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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 3, 2003
FAIR ISAAC CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 0-16439 | 94-1499887 | ||
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| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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| 200 Smith Ranch Road | ||||
| San Rafael, California | 94903 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code 415-472-2211
| Item 7. Financial Statements and Exhibits. | ||||||||
| Item 12. Results of Operations and Financial Condition. | ||||||||
| SIGNATURE | ||||||||
| EXHIBIT INDEX | ||||||||
| EXHIBIT 99 | ||||||||
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
| Exhibit | ||
| Number | Description | |
| 99 | Press Release dated November 3, 2003 |
Item 12. Results of Operations and Financial Condition.
On November 3, 2003, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter and year ended September 30, 2003. See the Company’s press release dated November 3, 2003, which is furnished as Exhibit 99 hereto and incorporated by reference in this Item 12. In the press release, the Company provides the amount of charges resulting from the HNC Software Inc. acquisition included in its financial results for the periods presented and the impact of these charges on earnings per share. This information may be considered to be a “non-GAAP financial measure” under Regulation G adopted by the Securities and Exchange Commission. The Company believes that this information is useful in that it helps investors evaluate the Company’s operating performance and compare this performance between periods.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FAIR ISAAC CORPORATION | ||
| By /s/ Kenneth J. Saunders | ||
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| Kenneth J. Saunders | ||
| Vice President and Chief Financial Officer | ||
| Date: November 3, 2003 |
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EXHIBIT INDEX
| Exhibit | ||||
| Number | Description | Method of Filing | ||
| 99 | Press Release dated November 3, 2003 | Filed Electronically |
[FAIR ISAAC LOGO] Contacts: INVESTORS & ANALYSTS: Heidi Flannery Fair Isaac Corporation (800) 213-5542 investor@fairisaac.com FAIR ISAAC REPORTS FOURTH QUARTER AND FISCAL 2003 RESULTS 60% Year-Over-Year Revenue Growth with HNC Revenues SAN RAFAEL, Calif. -- November 3, 2003 -- Fair Isaac Corporation (NYSE:FIC), the leader in customer analytics and decision technology, today announced financial results for the fourth fiscal quarter and full fiscal year ended September 30, 2003. The company achieved fourth quarter revenues of $161.0 million in fiscal 2003 versus $129.3 million reported in the fourth quarter of fiscal 2002. Revenues for fiscal 2003 totaled $629.3 million as compared to revenues of $392.4 million in fiscal 2002. Net income for the fourth quarter of fiscal 2003 totaled $31.7 million, or $0.64 per share on 52.4 million diluted shares outstanding(1), compared with a net loss of $(24.2) million, or $(0.55) per share on 43.7 million diluted shares outstanding reported in the same quarter last year. Net income for fiscal 2003 totaled $107.2 million, or $2.12 per share on 50.6 million diluted shares outstanding(1), compared with $17.9 million, or $0.48 per share on 37.6 million diluted shares outstanding reported in fiscal 2002. Results for fiscal 2003 include $2.5 million in merger-related charges, resulting from the HNC Software acquisition, which resulted in a negative three-cent(2) impact to diluted earnings per share during this period. "We are very pleased with our revenue and income growth for this fiscal year," said Tom Grudnowski, President and CEO of Fair Isaac. "We continue to believe that Enterprise Decision Management is a growing dimension of customers' technology spending and our portfolio of products and services is well positioned to address their needs." The company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its fourth quarter and fiscal 2003 results and provide guidance for fiscal 2004. The call can be accessed live on the Investor Relations' section of the company's Web site at www.fairisaac.com, and will be archived on the site immediately following the call. ABOUT FAIR ISAAC Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. The company's predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power billions of mission-critical customer decisions a year. Founded in 1956, Fair Isaac helps thousands of companies in over 60 countries acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses and enter new markets more profitably. Most leading banks and credit card issuers rely on Fair Isaac solutions, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies. Through the www.myfico.com Web site, consumers use the company's FICO(R) scores, the standard measure of credit risk, to manage their financial health. As of August 5, 2002, the business of HNC Software Inc., a leading provider of high-end analytic and decision management software, is part of Fair Isaac. For more information, visit www.fairisaac.com. FORWARD-LOOKING STATEMENTS Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac, including statements regarding our ability to build and maintain customer and other business relationships, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the company's ability to recruit and retain key technical and managerial personnel, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, competition, regulatory changes applicable to the use of consumer credit and other data, the possibility that the anticipated benefits of its merger with HNC, including expected synergies, cannot be fully realized, the possibility that costs or difficulties related to the integration of our business and HNC's business will be greater than expected, and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2002. If any of these risks or uncertainties materializes, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements. Fair Isaac, HNC and FICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be trademarks of their respective owners. - ---------------------------- 1 The computation of diluted earnings per share for the quarter ended September 30, 2003 includes 2.7 million shares of common stock issuable upon conversion of our convertible subordinated notes, along with a corresponding adjustment to net income to add back related interest expense, net of tax, of approximately $1.6 million. The computation of diluted earnings per share for the year ended September 30, 2003 excludes these shares, as they were antidilutive during this period. 2 Calculated as $2.5 million in merger-related charges less $0.9 million income tax benefit (by application of the company's 37.75 percent effective tax rate for the fiscal year), or $1.6 million, divided by 50.6 million diluted shares outstanding for the fiscal year. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Quarters and Years Ended September 30, 2003 and 2002 (In thousands, except per share data) (Unaudited) (a) The computation of diluted earnings per share for the quarter ended September 30, 2003 includes 2.7 million shares of common stock issuable upon conversion of our convertible subordinated notes, along with a corresponding adjustment to net income to add back related interest expense, net of tax, of approximately $1.6 million. The computation of diluted earnings per share for the year ended September 30, 2003 excludes these shares, as they were antidilutive during this period.
Quarter Ended Year Ended September 30, September 30, ------------------------- ------------------------ 2003 2002 2003 2002 --------- --------- --------- -------- Revenues $ 160,965 $ 129,293 $ 629,295 $392,418 --------- --------- --------- -------- Operating expenses: Cost of revenues 59,688 55,764 246,592 172,617 Research and development 16,249 12,168 67,574 33,840 Selling, general and administrative 29,466 28,458 124,641 87,045 Amortization of intangibles 3,651 2,637 13,793 4,380 In-process research and development -- 40,200 -- 40,200 Restructuring and merger-related (79) 7,224 2,501 7,224 --------- --------- --------- -------- Total operating expenses 108,975 146,451 455,101 345,306 --------- --------- --------- -------- Operating income (loss) 51,990 (17,158) 174,194 47,112 Other (expense) income, net (1,572) 1,547 (2,054) 5,986 --------- --------- --------- -------- Income (loss) before income taxes 50,418 (15,611) 172,140 53,098 Provision for income taxes 18,728 8,589 64,983 35,214 --------- --------- --------- -------- Net income (loss) $ 31,690 $ (24,200) $ 107,157 $ 17,884 ========= ========= ========= ======== Earnings (loss) per share: Basic $ 0.68 $ (0.55) $ 2.23 $ 0.49 ========= ========= ========= ======== Diluted $ 0.64 (a) $ (0.55) $ 2.12 $ 0.48 ========= ========= ========= ======== Shares used in computing earnings (loss) per share: Basic 46,933 43,717 48,123 36,534 ========= ========= ========= ======== Diluted 52,406 (a) 43,717 50,649 37,550 ========= ========= ========= ======== FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2003 and 2002 (In thousands) (Unaudited)
September 30, September 30, 2003 2002 ---------- ---------- ASSETS: Current assets: Cash and investments $ 505,351 $ 281,211 Receivables, net 138,712 126,743 Prepaid expenses and other current assets 23,809 25,507 ---------- ---------- Total current assets 667,872 433,461 Investments 164,254 150,202 Property and equipment, net 50,706 62,474 Goodwill and intangibles, net 551,772 520,114 Other noncurrent assets 60,569 51,549 ---------- ---------- $1,495,173 $1,217,800 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $ 40,939 $ 44,135 Accrued compensation and employee benefits 25,839 28,153 Deferred revenue 31,584 23,208 ---------- ---------- Total current liabilities 98,362 95,496 Senior convertible notes 400,000 -- Convertible subordinated notes 141,364 139,922 Other noncurrent liabilities 5,905 8,910 ---------- ---------- Total liabilities 645,631 244,328 Stockholders' equity 849,542 973,472 ---------- ---------- $1,495,173 $1,217,800 ========== ========== FAIR ISAAC CORPORATION REVENUES BY SEGMENT For the Quarters and Years Ended September 30, 2003 and 2002 (In thousands) (Unaudited)
Quarter Ended Year Ended September 30, September 30, ---------------------- ---------------------- 2003 2002 2003 2002 -------- -------- -------- -------- Scoring solutions $ 34,487 $ 33,500 $135,994 $127,991 Strategy machine solutions 96,599 70,275 380,550 190,249 Professional services 21,642 21,829 83,975 62,576 Analytic software tools 8,237 3,689 28,776 11,602 -------- -------- -------- -------- Total revenues $160,965 $129,293 $629,295 $392,418 ======== ======== ======== ========