FICO Announces Earnings of $0.35 per Share for Fourth Quarter 2009

November 4, 2009 4:05 PM EST

Bookings for fourth quarter 2009 of $85.9 million vs. $71.2 million in prior year

MINNEAPOLIS--(BUSINESS WIRE)-- FICO (NYSE: FICO), the leading provider of analytics and decision management technology, today announced financial results for its fourth fiscal quarter ended September 30, 2009.

Fourth Quarter Fiscal 2009 Results

Net income for the fourth quarter of fiscal 2009 totaled $17.1 million, or $0.35 per share, versus $23.8 million, or $0.49 per share, reported in the prior year period, which included $0.07 per share of net favorable adjustments related to income tax adjustments and restructuring costs.

"Unwavering focus on our core strategy, combined with our ongoing expense discipline, has yielded strong operating leverage for FICO over the past 12 months," said Mark Greene, chief executive officer. "We've used that leverage to bring to market new Decision Management products that our customers urgently need to compete effectively. Our approach has led to consistent earnings, and now, a significant increase in bookings during the fourth quarter. And thanks to our strong balance sheet and substantial free cash flow, we remain in a position to invest in products whose value is prized by our clients - the key to meaningful revenue growth for FICO over the longer term."

Fourth Quarter Fiscal 2009 Revenue

The company reported fourth quarter revenues of $151.9 million in fiscal 2009 versus $178.2 million reported in the prior year period. Revenues for fourth quarter fiscal 2009 across each of the company's four operating segments were as follows:

    --  Strategy Machine(R) Solutions revenues were $82.9 million in the fourth
        quarter compared to $94.5 million in the prior year quarter, or a
        decrease of 12%, primarily due to the divestiture of our telecom product
        lines. Fourth quarter 2008 included $5.9 million of revenue associated
        with the divested telecom product lines. The remaining decrease was due
        to declines in our consumer solutions and customer management solutions,
        which were partially offset by an increase in our fraud solutions and
        marketing solutions.
    --  Scoring Solutions revenues were $31.8 million in the fourth quarter
        compared to $37.3 million in the prior year quarter, or a decrease of
        15%, primarily due to a decrease in revenues derived from our credit
        bureau risk scores.
    --  Professional Services revenues were $25.0 million in the fourth quarter
        compared to $33.2 million in the prior year quarter, or a decrease of
        25%, primarily due to the general decline in license sales, resulting in
        a corresponding decline in implementation services. This decline is also
        the result of a practice of discontinuing certain lower margin
        consulting service engagements that was started in early fiscal 2009.
    --  Analytic Software Tools revenues decreased to $12.2 million in the
        fourth quarter compared to $13.2 million in the prior year quarter, or a
        decrease of 8%, primarily due to decreases associated with the sale of
        the Blaze Advisor(R) product.

Bookings

The bookings for the fourth quarter were $85.9 million compared to $71.2 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

Cash and cash equivalents, and investments were $390.3 million at September 30, 2009, as compared to $271.2 million at September 30, 2008. Significant changes in cash and cash equivalents from September 30, 2008 include cash provided by operations of $151.6 million, $4.0 million received from the sale of product line assets, and $3.3 million received from the exercise of stock options and stock issued under an employee stock purchase plan. Cash used during the year includes $18.5 million to repurchase common stock, $14.0 million related to purchases of property and equipment and $3.9 million of dividends paid.

Outlook

In light of the continuing uncertainty in the global financial markets and the limited visibility into our clients' spending intentions, the company is not providing specific quarterly guidance. However, the company expects to grow year-over-year GAAP earnings per share by a high single-digit percentage in fiscal 2010 compared to fiscal 2009, with relatively flat results in the first half of the year compared to the prior year, and stronger performance in the latter half of fiscal 2010.

Company to Host Conference Call

The company will host a webcast today at 5:00 p.m. Eastern Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to report its fourth quarter fiscal 2009 results and provide various strategic and operational updates. The call can be accessed at FICO's Web site at www.FICO.com (follow the instructions on the Investor Relations page). A replay of the webcast will be available through December 4, 2009.

The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

About FICO

FICO (NYSE:FICO; www.FICO.com) is the leader in decision management, transforming business by making every decision count. FICO combines trusted advice, world-class analytics, and innovative applications to help businesses automate, improve, and connect decisions over customer lifecycles and across the enterprise. Clients in 80 countries work with FICO to increase customer loyalty and profitability, reduce fraud losses, manage credit risk, meet regulatory and competitive demands, and rapidly build market share. FICO also helps millions of individuals manage their credit health through its consumer website, www.myFICO.com.

Statement Concerning Forward-Looking Information

Except for historical information contained herein, the statements contained in this news release that relate to FICO 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 Decision Management strategy and reengineering plan, 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, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2008, and its last quarterly report on Form 10-Q for the period ended June 30, 2009. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.

FICO, Strategy Machine, and Blaze Advisor are all 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 Years Ended September 30, 2009 and 2008

(In thousands, except per share data)

(Unaudited)

                        Quarter Ended                 Year Ended

                        September 30,                 September 30,

                        2009           2008           2009           2008

Revenues                $ 151,922      $ 178,187      $ 630,735      $ 744,842

Operating expenses:

Cost of revenues          45,793         66,290         206,448        274,917

Research and              18,217         18,884         73,626         77,794
development

Selling, general and      51,800         57,781         209,319        245,639
administrative

Amortization of           3,269          3,562          12,891         14,043
intangible assets

Restructuring             -              2,311          8,711          10,166

Loss on sale of           -              -              2,993          -
product line assets

Total operating           119,079        148,828        513,988        622,559
expenses

Operating income          32,843         29,359         116,747        122,283

Other expense, net        (4,893  )      (3,864  )      (19,177 )      (9,288  )

Income from
continuing operations     27,950         25,495         97,570         112,995
before income taxes

Provision for income      10,842         1,717          32,105         31,809
taxes

Income from               17,108         23,778         65,465         81,186
continuing operations

Gain (loss) from
discontinued              -              -              (363    )      2,766
operations

Net income              $ 17,108       $ 23,778       $ 65,102       $ 83,952

Basic earnings (loss)
per share:

Continuing operations   $ 0.35         $ 0.49         $ 1.35         $ 1.66

Discontinued              -              -              (0.01   )      0.06
operations

Total                   $ 0.35         $ 0.49         $ 1.34         $ 1.72

Diluted earnings
(loss) per share:

Continuing operations   $ 0.35         $ 0.49         $ 1.34         $ 1.64

Discontinued              -              -              (0.01   )      0.06
operations

Total                   $ 0.35         $ 0.49         $ 1.33         $ 1.70

Shares used in
computing earnings
per share:

Basic                     48,513         48,431         48,658         48,940

Diluted                   48,772         48,596         48,776         49,373

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2009 and 2008

(In thousands)

(Unaudited)

                                                 September 30,    September 30,

                                                 2009             2008

ASSETS:

Current assets:

Cash and cash equivalents                        $ 178,157        $ 129,678

Marketable securities                              139,673          57,049

Accounts receivable, net                           101,742          141,571

Prepaid expenses and other current assets          22,986           23,404

Total current assets                               442,558          351,702

Marketable securities and investments              72,445           84,475

Property and equipment, net                        34,340           46,360

Goodwill and intangible assets, net                705,895          738,550

Other noncurrent assets                            48,650           54,166

                                                 $ 1,303,888      $ 1,275,253

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable and other accrued liabilities   $ 46,776         $ 54,837

Accrued compensation and employee benefits         28,139           29,551

Deferred revenue                                   39,673           38,243

Total current liabilities                          114,588          122,631

Revolving line of credit                           295,000          295,000

Senior notes                                       275,000          275,000

Other noncurrent liabilities                       19,031           20,681

Total liabilities                                  703,619          713,312

Stockholders' equity                               600,269          561,941

                                                 $ 1,303,888      $ 1,275,253

FAIR ISAAC CORPORATION

REVENUES BY SEGMENT

For the Quarters and Years Ended September 30, 2009 and 2008

(In thousands)

(Unaudited)

                           Quarter Ended               Year Ended

                           September 30,               September 30,

                           2009         2008           2009         2008

Strategy machine           $ 82,879     $ 94,469       $ 338,753    $ 388,108
solutions

Scoring solutions            31,824       37,260         131,621      156,816

Professional                 24,986       33,219         111,174      147,864
services

Analytic software            12,233       13,239         49,187       52,054
tools

Total revenues             $ 151,922    $ 178,187      $ 630,735    $ 744,842

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended September 30, 2009 and 2008

(In thousands)

(Unaudited)

                                                  Year Ended

                                                  September 30,

                                                  2009             2008

Cash flows from operating activities:

Net income                                        $ 65,102         $ 83,952

Adjustments to reconcile net income to net
cash provided by

operating activities:

Depreciation and amortization                       38,419           39,494

Share-based compensation                            19,935           27,981

Changes in operating assets and liabilities,
net of acquisition

and disposition effects                             25,426           24,447

Other, net                                          2,751            (16,724  )

Net cash provided by operating activities           151,633          159,150

Cash flows from investing activities:

Purchases of property and equipment                 (13,958 )        (22,780  )

Cash paid for acquisition, net of cash              -                (33,336  )
acquired

Cash proceeds from sale of product line             4,000            -
assets

Cash proceeds from sale of business unit            -                15,581

Net activity from marketable securities             (73,289 )        7,889

Other, net                                          1,300            1,527

Net cash used in investing activities               (81,947 )        (31,119  )

Cash flows from financing activities:

Net increase on revolving line of credit            -                125,000

Payments for the repurchases of senior              -                (390,067 )
convertible notes

Proceeds from issuance of Senior Notes              -                275,000

Proceeds from issuances of common stock             3,289            19,786

Repurchases of common stock                         (18,500 )        (116,642 )

Other, net                                          (3,607  )        (4,032   )

Net cash used in financing activities               (18,818 )        (90,955  )

Effect of exchange rate changes on cash             (2,389  )        (2,682   )

Increase in cash and cash equivalents               48,479           34,394

Cash and cash equivalents, beginning of             129,678          95,284
period

Cash and cash equivalents, end of period          $ 178,157        $ 129,678

    Source: FICO

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