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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) April 25, 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
i
Item 2.02. Results of Operations and Financial Condition.
On April 25, 2007, Fair Isaac Corporation (the "Company") reported its
financial results for the quarter and six months ended March 31, 2007. See the
Company's press release dated April 25, 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 April 25, 2007
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: April 25, 2007
2
EXHIBIT INDEX
Exhibit No. Description Manner of Filing
- ----------- ----------- ----------------
99.1 Press Release dated April 25, 2007 Filed
Electronically
EXHIBIT 99.1
Fair Isaac Announces Second Quarter 2007 Results
Total revenue of $201.0 million;
Earnings per share of $0.37
MINNEAPOLIS--(BUSINESS WIRE)--April 25, 2007--Fair Isaac Corporation
(NYSE:FIC), the leading provider of analytics and decision technology, today
announced the financial results for its second quarter ended March 31, 2007.
Second Quarter Fiscal 2007 Results
The company reported second quarter revenues of $201.0 million in fiscal
2007 versus $208.2 million reported in the prior year period. Net income for the
second quarter of fiscal 2007 totaled $21.4 million, or $0.37 per diluted share,
versus $27.0 million, or $0.40 per diluted share, reported in the prior year
period. Second quarter fiscal 2007 results included a $1.5 million pre-tax
operating gain from the previously announced sale of the mortgage product line
and an associated $1.9 million increase in tax expense.
Fiscal 2007 Year-to-date Results
The company reported year-to-date revenues of $409.2 million in fiscal 2007
versus $410.9 million reported in the prior year period. Net income for
year-to-date fiscal 2007 totaled $52.7 million, or $0.89 per diluted share,
versus $55.4 million, or $0.83 per diluted share, reported in the prior year
period.
Second Quarter Fiscal 2007 Revenues Highlights
Revenues for second quarter fiscal 2007 across each of the company's four
operating segments were as follows:
-- Strategy Machine(R) Solutions revenues were $111.7 million in the
second quarter compared to $118.9 million in the prior year quarter,
or a decrease of 6.0%, primarily due to a decline associated with
fraud, consumer, customer management, and mortgage products.
-- Scoring Solutions revenues increased to $42.3 million in the second
quarter compared to $41.8 million in the prior year quarter, or by
1.4%, primarily due to an increase in revenues from risk scoring
services at the credit reporting agencies and the FICO Expansion(TM)
score.
-- Professional Services revenues were $37.5 million in the second
quarter compared to $38.7 million in the prior year quarter, or a
decrease of 3.0%, primarily due to a decline associated with industry
consulting, fraud, and collections and recovery implementation
services, offset by an increase in revenues derived from customer
management implementation services.
-- Analytic Software Tools revenues increased to $9.4 million in the
second quarter compared to $8.8 million in the prior year quarter, or
by 6.5%, due to an increase in revenues generated from sales of the
Model Builder product.
Fiscal 2007 Year-to-date Revenues Highlights
Revenues for fiscal 2007 year-to-date across each of the company's four
operating segments were as follows:
-- Strategy Machine(R) Solutions revenues were $222.4 million compared to
$230.8 million in the prior year, or a decrease of 3.7%, primarily due
to a decline associated with mortgage, consumer, fraud, and
originations products, offset by an increase in revenues derived from
collections and recovery products.
-- Scoring Solutions revenues were $87.3 million compared to $87.9
million in the prior year, or a decrease of 0.8%, primarily due to a
decrease in revenues derived from our PreScore(R) Service.
-- Professional Services revenues increased to $75.9 million compared to
$71.5 million in the prior year, or by 6.2%, primarily due to an
increase in revenues derived from customer management and model
development services, offset by a decline associated with collections
and recovery implementation services, and industry consulting.
-- Analytic Software Tools revenues increased to $23.6 million compared
to $20.7 million in the prior year, or by 14.4%, due to an increase in
revenues generated from sales of the Blaze Advisor(TM) product.
Bookings Highlights
The bookings for the second quarter were $58.9 million versus $106.0
million in the same period last year. The company defines a "new booking" as
estimated future contractual revenues, including agreements with perpetual,
multi-year and annual terms. Management regards the volume of new 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 marketable security investments were $303.9
million at March 31, 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 $88.4 million, borrowings under the revolving
credit facility of $70.0 million, $61.8 million received from the exercise of
stock options and stock issued under an employee stock purchase plan, and $13.9
million received on the sale of the mortgage product line. Cash used during
fiscal 2007 includes $11.7 million related to purchases of property and
equipment and $196.4 million to repurchase common stock.
Outlook
The company expects revenues for third quarter fiscal 2007 to be
approximately $195.0 to $200.0 million and earnings per diluted share to be
approximately $0.33 to $0.38. The company expects revenues for fiscal 2007 to be
approximately $795.0 to $805.0 million and earnings per diluted share to be
approximately $1.55 to $1.65.
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 second quarter
fiscal 2007 results, and outlook for the remainder of fiscal 2007. The call can
be accessed live on the Investor Relations section of the company's Web site at
www.fairisaac.com, and a replay will be available approximately two hours after
the completion of the call through May 28, 2007.
About Fair Isaac Corporation
Fair Isaac Corporation (NYSE:FIC) makes decisions smarter. The company's
solutions and technologies for Enterprise Decision Management give businesses
the power to automate more processes, and apply more intelligence to every
customer interaction. Through increasing the precision, consistency and agility
of their decisions, Fair Isaac clients worldwide increase sales, build customer
value, cut fraud losses, manage credit risk, reduce operational costs, meet
changing compliance demands and enter new markets more profitably. Founded in
1956, Fair Isaac powers hundreds of billions of decisions each year in financial
services, insurance, telecommunications, retail, consumer branded goods,
healthcare and the public sector. Fair Isaac also helps millions of individuals
manage their credit health through the www.myfico.com website. Visit 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 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, 2006, and its quarterly report on
Form 10-Q for the period ended December 31, 2006. If any of these risks or
uncertainties materialize, Fair Isaac's results could differ materially from its
expectations. Fair Isaac disclaims any intent or obligation to update these
forward-looking statements.
Fair Isaac, FICO, myFICO, Blaze Advisor, Strategy Machine, FICO
Expansion(TM) score, and PreScore are trademarks or registered trademarks of
Fair Isaac Corporation in the United States and in other countries.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters and Six Months Ended March 31, 2007 and 2006
(In thousands, except per share data)
(Unaudited)
Quarter Ended Six Months Ended
March 31, March 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues $201,000 $208,157 $409,227 $410,947
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Operating expenses:
Cost of revenues 74,172 73,144 144,741 140,189
Research and development 17,781 21,694 35,500 44,424
Selling, general and
administrative 68,015 64,157 136,663 127,540
Amortization of intangible
assets 6,352 6,260 12,742 12,523
Restructuring and
acquisition-related - 2,184 - 1,510
Gain on sale of product
line assets (1,541) - (1,541) -
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Total operating expenses 164,779 167,439 328,105 326,186
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Operating income 36,221 40,718 81,122 84,761
Other income, net 602 1,495 1,037 2,340
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Income before income taxes 36,823 42,213 82,159 87,101
Provision for income taxes 15,385 15,240 29,496 31,671
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Net income $21,438 $26,973 $52,663 $55,430
========= ========= ========= =========
Earnings per share:
Basic $0.38 $0.41 $0.92 $0.86
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Diluted $0.37 $0.40 $0.89 $0.83
========= ========= ========= =========
Shares used in computing
earnings per share:
Basic 56,940 65,052 57,504 64,626
========= ========= ========= =========
Diluted 58,659 66,834 59,328 66,521
========= ========= ========= =========
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2007 and September 30, 2006
(In thousands)
(Unaudited)
March 31, September 30,
2007 2006
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ASSETS:
Current assets:
Cash and cash equivalents $122,447 $75,154
Marketable securities 150,449 152,141
Receivables, net 178,703 165,806
Prepaid expenses and other current
assets 22,376 20,209
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Total current assets 473,975 413,310
Marketable securities and investments 31,039 40,479
Property and equipment, net 53,889 56,611
Goodwill and intangible assets, net 766,341 786,062
Other noncurrent assets 22,048 24,743
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$1,347,292 $1,321,205
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued
liabilities $54,721 $53,809
Senior convertible notes 400,000 400,000
Revolving credit agreement 70,000 -
Accrued compensation and employee
benefits 39,608 34,936
Deferred revenue 44,602 48,284
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Total current liabilities 608,931 537,029
Other noncurrent liabilities 13,356 14,148
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Total liabilities 622,287 551,177
Stockholders' equity 725,005 770,028
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$1,347,292 $1,321,205
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FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
For the Quarters and Six Months Ended March 31, 2007 and 2006
(In thousands)
(Unaudited)
Quarter Ended Six Months Ended
March 31, March 31,
------------------- -------------------
2007 2006 2007 2006
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Strategy machine solutions $111,716 $118,852 $222,385 $230,838
Scoring solutions 42,335 41,768 87,253 87,924
Professional services 37,529 38,691 75,946 71,522
Analytic software tools 9,420 8,846 23,643 20,663
--------- --------- --------- ---------
Total revenues $201,000 $208,157 $409,227 $410,947
========= ========= ========= =========
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 2007 and 2006
(In thousands)
(Unaudited)
Six Months Ended
March 31,
-------------------
2007 2006
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Cash flows from operating activities:
Net income $52,663 $55,430
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 26,867 24,237
Changes in operating assets and liabilities,
net of disposition (17,097) 9,370
Other, net 25,971 20,648
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Net cash provided by operating activities 88,404 109,685
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Cash flows from investing activities:
Purchases of property and equipment (11,651) (8,125)
Cash proceeds from disposition of product line
assets 13,904 -
Net activity from marketable securities 12,737 3,339
Other, net (213) 500
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Net cash provided by (used in) investing
activities 14,777 (4,286)
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Cash flows from financing activities:
Proceeds from revolving line of credit 70,000 -
Proceeds from issuances of common stock 61,838 45,577
Repurchases of common stock (196,443) (12,766)
Other, net 7,387 2,708
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Net cash provided by (used in) financing
activities (57,218) 35,519
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Effect of exchange rate changes on cash 1,330 (335)
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Increase in cash and cash equivalents 47,293 140,583
Cash and cash equivalents, beginning of period 75,154 82,880
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Cash and cash equivalents, end of period $122,447 $223,463
========= =========
CONTACT: Fair Isaac Corporation
Investors & Analysts:
John D. Emerick, Jr., 800-213-5542
or
Marcy K. Oelhafen, 800-213-5542
investorrelations@fairisaac.com