EX-99.1 3 j6898_ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE

For Immediate Release

 

 

Contacts:                   Eric Bur

913-498-1962

ebur@nicusa.com


Chris Neff

435-645-8898

cneff@nicusa.com

 

 

 

NIC Reports Second Consecutive Quarterly Profit

 

Company reports net income of $455,000 and $0.01 EPS; portal gross profits rise 61%, driven by 20% revenue growth and improved margins

 

 

OVERLAND PARK, Kan. — January 30, 2003 — NIC Inc. (Nasdaq: EGOV) today announced financial results for the fourth quarter ended December 31, 2002.  Driven by a 61% increase in outsourced portal gross profits, net income for the quarter was $455,000, or $0.01 per share, compared with a net loss of $18.9 million, or $0.34 per share in the same quarter last year.  NIC outperformed expectations in what is traditionally its slowest quarter.  Portal revenues grew by 20% over fourth quarter 2001, and gross margins were 39%, up from 29% in the prior year quarter.  Total revenues increased by 15% to $10.8 million during the same period.

 

Operating Highlights

Three Months ended December 31

(thousands)

 

 

 

Portals

 

Software & Services

 

 

 

2002

 

2001

 

Change

 

2002

 

2001

 

Change

 

Revenues

 

$

8,428

 

$

7,048

 

20

%

$

2,419

 

$

2,412

 

0.3

%

Cost of Revenues

 

5,142

 

5,008

 

3

%

1,550

 

4,128

 

-63

%

Gross Profit

 

$

3,286

 

$

2,040

 

61

%

$

869

 

$

(1,716

)

151

%

Gross Profit %

 

39

%

29

%

 

 

36

%

-71

%

 

 

 

 

Gross profit in the software and services business was $869,000 on revenues of $2.4 million.  These results were affected by three transactions during the quarter:  1) a $400,000 reduction in revenues associated with enhancing the role of a subcontractor in the California Secretary of State engagement; 2) an $800,000 reduction in loss reserves related to the legacy business filing contracts; and 3) a $275,000 charge related to the write-off of certain fixed assets.

 

Selling, general, and administrative expenses were $2.5 million, or 23% of revenue, compared to $3.3 million, or 35% of revenue in the same quarter last year.  The Company attributed the improvement to strong cost controls and a focus on organizational efficiency.

 

NIC ended its fiscal year with $16.1 million in cash and cash equivalents, an increase of approximately $600,000 from September 30, 2002.

 

 

 

Fourth Quarter Operating Highlights

 

Kansas (www.accessKansas.org) agreed to a new long-term outsourcing contract with NIC for portal services in the fourth quarter.  The new self-funding contract’s base term and renewal options will span seven years.  In addition, Indianapolis and Marion County, Indiana, which share the CivicNet (www.CivicNet.net) eCommerce portal, agreed to extend their joint self-funding enterprise portal agreement for another three years.

 

“NIC builds eGovernment services that get results, and we thank Kansas, Indianapolis, and Marion County for continuing to place their trust in NIC,” said Jeff Fraser, Chief Executive Officer of NIC.

 

To further reduce risk in its California Secretary of State engagement, the Company also agreed in principle to enter into a fixed price subcontracting agreement with a leading offshore software development firm.  The subcontractor will manage project delivery and software development with NIC’s subject matter expertise.

 

Fourth Quarter Earnings Call and Webcast Details

 

 

Conference Call

Thursday, January 30, 2003

9:00 a.m. ET

 

 

Call bridge:

 

1-800-218-0204

Call leaders:

 

Jeff Fraser, Chairman and Chief Executive Officer

 

 

Eric Bur, Chief Financial Officer

 

 

Harry Herington, Chief Operating Officer

 

A replay of the call will be available until 5:00 p.m. ET on February 6 by dialing 1-800-405-2236 and using passcode 515377.

 

Webcast

Thursday, January 30, 2003

9:00 a.m. ET

 

To sign in and listen:  The Webcast system is available in the investor relations section of www.nicusa.com.

 

Some users may need to refresh their browsers to view the Webcast.  A replay of the Webcast will be available until 5:00 p.m. ET on April 30 by visiting www.nicusa.com.

 

About NIC

NIC delivers more online government services than any provider in the world.  The company is helping transform the relationship between government and the communities it serves by providing convenient eGovernment applications that make life easier for businesses and citizens.  Through partnership at all levels of government, NIC manages transactions for over 1,400 state and local agencies that serve more than 67 million people in the United States.

 

The statements in this release regarding continued implementation of NIC’s business model and its development of new products and services are forward-looking statements. 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 solutions by businesses and citizens; competition; and general economic conditions and the other important cautionary statements and risk factors described in NIC’s Annual Report on Form 10-K filed on March 25, 2002, with the Securities and Exchange Commission, and in NIC’s most recent Quarterly Report on Form 10-Q filed with the SEC.

 

(financial tables follow)

 

 

NIC Inc.

FINANCIAL SUMMARY

(UNAUDITED)

Thousands except for per share amounts

 

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

 

 

 

2002

 

2001

 

2002

 

2001

 

Revenues:

 

 

 

 

 

 

 

 

 

Portal revenues

 

$

8,428

 

$

7,048

 

$

34,779

 

$

26,371

 

Software and services revenues

 

2,419

 

2,412

 

12,766

 

10,649

 

Total revenues

 

10,847

 

9,460

 

47,545

 

37,020

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of portal revenues

 

5,142

 

5,008

 

19,855

 

19,473

 

Cost of software and services revenues

 

1,550

 

4,128

 

13,688

 

14,495

 

Selling and administrative

 

2,492

 

3,319

 

13,322

 

17,567

 

Impairment loss

 

—

 

7,838

 

4,316

 

44,835

 

Stock compensation

 

—

 

349

 

1,307

 

1,525

 

Depreciation and amortization

 

555

 

2,195

 

2,988

 

26,627

 

Total operating expenses

 

9,739

 

22,837

 

55,476

 

124,522

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

1,108

 

(13,377

)

(7,931

)

(87,502

)

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

46

 

79

 

180

 

966

 

Interest expense

 

4

 

(16

)

(49

)

(38

)

Equity in net loss of affiliates

 

(267

)

(1,234

)

(1,235

)

(3,272

)

Other income (expense), net

 

(35

)

(159

)

(72

)

(233

)

Total other income (expense)

 

(252

)

(1,330

)

(1,176

)

(2,577

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and minority interest

 

856

 

(14,707

)

(9,107

)

(90,079

)

Income tax provision (benefit)

 

401

 

246

 

(3,532

)

(18,685

)

Income (loss) from continuing operations before minority interest

 

455

 

(14,953

)

(5,575

)

(71,394

)

Minority interest

 

—

 

—

 

—

 

(475

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

455

 

(14,953

)

(5,575

)

(70,919

)

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Loss from discontinued operations (less applicable income tax benefit of $-, $2,100, $1,307, and $3,940)

 

—

 

(3,898

)

(2,035

)

(6,525

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

455

 

$

(18,851

)

$

(7,610

)

$

(77,444

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

 

 

 

 

 

 

 

 

Earnings (loss) per share — continuing operations

 

$

0.01

 

$

(0.27

)

$

(0.10

)

$

(1.26

)

Loss per share — discontinued operations

 

$

—

 

$

(0.07

)

$

(0.03

)

$

(0.12

)

Net earnings (loss) per share

 

$

0.01

 

$

(0.34

)

$

(0.13

)

$

(1.38

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

57,824

 

56,240

 

56,875

 

56,110

 

Diluted

 

57,860

 

56,240

 

56,875

 

56,110

 

 

 

 

 

 

 

 

 

 

 

Key Financial Metrics:

 

 

 

 

 

 

 

 

 

Revenue growth — outsourced portals

 

19.6

%

61.2

%

31.9

%

48.1

%

Revenue growth — software and services

 

0.3

%

32.5

%

19.9

%

92.5

%

Gross margin — outsourced portals

 

39.0

%

28.9

%

42.9

%

26.2

%

Gross margin — software and services

 

35.9

%

-71.1

%

-7.2

%

-36.1

%

Selling and administrative costs as a percentage of revenue

 

23.0

%

35.1

%

28.0

%

47.5

%

 

NIC Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Thousands except for share amounts

 

 

 

December 31,

 

December 31,

 

 

 

2002

 

2001

 

ASSETS

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

15,859

 

$

17,235

 

Marketable securities

 

249

 

4,066

 

Trade accounts receivable

 

14,465

 

12,194

 

Deferred income taxes

 

606

 

—

 

Prepaid expenses

 

761

 

1,156

 

Other current assets

 

3,215

 

2,808

 

Total current assets

 

35,155

 

37,459

 

 

 

 

 

 

 

Property and equipment, net

 

3,054

 

6,386

 

Deferred income taxes

 

35,003

 

31,757

 

Other assets

 

139

 

270

 

Investments in affiliates

 

839

 

1,501

 

Goodwill, net

 

—

 

1,255

 

Intangible assets, net

 

220

 

3,185

 

Total assets

 

$

74,410

 

$

81,813

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

12,701

 

$

11,232

 

Accrued expenses

 

3,792

 

5,676

 

Income taxes payable

 

57

 

21

 

Capital lease obligations — current portion

 

1

 

14

 

Note payable — current portion

 

332

 

348

 

Application development contracts

 

1,559

 

3,962

 

Other current liabilities

 

711

 

476

 

Total current liabilities

 

19,153

 

21,729

 

 

 

 

 

 

 

Capital lease obligation — long-term portion

 

—

 

1

 

Note payable — long-term portion

 

201

 

524

 

Total liabilities

 

19,354

 

22,254

 

 

 

 

 

 

 

Commitments and contingencies

 

—

 

—

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock, no par, 200,000,000 shares authorized 58,092,346 and 56,260,197 shares issued and outstanding

 

—

 

—

 

Additional paid-in capital

 

197,160

 

195,159

 

Accumulated deficit

 

(141,889

)

(134,279

)

Accumulated other comprehensive income

 

—

 

1

 

 

 

55,271

 

60,881

 

Less treasury stock

 

(215

)

—

 

Less notes and stock subscriptions receivable

 

—

 

(15

)

Less deferred compensation expense

 

—

 

(1,307

)

Total shareholders’ equity

 

55,056

 

59,559

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

74,410

 

$

81,813

 

 

 

NIC Inc.

CASH FLOW SUMMARY

(UNAUDITED)

Thousands

 

 

 

Three months ended

 

 

 

December 31,

 

 

 

2002

 

2001

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

455

 

$

(18,851

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

555

 

2,608

 

Compensation expense recognized related to sale of common stock

 

—

 

4

 

Compensation expense recognized related to stock options

 

—

 

345

 

Loss on disposal of property and equipment

 

310

 

159

 

Accretion of discount on marketable securities

 

—

 

3

 

Application development contracts

 

(1,545

)

789

 

Impairment loss

 

—

 

12,497

 

Deferred income taxes

 

312

 

(1,747

)

Equity in net loss of affiliates

 

267

 

1,235

 

 

 

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

(Increase) decrease in trade accounts receivable

 

172

 

(529

)

(Increase) decrease in prepaid expenses

 

(112

)

282

 

(Increase) in other current assets

 

(655

)

(701

)

(Increase) decrease in other assets

 

39

 

(63

)

Increase in accounts payable

 

1,442

 

3,801

 

Increase (decrease) in accrued expenses

 

(1,006

)

286

 

Increase (decrease) in income taxes payable

 

57

 

(180

)

(Decrease) in other current liabilities

 

(309

)

(187

)

 

 

 

 

 

 

Net cash used in operating activities

 

(18

)

(249

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(324

)

(329

)

Capitalized software development costs

 

—

 

(837

)

Purchases of marketable securities

 

(2,746

)

(3,667

)

Maturities of marketable securities

 

9,659

 

6,426

 

Investments in affiliates and joint ventures

 

—

 

(348

)

 

 

 

 

 

 

Net cash provided by investing activities

 

6,589

 

1,245

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Payments on notes payable

 

(102

)

(79

)

Payments on capital lease obligations

 

(6

)

(49

)

Payments to repurchase common stock

 

(215

)

—

 

Proceeds from exercise of employee stock options

 

1,236

 

130

 

 

 

 

 

 

 

Net cash provided by financing activities

 

913

 

2

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

7,484

 

998

 

Cash and cash equivalents, beginning of quarter

 

8,375

 

16,237

 

Cash and cash equivalents, end of quarter

 

$

15,859

 

$

17,235

 

Other cash flow information:

 

 

 

 

 

Interest paid

 

$

6

 

$

18

 

Income taxes paid

 

$

14

 

$

14