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Fair Isaac Corporation

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported)		July 28, 2004

FAIR ISAAC CORPORATION

(Exact name of registrant as specified in its charter)


Delaware	0-16439	94-1499887

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

901 Marquette Avenue, Suite 3200
Minneapolis, Minnesota		55402-3232

(Address of principal executive offices)		(Zip Code)


Registrant’s telephone number, including area code		612-758-5200

TABLE OF CONTENTS


	Item 7. Financial Statements and Exhibits.
	Item 12. Results of Operations and Financial Condition.
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99

Item 7. Financial Statements and Exhibits.

(c)

Exhibits


Exhibit
Number		Description
99		Press Release dated July 28, 2004

Item 12. Results of Operations and Financial Condition.

On July 28, 2004, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter and nine months ended June 30, 2004. See the Company’s press release dated July 28, 2004, which is furnished as Exhibit 99 hereto and incorporated by reference in this Item 12.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	FAIR ISAAC CORPORATION
	By:	/s/ CHARLES M. OSBORNE
		Charles M. Osborne
		Vice President and Chief Financial Officer

Date: July 28, 2004

EXHIBIT INDEX


Exhibit
Number	Description	Method of Filing
99	Press Release dated July 28, 2004	Filed Electronically

EXHIBIT 99 [FAIR ISAAC LOGO] Contact: INVESTORS & ANALYSTS: Megan Forrester Fair Isaac Corporation (800) 213-5542 investor@fairisaac.com FAIR ISAAC ANNOUNCES THIRD QUARTER FISCAL 2004 RESULTS, STOCK REPURCHASE PROGRAM AND NOTICE OF REDEMPTION OF CONVERTIBLE SUBORDINATED NOTES 6% Year-Over-Year Revenue Growth MINNEAPOLIS--July 28, 2004--Fair Isaac Corporation (NYSE:FIC), a leader in customer analytics and decision technology, today announced financial results for the third fiscal quarter ended June 30, 2004, a $200 million stock repurchase program and notice of redemption of its $150 million principal amount, 5.25% Convertible Subordinated Notes. GAAP RESULTS The company reported third quarter revenues of $173.2 million in fiscal 2004 versus $163.0 million reported in the third quarter of fiscal 2003. Revenues for the nine months ended June 30, 2004, totaled $515.8 million as compared to revenues of $468.3 million reported in the same period last year. Net income for the third quarter of fiscal 2004 totaled $28.8 million, or $0.39 per share, on 73.1 million diluted shares outstanding, compared with net income of $30.0 million, or $0.40 per share, on 79.4 million diluted shares outstanding reported in the same quarter last year(1). Net income for the nine months ended June 30, 2004, totaled $88.4 million, or $1.20 per share, on 77.7 million diluted shares outstanding, compared with $75.5 million, or $0.99 per share, on 76.5 million diluted shares outstanding reported in the same period last year(1). PRO FORMA RESULTS The company reported pro forma net income for the third quarter of fiscal 2004 of $32.9 million, compared to pro forma net income of $32.2 million reported in the same quarter last year. Pro forma diluted earnings per share for the third quarter of fiscal 2004 was $0.45, compared to pro forma diluted earnings per share of $0.43 reported in the same quarter last year. Pro forma net income for the nine months ended June 30, 2004 was $97.5 million, compared with pro forma net income of $83.4 million reported in the same period last year. Pro forma diluted earnings per share for the nine months ended June 30, 2004 was $1.32, compared to pro forma diluted earnings per share of $1.09 reported in the same period last year. The GAAP results for the third quarter and nine months ended June 30, 2004 include the revenue impact of the purchase accounting adjustments, including the write-down to fair market value of deferred maintenance revenue, in connection with the acquisition of London Bridge Software

Holdings plc, the amortization of intangible assets acquired in acquisitions, and acquisition-related expenses. The pro forma results for the third quarter and nine months ended June 30, 2004 exclude the impact of these purchase accounting adjustments and acquisition-related expenses. A reconciliation of GAAP to pro forma, or non-GAAP, financial results is included in this press release. All earnings per share figures reflect the company's three-for-two stock split, which took effect March 10, 2004. "Although we are disappointed in our lower-than expected results this particular quarter, we believe our business model and portfolio of unique transaction-oriented analytic products will provide revenue and income growth in FY05 and beyond, consistent with that of the last four years," said Tom Grudnowski, President and CEO of Fair Isaac. "Our innovation is as strong as ever, but we are still learning how to execute well in multiple markets simultaneously. We have begun the integration of London Bridge, and our expectations remain high as we begin to manage in this new space." NON-GAAP FINANCIAL MEASURES The company uses pro forma non-GAAP financial measures, which exclude the purchase accounting adjustments and acquisition-related expenses described above, in analyzing financial results because they provide meaningful information regarding the company's operational performance and facilitate management's internal comparisons to the company's historical operating results and comparisons to the operating results of other companies. The company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency of the company's operating performance. Wherever non-GAAP financial measures have been included in this press release, the company has reconciled them in the tables below to their GAAP counterparts. These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States of America and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following tables reconcile the non-GAAP financial measures to GAAP:

STOCK REPURCHASE PROGRAM The company's Board of Directors has approved a stock repurchase program to acquire up to $200 million of the company's outstanding common stock. As of June 30, 2004, the company had approximately 70.3 million shares of common stock outstanding. The program, which will expire in one year, will allow the company to repurchase its shares from time-to-time in the open market and in negotiated transactions. REDEMPTION OF 5.25% CONVERTIBLE SUBORDINATED NOTES The company has given notice to redeem its 5.25% Convertible Subordinated Notes due September 1, 2008. The redemption date will be September 8, 2004 at a redemption price of 102.625% of the principal amount of the notes plus interest accrued on the notes to the redemption date. COMPANY TO HOST CONFERENCE CALL The company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its third quarter results and provide guidance for the remainder of fiscal 2004 and fiscal 2005. 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. For more information, visit www.fairisaac.com.

STATEMENT CONCERNING FORWARD-LOOKING INFORMATION Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the company's ability to recruit and retain key technical and managerial personnel, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, competition, regulatory changes applicable to the use of consumer credit and other data, the possibility that the anticipated benefits of acquisitions, including expected synergies, will not be realized and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2003, and quarterly report on Form 10-Q for the quarter ended March 31, 2004. If any of these risks or uncertainties materializes, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements. Fair Isaac and FICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be trademarks of their respective owners. - ---------- (1) The computation of diluted earnings per share for the quarter ended June 30, 2003, and for the nine months ended June 30, 2004, includes 4.1 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 and $4.8 million, respectively. The computation of diluted earnings per share for the quarter ended June 30, 2004, and for the nine months ended June 30, 2003, excludes these shares, as they were antidilutive during these periods.

FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE QUARTERS AND NINE MONTHS ENDED JUNE 30, 2004 AND 2003 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

(a) The computation of diluted earnings per share for the quarter ended June 30, 2003, and for the nine months ended June 30, 2004, includes 4.1 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 and $4.8 million, respectively. The computation of diluted earnings per share for the quarter ended June 30, 2004, and for the nine months ended June 30, 2003, excludes these shares, as they were antidilutive during these periods. (b) On February 2, 2004, our Board of Directors declared a three-for-two stock split in the form of a 50% common stock dividend with cash payment in lieu of fractional shares, paid on March 10, 2004 to shareholders of record on February 18, 2004. The share and per share amounts within the condensed consolidated statements of income have been restated to reflect this stock split.

FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 2004 AND SEPTEMBER 30, 2003 (IN THOUSANDS) (UNAUDITED)

FAIR ISAAC CORPORATION REVENUES BY SEGMENT FOR THE QUARTERS AND NINE MONTHS ENDED JUNE 30, 2004 AND 2003 (IN THOUSANDS) (UNAUDITED)

FAIR ISAAC CORPORATION BASELINE REVENUE ANALYSIS - 2004 (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------------------------ BKG'04 Q1A Q2A Q3A Q4E FY04 - ------------------------------------------------------------------------------------------------------------------------------------ Baseline Prior to '04 $ 153,440 $ 148,234 $ 140,726 $ 132,887 $ 575,287 London Bridge Baseline 5,433 15,440 20,873 - ----------------------------------- ----------------------------------------------------------------------------- Total Baseline Prior to '04 153,440 148,234 146,159 148,327 596,160 ----------------------------------------------------------------------------- Q1-2004 $ 135,108 15,901 10,304 8,300 7,273 41,778 Q2-2004 116,997 14,708 8,397 9,824 32,929 Q3-2004 78,580 10,341 8,598 18,939 Q4-2004 E 100,000 15,059 15,059 - ------------------------------------------------------------------------------------------------------------------------------------ Total FY04 E 430,685 15,901 25,012 27,038 40,754 108,705 ---------------------------------------------------------------------------------------------- Baseline Prior to '05 E 169,341 173,246 173,197 189,081 704,865 ---------------------------------------------------------------------------------------------- Q1-2005 Q2-2005 Q3-2005 Q4-2005 Not Used Total FY05 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL ESTIMATE $ 430,685 $ 169,341 $ 173,246 $ 173,197 $ 189,081 $ 704,865 ==================================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ BKG'05 Q1E Q2E Q3E Q4E FY05E - ------------------------------------------------------------------------------------------------------------------------------------ Baseline Prior to '04 $ 125,057 $ 121,996 $ 122,773 $ 120,258 $ 490,084 London Bridge Baseline 16,450 17,050 17,100 16,400 67,000 - ----------------------------------- ------------------------------------------------------------------------------------ Total Baseline Prior to '04 141,507 139,046 139,873 136,658 557,084 ------------------------------------------------------------------------------------ Q1-2004 7,025 6,659 5,906 5,649 25,239 Q2-2004 8,735 6,961 6,457 6,363 28,516 Q3-2004 6,721 4,803 2,460 2,522 16,506 Q4-2004 E 5,066 3,864 3,630 3,416 15,976 - ------------------------------------------------------------------------------------------------------------------------------------ Total FY04 E 27,547 22,287 18,453 17,950 86,237 ------------------------------------------------------------------------------------ Baseline Prior to '05 E $ 169,054 $ 161,333 $ 158,326 $ 154,608 $ 643,321 ==================================================================================== Q1-2005 Q2-2005 '05 New Revenue Q3-2005 To Be Reported Q4-2005 Total FY05 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL ESTIMATE - ------------------------------------------------------------------------------------------------------------------------------------ E = Estimate A = Actual

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