Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 22, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EGOV | |
Entity Registrant Name | NIC INC | |
Entity Central Index Key | 1065332 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 65,543,402 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash | $92,104 | $87,983 |
Trade accounts receivable, net (Note 1) | 67,822 | 57,468 |
Deferred income taxes, net | 1,079 | 1,039 |
Prepaid expenses & other current assets | 12,525 | 11,502 |
Total current assets | 173,530 | 157,992 |
Property and equipment, net | 11,018 | 12,247 |
Intangible assets, net | 2,395 | 2,394 |
Other assets | 444 | 446 |
Total assets | 187,387 | 173,079 |
Current liabilities: | ||
Accounts payable | 48,318 | 41,402 |
Accrued expenses | 16,498 | 19,751 |
Other current liabilities | 2,458 | 2,902 |
Total current liabilities | 67,274 | 64,055 |
Deferred income taxes, net | 1,558 | 1,536 |
Other long-term liabilities | 3,563 | 3,350 |
Total liabilities | 72,395 | 68,941 |
Commitments and contingencies (Notes 1 and 2) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par, 200,000 shares authorized, 65,543 and 65,303 shares issued and outstanding | 7 | 7 |
Additional paid-in capital | 96,546 | 94,690 |
Retained earnings | 18,439 | 9,441 |
Total stockholders' equity | 114,992 | 104,138 |
Total liabilities and stockholders' equity | $187,387 | $173,079 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Common stock, par | $0.00 | $0.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 65,543,000 | 65,303,000 |
Common stock, shares outstanding | 65,543,000 | 65,303,000 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues: | ||
Portal revenues | $65,914 | $61,482 |
Software & services revenues | 4,445 | 3,915 |
Total revenues | 70,359 | 65,397 |
Operating expenses: | ||
Cost of portal revenues, exclusive of depreciation & amortization (Note 1) | 41,494 | 37,560 |
Cost of software & services revenues, exclusive of depreciation & amortization | 1,290 | 993 |
Selling & administrative (Note 1) | 10,538 | 9,208 |
Depreciation & amortization | 2,292 | 2,250 |
Total operating expenses | 55,614 | 50,011 |
Operating income (loss) before income taxes | 14,745 | 15,386 |
Income tax provision | 5,804 | 6,010 |
Net income | $8,941 | $9,376 |
Basic net income per share (Note 1) | $0.14 | $0.14 |
Diluted net income per share (Note 1) | $0.14 | $0.14 |
Weighted average shares outstanding: | ||
Basic | 65,387 | 65,057 |
Diluted | 65,387 | 65,057 |
CONSOLIDATED_STATEMENT_OF_CHAN
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
In Thousands, except Share data | ||||
Beginning Balance at Dec. 31, 2014 | $104,138 | $7 | $94,690 | $9,441 |
Beginning Balance (in shares) at Dec. 31, 2014 | 65,303,000 | 65,303,000 | ||
Net income | 8,941 | 8,941 | ||
Restricted stock vestings (in shares) | 258,000 | |||
Restricted stock vestings | 74 | 74 | ||
Dividend equivalents cancelled upon forfeiture of performance-based restricted stock awards | 75 | 18 | 57 | |
Shares surrendered and cancelled upon vesting of restricted stock to satisfy tax withholdings (in shares) | -93,000 | |||
Shares surrendered and cancelled upon vesting of restricted stock to satisfy tax withholdings | -1,581 | -1,581 | ||
Stock-based compensation | 2,159 | 2,159 | ||
Tax deductions relating to stock-based compensation | 204 | 204 | ||
Shares issuable in lieu of dividend payments on unvested performance-based restricted stock awards | -149 | -149 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 75,000 | |||
Issuance of common stock under employee stock purchase plan | 1,131 | 1,131 | ||
Ending Balance at Mar. 31, 2015 | $114,992 | $7 | $96,546 | $18,439 |
Ending Balance (in shares) at Mar. 31, 2015 | 65,543,000 | 65,543,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $8,941 | $9,376 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation & amortization | 2,292 | 2,250 |
Stock-based compensation expense | 2,159 | 1,000 |
Deferred income taxes | -1,436 | -676 |
Loss on disposal of property and equipment | 27 | 104 |
Changes in operating assets and liabilities: | ||
(Increase) in trade accounts receivable, net | -10,354 | -8,797 |
Decrease in prepaid expenses & other current assets | 395 | 2,241 |
(Increase) decrease in other assets | 2 | -34 |
Increase in accounts payable | 6,916 | 7,987 |
(Decrease) in accrued expenses | -4,960 | -7,227 |
Increase (decrease) in other current liabilities | -444 | 415 |
Increase in other long-term liabilities | 213 | 161 |
Net cash provided by operating activities | 3,751 | 6,800 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -677 | -919 |
Capitalized internal use software development costs | -288 | -325 |
Net cash used in investing activities | -965 | -1,244 |
Cash flows from financing activities: | ||
Proceeds from employee common stock purchases | 1,131 | 1,107 |
Tax deductions related to stock-based compensation | 204 | 690 |
Net cash provided by financing activities | 1,335 | 1,797 |
Net increase in cash | 4,121 | 7,353 |
Cash, beginning of period | 87,983 | 74,245 |
Cash, end of period | 92,104 | 81,598 |
Non-cash investing activities: | ||
Capital expenditures accrued but not yet paid | 126 | 189 |
Cash payments: | ||
Income taxes paid | 6,414 | 6,532 |
Cash dividends on common stock previously restricted for payment of dividend | $22,982 |
THE_COMPANY_AND_SUMMARY_OF_SIG
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
The Company | |||||||||
NIC is a leading provider of eGovernment services that helps governments use the Internet to reduce internal costs, increase efficiencies and provide a higher level of service to businesses and citizens. The Company accomplishes this currently through two channels: its primary outsourced portal businesses and its software & services businesses. | |||||||||
In its primary outsourced portal businesses, the Company generally designs, builds, and operates Internet-based portals on an enterprise-wide basis on behalf of state and local governments desiring to provide access to government information and to complete secure government-based transactions through multiple online channels, including mobile devices. These portals consist of websites and applications the Company has built that allow businesses and citizens to access government information online and complete transactions, such as applying for a permit, retrieving government records, or filing a government-mandated form or report. Operating under multiple-year contracts (see Note 2), NIC markets the services and solicits users to complete government-based transactions and to enter into subscriber contracts permitting users to access the portal and the government information contained therein in exchange for transactional and/or subscription user fees. The Company typically manages operations for each contractual relationship through separate local subsidiaries that operate as decentralized businesses with a high degree of autonomy. NIC’s self-funded business model allows the Company to generate revenues by sharing in the fees the Company collects from eGovernment transactions. The Company’s government partners benefit through reducing their financial and technology risks, increasing their operational efficiencies, and gaining a centralized, customer-focused presence on the Internet, while businesses and citizens receive a faster, more convenient, and more cost-effective means to interact with governments. The Company is typically responsible for funding up-front investment and ongoing operations and maintenance costs of the outsourced government portals. | |||||||||
The Company’s software & services businesses primarily include its subsidiaries that provide software development and services, other than outsourced portal services, to state and local governments as well as federal agencies (see Note 2). | |||||||||
Basis of presentation | |||||||||
The Company classifies its revenues and cost of revenues into two categories: (1) portal and (2) software & services. The portal category generally includes revenues and cost of revenues from the Company’s subsidiaries operating outsourced portals on behalf of state and local governments. The software & services category primarily includes revenues and cost of revenues from the Company’s subsidiaries that provide software development and services, other than outsourced portal services, to state and local governments as well as federal agencies. The primary categories of operating expenses include: cost of portal revenues, cost of software & services revenues, selling & administrative expenses and depreciation & amortization. Cost of portal revenues consists of all direct costs associated with operating government portals on an outsourced basis including employee compensation and benefits (including stock-based compensation), provision for losses on accounts receivable, subcontractor labor costs, gains and losses on disposal of assets, telecommunications, fees required to process credit/debit card and automated clearinghouse transactions, and all other costs associated with the provision of dedicated client service such as dedicated facilities. Cost of software & services revenues consists of all direct project costs to provide software development and services such as employee compensation and benefits (including stock-based compensation), subcontractor labor costs, gains and losses on disposal of assets and all other direct project costs including hardware, software, materials, travel and other out-of-pocket expenses. Selling & administrative expenses consist primarily of corporate-level expenses relating to human resource management, administration, information technology, security, legal, finance and accounting, internal audit and all costs of non-customer service personnel from the Company’s software & services businesses, including information systems and office rent. Selling & administrative expenses also consist of management incentive compensation, including stock-based compensation, and corporate-level expenses for market development, public relations and gains and losses on disposal of assets. | |||||||||
The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of selling & administrative expenses of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in cost of portal revenues. The reclassification had no effect on total operating expenses, operating income, net income, earnings per share or cash flows. Certain other income statement amounts for the three-month period ended March 31, 2014 have been reclassified to conform to the 2015 presentation. | |||||||||
Trade accounts receivable | |||||||||
The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The Company calculates this allowance based on its history of write-offs, the level of past-due accounts, and its relationship with, and the economic status of, its customers. Trade accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. | |||||||||
One of the customers who does business with most of the Company’s subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on February 8, 2015. As of the date of this filing, the Company is in the process of evaluating certain potential contingent liabilities, including outstanding accounts receivable, in connection with the customer’s bankruptcy. While the result of the potential contingent liabilities cannot be predicted with certainty, the Company believes the final outcome of such matters will not have a material adverse effect on its results of operations or financial position. | |||||||||
The Company’s allowance for doubtful accounts at both March 31, 2015 and December 31, 2014 was $0.5 million. | |||||||||
Earnings per share | |||||||||
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. The Company’s service-based restricted stock awards contain non-forfeitable rights to dividends and are considered participating securities. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. Unvested service-based restricted shares totaled approximately 0.7 million at both March 31, 2015 and 2014. Basic earnings per share is calculated by first allocating earnings between common stockholders and participating securities. Earnings attributable to common stockholders are divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to dilutive potential common shares outstanding during the period. The dilutive effect of shares related to the Company’s employee stock purchase plan is determined based on the treasury stock method. The dilutive effect of service-based restricted stock awards is based on the more dilutive of the treasury stock method or the two-class method assuming a reallocation of undistributed earnings to common stockholders after considering the dilutive effect of potential common shares other than the participating unvested restricted stock awards. The dilutive effect of performance-based restricted stock awards is based on the treasury stock method. | |||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income | $ | 8,941 | $ | 9,376 | |||||
Less: Income allocated to participating securities | (85 | ) | (94 | ) | |||||
Net income available to common stockholders | $ | 8,856 | $ | 9,282 | |||||
Denominator: | |||||||||
Weighted average shares - basic | 65,387 | 65,057 | |||||||
Performance-based restricted stock awards | - | - | |||||||
Weighted average shares - diluted | 65,387 | 65,057 | |||||||
Basic net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 | |||||
Diluted net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 | |||||
Concentration of credit risk | |||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) provides deposit insurance coverage up to $250,000 per depositor for deposit accounts at each FDIC-insured depository institution. At March 31, 2015, the amount of cash covered by FDIC deposit insurance was approximately $10.4 million, and approximately $81.7 million of cash was above the FDIC deposit insurance limit. The Company performs ongoing credit evaluations of its customers and generally requires no collateral to secure accounts receivable. | |||||||||
Recent accounting pronouncements | |||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued new authoritative literature, Revenue from Contracts with Customers, as part of a joint effort by the FASB and the International Accounting Standards Board to enhance financial reporting by creating common revenue recognition guidance and thereby improve the consistency of requirements, comparability of practices and usefulness of disclosures. The new standard will supersede much of the existing authoritative literature for revenue recognition. The standard and related amendments will be effective for the Company for its annual reporting period beginning January 1, 2017, including interim periods within that reporting period. Early application is not permitted. Entities are allowed to transition to the new standard by either recasting prior periods presented or recognizing the cumulative effect of the change in accounting principle in beginning stockholders’ equity. The Company is currently evaluating the newly issued guidance, including which transition approach will be applied and the estimated impact it will have on the Company’s consolidated financial statements. |
OUTSOURCED_GOVERNMENT_CONTRACT
OUTSOURCED GOVERNMENT CONTRACTS | 3 Months Ended | |||
Mar. 31, 2015 | ||||
OUTSOURCED GOVERNMENT CONTRACTS | 2. OUTSOURCED GOVERNMENT CONTRACTS | |||
Outsourced Portal Contracts | ||||
The Company’s outsourced government portal contracts generally have an initial multi-year term with provisions for renewals for various periods at the option of the government. The Company’s primary business obligation under these contracts is generally to design, build, and operate Internet-based portals on an enterprise-wide basis on behalf of governments desiring to provide access to government information and to complete government-based transactions online. NIC typically markets the services and solicits users to complete government-based transactions and to enter into subscriber contracts permitting the user to access the portal and the government information contained therein in exchange for transactional and/or subscription user fees. The Company enters into separate agreements with various agencies and divisions of the government to provide specific services and to conduct specific transactions. These agreements preliminarily establish the pricing of the electronic transactions and data access services the Company provides and the division of revenues between the Company and the government agency. The government oversight authority must approve prices and revenue sharing agreements. The Company has limited control over the level of fees it is permitted to retain. Any changes made to the amount or percentage of fees retained by NIC, or to the amounts charged for the services offered, could materially affect the profitability of the respective contract to NIC. | ||||
The Company is typically responsible for funding up-front investment and ongoing operations and maintenance costs of the government portals, and generally owns all of the intellectual property in connection with the applications developed under these contracts. After completion of a defined contract term, the government partner typically receives a perpetual, royalty-free license to use the software only in its own portal. However, certain customer management, billing and payment processing software applications that the Company has developed and standardized centrally and that are utilized by the Company’s portal businesses, are being provided to an increasing number of government partners on a software-as-a-service, or “SaaS,” basis, and thus would not be included in any royalty-free license. If the Company’s contract was not renewed after a defined term or if the contract was terminated by the government partner for cause, the government agency would be entitled to take over the portal in place with no future obligation of the Company, except as otherwise provided in the contract and except for services provided by the Company on a SaaS basis, which would be available to the partner on a fee-for-service basis. | ||||
Any renewal of these contracts beyond the initial term by the government is optional and a government may terminate its contract prior to the expiration date if the Company breaches a material contractual obligation and fails to cure such breach within a specified period or upon the occurrence of other events or circumstances specified in the contract. In addition, 17 contracts under which the Company provides outsourced portal services or software development and services can be terminated by the other party without cause on a specified period of notice. Collectively, revenues generated from these contracts represented 62% of the Company’s total consolidated revenues for the three-month period ended March 31, 2015. In the event that any of these contracts is terminated without cause, the terms of the respective contract may require the government to pay a fee to the Company in order to continue to use the Company’s software in its portal. In addition, the loss of one or more of the Company’s larger state portal partners, such as Alabama, Arkansas, Colorado, Indiana, Kentucky, New Jersey, Pennsylvania, Tennessee, Texas, or Utah, as a result of the expiration, termination or failure to renew the respective contract, if such partner is not replaced, could significantly reduce the Company’s revenues and profitability. See the discussion below under “Expiring Contracts” regarding the expiration of the Company’s contract with the states of Arizona and Delaware. | ||||
Under a typical portal contract, the Company is required to fully indemnify its government clients against claims that the Company’s services infringe upon the intellectual property rights of others and against claims arising from the Company’s performance or the performance of the Company’s subcontractors under the contract. The Company has never had any defaults resulting in draws on performance bonds. At March 31, 2015, the Company was bound by performance bond commitments totaling approximately $6.6 million on certain outsourced portal contracts. | ||||
The following is a summary of the portals in each state through which the Company provides enterprise-wide outsourced portal services to multiple government agencies as of March 31, 2015: | ||||
Year Services | Contract Expiration Date | |||
NIC Portal Entity (1) | Portal Website (State) | Commenced | (Renewal Options Through) | |
Connecticut Interactive, LLC | www.ct.gov (Connecticut) | 2014 | 1/9/2017 (1/9/2020) | |
Wisconsin Interactive Network, LLC | www.wisconsin.gov (Wisconsin) | 2013 | 5/13/2018 (5/13/2023) | |
Pennsylvania Interactive, LLC | www.pa.gov (Pennsylvania) | 2012 | 11/30/2017 (11/30/2022) | |
NICUSA, OR Division | www.oregon.gov (Oregon) | 2011 | 11/22/21 | |
NICUSA, MD Division | www.maryland.gov (Maryland) | 2011 | 8/10/2016 (8/10/2019) | |
Mississippi Interactive, LLC | www.ms.gov (Mississippi) | 2011 | 12/31/2015 (12/31/2021) | |
New Jersey Interactive, LLC | www.nj.gov (New Jersey) | 2009 | 5/1/2020 (5/1/2022) | |
Texas NICUSA, LLC | www.Texas.gov (Texas) | 2009 | 8/31/2017 (8/31/2018) | |
West Virginia Interactive, LLC | www.WV.gov (West Virginia) | 2007 | 6/30/15 | |
Vermont Information Consortium, LLC | www.Vermont.gov (Vermont) | 2006 | 6/8/2016 (6/8/2019) | |
Colorado Interactive, LLC | www.Colorado.gov (Colorado) | 2005 | 4/30/2019 (4/30/2023) | |
South Carolina Interactive, LLC | www.SC.gov (South Carolina) | 2005 | 7/15/2019 (7/15/2021) | |
Kentucky Interactive, LLC | www.Kentucky.gov (Kentucky) | 2003 | 8/31/15 | |
Alabama Interactive, LLC | www.Alabama.gov (Alabama) | 2002 | 3/1/2016 (3/1/2017) | |
Rhode Island Interactive, LLC | www.RI.gov (Rhode Island) | 2001 | 7/1/2017 (7/1/2019) | |
Oklahoma Interactive, LLC | www.OK.gov (Oklahoma) | 2001 | 3/31/2016 (3/31/2020) | |
Montana Interactive, LLC | www.MT.gov (Montana) | 2001 | 12/31/2017 (12/31/2020) | |
NICUSA, TN Division | www.TN.gov (Tennessee) | 2000 | 3/31/17 | |
Hawaii Information Consortium, LLC | www.eHawaii.gov (Hawaii) | 2000 | 1/3/2016 (3-year renewal options) | |
Idaho Information Consortium, LLC | www.Idaho.gov (Idaho) | 2000 | 6/30/17 | |
Utah Interactive, LLC | www.Utah.gov (Utah) | 1999 | 6/5/2016 (6/5/2019) | |
Year Services | Contract Expiration Date | |||
NIC Portal Entity (1) | Portal Website (State) | Commenced | (Renewal Options Through) | |
Maine Information Network, LLC | www.Maine.gov (Maine) | 1999 | 7/1/2016 (7/1/2018) | |
Arkansas Information Consortium, LLC | www.Arkansas.gov (Arkansas) | 1997 | 6/30/18 | |
Iowa Interactive, LLC | www.Iowa.gov (Iowa) | 1997 | 6/30/2016 (6/30/2020) | |
Indiana Interactive, LLC | www.IN.gov (Indiana) | 1995 | 7/31/16 | |
Nebraska Interactive, LLC | www.Nebraska.gov (Nebraska) | 1995 | 1/31/16 | |
Kansas Information Consortium, LLC | www.Kansas.gov (Kansas) | 1992 | 12/31/2021 (annual 1-year renewal options) | |
(1) | The Company’s contract with the state of Delaware expired on March 31, 2015. | |||
During the first quarter of 2015, the Company received two-year contract extensions from the states of Montana and Idaho. In addition, the Company executed one-year contract extensions with the states of Alabama and Tennessee. | ||||
During the second quarter of 2015, the Company signed a new one-year contract with the state of Oklahoma, which includes four one-year renewal options for the government to extend the contract. In addition, the Company was awarded a new five-year contract with the state of New Jersey, which includes two one-year renewal options for the government to extend the contract. | ||||
Other Outsourced State Contracts | ||||
During the third quarter of 2014, the Company’s subsidiary, Louisiana Interactive, LLC, signed a master contract with the state of Louisiana Division of Administration, Office of Technology Services (“Louisiana Division”) that creates a framework to provide certain eGovernment services for a pilot period. The pilot period commenced during the first quarter of 2015 and the Company anticipates it will conclude in approximately 12-18 months. Subsequent to the pilot period, the Louisiana Division has the option to receive enterprise-wide eGovernment services pursuant to the master contract. | ||||
The Company’s subsidiary, New Mexico Interactive, LLC, has a contract to manage eGovernment services for the New Mexico Motor Vehicle Division (“MVD”) and its parent, the New Mexico Taxation and Revenue Department. During the third quarter of 2014, the Company was awarded a new two-year contract by the MVD to manage eGovernment services through June 30, 2016. The contract includes a renewal option for the government to extend the contract for two additional one-year periods. | ||||
During the third quarter of 2014, the Company’s subsidiary, Virginia Interactive, LLC (“VI”), extended its agreement with the Virginia Department of Game and Inland Fisheries to provide eGovernment services through August 31, 2015. During the third quarter of 2014, VI extended its agreement with the Office of the Executive Secretary of the Supreme Court of Virginia to provide eGovernment services through August 31, 2015. | ||||
Outsourced Federal Contracts | ||||
The Company’s subsidiary, NIC Federal, LLC (“NIC Federal”, formerly known as NIC Technologies, LLC) has a contract with the Federal Motor Carrier Safety Administration (“FMCSA”) to develop and manage the FMCSA’s Pre-Employment Screening Program (“PSP”) for motor carriers nationwide, using the self-funded, transaction-based business model. The Company’s contract with the FMCSA expires on August 16, 2015. | ||||
Any renewal of the contract with the FMCSA beyond the current term is at the option of the FMCSA and the contract can be terminated by the FMCSA without cause on a specified period of notice. The loss of the contract as a result of the expiration, termination or failure to renew the contract, if not replaced, could significantly reduce the Company’s revenues and profitability. In addition, the Company has limited control over the level of fees it is permitted to retain under the contract with the FMCSA. Any changes made to the amount or percentage of fees retained by the Company, or to the amounts charged for the services offered, could materially affect the profitability of this contract. | ||||
Expiring Contracts | ||||
As of March 31, 2015, there were 10 contracts under which the Company provides outsourced portal services or software development and services that have expiration dates within the 12-month period following March 31, 2015. Collectively, revenues generated from these contracts represented 24% of the Company’s total consolidated revenues for the three-month period ended March 31, 2015. As described above, if a contract is not renewed after a defined term, the government partner would be entitled to take over the portal in place with no future obligation of the Company, except as otherwise provided in the contract and except for the services the Company provides on a SaaS basis, which would be available to the government agency on a fee-for-service basis. | ||||
During the first quarter of 2013, the Company’s subsidiary, NICUSA, Inc. (“NICUSA”), chose not to respond to a request for proposal issued by the state of Arizona for a new contract. The contract under which NICUSA provided outsourced portal services to agencies of the state of Arizona expired on June 26, 2013 and was subsequently extended through March 26, 2014. NICUSA provided transition services as required by the contract through the March 26, 2014 expiration date of the contract. The costs incurred in transitioning out of NICUSA’s contract with the state of Arizona, including employee retention bonuses, operating lease termination costs, and fixed asset impairment, did not have a material impact on the Company’s consolidated results of operations, cash flows, or financial condition. For the three-month period ended March 31, 2014, revenues from the legacy Arizona portal contract were approximately $0.8 million. | ||||
The contract under which the Company’s subsidiary, Delaware Interactive, LLC (“DI”), managed the state of Delaware’s official government portal expired on March 31, 2015. The primary revenue source for DI under the contract was an annual portal management fee paid to DI by the state. During the second quarter of 2014, the state informed DI that due to fiscal constraints, it did not intend to renew its contract with DI when the contract term expired. The costs incurred in transitioning out of DI’s contract with the state of Delaware, including employee retention bonuses, operating lease termination costs, and fixed asset impairment, did not have a material impact on the Company’s consolidated results of operations, cash flows, or financial condition. For each of the three-month periods ended March 31, 2015 and 2014, revenues from the Delaware portal contract were approximately $0.6 million. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2015 | |
STOCKHOLDERS' EQUITY | 3. STOCKHOLDERS’ EQUITY |
On October 27, 2014, the Company’s Board of Directors declared a special cash dividend of $0.50 per share, payable to stockholders of record as of November 7, 2014. The dividend, totaling approximately $33.0 million, was paid on November 20, 2014 on 65,298,472 outstanding shares of common stock. A dividend equivalent of $0.50 per share was also paid simultaneously on 655,499 unvested shares of service-based restricted stock. The dividend was paid out of the Company’s available cash. | |
On October 28, 2013, the Company’s Board of Directors declared a special cash dividend of $0.35 per share, payable to stockholders of record as of November 8, 2013. The dividend, totaling approximately $23.0 million, was paid on January 2, 2014 on 64,987,854 outstanding shares of common stock. A dividend equivalent of $0.35 per share was also paid simultaneously on 676,281 unvested shares of service-based restricted stock. The dividend was paid out of the Company’s available cash. | |
In addition, holders of performance-based restricted stock accrued dividend equivalents, for each of the dividends declared noted above, that could be earned and become payable in the form of shares of common stock at the end of the respective performance period to the extent that the underlying shares of restricted stock were earned. |
STOCK_BASED_COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
STOCK BASED COMPENSATION | 4. STOCK BASED COMPENSATION | ||||||||
During the first quarter of 2015, the Board of Directors of the Company granted to certain management-level employees and executive officers service-based restricted stock awards totaling 252,363 shares with a grant-date fair value totaling approximately $4.2 million. Such restricted stock awards vest beginning one year from the date of grant in annual installments of 25%. Restricted stock is valued at the date of grant, based on the closing market price of the Company’s common stock, and expensed using the straight-line method over the requisite service period (generally the vesting period of the award). The Company estimates and excludes compensation cost related to awards not expected to vest based upon estimated forfeitures. | |||||||||
During the first quarter of 2015, the Board of Directors of the Company also granted to certain executive officers performance-based restricted stock awards pursuant to the terms of the Company’s executive compensation program totaling 109,705 shares with a grant-date fair value totaling approximately $1.9 million, which represents the maximum number of shares able to be earned by the executive officers at the end of a three-year performance period ending December 31, 2017. | |||||||||
The actual number of shares earned will be based on the Company’s performance related to the following performance criteria over the performance period: | |||||||||
● | Operating income growth (three-year compound annual growth rate); | ||||||||
● | Total consolidated revenue growth (three-year compound annual growth rate); and | ||||||||
● | Cash flow return on invested capital, excluding income taxes paid (three-year average). | ||||||||
At the end of the three-year period, the executive officers are eligible to receive up to a specified number of shares based upon the Company’s performance relative to these performance criteria over the performance period. In addition, the executive officers will accrue dividend equivalents for any cash dividend declared during the performance period, payable in the form of shares of Company common stock, based upon the maximum number of shares to be earned by the executive officers for each performance-based restricted stock award. Such hypothetical cash dividend payment shall be divided by the fair value of the Company’s common stock on the dividend payment date to determine the maximum number of notional shares to be awarded. At the end of the three-year performance period and on the date some or all of the shares are paid under the agreement, a pro rata number of notional dividend shares will be converted into an equivalent number of dividend shares paid and granted to the executive officers based upon the actual number of underlying shares earned during the performance period. | |||||||||
At December 31, 2014, the three-year performance period related to the performance-based restricted stock awards granted to certain executive officers on January 30, 2012 ended. Based on the Company’s actual financial results from 2012 through 2014, 67,239 of the shares subject to the awards and 4,043 dividend shares were earned and vested on January 30, 2015. | |||||||||
Stock-based compensation cost for performance-based restricted stock awards is measured at the grant date based on the fair value of shares expected to be earned at the end of the performance period, and is recognized as expense over the performance period based upon the probable number of shares expected to vest. The Company estimates and excludes compensation cost related to awards not expected to vest based upon estimated forfeitures. | |||||||||
The following table presents stock-based compensation expense included in the Company’s unaudited consolidated statements of income (in thousands): | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Cost of portal revenues, exclusive of depreciation & amortization | $ | 404 | $ | 282 | |||||
Cost of software & services revenues, exclusive of depreciation & amortization | 11 | 12 | |||||||
Selling & administrative | 1,744 | 706 | |||||||
Stock-based compensation expense before income taxes | 2,159 | 1,000 | |||||||
Income tax benefit | (850 | ) | (391 | ) | |||||
Net stock-based compensation expense | $ | 1,309 | $ | 609 | |||||
REPORTABLE_SEGMENT_AND_RELATED
REPORTABLE SEGMENT AND RELATED INFORMATION | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
REPORTABLE SEGMENT AND RELATED INFORMATION | 5. REPORTABLE SEGMENT AND RELATED INFORMATION | ||||||||||||||||
The Outsourced Portals segment is the Company’s only reportable segment and generally includes the Company’s subsidiaries operating outsourced state and local government portals and the corporate divisions that directly support portal operations. The Other Software & Services category primarily includes the Company’s subsidiaries that provide software development and services, other than outsourced portal services, to state and local governments as well as federal agencies. Each of the Company’s businesses within the Other Software & Services category is an operating segment and has been grouped together to form the Other Software & Services category, as none of the operating segments meets the quantitative threshold of a separately reportable segment. Unallocated corporate-level expenses are reported in the reconciliation of the segment totals to the related consolidated totals as “Other Reconciling Items.” There have been no significant intersegment transactions for the periods reported. The summary of significant accounting policies applies to all reportable and operating segments. | |||||||||||||||||
The measure of profitability by which management, including the Company’s chief operating decision maker, evaluates the performance of its segments and allocates resources to them is operating income (loss) before income taxes. Segment assets or other segment balance sheet information is not presented to the Company’s chief operating decision maker. Accordingly, the Company has not presented information relating to segment assets. | |||||||||||||||||
The table below reflects summarized financial information for the Company’s reportable and operating segments for the three month-period ended March 31 (in thousands): | |||||||||||||||||
Outsourced Portals | Other | Other Reconciling | Consolidated Total | ||||||||||||||
Software & Services | Items | ||||||||||||||||
2015 | |||||||||||||||||
Revenues | $ | 65,914 | $ | 4,445 | $ | - | $ | 70,359 | |||||||||
Costs & expenses | 44,911 | 1,290 | 7,121 | 53,322 | |||||||||||||
Depreciation & amortization | 2,176 | 9 | 107 | 2,292 | |||||||||||||
Operating income (loss) before income taxes | $ | 18,827 | $ | 3,146 | $ | (7,228 | ) | $ | 14,745 | ||||||||
2014 | |||||||||||||||||
Revenues | $ | 61,482 | $ | 3,915 | $ | - | $ | 65,397 | |||||||||
Costs & expenses (1) | 39,510 | 955 | 7,296 | 47,761 | |||||||||||||
Depreciation & amortization | 2,169 | 11 | 70 | 2,250 | |||||||||||||
Operating income (loss) before income taxes | $ | 19,803 | $ | 2,949 | $ | (7,366 | ) | $ | 15,386 | ||||||||
(1) | The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of costs & expenses in Other Reconciling Items of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in costs & expenses in Outsourced Portals. See Note 1. | ||||||||||||||||
For each of the three-month periods ended March 31, 2015 and 2014, the Company’s Texas portal contract accounted for approximately 22% of the Company’s total consolidated revenues. No other contract accounted for 10% or more of the Company’s total consolidated revenues for the three-month periods ended March 31, 2015 or 2014, respectively. |
THE_COMPANY_AND_SUMMARY_OF_SIG1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Basis of presentation | Basis of presentation | ||||||||
The Company classifies its revenues and cost of revenues into two categories: (1) portal and (2) software & services. The portal category generally includes revenues and cost of revenues from the Company’s subsidiaries operating outsourced portals on behalf of state and local governments. The software & services category primarily includes revenues and cost of revenues from the Company’s subsidiaries that provide software development and services, other than outsourced portal services, to state and local governments as well as federal agencies. The primary categories of operating expenses include: cost of portal revenues, cost of software & services revenues, selling & administrative expenses and depreciation & amortization. Cost of portal revenues consists of all direct costs associated with operating government portals on an outsourced basis including employee compensation and benefits (including stock-based compensation), provision for losses on accounts receivable, subcontractor labor costs, gains and losses on disposal of assets, telecommunications, fees required to process credit/debit card and automated clearinghouse transactions, and all other costs associated with the provision of dedicated client service such as dedicated facilities. Cost of software & services revenues consists of all direct project costs to provide software development and services such as employee compensation and benefits (including stock-based compensation), subcontractor labor costs, gains and losses on disposal of assets and all other direct project costs including hardware, software, materials, travel and other out-of-pocket expenses. Selling & administrative expenses consist primarily of corporate-level expenses relating to human resource management, administration, information technology, security, legal, finance and accounting, internal audit and all costs of non-customer service personnel from the Company’s software & services businesses, including information systems and office rent. Selling & administrative expenses also consist of management incentive compensation, including stock-based compensation, and corporate-level expenses for market development, public relations and gains and losses on disposal of assets. | |||||||||
The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of selling & administrative expenses of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in cost of portal revenues. The reclassification had no effect on total operating expenses, operating income, net income, earnings per share or cash flows. Certain other income statement amounts for the three-month period ended March 31, 2014 have been reclassified to conform to the 2015 presentation. | |||||||||
Trade accounts receivable | Trade accounts receivable | ||||||||
The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The Company calculates this allowance based on its history of write-offs, the level of past-due accounts, and its relationship with, and the economic status of, its customers. Trade accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. | |||||||||
One of the customers who does business with most of the Company’s subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on February 8, 2015. As of the date of this filing, the Company is in the process of evaluating certain potential contingent liabilities, including outstanding accounts receivable, in connection with the customer’s bankruptcy. While the result of the potential contingent liabilities cannot be predicted with certainty, the Company believes the final outcome of such matters will not have a material adverse effect on its results of operations or financial position. | |||||||||
The Company’s allowance for doubtful accounts at both March 31, 2015 and December 31, 2014 was $0.5 million. | |||||||||
Earnings per share | Earnings per share | ||||||||
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. The Company’s service-based restricted stock awards contain non-forfeitable rights to dividends and are considered participating securities. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. Unvested service-based restricted shares totaled approximately 0.7 million at both March 31, 2015 and 2014. Basic earnings per share is calculated by first allocating earnings between common stockholders and participating securities. Earnings attributable to common stockholders are divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to dilutive potential common shares outstanding during the period. The dilutive effect of shares related to the Company’s employee stock purchase plan is determined based on the treasury stock method. The dilutive effect of service-based restricted stock awards is based on the more dilutive of the treasury stock method or the two-class method assuming a reallocation of undistributed earnings to common stockholders after considering the dilutive effect of potential common shares other than the participating unvested restricted stock awards. The dilutive effect of performance-based restricted stock awards is based on the treasury stock method. | |||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income | $ | 8,941 | $ | 9,376 | |||||
Less: Income allocated to participating securities | (85 | ) | (94 | ) | |||||
Net income available to common stockholders | $ | 8,856 | $ | 9,282 | |||||
Denominator: | |||||||||
Weighted average shares - basic | 65,387 | 65,057 | |||||||
Performance-based restricted stock awards | - | - | |||||||
Weighted average shares - diluted | 65,387 | 65,057 | |||||||
Basic net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 | |||||
Diluted net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 | |||||
Concentration of credit risk | Concentration of credit risk | ||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) provides deposit insurance coverage up to $250,000 per depositor for deposit accounts at each FDIC-insured depository institution. At March 31, 2015, the amount of cash covered by FDIC deposit insurance was approximately $10.4 million, and approximately $81.7 million of cash was above the FDIC deposit insurance limit. The Company performs ongoing credit evaluations of its customers and generally requires no collateral to secure accounts receivable. | |||||||||
Recent accounting pronouncements | Recent accounting pronouncements | ||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued new authoritative literature, Revenue from Contracts with Customers, as part of a joint effort by the FASB and the International Accounting Standards Board to enhance financial reporting by creating common revenue recognition guidance and thereby improve the consistency of requirements, comparability of practices and usefulness of disclosures. The new standard will supersede much of the existing authoritative literature for revenue recognition. The standard and related amendments will be effective for the Company for its annual reporting period beginning January 1, 2017, including interim periods within that reporting period. Early application is not permitted. Entities are allowed to transition to the new standard by either recasting prior periods presented or recognizing the cumulative effect of the change in accounting principle in beginning stockholders’ equity. The Company is currently evaluating the newly issued guidance, including which transition approach will be applied and the estimated impact it will have on the Company’s consolidated financial statements. |
THE_COMPANY_AND_SUMMARY_OF_SIG2
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | ||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net income | $ | 8,941 | $ | 9,376 | |||||
Less: Income allocated to participating securities | (85 | ) | (94 | ) | |||||
Net income available to common stockholders | $ | 8,856 | $ | 9,282 | |||||
Denominator: | |||||||||
Weighted average shares - basic | 65,387 | 65,057 | |||||||
Performance-based restricted stock awards | - | - | |||||||
Weighted average shares - diluted | 65,387 | 65,057 | |||||||
Basic net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 | |||||
Diluted net income per share: | |||||||||
Net income | $ | 0.14 | $ | 0.14 |
OUTSOURCED_GOVERNMENT_CONTRACT1
OUTSOURCED GOVERNMENT CONTRACTS (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Summary of Enterprise-Wide Portal Outsourcing Services to Multiple Governments Agencies | The following is a summary of the portals in each state through which the Company provides enterprise-wide outsourced portal services to multiple government agencies as of March 31, 2015: | |||
Year Services | Contract Expiration Date | |||
NIC Portal Entity (1) | Portal Website (State) | Commenced | (Renewal Options Through) | |
Connecticut Interactive, LLC | www.ct.gov (Connecticut) | 2014 | 1/9/2017 (1/9/2020) | |
Wisconsin Interactive Network, LLC | www.wisconsin.gov (Wisconsin) | 2013 | 5/13/2018 (5/13/2023) | |
Pennsylvania Interactive, LLC | www.pa.gov (Pennsylvania) | 2012 | 11/30/2017 (11/30/2022) | |
NICUSA, OR Division | www.oregon.gov (Oregon) | 2011 | 11/22/21 | |
NICUSA, MD Division | www.maryland.gov (Maryland) | 2011 | 8/10/2016 (8/10/2019) | |
Mississippi Interactive, LLC | www.ms.gov (Mississippi) | 2011 | 12/31/2015 (12/31/2021) | |
New Jersey Interactive, LLC | www.nj.gov (New Jersey) | 2009 | 5/1/2020 (5/1/2022) | |
Texas NICUSA, LLC | www.Texas.gov (Texas) | 2009 | 8/31/2017 (8/31/2018) | |
West Virginia Interactive, LLC | www.WV.gov (West Virginia) | 2007 | 6/30/15 | |
Vermont Information Consortium, LLC | www.Vermont.gov (Vermont) | 2006 | 6/8/2016 (6/8/2019) | |
Colorado Interactive, LLC | www.Colorado.gov (Colorado) | 2005 | 4/30/2019 (4/30/2023) | |
South Carolina Interactive, LLC | www.SC.gov (South Carolina) | 2005 | 7/15/2019 (7/15/2021) | |
Kentucky Interactive, LLC | www.Kentucky.gov (Kentucky) | 2003 | 8/31/15 | |
Alabama Interactive, LLC | www.Alabama.gov (Alabama) | 2002 | 3/1/2016 (3/1/2017) | |
Rhode Island Interactive, LLC | www.RI.gov (Rhode Island) | 2001 | 7/1/2017 (7/1/2019) | |
Oklahoma Interactive, LLC | www.OK.gov (Oklahoma) | 2001 | 3/31/2016 (3/31/2020) | |
Montana Interactive, LLC | www.MT.gov (Montana) | 2001 | 12/31/2017 (12/31/2020) | |
NICUSA, TN Division | www.TN.gov (Tennessee) | 2000 | 3/31/17 | |
Hawaii Information Consortium, LLC | www.eHawaii.gov (Hawaii) | 2000 | 1/3/2016 (3-year renewal options) | |
Idaho Information Consortium, LLC | www.Idaho.gov (Idaho) | 2000 | 6/30/17 | |
Utah Interactive, LLC | www.Utah.gov (Utah) | 1999 | 6/5/2016 (6/5/2019) | |
Year Services | Contract Expiration Date | |||
NIC Portal Entity (1) | Portal Website (State) | Commenced | (Renewal Options Through) | |
Maine Information Network, LLC | www.Maine.gov (Maine) | 1999 | 7/1/2016 (7/1/2018) | |
Arkansas Information Consortium, LLC | www.Arkansas.gov (Arkansas) | 1997 | 6/30/18 | |
Iowa Interactive, LLC | www.Iowa.gov (Iowa) | 1997 | 6/30/2016 (6/30/2020) | |
Indiana Interactive, LLC | www.IN.gov (Indiana) | 1995 | 7/31/16 | |
Nebraska Interactive, LLC | www.Nebraska.gov (Nebraska) | 1995 | 1/31/16 | |
Kansas Information Consortium, LLC | www.Kansas.gov (Kansas) | 1992 | 12/31/2021 (annual 1-year renewal options) | |
(1) | The Company’s contract with the state of Delaware expired on March 31, 2015. |
STOCK_BASED_COMPENSATION_Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-based Compensation Expense | The following table presents stock-based compensation expense included in the Company’s unaudited consolidated statements of income (in thousands): | ||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Cost of portal revenues, exclusive of depreciation & amortization | $ | 404 | $ | 282 | |||||
Cost of software & services revenues, exclusive of depreciation & amortization | 11 | 12 | |||||||
Selling & administrative | 1,744 | 706 | |||||||
Stock-based compensation expense before income taxes | 2,159 | 1,000 | |||||||
Income tax benefit | (850 | ) | (391 | ) | |||||
Net stock-based compensation expense | $ | 1,309 | $ | 609 | |||||
REPORTABLE_SEGMENT_AND_RELATED1
REPORTABLE SEGMENT AND RELATED INFORMATION (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Summary of Financial Information for Reportable Segments | The table below reflects summarized financial information for the Company’s reportable and operating segments for the three month-period ended March 31 (in thousands): | ||||||||||||||||
Outsourced Portals | Other | Other Reconciling | Consolidated Total | ||||||||||||||
Software & Services | Items | ||||||||||||||||
2015 | |||||||||||||||||
Revenues | $ | 65,914 | $ | 4,445 | $ | - | $ | 70,359 | |||||||||
Costs & expenses | 44,911 | 1,290 | 7,121 | 53,322 | |||||||||||||
Depreciation & amortization | 2,176 | 9 | 107 | 2,292 | |||||||||||||
Operating income (loss) before income taxes | $ | 18,827 | $ | 3,146 | $ | (7,228 | ) | $ | 14,745 | ||||||||
2014 | |||||||||||||||||
Revenues | $ | 61,482 | $ | 3,915 | $ | - | $ | 65,397 | |||||||||
Costs & expenses (1) | 39,510 | 955 | 7,296 | 47,761 | |||||||||||||
Depreciation & amortization | 2,169 | 11 | 70 | 2,250 | |||||||||||||
Operating income (loss) before income taxes | $ | 19,803 | $ | 2,949 | $ | (7,366 | ) | $ | 15,386 | ||||||||
(1) | The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of costs & expenses in Other Reconciling Items of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in costs & expenses in Outsourced Portals. See Note 1. |
Recovered_Sheet1
The Company and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | ||
Share data in Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Categories | |||
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | |||
Number of business channels | 2 | ||
Number of revenue and cost categories | 2 | ||
Selling & administrative | $10,538,000 | $9,208,000 | |
Allowance for doubtful accounts | 500,000 | 500,000 | |
Unvested service-based restricted stock awards included in the calculation of earnings per share | 0.7 | 0.7 | |
Reclassification Adjustment | |||
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | |||
Selling & administrative | -1,100,000 | ||
Deposits Assets | |||
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | |||
Cash subject to FDIC insurance | 10,400,000 | ||
Cash not subject to FDIC insurance | 81,700,000 | ||
Deposits Assets | Maximum | |||
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | |||
FDIC deposit insurance coverage per depositor | $250,000 |
Computation_of_Basic_and_Dilut
Computation of Basic and Diluted Earnings per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net income | $8,941 | $9,376 |
Less: Income allocated to participating securities | -85 | -94 |
Net income available to common stockholders | $8,856 | $9,282 |
Denominator: | ||
Weighted average shares - basic | 65,387 | 65,057 |
Performance-based restricted stock awards | 0 | 0 |
Weighted average shares - diluted | 65,387 | 65,057 |
Basic net income per share: | ||
Net income | $0.14 | $0.14 |
Diluted net income per share: | ||
Net income | $0.14 | $0.14 |
Recovered_Sheet2
Outsourced Government Contracts - Additional Information (Detail) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2015 | |
Contract | Option | RenewalOptions | ||
Customer | ||||
Contracts [Line Items] | ||||
Performance bond commitments | $6,600,000 | |||
Number of federal agencies the Company currently has contracts with to provide outsourced services | 1 | |||
Number of outsourced portal services or software development and services contracts with expiration date within a 12-month period | 10 | |||
Percentage of total consolidated revenues related to contracts with expiration dates within a 12-month period | 24.00% | |||
Revenues | 70,359,000 | 65,397,000 | ||
Portal revenues | 65,914,000 | 61,482,000 | ||
Outsourced Portals | ||||
Contracts [Line Items] | ||||
Number of portal outsourcing contracts that can be terminated by the other party without cause on period of notice | 17 | |||
Outsourced Portals | Consolidated Revenues | Customer Concentration Risk | ||||
Contracts [Line Items] | ||||
Concentration risk percentage | 62.00% | |||
New Mexico Interactive, LLC | ||||
Contracts [Line Items] | ||||
Contract period | 2 years | |||
Contract renewal option | 2 | |||
Option for the government to extend the contract | 1 year | |||
NICUSA, AZ Division | ||||
Contracts [Line Items] | ||||
Contract Expiration Date | 26-Mar-14 | |||
NICUSA, AZ Division | Consolidated Revenues | ||||
Contracts [Line Items] | ||||
Revenues | 800,000 | |||
Delaware Interactive, LLC | ||||
Contracts [Line Items] | ||||
Portal revenues | $600,000 | $600,000 | ||
Montana | Extended Term | ||||
Contracts [Line Items] | ||||
Contract period | 2 years | |||
IDAHO | Extended Term | ||||
Contracts [Line Items] | ||||
Contract period | 2 years | |||
State of Alabama | Extended Term | ||||
Contracts [Line Items] | ||||
Contract period | 1 year | |||
TENNESSEE | Extended Term | ||||
Contracts [Line Items] | ||||
Contract period | 1 year | |||
State of Oklahoma | Scenario, Forecast | ||||
Contracts [Line Items] | ||||
Contract period | 1 year | |||
Contract renewal option | 4 | |||
State of Oklahoma | Scenario, Forecast | Renewal Term | ||||
Contracts [Line Items] | ||||
Contract period | 1 year | |||
State of New Jersey | Scenario, Forecast | ||||
Contracts [Line Items] | ||||
Contract period | 5 years | |||
Contract renewal option | 2 | |||
State of New Jersey | Scenario, Forecast | Renewal Term | ||||
Contracts [Line Items] | ||||
Contract period | 1 year | |||
US Department of Transportation, Federal Motor Carrier Safety Administration | ||||
Contracts [Line Items] | ||||
Contract Expiration Date | 16-Aug-15 |
Summary_of_EnterpriseWide_Port
Summary of Enterprise-Wide Portal Outsourcing Services to Multiple Governments Agencies (Detail) | 3 Months Ended | |
Mar. 31, 2015 | ||
State of Delaware | ||
Contracts [Line Items] | ||
Contract Expiration Date | 31-Mar-13 | |
Connecticut Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.ct.gov (Connecticut) | [1] |
Year Service Commenced | 2014 | [1] |
Contract Expiration Date | 9-Jan-17 | [1] |
Connecticut Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 9-Jan-20 | [1] |
Wisconsin Interactive Network, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.wisconsin.gov (Wisconsin) | [1] |
Year Service Commenced | 2013 | [1] |
Contract Expiration Date | 13-May-18 | [1] |
Wisconsin Interactive Network, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 13-May-23 | [1] |
Pennsylvania Interactive LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.pa.gov (Pennsylvania) | [1] |
Year Service Commenced | 2012 | [1] |
Contract Expiration Date | 30-Nov-17 | [1] |
Pennsylvania Interactive LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 30-Nov-22 | [1] |
NICUSA, OR Division | ||
Contracts [Line Items] | ||
Portal Website (State) | www.oregon.gov (Oregon) | [1] |
Year Service Commenced | 2011 | [1] |
Contract Expiration Date | 22-Nov-21 | [1] |
NICUSA, MD Division | ||
Contracts [Line Items] | ||
Portal Website (State) | www.maryland.gov (Maryland) | [1] |
Year Service Commenced | 2011 | [1] |
Contract Expiration Date | 10-Aug-16 | [1] |
NICUSA, MD Division | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 10-Aug-19 | [1] |
Mississippi Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.ms.gov (Mississippi) | [1] |
Year Service Commenced | 2011 | [1] |
Contract Expiration Date | 31-Dec-15 | [1] |
Mississippi Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 31-Dec-21 | [1] |
New Jersey Interactive LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.nj.gov (New Jersey) | [1] |
Year Service Commenced | 2009 | [1] |
Contract Expiration Date | 1-May-20 | [1] |
New Jersey Interactive LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 1-May-22 | [1] |
Texas NICUSA, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Texas.gov (Texas) | [1] |
Year Service Commenced | 2009 | [1] |
Contract Expiration Date | 31-Aug-17 | [1] |
Texas NICUSA, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 31-Aug-18 | [1] |
West Virginia Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.WV.gov (West Virginia) | [1] |
Year Service Commenced | 2007 | [1] |
Contract Expiration Date | 30-Jun-15 | [1] |
Vermont Information Consortium, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Vermont.gov (Vermont) | [1] |
Year Service Commenced | 2006 | [1] |
Contract Expiration Date | 8-Jun-16 | [1] |
Vermont Information Consortium, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 8-Jun-19 | [1] |
Colorado Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Colorado.gov (Colorado) | [1] |
Year Service Commenced | 2005 | [1] |
Contract Expiration Date | 30-Apr-19 | [1] |
Colorado Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 30-Apr-23 | [1] |
South Carolina Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.SC.gov (South Carolina) | [1] |
Year Service Commenced | 2005 | [1] |
Contract Expiration Date | 15-Jul-19 | [1] |
South Carolina Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 15-Jul-21 | [1] |
Kentucky Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Kentucky.gov (Kentucky) | [1] |
Year Service Commenced | 2003 | [1] |
Contract Expiration Date | 31-Aug-15 | [1] |
Alabama Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Alabama.gov (Alabama) | [1] |
Year Service Commenced | 2002 | [1] |
Contract Expiration Date | 1-Mar-16 | [1] |
Alabama Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 1-Mar-17 | [1] |
Rhode Island Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.RI.gov (Rhode Island) | [1] |
Year Service Commenced | 2001 | [1] |
Contract Expiration Date | 1-Jul-17 | [1] |
Rhode Island Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 1-Jul-19 | [1] |
Oklahoma Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.OK.gov (Oklahoma) | [1] |
Year Service Commenced | 2001 | [1] |
Contract Expiration Date | 31-Mar-16 | [1] |
Oklahoma Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 31-Mar-20 | [1] |
Montana Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.MT.gov (Montana) | [1] |
Year Service Commenced | 2001 | [1] |
Contract Expiration Date | 31-Dec-17 | [1] |
Montana Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 31-Dec-20 | [1] |
NICUSA, TN Division | ||
Contracts [Line Items] | ||
Portal Website (State) | www.TN.gov (Tennessee) | [1] |
Year Service Commenced | 2000 | [1] |
Contract Expiration Date | 31-Mar-17 | [1] |
Hawaii Information Consortium, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.eHawaii.gov (Hawaii) | [1] |
Year Service Commenced | 2000 | [1] |
Contract Expiration Date | 3-Jan-16 | [1] |
Hawaii Information Consortium, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Term of contract | 3-year renewal options | [1] |
Idaho Information Consortium, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Idaho.gov (Idaho) | [1] |
Year Service Commenced | 2000 | [1] |
Contract Expiration Date | 30-Jun-17 | [1] |
Utah Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Utah.gov (Utah) | [1] |
Year Service Commenced | 1999 | [1] |
Contract Expiration Date | 5-Jun-16 | [1] |
Utah Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 5-Jun-19 | [1] |
Maine Information Network, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Maine.gov (Maine) | [1] |
Year Service Commenced | 1999 | [1] |
Contract Expiration Date | 1-Jul-16 | [1] |
Maine Information Network, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 1-Jul-18 | [1] |
Arkansas Information Consortium, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Arkansas.gov (Arkansas) | [1] |
Year Service Commenced | 1997 | [1] |
Contract Expiration Date | 30-Jun-18 | [1] |
Iowa Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Iowa.gov (Iowa) | [1] |
Year Service Commenced | 1997 | [1] |
Contract Expiration Date | 30-Jun-16 | [1] |
Iowa Interactive, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Contract Expiration Date | 30-Jun-20 | [1] |
Indiana Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.IN.gov (Indiana) | [1] |
Year Service Commenced | 1995 | [1] |
Contract Expiration Date | 31-Jul-16 | [1] |
Nebraska Interactive, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Nebraska.gov (Nebraska) | [1] |
Year Service Commenced | 1995 | [1] |
Contract Expiration Date | 31-Jan-16 | [1] |
Kansas Information Consortium, LLC | ||
Contracts [Line Items] | ||
Portal Website (State) | www.Kansas.gov (Kansas) | [1] |
Year Service Commenced | 1992 | [1] |
Contract Expiration Date | 31-Dec-21 | [1] |
Kansas Information Consortium, LLC | Renewal Term | ||
Contracts [Line Items] | ||
Term of contract | annual 1-year renewal options | [1] |
[1] | The Company's contract with the state of Delaware expired on March 31, 2015. |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 0 Months Ended | |||||
In Millions, except Share data, unless otherwise specified | Oct. 27, 2014 | Oct. 28, 2013 | Mar. 31, 2015 | Dec. 31, 2014 | Oct. 27, 2014 | Oct. 28, 2013 |
Stockholders Equity Note [Line Items] | ||||||
Special cash dividend declared, date | 27-Oct-14 | 28-Oct-13 | ||||
Special cash dividend record, date | 7-Nov-14 | 8-Nov-13 | ||||
Special cash dividend declared per share | $0.50 | $0.35 | ||||
Special cash dividend paid | $33 | $23 | ||||
Special cash dividend paid, date | 20-Nov-14 | 2-Jan-14 | ||||
Outstanding shares of common stock | 65,543,000 | 65,303,000 | 65,298,472 | 64,987,854 | ||
Dividend equivalent paid per share on unvested shares of restricted stock outstanding on the dividend record date granted under the Company's 2006 Stock Option and Incentive Plan | $0.50 | $0.35 | ||||
Unvested shares of restricted stock on the dividend record date | 655,499 | 676,281 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Performance Shares | ||
Stock Based Compensation And Employee Benefit Plans [Line Items] | ||
Share based compensation award shares granted in period | 109,705 | |
Share based compensation award granted in period grant-date fair value | $1.90 | |
Share based compensation award vesting period from date of grant | 3 years | |
Share based compensation award end date of the a three-year performance period | 31-Dec-17 | |
Performance criteria over the performance period | The actual number of shares earned will be based on the Company's performance related to the following performance criteria over the performance period Operating income growth (three-year compound annual growth rate); Total consolidated revenue growth (three-year compound annual growth rate); and Cash flow return on invested capital, excluding income taxes paid (three-year average). | |
Performance Shares | Performance Period 2012 to 2014 | ||
Stock Based Compensation And Employee Benefit Plans [Line Items] | ||
Share based compensation award shares earned in period | 67,239 | |
Share based compensation dividend earned on shares subject to the awards, shares | 4,043 | |
Share based compensation performance-based restricted stock awards, vesting date | 30-Jan-15 | |
Share based compensation performance-based restricted stock awards, grant date | 30-Jan-12 | |
Restricted Stock | Service Based Awards | Employees And Executives | ||
Stock Based Compensation And Employee Benefit Plans [Line Items] | ||
Share based compensation award shares granted in period | 252,363 | |
Share based compensation award granted in period grant-date fair value | $4.20 | |
Share based compensation award vesting period from date of grant | 1 year | |
Restricted Stock | Service Based Awards | Annual installment | Employees And Executives | ||
Stock Based Compensation And Employee Benefit Plans [Line Items] | ||
Share based compensation award annual installment vesting rate | 25.00% |
Stock_Based_Compensation_Expen
Stock Based Compensation Expenses (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense before income taxes | $2,159 | $1,000 |
Income tax benefit | -850 | -391 |
Net stock-based compensation expense | 1,309 | 609 |
Cost of portal revenues, exclusive of depreciation & amortization | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense before income taxes | 404 | 282 |
Cost of software & services revenues, exclusive of depreciation & amortization | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense before income taxes | 11 | 12 |
Selling, General and Administrative Expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense before income taxes | $1,744 | $706 |
Reportable_Segments_and_Relate
Reportable Segments and Related Information - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 1 | |
Texas NICUSA, LLC | Customer Concentration Risk | Consolidated Revenues | ||
Segment Reporting Information [Line Items] | ||
Concentration risk percentage | 22.00% | 22.00% |
Summary_of_Financial_Informati
Summary of Financial Information for Reportable Segments (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Revenues | $70,359 | $65,397 | |
Costs & expenses | 53,322 | 47,761 | [1] |
Depreciation & amortization | 2,292 | 2,250 | |
Operating income (loss) before income taxes | 14,745 | 15,386 | |
Other Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Costs & expenses | 7,121 | 7,296 | [1] |
Depreciation & amortization | 107 | 70 | |
Operating income (loss) before income taxes | -7,228 | -7,366 | |
Total segment operating income | Outsourced Portals | |||
Segment Reporting Information [Line Items] | |||
Revenues | 65,914 | 61,482 | |
Costs & expenses | 44,911 | 39,510 | [1] |
Depreciation & amortization | 2,176 | 2,169 | |
Operating income (loss) before income taxes | 18,827 | 19,803 | |
Total segment operating income | Other Software & Services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 4,445 | 3,915 | |
Costs & expenses | 1,290 | 955 | [1] |
Depreciation & amortization | 9 | 11 | |
Operating income (loss) before income taxes | $3,146 | $2,949 | |
[1] | The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of costs & expenses in Other Reconciling Items of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in costs & expenses in Outsourced Portals. See Note 1. |
Summary_of_Financial_Informati1
Summary of Financial Information for Reportable Segments (Parenthetical) (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Costs & expenses | $53,322 | $47,761 | [1] |
Other Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Costs & expenses | 7,121 | 7,296 | [1] |
Other Reconciling Items | Reclassification Adjustment | |||
Segment Reporting Information [Line Items] | |||
Costs & expenses | ($1,100) | ||
[1] | The Company reclassified certain income statement employee benefit-related expenses for the three-month period ended March 31, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of costs & expenses in Other Reconciling Items of $1.1 million for the three-month period ended March 31, 2014 and a corresponding increase in costs & expenses in Outsourced Portals. See Note 1. |