-----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, LZb0aeWIe1NI8H6/ROJ8SiTEtoPx6hc8cTWVTxv2wadnKdPG82Z+wxJLvhUy5tiQ S2xVT+EPzsrPoKXQc+IYiQ== 0001157523-05-003901.txt : 20050427 0001157523-05-003901.hdr.sgml : 20050427 20050427161531 ACCESSION NUMBER: 0001157523-05-003901 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050427 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050427 DATE AS OF CHANGE: 20050427 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: 05776626 BUSINESS ADDRESS: STREET 1: 901 MARQUETTE AVENUE STREET 2: SUITE 3200 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: (612) 758-5200 MAIL ADDRESS: STREET 1: 901 MARQUETTE AVENUE STREET 2: SUITE 3200 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: FAIR ISAAC & COMPANY INC DATE OF NAME CHANGE: 19920703 8-K 1 a4874673.txt FAIR ISAAC CORPORATION =============================================================================== 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) April 27, 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 April 27, 2005, Fair Isaac Corporation (the "Company") reported its financial results for the quarter and six months ended March 31, 2005. See the Company's press release dated April 27, 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 April 27, 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: April 27, 2005 EXHIBIT INDEX Exhibit Number Description METHOD OF FILING - ------------------------------------------------------------------------------- 99.1 Press Release dated April 27, 2005 Filed Electronically EX-99.1 2 a4874673ex991.txt EXHIBIT 99.1 Exhibit 99.1 Fair Isaac Announces Second Quarter Fiscal 2005 Results; Year over Year Revenue Growth of 13%; Record Earnings and Bookings for Second Quarter MINNEAPOLIS--(BUSINESS WIRE)--April 27, 2005--Fair Isaac Corporation (NYSE:FIC), a leader in customer analytics and decision technology, today announced financial results for its second fiscal quarter ended March 31, 2005. Second Quarter Fiscal 2005 Results The company reported second quarter revenues of $196.0 million in fiscal 2005 versus $173.2 million reported in the prior year period. Net income for the second quarter of fiscal 2005 totaled $34.3 million, or $0.45 per diluted share, compared with net income of $30.8 million, or $0.39 per diluted share, reported in the same quarter last year. Net income for the second quarter of 2005 included an adjustment that reduced income tax expense by $6.0 million, or $0.08 per diluted share. This adjustment resulted from revisions made to estimates of prior years' tax liabilities. The impact of the adoption of EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share (EITF Issue No. 04-8), including the costs associated with the exchange offer, reduced the second quarter diluted earnings per share by $0.05 in fiscal 2005 and $0.03 in fiscal 2004. Fiscal 2005 Year-to-date Results The company reported revenues of $391.6 million year-to-date versus $342.6 million reported in the same period last year. Year-to-date net income totaled $62.2 million, or $0.82 per diluted share, compared with net income of $59.6 million, or $0.75 per diluted share, reported in the same period last year. Year-to-date net income was also affected by the second quarter adjustment that reduced income tax expense as described above. The impact of the adoption of EITF Issue No. 04-8 reduced the year-to-date diluted earnings per share by $0.08 in fiscal 2005 and $0.06 in fiscal 2004. "We are pleased with our record earnings and bookings for the quarter," said Thomas Grudnowski, Fair Isaac's chief executive officer. "The strong bookings and sales pipeline demonstrates the success of our increased sales efforts in the core, high-margin market segments." Senior Convertible Notes During the first quarter, the company adopted EITF Issue No. 04-8 related to its $400 million of Senior Convertible Notes ("old notes"). In the second quarter, the company commenced an offer to exchange its old notes for new Senior Convertible Notes ("new notes") that, upon conversion, would pay the holder cash for the principal amount and cash or common stock for any conversion value in excess of the principal amount. On March 31, 2005, the company successfully completed its exchange offer for approximately 99.9% of the principal amount of the old notes. The new notes are currently not dilutive to the company's diluted earnings per share calculation. Second Quarter Fiscal 2005 Revenues and Bookings Highlights Revenues increased across each of the company's four operating segments. Strategy Machine Solutions revenues increased to $111.3 million in the second quarter of 2005 from $103.6 million in the prior year quarter, or by 7%, primarily due to revenues generated by collections and recovery solutions, and mortgage banking solutions associated with the acquisition of London Bridge and increased revenues from fraud solutions products. These gains were partially offset by a decline in revenues associated with marketing services, and insurance and healthcare solutions. Scoring Solutions revenues increased to $39.3 million in the second quarter from $33.7 million in the prior year quarter, or by 17%, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies. Professional Services revenues increased to $33.6 million in the second quarter from $24.6 million in the prior year quarter, or by 36%, due to the acquisition of London Bridge and Braun Consulting, Inc. Analytic Software Tools revenues increased to $11.8 million in the second quarter from $11.3 million in the prior year quarter, or by 4%, due to revenues generated by sales from the Enterprise Decision Management suite of products, primarily due to the acquisition of London Bridge. The company achieved new bookings of $136.6 million in the second quarter of 2005, as compared to its previous guidance of $125.0 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 $368.3 million at March 31, 2005 as compared to $364.3 million at September 30, 2004. Significant changes in cash and cash equivalents from September 30, 2004 include cash provided by operations of $119.6 million. Cash used year-to-date includes $10.0 million related to purchases of property and equipment, $33.8 million (net of cash acquired) related to the November 2004 acquisition of Braun Consulting, Inc., and $127.0 million to repurchase company stock under its share repurchase plan. In addition to operating cash flows, cash was also generated from the November 2004 sale of the company's subsidiary, London Bridge Phoenix Software, Inc., for $22.7 million and $27.4 million received from the exercise of stock options and stock issued. Outlook The company expects revenue for the third quarter of fiscal 2005 of approximately $205.0 million and earnings per diluted share of about $0.44. The company also expects fiscal 2005 total revenue of approximately $811.0 million and earnings per diluted share of about $1.80. This guidance reflects the continuation of top-line growth in its core market segments and further expansion of its operating margin. "We are encouraged by our continuing growth in key market segments," said Grudnowski. "Our above plan growth in sales and operating earnings from these segments drives our expectations for full-year, record sales and earnings. The growing demand for our analytic solutions in these core segments demonstrates the critical value we deliver to our customers and their business success." 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 second quarter results and outlook for the remainder of fiscal 2005. 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 two hours after the completion of the call through May 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 and Quarterly Report on Form 10-Q for the period ended December 31, 2004. If any of these risks or uncertainties materialize, Fair Isaac's results could differ materially from its expectations. 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 and Six Months Ended March 31, 2005 and 2004 (In thousands, except per share data) (Unaudited) Quarter Ended Six Months Ended March 31, March 31, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- Revenues $196,021 $173,246 $391,567 $342,587 --------- --------- --------- --------- Operating expenses: Cost of revenues 69,648 63,283 139,418 122,818 Research and development 18,123 14,333 39,121 30,734 Selling, general and administrative 55,085 40,508 108,653 82,268 Amortization of intangible assets 6,536 4,064 13,320 8,131 --------- --------- --------- --------- Total operating expenses 149,392 122,188 300,512 243,951 --------- --------- --------- --------- Operating income 46,629 51,058 91,055 98,636 Other expense, net (490) (1,117) (160) (2,492) --------- --------- --------- --------- Income before income taxes 46,139 49,941 90,895 96,144 Provision for income taxes 11,812 19,098 28,707 36,540 --------- --------- --------- --------- Net income $34,327 $30,843 $62,188 $59,604 ========= ========= ========= ========= Earnings per share: Basic $0.51 $0.44 $0.92 $0.85 ========= ========= ========= ========= Diluted (b) $0.45 $0.39 (a) $0.82 $0.75 (a) ========= ========= ========= ========= Shares used in computing earnings per share: Basic 66,979 70,308 67,769 70,065 ========= ========= ========= ========= Diluted (b) 78,385 83,117 (a) 79,231 82,976 (a) ========= ========= ========= ========= (a) The computation of diluted earnings per share for the quarters ended March 31, 2005 and 2004, includes 9.0 million and 9.1 million, respectively, 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 $1.2 million and $1.3 million, respectively. The computation of diluted earnings per share for the six months ended March 31, 2005 and 2004, 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 $2.5 million. (b) The dilutive effect of the Company's old notes has been calculated on the if-converted method through March 30, 2005. Effective March 31, 2005, the dilutive effect of the Company's new notes has been calculated using the treasury stock method. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2005 and September 30, 2004 (In thousands) (Unaudited) March 31, September 30, 2005 2004 ------------ ------------- ASSETS: Current assets: Cash and cash equivalents $167,359 $134,070 Marketable securities 161,608 165,235 Receivables, net 166,434 140,845 Prepaid expenses and other current assets 39,522 25,951 ------------ ------------- Total current assets 534,923 466,101 Marketable securities and investments 39,293 65,007 Property and equipment, net 54,089 53,288 Goodwill and intangible assets, net 807,243 825,142 Other noncurrent assets 31,025 35,241 ------------ ------------- $1,466,573 $1,444,779 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $60,583 $45,596 Accrued compensation and employee benefits 36,420 33,670 Deferred revenue 64,451 41,050 ------------ ------------- Total current liabilities 161,454 120,316 Senior convertible notes 400,000 400,000 Other noncurrent liabilities 8,994 7,992 ------------ ------------- Total liabilities 570,448 528,308 Stockholders' equity 896,125 916,471 ------------ ------------- $1,466,573 $1,444,779 ============ ============= FAIR ISAAC CORPORATION REVENUES BY SEGMENT For the Quarters and Six Months Ended March 31, 2005 and 2004 (In thousands) (Unaudited) Quarter Ended Six Months Ended March 31, March 31, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- Strategy machine solutions $111,252 $103,587 $229,064 $206,848 Scoring solutions 39,347 33,707 78,771 69,014 Professional services 33,580 24,616 63,050 47,108 Analytic software tools 11,842 11,336 20,682 19,617 --------- --------- --------- --------- Total revenues $196,021 $173,246 $391,567 $342,587 ========= ========= ========= ========= FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended March 31, 2005 and 2004 (In thousands) (Unaudited) Six Months Ended March 31, ------------------- 2005 2004 --------- --------- Cash flows from operating activities: Net income $62,188 $59,604 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,539 22,620 Changes in operating assets and liabilities, net of acquisitions 19,701 24,327 Other, net 11,129 9,727 --------- --------- Net cash provided by operating activities 119,557 116,278 --------- --------- Cash flows from investing activities: Purchases of property and equipment (10,012) (10,744) Cash paid for acquisitions, net of cash acquired (33,800) (5,000) Net activity from marketable securities 35,143 7,940 Other, net 24,156 1,950 --------- --------- Net cash provided by (used in) investing activities 15,487 (5,854) --------- --------- Cash flows from financing activities: Proceeds from issuances of common stock 27,353 32,235 Repurchases of common stock (127,048) (40,653) Other, net (2,716) (2,118) --------- --------- Net cash used in financing activities (102,411) (10,536) --------- --------- Effect of exchange rate changes on cash 656 - --------- --------- Increase in cash and cash equivalents 33,289 99,888 Cash and cash equivalents, beginning of period 134,070 130,383 --------- --------- Cash and cash equivalents, end of period $167,359 $230,271 ========= ========= Fair Isaac Corporation Baseline Revenue Analysis (In thousands) - ---------------------------------------------------------------------- BKG'04 Q1A Q2A Q3A Q4A FY04 - ---------------------------------------------------------------------- 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 FY04 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 - ---------------------------------------------------------------------- Q1-2005E Q2-2005E Q3-2005E Q4-2005E - ---------------------------------------------------------------------- Total FY05 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Grand Total $441,270 $169,341 $173,246 $173,197 $190,422 $706,206 ====================================================================== E = Estimate A = Actual - ---------------------------------------------------------------------- BKG'05 Q1A Q2A Q3E Q4E FY05E - ---------------------------------------------------------------------- Total Baseline Prior to '04 $144,463 $139,115 $135,000 $133,500 $552,078 - ---------------------------------------------------------------------- Q1-2004A 8,714 6,506 5,500 5,000 25,720 Q2-2004A 6,350 5,276 5,000 4,000 20,626 Q3-2004A 6,688 5,279 4,000 3,500 19,467 Q4-2004A 9,946 8,269 7,500 7,000 32,715 - ---------------------------------------------------------------------- Total FY04 31,698 25,330 22,000 19,500 98,528 - ---------------------------------------------------------------------- Baseline Prior to '05 176,161 164,445 157,000 153,000 650,606 - ---------------------------------------------------------------------- Q1-2005E $115,363 19,385 12,916 12,000 11,500 55,801 Q2-2005E 136,559 18,660 16,000 10,000 44,660 Q3-2005E 123,000 20,000 16,500 36,500 Q4-2005E 125,078 23,000 23,000 - ---------------------------------------------------------------------- Total FY05 500,000 19,385 31,576 48,000 61,000 159,961 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Grand Total $500,000 $195,546 $196,021 $205,000 $214,000 $810,567 ====================================================================== 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-----