UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported) November 10, 2004
FAIR ISAAC CORPORATION
Delaware | 0-16439 | 94-1499887 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
901 Marquette Avenue, Suite 3200 | ||
Minneapolis, Minnesota | 55402-3232 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code 612-758-5200
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))
Item 2.02 Results of Operations and Financial Condition.
On November 10, 2004, Fair Isaac Corporation (the Company) reported its financial results for the quarter and fiscal year ended September 30, 2004. See the Companys press release dated November 10, 2004, which is furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 2.02.
Item 9.01 Financial Statements and Exhibits.
(c) | Exhibits. |
Exhibit | ||
Number |
Description |
|
99.1
|
Press Release dated November 10, 2004 |
1
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: November 10, 2004
2
EXHIBIT INDEX
Exhibit | ||||
Number |
Description |
Method of Filing |
||
99.1
|
Press Release dated November 10, 2004 | Filed Electronically |
Exhibit 99.1
Contact:
|
Investors & Analysts: | |
John Emerick | ||
Megan Forrester | ||
Fair Isaac Corporation | ||
(800) 213-5542 | ||
investor@fairisaac.com |
Fair Isaac Announces Fourth Quarter and Fiscal 2004 Results
18% year-over-year revenue growth for fourth quarter
MINNEAPOLISNovember 10, 2004Fair Isaac Corporation (NYSE:FIC), a leader in customer analytics and decision technology, today announced financial results for the fourth fiscal quarter and full fiscal year ended September 30, 2004.
GAAP Results
The company reported fourth quarter revenues of $190.4 million in fiscal 2004 versus $161.0 million reported in the fourth quarter of fiscal 2003. Revenues for fiscal 2004 totaled $706.2 million as compared to revenues of $629.3 million reported in the same period last year. Net income for the fourth quarter of fiscal 2004 totaled $14.4 million, or $0.20 per share, on 71.3 million diluted shares outstanding, compared with net income of $31.7 million, or $0.42 per share, on 78.6 million diluted shares outstanding reported in the same quarter last year. Net income for fiscal 2004 totaled $102.8 million, or $1.41 per share, on 73.0 million diluted shares outstanding, compared with $107.2 million, or $1.41 per share, on 76.0 million diluted shares outstanding reported in fiscal 2003.
Pro Forma Results
The company reported pro forma net income for the fourth quarter of fiscal 2004 of $28.5 million, compared to pro forma net income of $33.9 million reported in the same quarter last year. Pro forma diluted earnings per share for the fourth quarter of fiscal 2004 was $0.40, compared to pro forma diluted earnings per share of $0.45 reported in the same quarter last year.
Pro forma net income for fiscal 2004 was $126.4 million, compared with pro forma net income of $117.3 million reported in fiscal 2003. Pro forma diluted earnings per share for fiscal 2004 was $1.72, compared to pro forma diluted earnings per share of $1.54 reported in fiscal 2003.
The GAAP results for the fourth quarter of fiscal 2004 and fiscal 2004 include: i) the revenue impact of the purchase accounting adjustments, related to the write-down of deferred revenue to fair market value, in connection with the acquisition of London Bridge Software Holdings plc, ii) the amortization of intangible assets acquired in acquisitions, iii) restructuring and acquisition-related expenses, iv) a loss recorded in connection with the redemption of our convertible subordinated notes in the fourth quarter of fiscal 2004, and v) a loss recorded in the fourth quarter
of fiscal 2004 in connection with a non-recurring legal settlement. The pro forma results for the fourth quarter of fiscal 2004 and fiscal 2004 exclude the impact of these items. 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 companys three-for-two stock split, which took effect March 10, 2004.
We are pleased with the strong revenue and operating results we achieved during the fourth quarter, and we are in a strong position for continued growth in 2005 as we work to increase the impact of our analytics in both core and new markets, said Tom Grudnowski, CEO of Fair Isaac. While 2004 has been a challenging year across the technology sector, weve made significant progress in growing our global presence, delivering more valuable capabilities through strategic acquisitions and bringing several major analytic innovations to the marketplace.
Acquisition of Braun Completed
Fair Isaac also announced today that it has completed its previously announced acquisition of Braun Consulting, Inc. (NASDAQ:BRNC), a marketing strategy and technology consulting firm. The closing of the transaction follows acceptance of the acquisition terms by Braun shareholders. Under terms of the agreement, Braun shareholders will receive $2.34 in cash for each share of Braun.
The acquisition of Braun adds proven expertise in integrating marketing strategy and customer management technology to Fair Isaacs roster of Precision Marketing solutions and services. In addition, Brauns broad industry presence expands Fair Isaacs capabilities in markets targeted for growth, including healthcare, retail and pharmaceuticals.
Non-GAAP Financial Measures
The company uses pro forma non-GAAP financial measures, which exclude the revenue impact of the purchase accounting adjustments, related to the write-down of deferred revenue to fair market value, in connection with the acquisition of London Bridge Software Holdings plc, the amortization of intangible assets acquired in acquisitions, restructuring and acquisition-related expenses, the loss recorded in connection with the redemption of our convertible subordinated notes in the fourth quarter of fiscal 2004, and the loss recorded in the fourth quarter of fiscal 2004 in connection with a non-recurring legal settlement, in analyzing financial results because they provide meaningful information regarding the companys operational performance and facilitate managements internal comparisons to the companys 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 companys 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:
Quarter Ended | Quarter Ended | |||||||||||||||
September 30, 2004 |
September 30, 2003 |
|||||||||||||||
Diluted | Diluted | |||||||||||||||
Net Income |
EPS (2) |
Net Income |
EPS (1)(2) |
|||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Non-GAAP (pro forma) |
$ | 28,457 | $ | 0.40 | $ | 33,935 | $ | 0.45 | ||||||||
Impact of deferred
revenue write-down |
2,526 | 0.04 | | | ||||||||||||
Amortization of acquired intangible
assets |
3,476 | 0.05 | 2,295 | 0.03 | ||||||||||||
Restructuring and
acquisition-related expenses |
261 | | (50 | ) | | |||||||||||
Loss on redemption of
convertible subordinated notes |
6,110 | 0.09 | | | ||||||||||||
Loss related to non-recurring legal
settlement |
1,669 | 0.02 | | | ||||||||||||
GAAP |
$ | 14,415 | $ | 0.20 | $ | 31,690 | $ | 0.42 | ||||||||
Year Ended | Year Ended | |||||||||||||||
September 30, 2004 |
September 30, 2003 |
|||||||||||||||
Diluted | Diluted | |||||||||||||||
Net Income |
EPS (2) |
Net Income |
EPS |
|||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Non-GAAP (pro forma) |
$ | 126,363 | $ | 1.72 | $ | 117,300 | $ | 1.54 | ||||||||
Impact of deferred
revenue write-down |
3,440 | 0.05 | | | ||||||||||||
Amortization of acquired intangible
assets |
11,608 | 0.16 | 8,586 | 0.11 | ||||||||||||
Restructuring and
acquisition-related expenses |
748 | 0.01 | 1,557 | 0.02 | ||||||||||||
Loss on redemption of
convertible subordinated notes |
6,110 | 0.08 | | | ||||||||||||
Loss related to non-recurring legal
settlement |
1,669 | 0.02 | | | ||||||||||||
Impact of convertible
subordinated notes on
diluted EPS (2) |
| (0.01 | ) | | | |||||||||||
GAAP |
$ | 102,788 | $ | 1.41 | $ | 107,157 | $ | 1.41 | ||||||||
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 fourth quarter and fiscal year 2004 results and provide guidance for fiscal 2005. The call can be accessed live on the Investor Relations section of the companys 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 companys 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 companys FICO® 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 companys 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 Isaacs 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 June 30, 2004. If any of these risks or uncertainties materializes, Fair Isaacs results could differ materially from Fair Isaacs 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 GAAP diluted earnings per share for the quarter ended September 30, 2003, 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. The computation of GAAP diluted earnings per share for the quarter ended September 30, 2004, and for the years ended September 30, 2004 and 2003, excludes these shares, as they were antidilutive during these periods. | |
(2) | The computation of non-GAAP diluted earnings per share for the quarter and year ended September 30, 2004, includes 3.0 million and 3.8 million shares of common stock issuable upon conversion of our convertible subordinated notes, respectively, along with a corresponding adjustment to net income to add back related interest expense, net of tax, of approximately $1.1 million and $5.9 million, respectively. The computation of non-GAAP diluted earnings per share for the quarter ended September 30, 2003, 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. The computation of non-GAAP diluted earnings per share for the year ended September 30, 2003, excludes these shares, as they were antidilutive during this period. |
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters and Years Ended September 30, 2004 and 2003
(In thousands, except per share data)
(Unaudited)
Quarter Ended | Year Ended | |||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2004 |
2003 |
2004 |
2003 |
|||||||||||||
Revenues |
$ | 190,422 | $ | 160,965 | $ | 706,206 | $ | 629,295 | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenues |
68,408 | 59,688 | 252,587 | 246,592 | ||||||||||||
Research and development |
21,258 | 16,249 | 71,088 | 67,574 | ||||||||||||
Selling, general and administrative |
54,722 | 29,466 | 182,374 | 124,641 | ||||||||||||
Amortization of intangible assets |
6,336 | 3,651 | 19,064 | 13,793 | ||||||||||||
Restructuring
and acquisition-related |
476 | (79 | ) | 1,227 | 2,501 | |||||||||||
Total operating expenses |
151,200 | 108,975 | 526,340 | 455,101 | ||||||||||||
Operating income |
39,222 | 51,990 | 179,866 | 174,194 | ||||||||||||
Loss on redemption of convertible
subordinated notes |
(11,137 | ) | | (11,137 | ) | | ||||||||||
Other (expense) income, net |
(1,807 | ) | (1,572 | ) | 86 | (2,054 | ) | |||||||||
Income before income taxes |
26,278 | 50,418 | 168,815 | 172,140 | ||||||||||||
Provision for income taxes |
11,863 | 18,728 | 66,027 | 64,983 | ||||||||||||
Net income |
$ | 14,415 | $ | 31,690 | $ | 102,788 | $ | 107,157 | ||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.21 | $ | 0.45 | (b) | $ | 1.47 | $ | 1.48 | (b) | ||||||
Diluted |
$ | 0.20 | $ | 0.42 | (a)(b) | $ | 1.41 | $ | 1.41 | (b) | ||||||
Shares used in computing earnings per share: |
||||||||||||||||
Basic |
69,596 | 70,400 | (b) | 69,933 | 72,185 | (b) | ||||||||||
Diluted |
71,328 | 78,610 | (a)(b) | 73,032 | 75,973 | (b) | ||||||||||
(a) | The computation of diluted earnings per share for the quarter ended September 30, 2003, 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. The computation of diluted earnings per share for the quarter ended September 30, 2004, and for the years ended September 30, 2004 and 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 adjusted to reflect this stock split. |
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2004 and 2003
(In thousands)
(Unaudited)
September 30, | September 30, | |||||||
2004 |
2003 |
|||||||
ASSETS: |
||||||||
Current assets: |
||||||||
Cash and investments |
$ | 299,305 | $ | 505,351 | ||||
Receivables, net |
140,845 | 138,712 | ||||||
Prepaid expenses and other current assets |
25,951 | 23,809 | ||||||
Total current assets |
466,101 | 667,872 | ||||||
Investments |
65,007 | 164,254 | ||||||
Property and equipment, net |
53,288 | 50,706 | ||||||
Goodwill and intangible assets, net |
838,082 | 551,772 | ||||||
Other noncurrent assets |
35,241 | 60,569 | ||||||
$ | 1,457,719 | $ | 1,495,173 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY: |
||||||||
Current liabilities: |
||||||||
Accounts payable and other accrued liabilities |
$ | 58,536 | $ | 40,939 | ||||
Accrued compensation and employee benefits |
33,670 | 25,839 | ||||||
Deferred revenue |
41,050 | 31,584 | ||||||
Total current liabilities |
133,256 | 98,362 | ||||||
Senior convertible notes |
400,000 | 400,000 | ||||||
Convertible subordinated notes |
| 141,364 | ||||||
Other noncurrent liabilities |
7,992 | 5,905 | ||||||
Total liabilities |
541,248 | 645,631 | ||||||
Stockholders equity |
916,471 | 849,542 | ||||||
$ | 1,457,719 | $ | 1,495,173 | |||||
FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
For the Quarters and Years Ended September 30, 2004 and 2003
(In thousands)
(Unaudited)
Quarter Ended | Year Ended | |||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2004 |
2003 |
2004 |
2003 |
|||||||||||||
Strategy machine solutions |
$ | 115,100 | $ | 96,366 | $ | 427,647 | $ | 379,404 | ||||||||
Scoring solutions |
37,512 | 34,487 | 142,834 | 136,057 | ||||||||||||
Professional services |
26,410 | 21,642 | 96,715 | 83,660 | ||||||||||||
Analytic software tools |
11,400 | 8,470 | 39,010 | 30,174 | ||||||||||||
Total revenues |
$ | 190,422 | $ | 160,965 | $ | 706,206 | $ | 629,295 | ||||||||
FAIR ISAAC CORPORATION
BASELINE REVENUE ANALYSIS
(In Thousands)
Bookings | Bookings | |||||||||||||||||||||||||||||||||||||||||||||||
FY04 |
Q1A |
Q2A |
Q3A |
Q4A |
FY04A |
FY05 |
Q1E |
Q2E |
Q3E |
Q4E |
FY05E |
|||||||||||||||||||||||||||||||||||||
Baseline (including LB/Braun) |
$ | 153,440 | $ | 148,234 | $ | 146,159 | $ | 151,800 | $ | 599,633 | $ | 142,000 | $ | 141,800 | $ | 141,400 | $ | 139,600 | $ | 564,800 | ||||||||||||||||||||||||||||
Q1-2004A |
$ | 135,108 | 15,901 | 10,304 | 8,300 | 8,021 | 42,526 | 7,500 | 7,100 | 6,300 | 5,900 | 26,800 | ||||||||||||||||||||||||||||||||||||
Q2-2004A |
116,997 | 14,708 | 8,397 | 9,933 | 33,038 | 8,600 | 6,800 | 5,900 | 5,700 | 27,000 | ||||||||||||||||||||||||||||||||||||||
Q3-2004A |
78,580 | 10,341 | 7,537 | 17,878 | 6,900 | 5,300 | 3,700 | 4,400 | 20,300 | |||||||||||||||||||||||||||||||||||||||
Q4-2004A |
110,585 | 13,131 | 13,131 | 8,400 | 9,800 | 10,300 | 7,800 | 36,300 | ||||||||||||||||||||||||||||||||||||||||
Total FY04 |
441,270 | 15,901 | 25,012 | 27,038 | 38,622 | 106,573 | 31,400 | 29,000 | 26,200 | 23,800 | 110,400 | |||||||||||||||||||||||||||||||||||||
Baseline Prior to FY05 |
441,270 | 169,341 | 173,246 | 173,197 | 190,422 | 706,206 | 173,400 | $ | 170,800 | $ | 167,600 | $ | 163,400 | $ | 675,200 | |||||||||||||||||||||||||||||||||
Q1-2005E |
$ | 120,000 | 19,600 | FY05
Revenue to be Reported |
||||||||||||||||||||||||||||||||||||||||||||
Q2-2005E |
||||||||||||||||||||||||||||||||||||||||||||||||
Q3-2005E |
||||||||||||||||||||||||||||||||||||||||||||||||
Q4-2005E |
||||||||||||||||||||||||||||||||||||||||||||||||
Total FY05 |
500,00 | 19,600 | ||||||||||||||||||||||||||||||||||||||||||||||
Grand Total |
$ | 441,270 | $ | 169,341 | $ | 173,246 | $ | 173,197 | $ | 190,422 | $ | 706,206 | $ | 500,000 | $ | 193,000 | ||||||||||||||||||||||||||||||||
E = Estimate
A = Actual