Exhibit 99.1
| | NEWS RELEASEFor 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 | |
