Annual Report of Employee Stock Purchase


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

FORM 11-K
(Mark One)

x   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the years ended March 31, 2013, 2012, and 2011

o   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________


COMMISSION FILE NUMBER 000- 26621
1999 National Information Consortium Employee Stock Purchase Plan
(Full title of the plan)

NIC INC.
25501 W. Valley Parkway, Suite 300
Olathe, Kansas 66061

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)
 
 
 

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Index
 
 
 
Page(s)
   
Report of Independent Registered Public Accounting Firms
1-2
   
Financial Statements
 
   
Statements of Financial Condition as of March 31, 2013 and 2012
3
   
Statements of Operations and Changes in Plan Equity for the years ended March 31, 2013, 2012,
 
and 2011
4
   
Notes to Financial Statements
5-7
 
 
 

 
 
Report of Independent Registered Public Accounting Firm



Board of Directors
NIC Inc. 1999 National Information Consortium
   Employee Stock Purchase Plan
Olathe, Kansas


We have audited the accompanying statement of financial condition of the NIC Inc. 1999 National Information Consortium Employee Stock Purchase Plan (the Plan) as of March 31, 2013 and the related statement of operations and changes in plan equity for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial condition of the NIC Inc. 1999 National Information Consortium Employee Stock Purchase Plan as of March 31, 2013 and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
 
The 2012 and 2011 financial statements were audited by other accountants and their report thereon, dated June 27, 2012, expressed an unmodified opinion on those statements.
 

/s/BKD LLP
 
Kansas City, Missouri
June 7, 2013
 
 
 

 
 
Report of Independent Registered Public Accounting Firm



To the Participants and Administrator of the
1999 National Information Consortium Employee Stock Purchase Plan

In our opinion, the accompanying statement of financial condition and the related statements of operations and changes in plan equity present fairly, in all material respects, the financial position of the 1999 National Information Consortium Employee Stock Purchase Plan (the “Plan”) at March 31, 2012, and the results of its operations and changes in plan equity for the years ended March 31, 2012 and 2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


/s/PricewaterhouseCoopers LLP

Kansas City, Missouri
June 27, 2012
 
 
 

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Statements of Financial Condition
March 31, 2013 and 2012  

 
 
   
2013
   
2012
 
             
Assets
           
Receivable from NIC Inc.
  $ 3,737     $ 10,959  
                 
Total assets
  $ 3,737     $ 10,959  
                 
Liabilities and Plan Equity
               
Payable to participants
  $ 1,092     $ 5,250  
Total liabilities
    1,092       5,250  
                 
Plan equity
    2,645       5,709  
                 
Total liabilities and plan equity
  $ 3,737     $ 10,959  
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
3

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Statements of Operations and Changes in Plan Equity
Years Ended March 31, 2013, 2012, and 2011

 
 
   
2013
   
2012
   
2011
 
                   
Participant contributions
  $ 969,099     $ 856,249     $ 696,709  
                         
Purchases of NIC Inc. common stock
    (904,462 )     (806,010 )     (651,600 )
                         
Participant withdrawals
    (66,609 )     (43,477 )     (44,585 )
                         
Residual contribution amounts reserved for participants
    (1,092 )     (1,053 )     (524 )
                         
Net additions (reductions)
    (3,064 )     5,709       -  
                         
Plan equity at beginning of period
    5,709       -       -  
                         
Plan equity at end of period
  $ 2,645     $ 5,709     $ -  
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
4

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Notes to Financial Statements
March 31, 2013, 2012 and 2011  

 
1.
Description of Plan

The purpose of the 1999 National Information Consortium Employee Stock Purchase Plan (the “Plan”) is to provide employees of NIC Inc., formerly National Information Consortium, Inc., a Delaware corporation (the “Company”), an opportunity to purchase common stock of the Company. By means of the Plan, the Company seeks to attract and retain the services of persons of ability as employees and motivate such employees to exert their best efforts on behalf of the Company, any affiliate or other stockholder of the Company. Participants should refer to the Plan document for a more complete description of the Plan.

The Plan was adopted by the Board of Directors of the Company on April 14, 1999 and by the stockholders at its Annual Meeting on May 4, 1999.

The Plan year end is March 31. The date of inception was April 1, 2001.

Common stock for the Plan is issued directly from the Company’s authorized but unissued shares. The aggregate number of shares that may be issued under the Plan cannot exceed 2,321,688. At March 31, 2013, there are 1,446,136 shares remaining that are available to be purchased through the Plan.

Eligibility
An offering period is a twelve-month period beginning on April 1 of each year and ending on March 31 of each year (the “Offering Period”). Each eligible employee may enroll in the Plan during the open enrollment period, which is typically two weeks prior to the start of an Offering Period.

Employees of the Company are eligible to participate in the Plan if the employee has been continuously employed for three months as of the start of an Offering Period. In addition, the employee must work at least 20 hours per week for at least five months during a calendar year.

Contributions
A Plan participant may contribute from 1% to 15% of the participant’s “compensation,” as defined in the Plan, through after-tax payroll deductions during the Offering Period. Participants can increase, decrease or suspend their withholding percentage during an Offering Period. Additionally, a participant cannot accrue at a rate that exceeds $25,000 for a calendar year, as measured by the fair market value of shares (based on the fair market value of a share on the first day of an Offering Period). The Company holds contributions until the end of the Offering Period at which point the Company issues shares for the contributions received. Contributions received in excess of the $25,000 limit are refunded to participants as soon as administratively practicable. No interest is paid or accrued on the participants’ payroll deductions. Contributions from participant payroll deductions are held by the Company and are used for general corporate purposes. In accordance with the Plan, the Company has no obligation to segregate employee payroll deductions from any other funds of the Company or to hold funds representing the same pending application of such amount to the purchase of shares at the end of each Offering Period.

Any accumulated contribution amount that is insufficient to purchase a whole share of common stock at the end of an Offering Period is carried forward and applied to the purchase of whole shares of stock in future Offering Periods or refunded to the participant upon withdrawal from the Plan. Such amounts are recorded as “Payable to participants” in the Statements of Financial Condition.
 
 
5

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Notes to Financial Statements
March 31, 2013, 2012 and 2011  

 
Participant withdrawals
Participants may choose to withdraw from the Plan at any time during an Offering Period. Participants who terminate their employment with the Company are not eligible to continue participation in the Plan. Upon withdrawal, termination from employment or death, any accumulated contributions during an Offering Period are distributed to the employee or beneficiary, without interest, by the Company.

As of March 31, 2013 and 2012, amounts due to participants who withdrew from the Plan or who reached the $25,000 limit as described above totaled $2,645 and $9,900, respectively. As of March 31, 2012, the amount due to participants included approximately $4,197 of excess contributions recorded as a payable to participants, which were paid to participants after the Plan year.

Stock purchase provisions
On the first day of the Offering Period (the “Grant Date”), eligible employees are granted the option to purchase whole shares of the Company’s common stock. On the last day of the Offering Period (the “Purchase Date”), the Company issues common stock to the participants. The purchase price per share of common stock issued by the Company is 85% of the lower of either the fair market value of the Company’s common stock on the Grant Date or the Purchase Date. Fair market value is determined using the closing price of the Company’s common stock as listed on the NASDAQ Global Select Market.

Shares purchased pursuant to the Plan for the Offering Periods ended March 31, 2013, 2012, and 2011 were 87,578 shares, 78,045 shares, and 103,593 shares, respectively. For the Offering Periods ended March 31, 2013, 2012, and 2011, the purchase price per share of common stock was $10.328, $10.328, and $6.290, respectively.

Plan administration
The Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Company pays all expenses of the Plan. Administrative expenses related to the Plan amounted to approximately $14,500, $13,200 and $10,500 for the periods ended March 31, 2013, 2012 and 2011, respectively.

Plan termination
Although the Board of Directors of the Company has not expressed any intent to do so, it has the right to terminate the Plan at any time. In the event the Plan is terminated, all funds contributed to the Plan that have not been used to purchase shares will be returned without interest to the participants.

2.
Accounting Policy

The accompanying financial statements have been prepared on the accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan’s management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates.
 
 
6

 
 
NIC Inc.
1999 National Information Consortium Employee Stock Purchase Plan
Notes to Financial Statements
March 31, 2013, 2012 and 2011  

 
3.
Federal Income Taxes
 
The Plan is intended to constitute an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Code (the “Code”). Issuance of shares under this Plan is not intended to result in taxable income to participants in the Plan based on provisions of the Code. The Plan’s management believes that the Plan has been operated in accordance with the Code and therefore no provision for income taxes has been reflected in the accompanying financial statements. The Plan does not file a tax return; therefore, all years are open to examination. The Plan does not have any uncertain tax positions for the periods ended March 31, 2013, 2012 or 2011.
 
 
7

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.


 
1999 National Information Consortium
 
Employee Stock Purchase Plan
     
Date:    June 7, 2013
By:
/s/ William F. Bradley, Jr.
   
William F. Bradley, Jr.
   
Executive Vice President,
   
Chief Administrative Officer and
   
General Counsel
   
NIC Inc.
Exhibit 23.1

Consent of Independent Registered Public Accounting Firm


We consent to the incorporation by reference in the registration statement of NIC Inc., on Form S-8 (File Number 333-83171) of our report dated June 7, 2013, on our audit of the financial statements of the NIC Inc. 1999 National Information Consortium Employee Stock Purchase Plan as of March 31, 2013, and for the year then ended, which report appears in the March 31, 2013 annual report on Form 11-K of the NIC Inc. 1999 National Information Consortium Employee Stock Purchase Plan.
 

/s/BKD LLP

 
Kansas City, Missouri
June 7, 2013
 
Exhibit 23.2

Consent of Independent Registered Public Accounting Firm


We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-83171) of NIC Inc. of our report dated June 27, 2012 relating to the financial statements of the 1999 National Information Consortium Employee Stock Purchase Plan, which appears in this Form 11-K.
 

/s/PricewaterhouseCoopers LLP
 

Kansas City, Missouri
June 7, 2013