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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-11689

Fair Isaac Corporation

(Exact name of registrant as specified in its charter)



Delaware		94-1499887
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

181 Metro Drive, Suite 700		95110-1346
San Jose	California
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 408-535-1500

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	FICO	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	☒	Accelerated Filer	☐

Non-Accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



☐	Yes	☒	No

The number of shares of common stock outstanding on July 19, 2019 was 28,896,535 (excluding 59,960,248 shares held by us as treasury stock).

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TABLE OF CONTENTS



	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	40

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



	June 30, 2019			September 30, 2018
				As Adjusted
	(In thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents	$	78,808		$	90,023
Accounts receivable, net	318,044			266,742
Prepaid expenses and other current assets	38,212			39,624
Total current assets	435,064			396,389
Marketable securities	20,054			18,059
Other investments	1,672			1,697
Property and equipment, net	52,900			48,837
Goodwill	797,527			800,890
Intangible assets, net	9,919			14,536
Deferred income taxes	13,483			13,805
Other assets	43,179			36,254
Total assets	$	1,373,798		$	1,330,467
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	19,611		$	20,251
Accrued compensation and employee benefits	88,543			84,292
Other accrued liabilities	28,289			31,025
Deferred revenue	103,270			103,335
Current maturities on debt	218,000			235,000
Total current liabilities	457,713			473,903
Long-term debt	604,582			528,944
Other liabilities	43,186			40,183
Total liabilities	1,105,481			1,043,030
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 28,931 and 29,015 shares outstanding at June 30, 2019 and September 30, 2018, respectively)	289			290
Additional paid-in-capital	1,206,739			1,211,051
Treasury stock, at cost (59,926 and 59,842 shares at June 30, 2019 and September 30, 2018, respectively)	(2,759,825		)	(2,612,007		)
Retained earnings	1,902,064			1,764,524
Accumulated other comprehensive loss	(80,950		)	(76,421		)
Total stockholders’ equity	268,317			287,437
Total liabilities and stockholders’ equity	$	1,373,798		$	1,330,467

See accompanying notes.

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FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)



	Quarter Ended June 30,						Nine Months Ended June 30,
	2019			2018			2019			2018
				As Adjusted						As Adjusted
	(In thousands, except per share data)
Revenues:
Transactional and maintenance	$	226,040		$	192,143		$	632,012		$	555,337
Professional services	44,594			42,836			135,957			132,695
License	43,615			20,014			86,770			55,582
Total revenues	314,249			254,993			854,739			743,614
Operating expenses:
Cost of revenues *	87,215			79,011			248,849			232,936
Research and development	36,972			32,483			110,082			93,976
Selling, general and administrative *	102,906			97,391			308,094			283,858
Amortization of intangible assets *	1,448			1,571			4,453			5,043
Total operating expenses	228,541			210,456			671,478			615,813
Operating income	85,708			44,537			183,261			127,801
Interest expense, net	(10,111		)	(8,223		)	(29,795		)	(21,799		)
Other income, net	2,457			1,588			1,718			1,940
Income before income taxes	78,054			37,902			155,184			107,942
Provision for income taxes	13,902			8,181			17,644			14,173
Net income	64,152			29,721			137,540			93,769
Other comprehensive loss:
Foreign currency translation adjustments	(4,189		)	(18,796		)	(4,529		)	(6,600		)
Comprehensive income	$	59,963		$	10,925		$	133,011		$	87,169
Earnings per share:
Basic	$	2.21		$	1.00		$	4.74		$	3.13
Diluted	$	2.12		$	0.95		$	4.54		$	2.99
Shares used in computing earnings per share:
Basic	28,967			29,708			29,000			29,924
Diluted	30,292			31,161			30,295			31,341

* Cost of revenues and selling, general and administrative expenses exclude the amortization of intangible assets. See Note 4.

See accompanying notes.

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FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



	Common Stock					Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
(In thousands)	Shares		Par Value			Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at March 31, 2019	29,056		$	291		$	1,190,341		$	(2,704,305	)	$	1,837,912	$	(76,761	)	$	247,478
Share-based compensation	—		—			19,595			—			—		—			19,595
Issuance of treasury stock under employee stock plans	80		1			(3,197		)	3,680			—		—			484
Repurchases of common stock	(205	)	(3		)	—			(59,200		)	—		—			(59,203		)
Net income	—		—			—			—			64,152		—			64,152
Foreign currency translation adjustments	—		—			—			—			—		(4,189		)	(4,189		)
Balance at June 30, 2019	28,931		$	289		$	1,206,739		$	(2,759,825	)	$	1,902,064	$	(80,950	)	$	268,317

	Common Stock					Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
(In thousands)	Shares		Par Value			Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at March 31, 2018 (As Adjusted)	29,835		$	298		$	1,176,905		$	(2,410,171	)	$	1,702,090	$	(54,299	)	$	414,823
Share-based compensation	—		—			18,882			—			—		—			18,882
Issuance of treasury stock under employee stock plans	45		—			(3,465		)	1,827			—		—			(1,638		)
Repurchases of common stock	(563	)	(5		)	—			(106,863		)	—		—			(106,868		)
Net income	—		—			—			—			29,721		—			29,721
Foreign currency translation adjustments	—		—			—			—			—		(18,796		)	(18,796		)
Balance at June 30, 2018 (As Adjusted)	29,317		$	293		$	1,192,322		$	(2,515,207	)	$	1,731,811	$	(73,095	)	$	336,124

	Common Stock					Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
(In thousands)	Shares		Par Value			Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at September 30, 2018 (As Adjusted)	29,015		$	290		$	1,211,051		$	(2,612,007	)	$	1,764,524	$	(76,421	)	$	287,437
Share-based compensation	—		—			61,931			—			—		—			61,931
Issuance of treasury stock under employee stock plans	696		7			(66,243		)	31,100			—		—			(35,136		)
Repurchases of common stock	(780	)	(8		)	—			(178,918		)	—		—			(178,926		)
Net income	—		—			—			—			137,540		—			137,540
Foreign currency translation adjustments	—		—			—			—			—		(4,529		)	(4,529		)
Balance at June 30, 2019	28,931		$	289		$	1,206,739		$	(2,759,825	)	$	1,902,064	$	(80,950	)	$	268,317

	Common Stock					Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
(In thousands)	Shares		Par Value			Additional Paid-in-Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at September 30, 2017 (As Adjusted)	30,243		$	302		$	1,195,431		$	(2,301,097	)	$	1,638,042	$	(66,495	)	$	466,183
Share-based compensation	—		—			54,631			—			—		—			54,631
Issuance of treasury stock under employee stock plans	433		4			(57,740		)	17,356			—		—			(40,380		)
Repurchases of common stock	(1,359	)	(13		)	—			(231,466		)	—		—			(231,479		)
Net income	—		—			—			—			93,769		—			93,769
Foreign currency translation adjustments	—		—			—			—			—		(6,600		)	(6,600		)
Balance at June 30, 2018 (As Adjusted)	29,317		$	293		$	1,192,322		$	(2,515,207	)	$	1,731,811	$	(73,095	)	$	336,124

See accompanying notes.

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FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Nine Months Ended June 30,
	2019			2018
				As Adjusted
	(In thousands)
Cash flows from operating activities:
Net income	$	137,540		$	93,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23,734			22,329
Share-based compensation	61,931			54,631
Deferred income taxes	247			(3,643		)
Net (gain) loss on marketable securities	635			(635		)
Provision for doubtful accounts, net	509			541
Net loss on sales of property and equipment	22			28
Changes in operating assets and liabilities:
Accounts receivable	(53,288		)	2,922
Prepaid expenses and other assets	(5,369		)	(3,587		)
Accounts payable	631			2,623
Accrued compensation and employee benefits	4,217			(1,977		)
Other liabilities	(6,164		)	(21		)
Deferred revenue	291			(3,891		)
Net cash provided by operating activities	164,936			163,089
Cash flows from investing activities:
Purchases of property and equipment	(18,170		)	(24,220		)
Proceeds from sales of marketable securities	3,228			3,005
Purchases of marketable securities	(5,858		)	(5,509		)
Net cash used in investing activities	(20,800		)	(26,724		)
Cash flows from financing activities:
Proceeds from revolving line of credit	167,000			371,000
Payments on revolving line of credit	(109,000		)	(480,000		)
Proceeds from issuance of senior notes	—			400,000
Payments on senior notes	—			(131,000		)
Payments on debt issuance costs	—			(7,869		)
Proceeds from issuance of treasury stock under employee stock plans	16,073			2,492
Taxes paid related to net share settlement of equity awards	(51,208		)	(42,872		)
Repurchases of common stock	(178,926		)	(229,540		)
Net cash used in financing activities	(156,061		)	(117,789		)
Effect of exchange rate changes on cash	710			(4,265		)
Increase (decrease) in cash and cash equivalents	(11,215		)	14,311
Cash and cash equivalents, beginning of period	90,023			105,618
Cash and cash equivalents, end of period	$	78,808		$	119,929
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds	$	12,058		$	9,975
Cash paid for interest	$	33,401		$	20,501
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable	$	690		$	5,282
Unsettled repurchases of common stock	$	—		$	7,601
Capital lease obligations incurred	$	6,416		$	—

See accompanying notes.

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FAIR ISAAC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. 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 this Quarterly Report on Form 10-Q, 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 all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements 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 fiscal year ended September 30, 2018. 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.

Effective October 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) using the full retrospective method. In connection with this adoption, the results and related disclosures for the comparative fiscal 2018 periods presented in this Form 10-Q were adjusted to be presented as if ASU 2014‑09 had been in effect during such fiscal 2018 periods. See “New Accounting Pronouncements” below and Note 8. All amounts and disclosures set forth in this Form 10-Q reflect these changes.

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 collectability 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.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services.

See Note 8 for further discussion on revenues.

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New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from the contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (“full retrospective method”), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (“modified retrospective method”).

We adopted ASU 2014-09 in the first quarter of our fiscal 2019 using the full retrospective method which required us to adjust each prior reporting period presented. This adoption primarily affected 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 recognize revenue when control of the license is transferred to the customer, rather than at the date payments become due and payable when there are extended payment terms, or ratably over the term of the contract as required under the previous standard. In addition, revenue attributable to a software license renewal is recognized at the beginning of the applicable renewal period rather than at the signing of the renewal agreement as required under the previous standard. Additionally, under the new standard, when we enter into noncancellable contracts that provide unconditional rights to payment from our customers for services we have not yet completed or services we will provide in the near future, we present receivables — our unconditional rights to payments — and deferred revenues on a gross basis, rather than on a net basis. Finally, under the new standard we capitalize and amortize contract acquisition costs such as commissions paid for software-as-a-service (“SaaS”) cloud services contracts in excess of one year. Following the adoption of ASU 2014-09, the revenue recognition for our other sales arrangements remained materially consistent with our historical practice.

Upon adoption of ASU 2014-09, we applied the standard’s practical expedients that permit the omission of prior-period information about our performance obligations.

Adoption of the standard impacted our previously reported results as follows:

Condensed Consolidated Balance Sheets



	September 30, 2018
	As Previously Reported		Adjustment			As Adjusted
	(In thousands)
Accounts receivable, net	$	208,865	$	57,877		$	266,742
Deferred income taxes	20,117		(6,312		)	13,805
Other assets	12,431		23,823			36,254
Other accrued liabilities	30,457		568			31,025
Deferred revenue	52,215		51,120			103,335
Stockholders’ equity	263,737		23,700			287,437

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Condensed Consolidated Statements of Income and Comprehensive Income



	Quarter Ended June 30, 2018							Nine Months Ended June 30, 2018
	As Previously Reported		Adjustment			As Adjusted		As Previously Reported		Adjustment			As Adjusted
	(In thousands, except per share amounts)
Revenues	$	259,505	$	(4,512	)	$	254,993	$	752,684	$	(9,070	)	$	743,614
Cost of revenues	78,390		621			79,011		231,268		1,668			232,936
Selling, general and administrative	98,685		(1,294		)	97,391		286,038		(2,180		)	283,858
Provision for income taxes	9,380		(1,199		)	8,181		24,565		(10,392		)	14,173
Net income	32,361		(2,640		)	29,721		91,935		1,834			93,769
Comprehensive income	13,565		(2,640		)	10,925		85,335		1,834			87,169
Basic earnings per share	1.09		(0.09		)	1.00		3.07		0.06			3.13
Diluted earnings per share	1.04		(0.09		)	0.95		2.93		0.06			2.99

Condensed Consolidated Statement of Cash Flows



	Nine Months Ended June 30, 2018
	As Previously Reported			Adjustment			As Adjusted
	(In thousands)
Cash flows from operating activities:
Net income	$	91,935		$	1,834		$	93,769
Deferred income taxes	6,749			(10,392		)	(3,643		)
Changes in operating assets and liabilities	(12,489		)	8,558			(3,931		)

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, which means it will be effective for our fiscal year beginning October 1, 2020. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of Topic 326 on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, “Topic 842”). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. Topic 842 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 impact of our pending adoption of Topic 842 on our consolidated financial statements. We expect that most of our operating leases will be recognized as right-of-use assets and corresponding lease liabilities on our consolidated balance sheets, which will increase our total assets and total liabilities upon adoption.

We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements.

2. 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.

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•	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. We do not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of June 30, 2019 and September 30, 2018.

•

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 June 30, 2019 and September 30, 2018. 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.

•

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 June 30, 2019 and September 30, 2018.

The following tables represent financial assets that we measured at fair value on a recurring basis at June 30, 2019 and September 30, 2018:



June 30, 2019	Active Markets for Identical Instruments (Level 1)		Fair Value as of June 30, 2019
	(In thousands)
Assets:
Cash equivalents (1)	$	25,944	$	25,944
Marketable securities (2)	20,054		20,054
Total	$	45,998	$	45,998

September 30, 2018	Active Markets for Identical Instruments (Level 1)		Fair Value as of September 30, 2018
	(In thousands)
Assets:
Cash equivalents (1)	$	18,413	$	18,413
Marketable securities (2)	18,059		18,059
Total	$	36,472	$	36,472


(1)	Included in cash and cash equivalents on our condensed consolidated balance sheets at June 30, 2019 and September 30, 2018. Not included in these tables are cash deposits of $52.9 million and $71.6 million at June 30, 2019 and September 30, 2018, 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 sheets at June 30, 2019 and September 30, 2018.

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.

3. 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, Euro, and Singapore dollar.

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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, net. The forward contracts are not designated as hedges and are marked to market through other income, 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 June 30, 2019 and September 30, 2018:



	June 30, 2019
	Contract Amount				Fair Value
	Foreign Currency		US$		US$
	(In thousands)
Sell foreign currency:
Euro (EUR)	EUR	9,800	$	11,149	$	—
Buy foreign currency:
British pound (GBP)	GBP	8,743	$	11,100	$	—
Singapore dollar (SGD)	SGD	6,630	$	4,900	$	—



	September 30, 2018
	Contract Amount				Fair Value
	Foreign Currency		US$		US$
	(In thousands)
Sell foreign currency:
Euro (EUR)	EUR	9,000	$	10,372	$	—
Buy foreign currency:
British pound (GBP)	GBP	8,598	$	11,200	$	—
Singapore dollar (SGD)	SGD	9,580	$	7,000	$	—

The foreign currency forward contracts were entered into on June 30, 2019 and September 30, 2018, respectively; therefore, their fair value was $0 on each of these dates.

Losses on derivative financial instruments are recorded in our condensed consolidated statements of income and comprehensive income as a component of other income, net, and consisted of the following:



	Quarter Ended June 30,				Nine Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Losses on foreign currency forward contracts	$	928	$	870	$	612	$	251

4. Goodwill and Intangible Assets

Amortization expense associated with our intangible assets are reflected as a separate operating expense caption — amortization of intangible assets — and are excluded from cost of revenues and selling, general and administrative expenses within the accompanying condensed consolidated statements of income and comprehensive income. Amortization expense consisted of the following:

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	Quarter Ended June 30,				Nine Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Completed technology	$	452	$	628	$	1,440	$	1,949
Other intangible assets	996		943		3,013		3,094
Total	$	1,448	$	1,571	$	4,453	$	5,043

Estimated future intangible asset amortization expense associated with intangible assets existing at June 30, 2019 was as follows (in thousands):



Year Ending September 30,
2019 (excluding the nine months ended June 30, 2019)	$	1,456
2020	3,607
2021	2,391
2022	2,248
2023	217
	$	9,919

The following table summarizes changes to goodwill during the nine months ended June 30, 2019, both in total and as allocated to our segments:



	Applications			Scores		Decision Management Software			Total
	(In thousands)
Balance at September 30, 2018	$	585,161		$	146,648	$	69,081		$	800,890
Addition from acquisitions	980			—		—			980
Foreign currency translation adjustment	(3,968		)	—		(375		)	(4,343		)
Balance at June 30, 2019	$	582,173		$	146,648	$	68,706		$	797,527

5. Composition of Certain Financial Statement Captions

The following table summarizes property and equipment, and the related accumulated depreciation and amortization, at June 30, 2019 and September 30, 2018:



	June 30, 2019			September 30, 2018
	(In thousands)
Property and equipment	$	177,193		$	156,154
Less: accumulated depreciation and amortization	(124,293		)	(107,317		)
	$	52,900		$	48,837