-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hn26f3DOM9Fq4LwRSX3JbQech6VkK0xRF9vt1GPVJ/Itt2e8EbAf8vy/KEnsxb0L wt63Tb7KyI0Z5TR1jOOT6Q== 0000950124-98-006463.txt : 19981116 0000950124-98-006463.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950124-98-006463 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPSS INC CENTRAL INDEX KEY: 0000869570 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 362815480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22194 FILM NUMBER: 98746369 BUSINESS ADDRESS: STREET 1: 444 NORTH MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3123292400 MAIL ADDRESS: STREET 1: 444 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 10-Q 1 FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1998 Commission file Number: 33-64732 SPSS Inc. (Exact name of registrant as specified in its charter) Delaware 36-2815480 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 233 S. Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices and zip code) Registrant's telephone number including area code: (312) 651-3000 Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- As of November 2, 1998, there were 9,028,753 shares of common stock outstanding, par value $.01, of the registrant. ================================================================================ 2 SPSS Inc. Form 10-Q QUARTER ENDED SEPTEMBER 30, 1998 INDEX
PART I - FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Independent Auditors' Review Report 3 Consolidated Balance Sheets as of December 31, 1997 and September 30, 1998 (unaudited) 4 Consolidated Statements of Operations for the three and nine months ended September 30, 1997 (unaudited) and 1998 (unaudited) 5 Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 1997 (unaudited) and 1998 (unaudited) 6 Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 (unaudited) and 1998 (unaudited) 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 9 PART II - OTHER INFORMATION Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports on Form 8-K 16
2 3 Item 1. FINANCIAL STATEMENTS Independent Auditors' Review Report The Board of Directors SPSS Inc.: We have reviewed the consolidated balance sheet of SPSS Inc. and subsidiaries as of September 30, 1998, the related consolidated statement of operations and comprehensive income for the three and nine-month periods ended September 30, 1997 and 1998, and the related consolidated statements of cash flows for the nine-month periods ended September 30, 1997 and 1998. These consolidated financial statements are the responsibility of SPSS Inc.'s management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above, for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of SPSS Inc. and subsidiaries as of December 31, 1997, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 18, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1997, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG Peat Marwick LLP Chicago, Illinois November 2, 1998 3 4 SPSS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT FOR SHARE DATA)
DECEMBER 31, SEPTEMBER 30, 1997 1998 ----------- ------------ (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents $ 8,079 $ 12,930 Accounts receivable, net of allowances 27,872 28,160 Inventories 2,520 2,769 Prepaid expenses and other current assets 2,811 2,589 -------- -------- Total current assets 41,282 46,448 -------- -------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost: Land and building 1,700 1,758 Furniture, fixtures and office equipment 6,044 7,162 Computer equipment and software 18,032 21,243 Leasehold improvements 2,627 6,092 -------- -------- 28,403 36,255 Less accumulated depreciation and amortization 18,974 21,991 -------- -------- Net equipment and leasehold improvements 9,429 14,264 -------- -------- Capitalized software development costs, net of accumulated amortization 6,703 8,148 Goodwill, net of accumulated amortization 1,062 938 Deferred income tax assets 2,588 2,586 Other assets 1,681 1,578 -------- -------- $ 62,745 $ 73,962 ======== ======== CURRENT LIABILITIES: Notes payable $ 71 $ -- Accounts payable 5,013 5,201 Accrued royalties 482 450 Accrued rent 428 523 Other accrued liabilities 9,912 8,648 Income taxes and value added taxes payable 1,299 3,521 Customer advances 208 353 Deferred revenues 9,715 8,635 -------- -------- Total current liabilities 27,128 27,331 -------- -------- Deferred income taxes 1,936 1,936 Other noncurrent liabilities 1,219 1,182 STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 50,000,000 shares authorized; 8,811,644 and 9,023,304 shares issued and outstanding in 1997 and 1998, respectively 88 90 Additional paid-in capital 44,313 45,929 Accumulated other comprehensive income - cumulative foreign currency translation adjustments (1,065) (1,172) Accumulated deficit (10,874) (1,334) -------- -------- Total stockholders' equity 32,462 43,513 -------- -------- $ 62,745 $ 73,962 ======== ========
See accompanying notes to consolidated financial statements. 4 5 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT FOR SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1998 1997 1998 -------------- -------------- -------------- -------------- Net revenues: Desktop products $ 19,836 $ 21,328 $ 59,521 $ 63,487 Large System products 3,630 3,981 11,521 11,973 Other products and services 3,180 4,302 9,642 11,809 ------------- -------------- -------------- -------------- Net revenues 26,646 29,611 80,684 87,269 Cost of revenues 2,252 2,516 7,267 7,525 ------------- -------------- -------------- -------------- Gross profit 24,394 27,095 73,417 79,744 ------------- -------------- -------------- -------------- Operating expenses: Sales and marketing 13,040 14,108 39,335 43,648 Product development 4,713 5,334 13,309 15,075 General and administrative 3,078 2,620 9,547 6,625 Nonrecurring items 2,413 -- 2,413 -- Acquisition-related charges 6,053 -- 7,118 -- ------------- -------------- -------------- -------------- Operating expenses 29,297 22,062 71,722 65,348 ------------- -------------- -------------- -------------- Operating income (loss) (4,903) 5,033 1,695 14,396 ------------- -------------- -------------- -------------- Other income (expense): Net interest income 16 85 226 171 Other income (expense) (100) 153 (116) (46) ------------- -------------- -------------- -------------- Other income (expense) (84) 238 110 125 ------------- -------------- -------------- -------------- Income (loss) before income taxes (4,987) 5,271 1,805 14,521 Income tax expense (benefit) (965) 1,807 1,636 4,980 ------------- -------------- -------------- -------------- Net income (loss) $ (4,022) $ 3,464 $ 169 $ 9,541 ============= ============== ============== ============== Basic earnings (loss) per share $ (0.46) $ 0.38 $ 0.02 $ 1.07 ============= ============== ============== ============== Shares used in computing basic earnings (loss) per share 8,799,099 9,022,720 8,764,512 8,949,088 ============= ============== ============== ============== Diluted earnings (loss) per share $ (0.46) $ 0.36 $ 0.02 $ 1.00 ============= ============== ============== ============== Shares used in computing diluted earnings (loss) per share 8,799,099 9,591,083 9,643,429 9,565,561 ============== ============== ============== ==============
See accompanying notes to consolidated financial statements. 5 6 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1998 1997 1998 ------------ ------------- ------------- ------------ Net income (loss) $ (4,022) $ 3,464 $ 169 $ 9,541 Other comprehensive loss - foreign currency translation adjustment (78) (106) (804) (107) ------------ ------------- ------------ ------------ Comprehensive income (loss) $ (4,100) $ 3,358 $ (635) $ 9,434 ============ ============= ============ ============
6 7 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, -------------------------- 1997 1998 ------------ ------------ Cash flows from operating activities: Net income $ 169 $ 9,541 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 5,259 4,815 Write-off of software development costs and other assets 3,011 - Write-off of acquired and in-process technology 1,287 - Changes in assets and liabilities, net of effects of acquisitions: Deferred income taxes (107) - Accounts receivable (2,899) (288) Inventories (244) (249) Prepaid income taxes (1,772) - Accounts payable (605) 188 Accrued royalties (134) (32) Accrued expenses (196) (1,097) Accrued income taxes (3,551) 2,222 Other (1,744) (1,279) ------------ ------------ Net cash (used in) provided by operating activities (1,526) 13,821 ------------ ------------ Cash flows from investing activities: Capital expenditures, net (4,067) (7,551) Capitalized software development costs (908) (2,893) Net payments for acquisitions (958) (72) ------------ ------------ Net cash used in investing activities (5,933) (10,516) ------------ ------------ Cash flows from financing activities: Net borrowings (repayments) on notes payable 391 (71) Net proceeds from issuance of common stock 427 1,303 Income tax benefit from stock option exercises 300 314 ------------ ------------ Net cash provided by financing activities 1,118 1,546 ------------ ------------ Net change in cash and cash equivalents (6,341) 4,851 Cash and cash equivalents at beginning of period 13,491 8,079 ------------ ------------ Cash and cash equivalents at end of period $ 7,150 $ 12,930 ============ ============ Supplemental disclosures of cash flow information: Interest paid $ 226 $ 161 Income taxes paid 6,503 3,995 ============ ============
See accompanying notes to consolidated financial statements. 7 8 SPSS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods presented. All such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 1997, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following table sets forth the percentages that selected items in the Consolidated Statements of Operations bear to net revenues:
PERCENTAGE OF NET REVENUES PERCENTAGE OF NET REVENUES -------------------------------- ------------------------------ THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------------- ------------------------------ 1997 1998 1997 1998 -------------- -------------- -------------- -------------- Statement of Income Data: Net revenues: Desktop products 74% 72% 74% 73% Large System products 14% 13% 14% 14% Other products and services 12% 15% 12% 13% -------------- -------------- -------------- -------------- Net revenues 100% 100% 100% 100% Cost of revenues 8% 8% 9% 9% -------------- -------------- -------------- -------------- Gross profit 92% 92% 91% 91% Operating expenses: Sales and marketing 49% 48% 49% 50% Product development 18% 18% 16% 17% General and administrative 11% 9% 12% 8% Nonrecurring items 9% -- 3% -- Acquisition-related charges 23% -- 9% -- -------------- -------------- -------------- -------------- Operating expenses 110% 75% 89% 75% -------------- -------------- -------------- -------------- Operating income (loss) -18% 17% 2% 16% Other income (expense): Net interest income -- -- -- 1% Other income -- 1% -- -- -------------- -------------- -------------- -------------- Other income -- 1% -- 1% -------------- -------------- -------------- -------------- Income before income taxes -18% 18% 2% 17% Income tax expense (benefit) -3% 6% 2% 6% -------------- -------------- -------------- -------------- Net income (loss) -15% 12% -- 11% ============== ============== ============== ==============
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997 TO THREE MONTHS ENDED SEPTEMBER 30, 1998. Net Revenues. Net Revenues were $26,646,000 and $29,611,000 in the three months ended September 30, 1997 and 1998, respectively, an increase of 11%. Revenues from products designed for desktop computers ("Desktop products") increased $1,492,000 (8%) over the corresponding period in 1997. In addition, revenues from annual license renewals of Desktop 9 10 products increased by $973,000, reflecting a $406,000 increase in annual license renewals for SPSS for Windows. Revenues from products designed for mainframes, minicomputers, and UNIX workstations ("Large System products") increased 10% over the corresponding period in 1997 primarily due to new sales of SPSS software on mainframes domestically and new sales of Quantime software. Other products and services revenues increased 35% due to growth in training and consulting services domestically, as well as the return of royalties from Prentice Hall related to their distribution agreement for certain SPSS products and student software. Revenues for the third quarter of 1998 were adversely effected by changes in foreign currency exchange rates. Cost of Revenues. Cost of revenues consists of costs of goods sold, amortization of capitalized software development costs, and royalties paid to third parties. Cost of revenues was $2,252,000 and $2,516,000 in the three months ended September 30, 1997 and 1998, respectively, an increase of 12%. Such costs increased due to higher cost of goods sold resulting from increased sales and increased amortization of capitalized software. As a percentage of net revenues, cost of revenues remained constant at 8%. Sales and Marketing. Sales and marketing expenses were $13,040,000 and $14,108,000 in the three months ended September 30, 1997 and 1998, respectively, an increase of 8%. This increase was due to the expansion of the domestic and international sales organizations and increased media placement, promotional costs and training and consulting fees. As a percentage of net revenues, such expenses decreased from 49% to 48%. Product Development. Product development expenses were $4,713,000 and $5,334,000 (net of capitalized software development costs of $431,000 and $499,000) in the three months ended September 30, 1997 and 1998, respectively, an increase of 13%. In the corresponding periods in 1997 and 1998, the Company's expense for amortization of capitalized software and product translations, included in cost of revenues, was $363,000 and $480,000, respectively. The increase in product development expenses was primarily due to the higher cost of development personnel and additions to the product development staff. As a percentage of net revenues, product development expenses remained constant at 18%. General and Administrative. General and administrative expenses were $3,078,000 and $2,620,000 in the three months ended September 30, 1997 and 1998, respectively, a decrease of 15%. Such expenses decreased primarily due to a reduction in administrative staff and other efficiencies gained in connection with the acquisitions of the Quantime Limited ("Quantime") and In2itive Technologies A/S entities. As a percentage of net revenues, general and administrative expenses decreased from 11% to 9%. Non-recurring charges. Non-recurring charges of $2,413,000 in 1997 resulted from the revaluation of certain assets associated with the Company's Macintosh and BMDP product lines. Acquisition-related Charges. Acquisition-related charges of $6,053,000 in 1997 related primarily to the acquisition of Quantime ($5,985,000) and represented the write-off of duplicate 10 11 software products, professional fees and various other integration expenses, and other acquisition related charges. Net Interest Income. Net interest income was $16,000 and $85,000 in the three months ended September 30, 1997 and 1998, respectively. This favorable variance was primarily due to higher interest earned on short-term investments resulting from higher cash balances in the three months ended September 30, 1998 compared to September 30, 1997. Other Income (Expense). Other income (expense) was ($100,000) and $153,000 in the three months ended September 30, 1997 and 1998, respectively. Such transactions consist primarily of foreign currency gains (losses). Provision for Income Taxes. The provision for income taxes was ($965,000) and $1,807,000 in the three months ended September 30, 1997 and 1998, respectively. The ($965,000) income tax benefit for the three months ended September 30, 1997 reflects an effective tax rate of approximately 34 % for SPSS on a stand alone basis, offset by an effective tax rate of approximately 132% for Quantime, due to the non-deductibility of certain third quarter expenses. The $1,807,000 income tax expense for the three months ended September 30, 1998 reflects an approximate tax rate of 34.3%. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 TO NINE MONTHS ENDED SEPTEMBER 30, 1998 Net Revenues. Net Revenues were $80,684,000 and $87,269,000 in the nine months ended September 30, 1997 and 1998, respectively, an increase of 8%. Revenues from Desktop products increased 7% over the corresponding period in 1997 and revenues from Large System products increased 4%. Revenues from annual license renewals of Desktop products increased by $2,634,000 reflecting a $1,168,000 increase in annual license renewals for SPSS for Windows. Other products and services revenues increased 22% due to the increase in training and consulting services and revenues received from publications and student products. Cost of Revenues. Cost of revenues were $7,267,000 and $7,525,000 in the nine months ended September 30, 1997 and 1998, respectively, an increase of 4%. Such costs increased due to higher cost of goods sold resulting from increased sales and increased amortization of capitalized software. As a percentage of net revenues, cost of revenues remained constant at 9%. Sales and Marketing. Sales and marketing expenses were $39,335,000 and $43,648,000 in the nine months ended September 30, 1997 and 1998, respectively, an increase of 11%. This increase was due to the expansion of the domestic and international sales organizations, increased media placement and promotional costs and training and consulting fees. As a percentage of net revenues, sales and marketing expenses increased from 49% to 50%. Product Development. Product development expenses were $13,309,000 and $15,075,000 (net of capitalized software development costs of $1,154,000 and $1,526,000) in the nine months ended September 30, 1997 and 1998, respectively, an increase of 13%. In the corresponding 11 12 period in 1997 and 1998, the Company's expense for amortization of capitalized software and product translations, included in cost of revenues, was $1,246,000 and $1,449,000, respectively. The increase in product development expense was primarily due to the higher cost of development personnel and additions to the product development staff. As a percentage of net revenues, product development expense increased from 16% to 17%. General and Administrative. General and administrative expenses were $9,547,000 and $6,625,000 in the nine months ended September 30, 1997 and 1998, respectively, a decrease of 31%. Such expenses decreased primarily due to reduction in the administrative staff and other efficiencies gained in connection with the acquisitions of the Quantime and In2itive Technologies A/S entities. As a percentage of net revenues, general and administrative expenses decreased from 12% to 8%. Non-recurring charges. Non-recurring charges of $2,413,000 in 1997 resulted from the revaluation of certain assets associated with the Company's Macintosh and BMDP product lines. Acquisition-related Charges. Acquisition related charges of $7,118,000 related primarily to the acquisition of Quantime and represented the write-off of duplicate software products, professional fees and various other integration expenses, as well as charges related to the acquisition of DeltaGraph software from DeltaPoint, Inc. representing a one-time write-off of in-process technology and other acquisition-related charges. Net Interest Income. Net interest income was $226,000 and $171,000 in the nine months ended September 30, 1997 and 1998, respectively. The unfavorable variance was primarily due to lower interest earned on short-term investments resulting from lower cash balances maintained in 1998. Other Income (Expense). Other (expense) was ($116,000) and ($46,000) in the nine months ended September 30, 1997 and 1998, respectively. Such transactions consist of foreign currency losses. Provision for Income Taxes. The provision for income taxes was $1,636,000 for the nine months ended September 30, 1997 reflecting an effective tax rate of approximately 33% for SPSS on a stand-alone basis and 111% for Quantime, due to the nondeductibility of certain third quarter expenses. The provision for income taxes were $4,980,000, for the nine months ended September 30, 1998, reflecting an effective tax rate of 34.3%. LIQUIDITY AND CAPITAL RESOURCES The Company's only long-term debt as of September 30, 1998 is a mortgage on property in the UK and held approximately $12,930,000 in cash and cash equivalents. Funds in the first nine months of 1998 were used in operations and for payments related to the Company's acquisition of Quantime and In2itive Technologies A/S, as well as for capital expenditures including, among other things, new computer systems for use in internal product 12 13 development and leasehold improvements and furnishings for the Company's new office space in the Sears Tower in Chicago, Illinois. In May 1998, the Company entered into a new loan agreement (the "Agreement") with American National Bank and Trust Company of Chicago ("American National") to replace its existing agreement with Bank of America, N.T.S.A. Under the Agreement, the Company has an available $10,000,000 unsecured line of credit with American National, under which borrowings bear interest at either the prime interest rate or the Eurodollar Rate, depending on the circumstances. As of September 30, 1998, the Company had no borrowings under this line of credit. The Company's Agreement with American National requires the Company to comply with certain specified financial ratios and tests, and, among other things, restricts the Company's ability to (i) incur additional indebtedness, (ii) create liens on assets, (iii) make investments, (iv) engage in mergers, acquisitions or consolidations where the Company is not the surviving entity, (v) sell assets, (vi) engage in certain transactions with affiliates and (vii) amend its organizational documents or make changes in capital structure. The Company anticipates that amounts available under its line of credit, existing sources of liquidity and cash flows generated from operations will be sufficient to fund the Company's operations and capital requirements for the foreseeable future. However, no assurance can be given that changing business circumstances will not require additional capital for reasons that are not currently anticipated or that the necessary additional capital will then be available to the Company on favorable terms, or at all. INTERNATIONAL OPERATIONS Revenues from international operations were 44% of total net revenues in the three months ended September 30, 1998 compared to 47% in the three months ended September 30, 1997. For the first nine months, revenues from international operations were 48% compared to 51% in 1997. The portion of 1998 revenues attributable to international operations was negatively affected by changes in foreign currency exchange rates. Net corporate revenues increased 11% in the three months ended September 30, 1998 and 8% in the nine months ended September 30, 1998 when compared to the three and nine months ended September 30, 1997. Net of the effects of changes in foreign currency rates, the increases would have been approximately 13% for the quarter and 10% for the first nine months. SAFE HARBOR "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this report constitute "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Such statements involve known and unknown risks and uncertainties which may cause the Company's actual results, performance or achievements, or industry results, to be materially different than any future results, performance or achievements expressed or implied in or by such forward-looking statements. By way of example and not limitation, known risks and uncertainties include the Company's ability to successfully integrate or improve the performance 13 14 of acquired businesses, change in market conditions or product demand, competition and currency fluctuations, changes in product release schedules and product acceptance. In light of these and other risks and uncertainties, the inclusion of a forward-looking statements in this report should not be regarded as a representation by the Company that any future results, performance or achievements will be attained. YEAR 2000 DISCLOSURE Many computer systems and applications currently use two digits to define the applicable year. As a result, date-sensitive systems may recognize the year 2000 as 1900 or not at all, which could cause miscalculations or system failures. SPSS has not completed its assessment of its computerized systems to determine their ability to correctly identify the year 2000, but currently believes that costs of addressing this issue will not have a material adverse impact on SPSS' financial position. However, if SPSS and third parties upon which it relies are unable to address this issue in a timely manner, it could result in a material financial risk to SPSS. In order to assure that this does not occur, SPSS plans to devote all resources required to resolve any significant year 2000 issues in a timely manner. For information about SPSS products and the year 2000, visit SPSS' Web Site at www.spss.com. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Currently there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (Note: Management contracts and compensatory plans or arrangements are underlined in the following list.) Incorporation Exhibit by Reference Number Description of Document (if applicable) - ------ ----------------------- --------------- 3.1 Certificate of Incorporation of the Company * 3.2 3.2 By-Laws of the Company * 3.4 4.1 Loan Agreement between the Company and + 4.1 American National Bank and Trust Company Of Chicago 14 15 4.2 Rights Agreement, dated June 18, 1998 between ** Exhibit 1 SPSS Inc. and Harris Trust and Savings Bank 15.1 Acknowledgment of Independent Certified Public Accountants Regarding Independent Auditors' Review Report 27.1 Financial Data Schedule 27.1a Financial Data Schedule (Restated) - ------------------------------- * Previously filed with Amendment No. 2 to Form S-1 Registration Statement of SPSS Inc. filed on August 4, 1993 (Registration No. 33-64732) + Previously filed with SPSS' Form 10-Q Quarterly Report for the Quarterly period ended June 30, 1998. ** Previously filed with SPSS' Registration Statement on Form 8-A filed on June 18, 1998 (b) Reports on Form 8-K There were no reports on Form 8-K filed by the Company during the fiscal quarter ended September 30, 1998 15 16 ' SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. SPSS INC. DATE: NOVEMBER 12, 1998 BY: /S/ JACK NOONAN --------------------------------------------- JACK NOONAN PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE UNDERSIGNED, IN HIS CAPACITY AS THE PRINCIPAL FINANCIAL OFFICER OF THE REGISTRANT. DATE: NOVEMBER 12, 1998 BY: /S/ EDWARD HAMBURG --------------------------------------------- EDWARD HAMBURG EXECUTIVE VICE-PRESIDENT, CORPORATE OPERATIONS AND CHIEF FINANCIAL OFFICER 16 17 EXHIBIT INDEX Exhibit Page Number Description of Document Number - ------ ----------------------- ------ 15.1 Acknowledgement of Independent Certified Public Accountants Regarding Independent Auditors' Review Report 27.1 Financial Data Schedule 27.1a Financial Data Schedule (Restated) 17 EX-15.1 2 ACKNOWLEDGE. OF INDEPENDENT CERT. PUBLIC ACCTS 1 EXHIBIT 15.1 ACKNOWLEDGMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REGARDING INDEPENDENT AUDITORS' REVIEW REPORT The Board of Directors SPSS Inc.: With respect to the Registration Statements on Form S-8 (nos. 333-63167, 333-25869, 33-73130, 33-80799, 33-73120, and 33-74402) of SPSS Inc., we acknowledge our awareness of the use therein of our report dated November 2, 1998 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered part of a registration statement prepared or certified by an account or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. /s/ KPMG Peat Marwick LLP Chicago, Illinois November 11, 1998 18 EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPSS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998 AND CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS 9-MOS DEC-31-1998 DEC-31-1998 SEP-30-1998 SEP-30-1998 0 12,930 0 0 0 29,849 0 1,689 0 2,769 0 46,448 0 36,255 0 21,991 0 73,962 0 27,331 0 0 0 0 0 0 0 90 0 43,423 0 73,962 29,611 87,269 29,611 87,269 2,516 7,525 2,516 7,525 22,062 65,348 173 301 36 134 5,271 14,521 1,807 4,980 3,464 9,541 0 0 0 0 0 0 3,464 9,541 0.38 1.07 0.36 1.00
EX-27.1A 4 FINANCIAL DATA SCHEDULE (RESTATED)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPSS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS 9-MOS DEC-31-1997 DEC-31-1997 SEP-30-1997 SEP-30-1997 0 7,150 0 0 0 25,814 0 1,319 0 2,332 0 37,779 0 27,396 0 18,107 0 57,463 0 25,485 0 0 0 0 0 0 0 88 0 28,453 0 57,463 26,646 80,684 26,646 80,684 2,252 7,267 2,252 7,267 29,297 71,722 118 271 166 231 (4,987) 1,805 (965) 1,636 (4,022) 169 0 0 0 0 0 0 (4,022) 169 (0.46) 0.02 (0.46) 0.02
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