including the world's top ten banks and over 65% of the Fortune 100. More information is available at www.nice.com.

Trademark Note: 360 0 View, Agent@home, Big Picture Technology, Executive Connect, Executive Insight, Experience Your Customer, Investigator, Lasting Loyalty, Listen Learn Lead, MEGACORDER, Mirra, My Universe, NICE, NiceAdvantage, NICE Analyzer, NiceCall, NiceCLS, NiceCMS, NICE Feedback, NiceFix, NiceGuard, NICE Learning, NICE Link, NiceLog, NICE Perform, ScreenSense, NiceScreen, NiceSoft, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse LIVE, NiceVision, NiceVision Harmony, NiceVision Mobile, NiceVision Pro, NiceVision Virtual, NiceWatch, Renaissance, Secure Your Vision, Tienna, Wordnet and other product names and services mentioned herein are trademarks and registered trademarks of NICE Systems Ltd. All other registered and unregistered trademarks are the property of their respective owners. Only in Australia

| Media — Galit Sadan | NICE
Systems [email protected] | 972-9-775-3745 |
| --- | --- | --- |
| Investors | | |
| Rhona
Blotman | NICE
Systems [email protected] | 972-9-775-3030 |

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations of the management of NICE Systems Ltd. (the Company) only, and are subject to a number of risk factors and uncertainties, including but not limited to 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, which could cause the actual results or performance of the Company to differ materially from those described therein. We undertake no obligation to update these forward-looking statements. 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.

NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share amounts)
Three months ended Twelve months
ended
December 31, December 31,
2003 2004 2003 2004
Unaudited Unaudited Audited Audited
Revenue
Product $ 45,387 $ 51,395 $ 168,055 $ 182,616
Services 16,333 18,124 56,203 70,027
Total revenue 61,720 69,519 224,258 252,643
Cost of revenue
Product 16,152 17,704 64,231 64,432
Services 11,297 12,870 42,084 49,876
Total cost of revenue 27,449 30,574 106,315 114,308
Gross Profit 34,271 38,945 117,943 138,335
Operating Expenses:
Research and development, net 5,991 6,349 22,833 24,866
Selling and marketing 13,971 15,807 53,701 62,172
General and administrative 7,561 7,816 29,840 31,269
Restructuring and other special charges 5,381 - 7,082 -
Total operating expenses 32,904 29,972 113,456 118,307
Operating income 1,367 8,973 4,487 20,028
Financial income, net 349 790 2,034 3,556
Other income (expense), net 286 49 292 54
Income before taxes on income 2,002 9,812 6,813 23,638
Taxes on income 385 794 1,205 2,319
Net income from continuing operations 1,617 9,018 5,608 21,319
Net income from discontinued operation 298 - 1,483 3,236
Net income $ 1,915 $ 9,018 $ 7,091 $ 24,555
Basic income per share from continuing operations $ 0.10 $ 0.50 $ 0.35 $ 1.22
Basic income per share from discontinued operation $ 0.02 - $ 0.09 $ 0.18
Basic income per share $ 0.12 $ 0.50 $ 0.44 $ 1.40
Diluted income per share from continuing operations $ 0.09 $ 0.47 $ 0.33 $ 1.14
Diluted income per share from discontinued operation $ 0.02 - $ 0.09 $ 0.17
Diluted income per share $ 0.11 $ 0.47 $ 0.42 $ 1.31
Weighted average number of shares
outstanding used to compute:
Basic income per share 16,479 17,892 16,038 17,497
Diluted income per share 17,956 19,141 16,781 18,703

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NICE SYSTEMS LTD. AND SUBSIDIARIES
FOR COMPARATIVE PURPOSES
NET INCOME AND INCOME PER SHARE EXCLUDING RESTRUCTURING
COST,
AND OTHER SPECIAL CHARGES
U.S. dollars in thousands (except per share amounts)
Three
months ended Twelve
months ended
December 31, December 31,
2003 2004 2003 2004
Unaudited Unaudited Audited Audited
GAAP net income $ 1,915 $ 9,018 $ 7,091 $ 24,555
Adjustments:
GAAP net income from discontinued operation (298) - (1,483) (3,236)
Restructuring and other special charges 5,381 - 7,082 -
Other non-operating expense (income) (300) - (300) -
Non-GAAP net income from continuing operations $ 6,698 $ 9,018 $ 12,390 $ 21,319
Non-GAAP basic income per share from continuing operations $ 0.41 $ 0.50 $ 0.77 $ 1.22
Non-GAAP diluted income per share from continuing operations $ 0.37 $ 0.47 $ 0.74 $ 1.14

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NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2003 2004
Audited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,859 $ 40,279
Short-term bank deposits 189 175
Marketable securities 17,187 10,648
Trade receivables 45,973 46,407
Other receivables and prepaid expenses 7,366 7,937
Related party receivables 4,013 -
Inventories 12,634 12,615
Assets of discontinued operation 3,945 652
Total current assets 121,166 118,713
LONG-TERM INVESTMENTS:
Long-term marketable securities 60,034 114,805
Other long-term investments 8,084 9,410
Total long-term investments 68,118 124,215
PROPERTY AND EQUIPMENT, NET 18,627 16,981
OTHER ASSETS, NET 41,504 38,410
TOTAL ASSETS $ 249,415 $ 298,319
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 15,744 $ 11,975
Accrued expenses and other liabilities 47,370 55,302
Liabilities of discontinued operation 1,878 8
Total current liabilities 64,992 67,285
LONG-TERM LIABILITIES 7,592 8,163
SHAREHOLDERS' EQUITY 176,831 222,871
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 249,415 $ 298,319

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| NICE SYSTEMS LTD. AND
SUBSIDIARIES | | | | |
| --- | --- | --- | --- | --- |
| CONSOLIDATED CASH FLOW
STATEMENTS | | | | |
| U.S. dollars in thousands | | | | |
| | Three months ended | | Twelve months ended | |
| | December 31, | | December 31, | |
| | 2003 | 2004 | 2003 | 2004 |
| | Unaudited | Unaudited | Audited | Audited |
| Cash flows from operating
activities: | | | | |
| Net income | $ 1,915 | $ 9,018 | $ 7,091 | $ 24,555 |
| Less income for the period
from discontinued operation | (298) | - | (1,483) | (3,236) |
| Adjustments required to
reconcile net income to net cash | | | | |
| provided by operating
activities: | | | | |
| Depreciation and amortization | 4,464 | 3,511 | 17,617 | 13,793 |
| Accrued severance pay, net | (15) | 7 | 124 | 37 |
| Amortization of discount
(premium) and accrued interest | | | | |
| on
held-to-maturity marketable securities | 445 | 193 | 1,459 | 1,205 |
| Decrease (increase) in trade
receivables | (4,028) | (275) | 3,901 | (585) |
| Decrease (increase) in other
receivables and prepaid expenses | 316 | 672 | 1,208 | (549) |
| Decrease (increase) in
inventories | 2,284 | (1,072) | 1,515 | (122) |
| Increase (decrease) in trade
payables | 895 | (3,287) | (104) | (3,761) |
| Increase in accrued expenses
and other liabilities | 4,716 | 8,157 | 4,819 | 13,043 |
| Increase in long-term
liabilities related to legal settlement | 667 | - | 667 | - |
| Other | (33) | (116) | 46 | (112) |
| Net cash provided by operating
activities from continuing operations | 11,328 | 16,808 | 36,860 | 44,268 |
| Net cash provided (used) by
operating activities from discontinued operation | (814) | 146 | 1,316 | 750 |
| Net cash provided
by operating activities | 10,514 | 16,954 | 38,176 | 45,018 |
| Cash flows from investing
activities: | | | | |
| Purchase of property and
equipment | (1,581) | (1,504) | (5,492) | (6,701) |
| Proceeds from sale of property
and equipment | 79 | 29 | 747 | 89 |
| Investment in short-term bank
deposits | (35) | (57) | (132) | (129) |
| Proceeds from short-term bank
deposits | 43 | 33 | 165 | 149 |
| Proceeds from maturity of
short-term held-to-maturity marketable securities | 5,335 | 1,000 | 33,997 | 17,710 |
| Investment in short-term
held-to-maturity marketable securities | - | - | - | (3,000) |
| Proceeds of call of long-term
held-to-maturity marketable securities | 3,500 | 11,911 | 8,500 | 41,345 |
| Investment in long-term
held-to-maturity marketable securities | (15,951) | (24,435) | (72,077) | (105,492) |
| Capitalization of software
development costs | (498) | (318) | (2,291) | (1,305) |
| Decrease in accrued
acquisition costs | - | - | (3,008) | (75) |
| Payment in respect of
terminated contract from TCS acquisition | (1,377) | (2,402) | (6,518) | (5,249) |
| Additional acquisition costs
related to the TCS acquisition | (313) | - | (316) | - |
| Decrease in related party
receivables from TCS acquisition | - | - | 6,635 | 4,013 |
| Net cash used by investing
activities from continuing operations | (10,798) | (15,743) | (39,790) | (58,645) |
| Net cash provided (used) by
investing activities from discontinued operation | - | - | (52) | 4,136 |
| Net cash used by
investing activities | (10,798) | (15,743) | (39,842) | (54,509) |
| Cash flows from financing
activities: | | | | |
| Proceeds from issuance of
shares and exercise of share options, net | 7,482 | 7,196 | 12,086 | 19,867 |
| Short-term bank credit, net | - | - | (24) | - |
| Net cash provided
by financing activities | 7,482 | 7,196 | 12,062 | 19,867 |
| Effect of exchange rate
changes on cash | 210 | 143 | 182 | 44 |
| Increase in cash and cash
equivalents | 7,408 | 8,550 | 10,578 | 10,420 |
| Cash and cash equivalents at
beginning of period | 22,451 | 31,729 | 19,281 | 29,859 |
| Cash and cash equivalents at
end of period | $ 29,859 | $ 40,279 | $ 29,859 | $ 40,279 |

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