EXHIBIT 99
[FAIR ISAAC LOGO]
Contact: INVESTORS & ANALYSTS:
Megan Forrester
Fair Isaac Corporation
(800) 213-5542
investor@fairisaac.com
FAIR ISAAC ANNOUNCES THIRD QUARTER FISCAL 2004 RESULTS, STOCK
REPURCHASE PROGRAM AND NOTICE OF REDEMPTION OF CONVERTIBLE
SUBORDINATED NOTES
6% Year-Over-Year Revenue Growth
MINNEAPOLIS--July 28, 2004--Fair Isaac Corporation (NYSE:FIC), a leader in
customer analytics and decision technology, today announced financial results
for the third fiscal quarter ended June 30, 2004, a $200 million stock
repurchase program and notice of redemption of its $150 million principal
amount, 5.25% Convertible Subordinated Notes.
GAAP RESULTS
The company reported third quarter revenues of $173.2 million in fiscal 2004
versus $163.0 million reported in the third quarter of fiscal 2003. Revenues for
the nine months ended June 30, 2004, totaled $515.8 million as compared to
revenues of $468.3 million reported in the same period last year. Net income for
the third quarter of fiscal 2004 totaled $28.8 million, or $0.39 per share, on
73.1 million diluted shares outstanding, compared with net income of $30.0
million, or $0.40 per share, on 79.4 million diluted shares outstanding reported
in the same quarter last year(1). Net income for the nine months ended June 30,
2004, totaled $88.4 million, or $1.20 per share, on 77.7 million diluted shares
outstanding, compared with $75.5 million, or $0.99 per share, on 76.5 million
diluted shares outstanding reported in the same period last year(1).
PRO FORMA RESULTS
The company reported pro forma net income for the third quarter of fiscal 2004
of $32.9 million, compared to pro forma net income of $32.2 million reported in
the same quarter last year. Pro forma diluted earnings per share for the third
quarter of fiscal 2004 was $0.45, compared to pro forma diluted earnings per
share of $0.43 reported in the same quarter last year.
Pro forma net income for the nine months ended June 30, 2004 was $97.5 million,
compared with pro forma net income of $83.4 million reported in the same period
last year. Pro forma diluted earnings per share for the nine months ended June
30, 2004 was $1.32, compared to pro forma diluted earnings per share of $1.09
reported in the same period last year.
The GAAP results for the third quarter and nine months ended June 30, 2004
include the revenue impact of the purchase accounting adjustments, including the
write-down to fair market value of deferred maintenance revenue, in connection
with the acquisition of London Bridge Software
Holdings plc, the amortization of intangible assets acquired in acquisitions,
and acquisition-related expenses. The pro forma results for the
third quarter and nine months ended June 30, 2004 exclude the impact of these
purchase accounting adjustments and acquisition-related expenses. A
reconciliation of GAAP to pro forma, or non-GAAP, financial results is included
in this press release.
All earnings per share figures reflect the company's three-for-two stock split,
which took effect March 10, 2004.
"Although we are disappointed in our lower-than expected results this particular
quarter, we believe our business model and portfolio of unique
transaction-oriented analytic products will provide revenue and income growth in
FY05 and beyond, consistent with that of the last four years," said Tom
Grudnowski, President and CEO of Fair Isaac. "Our innovation is as strong as
ever, but we are still learning how to execute well in multiple markets
simultaneously. We have begun the integration of London Bridge, and our
expectations remain high as we begin to manage in this new space."
NON-GAAP FINANCIAL MEASURES
The company uses pro forma non-GAAP financial measures, which exclude the
purchase accounting adjustments and acquisition-related expenses described
above, in analyzing financial results because they provide meaningful
information regarding the company's operational performance and facilitate
management's internal comparisons to the company's historical operating results
and comparisons to the operating results of other companies. The company
believes that these non-GAAP financial measures are useful to investors because
they allow for greater transparency of the company's operating performance.
Wherever non-GAAP financial measures have been included in this press release,
the company has reconciled them in the tables below to their GAAP counterparts.
These non-GAAP financial measures are not prepared in accordance with accounting
principles generally accepted in the United States of America and may be
different from non-GAAP financial measures used by other companies. Non-GAAP
financial measures should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
The following tables reconcile the non-GAAP financial measures to GAAP:
<Table>
<Caption>
QUARTER ENDED QUARTER ENDED
JUNE 30, 2004 JUNE 30, 2003
--------------------------- --------------------------
DILUTED DILUTED
NET INCOME EPS NET INCOME EPS (1)
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Non-GAAP (pro forma) ................. $ 32,902 $ 0.45 $ 32,179 $ 0.43
Revenue impact of deferred
maintenance write-down ......... 816 0.01 -- --
Amortization of acquired intangible
assets ......................... 2,851 0.04 2,146 0.03
Acquisition-related expenses ...... 466 0.01 -- --
------------ ------------ ------------ ------------
GAAP ................................. $ 28,769 $ 0.39 $ 30,033 $ 0.40
============ ============ ============ ============
</Table>
<Table>
<Caption>
NINE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
--------------------------- --------------------------
DILUTED DILUTED
NET INCOME EPS (1) NET INCOME EPS
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Non-GAAP (pro forma) ................. $ 97,547 $ 1.32 $ 83,356 $ 1.09
Revenue impact of deferred
maintenance write-down ......... 816 0.01 -- --
Amortization of acquired intangible
assets ......................... 7,892 0.10 6,288 0.08
Acquisition-related expenses ...... 466 0.01 1,600 0.02
------------ ------------ ------------ ------------
GAAP ................................. $ 88,373 $ 1.20 $ 75,468 $ 0.99
============ ============ ============ ============
</Table>
STOCK REPURCHASE PROGRAM
The company's Board of Directors has approved a stock repurchase program to
acquire up to $200 million of the company's outstanding common stock. As of June
30, 2004, the company had approximately 70.3 million shares of common stock
outstanding. The program, which will expire in one year, will allow the company
to repurchase its shares from time-to-time in the open market and in negotiated
transactions.
REDEMPTION OF 5.25% CONVERTIBLE SUBORDINATED NOTES
The company has given notice to redeem its 5.25% Convertible Subordinated Notes
due September 1, 2008. The redemption date will be September 8, 2004 at a
redemption price of 102.625% of the principal amount of the notes plus interest
accrued on the notes to the redemption date.
COMPANY TO HOST CONFERENCE CALL
The company will host a conference call today at 2:00 p.m. Pacific Time / 5:00
p.m. Eastern Time to discuss its third quarter results and provide guidance for
the remainder of fiscal 2004 and fiscal 2005. 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. For more
information, visit www.fairisaac.com.
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Except for historical information contained herein, the statements contained in
this press 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 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 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, 2003, and quarterly report on Form
10-Q for the quarter ended March 31, 2004. 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 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.
- ----------
(1) The computation of diluted earnings per share for the quarter ended June
30, 2003, and for the nine months ended June 30, 2004, includes 4.1 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 and $4.8 million, respectively. The computation of diluted earnings
per share for the quarter ended June 30, 2004, and for the nine months
ended June 30, 2003, excludes these shares, as they were antidilutive
during these periods.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS AND NINE MONTHS ENDED JUNE 30, 2004 AND 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
Quarter Ended Nine Months Ended
June 30, June 30,
-------------------------- --------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues ................................... $ 173,197 $ 163,000 $ 515,784 $ 468,330
--------- --------- --------- ---------
Operating expenses:
Cost of revenues ................... 61,361 62,209 184,179 186,904
Research and development ........... 19,096 16,959 49,830 51,325
Selling, general and administrative 45,384 31,277 127,652 95,175
Amortization of intangible assets .. 4,597 3,461 12,728 10,142
Restructuring and merger-related ... 751 (36) 751 2,580
--------- --------- --------- ---------
Total operating expenses .. 131,189 113,870 375,140 346,126
--------- --------- --------- ---------
Operating income ........................... 42,008 49,130 140,644 122,204
Other income (expense), net ................ 4,385 (690) 1,893 (482)
--------- --------- --------- ---------
Income before income taxes ................. 46,393 48,440 142,537 121,722
Provision for income taxes ................. 17,624 18,407 54,164 46,254
--------- --------- --------- ---------
Net income ................................. $ 28,769 $ 30,033 $ 88,373 $ 75,468
========= ========= ========= =========
Earnings per share:
Basic .............................. $ 0.41 $ 0.42(b) $ 1.26 $ 1.04(b)
========= ========= ========= =========
Diluted ............................ $ 0.39 $ 0.40(a)(b) $ 1.20(a) $ 0.99(b)
========= ========= ========= =========
Shares used in computing earnings per share:
Basic .............................. 70,008 71,233(b) 70,046 72,787(b)
========= ========= ========= =========
Diluted ............................ 73,050 79,436(a)(b) 77,656(a) 76,453(b)
========= ========= ========= =========
</Table>
(a) The computation of diluted earnings per share for the quarter ended June
30, 2003, and for the nine months ended June 30, 2004, includes 4.1 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 and $4.8 million, respectively. The computation of diluted earnings
per share for the quarter ended June 30, 2004, and for the nine months
ended June 30, 2003, excludes these shares, as they were antidilutive
during these periods.
(b) On February 2, 2004, our Board of Directors declared a three-for-two stock
split in the form of a 50% common stock dividend with cash payment in lieu
of fractional shares, paid on March 10, 2004 to shareholders of record on
February 18, 2004. The share and per share amounts within the condensed
consolidated statements of income have been restated to reflect this stock
split.
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2004 AND SEPTEMBER 30, 2003
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
June 30, September 30,
2004 2003
--------------- ---------------
ASSETS:
Current assets:
Cash and investments $ 453,664 $ 505,351
Receivables, net 135,905 138,712
Prepaid expenses and other current assets 24,885 23,809
--------------- ---------------
Total current assets 614,454 667,872
Investments 70,971 164,254
Property and equipment, net 52,698 50,706
Goodwill and intangible assets, net 831,350 551,772
Other noncurrent assets 52,790 60,569
--------------- ---------------
$ 1,622,263 $ 1,495,173
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued liabilities $ 84,767 $ 40,939
Accrued compensation and employee benefits 25,489 25,839
Deferred revenue 39,517 31,584
--------------- ---------------
Total current liabilities 149,773 98,362
Senior convertible notes 400,000 400,000
Convertible subordinated notes 142,510 141,364
Other noncurrent liabilities 8,423 5,905
--------------- ---------------
Total liabilities 700,706 645,631
Stockholders' equity 921,557 849,542
--------------- ---------------
$ 1,622,263 $ 1,495,173
=============== ===============
</Table>
FAIR ISAAC CORPORATION
REVENUES BY SEGMENT
FOR THE QUARTERS AND NINE MONTHS ENDED JUNE 30, 2004 AND 2003
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
Quarter Ended Nine Months Ended
June 30, June 30,
----------------------- -----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Strategy machine solutions $ 105,699 $ 97,032 $ 312,547 $ 283,038
Scoring solutions 36,308 34,547 105,322 101,570
Professional services 23,197 21,925 70,305 62,018
Analytic software tools 7,993 9,496 27,610 21,704
--------- --------- --------- ---------
Total revenues $ 173,197 $ 163,000 $ 515,784 $ 468,330
========= ========= ========= =========
</Table>
FAIR ISAAC CORPORATION
BASELINE REVENUE ANALYSIS - 2004
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
BKG'04 Q1A Q2A Q3A Q4E FY04
- ------------------------------------------------------------------------------------------------------------------------------------
Baseline Prior to '04 $ 153,440 $ 148,234 $ 140,726 $ 132,887 $ 575,287
London Bridge Baseline 5,433 15,440 20,873
- ----------------------------------- -----------------------------------------------------------------------------
Total Baseline Prior to '04 153,440 148,234 146,159 148,327 596,160
-----------------------------------------------------------------------------
Q1-2004 $ 135,108 15,901 10,304 8,300 7,273 41,778
Q2-2004 116,997 14,708 8,397 9,824 32,929
Q3-2004 78,580 10,341 8,598 18,939
Q4-2004 E 100,000 15,059 15,059
- ------------------------------------------------------------------------------------------------------------------------------------
Total FY04 E 430,685 15,901 25,012 27,038 40,754 108,705
----------------------------------------------------------------------------------------------
Baseline Prior to '05 E 169,341 173,246 173,197 189,081 704,865
----------------------------------------------------------------------------------------------
Q1-2005
Q2-2005
Q3-2005
Q4-2005 Not Used
Total FY05
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL ESTIMATE $ 430,685 $ 169,341 $ 173,246 $ 173,197 $ 189,081 $ 704,865
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
BKG'05 Q1E Q2E Q3E Q4E FY05E
- ------------------------------------------------------------------------------------------------------------------------------------
Baseline Prior to '04 $ 125,057 $ 121,996 $ 122,773 $ 120,258 $ 490,084
London Bridge Baseline 16,450 17,050 17,100 16,400 67,000
- ----------------------------------- ------------------------------------------------------------------------------------
Total Baseline Prior to '04 141,507 139,046 139,873 136,658 557,084
------------------------------------------------------------------------------------
Q1-2004 7,025 6,659 5,906 5,649 25,239
Q2-2004 8,735 6,961 6,457 6,363 28,516
Q3-2004 6,721 4,803 2,460 2,522 16,506
Q4-2004 E 5,066 3,864 3,630 3,416 15,976
- ------------------------------------------------------------------------------------------------------------------------------------
Total FY04 E 27,547 22,287 18,453 17,950 86,237
------------------------------------------------------------------------------------
Baseline Prior to '05 E $ 169,054 $ 161,333 $ 158,326 $ 154,608 $ 643,321
====================================================================================
Q1-2005
Q2-2005 '05 New Revenue
Q3-2005 To Be Reported
Q4-2005
Total FY05
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL ESTIMATE
- ------------------------------------------------------------------------------------------------------------------------------------
E = Estimate
A = Actual