<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO REPORT FILED
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
DECEMBER 31, 1998
Date of report (date of earliest event reported)
SPSS INC.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
DELAWARE 33-64732 36-2815480
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
</TABLE>
233 S. WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices, Including Zip Code)
(312) 651-3000
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Report on Form 8-K dated December
31, 1998 as set forth in the pages attached hereto.
Item 7. Financial Statements and Exhibits. The financial statements are
amended by filing the following financial statements and pro forma financial
information:
(a) Financial statements of business acquired:
Integral Solutions Limited and Subsidiary for the year ended April 30, 1998 in
Pound Stirlings
<TABLE>
<S> <C>
Director's Report for the year ended April 30, 1998.....................F-1
Auditor's Report to the Shareholders of Integral Solutions Limited
for the year ended April 30, 1998......................................F-2
Consolidated Profit and Loss Account for the year ended April 30, 1998..F-3
Statement of Total Recognised Gains and Losses for the year ended
April 30, 1998.........................................................F-4
Consolidated Balance Sheet as at April 30, 1998.........................F-5
Company Balance Sheet as at April 30, 1998..............................F-6
Notes to Financial Statements for the year ended April 30, 1998.........F-7
Integral Solutions Limited and Subsidiary for the six months ended
October 31, 1998
Unaudited Condensed Consolidated Balance Sheet as of October 31, 1998...F-13
Unaudited Condensed Consolidated Statements of Operations for the six
months ended October 31, 1998 and 1997.................................F-14
Unaudited Condensed Consolidated Statements of Cash Flows for the
six months ended October 31, 1998 and 1997.............................F-15
Notes to Unaudited Condensed Consolidated Financial Statements..........F-16
</TABLE>
(b) Pro forma financial information:
SPSS Inc.
<TABLE>
<S> <C>
Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet as of
September 30, 1998......................................................F-17
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 ..................................... F-18
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
for the nine months ended September 30, 1998 ............................. F-19
Notes to Unaudited Pro Forma Combined Condensed
Consolidated Financial Statements ........................................ F-20
Exhibits
- ------------------------------------------------------------------------------
Independent Auditors' Consent ............................................. Ex. 23.1
</TABLE>
3
<PAGE> 4
Integral Solutions Limited and Subsidiary Company
Directors' Report
For the Year Ended 30 April 1998
The directors present their report and the financial statements for the year
ended 30 April 1998.
Principal activities
The principal activities of the group continue to be the sale of computer
software products and associated services.
Year 2000
The company has in place a project to assess the risks and uncertainties
associated with the Year 2000. This project is staffed internally and is
expected to be completed (all identified issues resolved) by 31 December 1998.
The cost of the project has not been quantified as most of the non-compliant
hardware and software will be replaced before the year 2000 through the ususal
asset replacement cycle. No significant additional external costs are
anticipated in relation to the project.
Directors and their Interests
The directors who served during the year and their interest in the company were
as stated below.
<TABLE>
<CAPTION>
Class of share Number of shares
--------------- ----------------
1998 1997
------ ------
<S> <C> <C> <C>
T.A. Montgomery Ordinary shares 586,083 586,083
L. Montgomery Ordinary shares 144,948 144,948
C. Morton Ordinary shares 52,784 52,784
C. Shearer Ordinary shares 52,784 52,784
Dr. D.J. Schafer Ordinary shares - -
</TABLE>
Auditors
In accordance with Section 385 of the Companies Act 1985, a resolution proposing
that Brooking Knowles & Lawrence be reappointed as auditors of the company will
be put to the Annual General Meeting.
Directors Responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
group and of the profit or loss of the group for that period. In so doing, the
directors are required to:
- -- select suitable accounting policies and then apply them consistently;
- -- make judgements and estimates that are reasonable and prudent;
- -- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
- -- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group will continue in business.
The directors are responsible for maintaining proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
group and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
This directors' report has been prepared in accordance with the special
provisions of Part VII of the Companies Act relating to small companies and
groups.
This report was approved by the Board on September 7, 1998 .
/s/ L.F. Montgomery
L. Montgomery
Secretary
F-1
<PAGE> 5
Integral Solutions Limited and Subsidiary Company
Auditor's Report to the Shareholders of Integral Solutions Limited
For the Year Ended 30 April 1998
We have audited the financial statements on pages 3 [F-3] to 13 [F-12] which
have been prepared under the historical cost convention and the accounting
policies set out on pages 7 [F-7] to 8 [F-8].
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 1 [F-1] the company's directors are responsible for the
preparation of financial statements. It is our responsibility as auditors to
form an independent opinion, based on our audit, on those statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with auditing standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group's and company's circumstances,
consistently supplied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state
of affairs of the company and the group as at 30 April 1998 and of the profit of
the group for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
Dated 10 September 1998
-----------------------
Clifton House
Bunnian Place
Basingstoke
Hampshire
/s/ Brooking Knowles & Lawrence
Brooking Knowles & Lawrence
Chartered Accountants
Registered Auditor
F-2
<PAGE> 6
Integral Solutions Limited and Subsidiary Company
Consolidated Profit and Loss Account
For the Year Ended 30 April 1998
<TABLE>
<CAPTION>
Notes 1998 1997
----- ---------- -----------
L. L.
<S> <C> <C> <C>
Turnover 2,047,780 1,414,465
Cost of Sales (142,121) (72,306)
---------- ----------
Gross profit 1,905,659 1,342,159
Administrative expenses (1,859,754) (1,501,036)
Other operating income 3 - 604,844
---------- ----------
Operating profit 4 45,905 445,967
Other interest receivable and similar income 5 4,697 4,776
Interest payable and similar charges (2,732) (15,336)
---------- ----------
Profit on ordinary activities before taxation 47,870 435,407
Tax on profit on ordinary activities 6 (34,225) (125,912)
---------- ----------
Profit for the year 15 13,645 309,495
========== ==========
</TABLE>
F-3
<PAGE> 7
Integral Solutions Limited and Subsidiary Company
Statement of Total Recognised Gains and Losses
For the Year Ended 30 April 1998
<TABLE>
<CAPTION>
1998 1997
------ -------
L. L.
<S> <C> <C>
Profit for the current year 13,645 309,495
Currency translation differences on Foreign currency net
investments 2,238 -
------ -------
Total recognized gains and losses relating to the year 15,883 309,495
====== =======
</TABLE>
F-4
<PAGE> 8
Integral Solutions Limited and Subsidiary Company
Consolidated Balance Sheet
As at 30 April 1998
<TABLE>
<CAPTION>
Notes 1998 1997
------ ------------------ -------------------
L. L. L. L.
<S> <C> <C> <C> <C> <C>
Fixed Assets 8 113,173 102,004
Tangible assets 9 9,013 8,000
------- -------
Investments 122,186 110,004
Current assets
Stock and work in progress 60,702 109,953
Debtors
- - amounts falling due after one year 10 98,684 186,430
- - amounts falling due within one year 10 698,830 422,445
Cash at bank and in hand 45,460 368,812
-------- ---------
903,676 1,087,640
Creditors: Amounts falling due
within one year 11 (565,840) (844,164)
-------- ---------
Net current assets 337,836 243,476
------- -------
Total assets less current liabilities 460,022 353,480
Creditors: Amounts falling due after
more than one year 12 (90,659) -
------- -------
Net assets 369,363 353,480
======= =======
Capital and reserves
Called up share capital 14 9,300 9,300
Share premium account 24,939 24,939
Profit and loss account 15 335,124 319,241
-------- -------
Shareholders' Funds (equity
interests) 16 369,363 353,480
======= =======
</TABLE>
These financial statements have been prepared in accordance with the special
provision of Part VII of the Companies Act 1985 relating to small companies and
groups.
The financial statements on pages 3 [F-3] to 13 [F-12] were approved by the
Board of Directors and signed on its behalf by:
/s/ T.A. Montgomery
- -------------------
T.A.Montgomery Dated September 7, 1998
/s/ L.F. Montgomery
- -------------------
L. Montgomery Dated September 7, 1998
Directors
F-5
<PAGE> 9
Integral Solutions Limited and Subsidiary Company
Company Balance Sheet
As at 30 April 1998
<TABLE>
<CAPTION>
Notes 1998 1997
----- ------------------ -------------------
L. L. L. L.
<S> <C> <C> <C> <C> <C>
Fixed Assets 8 100,856 96,591
Tangible assets 9 9,629 8,616
------- -------
Investments 110,485 105,207
Current assets
Stock and work in progress 60,702 109,953
Debtors
- - amounts falling due after one year 10 98,684 186,430
- - amounts falling due within one year 10 623,069 465,240
Cash at bank and in hand 43,146 309,980
-------- ---------
825,601 1,071,603
Creditors: Amounts falling due
within one year 11 (507,817) (822,714)
-------- ---------
Net current assets 317,784 248,889
------- -------
Total assets less current liabilities 428,269 354,096
Creditors: Amounts falling due after
more than one year 12 (60,528) -
------- -------
Net assets 367,741 354,096
======= =======
Capital and reserves
Called up share capital 14 9,300 9,300
Share premium account 24,939 24,939
Profit and loss account 15 333,502 319,857
------- -------
Shareholders' Funds (equity
interests) 16 367,741 354,096
======= =======
</TABLE>
These financial statements have been prepared in accordance with the special
provision of Part VII of the Companies Act 1985 relating to small companies and
groups.
The financial statements on pages 3 [F-3] to 13 [F-12] were approved by the
Board of Directors and signed on its behalf by:
/s/ T.A. Montgomery
- -------------------
T.A.Montgomery Dated September 7, 1998
/s/ L.F. Montgomery
- -------------------
L. Montgomery Dated September 7, 1998
Directors
F-6
<PAGE> 10
Integral Solutions Limited and Subsidiary Company
Notes to the Financial Statements
For the Year Ended 30 April 1998
1 ACCOUNTING POLICIES
1.1 Accounting convention
The financial statements are prepared under the
historical cost convention and include the results of the company's
operations as indicated in the directors' report all of which are
continuing.
The company has taken advantage of the exemption in Financial Reporting
Standard No. 1 from the requirement to produce a cash flow statement on the
grounds that it is a small group.
1.2 Basis of consolidation
The group accounts consolidate the accounts of the company and its
subsidiary. All companies in the group have accounting years ending 30
April. All intra group profits are eliminated.
The accounts are consolidated using the net investment method with the
profit and loss being translated at the closing rate. Exchange differences
arising on translation are taken directly to reserves.
The investment in the associated company (Infermed Limited) is stated at
cost as the company only commenced on 23rd March 1998. As at the year end
the directors believe cost represents a close approximation of the groups
interest in this company's net assets.
As permitted by Section 230 of the Companies Act 1985, the holding
company's profit and loss account has not been included in these financial
statement.
1.3 Turnover
Turnover represents the amounts receivable for goods and
services provided in the UK net of VAT and trade discounts.
1.4 Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less estimated residual
value of each asset over its expected useful life, as follows:
Computer equipment -33 1/3% straight line
Fixtures, fittings and
equipment -10% straight line
1.5 Leasing
Rentals payable under operating leases are charged against income on a
straight line basis over the lease term.
1.6 Investments
Fixed assets investments are stated at cost less provision for diminution
in value.
1.7 Stock and work in progress
Stock and work in progress are valued at the lower of cost and net
realizable value.
1.8 Pension
The company operates a defined contribution pension scheme. The assets of
that scheme are held separately from those of the company in an
independently administered fund.
1.9 Deferred taxation
Provision is made for deferred taxation using the liability method to take
account of timing differences between the incidence of income and
expenditure for taxation and accounting purposes except to the extent that
the directors consider that a liability to taxation is unlikely to
crystallize.
F-7
<PAGE> 11
1.10 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies and
assets and liabilities of subsidiaries in foreign currencies are translated
into sterling at the rates of exchange ruling at the accounting date.
Transactions in foreign currencies are recorded at the rate ruling at the
date of the transaction. All differences are taken to profit and loss
account except differences arising on the retranslation of opening net
investments in subsidiary companies which are taken reserves.
2 TURNOVER
In the year to 30 April 1998 28% of the groups' turnover was to markets
outside the United Kingdom.
3 OTHER OPERATING INCOME
<TABLE>
<CAPTION>
1998 1997
-------- --------
L. L.
<S> <C> <C>
Exceptional gain -- 604,844
======== ========
</TABLE>
Being the disposal of the business of the development and exploitation of
the software and related products and applications under the name "ISS".
4 OPERATING PROFIT
<TABLE>
<CAPTION>
1998 1997
-------- --------
L. L.
<S> <C> <C>
Operating profit is stated
after charging:
Deprecation of tangible assets 57,226 39,914
Losses on foreign currencies 2,842 18,511
Operating lease rentals
- Plant and machinery 24,163 17,369
- Land and buildings 45,000 45,000
Auditors' remuneration 5,250 3,675
Directors' emoluments 190,269 233,805
Directors' pension costs 7,111 27,410
Staff pension costs 21,829 14,307
======== ========
Directors emoluments
(including benefits in kind) 190,269 233,805
Payments to a defined contribution
pension scheme 7,111 27,410
-------- --------
197,380 261,215
========= ========
</TABLE>
Five directors have benefits accruing under a defined contribution scheme
(1997: five).
5 OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
<TABLE>
<CAPTION>
1998 1997
-------- --------
L. L.
<S> <C> <C>
Bank interest received 4,697 4,776
======== ========
</TABLE>
6 TAXATION
<TABLE>
<CAPTION>
1998 1997
-------- --------
L. L.
<S> <C> <C>
UK Current year taxation
UK Corporation tax at 21% (1997-28.22%) 11,882 125,912
Prior years
Corporation tax under provided 22,343 --
======== --------
34,225 125,912
======== ========
</TABLE>
7 PROFIT FOR THE FINANCIAL YEAR
<TABLE>
<CAPTION>
1998 1997
-------- --------
L. L.
<S> <C> <C>
Dealt with in the accounts of
the holding company 13,645 310,111
======== ========
</TABLE>
F-8
<PAGE> 12
8 TANGIBLE ASSETS
Group
<TABLE>
<CAPTION>
Fixtures
Computer fittings &
equipment equipment Total
---------- ----------- ----------
L. L. L.
<S> <C> <C> <C>
Cost
At 1 May 1997 282,874 19,949 302,823
Additions 65,645 2,905 68,550
Foreign exchange (173) - (173)
---------- ----------- ----------
At 30 April 1998 348,346 22,854 371,200
========== =========== ==========
Depreciation
At 1 May 1997 187,285 13,534 200,819
Charge for year 55,773 1,453 57,226
Foreign exchange (18) - (18)
---------- ----------- ----------
At 30 April 1998 243,040 14,987 258,027
========== =========== ==========
Net book values
At 30 April 1998 105,306 7,867 113,173
========== =========== ==========
At 30 April 1997 95,589 6,415 102,004
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Fixtures
Computer fittings &
equipment equipment Total
---------- ----------- ----------
L. L. L.
<S> <C> <C> <C>
Cost
At 1 May 1997 276,885 19,949 296,834
Additions 55,335 2,905 58,240
---------- ----------- ----------
At 30 April 1998 332,220 22,854 355,074
========== =========== ==========
Depreciation
At 1 May 1997 186,709 13,534 200,243
Charge for year 52,522 1,453 53,975
---------- ----------- ----------
At 30 April 1998 239,231 14,987 254,218
========== =========== ==========
Net book values
At 30 April 1998 92,989 7,867 100,856
========== =========== ==========
At 30 April 1997 90,176 6,415 96,591
========== =========== ==========
</TABLE>
9 FIXED ASSET INVESTMENTS
Shares in group undertakings and participating interests
F-9
<PAGE> 13
<TABLE>
<CAPTION>
Integral
Solutions ISL
Infermed (Asia) PTE Group Decision Company
Limited Limited Total Systems Inc. Total
-------- ---------- ----- ------------ -------
L. L. L. L. L.
<S> <C> <C> <C> <C> <C>
Cost
At 1 May 1997 - 8,000 8,000 616 8,616
Purchase of shares capital 1,013 - 1,013 - 1,013
-------- ---------- ----- ------------ -------
At 30 April 1998 1,013 8,000 9,013 616 9,629
======== ========== ===== ============ =======
Net book values
At 30 April 1998 1,013 8,000 9,013 616 9,629
======== ========== ===== ============ =======
At 30 April 1997 - 8,000 8,000 616 8,616
======== ========== ===== ============ =======
</TABLE>
In the opinion of the directors the aggregate value of the company's
investment in subsidiary undertakings is not less than the amount included in
the balance sheet.
Holdings of more than 10%.
The company holds more than 10% of the share capital of the following
companies
<TABLE>
<CAPTION>
Country of registration Shares held
Company Nature of business or incorporation Class %
- ------- ------------------ ------------------------ -----------
<S> <C> <C> <C>
ISL Decision Systems Inc. Software United States of America Ordinary 75
Integral Solutions
(Asia) PTE Ltd. Distributor Republic of Singapore Ordinary 20
Infermed Limited Medical systems England and Wales Ordinary 35
</TABLE>
The shares in Integral Solutions (Asia) PTE Limited are held in trust for the
company by T.A. Montgomery, a director of this company.
10 DEBTORS
<TABLE>
<CAPTION>
Group Company
---------------- ----------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Trade debtors 762,024 576,157 660,537 576,157
Amounts owed by groups undertakings - - 29,059 44,514
Other debtors 7,500 8,726 7,500 7,500
Prepayments and accrued income 27,990 23,992 24,657 23,499
------- ------- ------- -------
797,514 608,875 721,753 651,670
======= ======= ======= =======
</TABLE>
Amounts falling due after more than one year and included in the debtors
above are:
<TABLE>
<CAPTION>
Group Company
---------------- ----------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Trade debtors 98,684 186,430 98,684 186,430
======= ======= ======= =======
</TABLE>
F-10
<PAGE> 14
11 CREDITORS: Amounts falling due within one year
<TABLE>
<CAPTION>
Group Company
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Bank loans and overdrafts 39,948 75,821 39,948 75,821
Payments on account 33,684 - 33,684 -
Trade creditors 121,296 181,075 121,296 181,075
Corporation tax payable 43,219 125,949 43,219 125,949
Other tax and social security 65,553 27,542 65,553 27,542
Other creditors - 235,586 - 235,586
Accruals and deferred income 262,140 198,191 204,117 176,741
------- ------- ------- -------
565,840 844,164 507,817 822,714
======= ======= ======= =======
</TABLE>
12 CREDITORS: Amounts falling due after more than one year
<TABLE>
<CAPTION>
Group Company
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Accruals and deferred income 90,659 - 60,528 -
======= ======= ======= =======
</TABLE>
13 SECURED CREDITORS
The aggregate value of creditors for which security has been given amounted to
L.39,948 (1997 L.75,821)
14 SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
------- -------
L. L.
<S> <C> <C>
Authorized
1,000,000 Ordinary shares of 1p each 10,000 10,000
------ ------
Allotted called up and fully paid
930,000 Ordinary shares of 1p each 9,300 9,300
------ ------
</TABLE>
15 PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
Group Company
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Retained profits at 1 May 1997 319,241 9,746 319,857 9,746
Profit for the year 13,645 309,495 13,645 310,111
Foreign exchange 2,238 - - -
------- ------- ------- -------
Retained profits as 30 April 1998 335,124 319,241 333,502 319,857
======= ======= ======= =======
</TABLE>
F-11
<PAGE> 15
16 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Group Company
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Profit for the financial year 15,883 309,495 13,645 310,111
Opening shareholders' funds 353,480 43,985 354,096 43,985
------- ------- ------- -------
Closing shareholders' funds 369,363 353,480 367,741 354,096
======= ======= ======= =======
</TABLE>
17 FINANCIAL COMMITMENTS
At 30 April 1998 the Group had annual commitments under non-cancellable
operating leases as follows:
<TABLE>
<CAPTION>
Group Company
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
L. L. L. L.
<S> <C> <C> <C> <C>
Expiry date:
Within one year - - 3,077 6,615
After one year but within five years 45,000 45,000 23,833 3,068
------- ------- ------ -------
45,000 45,000 26,910 9,683
======= ======= ====== =======
</TABLE>
18 TRANSACTIONS WITH DIRECTORS
Integral Solutions Limited has an interest in transactions with Integral
Solutions (Asia) PTE Limited due to its shareholding in this company. Sales of
L.50,925 (1997: L.33,509) and purchases of Nil (1997: L.660) were made to this
company during the year. At the year end the debtor and creditor balances stood
at L.15,305 (1997: L.26,970) and Nil (1997: L.660) respectively.
T.A. Montgomery, L. Montgomery, C. Morton, C. Shearer and Dr. D.J. Schafer who
are directors of this company are also minority shareholders of ISL Decision
Systems Inc. a company incorporated in the United States. Loans were made to
this company of L.133,905 during 1997. Royalty sales during the year, and the
year end debtor stood at L.98,831 (1997: Nil). Against these debts is a
provision of L.201,708 (1997: L.77,539).
T.A. Montgomery and L. Montgomery have provided a personal guarantee in favour
of the bank overdraft of L.100,000.
T.A. Montgomery and L. Montgomery have been paid interest on loans made in
previous years amounting to L.1,753 (1997: L.11,012).
19 CONTINGENT LIABILITIES
The company and the group have no material contingent liabilities at 30 April
1998 (1997: Nil).
20 ULTIMATE CONTROLLING PARTY
The ultimate controlling parties are T.A. Montgomery and L. Montgomery by virtue
of their 78.6% holding in the company.
F-12
<PAGE> 16
Integral Solutions Limited and Subsidiary Company
Unaudited Condensed Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
October 31, 1998
-----------------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 36
Accounts receivable, net of allowances 1,225
Inventories 229
Prepaid expenses and other current assets 55
----------------
Total current assets 1,545
----------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
Furniture, fixtures and office equipment 39
Computer equipment and software 592
----------------
631
Less accumulated depreciation and amortization 483
----------------
Net equipment and leasehold improvements 148
----------------
$1,693
================
CURRENT LIABILITIES:
Notes payable $ 45
Accounts payable 330
Other accrued liabilities 53
Income taxes and value added taxes payable 90
Customer advances 70
Deferred revenues 500
----------------
Total current liabilities 1,088
----------------
Total stockholders' equity 605
----------------
$1,693
================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-13
<PAGE> 17
Integral Solutions Limited and Subsidiary Company
Unaudited Condensed Consolidated Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
For the six months ended October 31,
--------------------------------------
1998 1997
------------------ ------------------
<S> <C> <C>
Net revenue $1,682 $1,530
Cost of revenues 58 95
----------------- ------------------
Gross profit 1,624 1,435
Operating expenses 1,625 1,376
----------------- ------------------
Operating Income (loss) (1) 59
----------------- ------------------
Other Income 1 5
----------------- ------------------
Income before income taxes - 64
Income tax expense - 13
----------------- ------------------
Net income $ - $ 51
================= ==================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-14
<PAGE> 18
Integral Solutions Limited and Subsidiary Company
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
For the six months ended October 31,
------------------------------------
1998 1997
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ - $ 51
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 50 41
Changes in assets and liabilities:
Accounts receivable 75 (143)
Inventories (126) 44
Prepaid expenses and other current assets (6) (7)
Customer advances 14 140
Accounts payable 13 (460)
Other accrued expenses (33) (161)
Income taxes and value added taxes
Payable (45) 36
Deferred revenues 28 (35)
---------------- ----------------
Net cash used in operating activities (30) (494)
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (9) (51)
Cash flows from financing activities:
Net borrowings on notes payable - 50
Net change in cash and cash equivalents (39) (495)
Cash and cash equivalents at beginning
of period 75 601
---------------- ----------------
Cash and cash equivalents at end of period $ 36 $ 106
================ ================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-15
<PAGE> 19
Notes to Unaudited Condensed Consolidated
Financial Statements
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements reflect
all adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of the interim periods presented.
All such adjustments are of a normal recurring nature.
These condensed consolidated financial statements should be read in conjunction
with the Integral Solutions Limited audited consolidated financial statements
and notes thereto for the year ended April 30, 1998, included elsewhere herein.
F-16
<PAGE> 20
SPSS Inc.
Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet
As of September 30, 1998
(In Thousands)
<TABLE>
<CAPTION>
Pro Forma Pro-Forma
SPSS ISL Adjustments Combined
------- ------ --------------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $12,930 $ 36 ($2,032)B $10,934
Accounts receivable, net of allowances 28,160 1,225 - 29,385
Inventories 2,769 229 - 2,998
Prepaid expenses and other current assets 2,589 55 - 2,644
------- ------ -------------- ---------
Total current assets 46,448 1,545 (2,032) 45,961
------- ------ -------------- ---------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost
Land and building 1,758 - - 1,758
Furniture, fixtures and office equipment 7,162 39 - 7,201
Computer equipment and software 21,243 592 - 21,835
Leasehold improvements 6,092 - - 6,092
------- ------ -------------- ---------
36,255 631 - 36,886
Lease accumulated depreciation and amortization 21,991 483 - 22,474
------- ------ -------------- ---------
Net equipment and leasehold improvements 14,264 148 - 14,412
------- ------ -------------- ---------
Capitalized software developments costs, net
of accumulated amortization 8,148 - 1,313 B 9,461
Goodwill, net of accumulated amortization 938 - 1,324 B 2,262
Deferred income taxes 2,586 - - 2,586
Other assets 1,578 - 1,259 B 2,837
------- ------ -------------- ---------
$73,962 $1,693 $ 1,864 $77,519
======= ====== ============== =========
CURRENT LIABILITIES:
Notes payable $ - $ 45 6,776 B $ 6,821
Accounts payable 5,201 330 - 5,531
Accrued royalties 450 - - 450
Accrued rent 523 - - 523
Other accrued liabilities 8,648 53 - 8,701
Income taxes and value added taxes payable 3,521 90 (343)B 3,268
Customer advances 353 70 - 423
Deferred revenues 8,635 500 - 9,135
------- ------ -------------- ----------
Total current liabilities 27,331 1,088 6,433 34,852
------- ------ -------------- ----------
Deferred income taxes 1,936 - 998 B 2,934
Other noncurrent liabilities 1,182 - - 1,182
Stockholders' equity 43,513 605 (5,567)B 38,551
------- ------ -------------- ----------
$73,962 $1,693 $1,864 $77,519
======= ====== ============== ==========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed consolidated
financial statements.
F-17
<PAGE> 21
SPSS Inc.
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
Year Ended December 31, 1997
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
SPSS ISL Adjustments Combined
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $ 110,644 $3,369 $ - $ 114,013
Cost of revenues 9,835 234 404 C1 10,473
--------- --------- ----------- -----------
Gross profit 100,809 3,135 (404) 103,540
Operating expenses 93,823 3,060 453 C1 97,336
--------- --------- ----------- -----------
Operating income 6,986 75 (857) 6,204
--------- --------- ----------- -----------
Other income (expense) (162) 3 (569)C2 (728)
--------- --------- ----------- -----------
Income before income taxes 6,824 78 (1,426) 5,476
Income tax expense (benefit) 3,242 56 (442)C3 2,856
--------- --------- ----------- -----------
Net income $ 3,582 $ 22 ($984) $ 2,620
========= ========= =========== ===========
Basic earnings per share $0.41 $ 0.30
Shares used in computing
basic earnings per share 8,787,403 8,787,403
Diluted earnings per share $0.37 $ 0.27
Shares used in computing
diluted earnings per share 9,626,114 9,626,114
</TABLE>
See accompanying notes to unaudited pro forma combined condensed consolidated
financial statements.
F-18
<PAGE> 22
SPSS Inc.
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 1998
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Pro Forma
SPSS ISL Adjustments Pro Forma Combined
--------- --------- -------------------- ------------------
<S> <C> <C> <C> <C>
Net revenues $ 87,269 $2,652 $ - $ 89,921
Cost of revenues 7,525 84 303 7,912
--------- --------- ------------------- -----------------
Gross profit 79,744 2,568 (303) 82,009
Operating expenses 65,348 2,466 340 68,154
--------- --------- ------------------- -----------------
Operating income 14,396 102 (643) 13,855
--------- --------- ------------------- -----------------
Other income (expense) 125 1 (427) (301)
--------- --------- ------------------- -----------------
Income before income taxes 14,521 103 (1,070) 13,554
Income tax expense (benefit) 4,980 22 (332) 4,670
--------- --------- ------------------- -----------------
Net income $ 9,541 $ 81 ($738) $ 8,884
========= ========= =================== =================
Basic earnings per share $1.07 $ 0.99
Shares used in computing basic earnings per share 8,949,088 8,949,088
Diluted earnings per share $1.00 $ 0.93
Shares used in computing diluted earnings per
share 9,565,561 9,565,561
</TABLE>
See accompanying notes to unaudited pro forma combined condensed consolidated
financial statements.
F-19
<PAGE> 23
Notes to Unaudited Pro Forma Combined Condensed Consolidated
Financial Statements
Note A - Description of Business Combination
On December 31, 1998, SPSS Inc. (SPSS) acquired all of the outstanding shares of
capital stock of Integral Solutions Limited (ISL) for an aggregate purchase
price of approximately $7 million. SPSS may be required to make additional
payments up to approximately $7 million in future years to the former owners of
ISL based upon the attainment of certain operating results by ISL. The amount of
these payments was not determinable at December 31, 1998. Additional payments
will be recorded as an adjustment to purchase price in the periods in which such
payments are determinable.
The unaudited pro forma combined condensed consolidated financial statements
combine the balance sheets of SPSS as of September 30, 1998 and ISL as of
October 31, 1998 and the results of operations of SPSS for the year ended
December 31, 1997 with ISL's results for the fiscal year ended April 30, 1998.
Although the periods used to combine the annual period exceed 90 days, the
impact of adjusting ISL's results to include an annual period within 90 days of
SPSS' year end is not material to the pro forma results.
In addition, the pro forma results for the interim period combine SPSS for the
nine months ended September 30, 1998 with ISL for the nine months ended October
31, 1998. ISL's results for the three months ended April 30, 1998 are included
in both the annual and interim pro forma results. The results of ISL included in
both the annual and interim results are net revenues of $996,000 and net income
of $102,000.
Note B - Purchase Price Allocation
The expected purchase price allocation includes approximately $3.2 million of
acquired in-process technology, $2.0 million of capitalized purchased and
developed software, $1.7 million of other intangible assets and $1.7 million of
goodwill.
The allocation of purchase price represents an estimate of the fair values of
assets acquired and liabilities assumed, including estimated investment
advisory, professional fees and other acquisition expenses expected to be
incurred. The allocation is subject to change and is not necessarily indicative
of the ultimate purchase price allocation.
The estimated charge for acquired in-process technology is reflected as a
reduction of retained earnings in the accompanying unaudited pro forma combined
condensed consolidated balance sheet as of September 30, 1998. Such charge has
not been reflected in the unaudited pro forma combined condensed consolidated
statements of operations.
The unaudited pro forma combined condensed consolidated balance sheet as of
September 30, 1998 includes pro forma adjustments for the purchase price
allocation noted above, as well as the impact of the items in Note C below since
the assumed date of the acquisition of January 1, 1997.
Note C - Pro Forma Adjustments
The following adjustments are reflected in the unaudited pro forma combined
condensed consolidated statements of operations under the columns headed "Pro
Forma Adjustments."
(1) Amortization of Intangibles
The unaudited pro forma combined condensed consolidated statements of operations
includes pro forma adjustments for the amortization of the excess cost over net
assets acquired using the straight-line method over
F-20
<PAGE> 24
10 years, purchased and developed software using the straight-line method over 5
years, and other intangible assets using the straight-line method over 5 to 10
years.
(2) Interest
The unaudited pro forma combined condensed consolidated statements of operations
include adjustments to reduce interest income related to cash payments and
increase interest expense related to increased borrowings from the acquisition.
(3) Income Taxes
The related tax effect of the adjustments discussed above, other than the
amortization of the excess cost over net assets acquired, has been reflected
using an effective income tax rate of 34.5%.
F-21
<PAGE> 25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPSS INC.
(Registrant)
By: /s/ Robert Brinkmann
--------------------
Robert Brinkmann,
Controller
Date: March 12, 1999
<PAGE> 1
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors
Integral Solutions Limited:
We consent to the incorporation by reference in the registration statements
(Nos. 333-41207, 333-21025, and 333-10423) on Form S-3, the registration
statements (Nos. 33-73120, 33-73130, 33-74402, 33-80799, 333-63167, and
333-25869) on Form S-8, and the registration statement (No. 333-15427) on Form
S-4 of SPSS Inc. of our report dated September 10, 1998, with respect to the
consolidated financial statements of Integral Solutions Limited and Subsidiary
Company, which report appears in the Form 8-K/A of SPSS Inc. dated December 31,
1998.
/s/ BKL Weeks Green
- -------------------
BKL Weeks Green
12 March 1999
