Selling & administrative expenses were $8.2 million in the current quarter, up from $6.3 million in the prior year quarter, and as a percentage of total revenues were 15 percent in the current quarter, up from 13 percent in the prior year quarter. In connection with the previously disclosed SEC matter and derivative action, current quarter selling & administrative expenses included approximately $0.1 million in legal fees and other third-party costs, net of reimbursement from the Company’s directors’ and officers’ liability insurance carrier. In the prior year quarter, insurance reimbursement exceeded costs related to the SEC matter and derivative action by $0.9 million. Other selling & administrative expenses in the current quarter increased by approximately $0.9 million from the prior year quarter, due in part to higher costs to enhance corporate-wide information technology infrastructure as a result of the Company’s growth.

Depreciation & amortization expense in the current quarter increased 38 percent from the prior year quarter to $1.6 million, due mainly to capital expenditures to enhance corporate-wide information technology infrastructure and to implement the motor vehicle inspection service of Texas DPS Direct. As a percentage of total revenues, depreciation & amortization expense was 3 percent in the current quarter, up from 2 percent in the prior year quarter.

The Company’s effective tax rate in the current quarter increased to 43 percent from 38 percent in the prior year quarter due mainly to higher non-deductible compensation-related expenses. In addition, the effective tax rate in the prior year quarter reflects a favorable benefit related to the Federal research and development tax credit totaling approximately $0.2 million.

Third Quarter Operational Highlights

Eight NIC partner states ranked among the Top 10 state websites in the country as part of the Center for Digital Government’s “Best of the Web” competition. Alabama was named the best state website in the country for the first time in state history, with Utah, Rhode Island, and Mississippi placing third, fourth, and fifth, respectively. Maine, Nebraska, Texas, and Virginia rounded out the Top 10. In addition, the Center for Digital Government recognized 12 NIC partners for developing outstanding individual online services, with 75 percent of all awards in the government-to business category going to NIC and its partners.

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