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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): December 9, 2005

CHORDIANT SOFTWARE, INC.

(Exact name of Registrant as specified in its charter)

Delaware	93-1051328
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

Commission file number:

000-29357

20400 Stevens Creek Boulevard, Suite 400
Cupertino, CA    95014
(Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (408) 517-6100

(Former name or former address, if changed since last report.)

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 (see General Instruction A.2. below):

[ ] 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 December 9, 2005, the Company issued a press release announcing results for the three-months and year ended September 30, 2005. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 Press release issued by Chordiant Software, Inc. dated December 9, 2005.
 

SIGNATURE

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.

Chordiant Software, Inc.

Date:  December 9, 2005 By: /s/ George de Urioste George de Urioste Chief Operating Officer and Chief Financial Officer

EX-99.1

CHORDIANT SOFTWARE FILES ANNUAL REPORT ON FORM 10-K

FOR THE FOURTH QUARTER AND FISCAL YEAR 2005

ENDED SEPTEMBER 30, 2005

CUPERTINO, California - December 9, 2005 -- Chordiant Software, Inc. (Nasdaq: CHRD) today announced  final financial results for the fourth quarter and fiscal year (FY) 2005 ended September 30 and filed its Annual Report on Form 10-K with the Securities and Exchange Commission (SEC). On December 6, 2006, the Company announced that it intended to restate its interim financial statements for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005 due to certain accounting errors. All financial information contained in the Annual Report on Form 10-K filed on December 9, 2005, gives effect to these restatements.

Fourth Quarter and Fiscal Year 2005 Results
Total revenues for the fourth quarter of FY 2005 were $21.3 million, which compares to revenues of $24.0 million reported for the three months ended September 30, 2004. For the Fiscal Year 2005, revenues were $83.7 million, compared to $80.6 million for the same period of the prior year. License revenues for the fourth quarter of FY 2005 were $6.7 million, compared to $9.0 million reported for the three months ended September 30, 2004. For the Fiscal Year 2005, license revenues were $31.7 million, compared to $32.9 million reported for the same period of 2004. After the close of the September 2005 quarter and before filing its FORM 10-K on December 9, certain significant customers increased the scope of work on their projects which impacted Chordiant's percent of completion revenue calculation. As a result, license revenue for the September, 2005 quarter was reduced by approximately $2.5 million and deferred revenue was increased by an equal amount. Deferred revenue increased to $26.2 million as of September 30, 2005, compared to a balance of $20.6 million as of September 30, 2004. Service revenues for the fourth quarter of FY 2005 were $14.6 million, compared to $15.0 million reported for the three months ended September 30, 2004. For the Fiscal Year ended September 30, 2005, service revenues were $52.0 million, compared to $47.7 million for the same period of 2004.

Backlog of Business
Since an increasingly material portion of Chordiant's revenues has been derived from large orders, as major customers deploy the Company's products, Chordiant is now disclosing its backlog. As of September 30, 2005, the Company had approximately $33 million in backlog, which is defined as non-cancelable contractual commitments by the Company's customers through purchase orders or contracts. Backlog is comprised of current software license orders which have not met all of the required criteria for revenue recognition, deferred revenue from customer support contracts, and deferred consulting and education orders for services not yet completed or delivered. The backlog of Chordiant's business is not necessarily indicative of revenues to be recognized in a specified future period.

Cash Position
Chordiant increased its cash balances in the fourth quarter and had $40.9 million in cash and cash equivalents, restricted cash, and marketable securities at September 30, 2005.

GAAP and Non-GAAP Financial Measures
Chordiant posted a U.S. GAAP (Generally Accepted Accounting Principles) net loss of $5.5 million, or $0.07 per share loss for the fourth quarter of FY 2005 ended September 30, 2005, compared to a GAAP net profit of $1.5 million, or $0.02 per share for the three months ended September 30, 2004. Chordiant reported a fourth quarter FY 2005 non-GAAP financial measure loss of $2.8 million (which excludes stock-based compensation, amortization of intangible assets and restructuring expense), or a non-GAAP loss of $0.04 per share, compared to non-GAAP net income (which excludes, stock-based compensation, amortization of intangible assets and restructuring expense) of $0.8 million, or non-GAAP income of $0.01 per share for the three months ended September 30, 2004.

Non-GAAP Financial Measurements
The Company's management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, amortization of intangible assets and restructuring expenses, provide useful information regarding the Company's financial performance and earnings potential by calculating and quantifying the effect of certain charges of net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into profitability of the Company's operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods. The non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Operating Expenses
General and administrative expenses were $4.5 million for the three months ended September 30, 2005, compared to $3.1 million for the same period of 2004. The increase in these expenses was mainly attributable to an increase in consulting and professional services fees and expenses associated with efforts to comply with the Sarbanes-Oxley Act of 2002 (SOX) and to fill vacant accounting positions.

Sales and marketing expenses were $7.4 million for the three months ended September 30, 2005, compared to $6.1 million for the same period of 2004. The increase is attributable to personnel related expenses such as commissions and travel expenses due to a higher number of sales representatives.

Research and development expenses were $4.4 million for the three months ended September 30, 2005, compared to $4.5 million for the same period of 2004.

Customer Success
"From a market perspective momentum remains strong," said Stephen Kelly, Chordiant CEO. "We completed four $1.0 million-plus license transactions with new and existing customers. Notable customer wins included Capital One, HSBC, RSA Data Solutions - a unit of Fiserv, Inc., and O2. In fiscal 2005, we added 15 new customers, compared to seven new customers in fiscal 2004," Kelly added. "In terms of market perspective, we are continuing to see strong demand in our target markets of financial services, with on-going improvements in the wireless areas of telecommunications. The pipeline remains strong especially in North America."

About Chordiant Software, Inc.
Chordiant solutions automate and manage operational business processes for leading service-driven global organizations with a focus on retail finance and telecommunications.

Chordiant orchestrates the unique processes of an organization from the point of customer interaction, through the front and back offices to multiple transactional systems, corporate applications and data stores. Our solutions integrate existing infrastructure to orchestrate the assembly, enhancement and delivery of optimal role based business processes to the appropriate channels. Business value is realized through improved employee productivity, savings in operational costs, and increased business adaptability.

Headquartered in Cupertino, California, Chordiant maintains offices in Boston, MA; Mahwah, NJ; Manchester, NH; New York City; London; Paris; Amsterdam; and Munich.

Safe Harbor Statement

This news release includes "forward-looking statements" that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Forward-looking statements in this release are generally identified by words, such as "believes," "anticipates," "plans," "expects," "will," "would," "guidance," "projects" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, including, among others, market acceptance of our products. Further information on potential factors that could affect Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including, without limitation, Chordiant's Annual Report on Form 10-K for the period of October 1, 2004 to September 30, 2005.  These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov. Chordiant does not undertake an obligation to update forward-looking or other statements in this release.

Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
 

Chordiant Investor Relations Contact:

Steve Polcyn

Chordiant Software, Inc.

(408) 517-6282

steve.polcyn@chordiant.com

CHORDIANT SOFTWARE,  INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 

			Three Months Ended						Twelve Months Ended
			September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
Revenues:
	License	$	6,649		$	8,965		$	31,678		$	32,909
	Service		14,607			14,985			52,047			47,714
	Total revenues		21,256			23,950			83,725			80,623
Cost of revenues:
	License		377			619			1,079			1,836
	Service		7,453			8,725			29,438			27,746
	Stock-based compensation (benefit)		224			(242	)		633			601
	Amortization of intangible assets		303			106			1,068			1,838
	Total cost of revenues		8,357			9,208			32,218			32,021
Gross profit			12,899			14,742			51,507			48,602
Operating expenses:
	Sales and marketing		7,373			6,084			28,517			23,459
	Research and development		4,365			4,476			19,405			17,329
	General and administrative		4,504			3,144			18,008			8,008
	Stock-based compensation (benefit)		962			(703	)		2,211			2,389
	Amortization of intangible assets		--			16			117			222
	Restructuring expense		1,149			204			1,052			1,200
	Purchased in-process research and development		--			--			1,940			--
	Total operating expenses		18,353			13,221			71,250			52,607
Income (loss) from operations			(5,454	)		1,521			(19,743	)		(4,005	)
Interest income, net			216			144			755			515
Other income (expense), net			(58	)		(78	)		(103	)		9
Net income (loss) before income taxes			(5,296	)		1,587			(19,091	)		(3,481	)
Provision for income taxes			156			134			449			899
Net income (loss)		$	(5,452	)	$	1,453		$	(19,540	)	$	(4,380	)
Other comprehensive income (loss):
	Foreign currency translation gain (loss)	$	(91	)	$	272		$	(605	)	$	1,183
Comprehensive income (loss)		$	(5,543	)	$	1,725		$	(20,145	)	$	(3.197	)
Net income (loss) per share:
	Basic	$	(0.07	)	$	0.02		$	(0.26	)	$	(0.06	)
	Diluted	$	(0.07	)	$	0.02		$	(0.26	)	$	(0.06	)
Weighted average shares used in computing net income (loss) per share:
	Basic	$	75,851		$	71,253		$	74,449		$	67,522
	Diluted	$	75,851		$	75,406		$	74,449		$	67,522
Supplemental information [1]:
Non-GAAP financial measures and reconciliation:
	Net income (loss)		(5,452	)		1,453			(19,540	)		(4,380)
	Less: Stock-based compensation (benefit)		1,186			(945	)		2,844			2,990
	Less: Amortization of intangible assets		303			122			1,185			2,060
	Less: Purchased in-process research and development		--			--			1,940			--
	Less: Restructuring expense (reversal)		1,149			204			1,052			1,200
Pro forma net income (loss):		$	(2,814	)	$	834		$	(12,519	)	$	1,870
Pro forma net income (loss) per share:
	Basic	$	(0.04	)	$	0.01		$	(0.17	)	$	0.03
	Diluted	$	(0.04	)	$	0.01		$	(0.17	)	$	0.03
Weighted average shares used in computing net income (loss) per share [2]:
	Basic		75,851			71,253			74,449			67,522
	Diluted		75,851			75,406			74,449			67,522

[1] The accompanying supplemental pro forma financial information represents a non-GAAP financial measure. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements. Non-GAAP financial measures of net income or net loss is used by investors and analysts of Chordiant Software, Inc. (the "Company") as an alternative to GAAP measures when evaluating the Company's performance in comparison to other companies. The Company's management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, amortization of intangible assets and restructuring expenses, provide useful information regarding the Company's financial performance and earnings potential by calculating and quantifying the effect of certain charges of net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into profitability of the Company's operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods. The above non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

[2] Diluted net loss per share for the three months ended September 30, 2005 and twelve months ended September 30, 2005, is computed excluding total potential outstanding common shares of 8,461 and 8,461 respectively, as their effect is anti-dilutive.

 CHORDIANT SOFTWARE,  INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 

			September 30, 2005			September 30, 2004
ASSETS
Current assets:
	Cash and cash equivalents		$	38,546		$	55,748
	Marketable securities			--			4,000
	Restricted cash			1,982			279
	Accounts receivable, net			18,979			20,161
	Prepaid expenses and other current assets			4,345			3,097
		Total current assets		63,852			83,285
Restricted cash				365			2,057
Property and equipment, net				2,479			3,237
Goodwill				31,907			24,874
Intangible assets, net				5,148			244
Other assets				3,499			1,643
		Total assets	$	107,250		$	115,340
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	4,554		$	6,394
	Accrued expenses			8,902			11,681
	Deferred revenue			26,050			18,459
	Current portion of capital lease obligations			213			191
		Total current liabilities		39,719			36,725
Deferred revenue, long-term				147			2,122
Restructuring costs, net of current portion				1,731			--
Long-term portion of capital lease obligations				96			317
		Total liabilities		41,693			39,164
	Common stock			78			72
	Additional paid-in capital			273,824			262,703
	Deferred stock-based compensation			(1,940	)		(339	)
	Accumulated deficit			(208,889	)		(189,349	)
	Accumulated other comprehensive income			2,484			3,089
		Total stockholders' equity		65,557			76,176
		Total liabilities and stockholders' equity	$	107,250		$	115,340