8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 3, 2009

NIC Inc.

(Exact name of registrant as specified in its charter)

Colorado (State or other jurisdiction of incorporation) 000-26621 (Commission File Number) 52-2077581 (I.R.S. Employer Identification No.)

25501 West Valley Parkway, Suite 300

Olathe, Kansas 66061

(Address of principal executive office)(Zip Code)

(877) 234-3468

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Condition

On February 4, 2009, NIC Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year 2008, its financial outlook for fiscal 2009 and the declaration of a special cash dividend. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99.1.

Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(c) Appointment of Certain Officers

On February 3, 2009, the Board of Directors of the Company appointed Robert Knapp to the position of Executive Vice President, effective immediately.

Mr. Knapp, age 40, has served as the Company’s Vice President of Portal Operations since October 2006. Mr. Knapp served as a regional manager for the Company from September 2004 until October 2006, and as President of the Company's Kansas portal subsidiary, Kansas Information Consortium, Inc., from December 2000 to September 2004.

Mr. Knapp’s annual base salary in his new position is $260,000. As Executive Vice President, Mr. Knapp will participate in the Company’s 2009 annual cash incentive plan, which has the same terms as the 2008 annual cash incentive plan, which is described in the Company’s Current Report on Form 8-K filed on March 6, 2008 (the “Prior Form 8-K”) and incorporated herein by reference. Mr. Knapp will also participate in the Company’s long-term, equity-based incentive plan for executive officers included in the Company’s executive compensation program described in the Prior Form 8-K and incorporated herein by reference. Under that plan, on February 3, 2009 Mr. Knapp was granted 23,551 shares of service-based restricted stock, which vest ratably over a four-year service period following the date of grant, and 35,326 shares of performance-based restricted stock, which may be earned at the end of the three-year performance period ending December 31, 2011 pursuant to the terms of the long-term incentive plan described in the Prior Form 8-K.

Other than his employment arrangement with the Company, there is no arrangement or understanding between Mr. Knapp and any other person pursuant to which Mr. Knapp was appointed as Executive Vice President. Other than his employment arrangement, the Company is not aware of any transactions since January 1, 2008 or any proposed transactions in which the Company or any of its subsidiaries was or is to be a participant, in which the amount involved exceeds $120,000 and in which Mr. Knapp or any member of his immediate family had, or will have, a direct or indirect material interest. Mr. Knapp has no family relationships with any director or executive officer of the Company.

Item 5.03Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On February 3, 2009, the Board approved the following amendments to the Company’s Bylaws: (1) Section 2.4 was amended to clarify that the election of directors was not among the matters determined by majority vote of the shareholders and (2) Section 6.1 was amended to provide that certificates representing the Company’s capital stock, if any, would be in the form approved by the principal executive officer of the Company, who would thereafter promptly communicate notice of any change to the Board. A copy of the amendments is filed herewith as Exhibit 3.1 and incorporated herein by reference.

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Item 7.01Regulation FD Disclosure

The Company will host a conference call, which will also be available by webcast, to discuss its financial results for the fourth quarter and fiscal year 2008 and its financial outlook for fiscal 2009 at 4:30 p.m. EST on February 4, 2009.

On February 3, 2009, the Board of Directors of the Company approved amendments to the Company’s Audit Committee Charter. The Audit Committee Charter, as amended by the Board of Directors, is available on the Company’s website at http://www.nicusa.com under the Corporate Governance tab on the Investor Relations page.

The information in Items 2.02 and 7.01 of this Form 8-K and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth in such filing.

Item 9.01Financial Statements and Exhibits

(d)	Exhibits
3.1	Amendments to Bylaws of NIC Inc.
99.1	Press Release of NIC Inc. dated February 4, 2009 (furnished solely for purposes of incorporation by reference to Item 2.02 herein).

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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 hereunto duly authorized.

NIC INC.
By:	/s/William F. Bradley, Jr.
	William F. Bradley, Jr. Chief Operating Officer and General Counsel

Date: February 4, 2009

4

EX-3

Exhibit 3.1

Amendments to

the Bylaws of NIC Inc.

(Adopted February 3, 2009)

1. Section 2.4 of the Bylaws was amended to read as follows:

Section 2.4.      Quorum. Except as otherwise provided by law or by the Articles of Incorporation or these Bylaws, the presence in person or by proxy of the holders of a majority of the outstanding shares of stock of the corporation entitled to vote thereat shall constitute a quorum at each meeting of the stockholders and all questions other than the election of directors shall be decided by a majority of the shares so represented in person or by proxy at the meeting and entitled to vote thereat. The stockholders present at any duly organized meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

2. Section 6.1 of the Bylaws was amended to read as follows:

Section 6.1.      Stock. The shares of the corporation shall be represented by certificates or shall be uncertificated. Each registered holder of stock represented by a certificate, upon written request to the corporation, shall be provided with a certificate of stock representing the number of shares owned by such holder. Certificates representing the corporation’s capital stock, if any, shall be in such form as required by law and as approved by the principal executive officer of the Company, who shall thereafter promptly communicate notice of such change to the Board. Each such certificate shall be signed (either manually or by facsimile) in the name of the corporation by the Chair or Vice Chair of the Board, President or any Vice-President, and by the Treasurer or an assistant treasurer, or the Secretary or an assistant secretary of the corporation. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

EX-99

4Q 2008 EARNINGS

For Immediate Release

Contact: Nancy Beaton

913-754-7054

nbeaton@nicusa.com

NIC Grows Portal Revenue 14 Percent in the Fourth Quarter and Declares a Special Cash Dividend of $0.30 Per Share

OLATHE, Kan. – February 4, 2009 – NIC Inc. (NASDAQ: EGOV) today announced net income of $2.7 million and earnings per share of four cents on total revenues of $25.3 million for the three months ended December 31, 2008. Operating income was $4.1 million for the quarter, up 32 percent over the prior year quarter. In fourth quarter 2007, the Company reported net income of $2.7 million and earnings per share of four cents on total revenues of $22.1 million.

On February 3, 2009, the NIC Board of Directors also declared a special cash dividend of $0.30 per share payable on February 27, 2009, to shareholders of record on February 17, 2009. The dividend payout will total approximately $19.2 million based on the current number of shares outstanding.

“NIC’s business remains strong with continued growth in our core eGovernment portal business,” said Harry Herington, Chairman of the Board and Chief Executive Officer of NIC. “The strength of our business and continued confidence in future opportunities enables us to return capital to shareholders for the third year in a row in the form of a special cash dividend.”

The dividend may result in a partial return of capital to shareholders, with the balance being taxable to shareholders as a qualified dividend. The exact amount of the return of capital, if any, is dependent on the earnings of the Company computed on a tax basis through the end of its 2009 fiscal year. Once a final determination is made, the Company will make the appropriate notification to shareholders after the close of the year. Shareholders are encouraged to consult with their tax specialists regarding the circumstances of their particular tax situations.

Fourth Quarter 2008 Performance

Quarterly portal revenues were $24.2 million, up 14 percent over fourth quarter 2007. On a same-state basis, portal revenues grew 11 percent in the fourth quarter. NIC's same-state transaction-based revenues from non-driver record exchange (non-DMV) services rose 28 percent over fourth quarter 2007 through continued strong performance from several key applications, including payment processing, tax filings, professional licensing, motor vehicle registrations, and hunting & fishing licensing. On a same state basis, total DMV revenues declined two percent in the fourth quarter.

In the fourth quarter, NIC's portals launched 65 new non-DMV revenue-generating services and another 200 applications are in the development pipeline. NIC portals launched a total of 392 new non-DMV revenue-generating applications in 2008, up from 368 in 2007.

“We do not take lightly the impact the tough economy is having on our current state partners, potential new state partners, and the businesses and citizens they serve,” continued Herington. “That is why we continue to work every day to expand the online services states can offer through a model that does not tax state agency budgets and provides the businesses and citizens the benefit of a more efficient way to interact with state government.”

Selling and administrative expenses were $5.2 million in the current quarter, down from $5.8 million in the fourth quarter of 2007. As a percentage of portal revenue, selling and administrative expenses were 22 percent in the current quarter compared to 27 percent in the fourth quarter of 2007.

Interest income for the quarter was $0.1 million, down from $0.5 million in the fourth quarter of 2007, reflecting lower short-term interest rates on the Company’s cash reserves and funds invested in U.S. Government agencies and direct obligations of the U.S. Treasury.

NIC ended the year with approximately $60.4 million in cash and investments. On February 20, 2008, NIC used $15.7 million of its short-term investments and cash reserves to pay a $0.25 per share special cash dividend to shareholders.

NIC is also pleased to announce that during the fourth quarter a portal management contract was renewed for one year by Alabama (http://www.alabama.gov).

Full-Year 2008 Performance

Top and bottom line results for the year were in line with the high end of the Company’s financial guidance range provided in February 2008. For fiscal year 2008, total revenues rose 17 percent to $100.6 million and portal revenues grew 17 percent to $96.8 million. On a same state basis, portal revenues were 11 percent higher than in 2007, with non-DMV transaction revenues growing 25 percent and DMV revenues growing one percent. Selling and administrative expenses as a percentage of portal revenue were 23 percent, down from 26 percent in 2007. Operating income increased 15 percent to $18.6 million for the year. Interest income was $0.7 million compared to $1.7 million in 2007. The Company earned 19 cents per share in 2008, unchanged from 2007.

Results for 2008 include an income tax expense reduction of $0.4 million (one cent per share) which primarily reflects changes in the Company's uncertain tax positions. Results for 2007 include a gain of $0.5 million (one cent per share) from the sale of a minority investment. NIC also reduced its income tax expense by $0.4 million (one cent per share) during 2007 to reflect changes in the Company’s uncertain tax positions.

Full-Year 2009 Outlook

For full-year 2009, NIC expects total revenues of $109.7 - $112.9 million, with portal revenues ranging from $106 - $109 million and software & services revenues of $3.7 - $3.9 million. The Company also expects operating income to range from $19.1 - $21.1 million and net income of $11.4 – $12.7 million.

“While our financial guidance has been tempered by the current macroeconomic-related DMV softness we expect will continue into 2009, we believe that NIC will continue to perform well with organic revenue growth mirroring our historical rates,” said Steve Kovzan, Chief Financial Officer of NIC. “Portal margins should remain in the mid 40-percent range with selling and administrative expenses between 22 and 23 percent of portal revenue, which reflects only modest corporate overhead growth.”

The Company's projections do not include any new or unsigned portal contracts.

Fourth Quarter Earnings Call and Webcast Details

To sign in and listen:  The Webcast system is available at http://www.nicusa.com/investor.

A replay of the Webcast will be available until 11:00 p.m. (EDT) on May 7, 2009, by visiting http://www.nicusa.com/investor. The conference call replay will also be available via Podcast download by visiting http://www.nicusa.com/investor.

An audio replay of NIC’s fourth quarter earnings call will be available until 11:00 p.m. (EDT) on February 11 by dialing 1-800-405-2236 and using passcode 11125518. International callers may dial 303-590-3000 and use the aforementioned passcode to access the audio playback.

About NIC

NIC is the nation’s leading provider of official government portals, online services, and secure payment processing solutions. The company’s innovative eGovernment services help reduce costs and increase efficiencies for government agencies, citizens, and businesses across the country. NIC provides eGovernment solutions for 2,900 federal, state, and local agencies that serve more than 70 million people in the United States. Additional information is available at http://www.nicusa.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Any statements contained in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include NIC’s financial guidance for the current fiscal year and statements regarding continued implementation of NIC's business model and its development of new products and services. Forward-looking statements are subject to inherent risks and uncertainties and there can be no assurance that such statements will prove to be correct. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the success of the Company in signing contracts with new states and government agencies, including continued favorable government legislation; NIC's ability to develop new services; existing states and agencies adopting those new services; acceptance of eGovernment services by businesses and citizens; competition; and general economic conditions (including the recent worsening in such conditions) and the other important cautionary statements and risk factors described in NIC's 2007 Annual Report on Form 10-K filed on March 17, 2008, with the Securities and Exchange Commission (“SEC”) and Quarterly Report on form 10-Q filed on November 6, 2008, with the SEC. NIC does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances.

NIC INC.

FINANCIAL SUMMARY

(UNAUDITED)

Thousands except per share amounts

	Three months ended
	December 31,						Year Ended December 31,
	2008			2007			2008			2007
Revenues:
Portal revenues	$	24,231		$	21,275		$	96,795		$	82,452
Software & services revenues		1,022			812			3,780			3,303
Total revenues		25,253			22,087			100,575			85,755
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization		14,278			11,931			53,492			43,649
Cost of software & services revenues, exclusive of depreciation & amortization		642			441			2,323			1,883
Selling & administrative		5,213			5,822			22,518			21,594
Depreciation & amortization		985			758			3,633			2,502
Total operating expenses		21,118			18,952			81,966			69,628
Operating income		4,135			3,135			18,609			16,127
Other income (expense):
Interest income		112			483			695			1,741
Gain on affiliate investments		—			—			—			508
Other expense, net		(25	)		(18	)		(49	)		(16	)
Total other income		87			465			646			2,233
Income before income taxes		4,222			3,600			19,255			18,360
Income tax provision		1,529			933			7,334			6,405
Net income	$	2,693		$	2,667		$	11,921		$	11,955
Basic net income per share	$	0.04		$	0.04		$	0.19		$	0.19
Diluted net income per share	$	0.04		$	0.04		$	0.19		$	0.19
Weighted average shares outstanding
Basic		62,774			62,016			62,531			61,837
Diluted		62,799			62,646			62,842			62,525
Key Financial Metrics:
Revenue growth - outsourced portals		14	%		18	%		17	%		18	%
Same state revenue growth - outsourced portals		11	%		12	%		11	%		15	%
Recurring portal revenue percentage		92	%		94	%		92	%		94	%
Gross profit % - outsourced portals		41	%		44	%		45	%		47	%
Selling & administrative as a % of portal revenue		22	%		27	%		23	%		26	%
Operating income margin as a % of portal revenue		17	%		15	%		19	%		20	%
Portal Revenue Analysis:
DMV transaction-based	$	10,648		$	10,481		$	46,342		$	44,387
Non-DMV transaction-based		9,422			7,572			34,600			27,981
Portal software & services		2,057			1,234			7,511			4,795
Portal management		2,104			1,988			8,342			5,289
Total portal revenues	$	24,231		$	21,275		$	96,795		$	82,452

NIC INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Thousands

	December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	60,373		$	38,236
Short-term investments		—			17,600
Trade accounts receivable		37,497			28,149
Unbilled revenues		359			720
Deferred income taxes, net		4,293			6,746
Prepaid expenses & other current assets		2,273			2,143
Total current assets		104,795			93,594
Property and equipment, net		6,641			6,110
Deferred income taxes, net		6,727			10,809
Other assets		1,249			863
Total assets	$	119,412		$	111,376
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	41,792		$	36,498
Accrued expenses		8,407			6,848
Application development contracts		202			353
Other current liabilities		898			99
Total current liabilities		51,299			43,798
Other long-term liabilities		894			714
Total liabilities		52,193			44,512
Commitments and contingencies		—			—
Shareholders' equity:
Common stock, no par, 200,000 shares authorized
62,779 and 62,031 shares issued and outstanding		—			—
Additional paid-in capital		154,200			165,934
Accumulated deficit		(86,981	)		(98,902	)
		67,219			67,032
Less treasury stock		—			(168	)
Total shareholders' equity		67,219			66,864
Total liabilities and shareholders' equity	$	119,412		$	111,376

NIC INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

Thousands

					Additional
	Common Stock				Paid-In			Accumulated			Treasury
	Shares		Amount		Capital			Deficit			Stock			Total
Balance, January 1, 2008	62,031		$	—	$	165,934		$	(98,902	)	$	(168	)	$	66,864
Net income	—			—		—			11,921			—			11,921
Cash dividends on common stock	—			—		(15,709	)		—			—			(15,709	)
Retirement of treasury stock	—			—		(168	)		—			168			—
Shares surrendered upon vesting of
restricted stock to satisfy tax withholdings	(64	)		—		(469	)		—			—			(469	)
Stock options exercises and restricted
stock vestings	750			—		1,862			—			—			1,862
Stock-based compensation	—			—		2,470			—			—			2,470
Issuance of common stock under
employee stock purchase plan	62			—		280			—			—			280
Balance, December 31, 2008	62,779		$	—	$	154,200		$	(86,981	)	$	—		$	67,219

NIC INC.

CASH FLOW SUMMARY

(UNAUDITED)

Thousands

	Three-months Ended
	December 31,						Year Ended December 31,
	2008			2007			2008			2007
Cash flows from operating activities:
Net income	$	2,693		$	2,667		$	11,921		$	11,955
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization		985			758			3,633			2,502
Stock-based compensation expense		641			417			2,470			1,677
Application development contracts		(44	)		(39	)		(151	)		(160	)
Deferred income taxes		1,203			1,027			6,535			6,220
(Gain) on affiliate investments		—			—			—			(508	)
Impairment loss on property and equipment		—			—			—			164
Loss on disposal of property and equipment		25			16			49			16
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable		(4,216	)		2,724			(9,348	)		580
(Increase) decrease in unbilled revenues		(11	)		(375	)		361			349
(Increase) decrease in prepaid expenses & other current assets		16			(221	)		(130	)		(498	)
(Increase) in other assets		(2	)		(12	)		(11	)		(10	)
Increase (decrease) in accounts payable		(2,344	)		(165	)		5,294			2,296
Increase (decrease) in accrued expenses		161			(886	)		1,090			594
Increase (decrease) in other current liabilities		(119	)		(91	)		799			(156	)
Increase (decrease) in other long-term liabilities		(142	)		(17	)		180			(406	)
Net cash provided by (used in) operating activities		(1,154	)		5,803			22,692			24,615
Cash flows from investing activities:
Purchases of property and equipment		(823	)		(2,258	)		(3,942	)		(4,876	)
Proceeds from sale of property and equipment		32			14			32			14
Capitalized internal use software development costs		(117	)		(210	)		(678	)		(568	)
Purchases of investments		—			(6,000	)		(1,000	)		(18,000	)
Sales and maturities of investments		6,925			400			18,600			45,408
Proceeds from sale of affiliate		—			—			—			508
Net cash provided by (used in) investing activities		6,017			(8,054	)		13,012			22,486
Cash flows from financing activities:
Cash dividends on common stock		—			—			(15,709	)		(46,730	)
Proceeds from employee common stock purchases		—			—			280			239
Proceeds from exercise of employee stock options		—			75			1,862			881
Net cash provided by (used in) financing activities		—			75			(13,567	)		(45,610	)
Net increase (decrease) in cash and cash equivalents		4,863			(2,176	)		22,137			1,491
Cash and cash equivalents, beginning of period		55,510			40,412			38,236			36,745
Cash and cash equivalents, end of period	$	60,373		$	38,236		$	60,373		$	38,236
Other cash flow information:
Income taxes paid	$	506		$	36		$	1,083		$	777