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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
COMMISSION FILE NUMBER: 33-64732
SPSS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2815480
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
233 S. WACKER DRIVE, CHICAGO, ILLINOIS 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (312) 651-3000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS TO
BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO FILING REQUIREMENTS
FOR THE PAST 90 DAYS. YES NO X
--- ---
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 MAY 1, 2003, THERE WERE 17,267,463 SHARES OF COMMON STOCK
OUTSTANDING, PAR VALUE $.01, OF THE REGISTRANT.
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SPSS INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 2003
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2002 (AUDITED)
AND MARCH 31, 2003 (UNAUDITED) 3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED) AND 2003 (UNAUDITED) 4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) FOR THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED) AND 2003 (UNAUDITED) 5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 2002 (UNAUDITED) AND
2003 (UNAUDITED) 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 16
ITEM 4. CONTROLS AND PROCEDURES 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 18
ITEM 5. OTHER INFORMATION 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 20
2
ITEM 1. FINANCIAL STATEMENTS
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, MARCH 31,
2002 2003
----------- ---------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,589 $ 23,024
Accounts receivable, net of allowances 49,917 40,853
Inventories, net 2,775 2,373
Deferred income taxes 13,962 13,134
Prepaid expenses and other current assets 14,146 15,434
--------- ---------
Total current assets 96,389 94,818
--------- ---------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
Land and building 2,594 2,545
Furniture, fixtures, and office equipment 15,375 15,183
Computer equipment and software 65,877 66,377
Leasehold improvements 13,144 13,139
--------- ---------
96,990 97,244
Less accumulated depreciation and amortization 59,360 60,720
--------- ---------
Net property, equipment and leasehold improvements 37,630 36,524
--------- ---------
Restricted cash 1,594 1,584
Capitalized software development costs, net of accumulated
amortization 27,629 28,290
Goodwill, net of accumulated amortization 53,560 53,562
Intangibles, net 14,153 13,310
Deferred income taxes 11,116 11,150
Other assets 6,665 6,094
--------- ---------
$ 248,736 $ 245,332
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 2,500 $ 2,500
Accounts payable 11,764 13,451
Accrued royalties 1,437 1,277
Accrued rent 1,356 1,369
Merger consideration 7,250 7,250
Other accrued liabilities 22,425 18,987
Income taxes and value added taxes payable 6,680 4,993
Customer advances 1,920 1,331
Deferred revenues 43,603 44,043
--------- ---------
Total current liabilities 98,935 95,201
--------- ---------
Merger consideration 11,484 9,905
Other non-current liabilities 781 725
Non-current notes payable 6,000 6,000
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value; 50,000,000 shares
authorized; 17,214,515 and 17,258,741 shares
issued and outstanding in 2002 and 2003,
respectively 172 173
Additional paid-in capital 147,926 148,261
Accumulated other comprehensive loss (2,981) (2,713)
Accumulated deficit (13,581) (12,220)
--------- ---------
Total stockholders' equity 131,536 133,501
--------- ---------
$ 248,736 $ 245,332
========= =========
See accompanying notes to consolidated financial statements.
3
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR NET LOSS PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------------------
2002 2003
------------ ------------
Net revenues:
License fees $ 21,604 $ 19,188
Maintenance 19,783 21,427
Services 8,223 8,435
------------ ------------
Net revenues 49,610 49,050
Operating expenses:
Cost of license and maintenance revenues 5,848 3,822
Sales and marketing 30,754 28,354
Research and development 8,108 10,927
General and administrative 5,960 3,954
Special general and administrative charges 1,655 --
Merger-related 1,903 --
Acquired in-process technology 150 --
------------ ------------
Operating expenses 54,378 47,057
------------ ------------
Operating income (loss) (4,768) 1,933
------------ ------------
Other income:
Net interest and investment income 94 3
Other income 7 131
------------ ------------
Other income 101 134
------------ ------------
Income (loss) before income taxes and minority interest (4,667) 2,127
Income tax expense (benefit) (1,680) 766
------------ ------------
Income (loss) before minority interest (2,987) 1,361
Minority interest 439 --
------------ ------------
Net income (loss) $ (2,548) $ 1,361
============ ============
Basic net income (loss) per share $ (0.15) $ 0.08
============ ============
Shares used in computing basic net income (loss) per share 16,781,511 17,227,817
============ ============
Diluted net income (loss) per share $ (0.15) $ 0.08
============ ============
Shares used in computing diluted net income (loss) per share 16,781,511 17,281,003
============ ============
See accompanying notes to consolidated financial statements.
4
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------
2002 2003
------- -------
Net income (loss) $(2,548) $ 1,361
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment (1,432) 268
Unrealized holding gain on marketable securities 11 --
------- -------
Comprehensive income (loss) $(3,969) $ 1,629
======= =======
See accompanying notes to consolidated financial statements.
5
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
---------------------------
2002 2003
---------- ------------
Cash flows from operating activities:
Net income (loss) $ (2,548) $ 1,361
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization 4,364 4,369
Deferred income taxes (2,358) 794
Write-off of acquired in-process technology costs 150 --
Concurrent purchase and sale of software (4) --
Changes in assets and liabilities, net of acquisition:
Accounts receivable 3,274 9,152
Inventories (20) 402
Prepaid expenses and other current assets 652 (742)
Restricted cash (28) 10
Accounts payable (419) 1,709
Accrued royalties (679) (160)
Accrued expenses 1,766 (3,097)
Accrued income taxes (611) (1,784)
Deferred revenues (1,569) 396
Other (366) (14)
-------- --------
Net cash provided by operating activities 1,604 12,396
-------- --------
Cash flows from investing activities:
Capital expenditures, net (3,374) (1,165)
Capitalized software development costs (3,919) (2,458)
Acquisition of LexiQuest (2,500) --
Proceeds from maturities and sales of marketable
securities 7,779 --
Payment to AOL for Direct Marketing Services (1,812) (1,812)
Other investing activity (439) --
-------- --------
Net cash used in investing activities (4,265) (5,435)
Cash flows from financing activities:
Net borrowings under line-of-credit agreements 825 --
Proceeds from issuance of common stock 492 336
-------- --------
Net cash provided by financing activities 1,317 336
-------- --------
Effect of exchange rates on cash (236) 138
-------- --------
Net change in cash and cash equivalents (1,584) 7,435
Cash and cash equivalents at beginning of period 21,400 15,589
-------- --------
Cash and cash equivalents at end of period $ 19,816 $ 23,024
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 128 $ 147
Income taxes paid 1,335 2,669
Cash received from income tax refunds 232 1,160
See accompanying notes to consolidated financial statements.
6
SPSS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements reflect
all adjustments, which in the opinion of the Company's management are necessary
for a fair presentation of the results of the interim periods presented. All
such adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements of SPSS and notes thereto for the year ended December 31, 2002,
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE 2 - RECLASSIFICATIONS
Certain revenues, expenses and balances of prior periods have been
reclassified to conform to the current presentation. Also, in 2003 and on a
going-forward basis, SPSS will report and discuss its revenues in three
categories used by most enterprise software companies:
- License fees, representing new sales of the company's tools,
applications, and components on a perpetual, annual, or ASP
(applications services provider) basis;
- Maintenance, representing recurring revenues recognized by the company
from renewals of maintenance agreements associated with perpetual
licenses or renewals of annual licenses;
- Services, representing revenues recognized from professional services
engagements and training activities.
NOTE 3 - 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 Opinion ("APB") 25,
Accounting for Stock Issued to Employees, and related interpretations. In prior
years, the company has recognized compensation cost for restricted stock and
restricted stock units to employees. No compensation is recognized for stock
option grants to employees. All options granted under the stock incentive plan
had an exercise price equal to the market value of the underlying common stock
on the date of grant. The following table illustrates the effects on net income
(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. The following table also provides the
amount of stock-based compensation cost included in net income (loss) as
reported.
THREE MONTHS ENDED MARCH 31,
2002 2003
------------ ----------
Net income (loss), as reported $ (2,548) $ 1,361
Deduct:
Total stock-based employee compensation expense determined under
the fair value based method for all awards, net of related taxes (1,082) (1,065)
----------- -----------
Pro forma net income (loss) $ (3,630) $ 296
=========== ===========
Income (loss) per share:
Basic-- as reported $ (0.15) $ 0.08
Basic-- pro forma $ (0.21) $ 0.02
Diluted-- as reported $ (0.15) $ 0.08
Diluted-- pro forma $ (0.21) $ 0.02
7
Under the stock incentive plan, the exercise price of each option equals the
market value of the Company's stock on the date of grant. For purposes of
calculating the compensation costs consistent with SFAS No. 123, the fair value
of each grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in the three months ended March 31, 2002 and 2003, respectively: no
expected dividend yield; expected volatility of 37 percent in the three months
ended March 31, 2002 and 38 percent in the three months ended March 31, 2003;
risk-free interest rates of 5.24% in the three months ended March 31, 2002 and
1.70% in the three months ended March 31, 2003; and expected lives of 4-8 years
in each quarterly period.
The weighted average fair value of options granted in the three months ended
March 31, 2002 and in the three months ended March 31, 2003 was $9.56 and $4.63,
respectively.
NOTE 4 - SPECIAL GENERAL AND ADMINISTRATIVE CHARGES
Special general and administrative charges were $1,655,000 for the three
months ended March 31, 2002. These charges included costs associated with the
NetGenesis and LexiQuest acquisitions, including professional fees of $700,000,
severance payments and retention and other bonuses of $250,000, as well as
related travel and meeting expenses and other costs of $700,000. No special
general and administrative charges were incurred in the three months ended March
31, 2003.
NOTE 5 - MERGER-RELATED EXPENSES
Merger-related expenses were $1,900,000 for the three months ended March 31,
2002. These expenses included approximately $900,000 for professional fees,
approximately $500,000 for merger-related bonuses to employees, and
approximately $500,000 of other merger costs. No merger-related expenses were
incurred in the three months ended March 31, 2003.
NOTE 6 - GOODWILL AND INTANGIBLE ASSETS
On January 1, 2002, the Company implemented SFAS No. 142, Goodwill and Other
Intangible Assets. Under the provisions of SFAS No. 142, goodwill is no longer
subject to amortization over its estimated useful life, but instead is subject
to at least annual assessments for impairment by applying a fair-value based
test. SFAS No. 142 also requires that an acquired intangible asset be separately
recognized if the benefit of the intangible asset is obtained through
contractual or other legal rights, or if the asset can be sold, transferred,
licensed, rented or exchanged, regardless of the acquirer's intent to do so.
Based on an analysis of economic characteristics and how the Company operates
its business, the Company concluded it has a single reporting unit. The Company
determined that no transitional impairment loss was required at January 1, 2002.
The Company's policy is to conduct an impairment test under SFAS No. 142 at
December 31 of each year or when other impairment indicators are present. As of
December 31, 2002, the Company determined that no impairment loss was required.
8
Intangible asset data are as follows (in thousands):
MARCH 31,
--------------------------------------------------
2002 2003
----------------------- ------------------------
GROSS GROSS
CARRYING ACCUMULATED CARRYING ACCUMULATED
AMOUNT AMORTIZATION AMOUNT AMORTIZATION
-------- ------------ -------- ------------
Amortizable intangible assets:
Other intangible assets-- AOL/DMS sample $ 15,200 $ (834) $ 15,200 $ (3,965)
Other intangible assets-- ISL trademark 400 (130) 400 (170)
Unamortizable intangible assets:
Goodwill $ 52,572 $ 53,562
Other intangible assets 1,825 1,845
Aggregate amortization expense:
For the three months ended March 31, 2002 and 2003 $ 844 $ 844
Estimated amortization expense:
For the year ended December 31, 2003 $ 3,799
For the year ended December 31, 2004 4,464
For the year ended December 31, 2005 3,925
For the year ended December 31, 2006 40
For the year ended December 31, 2007 40
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following table sets forth the percentages that selected items in the
Consolidated Statements of Operations bear to net revenues.
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
PERCENTAGE OF NET REVENUES
---------------------------
THREE MONTHS ENDED
MARCH 31,
---------------------------
2002 2003
---------- -------------
Statement of Operations Data:
Net revenues:
License fees 43% 39%
Maintenance 40% 44%
Services 17% 17%
--- ---
Net revenues 100% 100%
Operating expenses:
Cost of license and maintenance revenues 12% 8%
Sales and marketing 62% 58%
Research and development 16% 22%
General and administrative 12% 8%
Special general and administrative charges 3% --
Merger-related 4% --
Acquired in-process technology -- --
--- ---
Operating expenses 109% 96%
--- ---
Operating income (loss) (9%) 4%
--- ---
Other income (expense):
Net interest and investment income (expense) -- --
Other income (expense) -- --
--- ---
Other income (expense) -- --
--- ---
Income (loss) before income taxes and minority interest (9%) 4%
Income tax expense (benefit) (3%) 1%
--- ---
Income (loss) before minority interest (6%) 3%
Minority interest 1% --
--- ---
Net income (loss) (5%) 3%
=== ====
10
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2002 TO THREE MONTHS ENDED MARCH 31,
2003.
Net Revenues. Net revenues decreased 1% from $49,610,000 in the three months
ended March 31, 2002 to $49,050,000 in the three months ended March 31, 2003. In
2003 and on a going-forward basis, SPSS will report and discuss its revenues in
three categories used by most enterprise software companies:
- License fees, representing new sales of the company's tools,
applications, and components on a perpetual, annual, or ASP
(application services provider) basis;
- Maintenance, representing recurring revenues recognized by the company
from renewals of maintenance agreements associated with perpetual
licenses or renewals of annual licenses;
- Services, representing revenues recognized from professional services
engagements and training activities.
License Fees. Revenue from new software licenses declined 11% from
$21,604,000 in the three months ended March 31, 2002 to $19,188,000 in the three
months ended March 31, 2003. These results were primarily due to the decrease in
demand for high-priced analytical tools, applications, and components, partially
offset by an increase in sales of lower-priced statistical analysis tools. New
license revenue from SPSS statistical analysis tools increased from higher sales
in the corporate, higher education, and state and local government markets in
the United States. Several European markets also showed growth, including
France, Spain, Sweden, and countries managed through indirect distribution.
Revenues from statistical tools declined in the United Kingdom and were flat in
other international markets. As a percentage of net revenues, software license
revenues decreased from 43% in the three months ended March 31, 2002 to 39% in
the three months ended March 31, 2003.
Maintenance. Revenue from maintenance agreements and renewals of annual
licenses increased by 8% from $19,783,000 in the three months ended March 31,
2002 to $21,427,000 in the three months ended March 31, 2003. This increase was
largely attributable to higher renewal rates across almost every SPSS product
line, particularly among the installed base using its statistical analysis and
business intelligence tools. As a percentage of net revenues, maintenance
revenues increased from 40% in the three months ended March 31, 2002 to 44% in
the three months ended March 31, 2003.
Services. Revenue from professional services engagements, training, and
other sources were $8,435,000 in the three months ended March 31, 2003 compared
to $8,223,000 in the same period last year. These results reflect a fall off in
implementation services associated with the lower number of new licenses signed
in the quarter for ShowCase products as well as flat revenues from training and
the SPSS Online (AOL) business; partially offset by sizable customer retention
and fraud detection consulting engagements completed in the quarter.
Cost of license and maintenance revenues. Cost of license and maintenance
revenues consists of costs of goods sold, amortization of capitalized software
development costs, and royalties paid to third parties. These costs decreased by
35% from $5,848,000 in the three months ended March 31, 2002 to $3,822,000 in
the three months ended March 31, 2003.
11
This decrease was due to lower cost of license and maintenance revenues related
to the decline in license revenues, lower Hyperion Solutions royalties, lower
amortization of acquired technology assets, and a favorable book-to-physical
inventory adjustment. As a percentage of net revenues, cost of license and
maintenance revenues decreased from 12% in the three months ended March 31, 2002
to 8% in the three months ended March 31, 2003.
Sales and marketing. Sales and marketing expenses decreased by 8% from
$30,754,000 in the three months ended March 31, 2002 to $28,354,000 in the first
three months of 2003. This decrease was primarily due to the reduction in the
number of sales and professional services personnel as a result of the
restructuring of the Company's field operations implemented in August 2002,
partially offset by increases due to changes in foreign currency exchange rates.
As a percentage of net revenues, sales and marketing expenses decreased from 62%
in the three months ended March 31, 2002 to 58% in the three months ended March
31, 2003.
Research and development. Research and development expenses increased 35%
from $8,108,000 in the three months ended March 31, 2002 to $10,927,000 in the
three months ended March 31, 2003 (net of capitalized internal software
development costs of $1,812,000 in the three months ended March 31, 2002 and
$1,551,000 in the three months ended March 31, 2003). In the same periods, the
Company's expense for amortization of capitalized software and product
translations, included in cost of revenues, was $1,639,000 in the three months
ended March 31, 2002 and $1,255,000 in the three months ended March 31, 2003.
The increase in research and development expenses was primarily due to the
addition of LexiQuest(TM) development personnel, and the unfavorable impact of
foreign exchange rates. As a percentage of net revenues, research and
development expenses were 16% in the three months ended March 31, 2002 and 22%
in the three months ended March 31, 2003.
General and administrative. General and administrative expenses decreased
34% from $5,960,000 in the three months ended March 31, 2002 to $3,954,000 in
the three months ended March 31, 2003. This decrease was primarily due to cost
reduction programs associated with the restructuring of the Company's field
operations implemented in August 2002 and lower administrative costs related to
the integration of the NetGenesis and LexiQuest acquisitions, partially offset
by increases due to changes in foreign currency exchange rates. As a percentage
of net revenues, general and administrative expenses decreased from 12% in three
months ended March 31, 2002 to 8% in the three months ended March 31, 2003.
Special general and administrative charges. Special general and
administrative charges were $1,655,000 in three months ended March 31, 2002.
These charges included costs associated with the NetGenesis and LexiQuest
acquisitions, such as professional fees of $700,000, severance payments and
retention and other bonuses of $250,000, as well as related travel and meeting
expenses and other costs of $700,000. No special general and administrative
charges were incurred in the three months ended March 31, 2003. As a percentage
of net revenues, special general and administrative expenses were 3% in the
three months ended March 31, 2002.
Merger-related. Merger-related costs were $1,903,000 in three months ended
March 31, 2002. These expenses related to acquisitions completed between October
and December 2001 and the LexiQuest acquisition in 2002, and included
approximately $900,000 for professional fees, approximately $500,000 for
merger-related bonuses paid to employees, and
12
approximately $500,000 for other merger costs. No merger-related costs were
incurred in the three months ended March 31, 2003. As a percentage of net
revenues, merger-related costs were 4% in the three months ended March 31, 2002.
Acquired in-process technology. Acquired in-process technology costs were
$150,000 in the three months ended March 31, 2002, related to the LexiQuest
acquisition.
Net interest and investment income. Net interest and investment income
decreased by 97% from $94,000 in the three months ended March 31, 2002 to
$3,000 in the three months ended March 31, 2003. The income in 2002 was
primarily due to interest earned on short-term investments, partially offset by
interest expense incurred on line-of-credit borrowings. The net income in the
three months ended March 31, 2003 was due primarily due to interest income of
$332,000 due to interest earned on line-of-credit deposits, almost entirely
offset by imputed (noncash) interest expense on the merger consideration payable
related to the Company's October 2001 transaction with AOL Time Warner and the
interest expense related to the financing arrangement with Bank One N.A.
Other income. Other income was $7,000 in three months ended March 31, 2002
and $131,000 in the three months ended March 31, 2003. The other income in the
three months ended March 31, 2003 was primarily due to gains from foreign
currency translations from the weakening of the U.S. dollar against other major
currencies, partially offset by the decline in value of U.S. dollar-denominated
receivables held overseas.
Income tax expense (benefit). The provision for income taxes increased from
a benefit of $1,680,000 in the three months ended March 31, 2002 to an expense
of $766,000 in the three months ended March 31, 2003. The income tax provision
represents an effective tax rate of approximately 36% in both the three month
periods ended March 31, 2002 and 2003.
13
LIQUIDITY AND CAPITAL RESOURCES
SPSS generated $1,604,000 in cash from operations in the three months ended
March 31, 2002 compared to $12,396,000 in the three months ended March 31, 2003.
The overall net loss in the three months ended March 31, 2002 was largely the
result of noncash charges for increased depreciation and amortization expense.
Cash from operations in the three months ended March 31, 2002 came primarily
from collections of open accounts receivable of $3,274,000 and an increase in
accrued expenses of $1,766,000. These amounts were offset by a reduction of
deferred revenues of $1,569,000.
Operating results in the three months ended March 31, 2003 benefited from
cost reductions related to the restructuring of the Company's field operations
implemented in August 2002. This restructuring reduced the SPSS field sales
force by 25%, total staff by 7%, and total payroll by 8%. In addition, the
Company closed its offices in Miami, Florida, and reduced its facilities in
Chicago, Illinois; London, England; Cambridge, Massachusetts; and Point
Richmond, California. These and other cost reductions combined with strong
collections of open accounts receivable and flat revenues, offset by decreases
in accrued expenses related to capital lease obligations, increased the
Company's cash from operations to $12,396,000 for the three months ended
March 31, 2003.
Investing activities reduced cash by $4,265,000 in the three months ended
March 31, 2002 and reduced cash by $5,435,000 in the three months ended March
31, 2003. In 2002, cash was primarily used for capital expenditures of
$3,374,000 and capitalized software development costs of $3,919,000. SPSS also
paid $2,500,000 to acquire LexiQuest and made a scheduled payment of $1,812,500
to AOL. Proceeds of $7,779,000 were received from the maturities and sales of
marketable securities. In the three months ended March 31, 2003, $1,165,000 in
cash was used for capital expenditures, along with $2,458,000 for capitalized
software development costs, and a scheduled payment of $1,812,500 related to the
AOL transaction.
Cash provided by financing activities was $1,317,000 in the three months
ended March 31, 2002 and $336,000 the three months ended March 31, 2003. In the
three months ended March 31, 2002, financing activities provided cash of
$825,000 from net borrowings under the line-of-credit agreement and proceeds of
$492,000 from the issuance of common stock, primarily through the exercise of
stock options and employee stock purchases through the employee stock purchase
plan. In the three months ended March 31, 2003, financing activities provided
proceeds of $336,000 from the issuance of common stock, primarily through the
exercise of stock options and employee stock purchases through the employee
stock purchase plan.
On March 31, 2003, SPSS entered into a four (4) year, $25 million credit
facility with Foothill Capital Corporation. This credit facility replaced SPSS's
prior banking relationship with Bank One, N.A. The Foothill facility includes a
four (4) year term loan in the amount of $10,000,000 and a revolving line of
credit. The maximum amount SPSS may borrow under the revolving line of credit
portion of the facility will depend upon the value of SPSS's eligible accounts
receivable generated within the United States. Additionally, the Company has
immediate availability of $2,500,000 under the revolving line of credit.
The terms and conditions of the Foothill credit facility are specified in a
Loan and Security Agreement, dated as of March 31, 2003, by and between Foothill
and SPSS. The term loan portion of the facility bears interest at a rate of 2.5%
above prime, with potential future
14
reductions of up to 0.5% in the interest rate based upon SPSS'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 Foothill. The term loan of
$10,000,000 will be paid down evenly over the four (4) year period (i.e.,
$2,500,000 per year over the next four years). As a result of the refinancing,
$6,000,000 of the Company's line of credit borrowings of $8,500,000 that existed
as of December 31, 2002 have been classified as long-term.
The 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. SPSS expects to
comply with these covenants for the three months ended March 31, 2003.
The facility is secured by all of SPSS's assets located in the United
States.
ShowCase Corporation, a Minnesota corporation and wholly owned subsidiary of
SPSS, and NetGenesis Corp., a Delaware corporation and wholly owned subsidiary
of SPSS, have guaranteed the obligations of SPSS under the Loan and Security
Agreement. This guaranty is secured by all of the assets of ShowCase and
NetGenesis.
SPSS 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.
SUMMARY DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table reflects a summary of SPSS's contractual cash
obligations:
LESS THAN
TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS AFTER 5 YEARS
----------------------- ---------- ---------- -------------
United Kingdom mortgage......... $ 804,000 $ 79,000 $ 300,000 $ 267,000 $ 158,000
Litigation settlement........... 595,000 595,000 -- -- --
Notes payable................... 8,500,000 2,500,000 5,000,000 1,000,000 --
Merger consideration-- AOL,
undiscounted.................. 16,313,000 7,250,000 9,063,000 -- --
Capital lease commitments....... 30,000 30,000 -- -- --
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, the Company 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 Company's Annual Report on Form 10-K for the year ended
December 31, 2002, filed with the Securities and Exchange Commission.
INTERNATIONAL OPERATIONS
Revenues from international operations were 48% and 55% of total net
revenues in the three months ended March 31, 2002 and March 31, 2003,
respectively. The percentage differences are the result of revenues increasing
at a higher rate in Europe and the Pacific Rim than in the United States
compared to the first quarter of 2002, as well as the positive effects of
changes in foreign currency exchange rates for the three months ended March 31,
2002 and March 31, 2003.
15
RECENT ACCOUNTING PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under Statement 133. The
new Statement amends Statement 133 for decisions made: 1) as part of the
Derivatives Implementation Group process that effectively required amendments to
Statement 133; 2) in connection with other Board projects dealing with financial
instruments; and, 3) regarding implementation issues raised in relation to the
application of the definition of a derivative, particularly regarding the
meaning of an "underlying" and the characteristics of a derivative that contain
financing components. The statement is generally effective for contracts entered
into or modified after June 30, 2003 and is to be applied prospectively. The
Company is currently reviewing the impact that SFAS No. 149 will have on future
results of operations.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks and
uncertainties that could cause the results of SPSS Inc. and its subsidiaries to
differ materially from those expressed or implied by such forward-looking
statements. These risks include the timely development, production, and
acceptance of new products and services, market conditions, competition, the
flow of products into third-party distribution channels, currency fluctuations
and other risks detailed from time to time in the Company's Securities and
Exchange Commission filings. The words "anticipate," "believe," "estimate,"
"expect," "plan," "intend," "will," and similar expressions, as they relate to
SPSS or its management, may identify forward-looking statements. Such statements
reflect the current views of SPSS with respect to future events and are subject
to certain risks, uncertainties, and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, or expected. SPSS does not intend to update
these forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company 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 March 31, 2003, the Company had
$8,500,000 outstanding under this line of credit. A 100 basis point increase in
interest rates would result in an additional $85,000 of annual interest expense,
assuming the same level of borrowing.
The Company is exposed to market risk from fluctuations in foreign currency
exchange rates. Since a substantial portion of the Company's operations and
revenue occur outside the United States, and in currencies other than the U.S.
dollar, the Company's results can be significantly impacted by changes in
foreign currency exchange rates. To manage the Company's exposure to
fluctuations to currency exchange rates, the Company may enter into various
financial instruments, such as options. These instruments 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
16
U.S. dollar by 10 percent from levels at March 31, 2003, management expects this
would have a materially adverse effect on the Company's financial results.
At March 31, 2003, the Company did not have any option contracts
outstanding.
The Company's derivative instruments do not qualify for hedge accounting
treatment under SFAS No. 133. Accordingly, gains and losses related to changes
in the fair value of these instruments are recognized in income in each
accounting period.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
SPSS maintains disclosure controls and procedures, which have been designed
to ensure that information related to SPSS is recorded, processed, summarized
and reported by SPSS on a timely basis. SPSS has reviewed its internal control
structure and these disclosure controls and procedures. In connection with the
Company's review of its disclosure controls and procedures, SPSS has established
a compliance committee that is responsible for accumulating potentially material
information regarding SPSS and considering the materiality of this information.
The compliance 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 compliance committee is
comprised of the Company's senior legal official, principal accounting officer,
chief investor relations officer, principal risk management officer, and certain
other members of the SPSS senior management.
Within 90 days prior to the filing of this report, SPSS's Chief Executive
Officer, Jack Noonan, and Chief Financial Officer, Edward Hamburg, with the
participation of the compliance committee, carried out an evaluation of the
effectiveness of the design and operation of SPSS's disclosure controls and
procedures. Based upon this evaluation, Mr. Noonan and Dr. Hamburg concluded
that the disclosure controls and procedures of SPSS are effective in causing
material information to be recorded, processed, summarized, and reported by
management of SPSS on a timely basis and ensuring that the quality and
timeliness of public disclosures by SPSS comply with its disclosure obligations
under the Securities Exchange Act of 1934.
Changes in Internal Controls
There were no significant changes in the internal controls of SPSS or in
other factors that could significantly affect these internal controls after the
date of the most recent evaluation.
17
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 SPSS'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 intends to vigorously defend itself against the claims set
forth in the complaint.
SPSS may also become party to various claims and legal actions arising in
the ordinary course of business.
18
ITEM 5. OTHER INFORMATION
It has been determined that SPSS should have filed historical and pro forma
financial statements with the Securities and Exchange Commission in connection
with the AOL transaction. Until these financial statements are filed, SPSS will
not be allowed to file any registration statements with the SEC. In addition,
SPSS is not eligible to file a registration statement on Form S-3 for one year
after the filing deficiency occurred.
Audit Committee and Related Issues
In keeping with the new relationships intended to be established between
publicly-traded companies and their auditors, the audit committee of SPSS's
Board of Directors has complete authority over the selection, direction and
compensation of the Company's independent auditors, KPMG LLP.
The audit committee also has authority and has developed a procedure to
pre-approve all non-audit services provided by KPMG and to monitor auditor
independence. During the fiscal quarter ended March 31, 2003, the audit
committee did not pre-approve any non-audit services as KPMG did not provide
any such services. In addition, the audit committee monitors SPSS's adherence
to its corporate compliance program and general corporate policies.
19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (Note: Management contracts and compensatory plans or
arrangements are identified with a "+" in the following list.)
INCORPORATION
EXHIBIT BY REFERENCE
NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE)
- ------- ------------------------------------------------------------------- ----------------
2.1 Agreement and Plan of Merger among SPSS Inc., SPSS ACSUB, Inc., (1), Ex. 2.1
Clear Software, Inc. and the shareholders named therein, dated
September 23, 1996.
2.2 Agreement and Plan of Merger among SPSS Inc., SPSS Acquisition Inc. (2), Annex A
and Jandel Corporation, dated October 30,1996.
2.3 Asset Purchase Agreement by and between SPSS Inc. and DeltaPoint, (16), Ex. 2.3
Inc., dated as of May 1, 1997.
2.4 Stock Purchase Agreement among the Registrant, Edward Ross, Richard (3), Ex. 2.1
Kottler, Norman Grunbaum, 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 (3), Ex. 2.2
Kottler, Norman Grunbaum, 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 (4), Ex. 2.1
Shareholders of Quantime Limited listed on the signature pages
thereto, dated November 21, 1997.
2.7 Stock Purchase Agreement by and among Jens Nielsen, Henrik (4), Ex.2.2
Rosendahl, Ole Stangegaard, Lars 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 (18), Ex. 2.1
Shareholders of Integral Solutions 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 (20), Ex. 2.9
Ltd. and Jens Meinecke and Microtab Systems Pty Ltd., dated as of
November 1, 1998.
20
2.10 Stock Acquisition Agreement by and among SPSS Inc., Vento Software, (21), Ex. 2.1
Inc. and David Blyer, John Gomez and John Pappajohn, dated as of
November 29, 1999.
2.11 Asset Purchase Agreement by and between SPSS Inc. and DataStat, (24), Ex. 2.11
S.A., dated as of December 23, 1999.
2.12 Agreement and Plan of Merger dated as of November 6, 2000, among (25), Ex. 2.1
SPSS Inc., SPSS Acquisition Sub Corp., and ShowCase Corporation.
2.13 Agreement and Plan of Merger dated as of October 28, 2001, among (29), Ex. 99.1
SPSS Inc., Red Sox Acquisition Corp. and NetGenesis Corp.
2.14 Stock Purchase Agreement by and among SPSS Inc., LexiQuest, S.A. (33), Ex. 2.14
and the owners of all of the issued and outstanding shares of
capital stock of LexiQuest, S.A., dated as of January 31, 2002.
3.1 Certificate of Incorporation of SPSS. (5), Ex. 3.2
3.2 By-Laws of SPSS. (5), Ex. 3.4
10.1 Employment Agreement with Jack Noonan.+ (8), Ex. 10.1
10.2 Agreement with Valletta.+ (6), Ex. 10.2
10.3 Agreement between SPSS and Prentice Hall. (6), Ex. 10.5
10.4 Intentionally omitted.
10.5 HOOPS Agreement. (6), Ex. 10.7
10.6 Stockholders Agreement. (5), Ex. 10.8
10.7 Agreements with CSDC. (5), Ex. 10.9
10.8 Amended 1991 Stock Option Plan.+ (5), Ex. 10.10
10.9 SYSTAT Asset Purchase Agreement. (9), Ex. 10.9
10.10 1994 Bonus Compensation.+ (10), Ex. 10.11
10.11 Lease for Chicago, Illinois Office. (10), Ex. 10.12
10.12 Amendment to Lease for Chicago, Illinois Office. (10), Ex. 10.13
10.13 1995 Equity Incentive Plan.+ (11), Ex. 10.14
10.14 1995 Bonus Compensation.+ (12), Ex. 10.15
10.15 Amended and Restated 1995 Equity Incentive Plan.+ (13), Ex. 10.17
10.16 1996 Bonus Compensation.+ (14), Ex. 10.18
10.17 Software Distribution Agreement between the Company and Banta (14), Ex. 10.19
Global Turnkey.
21
10.18 Lease for Chicago, Illinois in Sears Tower. (15), Ex. 10.20
10.19 1997 Bonus Compensation.+ (17), Ex. 10.21
10.20 Norman H. Nie Consulting L.L.C. Agreement with SPSS. (17), Ex. 10.22
10.21 Second Amended and Restated 1995 Equity Incentive Plan.+ (19), Ex. A
10.22 1998 Bonus Compensation.+ (20), Ex. 10.23
10.23 Third Amended and Restated 1995 Equity Incentive Plan.+ (22), Ex. 10.1
10.24 Intentionally omitted.
10.25 Intentionally omitted.
10.26 1999 Bonus Compensation+ (24), Ex. 10.27
10.27 2000 Equity Incentive Plan.+ (26), Ex. 10.45
10.28 SPSS Qualified Employee Stock Purchase Plan.+ (26), Ex. 10.46
10.29 SPSS Nonqualified Employee Stock Purchase Plan.+ (26), Ex. 10.47
10.30 2000 Bonus Compensation.+ (27), Ex. 10.30
10.31 Stock Purchase Agreement by and between SPSS Inc. and Siebel (28), Ex. 10.31
Systems, Inc.
10.32 1999 Employee Equity Incentive Plan.+ (30), Ex. 4.1
10.33 Stock Purchase Agreement by and between SPSS Inc. and (31), Ex. 10.33
America Online, Inc.
10.34 Strategic Online Research Services Agreement by and between SPSS (32), Ex. 99.1
Inc. and America Online, Inc.*
10.35 SPSS Inc. 2002 Equity Incentive Plan+ (34), Ex. 4.1
10.36 Intentionally omitted.
10.37 Intentionally omitted.
10.38 Intentionally omitted.
22
10.39 Intentionally omitted.
10.40 Intentionally omitted.
10.41 Intentionally omitted.
10.42 Service Agreement dated March 17, 1998, amended as of January 1, (37), Ex. 10.41
2002, by and between SPSS Inc. (as successor by merger to ShowCase
Corporation) and Patrick Dauga.
10.43 Loan and Security Agreement, dated as of March 31, 2003, by and (37), Ex. 10.41
between SPSS Inc. and each of SPSS's subsidiaries that may become
additional borrowers, as Borrower, and Foothill Capital Corporation,
as Lender.
99.1 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.
99.2 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.
- ----------
* Portions of this Exhibit are omitted and have been filed separately with
the Securities and Exchange Commission pursuant to Rule 406 promulgated
under the Securities Act of 1933.
(1) Previously filed with SPSS Inc.'s Report on Form 8-K, 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 Form S-4 Registration Statement of
SPSS Inc. filed on November 7, 1996. (File No. 333-15427)
(3) Previously filed with SPSS Inc.'s Report on Form 8-K, dated September 30,
1997, filed on October 15, 1997. (File No. 000-22194)
(4) Previously filed with the Form S-3 Registration Statement of SPSS Inc.
filed on November 26, 1997. (File No. 333-41207)
(5) Previously filed with Amendment No. 2 to Form S-1 Registration Statement of
SPSS Inc. filed on August 4, 1993. (File No. 33-64732)
23
(6) Previously filed with Amendment No. 1 to Form S-1 Registration Statement of
SPSS Inc. filed on July 23, 1993. (File No. 33-64732)
(7) Previously filed with Form 10-Q Quarterly Report of SPSS Inc. for the
quarterly period ended September 30, 1993. (File No. 000-22194)
(8) Previously filed with the Form S-1 Registration Statement of SPSS Inc.
filed on June 22, 1993. (File No. 33-64732)
(9) Previously filed with the Form S-1 Registration Statement of SPSS Inc.
filed on December 5, 1994. (File No. 33-86858)
(10) Previously cited with the Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 1994. (File No. 000-22194)
(11) Previously filed with SPSS Inc.'s 1995 Proxy Statement. (File No.
000-22194)
(12) Previously filed with the Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 1995. (File No. 000-22194)
(13) Previously filed with SPSS Inc.'s 1996 Proxy Statement. (File No.
000-22194)
(14) Previously filed with the Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 1996. (File No. 000-22194)
(15) Previously filed with the Form 10-Q Quarterly Report of SPSS Inc. for the
quarterly period ended March 31, 1997. (File No. 000-22194)
(16) Previously filed with the Form 10-Q Quarterly Report of SPSS Inc. for the
quarterly period ended June 30, 1997. (File No. 000-22194)
(17) Previously filed with Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 1997. (File No. 000-22194)
(18) Previously filed with SPSS Inc.'s Report on Form 8-K, dated December 31,
1998, filed on January 15, 1999, as amended on Form 8-K/A filed March 12,
1999. (File No. 000-22194)
(19) Previously filed with SPSS Inc.'s 1998 Proxy Statement. (File No.
000-22194)
(20) Previously filed with Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 1998. (File No. 000-22194)
(21) Previously filed with SPSS Inc. Report on Form 8-K, dated November 29,
1999, filed December 10, 1999. (File No. 000-22194)
(22) Previously filed with Form 10-Q Quarterly Report of SPSS Inc. for the
quarterly period ended June 30, 1999. (File No. 000-22194)
(23) Intentionally omitted.
(24) Previously filed with Form 10-K Annual Report of SPSS Inc. for the year
ended December 21, 1999. (File No. 000-22194).
24
(25) Previously filed with SPSS Inc.'s Form 8-K, filed November 15, 2000. (File
No. 000-22194).
(26) Previously filed with the Form S-4 Registration Statement of SPSS Inc.,
filed on December 19, 2000. (File No. 333-52216)
(27) Previously filed with the Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 2000. (File No. 000-22194)
(28) Previously filed with the Form S-3 Registration Statement of SPSS Inc.
filed on October 9, 2001. (File No. 333-71236)
(29) Previously filed with SPSS Inc. Report on Form 8-K, dated October 28, 2001,
filed on October 29, 2001. (File No. 000-22194)
(30) Previously filed with the Form S-8 Registration Statement of SPSS Inc.
filed on September 15, 2000. (File No. 333-45900)
(31) Previously filed with the Form S-3 Registration Statement of SPSS Inc.
filed on December 12, 2001. (File No. 333-74944)
(32) Previously filed with SPSS Inc. Report on Form 8-K/A (Amendment No. 1)
filed on December 12, 2001. (File No. 000-22194)
(33) Previously filed with SPSS Inc. Report on Form 8-K, dated February 6, 2002,
filed on February 21, 2002. (File No. 000-22194)
(34) Previously filed with the Form S-8 Registration Statement of SPSS Inc.
filed on June 18, 2002. (File No. 333-90694)
(35) Intentionally omitted.
(36) Intentionally omitted.
(37) Previously filed with the Form 10-K Annual Report of SPSS Inc. for the year
ended December 31, 2002. (File No. 000-22194)
(b) SPSS filed the following reports on Form 8-K during the three months
ended March 31, 2003:
The current report of SPSS Inc. on Form 8-K, dated April 30,
2003, filed with the SEC on May 2, 2003. In accordance with
the new rules issued by the SEC, the Form 8-K reported that
SPSS had issued a press release announcing its results for its
fiscal quarter ended March 31, 2003 and attached a copy of
this press release as an exhibit. The report also described
certain non-GAAP financial measures included in the press
release.
The current report of SPSS Inc. on Form 8-K, dated April 30,
2003, filed with the SEC on May 5, 2003. In accordance with
the new rules issued by the SEC, the Form 8-K reported that
SPSS had held its First Quarter 2003 Earnings Release
Conference Call on April 30, 2003. The Form 8-K attached a
transcript of the conference call as an exhibit because SPSS's
Form 8-K filed with the SEC on May 2, 2003 was not filed with
the SEC before the commencement of the conference call.
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPSS Inc.
Date: May 15, 2003 By: /s/ JACK NOONAN
----------------------------------------
Jack Noonan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the undersigned, in his capacity as the principal financial
officer of the Registrant.
Date: May 15, 2003 By: /s/ EDWARD HAMBURG
----------------------------------------
Edward Hamburg
Executive Vice President, Corporate
Operations and Chief Financial Officer
26
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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 By: /s/ JACK NOONAN
----------------------------------------
Jack Noonan
President and Chief Executive Officer
27
CERTIFICATION
I, Edward Hamburg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SPSS Inc.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures 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 quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2002 By: /s/ EDWARD HAMBURG
---------------------------------------
Edward Hamburg
Executive Vice President, Corporate
Operations and Chief Financial Officer
28
SPSS INC.
EXHIBIT INDEX
Exhibit
No. Description
------ -----------
99.1 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
99.2 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
29