-----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, J7aSMrnP1A3m/TpsN2mP9sZ3hi8BLU2gfMSkQAQnxnW1BXYCTsvbrvrNTe2F5hBR rCrH+RTcC7sp/65sA5m/rA== 0000950137-05-009574.txt : 20050804 0000950137-05-009574.hdr.sgml : 20050804 20050804102225 ACCESSION NUMBER: 0000950137-05-009574 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050804 DATE AS OF CHANGE: 20050804 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: 1934 Act SEC FILE NUMBER: 000-22194 FILM NUMBER: 05997956 BUSINESS ADDRESS: STREET 1: 233 S WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123292400 MAIL ADDRESS: STREET 1: 233 SOUTH WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 c97292e10vq.txt QUARTERLY REPORT 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 JUNE 30, 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 REQUIRED 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 AUGUST 1, 2005, THERE WERE 17,842,100 SHARES OF COMMON STOCK OUTSTANDING, PAR VALUE $.01, OF THE REGISTRANT. SPSS INC. FORM 10-Q QUARTER ENDED JUNE 30, 2005 INDEX
PART I - FINANCIAL INFORMATION PAGE - -------------------------------------------------------------------------------- ---- ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND JUNE 30, 2005 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2005 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2005 5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2005 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 15 ITEM 4. CONTROLS AND PROCEDURES 15 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 17 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17 ITEM 5. OTHER INFORMATION 18 ITEM 6. EXHIBITS 19
2 SPSS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
December 31, June 30, 2004 2005 ------------ --------- ASSETS Current assets: Cash and cash equivalents $ 37,107 $ 54,184 Accounts receivable, net 50,007 37,774 Inventories 789 777 Deferred income taxes 15,503 14,579 Prepaid income taxes 7,064 8,431 Other current assets 5,248 4,302 --------- --------- Total current assets 115,718 120,047 Property, equipment and leasehold improvements, net 21,480 21,323 Capitalized software development costs, net 28,178 29,208 Goodwill 42,197 41,384 Intangibles, net 3,278 3,121 Deferred income taxes 22,860 22,420 Other noncurrent assets 1,614 1,442 --------- --------- Total assets $ 235,325 $ 238,945 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 2,500 $ 2,500 Accounts payable 6,127 6,702 Income and value added taxes payable 7,340 7,921 Deferred revenues 62,148 59,614 Other current liabilities 23,757 22,295 --------- --------- Total current liabilities 101,872 99,032 Noncurrent deferred income taxes 632 632 Noncurrent notes payable 3,381 2,132 Other noncurrent liabilities 981 735 STOCKHOLDERS' EQUITY: Common Stock, $.01 par value; 50,000,000 shares authorized; 17,705,744 and 17,841,640 shares issued and outstanding in 2004 and 2005, respectively 177 179 Additional paid-in capital 152,477 155,579 Deferred compensation (145) (1,107) Accumulated other comprehensive loss (7,818) (8,155) Accumulated deficit (16,232) (10,082) --------- --------- Total stockholders' equity 128,459 136,414 --------- --------- Total liabilities and stockholders' equity $ 235,325 $ 238,945 ========= =========
See accompanying notes to consolidated financial statements. 3 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) (UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2004 2005 2004 2005 --------- --------- --------- --------- Net revenues: License $ 20,952 $ 24,413 $ 45,778 $ 50,410 Maintenance 24,246 26,448 48,087 51,760 Services 7,806 7,220 16,249 13,367 --------- --------- --------- --------- Net revenues 53,004 58,081 110,114 115,537 Operating expenses: Cost of license and maintenance revenues 3,240 4,066 7,176 7,767 Sales, marketing and services 34,658 29,247 67,045 59,525 Research and development 11,690 10,994 23,677 22,398 General and administrative 5,688 6,486 10,562 14,577 --------- --------- --------- --------- Operating expenses 55,276 50,793 108,460 104,267 --------- --------- --------- --------- Operating income (loss) (2,272) 7,288 1,654 11,270 --------- --------- --------- --------- Other income (expense): Net interest expense (29) (26) (104) (47) Other 789 (1,457) 187 (1,910) --------- --------- --------- --------- Other income (expense) 760 (1,483) 83 (1,957) --------- --------- --------- --------- Income (loss) before income taxes (1,512) 5,805 1,737 9,313 Income tax expense (benefit) (544) 2,075 601 3,163 --------- --------- --------- --------- Net income (loss) $ (968) $ 3,730 $ 1,136 $ 6,150 ========= ========= ========= ========= Basic net income (loss) per share $ (0.05) $ 0.21 $ 0.06 $ 0.34 ========= ========= ========= ========= Diluted net income (loss) per share $ (0.05) $ 0.21 $ 0.06 $ 0.34 ========= ========= ========= ========= Share data: Shares used in computing basic net income (loss) per share 17,702 17,823 17,737 18,073 ========= ========= ========= ========= Shares used in computing diluted net income (loss) per share 17,702 18,095 18,138 18,332 ========= ========= ========= =========
See accompanying notes to consolidated financial statements. 4 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (IN THOUSANDS) (UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2004 2005 2004 2005 -------- ------- -------- -------- Net income (loss) $ (968) $ 3,730 $ 1,136 $ 6,150 Other comprehensive loss: Foreign currency translation adjustment (661) (691) (84) (337) -------- ------- -------- -------- Comprehensive income (loss) $ (1,629) $ 3,039 $ 1,052 $ 5,813 ======== ======= ======== ========
See accompanying notes to consolidated financial statements. 5 SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Six Months Ended June 30, ------------------------- 2004 2005 -------- -------- Cash flows from operating activities: Net income $ 1,136 $ 6,150 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 8,114 7,390 Deferred income taxes (488) 1,128 Noncash services recoveries (750) -- Changes in assets and liabilities, net of acquisitions: Accounts receivable 12,485 9,835 Inventories 821 (10) Other current assets 213 833 Accounts payable (1,616) 755 Accrued expenses 625 (586) Income taxes (9,748) (607) Deferred revenue (4,684) 193 Other 2,445 1,525 -------- -------- Net cash provided by operating activities 8,553 26,606 -------- -------- Cash flows from investing activities: Capital expenditures, net (1,726) (3,326) Capitalized software development costs (5,078) (5,172) Repurchase of common stock issued for acquisition (5,421) -- Proceeds from the divestiture of Sigma-series product line 3,000 -- -------- -------- Net cash used in investing activities (9,225) (8,498) -------- -------- Cash flows from financing activities: Net borrowings under line-of-credit agreements (1,306) (1,249) Proceeds from issuance of common stock 2,240 2,023 -------- -------- Net cash provided by financing activities 934 774 -------- -------- Effect of exchange rates on cash (332) (1,805) -------- -------- Net change in cash and cash equivalents (70) 17,077 Cash and cash equivalents at beginning of period 36,101 37,107 -------- -------- Cash and cash equivalents at end of period $ 36,031 $ 54,184 ======== ======== Supplemental disclosures of cash flow information: Interest paid $ 359 $ 331 Income taxes paid 11,141 3,616 Cash received from income tax refunds (1,905) (2,707)
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. The Company recognizes compensation cost for restricted stock and restricted stock units issued to employees. No compensation is recognized for stock option grants to employees. During the three months ended June 30, 2005, the Company issued 66,950 restricted share units to employees. As a result of this issuance, the market value of the restricted share units was recorded as deferred compensation of $1.1 million and is being charged to expense over the respective vesting period. 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 (loss) and income (loss) 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 June 30, Six Months Ended June 30, --------------------------- ------------------------- 2004 2005 2004 2005 --------- -------- --------- -------- Net income (loss), as reported $ (968) $ 3,730 $ 1,136 $ 6,150 Add: Stock-based employee compensation cost, net of related tax, included in net income (loss), as reported 9 60 20 60 Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related taxes (1,118) (725) (2,241) (1,586) --------- -------- --------- -------- Pro forma net income (loss) $ (2,077) $ 3,065 $ (1,085) $ 4,624 ========= ======== ========= ======== Income (loss) per share: Basic-- as reported $ (0.05) $ 0.21 $ 0.06 $ 0.34 Basic-- pro forma $ (0.12) $ 0.17 $ (0.06) $ 0.26 Diluted-- as reported $ (0.05) $ 0.21 $ 0.06 $ 0.34 Diluted-- pro forma $ (0.12) $ 0.17 $ (0.06) $ 0.25
7 NOTE 3 - DOMESTIC AND FOREIGN OPERATIONS Net revenues per geographic region are summarized as follows:
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2004 2005 2004 2005 -------- -------- -------- -------- United States $ 25,001 $ 25,595 $ 48,246 $ 49,638 -------- -------- -------- -------- United Kingdom 7,377 8,444 16,207 17,047 The Netherlands 5,560 6,070 11,839 12,355 Japan 3,953 4,690 10,865 11,815 Other 11,113 13,282 22,957 24,682 -------- -------- -------- -------- Total International 28,003 32,486 61,868 65,899 -------- -------- -------- -------- Total $ 53,004 $ 58,081 $110,114 $115,537 ======== ======== ======== ========
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 primarily of stock options and restricted share units, which have been included in the calculation of weighted average shares outstanding using the treasury stock method. Basic weighted average shares reconciles to diluted weighted average shares as follows:
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2004 2005 2004 2005 ------ ------ ------ ------ Basic weighted average common shares outstanding 17,702 17,823 17,737 18,073 Dilutive effect of stock options -- 272 401 259 ------ ------ ------ ------ Diluted weighted average common shares outstanding 17,702 18,095 18,138 18,332 ====== ====== ====== ======
Anti-dilutive shares not included in the diluted EPS calculation for the three and six month periods ended June 30, 2004 and June 30, 2005 were as follows:
Three Months Ended June 30, Six Months Ended June 30, 2004 2005 2004 2005 ----- ---- ---- ---- 1,115 812 744 898
NOTE 5 - CONTINGENCIES SPSS, Jack Noonan, SPSS's President and Chief Executive Officer and Edward Hamburg, SPSS's former Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary, were named as defendants in a lawsuit filed in the United States District Court for the Northern District of Illinois on or about May 14, 2004. The lawsuit was filed under the caption Fred Davis, Individually and On Behalf of All Others Similarly Situated v. SPSS Inc., Jack Noonan and Edward Hamburg, Case No. 04 CH 03427. The lawsuit was amended on September 30, 2004 and KMPG LLP, SPSS's former auditor, was added as a defendant. The complaint alleged 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 further alleged that the defendants failed to disclose and misrepresented a series of material adverse facts regarding the Company's revenues. The complaint sought 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 May 10, 2005, the United States District Court for the Northern District of Illinois dismissed the plaintiffs' case for 8 failure to state a claim upon which relief may be granted, without prejudice, and granted the plaintiffs leave to file an amended complaint. On June 24, 2005, the Lead Plaintiff filed a second amended complaint which realleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated therunder, and seeks the same relief as the original complaint. The second amended complaint realleges many of the same factual bases for the claims as were set forth in the first amended complaint that was dismissed by the court. In addition, an additional plaintiff, AFCO, LP, has been added, and the second amended complaint has dropped the claims against KPMG LLP. Neither SPSS nor the individual defendants have responded to the second amended complaint as of the date of this filing. SPSS, Mr. Noonan and Dr. Hamburg believe that the suit is without merit and intend to defend vigorously against the allegations contained in the second amended complaint. NOTE 6 - COST MANAGEMENT PROGRAMS During the three months and six month periods ended June 30, 2005, the Company incurred certain expenses related to cost management programs totaling $352 and $2,018, respectively. For the six months ended June 30, 2005, the cost management programs included $1,562 for discontinued use of office space from consolidating certain activities and $456 related to the layoff of approximately 24 employees in the sales, marketing and administrative functions. As of June 30, 2005, $1,296 of these cost management programs remained in accrued liabilities. The Company expects the accruals to be utilized by January 31, 2007, the completion of the final 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. COMPARISON OF THREE MONTHS ENDED JUNE 30, 2004 TO THREE MONTHS ENDED JUNE 30, 2005, AND COMPARISON OF SIX MONTHS ENDED JUNE 30, 2004 TO SIX MONTHS ENDED JUNE 30, 2005 For the three and six month periods ended June 30, 2005, the following key financial performance metrics were higher than the corresponding periods in 2004: net revenue, operating income, net income and cash flow from operations. The specific improvements in these financial performance metrics are discussed below. 9 NET REVENUES Net revenues by product type, percent changes and percent of total sales for the three and six month periods ended June 30, 2004 and June 30, 2005 were as follows:
(In Thousands) June 30 June 30 Amount Percentage Percent of Total Revenues Three Months Ended 2004 2005 Change Change 2004 2005 ------- -------------- ------ ---------- ------ ------ License $20,952 $24,413 $3,461 17% 39% 42% Maintenance 24,246 26,448 2,202 9% 46% 46% Services 7,806 7,220 (586) (8)% 15% 12% ------- ------- ------ Net revenues $53,004 $58,081 5,077 10% 100% 100%
(In Thousands) June 30 June 30 Amount Percentage Percent of Total Revenues Six Months Ended 2004 2005 Change Change 2004 2005 -------- -------------- -------- ---------- ------ ------ License $ 45,778 $ 50,410 $ 4,632 10% 42% 44% Maintenance 48,087 51,760 3,673 8% 44% 45% Services 16,249 13,367 (2,882) (18)% 14% 11% -------- -------- -------- Net revenues $110,114 $115,537 $ 5,423 5% 100% 100%
The increases in license fee revenues were primarily driven by higher sales of SPSS data mining and desktop statistical tools, including increases in the U.S., Spain, Southeast Asia and Japan. In addition, changes in currency exchange rates resulted in increases of $0.2 million and $0.8 million in the three and six month periods respectively. The increases in maintenance revenues were primarily due to higher and consistent renewal rates for the Company's major offerings as well as $0.8 million and $1.3 million favorable impacts of changes in currency exchange rates in the three and six month periods, respectively. The decreases in services revenues were primarily due to fewer ShowCase, data mining and market research consulting projects primarily based upon management strategic business realignment. These decreases were partially offset by favorable changes in currency exchange rates, which contributed $0.1 million and $0.3 million increases to service revenues in the three and six month periods, respectively. Net revenues per geographic region, percent changes and percent of total sales for the three and six month periods ended June 30, 2004 and June 30, 2005 were as follows:
(In Thousands) June 30 June 30 Amount Percentage Percent of Total Revenues Three Months Ended 2004 2005 Change Change 2004 2005 ------- -------------- ------ ---------- ------ ------ United States $25,001 $25,595 $ 594 2% 47% 44% ------- ------- ------- --- --- United Kingdom 7,377 8,444 1,067 14% 14% 15% The Netherlands 5,560 6,070 510 9% 10% 10% Japan 3,953 4,690 737 19% 8% 8% Other 11,113 13,282 2,169 20% 21% 23% ------- ------- ------- --- --- Total International 28,003 32,486 4,483 16% 53% 56% ------- ------- ------- --- --- Total $53,004 $58,081 $ 5,077 10% 100% 100% ======= ======= ======= === ===
10
(In Thousands) June 30 June 30 Amount Percentage Percent of Total Revenues Six Months Ended 2004 2005 Change Change 2004 2005 -------- -------------- ------ ---------- ------ ------ United States $ 48,246 $ 49,638 $1,392 3% 44% 43% -------- -------- ------ --- --- United Kingdom 16,207 17,047 840 5% 15% 15% The Netherlands 11,839 12,355 516 4% 11% 11% Japan 10,865 11,815 950 9% 10% 10% Other 22,957 24,682 1,725 8% 20% 21% -------- -------- ------ --- --- Total International 61,868 65,899 4,031 7% 56% 57% -------- -------- ------ --- --- Total $110,114 $115,537 $5,423 5% 100% 100% ======== ======== ====== ==== ===
All major geographic regions contributed to sales growth during the three and six month periods ended June 30, 2005. We believe net revenue growth in the three and six month periods ended June 30, 2005 continued to reflect the increased demand for certain data mining and statistical products, a strong renewal base for our products and the increasing geographic coverage of the business. COST OF LICENSE AND MAINTENANCE REVENUES
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------ ---------- ---- ---- Three months ended June 30, $ 3,240 $ 4,066 $ 826 25% 6% 7% Six months ended June 30, $ 7,176 $ 7,767 $ 591 8% 6% 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. The increases in cost of license and maintenance revenues were primarily due to higher costs associated with royalties paid to third parties due to higher revenues and higher amortization of capitalized software development costs. SALES, MARKETING AND SERVICES
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------- ---------- ---- ---- Three months ended June 30, $34,658 $29,247 $(5,411) (16)% 65% 50% Six months ended June 30, $67,045 $59,525 $(7,520) (11)% 61% 52%
The decreases in sales, marketing and services expenses were primarily due to staff changes, lower service expenses due to decreased service sales volume and lower AOL service costs of $0.9 million and $1.6 million in 2005 from the respective three and six month periods in 2004. Additionally, the Company incurred severance costs of $1.2 million in the three and six month periods ended June 30, 2004 associated with personnel changes in the Company's sales and professional services organization. These decreases were partially offset by increases caused by changes in currency exchange rates of $0.8 million and $1.4 million in the three and six month periods, respectively. RESEARCH AND DEVELOPMENT
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------- ---------- ---- ---- Three months ended June 30, $11,690 $10,994 $ (696) (6)% 22% 19% Six months ended June 30, $23,677 $22,398 $(1,279) (5)% 21% 19%
The decreases in research and development expenses were primarily due to $0.9 million in increased capitalization of labor costs related to development of the Company's core products during the six months ended June 30, 2005. Research and development expenses are expected to remain relatively flat in the remaining quarters of the 2005 fiscal year. GENERAL AND ADMINISTRATIVE
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------ ---------- ---- ---- Three months ended June 30, $ 5,688 $ 6,486 $ 798 14% 11% 11% Six months ended June 30, $10,562 $14,577 $4,015 38% 10% 13%
11 The increase in general and administrative expenses in the three months ended June 30, 2005 from the respective three month period ended June 30, 2004 included additions to the corporate finance staff, higher compensation due to improved performance, and $0.2 million from expenses related to compliance with the Sarbanes-Oxley Act of 2002. The increase in the six months ended June 30, 2005 from the respective six month period ended June 30, 2004 was primarily due to higher legal and accounting expenses related to the audit of the Company's consolidated financial results, additions to the corporate finance staff, higher compensation due to improved performance, higher insurance costs, and $0.5 million from expenses related to compliance with the Sarbanes-Oxley Act of 2002. Additionally, the Company incurred nonrecurring charges of $0.2 million and $1.5 million in the three and six month periods ended June 30, 2005, respectively, related to exit costs for the darkening of leased facilities in Texas and Massachusetts. NET INTEREST EXPENSE
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------ ---------- ---- ---- Three months ended June 30, $ (29) $ (26) $ (3) (10)% --% --% Six months ended June 30, $ (104) $ (47) $ (57) (55)% --% --%
The decreases in net interest expenses were principally due to scheduled debt repayments under line of credit agreements. Net interest expense should continue to decrease for the remainder of the 2005 fiscal year due to ongoing debt repayments. OTHER INCOME (EXPENSE)
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------ ---------- ---- ---- Three months ended June 30, $ 789 $(1,457) $2,246 NM 1% (3)% Six months ended June 30, $ 187 $(1,910) $2,097 NM --% (2)%
The increases in other income (expense) were primarily due to the strengthening of the dollar which led to losses from currency transactions due to the decline in value of U.S. dollar-denominated receivables held in its international location principally relative to the British Pound and Euro denominated currencies. INCOME TAX EXPENSE (BENEFIT)
(In Thousands) Amount Percentage Percent of Total revenues Period 2004 2005 Change Change 2004 2005 ------- ------- ------ ---------- ---- ---- Three months ended June 30, $ (544) $ 2,075 $2,619 NM 36% 36% Six months ended June 30, $ 601 $ 3,163 $2,562 426% 35% 34%
The income tax provision changed in the three and six month periods ended June 30, 2005 compared to the same periods in 2004 due primarily to a change in earnings. The Company's effective tax rate should remain at or near 35 percent for the remainder of the 2005 fiscal year. 12 LIQUIDITY AND CAPITAL RESOURCES During the first six months of 2005, SPSS continued to generate cash well in excess of its operating requirements. As of June 30, 2005, SPSS had $54,184 in cash and cash equivalents compared with $37,107 at December 31, 2004. Factors affecting cash and cash equivalents during the first six months of 2005 include: - Cash provided from operating activities was $26,606, primarily from net income and receivable collections. - Collection of receivables contributed $9,835 to cash from operations. Collections continued to improve in the second quarter 2005. Average days sales outstanding were 66 days at June 30, 2005, compared to 67 days at December 31, 2004 and 70 days at June 30, 2004. - Deferred revenue contributed $193, before the impact of foreign currency translation which decreased deferred revenue by $2,341. - Purchases of capital expenditures were $3,326. - Capitalized software costs were $5,172. - The company did not have any acquisitions during the first six months of 2005. The change in goodwill was attributable to foreign currency translation. - Financing activities provided cash proceeds of $2,023 from the issuance of common stock, primarily through the exercise of stock options. - Net repayments were $1,249 on the line of credit agreements. Cash flows from operating activities were more than adequate to fund capital expenditures and software development costs of $6.8 million and $8.5 million in 2004 and 2005, respectively. Management believes that SPSS has ample capacity in its property and equipment to meet expected needs for future growth. Additionally, in the six months ended June 30, 2004, SPSS received scheduled payments totaling $3.0 million on the sale of its Sigma-series product line consummated in December 2003 and repurchased common stock related to its acquisition of Data Distillleries of $5.4 million. 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 letters 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 June 30, 2005, the Company has availability of $6,576,000 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 June 30, 2005, SPSS had $4,632,000 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 totaled 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 June 30, 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. 13 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 $1.8 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. 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, as amended by Form 10-K/A, for the year ended December 31, 2004, filed with the Securities and Exchange Commission. RECENT ACCOUNTING PRONOUNCEMENTS On October 22, 2004, the President signed the American Jobs Creation Act of 2004. The Act provides a deduction from income from qualified domestic production activities, which will be phased in from 2005 through 2010. In return, the Act also provides for a two-year phase-out (except for certain pre-existing binding contracts) of the existing Extraterritorial Income exclusion tax benefit for foreign sales which the World Trade Organization ("WTO") ruled was an illegal export subsidy. The European Union ("EU") believes that the Act fails to adequately repeal the illegal export subsidies because of the transitional provisions and has asked the WTO to review whether these transitional provisions are in compliance with their prior ruling. This will have no material impact on the Company. Additionally, the Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividend received deduction for certain dividends from controlled foreign corporations. The Company is currently evaluating the impact of this act on its consolidated financial statements. On December 21, 2004, the Financial Accounting Standards Board ("FASB") Staff Position ("FSP") FAS 109-I, "Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004" was issued. FSP FAS 109-I clarifies that this tax deduction should be accounted for as a special deduction in accordance with Statement 109. As such, the special deduction has no effect on deferred tax assets and liabilities existing at the date of enactment. Rather, the impact of this deduction would be reported in the period in which the deduction is claimed on the Company's tax return beginning in 2005. As regulations are still pending, the Company has not been able to determine whether the impact will be material; however, the Company believes that the impact will not be material. In December, 2004, the FASB issued SFAS No. 123R, "Share-Based Payment". 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 provisions of this statement are effective for interim or annual periods beginning after June 15, 2005. 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 not be required to adopt SFAS 123R prior to its first quarter of fiscal year 2006. The Company is currently evaluating the provisions of this revision to determine the impact on its consolidated financial statements. It is, however, expected to have a negative effect on consolidated net income. 14 On December 21, 2004, FSP FAS 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004" was issued. FSP FAS 109-2 provides companies additional time, beyond the financial reporting period during which the Act took effect, to evaluate the Act's impact on a company's plan for reinvestment or repatriation of certain foreign earnings for purposes of applying Statement 109. FSP FAS 109-2 was effective upon issuance. As of December 31, 2004 based on management's analysis of the Act, although not yet finalized, it is unlikely that under the repatriation provision of the Act the Company had any foreign earnings to repatriate and accordingly, the financial statements do not reflect any provisions for taxes on unremitted foreign earnings. The Company expects to complete the evaluation on the effects of the repatriation provision in 2005. In May 2005, FASB issued SFAS No. 154, "Accounting Changes and Error Corrections," which will be effective in the first quarter of fiscal year 2006. This statement addresses the retrospective application of such changes and corrections and will be followed if and when necessary. 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 bears interest at either the prime rate or the Eurodollar rate. As of June 30, 2005, the Company had $4,632,000 outstanding under this line of credit. A 100 basis point increase in interest rates would result in an additional $46,000 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 to 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 June 30, 2005, management expects this would have a materially adverse effect on the Company's financial results. At June 30, 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 committee referred to as the "Corporate Governance Committee" that is responsible for accumulating potentially material information regarding its activities and considering the materiality of this information. This committee (or a subcommittee) is also responsible for making recommendations regarding disclosure and communicating this information to the Company's Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. The SPSS Corporate Governance 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 Corporate Governance 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 15 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 throughout the first six months of 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 has implemented additional controls to strengthen its internal control over financial reporting with respect to revenue and income taxes. However, in certain instances, the new controls were not in place for a sufficient period of time in order to be considered to be operating effectively in management's assessment process. REVENUE During the third and fourth quarters of 2004, the Company began the process of improving its internal controls over financial reporting. Also during the first six months of 2005, the Company further formalized procedures to provide monthly monitoring of revenue policy and procedures to ensure consistent application of key revenue related controls. 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; - Implemented formalized procedures for testing key information technology application controls; and - Further updated its comprehensive revenue policies and distributed those policies to key personnel in the international subsidiaries. During the remainder of 2005, the Company will continue evaluating additional controls and procedures to further remediate this material weakness, as necessary. INCOME TAXES During the first six months of 2005, the Company has hired an additional tax professional with appropriate international tax expertise. Also during the three months ended June 30, 2005, SPSS implemented formalized procedures related to the review and validation of information used to compute income taxes and deferred tax assets in conjunction with preparing the financial statements for the three month and six months ended June 30, 2005. The Company will continue evaluating additional controls and procedures to further remediate this material weakness, as necessary, including further enhancements of its 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. 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 second quarter of fiscal year 2005 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 16 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. 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, Jack Noonan, SPSS's President and Chief Executive Officer and Edward Hamburg, SPSS's former Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary, were named as defendants in a lawsuit filed in the United States District Court for the Northern District of Illinois on or about May 14, 2004. The lawsuit was filed under the caption Fred Davis, Individually and On Behalf of All Others Similarly Situated v. SPSS Inc., Jack Noonan and Edward Hamburg, Case No. 04 CH 03427. The lawsuit was amended on September 30, 2004 and KMPG LLP, SPSS's former auditor, was added as a defendant. The complaint alleged 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 further alleged that the defendants failed to disclose and misrepresented a series of material adverse facts regarding the Company's revenues. The complaint sought 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 May 10, 2005, the United States District Court for the Northern District of Illinois dismissed the plaintiffs' case for failure to state a claim upon which relief may be granted, without prejudice, and granted the plaintiffs leave to file an amended complaint. On June 24, 2005, the Lead Plaintiff filed a second amended complaint which realleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and seeks the same relief as the original complaint. The second amended complaint realleges many of the same factual bases for the claims as were set forth in the first amended complaint that was dismissed by the court. In addition, an additional plaintiff, AFCO, LP, has been added, and the second amended complaint has dropped the claims against KPMG LLP. Neither SPSS nor the individual defendants have responded to the second amended complaint as of the date of this filing. SPSS, Mr. Noonan and Dr. Hamburg believe that the suit is without merit and intend to defend vigorously against the allegations contained in the second amended complaint. SPSS may also become party to various claims and legal actions arising in the ordinary course of business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting of Shareholders was held on June 15, 2005. The following persons were nominated and elected to serve as Directors of the Company for a term of three years or until their successors have been duly elected and qualified. 17
Nominee For Withheld - --------------------- ---------- --------- William Binch 10,578,203 6,127,199 Norman Nie 15,725,440 979,962 Charles R. Whitchurch 16,314,658 390,744
In addition, Jack Noonan, Michael Blair, Promod Haque, Meritt Lutz, and Ken Holec remained as directors of SPSS after the meeting. The Company's stockholders also approved the adoption of the SPSS Inc. Employee Stock Purchase Plan . This proposal received the following votes:
For Against Abstain Non-Votes - ---------- --------- ------- --------- 12,989,315 1,423,459 788,579 1,504,049
Finally, the SPSS stockholders ratified the selection of Grant Thornton LLP to serve as the Company's independent auditor for fiscal year 2005 by the following votes:
For Against Abstain Non-Votes - ---------- ------- ------- --------- 16,547,096 149,762 8,544 n/a
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 former auditors (who were dismissed by the Audit Committee on May 6, 2005) and Grant Thornton LLP, the Company's current 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 June 30, 2005, the audit committee pre-approved the following: - $4,000 to be paid to KPMG as compensation for tax services related to SPSS B.V. - $15,000 to be paid to KPMG in connection with the audit of financial statements of the SPSS employee stock purchase plans. - $8,000 to be paid to Grant Thornton for services related to the review of the Company's Registration Statement on Form S-8. SPSS Inc. 2006 Annual Meeting of Stockholders SPSS has changed the date of its 2006 Annual Meeting of Stockholders. The 2006 Annual Meeting of Stockholders of SPSS Inc. will be held on Thursday, April 27, 2006 beginning at 1:00 p.m. local time. Stockholder Proposals for 2006 Annual Meeting If a stockholder desires to have a proposal formerly considered at the 2006 Annual Meeting of Stockholders, and included in the Company's proxy statement for its 2006 Annual Meeting of Stockholders, the stockholder must deliver a copy of the proposal to the Company's headquarters located at 233 South Wacker Drive, 11th Floor, Chicago, Illinois 60606, Attn: Corporate Secretary, no later than December 28, 2005. Additionally, if a stockholder intends to present a proposal at the 2006 Annual Meeting of Stockholders, but does not intend to have the proposal included in the Company's proxy statement, the stockholder must deliver a written copy of the proposal to the SPSS corporate secretary by February 24, 2006. For matters submitted at the 2006 Annual Meeting of Stockholders that are not included in the Company's proxy statement, the proxy holders will have discretionary authority to vote with regard to such 18 proposals. SPSS will consider only proposals meeting the requirements of applicable SEC Rules. Further, if SPSS does not receive a stockholder proposal within the applicable deadline listed above, the stockholder will not be permitted to raise the proposal at the 2006 Annual Meeting of Stockholders. ITEM 6. EXHIBITS
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, (18), Ex. 2.1 John 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 (20), Ex. 2.11 23, 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
19 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 LLC, as Rights Agent 10.1 Intentionally omitted. 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.
20 10.26 Intentionally omitted. 10.27 2000 Equity Incentive Plan.+ (22), Ex. 10.45 10.28 Intentionally omitted. 10.29 Intentionally omitted. 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. 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 (34), Ex. 10.49 Hamburg. 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 (34), Ex. 10.51
21 SPSS 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 (34), Ex. 10.52 Inc. 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 10.55 SPSS Inc. Employee Stock Purchase Plan (37), Ex. 10.55 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. 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) Intentionally Omitted (8) Previously filed with the Registration Statement on Form S-1 of SPSS Inc. filed on December 5, 1994. (File No. 33-86858) 22 (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 in Form 10-K of SPSS Inc. for the year ended December 31, 1998. (File No. 000-22194) (18) Previously filed with the Report on Form 8-K 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) 23 (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) (37) Previously filed with the Current Report on Form 8-K of SPSS Inc., dated June 15, 2005, filed on June 15, 2005 (File No. 000-22194) 24 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: August 4, 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: August 4, 2005 By: /s/ Raymond H. Panza --------------------------------------- Raymond H Panza Executive Vice-President, Corporate Operations, Chief Financial Officer and Secretary 25 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. ss1350, 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. ss1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
26 EX-31.1 2 c97292exv31w1.txt 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Exhibit 31.1 CERTIFICATION I, Jack Noonan, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of SPSS Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 4, 2005 By: /s/ Jack Noonan ------------------------------------- Jack Noonan President and Chief Executive Officer 27 EX-31.2 3 c97292exv31w2.txt 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 31.2 CERTIFICATION I, Raymond H. Panza, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of SPSS Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 4, 2005 By: /s/ Raymond H. Panza -------------------------------------- Raymond H. Panza Executive Vice-President, Corporate Operations and Chief Financial Officer EX-32.1 4 c97292exv32w1.txt 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, THE UNDERSIGNED CERTIFIES THAT: 1. The Quarterly Report on Form 10-Q of SPSS Inc. for the period ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of SPSS Inc. Date: August 4, 2005 By: /s/ Jack Noonan ------------------------------------- Jack Noonan President and Chief Executive Officer EX-32.2 5 c97292exv32w2.txt 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, THE UNDERSIGNED CERTIFIES THAT: 1. The Quarterly Report on Form 10-Q of SPSS Inc. for the period ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of SPSS Inc. Date: August 4, 2005 By: /s/ Raymond H. Panza -------------------------------------- Raymond H. Panza Executive Vice-President, Corporate Operations and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----