Fair Isaac (FICO) 10-K risk factor changes: FY2017 vs FY2016

The market may be unreceptive to [removed: this] [added: our] general DM business approach, including being unreceptive to purchasing multiple products from [removed: us or] [added: us,] unreceptive to our customized [removed: solutions.][added: solutions, or unreceptive to our cloud-based offerings.]

We expect that revenues derived from our scoring solutions, fraud solutions, customer [added: communication services, customer] management solutions and [removed: tools] [added: decision management software] will continue to account for a substantial portion of our total revenues for the foreseeable future.

Most of our customers are relatively large enterprises, such as banks, credit card processors, insurance companies, healthcare firms, [added: telecommunications providers,] retailers and public agencies.

The European Union [added: (“E.U.”)] continues to face great economic uncertainty which could impact the overall world economy or various other regional economies.

We also derive a substantial portion of our revenues and operating income from our contracts with the three major credit reporting agencies, [removed: TransUnion, Equifax and] Experian, [added: TransUnion] and [added: Equifax, and] other parties that distribute our products to certain markets.

Our Scores segment relies on, among others, [removed: TransUnion, Equifax] [added: Experian, TransUnion] and [removed: Experian.][added: Equifax.]

For example, [removed: TransUnion, Equifax] [added: Experian, TransUnion] and [removed: Experian] [added: Equifax] have developed a credit scoring product to compete directly with our products and are collectively attempting to sell the product.

| • | our ability to complete large [removed: installations] [added: installations, and to adopt and configure cloud-based deployments,] on schedule and within budget; |

Large portions of our [removed: software license] [added: customer] agreements are consummated in the weeks immediately preceding quarter end.

Security compromises experienced by our competitors, by our [added: distributors, by our] customers or by us may lead to public disclosures, which may lead to widespread negative publicity.

Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively impact our ability to attract new customers, cause existing customers to curtail or cease their use of our products and [removed: services] [added: services, cause regulatory] or [added: industry changes that impact our products and services, or] subject us to [removed: third-][added: third-party lawsuits, regulatory fines or other action or liability, all of which could materially and adversely affect our business and operating results.]

In our markets, technology changes rapidly, and there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, database [removed: technology] [added: technologies, cloud-based technologies] and the use of the Internet.

For example, [removed: TransUnion, Equifax] [added: Experian, TransUnion] and [removed: Experian] [added: Equifax] have formed an alliance that has developed a credit scoring product competitive with our products.

[removed: Legislation that is enacted by] [added: Laws and regulations in] the U.S. [removed: Congress, the states, Canadian provinces,] and [removed: other countries, and government regulations] [added: abroad] that apply to us or to our customers may expose us to liability, cause us to incur significant expense, affect our ability to compete in certain markets, limit the profitability of or demand for our products, or render our products obsolete.

If these laws and regulations require us to change our [removed: current] products and services, it could adversely affect our business and results of operations.

[removed: Legislation] [added: Laws] and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision and future lawsuits arising from our products and services.

[removed: Globally, legislation] [added: Laws] and governmental regulation also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services.

| • | Use of data by creditors and consumer reporting [removed: agencies. Examples in] [added: agencies (e.g.,] the U.S. [removed: include the] Fair Credit Reporting [removed: Act, as amended by the Fair and Accurate Credit Transactions Act;] [added: Act);] |

| • | Laws and regulations that limit the use of credit scoring models [removed: such as] [added: (e.g.,] state “mortgage trigger” [removed: laws, state] [added: or] “inquiries” laws, state insurance restrictions on the use of [removed: credit based] [added: credit-based] insurance scores, and the [added: E.U.] Consumer Credit [removed: Directive in the European Union;] [added: Directive);] |

| • | Fair lending [removed: laws, such as] [added: laws (e.g.,] the [added: U.S.] Truth In Lending Act and Regulation Z, [removed: as amended by] the [removed: Credit Card Accountability Responsibility and Disclosure Act of 2009, the] Equal Credit Opportunity Act and Regulation B, and the Fair Housing [removed: Act;] [added: Act);] |

| • | Privacy and security laws and regulations that limit the use and disclosure of personally identifiable [removed: information or] [added: information,] require security procedures, [removed: including but not limited] [added: or otherwise apply] to the [removed: provisions] [added: collection, processing, storage, use and transmission] of [added: protected data (e.g.,] the [added: U.S.] Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley [removed: Act (“GLBA”);] [added: Act;] the [added: E.U. Data Protection Directive and the country-specific regulations that implement that directive; the U.S.] 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 [added: U.S.] 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 [removed: laws;] [added: laws);] |

| • | Regulations [added: and guidelines] applicable to secondary market participants [removed: such as] [added: (e.g.,] Fannie Mae and Freddie [removed: Mac] [added: 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 [removed: services, including] [added: services (e.g.,] the [added: Telemarketing Sales Rule,] Telephone Consumer Protection Act and regulations promulgated [removed: thereunder;] [added: thereunder);] |

| • | [removed: Insurance laws] [added: 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, [removed: such as] [added: including implementing regulations (e.g.,] the Consumer Financial Protection Act, the [added: Federal Trade Commission Act, the] Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, [removed: and] the Military Lending Act, and [removed: laws governing] the [removed: use of the Internet and telemarketing, advertising, endorsements and testimonials and credit repair;] [added: Credit Repair Organizations Act);] |

| • | [added: Financial regulatory standards (e.g.,] Sarbanes-Oxley Act requirements to maintain and verify internal process controls, including controls for material event awareness and [removed: notification;] [added: notification);] |

In addition to existing [removed: regulation,] [added: laws and regulations,] changes in [added: the U.S. or foreign] legislative, judicial, regulatory or consumer environments could harm our business, financial condition or results of operations.

[removed: These] [added: The laws and] regulations [added: above,] and [removed: amendments] [added: changes] to [removed: them] [added: them,] could affect the demand for or profitability of [removed: some of] our products, including scoring and consumer products.

New [added: laws and] regulations pertaining to [removed: financial institutions] [added: our customers] could cause them to pursue new strategies, reducing the demand for our products.

During fiscal [removed: 2016, 74%] [added: 2017, 76%] of our revenues were derived from sales of products and services to the banking and insurance industries.

[removed: Risk] [added: Risks] Related to External Conditions

[removed: Although it is unknown what those terms will be, the announcement of] Brexit [added: has] caused, and may continue to create, volatility in global stock markets and regional and global economic uncertainty, which may cause our customers to closely monitor their costs and reduce their spending budget on our products and services.

During fiscal [removed: 2016,] [added: 2017,] 36% of our revenues were derived from business outside the U.S. As part of our growth strategy, we plan to continue to pursue opportunities outside the U.S., including opportunities in countries with economic systems that are in early stages of development and that may not mature sufficiently to result in growth for our business.

Our DM strategy is also increasingly focused on the delivery of our products through cloud-based deployments.

As we continue to pursue our DM strategy, we may experience volatility in our revenues and operating results caused by various factors, including differences in revenue recognition treatment between our cloud-based offerings and on-premise software licenses, the timing of investments and other expenditures necessary to develop and operate our cloud-based offerings, and the adoption of new sales and delivery methods.

| • | failure to successfully adopt cloud-based technologies; |

New legislation or regulations, or changes to existing laws and regulations, may also negatively impact our business and increase our costs of doing business.

Laws and regulations that may affect our business and our current and prospective customers’ activities include, but are not limited to, those in the following significant regulatory areas:

| • | Laws and regulations governing the use of the Internet and social media, telemarketing, advertising, endorsements and testimonials; |

| • | Anti-bribery and corruption laws and regulations (e.g., the Foreign Corrupt Practices Act); |

| • | Regulatory requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors); |

| • | Anti-money laundering laws and regulations (e.g., the Bank Secrecy Act and the USA Patriot Act); |

In addition, many U.S. and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, privacy, and data security laws and regulations that may relate to our business or affect the demand for our products and services.

For example, on April 14, 2016, the European Parliament formally adopted the General Data Protection Regulation (the “GDPR”), which will supersede the existing Data Protection Directive of 95/46/EC in 2018.

The GDPR imposes more stringent operational requirements for entities processing personal information and greater penalties for noncompliance.

The costs and other burdens of compliance with privacy and data security laws and regulations could negatively impact the use and adoption of our solutions and reduce overall demand for them.

Additionally, concerns regarding data privacy may cause our customers, or their customers and potential customers, to resist providing the data necessary to allow us to deliver our solutions effectively.

Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our solutions and any failure to comply with such laws and regulations could lead to significant fines, penalties or other liabilities.

Any such decrease in demand or incurred fines, penalties or other liabilities could have a material adverse effect on our business, results of operations, and financial condition.

For example, on June 23, 2016, the United Kingdom (“U.K.”) held a referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit.” As a result of the referendum, on March 29, 2017, the U.K. triggered Article 50 of the Lisbon Treaty formally starting negotiations regarding its exit from the E.U. The U.K. has two years to complete these negotiations, and the future relationship between the U.K. and the E.U. remains unknown.

| | |

| --- | --- |

| | |

| --- | --- |

party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results.

Both our core businesses and our newer initiatives are affected globally by federal, regional, provincial, state and other jurisdictional regulations, including those in the following significant regulatory areas:

| • | 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; |

| • | 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; |

In making credit evaluations of consumers, or in performing fraud screening or user authentication, our customers are subject to requirements of multiple jurisdictions, which may impose onerous and contradictory requirements.

Privacy legislation such as GLBA or the European Union’s General Data Protection Regulation may also affect the nature and extent of the products or services that we can provide to customers, as well as our ability to collect, monitor and disseminate information subject to privacy protection.

In response to market disruptions over the past several years, legislators and financial regulators implemented a number of mechanisms designed to add stability to the financial markets, including the provision of direct and indirect assistance to distressed financial institutions, assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers, and implementation of programs by the Federal Reserve to provide liquidity to the commercial paper markets.

The overall effects of these and other legislative and regulatory efforts on the financial markets are uncertain, and they may not have the intended stabilization effects.

Should these or other legislative or regulatory initiatives fail to stabilize and add liquidity to the financial markets over the long term, our business, financial condition, results of operations and prospects could be materially and adversely affected.

Whether or not legislative or regulatory initiatives or other efforts designed to address recent economic conditions successfully stabilize and add liquidity to the financial markets over the long term, we may need to modify our strategies, businesses or operations, and we may incur additional costs in order to compete in a changed business environment.

For example, on June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit”.

As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the European Union.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes the following: a business overview that provides a [removed: high level] [added: high-level] summary of our strategies and initiatives, financial results and bookings trends that affect our business; a more detailed analysis of our results of operations; our liquidity and capital resources, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments; and a summary of our critical accounting policies and estimates we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

During fiscal [removed: 2016,] [added: 2017,] our growth initiatives continued to generate significant free cash flow.

We utilized our cash to enhance shareholder value through investments in long-term growth [removed: initiatives; acquisitions of relevant technologies and products that strengthen our portfolio and competitive position;] [added: initiatives] and our share repurchase programs.

[removed: We expanded] [added: While we continued to offer on-premise solutions for many customers who prefer to install and run] our [removed: traditional on-premises] software [added: in-house, we continued our expansion] into cloud-based solutions in our Applications and Decision Management Software [removed: (formerly “Tools”)] segments to provide growth opportunities with customers that can benefit from the affordability and simplicity of these solutions.

[removed: Through] [added: We commenced] this [removed: program, we] [added: program in 2014 and] now have more than [removed: 180] [added: 250] million [removed: consumers] [added: consumer accounts] with access to their free FICO® Score.

The partnership agreement we launched in fiscal 2015 with Experian, a leading global information services provider, [added: also] continued to accelerate during the current year.

We [removed: have partnered and] continue to pursue additional [removed: partners,] [added: partners] to distribute [removed: the] FICO® Scores with their product offerings sold directly to consumers.

In addition, we are pursuing opportunities to make [removed: the] FICO® Scores available to third-parties for affinity, white-labeled programs to further penetrate and expand the markets where our scores are available.

During fiscal [removed: 2016,] [added: 2017,] we repurchased approximately [removed: 1.3] [added: 1.5] million shares at a total repurchase price of [removed: $138.4] [added: $193.3] million.

As of September 30, [removed: 2016,] [added: 2017,] we had [removed: $230.0] [added: $36.7] million remaining under our [removed: current] [added: then-current] stock repurchase program.

Total revenues for fiscal [removed: 2016] [added: 2017] were [removed: $881.4] [added: $932.2] million, an increase of [removed: 5%] [added: 6%] from [removed: $838.8] [added: $881.4] million in fiscal [removed: 2015.][added: 2016.]

Revenue in each of our segments increased, with our Scores segment the primary driver increasing by [removed: 16%] [added: 10%] in fiscal [removed: 2016] [added: 2017] compared to fiscal [removed: 2015.][added: 2016.]

Our Applications and Decision Management Software segments increased by [removed: 1%] [added: 4%] and [removed: 2%] [added: 5%] in fiscal [removed: 2016] [added: 2017] compared to fiscal [removed: 2015,] [added: 2016,] respectively.

We derive a significant portion of [removed: revenue] [added: revenues] internationally, and 36% [removed: and 40%] of total consolidated revenues were derived from clients outside the U.S. during [added: each of] fiscal [removed: 2016] [added: 2017] and [removed: 2015, respectively.][added: 2016.]

A significant portion of our revenues are derived from the sale of products and services within the banking (including consumer credit) industry, and [removed: 72%] [added: 74%] and [removed: 69%] [added: 72%] of our revenues were derived from within this industry during fiscal [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

In addition, we derive a significant share of [removed: revenue] [added: revenues] from transactional or unit-based software license fees, transactional fees derived under [added: credit] scoring, [removed: network service or internal hosted software] [added: data processing, data management and SaaS subscription services] arrangements, [removed: annual software maintenance fees] and annual [removed: license fees under long-term] software [removed: license arrangements.][added: maintenance fees.]

Arrangements with transactional or unit-based pricing accounted for [removed: 69%] [added: 70%] and [removed: 67%] [added: 69%] of our revenues during fiscal [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

Operating income for fiscal [removed: 2016] [added: 2017] was [removed: $169.6] [added: $177.2] million, an increase of [removed: 23%] [added: 4%] from [removed: $137.5] [added: $169.6] million in fiscal [removed: 2015.][added: 2016.]

Diluted earnings per share for fiscal [removed: 2016] [added: 2017] was [removed: $3.39,] [added: $3.98,] an increase of [removed: 28%] [added: 17%] from [removed: $2.65] [added: $3.39] in fiscal [removed: 2015.][added: 2016.]

| Quarter ended September 30, [removed: 2015] [added: 2017] | $ | [removed: 105.3] [added: 145.9] | | | [removed: 21] [added: 16] | % | | 19 | | | [removed: 18] [added: 29] | |

| [added: |] Year [removed: ended] [added: Ended] September 30, [removed: 2015] | [removed: $] | [removed: 314.7] | | | [removed: 45] | [removed: %] | | [removed: 41] | | | [removed: NM(a)] | [added: 2017 to 2016] | [added: | | | 2016 to 2015 | | | | 2017 to 2016 | | | 2016 to 2015 | |]

Transactional and maintenance bookings were [removed: 35%] [added: 41%] and [removed: 31%] [added: 35%] of total bookings for the years ended September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

Professional services bookings were [removed: 45%] [added: 43%] and [removed: 47%] [added: 45%] of total bookings for the years ended September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

License bookings were [removed: 20%] [added: 16%] and [removed: 22%] [added: 20%] of total bookings for the years ended September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

[removed: Comparative segment] [added: Segment] revenues, operating income, and related financial information for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] are set forth in Note 17 to the accompanying consolidated financial statements.

The following tables set forth certain summary information on a segment basis related to our revenues for fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014:][added: 2015:]

| Segment | [added: 2017 | | | |] 2016 | | | | 2015 | | | | [removed: 2014] [added: 2017 to 2016] | | | | 2016 to 2015 | | | | [removed: 2015] [added: 2017] to [removed: 2014 |] [added: 2016] | | | 2016 to 2015 | | [removed: | 2015 to 2014 | |]

| Applications | $ | [removed: 532,642] [added: 553,167] | | | $ | [removed: 526,274] [added: 532,642] | | | $ | [removed: 504,256] [added: 526,274] | | | $ | [removed: 6,368] [added: 20,525] | | | $ | [removed: 22,018] [added: 6,368] | | | [removed: 1] [added: 4] | % | | [removed: 4] [added: 1] | % |

| Scores | [removed: 241,059] [added: 266,354] | | | | [removed: 207,007] [added: 241,059] | | | | [removed: 186,469] [added: 207,007] | | | | [removed: 34,052] [added: 25,295] | | | | [removed: 20,538] [added: 34,052] | | | | [removed: 16] [added: 10] | % | | [removed: 11] [added: 16] | % |

| Decision Management Software | [removed: 107,655] [added: 112,648] | | | | [removed: 105,500] [added: 107,655] | | | | [removed: 98,260] [added: 105,500] | | | | [removed: 2,155] [added: 4,993] | | | | [removed: 7,240] [added: 2,155] | | | | [removed: 2] [added: 5] | % | | [removed: 7] [added: 2] | % |

| Total | $ | [removed: 881,356] [added: 932,169] | | | $ | [removed: 838,781] [added: 881,356] | | | $ | [removed: 788,985] [added: 838,781] | | | [removed: 42,575] [added: 50,813] | | | | [removed: 49,796] [added: 42,575] | | | | [removed: 5] [added: 6] | % | | [removed: 6] [added: 5] | % |

| Segment | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | |

| Applications | [removed: 61] [added: 59] | % | | [removed: 63] [added: 61] | % | | [removed: 64] [added: 63] | % |

| Scores | [removed: 27] [added: 29] | % | | [removed: 25] [added: 27] | % | | [removed: 24] [added: 25] | % |

| | [added: 2017 | | | |] 2016 | | | | 2015 | | | | [removed: 2014] [added: 2017 to 2016] | | | | 2016 to 2015 | | | | [removed: 2015] [added: 2017] to [removed: 2014 |] [added: 2016] | | | 2016 to 2015 | | [removed: | 2015 to 2014 | |]

| Transactional and maintenance | $ | [removed: 328,472] [added: 348,861] | | | $ | [removed: 320,596] [added: 328,472] | | | $ | [removed: 313,316] [added: 320,596] | | | $ | [removed: 7,876] [added: 20,389] | | | $ | [removed: 7,280] [added: 7,876] | | | [removed: 2] [added: 6] | % | | 2 | % |

| Professional services | [removed: 138,775] [added: 141,857] | | | | [removed: 124,562] [added: 138,775] | | | | [removed: 121,100] [added: 124,562] | | | | [removed: 14,213] [added: 3,082] | | | | [removed: 3,462] [added: 14,213] | | | | [removed: 11] [added: 2] | % | | [removed: 3] [added: 11] | % |

| License | [removed: 65,395] [added: 62,449] | | | | [removed: 81,116] [added: 65,395] | | | | [removed: 69,840] [added: 81,116] | | | | [removed: (15,721] [added: (2,946] | | ) | | [removed: 11,276] [added: (15,721] | | [added: )] | | [removed: (19] [added: (5] | )% | | [removed: 16] [added: (19] | [removed: %] [added: )%] |

| Total | $ | [removed: 532,642] [added: 553,167] | | | $ | [removed: 526,274] [added: 532,642] | | | $ | [removed: 504,256] [added: 526,274] | | | [removed: 6,368] [added: 20,525] | | | | [removed: 22,018] [added: 6,368] | | | | [removed: 1] [added: 4] | % | | [removed: 4] [added: 1] | % |

The increase in customer communication services was primarily attributable to an increase in transactional [removed: revenues] [added: revenue] as a result of our [added: continued] growth in the mobile communication market.

The majority of our software solutions are available through the FICO® Analytic Cloud, and during fiscal 2017, we added Amazon Web Services, Inc. (“AWS”) as our primary cloud infrastructure provider.

We have migrated several core applications, including the Decision Management Suite, to AWS and will migrate additional applications over the next three years.

Our cloud bookings accounted for 24% and 26% of our total bookings during fiscal 2017 and 2016, respectively, directly demonstrating the willingness among our customers to engage our cloud-based solutions.

During fiscal 2017, we announced the FICO Financial Inclusion Initiative, a global effort to increase access to affordable credit for consumers and businesses with limited or no credit history, through the use of alternative data.

Operating margin was 19% for each of fiscal 2017 and 2016.

Net income increased 17% to $128.3 million in fiscal 2017 from $109.4 million in fiscal 2016 and net margin increased to 14% from 12%.

The increases were primarily driven by our adoption of ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), effective October 1, 2016, as further described in Notes 1 and 13 to the accompanying consolidated financial statements.

| Year ended September 30, 2017 | $ | 429.0 | | | 36 | % | | 59 | | | NM(a) | |

The increase in originations solutions was primarily attributable to an increase in services and transactional revenues from our SaaS products.

The increase in business-to-consumer services was primarily attributable to an increase in royalties derived from scores sold indirectly to consumers through credit reporting agencies.

Decision Management Software segment revenues increased $5.0 million in fiscal 2017 from 2016 primarily attributable to an increase in services revenue related to our FICO® Decision Optimizer, partially offset by a decrease in license revenue related to our FICO® Blaze Advisor®.

The $10.9 million increase was primarily attributable to a $21.0 million increase in labor and personnel costs, partially offset by a $4.0 million decrease in marketing expenses and a $6.6 million decrease in outside services.

The decrease in outside services was primarily attributable to a one-time settlement during fiscal 2017.

The fiscal 2017 over 2016 decrease in amortization expense of $1.3 million was primarily attributable to certain assets associated with our Adeptra, HNC and Entiera acquisitions becoming fully amortized in fiscal 2017 and 2016.

In fiscal 2018, we expect amortization expense will be significantly lower than that incurred in 2017 due to certain assets associated with our Adeptra and HNC acquisitions becoming fully amortized in fiscal 2017.

There were no acquisition-related expenses incurred during fiscal 2017.

Cash payments for all the facilities charges will be paid by the end of fiscal 2020.

| | 2017 | | | | 2016 | | | | 2015 | | |

In fiscal 2018, we expect net interest expense will be consistent with what we incurred during fiscal 2017.

The decrease in our effective tax rate in fiscal 2017 compared to fiscal 2016 was due primarily to the adoption of ASU 2016-09 on October 1, 2016.

We no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense.

| Segment | 2017 | | | | 2016 | | | | 2015 | | | | 2017 to 2016 | | | | 2016 to 2015 | | | | 2017 to 2016 | | | 2016 to 2015 | |

| | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | 2016 | | | 2015 | |

| | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | 2016 | | | 2015 | |

| | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | 2016 | | | 2015 | |

Segment operating margin for Decision Management Software decreased to a negative 10% from a negative 3% mainly due to a decrease in sales of our higher-margin software products, our continued investment in sales distribution, and expanded investment in cloud infrastructure operations.

| | 2017 | | | | 2016 | | | | 2015 | | |

| Operating activities | $ | 225,644 | | | $ | 210,268 | | | $ | 146,772 | |

| Financing activities | (180,625 | | ) | | (190,015 | | ) | | (72,430 | | ) |

The $15.3 million increase was mainly attributable to a $20.0 million decrease in our deferred income tax provision and an $18.8 million increase in net income, partially offset by a $24.2 million excess tax benefit related to share-based payments that was recorded as an increase to additional paid-in capital in the prior year but was recorded as a reduction of income tax expense in the current year as a result of our early adoption of ASU 2016-09 effective October 1, 2016.

In October 2017, our Board of Directors approved a new stock repurchase program following the completion of the July 2016 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.

In May 2017, our Board of Directors discontinued cash dividend payments in favor of using our excess cash flow for share repurchases.

In June 2017, we amended our credit agreement with a syndicate of banks, increasing our borrowing capacity under the unsecured revolving line of credit to $500 million with an option to increase it by another $100 million.

| Operating lease obligations | 23,787 | | | | 22,042 | | | | 13,414 | | | | 9,619 | | | | 9,104 | | | | 22,790 | | | | 100,756 | | |

| Total commitments | $ | 170,462 | | | $ | 56,311 | | | $ | 103,166 | | | $ | 9,619 | | | $ | 9,104 | | | $ | 22,790 | | | $ | 377,932 | |

If a deliverable does not have standalone value because the aforementioned criteria are not met, we combine it with the other applicable undelivered item(s) within the arrangement and account for the multiple deliverables as one combined unit of accounting.

For example, for hosting arrangements requiring a highly specialized and unique set of initial implementation and setup services prior to the commencement of hosting services, we typically conclude that these implementation or setup services do not have value to the customer on a stand-alone basis; therefore, we combine them with the hosting services as a combined unit of accounting.

For fiscal 2017, we elected to proceed directly to the step one quantitative analysis for all of our reporting units, as three years had elapsed since the date of our previous quantitative valuation.

As a result of the adoption, we recognized $24.7 million of excess tax benefits related to share-based payments in our provision for income taxes during fiscal 2017.

We continued to invest in our growth initiatives that expand our addressable markets.

Our software solutions are available through the FICO® Analytic Cloud, and we are adding delivery via third-party cloud environments, which are offered through large vendors in other geographic locations across the world.

We continue to offer our solutions on-premises for many customers who prefer to install and run our software in-house.

In addition, we introduced the FICO® Decision Management Suite 2.0 (“DMS”), which provides an easy way for customers to evaluate, customize, deploy and scale state-of-the-art analytics.

The DMS allows customers to quickly integrate our tools and components with their data, helping organizations of all sizes realize the promise of advanced analytics and decision management in a cost-effective, scalable cloud or on-premise solution.

We continued to make acquisitions that deliver solutions to the financial services industry and adjacent vertical industries.

Our acquisition of Quadmetrics, a provider of enterprise security assessment analytics, accelerates our efforts to provide a suite of complementary cyber-related analytics solutions to market.

With our strong portfolio of products now in place and the accelerating growth we are experiencing in our cloud-based offerings, we shifted some of our resources to distribution in our expanded market.

During fiscal 2016, we expanded our distribution and go-to-market for both the Applications and Decision Management Software segments, which include significant sales training and increasing sales resources to reach new market segments.

In fiscal 2017, we expect to broaden our investment into product delivery, support and infrastructure operations.

Operating margin increased to 19% from 16%.

The margin increase was primarily attributable to a higher percentage of revenues derived from our higher-margin products including revenues generated from our Experian agreement, no restructuring cost in the current year following the write-down of facilities in the prior year and a decrease in our professional services delivery cost.

Net income increased 27% to $109.4 million in fiscal 2016 from $86.5 million in fiscal 2015 primarily due to the increase in operating margin, partially offset by lower income tax expense in fiscal 2015, largely driven by a favorable tax adjustment.

The increase in compliance solutions was attributable to our acquisition of TONBELLER in January 2015.

The increase in fraud solutions was primarily attributable to increased number of large multi-year license transactions during fiscal 2015, as well as an increase in transactional revenues driven by increased volumes.

The decrease in marketing solutions was primarily attributable to terminations of several customers in fiscal 2015.

The increase in business-to-consumer services was primarily attributable to revenue generated from the agreement with Experian that launched in December 2014 and made FICO® Score available to consumers on Experian.com.

Decision Management Software segment revenues increased $7.2 million in fiscal 2015 from 2014 primarily due to an increase in our FICO® Decision Management Platform license sales as well as related services and transactional revenues, a one-time settlement with a customer related to under-reported royalties from a multi-year period, as well as increased transactional revenues from our InfoCentricity acquisition in April 2014.

The increase was partially offset by a decrease in optimization tools primarily attributable to decreased license sales on our FICO® Decision Optimizer and FICO® Xpress Optimization products.

| | Year Ended September 30, | | | | | | | | | | | | 2016 to 2015 | | | | 2015 to 2014 | | | | 2016 to 2015 | | | 2015 to 2014 | |

The increase in outside services was primarily attributable to an increase in our billable consulting projects utilizing temporary resources.

The increase in direct materials was primarily attributable to an increase in third-party royalties cost associated with increased software license sales, as well as an increase in third-party data cost associated with the increase in our business-to-consumer subscription based revenue.

The $21.8 million increase was primarily attributable to a $16.4 million increase in personnel and labor costs, a $2.0 million increase in allocated facilities and infrastructure costs, and a $1.7 million increase in marketing expenses.

The fiscal 2015 over 2014 increase in amortization expense of $1.7 million was primarily attributable to the addition of intangible assets associated with our TONBELLER acquisition in January 2015.

In fiscal 2017, we expect amortization expense will be slightly lower than that incurred in 2016.

We also incurred $0.2 million in acquisition-related cost primarily associated with our InfoCentricity acquisition.

In fiscal 2017, we expect net interest expense will be lower than what we incurred during fiscal 2016 due to the $60.0 million principal payment made in July 2016 and the $72.0 million principal payment due in July 2017 on our senior notes issued in July 2010.

The decrease in our effective tax rate in fiscal 2015 compared to 2014 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, 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 addition, the margin was positively impacted by an increase in our higher-margin revenues generated from the Experian agreement.

Segment operating income as a percentage of segment revenues for Decision Management Software was a negative 6% for fiscal 2015 compared to a positive 4% for fiscal 2014 mainly due to an increase in the research and development efforts related to our cloud-based FICO® Decision Management Platform and several new products in the Decision Management Software segment, as well as an increase in professional services delivery cost, partially offset by an increase in sales of higher-margin software products.

The $11.8 million decrease in unallocated corporate expenses was primarily attributable to a decrease in incentive cost, as well as a decrease in certain corporate charges including bad debt.

| Operating activities | $ | 185,231 | | | $ | 132,977 | | | $ | 175,034 | |

| Financing activities | (164,978 | | ) | | (58,635 | | ) | | (130,391 | | ) |

The $42.0 million decrease was mainly attributable to a $27.6 million decrease caused by timing of receipts and payments in our ordinary course of business, a $15.2 million increase in payment associated with our accrued incentive from prior year and an $11.4 million increase in our income tax payments.

Our dividend rate is set by the Board of Directors on a quarterly basis taking into account a variety of factors, including among others, our operating results and cash flows, general economic and industry conditions, our obligations, changes in applicable tax laws and other factors deemed relevant by the Board.

Although we expect to continue to pay dividends at the current rate, our dividend rate is subject to change from time to time based on the Board’s business judgment with respect to these and other relevant factors.

| Operating lease obligations | 22,069 | | | | 20,890 | | | | 17,806 | | | | 9,541 | | | | 6,004 | | | | 13,966 | | | | 90,276 | | |

| Total commitments | $ | 113,372 | | | $ | 167,565 | | | $ | 52,075 | | | $ | 99,293 | | | $ | 6,004 | | | $ | 13,966 | | | $ | 459,074 | |

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 following table presents the principal amounts and related weighted-average yields for our investments with interest rate risk at September 30, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

| | September 30, [removed: 2016] [added: 2017] | | | | | | | | | | | September 30, [removed: 2015] [added: 2016] | | | | | | | | | |

| Cash and cash equivalents | $ | [removed: 75,926] [added: 105,618] | | | $ | [removed: 75,926] [added: 105,618] | | | [removed: 0.17] [added: 0.56] | % | | $ | [removed: 86,120] [added: 75,926] | | | $ | [removed: 86,120] [added: 75,926] | | | [removed: 0.95] [added: 0.17] | % |

The following table presents the [removed: principal amounts,] carrying [removed: amounts,] [added: amounts] and fair values for the Senior Notes at September 30, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

| | September 30, [removed: 2016 | | | |] [added: 2017] | | | | | | | | September 30, [removed: 2015 | | | |] [added: 2016] | | | | | | |

| | [removed: Principal | | | |] Carrying Amounts | | | | Fair Value | | | | [removed: Principal | | | |] Carrying Amounts | | | | Fair Value | | |

| | (In thousands) | | | | | | | | | | | | [removed: (In thousands)] | | | [removed: | | | | | | | |]

| The 2008 Senior Notes | $ | 131,000 | | | $ | [removed: 131,000 | | | $ | 139,902 | | | $ | 131,000] [added: 134,250] | | | $ | 131,000 | | | $ | [removed: 144,009] [added: 139,902] | |

| The 2010 Senior Notes | [removed: $ | 185,000 | | | $ | 185,000 | | | $] [added: 113,000] | [removed: 195,715] | | | [removed: $] [added: 119,106] | [removed: 245,000] | | | [removed: $] [added: 185,000] | [removed: 245,000] | | | [removed: $] [added: 195,715] | [removed: 257,563] | |

We have interest rate risk with respect to our [removed: five-year $400] [added: $500] million unsecured revolving line of credit.

We had [removed: $255.0] [added: $361.0] million in borrowings outstanding at a weighted average interest of [removed: 1.661%] [added: 2.365%] under the credit facility as of September 30, [removed: 2016.][added: 2017.]

We routinely enter into contracts to offset exposures denominated in the British [removed: pound, Euro] [added: pound] and [removed: Canadian dollar.][added: Euro.]

The following tables summarize our outstanding foreign currency forward contracts, by currency, at September 30, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

| | Contract Amount | | | | | | | | Fair Value | | [removed: |]

| | Foreign Currency | | | | US$ | | | | US$ | | [removed: |]

| | (In thousands) | | | | | | | | | | [removed: |]

| Sell foreign currency: | | | | | | | | | | | [removed: |]

| Buy foreign currency: | | | | | | | | | | | [removed: |]

| British pound (GBP) | GBP | [removed: 6,943] [added: 9,341] | | | $ | [removed: 10,550] [added: 12,500] | | | — | | [removed: |]

The foreign currency forward contracts were entered into on September 30 of each fiscal year; therefore, the fair value was $0 on September 30, [removed: 2016] [added: 2017] and [removed: 2015.][added: 2016.]

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Debt issuance costs | (199 | | ) | | $ | (199 | ) | | (376 | | ) | | (376 | | ) |

| Total | $ | 243,801 | | | $ | 253,157 | | | $ | 315,624 | | | $ | 335,241 | |

| | September 30, 2017 | | | | | | | | | |

| Euro (EUR) | EUR | 5,050 | | | $ | 5,968 | | | — | |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | September 30, 2015 | | | | | | | | | | |

| Canadian dollar (CAD) | CAD | 2,750 | | | $ | 2,045 | | | $ | — | |

| Euro (EUR) | EUR | 5,600 | | | $ | 6,296 | | | — | | |

Fair Isaac Corporation (NYSE: FICO) (together with its consolidated subsidiaries, the “Company,” which may also be referred to in this report as “we,” “us,” “our,” and “FICO”) provides [removed: products] [added: products, solutions] and services that enable businesses to automate, improve and connect decisions to enhance business performance.

Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, [added: automotive companies,] pharmaceutical companies, healthcare organizations, public agencies and organizations in other industries.

| • | Decision Management [removed: Software (formerly“Tools”).] [added: Software.] 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. |

[removed: Comparative segment] [added: Segment] revenues, operating income and related financial information for fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] are set forth in Note 17 to the accompanying consolidated financial statements.

During fiscal [removed: 2016,] [added: 2017,] we continued to expand our product offerings for the FICO® Analytic Cloud, resulting in increased sales opportunities by accommodating small to mid-size businesses that benefit from the affordability and simplicity of cloud-based solutions.

Within our Applications [removed: segment] [added: segment,] our fraud solutions accounted for [removed: 20%, 23%] [added: 19%, 20%] and 23% of total revenues in each of fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively; our customer [removed: management solutions] [added: communication services] accounted for [removed: 9%,] [added: 10%,] 9% and [removed: 10%] [added: 8%] of total revenues [removed: in] [added: for] each of these periods, respectively; and our customer [removed: communication services] [added: management solutions] accounted for [removed: 9%, 8%] [added: 8%, 9%] and [removed: 8%] [added: 9%] of total revenues [removed: for] [added: in] each of these periods, respectively.

Our leading fraud detection solution is [added: the] FICO® Falcon® [removed: Fraud Manager,] [added: Platform,] recognized as a leader in global payment card fraud detection.

[added: The] Falcon® [removed: Fraud Manager] [added: Platform] examines transaction, cardholder, account, customer, device and merchant data to detect a wide range of payment card fraud quickly and accurately utilizing artificial intelligence technology.

FICO® Fraud Predictor with Merchant Profiles is used in conjunction with [added: the] Falcon® [removed: Fraud Manager on payment card monitoring for credit and debit] [added: Platform] to improve fraud detection rates through the inclusion of merchant [removed: profiles.][added: profiles, which is especially important for online transactions.]

These solutions are based on the acquisition of TONBELLER Aktiengesellschaft (“TONBELLER”) combined with FICO’s legacy fraud analytics, such as those used in [added: the] FICO® Falcon® [removed: Fraud Manager.][added: Platform.]

The FICO® Enterprise Security [removed: Score, based on the acquisition of QuadMetrics, Inc. (“QuadMetrics”) in 2016,] [added: Score] provides an empirically derived score that conveys the security posture of an organization and the likelihood of a material data breach in the next 12 months.

FICO® Customer Communication Services [removed: provides] [added: provide] customer engagement, fraud resolution, and collections solutions in the cloud.

Credit grantors use our FICO® Scores in a variety of ways: to prescreen candidates for marketing programs; [added: to] evaluate applicants for new credit; and [added: to] manage existing customer accounts.

FICO® Score is a three-digit score ranging from [removed: 300—850.][added: 300-850.]

They are calculated by running data from the three U.S. national credit reporting agencies, [removed: TransUnion, Experian] [added: Experian, TransUnion] and Equifax, through one of several proprietary scoring models developed by FICO.

While the core FICO® Score is the foundation of our scoring portfolio, we offer a number of other [removed: broad based] [added: broad-based] scores, including several specific FICO® Industry Scores.

[removed: In 2016 we introduced] [added: The] FICO® Score [removed: XD, which] [added: XD] expands the scorable population using alternative credit data.

FICO® Score XD looks at public records and property data, and a consumer’s history with mobile, landline phone and cable payments, to generate scores on the same [removed: 300—850] [added: 300-850] scale as standard FICO® Scores.

Outside the U.S., we offer the FICO® Score for consumers, [removed: as well as] [added: and in some cases] for small and medium [removed: enterprises lending] [added: enterprises,] through credit reporting agencies in [removed: 12] [added: 16] countries worldwide.

We make available the [removed: 19] [added: 28] most widely used versions of the FICO® Score from the three major U.S. credit bureaus through our myFICO® service, representing approximately 95% of all FICO® Scores sold and used by lenders.

In addition, consumers can purchase identity theft monitoring products that alert consumers of potential risks of identity fraud with comprehensive [removed: detection, defense] [added: detection] and identity restoration services.

During fiscal [removed: 2016,] [added: 2017,] FICO continued to enhance the FICO® Decision Management Suite, a collection of tools for building, extending, deploying and scaling applications and solutions.

| • | FICO® Decision Management Platform, the fundamental backbone of the Suite, [removed: to] [added: which] dramatically [removed: improve] [added: improves] performance, data interchange, model tracking and user collaboration; |

| • | FICO® Decision Management Streaming (formerly known as Data Management Integration [removed: Platform) to improve] [added: Platform), which improves] scale, performance and versatility; and |

| • | FICO® Decision Central™ (formerly known as Model Central), an analytic and decision model management tool, [removed: to expand] [added: which expands] its versatility and usability across a much broader range of implementations and use cases. |

All of the top ten companies on the [removed: 2016] [added: 2017] Fortune 500 list use FICO’s solutions.

During fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] revenues generated from our agreements with [removed: Equifax,] [added: Experian,] TransUnion and [removed: Experian] [added: Equifax] collectively accounted for [removed: 19%, 16%] [added: 20%, 19%] and [removed: 15%] [added: 16%] of our total revenues, respectively.

Revenues from international customers, including end users and resellers, amounted to 36%, [removed: 40%] [added: 36%] and [removed: 42%] [added: 40%] of our total revenues in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

In fiscal [removed: 2016,] [added: 2017,] we continued to make progress with our FICO® Analytic Cloud and FICO® Decision Management Platform initiatives.

These technologies include those successfully leveraged by our fraud management systems, including [added: the] FICO® Falcon® [removed: Fraud Manager,] [added: Platform,] and new methods we believe to be unique approaches for detecting certain types of cyber security threats.

Our research and development expenses were [removed: $103.7] [added: $110.9] million, [removed: $98.8] [added: $103.7] million and [removed: $83.4] [added: $98.8] million in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

Based on timing and cost [removed: considerations;] [added: considerations,] however, we have acquired, and in the future may consider acquiring, technology or products from third parties.

We currently hold [removed: 156] [added: 166] U.S. and [removed: 15] [added: 17] foreign patents with [removed: 93] [added: 86] applications pending.

We currently have [removed: 40] [added: 36] trademarks registered in the U.S. and select foreign countries.

As of September 30, [removed: 2016,] [added: 2017,] we employed [removed: 3,088] [added: 3,299] persons worldwide.

Of these, 169 full-time employees were located in our San Jose, California office, [removed: 341] [added: 366] full-time employees were located in our San Diego, California office, [removed: 195] [added: 187] full-time employees were located in our [removed: Roseville, Minnesota] [added: San Rafael, California] office, [removed: 189] [added: 186] full-time employees were located in our [removed: San Rafael, California] [added: Roseville, Minnesota] office, [removed: 146] [added: 130] full-time employees were located in our Fairfax, Virginia office, [removed: 630] [added: 786] full-time employees were located in our India-based offices and [removed: 321] [added: 344] full-time employees were located in our United Kingdom-based offices.

Recent upgrades and enhancements to the functionality in the suite include:

In fiscal 2016, we upgraded and enhanced much of the functionality in the suite, including:

For the fiscal year ended September 30, [removed: 2016][added: 2017]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

See definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

(Check [removed: one)][added: one):]

As of March 31, [removed: 2016,] [added: 2017,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was [removed: $2,262,902,883] [added: $2,637,371,198] based on the last transaction price as reported on the New York Stock Exchange on such date.

The number of shares of common stock outstanding on October [removed: 28, 2016] [added: 27, 2017] was [removed: 30,940,696] [added: 29,990,221] (excluding [removed: 57,916,087] [added: 58,866,562] shares held by the Company as treasury stock).

Items 10, 11, 12, 13 and 14 of Part III incorporate information by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

| Item 1. | [removed: [Business](#sA46F5AC3703250DFB203C157F6E5EF15)] [added: [Business](#sCF560B68CBF15A9DAE8EB68D896D09D7)] | [removed: [3](#sA46F5AC3703250DFB203C157F6E5EF15)] [added: [3](#sCF560B68CBF15A9DAE8EB68D896D09D7)] |

| Item 1A. | [Risk [removed: Factors](#sDF7199120BEC5DBB907BD527A7412D62)] [added: Factors](#s5E7D82117DE5590185F03A9932EDF3D7)] | [removed: [13](#sDF7199120BEC5DBB907BD527A7412D62)] [added: [13](#s5E7D82117DE5590185F03A9932EDF3D7)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s436F0089D3D2593FB8C44B3A1EF13631)] [added: Comments](#s9AA2D44CE1B1569CB7169BF4BF55E47E)] | [removed: [23](#s436F0089D3D2593FB8C44B3A1EF13631)] [added: [23](#s9AA2D44CE1B1569CB7169BF4BF55E47E)] |

| Item 2. | [removed: [Properties](#s9CB387A1ED355D60BEE82BEA8F61795E)] [added: [Properties](#s3225233EA0A758EDB8C53C71E070F1F3)] | [removed: [23](#s9CB387A1ED355D60BEE82BEA8F61795E)] [added: [23](#s3225233EA0A758EDB8C53C71E070F1F3)] |

| Item 3. | [Legal [removed: Proceedings](#s6DFE5A5CA2F7552FA839A27280C9468A)] [added: Proceedings](#sFE780DC098125F7BBFA0299E80A9BD98)] | [removed: [23](#s6DFE5A5CA2F7552FA839A27280C9468A)] [added: [24](#sFE780DC098125F7BBFA0299E80A9BD98)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s7B2813EC932B5A9198C26A98DA7AF85D)] [added: Disclosures](#s34EB403E25A4547EA087EF6AD489F371)] | [removed: [23](#s7B2813EC932B5A9198C26A98DA7AF85D)] [added: [24](#s34EB403E25A4547EA087EF6AD489F371)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sC6B7427CFC4C5CF8BE057D3059D2322D)] [added: Securities](#sAFE6C7531E5551F9AD0968F5AF1DC92B)] | [removed: [24](#sC6B7427CFC4C5CF8BE057D3059D2322D)] [added: [25](#sAFE6C7531E5551F9AD0968F5AF1DC92B)] |

| Item 6. | [Selected Financial [removed: Data](#sB7C4EDBA317553A0A8DDF23A201318E6)] [added: Data](#s1A2E440358545A0CB4AFBDFDC14ACB6B)] | [removed: [26](#sB7C4EDBA317553A0A8DDF23A201318E6)] [added: [27](#s1A2E440358545A0CB4AFBDFDC14ACB6B)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sCAD3341E00DB55A390AE69612CE4FEEC)] [added: Operations](#s16B89A68D06F5AFDB314DFFD0C13749B)] | [removed: [29](#sCAD3341E00DB55A390AE69612CE4FEEC)] [added: [28](#s16B89A68D06F5AFDB314DFFD0C13749B)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s0C27FF2873E456CFA66FC5DAC141BB26)] [added: Risk](#sCA47194E14C95FB8839E157EED990996)] | [removed: [46](#s0C27FF2873E456CFA66FC5DAC141BB26)] [added: [48](#sCA47194E14C95FB8839E157EED990996)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s691067C7519D5978A5AE25C8CCD02A29)] [added: Data](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] | [removed: [48](#s691067C7519D5978A5AE25C8CCD02A29)] [added: [50](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sCC9A2B6EDDAE5655912F829A11E874F3)] [added: Disclosure](#s77C8AEE0C7AF50679779D8BAEE5F7793)] | [removed: [81](#sCC9A2B6EDDAE5655912F829A11E874F3)] [added: [82](#s77C8AEE0C7AF50679779D8BAEE5F7793)] |

| Item 9A. | [Controls and [removed: Procedures](#s2A77D1B10B3750A5868635386E2BF90F)] [added: Procedures](#s182D92F3D70A585B8BF70C7AC27C6C76)] | [removed: [81](#s2A77D1B10B3750A5868635386E2BF90F)] [added: [82](#s182D92F3D70A585B8BF70C7AC27C6C76)] |

| Item 9B. | [Other [removed: Information](#sD049BB1DA6595E1B9D4A37A3C960D28A)] [added: Information](#s64A170E367135A28A16221D4D9A07C59)] | [removed: [81](#sD049BB1DA6595E1B9D4A37A3C960D28A)] [added: [82](#s64A170E367135A28A16221D4D9A07C59)] |

| [PART [removed: III](#sDC77AAB2784C59EE9E0E6AE502E88FA9)] [added: III](#s2B407167A1DF556890DCFF53DE8C369E)] | | |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s7106F3C8F8705EF095CBF45A6CE1CA7F)] [added: Governance](#s2647B45E55A85F8B81217CD745EB8385)] | [removed: [82](#s7106F3C8F8705EF095CBF45A6CE1CA7F)] [added: [83](#s2647B45E55A85F8B81217CD745EB8385)] |

| Item 11. | [Executive [removed: Compensation](#s3872C82BF852528293D15C760A2D94F9)] [added: Compensation](#s43EF99634311517183F5CAA160B303D0)] | [removed: [83](#s3872C82BF852528293D15C760A2D94F9)] [added: [84](#s43EF99634311517183F5CAA160B303D0)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s17B5BEC6619C5E058F7EB827967EE003)] [added: Matters](#s0B056309F3D05EF982DD629A0A706F97)] | [removed: [83](#s17B5BEC6619C5E058F7EB827967EE003)] [added: [84](#s0B056309F3D05EF982DD629A0A706F97)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s455CE3BA15CD5AAD8A6693E8FF937DB2)] [added: Independence](#s471551F84A985C29A5EA5045E32DAFF2)] | [removed: [83](#s455CE3BA15CD5AAD8A6693E8FF937DB2)] [added: [84](#s471551F84A985C29A5EA5045E32DAFF2)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#sA3E78303142353138AB3D47766DF62F6)] [added: Services](#s7092864E74C05CE697E37A928681B0BE)] | [removed: [83](#sA3E78303142353138AB3D47766DF62F6)] [added: [84](#s7092864E74C05CE697E37A928681B0BE)] |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#s2AE435CD834C5D119BF223AF88D7C7E7)] [added: Schedules](#s5CC23C6F09E35F65BE5461EC63A560E6)] | [removed: [84](#s2AE435CD834C5D119BF223AF88D7C7E7)] [added: [85](#s5CC23C6F09E35F65BE5461EC63A560E6)] |

Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our reports on Forms 10-Q and 8-K to be filed by the Company in fiscal [removed: 2017.][added: 2018.]

10-K 1 fico10-k2017.htm FICO 10-K 2017

| | | | Emerging Growth Company | | o |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [PART I](#s41BE609C69A75D98A16D741308C21FE7) | | |

| [PART II](#s57A46E5C5C8F5D1E805B4AA288E2296C) | | |

| [PART IV](#sCB62CB834DC45ADF960FD5694C9E082D) | | |

| [Signatures](#s97A185537F0F5C9D8257A4256F7BE032) | | [90](#s97A185537F0F5C9D8257A4256F7BE032) |

10-K 1 fico10-k2016.htm FICO 10-K 2016

| [PART I](#s6E3C91C1830B506AA83FA47EEA85D09B) | | |

| [PART II](#sFB14E19E3CBE51CB94A74BF6838825FF) | | |

| [PART IV](#sEAA4D339F2315F6FBA0B47FA1EA84E8D) | | |

| [Signatures](#sA467F52C6C08574DB77F61761C431B2B) | | [88](#sA467F52C6C08574DB77F61761C431B2B) |

| • | approximately [removed: 101,000] [added: 96,000] square feet of [removed: office, data center,] [added: office] and data [removed: processing space] [added: center] in [removed: Roseville, Brooklyn Park] [added: Roseville] and [removed: Minneapolis,] [added: Brooklyn Park,] Minnesota, in [removed: three] [added: two] buildings under leases expiring in fiscal [removed: 2017 or later;] [added: 2018 and 2023, respectively;] 16,000 square feet of this space is subleased to a third party; this is used for all of our segments; [added: and] |

In addition, we lease an aggregate of approximately [removed: 280,000] [added: 306,000] square feet of office and data center space in a number of smaller domestic locations and internationally in India, the United Kingdom, China, Singapore, and several other locations.

According to records of our transfer agent, at October [removed: 28, 2016,] [added: 27, 2017,] we had [removed: 380] [added: 366] shareholders of record of our common stock.

We paid dividends of $0.02 per share on a quarterly basis during each of fiscal [removed: 2016,] 2015 and [removed: 2014.][added: 2016, and the first and second quarters of our fiscal 2017.]

| (1) | Includes [removed: 11,153] [added: 6,399] 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, [removed: 2016.] [added: 2017.] |

| (2) | [removed: On August 18, 2014,] [added: In July 2016,] 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. [removed: On July 27, 2016, following the termination of the August 2014 program,] [added: In October 2017,] our Board of Directors approved a new stock repurchase [added: program following the completion of the July 2016] 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. |

The following graph shows the total stockholder return of an investment of $100 in cash on September 30, [removed: 2011,] [added: 2012,] in (a) the Company’s Common Stock, (b) the Standard & Poor’s 500 Stock Index and (c) the Standard & Poor’s 500 Application Software Index, in each case with reinvestment of dividends.

[removed: ][added: ]

| Fiscal 2017 | | | | | | | |

| October 1 — December 31, 2016 | $ | 126.00 | | | $ | 109.77 | |

| January 1 — March 31, 2017 | $ | 133.14 | | | $ | 118.95 | |

| April 1 — June 30, 2017 | $ | 140.64 | | | $ | 125.71 | |

| July 1 — September 30, 2017 | $ | 147.02 | | | $ | 131.52 | |

In May 2017, our Board of Directors discontinued cash dividend payments in favor of using our excess cash flow for share repurchases.

| July 1, 2017 through July 31, 2017 | 145,429 | | | $ | 141.15 | | | 140,000 | | | $ | 89,727,312 | |

| August 1, 2017 through August 31, 2017 | 110,828 | | | $ | 139.56 | | | 110,000 | | | $ | 74,375,781 | |

| September 1, 2017 through September 30, 2017 | 270,142 | | | $ | 139.50 | | | 270,000 | | | $ | 36,711,201 | |

| Total | 526,399 | | | $ | 139.97 | | | 520,000 | | | $ | 36,711,201 | |

| 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 | |

Our dividend rate is set by the Board of Directors on a quarterly basis taking into account a variety of factors, including among others, our operating results and cash flows, general economic and industry conditions, our obligations, changes in applicable tax laws and other factors deemed relevant by the Board.

Although we expect to continue to pay dividends at the current rate, our dividend rate is subject to change from time to time based on the Board’s business judgment with respect to these and other relevant factors.

| 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 | |

| | [removed: 2016] [added: 2017 (1)] | | | | [removed: 2015 (1)] [added: 2016] | | | | [removed: 2014] [added: 2015] (1) | | | | [removed: 2013] [added: 2014] (1) | | | | [removed: 2012] [added: 2013] (1) | | |

| Revenues | $ | [removed: 881,356] [added: 932,169] | | | $ | [removed: 838,781] [added: 881,356] | | | $ | [removed: 788,985] [added: 838,781] | | | $ | [removed: 743,444] [added: 788,985] | | | $ | [removed: 676,423] [added: 743,444] | |

| Operating income | [removed: 169,592] [added: 177,200] | | | | [removed: 137,505] [added: 169,592] | | | | [removed: 161,868] [added: 137,505] | | | | [removed: 161,593] [added: 161,868] | | | | [removed: 168,358] [added: 161,593] | | |

| Net income | [removed: 109,448] [added: 128,256] | | | | [removed: 86,502] [added: 109,448] | | | | [removed: 94,879] [added: 86,502] | | | | [removed: 90,095] [added: 94,879] | | | | [removed: 92,004] [added: 90,095] | | |

| Basic earnings per share | [removed: 3.52] [added: 4.16] | | | | [removed: 2.75] [added: 3.52] | | | | [removed: 2.80] [added: 2.75] | | | | [removed: 2.55] [added: 2.80] | | | | [removed: 2.64] [added: 2.55] | | |

| Diluted earnings per share | [removed: 3.39] [added: 3.98] | | | | [removed: 2.65] [added: 3.39] | | | | [removed: 2.72] [added: 2.65] | | | | [removed: 2.48] [added: 2.72] | | | | [removed: 2.55] [added: 2.48] | | |

| Dividends declared per share | [removed: 0.08] [added: 0.04] | | | | 0.08 | | | | 0.08 | | | | 0.08 | | | | 0.08 | | |

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Working capital | $ | [removed: 21,561] [added: (15,724] | [added: )] | | $ | [removed: 42,727] [added: 21,561] | | | $ | [removed: (52,877] [added: 42,727] | [removed: )] | | $ | [removed: 83,308] [added: (52,877] | [added: )] | | $ | [removed: 49,720] [added: 83,308] | |

| Total assets | [removed: 1,221,052] [added: 1,255,620] | | | | [removed: 1,230,163] [added: 1,220,676] | | | | [removed: 1,192,298] [added: 1,230,163] | | | | [removed: 1,161,547] [added: 1,192,298] | | | | [removed: 1,158,611] [added: 1,161,547] | | |

| Senior notes | [removed: 316,000] [added: 244,000] | | | | [removed: 376,000] [added: 316,000] | | | | [removed: 447,000] [added: 376,000] | | | | [removed: 455,000] [added: 447,000] | | | | [removed: 504,000] [added: 455,000] | | |

| Revolving line of credit | [removed: 255,000] [added: 361,000] | | | | [removed: 232,000] [added: 255,000] | | | | [removed: 99,000] [added: 232,000] | | | | [removed: 15,000] [added: 99,000] | | | | [removed: —] [added: 15,000] | | |

| Stockholders’ equity | [removed: 446,828] [added: 426,537] | | | | [removed: 436,998] [added: 446,828] | | | | [removed: 454,614] [added: 436,998] | | | | [removed: 530,677] [added: 454,614] | | | | [removed: 474,406] [added: 530,677] | | |

(1) Results of operations for fiscal years [added: 2017,] 2015, [removed: 2014, 2013] [added: 2014] and [removed: 2012] [added: 2013] include pre-tax charges of [added: $4.5 million,] $18.2 million, $4.3 [removed: million, $3.5] million and [removed: $5.1] [added: $3.5] million, respectively, in restructuring and acquisition-related expenses.

We acquired CR Software, LLC.

We acquired Entiera, Inc. (“Entiera”) in May 2012, Adeptra Ltd. (“Adeptra”) in September 2012, CR Software, LLC.

We have audited the accompanying consolidated balance sheets of Fair Isaac Corporation and subsidiaries (the "Company") as of September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the related consolidated statements of [removed: income,] [added: income and] comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended September 30, [removed: 2016.][added: 2017.]

We also have audited the Company's internal control over financial reporting as of September 30, [removed: 2016,] [added: 2017,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and subsidiaries as of September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended September 30, [removed: 2016,] [added: 2017,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2016,] [added: 2017,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

| | [added: 2017 | | | |] 2016 | | | | 2015 | | |

| Cash and cash equivalents | $ | [removed: 75,926] [added: 105,618] | | | $ | [removed: 86,120] [added: 75,926] | |

| Accounts receivable, net | [removed: 167,786] [added: 168,586] | | | | [removed: 158,773] [added: 167,786] | | |

| Prepaid expenses and other current assets | [removed: 23,926] [added: 36,727] | | | | [removed: 41,709] [added: 23,926] | | |

| Total current assets | [removed: 267,638] [added: 310,931] | | | | [removed: 286,602] [added: 267,638] | | |

| Marketable securities available for sale | [removed: 11,016] [added: 13,791] | | | | [removed: 9,567] [added: 11,016] | | |

| Other investments | [removed: 10,920] [added: 11,724] | | | | [removed: 10,958] [added: 10,920] | | |

| Property and equipment, net | [removed: 45,122] [added: 40,703] | | | | [removed: 38,208] [added: 45,122] | | |

| Goodwill | [removed: 798,415] [added: 804,414] | | | | [removed: 814,750] [added: 798,415] | | |

| Intangible assets, net | [removed: 33,619] [added: 21,185] | | | | [removed: 47,321] [added: 33,619] | | |

| Deferred income taxes | [removed: 47,598] [added: 47,204] | | | | [removed: 15,196] [added: 47,598] | | |

| Accounts payable | $ | [removed: 22,952] [added: 19,510] | | | $ | [removed: 19,852] [added: 22,952] | |

| Accrued compensation and employee benefits | [removed: 71,216] [added: 77,610] | | | | [removed: 54,368] [added: 71,216] | | |

| Other accrued liabilities | [removed: 27,780] [added: 32,104] | | | | [removed: 30,958] [added: 27,780] | | |

| Deferred revenue | [removed: 47,129] [added: 55,431] | | | | [removed: 46,697] [added: 47,129] | | |

| Current maturities on debt | [removed: 77,000] [added: 142,000] | | | | [removed: 92,000] [added: 77,000] | | |

| Total current liabilities | [removed: 246,077] [added: 326,655] | | | | [removed: 243,875] [added: 246,077] | | |

| Other liabilities | [removed: 34,147] [added: 39,627] | | | | [removed: 33,290] [added: 34,147] | | |

| Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and [removed: 30,935] [added: 30,243] and [removed: 31,290] [added: 30,935] shares outstanding at September 30, [removed: 2016] [added: 2017] and September 30, [removed: 2015,] [added: 2016,] respectively) | [removed: 309] [added: 302] | | | | [removed: 313] [added: 309] | | |

| Treasury stock, at cost [removed: (57,922] [added: (58,614] and [removed: 57,567] [added: 57,922] shares at September 30, [removed: 2016] [added: 2017] and September 30, [removed: 2015,] [added: 2016,] respectively) | [removed: (2,136,760] [added: (2,301,097] | | ) | | [removed: (2,033,644] [added: (2,136,760] | | ) |

| Accumulated other comprehensive loss | [removed: (77,011] [added: (66,494] | | ) | | [removed: (50,715] [added: (77,011] | | ) |

| Total stockholders’ equity | [removed: 446,828] [added: 426,537] | | | | [removed: 436,998] [added: 446,828] | | |

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Transactional and maintenance | $ | [removed: 605,919] [added: 652,660] | | | $ | [removed: 564,232] [added: 605,919] | | | $ | [removed: 527,563] [added: 564,232] | |

| Professional services | [removed: 169,738] [added: 179,569] | | | | [removed: 151,773] [added: 169,738] | | | | [removed: 149,834] [added: 151,773] | | |

| License | [removed: 105,699] [added: 99,940] | | | | [removed: 122,776] [added: 105,699] | | | | [removed: 111,588] [added: 122,776] | | |

| Total revenues | [removed: 881,356] [added: 932,169] | | | | [removed: 838,781] [added: 881,356] | | | | [removed: 788,985] [added: 838,781] | | |

| Cost of revenues (1) | [removed: 265,173] [added: 287,123] | | | | [removed: 270,535] [added: 265,173] | | | | [removed: 249,281] [added: 270,535] | | |

| Research and development | [removed: 103,669] [added: 110,870] | | | | [removed: 98,824] [added: 103,669] | | | | [removed: 83,435] [added: 98,824] | | |

| Selling, general and administrative (1) | [removed: 328,940] [added: 339,796] | | | | [removed: 300,002] [added: 328,940] | | | | [removed: 278,203] [added: 300,002] | | |

| Amortization of intangible assets (1) | [removed: 13,982] [added: 12,709] | | | | [removed: 13,673] [added: 13,982] | | | | [removed: 11,917] [added: 13,673] | | |

| Restructuring and acquisition-related | [removed: —] [added: 4,471] | | | | [removed: 18,242] [added: —] | | | | [removed: 4,281] [added: 18,242] | | |

| Total operating expenses | [removed: 711,764] [added: 754,969] | | | | [removed: 701,276] [added: 711,764] | | | | [removed: 627,117] [added: 701,276] | | |

| Operating income | [removed: 169,592] [added: 177,200] | | | | [removed: 137,505] [added: 169,592] | | | | [removed: 161,868] [added: 137,505] | | |

| Interest expense, net | [removed: (26,633] [added: (25,790] | | ) | | [removed: (29,150] [added: (26,633] | | ) | | [removed: (28,550] [added: (29,150] | | ) |

| Other income (expense), net | [removed: 1,610] [added: (86] | | [added: )] | | [removed: 883] [added: 1,610] | | | | [removed: (187] [added: 883] | | [removed: )] |

| November 9, 2017 |

| | 2017 | | | | 2016 | | |

| Other assets | 5,668 | | | | 6,348 | | |

| Total assets | $ | 1,255,620 | | | $ | 1,220,676 | |

| Long-term debt | 462,801 | | | | 493,624 | | |

| Total liabilities | 829,083 | | | | 773,848 | | |

| Paid-in-capital | 1,195,431 | | | | 1,188,913 | | |

| Retained earnings | 1,598,395 | | | | 1,471,377 | | |

| Total liabilities and stockholders’ equity | $ | 1,255,620 | | | $ | 1,220,676 | |

| Repurchases of common stock | (1,466 | ) | | (15 | | ) | | — | | | | (193,275 | | ) | | — | | | | — | | | | (193,290 | | ) |

| Balance at September 30, 2017 | 30,243 | | | $ | 302 | | | $ | 1,195,431 | | | $ | (2,301,097 | ) | | $ | 1,598,395 | | | $ | (66,494 | ) | | $ | 426,537 | |

| Net cash provided by operating activities | 225,644 | | | | 210,268 | | | | 146,772 | | |

| Net cash used in financing activities | (180,625 | | ) | | (190,015 | | ) | | (72,430 | | ) |

| Unsettled repurchases of common stock | $ | 5,661 | | | $ | — | | | $ | — | |

Years Ended September 30, 2017, 2016 and 2015

Years Ended September 30, 2017, 2016 and 2015

Years Ended September 30, 2017, 2016 and 2015

Alternatively, we may bypass the qualitative assessment described above for any reporting unit in any period and proceed directly to performing step one of the goodwill impairment test.

For fiscal 2017, we elected to proceed directly to the step one quantitative analysis for all of our reporting units, as three years had elapsed since the date of our previous quantitative valuation.

Years Ended September 30, 2017, 2016 and 2015

Years Ended September 30, 2017, 2016 and 2015

If a deliverable does not have standalone value because the aforementioned criteria are not met, we combine it with the other applicable undelivered item(s) within the arrangement and account for the multiple deliverables as one combined unit of accounting.

For example, for hosting arrangements requiring a highly specialized and unique set of initial implementation and setup services prior to the commencement of hosting services, we typically conclude that these implementation or setup services do not have value to the customer on a stand-alone basis; therefore, we combine them with the hosting services as a combined unit of accounting.

Years Ended September 30, 2017, 2016 and 2015

Years Ended September 30, 2017, 2016 and 2015

As a result of the adoption, we recognized $24.7 million of excess tax benefits related to share-based payments in our provision for income taxes during fiscal 2017.

These items were historically recorded as additional paid-in capital.

We elected to apply the change retrospectively in presentation to our consolidated statements of cash flows and no longer classify the excess tax benefits from employee stock plans as a reduction from operating cash flows, which resulted in increases to both net cash provided by operating activities and net cash used in financing activities of $25.0 million and $13.8 million for fiscal 2016 and 2015, respectively.

Our adoption of ASU 2016-09 also impacted the calculation of diluted weighted-average shares under the treasury stock method as we no longer increase or decrease the assumed proceeds from the vesting of, or an employee exercising, a share-based payment award by the amount of excess tax benefits or deficiencies taken to additional paid-in capital.

During fiscal 2017, the impact was immaterial.

Given our historical practice of including employee withholding taxes paid within financing activities in the statement of cash flows, no prior period reclassifications are required by the clarifications on classification provided by ASU 2016-09.

Furthermore, we elected to continue to estimate expected forfeitures of employee equity awards to determine the amount of compensation expense to be recognized in each period.

Years Ended September 30, 2017, 2016 and 2015

Effective October 1, 2016, we retrospectively adopted ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance” (“ASU 2015-03”).

As a result of the adoption, at September 30, 2017, the amount of debt issuance costs reflected as a deduction of long-term debt was $0.2 million.

At September 30, 2016, the amount of debt issuance costs reclassified from other assets to a deduction of long-term debt was $0.4 million.

In March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard.

In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance.

In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes.

In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.

| November 10, 2016 |

| Other assets | 6,724 | | | | 7,561 | | |

| Total assets | $ | 1,221,052 | | | $ | 1,230,163 | |

| Long-term debt | 494,000 | | | | 516,000 | | |

| Total liabilities | 774,224 | | | | 793,165 | | |

| Paid-in-capital | 1,185,076 | | | | 1,152,789 | | |

| Retained earnings | 1,475,214 | | | | 1,368,255 | | |

| Total liabilities and stockholders’ equity | $ | 1,221,052 | | | $ | 1,230,163 | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at September 30, 2013 | 34,786 | | | $ | 348 | | | $ | 1,110,198 | | | $ | (1,751,057 | ) | | $ | 1,192,096 | | | $ | (20,908 | ) | | $ | 530,677 | |

| Repurchases of common stock | (3,650 | ) | | (37 | | ) | | — | | | | (214,861 | | ) | | — | | | | — | | | | (214,898 | | ) |

| 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 | | ) |

| Net cash provided by operating activities | 185,231 | | | | 132,977 | | | | 175,034 | | |

| 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 | | ) |

For fiscal 2014, we elected to proceed directly to the step one quantitative analysis rather than perform the step zero qualitative assessment.

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.

ASP transactional fees are recorded monthly as earned.

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.

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.

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.

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.

No change in FICO’s internal control over financial reporting was identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the year ended September 30, [removed: 2016,] [added: 2017,] that has materially affected, or is reasonably likely to materially affect, FICO’s internal control over financial reporting.

Under the supervision and with the participation of management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, [removed: 2016] [added: 2017] based on the guidelines established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation management has concluded that our internal control over financial reporting was effective as of September 30, [removed: 2016.][added: 2017.]

Deloitte & Touche LLP, an independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has also audited the effectiveness of our internal control over financial reporting as of September 30, [removed: 2016,] [added: 2017,] as stated in their attestation report included in Part II, Item 8 of this Annual Report on Form 10-K.

The required information regarding our Directors is incorporated by reference from the information under the caption “Director Nominees” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

| 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. | [removed: 58] [added: 59] |

| 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. | [removed: 53] [added: 54] |

| Richard S. Deal | [added: November 2015-present, Executive Vice President, Chief Human Resources Officer of the Company.] August [removed: 2007-present,] [added: 2007-November 2015,] Senior Vice President, Chief Human Resources Officer of the Company. January [removed: 2001-July] [added: 2001-August] 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. | [removed: 49] [added: 50] |

| 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. | [removed: 57] [added: 58] |

| 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. | [removed: 51] [added: 52] |

| 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. | [removed: 47] [added: 48] |

| 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. | [removed: 51] [added: 52] |

| 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. | [removed: 60] [added: 61] |

The required information regarding compliance with Section 16(a) of the Securities Exchange Act is incorporated by reference from the information under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

The required information regarding the Company’s audit committee is incorporated by reference from the information under the caption “Board Meetings, Committees and Attendance” in our definitive proxy statement for the Annual Meeting of Shareholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

The information required by this Item is incorporated by reference from the information under the captions “Director Compensation for [removed: 2016,”] [added: 2017,”] “Executive Compensation,” and “Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

The information required by this Item is incorporated by reference from the information under the caption “Security Ownership Of Certain Beneficial Owners and Management” and “Executive Compensation Plan Information” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

The information required by this Item is incorporated by reference from the information under the caption “Certain Relationships and Related Transactions” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

The information required by this Item is incorporated by reference from the information under the caption “Ratification of Independent Registered Public Accounting Firm” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February [removed: 14, 2017.][added: 28, 2018.]

| [Report of independent registered public accounting [removed: firm](#s691067C7519D5978A5AE25C8CCD02A29)] [added: firm](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] | [removed: [48](#s691067C7519D5978A5AE25C8CCD02A29)] [added: [50](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] |

| [Consolidated balance sheets as of September 30, [removed: 2016] [added: 2017] and [removed: 2015](#s18C5169A6F285EACB9A0A1CD323ACBB3)] [added: 2016](#s01C47E6C46BD5D2E9D2DBDD9D3658EBE)] | [removed: [49](#s18C5169A6F285EACB9A0A1CD323ACBB3)] [added: [51](#s01C47E6C46BD5D2E9D2DBDD9D3658EBE)] |

| [Consolidated statements of income and comprehensive income for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#sC298D6A6D2425E02B7D2161DA2E7A961)] [added: 2015](#sA18677A728CD5E9A967E85E3748BDFC0)] | [removed: [50](#sC298D6A6D2425E02B7D2161DA2E7A961)] [added: [52](#sA18677A728CD5E9A967E85E3748BDFC0)] |

| [Consolidated statements of stockholders’ equity for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#s449723800F9F5A6F9DABCE252B5CE77C)] [added: 2015](#s07BE07C4F5A458518BAE52B5E6AF0D28)] | [removed: [51](#s449723800F9F5A6F9DABCE252B5CE77C)] [added: [53](#s07BE07C4F5A458518BAE52B5E6AF0D28)] |

| [Consolidated statements of cash flows for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#s855F616885FE55528275FA03785A077B)] [added: 2015](#sF273091C3E8E5A24AE0E9EFD216BC8FB)] | [removed: [52](#s855F616885FE55528275FA03785A077B)] [added: [54](#sF273091C3E8E5A24AE0E9EFD216BC8FB)] |

| [Notes to consolidated financial [removed: statements](#s613A63BC904456A792E6580D1FEAC091)] [added: statements](#sE92A8765E885549582A9FCAA0E2E6350)] | [removed: [53](#s613A63BC904456A792E6580D1FEAC091)] [added: [54](#sE92A8765E885549582A9FCAA0E2E6350)] |

| 3.1 | [removed: Bylaws] [added: [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. [removed: 001-11689))] [added: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w1.htm)] |

| 3.2 | [removed: Composite] [added: [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. [removed: 001-11689))] [added: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w2.htm)] |

| 10.1 | [removed: Form] [added: [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 [removed: 10-Q for the quarter ended June 30,] [added: 8-K filed on May 13,] 2008 (file no. [removed: 001-11689))] [added: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095013708007323/c26674exv10w1.htm)] |

| 10.2 | [removed: Form] [added: [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. [removed: 001-11689))] [added: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310066231/c59140exv10w1.htm)] |

| 10.3 | [removed: Fair] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095012310074342/c58327exv10w1.htm)] |

| 10.4 | [removed: Form] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708001822/c23579exv10w42.htm)] |

| 10.5 | [removed: Form] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013709000848/c49207exv10w3.htm)] |

| 10.6 | [removed: Form] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708001822/c23579exv10w49.htm)] |

| 10.7 | [removed: Form] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013706013419/c10450exv10w43.htm)] |

| 10.8 | [removed: Fair,] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708014107/c47904exv10w10.htm)] |

| 10.9 | [removed: Form] [added: [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)) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000093639202001464/a86033exv10w49.txt)] |

| 10.10 | [removed: Form] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512052923/d298825dex104.htm)] |

| 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.) [removed: (1)] |

| 10.17 | [removed: Letter] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312513029957/d453682dex101.htm)] |

| 10.18 | [removed: Letter] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312513029957/d453682dex102.htm)] |

| 10.19 | [removed: Letter] [added: [Letter] Agreement dated November 5, 2014 by and between the Company and Wayne Huyard. (Incorporated by reference to [added: Exhibit 10.3 to] the Company’s Form 10-Q for the quarter ended December 31, 2014.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454715000003/ex-10310xqq12015.htm)] |

| 10.20 | [removed: Form] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454716000031/ex-10x210xqq32016.htm)] |

| 10.21 | [removed: Fair] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312516433595/d95799ddef14a.htm)] |

| 10.22 | [removed: Form] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex102.htm)] |

| 10.23 | [removed: Form] [added: [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.) [removed: (1)] [added: (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex103.htm)] |