NIC
The eGovernment Company
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Kevin Childress
NIC
703.742.7827
[email protected]
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NIC STREAMLINES EGOVERNMENT APPLICATIONS
AND PROCUREMENT BUSINESSES
COMPANY WARNS THIRD QUARTER REVENUE, INCOME TARGETS WILL FALL SHORT
OF EXPECTATIONS
OVERLAND PARK, Kan. - (September 20, 2000) - NIC (Nasdaq: EGOV), the world's
largest eGovernment solutions provider, today announced it will re-align its
eGovernment applications and services businesses to better leverage its
advantages in the electronic government solutions market and to accelerate its
path to profitability. The company also issued a warning today that it will
likely fall short of third quarter expectations with an anticipated net loss per
share of between ($0.24) and ($0.25) prior to a one-time anticipated quarterly
charge of approximately $0.01/share. The Company also announced significant cost
saving measures at two units, and reorganized its management team. These
important changes will be addressed in a conference call at 11 AM Eastern Time
today, September 20, 2000.
Jim Dodd, NIC's President & CEO said, "In the past year we have successfully
built upon our core leadership position in eGovernment by expanding our target
market from state governments to local, federal and international public sector
enterprises, and by growing our technology and product base allowing us to
web-enable virtually all major government-to-business (G2B) and
government-to-consumer (G2C) processes. Through both acquisition and
partnership, we have assembled all the assets necessary to help guide
governments and their constituents through e-
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transformation and to widespread adoption of internet-enabled government
services. Our re-structuring is designed to integrate these assets - resulting
in a better solution set for government partners and accelerated profitability
for investors."
NIC will take a one-time pre-tax charge in the third quarter of approximately $1
million for the restructuring, which will involve reductions in force at NIC
Commerce and NIC Technologies, both of which were acquired in the past year. The
savings from these reductions are expected to approximate $1.25-1.75 million
(pretax) annually. These product solutions divisions had been the main source of
shortfalls vs. expectations in both Company revenues and EBITDA, which are
expected in the range of $19.0 to $19.5 million, and ($7.5) to ($8.5) million,
respectively. The revenue shortfalls are primarily attributable to industry-wide
post Y2K delays in sales cycles; the cash flow shortfalls resulted from
expenditures for sustained development and marketing efforts to support
significant new contracts whose revenue and positive margin impact will come in
future quarters.
In addition to the charges noted above, NIC announced that Robert Main,
president of NIC Commerce, will assume the post of Founder and Chief Technical
Officer of that division, and that a nationwide search firm has been retained to
seek his replacement.
"We are displeased with our short-term financial results, and in particular with
the performance of our newly-acquired companies. But we remain convinced that
our 1999 and 2000 expansion investments were all necessary to secure and broaden
NIC's lead in eGovernment at the most critical juncture in the category's
formation. We are now in a better position than ever to benefit from the
imminent explosion of e-commerce in the public sector", said Dodd.
Kevin Childress, NIC's Chief Financial Officer, said "Our difficulty forecasting
has resulted from disappointments in our newer businesses, which to date have
not been transaction-based and are therefore subject to significantly greater
revenue volatility. However, our recently announced new business announcements
together with new major alliances will allow for a more stable base of income on
an annuity (transaction) basis as we look forward.
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"Significant revenue and profit generation potential for 2001 and beyond will
come from:
--STATE PORTAL SERVICES. In addition to a very strong state portal pipeline
which could produce several additional partnerships, Tennessee, Idaho, and
Hawaii are all expected to produce revenue and positive cash flow in 2001;
--PROCUREMENT. As many two new states prior to the end of 2000 as well as the
States of Colorado and Utah and the Houston-Galveston Area Council;
--LOCAL PORTAL SERVICES. We have received notification of three major local
government NIC wins and believe there will be the announcement of at least two
more prior to year-end (in addition to San Francisco and Indianapolis/Marion
County);
--AOL GOVERNMENT GUIDE PARTNERSHIP. Depending on speed of adoption and demand
for advertising, this partnership can produce significant revenues and high
gross margins, particularly later in 2001 and accelerating into 2002."
NIC also announced a new management structure which will have three major
business sectors - public/private partnerships, strategic ventures and
eGovernment solutions - and an integrated business development, communications
and sales effort supporting all three. The public-private partnerships group
will include all state and local projects under long-term contracts, which
currently number 15 states and large localities. The strategic ventures group
will include NIC's alliances with AOL and Deloitte Consulting, its growing
international interests and its B2G industry portal venture. The eGovernment
solutions group will consist of NIC's three product solutions businesses: NIC
Commerce, NIC Technologies and NIC Conquest. This group will build and deploy
standard eGovernment solutions for NIC's public/private partnerships and
strategic venture companies, as well as for government enterprises and agencies
that desire stand-alone products and solutions.
Harry Herington, who oversees state portal operations, and Ray Coutermarsh of
the local division will report to Dodd in the partnerships sector, as will the
new president of NIC Commerce. Kevin Childress, currently CFO, will take on the
strategic ventures group, and P.K. Agarwal, currently CIO, will lead the
eGovernment solutions group. Joe Nemelka will continue to head the NIC Market
Development Division, which has expanded to include company-wide
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communications. Steve Kovzan, currently the Company's Controller, has been
appointed Vice President--Financial Operations.
Jim Dodd and Kevin Childress will address the issues in this release on a
conference call at 11 AM Eastern Time. To access the call, please dial
888.391.0089, the chairman is Kevin Childress and the reservation number is
16417305.
ABOUT NIC
NIC is the world's largest eGovernment solutions provider, dedicated to
positively transforming the relationships among citizens, businesses and
government. Through federal, state, local and global government partnerships,
NIC manages millions of transactions and thousands of applications accessible to
more than 160 million people worldwide. For more information, visit NIC at
www.nicusa.com.
Special Note: 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 e-government 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 10, 2000
with the Securities and Exchange Commission and in the Company's most recent
quarterly report on Form 10-Q filed with the SEC.
