SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,DECEMBER 31, 2000
OR
[ ][_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_______________________________ to _________________
Commission File Number: 0-26507
SHOWCASE CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1628214
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4115 Highway 52 North, Suite 300
Rochester, Minnesota 55901-0144
(Address of principal executive offices) (Zip Code)
(507) 288-5922
(Registrants's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 X NO ------- ------______
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
10,782,10310,833,316 Common Shares as of OctoberJanuary 31, 2000.2001.
Table of Contents
SHOWCASE CORPORATION AND SUBSIDIARIES
Report on Form 10-Q
for period ended
September 30, 2000
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations for the three and
six months ended September 30, 2000 and 1999 2
Consolidated Balance Sheets as of September 30, 2000 and
MarchDecember 31, 2000
3
Consolidated Statements of Cash Flows for the six months
ended September 30,
Page
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations for the three and nine months ended
December 31, 2000 and 1999 2
Consolidated Balance Sheets as of December 31, 2000 and March 31, 2000 3
Consolidated Statements of Cash Flows for the nine months ended
December 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Item 3. Quantitative and Qualitative Disclosure About Market Risks 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended SixNine Months Ended
September 30, September 30,
-------------------- --------------------December 31, December 31,
-------------------------------- -------------------------------
2000 1999 2000 1999
-------- -------- -------- ----------------------- ------------- ------------- --------------
Revenues:
License fees $ 6,4756,849 $ 4,0274,990 $ 11,98418,379 $ 10,09215,082
Maintenance and support 4,532 3,301 8,783 6,5074,756 3,456 13,540 9,963
Professional service fees 1,515 1,178 3,168 2,412
-------- -------- -------- --------1,262 1,201 4,430 3,613
--------------- ------------- ------------- --------------
Total revenues 12,522 8,506 23,935 19,011
-------- -------- -------- --------12,867 9,647 36,349 28,658
--------------- ------------- ------------- --------------
Cost of revenues:
License fees 1,101 766 1,930 1,8351,200 985 3,017 2,820
Maintenance and support 972 753 1,949 1,577952 855 2,902 2,432
Professional service fees 1,491 1,112 3,023 2,144
-------- -------- -------- --------1,414 1,199 4,436 3,342
--------------- ------------- ------------- --------------
Total cost of revenues 3,564 2,631 6,902 5,556
-------- -------- -------- --------3,566 3,039 10,355 8,594
--------------- ------------- ------------- --------------
Gross margin 8,958 5,875 17,033 13,455
-------- -------- -------- --------9,301 6,608 25,994 20,064
--------------- ------------- ------------- --------------
Operating expenses:
Sales and marketing 6,009 5,234 12,170 10,5085,811 5,691 17,981 16,199
Product development 1,565 1,247 3,150 2,4101,517 1,457 4,667 3,866
General and administrative 1,217 1,136 2,465 2,077
-------- -------- -------- --------1,139 1,160 3,604 3,238
--------------- ------------- ------------- --------------
Total operating expenses 8,791 7,617 17,785 14,995
-------- -------- -------- --------8,467 8,308 26,252 23,303
--------------- ------------- ------------- --------------
Operating income (loss) 167 (1,742) (752) (1,540)
-------- -------- -------- --------834 (1,700) (258) (3,239)
--------------- ------------- ------------- --------------
Other income (expense), net:
Interest expenses (2)-- (4) (5) (10)(6) (15)
Interest income 465 366 902 470426 396 1,328 867
Other income (expense), net (39) -- (45) 1
-------- -------- -------- --------(50) 3 (95) 3
--------------- ------------- ------------- --------------
Total other income (expense), net 424 362 852 461
-------- -------- -------- --------376 395 1,227 855
--------------- ------------- ------------- --------------
Net income (loss) before income taxes 591 (1,380) 100 (1,079)1,210 (1,305) 969 (2,384)
Income taxes 200 185 300 300
-------- -------- -------- --------200 500 500
--------------- ------------- ------------- --------------
Net income (loss) $ 3911,010 $ (1,565)(1,505) $ (200)469 $ (1,379)
-------- -------- -------- --------(2,884)
--------------- ------------- ------------- --------------
Other comprehensive income (loss):
Foreign currency translation adjustment (60) (6) 9 28(9) 26 -- 54
Unrealized holding gain (loss) on
securities -- 206 4 40 3 72
-------- -------- -------- --------279
--------------- ------------- ------------- --------------
Comprehensive income (loss) $ 3351,001 $ (1,531)(1,273) $ (188)473 $ (1,279)
======== ======== ======== ========(2,551)
=============== ============= ============= ==============
Net income (loss) per share:
Basic $ 0.04.09 (0.15) $ .04 $ (0.35)
=============== ============= ============= ==============
Diluted $ .09 $ (0.15) $ (0.02).04 $ (0.19)
======== ======== ======== ========
Diluted $ 0.03 $ (0.15) $ (0.02) $ (0.19)
======== ======== ======== ========(0.35)
=============== ============= ============= ==============
Weighted average shares outstanding
used in computing basic net income
(loss) per share 10,760 10,139 10,667 7,34110,784 10,368 10,706 8,354
Weighted average shares outstanding
used in computing diluted net
income (loss) per share 11,352 10,139 10,667 7,34111,267 10,368 11,260 8,354
See accompanying notes to unaudited consolidated financial statements
2
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
September 30,December 31, 2000 March 31, 2000
2000
-------- ------------------------- --------------
Assets
Current Assets:
Cash and equivalents $ 13,28917,605 $ 11,677
Marketable securities 14,71610,849 18,387
Accounts receivable, net 11,21712,976 8,848
Prepaid expenses and other current assets 1,4941,097 1,731
-------- ------------------------- --------------
Total current assets 40,71642,527 40,643
-------- ------------------------- --------------
Property and equipment, net 1,7921,634 2,088
Purchased software, net 1,000917 --
Goodwill, net of accumulated amortization 2611 56
-------- ------------------------- --------------
Total assets $ 43,53445,089 $ 42,787
======== ========================= ==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,7141,289 $ 1,323
Accrued liabilities 5,3525,327 4,333
Current portion of long-term debt -- 2
Current portion ofand obligations under
capital leases 25 78-- 80
Income taxes payable 293 --
Deferred revenue 12,13413,036 12,778
-------- ------------------------- --------------
Total current liabilities 19,22519,945 18,514
-------- ------------------------- --------------
Deferred revenue, less current portion 744743 914
-------- ------------------------- --------------
Total liabilities 19,96920,688 19,428
-------- ------------------------- --------------
Stockholders' Equity:
Common stock, $.01 par value, 50,000,000 shares authorized,
10,764,12910,823,996 and 10,522,113 shares issued and outstanding 108 105
Additional paid-in capital 31,77731,922 31,443
Accumulated other comprehensive income:
Cumulative translation adjustment 132123 123
Unrealized holding loss on securities (6)(5) (9)
Deferred compensation (368)(338) (426)
Accumulated deficit (8,078)(7,409) (7,877)
-------- ------------------------- --------------
Total stockholders' equity 23,56524,401 23,359
-------- ------------------------- --------------
Total liabilities and stockholders' equity $ 43,53445,089 $ 42,787
======== ========================= ==============
See accompanying notes to unaudited consolidated financial statements.
3
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
SixNine Months Ended
September 30,
----------------------December 31,
-------------------------------------
2000 1999
--------- ------------------------- ----------------
Cash flows from operating activities:
Net lossincome (loss) $ (200)469 $ (1,379)(2,884)
Adjustments to reconcile net lossincome (loss)
to cash used in operating activities:
Depreciation and amortization 459 375791 533
Provision for returns and doubtful accounts, net of returns
and writeoffs -- (90)
Deferred income taxes -- 330
Deferred compensation amortization and expense related to
cashless exercise of warrants 58 12987 158
Loss on the disposal of property and equipment 3 36
Changes in operating assets and liabilities, net of effect
of foreign exchange rate changes:
Accounts receivable (2,369) 250(4,128) (1,613)
Prepaid expenses (114) (118)282 313
Income taxes receivable 351 (238)(321)
Accounts payable 391 (349)(35) (550)
Accrued liabilities 915 271995 476
Deferred revenue (813) (1,153)87 836
Income taxes payable 104 (294)
--------- ---------293 (247)
---------------- ----------------
Net cash used in operating activities (1,215) (2,263)
--------- ---------(805) (3,053)
---------------- ----------------
Cash flows from investing activities:
Purchase of property and equipment (129) (370)(213) (608)
Purchase of marketable securities (98,388) (63,621)(152,138) (95,037)
Sale and maturity of marketable securities 102,062 38,192159,680 69,257
Purchase of software license (1,000) --
Proceeds from sale of property and equipment 2 --
--------- ------------------------- ----------------
Net cash provided by (used in) investing activities 2,547 (25,799)
--------- ---------6,331 (26,388)
---------------- ----------------
Cash flows from financing activities:
Proceeds from exercise of stock options 336 26482 342
Proceeds from initial public offering, net of expenses -- 24,350
Payments underon long-term debt -- (3)
Payments of capitalized lease obligations (56) (76)
--------- ---------(80) (106)
---------------- ----------------
Net cash provided by financing activities 280 24,300
--------- ---------402 24,583
---------------- ----------------
Net increase (decrease) in cash 1,612 (3,762)5,928 (4,858)
Cash, beginning of period 11,677 8,900
--------- ------------------------- ----------------
Cash, end of period $ 13,28917,605 $ 5,138
========= =========4,042
================ ================
Supplemental disclosure of cash flow information:
Cash paid during the sixnine months for interest $ 5 $ 10
========= =========15
================ ================
Cash paid during the sixnine months for income taxes $ 7590 $ 642
========= =========739
================ ================
Cash received during the sixnine months from income tax refunds $ 234 $ --
========= ========================= ================
See accompanying notes to unaudited consolidated financial statements.
4
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The unaudited interim consolidated financial statements include the
accounts of ShowCase Corporation and its wholly owned subsidiaries
(collectively, the "Company") and have been prepared by the Company in
accordance with generally accepted accounting principles, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included
in the financial statements have been omitted or condensed pursuant to such
rules and regulations. The information furnished reflects, in the opinion
of the management of the Company, all adjustments, consisting primarily of
recurring accruals, considered necessary for a fair presentation of the
financial position and the results of operations.
In June 2000, the SEC staff issued Staff Accounting Bulletin No. 101B,
which deferred the required implementation date of Staff Accounting
Bulletin No. 101 ("SAB 101"), as amended by SAB 101A. SAB 101,SAB101, as amended,
summarizes certain views of the SEC staff in applying generally accepted
accounting principles to revenue recognition in financial statements.
Implementation of SAB 101 by the Company was previously required in the
quarter beginning April 1, 2000. Subject to SAB 101B, required
implementation of SAB 101 has been deferred to the quarter beginning
January 1, 2001. The Company does not expect SAB 101 to have a material
impact on its financial condition or results of operation.operations.
Certain amounts presented in prior periods have been reclassified to
conform to current period presentation.
(2) Net Income (Loss) per Share
Basic income (loss) per share represents net income (loss) divided by the
weighted average number of shares of common stock outstanding during the
period. Diluted income (loss) per share represents net income (loss)
divided by the sum of the weighted average number of shares of common stock
outstanding plus shares derived from other potentially dilutive securities.
For the Company, potentially dilutive securities include "in-the-money"
fixed stock options and warrants. The number of shares added for stock
options and warrants is determined by the treasury stock method, which
assumes exercise of these options and warrants and the use of any proceeds
from such exercise to repurchase a portion of these shares at the average
market price for the period. When the results of operations are a loss,
other potentially dilutive securities are not included in the calculation
of loss per share.
For the three months ended September 30,December 31, 1999 and the sixnine months ended
September 30, 2000 andDecember 31, 1999, basic loss per share is the same as diluted loss per
share because the effect of the inclusion of other potentially dilutive
securities in the calculation of diluted loss per share was antidilutive.
The number of option shares excluded from the calculation of potentially
dilutive securities either because the exercise price exceeded the average
market price or because their inclusion in a calculation of net loss per
share would have been antidilutive was 189,996699,821 and 1,148,689985,538 for the three
months ended September 30,December 31, 2000 and 1999, respectively and 781,690192,620 and
1,125,7011,040,424 for the sixnine months ended September 30,December 31, 2000 and 1999,
respectively.
5
(3) Related Party Transactions
In late September 2000, the Company licensed certain software from
another software company, an executive of which is also a member of the
board of directors of the Company, for $1,000,000. The Company will
amortize this software over a three-year period.
(4) Subsequent Event--MergerMerger with SPSS
On November 6, 2000, the Company and SPSS Inc. ("SPSS") entered into a
merger agreement relating to the acquisition of the Company by SPSS. Under
the terms of the agreement, SPSS will issue one share of its common stock
in return for every three outstanding shares of the Company's stock. The
merger is subject to approval by the shareholders of the Company and SPSS,
the effectiveness of a Form S-4 registration statement to be filed with the
Securities and Exchange Commission and other customary closing conditions.
The merger is expected to close in the first calendar quarter of 2001.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
All statements, trend analysis and other information contained in the
following discussion relative to markets for our products and trends in
revenues, gross margins and anticipated expense levels, as well as other
statements including words such as "anticipate," "believe," "plan," "estimate,"
"expect," "intend" and other similar expressions constitute forward-looking
statements. These forward-looking statements are subject to business and
economic risks and uncertainties, including but not limited to those described
in Exhibit 99.1 to the Annual Report on Form 10-K for the fiscal year ended
March 31, 2000 on file with the Securities and Exchange Commission. Our actual
results of operations may differ materially from those contained in the forward-lookingforward-
looking statements. All forward-looking statements included in this report are
based on information available to us on the date of this report, and we assume
no obligation to update these forward-looking statements, or to update the
reasons why actual results could differ from those projected in these forward-lookingforward-
looking statements.
Recent Development
On November 6, 2000, the Company and SPSS Inc. ("SPSS") entered into a
Merger Agreement relating to the merger of the Company with a wholly owned
subsidiary of SPSS. The merger is subject to approval by the shareholders of
the Company and SPSS, the effectiveness of a Form S-4 registration statement to be
filed with the Securities and Exchange Commission and other customary closing
conditions. The merger is expected to close in the first calendar quarter of
2001.
Overview
ShowCase develops, markets and supports a fully integrated, end-to-end,
business intelligence solution for IBM AS/400 customers. Our ShowCase STRATEGY
product suite and related services are designed to enable organizations to
rapidly implement business intelligence solutions that create increased value
from their operational and customer data. The sophisticated data warehousing
and management capabilities of our product suite provide our clients with highly
scalable and tightly integrated solutions. Our products enable enterprise-wide
distribution of information and allow end-user access and analysis through
familiar applications and Internet browsers.
Results of Operations
The following table sets forth certain statement of operations data as a
percentage of total revenues for the periods indicated.
Three Months Ended Six Months Ended
September 30, September 30,
-------------- ---------------
2000 1999 2000 1999
----- ----- ----- -----
As a Percentage of Total Revenues:
Revenues:
License fees 51.7% 47.3% 50.1% 53.1%
Maintenance and support 36.2 38.8 36.7 34.2
Professional service fees 12.1 13.8 13.2 12.7
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
Cost of revenues:
License fees 8.8 9.0 8.1 9.7
Maintenance and support 7.8 8.9 8.1 8.3
Professional service fees 11.9 13.1 12.6 11.3
----- ----- ----- -----
Total cost of revenues 28.5 30.9 28.8 29.2
----- ----- ----- -----
Gross margin 71.5 69.1 71.2 70.8
Operating expenses:
Sales and marketing 48.0 61.5 50.8 55.3
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------- -----------------------
2000 1999 2000 1999
---------- --------- -------- ---------
As a Percentage of Total Revenues:
Revenues:
License fees 53.2% 51.7% 50.6% 52.6%
Maintenance and support 37.0 35.8 37.2 34.8
Professional service fees 9.8 12.4 12.2 12.6
---------- --------- ------- -------
Total revenues 100.0 100.0 100.0 100.0
Cost of revenues:
License fees 9.3 10.2 8.3 9.8
Maintenance and support 7.4 8.9 8.0 8.5
Professional service fees 11.0 12.4 12.2 11.7
---------- --------- ------- -------
Total cost of revenues 27.7 31.5 28.5 30.0
---------- --------- ------- -------
Gross margin 72.3 68.5 71.5 70.0
7
Product development 12.5 14.7 13.2 12.7
General and administrative 9.7 13.4 10.3 10.9
----- ----- ----- -----
Total operating expenses 70.2 89.5 74.3 78.9
----- ----- ----- -----
Operating income (loss) 1.3 (20.5) (3.1) (8.1)
Other income (expense), net 3.4 4.3 3.6 2.4
----- ----- ----- -----
Net income (loss) before income taxes 4.7 (16.2) 0.5 (5.7)
Income taxes 1.6 2.2 1.3 1.6
----- ----- ----- -----
Net income (loss) 3.1% (18.4)% (0.8)% (7.3)%
===== ===== ===== =====
Operating expenses:
Sales and marketing 45.2 59.0 49.5 56.5
Product development 11.8 15.1 12.8 13.5
General and administrative 8.9 12.0 9.9 11.3
----------- -------- --------- --------
Total operating expenses 65.9 86.1 72.2 81.3
----------- -------- --------- --------
Operating income (loss) 6.5 (17.6) (.7) (11.3)
Other income (expense), net 2.9 4.1 3.4 3.0
----------- -------- --------- --------
Net income (loss) before income taxes 9.4 (13.5) 2.7 (8.3)
Income taxes 1.6 2.1 1.4 1.7
----------- -------- --------- --------
Net income (loss) 7.8% (15.6)% 1.3% (10.1)%
=========== ======== ========= ========
Revenues
Total revenues. Total revenues increased to $12.5$12.9 million for the three
months ended September 30,December 31, 2000 from $8.5$9.6 million for the three months ended
September 30,December 31, 1999, representing an increase of 47.2%33.4%. For the sixnine months ended
September 30,December 31, 2000, total revenues increased to $23.9$36.3 million from $19.0$28.7 million
for the sixnine months ended September 30,December 31, 1999, an increase of 25.9%26.8%.
8
License fees. License fee revenues increased to $6.5$6.8 million for the three
months ended September 30,December 31, 2000 from $4.0$5.0 million for the three months ended
September 30,December 31, 1999, representing an increase of 60.7%37.3%. License fee revenues
increase to $12.0$18.4 million for the sixnine months ended September 30,December 31, 2000 from $10.1$15.1
million for the sixnine months ended September 30,December 31, 1999, representing an increase of
18.7%21.9%. This increase in license fee revenue is largely attributable to an
increase in the number of licenses sold by our expanded direct sales force.
License fee revenues as a percentage of total revenues were 51.7%53.2% and 47.3%51.7% for
the three months ended September 30,December 31, 2000 and 1999, respectively, and 50.1%50.6% and
53.1%52.6% for the sixnine months ended September 30,December 31, 2000 and 1999, respectively.
License fee revenues from our Essbase/400 product represented 37.2%39.4% and
38.6%48.0% of our total license fee revenues for the three months ended September 30,December 31,
2000 and 1999, respectively, and 37.3%39.0% and 41.6%43.7% for the sixnine months ended
September 30,December 31, 2000 and 1999, respectively.
License fee revenues derived from our indirect distribution channels were
19.0%22.6% and 22.2%30.4% of license fee revenues for the three months ended September 30,December 31,
2000 and 1999, respectively and 17.0%19.5% and 19.6%23.2% for the sixnine months ended
September 30,December 31, 2000 and 1999, respectively.
Maintenance and support. Maintenance and support revenues increased to
$4.5$4.8 million for the three months ended September 30,December 31, 2000 from $3.3$3.5 million for
the three months ended September 30,December 31, 1999, representing an increase of 37.3%37.7%.
For the sixnine months ended September 30,December 31, 2000, maintenance and support revenues
increased to $8.8$13.5 million from $6.5$10.0 million for the sixnine months ended September
30,December
31, 1999, an increase of 35.0%35.9%. Maintenance and support revenues as a
percentage of total revenues were 36.2%37.0% and 38.8%35.8% for the three months ended
September 30,December 31, 2000 and 1999, respectively, and 36.7%37.2% and 34.2%34.8% for the sixnine
months ended September 30,December 31, 2000 and 1999, respectively. These increases in
maintenance and support revenues were largely a result of the renewal of
maintenance and support contracts, as well as new maintenance and support
contracts associated with new product licenses.
Professional service fees. Professional service fee revenues increased to
$1.5$1.3 million for the three months ended September 30,December 31, 2000 from $1.2 million for
the three months ended September 30,December 31, 1999, representing an increase of 28.6%5.1%. For
the sixnine months ended September 30,December 31, 2000, professional service fee revenues
increased to $3.2$4.4 million from $2.4$3.6 million for the sixnine months ended September 30,December
31, 1999, an increase of 31.3%22.6%. Professional service fee revenues as a
percentage of total revenues were 12.1%9.8% and 13.8%12.4% for the three months ended
September 30,December 31, 2000 and 1999, respectively, and 13.2%12.2% and 12.7%12.6% for the sixnine
months ended September 30,December 31, 2000 and 1999, respectively. These increases in
professional service fee revenues were largely a result of revenues associated
with the sale of new product licenses.
Revenues from clients outside North America represented 33.6%40.1% and 45.9%43.0% of
our total revenuesrevenue for the three months ended September 30,December 31, 2000 and 1999,
respectively, and 34.8%37.1% and 37.8%39.5% for the sixnine months ended September 30,December 31, 2000
and 1999, respectively. A majority of this revenuethese sales was derived from European
sales.
Costs of Revenues
9
Cost of license fees. Cost of license fees consists primarily of the costs
of product manuals, media, packaging, shipping and royalties paid to third
parties. Cost of license fees increased to $1.1$1.2 million for the three months
ended September 30,December 31, 2000 from $.8$1.0 million for the three months ended September
30,December
31, 1999, representing 17.0%17.5% and 19.0%19.7% of license fee revenues for these
periods, respectively. Cost of license fees increased to $1.9$3.0 million for the
sixnine months ended September 30,December 31, 2000 from $1.8$2.8 million for the sixnine months ended
September 30,December 31, 1999, representing 16.1%16.4% and 18.2%18.7% of license fee revenues for
these periods, respectively. These increases in cost of license fees in dollar
amount were primarily attributable to higher license fee revenues. We
anticipate that cost of license fees will increase in dollar amount in future
periods as license fee revenues increase. Cost of license fees as a percentage
of license fee revenues may increase if we enter into additional royalty
arrangements or if sales of Essbase/400 or other products which carry a royalty
obligation increase as a percentage of license fee revenues.
Cost of maintenance and support. Cost of maintenance and support consists
primarily of personnel costs associated with providing maintenance and support
services and payments to third parties to provide maintenance and support,
particularly with respect to Essbase/400. Cost of maintenance and support
increased to $1.0 million for the three months ended September 30,December 31, 2000 from $0.8$0.9
million for the three months ended September 30,December 31, 1999, representing 21.4%20.0% and
22.8%24.7% of maintenance and support revenues for these periods, respectively. Cost
of maintenance and support increased to $2.0$2.9 million for the sixnine months ended
September 30,December 31, 2000 from $1.6$2.4 million for the sixnine months ended September 30,December 31, 1999,
representing 22.2%21.4% and 24.2%24.4% of maintenance and support revenues for these
periods, respectively. These increases in cost of maintenance and support in
dollar amount were primarily due to the hiring of additional personnel. We
anticipate that cost of maintenance and support will increase in dollar amount
in future periods as maintenance and support revenues increase.
Cost of professional service fees. Cost of professional service fees
consists primarily of the costs of providing training and consulting services.
Cost of professional service fees increased to $1.5$1.4 million for the three months
ended September 30,December 31, 2000 from $1.1$1.2 million for the three months ended September
30,December
31, 1999, representing 98.4%112.0% and 94.4%99.8% of professional service fee revenues for
these periods, respectively. Cost of professional service fees increased to
$3.0$4.4 million for the sixnine months ended September 30,December 31, 2000 from $2.1$3.3 million for
the sixnine months ended September 30,December 31, 1999, representing 95.4%100.0% and 88.9%92.5% of
professional service fee revenues for these periods, respectively. These
increases in cost of professional service fees were primarily due to the
expansion of our professional services staff. We anticipate that cost of
professional service fees will increase in dollar amount in future periods as
professional service fee revenues increase.
Operating Expenses
Sales and marketing. Sales and marketing expenses consist primarily of
salaries, benefits, bonuses, commissions and travel and promotional expenses.
Sales and marketing expenses increased to $6.0$5.8 million for the three months
ended September 30,December 31, 2000 from $5.2$5.7 million for the three months ended September
30,December
31, 1999, representing 48.0%45.2% and 61.5%59.0% of total revenues for these periods,
respectively. Sales and marketing expenses increased to $12.2$18.0 million for the
sixnine months ended September 30,December 31, 2000 from $10.5$16.2 million for the sixnine months ended
September 30,December 31, 1999, representing 50.8%49.5% and 55.3%56.5% of total revenues for these
periods, respectively. These increases in sales and marketing expenses in dollar
amount reflect the hiring of additional sales and marketing personnel and
expanded promotional activities. Sales and marketing expenses decreased as a
percentage of total revenues primarily due to faster revenue growth during the
three and sixnine months ended September 30,December 31, 2000. We anticipate that sales and
marketing expenses will increase in dollar amount in future periods.
10
Product development. Product development expenses consist primarily of
development personnel compensation and related costs associated with the
development of new products, the enhancement of existing products, quality
assurance and testing. Product development expenses increased to $1.6remained at $1.5 million
for the three months ended September 30,December 31, 2000 from $1.2 million for the threes
months ended September 30,and 1999, representing 12.5%11.8% and
14.7%15.1% of total revenues for these periods, respectively. Product development
expenses increased to $3.2$4.7 million for the sixnine months ended September 30,December 31, 2000
from $2.4$3.9 million for the sixnine months ended September 30,December 31, 1999, representing
13.2%12.8% and 12.7%13.5% of total revenues for these periods, respectively. These increasesThe increase
in dollar amount werein the nine-month comparison was due to expenses associated
with the development of new products and the hiring of additional personnel. We
anticipate that we will continue to devote substantial resources to product
development efforts and that product development expenses will increase in
dollar amount in future periods. To date, all product development costs have
been expensed as incurred.
General and administrative. General and administrative expenses consist
primarily of salaries of executive, financial, human resources and information
services personnel as well as outside professional fees. General and
administrative expenses increaseddecreased to $1.1 million for the three months ended
December 31, 2000 from $1.2 million for the three months ended September 30, 2000 from $1.1 million for the three months ended September 30,December 31,
1999, representing 9.7%8.9% and 13.4%12.0% of total revenues for these periods,
respectively. General and administrative expenses increased to $2.5$3.6 million for
the sixnine months ended September 30,December 31, 2000 from $2.1$3.2 million for the sixnine months
ended September 30,December 31, 1999, representing 10.3%9.9% and 10.9%11.3% of total revenues for these
periods, respectively. These increasesThe increase in dollar amount werefor the nine months ended
December 31, 2000 was primarily due to increased staffing and related expenses
necessary to manage and support the expansion of operations. General and
administrative expenses decreased as a percentage of total revenues primarily
due to fasterhigher revenue growth during the three and sixnine months ended September 30,December 31,
2000. We anticipate that general and administrative expenses will increase in
dollar amount in the future as a result of increased personnel and
infrastructure costs necessary to support the expansion of operations.
Other Income
Other income consisted primarily of interest income and interest expense.
Other income increaseddecreased slightly to $424,000$376,000 for the three months ended September
30,December
31, 2000 from $362,000$395,000 for the three months ended September 30,December 31, 1999. Other
income increased to $852,000$1.2 million for the sixnine months ended September 30,December 31, 2000
from $461,000$855,000 for the sixnine months ended September 30,December 31, 1999. The increase in
other income in the nine-month comparison is primarily due to earnings on the
proceeds from the Company's initial public offering in fiscal 2000.
Provision for Income Taxes
Income taxes increased towere $200,000 for the three months ended September
30,December 31, 2000 from $185,000 for the three months ended September 30,and
1999. Income taxes remained at $300,000$500,000 for the sixnine months ended September 30,December 31,
2000 and 1999. The tax provision primarily represents foreign income tax
withholding and has varied to the extent of non-U.S. license activity.
Liquidity and Capital Resources
To date, the Company has financed its business through cash provided by
operations, the sale of equity securities and bank borrowings. Operating
activities used cash of $1.2 million$805,000 for the sixnine months ended September 30,December 31, 2000 and
used cash of $2.3$3.1 million for the sixnine months ended September 30,December 31, 1999. The
decreaseCash
used in cash from operating activities for the sixnine months ending September
30,December 31, 2000 was
due primarily to increased accounts receivable partially offset by decreases in
prepaid expenses and tax receivable and increases in income taxes payable and
accrued liabilities. Cash used in operating activities for the nine months
ending December 31, 1999 was due primarily to increased accounts receivable,
decreased accounts payable and a decrease in
deferred revenuenet loss of $2.9 million partially offset by an
increase in income taxes payable and
increase in accounts payable and accrued liabilities. The decrease in cash from
operating activities for the six months ending September 30, 1999 was due
primarily to a net loss of $1.4 million and a decrease in deferred revenue.
11
Investing activities provided cash of $2.5$6.3 million for the sixnine months
ended September 30,December 31, 2000 and used cash of $25.8$26.4 million for the sixnine months ended
September 30,December 31, 1999. The principal source of cash in investing activities for the
sixnine months ended September 30,December 31, 2000 was maturity of marketable securities offset
by the purchase of software rights and capital expenditures related to the
acquisition of computer equipment and furniture required to support the
expansion of our operations. The principal use of cash in investing activities
for the sixnine months ended September 30,December 31, 1999 was the investment of the proceeds
from our initial public offering and capital expenditures related to the
acquisition of computer equipment and furniture required to support the
expansion of our operations.
Financing activities provided cash of $280,000$402,000 and $24.3$24.6 million in the
sixnine months ended SeptemberDecember 30, 2000 and 1999, respectively. For the sixnine months
ended September 30,December 31, 2000, cash provided by financing activities consisted
primarily of the receipt of proceeds from the exercise of stock options. For
the sixnine months ended September 30,December 31, 1999, cash provided by financing activities
consisted primarily of proceeds from our initial public offering.
Our sources of liquidity at September 30,December 31, 2000 consisted principally of
cash and marketable securities of $28.0$28.5 million. We believe that cash generated
from operations, existing cash and marketable securities will be sufficient to
fund operations for at least the next twelve months.
Item 3. Quantitative and Qualitative Disclosure About Market Risks
There have been no material changes in our market risk during the three
and sixnine months ended September 30,December 31, 2000.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
Our registration statement, filed on Form S-1 under the Securities Act
(File No. 333-77223), for the initial public offering of our common stock became
effective June 29, 1999. We have invested the net proceeds from the offering of
approximately $24.4 million in marketable securities pending the use of such
proceeds. We expect to use the net offering proceeds for general corporate
purposes, including the expansion of our direct sales force, product development
and working capital. A portion of the proceeds may also be used to acquire
businesses or technologies that are complementary to ours. There are no current
agreements with respect to any material acquisitions.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The 2000 Annual Meeting of Shareholders of ShowCase Corporation was
held on Thursday, August 3, 2000, at the Marquette Hotel in Minneapolis,
Minnesota.
The holders of 7,880,576 shares of common stock, representing 74.6% of
the 10,568,873 outstanding shares entitled to vote as of the record date, were
represented at the meeting in person or by proxy. Management's slate of one
director listed in the proxy statement was elected to serve until the 2003
Annual Meeting of Shareholders by the following vote tally:
For Authority Withheld
--- ------------------
William B. Binch 7,855,376 25,200None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.1 -- Financial Data ScheduleNone.
(b) Reports on Form 8-K:
None.On November 13, 2000, we filed a Current Report on Form 8-K
regarding the execution of an agreement and plan of merger
pursuant to which ShowCase would become a wholly owned subsidiary
of SPSS Inc.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SHOWCASE CORPORATION
Date: November 9, 2000February 12, 2001 By: /s/ Craig W. Allen
------------------------------------------------
Craig W. Allen
Chief Financial Officer
(Duly authorized officer and principal
financial and accounting officer)
EXHIBIT INDEX
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27.1 Financial Data Schedule14