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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 March 31, 2021
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) 
Delaware94-1499887
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
181 Metro Drive, Suite 70095110-1346
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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareFICONew 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 (§ 232.405 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated 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 April 16, 2021 was 28,776,867 (excluding 60,079,916 shares held by us as treasury stock).


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TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 


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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,
2021
September 30, 2020
 (In thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents$197,836 $157,394 
Accounts receivable, net264,804 334,180 
Prepaid expenses and other current assets40,335 42,504 
Assets held for sale48,843  
Total current assets551,818 534,078 
Marketable securities30,437 25,513 
Other investments1,340 1,060 
Property and equipment, net34,897 46,419 
Operating lease right-of-use assets50,986 57,656 
Goodwill789,123 812,364 
Intangible assets, net7,437 9,236 
Deferred income taxes15,003 14,629 
Other assets 98,567 105,285 
Total assets$1,579,608 $1,606,240 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$19,767 $23,033 
Accrued compensation and employee benefits71,347 117,952 
Other accrued liabilities60,062 63,367 
Deferred revenue100,396 115,159 
Current maturities on debt225,000 95,000 
Liabilities related to assets held for sale23,989  
Total current liabilities500,561 414,511 
Long-term debt 740,226 739,435 
Operating lease liabilities59,100 73,207 
Other liabilities56,418 48,005 
Total liabilities1,356,305 1,275,158 
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 28,829 and 29,096 shares outstanding at March 31, 2021 and September 30, 2020, respectively)
288 291 
Additional paid-in-capital1,181,692 1,218,583 
Treasury stock, at cost (60,028 and 59,761 shares at March 31, 2021 and September 30, 2020, respectively)
(3,239,109)(2,997,856)
Retained earnings2,348,225 2,193,059 
Accumulated other comprehensive loss(67,793)(82,995)
Total stockholders’ equity223,303 331,082 
Total liabilities and stockholders’ equity$1,579,608 $1,606,240 
See accompanying notes.
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

 Quarter Ended March 31,Six Months Ended March 31,
 2021202020212020
 (In thousands, except per share data)
Revenues:
Transactional and maintenance$280,919 $240,702 $533,069 $461,076 
Professional services37,794 47,905 79,219 91,930 
License12,648 19,364 31,487 53,469 
Total revenues331,361 307,971 643,775 606,475 
Operating expenses:
Cost of revenues88,333 88,139 177,861 178,897 
Research and development43,612 39,439 84,263 78,382 
Selling, general and administrative97,272 103,465 191,183 215,486 
Amortization of intangible assets945 1,202 1,882 2,998 
Restructuring and impairment charges   3,104 
Gain on sale of product line assets  (7,334) 
Total operating expenses230,162 232,245 447,855 478,867 
Operating income101,199 75,726 195,920 127,608 
Interest expense, net(9,943)(11,254)(19,584)(21,022)
Other income (expense), net568 (2,008)3,448 (2,227)
Income before income taxes91,824 62,464 179,784 104,359 
Income tax provision (benefit)23,150 4,176 24,618 (8,850)
Net income68,674 58,288 155,166 113,209 
Other comprehensive gain (loss):
Foreign currency translation adjustments(1,846)(19,056)15,202 (4,964)
Comprehensive income$66,828 $39,232 $170,368 $108,245 
Earnings per share:
Basic$2.36 $2.00 $5.33 $3.89 
Diluted$2.33 $1.94 $5.23 $3.76 
Shares used in computing earnings per share:
Basic29,087 29,194 29,107 29,109 
Diluted29,531 29,985 29,660 30,076 

See accompanying notes.

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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Equity
(In thousands) SharesPar Value
Balance at December 31, 202029,236 $292 $1,145,893 $(3,035,668)$2,279,551 $(65,947)$324,121 
Share-based compensation— — 28,206 — — — 28,206 
Issuance of treasury stock under employee stock plans34  7,593 1,766 — — 9,359 
Repurchases of common stock(441)(4)— (205,207)— — (205,211)
Net income— — — — 68,674 — 68,674 
Foreign currency translation adjustments— — — — — (1,846)(1,846)
Balance at March 31, 202128,829 $288 $1,181,692 $(3,239,109)$2,348,225 $(67,793)$223,303 
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Equity
(In thousands) SharesPar Value
Balance at December 31, 201929,186 $292 $1,148,190 $(2,843,097)$2,011,569 $(75,993)$240,961 
Share-based compensation— — 22,788 — — — 22,788 
Issuance of treasury stock under employee stock plans186 2 (1,761)8,930 — — 7,171 
Repurchases of common stock(290)(3)— (95,998)— — (96,001)
Net income— — — — 58,288 — 58,288 
Foreign currency translation adjustments— — — — — (19,056)(19,056)
Balance at March 31, 202029,082 $291 $1,169,217 $(2,930,165)$2,069,857 $(95,049)$214,151 
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Equity
(In thousands) SharesPar Value
Balance at September 30, 202029,096 $291 $1,218,583 $(2,997,856)$2,193,059 $(82,995)$331,082 
Share-based compensation— — 53,338 — — — 53,338 
Issuance of treasury stock under employee stock plans275 2 (90,229)13,964 — — (76,263)
Repurchases of common stock(542)(5)— (255,217)— — (255,222)
Net income— — — — 155,166 — 155,166 
Foreign currency translation adjustments— — — — — 15,202 15,202 
Balance at March 31, 202128,829 $288 $1,181,692 $(3,239,109)$2,348,225 $(67,793)$223,303 
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Equity
(In thousands) SharesPar Value
Balance at September 30, 201928,944 $289 $1,225,365 $(2,802,450)$1,956,648 $(90,085)$289,767 
Share-based compensation— — 45,933 — — — 45,933 
Issuance of treasury stock under employee stock plans596 6 (102,081)28,291 — — (73,784)
Repurchases of common stock(458)(4)— (156,006)— — (156,010)
Net income— — — — 113,209 — 113,209 
Foreign currency translation adjustments— — — — — (4,964)(4,964)
Balance at March 31, 202029,082 $291 $1,169,217 $(2,930,165)$2,069,857 $(95,049)$214,151 
See accompanying notes.
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended March 31,
 20212020
 (In thousands)
Cash flows from operating activities:
Net income$155,166 $113,209 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization13,701 15,535 
Share-based compensation53,338 45,933 
Deferred income taxes(287)(1,213)
Net (gain) loss on marketable securities(2,669)2,526 
Non-cash operating lease costs8,005 10,000 
Provision for doubtful accounts, net266 2,459 
Net loss on sales and abandonment of property and equipment96 59 
Gain on sale of product line assets(7,334) 
Changes in operating assets and liabilities:
Accounts receivable64,304 (13,823)
Prepaid expenses and other assets4,572 (19,656)
Accounts payable(3,695)1,833 
Accrued compensation and employee benefits(46,147)(37,339)
Other liabilities(9,989)(4,659)
Deferred revenue2,143 6,995 
Net cash provided by operating activities 231,470 121,859 
Cash flows from investing activities:
Purchases of property and equipment(4,220)(13,166)
Proceeds from sales of marketable securities2,264 3,385 
Purchases of marketable securities(4,379)(5,232)
Proceeds from sale of product line assets8,291  
(Purchase of) distribution from equity investment(210)55 
Net cash provided by (used in) investing activities1,746 (14,958)
Cash flows from financing activities:
Proceeds from revolving line of credit251,000 156,000 
Payments on revolving line of credit(121,000)(377,000)
Proceeds from issuance of senior notes 350,000 
Payments on debt issuance costs (6,840)
Payments on finance leases(176)(712)
Proceeds from issuance of treasury stock under employee stock plans10,390 23,216 
Taxes paid related to net share settlement of equity awards(86,653)(97,000)
Repurchases of common stock(250,356)(148,008)
Net cash used in financing activities (196,795)(100,344)
Effect of exchange rate changes on cash4,021 (4,017)
Increase in cash and cash equivalents40,442 2,540 
Cash and cash equivalents, beginning of period157,394 106,426 
Cash and cash equivalents, end of period$197,836 $108,966 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds of $288 and $1,538 during the six months ended March 31, 2021, and 2020, respectively
$18,131 $4,475 
Cash paid for interest$18,488 $16,181 
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable$388 $1,920 
Unsettled repurchases of common stock$4,866 $8,002 
Finance lease obligations incurred$ $5,148 
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 analytic solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, healthcare organizations and public agencies.
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, 2020. 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.
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 collectibility of accounts receivable; the appropriate levels of various accruals; variable considerations included in the transaction price for our customer contracts; 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.

As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the condensed consolidated financial statements as new events occur and additional information becomes known. To the extent our actual results differ materially from those estimates and assumptions, our future financial statements could be affected. For more information, see Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.
New Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles—Goodwill and Other (Topic 350): Internal-Use Software (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15 in the first quarter of our fiscal 2021 and the adoption did not have a significant impact on our condensed consolidated financial statements.
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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, ASU 2019-05 and ASU 2019-11 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. We adopted Topic 326 in the first quarter of our fiscal 2021 and the adoption did not have a significant impact on our condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
We do not expect that any 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.
 
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 marketable securities. We did not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2021 and September 30, 2020.
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 did not have any assets that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2021 and September 30, 2020. We measure the fair value of our 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 did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2021 and September 30, 2020.
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The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2021 and September 30, 2020:
March 31, 2021Active Markets for
Identical Instruments
(Level 1)
Fair Value as of March 31, 2021
(In thousands)
Assets:
Cash equivalents (1)
$194 $194 
Marketable securities (2)
30,437 30,437 
Total$30,631 $30,631 
September 30, 2020Active Markets for
Identical Instruments
(Level 1)
Fair Value as of September 30, 2020
(In thousands)
Assets:
Cash equivalents (1)
$35,275 $35,275 
Marketable securities (2)
25,513 25,513 
Total$60,788 $60,788 
(1)Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2021 and September 30, 2020. Not included in these tables are cash deposits of $197.6 million and $122.1 million at March 31, 2021 and September 30, 2020, 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 March 31, 2021 and September 30, 2020.
See Note 7 for the fair value of our senior notes.
There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and six-month periods ended March 31, 2021 and 2020.
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.
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 (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), 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.
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The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2021 and September 30, 2020:
 March 31, 2021
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 19,200 $22,643 $ 
Buy foreign currency:
British pound (GBP)GBP 14,780 $20,400 $ 
Singapore dollar (SGD)SGD5,790 $4,300 $ 
 September 30, 2020
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 15,000 $17,656 $ 
Buy foreign currency:
British pound (GBP)GBP 16,555 $21,300 $ 
Singapore dollar (SGD)SGD7,815 $5,700 $ 
The foreign currency forward contracts were entered into on March 31, 2021 and September 30, 2020, respectively; therefore, their fair value was $0 on each of these dates.
Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following: 
 Quarter Ended March 31,Six Months Ended March 31,
 2021202020212020
 (In thousands)
Gains (losses) on foreign currency forward contracts$1,229 $(2,194)$2,915 $(1,049)

4. Goodwill and Intangible Assets
Amortization expense associated with our intangible assets is reflected as a separate operating expense caption — amortization of intangible assets — and is 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: 
 Quarter Ended March 31,Six Months Ended March 31,
 2021202020212020
 (In thousands)
Completed technology$323 $463 $645 $1,038 
Customer contracts and relationships578 658 1,149 1,798 
Trade names 38  75 
Non-compete agreements44 43 88 87 
       Total$945 $1,202 $1,882 $2,998 
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Estimated future intangible asset amortization expense associated with intangible assets existing at March 31, 2021 was as follows:
Year Ending September 30,(In thousands)
2021 (excluding the six months ended March 31, 2021)$1,804 
20223,400 
20231,316 
2024917 
       Total$7,437 
The following table summarizes changes to goodwill during the six months ended March 31, 2021, both in total and as allocated to our segments:
ApplicationsScoresDecision Management SoftwareTotal
 (In thousands)
Balance at September 30, 2020$596,804 $146,648 $68,912 $812,364 
Foreign currency translation adjustment3,679  1,040 4,719 
Reclassified as assets held for sale(27,960)  (27,960)
Balance at March 31, 2021$572,523 $146,648 $69,952 $789,123 

5. Composition of Certain Financial Statement Captions
The following table presents the composition of property and equipment, net and other assets at March 31, 2021 and September 30, 2020:
March 31,
2021
September 30,
2020
 (In thousands)
Property and equipment, net:
       Property and equipment$154,749 $161,119 
       Less: accumulated depreciation and amortization(119,852)(114,700)
           Total$34,897 $46,419 
Other assets:
Long-term receivables$45,994 $54,074 
Prepaid commissions40,598 38,579 
Others11,975 12,632 
    Total$98,567 $105,285 

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6. Revolving Line of Credit
We have a $400 million unsecured revolving line of credit with a syndicate of banks that expires on May 8, 2023 with an option to increase it, subject to lender approval, by another $100 million. Proceeds from the credit facility can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions and the repurchase of our common stock. Interest on amounts borrowed under the credit facility is based on (i) a base rate, which is the greater of (a) the prime rate, (b) the Federal Funds rate plus 0.500% and (c) the one-month LIBOR rate plus 1.000%, plus, in each case, an applicable margin, or (ii) an adjusted LIBOR rate plus an applicable margin. The applicable margin for base rate borrowings ranges from 0% to 0.875% and for LIBOR borrowings ranges from 1.000% to 1.875%, and is determined based on our consolidated leverage ratio. In addition, we must pay credit facility fees. The credit facility contains certain restrictive covenants including maintaining a maximum consolidated leverage ratio of 3.25 on an average trailing four-quarter basis, subject to a step up to 3.75 following certain permitted acquisitions; and a minimum interest coverage ratio of 3.00. The credit agreement also contains other covenants typical of unsecured facilities. As of March 31, 2021, we had $225.0 million in borrowings outstanding at a weighted-average interest rate of 1.236% and were in compliance with all financial covenants under this credit facility.
7. Senior Notes
On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”). The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25% per annum and will mature on May 15, 2026.
On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes,” and with the 2018 Senior Notes, the “Senior Notes”). The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028.
The indentures for the Senior Notes contain certain covenants typical of unsecured obligations.
The following table presents the face values and fair values for the Senior Notes at March 31, 2021 and September 30, 2020:
 March 31, 2021September 30, 2020
 Face Value (*)Fair ValueFace Value (*) Fair Value
 (In thousands)
The 2018 Senior Notes400,000 442,000 400,000 442,000 
The 2019 Senior Notes350,000 357,000 350,000 358,750 
       Total $750,000 $799,000 $750,000 $800,750 
(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $9.8 million and $10.6 million at March 31, 2021 and September 30, 2020, respectively.

8. Income Taxes
Effective Tax Rate
The effective income tax rates were 25.2% and 6.7% during the quarters ended March 31, 2021 and 2020, respectively, and 13.7% and (8.5)% during the six months ended March 31, 2021 and 2020, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.
The effective tax rates for the six months ended March 31, 2021 and 2020 were both impacted by the recording of excess tax benefits relating to stock awards. In addition, stock exercises during the quarter and six months ended March 31, 2020 resulted in an additional increase in excess benefits.
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The total unrecognized tax benefit for uncertain tax positions was estimated to be $10.2 million and $8.0 million at March 31, 2021 and September 30, 2020, respectively. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income. We accrued interest of $0.5 million and $0.4 million related to unrecognized tax benefits as of March 31, 2021 and September 30, 2020, respectively.

9. Earnings per Share
The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and six-month periods ended March 31, 2021 and 2020: 
 Quarter Ended March 31,Six Months Ended March 31,
 2021202020212020
 (In thousands, except per share data)
Numerator for diluted and basic earnings per share:
Net income$68,674 $58,288 $155,166 $113,209 
Denominator - share:
Basic weighted-average shares29,087 29,194 29,107 29,109 
Effect of dilutive securities444 791 553 967 
Diluted weighted-average shares29,531 29,985 29,660 30,076 
Earnings per share:
Basic$2.36 $2.00 $5.33 $3.89 
Diluted$2.33 $1.94 $5.23 $3.76 
Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.
10. Segment Information
We are organized into the following three operating segments, each of which is a reportable segment, to align with internal management of our worldwide business operations based on product offerings.
 
Applications. This segment includes decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, financial crimes compliance, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO® Analytic Cloud or Amazon Web Services (“AWS”).
Scores. This segment includes our business-to-business scoring solutions and services, our business-to-consumer scoring solutions and services including myFICO® solutions for consumers, and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions and services are either distributed through major credit reporting agencies worldwide or sold to our clients directly.
Decision Management Software. This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our FICO® Decision Management Suite, as well as associated professional services. Some of our decision management software is currently delivered as part of the FICO® Decision Management Platform and is increasingly being adopted to connect decisioning solutions or previously disconnected use cases. These tools are available to our customers as on-premises software, through the FICO® Analytic Cloud or AWS.
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Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets, nor capital expenditures where depreciation amounts are allocated to the segments from their internal cost centers as described above.
The following tables summarize segment information for the quarters and six-month periods ended March 31, 2021 and 2020:
 Quarter Ended March 31, 2021
 ApplicationsScoresDecision Management SoftwareUnallocated
Corporate
Expenses
Total
 (In thousands)
Segment revenues:
Transactional and maintenance$96,687 $167,212 $17,020 $— $280,919 
Professional services27,627 703 9,464 — 37,794 
License5,200 804 6,644 — 12,648 
Total segment revenues129,514 168,719 33,128 — 331,361 
Segment operating expense(102,142)(22,177)(43,300)(33,392)(201,011)
Segment operating income (loss)$27,372 $146,542 $(10,172)$(33,392)130,350 
Unallocated share-based compensation expense(28,206)
Unallocated amortization expense(945)
Operating income101,199 
Unallocated interest expense, net(9,943)
Unallocated other income, net568 
Income before income taxes$91,824 
Depreciation expense$4,110 $167 $902 $45 $5,224 
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 Quarter Ended March 31, 2020
 Applications