EX-99.1 2 c17213exv99w1.txt PRESS RELEASE FOR IMMEDIATE RELEASE [SPSS LOGO] Contact: Janine Warell, SPSS 312-261-6535 jwarell@spss.com GROWTH IN NEW LICENSE REVENUE, INCREASED PRODUCTIVITY DRIVE SOLID SPSS 2007 SECOND QUARTER, FIRST HALF RESULTS CHICAGO, IL (USA), July 31, 2007 -- SPSS Inc. (Nasdaq: SPSS), a worldwide provider of predictive analytics software, today announced results for the quarter and six months ended June 30, 2007. The company reported second quarter revenues of $68.9 million, an increase of 9 percent from $63.5 million in the second quarter of 2006. New license revenues were $32.4 million, up 10 percent from $29.3 million in the same quarter last year. Operating income increased to $10.2 million, or 15 percent of revenues, from $6.0 million, or 9 percent of revenues, in the 2006 second quarter. Diluted earnings per share (EPS) in the 2007 second quarter were $0.36, compared to $0.12 for the same quarter last year. Charges for stock-based compensation were $2.6 million and $2.2 million in the second quarter of 2007 and 2006, respectively. The company continued to identify cost-saving initiatives and drive productivity improvements in the 2007 second quarter, including the expected closure of three facilities, all of which should be completed by year end. Operating results in the quarter included reorganization and related pre-tax charges of $0.7 million or approximately $0.02 EPS. Additional charges related to these initiatives will be recorded in the 2007 third and fourth quarters. "We continued to see good sales momentum in the quarter, including double digit new license revenue growth in the United States and Europe, increased predictive application sales, and expanding partner influenced transactions," said SPSS president and CEO Jack Noonan. "Overall, the second quarter shows increasing demand for our predictive analytic tools and solutions with the continuation of bottom-line improvement." Revenues for the six months ended June 30, 2007 totaled $139.1 million, an increase of 11 percent from $125.7 million for the same period in 2006. New license revenues were $67.3 million, up 14 percent from $59.2 million in the same period last year. Operating income increased to $22.3 million, or 16 percent of revenues, from $13.0 million, or 10 percent of revenues, in the 2006 six-month period. EPS was $0.75, compared to $0.35 in the same period a year ago. Charges for stock-based compensation were $4.5 million and $3.1 million in the first six months of 2007 and 2006, respectively. The effective income tax rate in the 2007 six-month period was 37 percent, compared to 38 percent in the same period last year. Cash at June 30, 2007 was $278.4 million. Cash from operations increased to $34.7 million in the six months ended June 30, 2007 from $14.6 million in the same period in 2006. OUTLOOK AND GUIDANCE "We are pleased with the benefits realized from operational improvements," said Raymond Panza, SPSS executive vice president and CFO. "During the 2007 second quarter, we initiated the process for closing R&D centers in the United Kingdom and Denmark, closed a small facility in the United States and announced organizational changes. At the same time, the company continues to focus on global productivity initiatives to improve operations and reduce costs." Panza added, "In the 2007 third quarter we expect revenues of between $72.0 million and $74.0 million, with EPS in the range of $0.38 to $0.42, including an estimated expense of $0.06 for stock-based compensation. For the 2007 fiscal year, we reiterate our revenue guidance of between $285.0 million and $295.0 million. Based on our strong first half earnings results, we are increasing EPS guidance to a range of $1.53 to $1.63. Guidance for the 2007 fiscal year includes the $0.02 charge recognized in the second quarter for restructuring. Additional restructuring costs of approximately $3 million, expected to be incurred in the second half of 2007, are not included in the 2007 third quarter or 2007 fiscal year guidance. The full amount of these 2007 estimated restructuring charges are expected to be more than fully recovered in savings during 2008. EPS guidance for the 2007 fiscal year includes an estimated expense of $0.26 for stock-based compensation and an effective income tax rate of 37 percent." CONFERENCE CALL The company will host a conference call at 5 p.m. CT on July 31, 2007, 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 call 888-396-2386 in the United States or 617-847-8712 internationally. The live call pass-code is 26089755. A replay will be available via phone for one week after the call. To access it, participants in the United States should call 888-286-8010 or 617-801-6888 internationally using access code 13568380. 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 global provider of predictive analytics software and solutions. The company's predictive analytics technology improves business processes by giving organizations forward visibility for decisions made every day. By incorporating predictive analytics into their daily operations, organizations become Predictive Enterprises--able to direct and automate decisions to meet business goals and achieve a measurable competitive advantage. More than 250,000 public sector, academic, and commercial customers rely on SPSS technology to help increase revenue, reduce costs, and detect and prevent fraud. Founded in 1968, SPSS is headquartered in Chicago, Illinois. For more 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, ------------------------------------ Yr/Yr % of Total Revenue 2007 2006 % Chg. 2007 2006 -------- -------- ------ -------- -------- Net revenues: License $ 32,366 $ 29,312 10% 47% 46% Maintenance 30,449 27,428 11% 44% 43% Services 6,107 6,739 -9% 9% 11% -------- -------- -------- -------- Net revenues 68,922 63,479 9% 100% 100% -------- -------- -------- -------- Operating expenses: Cost of license and maintenance revenues 4,546 4,046 12% 7% 6% Sales, marketing and services 33,034 31,561 5% 48% 50% Research and development 12,351 13,089 -6% 18% 21% General and administrative 8,746 8,761 0% 12% 14% -------- -------- -------- -------- Operating expenses 58,677 57,457 2% 85% 91% -------- -------- -------- -------- Operating income 10,245 6,022 70% 15% 9% -------- -------- -------- -------- Other income (expense): Net interest income 1,749 659 165% 3% 1% Other (561) (2,211) -75% -1% -3% -------- -------- -------- -------- Other income 1,188 (1,552) NM 2% -2% -------- -------- -------- -------- Income before income taxes 11,433 4,470 156% 17% 7% Income tax expense 4,242 1,922 121% 7% 3% -------- -------- -------- -------- Net income $ 7,191 $ 2,548 182% 10% 4% ======== ======== ======== ======== Basic net income per common share $ 0.39 $ 0.13 200% Diluted net income per common share $ 0.36 $ 0.12 200% Share data: Shares used in basic per share computation 18,569 19,473 -5% Shares used in diluted per share computation 19,928 20,922 -5%
SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE) (UNAUDITED)
Six Months Ended June 30, --------------------------------------- Yr/Yr % of Total Revenue 2007 2006 % Chg. 2007 2006 --------- --------- --------- --------- --------- Net revenues: License $ 67,338 $ 59,185 14% 48% 47% Maintenance 59,375 53,491 11% 43% 43% Services 12,375 13,029 -5% 9% 10% --------- --------- --------- --------- Net revenues 139,088 125,705 11% 100% 100% --------- --------- --------- --------- Operating expenses: Cost of license and maintenance revenues 8,793 8,196 7% 6% 7% Cost of license and maintenance revenues -- software write-off -- 1,283 NM -- 1% Sales, marketing and services 66,663 61,957 8% 48% 49% Research and development 24,622 25,918 -5% 18% 21% General and administrative 16,690 15,377 9% 12% 12% --------- --------- --------- --------- Operating expenses 116,768 112,731 4% 84% 90% --------- --------- --------- --------- Operating income 22,320 12,974 72% 16% 10% --------- --------- --------- --------- Other income (expense): Net interest income (expense) 3,255 1,005 NM 2% 1% Other (1,345) (2,061) -35% -1% -2% --------- --------- --------- --------- Other income (expense) 1,910 (1,056) NM 1% -1% --------- --------- --------- --------- Income before income taxes 24,230 11,918 103% 17% 9% Income tax expense 8,888 4,529 96% 6% 3% --------- --------- --------- --------- Net income $ 15,342 $ 7,389 108% 11% 6% ========= ========= ========= ========= Basic net income per common share $ 0.80 $ 0.38 111% Diluted net income per common share $ 0.75 $ 0.35 114% Share data: Shares used in basic per share computation 19,197 19,469 -1% Shares used in diluted per share computation 20,529 20,999 -2%
SPSS INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
JUNE 30, DECEMBER 31, 2007 2006 --------- ----------- ASSETS Current assets Cash and cash equivalents $ 278,407 $ 140,203 Accounts receivable, net 48,959 53,814 Inventories, net 859 752 Deferred income taxes 4,165 3,784 Prepaid income taxes 5,308 3,285 Other current assets 4,183 4,692 --------- --------- Total current assets 341,881 206,530 Net property, equipment and leasehold improvements 17,563 17,708 Capitalized software development costs, net 34,390 31,583 Goodwill 42,082 41,923 Intangibles, net 3,339 3,470 Deferred income taxes 26,288 28,714 Other noncurrent assets 6,789 2,566 --------- --------- Total assets $ 472,332 $ 332,494 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 6,213 $ 6,496 Income and value added taxes payable 12,625 10,249 Deferred revenues 74,445 73,483 Other accrued liabilities 24,830 24,203 --------- --------- Total current liabilities 118,113 114,431 Long-term debt 150,000 -- Noncurrent deferred income taxes 510 795 Noncurrent deferred revenue 750 745 Stockholders' equity Common Stock 190 198 Additional paid-in capital 177,193 205,912 Accumulated other comprehensive income (loss) 78 (1,335) Retained earnings 25,498 11,748 --------- --------- Total stockholders' equity 202,959 216,523 --------- --------- Total liabilities and stockholders' equity $ 472,332 $ 332,494 ========= =========
SPSS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------ 2007 2006 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 15,342 $ 7,389 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,397 8,431 Deferred income taxes 5,899 1,398 Excess tax benefit from share-based compensation (5,302) (4,318) Amortization of share-based compensation 4,542 3,123 Write-off of software -- 1,283 Changes in assets and liabilities: Accounts receivable 5,405 (4,138) Inventories (106) 231 Prepaid and other assets 558 518 Accounts payable (306) (2,326) Accrued expenses 427 249 Income taxes (126) (204) Deferred revenue 92 1,266 Other, net (135) 1,744 --------- --------- Net cash provided by operating activities 34,687 14,646 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,674) (3,020) Capitalized software development costs (7,801) (3,975) --------- --------- Net cash used in investing activities (10,475) (6,995) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 150,000 -- Debt issuance costs (4,281) -- Purchases of common stock (49,998) -- Proceeds from stock option exercises and employee stock purchase plan 12,610 17,651 Tax benefit from stock option exercises 5,302 4,318 Net repayments under line-of-credit agreements -- (3,372) --------- --------- Net cash provided by financing activities 113,633 18,597 --------- --------- Effect of exchange rates on cash 359 2,690 --------- --------- Net change in cash and cash equivalents 138,204 28,938 Cash and cash equivalents at beginning of period 140,203 84,408 --------- --------- Cash and cash equivalents at end of period $ 278,407 $ 113,346 ========= =========
SPSS INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION--EFFECT OF SHARE-BASED COMPENSATION ON OPERATING INCOME (IN THOUSANDS, EXCEPT PERCENT AMOUNTS) (UNAUDITED)
Three Months Ended June 30, ---------------------------------------------------------------------------------- Adjusted To Exclude Reported--GAAP Share-Based Compensation Share-Based Compensation ------------------------ ------------------------- ------------------------ 2007 2006 2007 2006 2007 2006 ---------- ---------- ---------- ---------- ---------- ---------- Net revenues $ 68,922 $ 63,479 $ -- $ -- $ 68,922 $ 63,479 ---------- ---------- ---------- ---------- ---------- ---------- Operating expenses: Cost of license and maintenance revenues 4,546 4,046 -- -- 4,546 4,046 Sales, marketing and services 33,034 31,561 479 606 32,555 30,955 Research and development 12,351 13,089 495 347 11,856 12,742 General and administrative 8,746 8,761 1,658 1,239 7,088 7,522 ---------- ---------- ---------- ---------- ---------- ---------- Operating expenses 58,677 57,457 2,632 2,192 56,045 55,265 ---------- ---------- ---------- ---------- ---------- ---------- Operating income $ 10,245 $ 6,022 $ (2,632) $ (2,192) $ 12,877 $ 8,214 ========== ========== ========== ========== ========== ========== Operating income as % of revenues 15% 9% 19% 13% ========== ========== ========== ========== Diluted net income per common share $ 0.36 $ 0.12 $ (0.08) $ (0.06) $ 0.44 $ 0.18 ========== ========== ========== ========== ========== ==========
Six Months Ended June 30, ---------------------------------------------------------------------------------- Adjusted To Exclude Reported--GAAP Share-Based Compensation Share-Based Compensation ------------------------ ------------------------- ------------------------- 2007 2006 2007 2006 2007 2006 ---------- ---------- ---------- ---------- ---------- ---------- Net revenues $ 139,088 $ 125,705 $ -- $ -- $ 139,088 $ 125,705 ---------- ---------- ---------- ---------- ---------- ---------- Operating expenses: Cost of license and maintenance revenues 8,793 8,196 -- -- 8,793 8,196 Cost of license and maintenance revenues -- software write-off -- 1,283 -- -- -- 1,283 Sales, marketing and services 66,663 61,957 955 1,041 65,708 60,916 Research and development 24,622 25,918 960 609 23,662 25,309 General and administrative 16,690 15,377 2,627 1,473 14,063 13,904 ---------- ---------- ---------- ---------- ---------- ---------- Operating expenses 116,768 112,731 4,542 3,123 112,226 109,608 ---------- ---------- ---------- ---------- ---------- ---------- Operating income $ 22,320 $ 12,974 $ (4,542) $ (3,123) $ 26,862 $ 16,097 ========== ========== ========== ========== ========== ========== Operating income as % of revenues 16% 10% 19% 13% ========== ========== ========== ========== Diluted net income per common share $ 0.75 $ 0.35 $ (0.14) $ (0.09) $ 0.89 $ 0.44 ========== ========== ========== ========== ========== ==========
NOTE - Share-Based Compensation On January 1, 2006, the Company adopted the provisions of SFAS No. 123(R), Share-Based Payment ("SFAS No. 123(R)" or the "Statement") using the modified prospective method. SFAS No. 123(R) focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. Prior to the adoption of SFAS No. 123(R), the Company followed the intrinsic value method in accordance with APB No. 25 to account for its employee stock options and share-based awards issued before 2006. The Company has provided the effects of share-based compensation to show the comparable year effects of share-based compensation and the related effects on operating income and diluted net income per common share thereby facilitating year over year comparisons.