8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported) July 29, 2008

SPSS Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-22194	36-2815480
(State or Other Jurisdiction of	(Commission	(I.R.S. Employer
Incorporation)	File Number)	Identification No.)
233 South Wacker Drive, Chicago, Illinois		60606
(Address of Principal Executive Offices)		(Zip Code)

(312) 651-3000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On July 29, 2008, SPSS Inc. issued a press release announcing its results for its fiscal quarter ended June 30, 2008. The full text of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

     The information in this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing made by SPSS under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as set forth by specific reference in such filing.

ITEM 9.01: FINANCIAL STATEMENTS AND EXHIBITS.

     (d) Exhibits.

99.1 SPSS Press Release, dated July 29, 2008 (furnished pursuant to Item 2.02)

2

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 hereunto duly authorized.

	SPSS INC.
	By:	/s/ Raymond H. Panza
		Raymond H. Panza
Dated: July 29, 2008		Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
Contact: Janine Warell, SPSS
312-261-6535
jwarell@spss.com

SPSS Reports 2008 Second Quarter, First Half Results

CHICAGO, IL (USA), July 29, 2008 — SPSS Inc. (Nasdaq: SPSS), a global provider of Predictive Analytics software and solutions, today announced results for the quarter and six months ended June 30, 2008.

The Company reported second quarter revenues of $75.7 million, an increase of 10 percent from $68.9 million in the second quarter of 2007. Net income was $7.8 million, up 9 percent from $7.2 million in the second quarter last year, with diluted earnings per share (EPS) of $0.41, a 14 percent increase from $0.36 in the 2007 second quarter. License revenues were $34.8 million, up 8 percent from $32.4 million in the same quarter last year. Operating income was $10.9 million, or 14 percent of revenues, compared to $10.2 million, or 15 percent of revenues, in the 2007 second quarter. Charges for share-based compensation were $0.08 per share in the second quarter of both 2008 and 2007. Approximately 60 percent of total revenues in the 2008 second quarter came from outside the United States. Excluding the effects of currency exchange rates, total revenues were up 3 percent over the 2007 second quarter.

“While facing a challenging global economic environment, we continued to realize both top- and bottom-line growth,” said Jack Noonan, SPSS chairman, president and CEO. “The breadth of our product offerings, the range of transaction pricing, our diverse customer base and geographic markets contributed to an ability to sustain our financial performance in a weaker economy.”

Noonan continued, “License growth was strongest in the United States, up 9 percent, and in the United Kingdom, up 28 percent, net of currency. These increases occurred most notably with our data mining and data capture technologies. Growth in services revenues was also solid, reflecting a steadily increasing number of consulting and training engagements.”

Revenues for the six months ended June 30, 2008, totaled $153.9 million, an increase of 11 percent from $139.1 million for the same period in 2007. Net income was $17.7 million, up 15 percent from $15.3 million in the first six months of 2007, with EPS of $0.92, a 23 percent increase from $0.75 in the 2007 six-month period. License revenues were $73.2 million, up 9 percent from $67.3 million in the same period last year. Operating income was $24.8 million, or 16 percent of revenues, from $22.3 million, or 16 percent of revenues, in the 2007 six-month period. Charges for share-based compensation were $0.14 per share in the first six month periods of both 2008 and 2007. The effective income tax rate in the 2008 six-month period was 36 percent, compared to 37 percent in the same period last year.

At June 30, 2008, cash and cash equivalents totaled $306.0 million. The Company generated $14.6 million in cash from operations in the 2008 second quarter, up from $13.4 million in the same quarter last year. Cash provided by operating activities in the first six months of 2008 was $28.8 million after the payment of $7.4 million of a year-end 2007 accrued payable related to the Company’s share repurchase program, compared to $34.7 million for the same period in 2007.

Outlook and Guidance

“While underperformance in Northern Europe and Asia, combined with higher investments in marketing, affected our profitability in the quarter, the operating margin for the six-month period remained unchanged from a year ago at 16 percent,” said Raymond Panza, SPSS executive vice president and CFO. “Although we expect to realize the benefits from our investments in marketing, we are focused on managing expenses for the remainder of the year.”

Panza added, “In the 2008 third quarter, we expect revenues of between $74.0 million and $78.0 million, with EPS in the range of $0.42 to $0.48. For the 2008 full year, we reiterate our revenue guidance of between $310.0 million and $320.0 million and EPS in the range of $1.90 to $2.00. EPS guidance for the third quarter and 2008 full year assumes charges for share-based compensation of $0.06 and $0.26, respectively, and an effective income tax rate of 36 percent.”

Conference Call — 4 p.m. CT/5 p.m. ET

The Company will host a conference call at 4 p.m. CT/5 p.m. ET on July 29, 2008, 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 866-356-4123 in the United States or 617-597-5393 internationally. The live call pass-code is 94910927. 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 21486508. 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

In addition to historical information, this press release 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 the Company on the date hereof. The Company cautions investors that its business and financial performance and the matters described in these forward-looking statements are subject to substantial risks and uncertainties. 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 expressed in or implied by the forward-looking statements. The potential risks and uncertainties that could cause results to differ materially include, but are not limited to: the Company’s ability to predict revenue, the Company’s ability to respond to rapid technological changes, a potential loss of relationships with third parties from whom the Company licenses certain software, fluctuations in currency exchange rates, the impact of new accounting pronouncements, increased competition and risks associated with product performance and market acceptance of new products. A detailed discussion of other risk factors that affect the Company’s business is contained in the Company’s Annual Reports on Form 10-K, particularly under the heading “Risk Factors.” The Company does not intend to update these forward-looking statements to reflect actual future events.

SPSS Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)

	For the Three Months Ended June 30,
							Percent			% of Net Revenues
	2008			2007			Change			2008			2007
	(in thousands, except per share amounts)
Net revenues:
License	$	34,823		$	32,366			8	%		46	%		47	%
Maintenance		33,184			30,449			9	%		44	%		44	%
Services		7,694			6,107			26	%		10	%		9	%
Net revenues		75,701			68,922			10	%		100	%		100	%
Operating expenses:
Cost of license and maintenance revenues		5,221			4,546			15	%		7	%		7	%
Sales, marketing and services		38,767			33,034			17	%		51	%		48	%
Research and development		11,305			12,351			-8	%		15	%		18	%
General and administrative		9,495			8,746			9	%		13	%		12	%
Operating expenses		64,788			58,677			10	%		86	%		85	%
Operating income		10,913			10,245			7	%		14	%		15	%
Other income (expense):
Net interest and investment income		1,166			1,749			-33	%		2	%		3	%
Other		(468	)		(561	)		-17	%		-1	%		-1	%
Other income		698			1,188			-41	%		1	%		2	%
Income before income taxes		11,611			11,433			2	%		15	%		17	%
Income tax expense		3,779			4,242			-11	%		5	%		7	%
Net income	$	7,832		$	7,191			9	%		10	%		10	%
Basic net income per share	$	0.44		$	0.39			13	%
Diluted net income per share	$	0.41		$	0.36			14	%
Shares used in computing basic net income per share		17,936			18,569			-3	%
Shares used in computing diluted net income per share		19,072			19,928			-4	%

SPSS Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)

	For the Six Months Ended June 30,
							Percent			% of Net Revenues
	2008			2007			Change			2008			2007
	(in thousands, except per share amounts)
Net revenues:
License	$	73,240		$	67,338			9	%		48	%		48	%
Maintenance		65,331			59,375			10	%		42	%		43	%
Services		15,371			12,375			24	%		10	%		9	%
Net revenues		153,942			139,088			11	%		100	%		100	%
Operating expenses:
Cost of license and maintenance revenues		10,520			8,793			20	%		7	%		6	%
Sales, marketing and services		77,927			66,663			17	%		51	%		48	%
Research and development		22,686			24,622			-8	%		15	%		18	%
General and administrative		18,031			16,690			8	%		11	%		12	%
Operating expenses		129,164			116,768			11	%		84	%		84	%
Operating income		24,778			22,320			11	%		16	%		16	%
Other income (expense):
Net interest and investment income		2,986			3,255			-8	%		2	%		2	%
Other		(168	)		(1,345	)		-88	%		0	%		-1	%
Other income		2,818			1,910			48	%		2	%		1	%
Income before income taxes		27,596			24,230			14	%		18	%		17	%
Income tax expense		9,934			8,888			12	%		7	%		6	%
Net income	$	17,662		$	15,342			15	%		11	%		11	%
Basic net income per share	$	0.99		$	0.80			24	%
Diluted net income per share	$	0.92		$	0.75			23	%
Shares used in computing basic net income per share		17,926			19,197			-7	%
Shares used in computing diluted net income per share		19,154			20,529			-7	%

SPSS Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(unaudited)

	June 30,		December 31,
	2008		2007
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	305,996	$	306,930
Accounts receivable, net		47,194		56,580
Inventories, net		719		698
Deferred income taxes		4,373		3,964
Prepaid income taxes		7,472		3,301
Other current assets		6,318		4,162
Total current assets		372,072		375,635
Net property, equipment and leasehold improvements, net		16,014		16,429
Capitalized software development costs, net		35,130		34,140
Goodwill		42,683		42,093
Intangibles, net		4,427		3,273
Noncurrent deferred income taxes		21,374		22,731
Other noncurrent assets		6,622		6,759
Total assets	$	498,322	$	501,060
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,408	$	7,759
Income taxes and value added taxes payable		16,078		14,737
Deferred revenues		85,204		83,862
Other accrued liabilities		26,876		32,988
Total current liabilities		136,566		139,346
Long-term debt		150,000		150,000
Noncurrent deferred income taxes		999		784
Other noncurrent liabilities		1,468		1,577
Stockholders’ equity:
Common Stock		180		189
Additional paid-in capital		142,512		175,267
Treasury stock		—		(12,680	)
Accumulated other comprehensive income		5,054		2,696
Retained earnings		61,543		43,881
Total stockholders’ equity		209,289		209,353
Total liabilities and stockholders’ equity	$	498,322	$	501,060

SPSS Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)

	For the Six Months Ended
	June 30,
	2008			2007
	(in thousands)
Cash flows from operating activities:
Net income	$	17,662		$	15,342
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,859			8,397
Deferred income taxes		2,404			5,899
Excess tax benefit from share-based compensation		(1,241	)		(5,302	)
Amortization of share-based compensation		4,538			4,542
Changes in assets and liabilities:
Accounts receivable		11,391			5,405
Inventories		(18	)		(106	)
Prepaid and other assets		(2,053	)		558
Accounts payable		466			(306	)
Accrued expenses		(6,288	)		427
Income taxes		(3,085	)		(126	)
Deferred revenue		(1,504	)		92
Other, net		(3,348	)		(135	)
Net cash provided by operating activities		28,783			34,687
Cash flows from investing activities:
Capital expenditures		(2,816	)		(2,674	)
Capitalized software development costs		(6,802	)		(7,801	)
Purchase of business and intangible assets		(1,245	)		—
Net cash used in investing activities		(10,863	)		(10,475	)
Cash flows from financing activities:
Purchases of common stock		(27,870	)		(49,998	)
Proceeds from stock option exercises and employee stock purchase plan		4,204			12,610
Tax benefit from stock option exercises		1,241			5,302
Proceeds from issuance of long-term debt		—			150,000
Debt issuance costs		—			(4,281	)
Net cash provided by financing activities		(22,425	)		113,633
Effect of exchange rates on cash		3,571			359
Net change in cash and cash equivalents		(934	)		138,204
Cash and cash equivalents at beginning of period		306,930			140,203
Cash and cash equivalents at end of period	$	305,996		$	278,407

SPSS Inc. and Subsidiaries
Supplemental Information—Effect of Share-Based Compensation on Operating Income
(unaudited)

	For the Three Months Ended June 30,
													Adjusted To Exclude
	Reported-GAAP						Share-Based Compensation						Share-Based Compensation
	2008			2007			2008			2007			2008			2007
	(in thousands, except percent amounts)
Net revenues	$	75,701		$	68,922		$	—		$	—		$	75,701		$	68,922
Operating expenses:
Cost of license and maintenance revenues		5,221			4,546			—			—			5,221			4,546
Sales, marketing and services		38,767			33,034			401			479			38,366			32,555
Research and development		11,305			12,351			275			495			11,030			11,856
General and administrative		9,495			8,746			1,793			1,658			7,702			7,088
Operating expenses		64,788			58,677			2,469			2,632			62,319			56,045
Operating income	$	10,913		$	10,245		$	(2,469	)	$	(2,632	)	$	13,382		$	12,877
Operating income as % of revenues		14	%		15	%								18	%		19	%
Diluted net income per common share	$	0.41		$	0.36		$	(0.08	)	$	(0.08	)	$	0.49		$	0.44

	For the Six Months Ended June 30,
													Adjusted To Exclude
	Reported-GAAP						Share-Based Compensation						Share-Based Compensation
	2008			2007			2008			2007			2008			2007
	(in thousands, except percent amounts)
Net revenues	$	153,942		$	139,088		$	—		$	—		$	153,942		$	139,088
Operating expenses:
Cost of license and maintenance revenues		10,520			8,793			—			—			10,520			8,793
Sales, marketing and services		77,927			66,663			810			955			77,117			65,708
Research and development		22,686			24,622			555			960			22,131			23,662
General and administrative		18,031			16,690			3,173			2,627			14,858			14,063
Operating expenses		129,164			116,768			4,538			4,542			124,626			112,226
Operating income	$	24,778		$	22,320		$	(4,538	)	$	(4,542	)	$	29,316		$	26,862
Operating income as % of revenues		16	%		16	%								19	%		19	%
Diluted net income per common share	$	0.92		$	0.75		$	(0.14	)	$	(0.14	)	$	1.06		$	0.89

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 effects of share-based compensation and the related effects on operating income and diluted net income per common share.