ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
Delaware | 94-1499887 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
181 Metro Drive, Suite 700 | ||
San Jose, California | 95110-1346 | |
(Address of principal executive offices) | (Zip Code) |
(Title of Class) | (Name of each exchange on which registered) | |
Common Stock, $0.01 par value per share | New York Stock Exchange, Inc. |
Large Accelerated Filer | ý | Accelerated Filer | o | ||
Non-Accelerated Filer | o | Smaller Reporting Company | o |
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• | Applications. This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO® Analytic Cloud. |
• | Scores. This segment includes our business-to-business scoring solutions and services, our business-to-consumer scoring solutions and services including myFICO® solutions for consumers, and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies worldwide, as well as services through which we provide our scores to clients directly. |
• | Decision Management Software (formerly“Tools”). This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our new FICO® Decision Management Suite, as well as associated professional services. These tools are available to our customers as on-premises software or through the FICO® Analytic Cloud. |
• | Analytics, which include predictive analytics that identify risks and opportunities associated with individual customers, prospects and transactions, in order to detect patterns such as risk and fraud, as well as optimization analytics that are used to improve the design of decision logic or “strategies.” |
• | Data management and transaction profiling that bring extensive consumer information to every decision. |
• | Software such as decision management systems that implement business rules, models and decision strategies, often in a real-time environment, as well as software for managing customer engagement. |
• | Consulting services that help clients make the most of investments in FICO applications, tools and scores in the shortest possible time. |
• | FICO® Decision Management Platform, the fundamental backbone of the Suite, to dramatically improve performance, data interchange, model tracking and user collaboration; |
• | FICO® Decision Management Streaming (formerly known as Data Management Integration Platform) to improve scale, performance and versatility; and |
• | FICO® Decision Central™ (formerly known as Model Central), an analytic and decision model management tool, to expand its versatility and usability across a much broader range of implementations and use cases. |
• | Rules Management. The FICO® Blaze Advisor® decision rules management system is used to design, develop, execute and maintain rules-based business applications. The Blaze Advisor system enables business users to propose and preview the impact of changes to decisioning logic, to review and approve proposed changes, and commit those changes to production decisioning, all without demanding IT cycles. The Blaze Advisor system is sold as an end-user tool and is also the rules engine within several of our decision management applications. The Blaze Advisor system, available in six languages, is a multi-platform solution that: embeds rules management within existing applications; supports Web Services and service-oriented architecture, Java 2 Enterprise Edition platforms, Microsoft .NET and COBOL for z/OS mainframes; and is the first rules engine to support Java, .NET and COBOL deployment of the same rules. It also incorporates the exclusive Rete III rules execution technology, which improves the efficiency and speed with which the Blaze Advisor® system is able to process and execute complex, high-volume decision rules. FICO’s solution for rules management in the cloud is called FICO® Decision Modeler. |
• | Predictive Modeling. FICO® Decision Central™ is a comprehensive offering to help banks and other organizations, including insurance, retail and health care companies, maximize the power of their predictive and decision models and meet stricter regulations for model management. It complements FICO® Model Builder, which enables the user to develop and deploy sophisticated predictive models for use in automated decisions. This software is based on the methodology and tools FICO uses to build both client-level and industry-level predictive models and scorecards, which we have developed over more than 40 years, and includes additional algorithms for rapidly discovering variable relationships, predictive interactions and optimal segmentation. The predictive models produced can be embedded in custom production applications or one of our Decision Management applications and can also be executed in the FICO® Blaze Advisor® system. FICO’s solution set for predictive modeling in the cloud is called FICO® Analytic Modeler. |
• | Optimization. FICO® Xpress Optimization Suite provides operations research professionals with world-class solvers and high-productivity tools to quickly design and deliver custom, mathematically optimal solutions for a wide range of industry problems. Xpress includes a powerful modeling and programming language, with robust scalability, to quickly model and solve even the largest optimization problems. Xpress tools are licensed to end users, consultants and independent software vendors in several industries, and are a core component within FICO® Decision Optimizer. Decision Optimizer is a software tool that enables complex, large-scale optimizations involving dozens of networked action-effect models, and enables exploration and simulation of many optimized scenarios along an efficient frontier of options. The data-driven strategies produced by these tools can be executed by the FICO® Blaze Advisor® system or one of our Decision Management applications. FICO’s solution for executing optimization services in the cloud is called FICO® Optimization Modeler. |
• | in-house analytic and systems developers; |
• | scoring model builders; |
• | enterprise resource planning and customer relationship management packaged solutions providers; |
• | business intelligence solutions providers; |
• | business process management and decision rules management providers; |
• | providers of credit reports and credit scores; |
• | providers of automated application processing services; |
• | data vendors; |
• | neural network developers and artificial intelligence system builders; |
• | third-party professional services and consulting organizations; |
• | providers of account/workflow management software; |
• | software companies supplying modeling, rules, or analytic development tools; collections and recovery solutions providers; entity resolution and social network analysis solutions providers; and |
• | providers of cloud-based customer engagement and risk management solutions. |
• | changes in the business analytics industry; |
• | changes in technology; |
• | our inability to obtain or use key data for our products; |
• | saturation or contraction of market demand; |
• | loss of key customers; |
• | industry consolidation; |
• | failure to execute our selling approach; and |
• | inability to successfully sell our products in new vertical markets. |
• | our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities; |
• | an acquisition may not further our business strategy as we expected, we may not integrate acquired operations or technology as successfully as we expected or we may overpay for our investments, or otherwise not realize the expected return, which could adversely affect our business or operating results; |
• | we may be unable to retain the key employees, customers and other business partners of the acquired operation; |
• | we may have difficulties entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions; |
• | our operating results or financial condition may be adversely impacted by claims or liabilities we assume from an acquired company, business, product or technology, including claims by government agencies, terminated employees, current or former customers, former stockholders or other third parties; pre-existing contractual relationships of an acquired company we would not have otherwise entered into; unfavorable revenue recognition or other accounting treatment as a result of an acquired company’s practices; and intellectual property claims or disputes; |
• | we may fail to identify or assess the magnitude of certain liabilities or other circumstances prior to acquiring a company, business, product or technology, which could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on our business, operating results or financial condition; |
• | we may not realize the anticipated increase in our revenues from an acquisition for a number of reasons, including if a larger than predicted number of customers decline to renew their contracts, if we are unable to sell the acquired products to our customer base or if contract models of an acquired company do not allow us to recognize revenues on a timely basis; |
• | we may have difficulty incorporating acquired technologies or products with our existing product lines and maintaining uniform standards, architecture, controls, procedures and policies; |
• | our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, dividend payments and retirement of outstanding indebtedness; |
• | to the extent we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease; and |
• | we may experience additional or unexpected changes in how we are required to account for our acquisitions pursuant to U.S. generally accepted accounting principles, including arrangements we assume from an acquisition. |
• | disruption of our ongoing business; |
• | reductions of our revenues or earnings per share; |
• | unanticipated liabilities, legal risks and costs; |
• | the potential loss of key personnel; |
• | distraction of management from our ongoing business; and |
• | impairment of relationships with employees and customers as a result of migrating a business to new owners. |
• | impairment of goodwill or intangible assets, or a reduction in the useful lives of intangible assets acquired; |
• | amortization of intangible assets acquired; |
• | identification of, or changes to, assumed contingent liabilities, both income tax and non-income tax related, after our final determination of the amounts for these contingencies or the conclusion of the measurement period (generally up to one year from the acquisition date), whichever comes first; |
• | costs incurred to combine the operations of companies we acquire, such as transitional employee expenses and employee retention, redeployment or relocation expenses; |
• | charges to our operating results to maintain certain duplicative pre-merger activities for an extended period of time or to maintain these activities for a period of time that is longer than we had anticipated, charges to eliminate certain duplicative pre-merger activities, and charges to restructure our operations or to reduce our cost structure; and |
• | charges to our operating results resulting from expenses incurred to effect the acquisition. |
• | variability in demand from our existing customers; |
• | failure to meet the expectations of market analysts; |
• | changes in recommendations by market analysts; |
• | the lengthy and variable sales cycle of many products, combined with the relatively large size of orders for our products, increases the likelihood of short-term fluctuation in revenues; |
• | consumer or customer dissatisfaction with, or problems caused by, the performance of our products; |
• | the timing of new product announcements and introductions in comparison with our competitors; |
• | the level of our operating expenses; |
• | changes in competitive and other conditions in the consumer credit, banking and insurance industries; |
• | fluctuations in domestic and international economic conditions; |
• | our ability to complete large installations on schedule and within budget; |
• | acquisition-related expenses and charges; and |
• | timing of orders for and deliveries of software systems. |
• | incur significant defense costs or substantial damages; |
• | be required to cease the use or sale of infringing products; |
• | expend significant resources to develop or license a substitute non-infringing technology; |
• | discontinue the use of some technology; or |
• | be required to obtain a license under the intellectual property rights of the third party claiming infringement, which license may not be available or might require substantial royalties or license fees that would reduce our margins. |
• | innovate by internally developing new and competitive technologies; |
• | use leading third-party technologies effectively; |
• | continue to develop our technical expertise; |
• | anticipate and effectively respond to changing customer needs; |
• | initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases; and |
• | influence and respond to emerging industry standards and other technological changes. |
• | in-house analytic and systems developers; |
• | scoring model builders; |
• | enterprise resource planning, customer relationship management, and customer communication and mobility solution providers; |
• | business intelligence solutions providers; |
• | credit report and credit score providers; |
• | business process management and decision rules management providers; |
• | process modeling tools providers; |
• | automated application processing services providers; |
• | data vendors; |
• | neural network developers and artificial intelligence system builders; |
• | third-party professional services and consulting organizations; |
• | account/workflow management software providers; |
• | software tools companies supplying modeling, rules, or analytic development tools; collections and recovery solutions providers; entity resolution and social network analysis solutions providers; and |
• | cloud-based customer engagement and risk management solutions providers. |
• | Use of data by creditors and consumer reporting agencies. Examples in the U.S. include the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act; |
• | Laws and regulations that limit the use of credit scoring models such as state “mortgage trigger” laws, state “inquiries” laws, state insurance restrictions on the use of credit based insurance scores, and the Consumer Credit Directive in the European Union; |
• | Fair lending laws, such as the Truth In Lending Act and Regulation Z, as amended by the Credit Card Accountability Responsibility and Disclosure Act of 2009, the Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act; |
• | Privacy and security laws and regulations that limit the use and disclosure of personally identifiable information or require security procedures, including but not limited to the provisions of the Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley Act (“GLBA”); the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act; the Cybersecurity Act of 2015; the Department of Commerce’s National Institute of Standards and Technology’s Cybersecurity Framework; and identity theft, file freezing, security breach notification and similar state privacy laws; |
• | Extension of credit to consumers through the Electronic Fund Transfers Act and Regulation E, as well as non‑governmental VISA and MasterCard electronic payment standards; |
• | Regulations applicable to secondary market participants such as Fannie Mae and Freddie Mac that could have an impact on our products; |
• | Laws and regulations applicable to our customer communication clients and their use of our products and services, including the Telephone Consumer Protection Act and regulations promulgated thereunder; |
• | Insurance laws and regulations applicable to our insurance clients and their use of our insurance products and services; |
• | The application or extension of consumer protection laws, such as the Consumer Financial Protection Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, and the Military Lending Act, and laws governing the use of the Internet and telemarketing, advertising, endorsements and testimonials and credit repair; |
• | Laws and regulations applicable to operations in other countries, for example, the European Union’s General Data Protection Regulation, and the Foreign Corrupt Practices Act; |
• | Sarbanes-Oxley Act requirements to maintain and verify internal process controls, including controls for material event awareness and notification; |
• | Regulatory expectations for management of third parties (e.g., vendors, contractors, suppliers, distributors), such as OCC Bulletin 2013-29; Federal Reserve Supervisory Letter 13-19 / CA 13-21; Federal Housing Finance Agency Advisory Bulletin AB 2014-07; CFPB Bulletin 2012-03; and FFIEC Outsourcing Technology Services June 2004; |
• | Regulations applicable to anti-money laundering, such as the Bank Secrecy Act, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001; |
• | Financial regulatory reform stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act and the many regulations mandated by that Act, including regulations issued by, and the supervisory and investigative authority of, the Bureau of Consumer Financial Protection; and |
• | Laws and regulations regarding export controls as they apply to FICO products delivered in non-U.S. countries. |
• | general economic and political conditions in countries where we sell our products and services; |
• | difficulty in staffing and efficiently managing our operations in multiple geographic locations and in various countries; |
• | effects of a variety of foreign laws and regulations, including restrictions on access to personal information; |
• | import and export licensing requirements; |
• | longer payment cycles; |
• | reduced protection for intellectual property rights; |
• | currency fluctuations; |
• | changes in tariffs and other trade barriers; and |
• | difficulties and delays in translating products and related documentation into foreign languages. |
• | approximately 55,000 square feet of office space in San Jose, California in one building under a lease expiring in fiscal 2024; this is used for our corporate headquarters and all of our segments; |
• | approximately 124,000 square feet of office space in San Rafael, California in one building under a lease expiring in fiscal 2020; this is used for all of our segments; |
• | approximately 101,000 square feet of office, data center, and data processing space in Roseville, Brooklyn Park and Minneapolis, Minnesota, in three buildings under leases expiring in fiscal 2017 or later; 16,000 square feet of this space is subleased to a third party; this is used for all of our segments; |
• | approximately 80,000 square feet of office space in San Diego, California in one building under a lease expiring in fiscal 2020; this is used for Applications and Decision Management Software segments. |
High | Low | ||||||
Fiscal 2015 | |||||||
October 1 — December 31, 2014 | $ | 74.39 | $ | 53.09 | |||
January 1 — March 31, 2015 | $ | 89.42 | $ | 69.44 | |||
April 1 — June 30, 2015 | $ | 96.53 | $ | 85.40 | |||
July 1 — September 30, 2015 | $ | 97.56 | $ | 77.57 | |||
Fiscal 2016 | |||||||
October 1 — December 31, 2015 | $ | 97.00 | $ | 78.11 | |||
January 1 — March 31, 2016 | $ | 106.64 | $ | 80.20 | |||
April 1 — June 30, 2016 | $ | 115.87 | $ | 102.77 | |||
July 1 — September 30, 2016 | $ | 132.95 | $ | 111.73 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||
July 1, 2016 through July 31, 2016 | 160,537 | $ | 116.63 | 154,068 | $ | 250,000,000 | |||||||
August 1, 2016 through August 31, 2016 | 32,050 | $ | 127.91 | 30,000 | $ | 246,165,162 | |||||||
September 1, 2016 through September 30, 2016 | 126,440 | $ | 130.60 | 123,806 | $ | 230,001,105 | |||||||
Total | 319,027 | $ | 123.30 | 307,874 | $ | 230,001,105 |
(1) | Includes 11,153 shares delivered in satisfaction of the tax withholding obligations resulting from the vesting of restricted stock units held by employees during the quarter ended September 30, 2016. |
(2) | On August 18, 2014, our Board of Directors approved a stock repurchase program following the completion of our previous program. This program was open-ended and authorized repurchases of shares of our common stock up to an aggregate cost of $250.0 million in the open market or in negotiated transactions. On July 27, 2016, following the termination of the August 2014 program, our Board of Directors approved a new stock repurchase program. The new program is open-ended and authorizes repurchases of shares of our common stock up to an aggregate cost of $250.0 million in the open market or in negotiated transactions. |
Year Ended September 30, | |||||||||||||||||||
2016 | 2015 (1) | 2014 (1) | 2013 (1) | 2012 (1) | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
Revenues | $ | 881,356 | $ | 838,781 | $ | 788,985 | $ | 743,444 | $ | 676,423 | |||||||||
Operating income | 169,592 | 137,505 | 161,868 | 161,593 | 168,358 | ||||||||||||||
Net income | 109,448 | 86,502 | 94,879 | 90,095 | 92,004 | ||||||||||||||
Basic earnings per share | 3.52 | 2.75 | 2.80 | 2.55 | 2.64 | ||||||||||||||
Diluted earnings per share | 3.39 | 2.65 | 2.72 | 2.48 | 2.55 | ||||||||||||||
Dividends declared per share | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 |
September 30, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Working capital | $ | 21,561 | $ | 42,727 | $ | (52,877 | ) | $ | 83,308 | $ | 49,720 | ||||||||
Total assets | 1,221,052 | 1,230,163 | 1,192,298 | 1,161,547 | 1,158,611 | ||||||||||||||
Senior notes | 316,000 | 376,000 | 447,000 | 455,000 | 504,000 | ||||||||||||||
Revolving line of credit | 255,000 | 232,000 | 99,000 | 15,000 | — | ||||||||||||||
Stockholders’ equity | 446,828 | 436,998 | 454,614 | 530,677 | 474,406 |
Bookings | Bookings Yield (1) | Number of Bookings over $1 Million | Weighted- Average Term (2) | |||||||||
(In millions) | (months) | |||||||||||
Quarter ended September 30, 2016 | $ | 80.3 | 20 | % | 13 | 37 | ||||||
Quarter ended September 30, 2015 | $ | 105.3 | 21 | % | 19 | 18 | ||||||
Year ended September 30, 2016 | $ | 378.0 | 40 | % | 57 | NM(a) | ||||||
Year ended September 30, 2015 | $ | 314.7 | 45 | % | 41 | NM(a) |
(1) | Bookings yield represents the percentage of revenue recognized from bookings for the periods indicated. |
(2) | Weighted-average term of bookings measures the average term over which bookings are expected to be recognized as revenue. |
(a) | NM - Measure is not meaningful as our estimate of bookings is as of the end of the period in which a contract is signed, and we do not update our initial booking estimates in future periods for changes between estimated and actual results. |
Revenues Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||
Segment | 2016 | 2015 | 2014 | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Applications | $ | 532,642 | $ | 526,274 | $ | 504,256 | $ | 6,368 | $ | 22,018 | 1 | % | 4 | % | |||||||||||
Scores | 241,059 | 207,007 | 186,469 | 34,052 | 20,538 | 16 | % | 11 | % | ||||||||||||||||
Decision Management Software | 107,655 | 105,500 | 98,260 | 2,155 | 7,240 | 2 | % | 7 | % | ||||||||||||||||
Total | $ | 881,356 | $ | 838,781 | $ | 788,985 | 42,575 | 49,796 | 5 | % | 6 | % |
Percentage of Revenues Year Ended September 30, | ||||||||
Segment | 2016 | 2015 | 2014 | |||||
Applications | 61 | % | 63 | % | 64 | % | ||
Scores | 27 | % | 25 | % | 24 | % | ||
Decision Management Software | 12 | % | 12 | % | 12 | % | ||
Total | 100 | % | 100 | % | 100 | % |
Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | |||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Transactional and maintenance | $ | 328,472 | $ | 320,596 | $ | 313,316 | $ | 7,876 | $ | 7,280 | 2 | % | 2 | % | |||||||||||
Professional services | 138,775 | 124,562 | 121,100 | 14,213 | 3,462 | 11 | % | 3 | % | ||||||||||||||||
License | 65,395 | 81,116 | 69,840 | (15,721 | ) | 11,276 | (19 | )% | 16 | % | |||||||||||||||
Total | $ | 532,642 | $ | 526,274 | $ | 504,256 | 6,368 | 22,018 | 1 | % | 4 | % |
Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | |||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Transactional and maintenance | $ | 233,655 | $ | 200,426 | $ | 178,023 | $ | 33,229 | $ | 22,403 | 17 | % | 13 | % | |||||||||||
Professional services | 4,185 | 2,901 | 2,784 | 1,284 | 117 | 44 | % | 4 | % | ||||||||||||||||
License | 3,219 | 3,680 | 5,662 | (461 | ) | (1,982 | ) | (13 | )% | (35 | )% | ||||||||||||||
Total | $ | 241,059 | $ | 207,007 | $ | 186,469 | 34,052 | 20,538 | 16 | % | 11 | % |
Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | |||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Transactional and maintenance | $ | 43,792 | $ | 43,210 | $ | 36,224 | $ | 582 | $ | 6,986 | 1 | % | 19 | % | |||||||||||
Professional services | 26,778 | 24,310 | 25,950 | 2,468 | (1,640 | ) | 10 | % | (6 | )% | |||||||||||||||
License | 37,085 | 37,980 | 36,086 | (895 | ) | 1,894 | (2 | )% | 5 | % | |||||||||||||||
Total | $ | 107,655 | $ | 105,500 | $ | 98,260 | 2,155 | 7,240 | 2 | % | 7 | % |
Period-to-Period Change | Period-to-Period Percentage Change | ||||||||||||||||||||||||
Year Ended September 30, | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | |||||||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||||||||||
(In thousands, except employees) | (In thousands, except employees) | ||||||||||||||||||||||||
Revenues | $ | 881,356 | $ | 838,781 | $ | 788,985 | $ | 42,575 | $ | 49,796 | 5 | % | 6 | % | |||||||||||
Operating expenses: | |||||||||||||||||||||||||
Cost of revenues | 265,173 | 270,535 | 249,281 | (5,362 | ) | 21,254 | (2 | )% | 9 | % | |||||||||||||||
Research and development | 103,669 | 98,824 | 83,435 | 4,845 | 15,389 | 5 | % | 18 | % | ||||||||||||||||
Selling, general and administrative | 328,940 | 300,002 | 278,203 | 28,938 | 21,799 | 10 | % | 8 | % | ||||||||||||||||
Amortization of intangible assets | 13,982 | 13,673 | 11,917 | 309 | 1,756 | 2 | % | 15 | % | ||||||||||||||||
Restructuring and acquisition-related | — | 18,242 | 4,281 | (18,242 | ) | 13,961 | (100 | )% | 326 | % | |||||||||||||||
Total operating expenses | 711,764 | 701,276 | 627,117 | 10,488 | 74,159 | 1 | % | 12 | % | ||||||||||||||||
Operating income | 169,592 | 137,505 | 161,868 | 32,087 | (24,363 | ) | 23 | % | (15 | )% | |||||||||||||||
Interest expense, net | (26,633 | ) | (29,150 | ) | (28,550 | ) | 2,517 | (600 | ) | (9 | )% | 2 | % | ||||||||||||
Other income (expense), net | 1,610 | 883 | (187 | ) | 727 | 1,070 | 82 | % | (572 | )% | |||||||||||||||
Income before income taxes | 144,569 | 109,238 | 133,131 | 35,331 | (23,893 | ) | 32 | % | (18 | )% | |||||||||||||||
Provision for income taxes | 35,121 | 22,736 | 38,252 | 12,385 | (15,516 | ) | 54 | % | (41 | )% | |||||||||||||||
Net income | $ | 109,448 | $ | 86,502 | $ | 94,879 | 22,946 | (8,377 | ) | 27 | % | (9 | )% | ||||||||||||
Number of employees at fiscal year-end | 3,088 | 2,803 | 2,646 | 285 | 157 | 10 | % | 6 | % |
Percentage of Revenues Year Ended September 30, | ||||||||
2016 | 2015 | 2014 | ||||||
Revenues | 100 | % | 100 | % | 100 | % | ||
Operating expenses: | ||||||||
Cost of revenues | 30 | % | 32 | % | 31 | % | ||
Research and development | 12 | % | 12 | % | 11 | % | ||
Selling, general and administrative | 37 | % | 36 | % | 35 | % | ||
Amortization of intangible assets | 2 | % | 2 | % | 1 | % | ||
Restructuring and acquisition-related | — | % | 2 | % | 1 | % | ||
Total operating expenses | 81 | % | 84 | % | 79 | % | ||
Operating income | 19 | % | 16 | % | 21 | % | ||
Interest expense, net | (3 | )% | (3 | )% | (4 | )% | ||
Income before income taxes | 16 | % | 13 | % | 17 | % | ||
Provision for income taxes | 4 | % | 3 | % | 5 | % | ||
Net income | 12 | % | 10 | % | 12 | % |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Severance costs | $ | — | $ | 3,908 | $ | 3,963 | |||||
Lease exit costs and other adjustments | — | 13,571 | 167 | ||||||||
Total restructuring expense | $ | — | $ | 17,479 | $ | 4,130 |
Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||
Segment | 2016 | 2015 | 2014 | 2016 to 2015 | 2015 to 2014 | 2016 to 2015 | 2015 to 2014 | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Applications | $ | 168,271 | $ | 159,608 | $ | 169,494 | $ | 8,663 | $ | (9,886 | ) | 5 | % | (6 | )% | ||||||||||
Scores | 185,084 | 151,214 | 142,282 | 33,870 | 8,932 | 22 | % | 6 | % | ||||||||||||||||
Decision Management Software | (3,660 | ) | (6,350 | ) | 4,203 | 2,690 | (10,553 | ) | (42 | )% | (251 | )% | |||||||||||||
Unallocated corporate expenses | (110,612 | ) | (89,744 | ) | (101,551 | ) | (20,868 | ) | 11,807 | 23 | % | (12 | )% | ||||||||||||
Total segment operating income | 239,083 | 214,728 | 214,428 | 24,355 | 300 | 11 | % | — | % | ||||||||||||||||
Unallocated share-based compensation | (55,509 | ) | (45,308 | ) | (36,362 | ) | (10,201 | ) | (8,946 | ) | 23 | % | 25 | % | |||||||||||
Unallocated amortization expense | (13,982 | ) | (13,673 | ) | (11,917 | ) | (309 | ) | (1,756 | ) | 2 | % | 15 | % | |||||||||||
Unallocated restructuring and acquisition-related | — | (18,242 | ) | (4,281 | ) | 18,242 | (13,961 | ) | (100 | )% | 326 | % | |||||||||||||
Operating income | $ | 169,592 | $ | 137,505 | $ | 161,868 | 32,087 | (24,363 | ) | 23 | % | (15 | )% |
Year Ended September 30, | Percentage of Revenues | |||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Segment revenues | $ | 532,642 | $ | 526,274 | $ | 504,256 | 100 | % | 100 | % | 100 | % | ||||||||
Segment operating expenses | (364,371 | ) | (366,666 | ) | (334,762 | ) | (68 | )% | (70 | )% | (66 | )% | ||||||||
Segment operating income | $ | 168,271 | $ | 159,608 | $ | 169,494 | 32 | % | 30 | % | 34 | % |
Year Ended September 30, | Percentage of Revenues | |||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Segment revenues | $ | 241,059 | $ | 207,007 | $ | 186,469 | 100 | % | 100 | % | 100 | % | ||||||||
Segment operating expenses | (55,975 | ) | (55,793 | ) | (44,187 | ) | (23 | )% | (27 | )% | (24 | )% | ||||||||
Segment operating income | $ | 185,084 | $ | 151,214 | $ | 142,282 | 77 | % | 73 | % | 76 | % |
Year Ended September 30, | Percentage of Revenues | |||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Segment revenues | $ | 107,655 | $ | 105,500 | $ | 98,260 | 100 | % | 100 | % | 100 | % | ||||||||
Segment operating expenses | (111,315 | ) | (111,850 | ) | (94,057 | ) | (103 | )% | (106 | )% | (96 | )% | ||||||||
Segment operating income (loss) | $ | (3,660 | ) | $ | (6,350 | ) | $ | 4,203 | (3 | )% | (6 | )% | 4 | % |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Cash provided by (used in): | |||||||||||
Operating activities | $ | 185,231 | $ | 132,977 | $ | 175,034 | |||||
Investing activities | (27,615 | ) | (81,916 | ) | (19,843 | ) | |||||
Financing activities | (164,978 | ) | (58,635 | ) | (130,391 | ) | |||||
Effect of exchange rate changes on cash | (2,832 | ) | (11,381 | ) | (2,903 | ) | |||||
Increase (decrease) in cash and cash equivalents | $ | (10,194 | ) | $ | (18,955 | ) | $ | 21,897 |
Year Ended September 30, | Thereafter | Total | |||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Senior notes (1) | $ | 72,000 | $ | 131,000 | $ | 28,000 | $ | 85,000 | $ | — | $ | — | $ | 316,000 | |||||||||||||
Interest due on debt obligations (2) | 19,303 | 15,675 | 6,269 | 4,752 | — | — | 45,999 | ||||||||||||||||||||
Operating lease obligations | 22,069 | 20,890 | 17,806 | 9,541 | 6,004 | 13,966 | 90,276 | ||||||||||||||||||||
Unrecognized tax benefits (3) | — | — | — | — | — | — | 6,799 | ||||||||||||||||||||
Total commitments | $ | 113,372 | $ | 167,565 | $ | 52,075 | $ | 99,293 | $ | 6,004 | $ | 13,966 | $ | 459,074 |
(1) | Represents the unpaid principal amount of the Senior Notes. |
(2) | Represents interest payments on the Senior Notes. |
(3) | Represents unrecognized tax benefits related to uncertain tax positions. As we are not able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related balances have not been reflected in the section of the table showing payment by fiscal year. |
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||
Cost Basis | Carrying Amount | Average Yield | Cost Basis | Carrying Amount | Average Yield | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | 75,926 | $ | 75,926 | 0.17 | % | $ | 86,120 | $ | 86,120 | 0.95 | % |
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Principal | Carrying Amounts | Fair Value | Principal | Carrying Amounts | Fair Value | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||
The 2008 Senior Notes | $ | 131,000 | $ | 131,000 | $ | 139,902 | $ | 131,000 | $ | 131,000 | $ | 144,009 | |||||||||||
The 2010 Senior Notes | $ | 185,000 | $ | 185,000 | $ | 195,715 | $ | 245,000 | $ | 245,000 | $ | 257,563 |
September 30, 2016 | ||||||||||
Contract Amount | Fair Value | |||||||||
Foreign Currency | US$ | US$ | ||||||||
(In thousands) | ||||||||||
Sell foreign currency: | ||||||||||
Euro (EUR) | EUR | 7,850 | $ | 8,743 | — | |||||
Buy foreign currency: | ||||||||||
British pound (GBP) | GBP | 7,721 | $ | 10,000 | — |
September 30, 2015 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Canadian dollar (CAD) | CAD | 2,750 | $ | 2,045 | $ | — | |||||
Euro (EUR) | EUR | 5,600 | $ | 6,296 | — | ||||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 6,943 | $ | 10,550 | — |
/s/ Deloitte & Touche LLP |
San Diego, CA |
November 10, 2016 |
September 30, | |||||||
2016 | 2015 | ||||||
(In thousands, except par value data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 75,926 | $ | 86,120 | |||
Accounts receivable, net | 167,786 | 158,773 | |||||
Prepaid expenses and other current assets | 23,926 | 41,709 | |||||
Total current assets | 267,638 | 286,602 | |||||
Marketable securities available for sale | 11,016 | 9,567 | |||||
Other investments | 10,920 | 10,958 | |||||
Property and equipment, net | 45,122 | 38,208 | |||||
Goodwill | 798,415 | 814,750 | |||||
Intangible assets, net | 33,619 | 47,321 | |||||
Deferred income taxes | 47,598 | 15,196 | |||||
Other assets | 6,724 | 7,561 | |||||
Total assets | $ | 1,221,052 | $ | 1,230,163 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 22,952 | $ | 19,852 | |||
Accrued compensation and employee benefits | 71,216 | 54,368 | |||||
Other accrued liabilities | 27,780 | 30,958 | |||||
Deferred revenue | 47,129 | 46,697 | |||||
Current maturities on debt | 77,000 | 92,000 | |||||
Total current liabilities | 246,077 | 243,875 | |||||
Long-term debt | 494,000 | 516,000 | |||||
Other liabilities | 34,147 | 33,290 | |||||
Total liabilities | 774,224 | 793,165 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock ($0.01 par value; 1,000 shares authorized; none issued and outstanding) | — | — | |||||
Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and 30,935 and 31,290 shares outstanding at September 30, 2016 and September 30, 2015, respectively) | 309 | 313 | |||||
Paid-in-capital | 1,185,076 | 1,152,789 | |||||
Treasury stock, at cost (57,922 and 57,567 shares at September 30, 2016 and September 30, 2015, respectively) | (2,136,760 | ) | (2,033,644 | ) | |||
Retained earnings | 1,475,214 | 1,368,255 | |||||
Accumulated other comprehensive loss | (77,011 | ) | (50,715 | ) | |||
Total stockholders’ equity | 446,828 | 436,998 | |||||
Total liabilities and stockholders’ equity | $ | 1,221,052 | $ | 1,230,163 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues: | |||||||||||
Transactional and maintenance | $ | 605,919 | $ | 564,232 | $ | 527,563 | |||||
Professional services | 169,738 | 151,773 | 149,834 | ||||||||
License | 105,699 | 122,776 | 111,588 | ||||||||
Total revenues | 881,356 | 838,781 | 788,985 | ||||||||
Operating expenses: | |||||||||||
Cost of revenues (1) | 265,173 | 270,535 | 249,281 | ||||||||
Research and development | 103,669 | 98,824 | 83,435 | ||||||||
Selling, general and administrative (1) | 328,940 | 300,002 | 278,203 | ||||||||
Amortization of intangible assets (1) | 13,982 | 13,673 | 11,917 | ||||||||
Restructuring and acquisition-related | — | 18,242 | 4,281 | ||||||||
Total operating expenses | 711,764 | 701,276 | 627,117 | ||||||||
Operating income | 169,592 | 137,505 | 161,868 | ||||||||
Interest expense, net | (26,633 | ) | (29,150 | ) | (28,550 | ) | |||||
Other income (expense), net | 1,610 | 883 | (187 | ) | |||||||
Income before income taxes | 144,569 | 109,238 | 133,131 | ||||||||
Provision for income taxes | 35,121 | 22,736 | 38,252 | ||||||||
Net income | 109,448 | 86,502 | 94,879 | ||||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation adjustments | (26,296 | ) | (27,526 | ) | (2,281 | ) | |||||
Comprehensive income | $ | 83,152 | $ | 58,976 | $ | 92,598 | |||||
Basic earnings per share | $ | 3.52 | $ | 2.75 | $ | 2.80 | |||||
Shares used in computing basic earnings per share | 31,129 | 31,402 | 33,870 | ||||||||
Diluted earnings per share | $ | 3.39 | $ | 2.65 | $ | 2.72 | |||||
Shares used in computing diluted earnings per share | 32,308 | 32,609 | 34,864 |
(1) | Cost of revenues and selling, general and administrative expenses exclude the amortization of intangible assets. See Note 7. |
Common Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Par Value | Paid-in- Capital | Treasury Stock | Retained Earnings | ||||||||||||||||||||||
Balance at September 30, 2013 | 34,786 | $ | 348 | $ | 1,110,198 | $ | (1,751,057 | ) | $ | 1,192,096 | $ | (20,908 | ) | $ | 530,677 | |||||||||||
Share-based compensation | — | — | 36,362 | — | — | — | 36,362 | |||||||||||||||||||
Issuance of treasury stock under employee stock plans | 911 | 9 | (23,278 | ) | 29,823 | — | — | 6,554 | ||||||||||||||||||
Tax effect from share-based payment arrangements | — | — | 6,035 | — | — | — | 6,035 | |||||||||||||||||||
Repurchases of common stock | (3,650 | ) | (37 | ) | — | (214,861 | ) | — | — | (214,898 | ) | |||||||||||||||
Dividends paid | — | — | — | — | (2,714 | ) | — | (2,714 | ) | |||||||||||||||||
Net income | — | — | — | — | 94,879 | — | 94,879 | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | (2,281 | ) | (2,281 | ) | |||||||||||||||||
Balance at September 30, 2014 | 32,047 | 320 | 1,129,317 | (1,936,095 | ) | 1,284,261 | (23,189 | ) | 454,614 | |||||||||||||||||
Share-based compensation | — | — | 45,308 | — | — | — | 45,308 | |||||||||||||||||||
Issuance of treasury stock under employee stock plans | 954 | 10 | (34,366 | ) | 33,153 | — | — | (1,203 | ) | |||||||||||||||||
Tax effect from share-based payment arrangements | — | — | 12,530 | — | — | — | 12,530 | |||||||||||||||||||
Repurchases of common stock | (1,711 | ) | (17 | ) | — | (130,702 | ) | — | — | (130,719 | ) | |||||||||||||||
Dividends paid | — | — | — | — | (2,508 | ) | — | (2,508 | ) | |||||||||||||||||
Net income | — | — | — | — | 86,502 | — | 86,502 | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | (27,526 | ) | (27,526 | ) | |||||||||||||||||
Balance at September 30, 2015 | 31,290 | 313 | 1,152,789 | (2,033,644 | ) | 1,368,255 | (50,715 | ) | 436,998 | |||||||||||||||||
Share-based compensation | — | — | 55,509 | — | — | — | 55,509 | |||||||||||||||||||
Issuance of treasury stock under employee stock plans | 980 | 10 | (47,406 | ) | 35,269 | — | — | (12,127 | ) | |||||||||||||||||
Tax effect from share-based payment arrangements | — | — | 24,184 | — | — | — | 24,184 | |||||||||||||||||||
Repurchases of common stock | (1,335 | ) | (14 | ) | — | (138,385 | ) | — | — | (138,399 | ) | |||||||||||||||
Dividends paid | — | — | — | — | (2,489 | ) | — | (2,489 | ) | |||||||||||||||||
Net income | — | — | — | — | 109,448 | — | 109,448 | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | (26,296 | ) | (26,296 | ) | |||||||||||||||||
Balance at September 30, 2016 | 30,935 | $ | 309 | $ | 1,185,076 | $ | (2,136,760 | ) | $ | 1,475,214 | $ | (77,011 | ) | $ | 446,828 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 109,448 | $ | 86,502 | $ | 94,879 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 31,633 | 33,889 | 32,632 | ||||||||
Share-based compensation | 55,509 | 45,308 | 36,362 | ||||||||
Deferred income taxes | (26,007 | ) | (5,934 | ) | (16,026 | ) | |||||
Tax effect from share-based payment arrangements | 24,184 | 12,530 | 6,035 | ||||||||
Excess tax benefits from share-based payment arrangements | (25,037 | ) | (13,795 | ) | (6,808 | ) | |||||
Provision of doubtful accounts | 2,011 | — | 1,485 | ||||||||
Net (gain) loss on sales of property and equipment | 6 | 2,210 | (10 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (18,225 | ) | (4,602 | ) | (13,649 | ) | |||||
Prepaid expenses and other assets | 12,848 | (15,462 | ) | (1,754 | ) | ||||||
Accounts payable | 564 | (3,672 | ) | 3,174 | |||||||
Accrued compensation and employee benefits | 17,079 | (1,506 | ) | 17,450 | |||||||
Other liabilities | (4,282 | ) | 4,113 | 15,566 | |||||||
Deferred revenue | 5,500 | (6,604 | ) | 5,698 | |||||||
Net cash provided by operating activities | 185,231 | 132,977 | 175,034 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (21,969 | ) | (24,999 | ) | (12,590 | ) | |||||
Cash paid for acquisitions, net of cash acquired | (5,683 | ) | (56,992 | ) | (7,253 | ) | |||||
Distribution from cost method investees | 37 | 75 | — | ||||||||
Net cash used in investing activities | (27,615 | ) | (81,916 | ) | (19,843 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from revolving line of credit | 122,000 | 249,000 | 145,000 | ||||||||
Payments on revolving line of credit and other short-term loans | (99,000 | ) | (116,000 | ) | (61,000 | ) | |||||
Payments on senior notes | (60,000 | ) | (71,000 | ) | (8,000 | ) | |||||
Proceeds from issuance of treasury stock under employee stock plans | 17,828 | 18,258 | 18,851 | ||||||||
Taxes paid related to net share settlement of equity awards | (29,955 | ) | (19,461 | ) | (12,297 | ) | |||||
Dividends paid | (2,489 | ) | (2,508 | ) | (2,714 | ) | |||||
Repurchases of common stock | (138,399 | ) | (130,719 | ) | (217,039 | ) | |||||
Excess tax benefits from share-based payment arrangements | 25,037 | 13,795 | 6,808 | ||||||||
Net cash used in financing activities | (164,978 | ) | (58,635 | ) | (130,391 | ) | |||||
Effect of exchange rate changes on cash | (2,832 | ) | (11,381 | ) | (2,903 | ) | |||||
Increase (decrease) in cash and cash equivalents | (10,194 | ) | (18,955 | ) | 21,897 | ||||||
Cash and cash equivalents, beginning of year | 86,120 | 105,075 | 83,178 | ||||||||
Cash and cash equivalents, end of year | $ | 75,926 | $ | 86,120 | $ | 105,075 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for income taxes, net of refunds of $11,363, $1,592 and $3,424 during the years ended September 30, 2016, 2015 and 2014, respectively | $ | 10,855 | $ | 33,752 | $ | 22,367 | |||||
Cash paid for interest | $ | 26,884 | $ | 30,470 | $ | 28,209 | |||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||||
Purchase of property and equipment included in accounts payable | $ | 3,287 | $ | 436 | $ | 363 |
Estimated Useful Life | |
Data processing equipment and software | 3 years |
Office furniture and equipment | 3 to 7 years |
Leasehold improvements | Shorter of estimated useful life or lease term |
Estimated Useful Life | |
Completed technology | 4 to 10 years |
Customer contracts and relationships | 5 to 15 years |
Trade names | 1 to 3 years |
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Fair Value | Amortized Cost | Gross Unrealized Gains | Fair Value | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cash and Cash Equivalents: | |||||||||||||||||||||||
Cash | $ | 75,486 | $ | — | $ | 75,486 | $ | 85,681 | $ | — | $ | 85,681 | |||||||||||
Money market funds | 440 | — | 440 | 439 | — | 439 | |||||||||||||||||
Total | $ | 75,926 | $ | — | $ | 75,926 | $ | 86,120 | $ | — | $ | 86,120 | |||||||||||
Long-term Marketable Securities: | |||||||||||||||||||||||
Marketable equity securities | $ | 9,598 | $ | 1,418 | $ | 11,016 | $ | 8,691 | $ | 876 | $ | 9,567 |
• | Level 1 — uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. Our Level 1 assets are comprised of money market funds and certain equity securities. |
• | Level 2 — uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. We do not have any assets that are valued using inputs identified under a Level 2 hierarchy as of September 30, 2016 and 2015. |
• | Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. We do not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of September 30, 2016 and 2015. |
September 30, 2016 | Active Markets for Identical Instruments (Level 1) | Fair Value as of September 30, 2016 | |||||
(In thousands) | |||||||
Assets: | |||||||
Cash equivalents (1) | $ | 440 | $ | 440 | |||
Marketable securities (2) | 11,016 | 11,016 | |||||
Total | $ | 11,456 | $ | 11,456 |
September 30, 2015 | Active Markets for Identical Instruments (Level 1) | Fair Value as of September 30, 2015 | |||||
(In thousands) | |||||||
Assets: | |||||||
Cash equivalents (1) | $ | 439 | $ | 439 | |||
Marketable securities (2) | 9,567 | 9,567 | |||||
Total | $ | 10,006 | $ | 10,006 |
(1) | Included in cash and cash equivalents on our balance sheet at September 30, 2016 and 2015. Not included in this table are cash deposits of $75.5 million and $85.7 million at September 30, 2016 and 2015, respectively. |
(2) | Represents securities held under a supplemental retirement and savings plan for certain officers and senior management employees, which are distributed upon termination or retirement of the employees. Included in long-term marketable securities on our balance sheet at September 30, 2016 and 2015. |
September 30, 2016 | ||||||||||
Contract Amount | Fair Value | |||||||||
Foreign Currency | US$ | US$ | ||||||||
(In thousands) | ||||||||||
Sell foreign currency: | ||||||||||
Euro (EUR) | EUR | 7,850 | $ | 8,743 | — | |||||
Buy foreign currency: | ||||||||||
British pound (GBP) | GBP | 7,721 | $ | 10,000 | — |
September 30, 2015 | |||||||||||
Contract Amount | Fair Value | ||||||||||
Foreign Currency | US$ | US$ | |||||||||
(In thousands) | |||||||||||
Sell foreign currency: | |||||||||||
Canadian dollar (CAD) | CAD | 2,750 | $ | 2,045 | $ | — | |||||
Euro (EUR) | EUR | 5,600 | $ | 6,296 | — | ||||||
Buy foreign currency: | |||||||||||
British pound (GBP) | GBP | 6,943 | $ | 10,550 | — |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Gain (loss) on foreign currency forward contracts | $ | (2,911 | ) | $ | (62 | ) | $ | 256 |
September 30, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
Billed | $ | 124,731 | $ | 114,464 | |||
Unbilled (1) | 45,247 | 46,435 | |||||
169,978 | 160,899 | ||||||
Less: allowance for doubtful accounts | (2,192 | ) | (2,126 | ) | |||
Receivables, net | $ | 167,786 | $ | 158,773 |
(1) | Represents revenue recorded in excess of amounts billable pursuant to contract provisions and generally become billable at contractually specified dates or upon the attainment of milestones. Unbilled amounts are expected to be realized within one year. |
Year Ended September 30, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
Balance, beginning of year | $ | 2,126 | $ | 2,927 | |||
Add: expense | 2,011 | — | |||||
Less: write-offs (net of recoveries) | (1,945 | ) | (801 | ) | |||
Balance, end of year | $ | 2,192 | $ | 2,126 |
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||
(In thousands, except average life) | |||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Average Life | Gross Carrying Amount | Accumulated Amortization | Net | Average Life | ||||||||||||||||||||
Completed technology | $ | 84,184 | $ | (70,368 | ) | $ | 13,816 | 5 | $ | 87,820 | $ | (67,769 | ) | $ | 20,051 | 5 | |||||||||||
Customer contracts and relationships | 64,592 | (45,034 | ) | 19,558 | 12 | 65,762 | (38,930 | ) | 26,832 | 12 | |||||||||||||||||
Trade names | 575 | (330 | ) | 245 | 3 | 576 | (138 | ) | 438 | 3 | |||||||||||||||||
$ | 149,351 | $ | (115,732 | ) | $ | 33,619 | 8 | $ | 154,158 | $ | (106,837 | ) | $ | 47,321 | 8 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Cost of revenues | $ | 7,300 | $ | 7,594 | $ | 7,371 | |||||
Selling, general and administrative expenses | 6,682 | 6,079 | 4,546 | ||||||||
Total | $ | 13,982 | $ | 13,673 | $ | 11,917 |
Year Ended September 30, | |||
2017 | $ | 12,846 | |
2018 | 6,398 | ||
2019 | 5,882 | ||
2020 | 3,611 | ||
2021 | 2,405 | ||
Thereafter | 2,477 | ||
Total | $ | 33,619 |
Applications | Scores | Decision Management Software | Total | ||||||||||||
(In thousands) | |||||||||||||||
Balance at September 30, 2014 | $ | 560,295 | $ | 146,648 | $ | 72,985 | $ | 779,928 | |||||||
Addition from acquisitions | 46,149 | — | — | 46,149 | |||||||||||
Foreign currency translation adjustment | (9,679 | ) | — | (1,648 | ) | (11,327 | ) | ||||||||
Balance at September 30, 2015 | 596,765 | 146,648 | 71,337 | 814,750 | |||||||||||
Addition from acquisitions | 3,857 | — | — | 3,857 | |||||||||||
Adjustment related to prior acquisitions | 283 | — | — | 283 | |||||||||||
Foreign currency translation adjustment | (18,185 | ) | — | (2,290 | ) | (20,475 | ) | ||||||||
Balance at September 30, 2016 | $ | 582,720 | $ | 146,648 | $ | 69,047 | $ | 798,415 |
September 30, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
Property and equipment: | |||||||
Data processing equipment and software | $ | 84,761 | $ | 71,841 | |||
Office furniture and equipment | 16,847 | 14,750 | |||||
Leasehold improvements | 25,152 | 23,269 | |||||
Less: accumulated depreciation and amortization | (81,638 | ) | (71,652 | ) | |||
Total | $ | 45,122 | $ | 38,208 |
Series | Amount | Interest Rate | Maturity Date | |||
(In millions) | ||||||
A | $ | 41.0 | 6.37 | % | May 7, 2013 | |
B | $ | 40.0 | 6.37 | % | May 7, 2015 | |
C | $ | 63.0 | 6.71 | % | May 7, 2015 | |
D | $ | 131.0 | 7.18 | % | May 7, 2018 |
Series | Amount | Interest Rate | Maturity Date | |||
(In millions) | ||||||
E | $ | 60.0 | 4.72 | % | July 14, 2016 | |
F | $ | 72.0 | 5.04 | % | July 14, 2017 | |
G | $ | 28.0 | 5.42 | % | July 14, 2019 | |
H | $ | 85.0 | 5.59 | % | July 14, 2020 |
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Principal | Carrying Amounts | Fair Value | Principal | Carrying Amounts | Fair Value | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||
The 2008 Senior Notes | $ | 131,000 | $ | 131,000 | $ | 139,902 | $ | 131,000 | $ | 131,000 | $ | 144,009 | |||||||||||
The 2010 Senior Notes | $ | 185,000 | $ | 185,000 | $ | 195,715 | $ | 245,000 | $ | 245,000 | $ | 257,563 |
Year Ended September 30, | |||
2017 | $ | 72,000 | |
2018 | 131,000 | ||
2019 | 28,000 | ||
2020 | 85,000 | ||
Total | $ | 316,000 |
Accrual at September 30, 2014 | Expense Additions | Cash Payments | Non-cash Settlements | Accrual at September 30, 2015 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Facilities charges | $ | 92 | $ | 13,571 | $ | (92 | ) | $ | (576 | ) | $ | 12,995 | |||||||
Employee separation | 170 | 3,908 | (1,673 | ) | — | 2,405 | |||||||||||||
262 | $ | 17,479 | $ | (1,765 | ) | $ | (576 | ) | 15,400 | ||||||||||
Less: current portion | (262 | ) | (5,570 | ) | |||||||||||||||
Non-current | $ | — | $ | 9,830 |
Accrual at September 30, 2015 | Expense Additions | Cash Payments | Non-cash Settlements | Accrual at September 30, 2016 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Facilities charges | $ | 12,995 | $ | — | $ | (3,762 | ) | $ | — | $ | 9,233 | ||||||||
Employee separation | 2,405 | — | (2,405 | ) | — | — | |||||||||||||
15,400 | $ | — | $ | (6,167 | ) | $ | — | 9,233 | |||||||||||
Less: current portion | (5,570 | ) | (4,266 | ) | |||||||||||||||
Non-current | $ | 9,830 | $ | 4,967 |
Year ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Current: | |||||||||||
Federal | $ | 50,631 | $ | 23,646 | $ | 42,570 | |||||
State | 2,900 | (5,381 | ) | 4,221 | |||||||
Foreign | 7,597 | 10,405 | 7,487 | ||||||||
61,128 | 28,670 | 54,278 | |||||||||
Deferred: | |||||||||||
Federal | (23,592 | ) | (5,004 | ) | (15,401 | ) | |||||
State | (225 | ) | 1,422 | (1,093 | ) | ||||||
Foreign | (2,190 | ) | (2,352 | ) | 468 | ||||||
(26,007 | ) | (5,934 | ) | (16,026 | ) | ||||||
Total provision | $ | 35,121 | $ | 22,736 | $ | 38,252 |
September 30, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
Deferred tax assets: | |||||||
Net operating loss carryforward | $ | 16,122 | $ | 17,650 | |||
Foreign tax credit carryforward | 14,590 | — | |||||
Research credit carryforward | 6,132 | 5,759 | |||||
Accrued bonus | 13,807 | 5,400 | |||||
Investments | 619 | 1,042 | |||||
Accrued compensation | 1,328 | 1,834 | |||||
Share-based compensation | 27,203 | 23,741 | |||||
Deferred revenue | 1,467 | 979 | |||||
Accrued lease costs | 3,406 | 5,009 | |||||
Property and equipment | 3,348 | 3,249 | |||||
Other | 7,728 | 5,613 | |||||
95,750 | 70,276 | ||||||
Less valuation allowance | (15,145 | ) | (13,882 | ) | |||
Total deferred tax assets | 80,605 | 56,394 | |||||
Deferred tax liabilities: | |||||||
Intangible assets | (28,056 | ) | (30,286 | ) | |||
Prepaid expense | (3,959 | ) | (3,877 | ) | |||
Other | (992 | ) | (993 | ) | |||
Total deferred tax liabilities | (33,007 | ) | (35,156 | ) | |||
Deferred tax assets, net | $ | 47,598 | $ | 21,238 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Income tax provision at U.S. federal statutory rate | $ | 50,599 | $ | 38,233 | $ | 46,595 | |||||
State income taxes, net of U.S. federal benefit | 2,244 | 1,719 | 2,832 | ||||||||
Foreign tax rate differential | (4,661 | ) | (5,279 | ) | (4,592 | ) | |||||
Intercompany interest | (1,223 | ) | (1,260 | ) | (1,246 | ) | |||||
Research credits | (4,398 | ) | (2,104 | ) | (302 | ) | |||||
Domestic production deduction | (3,726 | ) | (1,607 | ) | (3,141 | ) | |||||
Federal and state audit settlements | (248 | ) | (5,806 | ) | (5,886 | ) | |||||
Foreign | (1,702 | ) | (3,109 | ) | (1,654 | ) | |||||
Valuation allowance | 1,262 | 1,805 | 3,888 | ||||||||
Foreign Tax Credit | (3,286 | ) | (1,296 | ) | 150 | ||||||
Other | 260 | 1,440 | 1,608 | ||||||||
Recorded income tax provision | $ | 35,121 | $ | 22,736 | $ | 38,252 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands) | |||||||||||
Gross unrecognized tax benefits at beginning of year | $ | 4,634 | $ | 4,554 | $ | 9,009 | |||||
Gross increases for tax positions in prior years | 1,004 | 1,725 | 2,468 | ||||||||
Gross decreases for tax positions in prior years | (117 | ) | (3 | ) | (967 | ) | |||||
Gross increases based on tax positions related to the current year | 1,310 | 582 | 923 | ||||||||
Decreases for settlements and payments | (32 | ) | (2,224 | ) | (6,879 | ) | |||||
Gross unrecognized tax benefits at end of year | $ | 6,799 | $ | 4,634 | $ | 4,554 |
Year Ended September 30, | ||||||||
2016 | 2015 | 2014 | ||||||
Stock Options: | ||||||||
Average expected term (years) | 4.83 | 4.18 | 4.04 | |||||
Expected volatility (range) | 35.3 - 36.4 | % | 34.5 - 35.3 | % | 34.6 - 35.6 | % | ||
Weighted average volatility | 36.0 | % | 34.6 | % | 35.1 | % | ||
Risk-free interest rate (range) | 1.21 - 1.49 | % | 1.33 - 1.48 | % | 0.76 - 1.16 | % | ||
Average expected dividend yield | 0.09 | % | 0.14 | % | 0.16 | % | ||
Expected dividend yield (range) | 0.09 - 0.10 | % | 0.11 - 0.14 | % | 0.16 - 0.17 | % |
Shares | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
(In thousands) | (In years) | (In thousands) | ||||||||||
Outstanding at October 1, 2015 | 2,024 | $ | 46.94 | |||||||||
Granted | 36 | 94.84 | ||||||||||
Exercised | (521 | ) | 34.25 | |||||||||
Forfeited | (18 | ) | 50.29 | |||||||||
Outstanding at September 30, 2016 | 1,521 | $ | 52.37 | 3.79 | $ | 109,873 | ||||||
Exercisable at September 30, 2016 | 985 | $ | 44.92 | 3.24 | $ | 78,461 | ||||||
Vested and expected to vest at September 30, 2016 | 1,497 | $ | 52.04 | 3.77 | $ | 108,573 |
Shares | Weighted-average Grant-date Fair Value | |||||
(In thousands) | ||||||
Outstanding at October 1, 2015 | 1,319 | $ | 58.51 | |||
Granted | 575 | 94.77 | ||||
Released | (526 | ) | 52.47 | |||
Forfeited | (157 | ) | 69.52 | |||
Outstanding at September 30, 2016 | 1,211 | $ | 76.93 |
Shares | Weighted- average Grant-date Fair Value | |||||
(In thousands) | ||||||
Outstanding at October 1, 2015 | 281 | $ | 53.70 | |||
Granted | 105 | 91.74 | ||||
Released | (156 | ) | 49.36 | |||
Outstanding at September 30, 2016 | 230 | $ | 73.99 |
Year Ended September 30, | ||||||||
2016 | 2015 | 2014 | ||||||
Expected volatility in FICO’s stock price | 24.1 | % | 26.6 | % | 33.9 | % | ||
Expected volatility in Russell 3000 Index | 12.8 | % | 12.2 | % | 17.3 | % | ||
Correlation between FICO and the Russell 3000 Index | 60.2 | % | 55.9 | % | 68.0 | % | ||
Risk-free interest rate | 1.25 | % | 1.10 | % | 0.68 | % | ||
Average expected dividend yield | 0.09 | % | 0.14 | % | 0.16 | % |
Shares | Weighted- average Grant-date Fair Value | |||||
(In thousands) | ||||||
Outstanding at October 1, 2015 | 129 | $ | 88.65 | |||
Granted | 114 | 100.63 | ||||
Released | (101 | ) | 85.65 | |||
Outstanding at September 30, 2016 | 142 | $ | 100.40 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(In thousands, except per share data) | |||||||||||
Numerator for basic and diluted earnings per share — net income | $ | 109,448 | $ | 86,502 | $ | 94,879 | |||||
Denominator — share: | |||||||||||
Basic weighted-average shares | 31,129 | 31,402 | 33,870 | ||||||||
Effect of dilutive securities | 1,179 | 1,207 | 994 | ||||||||
Diluted weighted-average shares | 32,308 | 32,609 | 34,864 | ||||||||
Earnings per share: | |||||||||||
Basic | $ | 3.52 | $ | 2.75 | $ | 2.80 | |||||
Diluted | $ | 3.39 | $ | 2.65 | $ | 2.72 |
• | Applications. This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO® Analytic Cloud. |
• | Scores. This segment includes our business-to-business scoring solutions, our myFICO® solutions for consumers and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies, as well as services through which we provide our scores to clients directly. |
• | Decision Management Software (formerly“Tools”). This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our new FICO® Decision Management Suite, as well as associated professional services. These tools are available to our customers as on-premises software or through the FICO® Analytic Cloud. |
Year Ended September 30, 2016 | |||||||||||||||||||
Applications | Scores | Decision Management Software | Unallocated Corporate Expenses | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Segment revenues: | |||||||||||||||||||
Transactional and maintenance | $ | 328,472 | $ | 233,655 | $ | 43,792 | $ | — | $ | 605,919 | |||||||||
Professional services | 138,775 | 4,185 | 26,778 | — | 169,738 | ||||||||||||||
License | 65,395 | 3,219 | 37,085 | — | 105,699 | ||||||||||||||
Total segment revenues | 532,642 | 241,059 | 107,655 | — | 881,356 | ||||||||||||||
Segment operating expense | (364,371 | ) | (55,975 | ) | (111,315 | ) | (110,612 | ) | (642,273 | ) | |||||||||
Segment operating income (loss) | $ | 168,271 | $ | 185,084 | $ | (3,660 | ) | $ | (110,612 | ) | $ | 239,083 | |||||||
Unallocated share-based compensation expense | (55,509 | ) | |||||||||||||||||
Unallocated amortization expense | (13,982 | ) | |||||||||||||||||
Operating income | 169,592 | ||||||||||||||||||
Unallocated interest expense, net | (26,633 | ) | |||||||||||||||||
Unallocated other income, net | 1,610 | ||||||||||||||||||
Income before income taxes | $ | 144,569 | |||||||||||||||||
Depreciation expense | $ | 11,852 | $ | 814 | $ | 3,657 | $ | 1,328 | $ | 17,651 |
Year Ended September 30, 2015 | |||||||||||||||||||
Applications | Scores | Decision Management Software | Unallocated Corporate Expenses | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Segment revenues: | |||||||||||||||||||
Transactional and maintenance | $ | 320,596 | $ | 200,426 | $ | 43,210 | $ | — | $ | 564,232 | |||||||||
Professional services | 124,562 | 2,901 | 24,310 | — | 151,773 | ||||||||||||||
License | 81,116 | 3,680 | 37,980 | — | 122,776 | ||||||||||||||
Total segment revenues | 526,274 | 207,007 | 105,500 | — | 838,781 | ||||||||||||||
Segment operating expense | (366,666 | ) | (55,793 | ) | (111,850 | ) | (89,744 | ) | (624,053 | ) | |||||||||
Segment operating income (loss) | $ | 159,608 | $ | 151,214 | $ | (6,350 | ) | $ | (89,744 | ) | 214,728 | ||||||||
Unallocated share-based compensation expense | (45,308 | ) | |||||||||||||||||
Unallocated amortization expense | (13,673 | ) | |||||||||||||||||
Unallocated restructuring and acquisition-related expenses | (18,242 | ) | |||||||||||||||||
Operating income | 137,505 | ||||||||||||||||||
Unallocated interest expense, net | (29,150 | ) | |||||||||||||||||
Unallocated other income, net | 883 | ||||||||||||||||||
Income before income taxes | $ | 109,238 | |||||||||||||||||
Depreciation expense | $ | 13,861 | $ | 921 | $ | 3,087 | $ | 2,347 | $ | 20,216 |
Year Ended September 30, 2014 | |||||||||||||||||||
Applications | Scores | Decision Management Software | Unallocated Corporate Expenses | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Segment revenues: | |||||||||||||||||||
Transactional and maintenance | $ | 313,316 | $ | 178,023 | $ | 36,224 | $ | — | $ | 527,563 | |||||||||
Professional services | 121,100 | 2,784 | 25,950 | — | 149,834 | ||||||||||||||
License | 69,840 | 5,662 | 36,086 | — | 111,588 | ||||||||||||||
Total segment revenues | 504,256 | 186,469 | 98,260 | — | 788,985 | ||||||||||||||
Segment operating expense | (334,762 | ) | (44,187 | ) | (94,057 | ) | (101,551 | ) | (574,557 | ) | |||||||||
Segment operating income | $ | 169,494 | $ | 142,282 | $ | 4,203 | $ | (101,551 | ) | 214,428 | |||||||||
Unallocated share-based compensation expense | (36,362 | ) | |||||||||||||||||
Unallocated amortization expense | (11,917 | ) | |||||||||||||||||
Unallocated restructuring and acquisition-related expenses | (4,281 | ) | |||||||||||||||||
Operating income | 161,868 | ||||||||||||||||||
Unallocated interest expense, net | (28,550 | ) | |||||||||||||||||
Unallocated other expense, net | (187 | ) | |||||||||||||||||
Income before income taxes | $ | 133,131 | |||||||||||||||||
Depreciation expense | $ | 14,451 | $ | 851 | $ | 2,752 | $ | 2,661 | $ | 20,715 |
Year Ended September 30, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Applications | $ | 532,642 | 61 | % | $ | 526,274 | 63 | % | $ | 504,256 | 64 | % | ||||||||
Scores | 241,059 | 27 | % | 207,007 | 25 | % | 186,469 | 24 | % | |||||||||||
Decision Management Software | 107,655 | 12 | % | 105,500 | 12 | % | 98,260 | 12 | % | |||||||||||
Total | $ | 881,356 | 100 | % | $ | 838,781 | 100 | % | $ | 788,985 | 100 | % |
Year Ended September 30, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
United States | $ | 567,443 | 64 | % | $ | 505,109 | 60 | % | $ | 457,270 | 58 | % | ||||||||
United Kingdom | 86,485 | 10 | % | 93,855 | 11 | % | 98,784 | 12 | % | |||||||||||
Other countries | 227,428 | 26 | % | 239,817 | 29 | % | 232,931 | 30 | % | |||||||||||
Total | $ | 881,356 | 100 | % | $ | 838,781 | 100 | % | $ | 788,985 | 100 | % |
September 30, | |||||||||||||
2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||
United States | $ | 36,083 | 80 | % | $ | 29,949 | 78 | % | |||||
International | 9,039 | 20 | % | 8,259 | 22 | % | |||||||
Total | $ | 45,122 | 100 | % | $ | 38,208 | 100 | % |
Year Ended September 30, | Future Minimum Lease Commitments | ||
(In thousands) | |||
2017 | $ | 22,069 | |
2018 | 20,890 | ||
2019 | 17,806 | ||
2020 | 9,541 | ||
2021 | 6,004 | ||
Thereafter | 13,966 | ||
Total | $ | 90,276 |
Quarter Ended | |||||||||||||||
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues | $ | 235,824 | $ | 238,778 | $ | 206,678 | $ | 200,076 | |||||||
Cost of revenues (1) | 74,298 | 66,384 | 62,298 | 62,193 | |||||||||||
Gross profit | 161,526 | 172,394 | 144,380 | 137,883 | |||||||||||
Net income | $ | 32,104 | $ | 34,987 | $ | 23,116 | $ | 19,241 | |||||||
Earnings per share (2): | |||||||||||||||
Basic | $ | 1.04 | $ | 1.12 | $ | 0.74 | $ | 0.62 | |||||||
Diluted | $ | 1.00 | $ | 1.08 | $ | 0.72 | $ | 0.59 | |||||||
Shares used in computing earnings per share: | |||||||||||||||
Basic | 30,916 | 31,149 | 31,268 | 31,185 | |||||||||||
Diluted | 32,221 | 32,313 | 32,262 | 32,436 |
Quarter Ended | |||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues | $ | 232,756 | $ | 209,366 | $ | 207,109 | $ | 189,550 | |||||||
Cost of revenues (1) | 67,042 | 66,202 | 70,991 | 66,300 | |||||||||||
Gross profit | 165,714 | 143,164 | 136,118 | 123,250 | |||||||||||
Net income | $ | 33,319 | $ | 19,906 | $ | 18,870 | $ | 14,407 | |||||||
Earnings per share (2): | |||||||||||||||
Basic | $ | 1.07 | $ | 0.64 | $ | 0.60 | $ | 0.45 | |||||||
Diluted | $ | 1.03 | $ | 0.62 | $ | 0.58 | $ | 0.43 | |||||||
Shares used in computing earnings per share: | |||||||||||||||
Basic | 31,214 | 31,118 | 31,335 | 31,936 | |||||||||||
Diluted | 32,494 | 32,363 | 32,448 | 33,128 |
(1) | Cost of revenues excludes amortization expense of $1.7 million, $1.9 million, $1.9 million, $1.9 million, $1.8 million, $1.9 million, $1.9 million and $1.8 million for the quarters ended September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively. |
(2) | Earnings per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per share amounts may not equal the totals for the respective years. |
Name | Positions Held | Age |
William J. Lansing | January 2012-present, Chief Executive Officer and member of the Board of Directors of the Company. February 2009-November 2010, Chief Executive Offer and President, Infospace, Inc. 2004-2007, Chief Executive Officer and President, ValueVision Media, Inc. 2001-2003, General Partner, General Atlantic LLC. 2000-2001, Chief Executive Officer, NBC Internet, Inc. 1998-2000, President/Chief Executive Officer, Fingerhut Companies, Inc. 1996-1998, Vice President, Corporate Business Development, General Electric Company. 1996, Executive Vice President, Chief Operating Office, Prodigy, Inc. 1986-1995, various positions, McKinsey & Company, Inc. | 58 |
Michael J. Pung | November 2010-present, Executive Vice President and Chief Financial Officer of the Company. August 2004-November 2010, Vice President, Finance of the Company. 2000-2004, Vice President and Controller, Hubbard Media Group, LLC. 1999-2000, Controller, Capella Education, Inc. 1998-1999, Controller, U.S. Satellite Broadcasting, Inc. 1992-1998, various financial management positions with Deluxe Corporation. 1985-1992, various audit positions, including audit manager, at Deloitte & Touche LLP. | 53 |
Richard S. Deal | August 2007-present, Senior Vice President, Chief Human Resources Officer of the Company. January 2001-July 2007, Vice President, Human Resources of the Company. 1998-2001, Vice President, Human Resources, Arcadia Financial, Ltd. 1993-1998, managed broad range of human resources corporate and line consulting functions with U.S. Bancorp. | 49 |
Wayne Huyard | November 2014-present, Executive Vice President of Sales, Services, and Marketing of the Company. January 2014-November 2014, Consultant to the Chief Executive Officer of the Company. September 2012-November 2014, Chief Executive Officer and President, TEXbase, Inc. March 2012-May 2012, General Manager of RightNow Technologies, Oracle Corporation. July 2010-February 2012, President and Chief Operating Officer, RightNow Technologies, Inc. May 2006-May 2010, Operations and Advisory Group Executive Leadership Team Member, Cerberus Capital Management L.P. | 57 |
Michael S. Leonard | November 2011-present, Vice President, Chief Accounting Officer of the Company. November 2007-November 2011, Senior Director, Finance of the Company. July 2000-November 2007, Director, Finance of the Company. 1998-2000, Controller of Natural Alternatives International, Inc. 1994-1998, various audit staff positions at KPMG LLP. | 51 |
Mark R. Scadina | February 2009-present, Executive Vice President and General Counsel and Corporate Secretary of the Company. June 2007-February 2009, Senior Vice President and General Counsel and Corporate Secretary of the Company. 2003-2007, various senior positions including Executive Vice President, General Counsel and Corporate Secretary, Liberate Technologies, Inc. 1999-2003, various leadership positions including Vice President and General Counsel, Intertrust Technologies Corporation. 1994-1999, Associate, Pennie and Edmonds LLP. | 47 |
James M. Wehmann | April 2012-present, Executive Vice President, Scores of the Company. November 2003-March 2012, Vice President/Senior Vice President, Global Marketing, Digital River, Inc. March 2002-June 2003, Vice President, Marketing, Brylane, Inc. September 2000-March 2002, Senior Vice President, Marketing, New Customer Acquisition, Bank One. 1993-2000, various roles, including Senior Vice President, Marketing, Fingerhut Companies, Inc. | 51 |
Stuart C. Wells | April 2012-present, Executive Vice President, Chief Technology Officer of the Company. June 2010- April 2012, Head of Global Professional Services and Support of the Company (Consultant). February 2009-June 2010, CEO, and Chairman of the Board, ScaleMP. January 2007-January 2009, Senior Vice President and President, Avaya, Inc. April 2005-December 2006, Executive Vice President, Utility Computing, Sun Microsystems. | 60 |
Reference Page Form 10-K | |
Exhibit Number | Description |
3.1 | Bylaws of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. 001-11689)) |
3.2 | Composite Restated Certificate of Incorporation of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. 001-11689)) |
10.1 | Form of Note Purchase Agreement, dated May 7, 2008, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series A, B, C and D (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 2008 (file no. 001-11689)) |
10.2 | Form of Note Purchase Agreement, dated July 14, 2010, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series E, F, G and H (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 19, 2010 (file no. 001-11689)) |
10.3 | Fair Isaac Corporation 1992 Long-Term Incentive Plan, as amended effective May 4, 2010. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2010 (file no. 001-11689)) (1) |
10.4 | Form of Non-Qualified Stock Option Agreement under 1992 Long-term Incentive Plan, as amended effective July 18, 2007. (Incorporated by reference to Exhibit 10.42 to the Company’s Form 10-Q for the quarter ended December 31, 2007 (file no. 001-11689)) (1) |
10.5 | Form of Nonstatutory Stock Option Agreement for Initial Grants to Non-Employee Directors under 1992 Long-term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2008 (file no. 001-11689)) (1) |
10.6 | Form of Restricted Stock Unit Agreement under 1992 Long-term Incentive Plan, as amended effective July 18, 2007. (Incorporated by reference to Exhibit 10.49 to the Company’s Form 10-Q for the quarter ended December 31, 2007 (file no. 001-11689)) (1) |
10.7 | Form of Restricted Stock Agreement under 1992 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.43 to the Company’s Form 10-K for the period ended September 30, 2006 (file no. 001-11689)) (1) |
10.8 | Fair, Isaac Supplemental Retirement and Savings Plan, as amended and restated effective January 1, 2009. (Incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K for the fiscal year ended September 30, 2008 (file no. 001-11689)) (1) |
10.9 | Form of Indemnity Agreement entered into by the Company with the Company’s directors and executive officers. (Incorporated by reference to Exhibit 10.49 to the Company’s Form 10-K for the fiscal year ended September 30, 2002 (file no. 001-11689)) (1) |
10.10 | Form of Management Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed on February 10, 2012.) (1) |
10.11 | Form of Amendment to Management Agreement entered into with certain of the Company’s executive officers. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2014) (1) |
10.12 | Form of Amendment to Management Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2016.) (1) |
10.13 | Offer Letter entered into on May 29, 2007 with Mark R. Scadina. (Incorporated by reference to Exhibit 10.61 to the Company’s Form 10-K for the fiscal year ended September 30, 2008 (file no. 001-11689)) (1) |
10.14 | Letter Agreement dated January 24, 2012 by and between the Company and William J. Lansing. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on January 26, 2012.) (1) |
10.15 | Letter Agreement dated February 6, 2012 by and between the Company and Michael Pung. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 10, 2012.) (1) |
10.16 | Letter Agreement dated February 6, 2012 by and between the Company and Mark Scadina. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on February 10, 2012.) (1) |
10.17 | Letter Agreement dated March 7, 2012 by and between the Company and James M. Wehmann. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) |
10.18 | Letter Agreement dated April 24, 2012 by and between the Company and Stuart C. Wells. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) |
10.19 | Letter Agreement dated November 5, 2014 by and between the Company and Wayne Huyard. (Incorporated by reference to the Company’s Form 10-Q for the quarter ended December 31, 2014.) (1) |
10.20 | Form of Amendment to Letter Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended June 30, 2016.) (1) |
10.21 | Fair Isaac Corporation 2012 Long-Term Incentive Plan, as amended through February 24, 2016. (Incorporated by reference to Exhibit A of the Company’s definitive proxy statement for the 2016 Annual Meeting of Stockholders, filed with the SEC on January 20, 2016.) (1) |
10.22 | Form of Employee Non-Statutory Stock Option Agreement (U.S.) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.23 | Form of Employee Restricted Stock Unit Award Agreement (U.S.) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.24 | Form of Employee Non-Statutory Stock Option Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.25 | Form of Employee Restricted Stock Unit Award Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.26 | Form of Director Non-Statutory Stock Option Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.27 | Form of Director Restricted Stock Unit Award Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.28 | Form of Performance Share Unit Award Agreement (fiscal 2012 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) |
10.29 | Form of Performance Share Unit Award Agreement (fiscal 2013 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) |
10.30 | Form of Performance Share Unit Award Agreement (fiscal 2014 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2013.) (1) |
10.31 | Form of Performance Share Unit Award Agreement (fiscal 2015 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.29 to the Company’s Form 10-K for the fiscal year ended September 30, 2015.) (1) |
10.32 | Form of Performance Share Unit Award Agreement (fiscal 2016 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2015.) (1) |
10.33 | Form of Market Share Unit Agreement (fiscal 2014 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2013.) (1) |
10.34 | Form of Market Share Unit Agreement (fiscal 2015 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.31 to the Company’s Form 10-K for the fiscal year ended September 30, 2015.) (1) |
10.35 | Form of Market Share Unit Award Agreement (fiscal 2016 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2015.) (1) |
10.36 | Amended and Restated Credit Agreement dated December 31, 2014 among the Company, Wells Fargo Securities, LLC, U.S. Bank National Association, and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 31, 2014.) |
10.37 | First Amendment to Amended and Restated Credit Agreement among the Company, Wells Fargo Bank, National Association as administrative agent and the lenders thereto dated as of April 16, 2015. (Incorporated by reference to the Exhibit 10.1 to the Company's Form 8-K filed on April 17, 2015) |
12.1* | Computations of ratios of earnings to fixed charges. |
21.1* | List of Company’s subsidiaries. |
23.1* | Consent of Deloitte & Touche LLP, independent registered public accounting firm. |
31.1* | Rule 13a-14(a)/15d-14(a) Certifications of CEO. |
31.2* | Rule 13a-14(a)/15d-14(a) Certifications of CFO. |
32.1* | Section 1350 Certification of CEO. |
32.2* | Section 1350 Certification of CFO. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
(1) | Management contract or compensatory plan or arrangement. |
* | Filed herewith. |
FAIR ISAAC CORPORATION | ||
By | /s/ MICHAEL J. PUNG | |
Michael J. Pung | ||
Executive Vice President and Chief Financial Officer |
/s/ WILLIAM J. LANSING | Chief Executive Officer (Principal Executive Officer) and Director | November 10, 2016 |
William J. Lansing | ||
/s/ MICHAEL J. PUNG | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | November 10, 2016 |
Michael J. Pung | ||
/s/ MICHAEL S. LEONARD | Vice President and Chief Accounting Officer (Principal Accounting Officer) | November 10, 2016 |
Michael S. Leonard | ||
/s/ A. GEORGE BATTLE | Director | November 10, 2016 |
A. George Battle | ||
/s/ MARK W. BEGOR | Director | November 10, 2016 |
Mark W. Begor | ||
/s/ GREG R. GIANFORTE | Director | November 10, 2016 |
Greg R. Gianforte | ||
/s/ BRADEN R. KELLY | Director | November 10, 2016 |
Braden R. Kelly | ||
/s/ JAMES D. KIRSNER | Director | November 10, 2016 |
James D. Kirsner | ||
/s/ MARC F. MCMORRIS | Director | November 10, 2016 |
Marc F. McMorris | ||
/s/ JOANNA REES | Director | November 10, 2016 |
Joanna Rees | ||
/s/ DAVID A. REY | Director | November 10, 2016 |
David A. Rey |
Exhibit Number | Description | |
3.1 | Bylaws of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. 001-11689)) | Incorporated by Reference |
3.2 | Composite Restated Certificate of Incorporation of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. 001-11689)) | Incorporated by Reference |
10.1 | Form of Note Purchase Agreement, dated May 7, 2008, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series A, B, C and D (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 2008 (file no. 001-11689)) | Incorporated by Reference |
10.2 | Form of Note Purchase Agreement, dated July 14, 2010, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series E, F, G and H (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 19, 2010 (file no. 001-11689)) | Incorporated by Reference |
10.3 | Fair Isaac Corporation 1992 Long-Term Incentive Plan, as amended effective May 4, 2010. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2010 (file no. 001-11689)) (1) | Incorporated by Reference |
10.4 | Form of Non-Qualified Stock Option Agreement under 1992 Long-term Incentive Plan, as amended effective July 18, 2007. (Incorporated by reference to Exhibit 10.42 to the Company’s Form 10-Q for the quarter ended December 31, 2007 (file no. 001-11689)) (1) | Incorporated by Reference |
10.5 | Form of Nonstatutory Stock Option Agreement for Initial Grants to Non-Employee Directors under 1992 Long-term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2008 (file no. 001-11689)) (1) | Incorporated by Reference |
10.6 | Form of Restricted Stock Unit Agreement under 1992 Long-term Incentive Plan, as amended effective July 18, 2007. (Incorporated by reference to Exhibit 10.49 to the Company’s Form 10-Q for the quarter ended December 31, 2007 (file no. 001-11689)) (1) | Incorporated by Reference |
10.7 | Form of Restricted Stock Agreement under 1992 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.43 to the Company’s Form 10-K for the period ended September 30, 2006 (file no. 001-11689)) (1) | Incorporated by Reference |
10.8 | Fair, Isaac Supplemental Retirement and Savings Plan, as amended and restated effective January 1, 2009. (Incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K for the fiscal year ended September 30, 2008 (file no. 001-11689)) (1) | Incorporated by Reference |
10.9 | Form of Indemnity Agreement entered into by the Company with the Company’s directors and executive officers. (Incorporated by reference to Exhibit 10.49 to the Company’s Form 10-K for the fiscal year ended September 30, 2002 (file no. 001-11689)) (1) | Incorporated by Reference |
10.10 | Form of Management Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed on February 10, 2012.) (1) | Incorporated by Reference |
10.11 | Form of Amendment to Management Agreement entered into with certain of the Company’s executive officers. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2014) (1) | Incorporated by Reference |
10.12 | Form of Amendment to Management Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2016.) | Incorporated by Reference |
10.13 | Offer Letter entered into on May 29, 2007 with Mark R. Scadina. (Incorporated by reference to Exhibit 10.61 to the Company’s Form 10-K for the fiscal year ended September 30, 2008 (file no. 001-11689)) (1) | Incorporated by Reference |
10.14 | Letter Agreement dated January 24, 2012 by and between the Company and William J. Lansing. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on January 26, 2012.) (1) | Incorporated by Reference |
10.15 | Letter Agreement dated February 6, 2012 by and between the Company and Michael Pung. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 10, 2012.) (1) | Incorporated by Reference |
10.16 | Letter Agreement dated February 6, 2012 by and between the Company and Mark Scadina. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on February 10, 2012.) (1) | Incorporated by Reference |
10.17 | Letter Agreement dated March 7, 2012 by and between the Company and James M. Wehmann. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) | Incorporated by Reference |
10.18 | Letter Agreement dated April 24, 2012 by and between the Company and Stuart C. Wells. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) | Incorporated by Reference |
10.19 | Letter Agreement dated November 5, 2014 by and between the Company and Wayne Huyard. (Incorporated by reference to the Company’s Form 10-Q for the quarter ended December 31, 2014.) (1) | Incorporated by Reference |
10.20 | Form of Amendment to Letter Agreement entered into with each of the Company’s executive officers. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended June 30, 2016.) (1) | Incorporated by Reference |
10.21 | Fair Isaac Corporation 2012 Long-Term Incentive Plan, as amended through February 24, 2016. (Incorporated by reference to Exhibit A of the Company’s definitive proxy statement for the 2016 Annual Meeting of Stockholders, filed with the SEC on January 20, 2016.) (1) | Incorporated by Reference |
10.22 | Form of Employee Non-Statutory Stock Option Agreement (U.S.) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.23 | Form of Employee Restricted Stock Unit Award Agreement (U.S.) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.24 | Form of Employee Non-Statutory Stock Option Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.25 | Form of Employee Restricted Stock Unit Award Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.26 | Form of Director Non-Statutory Stock Option Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.27 | Form of Director Restricted Stock Unit Award Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.28 | Form of Performance Share Unit Award Agreement (fiscal 2012 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q for the quarter ended March 31, 2012.) (1) | Incorporated by Reference |
10.29 | Form of Performance Share Unit Award Agreement (fiscal 2013 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2012.) (1) | Incorporated by Reference |
10.30 | Form of Performance Share Unit Award Agreement (fiscal 2014 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2013.) (1) | Incorporated by Reference |
10.31 | Form of Performance Share Unit Award Agreement (fiscal 2015 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.29 to the Company’s Form 10-K for the fiscal year ended September 30, 2015.) (1) | Incorporated by Reference |
10.32 | Form of Performance Share Unit Award Agreement (fiscal 2016 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2015.) (1) | Incorporated by Reference |
10.33 | Form of Market Share Unit Agreement (fiscal 2014 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2013.) (1) | Incorporated by Reference |
10.34 | Form of Market Share Unit Agreement (fiscal 2015 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.31 to the Company’s Form 10-K for the fiscal year ended September 30, 2015.) (1) | Incorporated by Reference |
10.35 | Form of Market Share Unit Award Agreement (fiscal 2016 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2015.) (1) | Incorporated by Reference |
10.36 | Amended and Restated Credit Agreement dated December 31, 2014 among the Company, Wells Fargo Securities, LLC, U.S. Bank National Association, and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 31, 2014.) | Incorporated by Reference |
10.37 | First Amendment to Amended and Restated Credit Agreement among the Company, Wells Fargo Bank, National Association as administrative agent and the lenders thereto dated as of April 16, 2015. (Incorporated by reference to the Exhibit 10.1 to the Company's Form 8-K filed on April 17, 2015) | Incorporated by Reference |
12.1 | Computations of ratios of earnings to fixed charges. | Filed Electronically |
21.1 | List of Company’s subsidiaries. | Filed Electronically |
23.1 | Consent of Deloitte & Touche LLP, independent registered public accounting firm. | Filed Electronically |
31.1 | Rule 13a-14(a)/15d-14(a) Certifications of CEO. | Filed Electronically |
31.2 | Rule 13a-14(a)/15d-14(a) Certifications of CFO. | Filed Electronically |
32.1 | Section 1350 Certification of CEO. | Filed Electronically |
32.2 | Section 1350 Certification of CFO. | Filed Electronically |
101.INS | XBRL Instance Document. | Filed Electronically |
101.SCH | XBRL Taxonomy Extension Schema Document. | Filed Electronically |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | Filed Electronically |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | Filed Electronically |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | Filed Electronically |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | Filed Electronically |
Year Ended September 30, | |||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||
Earnings: | |||||||||||||||||||
Income before income taxes | $ | 136,243 | $ | 131,984 | $ | 133,131 | $ | 109,238 | $ | 144,569 | |||||||||
Fixed charges: | |||||||||||||||||||
Interest expense | 31,734 | 30,281 | 28,594 | 29,254 | 26,791 | ||||||||||||||
Rent expense (Interest factor) | 7,100 | 7,359 | 6,480 | 6,892 | 5,875 | ||||||||||||||
TOTAL FIXED CHARGES | 38,834 | 37,640 | 35,074 | 36,146 | 32,666 | ||||||||||||||
EARNINGS AVAILABLE FOR FIXED CHARGES | $ | 175,077 | $ | 169,624 | $ | 168,205 | $ | 145,384 | $ | 177,235 | |||||||||
Ratio of earnings to fixed charges (1) | 4.51 | 4.51 | 4.80 | 4.02 | 5.43 |
Name of Company | Jurisdiction of Incorporation/Organization |
QuadMetrics, Inc. (1) | Delaware |
HNC Software LLC (1) | Delaware |
Infoglide Software Corporation (1) | Delaware |
Fair Isaac Holdings, Inc. (1) | Delaware |
Data Research Technologies, Inc. (2) | Minnesota |
Fair Isaac Credit Services, Inc. (2) | Delaware |
Fair Isaac Network, Inc. (2) | Delaware |
CR Software, LLC (2) | Virginia |
myFICO Consumer Services Inc. (2) | Delaware |
Blade, Inc. (2) | Delaware |
Entiera, Inc. (1) | Delaware |
Entiera Solutions Company Limited (3) | Thailand |
Fair Isaac International Corporation (1) | California |
Fair Isaac Hong Kong Limited (4) | Hong Kong |
Fair Isaac Canada, Ltd. (4) | Canada |
Fair Isaac Asia Pacific Corp. (4) | Delaware |
Fair Isaac Japan G.K. (5) | Japan |
Fair Isaac Brazil, LLC (4) | Delaware |
Fair Isaac do Brasil Ltda. (6) | Brazil |
Fair Isaac Asia Holdings, Inc. (4) | Minnesota |
Fair Isaac Information Technology (Beijing) Co., Ltd. (7) | China |
Fair Isaac India Software Private Limited (8) | India |
Fair Isaac Sales and Services (India) Private Limited (9) | India |
Fair Isaac UK Holdings, Inc. (4) | Delaware |
Fair Isaac (Luxembourg) S.a.r.l (10) | Luxembourg |
Fair Isaac UK Group Limited (10) | England and Wales |
Fair Isaac UK International Holdings Ltd. (11) (formerly, Fair Isaac Africa Ltd.) | England and Wales |
Fair Isaac Software Holdings Limited (12) | England and Wales |
Fair Isaac South Africa (Pty) Ltd (13) | South Africa |
Fair Isaac (UK) LLP (13) | England & Wales |
Fair Isaac Services Limited (13) | England and Wales |
Fair Isaac (Adeptra) Limited (13) | England and Wales |
Fair Isaac Europe Limited (13) | England and Wales |
Fair Isaac Turkey Software and Consultancy Services Limited Sirketi (14) | Turkey |
Fair Isaac Lithuania, UAB (14) | Lithuania |
Fair Isaac Italy S.r.l. (14) | Italy |
Fair Isaac Polska sp. z.o.o. (14) | Poland |
Fair Isaac Nordics AB (14) | Sweden |
Fair Isaac (ASPAC) Pte. Ltd. (13) | Singapore |
Fair Isaac (Australia) Pty Ltd (15) | Australia |
Fair Isaac Holdings One GmbH (13) | Germany |
Fair Isaac Holdings Two GmbH (13) | Germany |
Fair Isaac Germany GmbH (16) | Germany |
Fair Isaac (Thailand) Co., Ltd. (17) | Thailand |
Fair Isaac WBR Limited Liability Company (18) | Russia |
(1) | 100% owned by Fair Isaac Corporation |
(2) | 100% owned by Fair Isaac Holdings, Inc. |
(3) | 99.99% owned by Entiera, Inc., .005% owned by Fair Isaac Asia Holdings, Inc. and .005% owned by Fair Isaac Asia Pacific Corp. |
(4) | 100% owned by Fair Isaac International Corporation |
(5) | 100% owned by Fair Isaac Asia Pacific Corp. |
(6) | 99% owned by Fair Isaac International Corporation and 1% owned by Fair Isaac Brazil, LLC |
(7) | 100% owned by Fair Isaac Asia Holdings, Inc. |
(8) | 99.99% owned by Fair Isaac International Corporation and .01% owned by Fair Isaac Corporation |
(9) | 90% owned by Fair Isaac International Corporation and 10% owned by Fair Isaac Corporation |
(10) | 100% owned by Fair Isaac UK Holdings, Inc. |
(11) | 100% owned by Fair Isaac UK Group Limited |
(12) | 100% owned by Fair Isaac UK International Holdings Ltd. |
(13) | 100% owned by Fair Isaac Software Holding Limited |
(14) | 100% owned by Fair Isaac Europe Limited |
(15) | 100% owned by Fair Isaac (ASPAC) Pte. Ltd. |
(16) | 70% owned by Fair Isaac Holdings One GmbH and 30% owned by Fair Isaac Holdings Two GmbH |
(17) | 99.98% owned by Fair Isaac International Corporation, .01% owned by Fair Isaac Asia Holdings, Inc. and .01% owned by Fair Isaac Asia Pacific Corp. |
(18) | 99% owned by Fair Isaac International Corporation and 1% owned by Fair Isaac Corporation |
1. | I have reviewed this annual report on Form 10-K of Fair Isaac Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ WILLIAM J. LANSING |
William J. Lansing |
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Fair Isaac Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MICHAEL J. PUNG |
Michael J. Pung |
Chief Financial Officer |
/s/ WILLIAM J. LANSING |
William J. Lansing |
Chief Executive Officer |
/s/ MICHAEL J. PUNG |
Michael J. Pung |
Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Oct. 28, 2016 |
Mar. 31, 2016 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | FICO | ||
Entity Registrant Name | FAIR ISAAC CORP | ||
Entity Central Index Key | 0000814547 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 30,940,696 | ||
Entity Public Float | $ 2,262,902,883 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 88,857,000 | 88,857,000 |
Common stock, shares outstanding (in shares) | 30,935,000 | 31,290,000 |
Treasury stock, shares | 57,922,000 | 57,567,000 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||||
Revenues: | ||||||
Transactional and maintenance | $ 605,919 | $ 564,232 | $ 527,563 | |||
Professional services | 169,738 | 151,773 | 149,834 | |||
License | 105,699 | 122,776 | 111,588 | |||
Total revenues | 881,356 | 838,781 | 788,985 | |||
Operating expenses: | ||||||
Cost of revenues | [1] | 265,173 | 270,535 | 249,281 | ||
Research and development | 103,669 | 98,824 | 83,435 | |||
Selling, general and administrative | [1] | 328,940 | 300,002 | 278,203 | ||
Amortization of intangible assets | [1] | 13,982 | 13,673 | 11,917 | ||
Restructuring and acquisition-related | 0 | 18,242 | 4,281 | |||
Total operating expenses | 711,764 | 701,276 | 627,117 | |||
Operating income | 169,592 | 137,505 | 161,868 | |||
Interest expense, net | (26,633) | (29,150) | (28,550) | |||
Other income (expense), net | 1,610 | 883 | (187) | |||
Income before income taxes | 144,569 | 109,238 | 133,131 | |||
Provision for income taxes | 35,121 | 22,736 | 38,252 | |||
Net income | 109,448 | 86,502 | 94,879 | |||
Other comprehensive loss: | ||||||
Foreign currency translation adjustments | (26,296) | (27,526) | (2,281) | |||
Comprehensive income | $ 83,152 | $ 58,976 | $ 92,598 | |||
Basic earnings per share (in dollars per share) | $ 3.52 | $ 2.75 | $ 2.80 | |||
Shares used in computing basic earnings per share (in shares) | 31,129 | 31,402 | 33,870 | |||
Diluted earnings per share (in dollars per share) | $ 3.39 | $ 2.65 | $ 2.72 | |||
Shares used in computing diluted earnings per share (in shares) | 32,308 | 32,609 | 34,864 | |||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Statement of Cash Flows [Abstract] | |||
Cash paid for income taxes, refunds | $ 11,363 | $ 1,592 | $ 3,424 |
Nature of Business and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||
Nature of Business and Summary of Significant Accounting Policies | Nature of Business and Summary of Significant Accounting Policies Fair Isaac Corporation Incorporated under the laws of the State of Delaware, Fair Isaac Corporation (“FICO”) is a provider of analytic, software and data management products and services that enable businesses to automate, improve and connect decisions. FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, healthcare organizations and public agencies. In these consolidated financial statements, FICO is referred to as “we,” “us,” “our,” or “the Company.” Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated. Use of Estimates We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the collectibility of accounts receivable; the appropriate levels of various accruals; labor hours in connection with fixed-fee service contracts; the amount of our tax provision and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash in banks and investments with an original maturity of 90 days or less at time of purchase. Fair Value of Financial Instruments The fair value of certain of our financial instruments, including cash and cash equivalents, receivables, other current assets, accounts payable, accrued compensation and employee benefits, other accrued liabilities and amounts outstanding under our revolving line of credit, approximate their carrying amounts because of the short-term maturity of these instruments. The fair values of our cash and cash equivalents and marketable security investments are disclosed in Note 4. The fair value of our derivative instruments is disclosed in Note 5. The fair value of our senior notes is disclosed in Note 10. Investments Management determines the appropriate classification of our investments in marketable debt and equity securities at the time of purchase, and re-evaluates this designation at each balance sheet date. While it is our intent to hold debt securities to maturity, our investments in U.S. government obligations and marketable equity and debt securities that have readily determinable fair values are classified as available-for-sale, as the sale of such securities may be required prior to maturity to implement management strategies. Therefore, such securities are carried at fair value with unrealized gains or losses related to these securities included in accumulated other comprehensive income (loss). The fair value of marketable securities is based upon inputs including quoted prices for identical or similar assets. Realized gains and losses are included in other income (expense), net on the consolidated statements of income and comprehensive income. The cost of investments sold is based on the specific identification method. Losses resulting from other than temporary declines in fair value are charged to operations. Investments with remaining maturities over one year are classified as long-term investments. Our investments in equity securities of companies over which we do not have significant influence are accounted for under the cost method. The investment is originally recorded at cost and adjusted for additional contributions or distributions. Management periodically reviews cost-method investments for instances where fair value is less than the carrying amount and the decline in value is determined to be other than temporary. If the decline in value is judged to be other than temporary, the carrying amount of the security is written down to fair value and the resulting loss is charged to operations. We currently do not have investments in which we own 20% to 50% and exercise significant influence over operating and financial policies, therefore we do not account for any investment under the equity method. Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable, which are generally not collateralized. Our policy is to place our cash, cash equivalents, and marketable securities with high quality financial institutions, commercial corporations and government agencies in order to limit the amount of credit exposure. We have established guidelines relative to diversification and maturities for maintaining safety and liquidity. We generally do not require collateral from our customers, but our credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. We maintain allowances for potential credit losses. A significant portion of our revenues are derived from the sales of products and services to the consumer credit and banking industries. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Major renewals and improvements are capitalized, while repair and maintenance costs are expensed as incurred. Depreciation and amortization charges are calculated using the straight-line method over the following estimated useful lives:
The cost and accumulated depreciation for property and equipment sold, retired or otherwise disposed of are removed from the applicable accounts and resulting gains or losses are recorded in our consolidated statements of income and comprehensive income. Depreciation and amortization on property and equipment totaled $17.7 million, $20.2 million and $20.7 million during fiscal 2016, 2015 and 2014, respectively. Internal-Use Software Costs incurred to develop internal-use software during the application development stage are capitalized and reported at cost. Application development stage costs generally include costs associated with internal-use software configuration, coding, installation and testing. Costs of significant upgrades and enhancements that result in additional functionality are also capitalized whereas costs incurred for maintenance and minor upgrades and enhancements are expensed as incurred. Capitalized costs are amortized using the straight-line method over two to three years. Software development costs required to be capitalized for internal-use software have not been material to date. Capitalized Software and Research and Development Costs Software development costs relating to products to be sold in the normal course of business are expensed as incurred as research and development costs until technological feasibility is established. Technological feasibility for our products occurs approximately concurrently with the general release of our products; accordingly, we have not capitalized any development or production costs. Costs we incur to maintain and support our existing products after the general release of the product are expensed in the period they are incurred and included in research and development costs in our consolidated statements of income and comprehensive income. Goodwill, Acquisition Intangibles and Other Long-Lived Assets Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. We assess goodwill for impairment for each of our reporting units on an annual basis during the fourth quarter using a July 1 measurement date unless circumstances require a more frequent measurement. We have determined that our reporting units are the same as our reportable segments. When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. Events and circumstances we consider in performing the "step zero" qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and the overall financial performance of the reporting units. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the reporting unit by using discounted cash flow valuation models and by comparing our reporting units to guideline publicly-traded companies. These methods require estimates of our future revenues, profits, capital expenditures, working capital, and other relevant factors, as well as selecting appropriate guideline publicly-traded companies for each reporting unit. We estimate these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. For fiscal 2016 and 2015, we performed a step zero qualitative analysis for our annual assessment of goodwill impairment. After evaluating and weighing all relevant events and circumstances, we concluded that it is not more likely than not that the fair value of any of our reporting units was less their carrying amounts. Consequently, we did not perform a step one quantitative analysis in fiscal 2016 and 2015. For fiscal 2014, we elected to proceed directly to the step one quantitative analysis rather than perform the step zero qualitative assessment. There was a substantial excess of fair value over carrying value for each of our reporting units and we determined goodwill was not impaired for any of our reporting units. We amortize our finite-lived intangible assets which result from our acquisitions over the following estimated useful lives:
Our intangible assets that have finite useful lives and other long-lived assets are assessed for potential impairment when there is evidence that events and circumstances related to our financial performance and economic environment indicate the carrying amount of the assets may not be recoverable. When impairment indicators are identified, we test for impairment using undiscounted cash flows. If such tests indicate impairment, then we measure and record the impairment as the difference between the carrying value of the asset and the fair value of the asset. We did not recognize any impairment charges on intangible assets that have finite useful lives or other long-lived assets in fiscal 2016, 2015 and 2014. Revenue Recognition Software Licenses Software license fee revenue is recognized when persuasive evidence of an arrangement exists, software is made available to our customers, the fee is fixed or determinable and collection is probable. The determination of whether fees are fixed or determinable and collection is probable involves the use of judgment. If at the outset of an arrangement we determine that the arrangement fee is not fixed or determinable, revenue is deferred until the arrangement fee becomes fixed or determinable, assuming all other revenue recognition criteria have been met. If at the outset of an arrangement we determine that collectability is not probable, revenue is deferred until the earlier of when collectability becomes probable or the receipt of payment. If there is uncertainty as to the customer’s acceptance of our deliverables, revenue is not recognized until the earlier of receipt of customer acceptance, expiration of the acceptance period, or when we can demonstrate we meet the acceptance criteria. We evaluate contract terms and customer information to ensure that these criteria are met prior to our recognition of license fee revenue. We use the residual method to recognize revenue when a software arrangement includes one or more elements to be delivered at a future date provided the following criteria are met: (i) vendor-specific objective evidence (“VSOE”) of the fair value does not exist for one or more of the delivered items but exists for all undelivered elements, (ii) all other applicable revenue recognition criteria are met and (iii) the fair value of all of the undelivered elements is less than the arrangement fee. VSOE of fair value is based on the normal pricing practices for those products and services when sold separately by us and customer renewal rates for post-contract customer support services. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. If evidence of the fair value of one or more undelivered elements does not exist, the revenue is deferred and recognized when delivery of those elements occurs or when fair value can be established. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements, the fair value of the respective elements, and change to a product’s estimated life cycle could materially impact the amount of earned and unearned revenue. Revenues from post-contract customer support services, such as software maintenance, are recognized on a straight-line basis over the term of the support period. The majority of our software maintenance agreements provide technical support as well as unspecified software product upgrades and releases when and if made available by us during the term of the support period. Transactional-Based Revenues Transactional-based revenue is recognized when persuasive evidence of an arrangement exists, fees are fixed or determinable, and collection is probable. Revenues from our credit scoring, data processing, data management and internet delivery services are recognized as these services are performed. Revenues from transactional or unit-based license fees under software license arrangements, network service and internally-hosted software agreements are recognized based on minimum contractual amounts or on system usage that exceeds minimum contractual amounts. Certain of our transactional-based revenues are based on transaction or active account volumes as reported by our clients. In instances where volumes are reported to us in arrears, we estimate volumes based on preliminary customer transaction information or average actual reported volumes for an immediate trailing period. Differences between our estimates and actual final volumes reported are recorded in the period in which actual volumes are reported. We have not experienced material variances between our estimates and actual reported volumes in the past and anticipate that we will be able to continue to make reasonable estimates in the future. If for some reason we were unable to reasonably estimate transaction volumes in the future, revenue may be deferred until actual customer data is received, and this could have a material impact on our consolidated results of operations. Consulting Services We provide consulting, training, model development and software integration services under both hourly-based time and materials and fixed-priced contracts. Revenues from these services are generally recognized as the services are performed. For fixed-price service contracts, we use a proportionate performance model with hours as the input method of attribution to determine progress towards completion, with consideration also given to output measures, such as contract milestones, when applicable. In such instances, management is required to estimate the total estimated hours of the project. Adjustments to estimates are made in the period in which the facts requiring such revisions become known and, accordingly, recognized revenues and profits are subject to revisions as the contract progresses to completion. Estimated losses, if any, are recorded in the period in which current estimates of total contract revenue and contract costs indicate a loss. If substantive uncertainty related to customer acceptance of services exists, we defer the associated revenue until the contract is completed. We have not experienced material variances between our estimates and actual hours in the past and anticipate that we will be able to continue to make reasonable estimates in the future. If for some reason we are unable to accurately estimate the input measures, revenue would be deferred until the contract is complete, and this could have a material impact on our consolidated results of operations. Services that are sold in connection with software license arrangements generally qualify for separate accounting from the license element because they do not involve significant production, modification or customization of our products and are not otherwise considered to be essential to the functionality of our software. In arrangements where the professional services do not qualify for separate accounting from the license element, the combined software license and professional services revenue are recognized based on contract accounting using either the percentage-of-completion or completed-contract method. Hosting Services We are an application service provider (“ASP”), where we provide hosting services that allow customers access to software that resides on our servers. The ASP model typically includes an up-front fee and a monthly commitment from the customer that commences upon completion of the implementation through the remainder of the customer life. The up-front fee is the initial setup fee, or the implementation fee. The monthly commitment includes, but is not limited to, a fixed monthly fee or a transactional fee based on system usage that exceeds monthly minimums. Revenue is recognized from ASP transactions when there is persuasive evidence of an arrangement, the service has been provided to the customer, the amount of fees is fixed or determinable and the collection of our fees is probable. We do not view the activities of signing the contract or providing initial setup services as discrete earnings events. Revenue is typically deferred until the date the customer commences use of our services, at which point the up-front fees are recognized ratably over the expected life of the customer relationship. ASP transactional fees are recorded monthly as earned. Multiple-Deliverable Arrangements including Non-Software When we enter into a multiple-deliverable arrangement that includes non-software, each deliverable is accounted for as a separate unit of accounting if the following criteria are met: (i) the delivered item or items have value to the customer on a standalone basis and (ii) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. We consider a deliverable to have standalone value if we sell this item separately or if the item is sold by another vendor or could be resold by the customer; for example, we conclude professional services offered along with our SaaS subscription services typically have standalone value using this criteria. Further, our revenue arrangements generally do not include a general right of return relative to delivered products. Revenue for multiple element arrangements is allocated to the software and non-software deliverables based on a relative selling price. We use VSOE in our allocation of arrangement consideration when it is available. We define VSOE as a median price of recent standalone transactions that are priced within a narrow range, as defined by us. If a product or service is seldom sold separately, it is unlikely that we can determine VSOE. In circumstances when VSOE does not exist, we then assess whether we can obtain third-party evidence (“TPE”) of the selling price. It may be difficult for us to obtain sufficient information on competitor pricing to substantiate TPE and therefore we may not always be able to use TPE. When we are unable to establish selling price using VSOE or TPE, we use estimated selling price (“ESP”) in our allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact if the product or service were sold by us on a standalone basis. Our determination of ESP involves weighting several factors based on the specific facts and circumstances of each arrangement. The factors include, but are not limited to, geographies, market conditions, gross margin objectives, pricing practices and controls, customer segment pricing strategies and the product lifecycle. Gross vs. Net Revenue Reporting We apply accounting guidance to determine whether we report revenue for certain transactions based upon the gross amount billed to the customer, or the net amount retained by us. In accordance with the guidance we record revenue on a gross basis for sales in which we have acted as the principal and on a net basis for those sales in which we have in substance acted as an agent or broker in the transaction. Business Combinations Accounting for our acquisitions requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of income and comprehensive income. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and contingent consideration, where applicable. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, we will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. Examples of critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to: (i) future expected cash flows from software license sales, support agreements, consulting contracts, other customer contracts and acquired developed technologies and patents; (ii) expected costs to develop the in-process research and development into commercially viable products and estimated cash flows from the projects when completed; and (iii) the acquired company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statements of income and comprehensive income and could have a material impact on our results of operations and financial position. Income Taxes We estimate our income taxes based on the various jurisdictions where we conduct business, which involves significant judgment in determining our income tax provision. We estimate our current tax liability using currently enacted tax rates and laws and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities recorded on our balance sheet using the currently enacted tax rates and laws that will apply to taxable income for the years in which those tax assets are expected to be realized or settled. We then assess the likelihood our deferred tax assets will be realized and to the extent we believe realization is not more likely than not, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding income tax expense in our consolidated statements of income and comprehensive income. In assessing the need for the valuation allowance, we consider future taxable income in the jurisdictions we operate; our ability to carry back tax attributes to prior years; an analysis of our deferred tax assets and the periods over which they will be realizable; and ongoing prudent and feasible tax planning strategies. An increase in the valuation allowance would have an adverse impact, which could be material, on our income tax provision and net income in the period in which we record the increase. We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the technical merits of the tax position indicate it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions and they are evaluated on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results. A description of our accounting policies associated with tax-related contingencies and valuation allowances assumed as part of a business combination is provided under “Business Combinations” above. Earnings per Share Basic earnings per share are computed on the basis of the weighted-average number of common shares outstanding during the period under measurement. Diluted earnings per share are based on the weighted-average number of common shares outstanding and potential common shares. Potential common shares result from the assumed exercise of outstanding stock options or other potentially dilutive equity instruments, when they are dilutive under the treasury stock method. Comprehensive Income Comprehensive income is the change in our equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. It includes net income, foreign currency translation adjustments and unrealized gains and losses on our investments in marketable securities, net of tax. Foreign Currency and Derivative Financial Instruments We have determined that the functional currency of each foreign operation is the local currency. Assets and liabilities denominated in their local foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the period. Foreign currency translation adjustments are accumulated as a separate component of consolidated stockholders’ equity. We utilize derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates as they relate to specific balances of accounts receivable and cash denominated in foreign currencies. We principally utilize foreign currency forward contracts to protect against market risks arising in the normal course of business. Our policies prohibit the use of derivative instruments for the sole purpose of trading for profit on price fluctuations or to enter into contracts that intentionally increase our underlying exposure. All of our foreign currency forward contracts have maturity periods of less than three months. At the end of the reporting period, foreign-currency-denominated assets and liabilities are remeasured into the functional currencies of the reporting entities at current market rates. The change in value from this remeasurement is reported as a foreign exchange gain or loss for that period in other income (expense), net in the accompanying consolidated statements of income and comprehensive income. We recorded transactional foreign exchange gains (losses) of $0.2 million, $0.0 million (less than $100,000) and $(1.0) million during fiscal 2016, 2015 and 2014, respectively. Share-Based Compensation We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, net of estimated forfeitures, over the vesting or service period, as applicable, of the stock award (generally three to four years). See Note 14 for further discussion of our share-based employee benefit plans. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income and comprehensive income. Advertising and promotion costs totaled $3.6 million, $3.7 million and $3.8 million in fiscal 2016, 2015 and 2014, respectively. New Accounting Pronouncements Recently Adopted Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 applies to all entities that present a classified statement of financial position. ASU 2015-17 may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. ASU 2015-17 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. We elected to early adopt the standard prospectively as of March 31, 2016, which did not have a significant impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years and interim periods beginning after December 15, 2017, which means it will be effective for our fiscal year beginning October 1, 2018. ASU 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted in the first interim period of an entity's annual financial statements. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016, which means it will be effective for our fiscal year beginning October 1, 2017. Early adoption is permitted. We plan to early adopt ASU 2016-09 on a prospective basis in the first quarter of our fiscal 2017 (the quarter ended December 31, 2016), which is expected to have an impact on the recording of excess tax benefits and deficiencies in our consolidated balance sheets and consolidated statements of income and comprehensive income, as well as our operating and financing cash flows on our consolidated statements of cash Flows. The magnitude of such impact is dependent upon our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on grant date and the exercise behavior of the our stock option holders. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018, which means it will be effective for our fiscal year beginning October 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will be effective for our fiscal year beginning October 1, 2018. Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). We have not yet selected a transition method and we are currently evaluating the impact that the updated standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance” (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015, which means it is effective for our fiscal year beginning October 1, 2016. Early adoption was permitted. We do not believe that adoption of ASU 2015-03 will have a significant impact on our consolidated financial statements. |
Business Combinations |
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Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On May 19, 2016, we acquired 100% of the equity of QuadMetrics for $5.7 million in cash. QuadMetrics is a provider of enterprise security assessment analytics. We expect that this acquisition will help accelerate our efforts to provide a suite of complementary cyber-related analytics solutions to market. QuadMetrics has been included in our operating results since the acquisition date. The pro forma impact of this acquisition was not deemed material to our results of operations. In fiscal 2015, we acquired 100% of the equity of TONBELLER for $59.6 million in cash. We recorded $14.9 million of intangible assets, which are being amortized using the straight-line method over a weighted average useful life of approximately 4.9 years. The goodwill of $46.1 million was allocated to our Applications segment and was not deductible for tax purposes. In fiscal 2014, we acquired 100% of the common stock of InfoCentricity for $8.2 million in cash. |
Cash, Cash Equivalents and Marketable Securities Available for Sale |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Marketable Securities Available for Sale | Cash, Cash Equivalents and Marketable Securities Available for Sale The following is a summary of cash, cash equivalents and marketable securities available for sale at September 30, 2016 and 2015:
The long-term marketable equity securities represent securities held under a supplemental retirement and savings plan for senior management employees, which are distributed upon termination or retirement of the employees. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
The following table represents financial assets that we measured at fair value on a recurring basis at September 30, 2016 and 2015:
Where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing applies to our Level 1 investments. To the extent quoted prices in active markets for assets or liabilities are not available, the valuation techniques used to measure the fair values of our financial assets incorporate market inputs, which include reported trades, broker/dealer quotes, benchmark yields, issuer spreads, benchmark securities and other inputs derived from or corroborated by observable market data. This methodology would apply to our Level 2 investments. We have not changed our valuation techniques in measuring the fair value of any financial assets and liabilities during the period. For the fair value of our derivative instruments and senior notes, see Note 5 and Note 10, respectively. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro and Canadian dollar. Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months. The following tables summarize our outstanding foreign currency forward contracts, by currency at September 30, 2016 and 2015:
The foreign currency forward contracts were entered into on September 30 of each fiscal year; therefore, their fair value was $0 at September 30, 2016 and 2015. Gains (losses) on derivative financial instruments are recorded in our consolidated statements of income and comprehensive income as a component of other income (expense), net. These amounts are shown below for the years ended September 30, 2016, 2015 and 2014:
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Receivables |
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Receivables | Receivables Receivables at September 30, 2016 and 2015 consisted of the following:
Activity in the allowance for doubtful accounts was as follows:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Intangible assets that are subject to amortization consisted of the following at September 30, 2016 and 2015:
Amortization expense associated with our intangible assets, which has been reflected as a separate operating expense caption within the accompanying consolidated statements of income and comprehensive income, consisted of the following during fiscal 2016, 2015 and 2014:
In the table above, cost of revenues reflects our amortization of completed technology, and selling, general and administrative expenses reflect our amortization of other intangible assets. Estimated future intangible asset amortization expense associated with intangible assets existing at September 30, 2016, was as follows (in thousands):
The following table summarizes changes to goodwill during fiscal 2016 and 2015, both in total and as allocated to our operating segments. We have not recognized any goodwill impairment losses to date.
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Composition of Certain Financial Statement Captions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions The following table presents the composition of property and equipment at September 30, 2016 and 2015:
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Revolving Line of Credit |
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Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Revolving Line of Credit | Revolving Line of Credit In December 2014 we refinanced our $200 million unsecured revolving line of credit, increasing our borrowing capacity to $400 million with a syndicate of banks that expires on December 30, 2019. Proceeds from the credit facility can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. Interest on amounts borrowed under the credit facility is based on (i) a base rate, which is the greater of (a) the prime rate and (b) the Federal Funds rate plus 0.500% and (c) the one-month LIBOR rate plus 1.000%, plus, in each case, an applicable margin, or (ii) an adjusted LIBOR rate plus an applicable margin. The applicable margin for base rate borrowings ranges from 0% to 0.875% and for LIBOR borrowings ranges from 1.000% to 1.875% and is determined based on our consolidated leverage ratio. In addition, we must pay credit facility fees. The credit facility contains certain restrictive covenants including maintaining a minimum fixed charge ratio of 2.5 and a maximum consolidated leverage ratio of 3.0, subject to a step up to 3.5 following certain permitted acquisitions. The credit agreement also contains other covenants typical of unsecured facilities. As of September 30, 2016, we had $255.0 million in borrowings outstanding at a weighted average interest rate of 1.661%, of which $250.0 million was classified as a long-term liability and recorded in long-term debt within the accompanying consolidated balance sheets. We were in compliance with all financial covenants under this credit facility as of September 30, 2016. |
Senior Notes |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Notes | Senior Notes On May 7, 2008, we issued $275 million of senior notes in a private placement to a group of institutional investors (the “2008 Senior Notes”). The 2008 Senior Notes were issued in four series as follows:
On July 14, 2010, we issued $245 million of senior notes in a private placement to a group of institutional investors (the “2010 Senior Notes” and, with the 2008 Senior Notes, the “Senior Notes”). The 2010 Senior Notes were issued in four series as follows:
We were and are required to pay the entire unpaid principal balances of each note series on its maturity date except for Series B notes, which required annual principal payments of $8.0 million starting on May 7, 2011 and ending on May 7, 2015. The Senior Notes require interest payments semi-annually and contain certain restrictive covenants, including the maintenance of consolidated net debt to consolidated EBITDA ratio and a fixed charge coverage ratio. The purchase agreements for the Senior Notes also contain certain covenants typical of unsecured facilities. As of September 30, 2016, we were in compliance with all financial covenants. The following table presents the principal amounts, carrying amounts and fair values for the Senior Notes at September 30, 2016 and 2015:
We measure the fair value of the Senior Notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities. Future principal payments for the Senior Notes are as follows (in thousands):
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Employee Benefit Plans |
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Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Defined Contribution Plans We sponsor the Fair Isaac Corporation 401(k) plan for eligible employees in the U.S. Under this plan, eligible employees may contribute up to 25% of compensation, not to exceed statutory limits. We also provide a company matching contribution. Investment in FICO common stock is not an option under this plan. Our contributions into all 401(k) plans, including former acquired company sponsored plans that have since merged into the Fair Isaac Corporation 401(k) plan or have been frozen, totaled $7.3 million, $7.1 million and $6.3 million during fiscal 2016, 2015 and 2014, respectively. Employee Incentive Plans We maintain various employee incentive plans for the benefit of eligible employees, including officers. The awards generally are based on the achievement of certain financial and performance objectives subject to the discretion of management. Total expenses under our employee incentive plans were $40.0 million, $20.3 million and $25.0 million during fiscal 2016, 2015 and 2014, respectively. |
Restructuring Expenses |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Expenses | Restructuring Expenses There was no restructuring expense incurred during fiscal 2016. During fiscal 2015, we incurred net charges totaling $17.5 million consisting of $13.6 million in facilities charges associated with vacating excess leased space in Roseville, Minnesota and San Rafael, California, and $3.9 million in severance charges due to the elimination of 97 positions throughout the company. Cash payments for all the facilities charges will be paid by the end of our fiscal 2020. Cash payments for all the severance costs were paid by the end of the third quarter of our fiscal 2016. During fiscal 2014, we incurred net charges totaling $4.1 million consisting of $0.2 million in facilities charges and $3.9 million in severance charges due to the elimination of 88 positions primarily in the U.S. Cash payments for all the restructuring charges were paid by the end of the second quarter of our fiscal 2015. The following tables summarize our restructuring accruals associated with the above actions. The current portion and non-current portion was recorded in other accrued current liabilities and other liabilities, respectively, within the accompanying consolidated balance sheets.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The provision for income taxes was as follows during fiscal 2016, 2015 and 2014:
The foreign provision was based on foreign pre-tax earnings of $33.0 million, $45.2 million and $43.3 million in fiscal 2016, 2015 and 2014, respectively. Current foreign tax expense related to foreign tax withholdings was $6.5 million, $5.3 million and $7.7 million in fiscal 2016, 2015 and 2014, respectively. Foreign withholding tax and related foreign tax credits are included in current tax expense above. Deferred tax assets and liabilities at September 30, 2016 and 2015 were as follows:
Based upon the level of historical taxable income and projections for future taxable income over the periods that the deferred tax assets will reverse, management believes it is more likely than not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowance at September 30, 2016. As of September 30, 2016, we had available U.S. federal, state and foreign net operating loss (“NOL”) carryforwards of approximately $20.2 million, $0.3 million, and $34.7 million, respectively. The U.S. NOLs were acquired in connection with our acquisitions of Braun in fiscal 2005, Adeptra in fiscal 2012, and Infoglide in fiscal 2013. The U.S. federal NOL carryforward will expire at various dates beginning in fiscal 2020, if not utilized. The state NOL carryforward will begin to expire at various dates beginning in fiscal 2021, if not utilized. The Luxembourg NOL carryforward does not have an expiration date. The $34.7 million of foreign NOL includes $25.5 million related to China. Due to a limited ability to utilize the China NOLs a full valuation allowance has been recorded on the China NOLs, resulting in no tax benefit. Utilization of the U.S. federal and state NOL are subject to an annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. In fiscal 2016 we generated excess foreign tax credits associated with dividends received from two of our foreign subsidiaries. The associated deferred tax asset of $14.6 million can be carried forward for up to 10 years. Management believes it is more likely than not that we will realize the benefit of this deferred tax asset and therefore no valuation allowance has been recorded to offset the future benefit of these credits. We also have available excess California state research credit of approximately $6.1 million. The California state research credit does not have an expiration date; however, based on enacted law and expected future cash taxes, we have recorded a valuation allowance of $6.1 million. A reconciliation of the provision for income taxes, with the amount computed by applying the U.S. federal statutory income tax rate (35% in fiscal 2016, 2015 and 2014) to income before provision for income taxes for fiscal 2016, 2015 and 2014 is shown below:
The increase in our effective tax rate in fiscal 2016 compared to fiscal 2015 was due primarily to the favorable settlement of the fiscal 2006-2009 state audits and the favorable settlement of the 2010 foreign transfer pricing assessment in fiscal 2015, partially offset by an increase in the foreign tax credit associated with the repatriation of income from the United Kingdom and Brazil and the Domestic Production Activities Deduction in fiscal 2016. The decrease in our effective tax rate in fiscal 2015 compared to fiscal 2014 was due primarily to the favorable settlement of the fiscal 2006-2009 state audits, the favorable settlement of the 2010 foreign transfer pricing assessment, as well as the December 2014 reenactment of the calendar 2014 U.S. Federal Research and Development Credit, which resulted in a catch up adjustment for the R&D credit during fiscal 2015. In fiscal 2016 and 2015, the foreign taxes consist of local country permanent items and prior years’ true ups. As of September 30, 2016, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $45.3 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries. We intend to reinvest the earnings of its non-U.S. subsidiaries in those operations indefinitely, except where we are able to repatriate these earnings to the United States without material incremental tax provision. The determination and estimation of the future income tax consequences in all relevant taxing jurisdictions involves the application of highly complex tax laws in the countries involved, particularly in the United States, and is based on our tax profile in the year of earnings repatriation. Accordingly, it is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. Unrecognized Tax Benefit for Uncertain Tax Positions We conduct business globally and, as a result, file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. With few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for fiscal years prior to 2013. We concluded the audit by the California Franchise Tax Board for fiscal 2012 and 2013, and did not have any adjustments related to those audits that resulted in a material change to our consolidated financial statements. We are currently under audit by New York State and New York City for fiscal 2011, 2012 and 2013. We do not anticipate any adjustments related to those audits that will result in a material change to our consolidated financial statements. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
We had $6.8 million of total unrecognized tax benefits as of September 30, 2016, including $6.0 million of tax benefits that, if recognized, would impact the effective tax rate. Although the timing and outcome of audit settlements are uncertain, it is unlikely there will be a reduction of the uncertain tax benefits in the next 12 months. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our consolidated statements of income and comprehensive income. We recognize interest earned related to income tax matters as interest income in our consolidated statements of income and comprehensive income. As of September 30, 2016, we have accrued interest of $0.3 million related to the unrecognized tax benefits. |
Stock-Based Employee Benefit Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Employee Benefit Plans | Stock-Based Employee Benefit Plans Description of Stock Option and Share Plans We maintain the 2012 Long-Term Incentive Plan (the “2012 Plan”) under which we are authorized to issue equity awards, including stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards. All employees, consultants and advisors of FICO or any subsidiary, as well as all non-employee directors are eligible to receive awards under the 2012 Plan. We also have one other long-term incentive plan under which awards are currently outstanding: the 1992 Long-term Incentive Plan, which was adopted in February 1992 and expired in February 2012. Stock option awards have a maximum term of seven years. Stock option awards and restricted stock unit awards not subject to market conditions vest ratably over three or four years. Restricted stock unit awards subject to market conditions vest annually over a period of three years based on achievement of specified criteria. At September 30, 2016, there were 3,438,986 shares available for issuance under the 2012 Plan. Description of Employee Stock Purchase Plan Under our Employee Stock Purchase Plan (the “Purchase Plan”), we are authorized to issue up to 5,062,500 shares of common stock to eligible employees. Employees may have up to 10% of their base salary withheld through payroll deductions to purchase FICO common stock during semi-annual offering periods. The purchase price of the stock is 85% of the fair market value on the exercise date (the last day of each offering period). Offering period means approximately six-month periods commencing (a) on the first trading day on or after January 1 and terminating on the last trading day in the following June, and (b) on the first trading day on or after July 1 and terminating on the last trading day in the following December. The Purchase Plan was suspended effective January 1, 2009 and employees cannot contribute to the Purchase Plan until the suspension is repealed. At September 30, 2016, there were 2,707,966 shares available for issuance. We satisfy stock option exercises, vesting of restricted stock units and the Purchase Plan issuances from treasury shares. Share-Based Compensation Expense and related income tax benefits We recorded share-based compensation expense of $55.5 million, $45.3 million and $36.4 million in fiscal years 2016, 2015 and 2014, respectively. The total tax benefit related to this share-based compensation expense was $18.7 million, $16.1 million and $13.0 million in fiscal 2016, 2015 and 2014, respectively. As of September 30, 2016, there was $80.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. We expect to recognize that cost over a weighted average period of 2.44 years. In fiscal 2016 we received $17.8 million in cash from stock option exercises, with the tax benefit realized for the tax deductions from these exercises of $15.3 million. Stock-Based Activity Stock Options We estimate the fair value of stock options granted using the Black-Scholes option valuation model and we amortize the fair value on a straight-line basis over the vesting period. We used the following assumptions to estimate the fair value of our stock options during fiscal 2016, 2015 and 2014:
Expected Volatility. We estimate the volatility of our common stock at the date of grant based on a combination of the implied volatility of publicly traded options on our common stock and our historical volatility rate. Expected Term. The expected term represents the period that our stock options are expected to be outstanding. We estimate the expected term based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. Dividends. The dividend yield assumption is based on historical dividend payouts. Risk-Free Interest Rate. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of our employee options. Forfeitures. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. The following table summarizes option activity during fiscal 2016:
The weighted average fair value of options granted were $31.06, $21.66 and $15.50 during fiscal 2016, 2015 and 2014, respectively. The aggregate intrinsic value of options outstanding at September 30, 2016 was calculated as the difference between the exercise price of the underlying options and the market price of our common stock for the 1.5 million outstanding shares, which had exercise prices lower than the $124.59 market price of our common stock at September 30, 2016. The total intrinsic value of options exercised was $41.3 million, $24.3 million and $13.8 million during fiscal 2016, 2015 and 2014, respectively, determined as of the date of exercise. Restricted Stock Units The fair value of restricted stock units (“RSUs”) granted is the closing market price of our common stock on the date of grant adjusted for the expected dividend yield. We amortize the fair value on a straight-line basis over the vesting period. The following table summarizes the RSUs activity during fiscal 2016:
The weighted average fair value of the RSUs granted were $94.77, $73.93 and $56.23 during fiscal 2016, 2015 and 2014, respectively. The total intrinsic value of the RSUs that vested was $49.8 million, $38.5 million and $27.6 million during fiscal 2016, 2015 and 2014, respectively, determined as of the date of vesting. Performance Share Units Performance share units (“PSUs”) are granted to our senior officers and earned based on pre-established performance goals approved by the Leadership Development and Compensation Committee of our Board of Directors for any given performance period. The range of payout is zero to 200% of the number of granted PSUs, based on the outcome of the performance conditions. The fair value of the PSUs is the closing market price of our common stock on the date of grant adjusted for the expected dividend yield. We amortize the fair value on a straight-line basis over the vesting period, based on the performance condition that is probable of achievement that would result in the vesting of the most shares. The Company reassesses the probability at each reporting period and recognizes the cumulative effect of the change in estimate in the period of change. As of September 30, 2016, the Company believed the performance condition of the PSUs granted during fiscal year 2016 had been achieved at 166.77% of target value, however, the final determination has not yet been made by the Leadership Development and Compensation Committee. The following table summarizes the PSUs activity during fiscal 2016:
The weighted average fair value of the PSUs granted were $91.74, $71.86 and $56.63 during fiscal 2016, 2015 and 2014, respectively. The total intrinsic value of the PSUs that vested was $14.0 million, $9.7 million and $4.9 million during fiscal 2016, 2015 and 2014, respectively, determined as of the date of vesting. Market Share Units Market share units (“MSUs”) are granted to our senior officers and earned based on our total shareholder return relative to the Russell 3000 Index over performance periods of one, two and three years. We estimate the fair value of MSUs granted using the Monte Carlo valuation model and attribute the cost separately for each vesting tranche of the award. In addition, we do not reverse the compensation cost solely because the market condition is not satisfied, and the award is therefore not exercisable or retained by the employee, provided the requisite service is rendered. We used the following assumptions to estimate the fair value of our MSUs during fiscal 2016, 2015 and 2014:
The expected volatility was determined based on daily historical movements in our stock price and the Russell 3000 index for the three years preceding the grant date. The correlation between FICO and the Russell 3000 Index was determined based on historical daily stock price movements for the three years preceding the grant date. The dividend yield was determined using the historical dividend payout and a trailing twelve month closing stock price on the grant date. The risk-free rate was determined based on U.S. Treasury zero-coupon yields over the three-year performance period. The following table summarizes the MSUs activity during fiscal 2016:
The weighted average fair value of the MSUs granted were $100.63, $101.85 and $68.47 during fiscal 2016, 2015 and 2014, respectively. The total intrinsic value of the MSUs that vested was $9.2 million and $1.7 million during fiscal 2016 and 2015, respectively, determined as of the date of vesting. |
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Earnings per Share | Earnings per Share The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) during fiscal 2016, 2015 and 2014:
The computation of diluted EPS excludes options to purchase approximately 9,000, 138,000, and 11,000 shares of common stock for fiscal 2016, 2015 and 2014, respectively, because the exercise prices of the options exceeded the average market price of our common stock in these fiscal years and their inclusion would be antidilutive. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We have a $10 million investment in convertible preferred stock of a private company. The company is developing a range of products focused on revenue cycle activities for hospitals and healthcare providers. Related party revenue was immaterial for the years ended September 30, 2016, 2015 and 2014. The accounts receivable balance from this company was not significant as of September 30, 2016 and 2015. |
Segment Information |
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Segment Information | Segment Information We are organized into the following three operating segments, each of which is a reportable segment, to align with internal management of our worldwide business operations based on product offerings.
Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring and acquisition-related expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation amounts are allocated to the segments from their internal cost centers as described above. The following tables summarize segment information for fiscal 2016, 2015 and 2014:
Our revenues and percentage of revenues by reportable market segments were as follows for fiscal 2016, 2015 and 2014, the majority of which were derived from the sale of products and services within the banking (including consumer credit) industry:
Within our Applications segment our fraud solutions accounted for 20%, 23% and 23% of total revenues in each of fiscal 2016, 2015 and 2014, respectively, and our customer management solutions accounted for 9%, 9% and 10% of total revenues, in each of these periods, respectively. Our revenues and percentage of revenues on a geographical basis are summarized below for fiscal 2016, 2015 and 2014:
During fiscal 2016, 2015 and 2014, no individual customer accounted for 10% or more of our total revenues; however, we derive a substantial portion of revenues from our contracts with the three major credit reporting agencies, TransUnion, Equifax and Experian. Revenues collectively generated by agreements with these customers accounted for 19%, 16% and 15% of our total revenues in fiscal 2016, 2015 and 2014, respectively. At September 30, 2016 and 2015, no individual customer accounted for 10% or more of total consolidated receivables. Our property and equipment, net, on a geographical basis are summarized below at September 30, 2016 and 2015. At September 30, 2016 and 2015, no individual country outside the U.S. accounted for 10% or more of total consolidated net property and equipment.
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Commitments | Commitments Minimum future commitments under non-cancelable operating leases and other obligations were as follows at September 30, 2016:
Lease Commitments The above amounts have contractual sublease commitments totaling $0.6 million from fiscal 2017 to 2019. We occupy the majority of our facilities under non-cancelable operating leases with lease terms in excess of one year. Such facility leases generally provide for annual increases based upon the Consumer Price Index or fixed increments. Rent expense under operating leases, including month-to-month leases, totaled $17.6 million, $20.7 million and $19.4 million during fiscal 2016, 2015 and 2014, respectively. Other Commitments In the ordinary course of business, we enter into contractual purchase obligations and other agreements that are legally binding and specify certain minimum payment terms. We are also a party to a management agreement with 23 of our executives providing for certain payments and other benefits in the event of a qualified change in control of FICO, coupled with a termination of the officer during the following year. |
Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We are in disputes with certain customers regarding amounts owed in connection with the sale of certain of our products and services. We also have had claims asserted by former employees relating to compensation and other employment matters. We are also involved in various other claims and legal actions arising in the ordinary course of business. We record litigation accruals for legal matters which are both probable and estimable. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have material exposure on an aggregate basis. |
Guarantees |
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Guarantees [Abstract] | |
Guarantees | Guarantees In the ordinary course of business, we are not subject to potential obligations under guarantees, except for standard indemnification and warranty provisions that are contained within many of our customer license and service agreements and certain supplier agreements, including underwriter agreements, as well as standard indemnification agreements that we have executed with certain of our officers and directors, and give rise only to the disclosure in the consolidated financial statements. In addition, we continue to monitor the conditions that are subject to the guarantees and indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the guarantees and indemnifications when those losses are estimable. Indemnification and warranty provisions contained within our customer license and service agreements and certain supplier agreements are generally consistent with those prevalent in our industry. The duration of our product warranties generally does not exceed 90 days following delivery of our products. We have not incurred significant obligations under customer indemnification or warranty provisions historically and do not expect to incur significant obligations in the future. Accordingly, we do not maintain accruals for potential customer indemnification or warranty-related obligations. The indemnification agreements that we have executed with certain of our officers and directors would require us to indemnify such officers and directors in certain instances. We have not incurred obligations under these indemnification agreements historically and do not expect to incur significant obligations in the future. Accordingly, we do not maintain accruals for potential officer or director indemnification obligations. The maximum potential amount of future payments that we could be required to make under the indemnification provisions in our customer license and service agreements, and officer and director agreements is unlimited. |
Supplementary Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Financial Data (Unaudited) | Supplementary Financial Data (Unaudited) The following table presents selected unaudited consolidated financial results for each of the eight quarters in the two-year period ended September 30, 2016. In the opinion of management, this unaudited information has been prepared on the same basis as the audited information and includes all adjustments (consisting of only normal recurring adjustments, except as noted below) necessary for a fair statement of the consolidated financial information for the period presented.
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Nature of Business and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated. |
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Use of Estimates | Use of Estimates We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the collectibility of accounts receivable; the appropriate levels of various accruals; labor hours in connection with fixed-fee service contracts; the amount of our tax provision and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash in banks and investments with an original maturity of 90 days or less at time of purchase. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of certain of our financial instruments, including cash and cash equivalents, receivables, other current assets, accounts payable, accrued compensation and employee benefits, other accrued liabilities and amounts outstanding under our revolving line of credit, approximate their carrying amounts because of the short-term maturity of these instruments. |
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Investments | Investments Management determines the appropriate classification of our investments in marketable debt and equity securities at the time of purchase, and re-evaluates this designation at each balance sheet date. While it is our intent to hold debt securities to maturity, our investments in U.S. government obligations and marketable equity and debt securities that have readily determinable fair values are classified as available-for-sale, as the sale of such securities may be required prior to maturity to implement management strategies. Therefore, such securities are carried at fair value with unrealized gains or losses related to these securities included in accumulated other comprehensive income (loss). The fair value of marketable securities is based upon inputs including quoted prices for identical or similar assets. Realized gains and losses are included in other income (expense), net on the consolidated statements of income and comprehensive income. The cost of investments sold is based on the specific identification method. Losses resulting from other than temporary declines in fair value are charged to operations. Investments with remaining maturities over one year are classified as long-term investments. Our investments in equity securities of companies over which we do not have significant influence are accounted for under the cost method. The investment is originally recorded at cost and adjusted for additional contributions or distributions. Management periodically reviews cost-method investments for instances where fair value is less than the carrying amount and the decline in value is determined to be other than temporary. If the decline in value is judged to be other than temporary, the carrying amount of the security is written down to fair value and the resulting loss is charged to operations. We currently do not have investments in which we own 20% to 50% and exercise significant influence over operating and financial policies, therefore we do not account for any investment under the equity method. |
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Concentration of Risk | Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable, which are generally not collateralized. Our policy is to place our cash, cash equivalents, and marketable securities with high quality financial institutions, commercial corporations and government agencies in order to limit the amount of credit exposure. We have established guidelines relative to diversification and maturities for maintaining safety and liquidity. We generally do not require collateral from our customers, but our credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. We maintain allowances for potential credit losses. A significant portion of our revenues are derived from the sales of products and services to the consumer credit and banking industries. |
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Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Major renewals and improvements are capitalized, while repair and maintenance costs are expensed as incurred. Depreciation and amortization charges are calculated using the straight-line method over the following estimated useful lives:
The cost and accumulated depreciation for property and equipment sold, retired or otherwise disposed of are removed from the applicable accounts and resulting gains or losses are recorded in our consolidated statements of income and comprehensive income. |
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Internal-use Software | Internal-Use Software Costs incurred to develop internal-use software during the application development stage are capitalized and reported at cost. Application development stage costs generally include costs associated with internal-use software configuration, coding, installation and testing. Costs of significant upgrades and enhancements that result in additional functionality are also capitalized whereas costs incurred for maintenance and minor upgrades and enhancements are expensed as incurred. Capitalized costs are amortized using the straight-line method over two to three years. Software development costs required to be capitalized for internal-use software have not been material to date. |
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Capitalized Software and Research and Development Costs | Capitalized Software and Research and Development Costs Software development costs relating to products to be sold in the normal course of business are expensed as incurred as research and development costs until technological feasibility is established. Technological feasibility for our products occurs approximately concurrently with the general release of our products; accordingly, we have not capitalized any development or production costs. Costs we incur to maintain and support our existing products after the general release of the product are expensed in the period they are incurred and included in research and development costs in our consolidated statements of income and comprehensive income. |
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Goodwill and Intangible Assets | Goodwill, Acquisition Intangibles and Other Long-Lived Assets Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. We assess goodwill for impairment for each of our reporting units on an annual basis during the fourth quarter using a July 1 measurement date unless circumstances require a more frequent measurement. We have determined that our reporting units are the same as our reportable segments. When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. Events and circumstances we consider in performing the "step zero" qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and the overall financial performance of the reporting units. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the reporting unit by using discounted cash flow valuation models and by comparing our reporting units to guideline publicly-traded companies. These methods require estimates of our future revenues, profits, capital expenditures, working capital, and other relevant factors, as well as selecting appropriate guideline publicly-traded companies for each reporting unit. We estimate these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. For fiscal 2016 and 2015, we performed a step zero qualitative analysis for our annual assessment of goodwill impairment. After evaluating and weighing all relevant events and circumstances, we concluded that it is not more likely than not that the fair value of any of our reporting units was less their carrying amounts. Consequently, we did not perform a step one quantitative analysis in fiscal 2016 and 2015. For fiscal 2014, we elected to proceed directly to the step one quantitative analysis rather than perform the step zero qualitative assessment. There was a substantial excess of fair value over carrying value for each of our reporting units and we determined goodwill was not impaired for any of our reporting units. We amortize our finite-lived intangible assets which result from our acquisitions over the following estimated useful lives:
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Impairment of Long-Lived Assets | Our intangible assets that have finite useful lives and other long-lived assets are assessed for potential impairment when there is evidence that events and circumstances related to our financial performance and economic environment indicate the carrying amount of the assets may not be recoverable. When impairment indicators are identified, we test for impairment using undiscounted cash flows. If such tests indicate impairment, then we measure and record the impairment as the difference between the carrying value of the asset and the fair value of the asset. |
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Revenue Recognition | Revenue Recognition Software Licenses Software license fee revenue is recognized when persuasive evidence of an arrangement exists, software is made available to our customers, the fee is fixed or determinable and collection is probable. The determination of whether fees are fixed or determinable and collection is probable involves the use of judgment. If at the outset of an arrangement we determine that the arrangement fee is not fixed or determinable, revenue is deferred until the arrangement fee becomes fixed or determinable, assuming all other revenue recognition criteria have been met. If at the outset of an arrangement we determine that collectability is not probable, revenue is deferred until the earlier of when collectability becomes probable or the receipt of payment. If there is uncertainty as to the customer’s acceptance of our deliverables, revenue is not recognized until the earlier of receipt of customer acceptance, expiration of the acceptance period, or when we can demonstrate we meet the acceptance criteria. We evaluate contract terms and customer information to ensure that these criteria are met prior to our recognition of license fee revenue. We use the residual method to recognize revenue when a software arrangement includes one or more elements to be delivered at a future date provided the following criteria are met: (i) vendor-specific objective evidence (“VSOE”) of the fair value does not exist for one or more of the delivered items but exists for all undelivered elements, (ii) all other applicable revenue recognition criteria are met and (iii) the fair value of all of the undelivered elements is less than the arrangement fee. VSOE of fair value is based on the normal pricing practices for those products and services when sold separately by us and customer renewal rates for post-contract customer support services. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. If evidence of the fair value of one or more undelivered elements does not exist, the revenue is deferred and recognized when delivery of those elements occurs or when fair value can be established. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements, the fair value of the respective elements, and change to a product’s estimated life cycle could materially impact the amount of earned and unearned revenue. Revenues from post-contract customer support services, such as software maintenance, are recognized on a straight-line basis over the term of the support period. The majority of our software maintenance agreements provide technical support as well as unspecified software product upgrades and releases when and if made available by us during the term of the support period. Transactional-Based Revenues Transactional-based revenue is recognized when persuasive evidence of an arrangement exists, fees are fixed or determinable, and collection is probable. Revenues from our credit scoring, data processing, data management and internet delivery services are recognized as these services are performed. Revenues from transactional or unit-based license fees under software license arrangements, network service and internally-hosted software agreements are recognized based on minimum contractual amounts or on system usage that exceeds minimum contractual amounts. Certain of our transactional-based revenues are based on transaction or active account volumes as reported by our clients. In instances where volumes are reported to us in arrears, we estimate volumes based on preliminary customer transaction information or average actual reported volumes for an immediate trailing period. Differences between our estimates and actual final volumes reported are recorded in the period in which actual volumes are reported. We have not experienced material variances between our estimates and actual reported volumes in the past and anticipate that we will be able to continue to make reasonable estimates in the future. If for some reason we were unable to reasonably estimate transaction volumes in the future, revenue may be deferred until actual customer data is received, and this could have a material impact on our consolidated results of operations. Consulting Services We provide consulting, training, model development and software integration services under both hourly-based time and materials and fixed-priced contracts. Revenues from these services are generally recognized as the services are performed. For fixed-price service contracts, we use a proportionate performance model with hours as the input method of attribution to determine progress towards completion, with consideration also given to output measures, such as contract milestones, when applicable. In such instances, management is required to estimate the total estimated hours of the project. Adjustments to estimates are made in the period in which the facts requiring such revisions become known and, accordingly, recognized revenues and profits are subject to revisions as the contract progresses to completion. Estimated losses, if any, are recorded in the period in which current estimates of total contract revenue and contract costs indicate a loss. If substantive uncertainty related to customer acceptance of services exists, we defer the associated revenue until the contract is completed. We have not experienced material variances between our estimates and actual hours in the past and anticipate that we will be able to continue to make reasonable estimates in the future. If for some reason we are unable to accurately estimate the input measures, revenue would be deferred until the contract is complete, and this could have a material impact on our consolidated results of operations. Services that are sold in connection with software license arrangements generally qualify for separate accounting from the license element because they do not involve significant production, modification or customization of our products and are not otherwise considered to be essential to the functionality of our software. In arrangements where the professional services do not qualify for separate accounting from the license element, the combined software license and professional services revenue are recognized based on contract accounting using either the percentage-of-completion or completed-contract method. Hosting Services We are an application service provider (“ASP”), where we provide hosting services that allow customers access to software that resides on our servers. The ASP model typically includes an up-front fee and a monthly commitment from the customer that commences upon completion of the implementation through the remainder of the customer life. The up-front fee is the initial setup fee, or the implementation fee. The monthly commitment includes, but is not limited to, a fixed monthly fee or a transactional fee based on system usage that exceeds monthly minimums. Revenue is recognized from ASP transactions when there is persuasive evidence of an arrangement, the service has been provided to the customer, the amount of fees is fixed or determinable and the collection of our fees is probable. We do not view the activities of signing the contract or providing initial setup services as discrete earnings events. Revenue is typically deferred until the date the customer commences use of our services, at which point the up-front fees are recognized ratably over the expected life of the customer relationship. ASP transactional fees are recorded monthly as earned. Multiple-Deliverable Arrangements including Non-Software When we enter into a multiple-deliverable arrangement that includes non-software, each deliverable is accounted for as a separate unit of accounting if the following criteria are met: (i) the delivered item or items have value to the customer on a standalone basis and (ii) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. We consider a deliverable to have standalone value if we sell this item separately or if the item is sold by another vendor or could be resold by the customer; for example, we conclude professional services offered along with our SaaS subscription services typically have standalone value using this criteria. Further, our revenue arrangements generally do not include a general right of return relative to delivered products. Revenue for multiple element arrangements is allocated to the software and non-software deliverables based on a relative selling price. We use VSOE in our allocation of arrangement consideration when it is available. We define VSOE as a median price of recent standalone transactions that are priced within a narrow range, as defined by us. If a product or service is seldom sold separately, it is unlikely that we can determine VSOE. In circumstances when VSOE does not exist, we then assess whether we can obtain third-party evidence (“TPE”) of the selling price. It may be difficult for us to obtain sufficient information on competitor pricing to substantiate TPE and therefore we may not always be able to use TPE. When we are unable to establish selling price using VSOE or TPE, we use estimated selling price (“ESP”) in our allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact if the product or service were sold by us on a standalone basis. Our determination of ESP involves weighting several factors based on the specific facts and circumstances of each arrangement. The factors include, but are not limited to, geographies, market conditions, gross margin objectives, pricing practices and controls, customer segment pricing strategies and the product lifecycle. Gross vs. Net Revenue Reporting We apply accounting guidance to determine whether we report revenue for certain transactions based upon the gross amount billed to the customer, or the net amount retained by us. In accordance with the guidance we record revenue on a gross basis for sales in which we have acted as the principal and on a net basis for those sales in which we have in substance acted as an agent or broker in the transaction. |
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Business Combinations | Business Combinations Accounting for our acquisitions requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of income and comprehensive income. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and contingent consideration, where applicable. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, we will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. Examples of critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to: (i) future expected cash flows from software license sales, support agreements, consulting contracts, other customer contracts and acquired developed technologies and patents; (ii) expected costs to develop the in-process research and development into commercially viable products and estimated cash flows from the projects when completed; and (iii) the acquired company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statements of income and comprehensive income and could have a material impact on our results of operations and financial position. |
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Income Taxes | Income Taxes We estimate our income taxes based on the various jurisdictions where we conduct business, which involves significant judgment in determining our income tax provision. We estimate our current tax liability using currently enacted tax rates and laws and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities recorded on our balance sheet using the currently enacted tax rates and laws that will apply to taxable income for the years in which those tax assets are expected to be realized or settled. We then assess the likelihood our deferred tax assets will be realized and to the extent we believe realization is not more likely than not, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding income tax expense in our consolidated statements of income and comprehensive income. In assessing the need for the valuation allowance, we consider future taxable income in the jurisdictions we operate; our ability to carry back tax attributes to prior years; an analysis of our deferred tax assets and the periods over which they will be realizable; and ongoing prudent and feasible tax planning strategies. An increase in the valuation allowance would have an adverse impact, which could be material, on our income tax provision and net income in the period in which we record the increase. We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the technical merits of the tax position indicate it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions and they are evaluated on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results. A description of our accounting policies associated with tax-related contingencies and valuation allowances assumed as part of a business combination is provided under “Business Combinations” above. |
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Earnings per Share | Earnings per Share Basic earnings per share are computed on the basis of the weighted-average number of common shares outstanding during the period under measurement. Diluted earnings per share are based on the weighted-average number of common shares outstanding and potential common shares. Potential common shares result from the assumed exercise of outstanding stock options or other potentially dilutive equity instruments, when they are dilutive under the treasury stock method. |
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Comprehensive Income | Comprehensive Income Comprehensive income is the change in our equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. It includes net income, foreign currency translation adjustments and unrealized gains and losses on our investments in marketable securities, net of tax. |
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Foreign Currency and Derivative Financial Instruments | Foreign Currency and Derivative Financial Instruments We have determined that the functional currency of each foreign operation is the local currency. Assets and liabilities denominated in their local foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the period. Foreign currency translation adjustments are accumulated as a separate component of consolidated stockholders’ equity. We utilize derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates as they relate to specific balances of accounts receivable and cash denominated in foreign currencies. We principally utilize foreign currency forward contracts to protect against market risks arising in the normal course of business. Our policies prohibit the use of derivative instruments for the sole purpose of trading for profit on price fluctuations or to enter into contracts that intentionally increase our underlying exposure. All of our foreign currency forward contracts have maturity periods of less than three months. At the end of the reporting period, foreign-currency-denominated assets and liabilities are remeasured into the functional currencies of the reporting entities at current market rates. The change in value from this remeasurement is reported as a foreign exchange gain or loss for that period in other income (expense), net in the accompanying consolidated statements of income and comprehensive income. |
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Share-Based Compensation | Share-Based Compensation We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, net of estimated forfeitures, over the vesting or service period, as applicable, of the stock award (generally three to four years). |
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Advertising and Promotion Costs | Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income and comprehensive income. |
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New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 applies to all entities that present a classified statement of financial position. ASU 2015-17 may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. ASU 2015-17 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. We elected to early adopt the standard prospectively as of March 31, 2016, which did not have a significant impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years and interim periods beginning after December 15, 2017, which means it will be effective for our fiscal year beginning October 1, 2018. ASU 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted in the first interim period of an entity's annual financial statements. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016, which means it will be effective for our fiscal year beginning October 1, 2017. Early adoption is permitted. We plan to early adopt ASU 2016-09 on a prospective basis in the first quarter of our fiscal 2017 (the quarter ended December 31, 2016), which is expected to have an impact on the recording of excess tax benefits and deficiencies in our consolidated balance sheets and consolidated statements of income and comprehensive income, as well as our operating and financing cash flows on our consolidated statements of cash Flows. The magnitude of such impact is dependent upon our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on grant date and the exercise behavior of the our stock option holders. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018, which means it will be effective for our fiscal year beginning October 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will be effective for our fiscal year beginning October 1, 2018. Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). We have not yet selected a transition method and we are currently evaluating the impact that the updated standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance” (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015, which means it is effective for our fiscal year beginning October 1, 2016. Early adoption was permitted. We do not believe that adoption of ASU 2015-03 will have a significant impact on our consolidated financial statements. |
Nature of Business and Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2016 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Estimated Useful Life of Property and Equipment | Depreciation and amortization charges are calculated using the straight-line method over the following estimated useful lives:
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Estimated Useful Life of Definite-Lived Intangible Assets | We amortize our finite-lived intangible assets which result from our acquisitions over the following estimated useful lives:
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Cash, Cash Equivalents and Marketable Securities Available for Sale (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash, Cash Equivalents and Marketable Securities Available for Sale | The following is a summary of cash, cash equivalents and marketable securities available for sale at September 30, 2016 and 2015:
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Fair Value Measurements (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | The following table represents financial assets that we measured at fair value on a recurring basis at September 30, 2016 and 2015:
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Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The following tables summarize our outstanding foreign currency forward contracts, by currency at September 30, 2016 and 2015:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | These amounts are shown below for the years ended September 30, 2016, 2015 and 2014:
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Receivables (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables | Receivables at September 30, 2016 and 2015 consisted of the following:
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Activity of Allowance for Doubtful Accounts | Activity in the allowance for doubtful accounts was as follows:
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Goodwill and Intangible Assets (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Subject to Amortization | Intangible assets that are subject to amortization consisted of the following at September 30, 2016 and 2015:
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Schedule of Amortization Expense | Amortization expense associated with our intangible assets, which has been reflected as a separate operating expense caption within the accompanying consolidated statements of income and comprehensive income, consisted of the following during fiscal 2016, 2015 and 2014:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future intangible asset amortization expense associated with intangible assets existing at September 30, 2016, was as follows (in thousands):
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Schedule of Goodwill | The following table summarizes changes to goodwill during fiscal 2016 and 2015, both in total and as allocated to our operating segments. We have not recognized any goodwill impairment losses to date.
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Composition of Certain Financial Statement Captions (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | The following table presents the composition of property and equipment at September 30, 2016 and 2015:
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Senior Notes (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Notes | The 2008 Senior Notes were issued in four series as follows:
The 2010 Senior Notes were issued in four series as follows:
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Principal Amounts Carrying amounts and Fair Values of Senior Notes | The following table presents the principal amounts, carrying amounts and fair values for the Senior Notes at September 30, 2016 and 2015:
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Future Principal Payments For the Senior Notes | Future principal payments for the Senior Notes are as follows (in thousands):
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Restructuring Expenses (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs | The following tables summarize our restructuring accruals associated with the above actions. The current portion and non-current portion was recorded in other accrued current liabilities and other liabilities, respectively, within the accompanying consolidated balance sheets.
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Income Taxes (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Income Taxes | The provision for income taxes was as follows during fiscal 2016, 2015 and 2014:
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Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities at September 30, 2016 and 2015 were as follows:
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Reconciliation Between Federal Statutory Income Tax Rate and Effective Tax Rate | A reconciliation of the provision for income taxes, with the amount computed by applying the U.S. federal statutory income tax rate (35% in fiscal 2016, 2015 and 2014) to income before provision for income taxes for fiscal 2016, 2015 and 2014 is shown below:
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Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Stock-Based Employee Benefit Plans (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions Used to Estimate Fair Value of Stock Options | We used the following assumptions to estimate the fair value of our stock options during fiscal 2016, 2015 and 2014:
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Summary of Option Activity | The following table summarizes option activity during fiscal 2016:
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Summary of Restricted Stock Unit and Market Stock Unit Activity | The following table summarizes the RSUs activity during fiscal 2016:
The following table summarizes the MSUs activity during fiscal 2016:
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Summary of Performance Stock Unit Activity | The following table summarizes the PSUs activity during fiscal 2016:
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Assumptions Used to Estimate Fair Value of Market Stock Units | We used the following assumptions to estimate the fair value of our MSUs during fiscal 2016, 2015 and 2014:
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Earnings per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share | The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) during fiscal 2016, 2015 and 2014:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables summarize segment information for fiscal 2016, 2015 and 2014:
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Revenues and Percentage of Revenues by Reportable Market Segments | Our revenues and percentage of revenues by reportable market segments were as follows for fiscal 2016, 2015 and 2014, the majority of which were derived from the sale of products and services within the banking (including consumer credit) industry:
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Revenues and Percentage of Revenues on Geographical Basis | Our revenues and percentage of revenues on a geographical basis are summarized below for fiscal 2016, 2015 and 2014:
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Property and Equipment Net on Geographical Basis | Our property and equipment, net, on a geographical basis are summarized below at September 30, 2016 and 2015. At September 30, 2016 and 2015, no individual country outside the U.S. accounted for 10% or more of total consolidated net property and equipment.
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Commitments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Minimum Future Commitments Under Non-Cancelable Operating Leases and Other Obligations | Minimum future commitments under non-cancelable operating leases and other obligations were as follows at September 30, 2016:
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Supplementary Financial Data (Unaudited) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Unaudited Consolidated Financial Results | The following table presents selected unaudited consolidated financial results for each of the eight quarters in the two-year period ended September 30, 2016. In the opinion of management, this unaudited information has been prepared on the same basis as the audited information and includes all adjustments (consisting of only normal recurring adjustments, except as noted below) necessary for a fair statement of the consolidated financial information for the period presented.
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Nature of Business and Summary of Significant Accounting Policies - Estimated Useful Life of Property and Equipment (Detail) |
12 Months Ended |
---|---|
Sep. 30, 2016 | |
Data processing equipment and software | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 3 years |
Office furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 3 years |
Office furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 7 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | Shorter of estimated useful life or lease term |
Nature of Business and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Depreciation and amortization, property and equipment | $ 17.7 | $ 20.2 | $ 20.7 |
Property, Plant and Equipment [Line Items] | |||
Foreign Currency Transaction Gain (Loss), before Tax | 0.2 | 0.0 | (1.0) |
Advertising and promotion costs | $ 3.6 | $ 3.7 | $ 3.8 |
Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Stock option awards vesting period | 3 years | ||
Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Stock option awards vesting period | 4 years | ||
Internal-use Software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 2 years | ||
Internal-use Software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, estimated useful life | 3 years |
Business Combinations - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
May 19, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2016 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 814,750 | $ 779,928 | $ 798,415 | |
QuadMetrics | ||||
Business Acquisition [Line Items] | ||||
Common stock acquired | 100.00% | |||
Cash consideration | $ 5,700 | |||
TONBELLER | ||||
Business Acquisition [Line Items] | ||||
Common stock acquired | 100.00% | |||
Weighted average useful life | 4 years 11 months | |||
Goodwill | $ 46,100 | |||
Cash consideration | 59,600 | |||
Intangible assets acquired | $ 14,900 | |||
InfoCentricity | ||||
Business Acquisition [Line Items] | ||||
Common stock acquired | 100.00% | |||
Cash consideration | $ 8,200 |
Cash, Cash Equivalents and Marketable Securities Available for Sale - Summary of Cash, Cash Equivalents and Marketable Securities Available for Sale (Detail) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Cash and Cash Equivalents | ||
Cash, cash equivalents and marketable securities [Line Items] | ||
Amortized Cost | $ 75,926 | $ 86,120 |
Gross Unrealized Gains | 0 | 0 |
Fair Value | 75,926 | 86,120 |
Cash and Cash Equivalents | Cash | ||
Cash, cash equivalents and marketable securities [Line Items] | ||
Amortized Cost | 75,486 | 85,681 |
Gross Unrealized Gains | 0 | 0 |
Fair Value | 75,486 | 85,681 |
Cash and Cash Equivalents | Money market funds | ||
Cash, cash equivalents and marketable securities [Line Items] | ||
Amortized Cost | 440 | 439 |
Gross Unrealized Gains | 0 | 0 |
Fair Value | 440 | 439 |
Long-term Marketable Securities | Marketable equity securities | ||
Cash, cash equivalents and marketable securities [Line Items] | ||
Amortized Cost | 9,598 | 8,691 |
Gross Unrealized Gains | 1,418 | 876 |
Fair Value | $ 11,016 | $ 9,567 |
Fair Value Measurements - Financial Assets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
|||||
---|---|---|---|---|---|---|---|
Assets: | |||||||
Total | $ 11,456 | $ 10,006 | |||||
Cash | |||||||
Assets: | |||||||
Cash equivalents | [1] | 440 | 439 | ||||
Marketable securities | |||||||
Assets: | |||||||
Marketable securities | [2] | 11,016 | 9,567 | ||||
Active Markets for Identical Instruments (Level 1) | |||||||
Assets: | |||||||
Total | 11,456 | 10,006 | |||||
Active Markets for Identical Instruments (Level 1) | Cash | |||||||
Assets: | |||||||
Cash equivalents | [1] | 440 | 439 | ||||
Active Markets for Identical Instruments (Level 1) | Marketable securities | |||||||
Assets: | |||||||
Marketable securities | [2] | $ 11,016 | $ 9,567 | ||||
|
Fair Value Measurements - Financial Assets Measured at Fair Value on Recurring Basis - Additional Information (Detail) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash deposits | $ 75.5 | $ 85.7 |
Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Derivative [Line Items] | ||
Short-term forward contracts, average maturities at inception | 3 months | |
Foreign Currency Forward Contracts | ||
Derivative [Line Items] | ||
Forward foreign currency contracts fair value | $ 0 | $ 0 |
Derivative Financial Instruments - Gains Losses on Derivative Financial Instruments Recorded in Consolidated Statements of Income (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Foreign Currency Forward Contracts | |||
Derivative [Line Items] | |||
Gain (loss) on foreign currency forward contracts | $ (2,911) | $ (62) | $ 256 |
Receivables - Summary of Receivables (Detail) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||
---|---|---|---|---|---|
Receivables [Abstract] | |||||
Billed | $ 124,731 | $ 114,464 | |||
Unbilled | [1] | 45,247 | 46,435 | ||
Receivables, Gross, Current, Total | 169,978 | 160,899 | |||
Less: allowance for doubtful accounts | (2,192) | (2,126) | $ (2,927) | ||
Receivables, net | $ 167,786 | $ 158,773 | |||
|
Receivables - Activity of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance, beginning of year | $ 2,126 | $ 2,927 | |
Add: expense | 2,011 | 0 | $ 1,485 |
Less: write-offs (net of recoveries) | (1,945) | (801) | |
Balance, end of year | $ 2,192 | $ 2,126 | $ 2,927 |
Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 149,351 | $ 154,158 |
Accumulated Amortization | (115,732) | (106,837) |
Total | $ 33,619 | $ 47,321 |
Average Life | 8 years | 8 years |
Completed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 84,184 | $ 87,820 |
Accumulated Amortization | (70,368) | (67,769) |
Total | $ 13,816 | $ 20,051 |
Average Life | 5 years | 5 years |
Customer contracts and relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 64,592 | $ 65,762 |
Accumulated Amortization | (45,034) | (38,930) |
Total | $ 19,558 | $ 26,832 |
Average Life | 12 years | 12 years |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 575 | $ 576 |
Accumulated Amortization | (330) | (138) |
Total | $ 245 | $ 438 |
Average Life | 3 years | 3 years |
Goodwill and Intangible Assets - Amortization Expense Associated with Intangible Assets (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Amortization expense of intangible assets | $ 1,700 | $ 1,900 | $ 1,900 | $ 1,900 | $ 1,800 | $ 1,900 | $ 1,900 | $ 1,800 | $ 13,982 | [1] | $ 13,673 | [1] | $ 11,917 | [1] | ||
Cost of revenues | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Amortization expense of intangible assets | 7,300 | 7,594 | 7,371 | |||||||||||||
Selling, general and administrative expenses | ||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||
Amortization expense of intangible assets | $ 6,682 | $ 6,079 | $ 4,546 | |||||||||||||
|
Goodwill and Intangible Assets - Estimated Future Intangible Asset Amortization Expense (Detail) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Estimated future intangible asset amortization expense | ||
2017 | $ 12,846 | |
2018 | 6,398 | |
2019 | 5,882 | |
2020 | 3,611 | |
2021 | 2,405 | |
Thereafter | 2,477 | |
Total | $ 33,619 | $ 47,321 |
Composition of Certain Financial Statement Captions - Property and Equipment (Detail) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Property and equipment: | ||
Data processing equipment and software | $ 84,761 | $ 71,841 |
Office furniture and equipment | 16,847 | 14,750 |
Leasehold improvements | 25,152 | 23,269 |
Less: accumulated depreciation and amortization | (81,638) | (71,652) |
Total | $ 45,122 | $ 38,208 |
Senior Notes - Additional Information (Detail) |
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
May 07, 2015
USD ($)
|
Jul. 14, 2010
USD ($)
Contract
|
May 07, 2008
USD ($)
Contract
|
---|---|---|---|---|---|
May 2008 Senior Notes | |||||
Debt Disclosure [Line Items] | |||||
Senior Notes issued in a private placement to a group of institutional investors | $ 131,000,000 | $ 131,000,000 | $ 275,000,000 | ||
Number of series of Senior Notes issued | Contract | 4 | ||||
Senior Notes issued in a private placement to a group of institutional investors, annual principal payment | $ 8,000,000 | ||||
July 2010 Senior Notes | |||||
Debt Disclosure [Line Items] | |||||
Senior Notes issued in a private placement to a group of institutional investors | $ 185,000,000 | $ 245,000,000 | $ 245,000,000 | ||
Number of series of Senior Notes issued | Contract | 4 |
Senior Notes - Summary of Senior Notes (Detail) - USD ($) $ in Millions |
Jul. 14, 2010 |
May 07, 2008 |
---|---|---|
Series A | ||
Debt Instrument [Line Items] | ||
Amount | $ 41.0 | |
Interest rate | 6.37% | |
Maturity date | May 07, 2013 | |
Series B | ||
Debt Instrument [Line Items] | ||
Amount | $ 40.0 | |
Interest rate | 6.37% | |
Maturity date | May 07, 2015 | |
Series C | ||
Debt Instrument [Line Items] | ||
Amount | $ 63.0 | |
Interest rate | 6.71% | |
Maturity date | May 07, 2015 | |
Series D | ||
Debt Instrument [Line Items] | ||
Amount | $ 131.0 | |
Interest rate | 7.18% | |
Maturity date | May 07, 2018 | |
Series E | ||
Debt Instrument [Line Items] | ||
Amount | $ 60.0 | |
Interest rate | 4.72% | |
Maturity date | Jul. 14, 2016 | |
Series F | ||
Debt Instrument [Line Items] | ||
Amount | $ 72.0 | |
Interest rate | 5.04% | |
Maturity date | Jul. 14, 2017 | |
Series G | ||
Debt Instrument [Line Items] | ||
Amount | $ 28.0 | |
Interest rate | 5.42% | |
Maturity date | Jul. 14, 2019 | |
Series H | ||
Debt Instrument [Line Items] | ||
Amount | $ 85.0 | |
Interest rate | 5.59% | |
Maturity date | Jul. 14, 2020 |
Senior Notes - Principal Amounts Carrying Amounts and Fair Values of Senior Notes (Detail) - USD ($) |
Sep. 30, 2016 |
Sep. 30, 2015 |
Jul. 14, 2010 |
May 07, 2008 |
---|---|---|---|---|
May 2008 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | $ 131,000,000 | $ 131,000,000 | $ 275,000,000 | |
Carrying amounts | 131,000,000 | 131,000,000 | ||
Fair value | 139,902,000 | 144,009,000 | ||
July 2010 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | 185,000,000 | 245,000,000 | $ 245,000,000 | |
Carrying amounts | 185,000,000 | 245,000,000 | ||
Fair value | $ 195,715,000 | $ 257,563,000 |
Senior Notes - Future Principal Payments For Senior Notes (Detail) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2017 | $ 72,000 |
2018 | 131,000 |
2019 | 28,000 |
2020 | 85,000 |
Total | $ 316,000 |
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Compensation and Retirement Disclosure [Abstract] | |||
Eligible employees contribution to 401(k) plan (up to 25%) | 25.00% | ||
Employer contributions into 401(k) plans | $ 7.3 | $ 7.1 | $ 6.3 |
Employee incentive plans expenses | $ 40.0 | $ 20.3 | $ 25.0 |
Restructuring Expenses - Additional Information (Detail) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
position
|
Sep. 30, 2014
USD ($)
position
|
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 0 | $ 17,479,000 | $ 4,100,000 |
Number of positions reduced | position | 97 | 88 | |
Facilities charges | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 0 | $ 13,571,000 | $ 200,000 |
Employee separation | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 0 | $ 3,908,000 | $ 3,900,000 |
Restructuring Expenses - Summary of Restructuring Accruals and Certain Facility Closures (Detail) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Restructuring Reserve [Roll Forward] | |||
Beginning balance | $ 15,400,000 | $ 262,000 | |
Expense additions | 0 | 17,479,000 | $ 4,100,000 |
Cash payments | (6,167,000) | (1,765,000) | |
Non-cash settlements | 0 | (576,000) | |
Ending balance | 9,233,000 | 15,400,000 | 262,000 |
Less: current portion | (4,266,000) | (5,570,000) | (262,000) |
Non-current | 4,967,000 | 9,830,000 | 0 |
Facilities charges | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 12,995,000 | 92,000 | |
Expense additions | 0 | 13,571,000 | 200,000 |
Cash payments | (3,762,000) | (92,000) | |
Non-cash settlements | 0 | (576,000) | |
Ending balance | 9,233,000 | 12,995,000 | 92,000 |
Employee separation | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 2,405,000 | 170,000 | |
Expense additions | 0 | 3,908,000 | 3,900,000 |
Cash payments | (2,405,000) | (1,673,000) | |
Non-cash settlements | 0 | 0 | |
Ending balance | $ 0 | $ 2,405,000 | $ 170,000 |
Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Current: | |||
Federal | $ 50,631 | $ 23,646 | $ 42,570 |
State | 2,900 | (5,381) | 4,221 |
Foreign | 7,597 | 10,405 | 7,487 |
Current income tax | 61,128 | 28,670 | 54,278 |
Deferred: | |||
Federal | (23,592) | (5,004) | (15,401) |
State | (225) | 1,422 | (1,093) |
Foreign | (2,190) | (2,352) | 468 |
Deferred income taxes | (26,007) | (5,934) | (16,026) |
Total provision | $ 35,121 | $ 22,736 | $ 38,252 |
Income Taxes - Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Deferred tax assets: | ||
Net operating loss carryforward | $ 16,122 | $ 17,650 |
Foreign tax credit carryforward | 14,590 | 0 |
Research credit carryforward | 6,132 | 5,759 |
Accrued bonus | 13,807 | 5,400 |
Investments | 619 | 1,042 |
Accrued compensation | 1,328 | 1,834 |
Share-based compensation | 27,203 | 23,741 |
Deferred revenue | 1,467 | 979 |
Accrued lease costs | 3,406 | 5,009 |
Property and equipment | 3,348 | 3,249 |
Other | 7,728 | 5,613 |
Deferred tax assets, gross | 95,750 | 70,276 |
Less valuation allowance | (15,145) | (13,882) |
Total deferred tax assets | 80,605 | 56,394 |
Deferred tax liabilities: | ||
Intangible assets | (28,056) | (30,286) |
Prepaid expense | (3,959) | (3,877) |
Other | (992) | (993) |
Total deferred tax liabilities | (33,007) | (35,156) |
Deferred tax assets, net | $ 47,598 | $ 21,238 |
Income Taxes - Reconciliation Between Federal Statutory Income Tax Rate and Effective Tax Rate (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Income tax provision at U.S. federal statutory rate | $ 50,599 | $ 38,233 | $ 46,595 |
State income taxes, net of U.S. federal benefit | 2,244 | 1,719 | 2,832 |
Foreign tax rate differential | (4,661) | (5,279) | (4,592) |
Intercompany interest | (1,223) | (1,260) | (1,246) |
Research credits | (4,398) | (2,104) | (302) |
Domestic production deduction | (3,726) | (1,607) | (3,141) |
Federal and state audit settlements | (248) | (5,806) | (5,886) |
Foreign | (1,702) | (3,109) | (1,654) |
Valuation allowance | 1,262 | 1,805 | 3,888 |
Foreign Tax Credit | (3,286) | (1,296) | 150 |
Other | 260 | 1,440 | 1,608 |
Total provision | $ 35,121 | $ 22,736 | $ 38,252 |
Income Taxes - Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits at beginning of year | $ 4,634 | $ 4,554 | $ 9,009 |
Gross increases for tax positions in prior years | 1,004 | 1,725 | 2,468 |
Gross decreases for tax positions in prior years | (117) | (3) | (967) |
Gross increases based on tax positions related to the current year | 1,310 | 582 | 923 |
Decreases for settlements and payments | (32) | (2,224) | (6,879) |
Gross unrecognized tax benefits at end of year | $ 6,799 | $ 4,634 | $ 4,554 |
Stock-Based Employee Benefit Plans - Assumptions Used to Estimate Fair Value of Stock Options (Detail) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Average expected term (years) | 4 years 10 months | 4 years 2 months 4 days | 4 years 13 days |
Expected volatility (range), minimum | 35.30% | 34.50% | 34.60% |
Expected volatility (range), maximum | 36.40% | 35.30% | 35.60% |
Weighted average volatility | 36.00% | 34.60% | 35.10% |
Risk free interest rate, minimum | 1.21% | 1.33% | 0.76% |
Risk free interest rate, maximum | 1.49% | 1.48% | 1.16% |
Average expected dividend yield | 0.09% | 0.14% | 0.16% |
Expected dividend yield (range), minimum | 0.09% | 0.11% | 0.16% |
Expected dividend yield (range), maximum | 0.10% | 0.14% | 0.17% |
Stock-Based Employee Benefit Plans - Assumptions Used to Estimate Fair Value of Market Stock Units (Details) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Average expected dividend yield | 0.09% | 0.14% | 0.16% |
Market stock units (MSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility in FICO’s stock price | 24.10% | 26.60% | 33.90% |
Expected volatility in Russell 3000 Index | 12.80% | 12.20% | 17.30% |
Correlation between FICO and the Russell 3000 Index | 60.20% | 55.90% | 68.00% |
Risk-free interest rate | 1.25% | 1.10% | 0.68% |
Average expected dividend yield | 0.09% | 0.14% | 0.16% |
Earnings per Share - Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|||||||||||
Numerator for basic and diluted earnings per share | |||||||||||||||||||||
Net income | $ 32,104 | $ 34,987 | $ 23,116 | $ 19,241 | $ 33,319 | $ 19,906 | $ 18,870 | $ 14,407 | $ 109,448 | $ 86,502 | $ 94,879 | ||||||||||
Denominator — share: | |||||||||||||||||||||
Basic weighted-average shares (in shares) | 30,916 | 31,149 | 31,268 | 31,185 | 31,214 | 31,118 | 31,335 | 31,936 | 31,129 | 31,402 | 33,870 | ||||||||||
Effect of dilutive securities (in shares) | 1,179 | 1,207 | 994 | ||||||||||||||||||
Diluted weighted-average shares (in shares) | 32,221 | 32,313 | 32,262 | 32,436 | 32,494 | 32,363 | 32,448 | 33,128 | 32,308 | 32,609 | 34,864 | ||||||||||
Earnings per share: | |||||||||||||||||||||
Basic (in dollars per share) | $ 1.04 | [1] | $ 1.12 | [1] | $ 0.74 | [1] | $ 0.62 | [1] | $ 1.07 | [1] | $ 0.64 | [1] | $ 0.60 | [1] | $ 0.45 | [1] | $ 3.52 | $ 2.75 | $ 2.80 | ||
Diluted (in dollars per share) | $ 1.00 | [1] | $ 1.08 | [1] | $ 0.72 | [1] | $ 0.59 | [1] | $ 1.03 | [1] | $ 0.62 | [1] | $ 0.58 | [1] | $ 0.43 | [1] | $ 3.39 | $ 2.65 | $ 2.72 | ||
|
Earnings per Share - Additional Information (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Earnings Per Share [Abstract] | |||
Options to purchase shares of common stock excluded in the computation of diluted earnings per share because their inclusion would be antidilutive (in shares) | 9 | 138 | 11 |
Related Party Transactions - Additional Information (Detail) |
Sep. 30, 2016
USD ($)
|
---|---|
Related Party Transactions [Abstract] | |
Investment in convertible preferred stock in a private company | $ 10,000,000 |
Segment Information - Summary of Segment Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||||||
Segment revenues: | ||||||||||||||||
Transactional and maintenance | $ 605,919 | $ 564,232 | $ 527,563 | |||||||||||||
Professional services | 169,738 | 151,773 | 149,834 | |||||||||||||
License | 105,699 | 122,776 | 111,588 | |||||||||||||
Total revenues | $ 235,824 | $ 238,778 | $ 206,678 | $ 200,076 | $ 232,756 | $ 209,366 | $ 207,109 | $ 189,550 | 881,356 | 838,781 | 788,985 | |||||
Segment operating expense | (711,764) | (701,276) | (627,117) | |||||||||||||
Operating income | 169,592 | 137,505 | 161,868 | |||||||||||||
Unallocated share-based compensation expense | (55,509) | (45,308) | (36,362) | |||||||||||||
Unallocated amortization expense | $ (1,700) | $ (1,900) | $ (1,900) | $ (1,900) | $ (1,800) | $ (1,900) | $ (1,900) | $ (1,800) | (13,982) | [1] | (13,673) | [1] | (11,917) | [1] | ||
Unallocated restructuring and acquisition-related expenses | 0 | (18,242) | (4,281) | |||||||||||||
Unallocated interest expense, net | (26,633) | (29,150) | (28,550) | |||||||||||||
Unallocated other income (expense), net | 1,610 | 883 | (187) | |||||||||||||
Income before income taxes | 144,569 | 109,238 | 133,131 | |||||||||||||
Depreciation expense | 17,651 | 20,216 | 20,715 | |||||||||||||
Applications | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Total revenues | 532,642 | 526,274 | 504,256 | |||||||||||||
Scores | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Total revenues | 241,059 | 207,007 | 186,469 | |||||||||||||
Decision Management Software | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Total revenues | 107,655 | 105,500 | 98,260 | |||||||||||||
Operating Segments | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Segment operating expense | (642,273) | (624,053) | (574,557) | |||||||||||||
Operating income | 239,083 | 214,728 | 214,428 | |||||||||||||
Operating Segments | Applications | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Transactional and maintenance | 328,472 | 320,596 | 313,316 | |||||||||||||
Professional services | 138,775 | 124,562 | 121,100 | |||||||||||||
License | 65,395 | 81,116 | 69,840 | |||||||||||||
Total revenues | 532,642 | 504,256 | ||||||||||||||
Segment operating expense | (364,371) | (366,666) | (334,762) | |||||||||||||
Operating income | 168,271 | 159,608 | 169,494 | |||||||||||||
Depreciation expense | 11,852 | 13,861 | 14,451 | |||||||||||||
Operating Segments | Scores | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Transactional and maintenance | 233,655 | 200,426 | 178,023 | |||||||||||||
Professional services | 4,185 | 2,901 | 2,784 | |||||||||||||
License | 3,219 | 3,680 | 5,662 | |||||||||||||
Total revenues | 241,059 | 186,469 | ||||||||||||||
Segment operating expense | (55,975) | (55,793) | (44,187) | |||||||||||||
Operating income | 185,084 | 151,214 | 142,282 | |||||||||||||
Depreciation expense | 814 | 921 | 851 | |||||||||||||
Operating Segments | Decision Management Software | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Transactional and maintenance | 43,792 | 43,210 | 36,224 | |||||||||||||
Professional services | 26,778 | 24,310 | 25,950 | |||||||||||||
License | 37,085 | 37,980 | 36,086 | |||||||||||||
Total revenues | 107,655 | 98,260 | ||||||||||||||
Segment operating expense | (111,315) | (111,850) | (94,057) | |||||||||||||
Operating income | (3,660) | (6,350) | 4,203 | |||||||||||||
Depreciation expense | 3,657 | 3,087 | 2,752 | |||||||||||||
Unallocated Corporate Expenses | ||||||||||||||||
Segment revenues: | ||||||||||||||||
Segment operating expense | (110,612) | (89,744) | (101,551) | |||||||||||||
Operating income | (110,612) | (89,744) | (101,551) | |||||||||||||
Depreciation expense | $ 1,328 | $ 2,347 | $ 2,661 | |||||||||||||
|
Commitments - Minimum Future Commitments Under Non Cancelable Operating Leases and Other Obligations (Detail) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Future Minimum Lease Commitments | |
2017 | $ 22,069 |
2018 | 20,890 |
2019 | 17,806 |
2020 | 9,541 |
2021 | 6,004 |
Thereafter | 13,966 |
Total | $ 90,276 |
Commitments - Additional Information (Detail) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016
USD ($)
executive
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2014
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | |||
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals | $ 0.6 | ||
Rent expense under operating leases | $ 17.6 | $ 20.7 | $ 19.4 |
Number of executives in a management agreement providing for certain payments and other benefits in the event of a qualified change | executive | 23 |
Guarantees - Additional Information (Detail) |
12 Months Ended |
---|---|
Sep. 30, 2016 | |
Maximum | |
Product Warranty [Line Items] | |
Duration of product warranties | 90 days |
Supplementary Financial Data (Unaudited) - Selected Unaudited Consolidated Financial Results (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||
Revenues | $ 235,824 | $ 238,778 | $ 206,678 | $ 200,076 | $ 232,756 | $ 209,366 | $ 207,109 | $ 189,550 | $ 881,356 | $ 838,781 | $ 788,985 | |||||||||||||||||
Cost of revenues | 74,298 | [1] | 66,384 | [1] | 62,298 | [1] | 62,193 | [1] | 67,042 | [1] | 66,202 | [1] | 70,991 | [1] | 66,300 | [1] | 265,173 | [2] | 270,535 | [2] | 249,281 | [2] | ||||||
Gross profit | 161,526 | 172,394 | 144,380 | 137,883 | 165,714 | 143,164 | 136,118 | 123,250 | ||||||||||||||||||||
Net income | $ 32,104 | $ 34,987 | $ 23,116 | $ 19,241 | $ 33,319 | $ 19,906 | $ 18,870 | $ 14,407 | $ 109,448 | $ 86,502 | $ 94,879 | |||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||
Basic (in dollars per share) | $ 1.04 | [3] | $ 1.12 | [3] | $ 0.74 | [3] | $ 0.62 | [3] | $ 1.07 | [3] | $ 0.64 | [3] | $ 0.60 | [3] | $ 0.45 | [3] | $ 3.52 | $ 2.75 | $ 2.80 | |||||||||
Diluted (in dollars per share) | $ 1.00 | [3] | $ 1.08 | [3] | $ 0.72 | [3] | $ 0.59 | [3] | $ 1.03 | [3] | $ 0.62 | [3] | $ 0.58 | [3] | $ 0.43 | [3] | $ 3.39 | $ 2.65 | $ 2.72 | |||||||||
Shares used in computing earnings per share: | ||||||||||||||||||||||||||||
Basic weighted-average shares (in shares) | 30,916 | 31,149 | 31,268 | 31,185 | 31,214 | 31,118 | 31,335 | 31,936 | 31,129 | 31,402 | 33,870 | |||||||||||||||||
Diluted (in shares) | 32,221 | 32,313 | 32,262 | 32,436 | 32,494 | 32,363 | 32,448 | 33,128 | 32,308 | 32,609 | 34,864 | |||||||||||||||||
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Supplementary Financial Data (Unaudited) - Selected Unaudited Consolidated Financial Results - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
Amortization expense | $ 1,700 | $ 1,900 | $ 1,900 | $ 1,900 | $ 1,800 | $ 1,900 | $ 1,900 | $ 1,800 | $ 13,982 | [1] | $ 13,673 | [1] | $ 11,917 | [1] | ||
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