What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-05 · 96 added, 107 removed, 503 unchanged (29% of the section changed)

8 unchanged sentences

Prepaid expenses and other current assets 38,670 42,504

Assets held for sale 48,843 —

Total current assets 556,880 534,078

15 unchanged sentences

Current maturities on debt 250,000 95,000

Liabilities related to assets held for sale 23,989 —

Total current liabilities 544,769 414,511

9 unchanged sentences

Common stock ($ 0.01 par value;

200,000 shares authorized, 88,857 shares issued and 28,829 and 29,096 shares outstanding at March 31, 2021 and September 30, 2020, respectively)

200,000 shares authorized, 88,857 shares issued and 28,386 and 29,096 shares outstanding at June 30, 2021 and September 30, 2020, respectively)

Additional paid-in-capital 1,171,164 1,218,583

Treasury stock, at cost ( 60,028 and 59,761 shares at March 31, 2021 and September 30, 2020, respectively)

Treasury stock, at cost ( 60,471 and 59,761 shares at June 30, 2021 and September 30, 2020, respectively)

( 3,482,483 ) ( 2,997,856 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Quarter Ended March 31, Six Months Ended March 31,

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

10 unchanged sentences

Restructuring and impairment charges — — — 3,104

Gain on sale of product line assets — — ( 7,334 ) —

Gains on product line asset sales and business divestiture ( 92,805 ) — ( 100,139 ) —

Total operating expenses 143,800 230,860 591,655 709,727

1 unchanged sentence

Interest expense, net ( 10,018 ) ( 11,223 ) ( 29,602 ) ( 32,245 )

Other income (expense), net 568 ( 2,008 ) 3,448 ( 2,227 )

Other income, net 3,526 4,560 6,974 2,333

Income before income taxes 187,892 76,208 367,676 180,567

Income tax provision (benefit) 23,150 4,176 24,618 ( 8,850 )

Income tax provision 36,694 12,132 61,312 3,282

Net income 151,198 64,076 306,364 177,285

16 unchanged sentences

(In thousands) Shares Par Value

Balance at December 31, 2020 29,236 $ 292 $ 1,145,893 $ ( 3,035,668 ) $ 2,279,551 $ ( 65,947 ) $ 324,121

Balance at March 31, 2021 28,829 $ 288 $ 1,181,692 $ ( 3,239,109 ) $ 2,348,225 $ ( 67,793 ) $ 223,303

Share-based compensation — — 30,004 — — — 30,004

3 unchanged sentences

Foreign currency translation adjustments — — — — — 4,243 4,243

Balance at March 31, 2021 28,829 $ 288 $ 1,181,692 $ ( 3,239,109 ) $ 2,348,225 $ ( 67,793 ) $ 223,303

Balance at June 30, 2021 28,386 $ 284 $ 1,171,164 $ ( 3,482,483 ) $ 2,499,423 $ ( 63,550 ) $ 124,838

Common Stock Additional

3 unchanged sentences

(In thousands) Shares Par Value

Balance at December 31, 2019 29,186 $ 292 $ 1,148,190 $ ( 2,843,097 ) $ 2,011,569 $ ( 75,993 ) $ 240,961

Balance at March 31, 2020 29,082 $ 291 $ 1,169,217 $ ( 2,930,165 ) $ 2,069,857 $ ( 95,049 ) $ 214,151

Share-based compensation — — 22,264 — — — 22,264

3 unchanged sentences

Foreign currency translation adjustments — — — — — 832 832

Balance at March 31, 2020 29,082 $ 291 $ 1,169,217 $ ( 2,930,165 ) $ 2,069,857 $ ( 95,049 ) $ 214,151

Balance at June 30, 2020 28,999 $ 290 $ 1,187,717 $ ( 2,980,437 ) $ 2,133,933 $ ( 94,217 ) $ 247,286

Common Stock Additional

9 unchanged sentences

Foreign currency translation adjustments — — — — — 19,445 19,445

Balance at March 31, 2021 28,829 $ 288 $ 1,181,692 $ ( 3,239,109 ) $ 2,348,225 $ ( 67,793 ) $ 223,303

Balance at June 30, 2021 28,386 $ 284 $ 1,171,164 $ ( 3,482,483 ) $ 2,499,423 $ ( 63,550 ) $ 124,838

Common Stock Additional

9 unchanged sentences

Foreign currency translation adjustments — — — — — ( 4,132 ) ( 4,132 )

Balance at March 31, 2020 29,082 $ 291 $ 1,169,217 $ ( 2,930,165 ) $ 2,069,857 $ ( 95,049 ) $ 214,151

Balance at June 30, 2020 28,999 $ 290 $ 1,187,717 $ ( 2,980,437 ) $ 2,133,933 $ ( 94,217 ) $ 247,286

See accompanying notes.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

(In thousands)

5 unchanged sentences

Deferred income taxes ( 11,064 ) ( 1,230 )

Net (gain) loss on marketable securities ( 2,669 ) 2,526

Net gain on marketable securities ( 4,706 ) ( 998 )

Non-cash operating lease costs 12,056 14,962

1 unchanged sentence

Net loss on sales and abandonment of property and equipment 107 61

Gain on sale of product line assets ( 7,334 ) —

Gains on product line asset sales and business divestiture ( 100,139 ) —

Changes in operating assets and liabilities:

10 unchanged sentences

Purchases of marketable securities ( 5,121 ) ( 5,790 )

Proceeds from sale of product line assets 8,291 —

Proceeds from product line asset sales and business divestiture 146,428 —

(Purchase of) distribution from equity investment ( 210 ) 55

8 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 88,770 ) ( 100,067 )

Repurchases of common stock ( 250,356 ) ( 148,008 )

Repurchases of common stock including prepayment under accelerated share repurchase agreement ( 541,205 ) ( 210,000 )

Net cash used in financing activities ( 394,572 ) ( 183,483 )

4 unchanged sentences

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net of refunds of $ 288 and $ 1,538 during the six months ended March 31, 2021, and 2020, respectively

Cash paid for income taxes, net of refunds of $ 289 and $ 1,552 during the nine months ended June 30, 2021, and 2020, respectively

$ 34,465 $ 5,723

2 unchanged sentences

Purchase of property and equipment included in accounts payable $ 564 $ 50

Unsettled repurchases of common stock $ 4,866 $ 8,002

Finance lease obligations incurred $ — $ 6,489

45 unchanged sentences

We do not expect that any recently issued accounting pronouncements will have a significant effect on our financial statements.

Business Divestiture

On May 4, 2021, we entered into a definitive agreement to sell our Collections and Recovery (“C&R”) business to Jonas Collections and Recovery Inc.

(“Jonas”), a company in the Jonas Software operating group of Constellation Software Inc.

The decision to sell the C&R business was the result of management’s decision to divest certain software products that are not built on the FICO Decision Management Platform.

This divestiture will allow us to focus our development and go to market resources on the growth of our Decision Management Platform products.

On June 7, 2021, we completed the sale to Jonas.

As the C&R business has the input, process and output elements defined in Accounting Standards Codification 805, Business Combinations , we concluded the sale qualified as a sale of a business.

The gain recognized from the sale was $ 92.8 million, which was recorded in gains on product line asset sales and business divestiture within the accompanying condensed consolidated statements of income and comprehensive income.

Our C&R business was part of the Applications segment.

Fair Value Measurements

3 unchanged sentences

Our Level 1 assets are comprised of money market funds and certain marketable securities.

We did not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2021 and September 30, 2020.

We did not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of June 30, 2021 and September 30, 2020.

• Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data.

2 unchanged sentences

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 did not have any assets that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2021 and September 30, 2020.

We did not have any assets that are valued using inputs identified under a Level 2 hierarchy as of June 30, 2021 and September 30, 2020.

We measure the fair value of our senior notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities.

1 unchanged sentence

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 did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2021 and September 30, 2020.

The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2021 and September 30, 2020:

March 31, 2021 Active Markets for

We did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of June 30, 2021 and September 30, 2020.

The following tables represent financial assets that we measured at fair value on a recurring basis at June 30, 2021 and September 30, 2020:

June 30, 2021 Active Markets for

Identical Instruments

(Level 1) Fair Value as of March 31, 2021

(Level 1) Fair Value as of

June 30, 2021

(In thousands)

12 unchanged sentences

Total $ 60,788 $ 60,788

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2021 and September 30, 2020.

Not included in these tables are cash deposits of $ 197.6 million and $ 122.1 million at March 31, 2021 and September 30, 2020, respectively.

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets at June 30, 2021 and September 30, 2020.

Not included in these tables are cash deposits of $ 237.4 million and $ 122.1 million at June 30, 2021 and September 30, 2020, respectively.

(2) Represents securities held under a supplemental retirement and savings plan for senior management employees, which are distributed upon termination or retirement of the employees.

Included in marketable securities on our condensed consolidated balance sheets at March 31, 2021 and September 30, 2020.

Included in marketable securities on our condensed consolidated balance sheets at June 30, 2021 and September 30, 2020.

See Note 8 for the fair value of our senior notes.

There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and six-month periods ended March 31, 2021 and 2020.

There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and nine-month periods ended June 30, 2021 and 2020.

Derivative Financial Instruments

3 unchanged sentences

We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore 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.

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, net.

The forward contracts are not designated as hedges and are marked to market through other income, 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 March 31, 2021 and September 30, 2020:

March 31, 2021

The following tables summarize our outstanding foreign currency forward contracts, by currency, at June 30, 2021 and September 30, 2020:

June 30, 2021

Contract Amount Fair Value

15 unchanged sentences

Singapore dollar (SGD) SGD 7,815 $ 5,700 $ —

The foreign currency forward contracts were entered into on March 31, 2021 and September 30, 2020, respectively;

The foreign currency forward contracts were entered into on June 30, 2021 and September 30, 2020, respectively;

therefore, their fair value was $ 0 on each of these dates.

Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:

Quarter Ended March 31, Six Months Ended March 31,

Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income, net, and consisted of the following:

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

4 unchanged sentences

Amortization expense consisted of the following:

Quarter Ended March 31, Six Months Ended March 31,

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

5 unchanged sentences

Total $ 810 $ 1,048 $ 2,692 $ 4,046

Estimated future intangible asset amortization expense associated with intangible assets existing at March 31, 2021 was as follows:

Estimated future intangible asset amortization expense associated with intangible assets existing at June 30, 2021 was as follows:

Year Ending September 30, (In thousands)

2021 (excluding the six months ended March 31, 2021) $ 1,804

2021 (excluding the nine months ended June 30, 2021) $ 563

Total $ 4,685

The following table summarizes changes to goodwill during the six months ended March 31, 2021, both in total and as allocated to our segments:

The following table summarizes changes to goodwill during the nine months ended June 30, 2021, both in total and as allocated to our segments:

Applications Scores Decision Management Software Total

2 unchanged sentences

Foreign currency translation adjustment 5,265 — 1,152 6,417

Reclassified as assets held for sale ( 27,960 ) — — ( 27,960 )

Balance at March 31, 2021 $ 572,523 $ 146,648 $ 69,952 $ 789,123

C&R business divestiture $ ( 25,596 ) $ — $ — ( 25,596 )

Balance at June 30, 2021 $ 576,473 $ 146,648 $ 70,064 $ 793,185

Composition of Certain Financial Statement Captions

The following table presents the composition of property and equipment, net and other assets at March 31, 2021 and September 30, 2020:

The following table presents the composition of property and equipment, net and other assets at June 30, 2021 and September 30, 2020:

2021 September 30,

7 unchanged sentences

Prepaid commissions 39,082 38,579

Others 11,975 12,632

Other 12,911 12,632

Total $ 93,485 $ 105,285

8 unchanged sentences

The credit agreement also contains other covenants typical of unsecured facilities.

As of March 31, 2021, we had $ 225.0 million in borrowings outstanding at a weighted-average interest rate of 1.236 % and were in compliance with all financial covenants under this credit facility.

As of June 30, 2021, we had $ 316.0 million in borrowings outstanding at a weighted-average interest rate of 1.216 % and were in compliance with all financial covenants under this credit facility.

On May 8, 2018, we issued $ 400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”).

3 unchanged sentences

The indentures for the Senior Notes contain certain covenants typical of unsecured obligations.

The following table presents the face values and fair values for the Senior Notes at March 31, 2021 and September 30, 2020:

March 31, 2021 September 30, 2020

The following table presents the face values and fair values for the Senior Notes at June 30, 2021 and September 30, 2020:

June 30, 2021 September 30, 2020

Face Value (*) Fair Value Face Value (*) Fair Value

3 unchanged sentences

Total $ 750,000 $ 808,625 $ 750,000 $ 800,750

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 9.8 million and $ 10.6 million at March 31, 2021 and September 30, 2020, respectively.

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 9.4 million and $ 10.6 million at June 30, 2021 and September 30, 2020, respectively.

Accelerated Share Repurchase

We have authorization to make repurchases of shares of our common stock from time to time in the open market or in negotiated transactions.

As part of the broader share repurchase program, we entered into an accelerated share repurchase agreement (“ASR Agreement”) with Wells Fargo on June 17, 2021 to repurchase $ 200.0 million of our common stock.

The ASR Agreement was accounted for as two separate transactions (1) a repurchase of common stock and (2) an equity-linked contract on our own stock.

Pursuant to the ASR Agreement, we paid $ 200.0 million to Wells Fargo and received an initial delivery of 319,400 shares of common stock, which approximated 80 percent of the total number of expected shares to be repurchased under the ASR Agreement.

The final number of shares to be repurchased and the average price paid per share will be determined upon the expected settlement of the agreement during the fourth quarter of fiscal 2021.

The final number of shares to be repurchased will be based on the volume-weighted average price of our common stock over the duration of the ASR Agreement, less a discount.

The equity-linked contract for the remaining $ 40.0 million, representing remaining shares to be delivered by Wells Fargo under the ASR Agreement, was recorded as a reduction to stockholders’ equity as of June 30, 2021.

Effective Tax Rate

The effective income tax rates were 25.2 % and 6.7 % during the quarters ended March 31, 2021 and 2020, respectively, and 13.7 % and ( 8.5 )% during the six months ended March 31, 2021 and 2020, respectively.

The effective income tax rates were 19.5 % and 15.9 % during the quarters ended June 30, 2021 and 2020, respectively, and 16.7 % and 1.8 % during the nine months ended June 30, 2021 and 2020, respectively.

The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year.

The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.

The effective tax rates for the six months ended March 31, 2021 and 2020 were both impacted by the recording of excess tax benefits relating to stock awards.

In addition, stock exercises during the quarter and six months ended March 31, 2020 resulted in an additional increase in excess benefits.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 10.2 million and $ 8.0 million at March 31, 2021 and September 30, 2020, respectively.

The effective tax rates for the nine months ended June 30, 2021 and 2020 were both impacted favorably by the recording of excess tax benefits relating to stock awards.

In addition, the effective tax rate for the nine months ended June 30, 2021 was increased by the tax impact of the gain on the sale of C&R business.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 12.1 million and $ 8.0 million at June 30, 2021 and September 30, 2020, respectively.

We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income.

We accrued interest of $ 0.5 million and $ 0.4 million related to unrecognized tax benefits as of March 31, 2021 and September 30, 2020, respectively.

We accrued interest of $ 0.6 million and $ 0.4 million related to unrecognized tax benefits as of June 30, 2021 and September 30, 2020, respectively.

Earnings per Share

The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and six-month periods ended March 31, 2021 and 2020:

Quarter Ended March 31, Six Months Ended March 31,

The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and nine-month periods ended June 30, 2021 and 2020:

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

28 unchanged sentences

Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets, nor capital expenditures where depreciation amounts are allocated to the segments from their internal cost centers as described above.

The following tables summarize segment information for the quarters and six-month periods ended March 31, 2021 and 2020:

Quarter Ended March 31, 2021

The following tables summarize segment information for the quarters and nine-month periods ended June 30, 2021 and 2020:

Quarter Ended June 30, 2021

Applications Scores Decision Management Software Unallocated

10 unchanged sentences

Unallocated amortization expense ( 810 )

Unallocated gains on product line asset sales and business divestiture 92,805

Operating income 194,384

3 unchanged sentences

Depreciation expense $ 3,920 $ 159 $ 934 $ 38 $ 5,051

Quarter Ended March 31, 2020

Quarter Ended June 30, 2020

Applications Scores Decision Management Software Unallocated

15 unchanged sentences

Depreciation expense $ 5,091 $ 176 $ 1,156 $ 28 $ 6,451

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

Applications Scores Decision Management Software Unallocated

10 unchanged sentences

Unallocated amortization expense ( 2,692 )

Unallocated gain on sale of product line assets 7,334

Unallocated gains on product line asset sales and business divestiture 100,139

Operating income 390,304

3 unchanged sentences

Depreciation expense $ 12,404 $ 520 $ 2,820 $ 116 $ 15,860

Six Months Ended March 31, 2020

Nine Months Ended June 30, 2020

Applications Scores Decision Management Software Unallocated

17 unchanged sentences

Information about disaggregated revenue by product deployment methods was as follows:

Quarter Ended March 31, 2021

Quarter Ended June 30, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

4 unchanged sentences

Total $ 87,024 $ 78,958 $ 172,202 $ 338,184 100 %

Quarter Ended March 31, 2020

Quarter Ended June 30, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

4 unchanged sentences

Total $ 105,556 $ 76,625 $ 131,550 $ 313,731 100 %

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

4 unchanged sentences

Total $ 269,491 $ 226,896 $ 485,572 $ 981,959 100 %

Six Months Ended March 31, 2020

Nine Months Ended June 30, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

5 unchanged sentences

Information about disaggregated revenue by primary geographical markets was as follows:

Quarter Ended March 31, 2021

Quarter Ended June 30, 2021

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

4 unchanged sentences

Total $ 253,610 $ 15,556 $ 47,869 $ 21,149 $ 338,184

Quarter Ended March 31, 2020

Quarter Ended June 30, 2020

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

4 unchanged sentences

Total $ 230,489 $ 16,808 $ 44,107 $ 22,327 $ 313,731

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

4 unchanged sentences

Total $ 736,582 $ 42,780 $ 143,092 $ 59,505 $ 981,959

Six Months Ended March 31, 2020

Nine Months Ended June 30, 2020

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

9 unchanged sentences

We record deferred revenue when the payment is made or due before we satisfy a performance obligation.

Receivables at March 31, 2021 and September 30, 2020 consisted of the following:

Receivables at June 30, 2021 and September 30, 2020 consisted of the following:

2021 September 30,

8 unchanged sentences

* Short-term receivables and long-term receivables were recorded in accounts receivable, net and other assets, respectively, within the accompanying condensed consolidated balance sheets.

Contract assets balance at March 31, 2021 and September 30, 2020 was immaterial.

Contract assets balance at June 30, 2021 and September 30, 2020 was immaterial.

Deferred revenue primarily relates to our maintenance and SaaS contracts billed annually in advance and generally recognized ratably over the term of the service period.

Significant changes in the deferred revenues balances during the six months ended March 31, 2021 were as follows:

Six Months Ended

March 31, 2021

Significant changes in the deferred revenues balances during the nine months ended June 30, 2021 were as follows:

Nine Months Ended

June 30, 2021

(In thousands)

2 unchanged sentences

Increases due to billings, excluding amounts recognized as revenue during the period 78,658

Reclassified as liabilities related to assets held for sale $ ( 16,508 )

Deferred revenues at March 31, 2021 * $ 108,978

Decrease due to divestiture of the C&R business ( 16,671 )

Deferred revenues at June 30, 2021 * $ 105,577

* Deferred revenues at September 30, 2020 included current portion of $ 115.2 million and long-term portion of $ 6.9 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Deferred revenues at March 31, 2021 included current portion of $ 100.4 million and long-term portion of $ 8.6 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Deferred revenues at June 30, 2021 included current portion of $ 99.8 million and long-term portion of $ 5.8 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days.

8 unchanged sentences

• Revenue from variable considerations that will be recognized in accordance with the “right-to-invoice” practical expedient, such as fees from our professional services billed based on a time and materials basis.

Revenue allocated to remaining performance obligations was $ 334.4 million as of March 31, 2021, of which we expect to recognize approximately 50 % over the next 20 months and the remainder thereafter.

Revenue allocated to remaining performance obligations was $ 54.9 million as of June 30, 2021, of which we expect to recognize approximately 50 % over the next 16 months and the remainder thereafter.

Contingencies

4 unchanged sentences

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.

Assets Held for Sale

As discussed in Note 14 - Subsequent Events, we entered into an agreement to divest our Collections and Recovery business (“C&R”) on May 4th, 2021.

As a result of meeting the criteria to classify the disposal group as held for sale under ASC 360, Property, Plant, and Equipment, the C&R disposal group was classified as held for sale as of March 31, 2021.

Assets classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell and are not depreciated or amortized.

Classification of a disposal group as held for sale occurs when sufficient authority to sell the disposal group has been obtained, the disposal group is available for immediate sale, and its sale is probable within one year.

If at any time these criteria are no longer met, the disposal group would be reclassified as held and used.

We evaluate the held for sale classification during each reporting period.

The C&R disposal group did not meet the requirements for presentation as discontinued operations and is included in income from continuing operations for the three and six months ended March 31, 2021.

We did not have any assets held for sale as of September 30, 2020.

The following table presents the carrying amounts of major classes of assets and liabilities related to assets held for sale with respect to the C&R disposal group as of March 31, 2021.

March 31, 2021

(In thousands)

Accounts receivable, net $ 18,310

Property and equipment, net 312

Goodwill 27,960

Operating lease right-of-use assets 2,261

Total assets held for sale $ 48,843

Accounts payable $ 99

Accrued compensation and employee benefits 2,131

Deferred revenue 16,508

Operating lease liabilities 5,251

Total liabilities related to assets held for sale $ 23,989

Subsequent Events

On May 4th, 2021, we signed a definitive agreement to sell our C&R business.

The transaction is expected to close in our current fiscal year, subject to customary closing conditions.

The decision to sell the C&R business was the result of management’s decision to divest non-platform businesses and focus resources on the growth of our FICO Decision Management Platform.

Our C&R business is part of the Applications segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements