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Contacts: INVESTORS & ANALYSTS:
Heidi Flannery
Fair Isaac Corporation
(800) 213-5542
investor@fairisaac.com
FAIR ISAAC REPORTS FOURTH QUARTER AND FISCAL 2003 RESULTS
60% Year-Over-Year Revenue Growth with HNC Revenues
SAN RAFAEL, Calif. -- November 3, 2003 -- Fair Isaac Corporation (NYSE:FIC), the
leader in customer analytics and decision technology, today announced financial
results for the fourth fiscal quarter and full fiscal year ended September 30,
2003.
The company achieved fourth quarter revenues of $161.0 million in fiscal 2003
versus $129.3 million reported in the fourth quarter of fiscal 2002. Revenues
for fiscal 2003 totaled $629.3 million as compared to revenues of $392.4 million
in fiscal 2002. Net income for the fourth quarter of fiscal 2003 totaled $31.7
million, or $0.64 per share on 52.4 million diluted shares outstanding(1),
compared with a net loss of $(24.2) million, or $(0.55) per share on 43.7
million diluted shares outstanding reported in the same quarter last year. Net
income for fiscal 2003 totaled $107.2 million, or $2.12 per share on 50.6
million diluted shares outstanding(1), compared with $17.9 million, or $0.48 per
share on 37.6 million diluted shares outstanding reported in fiscal 2002.
Results for fiscal 2003 include $2.5 million in merger-related charges,
resulting from the HNC Software acquisition, which resulted in a negative
three-cent(2) impact to diluted earnings per share during this period.
"We are very pleased with our revenue and income growth for this fiscal year,"
said Tom Grudnowski, President and CEO of Fair Isaac. "We continue to believe
that Enterprise Decision Management is a growing dimension of customers'
technology spending and our portfolio of products and services is well
positioned to address their needs."
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 2003 results and
provide guidance for fiscal 2004. The call can be accessed live on the Investor
Relations' section of the company's 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 company's
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 company's FICO(R) scores, the
standard measure of credit risk, to manage their financial health. As of August
5, 2002, the business of HNC Software Inc., a leading provider of high-end
analytic and decision management software, is part of Fair Isaac. For more
information, visit www.fairisaac.com.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the statements contained in
this press release that relate to Fair Isaac, including statements regarding our
ability to build and maintain customer and other business relationships, 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 company's 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 its
merger with HNC, including expected synergies, cannot be fully realized, the
possibility that costs or difficulties related to the integration of our
business and HNC's business will be greater than expected, 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, 2002. If any of these risks
or uncertainties materializes, Fair Isaac's results could differ materially from
Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent
or obligation to update these forward-looking statements.
Fair Isaac, HNC 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.
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1 The computation of diluted earnings per share for the quarter ended
September 30, 2003 includes 2.7 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 year ended September 30, 2003 excludes
these shares, as they were antidilutive during this period.
2 Calculated as $2.5 million in merger-related charges less $0.9 million
income tax benefit (by application of the company's 37.75 percent
effective tax rate for the fiscal year), or $1.6 million, divided by 50.6
million diluted shares outstanding for the fiscal year.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters and Years Ended September 30, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
September 30, September 30,
------------------------- ------------------------
2003 2002 2003 2002
--------- --------- --------- --------
Revenues $ 160,965 $ 129,293 $ 629,295 $392,418
--------- --------- --------- --------
Operating expenses:
Cost of revenues 59,688 55,764 246,592 172,617
Research and development 16,249 12,168 67,574 33,840
Selling, general and administrative 29,466 28,458 124,641 87,045
Amortization of intangibles 3,651 2,637 13,793 4,380
In-process research and development -- 40,200 -- 40,200
Restructuring and merger-related (79) 7,224 2,501 7,224
--------- --------- --------- --------
Total operating expenses 108,975 146,451 455,101 345,306
--------- --------- --------- --------
Operating income (loss) 51,990 (17,158) 174,194 47,112
Other (expense) income, net (1,572) 1,547 (2,054) 5,986
--------- --------- --------- --------
Income (loss) before income taxes 50,418 (15,611) 172,140 53,098
Provision for income taxes 18,728 8,589 64,983 35,214
--------- --------- --------- --------
Net income (loss) $ 31,690 $ (24,200) $ 107,157 $ 17,884
========= ========= ========= ========
Earnings (loss) per share:
Basic $ 0.68 $ (0.55) $ 2.23 $ 0.49
========= ========= ========= ========
Diluted $ 0.64 (a) $ (0.55) $ 2.12 $ 0.48
========= ========= ========= ========
Shares used in computing earnings (loss) per share:
Basic 46,933 43,717 48,123 36,534
========= ========= ========= ========
Diluted 52,406 (a) 43,717 50,649 37,550
========= ========= ========= ========
(a) The computation of diluted earnings per share for the quarter ended
September 30, 2003 includes 2.7 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 year ended September 30, 2003 excludes
these shares, as they were antidilutive during this period.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2003 and 2002
(In thousands)
(Unaudited)
September 30, September 30,
2003 2002
---------- ----------
ASSETS:
Current assets:
Cash and investments $ 505,351 $ 281,211
Receivables, net 138,712 126,743
Prepaid expenses and other current assets 23,809 25,507
---------- ----------
Total current assets 667,872 433,461
Investments 164,254 150,202
Property and equipment, net 50,706 62,474
Goodwill and intangibles, net 551,772 520,114
Other noncurrent assets 60,569 51,549
---------- ----------
$1,495,173 $1,217,800
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued liabilities $ 40,939 $ 44,135
Accrued compensation and employee benefits 25,839 28,153
Deferred revenue 31,584 23,208
---------- ----------
Total current liabilities 98,362 95,496
Senior convertible notes 400,000 --
Convertible subordinated notes 141,364 139,922
Other noncurrent liabilities 5,905 8,910
---------- ----------
Total liabilities 645,631 244,328
Stockholders' equity 849,542 973,472
---------- ----------
$1,495,173 $1,217,800
========== ==========
FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
For the Quarters and Years Ended September 30, 2003 and 2002
(In thousands)
(Unaudited)
Quarter Ended Year Ended
September 30, September 30,
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Scoring solutions $ 34,487 $ 33,500 $135,994 $127,991
Strategy machine solutions 96,599 70,275 380,550 190,249
Professional services 21,642 21,829 83,975 62,576
Analytic software tools 8,237 3,689 28,776 11,602
-------- -------- -------- --------
Total revenues $160,965 $129,293 $629,295 $392,418
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