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2Q 2003 EARNINGSFor Immediate Release |
| Contact: Eric Bur 913-754-7003 ebur@nicusa.com Chris Neff 435-645-8898 cneff@nicusa.com |
NIC Reports Record Second Quarter Earnings
Company reports net income of $1.4 million and record portal revenues of $10.2 million
OLATHE, Kan. - July 31, 2003 - NIC Inc. (Nasdaq: EGOV) today reported net income of $1.4 million and earnings per share of 2 cents for the three months ended June 30, 2003, as compared to a net loss of $7.4 million and loss per share of 13 cents in second quarter 2002. Total revenues for the quarter were $12.9 million, up from $12.5 million in first quarter 2003.
Revenues for NIC's core outsourced portal business reached a record $10.2 million, up 13 percent over the prior year quarter. During the same period, portal gross profit rose by 13 percent. The Company maintained a 48 percent gross profit percentage for the portal business, matching its performance during the same period last year as well as in first quarter 2003.
Portal revenue growth included a 37% increase in non-DMV services (transactional revenues for eGovernment applications other than the electronic exchange of driver histories), which was a record $2.8 million for the quarter. Non-DMV growth for the quarter was driven primarily by increased usage of Uniform Commercial Code filing, corporation search, and professional licensing applications.
Gross profit in the software and services business was $515,000 on revenues of $2.8 million, compared to a negative gross profit of $3.7 million on revenues of $3.9 million during the same period last year. Gross profit for second quarter 2002 was negatively affected by a pre-tax $4.3 million charge for cost overruns on the Company's legacy business filing contracts. The financial performance of the software and services business for the second quarter continued to match the Company's expectations.
Selling and administrative expenses for the quarter were $2.9 million, or 23 percent of revenue, compared to $3.8 million, or 29 percent of revenue in the same quarter last year. On a sequential basis, overhead expenses were down two basis points from 25 percent of revenue in first quarter 2003.
In the prior year quarter, NIC recorded a pre-tax impairment charge of $4.3 million related primarily to the Company's IDT and AOL businesses. Second quarter 2003 results included a pre-tax $300,000 non-operating gain in equity income from the 2001 sale of the Company's investment in Tidemark, an eGovernment software company. The gain was recognized after the completion of the two-year contingency period following the sale.
NIC ended the second quarter with $15.9 million in cash and equivalents, up approximately $100,000 from March 31, 2003. During the same period, working capital grew by $2.2 million to $20.2 million.
Second Quarter Operating Highlights
During the second quarter, Oklahoma (www.YourOklahoma.com) signed a one-year extension for portal management services. In addition, several of NIC's state and local government partners were recognized for national eGovernment excellence. In June, NIC's partners in Maine (www.Maine.gov), Kansas (www.accessKansas.org), Montana (www.DiscoveringMontana.com), and Iowa (www.Iowatreasurers.org) received electronic government innovation awards at the E-Gov 2003 Conference and Exposition in Washington, D.C.
Last month, NIC's partners in Kent County, Michigan (www.accessKent.com) and Washtenaw County, Michigan (www.eWashtenaw.org) were also ranked among the top ten counties in their respective population categories by the Center for Digital Government's 2003 Digital Counties Survey.
"NIC helps state and local governments use technology to get results, and we're very pleased that our partners are receiving this well-deserved recognition for their eGovernment programs," said Jeff Fraser, Chief Executive Officer of NIC.
Third Quarter Outlook
The Company expects third quarter 2003 results to resemble second quarter 2003 performance. Total revenues should be slightly lower than second quarter due to expected seasonality for certain non-DMV services, and the mix between portal and software and services revenues could vary slightly. Operating income, portal gross margins, selling and administrative costs, and EPS should also be comparable to second quarter 2003 results, while software and services gross margins may experience a modest decrease.
Second Quarter Earnings Webcast Details
Webcast Information
Thursday, July 31, 2003
9:00 a.m. EDT
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 information. A replay of the Webcast will be available until 5:00 p.m. EDT on October 31 by visiting www.nicusa.com.
A replay of the call will be available until 5:00 p.m. EDT on August 7 by dialing 1-800-405-2236 and using passcode 544003.
About NIC
NIC manages more eGovernment services than any provider in the world. The company is helping governments communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 1,400 state and local agencies that serve more than 71 million people in the United States. Additional company information is available at www.nicusa.com.
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 services by businesses and citizens; competition; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2002 Annual Report on Form 10-K filed on March 20, 2003, with the Securities and Exchange Commission.
(financial tables follow)
NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
(Thousands except for per share amounts)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Portal revenues $ 10,159 $ 9,002 $ 19,949 $ 17,488
Software and services
revenues 2,757 3,932 5,487 7,543
------- ------- ------- -------
Total revenues 12,916 12,934 25,436 25,031
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Cost of revenues:
Cost of portal revenues,
exclusive of
depreciation and
amortization 5,295 4,690 10,375 9,648
Cost of software and
services revenues,
exclusive of
depreciation and
amortization 2,242 7,678 4,386 10,013
Selling and
administrative 2,937 3,781 6,057 7,576
Impairment loss - 4,316 - 4,316
Stock compensation - 995 - 1,306
Depreciation and
amortization 450 938 942 1,866
------- ------- ------- -------
Total operating
expenses 10,924 22,398 21,760 34,725
------- ------- ------- -------
Operating income (loss) 1,992 (9,464) 3,676 (9,694)
------- ------- ------- -------
Other income (expense):
Interest income 30 55 59 96
Interest expense (4) (22) (9) (33)
Equity in net loss of
affiliates 262 (458) 202 (682)
Other income (expense),
net - (36) - (36)
------- ------- ------- -------
Total other income
(expense) 288 (461) 252 (655)
------- ------- ------- -------
Income (loss) from
continuing operations
before income taxes 2,280 (9,925) 3,928 (10,349)
Income tax provision
(benefit) 923 (4,091) 1,582 (4,101)
------- ------- ------- -------
Income (loss) from
continuing operations 1,357 (5,834) 2,346 (6,248)
Discontinued operations:
Loss from discontinued
operations (less
applicable income tax
benefit of $-, $974,
$-, and $1,302) - (1,562) - (2,028)
------- ------- ------- -------
Net income (loss) $ 1,357 $(7,396) $ 2,346 $(8,276)
======= ======= ======= =======
Basic and diluted earnings
(loss) per share:
Earnings (loss) per share
-- continuing
operations $ 0.02 $ (0.10) $ 0.04 $ (0.11)
======= ======= ======= =======
Loss per share --
discontinued operations $ - $ (0.03) $ - $ (0.04)
======= ======= ======= =======
Net earnings (loss) per
share $ 0.02 $ (0.13) $ 0.04 $ (0.15)
======= ======= ======= =======
Weighted average shares
outstanding:
Basic 58,234 56,493 58,184 56,426
======= ======= ======= =======
Diluted 58,654 56,493 58,411 56,426
======= ======= ======= =======
Key Financial Metrics:
Revenue growth --
outsourced portals 12.9% 46.5% 14.1% 51.1%
Revenue growth -- software
and services (29.9%) 22.5% (27.3%) 40.9%
Gross profit % --
outsourced portals 47.9% 47.9% 48.0% 44.8%
Gross profit % -- software
and services 18.7% (95.3%) 20.1% (32.7%)
Selling and administrative
costs as a percentage of
revenue 22.7% 29.2% 23.8% 30.3%
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Thousands except for share amounts)
June 30, December 31,
2003 2002
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 10,257 $ 9,559
Cash and cash equivalents -- restricted 5,437 6,300
Marketable securities 250 249
Trade accounts receivable 16,701 14,465
Deferred income taxes 322 606
Prepaid expenses 464 761
Other current assets 6,545 3,215
------- -------
Total current assets 39,976 35,155
Property and equipment, net 2,812 3,054
Deferred income taxes 33,872 35,049
Other assets 125 139
Investments in affiliates 739 839
Intangible assets, net 143 220
------- -------
Total assets $ 77,667 $ 74,456
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,215 $ 12,701
Accrued expenses 4,454 3,792
Note payable -- current portion 151 332
Application development contracts 827 1,559
Other current liabilities 116 815
------- -------
Total current liabilities 19,763 19,199
Note payable -- long-term portion 286 201
------- -------
Total liabilities 20,049 19,400
------- -------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000,000
shares authorized 58,238,482 and
58,092,346 shares issued and
outstanding - -
Additional paid-in capital 197,376 197,160
Accumulated deficit (139,543) (141,889)
------- -------
57,833 55,271
Less treasury stock (215) (215)
------- -------
Total shareholders' equity 57,618 55,056
------- -------
Total liabilities and shareholders'
equity $ 77,667 $ 74,456
======= =======
NIC Inc.
CASH FLOW SUMMARY
(UNAUDITED)
(Thousands)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Cash flows from operating
activities:
Net income (loss) $ 1,357 $ (7,396) $ 2,346 $ (8,276)
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating
activities:
Depreciation and
amortization 450 1,094 942 2,257
Compensation expense
recognized related to
stock options - 995 - 1,306
Loss on disposal of
property and equipment - 1,459 - 1,459
Accretion of discount
on marketable securities - - - (4)
Application development
contracts (273) 2,998 (732) 1,296
Impairment loss - 4,316 - 4,316
Deferred income taxes 849 (5,075) 1,461 (5,454)
Equity in net loss of
affiliates (262) 458 (202) 682
Changes in operating
assets and liabilities:
(Increase) decrease in
trade accounts
receivable (749) 1,046 (2,236) (2,364)
Decrease in prepaid
expenses 270 66 297 181
(Increase) decrease in
other current assets (2,029) (654) (3,320) 886
Decrease in other
assets 7 125 14 93
Increase (decrease) in
accounts payable 904 (2,568) 1,514 (915)
Increase (decrease) in
accrued expenses 159 (1,314) 734 (868)
Increase (decrease) in
other current
liabilities (209) (1,735) (398) 101
------- ------- ------- -------
Net cash provided by
(used in) operating
activities 474 (6,185) 420 (5,304)
------- ------- ------- -------
Cash flows from investing
activities:
Purchases of property and
equipment (354) (220) (622) (303)
Purchases of marketable
securities - (500) - (20,595)
Maturities of marketable
securities - 760 - 17,041
------- ------- ------- -------
Net cash provided by
(used in) investing
activities (354) 40 (622) (3,857)
------- ------- ------- -------
Cash flows from financing
activities:
Decrease in cash and
cash equivalents --
restricted 25 - 863 -
Payments on notes payable (25) (70) (96) (153)
Payments on capital lease
obligation - (6) - (6)
Proceeds from exercise
of employee stock options - 207 133 617
------- ------- ------- -------
Net cash provided by
financing activities - 131 900 458
------- ------- ------- -------
Net increase (decrease) in
cash and cash equivalents 120 (6,014) 698 (8,703)
Cash and cash equivalents,
beginning of period 10,137 14,546 9,559 17,235
------- ------- ------- -------
Cash and cash equivalents,
end of period $ 10,257 $ 8,532 $ 10,257 $ 8,532
======= ======= ======= =======
Other cash flow
information:
Interest paid $ 4 $ 10 $ 9 $ 21
======= ======= ======= =======
Income taxes paid $ 149 $ 59 $ 220 $ 66
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