-----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, S4CX6CZY/RbhnjdKcUPb3+/lnxKLXY4E63EXJHLdM8ghozA4cN5HN4Z+7sbDHeL1 bKE8vDOwnrrDVeBDnu3jrg== 0001157523-05-000648.txt : 20050126 0001157523-05-000648.hdr.sgml : 20050126 20050126161433 ACCESSION NUMBER: 0001157523-05-000648 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050126 DATE AS OF CHANGE: 20050126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIR ISAAC CORP 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11689 FILM NUMBER: 05550310 BUSINESS ADDRESS: STREET 1: 200 SMITH RANCH ROAD CITY: SAN RAFAEL STATE: CA ZIP: 94903 BUSINESS PHONE: 4154722211 MAIL ADDRESS: STREET 1: 3661 VALLEY CENTRE DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92130 FORMER COMPANY: FORMER CONFORMED NAME: FAIR ISAAC & COMPANY INC DATE OF NAME CHANGE: 19920703 8-K 1 a4807925.txt FAIR ISAAC CORP. 8-K ================================================================================ 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) January 26, 2005 -------------------- FAIR ISAAC CORPORATION ---------------------- (Exact name of registrant as specified in its charter) Delaware 0-16439 94-1499887 -------- ------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 901 Marquette Avenue, Suite 3200 Minneapolis, Minnesota 55402-3232 -------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 612-758-5200 ---------------- 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)) ================================================================================ TABLE OF CONTENTS Item 2.02 Results of Operations and Financial Condition. Item 9.01 Financial Statements and Exhibits. Signature Exhibit Index Exhibit 99.1 Item 2.02 Results of Operations and Financial Condition. On January 26, 2005, Fair Isaac Corporation (the "Company") reported its financial results for the quarter ended December 31, 2004. See the Company's press release January 26, 2005, which is furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 2.02. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description ----------------------------------------------------------------------- 99.1 Press Release dated January 26, 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. FAIR ISAAC CORPORATION By: /s/ CHARLES M. OSBORNE --------------------------------------- Charles M. Osborne Vice President and Chief Financial Officer Date: January 26, 2005 EXHIBIT INDEX Exhibit Number Description Method of Filing ----------------------------------------------------------------------------- 99.1 Press Release dated January 26, 2005 Filed Electronically EX-99.1 2 a4807925ex991.txt PRESS RELEASE EXHIBIT 99.1 Fair Isaac Announces First Quarter Fiscal 2005 Results MINNEAPOLIS--(BUSINESS WIRE)--Jan. 26, 2005-- Year over year revenue growth of 15% for first quarter; net income exceeds company guidance by 8% Fair Isaac Corporation (NYSE:FIC), a leader in customer analytics and decision technology, today announced financial results for its first fiscal quarter ended December 31, 2004. GAAP Results The company reported first quarter revenues of $195.5 million in fiscal 2005 versus $169.3 million reported in the first quarter of fiscal 2004. Net income for the first quarter of fiscal 2005 totaled $27.9 million, or $0.36 per diluted share, compared with net income of $28.8 million, or $0.36 per diluted share, reported in the same quarter last year. During the first quarter, the company adopted EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share, related to its Senior Convertible Notes. The adoption of this standard only impacts the computation of diluted earnings per share, and reduced the first quarter diluted earnings per share by $0.03 in fiscal 2005 and $0.03 in fiscal 2004. Pro Forma Results The company reported pro forma net income for the first quarter of fiscal 2005 of $33.5 million, compared to pro forma net income of $31.3 million reported in the same quarter last year. Pro forma diluted earnings per share for the first quarter of fiscal 2005 was $0.43, compared to pro forma diluted earnings per share of $0.39 reported in the same quarter last year. The GAAP results for the first quarter include: i) the revenue impact of the purchase accounting adjustments related to the write-down of deferred revenue to fair market value in connection with the acquisition of London Bridge Software Holdings plc, and ii) the amortization of intangible assets acquired in acquisitions. The pro forma results for the first quarter of fiscal 2005 exclude the impact of these items. A reconciliation of GAAP to pro forma, or non-GAAP, financial results is included in this news release. "We are pleased with our first quarter revenues and bookings, and are off to a great start in achieving our 2005 objectives," said Thomas Grudnowski, Fair Isaac's Chief Executive Officer. "In addition, we continue to deliver strong cash flow performance." Non-GAAP Financial Measures The company uses pro forma non-GAAP financial measures because they provide meaningful information regarding the company's operational performance and facilitate management's internal comparisons to the company's historical operating results and comparisons to the operating results of other companies. The company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency of the company's operating performance. Wherever non-GAAP financial measures have been included in this news release, the company has reconciled them in the tables below to their GAAP counterparts. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following table reconciles the non-GAAP financial measures to GAAP: Quarter Ended Quarter Ended December 31, 2004 December 31, 2003 ----------------- ----------------- Net Diluted Net Diluted Income EPS Income EPS -------- -------- -------- -------- (In thousands, except per share data) Non-GAAP (pro forma).............$33,480 $0.43 $31,293 $0.39 Impact of deferred revenue write-down................... 1,396 0.02 -- -- Amortization of acquired intangible assets............ 4,223 0.05 2,532 0.03 -------- -------- -------- -------- GAAP.............................$27,861 $0.36 $28,761 $0.36 ======== ======== ======== ======== Revenues and Bookings Highlights Revenues increased across each of the company's four operating segments. Strategy Machine Solutions revenues increased to $117.8 million in 2005 from $103.3 million in 2004, or by 14%, primarily due to revenues generated by our collections and recovery solutions and mortgage banking solutions associated with the acquisition of London Bridge and increased revenues from our fraud solutions products, partially offset by a decline in revenues associated with insurance and healthcare solutions. Scoring Solutions revenues increased to $39.4 million in 2005 from $35.3 million in 2004, or by 12%, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies. Professional Services revenues increased to $29.5 million in 2005 from $22.5 million in 2004, or by 31%, due to our acquisition of London Bridge and Braun Consulting, Inc. Analytic Software Tools revenues increased to $8.8 million in 2005 from $8.3 million in 2004, or by 7%, due to revenues generated by sales from the Enterprise Decision Management suite of products. The company achieved new bookings of $115.4 million in the first quarter of 2005, as compared to its previous guidance of $120.0 million. The company defines a "new booking" as estimated future contractual revenues, including agreements with perpetual, multi-year and annual terms. Management regards the volume of new bookings achieved, among other factors, as an important indicator of future revenues, but they are not comparable to, nor should they be substituted for, an analysis of the company's revenues. Balance Sheet and Cash Flow Highlights Cash and cash equivalents, and marketable security investments were $344.3 million at December 31, 2004 as compared to $364.3 million at September 30, 2004. Significant changes in cash and cash equivalents include cash provided by operations of $79.9 million for the first quarter of 2005. Cash used during the first quarter of 2005 includes $3.1 million related to purchases of property and equipment, $33.8 million (net of cash acquired) related to the November 10, 2004 acquisition of Braun Consulting, Inc., and $109.9 million to repurchase company stock under its share repurchase plan. Cash was generated from the November 12, 2004 sale of the company's subsidiary, London Bridge Phoenix Software, Inc., for $23.0 million and $17.9 million received from the exercise of stock options and stock issued. "We believe our first quarter performance is another strong indicator of the appreciation and demand for our analytic solutions and tools," said Grudnowski. "We expect demand will accelerate as more businesses seek answers to critical decision management challenges." Company to Host Conference Call The company will host a conference call today at 5:00 p.m. Eastern Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to discuss its first quarter results. The call can be accessed live on the Investor Relations section of the company's Web site at www.fairisaac.com, and a replay will be available approximately 2 hours after the completion of the call through February 25, 2005. About Fair Isaac Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. The company's predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power billions of mission-critical customer decisions a year. Founded in 1956, Fair Isaac helps thousands of companies in over 60 countries acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses and enter new markets more profitably. Most leading banks and credit card issuers rely on Fair Isaac solutions, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies. Through the www.myFICO.com Web site, consumers use the company's FICO(R) scores, the standard measure of credit risk, to manage their financial health. For more information, visit www.fairisaac.com. Statement Concerning Forward-Looking Information Except for historical information contained herein, the statements contained in this news release that relate to Fair Isaac or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the company's ability to recruit and retain key technical and managerial personnel, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, competition, regulatory changes applicable to the use of consumer credit and other data, the possibility that the anticipated benefits of acquisitions, including expected synergies, will not be realized and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2004. If any of these risks or uncertainties materializes, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements. Fair Isaac and FICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be trademarks of their respective owners. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Quarters Ended December 31, 2004 and 2003 (In thousands, except per share data) (Unaudited) Quarter Ended December 31, --------------------- 2004 2003 --------- --------- Revenues $195,546 $169,341 --------- --------- Operating expenses: Cost of revenues 69,770 59,535 Research and development 20,998 16,401 Selling, general and administrative 53,568 41,760 Amortization of intangible assets 6,784 4,067 --------- --------- Total operating expenses 151,120 121,763 --------- --------- Operating income 44,426 47,578 Other income (expense), net 330 (1,375) --------- --------- Income before income taxes 44,756 46,203 Provision for income taxes 16,895 17,442 --------- --------- Net income $27,861 $28,761 ========= ========= Earnings per share: Basic $0.41 $0.41 ========= ========= Diluted $0.36 (a) $0.36 (a) ========= ========= Shares used in computing earnings per share: Basic 68,570 69,824 ========= ========= Diluted 80,056 (a) 82,838 (a) ========= ========= (a) The computation of diluted earnings per share for the quarters ended December 31, 2004 and 2003, includes 9.1 million shares of common stock issuable upon conversion of our senior convertible notes, along with a corresponding adjustment to net income to add back related interest expense, net of tax, of approximately $1.3 million. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS December 31, 2004 and September 30, 2004 (In thousands) (Unaudited) December 31, September 30, 2004 2004 ------------ ------------- ASSETS: Current assets: Cash and cash equivalents $157,150 $159,870 Marketable securities 149,844 139,435 Receivables, net 141,976 140,845 Prepaid expenses and other current assets 38,011 25,951 ------------ ------------- Total current assets 486,981 466,101 Marketable securities and investments 37,270 65,007 Property and equipment, net 53,158 53,288 Goodwill and intangible assets, net 818,464 825,142 Other noncurrent assets 34,928 35,241 ------------ ------------- $1,430,801 $1,444,779 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $60,906 $45,596 Accrued compensation and employee benefits 31,738 33,670 Deferred revenue 59,223 41,050 ------------ ------------- Total current liabilities 151,867 120,316 Senior convertible notes 400,000 400,000 Other noncurrent liabilities 11,306 7,992 ------------ ------------- Total liabilities 563,173 528,308 Stockholders' equity 867,628 916,471 ------------ ------------- $1,430,801 $1,444,779 ============ ============= FAIR ISAAC CORPORATION REVENUES BY SEGMENT For the Quarters Ended December 31, 2004 and 2003 (In thousands) (Unaudited) Quarter Ended December 31, ------------------- 2004 2003 --------- --------- Strategy machine solutions $117,812 $103,261 Scoring solutions 39,424 35,307 Professional services 29,470 22,492 Analytic software tools 8,840 8,281 --------- --------- Total revenues $195,546 $169,341 ========= ========= FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Quarters Ended December 31, 2004 and 2003 (In thousands) (Unaudited) Quarter Ended December 31, ------------------- 2004 2003 --------- --------- Cash flows from operating activities: Net income $27,861 $28,761 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,472 11,307 Changes in operating assets and liabilities, net of acquisitions 33,705 23,985 Other, net 4,872 3,674 --------- --------- Net cash provided by operating activities 79,910 67,727 --------- --------- Cash flows from investing activities: Purchases of property and equipment (3,089) (4,320) Cash paid for acquisitions, net of cash acquired (33,800) (5,000) Net activity from marketable securities 23,997 (122,786) Other, net 23,250 1,700 --------- --------- Net cash provided by (used in) investing activities 10,358 (130,406) --------- --------- Cash flows from financing activities: Proceeds from issuances of common stock 17,868 11,682 Dividends paid (1,371) (935) Repurchases of common stock (109,892) - --------- --------- Net cash provided by (used in) financing activities (93,395) 10,747 --------- --------- Effect of exchange rate changes on cash 407 - --------- --------- Decrease in cash and cash equivalents (2,720) (51,932) Cash and cash equivalents, beginning of period 159,870 249,458 --------- --------- Cash and cash equivalents, end of period $157,150 $197,526 ========= ========= FAIR ISAAC CORPORATION BASELINE REVENUE ANALYSIS (In thousands) - ---------------------------------------------------------------------- BKG'04 Q1A Q2A Q3A Q4A FY04A - ---------------------------------------------------------------------- Total Baseline Prior to '04 $153,440 $148,234 $146,159 $151,800 $599,633 - ---------------------------------------------------------------------- Q1-2004A $135,108 15,901 10,304 8,300 8,021 42,526 Q2-2004A 116,997 14,708 8,397 9,933 33,038 Q3-2004A 78,580 10,341 7,537 17,878 Q4-2004A 110,585 13,131 13,131 - ---------------------------------------------------------------------- Total FY04A 441,270 15,901 25,012 27,038 38,622 106,573 - ---------------------------------------------------------------------- Baseline Prior to '05 441,270 169,341 173,246 173,197 190,422 706,206 - ---------------------------------------------------------------------- Q1-2005A Q2-2005E Q3-2005E Q4-2005E - ---------------------------------------------------------------------- Total FY05E - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Grand Total $441,270 $169,341 $173,246 $173,197 $190,422 $706,206 ====================================================================== - ---------------------------------------------------------------------- BKG'05 Q1A Q2E Q3E Q4E FY05E - ---------------------------------------------------------------------- Total Baseline Prior to '04 $143,751 $141,800 $141,400 $139,600 $566,551 - ---------------------------------------------------------------------- Q1-2004A 8,714 7,100 6,300 5,900 28,014 Q2-2004A 6,447 6,500 5,900 5,700 24,547 Q3-2004A 6,720 5,300 3,700 4,400 20,120 Q4-2004A 10,046 9,800 10,300 7,800 37,946 - ---------------------------------------------------------------------- Total FY04A 31,927 28,700 26,200 23,800 110,627 - ---------------------------------------------------------------------- Baseline Prior to '05 175,678 170,500 167,600 163,400 677,178 - ---------------------------------------------------------------------- Q1-2005A $115,363 19,868 13,500 11,300 10,200 54,868 Q2-2005E 125,000 19,000 --------- Q3-2005E Q4-2005E - ---------------------------------------------------------------------- Total FY05E 500,000 19,868 32,500 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Grand Total $500,000 $195,546 $203,000 ====================================================================== E = Estimate A = Actual CONTACT: Fair Isaac Corporation, Minneapolis Investors & Analysts: John Emerick or JD Bergquist Wood, 800-213-5542 investor@fairisaac.com -----END PRIVACY-ENHANCED MESSAGE-----