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April 28, 2008
(Minneapolis, Minnesota, USA) - Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision management technology, today announced the financial results for its second quarter ended March 31, 2008.
As announced on April 1, 2008, the company entered into a definitive agreement for the sale of its Insurance Bill Review business unit on March 31, 2008. The transaction is expected to close in the third quarter, and has been reported as a discontinued operation within this press release and in the accompanying financial statements.
"We achieved respectable results in a challenging market. We are focused on controlling costs during this tight market, as evidenced by our reengineering for growth effort launched in the quarter, while continuing to invest in our Decision Management growth strategy," said Mark Greene, Chief Executive Officer of Fair Isaac.
Second Quarter Fiscal 2008 Results from Continuing OperationsThe company reported second quarter revenues from continuing operations of $193.2 million in fiscal 2008 versus $190.7 million reported in the prior year period. Net income from continuing operations for the second quarter of fiscal 2008 totaled $17.8 million, or $0.36 per diluted share, versus $21.6 million, or $0.37 per diluted share, reported in the prior year period.
Second quarter fiscal 2008 results from continuing operations included after-tax charges of $4.0 million, or $0.08 per diluted share, related to the company's previously announced reengineering plan. The charges relate to a reduction in workforce and facility consolidation.
Second quarter fiscal 2007 results from continuing operations included $3.3 million in revenues from the mortgage product line, which was sold in March 2007.
Second Quarter Fiscal 2008 Revenues from Continuing Operations HighlightsRevenues for second quarter fiscal 2008 across each of the company's four operating segments were as follows:
Fiscal 2008 Year-to-date Results from Continuing OperationsThe company reported year-to-date revenues from continuing operations of $383.3 million in fiscal 2008 versus $388.8 million reported in the prior year period. Net income from continuing operations for year-to-date fiscal 2008 totaled $38.6 million, or $0.77 per diluted share, versus $53.2 million, or $0.90 per diluted share, reported in the prior year period.
Year-to-date fiscal 2007 results from continuing operations included $7.7 million in revenues from the mortgage product line, which was sold in March 2007.
Fiscal 2008 Year-to-date Revenues from Continuing Operations HighlightsRevenues for year-to-date fiscal 2008 across each of the company's four operating segments were as follows:
Bookings from Continuing Operations HighlightsThe bookings from continuing operations for the second quarter were $99.2 million compared to $57.8 million in the same period last year. Year-to-date fiscal 2008 bookings from continuing operations were $191.9 million compared to $129.8 million for the prior 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.
Impact from Discontinued OperationsSecond quarter revenues associated with the discontinued operation were $10.1 million in fiscal 2008 versus $10.3 million in the prior year period. The net loss associated with the discontinued operation for the second quarter of fiscal 2008 totaled $4.3 million, or $0.08 per diluted share, versus $200,000, or no impact on income per diluted share, in the prior year period. The second quarter of fiscal 2008 loss is comprised of a $4.2 million loss on the sale of the business unit and $100,000 loss from operations.
Year-to-date revenues associated with the discontinued operation were $19.3 million in fiscal 2008 versus $20.4 million in the prior year period. The net loss associated with the discontinued operation for year-to-date fiscal 2008 totaled $4.9 million, or $0.10 per diluted share, versus $600,000, or $0.01 per diluted share, in the prior year period.
The company expects to recognize an additional tax benefit of approximately $7.0 million in the third quarter upon completion of the transaction. This benefit, which represents tax deductions related to intangible assets of the business unit, will result in an after-tax gain related to the sale of the business unit, and will offset the net loss recorded in the second quarter.
Balance Sheet and Cash Flow HighlightsCash and cash equivalents, and investments were $200.3 million at March 31, 2008, as compared to $246.8 million at September 30, 2007. Significant changes in cash and cash equivalents from September 30, 2007 include cash provided by operations of $70.3 million, borrowings under the revolving credit facility of $43.0 million, and $14.9 million received from the exercise of stock options and stock issued under an employee stock purchase plan. Cash used during fiscal 2008 includes $13.4 million related to purchases of property and equipment, $31.9 million related to the acquisition of Dash Optimization Limited, $23.3 million related to repurchases of Senior Convertible Notes, and $106.8 million to repurchase common stock.
Outlook of Continuing OperationsOn April 1, 2008 the company announced a reengineering plan designed to grow revenues through strategic resource reallocation and to improve profitability through significant cost reductions. Once completed, the actions are expected to reduce the company's annual revenues by $65 million, decrease the overall cost structure by $100 million, and yield annual pre-tax savings of $35 million. The financial guidance for the remainder of fiscal 2008 is dependent upon the timing of announced divestitures, closure or consolidation of facilities, and completion of other cost management actions. Therefore, due to the uncertainty of the timing of the benefits associated with these actions, the company is providing combined guidance for the second half of fiscal 2008.
The company expects revenues from continuing operations for the second half of fiscal 2008 to be approximately $380.0 million and earnings per diluted share to be approximately $0.74. This revenue and earnings per diluted share from continuing operations are based on the following assumptions:
Company to Host Conference CallThe company will host a conference call today at 5:00 p.m. Eastern Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to discuss its second quarter fiscal 2008 results, and outlook for the remainder of fiscal 2008. The call can be accessed live on the Investor Relations section of the company's Web site at www.fairisaac.com, and a replay will be available approximately two hours after the completion of the call through May 26, 2008.
Mid-Year Investor/Analyst Day with ManagementThe company will host a Mid-Year Investor/Analyst Day with Management in San Francisco tomorrow, Tuesday, April 29th at 9 a.m. Pacific Time at the Palace Hotel. Pre-registration is required to attend this event. A webcast will also be available for this event which can be accessed live on the Investor Relations section of the company's website (www.fairisaac.com).
Q208 Earnings Release Financials
About Fair Isaac Fair Isaac Corporation (NYSE:FIC) transforms business by making every decision count. Fair Isaac's Decision Management solutions combine trusted advice, world-class analytics and innovative applications to give organizations the power to automate, improve and connect decisions across their business. Clients in 80 countries work with Fair Isaac to increase customer loyalty and profitability, cut fraud losses, manage credit risk, meet regulatory and competitive demands, and rapidly build market share. Fair Isaac also helps millions of individuals manage their credit health through the www.myFICO.com website. Learn more about Fair Isaac at www.fairisaac.com.
Statement Concerning Forward-Looking InformationExcept for historical information contained herein, the statements contained in this news 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 execute the reengineering plan in the manner and timeframe described in this press release, the actual expense, revenue and net income impact associated with the reengineering plan, the success of the Company's Decision Management strategy, its 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, 2007, and its quarterly report on Form 10-Q for the period ended December 31, 2007. If any of these risks or uncertainties materialize, Fair Isaac's results could differ materially from its expectations. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.
Fair Isaac, Strategy Machine, Blaze Advisor and PreScore are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.
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