Nice Ltd. — Interim / Quarterly Report 2005

May 4, 2005

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NICE Reports 2005 First Quarter Results

Highlights:

• ! Q1 revenue at $66.1 million, up 13.3% from Q1 2004

• ! Q1 gross margin improved to 55.3%

• ! EPS was $0.29, up 107% from Q1 2004

• ! Acquisition of Dictaphones CRS business on track

Ra'anana, Israel, May 4, 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 first quarter ending March 31, 2005.

First quarter 2005 revenue was $66.1 million, at the upper end of the Company's guidance range. First quarter revenue represents a 13.3% increase over $58.3 million in the same quarter of 2004.

First quarter gross margin was 55.3%, an improvement from the 53.8% reported in the first quarter of 2004.

The company reported a first quarter operating profit of $5.4 million and operating margins of 8.2%, compared with $2.0 million and 3.5% in the first quarter of 2004.

Net income from continuing operations, which excludes income from discontinued operations, was $5.8 million or $0.29 per fully diluted share in the first quarter of 2005, up from $2.6 million or $0.14 per fully diluted share in the same quarter of 2004. First quarter net income was $5.8 million, or $0.29 per fully diluted share, compared with net income of $5.9 million, or $0.32 per share, on a fully diluted basis, in the first quarter of 2004.

Total cash and equivalents at March 31, 2005 rose to $185.1 million, up from $165.9 million at December 31, 2004. DSO’s for the first quarter stood at 69 days.

Commenting on the quarter, Haim Shani, Chief Executive Officer of NICE, said, "After a great year in fiscal 2004, we got off to an outstanding start in fiscal 2005. We are seeing a general growth in demand for our Insight from Interactions solutions, both in the enterprise and security sector. And as a result of the increase in demand and further to the Company’s strong operating platform and business model we have achieved significant earnings growth rate and bottom line leverage.”

“Last month we announced our acquisition of Dictaphone’s Communications Recording Systems business, which strengthens our leadership positions in each of our key sectors, and the transaction is progressing according to plan.“

"We reiterate our annual guidance, with revenues at $295 - $300 million and pro-forma EPS at $1.50 – 1.60. For the second quarter of 2005, we expect to see 9%-14% growth in revenues to $67-$70 million from the $61.3 million reported in the second quarter of last year. In terms of earnings, we expect a 33%-50% increase over second quarter 2004 EPS of $0.24, to between $0.32 and $0.36 per share.”

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: 03925-5930.

About NICE

NICE Systems (NASDAQ: NICE) is the leading provider of Insight from Interactions, based on advanced content analytics of telephony, web, radio and video communications. NICE's solutions improve business and operational performance, as well as security. NICE has over 15,000 customers in 100 countries, including the world's top 10 banks and 65% of the Fortune 100. More information is available at www.nice.com.

Trademark Note: 360° 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 Investors Amit Scheinmann

NICE Systems 972-9-775-3745 galit.sadan@nice.com NICE Systems 972-9-775-3026 ir@nice.com

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)

RevenueProductServicesTotal revenueCost of revenueProductServicesTotal cost of revenueGross ProfitOperating Expenses:Research and development, netSelling and marketingGeneral and administrativeTotal operating expensesOperating incomeFinancial income, netIncome before taxes on incomeTaxes on incomeNet income from continuing operationsNet income from discontinued operationNet incomeBasic income per share from continuing operationsBasic income per share from discontinued operationBasic income per shareDiluted income per share from continuing operationsDiluted income per share from discontinued operationDiluted income per shareWeighted average number of sharesoutstanding used to compute:Basic income per shareDiluted income per share

Three months endedMarch 31,20042005UnauditedUnaudited$ 41,397$ 47,27716,94618,84558,34366,12214,85515,55712,12313,99126,97829,54831,36536,5746,2156,75615,26116,0697,8658,34029,34131,1652,0245,4099011,0522,9256,4613106852,6155,7763,236-$ 5,851$ 5,776$ 0.15$ 0.31$ 0.19-$ 0.34$ 0.31$ 0.14$ 0.29$ 0.17-$ 0.32$ 0.2917,10718,41118,56819,861

2004Unaudited$ 41,39716,94658,34314,85512,12326,97831,3656,21515,2617,86529,3412,0249012,9253102,6153,236$ 5,851$ 0.15$ 0.19$ 0.34$ 0.14$ 0.17$ 0.3217,10718,568

NICE SYSTEMS LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands

ASSETSCURRENT ASSETS:Cash and cash equivalentsShort-term bank depositsMarketable securitiesTrade receivablesOther receivables and prepaid expensesInventoriesAssets of discontinued operationTotal current assetsLONG-TERM INVESTMENTS:Long-term marketable securitiesOther long-term investmentsTotal long-term investmentsPROPERTY AND EQUIPMENT, NETOTHER ASSETS, NETTOTAL ASSETSLIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Trade payablesAccrued expenses and other liabilitiesLiabilities of discontinued operationTotal current liabilitiesLONG-TERM LIABILITIESSHAREHOLDERS' EQUITYTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	December 31,2004Audited$ 26,57917524,34846,4077,93712,615652118,713114,8059,410124,21516,98138,410$ 298,319$ 11,97555,302867,2858,163222,871$298,319	March 31,2005
		Unaudited$ 25,42016141,48649,3658,61711,306652
		137,007118,0249,324
		127,34816,24736,064
		$ 316,666
		$ 15,03759,8608
		74,9058,068233,693
		$316,666

NICE SYSTEMS LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

	NICE SYSTEMS LTD. AND SUBSIDIARIESCONSOLIDATED CASH FLOW STATEMENTSU.S. dollars in thousands
	Cash flows from operating activities:Net incomeLess income for the period from discontinued operationAdjustments required to reconcile net income to net cashprovided by operating activities:Depreciation and amortizationAccrued severance pay, netAmortization of discount (premium) and accrued intereston marketable securitiesDecrease (increase) in trade receivablesDecrease (increase) in other receivables and reaid exenses	Three months endedMarch 31,20042005UnauditedUnaudited$ 5,851$ 5,776(3,236)-3,5103,009(9)(49)3032801,541(3,477)1,145(759)285229(1,598)3,097(99)4,70011377,70412,843204-7,90812,843(1,838)(1,378)(7)(21)47337,30083,485-(95,050)
		2004Unaudited$ 5,851(3,236)3,510(9)3031,5411,145285(1,598)(99)117,7042047,908(1,838)(7)477,300-
	pp pDecrease in inventories
	Increase (decrease) in trade payables
	Increase (decrease) in accrued expenses and other liabilities
	Other
	Net cash provided by operating activities from continuing operationsNet cash provided by operating activities from discontinued operationNet cash provided by operating activitiesCash flows from investing activities:Purchase of property and equipmentInvestment in short-term bank depositsProceeds from short-term bank depositsProceeds from maturity of short-term marketable securitiesInvestment in short-term marketable securities
	Proceeds of call of long-term held-to-maturity marketable securitiesInvestment in long-term held-to-maturity marketable securitiesCapitalization of software development costsDecrease in accrued acquisition costsPayment in respect of terminated contract from TCS acquisitionProceeds from related party in respect of TCS acquisitionNet cash used by investing activities from continuing operationsNet cash provided by investing activities from discontinued operationNet cash used by investing activitiesCash flows from financing activities:Proceeds from issuance of shares and exercise of share options, netNet cash provided by financing activitiesEffect of exchange rate changes on cashIncrease (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period	15,800(35,355)(443)(75)(1,483)4,013(12,041)4,136 (7,905)8,0228,022 (6)8,01929,859$37,878	-(9,072)(217)--2,531(19,689)- (19,689)
			5,7035,703 (16)
			(1,159)26,579$25,420