UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2009
Commission
File Number: 001-34103
SPSS Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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36-2815480
(IRS Employer
Identification No.)
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233 S. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices and zip code)
Registrants telephone number including area code: (312) 651-3000
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes
o
No
þ
The number of shares outstanding of the registrants Common Stock, par value $0.01, as of July
30, 2009, was 18,444,071.
SPSS INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2009
INDEX
2
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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December 31,
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June 30,
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2008
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2009
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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305,917
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$
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337,882
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Accounts receivable, net
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43,172
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39,870
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Inventories, net
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433
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|
651
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Deferred income taxes, net
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4,142
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3,945
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Prepaid income taxes
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5,738
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9,032
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Other current assets
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4,693
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5,459
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Total current assets
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364,095
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396,839
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Property, equipment and leasehold improvements, net
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14,323
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13,892
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Capitalized software development costs, net
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37,470
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39,069
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Goodwill
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41,845
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41,886
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Intangibles, net
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2,091
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1,898
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Deferred income taxes
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20,728
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16,435
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Other noncurrent assets
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3,673
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2,583
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Total assets
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$
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484,225
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$
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512,602
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities:
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Accounts payable
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$
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6,391
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$
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7,729
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Income taxes and value added taxes payable
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10,877
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12,764
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Deferred revenues
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83,638
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79,992
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Other accrued liabilities
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22,146
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21,605
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Total current liabilities
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123,052
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122,090
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Long-term debt (see Note 9)
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128,106
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128,173
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Noncurrent deferred income taxes, net
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8,509
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7,384
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Other noncurrent liabilities
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1,937
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1,578
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Stockholders equity:
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Common Stock, $.01 par value; 50,000,000 shares
authorized; 18,172,910 and 18,349,931 issued at
December 31, 2008 and June 30, 2009,
respectively
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182
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|
184
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Additional paid-in capital (see Note 9)
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164,373
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170,202
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Accumulated other comprehensive loss
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(16,197
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)
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(6,817
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)
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Retained earnings (see Note 9)
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74,263
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89,808
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Total stockholders equity
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222,621
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253,377
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Total liabilities and stockholders equity
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$
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484,225
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$
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512,602
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See accompanying notes to consolidated financial statements.
3
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2008
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2009
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2008
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2009
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Net revenues:
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License
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$
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34,823
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$
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30,296
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$
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73,240
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$
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64,066
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Maintenance
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33,184
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33,561
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65,331
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66,056
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Services
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7,694
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5,888
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15,371
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11,704
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Net revenues
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75,701
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69,745
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153,942
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141,826
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Operating expenses:
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Cost of license and maintenance revenues
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5,221
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4,753
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10,520
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9,365
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Sales, marketing and services
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38,767
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33,223
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77,927
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64,360
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Research and development
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11,305
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9,686
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22,686
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20,663
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General and administrative
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9,495
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10,772
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18,031
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18,903
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Operating expenses
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64,788
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58,434
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|
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129,164
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113,291
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Operating income
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10,913
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|
11,311
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24,778
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28,535
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Other income (expense):
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|
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|
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Interest expense (see Note 9)
|
|
|
(2,479
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)
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|
(2,504
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)
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|
|
(4,919
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)
|
|
|
(5,027
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)
|
Interest income
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|
2,339
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|
|
|
681
|
|
|
|
5,316
|
|
|
|
1,498
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|
Gain on convertible debt retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356
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|
Other
|
|
|
(468
|
)
|
|
|
(816
|
)
|
|
|
(168
|
)
|
|
|
(2,056
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(608
|
)
|
|
|
(2,639
|
)
|
|
|
229
|
|
|
|
(5,229
|
)
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
10,305
|
|
|
|
8,672
|
|
|
|
25,007
|
|
|
|
23,306
|
|
Income tax expense
|
|
|
3,279
|
|
|
|
2,492
|
|
|
|
8,943
|
|
|
|
7,761
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
7,026
|
|
|
$
|
6,180
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|
|
$
|
16,064
|
|
|
$
|
15,545
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
Basic net income per share
|
|
$
|
0.39
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|
|
$
|
0.34
|
|
|
$
|
0.90
|
|
|
$
|
0.85
|
|
|
|
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|
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|
|
|
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|
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|
|
|
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|
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|
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|
Diluted net income per share
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|
$
|
0.37
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|
|
$
|
0.32
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|
|
$
|
0.84
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|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
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|
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|
Share data:
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
Shares used in computing basic net income per share
|
|
|
17,936
|
|
|
|
18,327
|
|
|
|
17,926
|
|
|
|
18,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted net income per share
|
|
|
19,072
|
|
|
|
19,568
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|
|
|
19,154
|
|
|
|
19,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
4
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
Net income
|
|
$
|
7,026
|
|
|
$
|
6,180
|
|
|
$
|
16,064
|
|
|
$
|
15,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
397
|
|
|
|
11,689
|
|
|
|
2,358
|
|
|
|
9,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
7,423
|
|
|
$
|
17,869
|
|
|
$
|
18,422
|
|
|
$
|
24,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
5
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16,064
|
|
|
$
|
15,545
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
9,509
|
|
|
|
9,256
|
|
Convertible debt amortization
|
|
|
2,939
|
|
|
|
3,081
|
|
Deferred income taxes
|
|
|
1,413
|
|
|
|
3,459
|
|
Excess tax benefit from share-based compensation
|
|
|
(1,241
|
)
|
|
|
74
|
|
Amortization of share-based compensation
|
|
|
4,538
|
|
|
|
4,648
|
|
Gain on convertible debt retirement
|
|
|
|
|
|
|
(356
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
11,391
|
|
|
|
3,784
|
|
Inventories
|
|
|
(18
|
)
|
|
|
(201
|
)
|
Prepaid and other assets
|
|
|
(2,053
|
)
|
|
|
(734
|
)
|
Accounts payable
|
|
|
466
|
|
|
|
1,320
|
|
Accrued expenses
|
|
|
(6,288
|
)
|
|
|
(511
|
)
|
Income taxes
|
|
|
(3,085
|
)
|
|
|
(1,372
|
)
|
Deferred revenue
|
|
|
(1,504
|
)
|
|
|
(5,510
|
)
|
Other, net
|
|
|
(3,348
|
)
|
|
|
186
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
28,783
|
|
|
|
32,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(2,816
|
)
|
|
|
(2,677
|
)
|
Capitalized software development costs
|
|
|
(6,802
|
)
|
|
|
(6,887
|
)
|
Purchase of business and intangible assets
|
|
|
(1,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(10,863
|
)
|
|
|
(9,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from stock option exercises and employee stock purchase plan
|
|
|
4,204
|
|
|
|
2,434
|
|
Tax benefit from stock option exercises
|
|
|
1,241
|
|
|
|
|
|
Retirement of convertible debt
|
|
|
|
|
|
|
(3,084
|
)
|
Purchases of common stock
|
|
|
(27,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(22,425
|
)
|
|
|
(650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash
|
|
|
3,571
|
|
|
|
9,510
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(934
|
)
|
|
|
31,965
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
306,930
|
|
|
|
305,917
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
305,996
|
|
|
$
|
337,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
1,896
|
|
|
$
|
1,878
|
|
Income taxes paid
|
|
|
9,432
|
|
|
|
7,582
|
|
Cash received from income tax refunds
|
|
|
22
|
|
|
|
152
|
|
See accompanying notes to consolidated financial statements.
6
SPSS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Basis of Presentation
The accompanying consolidated financial statements of SPSS Inc. (the Company) have been
prepared in accordance with accounting principles generally accepted in the United States of
America for interim financial information, the instructions to United States Securities and
Exchange Commission Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. It is presumed that the reader has
already read the Companys Annual Report on Form 10-K for the year ended December 31, 2008.
In the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included in these consolidated financial
statements. The results of operations for the interim periods are not necessarily indicative of
the results that may be expected for the fiscal year. For further information, refer to the
consolidated financial statements and accompanying notes included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2008.
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates. Where
appropriate, some items relating to prior years have been reclassified to conform to the
presentation in the current year.
NOTE 2 Share-Based Compensation
Share-based compensation expense, including expense related to restricted share units,
deferred share units and stock options under the provision of SFAS No. 123(R) was comprised as
follows (in thousands) :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
Sales, Marketing and Services
|
|
$
|
401
|
|
|
$
|
292
|
|
|
$
|
810
|
|
|
$
|
587
|
|
Research and Development
|
|
|
275
|
|
|
|
206
|
|
|
|
555
|
|
|
|
412
|
|
General and Administrative
|
|
|
1,793
|
|
|
|
2,179
|
|
|
|
3,173
|
|
|
|
3,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation expense
|
|
$
|
2,469
|
|
|
$
|
2,677
|
|
|
$
|
4,538
|
|
|
$
|
4,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 3 Domestic and Foreign Operations
Net revenues per geographic region are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
Americas
|
|
$
|
30,297
|
|
|
$
|
31,186
|
|
|
$
|
61,206
|
|
|
$
|
59,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
9,924
|
|
|
|
6,679
|
|
|
|
19,562
|
|
|
|
13,577
|
|
The Netherlands
|
|
|
11,099
|
|
|
|
8,942
|
|
|
|
21,545
|
|
|
|
17,442
|
|
Other
|
|
|
14,200
|
|
|
|
12,477
|
|
|
|
27,076
|
|
|
|
24,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Europe
|
|
|
35,223
|
|
|
|
28,098
|
|
|
|
68,183
|
|
|
|
55,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan
|
|
|
5,187
|
|
|
|
6,012
|
|
|
|
15,326
|
|
|
|
18,594
|
|
Other
|
|
|
4,994
|
|
|
|
4,449
|
|
|
|
9,227
|
|
|
|
8,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pacific Rim
|
|
|
10,181
|
|
|
|
10,461
|
|
|
|
24,553
|
|
|
|
26,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
45,404
|
|
|
|
38,559
|
|
|
|
92,736
|
|
|
|
82,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
75,701
|
|
|
$
|
69,745
|
|
|
$
|
153,942
|
|
|
$
|
141,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
NOTE 4 Earnings Per Common Share
Earnings per common share (EPS) are computed by dividing net income by the weighted average
number of shares of common stock (basic) plus common stock equivalents outstanding (diluted) during
the period. Common stock equivalents consist of contingently issuable shares, stock options and
common shares issuable on conversion of the Companys convertible notes. The Company computes the
diluted weighted average shares outstanding using the treasury stock method. Basic weighted average
common shares outstanding reconciles to diluted weighted average common shares outstanding as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2008
|
|
2009
|
|
2008
|
|
2009
|
Basic weighted average common shares outstanding
|
|
|
17,936
|
|
|
|
18,327
|
|
|
|
17,926
|
|
|
|
18,280
|
|
Dilutive effect of stock options and other equity
|
|
|
1,136
|
|
|
|
1,241
|
|
|
|
1,228
|
|
|
|
1,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
19,072
|
|
|
|
19,568
|
|
|
|
19,154
|
|
|
|
19,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares not included in the diluted EPS calculation for the three and six month
periods ended June 30, 2008 and June 30, 2009 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
2008
|
|
2009
|
|
2008
|
|
2009
|
22
|
|
|
101
|
|
|
|
12
|
|
|
|
136
|
|
NOTE 5 Cost Management Programs
During 2007, the Company incurred expenses totaling $4.6 million related to a management
reorganization and a planned consolidation of certain research and development facilities. These
costs principally included employee severance costs, lease exit costs and the write-off of
leasehold improvements. These costs are primarily recorded as a component of Research and
Development expense in the Consolidated Statements of Income. As of June 30, 2009, the Company has
remaining approximately $0.8 million in other accrued liabilities related to these expenses and
expects the liabilities to be paid in 2009.
During 2008, the Company incurred expenses totaling $4.8 million related to a cost management
program involving staff reorganization and reduction. These costs primarily included employee
severance costs and are primarily recorded as a component of Sales, Marketing and Services expense
in the Consolidated Statements of Income. As of June 30, 2009, all liabilities related to this
program have been paid.
NOTE 6 Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require
any new fair value measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This statement is effective
for fiscal years beginning after November 15, 2007. On February 14, 2008 the FASB issued FSP FAS
No. 157-1 Application of FASB Statement No. 157 to FASB Statement 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13 that amends SFAS No. 157 to exclude its application for purposes of
lease classification or measurement under SFAS13. On February 12, 2008, the FASB issued Staff
Position Financial Accounting Standard (FSP FAS) No. 157-2 Effective Date of FASB Statement No.
157 that amends SFAS No. 157 to delay the effective date for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis to fiscal years beginning after November 15, 2008. The
Company adopted the required provisions of SFAS No. 157-1 effective January 1, 2008 for financial
assets and liabilities and there was no material effect on its consolidated financial statements.
On January 1, 2009, the Company adopted FSP 157-2 and it did not have a material impact on its
consolidated financial statements. On January 1, 2009, the Company adopted SFAS No. 157 for
non-financial assets and liabilities. In October 2008, the FASB issued FSP 157-3, Determining the
Fair Value of a Financial Asset in a Market That Is Not Active. The FSP was effective upon
issuance, including periods for which financial statements have not been issued. The FSP clarified
the application of SFAS 157 in an inactive market and provided an illustrative example to
demonstrate how the fair value of a financial asset is determined when the market for that
financial asset is inactive. The adoption of this FSP FAS 157-3 did not have a material impact on
the Companys consolidated financial statements.
8
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3,
Determination of the Useful
Life of Intangible Assets
(FSP No. FAS 142-3). FSP No. FAS 142-3 requires companies estimating
the useful life of a recognized intangible asset to consider their historical experience in
renewing or extending similar arrangements or, in the absence of historical experience, to consider
assumptions that market participants would use about renewal or extension as adjusted for SFAS No.
142s,
Goodwill and Other Intangible Assets,
entity-specific factors. FSP No. FAS 142-3 is
effective for fiscal years beginning after December 15, 2008. The Company adopted FSP No. FAS
142-3 on January 1, 2009. The adoption of FSP No. FAS 142-3 did not have a material effect on its
consolidated financial statements.
In May 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 162,
The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles used in the preparation of
financial statements that are presented in conformity with generally accepted accounting
principles. SFAS No. 162 becomes effective 60 days following the SECs approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles. The Company does not expect that the
adoption of SFAS No. 162 to have a material effect on its consolidated financial statements.
On January 1, 2009, the Company adopted FASB No. 141 (Revised 2007),
Business Combinations
(FAS No. 141(R)). FAS No. 141(R) significantly changed the accounting for business combinations.
Under FAS No. 141(R), an acquiring entity is required to recognize all the assets acquired and all
the liabilities assumed in a transaction at the acquisition-date fair value with limited
exceptions. Transaction costs are no longer included in the measurement of the business acquired.
Instead, these costs are expensed as they are incurred. FAS No. 141(R) also includes a substantial
number of new disclosure requirements. FAS No. 141(R) applies to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2008. The adoption of FAS No. 141(R) did not have a material impact on the
Companys consolidated financial statements.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (FAS 165), which provides
guidance to establish general standards of accounting for and disclosures of events that occur
after the balance sheet date but before financial statements are issued or are available to be
issued. FAS 165 also requires entities to disclose the date through which subsequent events were
evaluated as well as the rationale for why that date was selected. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events after that date in
the set of financial statements being presented. FAS 165 is effective for interim and annual
periods ending after June 15, 2009. Since FAS 165 at most requires additional disclosures, the
Company does not expect the adoption to have a material impact on its consolidated financial
statements.
In June 2009, the FASB approved the FASB Accounting Standards Codification (the
Codification) as the single source of authoritative nongovernmental U.S. GAAP to be launched on
July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user
access to all authoritative U.S. GAAP by providing all the authoritative literature related to a
particular topic in one place. All existing accounting standard documents will be superseded and
all other accounting literature not included in the Codification will be considered
nonauthoritative. The Codification is effective for interim and annual periods ending after
September 15, 2009. The Codification is effective for the Company in the interim period ending
September 30, 2009 and it does not expect the adoption to have a material impact on its
consolidated financial statements.
NOTE 7 Contingencies
Basu Litigation
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 December 31, 2001, the effective date of the merger in which the Companys
acquisition subsidiary merged with and into NetGenesis Corp. NetGenesis Corp. is now a wholly owned
subsidiary of SPSS. Other defendants to this action include the former officers and directors of
NetGenesis Corp. and the investment banking firms that acted as underwriters in connection with the
IPO. The plaintiff is seeking unspecified compensatory damages, prejudgment and post-judgment
interest, reasonable attorney fees, experts witness fees and other costs and any other relief
deemed proper by the Court. The Company is aggressively defending itself, and plans to continue to
aggressively defend itself against the claims set forth in the complaint. The Company and the named
officers and directors filed an answer to the complaint on July 14, 2003. At this time, the Company
believes the lawsuit will be settled with no material adverse effect on its results of operations,
financial condition, or cash flows.
9
Trademark Litigation
On January 3, 2008, the Company filed a complaint for declaratory judgment in the U.S.
District Court for the Northern District of Illinois against Norman H. Nie and C. Hadlai Hull. The
filing of the complaint was in response to recent assertions by Dr. Nie that the Companys use of
the SPSS trademark was subject to a License Agreement (the Agreement) dated September 30, 1976
between a predecessor of the Company, as licensee, and Norman H. Nie and C. Hadlai Hull, as
licensors. Dr. Nie stated his desire to enforce his alleged rights under the Agreement, which he
claimed included the right to inspect and approve products sold under the SPSS trademark and to
obtain other information regarding those products. The complaint seeks a declaratory judgment that
Dr. Nie and Mr. Hull are estopped from enforcing any rights under the Agreement and that the
Company shall be deemed to have an irrevocable, assignable and exclusive license to use the SPSS
trademark.
On January 28, 2008, Dr. Nie and Mr. Hull filed a counterclaim against the Company. The
counterclaim asserts that the Company has repudiated the Agreement and that the Companys use of
the SPSS trademark is unauthorized and constitutes an infringement on their rights as owners of the
trademark. The counterclaim seeks an injunction prohibiting the Company from continuing to use the
SPSS trademark and an award of damages, costs and attorneys fees.
On February 15, 2008, the Company filed its answer to the counterclaim. In its answer, the
Company denies liability for trademark infringement and asserts that Dr. Nie and Mr. Hull are
barred from asserting the counterclaim on several grounds, including but not limited to the
doctrines of estoppel, laches and waiver.
In May 2008, Dr. Nie filed an amended counterclaim to reflect that Mr. Hull had subsequently
assigned his claims to Dr. Nie. Motions for summary judgment filed by each of the Company and Dr.
Nie were denied by the Court on April 2, 2009. The Court has set October 5, 2009 as the trial
date.
On April 27, 2009, Dr. Nie filed a complaint against the Company in the Court of Chancery of
the State of Delaware seeking the advancement of legal fees and expenses incurred by Dr. Nie in
connection with the action described above. The complaint seeks a declaration that SPSS must pay
all such legal fees and expenses (both fees incurred to date and any fees to be incurred in the
future), the payment of interest on all legal fees and expenses incurred by Dr. Nie to date and all
legal fees and expenses incurred in connection with this action in Delaware.
NOTE 8 Cash and Cash Equivalents
The Companys cash balance at December 31, 2008 and June 30, 2009 was comprised entirely of
checking, demand deposits or money market allowing on demand withdrawal and are valued in
accordance with Statement of Financial Accounting Standards 157 (SFAS 157) Fair Value
Measurements. SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs
such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in
active markets that are either directly or indirectly observable; and Level 3, defined as
unobservable inputs in which little or no market data exists, therefore requiring an entity to
develop its own assumptions. The Companys cash and cash equivalent balances are all valued using
Level 1 inputs. Accordingly, the Companys carrying value of its cash balances equals their fair
value. The specific composition of the Companys cash balance at December 31, 2008 and June 30,
2009 was as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
June 30, 2009
|
|
|
|
|
|
Carrying
|
|
|
Estimated Fair
|
|
|
Carrying
|
|
|
Estimated Fair
|
|
Instrument
|
|
Original Maturity
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
Checking or time deposits
|
|
On Demand
|
|
$
|
133,157
|
|
|
$
|
133,157
|
|
|
$
|
164,368
|
|
|
$
|
164,368
|
|
Money market
|
|
On Demand
|
|
|
172,760
|
|
|
|
172,760
|
|
|
|
173,514
|
|
|
|
173,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
|
|
$
|
305,917
|
|
|
$
|
305,917
|
|
|
$
|
337,882
|
|
|
$
|
337,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 9 Implementation of FASB Staff Position No. APB 14-1
The Company adopted the provisions of FASB Staff Position No. APB 14-1 (FSP or FSP No. APB
14-1), Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement) on January 1, 2009. FSP No. APB 14-1 requires that issuers of
convertible debt instruments that may be settled in cash upon conversion separately
10
account for the liability and equity components in a manner that will reflect the entitys
nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.
The FSP requires retrospective application related to the Companys convertible debt that was
outstanding during the periods presented in the financial statements. As the Company issued its
convertible bonds on March 19, 2007, the Company applied FSP No. APB 14-1 retrospectively to 2008
including the following effects on the Companys income statement captions for the three and six
month periods ended June 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2008
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
Effect of Change
|
|
|
|
|
As originally
|
|
in Accounting
|
|
|
|
|
reported
|
|
Principle
|
|
As adjusted
|
Interest expense
|
|
$
|
1,173
|
|
|
$
|
1,306
|
|
|
$
|
2,479
|
|
Net income
|
|
$
|
7,832
|
|
|
$
|
(806
|
)
|
|
$
|
7,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.41
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2008
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
Effect of Change
|
|
|
|
|
As originally
|
|
in Accounting
|
|
|
|
|
reported
|
|
Principle
|
|
As adjusted
|
Interest expense
|
|
$
|
2,330
|
|
|
$
|
2,589
|
|
|
$
|
4,919
|
|
Net income
|
|
$
|
17,662
|
|
|
$
|
(1,598
|
)
|
|
$
|
16,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.92
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.84
|
|
The FSP also requires recognition of the cumulative effect of this accounting change to be
recognized as of the beginning of the first period presented. This cumulative effect of adopting
FSP No. APB 14-1 resulted in the following changes to the Companys December 31, 2008 balance
sheet:
|
|
|
decrease to convertible debt of $21.9 million;
|
|
|
|
|
increase to additional paid-in capital of $17.3 million;
|
|
|
|
|
increase to non-current deferred tax liability of $7.5 million;
|
|
|
|
|
decrease to other assets of $2.8 million; and
|
|
|
|
|
decrease of $5.7 million to retained earnings for the cumulative net income effect of
adopting the FSP.
|
Additional details related to the Companys adoption of FSP No. APB 14-1 include the
following:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands, except percentage data)
|
|
Interest expense Contractual interest coupon
|
|
$
|
938
|
|
|
$
|
910
|
|
Interest expense Debt discount amortization
|
|
|
1,306
|
|
|
|
1,370
|
|
Interest expense Debt issuance cost amortization
|
|
|
217
|
|
|
|
212
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
$
|
2,461
|
|
|
$
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective interest rate on the liability component
|
|
|
7.2
|
%
|
|
|
7.2
|
%
|
11
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands, except percentage data)
|
|
Interest expense Contractual interest coupon
|
|
$
|
1,875
|
|
|
$
|
1,848
|
|
Interest expense Debt discount amortization
|
|
|
2,589
|
|
|
|
2,736
|
|
Interest expense Debt issuance cost amortization
|
|
|
434
|
|
|
|
427
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
$
|
4,898
|
|
|
$
|
5,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective interest rate on the liability component
|
|
|
7.2
|
%
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
As of June 30, 2009
|
|
|
|
($ in thousands)
|
|
Net carrying amount of liability component
|
|
$
|
128,173
|
|
Unamortized transaction costs with third parties allocated to liability
|
|
|
1,814
|
|
Unamortized discount of liability component
|
|
|
16,513
|
|
|
|
|
|
Principal amount of the liability component
|
|
$
|
146,500
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount of equity component
|
|
$
|
17,118
|
|
|
|
|
|
|
|
|
|
|
Remaining amortization period of discount of liability component
|
|
2.71 years
|
The 2.50% Convertible Subordinated Notes due 2012 (the Convertible Notes) will be
convertible into cash and, if applicable, shares of the Companys common stock, par value $0.01 per
share (the Common Stock) based on an initial conversion rate of 21.3105 shares of Common Stock
per $1,000 principal amount of Convertible Notes (which is equal to an initial conversion price of
approximately $46.93 per share) upon the occurrence of certain events.
NOTE 10 Convertible Notes Repurchase
On March 11, 2009, the Company announced that its Board of Directors had authorized the
Company to repurchase up to a maximum of $40 million of its issued and outstanding 2.50%
Convertible Subordinated Notes due 2012 (the Convertible Notes). These repurchases are not
mandatory and will be made from time to time based on the availability of alternative investment
opportunities and market conditions. This authorization expires on December 31, 2009. On March
20, 2009, the Company repurchased $3.5 million principal amount of the Convertible Notes at a cost
of $3.1 million. The Company recognized a gain of $0.4 million related to this Convertible Note
repurchase reflected in the line caption Gain on convertible debt retirement in the consolidated
statements of income. Following this repurchase, $36.9 million remains available under the
authorization and $146.5 million principal amount of the Convertible Notes remain outstanding.
NOTE 11 Subsequent Events
On July 27, 2009, the Company entered into a definitive Agreement and Plan of Merger (the
Merger Agreement) with International Business Machines Corporation, a New York corporation
(IBM), and Pipestone Acquisition Corp., a Delaware corporation and wholly owned subsidiary of IBM
(Merger Sub), pursuant to which Merger Sub will merge with and into the Company (the Merger).
The Board of Directors of the Company has unanimously approved the Merger Agreement and the Merger,
upon the terms and conditions set forth in the Merger Agreement.
Pursuant to the terms of the Merger Agreement and subject to the conditions thereof,
stockholders of the Company will be entitled to receive $50.00 in cash for each share of the
Companys common stock. Also, each outstanding Company stock option will fully vest and be
converted into an amount in cash equal to the product of (i) the excess, if any, of $50.00 over the
per share exercise price of the stock option multiplied by (ii) the total number of shares of
Company common stock subject to the stock option. In addition, each outstanding restricted share
unit and deferred share unit will fully vest and be converted into the right to receive $50.00 per
unit in cash. All of the foregoing amounts are without interest and prior to the deduction of
applicable withholding taxes. Upon the closing of the Merger, the Companys outstanding 2.50%
Convertible Subordinated Notes due 2012 (the Convertible Notes) will become convertible, at the
option of the holder, into the right to receive $50.00 multiplied by the applicable conversion rate
for each $1,000 principal amount of Convertible Notes submitted for conversion. As a result of the
Merger, the applicable conversion rate will be increased by a make-whole premium, calculated in
accordance with the terms of the indenture governing the Convertible Notes, for any conversions
effected during the period specified in the indenture.
As
a result of entering into the Merger Agreement with IBM, the Company
is not permitted to incur any borrowings under its $50 million Credit
Facility with the Bank of America.
12
It is anticipated that the total consideration that will be payable to stockholders, to
holders of stock options, restricted share units and deferred share units, and to holders of the
Convertible Notes, will be approximately $1.17 billion.
The Merger Agreement may be terminated under certain circumstances, including, subject to the
terms of the Merger Agreement, by IBM if the Companys Board of Directors determines to withdraw
its recommendation of the Merger as a result of an unsolicited superior proposal, provided that IBM
has first been given notice and the opportunity to propose modifications to the Merger Agreement
that result in the unsolicited proposal no longer being a superior proposal. The Merger Agreement
provides that if the Merger Agreement is terminated under certain circumstances, the Company will
be required to pay IBM a termination fee of $23.5 million.
Consummation of the Merger is subject to various conditions, including (i) adoption of the
Merger Agreement by the Companys stockholders, (ii) expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii)
receipt of all required approvals, or termination or expiration of any applicable waiting periods,
under any antitrust laws applicable to the Merger in certain other jurisdictions and (iv) other
customary closing conditions. The transaction is expected to close later in the second half of
2009.
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
In addition to historical information, this quarterly report on form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934, including, without limitation, statements regarding the Companys
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 Companys 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 Companys
ability to predict revenue, the Companys 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 these and other risk factors that affect the Companys business is contained
in the Companys 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.
The following discussion should be read in conjunction with the Companys financial statements and
accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2008 TO THREE MONTHS ENDED JUNE 30, 2009, AND
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2008 TO SIX MONTHS ENDED JUNE 30, 2009 .
NET REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
Percent of Total Revenues
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License
|
|
$
|
34,823
|
|
|
$
|
30,296
|
|
|
$
|
(4,527
|
)
|
|
|
(13
|
)%
|
|
|
46
|
%
|
|
|
43
|
%
|
Maintenance
|
|
|
33,184
|
|
|
|
33,561
|
|
|
|
377
|
|
|
|
1
|
%
|
|
|
44
|
%
|
|
|
48
|
%
|
Services
|
|
|
7,694
|
|
|
|
5,888
|
|
|
|
(1,806
|
)
|
|
|
(23
|
)%
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
75,701
|
|
|
$
|
69,745
|
|
|
$
|
(5,956
|
)
|
|
|
(8
|
)%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
Percent of Total Revenues
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License
|
|
$
|
73,240
|
|
|
$
|
64,066
|
|
|
$
|
(9,174
|
)
|
|
|
(13
|
)%
|
|
|
48
|
%
|
|
|
45
|
%
|
Maintenance
|
|
|
65,331
|
|
|
|
66,056
|
|
|
|
725
|
|
|
|
1
|
%
|
|
|
42
|
%
|
|
|
47
|
%
|
Services
|
|
|
15,371
|
|
|
|
11,704
|
|
|
|
(3,667
|
)
|
|
|
(24
|
)%
|
|
|
10
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
153,942
|
|
|
$
|
141,826
|
|
|
$
|
(12,116
|
)
|
|
|
(8
|
)%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The impact of foreign currency exchange rates decreased net revenues by $6.1 and $11.4
million, respectively, from the three and six month periods ended June 30, 2008 to the three month
and six month periods ended June 30, 2009. Excluding the impact of foreign currency exchange
rates, revenues increased $0.1 million and decreased $0.7 million, from the three and six month
periods ended June 30, 2008 to the three month and six month periods ended June 30, 2009 resulting
from lower license revenue and service revenue essentially offset by higher maintenance revenue as
further explained in the related revenue captions below.
License revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
15,935
|
|
|
$
|
15,697
|
|
|
$
|
(238
|
)
|
|
|
(1
|
)%
|
|
$
|
|
|
|
|
(1
|
)%
|
Europe
|
|
|
13,575
|
|
|
|
9,062
|
|
|
|
(4,513
|
)
|
|
|
(33
|
)%
|
|
|
(2,073
|
)
|
|
|
(18
|
)%
|
Pacific Rim
|
|
|
5,313
|
|
|
|
5,537
|
|
|
|
224
|
|
|
|
4
|
%
|
|
|
(291
|
)
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License revenues
|
|
$
|
34,823
|
|
|
$
|
30,296
|
|
|
$
|
(4,527
|
)
|
|
|
(13
|
)%
|
|
$
|
(2,364
|
)
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
32,506
|
|
|
$
|
28,787
|
|
|
$
|
(3,719
|
)
|
|
|
(11
|
)%
|
|
$
|
|
|
|
|
(11
|
)%
|
Europe
|
|
|
25,681
|
|
|
|
18,217
|
|
|
|
(7,464
|
)
|
|
|
(29
|
)%
|
|
|
(4,126
|
)
|
|
|
(13
|
)%
|
Pacific Rim
|
|
|
15,053
|
|
|
|
17,062
|
|
|
|
2,009
|
|
|
|
13
|
%
|
|
|
339
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License revenues
|
|
$
|
73,240
|
|
|
$
|
64,066
|
|
|
$
|
(9,174
|
)
|
|
|
(13
|
)%
|
|
$
|
(3,787
|
)
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The overall decrease in license revenues from the three and six month periods ended June 30,
2008 to the three and six month periods ended June 30, 2009 was primarily due to the following:
|
|
|
the impact of foreign currency exchange rates, which decreased license revenues by
$2.4 million and $3.8 million in the three and six month periods ended June 30, 2009
from the comparable periods in 2008;
|
|
|
|
|
lower sales volume of desktop statistical and analytic tools of $0.8 million and $1.5
million in the three and six month periods ended June 30, 2009 compared to the similar
periods in 2008;
|
|
|
|
|
lower market research product revenue of $1.4 million and $2.5 million in the three
and six month periods ended June 30, 2009 compared to the similar periods in 2008;
partially offset by
|
|
|
|
|
higher data mining product revenue of $1.0 million and $0.7 million in the three and
six month periods ended June 30, 2009 compared to the similar periods in 2008
|
The decrease in revenue in the United States was primarily due to lower demand for market
research and statistical tool products due to sales staff turnover and a more challenging economic
environment in 2009.
The decrease in license revenue in Europe during the three and six months ended June 30, 2009
compared to the similar periods in 2008 was generally due to lower sales volume for deals
individually exceeding $100,000 and the impact of foreign currency. For the three month period
ended June 30, 2008, the Company closed 23 deals in Europe individually exceeding $100,000 and
totaling $5.9 million compared with 18 deals individually exceeding $100,000 and totaling $3.4
million for the three month period ended June 30, 2009. For the six month period ended June 30,
2008, the Company closed 55 deals in Europe individually exceeding $100,000 and totaling $12.0
million compared with 38 deals individually exceeding $100,000 and totaling $7.4 million for the
six months ended June 30, 2009. The decrease in significant deals for the three and six month
periods ended June 30, 2009 compared with the similar periods in 2008 generally reflected sales
staff turnover and a more challenging economic environment in 2009.
14
The revenue decreases in Europe and the United States were partially offset by higher revenue
in the Pacific Rim. Revenues increased $0.2 million and $2.0 million in the Pacific Rim from the
three and six month periods ended June 30, 2008 to the three and six month periods ended June 30,
2009. These increases are principally due to higher revenues in Japan due to foreign currency of
$0.1 million and $1.0 million and higher sales volume of desktop statistical tools of $0.6 million
and $1.5 million for the three and six month periods ended June 30, 2009.
Maintenance revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
11,264
|
|
|
$
|
13,028
|
|
|
$
|
1,764
|
|
|
|
16
|
%
|
|
$
|
|
|
|
|
16
|
%
|
Europe
|
|
|
17,859
|
|
|
|
16,495
|
|
|
|
(1,364
|
)
|
|
|
(8
|
)%
|
|
|
(2,830
|
)
|
|
|
8
|
%
|
Pacific Rim
|
|
|
4,061
|
|
|
|
4,038
|
|
|
|
(23
|
)
|
|
|
(1
|
)%
|
|
|
(200
|
)
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance revenues
|
|
$
|
33,184
|
|
|
$
|
33,561
|
|
|
$
|
377
|
|
|
|
1
|
%
|
|
$
|
(3,030
|
)
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
22,377
|
|
|
$
|
25,999
|
|
|
$
|
3,622
|
|
|
|
16
|
%
|
|
$
|
|
|
|
|
16
|
%
|
Europe
|
|
|
34,977
|
|
|
|
32,014
|
|
|
|
(2,963
|
)
|
|
|
(8
|
)%
|
|
|
(5,886
|
)
|
|
|
8
|
%
|
Pacific Rim
|
|
|
7,977
|
|
|
|
8,043
|
|
|
|
66
|
|
|
|
1
|
%
|
|
|
(355
|
)
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance revenues
|
|
$
|
65,331
|
|
|
$
|
66,056
|
|
|
$
|
725
|
|
|
|
1
|
%
|
|
$
|
(6,241
|
)
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The overall increase in maintenance revenues was primarily due to continued strong demand for
the Companys maintenance support and product upgrades as well as higher renewal rates by the
Companys customer base across all major geographic regions, most notable in the desktop
statistical tools and data mining product categories. From the three month period ended June 30,
2008 to the three month period ended June 30, 2009 these strong renewal rates were offset by
changes in foreign currency exchange rates which decreased maintenance revenue by $3.0 million,
including $2.8 million in Europe. From the six month period ended June 30, 2008 to the six month
period ended June 30, 2009, foreign currency decreased maintenance revenue by $6.2 million
including $5.9 million in Europe. Excluding the impact of foreign currency exchange rates,
maintenance revenues increased 10% and 11%, respectively, from the three and six month periods
ended June 30, 2008 to the three and six month periods ended June 30, 2009.
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
3,098
|
|
|
$
|
2,461
|
|
|
$
|
(637
|
)
|
|
|
(21
|
)%
|
|
$
|
|
|
|
|
(21
|
)%
|
Europe
|
|
|
3,789
|
|
|
|
2,541
|
|
|
|
(1,248
|
)
|
|
|
(33
|
)%
|
|
|
(624
|
)
|
|
|
(16
|
)%
|
Pacific Rim
|
|
|
807
|
|
|
|
886
|
|
|
|
79
|
|
|
|
10
|
%
|
|
|
(43
|
)
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
7,694
|
|
|
$
|
5,888
|
|
|
$
|
(1,806
|
)
|
|
|
(23
|
)%
|
|
$
|
(667
|
)
|
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
Excluding
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
Currency
|
|
|
Currency
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
6,323
|
|
|
$
|
4,902
|
|
|
$
|
(1,421
|
)
|
|
|
(22
|
)%
|
|
$
|
|
|
|
|
(22
|
)%
|
Europe
|
|
|
7,525
|
|
|
|
5,003
|
|
|
|
(2,522
|
)
|
|
|
(34
|
)%
|
|
|
(1,348
|
)
|
|
|
(16
|
)%
|
Pacific Rim
|
|
|
1,523
|
|
|
|
1,799
|
|
|
|
276
|
|
|
|
18
|
%
|
|
|
(15
|
)
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
15,371
|
|
|
$
|
11,704
|
|
|
$
|
(3,667
|
)
|
|
|
(24
|
)%
|
|
$
|
(1,363
|
)
|
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Service revenues decreased from the three and six month periods ended June 30, 2008 to the
three and six month periods ended June 30, 2009 primarily due to a decline in consulting projects
as a result of lower license revenue. Additionally, changes in foreign currency rates decreased
service revenues in Europe by $0.6 million and $1.3 million, including $0.3 million and $0.8
million in the United Kingdom for the three and six month periods ended June 30, 2009,
respectively.
Net revenues per geographic region, percent changes and percent of total revenues for the
three and six month periods ended June 30, 2007 and June 30, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
Percent of Total Revenues
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
30,297
|
|
|
$
|
31,186
|
|
|
$
|
889
|
|
|
|
3
|
%
|
|
|
40
|
%
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
9,924
|
|
|
|
6,679
|
|
|
|
(3,245
|
)
|
|
|
(33
|
)%
|
|
|
13
|
%
|
|
|
10
|
%
|
The Netherlands
|
|
|
11,099
|
|
|
|
8,942
|
|
|
|
(2,157
|
)
|
|
|
(19
|
)%
|
|
|
15
|
%
|
|
|
13
|
%
|
Other
|
|
|
14,200
|
|
|
|
12,477
|
|
|
|
(1,723
|
)
|
|
|
(12
|
)%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Europe
|
|
|
35,223
|
|
|
|
28,098
|
|
|
|
(7,125
|
)
|
|
|
(20
|
)%
|
|
|
47
|
%
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan
|
|
|
5,187
|
|
|
|
6,012
|
|
|
|
825
|
|
|
|
16
|
%
|
|
|
7
|
%
|
|
|
9
|
%
|
Other
|
|
|
4,994
|
|
|
|
4,449
|
|
|
|
(545
|
)
|
|
|
(11
|
)%
|
|
|
6
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pacific Rim
|
|
|
10,181
|
|
|
|
10,461
|
|
|
|
280
|
|
|
|
3
|
%
|
|
|
13
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
45,404
|
|
|
|
38,559
|
|
|
|
(6,845
|
)
|
|
|
(15
|
)%
|
|
|
60
|
%
|
|
|
55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
75,701
|
|
|
$
|
69,745
|
|
|
$
|
(5,956
|
)
|
|
|
(8
|
)%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Amount
|
|
|
Percentage
|
|
|
Percent of Total Revenues
|
|
|
|
2008
|
|
|
2009
|
|
|
Change
|
|
|
Change
|
|
|
2008
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
61,206
|
|
|
$
|
59,688
|
|
|
$
|
(1,518
|
)
|
|
|
(2
|
)%
|
|
|
40
|
%
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
19,562
|
|
|
|
13,577
|
|
|
|
(5,985
|
)
|
|
|
(31
|
)%
|
|
|
13
|
%
|
|
|
10
|
%
|
The Netherlands
|
|
|
21,545
|
|
|
|
17,442
|
|
|
|
(4,103
|
)
|
|
|
(19
|
)%
|
|
|
14
|
%
|
|
|
12
|
%
|
Other
|
|
|
27,076
|
|
|
|
24,215
|
|
|
|
(2,861
|
)
|
|
|
(11
|
)%
|
|
|
17
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Europe
|
|
|
68,183
|
|
|
|
55,234
|
|
|
|
(12,949
|
)
|
|
|
(19
|
)%
|
|
|
44
|
%
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan
|
|
|
15,326
|
|
|
|
18,594
|
|
|
|
3,268
|
|
|
|
21
|
%
|
|
|
10
|
%
|
|
|
13
|
%
|
Other
|
|
|
9,227
|
|
|
|
8,310
|
|
|
|
(917
|
)
|
|
|
(10
|
)%
|
|
|
6
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pacific Rim
|
|
|
24,553
|
|
|
|
26,904
|
|
|
|
2,351
|
|
|
|
10
|
%
|
|
|
16
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
92,736
|
|
|
|
82,138
|
|
|
|
(10,598
|
)
|
|
|
(11
|
)%
|
|
|
60
|
%
|
|
|
58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
153,942
|
|
|
$
|
141,826
|
|
|
$
|
(12,116
|
)
|
|
|
(8
|
)%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues derived internationally decreased 15% and 11% from the three and six month
periods ended June 30, 2008 to the three and six month periods ended June 30, 2009. These
decreases resulted from a revenue decline in almost all significant international markets
throughout Europe including the United Kingdom, the Netherlands, France and Germany partially
offset by increases in Japan. The decreases in Europe reflected the impact of foreign currency as
well as declining demand for the Companys statistical and analytic tools and market research
products. The increases in Japan were primarily due to the impact of foreign currency as well as
an increase in demand for the Companys statistical and analytic tools.
16
Net revenues from the Americas increased 3% and decreased 3% from the three and six month
periods ended June 30, 2008 to the three and six month periods ended June 30, 2009. The increase
in the Americas in the three month period ended June 30, 2009 was primarily due to strong demand
for the Companys data mining products. For the six month period ended June 30, 2009, net revenues
decreased due to lower service revenues and lower demand for the Companys data mining products
during the first quarter of 2009.
Changes in foreign currency were a significant factor impacting international revenue from the
three and six months ended June 30, 2008 to the three and six months ended June 30, 2009. The
following table indicates the changes in revenue attributable to foreign currency exchange rates
for the specified periods:
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2009
|
|
|
2009
|
|
Country (Currency)
|
|
(In thousands)
|
|
|
(In thousands)
|
|
Netherlands (Euro)
|
|
$
|
1,425
|
|
|
$
|
2,769
|
|
Other Euro-denominated countries
|
|
|
1,536
|
|
|
|
2,873
|
|
British Pound (GBP)
|
|
|
2,137
|
|
|
|
4,770
|
|
Japan (Yen)
|
|
|
(242
|
)
|
|
|
(1,529
|
)
|
Australia (Australian dollar)
|
|
|
647
|
|
|
|
1,315
|
|
Other currencies
|
|
|
558
|
|
|
|
1,193
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,061
|
|
|
$
|
11,391
|
|
|
|
|
|
|
|
|
COST OF LICENSE AND MAINTENANCE REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
5,221
|
|
|
$
|
4,753
|
|
|
$
|
(468
|
)
|
|
|
(9
|
)%
|
|
|
7
|
%
|
|
|
7
|
%
|
Six months ended June 30,
|
|
|
10,520
|
|
|
|
9,365
|
|
|
|
(1,155
|
)
|
|
|
(11
|
)%
|
|
|
7
|
%
|
|
|
7
|
%
|
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
from the three month period ended June 30, 2008 to the three month period ended June 30, 2009
primarily due to a $0.3 million decrease in product material and delivery costs. These costs
decreased from the six month period ended June 30, 2008 to the six month period ended June 30, 2009
primarily due to a $0.7 million decrease in product material and delivery costs and a $0.1 million
decrease in royalties paid to third parties as a result of lower license revenues. The Company
expects the cost of license and maintenance revenues to remain relatively constant as a percentage
of total revenues at approximately 7% for the remainder of 2009.
SALES, MARKETING AND SERVICES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
38,767
|
|
|
$
|
33,223
|
|
|
$
|
(5,544
|
)
|
|
|
(14
|
)%
|
|
|
51
|
%
|
|
|
48
|
%
|
Six months ended June 30,
|
|
|
77,927
|
|
|
|
64,360
|
|
|
|
(13,567
|
)
|
|
|
(17
|
)%
|
|
|
51
|
%
|
|
|
45
|
%
|
Sales, marketing and services expenses decreased from the three and six month periods ended
June 30, 2008 to the three and six month periods ended June 30, 2009 primarily due to decreased
compensation costs associated with lower revenues, lower travel and entertainment expenditures,
lower salary related expenses resulting from the Companys cost management initiatives implemented
in the fourth quarter of 2008 and effects of foreign currency. For the three and six month periods
ended June 30, 2009, the Company had lower salary related expenses associated with these cost
management initiatives of $1.6 million and $3.2 million, respectively. Changes in foreign currency
contributed $2.9 million and $5.8 million to the decrease in the three and six month periods ended
June 30, 2009, respectively. The Company expects sales, marketing and services costs to be
approximately 48% of net revenues for the remainder of 2009.
RESEARCH AND DEVELOPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
11,305
|
|
|
$
|
9,686
|
|
|
$
|
(1,619
|
)
|
|
|
(14
|
)%
|
|
|
15
|
%
|
|
|
14
|
%
|
Six months ended June 30,
|
|
|
22,686
|
|
|
|
20,663
|
|
|
|
(2,023
|
)
|
|
|
(9
|
)%
|
|
|
15
|
%
|
|
|
15
|
%
|
17
Research and development costs decreased from the three and six month periods ended June 30,
2008 to the three and six month periods ended June 30, 2009 primarily due to decreased project
related expenses, improved productivity and lower salary related expenses resulting from the
Companys cost management initiatives implemented in the fourth quarter of 2008. For the three and
six month periods ended June 30, 2009, the Company had lower salary related expenses associated
with cost management initiatives of $0.8 million and $1.6 million, respectively. The Company
expects the research and development costs to remain relatively constant as a percentage of total
revenues at 15% for the remainder of 2009.
GENERAL AND ADMINISTRATIVE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
9,495
|
|
|
$
|
10,772
|
|
|
$
|
1,277
|
|
|
|
13
|
%
|
|
|
13
|
%
|
|
|
15
|
%
|
Six months ended June 30,
|
|
|
18,031
|
|
|
|
18,903
|
|
|
|
872
|
|
|
|
5
|
%
|
|
|
11
|
%
|
|
|
13
|
%
|
General and administrative expenses increased from the three and six month periods ended June
30, 2008 to the three and six month periods ended June 30, 2009 primarily due to increased
professional legal fees offset by lower travel and entertainment expenditures and lower salary
related expenses associated with the Companys cost management initiatives implemented in the
fourth quarter of 2008. Changes in foreign currency contributed $0.2 million to the decrease in
the three and six month periods ended June 30, 2009, respectively.
OPERATING INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
10,913
|
|
|
$
|
11,311
|
|
|
$
|
398
|
|
|
|
4
|
%
|
|
|
14
|
%
|
|
|
16
|
%
|
Six months ended June 30,
|
|
|
24,778
|
|
|
|
28,535
|
|
|
|
3,757
|
|
|
|
15
|
%
|
|
|
16
|
%
|
|
|
20
|
%
|
Operating income increased from the three and six month periods ended June 30, 2008 to the
three and six month periods ended June 30, 2009 primarily because decreases in operating expenses
exceeded decreases in net revenues. Most notably, the Companys lower operating expenses primarily
resulted from lower cost of sales, lower selling expenses and lower research and development
expenses associated with the Companys cost management initiatives described in Note 5. See
further discussion of these expenses under the caption heading above.
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
2,479
|
|
|
$
|
2,504
|
|
|
$
|
25
|
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
Six months ended June 30,
|
|
|
4,919
|
|
|
|
5,027
|
|
|
|
108
|
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
Interest expense consists of cash interest computed at the 2.50% coupon rate on the Companys
Convertible Subordinated Notes due 2012 and amortization of debt discount determined using the
effective interest method. The increases in interest expense from the three and six month periods
ended June 30, 2008 to the three and six month periods ended June 30, 2009 were primarily due to
the interest accretion on the additional debt discount amortization. See additional discussion in
Note 9 to the Consolidated Financial Statements.
INTEREST INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
2,339
|
|
|
$
|
681
|
|
|
$
|
(1,658
|
)
|
|
(71)%
|
|
3
|
%
|
|
|
1
|
%
|
|
Six months ended June 30,
|
|
|
5,316
|
|
|
$
|
1,498
|
|
|
$
|
(3,818
|
)
|
|
(72)%
|
|
3
|
%
|
|
|
1
|
%
|
|
Interest income decreased from the three month and six month periods ended June 30, 2008 to
the three and six month periods ended June 30, 2009 primarily due to lower interest rates on
investment cash balances.
GAIN ON CONVERTIBLE DEBT RETIREMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
Six months ended June 30,
|
|
|
|
|
|
|
356
|
|
|
|
356
|
|
|
NM
|
|
|
|
%
|
|
|
|
%
|
18
On March 11, 2009, the Company announced that its Board of Directors had authorized the
Company to repurchase up to a maximum of $40 million of its issued and outstanding 2.50%
Convertible Subordinated Notes due 2012 (the Convertible Notes). During the three month period
ended March 31, 2009, the Company repurchased $3.5 million principal amount of the Convertible
Notes at a cost of $3.1 million resulting in a gain of $0.4 million.
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Total Revenues
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
(468
|
)
|
|
$
|
(816
|
)
|
|
$
|
(348
|
)
|
|
|
(74
|
)%
|
|
|
|
%
|
|
|
(1
|
)%
|
Six months ended June 30,
|
|
|
(168
|
)
|
|
|
(2,056
|
)
|
|
|
(1,888
|
)
|
|
NM%
|
|
|
|
%
|
|
|
(1
|
)%
|
Other expense increased for the three and six month periods ended June 30, 2008 to the three
and six month periods ended June 30, 2009 primarily due to transactional losses in 2009 resulting
from changes in the value of Singapore dollar denominated receivables/payables, U.S. dollar
denominated cash held in foreign countries and the decrease in value of U.S. dollar-denominated
receivables held in international locations, principally related to the Euro and the British Pound.
INCOME TAX EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Amount
|
|
Percentage
|
|
Percent of Pre-Tax Income
|
Period
|
|
2008
|
|
2009
|
|
Change
|
|
Change
|
|
2008
|
|
2009
|
Three months ended June 30,
|
|
$
|
3,279
|
|
|
$
|
2,492
|
|
|
$
|
(787
|
)
|
|
|
(24
|
)%
|
|
|
32
|
%
|
|
|
29
|
%
|
Six months ended June 30,
|
|
|
8,943
|
|
|
|
7,761
|
|
|
|
(1,182
|
)
|
|
|
(13
|
)%
|
|
|
36
|
%
|
|
|
33
|
%
|
The income tax provision decreased from the three and six month periods ended June 30, 2008 to
the three and six month periods ended June 30, 2009 principally reflecting a favorable adjustment
to certain foreign tax valuation allowances due to improved profitability in certain foreign tax
jurisdictions. Generally, the Company expects its full year effective tax rate to be 33% to 35%
given the current geographic income mix.
LIQUIDITY AND CAPITAL RESOURCES
During the six month period ended June 30, 2009, SPSS generated cash in excess of its
operating requirements. As of June 30, 2009, SPSS had $337.9 million in cash and cash equivalents
compared with $305.9 million at December 31, 2008. The increase in cash principally resulted from
cash generated from operating activities. Factors affecting cash and cash equivalents during the
six month period ended June 30, 2009 include:
Operating Cash Flows:
|
|
|
Cash derived from operating activities was $32.7 million. This cash resulted
primarily from net income and receivable collections.
|
|
|
|
|
Accounts receivable increased operating cash flow by $3.8 million reflecting
favorable collections. Average days sales outstanding were 53 days at June 30, 2009,
compared to 54 days at December 31, 2008 and 57 days at June 30, 2008.
|
|
|
|
|
Deferred revenue decreased operating cash flow by $5.5 million as a result of
decreased net revenues.
|
Investing Activities:
|
|
|
Capital expenditures were $2.7 million.
|
|
|
|
|
Capitalized software development costs were $6.9 million.
|
19
Financing Activities:
|
|
|
The Company utilized $3.1 million to repurchase the Companys 2.50% Convertible
Subordinated Notes due 2012.
|
|
|
|
|
Cash proceeds of $2.4 million were received from the issuance of common stock,
primarily through the employee stock purchase plan.
|
Cash flows from operating activities were more than adequate to fund capital expenditures and
software development costs of $9.6 million. Management believes that cash flows from future
operating activities will be more than adequate to meet future capital expenditures and software
development costs.
On March 19, 2007, the Company issued $150 million aggregate principal amount of 2.50%
Convertible Subordinated Notes due 2012 (the Convertible Notes) in a private placement.
The Convertible Notes will be convertible into cash and, if applicable, shares of the
Companys common stock, par value $0.01 per share (the Common Stock) based on an initial
conversion rate of 21.3105 shares of Common Stock per $1,000 principal amount of Convertible Notes
(which is equal to an initial conversion price of approximately $46.93 per share) only under the
following circumstances: (1) during any calendar quarter (and only during such calendar quarter),
if the closing sale price of the Common Stock for at least 20 trading days in the 30 consecutive
trading days ending on the last trading day of the immediately preceding calendar quarter is more
than 120% of the conversion price per share, which is $1,000 divided by the then applicable
conversion rate; (2) during any five business day period after any five consecutive trading day
period in which the trading price per $1,000 principal amount of Convertible Notes for each day of
that period was less than 98% of the product of the closing price of the Common Stock for each day
in that period and the conversion rate; (3) if specified distributions to holders of the Common
Stock occur; (4) if a fundamental change occurs; or (5) during the period beginning on February 15,
2012 and ending on the close of business on the business day immediately preceding the maturity
date. If the Company makes a physical settlement election as described below, the Convertible Notes
will become convertible at the option of the holder at any time after the date of such physical
settlement election and prior to the close of business on the business day immediately preceding
the maturity date of the Convertible Notes.
Unless the Company has made a physical settlement election, upon conversion of each $1,000
principal amount of Convertible Notes, a holder will receive, in lieu of Common Stock, an amount in
cash equal to the lesser of (i) $1,000, or (ii) the conversion value of the Convertible Notes. If
the conversion value exceeds $1,000 on the conversion date, the Company will also deliver as
payment for the excess value, at its election, cash or Common Stock or a combination of cash and
Common Stock. At any time prior to maturity, the Company may make a physical settlement election.
A physical settlement election is the irrevocable election to provide upon conversion, in lieu of
providing cash and Common Stock, shares of Common Stock equal to the conversion rate for each
$1,000 principal amount of Convertible Notes converted.
On March 11, 2009, the Company announced that its Board of Directors had authorized the
Company to repurchase up to a maximum of $40 million of its issued and outstanding Convertible
Notes. These repurchases are not mandatory and will be made from time to time based on the
availability of alternative investment opportunities and market conditions. This authorization
expires on December 31, 2009. On March 20, 2009, the Company repurchased $3.5 million principal
amount of the Convertible Notes at a cost of $3.1 million. Following this repurchase, $36.9
million remains available under the authorization and $146.5 million principal amount of the
Convertible Notes remain outstanding.
As of June 30, 2009, the Convertible Notes were not convertible and the holders of the
Convertible Notes had no right to require the Company to repurchase the Convertible Notes.
On March 27, 2008, the Company entered into a three-year senior revolving credit facility (the
Credit Facility) that enables the Company to borrow up to $50 million. The Credit Facility was
entered into between the Company and LaSalle Bank National Association, now known as Bank of
America, as lender (the Lender). Borrowings under the Credit Facility may be borrowed by the
Company (or one or more subsidiaries designated by the Company) in U.S. dollars, Australian
dollars, Euros, Pounds Sterling, Japanese Yen and in other currencies that the Lender may approve
from time to time. Borrowings under the Credit Facility will bear interest at a rate per annum
equal to the applicable eurocurrency rate plus a 0.50% spread. The Company pays a fee of 0.10% of
the unused amount of the Credit Facility. The Company has guaranteed the obligations of all
subsidiary borrowers under the Credit Facility. As of June 30, 2009, the Company had not borrowed
any funds under this credit facility.
Borrowings under the Credit Facility are subject to the Companys satisfaction of various
conditions at the time of borrowing. The Credit Facility contains the following financial
covenants:
20
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the Company is required to have consolidated EBITDA of at least $40,000,000 for each
period of four consecutive fiscal quarters; and
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the Company is required to maintain a ratio of (a) (x) consolidated total debt less
(y) cash and cash equivalents to (b) consolidated EBITDA of not greater than 2.50 to 1,
with compliance with such covenant to be tested on the last day of each fiscal quarter.
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The Credit Facility contains other customary covenants, including restrictions on liens, asset
sales, acquisitions and debt permitted to be incurred by subsidiaries, and events of default. The
remedies for events of default are customary for this type of credit facility. The Company was in
compliance with all conditions and covenants as of June 30,
2009. See additional discussion in Note 11 to the Consolidated
Financial Statements.
SPSS intends to fund its future capital needs through operating cash flows and cash and cash
equivalents on hand. SPSS anticipates that these amounts will be sufficient to fund the Companys
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.
The Companys cash and cash equivalents of $337.9 million as of June 30, 2009, were comprised
of highly liquid investments with original maturity dates of three months or less. The Company
places temporary cash investments with top-tier institutions of high credit quality. Additionally,
the money market funds in which the Company invests are participants in the United States Treasury
Departments Temporary Guarantee Program for Money Market Funds. This program provides coverage
for amounts held in money market funds as of the close of business on September 19, 2008. The
program is designed to address temporary dislocations in credit markets. On March 31, 2009, the
United States Treasury Department extended this program through September 18, 2009. As of June 30,
2009, the Company had $173.5 million of cash investments covered under the aforementioned program.
Also, an additional $95.2 million of the Companys cash and cash equivalents was covered by certain
international government insurance programs.
SUBSEQUENT EVENTS
On July 27, 2009, the Company entered into a definitive Agreement and Plan of Merger (the
Merger Agreement) with International Business Machines Corporation, a New York corporation
(IBM), and Pipestone Acquisition Corp., a Delaware corporation and wholly owned subsidiary of IBM
(Merger Sub), pursuant to which Merger Sub will merge with and into the Company (the Merger).
The Board of Directors of the Company has unanimously approved the Merger Agreement and the Merger,
upon the terms and conditions set forth in the Merger Agreement. See additional discussion in Note
11 to the Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES
The Companys consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. As such, SPSS makes certain
estimates, judgments and assumptions that it believes are reasonable based upon the information
available. These estimates and assumptions affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during
the periods presented. The Companys critical accounting policies include revenue recognition,
capitalization of software development costs, impairment of long-lived assets, impairment of
goodwill and intangible assets, the estimation of credit losses on accounts receivable and the
valuation of deferred tax assets. For a discussion of these critical accounting policies, see
Critical Accounting Policies and Estimates in the SPSS Annual Report on Form 10-K for the year
ended December 31, 2008, filed with the Securities and Exchange Commission on February 18, 2009.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require
any new fair value measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This statement is effective
for fiscal years beginning after November 15, 2007. On February 14, 2008 the FASB issued FSP FAS
No. 157-1 Application of FASB Statement No. 157 to FASB Statement 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13 that amends SFAS No. 157 to exclude its application for purposes of
lease classification or measurement under SFAS13. On February 12, 2008, the FASB issued Staff
Position Financial Accounting Standard (FSP FAS) No. 157-2 Effective Date of FASB Statement No.
157 that amends SFAS No. 157 to delay the effective date for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a
21
recurring basis to fiscal years beginning after November 15, 2008. The Company adopted the
required provisions of SFAS No. 157-1 effective January 1, 2008 for financial assets and
liabilities and there was no material effect on its consolidated financial statements. On January
1, 2009, the Company adopted FSP 157-2 and it did not have a material impact on its consolidated
financial statements. On January 1, 2009, the Company adopted SFAS No. 157 for non-financial
assets and liabilities. In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of
a Financial Asset in a Market That Is Not Active. The FSP was effective upon issuance, including
periods for which financial statements have not been issued. The FSP clarified the application of
SFAS 157 in an inactive market and provided an illustrative example to demonstrate how the fair
value of a financial asset is determined when the market for that financial asset is inactive. The
adoption of this FSP FAS 157-3 did not have a material impact on the Companys consolidated
financial statements.
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3,
Determination of the Useful
Life of Intangible Assets
(FSP No. FAS 142-3). FSP No. FAS 142-3 requires companies estimating
the useful life of a recognized intangible asset to consider their historical experience in
renewing or extending similar arrangements or, in the absence of historical experience, to consider
assumptions that market participants would use about renewal or extension as adjusted for SFAS No.
142s,
Goodwill and Other Intangible Assets,
entity-specific factors. FSP No. FAS 142-3 is
effective for fiscal years beginning after December 15, 2008. The Company adopted FSP No. FAS
142-3 on January 1, 2009. The adoption of FSP No. FAS 142-3 did not have a material effect on its
consolidated financial statements.
In May 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 162,
The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles used in the preparation of
financial statements that are presented in conformity with generally accepted accounting
principles. SFAS No. 162 becomes effective 60 days following the SECs approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles. The Company does not expect that the
adoption of SFAS No. 162 to have a material effect on its consolidated financial statements.
On January 1, 2009, the Company adopted FASB No. 141 (Revised 2007),
Business Combinations
(FAS No. 141(R)). FAS No. 141(R) significantly changed the accounting for business combinations.
Under FAS No. 141(R), an acquiring entity is required to recognize all the assets acquired and all
the liabilities assumed in a transaction at the acquisition-date fair value with limited
exceptions. Transaction costs are no longer included in the measurement of the business acquired.
Instead, these costs are expensed as they are incurred. FAS No. 141(R) also includes a substantial
number of new disclosure requirements. FAS No. 141(R) applies to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2008. The adoption of FAS No. 141(R) did not have a material impact on the
Companys consolidated financial statements.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (FAS 165), which provides
guidance to establish general standards of accounting for and disclosures of events that occur
after the balance sheet date but before financial statements are issued or are available to be
issued. FAS 165 also requires entities to disclose the date through which subsequent events were
evaluated as well as the rationale for why that date was selected. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events after that date in
the set of financial statements being presented. FAS 165 is effective for interim and annual
periods ending after June 15, 2009. Since FAS 165 at most requires additional disclosures, the
Company does not expect the adoption to have a material impact on its consolidated financial
statements.
In June 2009, the FASB approved the FASB Accounting Standards Codification (the
Codification) as the single source of authoritative nongovernmental U.S. GAAP to be launched on
July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user
access to all authoritative U.S. GAAP by providing all the authoritative literature related to a
particular topic in one place. All existing accounting standard documents will be superseded and
all other accounting literature not included in the Codification will be considered
nonauthoritative. The Codification is effective for interim and annual periods ending after
September 15, 2009. The Codification is effective for the Company in the interim period ending
September 30, 2009 and it does not expect the adoption to have a material impact on its
consolidated financial statements.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from fluctuations in interest rates on cash and cash
equivalents. As of June 30, 2009, the Company had $337.9 million of cash and cash equivalents. A
50 basis point decrease in interest rates would result in $1.69 million of lower annual interest
income, assuming the same level of cash and cash equivalents.
22
The Company is exposed to risk from fluctuations in foreign currency exchange rates. Since a
substantial portion of the Companys operations and revenue occur outside of the United States, and
in currencies other than the U.S. dollar, the Companys results can be significantly affected by
changes in foreign currency exchange rates. Additionally, these changes can significantly affect
intercompany balances that are denominated in different currencies. Were the foreign currency
exchange rates to depreciate immediately and uniformly against the U.S. dollar by 10 percent from
levels at June 30, 2009, the reported cash balance would decrease $14.5 million from a reported
cash balance of $337.9 million at June 30, 2009.
ITEM 4. Controls and Procedures
Disclosure Controls and Procedures.
SPSS maintains disclosure controls and procedures that
have been designed to ensure that information related to the Company is recorded, processed,
summarized and reported on a timely basis. The Companys Chief Executive Officer and Chief
Financial Officer, with the participation of the Companys Disclosure Committee, evaluated the
effectiveness of the design and operation of the Companys disclosure controls and procedures as of
the end of the period covered by this report, as required by Rule 13a-15 of the Securities Exchange
Act of 1934. Based on this evaluation, the Companys Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the Companys
disclosure controls and procedures were effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the Securities Exchange Act
of 1934 (1) is accumulated and communicated to the Companys management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure; and (2) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC.
Changes in Internal Control Over Financial Reporting.
There has been no change in the
Companys internal control over financial reporting that occurred during the Companys fiscal
quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.
23
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On January 3, 2008, the Company filed a complaint for declaratory judgment in the U.S.
District Court for the Northern District of Illinois against Norman H. Nie and C. Hadlai Hull. The
filing of the complaint was in response to recent assertions by Dr. Nie that the Companys use of
the SPSS trademark was subject to a License Agreement (the Agreement) dated September 30, 1976
between a predecessor of the Company, as licensee, and Norman H. Nie and C. Hadlai Hull, as
licensors. Dr. Nie stated his desire to enforce his alleged rights under the Agreement, which he
claimed included the right to inspect and approve products sold under the SPSS trademark and to
obtain other information regarding those products. The complaint seeks a declaratory judgment that
Dr. Nie and Mr. Hull are estopped from enforcing any rights under the Agreement and that the
Company shall be deemed to have an irrevocable, assignable and exclusive license to use the SPSS
trademark.
On January 28, 2008, Dr. Nie and Mr. Hull filed a counterclaim against the Company. The
counterclaim asserts that the Company has repudiated the Agreement and that the Companys use of
the SPSS trademark is unauthorized and constitutes an infringement on their rights as owners of the
trademark. The counterclaim seeks an injunction prohibiting the Company from continuing to use the
SPSS trademark and an award of damages, costs and attorneys fees.
On February 15, 2008, the Company filed its answer to the counterclaim. In its answer, the
Company denies liability for trademark infringement and asserts that Dr. Nie and Mr. Hull are
barred from asserting the counterclaim on several grounds, including but not limited to the
doctrines of estoppel, laches and waiver.
In May 2008, Dr. Nie filed an amended counterclaim to reflect that Mr. Hull had subsequently
assigned his claims to Dr. Nie. Motions for summary judgment filed by each of the Company and Dr.
Nie were denied by the Court on April 2, 2009. The Court has set October 5, 2009 as the trial
date.
On April 27, 2009, Dr. Nie filed a complaint against the Company in the Court of Chancery of
the State of Delaware seeking the advancement of legal fees and expenses incurred by Dr. Nie in
connection with the action described above. The complaint seeks a declaration that SPSS must pay
all such legal fees and expenses (both fees incurred to date and any fees to be incurred in the
future), the payment of interest on all legal fees and expenses incurred by Dr. Nie to date and all
legal fees and expenses incurred in connection with this action in Delaware.
Item 4. Submission of Matters to a Vote of Security Holders
The Companys 2009 Annual Meeting of Stockholders was held on April 30, 2009. The following
persons were nominated and elected to serve as directors of the Company for a term of three years
or until their successors have been duly elected and qualified.
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NOMINEE
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FOR
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WITHHELD
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Jack Noonan
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6,628,421
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10,467,460
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Michael D. Blair
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6,560,503
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10,535,378
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Patricia B. Morrison
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6,418,047
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10,677,834
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In addition, Henry S. Bienen, William Binch, Michael Lavin, Merritt Lutz, and Charles R.
Whitchurch remained as directors of the Company after the meeting.
The Companys stockholders ratified the appointment of Grant Thornton LLP to serve as the
Companys independent auditor for fiscal year 2009 by the following votes:
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FOR
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AGAINST
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ABSTAIN
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NON-VOTES
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17,090,184
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1,916
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3,781
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n/a
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24
Item 6. Exhibits
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Incorporation
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Exhibit
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by Reference
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Number
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Description of Document
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(if applicable)
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10.1
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Form of Change of Control Agreement
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(1), Ex. 10.1
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10.2
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Amended and Restated Employment Agreement, dated as of May 1,
2009, by and between SPSS Inc. and Jack Noonan
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(1), Ex. 10.3
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10.3
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Amended and Restated Employment Agreement, dated as of May 1,
2009, by and between SPSS Inc. and Raymond H. Panza
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(1), Ex. 10.3
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31.1
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Certification of the Chief Executive Officer and President
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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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.
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32.2
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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.
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(1)
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Previously filed with the Quarterly Report on Form 10-Q of SPSS Inc. for the quarterly period
ended March 31, 2009.
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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.
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SPSS Inc.
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Date: August 5, 2009
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By:
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/s/ Jack Noonan
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Jack Noonan
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Chairman of the Board of Directors,
Chief Executive Officer and President
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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.
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Date: August 5, 2009
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By:
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/s/ Raymond H. Panza
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Raymond H. Panza
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Executive Vice President, Corporate
Operations, Chief Financial Officer and Secretary
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26
SPSS INC.
EXHIBIT INDEX
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EXHIBIT
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NO.
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DESCRIPTION
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31.1
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Certification of the Chief Executive Officer and President pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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31.2
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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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.
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32.2
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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.
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27
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