-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5sXLmmK09xCDQCQZU8ZJZ5cnu85JPVzaHD2IOAmKwS/jiNTFMGbkRhmdMmQZtD3 7nCpyzpe1FqHkV+SMgWzjg== 0000950005-99-000237.txt : 19990303 0000950005-99-000237.hdr.sgml : 19990303 ACCESSION NUMBER: 0000950005-99-000237 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIR ISAAC & COMPANY INC CENTRAL INDEX KEY: 0000814547 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 941499887 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-11689 FILM NUMBER: 99555733 BUSINESS ADDRESS: STREET 1: 120 N REDWOOD DR CITY: SAN RAFAEL STATE: CA ZIP: 94903 BUSINESS PHONE: 4154722211 MAIL ADDRESS: STREET 1: 120 N REDWOOD DRIVE CITY: SAN RAFAEL STATE: CA ZIP: 94903 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q/A AMENDMENT NO. 1 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission File Number 0-16439 FAIR, ISAAC AND COMPANY, INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 94-1499887 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 120 North Redwood Drive, San Rafael, California 94903 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 472-2211 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _x_ No ___. The number of shares of Common Stock, $0.01 par value per share, outstanding on February 9, 1999, was 14,219,644. AMENDMENT NO. 1 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements. Fair, Isaac and Company, Incorporated amends its report on Form 10-Q filed with the Securities and Exchange Commission on February 16, 1999, by substituting the following Consolidated Statements Of Income And Comprehensive Income financial statement for the one that appears in the original filing. The purpose of this Amendment No. 1 is to correct a typographical error in the Research and development amount for the three months ended December 31, 1998 in the Consolidated Statements Of Income And Comprehensive Income. Unless otherwise stated, information in the originally filed 10-Q is presented as of the original filing date, and has not been updated in this amended filing. FAIR, ISAAC AND COMPANY, INCORPORATED CONSOLIDATED BALANCE SHEETS December 31, 1998 and September 30, 1998 (dollars in thousands)
December 31 September 30 ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 17,687 $ 14,242 Marketable securities 22,305 18,283 Accounts receivable, net 35,028 39,028 Unbilled work in progress 22,765 22,004 Prepaid expenses and other current assets 4,359 4,040 Deferred income taxes 4,917 5,016 --------- --------- Total current assets 107,061 102,613 Marketable securities 23,846 24,368 Property and equipment, net 37,858 36,893 Intangibles, net 10,037 10,458 Deferred income taxes 6,398 6,398 Other assets 8,891 8,884 --------- --------- $ 194,091 $ 189,614 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued liabilities $ 17,656 $ 17,418 Accrued compensation and employee benefits 16,406 22,065 Billings in excess of earned revenues 8,628 7,862 Capital lease obligations 420 416 --------- --------- Total current liabilities 43,110 47,761 Other liabilities 7,415 7,613 Capital lease obligations 685 789 --------- --------- Total liabilities 51,210 56,163 --------- --------- Stockholders' equity: Preferred stock -- -- Common stock 141 140 Paid in capital in excess of par value 35,014 32,454 Retained earnings 107,445 100,678 Less treasury stock (10,621 shares at cost at 12/31/98; 9,787 at 9/30/98) (385) (351) Accumulated other comprehensive income 666 530 --------- --------- Total stockholders' equity 142,881 133,451 --------- --------- $ 194,091 $ 189,614 ========= ========= See accompanying notes to the consolidated financial statements.
3 FAIR, ISAAC AND COMPANY, INCORPORATED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the three months ended December 31, 1998 and 1997 (dollars in thousands, except per share data) Three Months Ended December 31 -------------------------- 1998 1997 ----------- ----------- Revenues $ 67,977 $ 53,511 Costs and expenses: Cost of revenues 25,071 19,865 Sales and marketing 10,279 8,747 Research and development 7,744 6,598 General and administrative 12,997 11,398 Amortization of intangibles 421 321 ----------- ----------- Total costs and expenses 56,512 46,929 ----------- ----------- Income from operations 11,465 6,582 Other income, net 686 29 ----------- ----------- Income before income taxes 12,151 6,611 Provision for income taxes 5,103 2,644 ----------- ----------- Net income $ 7,048 $ 3,967 =========== =========== Net Income $ 7,048 $ 3,967 Other comprehensive income, net of tax: Unrealized gains on investments 115 15 Foreign currency translation adjustments 21 44 ----------- ----------- Comprehensive income $ 7,184 $ 4,026 =========== =========== Earnings per share: Diluted $ .49 $ .28 =========== =========== Basic $ .50 $ .29 =========== =========== Shares used in computing earnings per share: Diluted 14,354,000 14,346,000 =========== =========== Basic 14,014,000 13,489,000 =========== =========== See accompanying notes to the consolidated financial statements. 4 FAIR, ISAAC AND COMPANY, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended December 31, 1998 and 1997 (dollars in thousands)
Three Months Ended December 31 ---------------------------- 1998 1997 -------- -------- Cash flows from operating activities: Net income $ 7,048 $ 3,967 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 4,150 3,474 Equity loss in investment 100 170 Deferred income taxes 99 26 Deferred compensation 61 240 Changes in operating assets and liabilities: Decrease in accounts receivable 4,021 364 (Increase) in unbilled work in progress (761) (1,078) (Increase) in prepaid expenses and other assets (319) (200) (Increase) in other assets (7) (45) Increase in accounts payable and other accrued liabilities 626 3,083 (Decrease) in accrued compensation and employee benefits (4,204) (6,885) Increase in billings in excess of earned revenues 766 751 (Decrease) in other liabilities (1,839) (1,119) -------- -------- Net cash provided by operating activities 9,741 2,748 -------- -------- Cash flows from investing activities: Purchases of property and equipment (3,053) (6,008) Payment for acquisition of subsidiary -- (91) Purchases of marketable securities (18,002) (351) Proceeds from maturities of marketable securities 14,015 2,019 Proceeds from the sale of marketable securities 502 -- -------- -------- Net cash used in investing activities (6,538) (4,431) -------- -------- Cash flows from financing activities: Principal payments of capital lease obligations (100) (94) Proceeds from the exercise of stock options and issuance of stock 666 335 Dividends paid (281) (270) Repurchase of company stock (43) -- -------- -------- Net cash provided by (used in) financing activities 242 (29) Increase (decrease) in cash and cash equivalents 3,445 (1,712) Cash and cash equivalents, beginning of period 14,242 13,209 -------- -------- Cash and cash equivalents, end of period $ 17,687 $ 11,497 ======== ======== See accompanying notes to the consolidated financial statements.
5 FAIR, ISAAC AND COMPANY, INCORPORATED Notes to Consolidated Financial Statements Note 1 General In management's opinion, the accompanying unaudited consolidated financial statements for Fair, Isaac & Company, Incorporated (the "Company") for the three months ended December 31, 1998 and 1997 have been prepared in accordance with generally accepted accounting principles for interim financial statements and include all adjustments (consisting only of normal recurring accruals) that the Company considers necessary for a fair presentation of its financial position, results of operations, and cash flows for such periods. However, the accompanying financial statements do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All such financial statements presented herein are unaudited, however, the September 30 balance sheet has been derived from audited financial statements. This Report and the accompanying financial statements should be read in connection with the Company's audited financial statements and notes thereto presented in its Annual Report on Form 10-K for the fiscal year ended September 30, 1998. Footnotes that would substantially duplicate the disclosures in the Company's audited financial statements for the fiscal year ended September 30, 1998, contained in the 1998 Form 10-K have been omitted. The interim financial information contained in this Report is not necessarily indicative of the results to be expected for any other interim period or for the full fiscal year ending September 30, 1999. Note 2 Earnings Per Share The following reconciles the numerators and denominators of diluted and basic earnings per share (EPS): Three months ended December 31, (in thousands, except per share data) 1998 1997 - ------------------------------------------------------------------------------- Numerator - Net income $ 7,048 $ 3,967 ======== ======== Denominator - Shares: Diluted weighted-average shares and assumed 14,354 14,346 conversions of stock options Effect of dilutive securities - employee stock options (340) (857) -------- -------- Basic weighted-average shares 14,014 13,489 ======== ======== Earnings per share: Diluted $ .49 $ .28 ======== ======== Basic $ .50 $ .29 ======== ======== Total options outstanding included 170,000 and 132,000 options to purchase shares of common stock at prices ranging from $39.88 to $45.63 and $41.88 to $45.63 at December 31, 1998 and 1997, respectively. These options were not included in the computation of diluted EPS because the exercise price for such options was greater than the average market price of the common shares for the three months ended December 31, 1998 and 1997. 6 Note 3 Cash Flow Statement Supplemental disclosure of cash flow information: Three months ended December 31, (dollars in thousands) 1998 1997 - -------------------------------------------------------------------------------- Income tax payments $4,752 $1,058 Interest paid $ 28 $ 31 Non-cash investing and financing activities: Issuance of common stock to ESOP $1,455 $ -- Tax benefit of stock options $ 388 $ 384 Purchase of CRMA with common stock $ -- $ 111 Capital lease obligations $ -- $ 40 Note 4 Reclassifications Certain prior period balances have been reclassified to conform to the current period presentation. Note 5 Accounting Pronouncements During the first quarter of fiscal year 1999, the Company adopted Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue Recognition," as amended by Statement of Position No. 98-4 "Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue Recognition". SOP 97-2 provides guidance for software revenue recognition. The adoption of SOP 97-2 did not have a significant impact on the Company's financial position or results of operations. During the first quarter of fiscal year 1999, the Company adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("FAS 130"). FAS 130 requires the Company to report in the financial statements, in addition to net income, comprehensive income and its components including foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners." In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." This statement establishes standards for publicly held entities to follow in reporting information about operating segments in annual financial statements and requires that those entities report selected information about operating segments in interim financial statements. This statement also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement is effective for annual financial statements issued for fiscal years beginning after December 15, 1997. Beginning with fiscal year 1999, management intends to conform its annual consolidated financial statements to this pronouncement. 7 In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits." The statement standardizes the disclosure requirements for pension and other postretirement benefits. This statement is effective for financial statements issued for fiscal years beginning after December 15, 1997. The Company is currently evaluating the impact of the disclosure. Beginning with fiscal year 1999, management intends to conform its annual consolidated financial statements to this pronouncement. In March 1998, the AICPA issued SOP No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The SOP requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. The SOP also requires that costs related to the preliminary project stage and the post-implementation/operations stage of an internal-use computer software development project be expensed as incurred. This statement is effective for financial statements issued for fiscal years beginning after December 15, 1998. The Company's management believes that the adoption of SOP 98-1 will not have a material impact on the Company's results of operations. Beginning with fiscal year 2000, management intends to conform its consolidated financial statements to this pronouncement. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to its 10-Q report to be signed on its behalf by the undersigned thereunto duly authorized. FAIR, ISAAC AND COMPANY, INCORPORATED DATE: March 1, 1999 By PETER L. McCORKELL ----------------------------------- Peter L. McCorkell Senior Vice President and Secretary POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints PETER L. McCORKELL his attorney-in-fact, with full power of substitution, for him in any and all capacities, to sign this Report on Form 10-Q/A and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated. DATE: March 1, 1999 By LENNOX L. VERNON ----------------------------------- Lennox L. Vernon Controller and Acting Chief Financial Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----