10-Q 1 c94945e10vq.txt FORM 10-Q ================================================================================ 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 MARCH 31, 2005 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 [ ] INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT). YES [X] NO [ ] AS OF APRIL 29, 2005, THERE WERE 17,806,314 SHARES OF COMMON STOCK OUTSTANDING, PAR VALUE $.01, OF THE REGISTRANT. ================================================================================ SPSS INC. FORM 10-Q QUARTER ENDED MARCH 31, 2005 INDEX
PAGE PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND MARCH 31, 2005 (UNAUDITED) 3 CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2004 (UNAUDITED) AND 2005 (UNAUDITED) 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2004 (UNAUDITED) AND 2005 (UNAUDITED) 5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2004 (UNAUDITED) AND 2005 (UNAUDITED) 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13 ITEM 4. CONTROLS AND PROCEDURES 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 16 ITEM 5. OTHER INFORMATION 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
2 SPSS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT FOR SHARE DATA)
December 31, March 31, 2004 2005 ------------ --------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 37,107 $ 47,137 Accounts receivable, net 50,007 41,098 Inventories 789 680 Deferred income taxes 15,503 14,760 Prepaid income taxes 7,064 7,793 Other current assets 5,248 4,761 --------- --------- Total current assets 115,718 116,229 Property, equipment and leasehold improvements, net 21,480 21,041 Capitalized software development costs, net 28,178 28,542 Goodwill 42,197 41,862 Intangibles, net 3,278 3,214 Deferred income taxes 22,860 23,469 Other noncurrent assets 1,614 1,222 --------- --------- Total assets $ 235,325 $ 235,579 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 2,500 $ 2,500 Accounts payable 6,127 5,865 Income and value added taxes payable 7,340 4,657 Deferred revenues 62,148 62,226 Other current liabilities 23,757 23,161 --------- --------- Total current liabilities 101,872 98,409 Noncurrent notes payable 3,381 2,767 Noncurrent deferred income taxes 632 1,021 Other noncurrent liabilities 981 664 Stockholders' equity: Common Stock, $.01 par value; 50,000,000 shares authorized; 17,705,744 and 17,803,604 shares issued and outstanding in 2004 and 2005, respectively 177 178 Additional paid-in capital 152,477 153,924 Deferred compensation (145) (108) Accumulated other comprehensive loss (7,818) (7,464) Accumulated deficit (16,232) (13,812) --------- --------- Total stockholders' equity 128,459 132,718 --------- --------- Total liabilities and stockholders' equity $ 235,325 $ 235,579 ========= =========
See accompanying notes to consolidated financial statements. 3 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) (UNAUDITED)
Three Months Ended March 31, ----------------------- 2004 2005 ------- -------- Net revenues: License fees $24,826 $25,997 Maintenance 23,841 25,312 Services 8,443 6,147 ------- ------- Net revenues 57,110 57,456 Operating expenses: Cost of license and maintenance revenues 3,936 3,701 Sales, marketing and services 32,387 30,278 Research and development 11,987 11,404 General and administrative 4,874 8,091 ------- ------- Operating expenses 53,184 53,474 ------- ------- Operating income 3,926 3,982 ------- ------- Other expense: Net interest expense 75 21 Other expense 602 453 ------- ------- Other expense 677 474 ------- ------- Income before income taxes 3,249 3,508 Income tax expense 1,145 1,088 ------- ------- Net income $ 2,104 $ 2,420 ======= ======= Basic net income per share $ 0.12 $ 0.14 ======= ======= Diluted net income per share $ 0.11 $ 0.13 ======= ======= Share data: Shares used in computing basic net income per share 17,765 17,760 ======= ======= Shares used in computing diluted net income per share 18,428 18,002 ======= =======
See accompanying notes to consolidated financial statements. 4 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) (UNAUDITED)
Three Months Ended March 31, -------------------- 2004 2005 ------ ------ Net income $2,104 $2,420 Other comprehensive income: Foreign currency translation adjustment 577 354 ------ ------ Comprehensive income $2,681 $2,774 ====== ======
See accompanying notes to consolidated financial statements. 5 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Three Months Ended March 31, ---------------------------- 2004 2005 -------- -------- Cash flows from operating activities: Net income $ 2,104 $ 2,420 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,064 3,564 Deferred income taxes 1,768 759 Noncash services recoveries (375) - Changes in assets and liabilities: Accounts receivable 7,892 8,009 Inventories 413 99 Prepaid expenses (1,703) 449 Accounts payable 72 (190) Accrued expenses (2,254) (281) Accrued income taxes (5,911) (3,364) Deferred revenues (1,805) 1,130 Other 895 895 -------- -------- Net cash provided by operating activities 5,160 13,490 -------- -------- Cash flows from investing activities: Capital expenditures, net (485) (1,238) Capitalized software development costs (2,583) (2,283) Proceeds from the divestiture of Sigma-series product line 2,000 - -------- -------- Net cash used in investing activities (1,068) (3,521) -------- -------- Cash flows from financing activities: Net borrowings under line-of-credit agreements (651) (614) Proceeds from issuance of common stock 1,850 1,448 -------- -------- Net cash provided by financing activities 1,199 834 -------- -------- Effect of exchange rates on cash 139 (773) -------- -------- Net change in cash and cash equivalents 5,430 10,030 Cash and cash equivalents at beginning of period 36,101 37,107 -------- -------- Cash and cash equivalents at end of period $ 41,531 $ 47,137 ======== ======== Supplemental disclosures of cash flow information: Interest paid $ 218 $ 124 Income taxes paid 6,402 2,667 Cash received from income tax refunds 1,291 91
See accompanying notes to consolidated financial statements. 6 SPSS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements of SPSS Inc. (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to United States Securities and Exchange Commission Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. It is presumed that the reader has already read the Company's Annual Report on Form 10-K for the year ended December 31, 2004, as amended. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the fiscal year. For further information, refer to the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, as amended. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - STOCK OPTION PLANS The Company maintains one stock incentive plan that is flexible and allows various forms of equity incentives to be issued under it. The Company accounts for this plan using the intrinsic value method under the recognition and measurement principles of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. In prior years, the Company has recognized compensation cost for restricted stock and restricted stock units to employees. No compensation is recognized for stock option grants to employees. All options granted under the stock incentive plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effects on net income and income per share if the Company had applied the fair value recognition provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," to stock-based compensation.
THREE MONTHS ENDED MARCH 31, ------------------------------ 2004 2005 --------- --------- Net income, as reported $ 2,104 $ 2,420 Deduct: Stock-based employee compensation cost, net of related tax, included in net income, as reported.................................. 16 - Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related taxes.... (1,123) (861) --------- --------- Pro forma net income $ 997 $ 1,559 ========= ========= Income per share: Basic-- as reported $ 0.12 $ 0.14 Basic-- pro forma $ 0.06 $ 0.09 Diluted-- as reported $ 0.11 $ 0.13 Diluted-- pro forma $ 0.05 $ 0.09
NOTE 3 - DOMESTIC AND FOREIGN OPERATIONS Net revenues per geographic region are summarized as follows: 7
THREE MONTHS ENDED MARCH 31, ---------------------------- 2004 2005 ------- ------- United States $23,245 $24,043 United Kingdom 8,830 8,603 Other 25,035 24,810 ------- ------- Total $57,110 $57,456 ======= =======
NOTE 4 - EARNINGS PER COMMON SHARE Earnings per common share (EPS) are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents outstanding (diluted) during the period. Common stock equivalents consist of contingently issuable shares and stock options, which have been included in the calculation of diluted weighted average shares outstanding using the treasury stock method. Basic weighted average shares reconciles to diluted weighted average shares as follows:
THREE MONTHS ENDED MARCH 31, ---------------------------- 2004 2005 ------ ------- Basic weighted average common shares outstanding 17,765 17,760 Dilutive effect of stock options 663 242 ------ ------ Diluted weighted average common shares outstanding 18,428 18,002 ====== ======
Anti-dilutive shares not included in the diluted EPS calculation for the three months ended March 31, 2004 and March 31, 2005, were 1,441 and 958, respectively. NOTE 5 - COST MANAGEMENT PROGRAMS During the three months ended March 31, 2005, the Company incurred certain expenses related to cost management programs totaling $1,666. The cost management programs included $1,320 for discontinued use of office space from consolidating certain activities and $346 related to the layoff of approximately 16 employees in the sales, marketing and administrative functions. As of March 31, 2005, $1,495 of these cost management programs remained in accrued liabilities. The Company expects the accrual to be utilized by August 31, 2006, the completion of the lease term. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, INTENTIONS OR FUTURE STRATEGIES THAT ARE SIGNIFIED BY THE WORDS "EXPECTS," "ANTICIPATES," "INTENDS," "BELIEVES," "ESTIMATES" OR SIMILAR LANGUAGE. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO SPSS ON THE DATE HEREOF. SPSS CAUTIONS INVESTORS THAT ITS BUSINESS AND FINANCIAL PERFORMANCE AND THE MATTERS DESCRIBED IN THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO SUBSTANTIAL RISKS AND UNCERTAINTIES. FOR FURTHER INFORMATION REGARDING THESE RISKS AND UNCERTAINTIES, PLEASE REFER TO PUBLICLY AVAILABLE DOCUMENTS THAT SPSS HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. BECAUSE OF THESE RISKS AND UNCERTAINTIES, SOME OF WHICH MAY NOT BE CURRENTLY ASCERTAINABLE AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. DEVIATIONS BETWEEN ACTUAL FUTURE EVENTS AND THE COMPANY'S ESTIMATES AND ASSUMPTIONS COULD LEAD TO RESULTS THAT ARE MATERIALLY DIFFERENT FROM THOSE EXPRESSED IN OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. SPSS DOES NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL FUTURE EVENTS. THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS AND ACCOMPANYING NOTES, WHICH APPEAR ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q. 2005 FINANCIAL HIGHLIGHTS Some of our key financial highlights for the three months ended March 31, 2005 were as follows: 8 - Revenues for the three months ended March 31, 2005 were $57.5 million, 1% higher than the three months ended March 31, 2004. - License revenues were $26.0 million during the three months ended March 31, 2005, 5% higher than in the comparable period in 2004. - Service revenues were $6.1 million for the three months ended March 31, 2005, down $2.3 million from the comparable period in 2004. - General and administrative expenses were $8.1 million during the three months ended March 31, 2005, up $3.2 million from the comparable period in 2004. - Operating income was $4.0 million, up $0.1 million from the three months ended March 31, 2004. - Net income of $2.4 million increased 15% from the comparable period in 2004. - Diluted EPS was $0.13, an increase of 18% from $0.11 in 2004. - Cash was $47.1 million at March 31, 2005, up $10.0 million from December 31, 2004. - Operating cash flow was $13.5 million during the three months ended March 31, 2005, $8.3 million higher than the comparable period in 2004. COMPARISON OF THREE MONTHS ENDED MARCH 31, 2004 TO THREE MONTHS ENDED MARCH 31, 2005. NET REVENUES.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 ---------- ---------- ---------- ---------------- ------------ License $24,826 $25,997 5% 43% 45% Maintenance 23,841 25,312 6% 42% 44% Services 8,443 6,147 (27)% 15% 11% ------- ------- --- --- --- Net revenues $57,110 $57,456 1% 100% 100%
License revenues increased $1.2 million from the first quarter of 2004 to the first quarter of 2005 primarily driven by higher sales of SPSS data mining and desktop statistical analysis tools, higher sales in Spain and Singapore as well as a $0.5 million favorable impact of changes in currency exchange rates. Maintenance revenues increased $1.5 million during the first quarter of 2005 primarily due to higher and consistent renewal rates for the Company's major offerings and $0.5 million favorable impact of changes in currency exchange rates. Services revenues decreased $2.3 million for the first quarter of 2005 compared to the first quarter of 2004 primarily due to fewer ShowCase, data mining and market research consulting projects. This decrease was partially offset by a $0.1 million favorable impact of changes in currency exchange rates. During the first three months of 2005, service revenues decreased by 27% from the comparable period in 2004 and decreased to 11% of net revenues. COST OF LICENSE AND MAINTENANCE REVENUES.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 ---------- --------- ----------- ----------- --------------- Cost of license and maintenance revenues $ 3,936 $ 3,701 (6)% 7% 6%
Cost of license and maintenance revenues consists of costs of goods sold, amortization of capitalized software development costs, and royalties paid to third parties. These costs decreased $0.2 million from the 2004 first quarter primarily due to lower costs associated with royalties paid to third parties. Cost of license and maintenance revenues should remain relatively constant as a percentage of total revenues in the remaining quarters of the 2005 fiscal year. 9 SALES, MARKETING AND SERVICES.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 --------- --------- ---------- ---------- --------------- Sales, marketing and services $ 32,387 $ 30,278 (7)% 57% 53%
Sales, marketing and services expenses decreased $2.1 million from the first three months of 2004 primarily due to reduction of staff as a result of the cost management program as further discussed in Note 5 to the Consolidated Financial Statements, and changes in currency exchange rates of $0.7 million. RESEARCH AND DEVELOPMENT.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 --------- --------- ---------- ---------- --------------- Research and development $ 11,987 $ 11,404 (5)% 21% 20%
Research and development costs decreased $0.6 million from the 2004 first quarter primarily due to $0.4 million in increased capitalization of labor costs related to development of the Company's core products during the first quarter of 2005. Research and development expenses are expected to remain relatively flat in the remaining quarters of 2005. GENERAL AND ADMINISTRATIVE.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 --------- --------- ---------- ---------- --------------- General and administrative $ 4,874 $ 8,091 66% 8% 14%
General and administrative expenses increased $3.2 million from the first three months of 2004 primarily due to higher legal and accounting expenses related to the audit of the Company's consolidated financial statements and internal control over financial reporting of $1.2 million, and one-time charges of $1.3 million related to exit costs for office space ceased to be used as a result of consolidating activities. 10 NET INTEREST EXPENSE.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 --------- --------- ---------- ---------- --------------- Net interest expense $ 75 $ 21 (72)% -% -%
Net interest expense in the three months ended March 31, 2005 related to the Company's financing arrangement with Wells Fargo Foothill, Inc. The decrease from the 2004 quarterly period was a result of lower debt levels. Net interest expense should remain relatively constant in the remaining quarters of the 2005 fiscal year. OTHER EXPENSE.
(In thousands) MARCH 31, MARCH 31, PERCENTAGE PERCENT OF TOTAL REVENUES THREE MONTHS ENDED 2004 2005 CHANGE 2004 2005 ---------- --------- ---------- ------------ --------------- Other expense $ 602 $ 453 (25)% 1% 1%
Other expense in the three months ended March 31, 2005 decreased $0.1 million compared to the three months ended March 31, 2004. The Company wrote off its 2001 investment in e-Intelligence Corporation in the first quarter of 2004 ($0.2 million). Other expense also includes losses from foreign currency transactions from the strengthening of the U.S. dollar against other major currencies during the first quarter of 2005. INCOME TAX EXPENSE.
(In thousands) MARCH 31, MARCH 31, PERCENT OF PRE-TAX INCOME THREE MONTHS ENDED 2004 2005 2004 2005 --------- --------- ---- ---- Income tax expense $1,145 $ 1,088 35% 31%
The income tax provision decreased in the three months ended March 31, 2005 compared to the three months ended March 31, 2004 and as a percent of pretax income was 31% for the first quarter of 2005. The Company's effective tax rate is expected to remain at or near 31 - 32 percent for the remainder of the 2005 fiscal year and should be consistent with the full year fiscal year 2004 rate of 31 percent. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2005, working capital was $17.8 million with a current ratio of 1.2 to 1. Excluding current deferred revenue, working capital was $80.0 million with a current ratio of 3.2 to 1. Cash flows from operating activities were $13.5 million in the three months ended March 31, 2005 compared with $5.2 million in the three months ended March 31, 2004. The increase in cash from operations in 2005 was mainly due to lower tax payments and accrued expense, a decrease in prepaid expenses and an increase in deferred revenues. Average days sales outstanding were 67 days at March 31, 2005 and December 31, 2004, and 75 days at March 31, 2004. Cash flows from operating activities were more than adequate to fund capital expenditures and software development costs of $3.1 million and $3.5 million in 2004 and 2005, respectively. Management believes that SPSS has ample capacity in its plant and equipment to meet expected needs for future growth. Additionally, in February 2004, SPSS received scheduled payments totaling $2.0 million on the sale of its Sigma-series product line consummated in December 2003. Cash provided by financing activities was $0.8 million in the three months ended March 31, 2005 and $1.2 million in the three months ended March 31, 2004. In the three months ended March 31, 2005, financing activities provided cash proceeds of $1.4 million from the issuance of common stock, primarily through the exercise of stock options. These proceeds were partially decreased by net repayments of $0.6 million under line of credit agreements. 11 On March 31, 2003, SPSS entered into a four (4) year, $25 million credit facility with Wells Fargo Foothill, Inc. (f/k/a Foothill Capital Corporation). The Wells Fargo Foothill facility includes a four (4) year term loan in the amount of $10,000,000, two revolving lines of credit and a letter of credit facility not to exceed $3,000,000. The maximum amount SPSS may borrow under Revolver A will depend upon the value of the Company's eligible accounts receivable generated within the United States. Revolver B provides for a credit facility of up to $3,500,000 provided that no event of default exists. As of March 31, 2005, the Company has availability of $5,914,000 under the revolving lines of credit. The terms and conditions of the Wells Fargo Foothill credit facility are specified in a Loan and Security Agreement, dated as of March 31, 2003, by and between Wells Fargo Foothill and SPSS. The term loan portion of the facility bears interest at a rate of 2.5% above prime, with potential future reductions of up to 0.5% in the interest rate based upon the Company's achievement of specified EBITDA targets. One component of the revolving line of credit will bear interest at a rate of prime plus 3.0%. On the remainder of the revolving line of credit, SPSS may select interest rates of either prime plus 0.25% or LIBOR plus 2.5% with respect to each advance made by Wells Fargo Foothill. The credit fee rate for letters of credit is 2.0% per annum times the daily balance of the undrawn amount of all outstanding letters of credit. In May 2003, the Company began paying down evenly the term loan of $10,000,000 over the four (4) year period (i.e., $2,500,000 per year over four years). At March 31, 2005, SPSS had $5,267,000 outstanding under its line of credit with Wells Fargo Foothill, including $2,500,000 classified as current notes payable and the face amount of letters of credit issued and outstanding under the existing credit facility totaling approximately $893,000. The Wells Fargo Foothill facility requires SPSS to meet certain financial covenants including minimum EBITDA targets and includes additional requirements concerning, among other things, the Company's ability to incur additional indebtedness, create liens on assets, make investments, engage in mergers, acquisitions or consolidations where SPSS is not the surviving entity, sell assets, engage in certain transactions with affiliates, and amend its organizational documents or make changes in capital structure. The Company was in compliance with all covenants as of March 31, 2005. The Wells Fargo Foothill facility is secured by all of the Company's assets located in the United States. ShowCase Corporation, a Minnesota corporation and wholly owned subsidiary of SPSS, and NetGenesis Corp., a Delaware corporation and wholly owned subsidiary of SPSS, have guaranteed the obligations of SPSS under the Loan and Security Agreement. This guaranty is secured by all of the assets of ShowCase and NetGenesis. SPSS may be obligated to make future contingent purchase price payments related to the Company's acquisition of Data Distilleries B.V. in the amount of up to $2.0 million at current estimated exchange rates. The Company's obligation to make contingent payments shall end on October 31, 2005. SPSS intends to fund its future capital needs through operating cash flows and borrowings on our credit facility. SPSS anticipates that amounts available from cash and cash equivalents on hand, under its line of credit, and cash flows generated from operations, will be sufficient to fund the Company's operations and capital requirements at the current level of operations. 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 SPSS on favorable terms or at all. 12 CRITICAL ACCOUNTING POLICIES The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. As such, SPSS makes certain estimates, judgments and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company's critical accounting policies include revenue recognition, capitalization of software development costs, impairment of long-lived assets, the estimation of credit losses on accounts receivable and the valuation of deferred tax assets. For a discussion of these critical accounting policies, see "Critical Accounting Policies and Estimates" in the SPSS Annual Report on Form 10-K/A for the year ended December 31, 2004, filed with the Securities and Exchange Commission. INTERNATIONAL OPERATIONS Revenues from international operations were 59% and 58% of total net revenues in the three months ended March 31, 2004 and March 31, 2005, respectively. RECENT ACCOUNTING PRONOUNCEMENTS In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payments". This statement is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The SEC issued guidance on April 14, 2005 announcing that public companies will now be required to adopt SFAS 123R by their first fiscal year beginning after June 15, 2005. Accordingly, the Company will be required to adopt SFAS 123R in its first quarter of fiscal year 2006. The Company is currently evaluating the provisions of this statement to determine the impact on its consolidated financial statements. It is, however, expected to have a negative effect on consolidated net income. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. SPSS is exposed to market risk from fluctuations in interest rates on borrowings under its borrowing arrangement that bear interest at either the prime rate or the Eurodollar rate. As of March 31, 2005, the Company had $5,267,000 outstanding under this line of credit. A 100 basis point increase in interest rates would result in an additional $53,000 of annual interest expense, assuming the same level of borrowing. SPSS is exposed to market risk from fluctuations in foreign currency exchange rates. Since a substantial portion of its operations and revenue occur outside the United States and in currencies other than the U.S. dollar, the Company's results can be significantly affected by changes in foreign currency exchange rates. To manage this exposure to fluctuations of currency exchange rates, SPSS may enter into various financial instruments, such as options, which generally mature within 12 months. Gains and losses on these instruments are recognized in other income or expense. Were the foreign currency exchange rates to depreciate immediately and uniformly against the U.S. dollar by 10 percent from levels at March 31, 2005, management expects this would have a material adverse effect on the Company's financial results. At March 31, 2005, SPSS did not have any option contracts outstanding. Historically, the Company's derivative instruments did not qualify for hedge accounting treatment under SFAS No. 133. Accordingly, gains and losses related to changes in the fair value of these instruments were recognized in income in each accounting period. ITEM 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures. SPSS maintains disclosure controls and procedures that have been designed to ensure that information related to the Company is recorded, processed, summarized and reported on a timely basis. SPSS reviews these disclosure controls and procedures on a periodic basis. In connection with this review, SPSS has established a compliance committee that is responsible for accumulating potentially material information regarding its activities and considering the materiality of this information. The compliance committee (or a subcommittee) is also responsible for making recommendations regarding disclosure 13 and communicating this information to the Company's Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. The SPSS compliance committee is comprised of the Company's senior legal official, principal accounting officer, senior manager in charge of investor relations, principal risk management officer, chief information officer and certain other members of the SPSS senior management. The Company's Chief Executive Officer and Chief Financial Officer, with the participation of the compliance committee, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, as required by Rule 13a-15 of the Securities Exchange Act of 1934. This evaluation included a review of the material weaknesses discussed in both Management's Annual Report on Internal Control Over Financial Reporting and the Attestation Report of the Registered Public Accounting Firm filed with the Company's Annual Report on Form 10-K for fiscal year 2004 filed with the SEC on March 16, 2005, as amended on April 22, 2005 (the "2004 Annual Report"). This evaluation also included remedial actions taken by the Company to address these material weaknesses as further described below under the section titled "Changes in Internal Control Over Financial Reporting". Based on this evaluation of the Company's disclosure controls and procedures, and the changes described below, the Company's Chief Executive Officer and Chief Financial Officer believe that as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company's disclosure controls and procedures were not effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. SPSS believes, however, that since March 31, 2005, its disclosure controls and procedures have improved due to remedial measures resulting from the scrutiny of such matters by its management in assessing and improving its internal control over financial reporting. SPSS believes that its disclosure controls and procedures will continue to improve as it completes the implementation of the changes described below. Changes in Internal Control Over Financial Reporting. In response to material weaknesses identified in conjunction with the assessment of the Company's internal control over financial reporting as of December 31, 2004, management implemented additional controls to strengthen its internal control over financial reporting with respect to revenue. With respect to income taxes, the Company continues to implement additional controls related to the review and validation of information used to compute income taxes, global tax reporting structure and staffing requirements. REVENUE During the third and fourth quarters of 2004, the Company began the process of improving its internal controls over financial reporting. With regard to deficiencies identified by management related to revenue, the Company took the following actions: - Hired two professional accountants in September and October 2004 to assist with its monthly closing process, including additional review of significant contracts to ensure that all key aspects of revenue recognition are considered and that conclusions are fully and properly documented; - Reviewed key controls and initiated remediation and testing of certain control deficiencies; and - Implemented formalized procedures for testing key information technology application controls. During the second quarter of 2005, management will further update its comprehensive revenue policies including distribution of these policies to key personnel in the international subsidiaries. Also during 2005, the Company will continue evaluating additional controls and procedures to further remediate this material weakness, as necessary. INCOME TAXES During the first quarter of 2005, the Company has hired a tax professional with appropriate international tax expertise. Also during 2005, the Company will continue evaluating additional controls and procedures to further remediate this material weakness, as necessary. Such additional actions may include enhanced procedures related to the review and validation of information used to compute income taxes, global tax reporting structure and staffing requirements. We believe these actions will strengthen our internal control over financial reporting and address the material weaknesses related to revenue and income taxes. 14 Other than the changes described above, there have been no changes in the Company's internal control over financial reporting identified in the evaluation that occurred during the Company's first quarter of fiscal year 2005 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Inherent Limitations on the Effectiveness of Controls. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company will be detected. 15 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS SPSS Inc. has been named as a defendant in a lawsuit filed on December 6, 2002 in the United States District Court for the Southern District of New York, under the caption Basu v. SPSS Inc., et al., Case No. 02CV9694. The complaint alleges that, in connection with the issuance and initial public offering of shares of common stock of NetGenesis Corp., the registration statement and prospectus filed with the Securities and Exchange Commission in connection with the IPO contained material misrepresentations and/or omissions. The alleged violations of the federal securities laws took place prior to the effective date of the merger in which the Company's acquisition subsidiary merged with and into NetGenesis Corp. NetGenesis Corp. is now a wholly owned subsidiary of SPSS. Other defendants to this action include the former officers and directors of NetGenesis Corp. and the investment banking firms that acted as underwriters in connection with the IPO. The plaintiff is seeking unspecified compensatory damages, prejudgment and post-judgment interest, reasonable attorney fees, experts' witness fees and other costs and any other relief deemed proper by the Court. The Company is aggressively defending itself, and plans to continue to aggressively defend itself against the claims set forth in the complaint. The Company and the named officers and directors filed an answer to the complaint on July 14, 2003. At this time, the Company believes the lawsuit will be settled with no material adverse effect on its results of operations, financial condition, or cash flows. SPSS has been named as a defendant in a lawsuit filed on or about May 14, 2004, and amended on September 30, 2004, in the United States District Court for the Northern District of Illinois, under the caption Fred Davis, Individually and On Behalf of All Others Similarly Situated v. SPSS Inc., Jack Noonan, Edward Hamburg and KPMG LLP, Case No. 04C3427. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants failed to disclose and misrepresented a series of material adverse facts regarding the Company's revenues. The complaint seeks to recover unspecified compensatory damages, reasonable attorney fees, experts' witness fees and other costs and any other relief deemed proper by the court on behalf of all purchasers of the Company's securities between May 2, 2001 and March 30, 2004, although no court has determined that such persons constitute a proper class. On December 15, 2004, SPSS, Mr. Noonan and Dr. Hamburg filed a motion to dismiss the amended complaint. On January 28, 2005, the Lead Plaintiff filed a memorandum in opposition to the motion to dismiss the amended complaint filed by SPSS, Mr. Noonan and Dr. Hamburg. On February 18, 2005, SPSS, Mr. Noonan and Dr. Hamburg filed a reply memorandum in support of their motion to dismiss. SPSS, Mr. Noonan and Dr. Hamburg believe that the suit is without merit and intend to defend vigorously against the allegations contained in the complaint. SPSS may also become party to various claims and legal actions arising in the ordinary course of business. ITEM 5. OTHER INFORMATION Audit Committee Pre Approval of Non-Audit Related Services The audit committee of the Company's board of directors approved certain non-audit related services provided to SPSS by KPMG LLP, the Company's auditors. The audit committee pre-approved these non-audit related services pursuant to the pre-approval procedure previously established by the audit committee. During the fiscal quarter ended March 31, 2005, the audit committee pre-approved the following: - $24,000 to be paid KPMG as compensation for tax services related to SPSS Science Germany. - $16,000 to be paid KPMG as compensation for tax services related to SPSS Japan. - $6,000 to be paid KPMG as compensation for tax services related to SPSS Asia Pacific. - $2,000 to be paid KPMG as compensation for tax services related to SPSS entities in Denmark. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (Note: Management contracts and compensatory plans or arrangements are identified with a "+" in the following list.) 16
INCORPORATION EXHIBIT BY REFERENCE NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE) ----------- ----------------------------------------------------------------------------------------------- ---------------- 2.1 Agreement and Plan of Merger among SPSS Inc., SPSS ACSUB, Inc., Clear Software, Inc. and the (1), Ex. 2.1 shareholders named therein, dated September 23, 1996. 2.2 Agreement and Plan of Merger among SPSS Inc., SPSS Acquisition Inc. and Jandel Corporation, (2), Annex A dated October 30,1996. 2.3 Asset Purchase Agreement by and between SPSS Inc. and DeltaPoint, Inc., dated as of May 1, (14), Ex. 2.3 1997. 2.4 Stock Purchase Agreement among the Registrant, Edward Ross, Richard Kottler, Norman Grunbaum, (3), Ex. 2.1 Louis Davidson and certain U.K.-Connected Shareholders or warrant holders of Quantime Limited named therein, dated as of September 30, 1997, together with a list briefly identifying the contents of omitted schedules. 2.5 Stock Purchase Agreement among the Registrant, Edward Ross, Richard Kottler, Norman Grunbaum, (3), Ex. 2.2 Louis Davidson and certain Non-U.K. Shareholders or warrant holders of Quantime Limited named therein, dated as of September 30, 1997, together with a list briefly identifying the contents of omitted schedules. 2.6 Stock Purchase Agreement by and among SPSS Inc. and certain Shareholders of Quantime Limited (4), Ex. 2.1 listed on the signature pages thereto, dated November 21, 1997. 2.7 Stock Purchase Agreement by and among Jens Nielsen, Henrik Rosendahl, Ole Stangegaard, Lars (4), Ex. 2.2 Thinggaard, Edward O'Hara, Bjorn Haugland, 2M Invest and the Shareholders listed on Exhibit A thereto, dated November 21, 1997. 2.8 Stock Purchase Agreement by and among SPSS Inc. and the Shareholders of Integral Solutions (15), Ex. 2.1 Limited listed on the signature pages hereof, dated as of December 31, 1998. 2.9 Share Purchase Agreement by and among SPSS Inc., Surveycraft Pty Ltd. and Jens Meinecke and (17), Ex. 2.9 Microtab Systems Pty Ltd., dated as of November 1, 1998. 2.10 Stock Acquisition Agreement by and among SPSS Inc., Vento Software, Inc. and David Blyer, John (18), Ex. 2.1 Gomez and John Pappajohn, dated as of November 29, 1999. 2.11 Asset Purchase Agreement by and between SPSS Inc. and DataStat, S.A., dated as of December 23, (20), Ex. 2.11 1999. 2.12 Agreement and Plan of Merger dated as of November 6, 2000, among SPSS Inc., SPSS Acquisition (21), Ex. 2.1 Sub Corp., and ShowCase Corporation. 2.13 Agreement and Plan of Merger dated as of October 28, 2001, among SPSS Inc., Red Sox (24), Ex. 99.1 Acquisition Corp. and NetGenesis Corp. 2.14 Stock Purchase Agreement by and among SPSS Inc., LexiQuest, S.A. and the owners of all of the (26), Ex. 2.14 issued and outstanding shares of capital stock of LexiQuest, S.A., dated as of January 31, 2002. 2.15 Stock Purchase Agreement dated as of November 4, 2003, by and among SPSS Inc., SPSS (30), Ex. 2.15 International B.V. and the owners of all of the issued and outstanding shares of Data Distilleries B.V. identified on Exhibit A thereto. 3.1 Certificate of Incorporation of SPSS. (5), Ex. 3.2 3.2 By-Laws of SPSS. (5), Ex. 3.4 4.1 Intentionally omitted. 4.2 Amended and Restated Rights Agreement, dated as of August 31, 2004, by and between SPSS Inc. (32), Ex. 4.2 and Computershare Investor Services LLP, as Rights Agent
17 10.1 Employment Agreement with Jack Noonan.+ (7), Ex. 10.1 10.2 Agreement with Valletta.+ (6), Ex. 10.2 10.3 Agreement between SPSS and Prentice Hall. (6), Ex. 10.5 10.4 Intentionally omitted. 10.5 HOOPS Agreement. (6), Ex. 10.7 10.6 Stockholders Agreement. (5), Ex. 10.8 10.7 Agreements with CSDC. (5), Ex. 10.9 10.8 Amended 1991 Stock Option Plan.+ (5), Ex. 10.10 10.9 SYSTAT Asset Purchase Agreement. (8), Ex. 10.9 10.10 Intentionally omitted. 10.11 Lease for Chicago, Illinois Office. (9), Ex. 10.12 10.12 Amendment to Lease for Chicago, Illinois Office. (9), Ex. 10.13 10.13 1995 Equity Incentive Plan.+ (10), Ex. 10.14 10.14 Intentionally omitted. 10.15 Amended and Restated 1995 Equity Incentive Plan.+ (11), Ex. 10.17 10.16 Intentionally omitted. 10.17 Software Distribution Agreement between the Company and Banta Global Turnkey. (12), Ex. 10.19 10.18 Lease for Chicago, Illinois in Sears Tower. (13), Ex. 10.20 10.19 Intentionally omitted. 10.20 Intentionally omitted. 10.21 Second Amended and Restated 1995 Equity Incentive Plan.+ (16), Ex. A 10.22 Intentionally omitted. 10.23 Third Amended and Restated 1995 Equity Incentive Plan.+ (19), Ex. 10.1 10.24 Intentionally omitted. 10.25 Intentionally omitted. 10.26 Intentionally omitted. 10.27 2000 Equity Incentive Plan.+ (22), Ex. 10.45 10.28 SPSS Qualified Employee Stock Purchase Plan.+ (22), Ex. 10.46 10.29 SPSS Nonqualified Employee Stock Purchase Plan.+ (22), Ex. 10.47 10.30 Intentionally omitted. 10.31 Stock Purchase Agreement by and between SPSS Inc. and Siebel Systems, Inc. (23), Ex. 10.31 10.32 1999 Employee Equity Incentive Plan.+ (25), Ex. 4.1 10.33 Intentionally omitted.
18 10.34 Intentionally omitted. 10.35 Intentionally omitted. 10.36 Intentionally omitted. 10.37 Intentionally omitted. 10.38 Intentionally omitted. 10.39 Intentionally omitted. 10.40 Intentionally omitted. 10.41 Intentionally omitted. 10.42 Intentionally omitted. 10.43 Loan and Security Agreement, dated as of March 31, 2003, by and between SPSS Inc. and each of (27), Ex. 10.43 SPSS' subsidiaries that may become additional borrowers, as Borrower, and Foothill Capital Corporation, as Lender. 10.44 Amendment to Stock Purchase Agreement, dated as of October 1, 2003, by and between SPSS Inc. (28), Ex. 10.44 and America Online, Inc. 10.45 Amended and Restated Strategic Online Research Services Agreement, dated as of October 1, (28), Ex. 10.45 2003, by and between SPSS Inc. and America Online, Inc. 10.46 Consulting Agreement, dated as of June 1, 2003, by and between SPSS Inc. and Norman H. Nie (29), Ex. 10.46 Consulting, L.L.C. 10.47 SPSS Inc. Amended and Restated 2002 Equity Incentive Plan (33), Ex. 10.47 10.48 Amended and Restated Employment Agreement, dated as of August 16, 2004, by and between SPSS (34), Ex. 10.48 Inc. and Raymond H. Panza. 10.49 Employment Agreement, dated as of August 16, 2004, by and between SPSS Inc. and Edward Hamburg. (34), Ex. 10.49 10.50 OEM Agreement, dated as of November 5, 2004, by and between SPSS Inc. and Hyperion Solutions (34), Ex. 10.50 Corporation* 10.51 Amended and Restated Consulting Agreement, dated as of January 1, 2005, by and between SPSS (34), Ex. 10.51 Inc. and Norman H. Nie Consulting, L.L.C. 10.52 Amended and Restated Employment Agreement, dated as of March 1, 2005, by and between SPSS Inc. (34), Ex. 10.52 and Jack Noonan. 10.53 Form of Amended and Restated Change of Control Agreement (35), Ex. 10.53 10.54 Form of Change of Control Agreement (35), Ex. 10.54 14.1 Intentionally Omitted. 14.2 SPSS Inc. Amended and Restated Code of Business Conduct and Ethics (36), Ex. 14.2 31.1 Certification of the Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
19 32.1 Certification of the Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1 SPSS Inc. Charter of the Audit Committee of the Board of Directors. (31), Ex. 99.1 99.2 Supplement A to the SPSS Inc. Charter of the Audit Committee of the Board of Directors. (31), Ex. 99.2
---------- * Portions of this Exhibit are omitted and have been filed separately with the Securities and Exchange Commission in connection with a pending request for confidential treatment of certain portions of the Exhibit pursuant to Rule 406 under the Securities Act of 1933. (1) Previously filed with the Report on Form 8-K of SPSS Inc., dated September 26, 1996, filed on October 11, 1996, as amended on Form 8-K/A-1, filed November 1, 1996. (File No. 000-22194) (2) Previously filed with Amendment No. 1 to the Registration Statement on Form S-4 Registration Statement of SPSS Inc. filed on November 7, 1996. (File No. 333-15427) (3) Previously filed with the Report on Form 8-K of SPSS Inc., dated September 30, 1997, filed on October 15, 1997. (File No. 000-22194) (4) Previously filed with the Registration Statement on Form S-3 of SPSS Inc. filed on November 26, 1997. (File No. 333-41207) (5) Previously filed with Amendment No. 2 to the Registration Statement on Form S-1 of SPSS Inc. filed on August 4, 1993. (File No. 33-64732) (6) Previously filed with Amendment No. 1 to the Registration Statement on Form S-1 of SPSS Inc. filed on July 23, 1993. (File No. 33-64732) (7) Previously filed with the Registration Statement on Form S-1 of SPSS Inc. filed on June 22, 1993. (File No. 33-64732) (8) Previously filed with the Registration Statement on Form S-1 of SPSS Inc. filed on December 5, 1994. (File No. 33-86858) (9) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 1994. (File No. 000-22194) (10) Previously filed with 1995 Proxy Statement of SPSS Inc. (File No. 000-22194) (11) Previously filed with 1996 Proxy Statement of SPSS Inc. (File No. 000-22194) (12) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 1996. (File No. 000-22194) (13) Previously filed with the Quarterly Report on Form 10-Q of SPSS Inc. for the quarterly period ended March 31, 1997. (File No. 000-22194) (14) Previously filed with the Quarterly Report on Form 10-Q of SPSS Inc. for the quarterly period ended June 30, 1997. (File No. 000-22194) (15) Previously filed with the Report on Form 8-K of SPSS Inc., dated December 31, 1998, filed on January 15, 1999, as amended on Form 8-K/A filed March 12, 1999. (File No. 000-22194) (16) Previously filed with 1998 Proxy Statement of SPSS Inc. (File No. 000-22194) (17) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 1998. (File No. 000-22194) 20 (18) Previously filed with the Report on Form 8-K of SPSS Inc., dated November 29, 1999, filed December 10, 1999. (File No. 000-22194) (19) Previously filed with Quarterly Report on Form 10-Q of SPSS Inc. for the quarterly period ended June 30, 1999. (File No. 000-22194) (20) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 1999. (File No. 000-22194). (21) Previously filed with the Report on Form 8-K of SPSS Inc., filed November 15, 2000. (File No. 000-22194). (22) Previously filed with the Registration Statement on Form S-4 on of SPSS Inc., filed on December 19, 2000. (File No. 333-52216) (23) Previously filed with the Registration Statement on Form S-3 of SPSS Inc. filed on October 9, 2001. (File No. 333-71236) (24) Previously filed with the Report on Form 8-K of SPSS Inc., dated October 28, 2001, filed on October 29, 2001. (File No. 000-22194) (25) Previously filed with the Registration Statement on Form S-8 of SPSS Inc. filed on September 15, 2000. (File No. 333-45900) (26) Previously filed with the Report on Form 8-K of SPSS Inc., dated February 6, 2002, filed on February 21, 2002. (File No. 000-22194) (27) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 2002. (File No. 000-22194) (28) Previously filed with the Report on Form 8-K of SPSS Inc., dated October 1, 2003, filed on October 15, 2003. (File No. 000-22194) (29) Previously filed with the Quarterly Report on Form 10-Q of SPSS Inc. for the quarterly period ended September 30, 2003. (File No. 000-22194) (30) Previously filed with the Report on Form 8-K of SPSS Inc., dated November 5, 2003, filed on November 18, 2003. (File No. 000-22194) (31) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 2003. (File No. 000-22194) (32) Previously filed with the Form 8-A12G/A of SPSS Inc. filed on August 31, 2004. (File No. 000-22194) (33) Previously filed with the Registration Statement on Form S-8 of SPSS Inc. filed on October 29, 2004. (File No. 222-120066) (34) Previously filed with the Annual Report on Form 10-K of SPSS Inc. for the year ended December 31, 2004. (File No. 000-22194) (35) Previously filed with the Current Report on Form 8-K of SPSS Inc., dated April 28, 2005, filed on May 2, 2005. (File No. 000-22194) (36) Previously filed with the Current Report on Form 8-K of SPSS Inc., dated April 28, 2005, filed on April 28, 2005. (File No. 000-22194) 21 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: May 5, 2005 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: May 5, 2005 By: /s/ Raymond H. Panza ------------------------------- Raymond H. Panza Executive Vice-President, Corporate Operations, Chief Financial Officer, and Secretary 22 SPSS INC. EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION -------- ----------- 31.1 Certification of the Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
23