EX-99.1 2 a5317707ex991.txt FAIR ISAAC CORPORATION EXHIBIT 99.1 Exhibit 99.1 Fair Isaac Announces First Quarter 2007 Results Total revenue of $208.2 million; Earnings per share of $0.52 MINNEAPOLIS--(BUSINESS WIRE)--Jan. 24, 2007--Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision technology, today announced the financial results for its first quarter ended December 31, 2006. First Quarter Fiscal 2007 Results The company reported first quarter revenues of $208.2 million in fiscal 2007 versus $202.8 million reported in the prior year period. Net income for the first quarter of fiscal 2007 totaled $31.2 million, or $0.52 per diluted share, versus $28.5 million, or $0.43 per diluted share, reported in the prior year period. First quarter fiscal 2007 results included a $2.3 million tax benefit arising from adjustments to income tax reserves resulting from the conclusion of a tax audit and the extension of the Federal Research Tax Credit. "We are pleased with our operating results, earnings per share, and cash flows for the quarter, and appreciate the hard work of our employees in good expense management," said Charles M. Osborne, Fair Isaac's interim chief executive officer. "We are still not satisfied with our rate of revenue growth. The expected benefits from our change to the Integrated Client Network organization have been slower than anticipated as people settle into new roles within the structure. We remain steadfast that our vision provides long-term growth for our customers, shareholders and employees." First Quarter Fiscal 2007 Revenues Highlights Revenues for first quarter fiscal 2007 across each of the company's four operating segments were as follows: -- Strategy Machine(R) Solutions revenues were $110.7 million in the first quarter compared to $112.0 million in the prior year quarter, or a decrease of 1.2%, primarily due to a decline associated with mortgage, originations, and precision marketing products offset by an increase in revenues from fraud, customer management, and collections and recovery solutions. -- Scoring Solutions revenues were $44.9 million in the first quarter compared to $46.2 million in the prior year quarter, or a decrease of 2.7%, primarily due to a decrease in revenues derived from our PreScore(R) Service. -- Professional Services revenues increased to $38.4 million in the first quarter from $32.8 million in the prior year quarter, or by 17.0%, primarily due to an increase in revenues from analytics, fraud, and customer management consulting offset by a decline associated with collections and recovery implementation solutions. -- Analytic Software Tools revenues increased to $14.2 million in the first quarter compared to $11.8 million in the prior year quarter, or by 20.4%, due to an increase in revenues generated from sales of the Blaze Advisor(TM) product. Bookings Highlights The bookings for the first quarter were $72.1 million versus $127.8 million in the same period last year. 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 as one indicator of future revenues, but they are not comparable to, nor should they be substituted for, an analysis of the company's revenues. "Our lower level of bookings this quarter reflects our emphasis on license and service sales," stated Mr. Osborne, "and these tend to carry a lower booking value." Balance Sheet and Cash Flow Highlights Cash and cash equivalents, and marketable security investments were $271.7 million at December 31, 2006, as compared to $267.8 million at September 30, 2006. Significant changes in cash and cash equivalents from September 30, 2006 include cash provided by operations of $59.6 million, borrowings under the revolving credit facility of $70.0 million, and $30.8 million received from the exercise of stock options and stock issued under an employee stock purchase plan. Cash used during the first quarter of fiscal 2007 includes $5.1 million related to purchases of property and equipment and $154.5 million to repurchase common stock. Outlook The company expects revenues for second quarter fiscal 2007 of approximately $215.0 million and earnings per diluted share to be approximately $0.48. The company expects revenues for fiscal 2007 of approximately $870.0 million and earnings per diluted share to be approximately $2.15. Organizational Announcement The company also announced today that Andrew Cecere has stepped down as a board member, effective immediately, in order to devote more time to his new role at U.S. Bancorp. Mr. Cecere, who has been a board member since April 2004, was recently named vice chairman and chief financial officer of U.S. Bancorp, where he had previously served as vice chairman of wealth management. "I want to extend my thanks to Andy for his contributions to Fair Isaac Corporation," said A. George Battle, chairman. "We are sorry to see him go, but all of us at Fair Isaac wish him well in his new position at U.S. Bancorp." 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 fiscal 2007 results, and outlook for fiscal 2007. 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 February 21, 2007. About Fair Isaac Corporation Fair Isaac Corporation (NYSE:FIC) makes decisions smarter. The company's solutions and technologies for Enterprise Decision Management give businesses the power to automate more processes, and apply more intelligence to every customer interaction. Through increasing the precision, consistency and agility of their decisions, Fair Isaac clients worldwide increase sales, build customer value, cut fraud losses, manage credit risk, reduce operational costs, meet changing compliance demands and enter new markets more profitably. Founded in 1956, Fair Isaac powers hundreds of billions of decisions each year in financial services, insurance, telecommunications, retail, consumer branded goods, healthcare and the public sector. Fair Isaac also helps millions of individuals manage their credit health through the www.myfico.com website. Visit Fair Isaac online at 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 success of the Company's Enterprise Decision Management strategy, its 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, 2006. 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, FICO, myFICO, Blaze Advisor, Strategy Machine and PreScore are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Quarters Ended December 31, 2006 and 2005 (In thousands, except per share data) (Unaudited) Quarter Ended December 31, ------------------- 2006 2005 --------- --------- Revenues $208,227 $202,790 --------- --------- Operating expenses: Cost of revenues 70,569 67,045 Research and development 17,719 22,730 Selling, general and administrative 68,648 63,383 Amortization of intangible assets 6,390 6,263 Restructuring and acquisition-related - (674) --------- --------- Total operating expenses 163,326 158,747 --------- --------- Operating income 44,901 44,043 Other income, net 435 845 --------- --------- Income before income taxes 45,336 44,888 Provision for income taxes 14,111 16,431 --------- --------- Net income $31,225 $28,457 ========= ========= Earnings per share: Basic $0.54 $0.44 ========= ========= Diluted $0.52 $0.43 ========= ========= Shares used in computing earnings per share: Basic 58,057 64,211 ========= ========= Diluted 59,985 66,219 ========= ========= FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS December 31, 2006 and September 30, 2006 (In thousands) (Unaudited) December 31, September 30, 2006 2006 ------------- ------------- ASSETS: Current assets: Cash and cash equivalents $99,149 $75,154 Marketable securities 122,812 152,141 Receivables, net 176,547 165,806 Prepaid expenses and other current assets 16,680 20,209 ------------- ------------- Total current assets 415,188 413,310 Marketable securities and investments 49,736 40,479 Property and equipment, net 54,650 56,611 Goodwill and intangible assets, net 786,535 786,062 Other noncurrent assets 22,061 24,743 ------------- ------------- $1,328,170 $1,321,205 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $56,610 $53,809 Senior convertible notes 400,000 400,000 Revolving credit agreement 70,000 - Accrued compensation and employee benefits 40,567 34,936 Deferred revenue 47,131 48,284 ------------- ------------- Total current liabilities 614,308 537,029 Other noncurrent liabilities 14,166 14,148 ------------- ------------- Total liabilities 628,474 551,177 Stockholders' equity 699,696 770,028 ------------- ------------- $1,328,170 $1,321,205 ============= ============= FAIR ISAAC CORPORATION REVENUES BY SEGMENT For the Quarters Ended December 31, 2006 and 2005 (In thousands) (Unaudited) Quarter Ended December 31, ------------------------------- 2006 2005 --------------- --------------- Strategy machine solutions $110,669 $111,986 Scoring solutions 44,918 46,156 Professional services 38,417 32,831 Analytic software tools 14,223 11,817 --------------- --------------- Total revenues $208,227 $202,790 =============== =============== FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Quarters Ended December 31, 2006 and 2005 (In thousands) (Unaudited) Quarter Ended December 31, --------------------- 2006 2005 ---------- ---------- Cash flows from operating activities: Net income $31,225 $28,457 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,549 12,059 Share-based compensation expense 9,572 9,514 Changes in operating assets and liabilities (3,732) 10,366 Other, net 9,034 348 ---------- ---------- Net cash provided by operating activities 59,648 60,744 ---------- ---------- Cash flows from investing activities: Purchases of property and equipment (5,125) (2,545) Net activity from marketable securities 21,392 22,587 Other, net (213) 249 ---------- ---------- Net cash provided by investing activities 16,054 20,291 ---------- ---------- Cash flows from financing activities: Proceeds from revolving credit agreement 70,000 - Proceeds from issuances of common stock 30,832 36,154 Repurchases of common stock (154,490) (12,766) Other, net 634 2,352 ---------- ---------- Net cash provided by (used in) financing activities (53,024) 25,740 ---------- ---------- Effect of exchange rate changes on cash 1,317 (359) ---------- ---------- Increase in cash and cash equivalents 23,995 106,416 Cash and cash equivalents, beginning of period 75,154 82,880 ---------- ---------- Cash and cash equivalents, end of period $99,149 $189,296 ========== ========== CONTACT: Fair Isaac Corporation Investors & Analysts: John D. Emerick, Jr., 800-213-5542 or Marcy K. Winson, 800-213-5542 investorrelations@fairisaac.com