NICE Systems Sets New Records with Second Quarter 2008 Results

Non-GAAP highlights for second quarter 2008 include:

* Record revenues at $155.3 , up 22.2% year-over-year
* Record gross margins at 65.5% from 63.0% in second quarter 2007
* EPS reaches $0.39, up from $0.36
* Continuous strong demand for NICE enterprise and security solutions
* Company raises revenue guidance for the year

Ra’anana, Israel, August 2008 - 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 second quarter of 2008.

Second quarter 2008 non-GAAP revenue reached a record of $155.3 million, representing a 22.2% increase from $127.1 million in the second quarter of 2007.

Non-GAAP gross margin in the second quarter of 2008 reached a record 65.5%, or $101.7 million gross profit, up from 63.0%, or $80.1 million respectively, in the second quarter of 2007.

Non-GAAP operating margin in the second quarter of 2008 was 16.5%, compared with 16.8% in the second quarter 2007. Non-GAAP operating profit reached $25.7 million, up 20.2% from $21.4 million in the second quarter of 2007.

Second quarter 2008 non-GAAP net income was $24.0 million, a 21.3% increase from $19.7 million in the second quarter of 2007. Non-GAAP earnings per fully diluted share were $0.39, up from $0.36 in the second quarter of 2007.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, stock based compensation expenses as well as certain business combination accounting entries and one time settlement and related expenses.

On a GAAP basis: Second quarter 2008 revenue was $154.1 million, an increase from $126.2 million in the second quarter of 2007. Second quarter 2008 gross margin was 62.0%, up from 60.3% in the second quarter of 2007; operating loss was $0.2 million, compared with operating profit of $11.2 million, in the second quarter of 2007; and second quarter 2008 net income was $1.5 million, or $0.02 per fully diluted share, compared with net income of $11.2 million, or $0.21 per share, on a fully diluted basis, for the second quarter of 2007.

Total cash and equivalents as of June 30, 2008 were $442.4 million, with no debt.

“The demand for NICE’s solutions remains strong in our two market sectors, enterprise and security, across all regions,” said Haim Shani, Chief Executive Officer of NICE. “We continue to execute well on our strategy of leading the market with our advanced applications solutions in the enterprise sector and of winning large-scale deals in the security sector.”

Guidance for third quarter and year 2008:
Third quarter 2008 non-GAAP revenues are expected to be in the range of $159-$163 million, and non-GAAP EPS is expected to be in the range of $0.41–$0.45 per fully diluted share.

The company is increasing its revenue guidance for year 2008; non-GAAP revenue is expected to be at $627-635 million, up from $619-634 million and non-GAAP EPS is reiterated at the range of $1.65 – $1.75 per fully diluted 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). Participants may access the conference call by dialing US toll-free +1-888-281-1167 or +1-800-994-4498; international: +972-3-918-0609; Israel: 03-918-0609. The call will also 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, starting from three hours after the call, by dialing one of the following numbers: US Toll-free: + 1-888- 782-4291; international: + 972-3- 925-5938; Israel: 03-925-5938.

The purpose of adjustments from GAAP to non-GAAP 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 Statement of Operations.
Trademark Note: 360° View, Alpha, ACTIMIZE, Actimize logo, Customer Feedback, Dispatcher Assessment, Encorder, eNiceLink, Executive Connect, Executive Insight, FAST, FAST alpha Blue, FAST alpha Silver, FAST Video Security, Freedom, Freedom Connect, IEX, Interaction Capture Unit, Insight from Interactions, Investigator, Last Message Replay, Mirra, My Universe, NICE, NICE logo, NICE Analyzer, NiceCall, NiceCall Focus, NiceCLS, NICE Inform, NICE Learning, NiceLog, NICE Perform, NiceScreen, NICE SmartCenter, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse Compact, NiceVision, NiceVision Alto, NiceVision Analytics, NiceVision ControlCenter, NiceVision Digital, NiceVision Harmony, NiceVision Mobile, NiceVision Net, NiceVision NVSAT, NiceVision Pro, Performix, Playback Organizer, Renaissance, Scenario Replay, ScreenSense, Tienna, TotalNet, TotalView, Universe, Wordnet are trademarks and/or registered trademarks of NICE Systems Ltd. All other trademarks are the property of their respective owners.

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.