SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______________ to____________
Commission File Number
0-16439
FAIR, ISAAC AND COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-1499887
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 North Redwood Drive, San Rafael, California 94903
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 472-2211
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _x_ No ___.
The number of shares of Common Stock, $0.01 par value per share,
outstanding on May 9, 1997, was 12,714,628.
<PAGE>
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements .............................. 3
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operation .................................... 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K .................. 11
SIGNATURES ..................................................... 12
EXHIBIT INDEX .................................................. 13
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
FAIR, ISAAC AND COMPANY, INCORPORATED
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and September 30, 1996
<CAPTION>
(dollars in thousands)
March 31 September 30
----------- ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 5,831 $ 8,247
Short-term investments 5,506 7,487
Accounts receivable, net 31,208 27,675
Unbilled work in progress 12,697 10,276
Prepaid expenses and other current assets 3,693 3,957
Deferred income taxes 2,861 2,759
Income taxes receivable 2,197 610
----------- ---------
Total current assets 63,993 61,011
Long-term investments 13,791 12,647
Property and equipment, net 26,271 23,219
Intangibles, net 8,935 9,557
Deferred income taxes 2,239 2,239
Other assets 5,323 4,381
----------- ---------
$ 120,552 $113,054
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 7,403 $ 7,466
Accrued compensation and employee benefits 11,095 16,648
Billings in excess of earned revenues 5,711 3,666
Capitalized leases 352 378
----------- ---------
Total current liabilities 24,561 28,158
Other liabilities 5,457 4,997
Capital leases 1,371 1,552
Commitments and contingencies -- --
----------- ---------
Total liabilities 31,389 34,707
----------- ---------
Stockholders' equity:
Preferred stock -- --
Common stock 127 126
Paid in capital in excess of par value 23,034 21,174
Retained earnings 66,235 57,163
Less treasury stock (1,872 shares at 3/31/97;
15,938 at 9/30/96) (12) (68)
Cumulative translation adjustments (227) (145)
Unrealized gain on investments 6 97
----------- ---------
Total stockholders' equity 89,163 78,347
----------- ---------
$120,552 $113,054
=========== =========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
FAIR, ISAAC AND COMPANY, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
For the six-month and three-month periods
ended March 31, 1997 and 1996 (dollars in
thousands, except per share data)
<CAPTION>
Six-Months Ended Three-Months Ended
March 31 March 31
------------------------- -----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $87,996 $67,904 $46,464 $35,275
Costs and expenses:
Cost of revenues 33,560 26,704 17,518 13,530
Sales and marketing 12,605 11,289 6,900 5,893
Research and development 6,935 2,989 3,809 2,229
General and administrative 17,979 13,302 9,013 5,950
Amortization of intangibles 655 575 319 288
---------- --------- ---------- ---------
Total costs and expenses 71,734 54,859 37,559 27,890
---------- --------- ---------- ---------
Income from operations 16,262 13,045 8,905 7,385
Other income (expense), net (368) 340 (453) 27
---------- --------- ---------- ---------
Income before income taxes 15,894 13,385 8,452 7,412
Provision for income taxes 6,317 5,488 3,359 3,039
---------- --------- ---------- ---------
Net income $ 9,577 $ 7,897 $ 5,093 $ 4,373
========== ========= ========== =========
Earnings per share $ .74 $ .62 $ .39 $ .34
========== ========= ========== =========
Shares used in computing earnings
per share 13,013,000 12,790,000 13,044,000 12,803,000
========== ========== ========== ==========
<FN>
See accompanying notes to the consolidated financial statements.
4
</FN>
</TABLE>
<PAGE>
FAIR, ISAAC AND COMPANY, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
For the six-month periods ended March 31, 1997 and 1996
(dollars in thousands)
<CAPTION>
Six Months Ended
March 31
----------------------------
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 9,577 $7,897
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 5,542 3,824
Equity loss on investment 1,051 400
Gain on sale of property and equipment (225)
Deferred income taxes (102)
(30)
Changes in operating assets and liabilities:
Increase in accounts receivable (3,613) (2,496)
Decrease (increase) in unbilled work in progress (2,421) 4,330
Decrease (increase) in prepaid expenses and other assets 264 (1,223)
Increase in income taxes receivable (1,588)
Decrease (increase) in other assets (943) 592
Increase in accounts payable and other accrued liabilities 818 2,508
Decrease in accrued compensation and employee benefits (3,919) (2,300)
Increase (decrease) in billings in excess of earned 2,044 (247)
revenues
Decrease in income taxes payable (125)
Increase (decrease) in other liabilities 461 (1,492)
-------- --------
Net cash provided by operating activities 6,946 11,638
--------- --------
Cash flows from investing activities:
Purchases of property and equipment (8,055) (6,237)
Proceeds from sale of property and equipment 340
Purchase of DynaMark, Printronic and CRMA (78) (1,231)
Purchases of investments (6,140) (3,501)
Proceeds from maturities of investments 5,000 3,362
------- --------
Net cash used by investing activities (8,933) (7,607)
------- --------
Cash flows from financing activities:
Principal payments of capital lease obligations (207) (206)
Issuance of common stock 283 459
Dividends paid (505) (492)
------- --------
Net cash used by financing activities (429) (239)
------- --------
Increase (decrease) in cash and cash equivalents (2,416) 3,792
Cash and cash equivalents, beginning of period 8,247 8,321
------- --------
Cash and cash equivalents, end of period $ 5,831 $12,113
======== ========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
FAIR, ISAAC AND COMPANY, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Income taxes paid
Cash payments for income taxes during the six-month periods ended March 31,
1997 and 1996, were $7,905,000 and $5,488,000, respectively.
Note 2 Non-cash transactions
The Company contributed newly-issued and treasury stock having a market
value of $1,468,000 and $979,000 to the Company's Employee Stock Ownership Plan
during the first two fiscal quarters of 1997 and 1996, respectively.
Note 3 Reclassifications
Certain reclassifications were made to the September 30, 1996, balance
sheet to conform to the March 31, 1997, presentation.
Note 4 Accounting pronouncements
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share ("SFAS
128"). SFAS 128 establishes standards for computing and presenting earnings per
share ("EPS") and applies to entities with publicly held common stock or
potential common stock. SFAS 128 simplifies the standards for computing earnings
per share previously found in APB Opinion No. 15, Earnings per Share, and
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement and requires reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted. This statement requires restatement of all prior-period EPS
data presented. The adoption of this statement is not expected to have a
material impact on the EPS presented in the accompanying financial statements.
Note 5 Subsequent events
On April 21, 1997, the company signed a letter of intent to acquire Risk
Management Technologies, Inc., a privately-held company, which provides
enterprise-wide risk management and performance measurement solutions to major
financial institutions. The purchase price is valued at $46 million of the
company's common stock, and is expected to be accounted for as a pooling of
interests.
6
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Fair, Isaac and Company, Incorporated, provides products and services
designed to help a variety of businesses use data to make better decisions on
their customers and prospective customers. The Company's products include
statistically derived, rule-based analytical tools, software designed to
implement those analytical tools, and consulting services to help clients use
and track the performance of those tools. The Company also provides a range of
credit scoring and credit account management services in conjunction with credit
bureaus and credit card processing agencies. Its DynaMark subsidiary provides
data processing and database management services to businesses engaged in direct
marketing activities, many of which are in the credit and insurance industries.
This discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes presented in the Company's
report on Form 10-K for the year ended September 30, 1996. In addition to
historical information, this report includes certain forward-looking statements
regarding events and trends which may affect the Company's future results. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results to differ materially. Such factors include, but are not limited
to, those described in this discussion and analysis.
The Company is organized into business units which correspond to its
principal markets: consumer credit, insurance and direct marketing (DynaMark).
Sales to the consumer credit industry have traditionally accounted for the bulk
of the Company's revenues. Products developed specifically for a single user in
this market are generally sold on a fixed-price basis. Such products include
application and behavior scoring algorithms (also known as "analytic products"
or "scorecards"), credit application processing systems (ASAP(TM) and
CreditDesk(R)) and custom credit account management systems including those
marketed under the name TRIAD(TM). Software systems usually also have a
component of ongoing maintenance revenue, and CreditDesk systems have also been
sold under time-or volume-based price arrangements. Credit scoring and credit
account management services sold through credit bureaus and third-party credit
card processors are generally priced based on usage. Products sold to the
insurance industry are generally priced based on the number of policies in
force, subject to contract minimums. DynaMark employs a combination of fixed-fee
and usage-based pricing.
Results of Operations
Revenues
<TABLE>
The following table sets forth for the fiscal periods indicated (a) the
percentage of revenues represented by fixed-price and usage-priced revenues from
the Credit business unit and the percentage of revenues contributed by the
DynaMark and Insurance business units; and (b) the percentage change in revenues
within each category from the corresponding period in the prior fiscal year.
Fixed-price revenues include all revenues from application processing software,
custom scorecard development and consulting projects for credit. Virtually all
usage revenues are generated through third-party alliances such as those with
credit bureaus and third-party credit card processors.
<CAPTION>
Three Months Six Months
Ended Percentage Ended Percentage
March 31, Change March 31, Change
-------------- ---------- ------------- ----------
1997 1996 1997 1996
----- ----- ----- -----
Credit
<S> <C> <C> <C> <C> <C> <C>
Fixed-price 31% 32% 27% 31% 30% 34%
Usage-priced 51% 53% 26% 52% 54% 24%
DynaMark 14% 12% 54% 14% 13% 38%
Insurance 4% 3% 96% 3% 3% 58%
----- ----- ----- -----
Total revenues 100% 100% 32% 100% 100% 30%
</TABLE>
Since its acquisition, DynaMark has taken on an increasing share of the
mainframe batch processing requirements of the Company's other business units.
During fiscal 1996, such intercompany revenue represented almost fifteen percent
of DynaMark's total revenues. Accordingly, DynaMark's externally reported
revenues tend to understate DynaMark's growth and contribution to the Company as
a whole. The increase in DynaMark's revenues
7
<PAGE>
shown in the foregoing table, which excludes such intercompany revenues, was due
primarily to increased revenues from customers in the financial services
industry.
The increase in usage revenues from the Credit business unit in the quarter
and six months ended March 31, 1997, compared with the same periods the prior
year, was due to continuing growth in (a) usage of the Company's scoring
services distributed through the three major credit bureaus in the United
States, including the PreScore(R) and ScoreNet(R) services, and (b) the number
of bankcard accounts being managed by the Company's account management services
delivered through third-party processors. Revenues for the credit bureau scoring
services in the six months ended March 31, 1997, were approximately 25 percent
higher than in the first half of fiscal 1996. Revenues from credit account
management services delivered through third-party processors in the most recent
six months were 18 percent higher than in the corresponding period of fiscal
1996.
Sales of credit application scorecards and credit application processing
software, especially for small business lending, primarily accounted for the
increase in fixed-price credit revenues in the quarter and six months ended
March 31, 1997. Revenues from sales of credit application scorecards and credit
application processing software increased by approximately 37 percent in the
quarter and 42 percent in the six months ended March 31, 1997, compared with the
same periods of fiscal 1996. Revenues from end-user credit account management
systems ("TRIAD") and behavior scoring projects in the three and six month
periods ended March 31, 1997 were down slightly from the same periods of 1996.
Revenues from credit bureau-related services have increased rapidly in each
of the last three fiscal years and accounted for approximately 39 percent of
revenues in fiscal 1996. Revenues from services provided through bankcard
processors also increased in each of these years, due primarily to increases in
the number of accounts at each of the major processors.
Revenues derived from alliances with credit bureaus and credit card
processors have accounted for much of the Company's revenue growth and
improvement in operating margins over the last three years. While the Company
has been very successful in extending or renewing such agreements in the past,
and believes it will generally be able to do so in the future, the loss of one
or more such alliances or an adverse change in terms could have a significant
impact on revenues and operating margin. Revenues generated through the
Company's alliances with Equifax, Inc., Experian Information Solutions, Inc.
(formerly TRW Information Systems & Services), and Trans Union Corporation each
accounted for approximately nine to eleven percent of the Company's total
revenues in fiscal 1995 and 1996.
On November 14, 1996, it was announced that Experian was being acquired by
CCN Group Ltd., a subsidiary of Great Universal Stores, PLC. CCN is the
Company's largest competitor, worldwide, in the area of credit scoring.
TRW/Experian has offered scoring products developed by CCN in competition with
those of the Company for several years. The Company is not presently able to
determine what effect, if any, the acquisition of Experian by CCN will have on
its future revenues.
On September 30, 1996, amendments to the Fair Credit Reporting Act were
enacted and signed into law. The Company believes these changes to the federal
law regulating credit reporting will be favorable to the Company and its
clients. Among other things, the new law expressly permits the use of credit
bureau data to prescreen consumers for offers of credit and insurance and allows
affiliated companies to share consumer information with each other subject to
certain conditions. There is also a seven-year moratorium on new state
legislation on certain issues. However, the states remain free to regulate the
use of credit bureau data in connection with insurance underwriting. The Company
believes such enacted or proposed state regulation has had a negative impact on
its efforts to sell insurance risk scores through credit reporting agencies.
The increases in Insurance revenues for the three- and six-month periods
ended March 31, 1997, compared with the same periods in fiscal 1996, were due to
strong growth in both insurance products sold to end-users and in the insurance
scoring services offered through consumer reporting agencies.
Revenues derived from outside of the United States represented
approximately 13 percent and 14 percent, respectively, of total revenues in the
quarter and six months ended March 31, 1997, compared with 15 percent of total
revenues in the same periods a year earlier.
8
<PAGE>
Revenues from software maintenance and consulting services each accounted
for less than 10 percent of revenues in each of the three years in the period
ended September 30, 1996, and in the six months ended March 31, 1997. The
Company does not expect revenues from either of these sources to exceed 10
percent of revenues in the foreseeable future.
During the period since 1990, while the rate of account growth in the U.S.
bankcard industry has been slowing and many of the Company's largest
institutional clients have merged and consolidated, the Company has generated
above-average growth in revenues--even after correcting for the effect of the
DynaMark acquisition--from its bankcard-related scoring and account management
business by deepening its penetration of large banks and other credit issuers.
The Company believes much of its future growth prospects will rest on its
ability (1) to develop new, high-value products and services for its present
client base of major U.S. consumer credit issuers; (2) to increase its
penetration of established or emerging credit markets outside the U.S. and
Canada; and (3) to expand--either directly or through further acquisitions--into
relatively undeveloped or underdeveloped markets for its products and services,
such as direct marketing, insurance, small business lending and healthcare
information management.
Over the long term, in addition to the factors discussed above, the
Company's rate of revenue growth--excluding growth due to acquisitions--is
limited by the rate at which it can recruit and absorb additional professional
staff. While the increased percentage of usage revenues may loosen this
constraint to some extent, management believes it will continue to exist
indefinitely. On the other hand, despite the high penetration the Company has
already achieved in certain markets, the opportunities for application of its
core competencies are much greater than it can pursue. Thus, the Company
believes it can continue to grow revenues, within the personnel constraint, for
the foreseeable future. At times management may forego short-term revenue growth
in order to devote limited resources to opportunities which it believes have
exceptional long-term potential. This occurred in the period from 1988 through
1990 when the Company devoted significant resources to developing the
usage-priced services distributed through credit bureaus and third-party
processors. Cumulative revenue since 1987, net of the DynaMark acquisition, is
slightly above the Company's 20-year historical average revenue growth of about
22 percent.
Expenses
<TABLE>
The following table sets forth for the periods indicated (a) the percentage
of revenues represented by certain line items in the Company's consolidated
statements of income and (b) the percentage change in such items from the same
quarter in the prior fiscal year.
<CAPTION>
Six Months Three Months
Ended Percentage Ended Percentage
March 31, Change March 31, Change
-------------- ---------- ------------- ----------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenues 100% 100% 30% 100% 100% 32%
Costs and expenses:
Cost of revenues 38 39 26% 38 38 29%
Sales and marketing 14 17 12% 15 17 17%
Research and development 8 4 132% 8 6 71%
General and administrative 21 20 35% 19 17 51%
Amortization of intangibles 1 1 14% 1 1 11%
------ ---- ----- ----
Total costs and expenses 82 81 31% 81 79 35%
------ ---- ----- ----
Income from operations 18 19 25% 19 21 21%
Other income and expense -- 1 NM (1) NM
------ ---- ------ ----
Income before income taxes 18 20 19% 18 21 14%
Provision for income taxes 7 8 15% 7 9 11%
------ ---- ----- ----
Net income 11% 12% 21% 11% 12% 16%
------ ---- ------ -----
<FN>
NM = Not meaningful
</FN>
</TABLE>
Cost of revenues
Cost of revenues consists primarily of personnel, travel, and related
overhead costs; costs of computer service bureaus; and the amounts paid by the
Company to credit bureaus for scores and related information in connection with
the ScoreNet(R) service. The cost of revenues, as a percentage of net revenues,
was essentially unchanged in the quarter ended March 31, 1997, as compared with
the same quarter a year earlier. During the six-month period ended
9
<PAGE>
March 31, 1997, cost of revenue declined slightly from the same period a year
earlier primarily because of an increase in the number of staff dedicated to
research and development activities.
Sales and marketing
Sales and marketing expenses consist principally of personnel, travel,
overhead, advertising and other promotional expenses. These expenses, as a
percentage of revenues, decreased in the three- and six-month periods ended
March 31, 1997, compared with the same periods in fiscal 1996, primarily due to
reductions in media advertising.
Research and development
Research and development expenses include the personnel and related
overhead costs incurred in developing products, researching mathematical and
statistical algorithms, and developing software tools that are aimed at
improving productivity and management control. Research and development expenses
increased significantly over the corresponding three- and sixth-month periods of
fiscal 1996. After several years of concentrating on developing new
markets--either geographical or by industry--for its existing technologies, the
Company has recently increased emphasis on developing new technologies,
especially in the area of software development.
General and Administrative
General and administrative expenses consist mainly of compensation expenses
for certain senior management, corporate facilities expenses, the costs of
administering certain benefit plans, legal expenses, expenses associated with
the exploration of new business opportunities and the costs of operating
administrative functions such as finance and computer information systems. As a
percentage of revenues, these expenses were essentially unchanged in the six
months ended March 31, 1997, compared with the same period of fiscal 1996.
Although these expenses increased as a percentage of revenues in the quarter
ended March 31, 1997, compared with the same quarter of fiscal 1996, they were
in line with the long-term average for such expenses as a percentage of revenue.
General and administrative expenses in the quarter ended March 31, 1996 were
unusually low due to a temporary slow-down in office expansions.
Amortization of intangibles
The Company is amortizing the intangible assets arising from various
acquisitions over periods ranging from two to fifteen years. The level of
amortization expense in future years will depend, in part, on the amount of
additional payments to the former shareholders of Credit & Risk Management
Associates, Inc., a privately held company acquired in 1996.
Other income and expense
Interest income, derived from the investment of funds surplus to the
Company's immediate operating requirements, increased over the three- and
six-month periods a year earlier due to higher balances and slightly higher
interest rates. However, this increase in interest income was more than offset
by the increase in the Company's share of operating losses in certain early
stage development companies that are accounted for using the equity method.
Provision for income taxes
The Company's effective tax rate in the quarter decreased from
approximately 41 percent in the three- and six-month periods ended March 31,
1996, to 39.7 percent in the corresponding periods of fiscal 1997, primarily due
to a changing mix of applicable state and foreign taxes.
Financial Condition
Working capital increased from $32,853,000 at September 30, 1996 to
$39,432,000 at March 31, 1997. Cash and marketable investments decreased from
$26,482,000 at September 30, 1996, to $24,445,000 at March 31, 1997, due
primarily to expenditures for computing facilities, and leasehold improvements
and furniture and equipment for additional office space. The Company has no
long-term debt other than lease and employee incentive obligations.
10
<PAGE>
The Company believes that cash and marketable securities on hand are adequate to
meet its capital and liquidity needs for the foreseeable future.
Interim Periods
The Company believes that all the necessary adjustments have been included
in the amounts shown in the consolidated financial statements contained in Item
1 above for the three- and six-month periods ended March 31, 1997 and 1996 to
state fairly the results for such interim periods. This includes all normal
recurring adjustments that the Company considers necessary for a fair statement
thereof, in accordance with generally accepted accounting principles. This
report should be read in conjunction with the Company's 1996 Form 10-K.
Quarterly results may be affected by fluctuations in revenues associated
with credit card solicitations, by the timing of orders for and deliveries of
certain ASAP and TRIAD systems, and by the seasonality of ScoreNet purchases.
With the exception of the cost of ScoreNet data purchased by the Company, most
of its operating expenses are not affected by short-term fluctuations in
revenues; thus short-term fluctuations in revenues may have a significant impact
on operating results. However, in recent years, these fluctuations were
generally offset by the strong growth in revenues from services delivered
through credit bureaus and third-party bankcard processors.
Management believes that neither the quarterly variation in revenues and
net income, nor the results of operations for any particular quarter, are
necessarily indicative of results of operations for full fiscal years.
Accordingly, management believes that the Company's results should be evaluated
on an annual basis.
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
11.1 Computation of Earnings per Share.
24.1 Power of Attorney (see page 12 of this Form 10-Q).
27 Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended March 31,
1997. On April 23, 1997, the company filed a report announcing that it had
entered into a preliminary agreement for the acquisition of Risk Management
Technologies. See note 5 to the Consolidated Financial Statements.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAIR, ISAAC AND COMPANY, INCORPORATED
DATE: May 14, 1997
By PETER L. MCCORKELL
-----------------------------------
Peter L. McCorkell
Senior Vice President and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints PETER L. McCORKELL his attorney-in-fact, with
full power of substitution, for him in any and all capacities, to sign any
amendments to this Report on Form 10-Q and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacities and on the date indicated.
DATE: May 14, 1997
By PATRICIA COLE
-------------------------------------------------
Patricia Cole
Senior Vice President and Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
TO FAIR, ISAAC AND COMPANY, INCORPORATED
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
Sequentially
Exhibit No. Exhibit Numbered Page
- ----------- ------- --------------
11.1 Computation of earnings per share. 14
24.1 Power of Attorney 12
27 Financial Data Schedule 15
13
Exhibit 11.1
<TABLE>
FAIR, ISAAC AND COMPANY, INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
Six-Months Ended Three-Months Ended
March 31 March 31
---------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ---- ----
Primary Earnings Per Share:
Weighted Average Common Shares
Outstanding 12,637 12,343 12,672 12,357
Dilutive effect of outstanding options
(as determined by the
treasury stock method) 376 447 372 446
---------- ---------- ---------- --------
Weighted Average Common Shares,
as Adjusted 13,013 12,790 13,044 12,803
========== ========== ========== ==========
Net Income $ 9,577 $ 7,897 $ 5,093 $ 4,373
========== ========== ========== ==========
Primary Earnings per Share $ 0.74 $ 0.62 $ 0.39 $ 0.34
========== ========== ========== ==========
Fully Diluted Earnings Per Share:
Weighted Average Common Shares
Outstanding 12,637 12,343 12,672 12,357
Dilutive effect of outstanding options
(as determined by the
treasury stock method) 376 507 372 491
---------- ---------- ---------- ----------
Weighted Average Common Shares,
as Adjusted 13,013 12,850 13,044 12,848
========== ========== ========== ==========
Net Income $ 9,577 $ 7,897 $ 5,093 $ 4,373
========== ========== ========== ==========
Fully Diluted Earnings Per Share $ 0.74 $ 0.61 $ 0.39 $ 0.34
========== ========== ========== ==========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND INCOME STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,831
<SECURITIES> 5,506
<RECEIVABLES> 31,763
<ALLOWANCES> 555
<INVENTORY> 0
<CURRENT-ASSETS> 63,993
<PP&E> 53,007
<DEPRECIATION> 26,736
<TOTAL-ASSETS> 120,552
<CURRENT-LIABILITIES> 24,561
<BONDS> 1,371
<COMMON> 127
0
0
<OTHER-SE> 89,036
<TOTAL-LIABILITY-AND-EQUITY> 120,552
<SALES> 0
<TOTAL-REVENUES> 87,996
<CGS> 0
<TOTAL-COSTS> 33,560
<OTHER-EXPENSES> 12,605
<LOSS-PROVISION> 110
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 15,894
<INCOME-TAX> 6,317
<INCOME-CONTINUING> 9,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,577
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
