<PAGE> 1
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
COMMISSION FILE NUMBER: 33-64732
SPSS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2815480
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
233 S. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices and Zip Code)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (312) 651-3000
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No
--- ---
As of May 10, 1999, there were 9,049,985 shares of common stock
outstanding, par value $.01, of the registrant.
===============================================================================
<PAGE> 2
SPSS INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Independent Auditors' Review Report 3
Consolidated Balance Sheets
as of December 31, 1998 And
March 31, 1999 (Unaudited) 4
Consolidated Statements of Income
for the three months ended March 31, 1998
(unaudited) and 1999 (unaudited) 5
Consolidated Statements of Comprehensive
Income for the three months ended
March 31, 1998 (unaudited) and 1999 (unaudited) 6
Consolidated Statements of Cash Flows
for the three months ended March 31, 1998
(unaudited) and 1999 (unaudited) 7
Notes to Consolidated Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS of
FINANCIAL CONDITION AND RESULTS of OPERATION 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors
SPSS Inc.:
We have reviewed the consolidated balance sheet of SPSS Inc. and subsidiaries as
of March 31, 1999 and the related consolidated statements of income,
comprehensive income and cash flows for the three-month periods ended March 31,
1998 and 1999. These consolidated financial statements are the responsibility of
SPSS Inc. management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above, for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of SPSS Inc. and subsidiaries as of
December 31, 1998, and the related consolidated statements of income,
comprehensive income, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 17, 1999, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1998, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ KPMG LLP
- ------------
KPMG LLP
Chicago, Illinois
May 4, 1999
3
<PAGE> 4
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
----------- -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 14,912 $13,638
Accounts receivable, net of allowances 33,825 32,160
Inventories 2,871 3,094
Deferred income taxes 2,183 2,183
Prepaid expenses and other current assets 2,304 2,474
-------- -------
Total current assets 56,095 53,549
-------- -------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
Land and building 1,721 1,670
Furniture, fixtures, and office equipment 7,252 7,236
Computer equipment and software 23,068 23,776
Leasehold improvements 6,434 7,489
-------- -------
38,475 40,171
Less accumulated depreciation and amortization 22,783 23,683
-------- -------
Net equipment and leasehold improvements 15,692 16,488
-------- -------
Capitalized software development costs, net of accumulated amortization 10,658 11,429
Goodwill, net of accumulated amortization 5,110 5,010
Other assets 3,734 3,515
-------- -------
$91,289 $89,991
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 9,000 $ 8,000
Accounts payable 6,146 5,507
Accrued royalties 571 491
Accrued rent 847 901
Other accrued liabilities 10,431 9,720
Income taxes and value added taxes payable 5,822 5,455
Customer advances 579 455
Deferred revenues 10,310 8,859
-------- -------
Total current liabilities 43,706 39,388
-------- -------
Deferred income taxes 2,638 2,638
Other non-current liabilities 1,222 1,122
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value; 50,000,000 shares authorized; 9,029,326 and
9,037,433 shares issued and outstanding in 1998 and
1999, respectively 90 90
Additional paid-in capital 47,054 47,161
Accumulated other comprehensive income (877) (1,159)
Retained earnings (accumulated deficit) (2,544) 751
-------- -------
Total stockholders' equity 43,723 46,843
-------- -------
$ 91,289 $89,991
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1998 1999
---------- ----------
<S> <C> <C>
Net revenues:
Desktop products $ 20,615 $ 24,035
Large System products 4,300 4,315
Other products and services 3,585 4,198
---------- ----------
Net revenues 28,500 32,548
Cost of revenues 2,435 2,683
---------- ----------
Gross profit 26,065 29,865
---------- ----------
Operating expenses:
Sales and marketing 14,281 16,757
Product development 4,954 5,639
General and administrative 1,785 2,212
---------- ----------
Operating expenses 21,020 24,608
---------- ----------
Operating income 5,045 5,257
---------- ----------
Other income (expense):
Net interest income (expense) 28 (75)
Other expense (162) (167)
---------- ----------
Other income (expense) (134) (242)
---------- ----------
Income before income taxes 4,911 5,015
Income tax expense 1,685 1,720
---------- ----------
Net income $ 3,226 $ 3,295
========== ==========
Basic net earnings per share $ 0.36 $ 0.36
========== ==========
Shares used in computing basic
net earnings per share 8,843,934 9,034,886
========== ==========
Diluted net earnings per share $ 0.34 $ 0.35
========== ==========
Shares used in computing diluted
net earnings per share 9,517,007 9,544,873
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1999
---- ----
<S> <C> <C>
Net income $3,226 $3,295
Other comprehensive income (loss):
Foreign currency translation adjustment 216 (282)
------ ------
Comprehensive income $3,442 $3,013
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
SPSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1999
----------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,226 $ 3,295
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,454 2,087
Changes in assets and liabilities:
Accounts receivable 983 1,665
Inventories (486) (223)
Accounts payable (223) (639)
Accrued royalties (90) (80)
Accrued expenses (1,863) (657)
Accrued income taxes 1,178 (367)
Deferred revenues (1,351) (1,451)
Other 433 (661)
------- -------
Net cash provided by operating activities 3,261 2,969
------- -------
Cash flows from investing activities:
Capital expenditures, net (1,861) (1,931)
Capitalized software development costs (1,016) (1,419)
Net payments for acquisitions (24) --
------- -------
Net cash used in investing activities (2,901) (3,350)
------- -------
Cash flows from financing activities:
Net repayments on notes payable (71) (1,000)
Net proceeds from issuance of common stock 253 107
Income tax benefit from stock option exercises 114 --
------- -------
Net cash (used in) provided by financing activities 296 (893)
------- -------
Net change in cash and cash equivalents 656 (1,274)
Cash and cash equivalents at beginning of period 8,079 14,912
------- -------
Cash and cash equivalents at end of period $ 8,735 $13,638
======= =======
Supplemental disclosures of cash flow information:
Interest paid $ 78 $ 185
Income taxes paid 843 1,546
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
SPSS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of the interim periods presented. All such
adjustments are of a normal recurring nature.
These consolidated financial statements should be read in conjunction with SPSS'
audited consolidated financial statements and notes thereto for the year ended
December 31, 1998, included in SPSS' Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following table sets forth the percentages that selected items in the
Consolidated Statements of Income bear to net revenues:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
--------------------------------
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1998 1999
--------------- --------------
<S> <C> <C>
Statement of Income Data:
Net revenues:
Desktop products 72% 74%
Large System products 15% 13%
Other products and services 13% 13%
--------------- --------------
Net revenues 100% 100%
Cost of revenues 9% 8%
--------------- --------------
Gross profit 91% 92%
--------------- --------------
Operating expenses:
Sales and marketing 50% 52%
Product development 17% 17%
General and administrative 6% 7%
--------------- --------------
Operating expenses 73% 76%
--------------- --------------
Operating income 18% 16%
--------------- --------------
Other income (expense):
Net interest income (expense) -- --
Other expense (1%) (1%)
--------------- --------------
Other income (expense) (1%) (1%)
--------------- --------------
Income before income taxes 17% 15%
Income tax expense 6% 5%
--------------- --------------
Net income 11% 10%
=============== ==============
</TABLE>
8
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COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THREE MONTHS ENDED MARCH 31,
1999.
Net Revenues. Net Revenues were $28,500,000 and $32,548,000 in the three months
ended March 31, 1998 and 1999, respectively, an increase of 14%. Revenues from
products designed for desktop computers ("Desktop products") increased
$3,420,000 (17%) over the corresponding period in 1998. In addition, revenues
from annual license renewals of Desktop products increased by $702,000,
reflecting a $734,000 increase in annual license renewals for SPSS for Windows.
Revenues from products designed for mainframes, minicomputers, and UNIX
workstations ("Large System products") were flat compared to the corresponding
period in 1998. Other products and services revenues increased 17% due to growth
in training and consulting revenues. Revenues for the first quarter of 1999 were
adversely effected by changes in foreign currency exchange rates.
Cost of Revenues. Cost of revenues consists of costs of goods sold, amortization
of capitalized software development costs, and royalties paid to third parties.
Cost of revenues was $2,435,000 and $2,683,000 in the three months ended March
31, 1998 and 1999, respectively, an increase of 10%. Such costs increased due to
higher cost of goods sold resulting from increased sales and increased
amortization of capitalized software. As a percentage of net revenues, cost of
revenues decreased from 9% to 8%.
Sales and Marketing. Sales and marketing expenses were $14,281,000 and
$16,757,000 in the three months ended March 31, 1998 and 1999, respectively, an
increase of 17%. This increase was due to the addition of the former Integral
Solutions Limited ("ISL") and Surveycraft Pty Ltd. sales, marketing and services
personnel, expansion of the domestic and international sales organizations,
higher cost of new, more senior sales personnel and increased consulting
expenses. As a percentage of net revenues, such expenses increased from 50% to
52%.
Product Development. Product development expenses were $4,954,000 and $5,639,000
(net of capitalized software development costs of $516,000 and $313,000) in the
three months ended March 31, 1998 and 1999, respectively, an increase of 14%. In
the corresponding periods in 1998 and 1999, SPSS' expense for amortization of
capitalized software and product translations, included in cost of revenues, was
$451,000 and $650,000, respectively. The increase in product development
expenses was primarily due to addition of the ISL development group, other
additions to the product development staff and increases in staff compensation.
As a percentage of net revenues, product development expenses remained constant
at 17%.
General and Administrative. General and administrative expenses were $1,785,000
and $2,212,000 in the three months ended March 31, 1998 and 1999, respectively,
an increase of 24%. Such expenses increased primarily due to the addition of
amortization expense related to ISL and Surveycraft intangibles and an increased
administrative staff. As a percentage of net revenues, general and
administrative expenses increased from 6% to 7%.
9
<PAGE> 10
Net Interest Income (Expense). Net interest income (expense) was $28,000 and
($75,000) in the three months ended March 31, 1998 and 1999, respectively. This
unfavorable variance was primarily due to the interest expense on the
line-of-credit borrowing during the three months ended March 31, 1999 compared
to no borrowing on the line-of-credit during the comparable period of 1998.
Other Expense. Other expense was $162,000 and $167,000 in the three months ended
March 31, 1998 and 1999, respectively. Such transactions consist of foreign
currency transactions.
Provision for Income Taxes. Provision for income taxes was $1,685,000 and
$1,720,000 in the three months ended March 31, 1998 and 1999, respectively.
During 1998 and 1999, the provision for income taxes represented an effective
tax rate of approximately 34.3%.
LIQUIDITY AND CAPITAL RESOURCES
SPSS' long-term debt as of March 31, 1999 is a mortgage on property in the
United Kingdom. As of March 31, 1999, SPSS held approximately $13,638,000 of
cash and short-term investments.
Funds in the first three months of 1999 were provided by operations and offset
by payments for acquisition-related charges from SPSS' acquisitions of
Quantime Limited, In2itive Technologies A/S, Surveycraft and ISL. Capital
expenditures included, among other things, new computer systems for use in
internal product development and sales.
In May 1998, SPSS entered into a new loan agreement (the "Agreement") with
American National Bank and Trust Company of Chicago ("American National") to
replace its existing agreement with Bank of America, N.T.S.A. Under the
Agreement, SPSS has an available $10,000,000 unsecured line of credit with
American National, under which borrowings bear interest at either the prime
interest rate or the Eurodollar Rate, depending on the circumstances. As of
March 31, 1999, SPSS had $8,000,000 outstanding under this line of credit. SPSS'
Agreement with American National requires SPSS to comply with certain specified
financial ratios and tests, and, among other things, restricts SPSS' ability to
(i) incur additional indebtedness, (ii) create liens on assets, (iii) make
investments, (iv) engage in mergers, acquisitions or consolidations where SPSS
is not the surviving entity, (v) sell assets, (vi) engage in certain
transactions with affiliates and (vii) amend its organizational documents or
make changes in capital structure.
SPSS anticipates that amounts available under its line of credit, existing
sources of liquidity and cash flows generated from operations will be sufficient
to fund SPSS' operations and capital requirements for the foreseeable future.
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.
10
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INTERNATIONAL OPERATIONS
Revenues from international operations were 53% of total net revenues in the
three months ended March 31, 1999 compared to 54% in the three months ended
March 31, 1998. The portion of revenues attributable to international operations
were affected by changes in foreign currency exchange rates. Net corporate
revenues increased 14% in the three months ended March 31, 1999 when compared to
the three months ended March 31, 1998. Net of the effects of changes in foreign
currency rates, the increase would have been approximately 13% for the quarter.
SAFE HARBOR
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Certain statements in this report constitute "forward-looking statements"
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). Such statements involve known and unknown risks
and uncertainties which may cause SPSS' actual results, performance or
achievements, or industry results, to be materially different than any future
results, performance or achievements expressed or implied in or by such
forward-looking statements. By way of example and not limitation, known risks
and uncertainties include SPSS' ability to successfully integrate or improve the
performance of acquired businesses, change in market conditions or product
demand, competition and currency fluctuations, changes in product release
schedules and product acceptance. In light of these and other risks and
uncertainties, the inclusion of forward-looking statements in this report should
not be regarded as a representation by SPSS that any future results, performance
or achievements will be attained.
YEAR 2000
Many computer systems and applications currently use two digits to define the
applicable year. As a result, date-sensitive systems may recognize the year 2000
as 1900 or not at all, which could cause miscalculations or system failures.
SPSS uses software and other related technologies throughout its business and
also sells computer software that will be affected by the date change in the
year 2000. The four areas where year 2000 issues may affect SPSS include:
- SPSS' information technology (IT) systems;
- SPSS' non-IT systems;
- the computer software SPSS sells; and
- third parties with material relationships with SPSS, such as vendors and
suppliers.
To address the year 2000 issue, SPSS assembled a committee of representatives
from all divisions and operating areas in early 1998. An inventory of the
readiness of all major IT and non-IT systems has been completed and SPSS is in
the process of testing and replacing non-compliant systems. This process is
expected to be completed by mid-1999. Likewise, SPSS has been testing the
software it sells to third parties. The year 2000 compliance of SPSS products is
detailed at SPSS' Web Site at www.spss.com. Finally, SPSS has sent compliance
question letters to all its major suppliers. Virtually all have responded and
most of those responding
11
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signed the standard compliance letter, as SPSS requested. Those responding
suppliers that did not sign the SPSS standard compliance letter instead provided
their own year 2000 compliance materials. These materials have been forwarded to
the appropriate members of SPSS' year 2000 committee for evaluation. Thus far,
the SPSS year 2000 committee has not encountered any material issues. The SPSS
year 2000 committee will be developing contingency plans in the event of year
2000 non-compliance and expects to have this completed by mid-1999.
While SPSS' year 2000 readiness plans are underway, the consequences of
non-compliance by SPSS, its major service providers, vendors or suppliers could
have a material adverse effect on SPSS' operations. Although SPSS does not
anticipate any major non-compliance issues, there can be no assurance that there
will not be a delay in, or increased costs associated with, the implementation
of SPSS' year 2000 readiness plan.
SPSS currently believes that the greatest risk of disruption in its business
exists in the event of non-compliance by its material third parties. Some of the
possible consequences of non-compliance by SPSS or its material third party
suppliers include:
- inability to efficiently contact customers to obtain orders:
- inability to get orders to fulfillment houses;
- inability to send product to customers; and
- invoice and collection errors.
Given these risks, SPSS is developing contingency plans intended to mitigate the
possible disruption in business operations that may result from year 2000
non-compliance. It is currently estimated that the aggregate cost of SPSS' year
2000 efforts will be approximately $1.25 million to $1.5 million, of which
$850,000 has been incurred to date. These costs do not include any costs
associated with the implementation of contingency plans, which are in the
process of being developed.
SPSS' year 2000 readiness plan is an ongoing process and the estimates of costs
and completion dates for various components of the program as described above
are subject to change.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
SPSS' market risk disclosures pursuant to item 3 are not material and
are therefore not required.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Currently there are no material pending legal proceedings to which
SPSS or any of its subsidiaries is a party or to which any of their
property is subject.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (Note: Management contracts and compensatory plans or
arrangements are underlined in the following list.)
<TABLE>
<CAPTION>
Incorporation
Exhibit by Reference
Number Description of Document (if applicable)
- ------- ----------------------- ---------------
<S> <C> <C>
3.1 Certificate of Incorporation of SPSS * 3.2
3.2 By-Laws of SPSS * 3.4
4.1 Loan Agreement between SPSS and + 4.1
American National Bank and Trust Company
Of Chicago
4.2 Rights Agreement, dated June 18, 1998 between ** Exhibit 1
SPSS Inc. and Harris Trust and Savings Bank
15.1 Acknowledgment of Independent Certified
Public Accountants Regarding Independent
Auditors' Review Report
27.1 Financial Data Schedule
</TABLE>
- -------------------------------
* Previously filed with Amendment No. 2 to Form S-1 Registration Statement
of SPSS Inc. filed on August 4, 1993 (Registration No. 33-64732)
** Previously filed with SPSS' Registration Statement on Form 8-A filed
on June 18, 1998
13
<PAGE> 14
+ Previously filed with SPSS' 10-Q Quarterly Report for the quarterly
period ended June 30, 1998.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by SPSS during the fiscal
quarter ended March 31, 1999.
14
<PAGE> 15
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
SPSS INC.
DATE: MAY 14, 1999 BY: /s/ JACK NOONAN
---------------------------------------
JACK NOONAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE UNDERSIGNED, IN HIS CAPACITY AS THE PRINCIPAL
FINANCIAL OFFICER OF THE REGISTRANT.
DATE: MAY 14, 1999 BY: /s/ EDWARD HAMBURG
---------------------------------------
EDWARD HAMBURG
EXECUTIVE VICE-PRESIDENT, CORPORATE
OPERATIONS AND CHIEF FINANCIAL OFFICER
15
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Document Number
- ------- ----------------------- ------
<S> <C>
15.1 Acknowledgement of Independent Certified Public Accountants
Regarding Independent Auditors' Review Report
27.1 Financial Data Schedule
</TABLE>
16
<PAGE> 1
EXHIBIT 15.1
ACKNOWLEDGMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
REGARDING INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors
SPSS Inc.:
With respect to the Registration Statements on Form S-8 (nos. 333-25869,
33-73130, 33-80799, 33-73120, 333-63167 and 33-74402) of SPSS Inc., on Form S-3
the registration statements (nos. 333-41207, 333-21025, 333-10423) and on Form
S-4 the registration statement (no. 333-15427) of SPSS Inc., we acknowledge our
awareness of the use therein of our report dated May 4, 1999 related to our
review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
/s/ KPMG LLP
-------------
KPMG LLP
Chicago, Illinois
May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPSS INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 31, 1999 AND CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> $13,638
<SECURITIES> 0
<RECEIVABLES> 34,020
<ALLOWANCES> 1,860
<INVENTORY> 3,094
<CURRENT-ASSETS> 53,549
<PP&E> 40,171
<DEPRECIATION> 23,683
<TOTAL-ASSETS> 89,991
<CURRENT-LIABILITIES> 39,388
<BONDS> 1,122
0
0
<COMMON> 90
<OTHER-SE> 46,753
<TOTAL-LIABILITY-AND-EQUITY> 89,991
<SALES> 32,548
<TOTAL-REVENUES> 32,548
<CGS> 2,683
<TOTAL-COSTS> 2,683
<OTHER-EXPENSES> 24,608
<LOSS-PROVISION> 241
<INTEREST-EXPENSE> 152
<INCOME-PRETAX> 5,015
<INCOME-TAX> 1,720
<INCOME-CONTINUING> 3,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,295
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.35
</TABLE>
