NIC 2012 Annual Report: We Build on Innovation


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NIC 2012 Annual Report: We Build on Innovation

  1. 1. we build on INNOVATION INNOVATION2 012 an n ua l r e p o r t
  2. 2. we build on INNOVATION
  4. 4. 1 Dear Fellow And then there’s NIC. In 1992 when we As we rang in the new year of 2012, behind us, in 2011, was one of our most successful years ever – ran just one application using dial-up record revenues, a record-breaking four new state Stockholders service that could only relay data modem-to-modem, did we imagine partnerships, and national recognition placing us among the best of the best companies in America. Yet we knew there was no time to rest, hit a plateau, Do you think in 1914 when Henry Ford mobile devices that would make our or continue as is. So, we did what we do best: evolve. installed moving assembly belts in his future library of 7,500 eGovernment In 2012, NIC generated total revenues of $211.1 manufacturing plants that he envisioned million, up 17 percent over 2011; total operating services accessible anytime, anywhere? income increased 12 percent from the prior year the C-MAX hybrid car that can take you to $43.2 million; and earnings per share reached from Detroit to New York City on one tank But, that’s what great companies do. We begin $0.40, up from $0.35 in 2011. In 2012, we utilized with a revolutionary product or service, and push our free cash flow to grow stockholder value, returning of gas? Or what about Nike co-founder Bill more than $32.5 million in the form of two special the envelope of invention for decades to come. Bowerman in 1971? When he was inventing Innovation never stops. Great companies build a cash dividends totaling $0.50 per share. And all legacy of reinventing what they do best to make of this happened during an investment year in lightweight athletic shoe soles using his it even better. We are always looking ahead with which our portal teams worked hard to ramp up a belief that the best is yet to come. That is our the four new portals secured in 2011 and launch wife’s waffle iron, do you think he thought story. It is what we celebrated as part of our 20th the first phase of a very large project in Texas, of today’s shoe that weighs less than five anniversary in 2012. “We Build On.” We build on DPS Direct. We were successful in managing those innovation. We build on our success. We build on investments while keeping our focus on growth. ounces and is virtually seamless? Or take our partnerships, efficiencies, corporate citizenship, By the second quarter of 2012, each of the four Steve Jobs. Back in 1976 when he and and more. Our passion hasn’t wavered. We new state portals secured in 2011 was generating continue what we began in 1992 – to revolutionize revenues. During that same time, our New Jersey Steve Wozniak were working on the Apple the paper-intensive, waiting-in-line means of portal became profitable solely through non-DMV I, did they know that one day the iPhone conducting business with government into a services. Just one quarter later, our Oregon portal secure, click-of-a-button, swipe-of-a-screen had completed its start-up phase as we finished 5’s retina display would be so clear that interaction. We dominate this industry and are still migrating hundreds of services and websites radically changing the way people do business from legacy platforms. And, there was momentum the human eye would not be able to detect with all levels of government today. In some ways, at the federal level too, as the Pre-Employment individual pixels? I believe we’re just getting started. Screening Program (PSP) was introduced to a 2
  5. 5. 3 | continued | new audience of users with the debut of PSP 2.0 and tablet users.” Even now, the Pew Research I replied, “We want to change the world by during the fourth quarter of 2012. Center states that for many young adults, those improving government.” It’s as simple as that. with no college experience, and lower income We created this industry and we will continue to As we grew the core business, we were also households, a smartphone is the primary means of make it more efficient to interact with all levels working on our future. In the second quarter of accessing the Internet. Today, NIC has launched 2012, three new requests for proposal were issued of government. I sincerely appreciate the hard more government mobile applications than any for enterprise-wide eGovernment services. Six work and dedication of the more than 725 NIC other company. In 2012, we launched 40 new months later, we secured another first in the history employees who made eGovernment flourish in native mobile applications, as we continue to of our Company – a sole-source agreement for 2012, and who continue to invent more creative expand the reach of our eGovernment services. self-funded, eGovernment services with the We also “mobile enabled” many of our existing services today. I also want to thank our Board of Commonwealth of Pennsylvania. It was definitely a online services. In Rhode Island, 90 percent of Directors. Their diverse areas of expertise and year in which we continued to build on our success. the online services that we have developed over strategic oversight contribute to keeping NIC at NIC’s Executive Leadership Team from left: the years were retrofitted to a “responsive design” STEPHEN M. KOVZAN, Chief Financial Officer ; the forefront of eGovernment innovation. And We also built on our innovation. I remember when template in 2012. This means the online service is ROBERT W. KNAPP, Chief Operating Officer ; our Company made the shift from dial-up, per-minute finally, I’d like to thank you – our stockholders. Your HARRY H. HERINGTON, Chief Executive Officer coded in such a way that it automatically detects support helps millions of Americans file, apply, and revenue generation to its current transaction- and Chairman of the Board ; and WILLIAM F. the screen size of the device being used, whether BRADLEY, JR., Executive Vice President, Chief register countless interactions with government based Internet format. What once seemed so it is a desktop computer, laptop, smartphone, Administrative Officer, General Counsel, and Secretary. revolutionary is now part of everyday business. securely and efficiently wherever technology takes or tablet, and scales the design and adjusts That’s also how we now view the evolution of them. I am proud to have served as Chief Executive content accordingly. designed “.gov” websites, they are not eGovernment. mobile. We are a company with a mobile-first Officer and Chairman of the Board during our 20th Just as your front door is an entry point to your strategy in how we approach eGovernment. There What is important to our Company as we look to anniversary year, and I look forward to leading this home, a “.gov” home page is an access point to was a day when every transaction took place at a the future is that however technology evolves, it is Company as we “build on” our success in the future. our eGovernment services. True eGovernment is the desktop computer or an over-the-counter credit our job to use it to make conducting business with service – renewing a professional license, applying Thank you, card device. But that’s all changing. The Pew government secure and efficient. That essence of for a handicap parking permit, filing taxes, Research Center, a nonprofit, nonpartisan group eGovernment is as solid today as it was 20 years checking in harvested wild game, searching for that provides information on the issues shaping ago. In 2012, it fueled our organic growth, with a property lien, looking up a district court record, America, said in an April 13, 2012 study, “Digital same-state portal revenues increasing a steady pulling a truck driver’s inspection history report, Differences,” that “within the next decade, 10 percent over 2011, and continued the momentous and much, much more. Harry Herington smart-device swiping will have gained mainstream interest in our business model. While we are proud acceptance as a method of payment and could to have won nine out of the top 10 awards in the As I was interviewed this past spring for the Ernst Chief Executive Officer and largely replace cash and credit cards for most Center for Digital Government’s 2012 “Best of the & Young Entrepreneur of the Year® Award, I was Chairman of the Board online and in-store purchases by smartphone Web” competition for user-friendly and well- asked what our goals are. Without hesitation, NIC Inc. 4
  6. 6. 53 G rowing stronger year over year. $ 211.1 As shown on the charts below, NIC had a year of strong growth. This growth caught the attention of Standard Poor’s, which added NIC to the SP SmallCap 600 Index in 2012. million total revenues WE EARNINGS per share $ 0.40 Up 17% over 2011 BUILD 0.40 0.35 $0.40 earnings per share $ 43.2 ON million FINANCIAL EGOV’s stock price increased $0.35 nearly 23 percent in 2012; noted 0.30 by The Kansas City Star as $0.28 one of the strongest performing operating income 0.25 stocks among publicly traded STRENGTH Kansas City companies. An increase of 12% 0.20 $0.19 $0.22 over the prior year $0.17 $0.19 $ 32.5 0.15 $0.12 199.4 $0.11 $0.10 0.10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ million million in special cash dividends PORTAL REVENUES in millions total portal was paid to stockholders in 2012, totaling $0.50 per share. revenues 200 $199.4 Up 17% over 2011 $170.3 150 150 $ $155.2 26 % $128.6 100 million $96.8 $82.5 50 $57.9 $70.0 non-DMV portal revenue GROWTH $48.5 $40.2 or $2.35 per share has been paid to stockholders in special cash 0 dividends since 2007. Over 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6 4
  7. 7. 73 $ 61 MILLION M aking government more accessible WE works for everyone. BUILD This year two studies revealed that self-funded eGovernment works. One showed it is preferred by citizens, while another noted it has helped the state of Utah avoid $61 million cost millions of dollars in costs. avoidance by the ON state of Utah over five years by placing nine high- volume services online our 67% and utilizing NIC’s self- funded model, according to a study by the University of Utah. Since $ 1999, more than 1,000 of Americans would model online services have been developed for the state by NIC’s subsidiary, pay an efficiency fee to conduct business with government online Utah Interactive, LLC. versus in line at a government agency office.* *2012 Wakefield Research 67% nationwide survey of 1,000 nationally representative American adults ages 18 and older. $10 the amount nearly one-third of Americans are willing to pay as an online $ 13 the cost per transaction saved by providing a government service online versus offline (waiting in line at a government agency office), according to a study by the University of Utah. efficiency fee per transaction in order to avoid Download the Layar app to your smartphone. standing in line Open the app, hover your phone over this page and at a government press “Scan.” Look for the “Tap to view” button to discover additional online content, such as the entire agency office.* University of Utah executive summary. 8
  8. 8. 9 T he NIC family pennsylvania continues to grow. NIC continues to grow in two significant ways: 1) Adding new partners, and new contract 2) Growing the business we do with current partners who continue to place their WE confidence in us through contract rebids and renewals. More than half the states in the U.S. now partner with NIC for their eGovernment needs. Contract Renewals Fourteen partners exercised contract new Contract The Commonwealth of pennsylvania BUILD ON extensions in 2012. In 2012, NIC secured a new partnership through its first The state of arizona signed a one-year sole-source agreement. contract extension with NICUSA, Arizona Division. Pennsylvania became the 29th partnerships The Federal Election Commission state to partner with NIC to signed a contract extension with NIC Technologies contract provide eGovernment services. through April 2013. renewals The contract term is for five The Federal Motor Carrier Safety years with renewal options Administration signed a one-year contract through December 2022. arizona extension with NIC Technologies. hawaii The state of Hawaii signed a three-year contract extension with Hawaii Information Consortium. iowa The state of Iowa signed a contract extension the federal with Iowa Interactive through March 2013. kansas motor carrier safety The state of Kansas signed a one-year contract administration alabama kentucky extension with Kansas Information Consortium. The commonwealth of Kentucky signed maine a one‑year contract extension with Kentucky Interactive. contract The state of Maine signed a two-year contract rebid extension with Maine Information Network, which includes options for the state to extend the contract for two additional two-year renewal terms. new jersey The state of New Jersey signed a one-year oklahoma contract extension with New Jersey Interactive. rhode island The state of Oklahoma signed a one-year contract extension with Oklahoma Interactive. the federal election Contract Rebid utah The state of Rhode Island signed a commission One partner signed a contract extension with Rhode Island Interactive vermont through March 2013. new contract with NIC west in 2012 as part of the The state of UTAH signed a three-year contract virginia mandatory rebid process. extension with Utah Interactive. The state of Vermont signed a contract The state of Alabama extension with Vermont Information Consortium signed a new contract with Download the Layar app to your smartphone. Open the through April 2013. Alabama Interactive to manage app, hover your phone over this page and press “Scan.” The state of West Virginia signed a one-year its eGovernment services for Look for the “Tap to view” button to read about NIC’s 20th contract extension with West Virginia Interactive. up to five years. anniversary year and what partners have to say about the eGovernment efficiencies NIC has delivered during the past two decades. 10 4
  9. 9. 11 New revenue streams flow in 2012. WE Generating new and more profitable revenue streams on an annual basis is the lifeblood of every successful company. By mid-2012, each of the four portals secured in 2011 was generating revenue. BUILD ON Mississippi Mississippi ranked among the top 5 Web portals in the country after partnering with NEW NIC for just 12 months. The site also won six additional awards in 2012, and two awards for the mobile version of BEGINNINGS Delaware Delaware launched several new online services, including the Public Integrity Reporting System, which features registration, employer authorization, and financial reporting for lobbyists, financial disclosure for public officers, and an administrative back-end system for the Public Integrity Commission. It also helps meet Governor Markell’s goal of providing greater transparency and accessible data to the public. Oregon Oregon partnered with the Secretary of State’s office to launch the new portal’s first service, Business Xpress, the collaboration of nine state agencies bringing together varying state online services, forms, and information into a single online location. Maryland Maryland developed several new services during its first year, including the Central Business Licensing and Registration system, the Maryland Waste Kitchen Grease Registry, the Insurance Contact Registry Search, and the Maryland Practice Driving Test mobile application for Apple and Android platforms, as well as a suite of driver  and vehicle search and monitoring services for the Maryland Motor Vehicle Administration. 12
  10. 10. 13 O ur services get 200 better every year. Each year we develop new services so more people can conduct business securely million transactions WE and efficiently across all screens – Web, mobile, kiosks, and more. were completed using online services developed by NIC. $ 22.5 BUILD Billion ON EFFICIENCIES was securely processed “We’re confident now that In New Jersey, when a police officer or a by NIC on behalf 545,022 tolling authority needs to rely of its government partners. on that temporary tag, it is 500 clearly legible ... even before they get out of their cruiser. Temporary vehicle tags were processed That is light years ahead of through the New Jersey Temporary Vehicle Tag online where we were before,” service, which became mandatory on July 1, 2012. said Ray Martinez, Chief new revenue- July 1 2 012 Administrator of the New Jersey Motor Vehicle Commission. generating Government Technology, online Nov. 27, 2012 applications were developed by NIC portals in 2012. 7,500 “Secretary of State Charles Maine launched a Summers describes the customized version of addition of service at AAA the Driver’s License/ID offices as a ‘force multiplier’ Renewal Replacement of its ability to effectively online service for AAA, serve its customers.” allowing for driver’s total unique licenses to be renewed or Government Technology, replaced at AAA offices. online services Aug. 10, 2012 Download the Layar app to your smartphone. Open the have been developed by NIC app, hover your phone over this page, and press “Scan.” since 1992. Look for the play button and tap for more examples of great eGovernment solutions featured in the video, “eGovernment Delivers.” 14
  11. 11. 15 WE BUILD ON EFFICIENCIES 6,500 Texas state inspection stations deployed 30,000+ marriages take place in Hawaii annually. A new online service developed by NIC’s Hawaii team allows couples to apply online for a civil union or the new Vehicle Inspection Connection system in September marriage license in Hawaii, making the process nearly 2012 as part of the DPS Direct suite of services. 1 paperless except for the marriage certificate itself. In the first three months of operation: • .4 million vehicle inspections were completed. 2 $ • 50,000 certificates were ordered. • 22,000 end user accounts were activated. billion 48,109 “The campground reservation solution was able to process 68 reservations in a one-minute time period. This resulted in less frustration campsite nights were reserved for campers and reduced stress on in 2012 by 17,373 campers through our limited call center resources.” the Maine online campground reservation tool, contributing Tom Morrison, Director of Operations nearly $1 million to the Maine and Maintenance, Maine Department of was processed through Vermont’s Agriculture, Conservation and Forestry business tax application, State General Fund. VTBizFile, since the service originally launched. $ 250,000 state of Arkansas estimates it will save is the amount the 728,524 commercial truck driver records were pulled in 2012 using the Pre-Employment Screening Program that NIC developed and manages on behalf of the U.S. annually from two enhancements made to the Arkansas State Jobs website that Department of Transportation Federal Motor Carrier Safety Administration. resulted in an entirely paperless hiring process. 16
  12. 12. 17 106 M obile is on the rise. As the use of tablets and smartphones continues to expand, so does NIC’s development of mobile-friendly sites and services, helping to make eGovernment accessible anytime, anywhere. 106 native mobile WE applications have been developed by NIC, and they have been downloaded more than BUILD 1.5 million times. ON 40 26,000 2,000 mobility 26,000 New Jersey 2,000 downloads of charities can be Arkansas’S “ReadyAR” “investigated before natural disaster 40 new native you donate” using preparedness mobile applications the Charity Lookup mobile application were launched by NIC mobile application took place during National in 2012, resulting in available for the iPhone, Preparedness Month. 328,365 downloads. iPad, and iPod touch. The mobile app includes The mobile application was information on weather featured in a June 12, 2012 conditions, road closures, article in USA Today. and emergency preparedness. 72 50,000 7 72 iPad kiosks 50,000 harvested are available deer in Indiana were 7 industry for on-site reported using associations, customer use the CheckIN game including the Republican at 26 Tennessee driver reporting system Governors Association, the service facilities, using a in 2012. American Association of custom application developed The application takes a Motor Vehicle Administrators, by NIC’s Tennessee team “mobile-first” approach using and the Montana Office that allows citizens to renew responsive design to format of Technology, have used a or replace their driver’s correctly on a computer, mobile agenda application license, submit their payment, smartphone, or tablet. developed by NIC’s West and receive their license Game can be checked in Virginia team. within minutes. real-time from the field. 18
  13. 13. 193 G iving back is good business. NIC employees pride themselves on giving their time and talents to worthy causes. WE Each year the team and individual who go above and beyond giving back to their community receive NIC’s Team of the Year and Citizen of the Year awards. BUILD New revenue ON streams flow community 135 units of blood NIC’s Oklahoma portal received were donated 2 awards of in 2012. the Team of the Year award for by NIC employees as part of donating more than the Company’s 20th anniversary 292 hours of celebration. The American Red national community service Cross estimates the donated blood will save nearly 400 lives. recognition 4 to NIC’s newest portals: Mississippi, Delaware, Oregon, – 20 charitable events in were received by and Maryland all generated revenues by the second quar- the Oklahoma City area. NIC’s CEO Harry ter of 2012. Herington on the same day – June 5, Mississippi ranked among the top 10 Web portals in the 2012. Herington was country after partnering with NIC for just 12 months. awarded the Ernst Young Entrepreneur Delaware launched several new online services, including of the Year® Award the Public Integrity Reporting System, allowing lobbyists for technology in and public officials to disclose expenses, as well as gifts the Central Midwest related to the lobbying activity of each piece of legislation. Region, as well as The service also allows the public to search all lobbying the first-ever Charles activity in the state. Shinholser Award for Oregon partnered with the Secretary of State’s office to Volunteerism from launch the new portal’s first service, Business Xpress, the Concerns of Police collaboration of nine state agencies bringing together vary- Survivors (C.O.P.S.). ing state online services, forms, and information in a single The Shinholser Award website. is C.O.P.S.’s highest Jill Willhoite, director of marketing for NIC’s volunteer honor Maryland developed several new services during portal, received the Company’s 2012 Oklahoma its first and was awarded year, including the Maryland Waste Kitchen Grease Reg- award for going above and Citizen of the Year to Herington for his istry, the Insurance Contact Registry Search, and giving back to her community. beyond in the outstanding support NIC’s CEO gives back to the community in a big way. Maryland Practice Driving Test mobile application for the of the families of Download the Layar app to your smartphone. Open the Android platform. fallen officers. app, hover your phone over this page, and press “Scan.” Look for the play button and tap to watch a video showing how his initiative, Ride4Cops, is changing lives. 20 4
  14. 14. 21 Top 1% Recognition NIC’s position follows success. The success we had in 2012 did not go unnoticed. We continue to be recognized for among all our innovative eGovernment solutions and the Company’s financial strength. publicly traded WE small companies by ranking 31st on Forbes’ list of the “100 Best Small BUILD Companies in America.” This was the Company’s NIC’s ranking by fourth consecutive year to Forbes on its list make the list, and NIC was of the “25 Fastest- #1 – ranking of ON the only company from the Growing Technology state of Kansas. as the best Companies in America.” More than 5,000 publicly traded state website in technology companies were the country recognition evaluated based on market as part of the Center for capitalization and a minimum of 10 percent Digital Government’s revenue growth over the past three years, among “Best of the Web” other factors. NIC was the only Midwestern competition. This is the company to make the list. first time in state history that Alabama has received this first-place honor. 9 out of the Top 10 best state websites in the country, as ranked by the Center for Digital 1 NIC employee, Dan Chapman, was selected Government, are NIC as one of 18 individuals from across the United States partner states. to serve on the Presidential Innovation Fellows program in Washington, D.C. More than 700 individuals applied to be a part of the program. 8 CEOs were interviewed for the Forbes Insights 75% of the eGovernment services 1st ever IDEAS Award research piece: “Inspired recognized in the business- for Growth: Lessons from to-government category by the National Association of Middle Market Companies,” of the Center for Digital Government’s “2012 Secretaries of State (NASS) including NIC’s. He was Digital Government Achievement Awards” went to Nebraska for its online also quoted in an April 20, were developed by NIC portals. application that tracks proposed 2012 Forbes article about state rules and regulations. the research. 22
  15. 15. 23 WE BUILD ON recognition AAMVA PACE Award Texas – Driver License Texas – Website/Dynamic Interactive Media Awards NASPO 2012 George Cronin Alabama – Award of Excellence – Best Use of Social Media Eligibility and Reinstatement Media: Public Sector – Outstanding Achievement Award Awards for Procurement Web Applications/Services Colorado, Guy Department of Public Safety – Texas – Government Excellence Category for Utah – Warrant Checks Driver License Renewal Arkansas – Arkansas Business Vroom Campaign Delaware – Public Emergency Listing System Indiana – Silver Award, Interactive Idaho – On-The-Go (OTG) aWWWards Davey Award Meeting Calendar (ABEL), Honorable Mention Distinction – Mobile Payments Alabama –,, Honorable Mention Best in Class Hawaii – Mobile Application Silver Award Government National Association of Indiana – Silver Award, Best of State Award Website Design Secretaries of State (NASS) for Annual License Renewal, Interactive Distinction –, Winner IDEA Award Honorable Mention Colorado – Online Driver’s Indiana Transparency Portal Nebraska – Rules and Bright Idea Award, Ash License Renewal Service – Texas – Driver License Regulations Tracking System Rhode Island – Silver Award, Center for Democratic Guy Vroom Campaign, Silver International Association of Renewal and Change of Award Integrated Marketing Governance and Innovation at Commercial Administrators PTI Web 2.0 State and Local Top US Government Websites Address, Honorable Mention Harvard Kennedy School Mississippi –, (IACA) Merit Award Government Award Maine – Design Shack Rhode Island Quick Start Government-to-Business Category Silver Award Government awaii – Mobile Applications H Delaware – Public Meeting Maine – Regulatory Licensing Website Design for Annual Business Filings Calendar VEMA (Visual Excellence in the Bronze Quill Award and Permitting Rhode Island –, Utah – Mark Index Connect Multimedia Arts) Marketing and Communications MarCom Award 2011 New Jersey – Temp Tag Service Silver Award Government Utah – Winner – Mississippi – Gold, Website SC Government Management Marketing Campaign Website Design New Jersey – Uniform Design – Mobile Information Systems W3 Awards nteractive Media Design I Commercial Code Service Award Association Indiana – Gold Award, Oklahoma – Gold, Website Online 2011 Utah – Finalist, Social Media, Elite Achiever Award Government Website South Carolina – Secretary Design – Home Page Advertising Campaign South Carolina – UCC Online Category – of State Uniform Commercial Oklahoma – Gold, Website West Virginia – Finalist, Application with the SC Center for Digital Government Code Online Design – Gov. Fallin Website Indiana – Silver Award, Web WV DMV Vehicle Secretary of State Best Fit Integrator Award Application/Services Category – Texas – Nurse Licensing Registration System TechPoint Mira Awards My Maine Connection Silver Communicator Award IDOI Rate Watch Application Renewal Nominee Rhode Island Quick Start Government Computer News olorado – Guy Vroom C Utah – One-Stop Business Award for IT Achievement Indiana – Innovation of the Year Campaign (for the promotion Rhode Island – Silver Award, Best of the Web Registration v. 4 Arkansas – of Colorado’s Online Driver’s Rhode Island Government Online 1st Place: Alabama Arkansas YOUniversal Mobile Web Award License Renewal Service) Driving State Digital ndiana – Best Travel I Web Marketing Association’s 3rd Place: Utah Financial Aid System, Government Category Honorable Mention Application – Summit International Awards WebAward 4th Place: Rhode Island Indiana – Mobile Bus DNR iPhone Application Indiana – Silver Award Hawaii – Best Mobile Government 5th Place: Mississippi Inspection Application Government Customer Service Support Indiana – Best of Show Mobile Sunshine Review – Website – Mobile Applications for Finalists: Maine, Nebraska, West Virginia – Homeland Excellence Awards Application – Sunny Award Annual Business Filings Texas, and Virginia Security Emergency Utah – Finalist, DNR iPhone Application Indiana – Top Transparency Website Indiana – Outstanding Digital Education Management Suspicious Activity Technical Excellence Rhode Island – Best Government Website – Achievement Award Utah – Master Index Utah – Finalist, Customer Government Mobile Application, The Communicator Awards Virginia, Master the Math Focus Excellence RI Government Online Mississippi – Award of Mississippi – Outstanding mobile application Government Internal Category Distinction – Structure Government Website – Utah – GovPay GovMark Award NASCIO Recognition Awards Digital Government Utah – Media Campaign Mississippi – Award of Texas – Government Standard of Hawaii – Finalist, Digital Distinction – Achievement Award Center for Plain Language Excellence – Texas – Best Digital Program – Government to Business Navigation Government-to-Citizen Category ClearMark Award 2011 Marketing Mississippi – Mobile Utah – Finalist – Colorado – Gambling Intercept Texas – Website/Dynamic Mississippi – Award of Campaign, Honorable Mention Payment System Media: Public Sector – Tennessee – Finalist, Distinction – Alabama – Best of Industry – Tennessee – Driver Service City of Houston – Horizon Interactive Award Tennessee’s Driver Service Home Page Best Government Website – Center, Self-Service iPad Kiosks Traffic Ticket Payment Utah Center iPad Kiosk Utah – Winner – 24
  16. 16. 25 W e think NIC is the best in the business because our leaders are the best in the business. CORPORATE BOARD OF DIRECTORS Ross C. Hartley Mr. Hartley, 65, is a co-founder of NIC and former President of The Hartley Insurance Group. He is also a Director of the Empire District Electric Company. He became a Director of the original COMMITTEE MEMBERSHIPS INFORMATION companies beginning in 1991, and later an NIC AUDIT COMMITTEE Director upon the Company’s formation in 1998. Art N. Burtscher – Chair Harry H. Herington C. Brad Henry Daniel J. Evans Chairman of the Board and Chief Executive Officer Governor Henry, 49, is of counsel to the law firm of Karen S. Evans Mr. Herington, 53, is the Chief Executive Officer Lester, Loving Davies in Edmond, Okla., and is Ross C. Hartley of NIC and previously served as the Company’s a founding member of Henry-Adams Companies, C. Brad Henry President, Chief Operating Officer, and Executive LLC. He was appointed by President Obama to the Alexander C. Kemper Vice President of Portal Operations. He became federal Council of Governors. He previously served William M. Lyons an NIC Director in 2006. as the Governor of Oklahoma, and was only the Pete Wilson third governor in the state to serve two consecutive Art N. Burtscher COMPENSATION terms. He became an NIC Director in 2011. Lead Independent Director COMMITTEE Mr. Burtscher, 62, is President, Westwood Trust Alexander C. Kemper Western Region. He is also a Director of Novation, Mr. Kemper, 47, is Chairman of The Collectors Alexander C. Kemper – Chair American National Bank, and several privately held Fund, a private equity fund, and Chairman and Chief Art N. Burtscher companies. He became an NIC Director in 2004 Executive Officer of Pollenware, a trade settlement Daniel J. Evans and was named Lead Director in 2008. company. He is a Director of UMB Financial Corp., Karen S. Evans AXA, ArtUSA, and several privately held companies. C. Brad Henry Daniel J. Evans He became an NIC Director in 2007. William M. Lyons Governor Evans, 87, is Chairman of Daniel J. Evans Associates Consulting, a public policy consulting William M. Lyons Pete Wilson firm, and previously served as Governor and U.S. Mr. Lyons, 57, is the former President and CEO CORPORATE Senator for the state of Washington. He is also a of American Century Companies, Inc., a Kansas Director of Costco Wholesale Corporation and City-based investment manager. Mr. Lyons is also a GOVERNANCE Archimedes Technology Group. He became an Director of Morningstar, Inc. and the NASDAQ Stock NOMINATING NIC Director in 1998. Exchange. He became an NIC Director in 2009. COMMITTEE Karen S. Evans Pete Wilson William M. Lyons – Chair Ms. Evans, 53, is an independent consultant and Governor Wilson, 79, is a Principal at Bingham Art N. Burtscher the National Director of U.S. Cyber Challenge, a Consulting Group, a business consulting firm. He Daniel J. Evans nationwide talent search and skills development previously served as Governor and U.S. Senator Karen S. Evans program focused on the cyber workforce. She for the state of California and Mayor of San Diego. Ross C. Hartley previously served as the de facto federal Chief He is also a Director of The Irvine Corporation, U.S. C. Brad Henry Information Officer under President George W. TelePacific Corporation, and U.S. HealthWorks. Alexander C. Kemper Bush. She became an NIC Director in 2011. He became an NIC Director in 1999. Pete Wilson 26 4
  17. 17. 27 corporate information contacting the BOARD OF DIRECTORS STOCKHOLDER INFORMATION Communications to NIC’s Board of Directors should be sent via email to or in writing to: ANNUAL MEETING Important information is included in the most recent Form 10-K, which is attached to this annual report. Board of Directors The Annual Meeting of NIC Inc. stockholders will be These documents can also be viewed online at NIC Inc. held May 7, 2013 at The Oread, 1200 Oread Avenue, 25501 West Valley Parkway Lawrence, KS 66044. Suite 300 A formal notice, together with the proxy statement and Olathe, KS 66061 proxy form (along with this annual report), will be CREDITS The Board’s committee charters, the Company’s Code of Business Conduct and Ethics, and Corporate mailed in advance of the meeting to all stockholders of DESIGN Governance Principles and Best Practices may be found on the Company’s website at record entitled to vote. Stockholders are encouraged Trozzolo Communications Group Investors/CorporateGov and may be obtained in print by contacting the Investor Relations Department at to attend the meeting, but those unable to do so are Kansas City, MO or (913) 498-EGOV. asked to vote in advance of the meeting by telephone, on the Internet, or by mail as described in the proxy form. PRINTING STOCK LISTING Alpine Litho-Graphics NIC Inc.’s common stock is traded on the NASDAQ Kansas City, MO EXECUTIVE LEADERSHIP SENIOR MANAGEMENT INDEPENDENT REGISTERED Global Select market under the symbol “EGOV.” TEAM* STEERING COMMITTEE PUBLIC ACCOUNTANTS REGISTER AND TRANSFER AGENT Harry H. Herington *Members of the Executive PricewaterhouseCoopers LLP Chairman of the Board and Leadership Team are also 1100 Walnut Street Computershare TRADEMARKS REGISTERED Chief Executive Officer members of the Senior Suite 1300 250 Royall Street SERVICE MARKS Management Steering Canton, MA 02021 NIC Inc. is a registered service mark of NIC Inc. Age 53 Kansas City, MO 64106 Committee. Additional (781) 575-2000 The NIC logo and “The People Behind William F. Bradley, Jr. (816) 472-7921 members are: eGovernment” are registered trademarks of Executive Vice President, Chief Aimi M. Daughtery INVESTOR RELATIONS NIC Inc. Certain other names and logos Administrative Officer, General protected by trademark appear in this report. Chief Accounting Officer Copies of NIC’s Annual Report on Form 10-K, Counsel, and Secretary OUTSIDE COUNSEL Rather than list the names and entities that Age 42 Quarterly Reports on Form 10-Q, and other Age 58 own these trademarks or insert a trademark Ron E. Thornburgh Stinson Morrison Hecker LLP publications are available free of charge upon symbol with each mention of the trademark, NIC Stephen M. Kovzan 1201 Walnut Street Senior Vice President, request. Inquiries should be directed to: Inc. states that it is using the names only for Chief Financial Officer Suite 2900 Business Development Angela Skinner informational purposes and to the benefit of the Age 44 Kansas City, MO 64106 trademark owner with no intention of infringing Age 50 Director of Corporate Communications Robert W. Knapp (816) 842-8600 upon that trademark. Investor Relations Chief Operating Officer 25501 West Valley Parkway ©2013 NIC Inc. NIC is an equal opportunity employer. Age 44 Suite 300 Olathe, KS 66061 (913) 754-7054 (877) 234-EGOV 28
  18. 18. 29 Expanding to serve more partners in more places. NIC is proud to partner with 3,500 federal, state, and local government agencies. alabama indiana montana south carolina arizona indianapolis nebraska tennessee Marion County, IN arkansas new jersey texas iowa colorado us department of new mexico mvd kansas transportation Delaware oklahoma kentucky utah federal election commission maine oregon vermont hawaii maryland pennsylvania virginia idaho mississippi rhode island west virginia
  19. 19. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from        to Commission file number 000-26621 NIC INC. (Exact name of registrant as specified in its charter) Delaware 52-2077581 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 25501 West Valley Parkway, Suite 300, Olathe, Kansas 66061 (Address of principal executive offices, including Zip Code) Registrant’s telephone number, including area code: (877) 234-3468 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $0.0001 par value per share The NASDAQ Stock Market, LLC Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act. Yes  o No  xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theAct. Yes o No  xIndicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes  x No  oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes  x No  o i
  20. 20. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer  x Accelerated filer o Non-accelerated filer  o Smaller reporting company o (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o No  x The aggregate market value of voting stock held by non-affiliates of the registrant, as of June 30, 2012, was approximately $753,110,699 (based on the closing price for shares of the registrant’s common stock as reported by the NASDAQ Global Select Market on that date). Shares of common stock held by each executive officer, director and holder of 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status for purposes of this calculation is not intended as a conclusive determination of affiliate status for other purposes. On February 13, 2013, 64,725,996 shares of the registrant’s common stock, $0.0001 par value per share, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive Proxy Statement to be issued in connection with its Annual Meeting of Stockholders to be held in 2013 are incorporated by reference into Part III of this Form 10-K.ii