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NEWS RELEASEFor Immediate Release |
| Contact: 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%
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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 Webcast Details
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.
A replay of the conference call will also be available until 5:00 p.m. ET on February 6 by dialing 1-800-405-2236 and using passcode 515377.
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 Twelve months ended
December 31, 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
------ ------
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