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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) October 30, 2007
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FAIR ISAAC CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-16439 94-1499887
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
901 Marquette Avenue, Suite 3200
Minneapolis, Minnesota 55402-3232
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-758-5200
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition.
Item 9.01. Financial Statements and Exhibits.
Signature
Exhibit Index
Exhibit 99.1
Item 2.02. Results of Operations and Financial Condition.
On October 30, 2007, Fair Isaac Corporation (the "Company") reported its
financial results for the quarter and year ended September 30, 2007. See the
Company's press release dated October 30, 2007, which is furnished as Exhibit
99.1 hereto and incorporated by reference in this Item 2.02.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
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99.1 Press Release dated October 30, 2007
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
Executive Vice President and
Chief Financial Officer
Date: October 30, 2007
EXHIBIT INDEX
Exhibit No. Description Manner of Filing
- ----------- ----------- ----------------
99.1 Press Release dated October 30, 2007 Filed Electronically
Exhibit 99.1
Fair Isaac Announces Fourth Quarter and Fiscal 2007 Results
Total quarterly revenues of $207.2 million;
Earnings per share of $0.52
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 30, 2007--Fair Isaac
Corporation (NYSE:FIC), which combines trusted advice, world-class
analytics and innovative applications to help businesses make smarter
decisions, today announced the financial results for its fourth
quarter and fiscal year ended September 30, 2007.
Fourth Quarter Fiscal 2007 Results
The company reported fourth quarter revenues of $207.2 million in
fiscal 2007 compared to $207.3 million reported in the prior year
period. Net income for the fourth quarter of fiscal 2007 totaled $28.2
million, or $0.52 per diluted share, compared to $22.1 million, or
$0.35 per diluted share, reported in the prior year period.
Fourth quarter fiscal 2007 results included the following one-time
items: a $7.3 million tax benefit, or $0.13 per diluted share, arising
from adjustments to income tax reserves resulting from the conclusion
of a tax audit, costs associated with the resolution of a customer
lawsuit involving our insurance solutions business of $3.8 million
after-tax, or $0.07 per diluted share, and restructuring costs of $1.6
million after-tax, or $0.03 per diluted share.
Fourth quarter fiscal 2006 results included $4.9 million in
revenues from the mortgage product line which was sold in March 2007,
as well as lease exit costs of $8.3 million after-tax, or $0.13 per
diluted share.
Fourth Quarter Fiscal 2007 Revenues Highlights
Revenues for fourth quarter fiscal 2007 across each of the
company's four operating segments were as follows:
-- Strategy Machine(R) Solutions revenues were $106.1 million in
the fourth quarter compared to $110.6 million in the prior
year quarter, or a decrease of 4.1%, primarily due to the
divestiture of the mortgage product line in the second quarter
and a decline associated with insurance solutions products.
The declines were partially offset by an increase in revenues
derived from collections and recovery products, and consumer
products.
-- Scoring Solutions revenues increased to $46.0 million in the
fourth quarter compared to $45.5 million in the prior year
quarter, or by 1.1%, primarily due to an increase in revenues
from risk scoring services at the credit reporting agencies.
-- Professional Services revenues were $37.4 million in the
fourth quarter compared to $38.0 million in the prior year
quarter, or a decrease of 1.4%, primarily due to a decline
associated with Blaze Advisor(TM) implementation and
consulting services.
-- Analytic Software Tools revenues increased to $17.7 million in
the fourth quarter compared to $13.2 million in the prior year
quarter, or by 33.8%, due to an increase in revenues generated
from sales of the Blaze Advisor(TM) and Model Builder
products.
"We are pleased with our performance this quarter, and we remain
firmly focused on achieving sustainable growth for 2008 and beyond,"
said Mark Greene, CEO of Fair Isaac. "We are confident we can achieve
this growth and drive shareholder value through our continued
strategic focus on Enterprise Decision Management (EDM), ongoing
innovation, elevated success with cross-selling, international
expansion, and our determined focus on customer satisfaction. With a
solid strategic and operational foundation in place, we are now
strongly positioned to answer the growing global demand for proven
analytic solutions and technology tools that drive smarter decisions
and business growth."
Fiscal 2007 Full Year Results
The company reported full year revenues of $822.2 million in
fiscal 2007 compared to $825.4 million reported in the prior year. Net
income for full year fiscal 2007 totaled $104.7 million, or $1.82 per
diluted share, compared to $103.5 million, or $1.59 per diluted share,
reported in the prior year.
Fiscal 2007 Full Year Revenues Highlights
Revenues for full year fiscal 2007 across each of the company's
four operating segments were as follows:
-- Strategy Machine(R) Solutions revenues were $439.3 million
compared to $453.2 million in the prior year, or a decrease of
3.1%, primarily due to a decline associated with originations,
customer management and insurance bill review products, and
the sale of the mortgage product line, partially offset by an
increase in revenues derived from collections and recovery
products.
-- Scoring Solutions revenues were $180.4 million compared to
$177.2 million in the prior year, or an increase of 1.9%,
primarily due to an increase in revenues derived from risk
scoring services at the credit reporting agencies.
-- Professional Services revenues increased to $151.1 million
compared to $149.3 million in the prior year, or by 1.2%,
primarily due to an increase in revenues derived from customer
management, Blaze Advisor(TM) implementation services and
model development services, partially offset by a decline
associated with collections and recovery implementation
services, and industry consulting.
-- Analytic Software Tools revenues increased to $51.4 million
compared to $45.7 million in the prior year, or by 12.5%, due
to an increase in revenues generated from sales of the Blaze
Advisor(TM) product.
Bookings Highlights
The bookings for the fourth quarter were $94.5 million compared to
$112.6 million in the same period last year. The company defines
"bookings" as estimated future contractual revenues, including
agreements with perpetual, multi-year and annual terms. Management
regards the volume of bookings achieved as one indicator of future
revenues, but they are not comparable to, nor should they be
substituted for, an analysis of the company's revenues.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents and investments were $246.8 million at
September 30, 2007, as compared to $267.8 million at September 30,
2006. Significant changes in cash and cash equivalents from September
30, 2006, include cash provided by operations of $179.2 million, $84.1
million received from the exercise of stock options and stock issued
under an employee stock purchase plan, borrowings under the revolving
credit facility of $170.0 million, and $15.8 million received on the
sale of the mortgage product line. Cash used during fiscal 2007
includes $451.1 million to repurchase common stock, $22.7 million
related to purchases of property and equipment, a $9.0 million
repayment on our senior convertible notes, and a $10.0 million
minority investment in a company that operates in the healthcare
market.
Operational Updates
Key fourth-quarter successes in driving towards our growth
initiatives included the completion of our leadership team with the
appointment of new Chief Marketing Officer, Tracey Stout, execution
against our new sales disciplines and elevated penetration into client
organizations. As a result, the company begins fiscal 2008 with a
healthy sales pipeline and encouraging growth momentum. Major clients
are making large-scale commitments to achieve the benefits of
automating, improving and connecting their decisions through
Enterprise Decision Management (EDM).
The company has also significantly advanced its client advisory,
delivery and service capabilities. Some recent enhancements include
the addition of more professional services employees, bringing the
total added over the full fiscal year to almost 100. This will help us
to better capture revenue opportunities. The company has also doubled
its client relationship staff in recent months, to more than 78
expert, service-focused professionals.
Finally, Fair Isaac continues to gain traction in its expansion
into China with the recent signing of another major financial services
institution in that promising market. The company expects more than
200 financial services leaders to attend its November InterACT
conference in Shanghai.
Outlook
The company expects revenues for first quarter fiscal 2008 to be
approximately $205.0 million and earnings per diluted share to be
approximately $0.45. The company expects revenues for fiscal 2008 to
be approximately $850.0 million and earnings per diluted share to be
approximately $2.00.
Company to Host Conference Call
The company will host a conference call today at 5:00 p.m. Eastern
Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to discuss its
fourth quarter fiscal 2007 results, and outlook for the first quarter
and full year fiscal 2008. The call can be accessed live on the
Investor Relations section of the company's website at
www.fairisaac.com, and a replay will be available approximately two
hours after the completion of the call through November 27, 2007.
About Fair Isaac Corporation
Fair Isaac Corporation (NYSE:FIC) combines trusted advice,
world-class analytics and innovative applications to help businesses
make smarter decisions. Fair Isaac's solutions and technologies for
Enterprise Decision Management turn strategy into action and elevate
business performance by giving organizations the power to automate
more decisions, improve the quality of their decisions, and connect
decisions across their business. Clients in 80 countries work with
Fair Isaac to increase customer loyalty and profitability, cut fraud
losses, manage credit risk, meet regulatory and competitive demands,
and rapidly build market share. Fair Isaac also helps millions of
individuals manage their credit health through the www.myFICO.com
website. Learn more about Fair Isaac online at www.fairisaac.com.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements
contained in this news release that relate to Fair Isaac or its
business are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including the success of the Company's Enterprise Decision Management
strategy, its ability to recruit and retain key technical and
managerial personnel, the maintenance of its existing relationships
and ability to create new relationships with customers and key
alliance partners, its ability to continue to develop new and enhanced
products and services, competition, regulatory changes applicable to
the use of consumer credit and other data, the possibility that the
anticipated benefits of acquisitions, including expected synergies,
will not be realized and other factors that could affect the Company's
business and financial results that are described more fully under the
captions "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Fair Isaac's SEC
reports, including its Annual Report on Form 10-K for the year ended
September 30, 2006, and its quarterly report on Form 10-Q for the
period ended June 30, 2007, which are on file with the SEC and
available at the SEC's website at www.sec.gov. All information,
including forward-looking statements, set forth in this press release
is as of October 30, 2007. Fair Isaac does not intend, and disclaims
any obligation to update this information, including the
forward-looking statements, to reflect future events or circumstances.
Fair Isaac, however, reserves the right to update such information
including forward-looking statements or any portion thereof at any
time for any reason.
Fair Isaac, Blaze Advisor, and Strategy Machine are trademarks or
registered trademarks of Fair Isaac Corporation in the United States
and in other countries. Other company names contained in this release
may be trademarks of their respective owners.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters and Years Ended September 30, 2007 and 2006
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
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Revenues $207,227 $207,289 $822,236 $825,365
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Operating expenses:
Cost of revenues 75,010 70,291 293,482 281,977
Research and development 17,824 19,173 70,599 84,967
Selling, general and
administrative 76,402 66,967 285,541 260,845
Amortization of intangible
assets 4,448 6,366 23,226 25,191
Restructuring and acquisition-
related 2,455 12,862 2,455 19,662
Gain on sale of product line
assets - - (1,541) -
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Total operating expenses 176,139 175,659 673,762 672,642
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Operating income 31,088 31,630 148,474 152,723
Other income (expense), net (33) 1,416 1,188 6,469
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Income before income taxes 31,055 33,046 149,662 159,192
Provision for income taxes 2,836 10,993 45,012 55,706
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Net income $ 28,219 $ 22,053 $104,650 $103,486
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Earnings per share:
Basic $ 0.53 $ 0.36 $ 1.87 $ 1.63
========= ======== ========= ========
Diluted $ 0.52 $ 0.35 $ 1.82 $ 1.59
========= ======== ========= ========
Shares used in computing
earnings per share:
Basic 53,459 61,423 56,054 63,579
========= ======== ========= ========
Diluted 54,669 62,506 57,548 65,125
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2007 and 2006
(In thousands)
(Unaudited)
September 30, September 30,
2007 2006
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ASSETS:
Current assets:
Cash and cash equivalents $ 95,284 $ 75,154
Marketable securities 125,327 152,141
Receivables, net 177,402 165,806
Prepaid expenses and other current
assets 24,738 20,209
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Total current assets 422,751 413,310
Marketable securities and investments 26,150 40,479
Property and equipment, net 52,157 56,611
Goodwill and intangible assets, net 753,080 786,062
Other noncurrent assets 21,633 24,743
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$1,275,771 $1,321,205
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued
liabilities $ 48,187 $ 53,809
Senior convertible notes 390,963 400,000
Accrued compensation and employee
benefits 44,202 34,936
Deferred revenue 42,572 48,284
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Total current liabilities 525,924 537,029
Revolving credit agreement 170,000 -
Other noncurrent liabilities 13,533 14,148
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Total liabilities 709,457 551,177
Stockholders' equity 566,314 770,028
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$1,275,771 $1,321,205
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FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
For the Quarters and Years Ended September 30, 2007 and 2006
(In thousands)
(Unaudited)
Quarter Ended Year Ended
September 30, September 30,
----------------- -----------------
2007 2006 2007 2006
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Strategy machine solutions $106,114 $110,612 $439,273 $453,232
Scoring solutions 45,962 45,483 180,444 177,152
Professional services 37,462 37,976 151,086 149,250
Analytic software tools 17,689 13,218 51,433 45,731
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Total revenues $207,227 $207,289 $822,236 $825,365
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2007 and 2006
(In thousands)
(Unaudited)
Year Ended
September 30,
---------------------
2007 2006
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Cash flows from operating activities:
Net income $ 104,650 $ 103,486
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 50,224 48,805
Changes in operating assets and liabilities,
net of disposition (22,448) (2,096)
Other, net 46,737 48,847
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Net cash provided by operating activities 179,163 199,042
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Cash flows from investing activities:
Purchases of property and equipment (22,735) (31,409)
Cash proceeds from disposition of product line
assets 15,758 -
Net activity from marketable securities 54,062 13,882
Other, net (9,647) 500
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Net cash provided by (used in) investing
activities 37,438 (17,027)
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Cash flows from financing activities:
Proceeds from revolving line of credit 170,000 -
Proceeds from issuances of common stock 84,087 64,200
Repurchases of common stock (451,088) (256,487)
Other, net (1,704) 1,994
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Net cash used in financing activities (198,705) (190,293)
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Effect of exchange rate changes on cash 2,234 552
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Increase (decrease) in cash and cash equivalents 20,130 (7,726)
Cash and cash equivalents, beginning of period 75,154 82,880
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Cash and cash equivalents, end of period $ 95,284 $ 75,154
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CONTACT: Fair Isaac Corporation
Investors & Analysts:
John D. Emerick, Jr., 800-213-5542
or
Marcy K. Oelhafen, 800-213-5542
investorrelations@fairisaac.com