Fair Isaac (FICO) 10-K risk factor changes: FY2018 vs FY2017

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

The loss of or a significant change in a relationship with one of these credit reporting agencies with respect to their distribution of our products or with respect to our myFICO® offerings, the loss of or a significant change in a relationship with a major customer, the loss of or a significant change in a relationship with a significant third-party distributor (including [removed: credit] [added: payment] card processors), or the delay of significant revenues from these sources, could have a material adverse effect on our revenues and results of operations.

Failure of our existing and future distributors to generate significant [removed: revenues,] [added: revenues or otherwise perform their expected services or functions,] demands by such distributors to change the terms on which they offer our products, or our failure to establish additional distribution or sales and marketing alliances, could have a material adverse effect on our business, operating results and financial condition.

Customers and key business [removed: alliances] [added: partners] provide us with the data we require to analyze transactions, report results and build new models.

If we fail to maintain sufficient data sourcing relationships with our customers and business [removed: alliances,] [added: partners,] or if they decline to provide such data due to privacy concerns, competition concerns, prohibitions or a lack of permission from their customers or partners, we could lose access to required data and our products, and the development of new products, might become less effective.

We have a significant share of the available market in portions of our Scores segment and for certain services in our Applications segment, specifically, the markets for account management services at [removed: credit] [added: payment] card processors and [removed: credit] [added: payment] card fraud detection software.

The market for business analytics is [removed: new,] rapidly evolving and highly competitive, and we expect competition in this market to persist and intensify.

For example, certain of our fraud solutions products compete against other methods of preventing [removed: credit] [added: payment] card fraud, such as [removed: credit] [added: payment] cards that contain the cardholder’s photograph; smart cards; cardholder verification and authentication solutions; biometric measures on devices including fingerprint and face matching; and other card authorization techniques and user verification techniques.

| • | Privacy and security laws and regulations that limit the use and disclosure of personally identifiable information, require security procedures, or otherwise apply to the collection, processing, storage, use and transmission of protected data (e.g., the U.S. Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley Act; the [removed: E.U.] [added: General] Data Protection [removed: Directive] [added: Regulation (the “GDPR”) adopted by the EU Parliament, the EU Council] and the [added: EU Commission, and] country-specific [removed: regulations that implement that directive;] [added: data protection laws enacted to supplement] the [added: GDPR; 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 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 laws); |

| • | Regulations [removed: and guidelines] applicable [removed: to] [added: to, or standards and criteria adopted by,] secondary market participants (e.g., Fannie Mae and Freddie Mac) that could have an impact on our [removed: products;] [added: scoring products, including any regulations, standards or criteria established as the result of Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174);] |

[removed: The] [added: For example, the] GDPR [added: became effective on May 25, 2018 and] imposes more stringent operational requirements for entities processing personal information and greater penalties for noncompliance.

During fiscal [removed: 2017, 76%] [added: 2018, 87%] of our revenues were derived from sales of products and services to the banking and insurance industries.

In operations outside the U.S., we are subject to [removed: unique] [added: additional] risks that may harm our business, financial condition or results of operations.

During fiscal [removed: 2017, 36%] [added: 2018, 34%] 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.

| • | fraud and security management providers; |

The California Consumer Privacy Act of 2018, which was enacted on June 28, 2018 and will become effective on January 1, 2020, gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights.

| | |

| --- | --- |

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.

During fiscal [removed: 2017,] [added: 2018,] our growth initiatives continued to generate significant free cash flow.

We utilized our cash to enhance [removed: shareholder] [added: stockholder] value through investments in long-term growth initiatives and our [removed: share] [added: stock] repurchase programs.

[removed: While we continued to offer on-premise solutions for many customers who prefer to install and run our software in-house, we] [added: Our] continued [removed: our expansion into cloud-based solutions in our Applications and Decision Management Software segments to provide] [added: product innovation provides] growth opportunities with customers that can benefit from the affordability and simplicity of these solutions.

The majority of our software solutions are available through the FICO® Analytic Cloud, and [removed: during] [added: starting] fiscal [removed: 2017,] [added: 2017] we added [removed: Amazon Web Services, Inc. (“AWS”)] [added: 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 [removed: three] [added: couple of] years.

Our cloud bookings accounted for [removed: 24%] [added: 35%] and [removed: 26%] [added: 24%] of our total bookings during fiscal [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively, directly demonstrating the willingness among our customers to engage our cloud-based solutions.

For our Scores segment, our industry leading business-to-business FICO® Scores [removed: expanded further into] [added: has achieved a multi-year expansion in] the [removed: larger, faster] growing U.S. consumer market.

The FICO® Score Open Access [removed: program,] [added: program launched in 2014,] which allows our participating clients to provide their customers with a free FICO® Score along with content to help them understand the FICO® Score their lender uses, [removed: continued its expansion during the current year.][added: has more than 310 million consumer accounts with access to their free FICO® Scores.]

During fiscal [removed: 2017,] [added: 2018,] we repurchased approximately [removed: 1.5] [added: 1.9] million shares at a total repurchase price of [removed: $193.3] [added: $336.9] million.

As of September 30, [removed: 2017,] [added: 2018,] we had [removed: $36.7] [added: $199.3] million remaining under our [removed: then-current] [added: current] stock repurchase program.

Total revenues for fiscal [removed: 2017] [added: 2018] were [removed: $932.2 million,] [added: $1.03 billion,] an increase of [removed: 6%] [added: 11%] from [removed: $881.4] [added: $932.2] million in fiscal [removed: 2016.][added: 2017.]

We derive a significant portion of revenues internationally, and [added: 34% and] 36% of total consolidated revenues were derived from clients outside the U.S. during [removed: each of] fiscal [removed: 2017] [added: 2018] and [removed: 2016.][added: 2017, respectively.]

A significant portion of our revenues are derived from the sale of products and services within the banking (including consumer credit) industry, and [removed: 74%] [added: 86%] and [removed: 72%] [added: 74%] of our revenues were derived from within this industry during fiscal [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

Arrangements with transactional or unit-based pricing accounted for [removed: 70%] [added: 74%] and [removed: 69%] [added: 70%] of our revenues during fiscal [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

Operating income for fiscal [removed: 2017] [added: 2018] was [removed: $177.2] [added: $206.4] million, an increase of [removed: 4%] [added: 16%] from [removed: $169.6] [added: $177.2] million in fiscal [removed: 2016.][added: 2017.]

Operating margin was [added: 20% and] 19% for [removed: each of] fiscal [removed: 2017] [added: 2018] and [removed: 2016.][added: 2017, respectively.]

Diluted earnings per share for fiscal [removed: 2017] [added: 2018] was [removed: $3.98,] [added: $4.57,] an increase of [removed: 17%] [added: 15%] from [removed: $3.39] [added: $3.98] in fiscal [removed: 2016.][added: 2017.]

| Quarter ended September 30, 2017 | $ | 145.9 | | | 16 | % | | [removed: 19] [added: 32] | | | 29 | |

| Quarter ended September 30, [removed: 2016] [added: 2018] | $ | [removed: 80.3] [added: 133.5] | | | [removed: 20] [added: 11] | % | | [removed: 13] [added: 24] | | | [removed: 37] [added: 31] | |

| Year ended September 30, 2017 | $ | 429.0 | | | 36 | % | | [removed: 59] [added: 88] | | | NM(a) | |

| Year ended September 30, [removed: 2016] [added: 2018] | $ | [removed: 378.0] [added: 437.3] | | | [removed: 40] [added: 29] | % | | [removed: 57] [added: 80] | | | NM(a) | |

Transactional and maintenance bookings were [removed: 41%] [added: 46%] and [removed: 35%] [added: 41%] of total bookings for the years ended September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

Professional services bookings were 43% and [removed: 45%] [added: 43%] of total bookings for the years ended September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

License bookings were [removed: 16%] [added: 11%] and [removed: 20%] [added: 16%] of total bookings for the years ended September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

Segment revenues, operating income, and related financial [removed: information] [added: information, including geographic information,] for the years ended September 30, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] are set forth in Note [removed: 17] [added: 16] 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: 2017, 2016] [added: 2018, 2017] and [removed: 2015:][added: 2016:]

| Segment | [added: 2018 | | | |] 2017 | | | | 2016 | | | | [removed: 2015] [added: 2018 to 2017] | | | | 2017 to 2016 | | | | [removed: 2016] [added: 2018] to [removed: 2015 |] [added: 2017] | | | 2017 to 2016 | | [removed: | 2016 to 2015 | |]

| Applications | $ | [removed: 553,167] [added: 585,571] | | | $ | [removed: 532,642] [added: 553,167] | | | $ | [removed: 526,274] [added: 532,642] | | | $ | [removed: 20,525] [added: 32,404] | | | $ | [removed: 6,368] [added: 20,525] | | | [removed: 4] [added: 6] | % | | [removed: 1] [added: 4] | % |

| Scores | [removed: 266,354] [added: 342,648] | | | | [removed: 241,059] [added: 266,354] | | | | [removed: 207,007] [added: 241,059] | | | | [removed: 25,295] [added: 76,294] | | | | [removed: 34,052] [added: 25,295] | | | | [removed: 10] [added: 29] | % | | [removed: 16] [added: 10] | % |

| Decision Management Software | [removed: 112,648] [added: 104,256] | | | | [removed: 107,655] [added: 112,648] | | | | [removed: 105,500] [added: 107,655] | | | | [removed: 4,993] [added: (8,392] | | [added: )] | | [removed: 2,155] [added: 4,993] | | | | [removed: 5] [added: (7] | [removed: %] [added: )%] | | [removed: 2] [added: 5] | % |

| Total | $ | [removed: 932,169] [added: 1,032,475] | | | $ | [removed: 881,356] [added: 932,169] | | | $ | [removed: 838,781] [added: 881,356] | | | [removed: 50,813] [added: 100,306] | | | | [removed: 42,575] [added: 50,813] | | | | [removed: 6] [added: 11] | % | | [removed: 5] [added: 6] | % |

| Segment | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

| Applications | [removed: 59] [added: 57] | % | | [removed: 61] [added: 59] | % | | [removed: 63] [added: 61] | % |

| Scores | [removed: 29] [added: 33] | % | | [removed: 27] [added: 29] | % | | [removed: 25] [added: 27] | % |

| Decision Management Software | [removed: 12] [added: 10] | % | | 12 | % | | 12 | % |

| | [added: 2018 | | | |] 2017 | | | | 2016 | | | | [removed: 2015] [added: 2018 to 2017] | | | | 2017 to 2016 | | | | [removed: 2016] [added: 2018] to [removed: 2015 |] [added: 2017] | | | 2017 to 2016 | | [removed: | 2016 to 2015 | |]

| Transactional and maintenance | $ | [removed: 348,861] [added: 381,109] | | | $ | [removed: 328,472] [added: 348,861] | | | $ | [removed: 320,596] [added: 328,472] | | | $ | [removed: 20,389] [added: 32,248] | | | $ | [removed: 7,876] [added: 20,389] | | | [removed: 6] [added: 9] | % | | [removed: 2] [added: 6] | % |

| Professional services | [removed: 141,857] [added: 142,908] | | | | [removed: 138,775] [added: 141,857] | | | | [removed: 124,562] [added: 138,775] | | | | [removed: 3,082] [added: 1,051] | | | | [removed: 14,213] [added: 3,082] | | | | [removed: 2] [added: 1] | % | | [removed: 11] [added: 2] | % |

| License | [removed: 62,449] [added: 61,554] | | | | [removed: 65,395] [added: 62,449] | | | | [removed: 81,116] [added: 65,395] | | | | [removed: (2,946] [added: (895] | | ) | | [removed: (15,721] [added: (2,946] | | ) | | [removed: (5] [added: (1] | )% | | [removed: (19] [added: (5] | )% |

| Total | $ | [removed: 553,167] [added: 585,571] | | | $ | [removed: 532,642] [added: 553,167] | | | $ | [removed: 526,274] [added: 532,642] | | | [removed: 20,525] [added: 32,404] | | | | [removed: 6,368] [added: 20,525] | | | | [removed: 4] [added: 6] | % | | [removed: 1] [added: 4] | % |

We continued to transform our business from on-premises to recurring revenue associated with our cloud-based solutions in our Applications and Decision Management Software segments.

We have launched numerous new FICO® Score based products, and continue to grow our partnership with Experian, a leading global information services provider.

We continue to enhance stockholder value by returning cash to stockholders through our stock repurchase program.

We continue to drive growth in our Scores segment.

Scores revenue increased 29% to $342.6 million in fiscal 2018 from $266.4 million in fiscal 2017, and Scores operating income increased 32% to $279.2 million in fiscal 2018 from $211.9 million in fiscal 2017.

For our Applications and Decision Management Software segments, our cloud business continues to grow both in the absolute dollar value and as a percentage of revenues as we pursue our cloud-first strategy.

During fiscal 2018, cloud revenues accounted for $241.5 million, or 35% of non-Scores revenues, compared to $202.7 million, or 30% during fiscal 2017.

Net income increased 11% to $142.4 million in fiscal 2018 from $128.3 million in fiscal 2017 primarily due to an increase in operating income, partially offset by the income tax expense related to enactment of the Tax Cuts and Jobs Act.

The increase in customer management solutions was primarily attributable to an increase in license and transactional revenues.

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.

Revenues from these customers included amounts recorded in our other segments.

| Other income (expense), net | 1 | % | | — | % | | — | % |

The fiscal 2018 over 2017 increase of $23.6 million in cost of revenues expenses was primarily attributable to a $13.4 million increase in facilities and infrastructure costs and a $7.7 million increase in personnel and labor costs.

The increase in facilities and infrastructure costs was primarily attributable to increased resource requirement due to expansion in our cloud infrastructure operations.

Cost of revenues as a percentage of revenues was 30% during fiscal 2018, materially consistent with that incurred during fiscal 2017.

The fiscal 2018 over 2017 increase of $40.6 million was primarily attributable to a $27.4 million increase in personnel and labor costs as a result of increased headcount, higher share-based compensation and incentive costs; as well as a $10.1 million increase in marketing and travel costs, primarily driven by a company-wide marketing event during fiscal 2018.

In fiscal 2019, we expect amortization expense will be slightly lower than that incurred in fiscal 2018.

There were no restructuring or acquisition-related expenses incurred during fiscal 2018.

The fiscal 2018 over 2017 increase in net interest expense of $5.8 million was primarily attributable to a higher average outstanding debt balance during fiscal 2018, as well as a higher average interest rate on our 2018 Senior Notes (as discussed below) compared to that on our revolving line of credit.

The increase in our income tax provision in fiscal 2018 compared to fiscal 2017 is primarily due to recording the impact related to the enactment of the Tax Act in fiscal 2018.

This includes re-measurement to our deferred tax assets and liabilities for the tax rate changes, the one-time Transition Tax, and a provisional charge related to the loss of deductibility of performance-based compensation for certain employees.

As of September 30, 2018, we have approximately $79.7 million of unremitted earnings of non-U.S. subsidiaries, of which $57.9 million was included in our current year provision for income taxes due to the one-time Transition Tax on the deemed repatriation of deferred foreign income under the Tax Act.

The Company generates substantial cash flow in the U.S. and does not have a current need for the cash to be returned to the U.S. from the foreign entities.

While the Transition Tax resulted in the reduction of the excess of the amount for financial reporting over the tax basis in our foreign subsidiaries such that a repatriation may not result in additional U.S. income tax, an actual repatriation from our non-US subsidiaries could still be subject to additional foreign withholding taxes and U.S. state taxes.

| Segment | 2018 | | | | 2017 | | | | 2016 | | | | 2018 to 2017 | | | | 2017 to 2016 | | | | 2018 to 2017 | | | 2017 to 2016 | |

| | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | 2017 | | | 2016 | |

| | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | 2017 | | | 2016 | |

| | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | 2017 | | | 2016 | |

Segment operating income as a percentage of segment revenue for Applications was 28%, materially consistent with fiscal 2017.

Segment operating income as a percentage of segment revenue for Scores was 81%, materially consistent with fiscal 2017.

Segment operating margin for Decision Management Software decreased to a negative 29% from a negative 10% mainly due to a decrease in sales of our higher-margin software products, as well as our continued investment in cloud infrastructure operations and new products.

| | 2018 | | | | 2017 | | | | 2016 | | |

The $2.5 million decrease was mainly attributable to a $43.8 million decrease that resulted from timing of receipts and payments in our ordinary course of business, partially offset by a $26.9 million increase in non-cash items, including a $31.8 million increase in non-cash deferred income taxes and $10 million non-operating gain related to the divestiture of a cost-method investment; as well a $14.2 increase in net income.

The $6.5 million decrease was primarily attributable to a $20.0 million increase in proceeds from the sale of cost method investment, partially offset by an $11.5 million increase in net cash used for purchases of property and equipment as well as a $2.8 million increase in purchases, net of proceeds from sale, of marketable securities.

On May 7, 2008, we issued $275 million of senior notes in a private placement to a group of institutional investors, the outstanding aggregate principal amount of which was paid in full at maturity on May 7, 2018.

The 2010 Senior Notes require interest payments semi-annually and contain certain restrictive covenants, including the maintenance of a maximum consolidated net debt to consolidated EBITDA ratio of 3.00 and a minimum fixed charge coverage ratio of 2.50.

The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25% per annum and will mature on May 15, 2026.

| Operating lease obligations | 24,224 | | | | 15,694 | | | | 15,768 | | | | 14,151 | | | | 12,866 | | | | 33,030 | | | | 115,733 | | |

| Total commitments | $ | 79,901 | | | $ | 126,446 | | | $ | 36,768 | | | $ | 35,151 | | | $ | 33,866 | | | $ | 496,030 | | | $ | 814,275 | |

For fiscal 2018, we performed a step zero qualitative analysis for our annual assessment of goodwill impairment.

We commenced this program in 2014 and now have more than 250 million 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, also continued to accelerate during the current year.

We also returned significant cash to shareholders through our stock repurchase program.

Revenue in each of our segments increased, with our Scores segment the primary driver increasing by 10% in fiscal 2017 compared to fiscal 2016.

Our Applications and Decision Management Software segments increased by 4% and 5% in fiscal 2017 compared to fiscal 2016, respectively.

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.

| | |

| --- | --- |

The decrease in fraud solutions was primarily attributable to a decrease in software revenues mainly driven by decreased number of large multi-year license deals occurring during our fiscal 2016.

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® Scores available to consumers on Experian.com.

| | Year Ended September 30, | | | | | | | | | | | | 2017 to 2016 | | | | 2016 to 2015 | | | | 2017 to 2016 | | | 2016 to 2015 | |

Cost of revenues as a percentage of revenues decreased to 30% during fiscal year 2016 from 32% during fiscal 2015.

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

The increase in direct materials was primarily attributable to an increase in telecommunications cost associated with the increase in our customer communications services subscription based revenue.

The fiscal year 2016 over 2015 increase of $4.8 million in research development expenses was primarily attributable to a $6.7 million increase in personnel and labor costs, partially offset by a $2.1 million decrease in outside services.

The decrease in outside services was primarily attributable to fewer internal projects utilizing temporary resources.

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 $28.9 million increase was primarily attributable to a $23.5 million increase in labor and personnel costs and a $1.6 million increase in marketing expenses.

The increase in personnel and costs was primarily attributable to an increase in salaries and benefits as a result of our increased headcount, an increase in incentive cost, and an increase in stock-based compensation cost primarily related to the reduction in our estimated forfeiture rate as well as higher stock price.

The increase in marketing expenses was primarily attributable to our investment in expanding and refining our distribution capabilities.

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.

Cash payments for all the employee separation costs will be paid by the end of the second quarter of fiscal 2018.

During fiscal 2015, we incurred net charges totaling $17.5 million consisting of $13.6 million in facilities charges associated with vacating excess leased space in Roseville, Minnesota and San Rafael, California, and $3.9 million in severance charges due to the elimination of 97 positions throughout the Company.

Cash payments for all the severance costs were paid by the end of fiscal 2016.

We also incurred $0.7 million in acquisition-related cost primarily associated with our TONBELLER acquisition.

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

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

| | Year Ended September 30, | | | | | | | | | | |

| | (In thousands) | | | | | | | | | | |

| Severance costs | $ | 2,742 | | | $ | — | | | $ | 3,908 | |

| Lease exit costs and other adjustments | 1,729 | | | | — | | | | 13,571 | | |

| Total restructuring expense | $ | 4,471 | | | $ | — | | | $ | 17,479 | |

The fiscal 2016 over 2015 decrease in net interest expense of $2.5 million was primarily attributable to the $71.0 million principal payment in May 2015 on the senior notes issued in May 2008 and the $60.0 million principal payment in July 2016 on the senior notes issued in July 2010, resulting in lower average debt balances for fiscal 2016 for both senior notes, partially offset by a higher average outstanding balance on our revolving line of credit.

The increase in our effective tax rate in fiscal 2016 compared to 2015 was primarily due to a higher percentage of revenue in higher taxing jurisdictions during the current year, and the favorable settlement of the fiscal 2006-2009 state audits and the 2010 foreign transfer pricing assessment in fiscal 2015, partially offset by higher foreign tax credits, research credits and domestic production deduction credits in fiscal 2016.

As of September 30, 2017, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $47.0 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries.

The determination and estimation of the future income tax consequences in all relevant taxing jurisdictions involves the application of highly complex tax laws in the countries involved, particularly in the United States, and is based on our tax profile in the year of earnings repatriation.

Accordingly, it is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

The following tables set forth certain summary information on a segment basis related to our operating income for the fiscal 2017, 2016 and 2015:

The increase in corporate expenses was primarily driven by a higher incentive cost.

The following table presents the principal amounts and related weighted-average yields for our investments with interest rate risk at September 30, [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

| | September 30, [removed: 2017] [added: 2018] | | | | | | | | | | | September 30, [removed: 2016] [added: 2017] | | | | | | | | | |

| Cash and cash equivalents | $ | [removed: 105,618] [added: 90,023] | | | $ | [removed: 105,618] [added: 90,023] | | | [removed: 0.56] [added: 0.66] | % | | $ | [removed: 75,926] [added: 105,618] | | | $ | [removed: 75,926] [added: 105,618] | | | [removed: 0.17] [added: 0.56] | % |

[removed: In May 2008,] [added: On July 14, 2010,] we issued [removed: $275] [added: $245] million of senior notes [added: in a private placement] to a group of institutional investors [removed: in a private placement] (the [removed: “2008] [added: “2010] Senior Notes”).

[removed: The] [added: On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”, and with the 2008 Senior Notes and the 2010 Senior Notes, the “Senior Notes”).The] fair value of the Senior Notes may increase or decrease due to various factors, including fluctuations in market interest rates and fluctuations in general economic conditions.

The following table presents the carrying amounts and fair values for the Senior Notes at September 30, [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

| | September 30, [removed: 2017] [added: 2018] | | | | | | | | September 30, [removed: 2016] [added: 2017] | | | | | | |

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

| The 2010 Senior Notes | 113,000 | | | | [removed: 119,106] [added: 114,413] | | | | [removed: 185,000] [added: 113,000] | | | | [removed: 195,715] [added: 119,106] | | |

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

We had [removed: $361.0] [added: $257.0] million in borrowings outstanding at a weighted average interest of [removed: 2.365%] [added: 3.555%] under the credit facility as of September 30, [removed: 2017.][added: 2018.]

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

The following tables summarize our outstanding foreign currency forward contracts, by currency, at September 30, [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

| British pound (GBP) | GBP | [removed: 7,721] [added: 8,598] | | | $ | [removed: 10,000] [added: 11,200] | | | — | |

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: 2017] [added: 2018] and [removed: 2016.][added: 2017.]

On May 7, 2008, we issued $275 million of senior notes to a group of institutional investors in a private placement (the “2008 Senior Notes”), the outstanding aggregate principal amount of which was paid in full at maturity on May 7, 2018.

| The 2018 Senior Notes | 400,000 | | | | $ | 404,000 | | | — | | | | — | | |

| Total | $ | 513,000 | | | $ | 518,413 | | | $ | 244,000 | | | $ | 253,356 | |

| | September 30, 2018 | | | | | | | | | |

| Euro (EUR) | EUR | 9,000 | | | $ | 10,372 | | | — | |

| Singapore dollar (SGD) | SGD | 9,580 | | | $ | 7,000 | | | — | |

In July 2010 we issued an additional $245 million of senior notes to a group of institutional investors in a private placement (the “2010 Senior Notes” and, with the 2008 Senior Notes, the “Senior Notes”).

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

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

| | September 30, 2016 | | | | | | | | | |

| Euro (EUR) | EUR | 7,850 | | | $ | 8,743 | | | — | |

More information about us can be found on our [removed: principal] website, www.fico.com.

References to our website [removed: addresses] [added: address] in this report [removed: are provided as a convenience and] do not constitute an incorporation by reference.

| • | Applications. This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO® Analytic [removed: Cloud.] [added: Cloud and/or Amazon Web Services, Inc. (“AWS”), our primary cloud infrastructure provider.] |

| • | Decision Management 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 [removed: Cloud.] [added: Cloud and/or AWS.] |

[removed: With the new FICO® Analytic Cloud, FICO® Decision Management Platform and FICO® Decision Management Suite,] [added: In addition,] we [removed: now] offer [added: our] clients [removed: an increasing] [added: a] portfolio of applications, tools and services in the cloud, which [removed: they can use] [added: allow them] to create, customize, deploy and manage powerful analytic services.

During fiscal [removed: 2017,] [added: 2018,] we continued to expand our product offerings for the FICO® Analytic [removed: Cloud,] [added: Cloud and AWS,] 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 segment, our fraud solutions accounted for [removed: 19%, 20%] [added: 17%, 19%] and [removed: 23%] [added: 20%] of total revenues in each of fiscal [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively; our customer communication services accounted for 10%, [removed: 9%] [added: 10%] and [removed: 8%] [added: 9%] of total revenues for each of these periods, respectively; and our customer management solutions accounted for 8%, [removed: 9%] [added: 8%] and 9% of total revenues in each of these periods, respectively.

[removed: These solutions offer] [added: FICO offers] a suite of [added: marketing] products, capabilities and services designed to integrate the technology and analytic services needed to perform context-sensitive customer acquisition, cross-selling and retention programs and deliver mathematically optimized offers.

Services offered in our marketing solutions include customer data integration services; services that enable real-time marketing through direct consumer interaction channels; campaign [removed: management] [added: management, messaging] and optimization services; interactive tools that automate the design, execution and collection of customer response data across multiple channels; and customer data collection, management and profiling services.

[removed: The latest version of our origination application,] FICO® Origination Manager, [removed: is] an application-to-decision processing solution, [added: is] available both on premises and in the FICO® Analytic Cloud.

[removed: Our other] [added: Other] solutions include the web-based FICO® LiquidCredit® service, which is primarily focused on credit decisions and [removed: is] offered largely to mid-tier banking institutions.

[removed: Our primary account and customer strategy management product is] FICO® TRIAD® Customer Manager, a leading credit management system, [added: is] available both on premises and in the FICO® Analytic Cloud.

By preventing fraud prior to account [removed: origination] [added: origination,] we help our customers avoid future losses as well as unnecessary collections costs.

FICO® Insurance Fraud Manager uses advanced unsupervised [removed: predictive] modeling techniques to detect health care claims fraud, abuse and errors as soon as unusual behavior patterns emerge.

The FICO® Enterprise Security 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 [removed: 12] [added: twelve] months.

Separately, FICO® Falcon® Cybersecurity Analytics utilizes advanced streaming self-learning models to help organizations detect and remediate [removed: cyber attacks] [added: cyber-attacks] by reducing the dwell time between when an attack occurs and when it is recognized.

FICO® Debt Manager™ [removed: solution and] [added: solution,] FICO® [added: Debt Manager™ Pro, FICO® Debt Manager™ Pro Plus, FICO®] PlacementsPlus® service [added: and Placement OptimizerSM solution] automate the full cycle of collections and recovery, including early collections, late collections, asset disposal, agency [removed: placement,] [added: placement and optimization,] recovery, litigation, bankruptcy, asset management and residual balance recovery.

FICO Debt Management Solutions also include assessments, models and scores, predictive analytics, advanced customer [removed: engagement, optimization] [added: engagement] and [removed: speech analytics capabilities.][added: optimization.]

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

It enables [removed: leading] financial services institutions, utilities, telecommunications firms, insurers, and other businesses to engage in automated two-way communications.

Outside the U.S., we offer [removed: the] FICO® [removed: Score] [added: Scores, including scores using alternative data,] for consumers, and in some cases for small and medium enterprises, through credit reporting agencies in [removed: 16] [added: 24] countries worldwide.

We have installed [added: nine] client-specific versions of the FICO® Score in [removed: nine] [added: five] countries.

We provide analytic and decision management platforms and tools that businesses use to build their own tailored, analytically powered decision management applications on-premises, within the FICO® Analytic Cloud or [removed: via third-party cloud environments such as Amazon Web Services.][added: AWS.]

During fiscal [removed: 2017,] [added: 2018,] FICO continued to enhance the FICO® Decision Management Suite, a collection of tools for building, extending, deploying and scaling applications and solutions.

The FICO® Decision Management Suite is available [added: on-premises or] in the [removed: FICO® Analytic Cloud and on-premises;] [added: cloud - FICO analytic cloud or AWS;] businesses can choose either or both deployments depending on their specific needs, IT environments and other factors.

| • | Predictive Modeling. FICO® Decision Central™ is a comprehensive offering to help banks and other organizations, including insurance, retail and health care companies, maximize the power of their predictive and decision models and meet stricter regulations for model management. It complements FICO® Model Builder, [added: and FICO® Analytics Workbench in the cloud,] which [removed: enables] [added: enable] the user to develop and deploy sophisticated predictive models for use in automated decisions. This software is based on the methodology and tools FICO uses to build both client-level and industry-level predictive models and scorecards, which we have developed over more than 40 years, and includes additional algorithms for rapidly discovering variable relationships, predictive interactions and optimal segmentation. The predictive models produced can be embedded in custom production applications or one of our Decision Management applications and can also be executed in the FICO® Blaze Advisor® system. [removed: FICO’s solution set for predictive modeling in the cloud is called FICO® Analytic Modeler.] |

| • | Optimization. FICO® Xpress Optimization [removed: Suite] provides operations research professionals with world-class solvers and high-productivity tools to quickly design and deliver custom, mathematically optimal solutions for a wide range of industry problems. Xpress includes a powerful modeling and programming language, with robust scalability, to quickly model and solve even the largest optimization problems. Xpress tools are licensed to end users, consultants and independent software vendors in several industries, and are a core component within FICO® Decision Optimizer. Decision Optimizer is a software tool that enables complex, large-scale optimizations involving dozens of networked action-effect models, and enables exploration and simulation of many optimized scenarios along an efficient frontier of options. The data-driven strategies produced by these tools can be executed by the FICO® Blaze Advisor® system or one of our Decision Management applications. [removed: FICO’s solution] [added: In addition to being available] for [removed: executing optimization services in the cloud is called] [added: on-premises deployment,] FICO® [added: Xpress] Optimization [removed: Modeler.] [added: is also available in the cloud.] |

| • | software companies supplying [added: predictive analytic] modeling, rules, or analytic development tools; collections and recovery solutions providers; entity resolution and social network analysis solutions providers; and |

In the marketing services market, we compete with [removed: Acxiom, Epsilon,] [added: Pegasystems,] Equifax, Experian, [removed: Harte-Hanks, InfoUSA, KnowledgeBase, Merkle] [added: SAS, Adobe] and [removed: TargetBase,] [added: Salesforce,] among others.

In the customer origination market, we compete with Experian, Equifax, [added: Moody’s, Meridian Link,] and CGI, among others.

In the customer strategy management market, we compete with [removed: Experian,] [added: Experian and SAS,] among others.

Major competitors include CGI, [removed: Experian, and various boutique firms, along with] the three major U.S. credit reporting agencies and [removed: Experian-Scorex for scoring and optimization projects.][added: various boutique firms.]

Primary competitors among outside suppliers of scoring models are the three major credit reporting agencies in the U.S. and Canada, which are also our partners in offering our scoring solutions, Experian, [removed: TransUnion and TransUnion International, Equifax,] [added: TransUnion,] and VantageScore (a joint venture entity established by the major U.S. credit reporting agencies).

Additional competitors include CRIF and other credit reporting agencies outside the U.S., and other data providers like LexisNexis and ChoicePoint, some of which also [removed: represent] [added: are among] FICO partners.

For our [removed: direct-to-consumer] [added: “direct-to-consumer”] services that deliver credit scores, credit reports and consumer credit education services, we compete with other direct to consumer credit and identity services.

Our primary competitors in this segment include IBM, [added: Experian,] SAS, Pegasystems and Angoss.

All of the top ten companies on the [removed: 2017] [added: 2018] Fortune 500 list use FICO’s solutions.

During fiscal [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] revenues generated from our agreements with Experian, TransUnion and Equifax collectively accounted for [removed: 20%, 19%] [added: 25%, 20%] and [removed: 16%] [added: 19%] of our total revenues, respectively.

We maintain active research in a number of fields for the purposes of deriving greater insight and predictive value from data, making various forms of data more usable and valuable to the model-building process, and automating and applying analytics to the various [added: business] processes involved in making high-volume decisions in real time.

In fiscal [removed: 2017,] [added: 2018,] we continued to make progress with our FICO® Analytic Cloud and FICO® Decision Management Platform initiatives.

Delivered as a cloud service, FICO® Origination Manager Essentials offers mid-market organizations the ability to inexpensively set up and process small business applications quickly, without a long or difficult implementation process.

FICO® Strategy Director, which helps organizations proactively manage consumer accounts to increase revenue, decrease risk and improve customer retention, is offered both on premises and in AWS.

FICO’s methodology for segmentation and deployment of predictive analytics enables institutions to deliver faster, fully automated and compliant decisions for a broad range of banking challenges based on each customer’s risk and relationship value.

Placement Optimizer maximizes the effectiveness of the placement strategy once accounts are outsourced.

| • | FICO® Analytics Workbench, a new general-purpose predictive analytics modeling and data wrangling tool with FICO proprietary IP to provide explainable artificial intelligence capabilities; and |

| • | FICO® Xpress Optimization, an optimization modeling suite which includes both the solver technology, Mosel, as well as a general-purpose optimization solver, Xpress Insight. |

Most significantly for the fiscal year, we have added distinct FICO IP into tools to develop explainable artificial intelligence or xAI.

We have enhanced our predictive analytic capabilities to include the development of machine learning algorithms and artificial intelligence.

FICO has focused on making artificial intelligence explainable to auditors, developers and decision makers.

Segment revenues, operating income and related financial information for fiscal 2017, 2016 and 2015 are set forth in Note 17 to the accompanying consolidated financial statements.

The chief offerings for marketing are our FICO® Analytic Offer Manager and FICO® Customer Dialogue Manager.

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

| • | FICO® Decision Management Streaming (formerly known as Data Management Integration Platform), which improves scale, performance and versatility; and |

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

Revenues from international customers, including end users and resellers, amounted to 36%, 36% and 40% of our total revenues in fiscal 2017, 2016 and 2015, respectively.

See Note 17 to the accompanying consolidated financial statements for a summary of our operating segments and geographic information.

Research and Development Activities

Our research and development expenses were $110.9 million, $103.7 million and $98.8 million in fiscal 2017, 2016 and 2015, respectively.

We believe that our future success depends on our ability to continually maintain and improve our core technologies, enhance our existing products, and develop new products and technologies that meet an expanding range of markets and customer requirements.

In the development of new products and enhancements to existing products, we use our own development tools extensively.

We have traditionally relied primarily on the internal development of our products.

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

For the fiscal year ended September 30, [removed: 2017][added: 2018]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| Non-Accelerated Filer | | o | [removed: Smaller Reporting Company] | | o |

As of March 31, [removed: 2017,] [added: 2018,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was [removed: $2,637,371,198] [added: $3,548,843,145] 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: 27, 2017] [added: 26, 2018] was [removed: 29,990,221] [added: 28,955,028] (excluding [removed: 58,866,562] [added: 59,901,755] 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 28, [removed: 2018.][added: 2019.]

| Item 1. | [removed: [Business](#sCF560B68CBF15A9DAE8EB68D896D09D7)] [added: [Business](#s7555ADD30B935FDDB404347B2552589E)] | [removed: [3](#sCF560B68CBF15A9DAE8EB68D896D09D7)] [added: [3](#s7555ADD30B935FDDB404347B2552589E)] |

| Item 1A. | [Risk [removed: Factors](#s5E7D82117DE5590185F03A9932EDF3D7)] [added: Factors](#sE785B47E15695B028FF7D637113CD23F)] | [removed: [13](#s5E7D82117DE5590185F03A9932EDF3D7)] [added: [13](#sE785B47E15695B028FF7D637113CD23F)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s9AA2D44CE1B1569CB7169BF4BF55E47E)] [added: Comments](#s602246C0830E5D6E912A1715F6825A50)] | [removed: [23](#s9AA2D44CE1B1569CB7169BF4BF55E47E)] [added: [23](#s602246C0830E5D6E912A1715F6825A50)] |

| Item 2. | [removed: [Properties](#s3225233EA0A758EDB8C53C71E070F1F3)] [added: [Properties](#s5D20D86C16F85B028C92030874CD8106)] | [removed: [23](#s3225233EA0A758EDB8C53C71E070F1F3)] [added: [24](#s5D20D86C16F85B028C92030874CD8106)] |

| Item 3. | [Legal [removed: Proceedings](#sFE780DC098125F7BBFA0299E80A9BD98)] [added: Proceedings](#s89F4A9FB76C3500293C5D68A4E5E4C88)] | [removed: [24](#sFE780DC098125F7BBFA0299E80A9BD98)] [added: [24](#s89F4A9FB76C3500293C5D68A4E5E4C88)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s34EB403E25A4547EA087EF6AD489F371)] [added: Disclosures](#s8491D8DE2B4C59EC8E1E11AA4030C4BF)] | [removed: [24](#s34EB403E25A4547EA087EF6AD489F371)] [added: [24](#s8491D8DE2B4C59EC8E1E11AA4030C4BF)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sAFE6C7531E5551F9AD0968F5AF1DC92B)] [added: Securities](#s53595C73A618578AA174D036F0022E42)] | [removed: [25](#sAFE6C7531E5551F9AD0968F5AF1DC92B)] [added: [25](#s53595C73A618578AA174D036F0022E42)] |

| Item 6. | [Selected Financial [removed: Data](#s1A2E440358545A0CB4AFBDFDC14ACB6B)] [added: Data](#s8A6DDEC5988754FE95ECF5E67AA9BFFE)] | [removed: [27](#s1A2E440358545A0CB4AFBDFDC14ACB6B)] [added: [26](#s8A6DDEC5988754FE95ECF5E67AA9BFFE)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s16B89A68D06F5AFDB314DFFD0C13749B)] [added: Operations](#s8022CBEE6FBA595DA39AF9BC4CDFAFEA)] | [removed: [28](#s16B89A68D06F5AFDB314DFFD0C13749B)] [added: [28](#s8022CBEE6FBA595DA39AF9BC4CDFAFEA)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sCA47194E14C95FB8839E157EED990996)] [added: Risk](#s8FB5D40EA4865868B25AFF792A4CE452)] | [removed: [48](#sCA47194E14C95FB8839E157EED990996)] [added: [47](#s8FB5D40EA4865868B25AFF792A4CE452)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] [added: Data](#s1FE26FCDE55558089FA953E8513A9AEB)] | [removed: [50](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] [added: [50](#s1FE26FCDE55558089FA953E8513A9AEB)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s77C8AEE0C7AF50679779D8BAEE5F7793)] [added: Disclosure](#sF4B626358DC151D79F50C540655C868E)] | [removed: [82](#s77C8AEE0C7AF50679779D8BAEE5F7793)] [added: [84](#sF4B626358DC151D79F50C540655C868E)] |

| Item 9A. | [Controls and [removed: Procedures](#s182D92F3D70A585B8BF70C7AC27C6C76)] [added: Procedures](#sFA67DA98E586542FB0D98E76DD82C153)] | [removed: [82](#s182D92F3D70A585B8BF70C7AC27C6C76)] [added: [84](#sFA67DA98E586542FB0D98E76DD82C153)] |

| Item 9B. | [Other [removed: Information](#s64A170E367135A28A16221D4D9A07C59)] [added: Information](#s30C100DE729B5484ABC45AEDF612F992)] | [removed: [82](#s64A170E367135A28A16221D4D9A07C59)] [added: [85](#s30C100DE729B5484ABC45AEDF612F992)] |

| [PART [removed: III](#s2B407167A1DF556890DCFF53DE8C369E)] [added: III](#s04116759CE9E5AC48FFA416C0A6FB901)] | | |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s2647B45E55A85F8B81217CD745EB8385)] [added: Governance](#sCC50263CC1665449BBAD1660D3212CB8)] | [removed: [83](#s2647B45E55A85F8B81217CD745EB8385)] [added: [86](#sCC50263CC1665449BBAD1660D3212CB8)] |

| Item 11. | [Executive [removed: Compensation](#s43EF99634311517183F5CAA160B303D0)] [added: Compensation](#s756CBA4B808254358ED3AB6236134771)] | [removed: [84](#s43EF99634311517183F5CAA160B303D0)] [added: [87](#s756CBA4B808254358ED3AB6236134771)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s0B056309F3D05EF982DD629A0A706F97)] [added: Matters](#s7A5F1D03B18D57F1BE0180225902F380)] | [removed: [84](#s0B056309F3D05EF982DD629A0A706F97)] [added: [87](#s7A5F1D03B18D57F1BE0180225902F380)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s471551F84A985C29A5EA5045E32DAFF2)] [added: Independence](#s16A3461F2D5B5415AC8DB1E7B97805B1)] | [removed: [84](#s471551F84A985C29A5EA5045E32DAFF2)] [added: [87](#s16A3461F2D5B5415AC8DB1E7B97805B1)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#s7092864E74C05CE697E37A928681B0BE)] [added: Services](#s5FA6509F75485819B72EF3667DFBDBB0)] | [removed: [84](#s7092864E74C05CE697E37A928681B0BE)] [added: [87](#s5FA6509F75485819B72EF3667DFBDBB0)] |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#s5CC23C6F09E35F65BE5461EC63A560E6)] [added: Schedules](#s3177000111DB5D828CEB8B1178F2CD1B)] | [removed: [85](#s5CC23C6F09E35F65BE5461EC63A560E6)] [added: [88](#s3177000111DB5D828CEB8B1178F2CD1B)] |

Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, [added: expenses,] earnings or loss per share, the payment or nonpayment of dividends, capital structure and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, research and development, and the sufficiency of capital resources; (iii) statements of assumptions underlying such statements, including those related to economic conditions; (iv) statements regarding business relationships with vendors, customers or collaborators, including the proportion of revenues generated from international as opposed to domestic customers; and (v) statements regarding products, their characteristics, performance, sales potential or effect in the hands of customers.

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: 2018.][added: 2019.]

10-K 1 fico10-k2018.htm FICO 10-K 2018

| [PART I](#sC8E47CD223545980B43190F579C3E6E0) | | |

| [PART II](#s2E11175A642C5A238353693B3A505345) | | |

| [PART IV](#sFD96A137EB1555E592A1E3A8ABC26C92) | | |

| [Signatures](#sA7DD97EB15F85ACF85891FD0C9E6420F) | | [93](#sA7DD97EB15F85ACF85891FD0C9E6420F) |

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

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

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

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

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

| • | approximately [removed: 96,000] [added: 77,000] square feet of office [removed: and data center] [added: space] in [removed: Roseville and Brooklyn Park, Minnesota,] [added: Roseville, Minnesota] in [removed: two buildings] [added: one building] under [removed: leases] [added: a lease] expiring in fiscal [removed: 2018 and 2023, respectively;] [added: 2023;] 16,000 square feet of this space is subleased to a third party; this is used for all of our [removed: segments; and] [added: segments.] |

| • | approximately 80,000 square feet of office space in San Diego, California in one building under a lease expiring in fiscal 2020; this is used for Applications and Decision Management Software [removed: segments.] [added: segments; and] |

In addition, we lease an aggregate of approximately [removed: 306,000] [added: 249,000] square feet of office and data center space in a number of smaller domestic locations and internationally in [removed: India,] the United Kingdom, China, Singapore, and several other locations.

| • | approximately 84,000 square feet of office space in Bangalore, India in one building under a lease expiring in fiscal 2019; this is used for Applications and Decision Management Software segments; |

| | |

| --- | --- |

According to records of our transfer agent, at October [removed: 27, 2017,] [added: 26, 2018,] we had [removed: 366 shareholders] [added: 331 stockholders] of record of our common stock.

| (1) | Includes [removed: 6,399] [added: 6,452] 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: 2017.] [added: 2018.] |

| (2) | In [removed: July 2016,] [added: October 2017,] 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. In [removed: October 2017,] [added: July 2018,] our Board of Directors approved a new stock repurchase program following the completion of the [removed: July 2016] [added: October 2017] 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: 2012,] [added: 2013,] in (a) the Company’s [removed: Common Stock,] [added: 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: ]

| July 1, 2018 through July 31, 2018 | 276,830 | | | $ | 201.18 | | | 271,955 | | | $ | 250,000,000 | |

| August 1, 2018 through August 31, 2018 | 201,445 | | | $ | 218.88 | | | 200,000 | | | $ | 206,224,769 | |

| September 1, 2018 through September 30, 2018 | 30,132 | | | $ | 232.39 | | | 30,000 | | | $ | 199,252,394 | |

| Total | 508,407 | | | $ | 210.04 | | | 501,955 | | | $ | 199,252,394 | |

The following table shows the high and low sales prices for our stock, as listed on the New York Stock Exchange for each quarter in the last two fiscal years:

| | | | | | | | |

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

| | High | | | | Low | | |

| Fiscal 2016 | | | | | | | |

| October 1 — December 31, 2015 | $ | 97.00 | | | $ | 78.11 | |

| January 1 — March 31, 2016 | $ | 106.64 | | | $ | 80.20 | |

| April 1 — June 30, 2016 | $ | 115.87 | | | $ | 102.77 | |

| July 1 — September 30, 2016 | $ | 132.95 | | | $ | 111.73 | |

| 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 | |

Dividends

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

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 | |

[removed: (“CR Software”) in November 2012, Infoglide Software, Inc. (“Infoglide”) in April 2013,] [added: We acquired] InfoCentricity, Inc. [removed: (“InfoCentricity”)] in April 2014, TONBELLER [added: Aktiengesellschaft] in January 2015, and [removed: QuadMetrics] [added: QuadMetrics, Inc.] in May 2016.

| | [added: 2018 | | | |] 2017 (1) | | | | 2016 | | | | 2015 (1) | | | | 2014 (1) | | | [removed: | 2013 (1) | | |]

| Revenues | $ | [removed: 932,169] [added: 1,032,475] | | | $ | [removed: 881,356] [added: 932,169] | | | $ | [removed: 838,781] [added: 881,356] | | | $ | [removed: 788,985] [added: 838,781] | | | $ | [removed: 743,444] [added: 788,985] | |

| Operating income | [removed: 177,200] [added: 206,437] | | | | [removed: 169,592] [added: 177,200] | | | | [removed: 137,505] [added: 169,592] | | | | [removed: 161,868] [added: 137,505] | | | | [removed: 161,593] [added: 161,868] | | |

| Net income | [removed: 128,256] [added: 142,415] | | | | [removed: 109,448] [added: 128,256] | | | | [removed: 86,502] [added: 109,448] | | | | [removed: 94,879] [added: 86,502] | | | | [removed: 90,095] [added: 94,879] | | |

| Basic earnings per share | [removed: 4.16] [added: 4.79] | | | | [removed: 3.52] [added: 4.16] | | | | [removed: 2.75] [added: 3.52] | | | | [removed: 2.80] [added: 2.75] | | | | [removed: 2.55] [added: 2.80] | | |

| Diluted earnings per share | [removed: 3.98] [added: 4.57] | | | | [removed: 3.39] [added: 3.98] | | | | [removed: 2.65] [added: 3.39] | | | | [removed: 2.72] [added: 2.65] | | | | [removed: 2.48] [added: 2.72] | | |

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

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Working capital | $ | [removed: (15,724] [added: (83,703] | ) | | $ | [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: )] |

| Total assets | [removed: 1,255,620] [added: 1,255,079] | | | | [removed: 1,220,676] [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] | | |

| Senior notes | [removed: 244,000] [added: 513,000] | | | | [removed: 316,000] [added: 244,000] | | | | [removed: 376,000] [added: 316,000] | | | | [removed: 447,000] [added: 376,000] | | | | [removed: 455,000] [added: 447,000] | | |

| Revolving line of credit | [removed: 361,000] [added: 257,000] | | | | [removed: 255,000] [added: 361,000] | | | | [removed: 232,000] [added: 255,000] | | | | [removed: 99,000] [added: 232,000] | | | | [removed: 15,000] [added: 99,000] | | |

| Stockholders’ equity | [removed: 426,537] [added: 263,737] | | | | [removed: 446,828] [added: 426,537] | | | | [removed: 436,998] [added: 446,828] | | | | [removed: 454,614] [added: 436,998] | | | | [removed: 530,677] [added: 454,614] | | |

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

We acquired CR Software, LLC.

We have audited the accompanying consolidated balance sheets of Fair Isaac Corporation and subsidiaries (the "Company") as of September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended September 30, [removed: 2017.][added: 2018, and the related notes (collectively referred to as the “financial statements”).]

We also have audited the Company's internal control over financial reporting as of September 30, [removed: 2017,] [added: 2018,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission.][added: Commission (COSO).]

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the [removed: audit] [added: audits] to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company [removed: and subsidiaries] as of September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended September 30, [removed: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by [removed: the Committee of Sponsoring Organizations of the Treadway Commission.][added: COSO.]

| | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| Cash and cash equivalents | $ | [removed: 105,618] [added: 90,023] | | | $ | [removed: 75,926] [added: 105,618] | |

| Accounts receivable, net | [removed: 168,586] [added: 208,865] | | | | [removed: 167,786] [added: 168,586] | | |

| Prepaid expenses and other current assets | [removed: 36,727] [added: 39,624] | | | | [removed: 23,926] [added: 36,727] | | |

| Total current assets | [removed: 310,931] [added: 338,512] | | | | [removed: 267,638] [added: 310,931] | | |

| Other investments | [removed: 11,724] [added: 1,697] | | | | [removed: 10,920] [added: 11,724] | | |

| Property and equipment, net | [removed: 40,703] [added: 48,837] | | | | [removed: 45,122] [added: 40,703] | | |

| Goodwill | [removed: 804,414] [added: 800,890] | | | | [removed: 798,415] [added: 804,414] | | |

| Intangible assets, net | [removed: 21,185] [added: 14,536] | | | | [removed: 33,619] [added: 21,185] | | |

| Deferred income taxes | [removed: 47,204] [added: 20,117] | | | | [removed: 47,598] [added: 47,204] | | |

| Other assets | [removed: 5,668] [added: 12,431] | | | | [removed: 6,348] [added: 5,668] | | |

| Total assets | $ | [removed: 1,255,620] [added: 1,255,079] | | | $ | [removed: 1,220,676] [added: 1,255,620] | |

| Accounts payable | $ | [removed: 19,510] [added: 20,251] | | | $ | [removed: 22,952] [added: 19,510] | |

| Accrued compensation and employee benefits | [removed: 77,610] [added: 84,292] | | | | [removed: 71,216] [added: 77,610] | | |

| Other accrued liabilities | [removed: 32,104] [added: 30,457] | | | | [removed: 27,780] [added: 32,104] | | |

| Deferred revenue | [removed: 55,431] [added: 52,215] | | | | [removed: 47,129] [added: 55,431] | | |

| Current maturities on debt | [removed: 142,000] [added: 235,000] | | | | [removed: 77,000] [added: 142,000] | | |

| Total current liabilities | [removed: 326,655] [added: 422,215] | | | | [removed: 246,077] [added: 326,655] | | |

| Long-term debt | [removed: 462,801] [added: 528,944] | | | | [removed: 493,624] [added: 462,801] | | |

| Other liabilities | [removed: 39,627] [added: 40,183] | | | | [removed: 34,147] [added: 39,627] | | |

| Total liabilities | [removed: 829,083] [added: 991,342] | | | | [removed: 773,848] [added: 829,083] | | |

| Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and [removed: 30,243] [added: 29,015] and [removed: 30,935] [added: 30,243] shares outstanding at September 30, [removed: 2017] [added: 2018] and September 30, [removed: 2016,] [added: 2017,] respectively) | [removed: 302] [added: 290] | | | | [removed: 309] [added: 302] | | |

| Paid-in-capital | [removed: 1,195,431] [added: 1,211,051] | | | | [removed: 1,188,913] [added: 1,195,431] | | |

| Treasury stock, at cost [removed: (58,614] [added: (59,842] and [removed: 57,922] [added: 58,614] shares at September 30, [removed: 2017] [added: 2018] and September 30, [removed: 2016,] [added: 2017,] respectively) | [removed: (2,301,097] [added: (2,612,007] | | ) | | [removed: (2,136,760] [added: (2,301,097] | | ) |

| Retained earnings | [removed: 1,598,395] [added: 1,740,810] | | | | [removed: 1,471,377] [added: 1,598,395] | | |

| Accumulated other comprehensive loss | [removed: (66,494] [added: (76,407] | | ) | | [removed: (77,011] [added: (66,494] | | ) |

| Total stockholders’ equity | [removed: 426,537] [added: 263,737] | | | | [removed: 446,828] [added: 426,537] | | |

| Total liabilities and stockholders’ equity | $ | [removed: 1,255,620] [added: 1,255,079] | | | $ | [removed: 1,220,676] [added: 1,255,620] | |

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Transactional and maintenance | $ | [removed: 652,660] [added: 766,059] | | | $ | [removed: 605,919] [added: 652,660] | | | $ | [removed: 564,232] [added: 605,919] | |

| Professional services | [removed: 179,569] [added: 176,804] | | | | [removed: 169,738] [added: 179,569] | | | | [removed: 151,773] [added: 169,738] | | |

| License | [removed: 99,940] [added: 89,612] | | | | [removed: 105,699] [added: 99,940] | | | | [removed: 122,776] [added: 105,699] | | |

| Total revenues | [removed: 932,169] [added: 1,032,475] | | | | [removed: 881,356] [added: 932,169] | | | | [removed: 838,781] [added: 881,356] | | |

Opinions on the Financial Statements and Internal Control over Financial Reporting

Basis for Opinions

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Definition and Limitations of Internal Control over Financial Reporting

| November 9, 2018 |

| We have served as the Company’s auditor since 2004. |

| | 2018 | | | | 2017 | | |

| Marketable securities | 18,059 | | | | 13,791 | | |

| Repurchases of common stock | (1,861 | ) | | (19 | | ) | | — | | | | (336,916 | | ) | | — | | | | — | | | | (336,935 | | ) |

| Balance at September 30, 2018 | 29,015 | | | $ | 290 | | | $ | 1,211,051 | | | $ | (2,612,007 | ) | | $ | 1,740,810 | | | $ | (76,407 | ) | | $ | 263,737 | |

| Net gain on marketable securities | (1,449 | | ) | | — | | | | — | | |

| Gain on sale of cost-method investment | (10,000 | | ) | | — | | | | — | | |

| Proceeds from sales of marketable securities | 3,230 | | | | — | | | | — | | |

| Purchases of marketable securities | (6,050 | | ) | | — | | | | — | | |

| Proceeds from sale of cost-method investment | 20,000 | | | | — | | | | — | | |

| Proceeds from issuance of senior notes | 400,000 | | | | — | | | | — | | |

We categorize our investments in debt and equity instruments as trading, available-for-sale or held-to-maturity at the time of purchase.

Available-for-sale securities are carried at fair value measurements using quoted prices in active markets for identical assets or liabilities with unrealized gains or losses included in accumulated other comprehensive income (loss).

Held-to-maturity securities are carried at amortized cost.

Dividends and interest income are accrued as earned.

We review marketable securities for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered.

We did not classify any securities as held-to-maturity during each of the three years ended September 30, 2018.

Years Ended September 30, 2018, 2017 and 2016

Years Ended September 30, 2018, 2017 and 2016

Consequently, we did not recognize any goodwill impairment charges in fiscal 2018, 2017 or 2016.

Years Ended September 30, 2018, 2017 and 2016

Years Ended September 30, 2018, 2017 and 2016

Years Ended September 30, 2018, 2017 and 2016

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”), as signed by the U.S. President on December 22, 2017, significantly revises U.S. tax law.

The legislation reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were indefinitely reinvested and creates new taxes on certain foreign sourced earnings.

The Tax Act adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (“GILTI”), the base erosion anti-abuse tax, a deduction for foreign derived intangible income, and the repeal of the deduction for domestic production activities.

Some of these provisions, such as tax on GILTI, the repeal of the deduction for domestic production activities, and executive compensation, may not apply to the Company with full effect until future years.

The Company is assessing the impact of the provisions of the Tax Act that do not apply until later years.

The items that impact the Company for fiscal 2018 include, but are not limited to, 1) reduction of the U.S. federal corporate income tax rate; (2) a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries; and (3) repeal of the performance-based compensation exception to the $1 million deduction limitation.

The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act.

SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under FASB Accounting Standards Codification (“ASC”) 740, “Accounting for Income Taxes” (“ASC 740”).

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete.

To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

| November 9, 2017 |

| Marketable securities available for sale | 13,791 | | | | 11,016 | | |

| | |

| --- | --- |

| Balance at September 30, 2014 | 32,047 | | | $ | 320 | | | $ | 1,133,154 | | | $ | (1,936,095 | ) | | $ | 1,280,424 | | | $ | (23,189 | ) | | $ | 454,614 | |

| Repurchases of common stock | (1,711 | ) | | (17 | | ) | | — | | | | (130,702 | | ) | | — | | | | — | | | | (130,719 | | ) |

| Tax effect from share-based payment arrangements | — | | | | 24,184 | | | | 12,530 | | |

| Dividends paid | (1,238 | | ) | | (2,489 | | ) | | (2,508 | | ) |

Management determines the appropriate classification of our investments in marketable debt and equity securities at the time of purchase, and re-evaluates this designation at each balance sheet date.

While it is our intent to hold debt securities to maturity, our investments in U.S. government obligations and marketable equity and debt securities that have readily determinable fair values are classified as available-for-sale, as the sale of such securities may be required prior to maturity to implement management strategies.

The fair value of marketable securities is based upon inputs including quoted prices for identical or similar assets.

The cost of investments sold is based on the specific identification method.

Losses resulting from other than temporary declines in fair value are charged to operations.

Consequently, we did not perform a step one quantitative analysis.

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.

Recently Adopted Accounting Pronouncements

Effective October 1, 2016, we early adopted ASU No. 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”).

ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.

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.

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

ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability, other than those relating to line-of-credit arrangements, in the balance sheet as a direct deduction from the related debt liability rather than as an asset.

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.

ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles when it becomes effective and permits the use of either the retrospective or cumulative effect transition method.

In August 2015, the FASB issued ASU No 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year.

Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods).

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.

The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard.

These amendments have the same effective date as the new revenue standard.

We have established a cross-functional implementation team consisting of representatives across the organization to address the scope of work required to implement the recognition and disclosure requirements under the new standard.

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: 2017,] [added: 2018,] 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: 2017] [added: 2018] 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: 2017.][added: 2018.]

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: 2017,] [added: 2018,] 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 [removed: “Director] [added: “Our Director] Nominees” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February 28, [removed: 2018.][added: 2019.]

| 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: 59] [added: 60] |

| 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: 54] [added: 55] |

| Richard S. Deal | November 2015-present, Executive Vice President, Chief Human Resources Officer of the Company. August 2007-November 2015, Senior Vice President, Chief Human Resources Officer of the Company. January 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: 50] [added: 51] |

| 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: 58] [added: 59] |

| 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: 52] [added: 54] |

| 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: 48] [added: 49] |

| 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: 52] [added: 53] |

| 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: 61] [added: 62] |

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 28, [removed: 2018.][added: 2019.]

The required information regarding the Company’s audit committee is incorporated by reference from the information under the caption “Board [removed: Meetings, Committees and Attendance”] [added: Committees”] in our definitive proxy statement for the Annual Meeting of [removed: Shareholders] [added: Stockholders] to be held on February 28, [removed: 2018.][added: 2019.]

The information required by this Item is incorporated by reference from the information under the captions “Director Compensation for [removed: 2017,” “Executive Compensation,” and “Compensation Committee Interlocks] [added: Fiscal 2018”] and [removed: Insider Participation”] [added: “Executive Compensation”] in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February 28, [removed: 2018.][added: 2019.]

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 28, [removed: 2018.][added: 2019.]

The information required by this Item is incorporated by reference from the information under the caption “Certain Relationships and Related [added: Persons] Transactions” in our definitive proxy statement for the Annual Meeting of Stockholders to be held on February 28, [removed: 2018.][added: 2019.]

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 28, [removed: 2018.][added: 2019.]

| [Report of independent registered public accounting [removed: firm](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] [added: firm](#s1FE26FCDE55558089FA953E8513A9AEB)] | [removed: [50](#sD33AF400261F5BD6ADB4CF7F4E0270D5)] [added: [50](#s1FE26FCDE55558089FA953E8513A9AEB)] |

| [Consolidated balance sheets as of September 30, [removed: 2017] [added: 2018] and [removed: 2016](#s01C47E6C46BD5D2E9D2DBDD9D3658EBE)] [added: 2017](#s69000A76D4755E64BDFCC23D7A7E5F7B)] | [removed: [51](#s01C47E6C46BD5D2E9D2DBDD9D3658EBE)] [added: [52](#s69000A76D4755E64BDFCC23D7A7E5F7B)] |

| [Consolidated statements of income and comprehensive income for the years ended September 30, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#sA18677A728CD5E9A967E85E3748BDFC0)] [added: 2016](#s7CAE2352E9675472B9C7F44B25C202C7)] | [removed: [52](#sA18677A728CD5E9A967E85E3748BDFC0)] [added: [53](#s7CAE2352E9675472B9C7F44B25C202C7)] |

| [Consolidated statements of stockholders’ equity for the years ended September 30, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#s07BE07C4F5A458518BAE52B5E6AF0D28)] [added: 2016](#s42C275CD5F2F58778CF92A0FB67EF7ED)] | [removed: [53](#s07BE07C4F5A458518BAE52B5E6AF0D28)] [added: [54](#s42C275CD5F2F58778CF92A0FB67EF7ED)] |

| [Consolidated statements of cash flows for the years ended September 30, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#sF273091C3E8E5A24AE0E9EFD216BC8FB)] [added: 2016](#s99F45894E8B952A29C1F6F54261EE10B)] | [removed: [54](#sF273091C3E8E5A24AE0E9EFD216BC8FB)] [added: [55](#s99F45894E8B952A29C1F6F54261EE10B)] |

| [Notes to consolidated financial [removed: statements](#sE92A8765E885549582A9FCAA0E2E6350)] [added: statements](#s8126BC3ED7A8595B95FC2608DDFEE0EE)] | [removed: [54](#sE92A8765E885549582A9FCAA0E2E6350)] [added: [56](#s8126BC3ED7A8595B95FC2608DDFEE0EE)] |

| 3.1 | [Bylaws of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. [removed: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w1.htm)] [added: 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w1.htm)] |

| 3.2 | [Composite Restated Certificate of Incorporation of Fair Isaac Corporation. (Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q for the quarter ended December 31, 2009 (file no. [removed: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w2.htm)] [added: 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000095012310009970/c56194exv3w2.htm)] |

| 10.1 | [Form of Note Purchase Agreement, dated May 7, 2008, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series A, B, C and D (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 13, 2008 (file no. [removed: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095013708007323/c26674exv10w1.htm)] [added: 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000095013708007323/c26674exv10w1.htm)] |

| 10.2 | [Form of Note Purchase Agreement, dated July 14, 2010, between Fair Isaac Corporation and the Purchasers listed on Schedule A thereto, which includes as Exhibits 1-4 the form of Senior Note for each of Series E, F, G and H (excluding certain schedules and exhibits thereto, which Fair Isaac Corporation agrees to furnish to the Securities and Exchange Commission upon request). (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 19, 2010 (file no. [removed: 001-11689))](http://www.sec.gov/Archives/edgar/data/814547/000095012310066231/c59140exv10w1.htm)] [added: 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000095012310066231/c59140exv10w1.htm)] |

| [removed: 10.3] [added: 10.4] | [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. [removed: 001-11689))] [added: 001‑11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095012310074342/c58327exv10w1.htm) |

| [removed: 10.4] [added: 10.5] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708001822/c23579exv10w42.htm) |

| [removed: 10.5] [added: 10.6] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013709000848/c49207exv10w3.htm) |

| [removed: 10.6] [added: 10.7] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708001822/c23579exv10w49.htm) |

| [removed: 10.7] [added: 10.8] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013706013419/c10450exv10w43.htm) |

| [removed: 10.8] [added: 10.9] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708014107/c47904exv10w10.htm) |

| [removed: 10.9] [added: 10.10] | [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. [removed: 001-11689))] [added: 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000093639202001464/a86033exv10w49.txt) |

| [removed: 10.10] [added: 10.11] | [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, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512052923/d298825dex104.htm) |

| [removed: 10.11] [added: 10.12] | [removed: Form] [added: [Form] of Amendment to Management Agreement entered into with certain of the Company’s executive officers. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2014) (1)] [added: 2014 (file no. 001-11689).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454715000003/ex-10210xqq12015.htm)] |

| [removed: 10.12] [added: 10.13] | [removed: Form] [added: [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, [removed: 2016.)] [added: 2016 (file no. 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000081454716000031/ex-10x110xqq32016.htm)] |

| [removed: 10.13] [added: 10.14] | [removed: Offer] [added: [Offer] Letter entered into on May 29, 2007 with Mark R. Scadina. (Incorporated by reference to Exhibit 10.61 to the Company’s Form 10-K for the fiscal year ended September 30, 2008 (file no. [removed: 001-11689)) (1)] [added: 001-11689).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000095013708014107/c47904exv10w61.htm)] |

| [removed: 10.14] [added: 10.15] | [removed: Letter] [added: [Letter] Agreement dated January 24, 2012 by and between the Company and William J. Lansing. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on January 26, [removed: 2012.) (1)] [added: 2012 (file no. 001-11689).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512025268/d287911dex102.htm)] |

| [removed: 10.15] [added: 10.16] | [removed: Letter] [added: [Letter] Agreement dated February 6, 2012 by and between the Company and Michael Pung. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 10, [removed: 2012.) (1)] [added: 2012 (file no. 001-11689).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512052923/d298825dex101.htm)] |

| [removed: 10.16] [added: 10.17] | [removed: Letter] [added: [Letter] Agreement dated February 6, 2012 by and between the Company and Mark Scadina. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on February 10, [removed: 2012.) (1)] [added: 2012 (file no. 001-11689).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512052923/d298825dex103.htm)] |

| [removed: 10.17] [added: 10.18] | [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, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312513029957/d453682dex101.htm) |

| [removed: 10.18] [added: 10.19] | [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, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312513029957/d453682dex102.htm) |

| [removed: 10.19] [added: 10.20] | [Letter Agreement dated November 5, 2014 by and between the Company and Wayne Huyard. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2014.)] [added: 2014 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454715000003/ex-10310xqq12015.htm) |

| [removed: 10.20] [added: 10.21] | [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, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454716000031/ex-10x210xqq32016.htm) |

| [removed: 10.21] [added: 10.22] | [Fair Isaac Corporation [removed: 2012] [added: 1992] Long-Term Incentive Plan, as amended through February [removed: 24, 2016.] [added: 28, 2018.] (Incorporated by reference to Exhibit [removed: A] [added: 99] of the [removed: Company’s definitive proxy statement for the 2016 Annual Meeting of Stockholders,] [added: Company's Registration Statement on Form S-8,] filed with the SEC on [removed: January 20, 2016.) (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312516433595/d95799ddef14a.htm)] [added: March 7, 2018 (Registration No. 333-223492).) (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312518073626/d547264dex99.htm)] |

| [removed: 10.22] [added: 10.23] | [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, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex102.htm) |

| [removed: 10.23] [added: 10.24] | [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, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex103.htm) |

| [removed: 10.24] [added: 10.25] | [Form of Employee Non-Statutory Stock Option Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended March 31, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex104.htm) |

| [removed: 10.25] [added: 10.26] | [Form of Employee Restricted Stock Unit Award Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended March 31, [removed: 2012.)] [added: 2012 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000119312512195607/d338746dex105.htm) |

| [removed: 10.26] [added: 10.27] | [Form of Employee Non-Statutory Stock Option Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x210xqq12017.htm) |

| [removed: 10.27] [added: 10.28] | [Form of Employee Restricted Stock Unit Award Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x310xqq12017.htm) |

| [removed: 10.28] [added: 10.29] | [Form of Executive Non-Statutory Stock Option Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x410xqq12017.htm) |

| [removed: 10.29] [added: 10.31] | [Form of Executive Restricted Stock Unit Award Agreement under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x510xqq12017.htm) |

| [removed: 10.30] [added: 10.33] | [Form of Employee Non Statutory Stock Option Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x610xqq12017.htm) |

| [removed: 10.31] [added: 10.34] | [Form of Employee Non Statutory Stock Option Agreement (United Kingdom) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x710xqq12017.htm) |

| [removed: 10.32] [added: 10.35] | [Form of Employee Restricted Stock Unit Award Agreement (International) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q for the quarter ended December 31, [removed: 2016.)] [added: 2016 (file no. 001-11689).)] (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x810xqq12017.htm) |

| 10.3 | [Indenture, dated as of May 8, 2018, by and between the Company and U.S. Bank National Association, as trustee, which includes the form of 5.25% Senior Notes due 2026. (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on May 8, 2018 (file no. 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000119312518156031/d560543dex41.htm) |

| 10.30* | [Form of Executive Non-Statutory Stock Option Agreement under the 2012 Long-Term Incentive Plan (U.S.), as amended November 6, 2018.](https://www.sec.gov/Archives/edgar/data/814547/000081454718000010/ex-103010xk2018stockoption.htm) |

| 10.32* | [Form of Executive Restricted Stock Unit Award Agreement under the 2012 Long-Term Incentive Plan (U.S.), as amended November 8, 2018.](https://www.sec.gov/Archives/edgar/data/814547/000081454718000010/ex-103210xk2018rsuagmt.htm) |

| 10.52 | [Commitment Increase Agreement to the Amended and Restated Credit Agreement dated as of November 17, 2017 by and among the Company, the lenders party thereto and Wells Fargo Bank, National Association as Administrative Agent (Incorporated by reference to the Exhibit 10.1 to the Company’s Form 8-K filed on November 20, 2017 (file no. 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000119312517347581/d472830dex101.htm) |

| 10.53 | [Third Amendment to Amended and Restated Credit Agreement dated as of May 8, 2018 by and among the Company, the several banks and other financial institutions party thereto, and Wells Fargo Bank, National Association, as administrative agent. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 8, 2018 (file no. 001-11689).)](http://www.sec.gov/Archives/edgar/data/814547/000119312518156031/d560543dex101.htm) |

| | |

| | |

| /s/ EVA MANOLIS | Director | November 9, 2018 |

| Eva Manolis | | |

| 10.46 | [Form of Market Share Unit Award Agreement (fiscal 2016 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2015.) (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454716000023/ex-10210xqq12016msu.htm) |

| 10.47 | [Form of Market Share Unit Agreement (fiscal 2017 grants) under the 2012 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.11 to the Company’s Form 10-Q for the quarter ended December 31, 2016.) (1)](http://www.sec.gov/Archives/edgar/data/814547/000081454717000005/ex-10x1110xqq12017.htm) |

| 12.1* | [Computations of ratios of earnings to fixed charges.](https://www.sec.gov/Archives/edgar/data/814547/000081454717000014/ex-121earningstofixedch10x.htm) |

| /s/ MARK W. BEGOR | Director | November 9, 2017 |

| Mark W. Begor | | |