ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-1499887 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
181 Metro Drive, Suite 700 San Jose, California | 95110-1346 |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | ý | Accelerated Filer | o |
Non-Accelerated Filer | o | Smaller Reporting Company | o |
Emerging Growth Company | o |
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December 31, 2017 | September 30, 2017 | ||||||
(In thousands, except par value data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 94,213 | $ | 105,618 | |||
Accounts receivable, net | 164,660 | 168,586 | |||||
Prepaid expenses and other current assets | 40,263 | 36,727 | |||||
Total current assets | 299,136 | 310,931 | |||||
Marketable securities | 15,816 | 13,791 | |||||
Other investments | 11,734 | 11,724 | |||||
Property and equipment, net | 38,808 | 40,703 | |||||
Goodwill | 806,332 | 804,414 | |||||
Intangible assets, net | 19,514 | 21,185 | |||||
Deferred income taxes | 40,699 | 47,204 | |||||
Other assets | 8,806 | 5,668 | |||||
Total assets | $ | 1,240,845 | $ | 1,255,620 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 19,201 | $ | 19,510 | |||
Accrued compensation and employee benefits | 49,031 | 77,610 | |||||
Other accrued liabilities | 25,305 | 32,104 | |||||
Deferred revenue | 58,743 | 55,431 | |||||
Current maturities on debt | 201,000 | 142,000 | |||||
Total current liabilities | 353,280 | 326,655 | |||||
Long-term debt | 462,834 | 462,801 | |||||
Other liabilities | 39,089 | 39,627 | |||||
Total liabilities | 855,203 | 829,083 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock ($0.01 par value; 1,000 shares authorized; none issued and outstanding) | — | — | |||||
Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and 30,246 and 30,243 shares outstanding at December 31, 2017 and September 30, 2017, respectively) | 302 | 302 | |||||
Paid-in-capital | 1,160,274 | 1,195,431 | |||||
Treasury stock, at cost (58,611 and 58,614 shares at December 31, 2017 and September 30, 2017, respectively) | (2,337,205 | ) | (2,301,097 | ) | |||
Retained earnings | 1,625,694 | 1,598,395 | |||||
Accumulated other comprehensive loss | (63,423 | ) | (66,494 | ) | |||
Total stockholders’ equity | 385,642 | 426,537 | |||||
Total liabilities and stockholders’ equity | $ | 1,240,845 | $ | 1,255,620 |
Quarter Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands, except per share data) | |||||||
Revenues: | |||||||
Transactional and maintenance | $ | 174,662 | $ | 153,660 | |||
Professional services | 42,626 | 43,543 | |||||
License | 18,033 | 22,397 | |||||
Total revenues | 235,321 | 219,600 | |||||
Operating expenses: | |||||||
Cost of revenues * | 74,359 | 69,997 | |||||
Research and development | 28,974 | 26,142 | |||||
Selling, general and administrative * | 90,296 | 85,214 | |||||
Amortization of intangible assets * | 1,788 | 3,320 | |||||
Total operating expenses | 195,417 | 184,673 | |||||
Operating income | 39,904 | 34,927 | |||||
Interest expense, net | (6,460 | ) | (6,172 | ) | |||
Other income (expense), net | 513 | (100 | ) | ||||
Income before income taxes | 33,957 | 28,655 | |||||
Provision for income taxes | 6,658 | (9,246 | ) | ||||
Net income | 27,299 | 37,901 | |||||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments | 3,071 | (14,347 | ) | ||||
Comprehensive income | $ | 30,370 | $ | 23,554 | |||
Earnings per share: | |||||||
Basic | $ | 0.91 | $ | 1.22 | |||
Diluted | $ | 0.86 | $ | 1.16 | |||
Shares used in computing earnings per share: | |||||||
Basic | 30,078 | 30,989 | |||||
Diluted | 31,561 | 32,536 |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||
Shares | Par Value | Paid-in-Capital | Treasury Stock | |||||||||||||||||||||||
Balance at September 30, 2017 | 30,243 | $ | 302 | $ | 1,195,431 | $ | (2,301,097 | ) | $ | 1,598,395 | $ | (66,494 | ) | $ | 426,537 | |||||||||||
Share-based compensation | — | — | 16,510 | — | — | — | 16,510 | |||||||||||||||||||
Issuance of treasury stock under employee stock plans | 338 | 3 | (51,667 | ) | 13,490 | — | — | (38,174 | ) | |||||||||||||||||
Repurchases of common stock | (335 | ) | (3 | ) | — | (49,598 | ) | — | — | (49,601 | ) | |||||||||||||||
Net income | — | — | — | — | 27,299 | — | 27,299 | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | 3,071 | 3,071 | |||||||||||||||||||
Balance at December 31, 2017 | 30,246 | $ | 302 | $ | 1,160,274 | $ | (2,337,205 | ) | $ | 1,625,694 | $ | (63,423 | ) | $ | 385,642 |
Quarter Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 27,299 | $ | 37,901 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,731 | 9,058 | |||||
Share-based compensation | 16,510 | 14,519 | |||||
Deferred income taxes | 6,717 | — | |||||
Net gain on marketable securities | (90 | ) | — | ||||
Provision for doubtful accounts, net | — | 463 | |||||
Net loss on sales of property and equipment | 9 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 4,656 | 8,253 | |||||
Prepaid expenses and other assets | (6,527 | ) | (16,876 | ) | |||
Accounts payable | (119 | ) | (725 | ) | |||
Accrued compensation and employee benefits | (28,672 | ) | (29,030 | ) | |||
Other liabilities | (1,174 | ) | (2,091 | ) | |||
Deferred revenue | 2,437 | 11,506 | |||||
Net cash provided by operating activities | 28,777 | 32,978 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (4,044 | ) | (4,319 | ) | |||
Proceeds from sales of marketable securities | 8 | — | |||||
Purchases of marketable securities | (1,943 | ) | — | ||||
Net cash used in investing activities | (5,979 | ) | (4,319 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving line of credit | 79,000 | 60,000 | |||||
Payments on revolving line of credit | (20,000 | ) | (10,000 | ) | |||
Payments on debt issuance costs | (240 | ) | — | ||||
Proceeds from issuance of treasury stock under employee stock plans | 693 | 3,663 | |||||
Taxes paid related to net share settlement of equity awards | (38,867 | ) | (35,598 | ) | |||
Dividends paid | — | (618 | ) | ||||
Repurchases of common stock | (55,263 | ) | (30,442 | ) | |||
Net cash used in financing activities | (34,677 | ) | (12,995 | ) | |||
Effect of exchange rate changes on cash | 474 | (3,489 | ) | ||||
Increase (decrease) in cash and cash equivalents | (11,405 | ) | 12,175 | ||||
Cash and cash equivalents, beginning of period | 105,618 | 75,926 | |||||
Cash and cash equivalents, end of period | $ | 94,213 | $ | 88,101 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes, net of refunds | $ | 2,221 | $ | 7,463 | |||
Cash paid for interest | $ | 7,087 | $ | 5,851 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Purchase of property and equipment included in accounts payable | $ | 1,482 | $ | 3,816 |
• | Timing of revenue recognition of license revenue on term licenses and transactional revenue on guaranteed minimum fees related to our on-premises software products. Under the new standard, we expect to recognize revenue when control of the license is transferred to the customer, rather than at the date payments become due and payable or ratably over the term of the contract required under the current standard; |
• | Presentation of contract balances. Under the new standard, when we enter into noncancellable contracts that provide unconditional rights to payment from our customers for services that we have not yet completed providing or services we will provide in the near future, we expect to present the unconditional rights as receivables, regardless of whether cash has been received from customers; |
• | Required disclosures including information about remaining transaction price and when we expect to recognize revenue; and |
• | Accounting for commissions under the new standard will result in the deferral of incremental commission costs for obtaining contracts. |
• | Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. Our Level 1 assets are comprised of money market funds and certain equity securities. |
• | Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. We do not have any assets that are valued using inputs identified under a Level 2 hierarchy as of December 31, 2017 and September 30, 2017. |
• | Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. We do not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of December 31, 2017 and September 30, 2017. |
December 31, 2017 | Active Markets for Identical Instruments (Level 1) | Fair Value as of December 31, 2017 | |||||
(In thousands) | |||||||
Assets: | |||||||
Cash equivalents (1) | $ | 4,105 | $ | 4,105 | |||
Marketable securities (2) | 15,816 | 15,816 | |||||
Total | $ | 19,921 | $ | 19,921 | |||
September 30, 2017 | Active Markets for Identical Instruments (Level 1) | Fair Value as of September 30, 2017 | |||||
(In thousands) | |||||||
Assets: | |||||||
Cash equivalents (1) | $ | 15,295 | $ | 15,295 | |||
Marketable securities (2) | 13,791 | 13,791 | |||||
Total | $ | 29,086 | $ | 29,086 |
(1) | Included in cash and cash equivalents on our condensed consolidated balance sheet at December 31, 2017 and September 30, 2017. Not included in these tables are cash deposits of $90.1 million and $90.3 million at December 31, 2017 and September 30, 2017, respectively. |
(2) | Represents securities held under a supplemental retirement and savings plan for senior management employees, which are distributed upon termination or retirement of the employees. Included in marketable securities on our condensed consolidated balance sheet at December 31, 2017 and September 30, 2017. |
December 31, 2017 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Euro (EUR) | EUR | 7,350 | $ | 8,825 | $ | — | |||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 5,398 | $ | 7,300 | $ | — | |||||
Singapore dollar (SGD) | SGD | 7,734 | $ | 5,800 | $ | — |
September 30, 2017 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Euro (EUR) | EUR | 5,050 | $ | 5,968 | $ | — | |||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 9,341 | $ | 12,500 | $ | — |
Quarter Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Gains (losses) on foreign currency forward contracts | $ | 194 | $ | (560 | ) |
Quarter Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Cost of revenues | $ | 706 | $ | 1,686 | |||
Selling, general and administrative expenses | 1,082 | 1,634 | |||||
$ | 1,788 | $ | 3,320 |
Year Ended September 30, | |||
2018 (excluding the quarter ended December 31, 2017) | $ | 4,803 | |
2019 | 6,085 | ||
2020 | 3,689 | ||
2021 | 2,433 | ||
2022 | 2,287 | ||
Thereafter | 217 | ||
$ | 19,514 |
Applications | Scores | Decision Management Software | Total | ||||||||||||
(In thousands) | |||||||||||||||
Balance at September 30, 2017 | $ | 588,288 | $ | 146,648 | $ | 69,478 | $ | 804,414 | |||||||
Foreign currency translation adjustment | 1,777 | — | 141 | 1,918 | |||||||||||
Balance at December 31, 2017 | $ | 590,065 | $ | 146,648 | $ | 69,619 | $ | 806,332 |
December 31, 2017 | September 30, 2017 | ||||||
(In thousands) | |||||||
Property and equipment | $ | 139,344 | $ | 135,360 | |||
Less: accumulated depreciation and amortization | (100,536 | ) | (94,657 | ) | |||
$ | 38,808 | $ | 40,703 |
December 31, 2017 | September 30, 2017 | ||||||||||||||
Carrying Amounts | Fair Value | Carrying Amounts | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
The 2008 Senior Notes | $ | 131,000 | $ | 132,814 | $ | 131,000 | $ | 134,250 | |||||||
The 2010 Senior Notes | 113,000 | 117,669 | 113,000 | 119,106 | |||||||||||
Debt issuance costs | (166 | ) | (166 | ) | (199 | ) | (199 | ) | |||||||
Total | $ | 243,834 | $ | 250,317 | $ | 243,801 | $ | 253,157 |
Accrual at | Cash Payments | Accrual at | |||||||||
September 30, 2017 | December 31, 2017 | ||||||||||
(In thousands) | |||||||||||
Facilities charges | $ | 8,120 | $ | (702 | ) | $ | 7,418 | ||||
Employee separation | 185 | (126 | ) | 59 | |||||||
8,305 | $ | (828 | ) | 7,477 | |||||||
Less: current portion | (3,077 | ) | (3,524 | ) | |||||||
Non-current | $ | 5,228 | $ | 3,953 |
Shares | Weighted-average Exercise Price | Weighted-average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||
(In thousands) | (In years) | (In thousands) | |||||||||||
Outstanding at October 1, 2017 | 1,230 | $ | 56.54 | ||||||||||
Granted | 3 | 157.31 | |||||||||||
Exercised | (21 | ) | 33.10 | ||||||||||
Outstanding at December 31, 2017 | 1,212 | $ | 57.19 | 2.90 | $ | 116,380 | |||||||
Exercisable at December 31, 2017 | 1,051 | $ | 53.34 | 2.68 | $ | 105,003 | |||||||
Vested and expected to vest at December 31, 2017 | 1,207 | $ | 57.06 | 2.89 | $ | 116,081 |
Shares | Weighted- average Grant-date Fair Value | ||||||
(In thousands) | |||||||
Outstanding at October 1, 2017 | 1,144 | $ | 97.95 | ||||
Granted | 358 | 157.11 | |||||
Released | (351 | ) | 86.88 | ||||
Forfeited | (5 | ) | 109.08 | ||||
Outstanding at December 31, 2017 | 1,146 | $ | 119.76 |
Shares | Weighted- average Grant-date Fair Value | ||||||
(In thousands) | |||||||
Outstanding at October 1, 2017 | 204 | $ | 105.37 | ||||
Granted | 51 | 157.03 | |||||
Released | (95 | ) | 98.15 | ||||
Outstanding at December 31, 2017 | 160 | $ | 126.27 |
Shares | Weighted- average Grant-date Fair Value | ||||||
(In thousands) | |||||||
Outstanding at October 1, 2017 | 131 | $ | 123.82 | ||||
Granted | 102 | 151.78 | |||||
Released | (119 | ) | 113.70 | ||||
Outstanding at December 31, 2017 | 114 | $ | 159.34 |
Quarter Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands, except per share data) | |||||||
Numerator for diluted and basic earnings per share: | |||||||
Net Income | $ | 27,299 | $ | 37,901 | |||
Denominator - share: | |||||||
Basic weighted-average shares | 30,078 | 30,989 | |||||
Effect of dilutive securities | 1,483 | 1,547 | |||||
Diluted weighted-average shares | 31,561 | 32,536 | |||||
Earnings per share: | |||||||
Basic | $ | 0.91 | $ | 1.22 | |||
Diluted | $ | 0.86 | $ | 1.16 |
• | Applications. This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO® Analytic Cloud. |
• | Scores. This segment includes our business-to-business scoring solutions, our myFICO® solutions for consumers and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies, as well as services through which we provide our scores to clients directly. |
• | Decision Management Software. This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our new FICO® Decision Management Suite, as well as associated professional services. These tools are available to our customers as on-premises software or through the FICO® Analytic Cloud. |
Quarter Ended December 31, 2017 | |||||||||||||||||||
Applications | Scores | Decision Management Software | Unallocated Corporate Expenses | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Segment revenues: | |||||||||||||||||||
Transactional and maintenance | $ | 93,213 | $ | 69,574 | $ | 11,875 | $ | — | $ | 174,662 | |||||||||
Professional services | 34,853 | 278 | 7,495 | — | 42,626 | ||||||||||||||
License | 13,343 | 63 | 4,627 | — | 18,033 | ||||||||||||||
Total segment revenues | 141,409 | 69,915 | 23,997 | — | 235,321 | ||||||||||||||
Segment operating expense | (102,619 | ) | (15,887 | ) | (31,853 | ) | (26,760 | ) | (177,119 | ) | |||||||||
Segment operating income (loss) | $ | 38,790 | $ | 54,028 | $ | (7,856 | ) | $ | (26,760 | ) | 58,202 | ||||||||
Unallocated share-based compensation expense | (16,510 | ) | |||||||||||||||||
Unallocated amortization expense | (1,788 | ) | |||||||||||||||||
Operating income | 39,904 | ||||||||||||||||||
Unallocated interest expense, net | (6,460 | ) | |||||||||||||||||
Unallocated other income, net | 513 | ||||||||||||||||||
Income before income taxes | $ | 33,957 | |||||||||||||||||
Depreciation expense | $ | 3,943 | $ | 155 | $ | 1,412 | $ | 284 | $ | 5,794 |
Quarter Ended December 31, 2016 | |||||||||||||||||||
Applications | Scores | Decision Management Software | Unallocated Corporate Expenses | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Segment revenues: | |||||||||||||||||||
Transactional and maintenance | $ | 84,881 | $ | 58,252 | $ | 10,527 | $ | — | $ | 153,660 | |||||||||
Professional services | 34,341 | 521 | 8,681 | — | 43,543 | ||||||||||||||
License | 15,543 | 609 | 6,245 | — | 22,397 | ||||||||||||||
Total segment revenues | 134,765 | 59,382 | 25,453 | — | 219,600 | ||||||||||||||
Segment operating expense | (99,797 | ) | (13,319 | ) | (29,085 | ) | (24,633 | ) | (166,834 | ) | |||||||||
Segment operating income (loss) | $ | 34,968 | $ | 46,063 | $ | (3,632 | ) | $ | (24,633 | ) | 52,766 | ||||||||
Unallocated share-based compensation expense | (14,519 | ) | |||||||||||||||||
Unallocated amortization expense | (3,320 | ) | |||||||||||||||||
Operating income | 34,927 | ||||||||||||||||||
Unallocated interest expense, net | (6,172 | ) | |||||||||||||||||
Unallocated other expense, net | (100 | ) | |||||||||||||||||
Income before income taxes | $ | 28,655 | |||||||||||||||||
Depreciation expense | $ | 3,868 | $ | 266 | $ | 1,126 | $ | 349 | $ | 5,609 |
• | The health of the economy and economic trends in our customers’ industries; |
• | Individual performance of our customers relative to their competitors; and |
• | Regulatory and other factors that affect the business environment in which our customers operate. |
Bookings | Bookings Yield (1) | Number of Bookings over $1 Million | Weighted- Average Term (2) | |||||||||
(In millions) | (Months) | |||||||||||
Quarter Ended December 31, 2017 | $ | 82.2 | 18 | % | 9 | 27 | ||||||
Quarter Ended December 31, 2016 | $ | 96.4 | 21 | % | 13 | 27 |
(1) | Bookings yield represents the percentage of revenue recognized from bookings for the periods indicated. |
(2) | Weighted-average term of bookings measures the average term over which bookings are expected to be recognized as revenue. |
Quarter Ended December 31, | Percentage of Revenues | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||
Segment | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||
Applications | $ | 141,409 | $ | 134,765 | 60 | % | 61 | % | $ | 6,644 | 5 | % | ||||||||
Scores | 69,915 | 59,382 | 30 | % | 27 | % | 10,533 | 18 | % | |||||||||||
Decision Management Software | 23,997 | 25,453 | 10 | % | 12 | % | (1,456 | ) | (6 | )% | ||||||||||
Total | $ | 235,321 | $ | 219,600 | 100 | % | 100 | % | 15,721 | 7 | % |
Quarter Ended December 31, | Period-to-Period Change | Period-to-Period Percentage Change | ||||||||||||
2017 | 2016 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||
Transactional and maintenance | $ | 93,213 | $ | 84,881 | $ | 8,332 | 10 | % | ||||||
Professional services | 34,853 | 34,341 | 512 | 1 | % | |||||||||
License | 13,343 | 15,543 | (2,200 | ) | (14 | )% | ||||||||
Total | $ | 141,409 | $ | 134,765 | 6,644 | 5 | % |
Quarter Ended December 31, | Period-to-Period Change | Period-to-Period Percentage Change | ||||||||||||
2017 | 2016 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||
Transactional and maintenance | $ | 69,574 | $ | 58,252 | $ | 11,322 | 19 | % | ||||||
Professional services | 278 | 521 | (243 | ) | (47 | )% | ||||||||
License | 63 | 609 | (546 | ) | (90 | )% | ||||||||
Total | $ | 69,915 | $ | 59,382 | 10,533 | 18 | % |
Quarter Ended December 31, | Period-to-Period Change | Period-to-Period Percentage Change | ||||||||||||
2017 | 2016 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||
Transactional and maintenance | $ | 11,875 | $ | 10,527 | $ | 1,348 | 13 | % | ||||||
Professional services | 7,495 | 8,681 | (1,186 | ) | (14 | )% | ||||||||
License | 4,627 | 6,245 | (1,618 | ) | (26 | )% | ||||||||
Total | $ | 23,997 | $ | 25,453 | (1,456 | ) | (6 | )% |
Quarter Ended December 31, | Percentage of Revenues | Period-to-Period Change | Period-to- Period Percentage Change | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(In thousands, except employees) | (In thousands, except employees) | |||||||||||||||||||
Revenues | $ | 235,321 | $ | 219,600 | 100 | % | 100 | % | $ | 15,721 | 7 | % | ||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenues | 74,359 | 69,997 | 32 | % | 32 | % | 4,362 | 6 | % | |||||||||||
Research and development | 28,974 | 26,142 | 12 | % | 12 | % | 2,832 | 11 | % | |||||||||||
Selling, general and administrative | 90,296 | 85,214 | 38 | % | 39 | % | 5,082 | 6 | % | |||||||||||
Amortization of intangible assets | 1,788 | 3,320 | 1 | % | 1 | % | (1,532 | ) | (46 | )% | ||||||||||
Total operating expenses | 195,417 | 184,673 | 83 | % | 84 | % | 10,744 | 6 | % | |||||||||||
Operating income | 39,904 | 34,927 | 17 | % | 16 | % | 4,977 | 14 | % | |||||||||||
Interest expense, net | (6,460 | ) | (6,172 | ) | (3 | )% | (3 | )% | (288 | ) | 5 | % | ||||||||
Other income (expense), net | 513 | (100 | ) | — | % | — | % | 613 | (613 | )% | ||||||||||
Income before income taxes | 33,957 | 28,655 | 14 | % | 13 | % | 5,302 | 19 | % | |||||||||||
Provision for income taxes | 6,658 | (9,246 | ) | 2 | % | (4 | )% | 15,904 | (172 | )% | ||||||||||
Net income | $ | 27,299 | $ | 37,901 | 12 | % | 17 | % | (10,602 | ) | (28 | )% | ||||||||
Number of employees at quarter end | 3,358 | 3,167 | 191 | 6 | % |
Quarter Ended December 31, | Period-to-Period Change | Period-to-Period Percentage Change | ||||||||||||
Segment | 2017 | 2016 | ||||||||||||
(In thousands) | (In thousands) | |||||||||||||
Applications | $ | 38,790 | $ | 34,968 | $ | 3,822 | 11 | % | ||||||
Scores | 54,028 | 46,063 | 7,965 | 17 | % | |||||||||
Decision Management Software | (7,856 | ) | (3,632 | ) | (4,224 | ) | 116 | % | ||||||
Corporate expenses | (26,760 | ) | (24,633 | ) | (2,127 | ) | 9 | % | ||||||
Total segment operating income | 58,202 | 52,766 | 5,436 | 10 | % | |||||||||
Unallocated share-based compensation | (16,510 | ) | (14,519 | ) | (1,991 | ) | 14 | % | ||||||
Unallocated amortization expense | (1,788 | ) | (3,320 | ) | 1,532 | (46 | )% | |||||||
Operating income | $ | 39,904 | $ | 34,927 | 4,977 | 14 | % |
Quarter Ended December 31, | Percentage of Revenues | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(In thousands) | |||||||||||||
Segment revenues | $ | 141,409 | $ | 134,765 | 100 | % | 100 | % | |||||
Segment operating expense | (102,619 | ) | (99,797 | ) | (73 | )% | (74 | )% | |||||
Segment operating income | $ | 38,790 | $ | 34,968 | 27 | % | 26 | % |
Quarter Ended December 31, | Percentage of Revenues | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(In thousands) | |||||||||||||
Segment revenues | $ | 69,915 | $ | 59,382 | 100 | % | 100 | % | |||||
Segment operating expense | (15,887 | ) | (13,319 | ) | (23 | )% | (22 | )% | |||||
Segment operating income | $ | 54,028 | $ | 46,063 | 77 | % | 78 | % |
Quarter Ended December 31, | Percentage of Revenues | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(In thousands) | |||||||||||||
Segment revenues | $ | 23,997 | $ | 25,453 | 100 | % | 100 | % | |||||
Segment operating expense | (31,853 | ) | (29,085 | ) | (133 | )% | (114 | )% | |||||
Segment operating loss | $ | (7,856 | ) | $ | (3,632 | ) | (33 | )% | (14 | )% |
Quarter Ended December 31, | Period-to-Period Change | ||||||||||
2017 | 2016 | ||||||||||
(In thousands) | |||||||||||
Cash provided by (used in): | |||||||||||
Operating activities | $ | 28,777 | $ | 32,978 | $ | (4,201 | ) | ||||
Investing activities | (5,979 | ) | (4,319 | ) | (1,660 | ) | |||||
Financing activities | (34,677 | ) | (12,995 | ) | (21,682 | ) | |||||
Effect of exchange rate changes on cash | 474 | (3,489 | ) | 3,963 | |||||||
Increase (decrease) in cash and cash equivalents | $ | (11,405 | ) | $ | 12,175 | (23,580 | ) |
• | Timing of revenue recognition of license revenue on term licenses and transactional revenue on guaranteed minimum fees related to our on-premises software products. Under the new standard, we expect to recognize revenue when control of the license is transferred to the customer, rather than at the date payments become due and payable or ratably over the term of the contract required under the current standard; |
• | Presentation of contract balances. Under the new standard, when we enter into noncancellable contracts that provide unconditional rights to payment from our customers for services that we have not yet completed providing or services we will provide in the near future, we expect to present the unconditional rights as receivables, regardless of whether cash has been received from customers; |
• | Required disclosures including information about remaining transaction price and when we expect to recognize revenue; and |
• | Accounting for commissions under the new standard will result in the deferral of incremental commission costs for obtaining contracts. |
December 31, 2017 | September 30, 2017 | ||||||||||||||||||||
Cost Basis | Carrying Amount | Average Yield | Cost Basis | Carrying Amount | Average Yield | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | 94,213 | $ | 94,213 | 0.48 | % | $ | 105,618 | $ | 105,618 | 0.56 | % |
December 31, 2017 | September 30, 2017 | ||||||||||||||
Carrying Amounts | Fair Value | Carrying Amounts | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
The 2008 Senior Notes | $ | 131,000 | $ | 132,814 | $ | 131,000 | $ | 134,250 | |||||||
The 2010 Senior Notes | 113,000 | 117,669 | 113,000 | 119,106 | |||||||||||
Debt issuance costs | (166 | ) | (166 | ) | (199 | ) | (199 | ) | |||||||
Total | $ | 243,834 | $ | 250,317 | $ | 243,801 | $ | 253,157 |
December 31, 2017 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Euro (EUR) | EUR | 7,350 | $ | 8,825 | $ | — | |||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 5,398 | $ | 7,300 | $ | — | |||||
Singapore dollar (SGD) | SGD | 7,734 | $ | 5,800 | $ | — | |||||
September 30, 2017 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Euro (EUR) | EUR | 5,050 | $ | 5,968 | $ | — | |||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 9,341 | $ | 12,500 | $ | — |
• | changes in the business analytics industry; |
• | changes in technology; |
• | our inability to obtain or use key data for our products; |
• | saturation or contraction of market demand; |
• | loss of key customers; |
• | industry consolidation; |
• | failure to successfully adopt cloud-based technologies; |
• | failure to execute our selling approach; and |
• | inability to successfully sell our products in new vertical markets. |
• | our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities; |
• | an acquisition may not further our business strategy as we expected, we may not integrate acquired operations or technology as successfully as we expected or we may overpay for our investments, or otherwise not realize the expected return, which could adversely affect our business or operating results; |
• | we may be unable to retain the key employees, customers and other business partners of the acquired operation; |
• | we may have difficulties entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions; |
• | our operating results or financial condition may be adversely impacted by claims or liabilities we assume from an acquired company, business, product or technology, including claims by government agencies, terminated employees, current or former customers, former stockholders or other third parties; pre-existing contractual relationships of an acquired company we would not have otherwise entered into; unfavorable revenue recognition or other accounting treatment as a result of an acquired company’s practices; and intellectual property claims or disputes; |
• | we may fail to identify or assess the magnitude of certain liabilities or other circumstances prior to acquiring a company, business, product or technology, which could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on our business, operating results or financial condition; |
• | we may not realize the anticipated increase in our revenues from an acquisition for a number of reasons, including if a larger than predicted number of customers decline to renew their contracts, if we are unable to sell the acquired products to our customer base or if contract models of an acquired company do not allow us to recognize revenues on a timely basis; |
• | we may have difficulty incorporating acquired technologies or products with our existing product lines and maintaining uniform standards, architecture, controls, procedures and policies; |
• | our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, dividend payments and retirement of outstanding indebtedness; |
• | to the extent we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease; and |
• | we may experience additional or unexpected changes in how we are required to account for our acquisitions pursuant to U.S. generally accepted accounting principles, including arrangements we assume from an acquisition. |
• | disruption of our ongoing business; |
• | reductions of our revenues or earnings per share; |
• | unanticipated liabilities, legal risks and costs; |
• | the potential loss of key personnel; |
• | distraction of management from our ongoing business; and |
• | impairment of relationships with employees and customers as a result of migrating a business to new owners. |
• | impairment of goodwill or intangible assets, or a reduction in the useful lives of intangible assets acquired; |
• | amortization of intangible assets acquired; |
• | identification of, or changes to, assumed contingent liabilities, both income tax and non-income tax related, after our final determination of the amounts for these contingencies or the conclusion of the measurement period (generally up to one year from the acquisition date), whichever comes first; |
• | costs incurred to combine the operations of companies we acquire, such as transitional employee expenses and employee retention, redeployment or relocation expenses; |
• | charges to our operating results to maintain certain duplicative pre-merger activities for an extended period of time or to maintain these activities for a period of time that is longer than we had anticipated, charges to eliminate certain duplicative pre-merger activities, and charges to restructure our operations or to reduce our cost structure; and |
• | charges to our operating results resulting from expenses incurred to effect the acquisition. |
• | variability in demand from our existing customers; |
• | failure to meet the expectations of market analysts; |
• | changes in recommendations by market analysts; |
• | the lengthy and variable sales cycle of many products, combined with the relatively large size of orders for our products, increases the likelihood of short-term fluctuation in revenues; |
• | consumer or customer dissatisfaction with, or problems caused by, the performance of our products; |
• | the timing of new product announcements and introductions in comparison with our competitors; |
• | the level of our operating expenses; |
• | changes in competitive and other conditions in the consumer credit, banking and insurance industries; |
• | fluctuations in domestic and international economic conditions; |
• | our ability to complete large installations, and to adopt and configure cloud-based deployments, on schedule and within budget; |
• | acquisition-related expenses and charges; and |
• | timing of orders for and deliveries of software systems. |
• | incur significant defense costs or substantial damages; |
• | be required to cease the use or sale of infringing products; |
• | expend significant resources to develop or license a substitute non-infringing technology; |
• | discontinue the use of some technology; or |
• | be required to obtain a license under the intellectual property rights of the third party claiming infringement, which license may not be available or might require substantial royalties or license fees that would reduce our margins. |
• | innovate by internally developing new and competitive technologies; |
• | use leading third-party technologies effectively; |
• | continue to develop our technical expertise; |
• | anticipate and effectively respond to changing customer needs; |
• | initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases; and |
• | influence and respond to emerging industry standards and other technological changes. |
• | in-house analytic and systems developers; |
• | scoring model builders; |
• | enterprise resource planning, customer relationship management, and customer communication and mobility solution providers; |
• | business intelligence solutions providers; |
• | credit report and credit score providers; |
• | business process management and decision rules management providers; |
• | process modeling tools providers; |
• | automated application processing services providers; |
• | data vendors; |
• | neural network developers and artificial intelligence system builders; |
• | third-party professional services and consulting organizations; |
• | account/workflow management software providers; |
• | software tools companies supplying modeling, rules, or analytic development tools; collections and recovery solutions providers; entity resolution and social network analysis solutions providers; and |
• | cloud-based customer engagement and risk management solutions providers. |
• | Use of data by creditors and consumer reporting agencies (e.g., the U.S. Fair Credit Reporting Act); |
• | Laws and regulations that limit the use of credit scoring models (e.g., state “mortgage trigger” or “inquiries” laws, state insurance restrictions on the use of credit-based insurance scores, and the E.U. Consumer Credit Directive); |
• | Fair lending laws (e.g., the U.S. Truth In Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act); |
• | Privacy and security laws and regulations that limit the use and disclosure of personally identifiable information, require security procedures, or otherwise apply to the collection, processing, storage, use and transmission of protected data (e.g., the U.S. Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley Act; the E.U. Data Protection Directive and the country-specific regulations that implement that directive; the U.S. Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act; the Cybersecurity Act of 2015; the U.S. Department of Commerce’s National Institute of Standards and Technology’s Cybersecurity Framework; and identity theft, file freezing, security breach notification and similar state privacy laws); |
• | Extension of credit to consumers through the Electronic Fund Transfers Act and Regulation E, as well as non‑governmental VISA and MasterCard electronic payment standards; |
• | Regulations and guidelines applicable to secondary market participants (e.g., Fannie Mae and Freddie Mac) that could have an impact on our products; |
• | Laws and regulations applicable to our customer communication clients and their use of our products and services (e.g., the Telemarketing Sales Rule, Telephone Consumer Protection Act and regulations promulgated thereunder); |
• | Laws and regulations applicable to our insurance clients and their use of our insurance products and services; |
• | The application or extension of consumer protection laws, including implementing regulations (e.g., the Consumer Financial Protection Act, the Federal Trade Commission Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, the Military Lending Act, and the Credit Repair Organizations Act); |
• | Laws and regulations governing the use of the Internet and social media, telemarketing, advertising, endorsements and testimonials; |
• | Anti-bribery and corruption laws and regulations (e.g., the Foreign Corrupt Practices Act); |
• | Financial regulatory standards (e.g., Sarbanes-Oxley Act requirements to maintain and verify internal process controls, including controls for material event awareness and notification); |
• | Regulatory requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors); |
• | Anti-money laundering laws and regulations (e.g., the Bank Secrecy Act and the USA Patriot Act); |
• | Financial regulatory reform stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act and the many regulations mandated by that Act, including regulations issued by, and the supervisory and investigative authority of, the Bureau of Consumer Financial Protection; and |
• | Laws and regulations regarding export controls as they apply to FICO products delivered in non-U.S. countries. |
• | general economic and political conditions in countries where we sell our products and services; |
• | difficulty in staffing and efficiently managing our operations in multiple geographic locations and in various countries; |
• | effects of a variety of foreign laws and regulations, including restrictions on access to personal information; |
• | import and export licensing requirements; |
• | longer payment cycles; |
• | reduced protection for intellectual property rights; |
• | currency fluctuations; |
• | changes in tariffs and other trade barriers; and |
• | difficulties and delays in translating products and related documentation into foreign languages. |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||
October 1, 2017 through October 31, 2017 | 254,431 | $ | 145.20 | 252,067 | $ | 110,107 | |||||||
November 1, 2017 through November 30, 2017 | 24,955 | $ | 156.16 | 20,716 | $ | 246,749,631 | |||||||
December 1, 2017 through December 31, 2017 | 303,307 | $ | 157.03 | 62,135 | $ | 236,999,395 | |||||||
582,693 | $ | 151.83 | 334,918 | $ | 236,999,395 |
(1) | Includes 247,775 shares delivered in satisfaction of the tax withholding obligations resulting from the vesting of restricted stock units held by employees during the quarter ended December 31, 2017. |
(2) | In July 2016, our Board of Directors approved a stock repurchase program following the completion of our previous program. This program was open-ended and authorized repurchases of shares of our common stock up to an aggregate cost of $250.0 million in the open market or in negotiated transactions. In October 2017, our Board of Directors approved a new stock repurchase program following the completion of the July 2016 program. The new program is open-ended and authorizes repurchases of shares of our common stock up to an aggregate cost of $250.0 million in the open market or in negotiated transactions. |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
10.1 | ||
10.2* | ||
10.3* | ||
31.1 * | ||
31.2 * | ||
32.1 * | ||
32.2 * | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
* | Filed herewith. |
FAIR ISAAC CORPORATION | |||
DATE: | January 25, 2018 | ||
By | /s/ MICHAEL J. PUNG | ||
Michael J. Pung | |||
Executive Vice President and Chief Financial Officer | |||
(for Registrant as duly authorized officer and | |||
as Principal Financial Officer) | |||
DATE: | January 25, 2018 | ||
By | /s/ MICHAEL S. LEONARD | ||
Michael S. Leonard | |||
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
1. | Grant of Performance Share Units. The Company hereby grants to the Participant an Award consisting of *[Insert maximum number of units the participant could earn] performance share units (the “Units”). Each Unit that has been earned pursuant to Section 3 of this Agreement and vests pursuant to Section 4 of this Agreement represents the right to receive one share of the Company’s common stock as provided in Section 7 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement. |
2. | Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than a transfer upon death in accordance with the Participant’s will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted by the Participant in accordance with Section 6(d) of the Plan. Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and the Participant’s right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in this Agreement until satisfaction of the conditions for earning and vesting the Units as set forth in Section 3 and Section 4, respectively, of this Agreement. |
3. | Earned Units. Whether and to what degree the Units will have been earned (the “Earned Units”) during the period starting on October 1, 2017 and ending on September 30, 2018 (the “Performance Period”) will be determined by whether and to what degree the Company has satisfied the applicable performance goal(s) for the Performance Period as set forth in Appendix A to this Agreement, and whether and to what degree the Committee has chosen to exercise its discretion to decrease the number of Units otherwise deemed to have been earned. The Participant acknowledges that in order to facilitate qualifying this Award as “performance-based compensation” for purposes of Section 162(m) of the Code, the Committee expects to exercise such discretion and to be guided in the exercise of such discretion based on the degree to which the Company has satisfied during the Performance Period the additional performance parameters specified in Appendix A. Any Units that are not designated as Earned Units at the conclusion of the Performance Period in accordance with this Section 3 will be forfeited. |
4. | Vesting of Earned Units. Subject to Section 6 of this Agreement, if the Participant remains a Service Provider continuously from the Grant Date, then ⅓ of the Earned Units will vest on each of December 8, 2018, December 8, 2019 and December 8, 2020. The period from October 1, 2018 through December 8, 2020 is referred to as the “Vesting Period.” |
5. | Service Requirement. Except as otherwise provided in accordance with Section 6 of this Agreement, if you cease to be a Service Provider prior to the vesting dates specified in Section 4 of this Agreement, you will forfeit all unvested Units. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into |
6. | Effect of Termination of Service or Change in Control. |
7. | Settlement of Units. After any Units vest pursuant to Section 4 or Section 6 of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to the Participant, or to the Participant’s designated beneficiary or estate in the event of the Participant’s death, one Share in payment and settlement of each vested Unit (the date of each such issuance being a “Settlement Date”). Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for the Participant at E*TRADE (or another broker designated by the Company or the Participant), or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 8 of this Agreement and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested Units. Notwithstanding the foregoing, the Committee may provide that the settlement of any Earned Units that vest in accordance with Section 6(b)(ii) or 6(d)(ii) of this Agreement will be made in the amount and in the form of the consideration (whether stock, cash, other securities or property, or a combination thereof) to which a holder of a Share was entitled upon the consummation of the Business Combination (without interest thereon) (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). |
8. | Tax Consequences and Withholding. As a condition precedent to the settlement of the Units, the Participant is required to make arrangements acceptable to the Company for payment of any federal, state or local |
9. | No Shareholder Rights. The Units subject to this Award do not entitle the Participant to any rights of a shareholder of the Company’s common stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to the Participant upon settlement of the Units as provided in Section 7 of this Agreement. |
10. | Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. |
11. | Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Minnesota (without regard to its conflicts or choice of law principles). |
12. | Binding Effect. This Agreement will be binding in all respects on the Participant’s heirs, representatives, successors and assigns, and on the successors and assigns of the Company. |
13. | Discontinuance of Service. This Agreement does not give the Participant a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate the Participant’s Service at any time and otherwise deal with the Participant without regard to the effect it may have upon the Participant under this Agreement. |
14. | Section 409A of the Code. The award of Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to be exempt from Section 409A of the Code under the short-term deferral exception specified in Treas. Reg. § 1.409A-l(b)(4). |
15. | Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this |
PARTICIPANT | FAIR ISAAC CORPORATION |
By:______________________________________ | |
Title:_____________________________________ |
1. | Grant of Market Share Units. The Company hereby grants to the Participant an Award consisting of *[________] Units (the “Target Units”), subject to possible decrease to as few as 0 Units and to possible increase to as many as *[________] Units as provided by this Agreement. Each Unit that has been earned pursuant to Section 3 of this Agreement and vests pursuant to Section 4 of this Agreement represents the right to receive one share of the Company’s common stock as provided in Section 7 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement. |
2. | Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than a transfer upon death in accordance with the Participant’s will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted by the Participant in accordance with Section 6(d) of the Plan. Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and the Participant’s right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in this Agreement until satisfaction of the conditions for earning and vesting the Units as set forth in Section 3 and Section 4 of this Agreement, respectively. |
3. | Earned Units. Whether and to what degree the Units are earned will be determined by the relationship between the Company’s total shareholder return performance relative to that of a benchmark index during three performance periods: Performance Period 1 will start on December 1, 2017 and end on November 30, 2018, Performance Period 2 will start on December 1, 2017 and end on November 30, 2019, and Performance Period 3 will start on December 1, 2017 and end on November 30, 2020 (each, a “Performance Period”). The Performance Periods may be adjusted under the circumstances and to the extent specified in Section 6(b) of this Agreement. |
4. | Vesting of Earned Units. Subject to Section 6 of this Agreement, if the Participant remains a Service Provider continuously from the Grant Date, then all Period 1 Earned Units will vest as of December 8, 2018, all Period 2 Earned Units will vest as of December 8, 2019, and all Period 3 Earned Units will vest as of December 8, 2020. |
5. | Service Requirement. Except as otherwise provided in accordance with Section 6 of this Agreement, if you cease to be a Service Provider prior to the vesting dates specified in Section 4 of this Agreement, you will forfeit all unvested Units. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service to the Company or any Affiliate following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave. |
6. | Effect of Termination of Service or Change in Control. |
7. | Settlement of Units. After any Units vest pursuant to Section 4 or Section 6 of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to the Participant, or to the Participant’s designated beneficiary or estate in the event of the Participant’s death, one Share in payment and settlement of each vested Unit (the date of each such issuance being a “Settlement Date”). Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for the Participant at E*TRADE (or another broker designated by the Company or the Participant), or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 8 of this Agreement and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested Units. Notwithstanding the foregoing, (i) the settlement of each Time-Based Unit that vests in accordance with Section 6(b)(iv) of this Agreement will be made in the amount and in the form of the consideration (whether stock, cash, other securities or property, or a combination thereof) to which a holder of a Share was entitled upon the consummation of the Business Combination (without interest thereon) (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares), and (ii) the Committee may provide for the settlement of Adjusted Period Earned Units that vest in accordance with Section 6(b)(iii) of this Agreement or for the settlement of Period 3 Earned Units that vest under the circumstances specified in Section 6(d) of this Agreement on the same basis as described in the preceding clause (i). |
8. | Tax Consequences and Withholding. As a condition precedent to the delivery of Shares in settlement of the Units, the Participant is required to make arrangements acceptable to the Company for payment of any federal, state or local withholding taxes that may be due as a result of the settlement of the Units (“Withholding Taxes”), in accordance with Section 15 of the Plan. |
9. | No Shareholder Rights. The Units subject to this Award do not entitle the Participant to any rights of a shareholder of the Company’s common stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to the Participant upon settlement of the Units as provided in Section 7 of this Agreement. |
10. | Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. |
11. | Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Minnesota (without regard to its conflicts or choice of law principles). |
12. | Binding Effect. This Agreement will be binding in all respects on the Participant’s heirs, representatives, successors and assigns, and on the successors and assigns of the Company. |
13. | Discontinuance of Service. This Agreement does not give the Participant a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate the Participant’s Service at any time and otherwise deal with the Participant without regard to the effect it may have upon the Participant under this Agreement. |
14. | Section 409A of the Code. The award of Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to be exempt from Section 409A of the Code under the short-term deferral exception specified in Treas. Reg. § 1.409A-l(b)(4). |
15. | Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning of (i) the Company’s Executive Officer Incentive Compensation Recovery Policy, (ii) any similar or superseding policy adopted by the Board or any committee thereof or (iii) Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s common stock is then listed, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with such policies, laws, rules or regulations. |
PARTICIPANT | FAIR ISAAC CORPORATION |
By:______________________________________ | |
Title:_____________________________________ |
1. | I have reviewed this quarterly report on Form 10-Q of Fair Isaac Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ WILLIAM J. LANSING | |
William J. Lansing | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Fair Isaac Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ MICHAEL J. PUNG | |
Michael J. Pung | |
Chief Financial Officer |
Date: | January 25, 2018 | /s/ WILLIAM J. LANSING |
William J. Lansing | ||
Chief Executive Officer |
Date: | January 25, 2018 | /s/ MICHAEL J. PUNG |
Michael J. Pung | ||
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Dec. 31, 2017 |
Jan. 12, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | FAIR ISAAC CORP | |
Trading Symbol | FICO | |
Entity Central Index Key | 0000814547 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 30,073,085 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Sep. 30, 2017 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 88,857,000 | 88,857,000 |
Common stock, shares outstanding | 30,246,000 | 30,243,000 |
Treasury stock, shares | 58,611,000 | 58,614,000 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | ||||
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Dec. 31, 2017 |
Dec. 31, 2016 |
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Revenues: | |||||
Transactional and maintenance | $ 174,662 | $ 153,660 | |||
Professional services | 42,626 | 43,543 | |||
License | 18,033 | 22,397 | |||
Total revenues | 235,321 | 219,600 | |||
Operating expenses: | |||||
Cost of revenues | [1] | 74,359 | 69,997 | ||
Research and development | 28,974 | 26,142 | |||
Selling, general and administrative | [1] | 90,296 | 85,214 | ||
Amortization of intangible assets | [1] | 1,788 | 3,320 | ||
Total operating expenses | 195,417 | 184,673 | |||
Operating income | 39,904 | 34,927 | |||
Interest expense, net | (6,460) | (6,172) | |||
Other income (expense), net | 513 | (100) | |||
Income before income taxes | 33,957 | 28,655 | |||
Provision for income taxes | 6,658 | (9,246) | |||
Net income | 27,299 | 37,901 | |||
Other comprehensive income (loss): | |||||
Foreign currency translation adjustments | 3,071 | (14,347) | |||
Comprehensive income | $ 30,370 | $ 23,554 | |||
Earnings per share: | |||||
Basic (in dollars per share) | $ 0.91 | $ 1.22 | |||
Diluted (in dollars per share) | $ 0.86 | $ 1.16 | |||
Shares used in computing earnings per share: | |||||
Basic (in shares) | 30,078 | 30,989 | |||
Diluted (in shares) | 31,561 | 32,536 | |||
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Dec. 31, 2017 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Paid-in-Capital |
Treasury Stock |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|---|
Beginning Balance (in shares) at Sep. 30, 2017 | 30,243 | |||||
Beginning Balance at Sep. 30, 2017 | $ 426,537 | $ 302 | $ 1,195,431 | $ (2,301,097) | $ 1,598,395 | $ (66,494) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 16,510 | 16,510 | ||||
Issuance of treasury stock under employee stock plans (in shares) | 338 | |||||
Issuance of treasury stock under employee stock plans | (38,174) | $ 3 | (51,667) | 13,490 | ||
Repurchases of common stock (in shares) | (335) | |||||
Repurchases of common stock | (49,601) | $ (3) | (49,598) | |||
Net income | 27,299 | 27,299 | ||||
Foreign currency translation adjustments | 3,071 | 3,071 | ||||
Ending Balance (in shares) at Dec. 31, 2017 | 30,246 | |||||
Ending Balance at Dec. 31, 2017 | $ 385,642 | $ 302 | $ 1,160,274 | $ (2,337,205) | $ 1,625,694 | $ (63,423) |
Nature of Business |
3 Months Ended | ||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Nature of Business | Nature of Business Fair Isaac Corporation Incorporated under the laws of the State of Delaware, Fair Isaac Corporation (“FICO”) is a provider of analytic, software and data management products and services that enable businesses to automate, improve and connect decisions. FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, telecommunications providers, pharmaceutical companies, healthcare organizations, public agencies and organizations in other industries. In these condensed consolidated financial statements, Fair Isaac Corporation is referred to as “FICO,” “we,” “us,” “our,” or “the Company.” Principles of Consolidation and Basis of Presentation We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the applicable accounting guidance. Consequently, we have not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements in this Form 10-Q reflect all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our financial position and results of operations. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our audited consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the year ended September 30, 2017. 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 entire fiscal year. The condensed consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated. Use of Estimates We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the collectibility of accounts receivable; the appropriate levels of various accruals; labor hours in connection with fixed-fee service contracts; the amount of our tax provision and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will be effective for our fiscal year beginning October 1, 2018. Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). In March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. We have established a cross-functional implementation team consisting of representatives across the organization to address the scope of work required to implement the recognition and disclosure requirements under the new standard. This cross-functional implementation team has developed a project plan, which includes evaluating customer contracts across the organization, developing policies, processes and tools to report financial results, and implementing and evaluating our internal controls over financial reporting that will be necessary under the new standard. We currently plan to adopt Topic 606 in the first quarter of our fiscal 2019 using the retrospective transition method. Our ability to adopt Topic 606 using the full retrospective method is dependent on system readiness, and the completion of our analysis of information necessary to restate prior period financial statements. As we continue to assess the new standard along with industry trends and additional interpretive guidance, we may adjust our implementation plan accordingly. We are continuing to assess the impact of adopting Topic 606 on our consolidated financial statements and believe the new standard will impact the following policies and disclosures:
We do not currently expect Topic 606 to have a significant effect on the timing of revenue recognition for our maintenance or professional services revenues, or SaaS contracts. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The guidance is effective for fiscal years and interim periods beginning after December 15, 2017, which means it will be effective for our fiscal year beginning October 1, 2018. ASU 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued. We do not believe that adoption of ASU 2016-16 will have a significant impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018, which means it will be effective for our fiscal year beginning October 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. |
Business Combinations |
3 Months Ended |
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Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On May 19, 2016, we acquired 100% of the equity of QuadMetrics, Inc. (“QuadMetrics”) for $5.7 million in cash. We recorded $2.0 million of intangible assets, which are being amortized using the straight-line method over a weighted average useful life of approximately 4.0 years. We allocated $3.9 million of goodwill to our Applications segment that was not deductible for tax purposes. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
The following tables represent financial assets that we measured at fair value on a recurring basis at December 31, 2017 and September 30, 2017:
Where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing applies to our Level 1 investments. To the extent quoted prices in active markets for assets or liabilities are not available, the valuation techniques used to measure the fair values of our financial assets incorporate market inputs, which include reported trades, broker/dealer quotes, benchmark yields, issuer spreads, benchmark securities and other inputs derived from or corroborated by observable market data. This methodology would apply to our Level 2 investments. We have not changed our valuation techniques in measuring the fair value of any financial assets and liabilities during the period. For the fair value of our derivative instruments and senior notes, see Note 3 and Note 7, respectively. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their respective functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound and Euro. Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months. The following tables summarize our outstanding foreign currency forward contracts, by currency, at December 31, 2017 and September 30, 2017:
The foreign currency forward contracts were entered into on December 31, 2017 and September 30, 2017, respectively; therefore, their fair value was $0 on each of these dates. Gains (losses) on derivative financial instruments are recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets Amortization expense associated with our intangible assets, which has been reflected as a separate operating expense caption within the accompanying condensed consolidated statements of income and comprehensive income, consisted of the following:
Cost of revenues reflects our amortization of completed technology and selling, general and administrative expenses reflects our amortization of other intangible assets. Intangible assets, gross were $112.1 million and $114.5 million as of December 31, 2017 and September 30, 2017, respectively. Estimated future intangible asset amortization expense associated with intangible assets existing at December 31, 2017 was as follows (in thousands):
The following table summarizes changes to goodwill during the quarter ended December 31, 2017, both in total and as allocated to our segments:
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Composition of Certain Financial Statement Captions |
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Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions The following table summarizes property and equipment, and the related accumulated depreciation and amortization, at December 31, 2017 and September 30, 2017:
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Revolving Line of Credit |
3 Months Ended |
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Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Revolving Line of Credit | Revolving Line of Credit On November 17, 2017, we amended our credit agreement with a syndicate of banks, increasing our borrowing capacity under the unsecured revolving line of credit to $600 million. The revolving line of credit expires on December 30, 2019. Proceeds from the credit facility can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions and the repurchase of our common stock. Interest on amounts borrowed under the credit facility is based on (i) a base rate, which is the greater of (a) the prime rate, (b) the Federal Funds rate plus 0.500% and (c) the one-month LIBOR rate plus 1.000%, plus, in each case, an applicable margin, or (ii) an adjusted LIBOR rate plus an applicable margin. The applicable margin for base rate borrowings ranges from 0% to 0.875% and for LIBOR borrowings ranges from 1.000% to 1.875%, and is determined based on our consolidated leverage ratio. In addition, we must pay credit facility fees. The credit facility contains certain restrictive covenants including maintaining a minimum fixed charge ratio of 2.5 and a maximum consolidated leverage ratio of 3.0, subject to a step up to 3.5 following certain permitted acquisitions. The credit agreement also contains other covenants typical of unsecured facilities. As of December 31, 2017, we had $420.0 million in borrowings outstanding at a weighted average interest rate of 2.655%, of which $350.0 million was classified as a long-term liability and recorded in long-term debt within the accompanying condensed consolidated balance sheets. We were in compliance with all financial covenants under this credit facility as of December 31, 2017. |
Senior Notes |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Notes | Senior Notes On May 7, 2008, we issued $275 million of senior notes in a private placement to a group of institutional investors (the “2008 Senior Notes”). The 2008 Senior Notes were issued in four series with maturities ranging from 5 to 10 years. The outstanding 2008 Senior Notes’ weighted average interest rate is 7.2% and the weighted average maturity is 10.0 years. On July 14, 2010, we issued $245 million of senior notes in a private placement to a group of institutional investors (the “2010 Senior Notes” and, with the 2008 Senior Notes, the “Senior Notes”). The 2010 Senior Notes were issued in four series with maturities ranging from 6 to 10 years. The outstanding 2010 Senior Notes’ weighted average interest rate is 5.6% and the weighted average maturity is 9.8 years. The Senior Notes require interest payments semi-annually and contain certain restrictive covenants, including the maintenance of consolidated net debt to consolidated EBITDA ratio and a fixed charge coverage ratio. The purchase agreements for the Senior Notes also contain certain covenants typical of unsecured facilities. As of December 31, 2017, we were in compliance with all financial covenants. The following table presents the carrying amounts and fair values for the Senior Notes at December 31, 2017 and September 30, 2017:
We measure the fair value of the Senior Notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities. |
Restructuring Expenses |
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Restructuring Expenses | Restructuring Expenses The following table summarizes our restructuring accruals related to facility closures and employee separation charges. The current portion and non-current portion is recorded in other accrued current liabilities and other long-term liabilities, respectively, within the accompanying condensed consolidated balance sheets. The balance for all the facilities charges will be paid by the end of fiscal 2020. The balance for all the employee separation costs will be paid by the end of the second quarter of fiscal 2018.
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Income Taxes |
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Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective Tax Rate The effective income tax rate was 19.6% and (32.3)% during the quarters ended December 31, 2017 and 2016, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective tax rate for the three months ended December 31, 2017 was significantly impacted by recording the impact of the Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017 by the U.S. government. The Tax Act makes broad and complex changes to the U.S. tax code that will affect our fiscal year ended September 30, 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate and (2) requiring a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries that is payable over eight years. The Tax Act reduces the federal corporate tax rate to 21.0% effective January 1, 2018. In accordance with Section 15 of the Internal Revenue Code, we will utilize a blended rate of 24.5% for our fiscal 2018 tax year, by applying a prorated percentage of the number of days prior to and subsequent to the January 1, 2018 effective date. We recorded provisional charges for the re-measurement of the deferred tax assets of $5.6 million to our income tax expense related to long-term deferred tax assets and $1.3 million related to short-term deferred tax assets during the quarter ended December 31, 2017. The Deemed Repatriation Transition Tax (the “Transition Tax”) is a tax on previously untaxed accumulated earnings and profits (“E&P”) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate and recorded a provisional Transition Tax obligation of $4.9 million. On December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act. While we are able to make reasonable estimates of the impact of the reduction in corporate rate and the deemed repatriation transition tax, the final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the I.R.S., and actions we may take. We are continuing to gather additional information to determine the final impact. The total unrecognized tax benefit for uncertain tax positions is estimated to be approximately $6.1 million and $6.5 million at December 31, 2017 and September 30, 2017, respectively. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income. We have accrued interest of $0.4 million related to unrecognized tax benefits as of December 31, 2017 and September 30, 2017. |
Earnings per Share |
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Earnings per Share | Earnings per Share The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters ended December 31, 2017 and 2016:
We exclude the options to purchase shares of common stock in the computation of the diluted EPS where the exercise price of the options exceeds the average market price of our common stock as their inclusion would be antidilutive. There were 3,000 options excluded for the quarter ended December 31, 2017. There were no options excluded for the quarter ended December 31, 2016. |
Segment Information |
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Segment Information | Segment Information We are organized into the following three operating segments, each of which is a reportable segment, to align with internal management of our worldwide business operations based on product offerings.
Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets, nor capital expenditures where depreciation amounts are allocated to the segments from their internal cost centers as described above. The following tables summarize segment information for the quarters ended December 31, 2017 and 2016:
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Contingencies |
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Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We are in disputes with certain customers regarding amounts owed in connection with the sale of certain of our products and services. We also have had claims asserted by former employees relating to compensation and other employment matters. We are also involved in various other claims and legal actions arising in the ordinary course of business. We record litigation accruals for legal matters which are both probable and estimable. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have material exposure on an aggregate basis. |
Share-Based Payments |
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Share-Based Payments | 10. Share-Based Payments We maintain the 2012 Long-Term Incentive Plan (the “2012 Plan”) under which we grant equity awards, including stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards. All employees, consultants and advisors of FICO or any subsidiary, as well as all non-employee directors are eligible to receive awards under the 2012 Plan. We also have awards currently outstanding under the 1992 Long-term Incentive Plan, which was adopted in February 1992 and expired in February 2012. Stock option awards have a maximum term of seven years. In general, stock option awards and restricted stock unit awards not subject to market or performance conditions vest annually over four years. Restricted stock unit awards subject to market or performance conditions vest annually over three years based on the achievement of specified criteria. Stock Options The following table summarizes option activity during the quarter ended December 31, 2017:
Restricted Stock Units The following table summarizes restricted stock unit activity during the quarter ended December 31, 2017:
Performance Share Units The following table summarizes performance share unit activity during the quarter ended December 31, 2017:
Market Share Units The following table summarizes market share unit activity during the quarter ended December 31, 2017:
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Nature of Business (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Fair Isaac Corporation | Fair Isaac Corporation Incorporated under the laws of the State of Delaware, Fair Isaac Corporation (“FICO”) is a provider of analytic, software and data management products and services that enable businesses to automate, improve and connect decisions. FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, telecommunications providers, pharmaceutical companies, healthcare organizations, public agencies and organizations in other industries. |
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Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the applicable accounting guidance. Consequently, we have not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements in this Form 10-Q reflect all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our financial position and results of operations. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our audited consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the year ended September 30, 2017. 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 entire fiscal year. The condensed consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated. |
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Use of Estimates | Use of Estimates We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the collectibility of accounts receivable; the appropriate levels of various accruals; labor hours in connection with fixed-fee service contracts; the amount of our tax provision and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates. |
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New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will be effective for our fiscal year beginning October 1, 2018. Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). In March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. We have established a cross-functional implementation team consisting of representatives across the organization to address the scope of work required to implement the recognition and disclosure requirements under the new standard. This cross-functional implementation team has developed a project plan, which includes evaluating customer contracts across the organization, developing policies, processes and tools to report financial results, and implementing and evaluating our internal controls over financial reporting that will be necessary under the new standard. We currently plan to adopt Topic 606 in the first quarter of our fiscal 2019 using the retrospective transition method. Our ability to adopt Topic 606 using the full retrospective method is dependent on system readiness, and the completion of our analysis of information necessary to restate prior period financial statements. As we continue to assess the new standard along with industry trends and additional interpretive guidance, we may adjust our implementation plan accordingly. We are continuing to assess the impact of adopting Topic 606 on our consolidated financial statements and believe the new standard will impact the following policies and disclosures:
We do not currently expect Topic 606 to have a significant effect on the timing of revenue recognition for our maintenance or professional services revenues, or SaaS contracts. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The guidance is effective for fiscal years and interim periods beginning after December 15, 2017, which means it will be effective for our fiscal year beginning October 1, 2018. ASU 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued. We do not believe that adoption of ASU 2016-16 will have a significant impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018, which means it will be effective for our fiscal year beginning October 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. |
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets Measured on a Recurring Basis | The following tables represent financial assets that we measured at fair value on a recurring basis at December 31, 2017 and September 30, 2017:
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Derivative Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Foreign Currency Forward Contracts | The following tables summarize our outstanding foreign currency forward contracts, by currency, at December 31, 2017 and September 30, 2017:
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Losses on Derivative Financial Instruments | Gains (losses) on derivative financial instruments are recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:
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Goodwill and Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amortization Expense | Amortization expense associated with our intangible assets, which has been reflected as a separate operating expense caption within the accompanying condensed consolidated statements of income and comprehensive income, consisted of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future intangible asset amortization expense associated with intangible assets existing at December 31, 2017 was as follows (in thousands):
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Schedule of Goodwill | The following table summarizes changes to goodwill during the quarter ended December 31, 2017, both in total and as allocated to our segments:
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Composition of Certain Financial Statement Captions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment | The following table summarizes property and equipment, and the related accumulated depreciation and amortization, at December 31, 2017 and September 30, 2017:
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Senior Notes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Fair Values of Senior Notes | The following table presents the carrying amounts and fair values for the Senior Notes at December 31, 2017 and September 30, 2017:
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Restructuring Expenses (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Accruals | The following table summarizes our restructuring accruals related to facility closures and employee separation charges. The current portion and non-current portion is recorded in other accrued current liabilities and other long-term liabilities, respectively, within the accompanying condensed consolidated balance sheets. The balance for all the facilities charges will be paid by the end of fiscal 2020. The balance for all the employee separation costs will be paid by the end of the second quarter of fiscal 2018.
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Earnings per Share (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share | The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters ended December 31, 2017 and 2016:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Information | The following tables summarize segment information for the quarters ended December 31, 2017 and 2016:
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Share-Based Payments (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Option Activity | Stock Options The following table summarizes option activity during the quarter ended December 31, 2017:
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Summary of Restricted Stock Unit Activity | Restricted Stock Units The following table summarizes restricted stock unit activity during the quarter ended December 31, 2017:
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Summary of Performance Share Unit Activity | Performance Share Units The following table summarizes performance share unit activity during the quarter ended December 31, 2017:
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Summary of Market Share Unit Activity | Market Share Units The following table summarizes market share unit activity during the quarter ended December 31, 2017:
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Business Combinations - Additional Information (Details) - USD ($) $ in Thousands |
May 19, 2016 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 806,332 | $ 804,414 | |
Applications | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 590,065 | $ 588,288 | |
QuadMetrics | |||
Business Acquisition [Line Items] | |||
Common stock acquired (percent) | 100.00% | ||
Cash | $ 5,700 | ||
Intangible assets | $ 2,000 | ||
Weighted average useful life | 4 years | ||
QuadMetrics | Applications | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 3,900 |
Fair Value Measurements - Financial Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Sep. 30, 2017 |
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Assets: | |||||||
Marketable securities | $ 13,791 | ||||||
Cash deposits | $ 90,100 | 90,300 | |||||
Fair Value, Measurements, Recurring | |||||||
Assets: | |||||||
Cash equivalents | [1] | 4,105 | 15,295 | ||||
Marketable securities | [2] | 15,816 | 13,791 | ||||
Total | 19,921 | 29,086 | |||||
Fair Value, Measurements, Recurring | Active Markets for Identical Instruments (Level 1) | |||||||
Assets: | |||||||
Cash equivalents | [1] | 4,105 | 15,295 | ||||
Marketable securities | [2] | 15,816 | 13,791 | ||||
Total | $ 19,921 | $ 29,086 | |||||
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Derivative Financial Instruments - Additional Information (Detail) - USD ($) |
3 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Short-term forward contracts, average maturities at inception (less than) | 3 months | |
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Forward foreign currency contracts fair value | $ 0 | $ 0 |
Derivative Financial Instruments - Gains (Losses) on Derivative Financial Instruments Recorded in Consolidated Statements of Income (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Gains (losses) on foreign currency forward contracts | $ 194 | $ (560) |
Goodwill and Intangible Assets - Amortization Expense Associated with Intangible Assets (Detail) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense of intangible assets | [1] | $ 1,788 | $ 3,320 | |
Cost of revenues | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense of intangible assets | 706 | 1,686 | ||
Selling, general and administrative expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense of intangible assets | $ 1,082 | $ 1,634 | ||
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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets, gross | $ 112.1 | $ 114.5 |
Goodwill and Intangible Assets - Estimated Future Intangible Asset Amortization Expense (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|
Estimated future intangible asset amortization expense | ||
2018 (excluding the quarter ended December 31, 2017) | $ 4,803 | |
2018 | 6,085 | |
2019 | 3,689 | |
2020 | 2,433 | |
2021 | 2,287 | |
Thereafter | 217 | |
Total | $ 19,514 | $ 21,185 |
Goodwill and Intangible Assets - Summary of Changes to Goodwill (Detail) $ in Thousands |
3 Months Ended |
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Dec. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at September 30, 2017 | $ 804,414 |
Foreign currency translation adjustment | 1,918 |
Balance at December 31, 2017 | 806,332 |
Applications | |
Goodwill [Roll Forward] | |
Balance at September 30, 2017 | 588,288 |
Foreign currency translation adjustment | 1,777 |
Balance at December 31, 2017 | 590,065 |
Scores | |
Goodwill [Roll Forward] | |
Balance at September 30, 2017 | 146,648 |
Foreign currency translation adjustment | 0 |
Balance at December 31, 2017 | 146,648 |
Decision Management Software | |
Goodwill [Roll Forward] | |
Balance at September 30, 2017 | 69,478 |
Foreign currency translation adjustment | 141 |
Balance at December 31, 2017 | $ 69,619 |
Composition of Certain Financial Statement Captions - Property and Equipment (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Property and equipment | $ 139,344 | $ 135,360 |
Less: accumulated depreciation and amortization | (100,536) | (94,657) |
Total | $ 38,808 | $ 40,703 |
Restructuring Expenses - Summary of Restructuring Accruals and Certain Facility Closures (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
|
Restructuring Reserve [Roll Forward] | ||
Accrual at September 30, 2017 | $ 8,305 | |
Cash Payments | (828) | |
Accrual at December 31, 2017 | 7,477 | |
Less: current portion | (3,524) | $ (3,077) |
Non-current | 3,953 | $ 5,228 |
Facilities charges | ||
Restructuring Reserve [Roll Forward] | ||
Accrual at September 30, 2017 | 8,120 | |
Cash Payments | (702) | |
Accrual at December 31, 2017 | 7,418 | |
Employee separation | ||
Restructuring Reserve [Roll Forward] | ||
Accrual at September 30, 2017 | 185 | |
Cash Payments | (126) | |
Accrual at December 31, 2017 | $ 59 |
Income Taxes -Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax [Line Items] | |||||
Effective income tax rate | 19.60% | (32.30%) | |||
Provisional charges for the re-measurement of deferred tax assets, long-term | $ 5.6 | ||||
Provisional charges for the re-measurement of deferred tax assets, short-term | 1.3 | ||||
Transition tax obligation | 4.9 | ||||
Unrecognized tax benefits, uncertain tax positions | 6.1 | $ 6.5 | |||
Unrecognized tax benefits, accrued interest | $ 0.4 | $ 0.4 | |||
Scenario, Forecast | |||||
Income Tax [Line Items] | |||||
Federal corporate tax rate | 21.00% | 24.50% |
Earnings per Share - Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Numerator for diluted and basic earnings per share: | ||
Net income | $ 27,299 | $ 37,901 |
Denominator - share: | ||
Basic weighted-average shares (in shares) | 30,078 | 30,989 |
Effect of dilutive securities (in shares) | 1,483 | 1,547 |
Diluted weighted-average shares (in shares) | 31,561 | 32,536 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.91 | $ 1.22 |
Diluted (in dollars per share) | $ 0.86 | $ 1.16 |
Earnings per Share - Additional Information (Detail) - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Options to purchase shares of common stock excluded in the computation of diluted earnings per share because their inclusion would be antidilutive (in shares) | 3,000 | 0 |
Segment Information - Additional Information (Detail) |
3 Months Ended |
---|---|
Dec. 31, 2017
Segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Share-Based Payments - Additional Information (Details) |
3 Months Ended |
---|---|
Dec. 31, 2017 | |
Employee stock option | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock option awards term | 7 years |
Restricted stock units not subject to market or performance conditions | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
Restricted stock units subject to market or performance conditions | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 3 years |
Share-Based Payments - Summary of Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
$ / shares
shares
| |
Shares | |
Outstanding at October 1, 2017 | shares | 1,230 |
Granted | shares | 3 |
Exercised | shares | (21) |
Outstanding at December 31, 2017 | shares | 1,212 |
Exercisable at December 31, 2017 | shares | 1,051 |
Vested and expected to vest at December 31, 2017 | shares | 1,207 |
Weighted-average Exercise Price | |
Outstanding at October 1, 2017 (in dollars per share) | $ / shares | $ 56.54 |
Granted (in dollars per share) | $ / shares | 157.31 |
Exercised (in dollars per share) | $ / shares | 33.10 |
Outstanding at December 31, 2017 (in dollars per share) | $ / shares | 57.19 |
Exercisable at December 31, 2017 (in dollars per share) | $ / shares | 53.34 |
Vested and expected to vest at December 31, 2016 (in dollars per share) | $ / shares | $ 57.06 |
Weighted-average Remaining Contractual Term | |
Outstanding at December 31, 2017 | 2 years 10 months 25 days |
Exercisable at December 31, 2017 | 2 years 8 months 4 days |
Vested and expected to vest at December 31, 2017 | 2 years 10 months 21 days |
Aggregate Intrinsic Value | |
Outstanding at December 31, 2017 | $ | $ 116,380 |
Exercisable at December 31, 2017 | $ | 105,003 |
Vested and expected to vest at December 31, 2017 | $ | $ 116,081 |
Share-Based Payments - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units shares in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2017
$ / shares
shares
| |
Shares | |
Outstanding at October 1, 2017 | shares | 1,144 |
Granted | shares | 358 |
Released | shares | (351) |
Forfeited | shares | (5) |
Outstanding at December 31, 2017 | shares | 1,146 |
Weighted- average Grant-date Fair Value | |
Outstanding at October 1, 2016 (in dollars per share) | $ / shares | $ 97.95 |
Granted (in dollars per share) | $ / shares | 157.11 |
Released (in dollars per share) | $ / shares | 86.88 |
Forfeited (in dollars per share) | $ / shares | 109.08 |
Outstanding at December 31, 2016 (in dollars per share) | $ / shares | $ 119.76 |
Share-Based Payments - Summary of Performance Share Unit and Market Share Unit Activity (Details) shares in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2017
$ / shares
shares
| |
Performance Share Units | |
Shares | |
Outstanding at October 1, 2017 | shares | 204 |
Granted | shares | 51 |
Released | shares | (95) |
Outstanding at December 31, 2017 | shares | 160 |
Weighted- average Grant-date Fair Value | |
Outstanding at October 1, 2016 (in dollars per share) | $ / shares | $ 105.37 |
Granted (in dollars per share) | $ / shares | 157.03 |
Released (in dollars per share) | $ / shares | 98.15 |
Outstanding at December 31, 2016 (in dollars per share) | $ / shares | $ 126.27 |
Market Share Units | |
Shares | |
Outstanding at October 1, 2017 | shares | 131 |
Granted | shares | 102 |
Released | shares | (119) |
Outstanding at December 31, 2017 | shares | 114 |
Weighted- average Grant-date Fair Value | |
Outstanding at October 1, 2016 (in dollars per share) | $ / shares | $ 123.82 |
Granted (in dollars per share) | $ / shares | 151.78 |
Released (in dollars per share) | $ / shares | 113.70 |
Outstanding at December 31, 2016 (in dollars per share) | $ / shares | $ 159.34 |
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