EX-99.1 2 c07353exv99w1.txt PRESS RELEASE Exhibit 99.1 (SPSS(R) LOGO) FOR IMMEDIATE RELEASE Contact: Marc Brailov, SPSS 312-651-3459 mbrailov@spss.com SPSS REPORTS RECORD SECOND QUARTER AND FIRST HALF REVENUES 20 PERCENT LICENSE INCREASE DRIVES GROWTH; NON-OPERATING FACTORS PUSH EARNINGS UNDER GUIDANCE CHICAGO, IL (USA), August 1, 2006 -- SPSS Inc. (NASDAQ: SPSS), a worldwide provider of predictive analytics software, today announced results for the quarter and six months ended June 30, 2006. Second quarter revenues were a record $63.5 million, an increase of 9 percent from $58.1 million in the second quarter of 2005. New license revenues were $29.3 million, up 20 percent from $24.4 million in the 2005 second quarter. For the six months ended June 30, 2006, revenues totaled $125.7 million, an increase of 9 percent from $115.5 million for the same period in 2005. New license revenues for the first six months of 2006 were $59.2 million, up 17 percent from $50.4 million for the six months ended June 30, 2005. Diluted earnings per share (EPS) in the 2006 second quarter were $0.12, compared to $0.21 for the same period last year. This decrease was primarily due to a $2.2 million charge related to share-based compensation reflecting the January 1, 2006 adoption of Statement of Financial Accounting Standards (SFAS) 123R. Also contributing to the decrease were higher, largely non-recurring, marketing, services and R&D expenses. In addition, the 2006 period includes a $0.8 million higher non-operating non-cash net currency exchange translation charge. The effective income tax rate in the 2006 second quarter was 43 percent compared to a tax rate of 36 percent in the same period in 2005. For the six months ended June 30, 2006, EPS was $0.35, compared with $0.34 in the same period last year. The 2006 period includes a charge of $3.1 million related to share-based compensation reflecting the January 1, 2006 adoption of SFAS 123R. In addition, the effective income tax rate increased to 38 percent in the first six months of 2006 from 34 percent in the same period last year. An increased number of diluted shares further lowered earnings in the 2006 period. As of June 30, 2006, cash was $113.3 million up from $84.4 million as of December 31, 2005 and $54.2 million on June 30, 2005. "We were delighted with the strong growth in new license revenue, particularly as it occurred for both applications and tools and across all major geographies," said SPSS president and CEO Jack Noonan. "Our field sales channel demonstrated increasing strength, our telesales channel continued its high productivity and both channels closed an increased number of larger transactions. Recent investments made in support of the field contributed to the higher expenses in the quarter. These investments are expected to continue our sales momentum in the second half of the year." OUTLOOK AND GUIDANCE "While pleased with the revenue growth and operational improvements, we were disappointed by the delivery of earnings below our guidance for the 2006 second quarter," said Raymond Panza, SPSS executive vice president and CFO. "For the six months ended June 30, 2006, however, revenue growth and operating margins were consistent with our anticipated performance." Panza further stated, "2006 third quarter revenues are expected to be between $64 and $66 million with EPS in the range of $0.24 to $0.30. EPS for the 2006 third quarter includes an estimated expense of $0.05 for share-based compensation. For the 2006 fiscal year, we are raising previous revenue guidance of between $248 million and $254 million to a range of between $252 million and $258 million. We are reiterating EPS guidance of $0.98 to $1.09. EPS guidance for this annual period includes estimated expense of $0.18 to $0.20 for share-based compensation. Share-based compensation expense includes the effect of SFAS 123R as well as the company's increased use of stock units." CONFERENCE CALL The company will host a conference call at 5:00 p.m. CT on August 1, 2006, to discuss its financial results. The live call will be broadcast online at www.spss.com/invest. Those interested in participating in the live call should dial 866.510.0710 in the United States and 617.597.5378 internationally. The live call pass-code is 75750256. A replay will be available via phone for one week after the call. To access it, participants should dial in the United States 888-286-8010 or 617-801-6888 internationally. Access code 73025627 is required for the replay. An archived version of the call will also be made available online at www.spss.com/invest approximately two hours after the live call. ABOUT SPSS INC. SPSS Inc. (NASDAQ: SPSS) is a leading worldwide provider of predictive analytics software and solutions. The company's offerings connect data to effective action by drawing reliable conclusions about current conditions and future events. More than 250,000 public sector, academic, and commercial customers, including 95 percent of the Fortune 1000 companies, rely on SPSS software to increase revenues, reduce costs, improve critical business processes, and detect and prevent fraud. Founded in 1968, SPSS is headquartered in Chicago, Illinois. For additional information, please visit www.spss.com. SAFE HARBOR STATEMENT This press release contains forward-looking information made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by phrases such as "anticipates," "believes," "estimates," "expects," "plans," "intends," "could," "designed," "should be" and other similar expressions which denote expectations of future events rather than statements of fact. These forward-looking statements involve factors that are subject to risks and uncertainties. These risks and uncertainties, which may not be currently ascertainable and many of which are beyond the Company's control, may cause the Company's actual results, performance or achievements to be materially different than the results, performance or achievements expressed in or implied by the forward-looking statements. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission ("SEC"). Copies of these filings are available either on the SEC's website at www.sec.gov or from the Company's investor relations department. In light of these risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that any future results, performance or achievements will be attained. These forward-looking statements speak only as of the date on which they are made. The Company assumes no obligation to update the forward-looking statements contained in this press release. SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE) (UNAUDITED)
Three Months Ended June 30, --------------------------- % of Total Revenue Yr/Yr ------------------ 2006 2005 % Chg. 2006 2005 ------- ------- ------ ---- ---- Net revenues: License fees $29,312 $24,413 20% 46% 42% Maintenance 27,428 26,448 4% 43% 46% Services 6,739 7,220 -7% 11% 12% ------- ------- --- --- Net revenues 63,479 58,081 9% 100% 100% ------- ------- --- --- Operating expenses: Cost of license and maintenance revenues 4,046 4,066 0% 6% 7% Sales, marketing and services 31,561 29,247 8% 50% 50% Research and development 13,089 10,994 19% 21% 19% General and administrative 8,761 6,486 35% 14% 11% ------- ------- --- --- Operating expenses 57,457 50,793 13% 91% 87% ------- ------- --- --- Operating income 6,022 7,288 -17% 9% 13% ------- ------- --- --- Other income (expense): Net interest income (expense) 659 (26) NM 1% -- Other (2,211) (1,457) 52% -3% -3% ------- ------- --- --- Other income (expense) (1,552) (1,483) 5% -2% -3% ------- ------- --- --- Income before income taxes 4,470 5,805 -23% 7% 10% Income tax expense 1,922 2,075 -7% 3% 4% ------- ------- --- --- Net income $ 2,548 $ 3,730 -32% 4% 6% ======= ======= === === Basic net income per common share $ 0.13 0.21 -38% Diluted net income per common share $ 0.12 0.21 -43% Share data: Shares used in basic per share computation 19,473 17,823 9% Shares used in diluted per share computation 20,922 18,095 16%
SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE) (UNAUDITED)
Six Months Ended June 30, ---------------------------- % of Total Revenue Yr/Yr ------------------ 2006 2005 % Chg. 2006 2005 -------- -------- ------ ---- ---- Net revenues: License $ 59,185 $ 50,410 17% 47% 44% Maintenance 53,491 51,760 3% 43% 45% Service 13,029 13,367 -3% 10% 11% -------- -------- --- --- Net revenues 125,705 115,537 9% 100% 100% Operating expenses: Cost of license and maintenance revenues 8,196 7,767 6% 7% 6% Cost of license and maintenance revenues -- software write-off 1,283 -- NM 1% -- Sales, marketing and services 61,957 59,525 4% 49% 52% Research and development 25,918 22,398 16% 21% 19% General and administrative 15,377 14,577 5% 12% 13% -------- -------- --- --- Operating expenses 112,731 104,267 8% 90% 90% -------- -------- --- --- Operating income 12,974 11,270 15% 10% 10% Other income (expense): Net interest income (expense) 1,005 (47) NM 1% -- Other (2,061) (1,910) 8% -2% -2% -------- -------- --- --- Other income (expense) (1,056) (1,957) -46% -1% -2% -------- -------- --- --- Income before income taxes 11,918 9,313 28% 9% 8% Income tax expense 4,529 3,163 43% 3% 3% -------- -------- --- --- Net income $ 7,389 $ 6,150 20% 6% 5% ======== ======== === === Basic net income per common share $ 0.38 $ 0.34 12% Diluted net income per common share $ 0.35 $ 0.34 3% Share data: Shares used in basic per share computation 19,469 18,073 8% Shares used in diluted per share computation 20,999 18,332 15%
SPSS INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
JUNE 30, DECEMBER 31, 2006 2005 -------- ------------ ASSETS Current assets Cash and cash equivalents $113,346 $ 84,408 Accounts receivable, net 48,261 42,488 Inventories, net 654 879 Deferred income taxes 6,782 5,624 Prepaid income taxes 5,213 5,067 Other current assets 4,796 5,233 -------- -------- Total current assets 179,052 143,699 Net property, equipment and leasehold improvements 19,061 20,441 Capitalized software development costs, net 27,740 28,522 Goodwill 41,717 41,207 Intangibles, net 3,583 3,627 Deferred income taxes 34,769 32,938 Other noncurrent assets 1,593 1,463 -------- -------- Total assets $307,515 $271,897 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ -- $ 2,500 Accounts payable 7,499 9,678 Income and value added taxes payable 9,125 9,024 Deferred revenues 67,447 63,980 Other accrued liabilities 21,786 21,102 -------- -------- Total current liabilities 105,857 106,284 Noncurrent deferred income taxes 518 449 Noncurrent notes payable -- 872 Other noncurrent liabilities 759 546 Stockholders' equity Common Stock 197 187 Additional paid-in capital 208,682 177,440 Deferred compensation (7,538) (1,069) Accumulated other comprehensive loss (4,957) (9,420) Retained earnings (Accumulated deficit) 3,997 (3,392) -------- -------- Total stockholders' equity 200,381 163,746 -------- -------- Total liabilities and stockholders' equity $307,515 $271,897 ======== ========
SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------ 2006 2005 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,389 $ 6,150 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,431 7,390 Deferred income taxes (2,920) 1,128 Amortization of share-based compensation 3,123 119 Write-off of software 1,283 -- Changes in assets and liabilities: Accounts receivable (4,138) 9,835 Inventories 231 (10) Prepaid and other assets 518 833 Accounts payable (2,326) 755 Accrued expenses 249 (586) Income taxes (204) (607) Deferred revenue 1,266 193 Other, net 1,744 1,406 -------- ------- Net cash provided by operating activities 14,646 26,606 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (3,020) (3,326) Capitalized software development costs (3,975) (5,172) -------- ------- Net cash used in investing activities (6,995) (8,498) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under line-of-credit agreements (3,372) (1,249) Proceeds from stock option exercises and employee stock purchase plan 17,651 1,955 Tax benefit from stock option exercises 4,318 68 -------- ------- Net cash provided by financing activities 18,597 774 -------- ------- Effect of exchange rates on cash 2,690 (1,805) -------- ------- Net change in cash and cash equivalents 28,938 17,077 Cash and cash equivalents at beginning of period 84,408 37,107 -------- ------- Cash and cash equivalents at end of period $113,346 $54,184 ======== =======