Current Report



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): November 6, 2014

NIC INC.
(Exact name of registrant as specified in its charter)

Delaware

000-26621

52-2077581

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

25501 West Valley Parkway, Suite 300
Olathe, Kansas 66061
(Address of principal executive offices, including zip code)

(877) 234-3468
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


ITEM 2.02          RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 6, 2014, NIC Inc. (the “Company”) issued a press release announcing its 2014 third quarter financial results. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99, and is incorporated by reference herein.


ITEM 7.01          REGULATION FD DISCLOSURE

The Company will host a conference call, which will also be available by webcast, to discuss its third quarter financial results at 4:30 p.m. EST on November 6, 2014.  The call may also include discussion of company developments, and forward-looking and other material information about business and financial matters.

The information in this Form 8-K and Exhibit 99 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth in such filing.


ITEM 9.01          FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99 - Press release issued by NIC Inc. dated November 6, 2014, announcing its third quarter financial results is being furnished as part of this report.

- 2 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NIC Inc.

 

Date: November 6, 2014

/s/ Stephen M. Kovzan

Stephen M. Kovzan

Chief Financial Officer

- 3 -

Exhibit 99

NIC Earns 16 Cents Per Share in Third Quarter 2014; Declares Special Cash Dividend of 50 Cents Per Share

Forbes and Barron’s again recognize the Company’s exceptional financial performance

OLATHE, Kan.--(BUSINESS WIRE)--November 6, 2014--NIC Inc. (NASDAQ: EGOV), the dominant provider of official eGovernment services, today announced net income of $10.4 million and earnings per share of 16 cents on total revenues of $69.5 million for the three months ended September 30, 2014. In the third quarter of 2013, the Company reported net income of $5.1 million and earnings per share of 8 cents on total revenues of $61.3 million. As previously reported, results for the prior year quarter include a non-cash pre-tax charge of approximately $5.1 million (approximately 5 cents per share on an after-tax basis) to write off outstanding accounts receivable.

On October 27, 2014, NIC’s Board of Directors declared a special cash dividend of 50 cents per share, payable on November 20, 2014 to stockholders of record on November 7, 2014. The dividend payout will total approximately $33.0 million based on the current number of shares outstanding.

Quarterly portal revenues were $65.3 million, a 13 percent increase over third quarter 2013. On a same-state basis, portal revenues were $60.2 million in the current quarter, a 9 percent increase over the third quarter of 2013. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 11 percent over third quarter 2013, with same-state revenues from Driver History Records (DHR) up 9 percent, due to DHR price increases in three states and continued transaction volume growth across several states. Same-state portal time & materials revenues decreased 11 percent and same-state portal management revenues were up 3 percent for the quarter.


Current quarter revenues from the Company’s newer portals in Pennsylvania, Wisconsin, and Connecticut totaled $4.4 million. The Company did not recognize any revenue from its Pennsylvania contract in the prior year quarter, the Wisconsin portal began generating revenues in September 2013, and the Connecticut portal began generating revenues in the second quarter of 2014. Revenues from the Virginia state agency partnerships were $0.8 million in the current quarter, while revenues from the legacy Virginia state portal contract in the prior year quarter were $1.3 million. The legacy Arizona state portal contract expired on March 26, 2014, while revenues from this contract in the prior year quarter were $0.8 million.

“If you focus on your passion and do what is in the best long-term interests of the Company, success will follow,” said Harry Herington, NIC Chief Executive Officer and Chairman of the Board. “We continue to launch new services for our government partners, find new ways to drive eGovernment innovation and return meaningful amounts of capital to shareholders with another special cash dividend – our business is as solid as ever.”

NIC’s portal gross profit percentage was 42 percent in the current quarter compared to 31 percent in the third quarter of 2013, which primarily reflects the one-time non-cash charge of $5.1 million and start-up losses from the Wisconsin and Pennsylvania portals in the prior year quarter.

Software & services revenues were $4.2 million in the current quarter, up 17 percent from the third quarter of 2013, in part due to an increase in revenues from the federal Pre-employment Screening Program.

“Our ability to grow organically is one of the strongest facets of our business,” said Steve Kovzan, NIC Chief Financial Officer. “The third quarter was no different – healthy organic growth continues to fuel our financial results.”

Operational Highlights

During the quarter, two NIC subsidiaries received contract extensions. The Tennessee Division of NICUSA received an 18-month contract extension from the State of Tennessee, and Delaware Interactive, LLC received a six-month extension from the State of Delaware to continue providing transition services through March 31, 2015.


In October 2014, Forbes announced its annual ranking of the “100 Best Small Companies in America” with annual revenues between $5 million and $1 billion. NIC was ranked No. 36 on the list, marking the sixth consecutive year that NIC has received this national recognition. Criteria included earnings growth, sales growth, and return on equity in the past 12 months and over five years, as well as stock performance.

The Company also was notified recently that it has been included in the Barron’s 400 Index, which selects the top 6 percent of all publicly traded companies in North America based on strong financial performance. This is the fourth consecutive year that NIC has been included in the index, placing it in an exclusive group of only 1.5 percent of all companies in North America to achieve the ranking in consecutive years.

Third Quarter Earnings Call and Webcast Details

On the call, the Company will discuss its 2014 third quarter financial results, and answer questions from the investment community. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters.

Dial-In Information

Thursday, November 6, 2014

       

4:30 p.m. (EST)

 
Call bridge: 888-299-7209 (U.S. callers) or 719-457-2689 (international callers)
Conference ID: 8221705
Call leaders: Harry Herington, Chief Executive Officer and Chairman of the Board
Steve Kovzan, Chief Financial Officer
Robert Knapp, Chief Operating Officer

Webcast Information

To sign in and listen: The Webcast system is available at http://www.egov.com/investors . A replay of the Webcast will be available until 11 p.m. (EDT) on May 6, 2015, by visiting http://www.egov.com/investors .


About NIC

Founded in 1992, NIC (NASDAQ: EGOV) is the nation's leading provider of official government websites, online services, and secure payment processing solutions. The Company's innovative eGovernment services help make government more accessible to everyone through technology. The family of NIC companies provides eGovernment solutions for more than 3,500 federal, state, and local agencies in the United States. Forbes has named NIC as one of the “100 Best Small Companies in America” six times, most recently ranked at No. 36 (2014), and the Company has been included four times on the Barron’s 400 Index. Additional information is available at http://www.egov.com .

Cautionary Statement Regarding Forward-Looking Information

Any statements contained in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include statements regarding the Company’s potential financial performance for the current fiscal year, statements regarding the planned implementation of new portal contracts and projects under existing portal contracts, and statements regarding continued implementation of NIC’s business model and its development of new products and services. Forward-looking statements are subject to inherent risks and uncertainties and there can be no assurance that such statements will prove to be correct. 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, NIC’s ability to successfully integrate into its operations recently awarded eGovernment contracts; NIC's ability to implement its new portal contracts and new projects in a timely and cost-effective manner; NIC’s ability to successfully increase the adoption and use of eGovernment services; the possibility of reductions in fees or revenues as a result of budget deficits, government shutdowns or changes in government policy; the success of the Company in renewing existing contracts and in signing contracts with new states and federal government agencies; 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; the possibility of security breaches through cyber attacks and any resulting liability; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2014. Any forward-looking statements made in this release speak only as of the date of this release. NIC does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances.


 
NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except per share amounts and percentages
       
Three months ended Nine months ended
September 30, September 30,
  2014     2013     2014     2013  
Revenues:
Portal revenues $ 65,304 $ 57,721 $ 193,595 $ 177,857
Software & services revenues   4,223     3,609     12,484     10,635  
Total revenues   69,527     61,330     206,079     188,492  
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization 38,071 39,755 113,001 107,416
Cost of software & services revenues, exclusive of depreciation &
amortization 1,246 928 3,420 3,220
Selling & administrative 11,439 10,387 32,604 30,054
Depreciation & amortization   2,292     2,145     6,819     6,221  
Total operating expenses   53,048     53,215     155,844     146,911  
Operating income 16,479 8,115 50,235 41,581
Other income (expense), net   (19 )   4     (147 )   (17 )
Income before income taxes 16,460 8,119 50,088 41,564
Income tax provision   6,099     3,026     19,322     15,707  
Net income $ 10,361   $ 5,093   $ 30,766   $ 25,857  
 
Basic net income per share $ 0.16   $ 0.08   $ 0.47   $ 0.39  
Diluted net income per share $ 0.16   $ 0.08   $ 0.47   $ 0.39  
 
Weighted average shares outstanding:
Basic   65,288     64,961     65,197     64,854  
Diluted   65,288     64,969     65,197     64,861  
 
Key Financial Metrics:
Revenue growth - outsourced portals 13 % 15 % 9 % 23 %
Same state revenue growth - outsourced portals 9 % 15 % 8 % 17 %
Recurring portal revenue as a % of total portal revenues 95 % 93 % 95 % 94 %
Gross profit % - outsourced portals 42 % 31 % 42 % 40 %
Revenue growth - software & services 17 % 20 % 17 % 18 %
Gross profit % - software & services 70 % 74 % 73 % 70 %
Selling & administrative expenses as a % of total revenues 16 % 17 % 16 % 16 %
Operating income as a % of total revenue 24 % 13 % 24 % 22 %
 
Portal Revenue Analysis:
IGS transaction-based (formerly, Non-DMV) $ 35,688 $ 32,197 $ 104,741 $ 96,372

DHR transaction-based (formerly, DMV)

24,695 19,037 73,188 63,829
Portal software development 3,101 3,922 9,416 9,961
Portal management   1,820     2,565     6,250     7,695  
Total portal revenues $ 65,304   $ 57,721   $ 193,595   $ 177,857  
 

NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount
       
 
September 30, 2014 December 31, 2013
ASSETS
Current assets:
Cash $ 105,955 $ 74,245
Cash restricted for payment of dividend - 22,982
Trade accounts receivable, net 61,898 52,818
Deferred income taxes, net 1,012 1,038
Prepaid expenses & other current assets   10,796   11,569
Total current assets 179,661 162,652
Property and equipment, net 12,959 15,167
Intangible assets, net 2,240 1,864
Other assets   352   290
Total assets $ 195,212 $ 179,973
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,514 $ 39,112
Accrued expenses 19,337 20,822
Dividend payable - 22,982
Other current liabilities   2,752   348
Total current liabilities 63,603 83,264
 
Deferred income taxes, net 1,466 2,432
Other long-term liabilities   2,943   2,341
Total liabilities   68,012   88,037
 
Commitments and contingencies - -
 
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized,
65,299 and 64,993 shares issued and outstanding 6 6
Additional paid-in capital 92,895 88,397
Retained earnings   34,299   3,533
Total stockholders' equity   127,200   91,936
Total liabilities and stockholders' equity $ 195,212 $ 179,973
 

NIC INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Thousands
         
 
Additional
Common Stock Paid-in
Shares Amount Capital Retained Earnings Total
Balance, January 1, 2014 64,993 $ 6 $ 88,397 $ 3,533 $ 91,936
Net income - - - 30,766 30,766
Restricted stock vestings 351 - 73 - 73
Dividend equivalents cancelled upon forfeiture of
performance-based restricted stock awards - - 35 - 35
Shares surrendered and cancelled upon vesting of restricted
stock to satisfy tax withholdings (113 ) - (2,242 ) - (2,242 )
Stock-based compensation - - 4,568 - 4,568
Tax deductions relating to stock-based compensation - - 1,065 - 1,065
Shares issuable in lieu of dividend payments on unvested
performance-based restricted stock awards - - (108 ) - (108 )
Issuance of common stock under employee stock purchase plan 68     -   1,107     -   1,107  
Balance, September 30, 2014 65,299   $ 6 $ 92,895   $ 34,299 $ 127,200  
 

NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
       
Three months ended Nine months ended
September 30, September 30,
  2014     2013     2014     2013  
 
Cash flows from operating activities:
Net income $ 10,361 $ 5,093 $ 30,766 $ 25,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization 2,292 2,145 6,819 6,221
Provision for losses on accounts receivable 104 5,086 266 5,125
Stock-based compensation expense 2,154 1,190 4,568 3,267
Deferred income taxes (969 ) (322 ) (2,463 ) (1,142 )
(Gain) loss on disposal of property and equipment 19 (4 ) 147 17
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable, net (791 ) 3,479 (9,346 ) (10,909 )
(Increase) decrease in prepaid expenses & other current assets (74 ) (4,674 ) 2,296 (1,541 )
(Increase) in other assets (20 ) (4 ) (62 ) (6 )
Increase (decrease) in accounts payable (4,303 ) (2,373 ) 2,402 2,183
Increase (decrease) in accrued expenses 614 2,975 (3,802 ) 1,303
Increase (decrease) in other current liabilities 2,302 (1,061 ) 2,404 119
Increase in other long-term liabilities   189     148     602     862  
Net cash provided by operating activities   11,878     11,678     34,597     31,356  
Cash flows from investing activities:
Purchases of property and equipment (1,335 ) (1,687 ) (3,988 ) (3,945 )
Capitalized internal use software development costs   (414 )   (349 )   (1,071 )   (1,079 )
Net cash used in investing activities   (1,749 )   (2,036 )   (5,059 )   (5,024 )
Cash flows from financing activities:
Proceeds from employee common stock purchases - - 1,107 904
Tax deductions related to stock-based compensation   168     599     1,065     1,335  
Net cash provided by financing activities   168     599     2,172     2,239  
Net increase in cash 10,297 10,241 31,710 28,571
Cash, beginning of period   95,658     80,688     74,245     62,358  
Cash, end of period $ 105,955   $ 90,929   $ 105,955   $ 90,929  
Other cash flow information:
Non-cash investing activities:
Capital expenditures accrued but not yet paid $ 75 $ 5 $ 75 $ 5
Cash payments:
Income taxes paid $ 6,827 $ 6,550 $ 20,664 $ 12,744
Cash dividends on common stock previously restricted for payment of dividend $ - $ - $ 22,982 $ -
 

CONTACT:
NIC Inc.
Angela Davied, 913-754-7054
adavied@egov.com