EXHIBIT 99.06
HNC REPORTS FOURTH QUARTER AND FISCAL 2001 RESULTS
DILUTED OPERATIONAL NET INCOME PER SHARE FOR FISCAL 2001 INCREASES BY 25%
OVER FISCAL 2000
SAN DIEGO, JANUARY 23, 2002 -- HNC Software Inc. (Nasdaq: HNCS)
announced today its financial results for the fourth quarter and fiscal year
ended December 31, 2001.
On September 29, 2000, HNC distributed to its stockholders all of its
shares of its former subsidiary, Retek Inc. Accordingly, unlike its fiscal year
ended December 31, 2000, HNC's financial results for its fiscal year ended
December 31, 2001, do not include or reflect Retek's operations.
HNC PRO FORMA RESULTS
Revenues for the fourth quarter of 2001 were $54.6 million. Revenues for
fiscal 2001 were $226.7 million, representing an increase of 16 percent over
revenues of $195.0 million excluding Retek for fiscal 2000.
Diluted operational net income per share for the fourth quarter of 2001
was $0.07 (see footnotes 4 and 5 on the following table entitled, "Selected Pro
Forma Financial Data, Excluding Retek"). Diluted operational net income per
share for fiscal 2001 was $0.45, representing an increase of 25 percent over
diluted operational net income per share for fiscal 2000 excluding Retek of
$0.36 (see footnotes 6, 7, 8 and 9 on the following table entitled, "Selected
Pro Forma Financial Data, Excluding Retek").
HNC ACTUAL CONSOLIDATED RESULTS
HNC Reports Fourth Quarter 2001 Results/page 2
Revenues for the fourth quarter of 2001 were $54.6 million. Revenues for
fiscal 2001 were $226.7 million. Diluted net loss for the fourth quarter of 2001
was $8.0 million, or $0.23 per share. Diluted net loss for fiscal 2001 was $36.5
million, or $1.06 per share.
"HNC's fourth quarter illustrated a continued slowdown in IT spending
both in the US and overseas. Despite this pullback, we saw strong and steady
business from our existing base of blue-chip customers. Additionally, we are
fortunate to have a flexible business model that allows businesses to opt for
payment on either a "pay-as-you-go" or a one time "up-front" model. In these
tight economic times, many of our customers have appreciated the ability to
forego large up-front fees and have chosen the pay-as-you-go or recurring
option," said John Mutch, chief executive officer, HNC Software. "In the fourth
quarter of 2001, we continued to make steady progress developing the Critical
Action Technology Platform, which we believe will be the type of business
analytics foundation companies will be looking for when IT spending increases."
HNC will host a live Webcast conference call regarding fourth quarter
2001 operating results on Wednesday, January 23, 2002, at 2 p.m. Pacific
Daylight Time. All are welcome to join the Webcast, which can be accessed
through the Investor Relations section of HNC's Web site: www.hnc.com. During
the conference call HNC executives will review several topics including, but not
limited to, HNC's fourth quarter of 2001 and fiscal year 2001 operating results,
and its growth strategy and vision, acquisition strategy, product roadmap and
recent product introductions. HNC also expects the call to discuss global market
expansion and market penetration, industry trends, and financial business model
and future revenue and earnings guidance.
A recording of the Webcast will be available for 10 days after the event
on HNC's Web site: www.hnc.com.
ABOUT HNC SOFTWARE INC.
HNC is a leading provider of high-end analytic and decision management
software that enables global companies to manage customer interactions by
converting data and customer transactions into real time recommendations. HNC's
proven software empowers Global 2000
HNC Reports Fourth Quarter 2001 Results/page 3
companies in the financial services, insurance, telecommunications and other
industries to make millions of the right mission-critical customer decisions
designed to increase revenues and decrease risk. For more information, visit
www.hnc.com.
This press release contains forward-looking statements about HNC's business
model, technology platform and other events and circumstances that have not yet
occurred. Forward-looking statements may be identified by words such as "will,"
"expects," "believes," "anticipates" or "plans" or other statements indicating a
future tense. Investors should be aware that actual results may differ
materially from HNC's expectations in forward-looking statements, due to
numerous risks and uncertainties about the future. HNC will not necessarily
update the information in this press release or in its conference call if any
forward-looking statement later turns out to be inaccurate.
Risks and uncertainties that may affect HNC's future results and performance and
lead to fluctuations in its financial results and revenue compared to
expectations include, but are not limited to, the following: timing of contract
acceptances by customers changes of recurring fee based agreements to one time
fixed fee-based agreements; changes in the percentage of HNC's revenues that are
paid on a recurring transaction fee basis the status of HNC's relationships with
its customers, particularly larger customers; developments in the financial
services, insurance and telecommunications industries, including consolidation
and trends in IT spending; the financial, accounting and business affects of
HNC's acquisitions of other companies, business, or assets; HNC's success in
integrating companies, businesses and assets it has acquired or may in the
future acquire and in managing potentially increased expenses arising from
acquisitions; intense competition and pricing pressures, particularly in the
software market; HNC's ability to maintain or increase its profit margins; the
impact of the current economic environment on the willingness of HNC's
customers' to make capital purchases or licenses; HNC's ability to correctly
anticipate market trends and customers' needs and develop and implement
successful strategies that are responsive to these trends and needs; HNC's
ability to maintain high reliability for its server-based Web services; HNC's
ability to maintain successful business relationships with strategic partners
and other third parties that are important to HNC's success; HNC's ability to
adapt and expand its product, service and content offerings for the Internet and
other environments; the costs of implementing HNC's strategy; changes in its
product lines and product strategies; uncertainty as to the timing and
availability for future products and services; future market growth and upgrade
rates for HNC's software products; the impact of government regulatory actions
on HNC's ability to sell and implement its products; HNC's ability to leverage
its existing customer base to cross-sell complementary products and sell
customers multiple products; the retention and motivation of HNC's employees;
and results for HNC's international operations. Additional information about
factors that could affect future results and events is included in the reports
that HNC files with the Securities and Exchange Commission, including its annual
report on Form 10-K for its fiscal year ended December 31, 2000.
HNC Reports Fourth Quarter 2001 Results/page 4
SELECTED FINANCIAL DATA
QUARTERS ENDED FISCAL YEARS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------------
2000 2001 2000 2001
--------- --------- --------- ---------
Revenues $ 55,076 $ 54,551 $ 254,884 $ 226,670
Operating loss $ (12,827) $ (12,101) $(149,741) $ (42,523)
Basic and diluted net loss per share $ (0.17) $ (0.23) $ (4.08) $ (1.06)
SELECTED PRO FORMA FINANCIAL DATA, EXCLUDING RETEK (1)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected financial data for the Company on a pro
forma basis, excluding Retek. Please see footnotes (1) through (9) to this
information for reconciliations between pro forma and GAAP bases for the
information presented.
QUARTERS ENDED FISCAL YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- -----------------------------
2000 2001 2000 2001
---------- ---------- ---------- -----------
Revenues $55,076 $54,551 $194,969 $226,670
Operating income, before non-cash and
non-recurring charges $ 3,966(2) $ 2,696(4) $ 9,187(6) $ 19,638(8)
Diluted operational net income per share $ 0.12(3) $ 0.07(5) $ 0.36(7) $ 0.45(9)
(1) On September 29, 2000, HNC spun off its former subsidiary Retek Inc. to
HNC's stockholders by means of a dividend of all shares of Retek owned
by HNC. Thus, Retek's operating results were included in HNC's financial
results through September 29, 2000, but were not included in HNC's
financial results for the quarter and fiscal year ended December 31,
2001. For purposes of comparability, the above pro forma financial data
for the fiscal year ended December 31, 2000 illustrates the financial
results of HNC (subject to the computations and exclusions explained
below), excluding Retek's financial results for such periods.
(2) Computed by excluding $283 of stock-based compensation charges, $13,627
of transaction-related amortization and costs, $1,711 of Retek spin-off
charges and $1,172 of restructuring and impairment charges.
(3) Based on: (a) diluted operational net income of $4,178, computed as
operating income before non-cash and non-recurring charges of $3,966
plus other net income of $2,719, fully taxed at a 37.5 percent tax rate,
divided by (b) weighted average shares of 36,130, computed as 32,228
shares used in computing diluted net loss per share plus 3,902 shares
associated with weighted average options, ESPP shares and convertible
subordinated notes, assuming conversion.
(4) Computed by excluding $58 of stock-based compensation charges and
$14,739 of transaction-related amortization and costs.
(5) Based on: (a) diluted operational net income of $3,078, computed as
operating income before non-cash and non-recurring charges of $2,696
plus other net income of $2,229, fully taxed at a 37.5 percent tax rate,
divided by (b) weighted average shares of 41,961, computed as 35,370
shares used in computing diluted net income per share plus 6,591 shares
associated with weighted average options, ESPP shares and convertible
subordinated notes, assuming conversion.
(6) Computed by excluding $13,154 of stock-based compensation charges,
$38,697 of transaction-related amortization and costs, $3,601 of
in-process research and development charges, $48,185 of Retek spin-off
charges and $1,172 of restructuring and impairment charges.
(7) Based on: (a) diluted operational net income of $12,199, computed as
operating income before non-cash and non-recurring charges of $9,187
plus other net income of $10,331, fully taxed at a 37.5 percent tax
rate, divided by (b) weighted average shares of 33,610, computed as
28,529 shares used in computing diluted net income per share plus 5,081
shares associated with weighted average options, ESPP shares and
convertible subordinated notes, assuming conversion.
(8) Computed by excluding $476 of stock-based compensation charges, $56,556
of transaction-related amortization and costs, $487 of in-process
research and development charges and $4,642 of restructuring and
impairment charges.
(9) Based on: (a) diluted operational net income of $17,188, computed as
operating income before non-cash and non-recurring charges of $19,638
plus other net income of $7,863, fully taxed at a 37.5 percent tax rate,
divided by (b) weighted average shares of 38,582, computed as 34,509
shares used in computing diluted net loss per share plus 4,073 shares
associated with weighted average options, ESPP shares and convertible
subordinated notes, assuming conversion.
HNC Reports Fourth Quarter 2001 Results/page 5
HNC SOFTWARE INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, DECEMBER 31
2001 2000
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities available for sale $ 217,910 $ 114,300
Accounts receivable, net 38,969 43,856
Deferred income taxes 22,279 15,045
Other current assets 10,656 8,402
--------- ---------
Total current assets 289,814 181,603
Marketable securities available for sale 95,815 48,453
Equity investments 9,219 14,719
Property and equipment, net 23,785 20,826
Goodwill, net 75,720 96,810
Intangible assets, net 42,942 47,522
Deferred income taxes 34,761 33,844
Other assets 5,970 3,964
--------- ---------
Total assets $ 578,026 $ 447,741
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 29,716 $ 38,675
Deferred revenue 8,807 9,876
--------- ---------
Total current liabilities 38,523 48,551
Other liabilities $ 1,684 $ 259
Convertible Subordinated Notes 150,000 16,357
--------- ---------
Total liabilities 190,207 65,167
--------- ---------
Stockholders' equity:
Preferred stock, $0.001 par value -- 4,000 shares authorized; no
Shares issued or outstanding - -
Common stock, $0.001 par value -- 120,000 shares authorized; 35,432
and 32,286 shares issued and outstanding, respectively 35 32
Common stock in treasury at cost -- 49 and 49 shares, respectively (3,251) (3,251)
Paid-in capital 531,666 499,705
Accumulated deficit (140,660) (104,209)
Notes receivable from stockholders - (9,049)
Unearned stock-based compensation (238) (577)
Accumulated other comprehensive income (loss) 267 (77)
--------- ---------
Total stockholders' equity 387,819 382,574
--------- ---------
Total liabilities and stockholders' equity $ 578,026 $ 447,741
========= =========
HNC Reports Fourth Quarter 2001 Results/page 6
HNC SOFTWARE INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FOURTH QUARTERS ENDED DECEMBER 30, 2000 AND 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED DECEMBER 30,
--------------------------
2000 2001
-------- --------
Revenues:
License and maintenance $ 39,870 $ 40,172
Services and other 15,206 14,379
-------- --------
Total revenues 55,076 54,551
Operating expenses:
License and maintenance 9,921 10,644
Services and other 11,546 11,150
Research and development 10,518 11,889
Sales and marketing 11,196 11,868
General and administrative 7,929 6,304
-------- --------
Operating income (loss) before non-cash and non-
recurring charges 3,966 2,696
Non-cash and non-recurring charges:
Stock-based compensation 283 58
Transaction-related amortization and costs 13,627 14,739
Expense related to spin-off of Retek subsidiary 1,711 -
Restructuring and impairment charges 1,172 -
-------- --------
Operating income (loss) (12,827) (12,101)
Other income (expense):
Other income, net 2,719 2,229
Write-down of equity investments (2,750) -
Interest expense related to convertible debt (220) (2,159)
-------- --------
Income (loss) before income tax provision (benefit) (13,078) (12,031)
Income tax provision (benefit) (7,540) (4,012)
-------- --------
Net income (loss) $ (5,538) $ (8,019)
======== ========
Earnings per share:
Basic and diluted net loss per common share $ (0.17) $ (0.23)
======== ========
Shares used in computing basic and diluted net loss
per common share 32,228 35,370
======== ========
HNC Reports Fourth Quarter 2001 Results/page 7
HNC SOFTWARE INC.
UNAUDITED PRO FORMA AND CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 2000
--------------------------------------------- YEAR ENDED
DISTRIBUTION DECEMBER 31,
AS REPORTED OF RETEK PRO FORMA 2001
----------- ------------ --------- -----------
Revenues:
License and maintenance $ 166,063 $ (35,229) $ 130,834 $ 168,626
Services and other 88,821 (24,686) 64,135 58,044
--------- --------- --------- ---------
Total revenues 254,884 (59,915) 194,969 226,670
Operating expenses:
License and maintenance 51,725 (15,058) 36,667 44,676
Services and other 63,762 (19,349) 44,413 42,465
Research and development 65,553 (26,197) 39,356 45,587
Sales and marketing 66,416 (28,236) 38,180 44,503
General and administrative 34,807 (7,641) 27,166 29,801
--------- --------- --------- ---------
Operating income (loss) before non-cash and non-
recurring charges (27,379) 36,566 9,187 19,638
Non-cash and non-recurring charges:
Stock-based compensation 21,670 (8,516) 13,154 476
Transaction-related amortization and costs 43,734 (5,037) 38,697 56,556
In-process research and development 7,601 (4,000) 3,601 487
Expense related to spin-off of Retek subsidiary 48,185 - 48,185 -
Restructuring and impairment charges 1,172 - 1,172 4,642
--------- --------- --------- ---------
Operating income (loss) (149,741) 54,119 (95,622) (42,523)
Other income (expense):
Other income, net 11,827 (1,496) 10,331 7,863
Interest expense related to convertible debt (3,762) - (3,762) (3,171)
Write-down of equity investments (2,750) - (2,750) (4,893)
Expense related to debt conversion (12,676) - (12,676) -
Minority interest in losses (income) of
consolidated subsidiary 7,582 (7,582) - -
--------- --------- --------- ---------
Income (loss) before income tax provision (benefit) (149,520) 45,041 (104,479) (42,724)
Income tax provision (benefit) (33,102) 16,488 (16,614) (6,272)
--------- --------- --------- ---------
Net income (loss) $(116,418) $ 28,553 $ (87,865) $ (36,452)
========= ========= ========= =========
Earnings per share:
Basic and diluted net loss per common share $ (4.08) $ (3.08) $ (1.06)
========= ========= =========
Shares used in computing basic and diluted net loss
per common share 28,529 28,529 34,509
========= ========= =========