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 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. 10,833,316 Common Shares as of January 31, 2001. Table of Contents SHOWCASE CORPORATION AND SUBSIDIARIES Report on Form 10-Q for period ended December 31, 2000 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 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 Nine Months Ended December 31, December 31, -------------------------------- ------------------------------- 2000 1999 2000 1999 --------------- ------------- ------------- -------------- Revenues: License fees $ 6,849 $ 4,990 $ 18,379 $ 15,082 Maintenance and support 4,756 3,456 13,540 9,963 Professional service fees 1,262 1,201 4,430 3,613 --------------- ------------- ------------- -------------- Total revenues 12,867 9,647 36,349 28,658 --------------- ------------- ------------- -------------- Cost of revenues: License fees 1,200 985 3,017 2,820 Maintenance and support 952 855 2,902 2,432 Professional service fees 1,414 1,199 4,436 3,342 --------------- ------------- ------------- -------------- Total cost of revenues 3,566 3,039 10,355 8,594 --------------- ------------- ------------- -------------- Gross margin 9,301 6,608 25,994 20,064 --------------- ------------- ------------- -------------- Operating expenses: Sales and marketing 5,811 5,691 17,981 16,199 Product development 1,517 1,457 4,667 3,866 General and administrative 1,139 1,160 3,604 3,238 --------------- ------------- ------------- -------------- Total operating expenses 8,467 8,308 26,252 23,303 --------------- ------------- ------------- -------------- Operating income (loss) 834 (1,700) (258) (3,239) --------------- ------------- ------------- -------------- Other income (expense), net: Interest expenses -- (4) (6) (15) Interest income 426 396 1,328 867 Other income (expense), net (50) 3 (95) 3 --------------- ------------- ------------- -------------- Total other income (expense), net 376 395 1,227 855 --------------- ------------- ------------- -------------- Net income (loss) before income taxes 1,210 (1,305) 969 (2,384) Income taxes 200 200 500 500 --------------- ------------- ------------- -------------- Net income (loss) $ 1,010 $ (1,505) $ 469 $ (2,884) --------------- ------------- ------------- -------------- Other comprehensive income (loss): Foreign currency translation adjustment (9) 26 -- 54 Unrealized holding gain (loss) on securities -- 206 4 279 --------------- ------------- ------------- -------------- Comprehensive income (loss) $ 1,001 $ (1,273) $ 473 $ (2,551) =============== ============= ============= ============== Net income (loss) per share: Basic $ .09 (0.15) $ .04 $ (0.35) =============== ============= ============= ============== Diluted $ .09 $ (0.15) $ .04 $ (0.35) =============== ============= ============= ============== Weighted average shares outstanding used in computing basic net income (loss) per share 10,784 10,368 10,706 8,354 Weighted average shares outstanding used in computing diluted net income (loss) per share 11,267 10,368 11,260 8,354 See accompanying notes to consolidated financial statements 2 SHOWCASE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share amounts) December 31, 2000 March 31, 2000 ----------------- -------------- Assets Current Assets: Cash and equivalents $ 17,605 $ 11,677 Marketable securities 10,849 18,387 Accounts receivable, net 12,976 8,848 Prepaid expenses and other current assets 1,097 1,731 ----------------- -------------- Total current assets 42,527 40,643 ----------------- -------------- Property and equipment, net 1,634 2,088 Purchased software, net 917 -- Goodwill, net of accumulated amortization 11 56 ----------------- -------------- Total assets $ 45,089 $ 42,787 ================= ============== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 1,289 $ 1,323 Accrued liabilities 5,327 4,333 Current portion of long-term debt and obligations under capital leases -- 80 Income taxes payable 293 -- Deferred revenue 13,036 12,778 ----------------- -------------- Total current liabilities 19,945 18,514 ----------------- -------------- Deferred revenue, less current portion 743 914 ----------------- -------------- Total liabilities 20,688 19,428 ----------------- -------------- Stockholders' Equity: Common stock, $.01 par value, 50,000,000 shares authorized, 10,823,996 and 10,522,113 shares issued and outstanding 108 105 Additional paid-in capital 31,922 31,443 Accumulated other comprehensive income: Cumulative translation adjustment 123 123 Unrealized holding loss on securities (5) (9) Deferred compensation (338) (426) Accumulated deficit (7,409) (7,877) ----------------- -------------- Total stockholders' equity 24,401 23,359 ----------------- -------------- Total liabilities and stockholders' equity $ 45,089 $ 42,787 ================= ============== See accompanying notes to unaudited consolidated financial statements. 3 SHOWCASE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended December 31, ------------------------------------- 2000 1999 ---------------- ---------------- Cash flows from operating activities: Net income (loss) $ 469 $ (2,884) Adjustments to reconcile net income (loss) to cash used in operating activities: Depreciation and amortization 791 533 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 87 158 Loss on the disposal of property and equipment 3 6 Changes in operating assets and liabilities, net of effect of foreign exchange rate changes: Accounts receivable (4,128) (1,613) Prepaid expenses 282 313 Income taxes receivable 351 (321) Accounts payable (35) (550) Accrued liabilities 995 476 Deferred revenue 87 836 Income taxes payable 293 (247) ---------------- ---------------- Net cash used in operating activities (805) (3,053) ---------------- ---------------- Cash flows from investing activities: Purchase of property and equipment (213) (608) Purchase of marketable securities (152,138) (95,037) Sale and maturity of marketable securities 159,680 69,257 Purchase of software license (1,000) -- Proceeds from sale of property and equipment 2 -- ---------------- ---------------- Net cash provided by (used in) investing activities 6,331 (26,388) ---------------- ---------------- Cash flows from financing activities: Proceeds from exercise of stock options 482 342 Proceeds from initial public offering, net of expenses -- 24,350 Payments on long-term debt -- (3) Payments of capitalized lease obligations (80) (106) ---------------- ---------------- Net cash provided by financing activities 402 24,583 ---------------- ---------------- Net increase (decrease) in cash 5,928 (4,858) Cash, beginning of period 11,677 8,900 ---------------- ---------------- Cash, end of period $ 17,605 $ 4,042 ================ ================ Supplemental disclosure of cash flow information: Cash paid during the nine months for interest $ 5 $ 15 ================ ================ Cash paid during the nine months for income taxes $ 90 $ 739 ================ ================ Cash received during the nine months from income tax refunds $ 234 $ -- ================ ================ See accompanying notes to 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. 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 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 December 31, 1999 and the nine months ended December 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 699,821 and 985,538 for the three months ended December 31, 2000 and 1999, respectively and 192,620 and 1,040,424 for the nine months ended December 31, 2000 and 1999, respectively. 5 (3) Merger 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 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- 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- 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 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 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 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 $12.9 million for the three months ended December 31, 2000 from $9.6 million for the three months ended December 31, 1999, representing an increase of 33.4%. For the nine months ended December 31, 2000, total revenues increased to $36.3 million from $28.7 million for the nine months ended December 31, 1999, an increase of 26.8%. 8 License fees. License fee revenues increased to $6.8 million for the three months ended December 31, 2000 from $5.0 million for the three months ended December 31, 1999, representing an increase of 37.3%. License fee revenues increase to $18.4 million for the nine months ended December 31, 2000 from $15.1 million for the nine months ended December 31, 1999, representing an increase of 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 53.2% and 51.7% for the three months ended December 31, 2000 and 1999, respectively, and 50.6% and 52.6% for the nine months ended December 31, 2000 and 1999, respectively. License fee revenues from our Essbase/400 product represented 39.4% and 48.0% of our total license fee revenues for the three months ended December 31, 2000 and 1999, respectively, and 39.0% and 43.7% for the nine months ended December 31, 2000 and 1999, respectively. License fee revenues derived from our indirect distribution channels were 22.6% and 30.4% of license fee revenues for the three months ended December 31, 2000 and 1999, respectively and 19.5% and 23.2% for the nine months ended December 31, 2000 and 1999, respectively. Maintenance and support. Maintenance and support revenues increased to $4.8 million for the three months ended December 31, 2000 from $3.5 million for the three months ended December 31, 1999, representing an increase of 37.7%. For the nine months ended December 31, 2000, maintenance and support revenues increased to $13.5 million from $10.0 million for the nine months ended December 31, 1999, an increase of 35.9%. Maintenance and support revenues as a percentage of total revenues were 37.0% and 35.8% for the three months ended December 31, 2000 and 1999, respectively, and 37.2% and 34.8% for the nine months ended 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 $1.3 million for the three months ended December 31, 2000 from $1.2 million for the three months ended December 31, 1999, representing an increase of 5.1%. For the nine months ended December 31, 2000, professional service fee revenues increased to $4.4 million from $3.6 million for the nine months ended December 31, 1999, an increase of 22.6%. Professional service fee revenues as a percentage of total revenues were 9.8% and 12.4% for the three months ended December 31, 2000 and 1999, respectively, and 12.2% and 12.6% for the nine months ended 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 40.1% and 43.0% of total revenue for the three months ended December 31, 2000 and 1999, respectively, and 37.1% and 39.5% for the nine months ended December 31, 2000 and 1999, respectively. A majority of these 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 $1.2 million for the three months ended December 31, 2000 from $1.0 million for the three months ended December 31, 1999, representing 17.5% and 19.7% of license fee revenues for these periods, respectively. Cost of license fees increased to $3.0 million for the nine months ended December 31, 2000 from $2.8 million for the nine months ended December 31, 1999, representing 16.4% and 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 December 31, 2000 from $0.9 million for the three months ended December 31, 1999, representing 20.0% and 24.7% of maintenance and support revenues for these periods, respectively. Cost of maintenance and support increased to $2.9 million for the nine months ended December 31, 2000 from $2.4 million for the nine months ended December 31, 1999, representing 21.4% and 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 $1.4 million for the three months ended December 31, 2000 from $1.2 million for the three months ended December 31, 1999, representing 112.0% and 99.8% of professional service fee revenues for these periods, respectively. Cost of professional service fees increased to $4.4 million for the nine months ended December 31, 2000 from $3.3 million for the nine months ended December 31, 1999, representing 100.0% and 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 $5.8 million for the three months ended December 31, 2000 from $5.7 million for the three months ended December 31, 1999, representing 45.2% and 59.0% of total revenues for these periods, respectively. Sales and marketing expenses increased to $18.0 million for the nine months ended December 31, 2000 from $16.2 million for the nine months ended December 31, 1999, representing 49.5% and 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 nine months ended 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 remained at $1.5 million for the three months ended December 31, 2000 and 1999, representing 11.8% and 15.1% of total revenues for these periods, respectively. Product development expenses increased to $4.7 million for the nine months ended December 31, 2000 from $3.9 million for the nine months ended December 31, 1999, representing 12.8% and 13.5% of total revenues for these periods, respectively. The increase in dollar amount in 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 decreased to $1.1 million for the three months ended December 31, 2000 from $1.2 million for the three months ended December 31, 1999, representing 8.9% and 12.0% of total revenues for these periods, respectively. General and administrative expenses increased to $3.6 million for the nine months ended December 31, 2000 from $3.2 million for the nine months ended December 31, 1999, representing 9.9% and 11.3% of total revenues for these periods, respectively. The increase in dollar amount for 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 higher revenue growth during the three and nine months ended 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 decreased slightly to $376,000 for the three months ended December 31, 2000 from $395,000 for the three months ended December 31, 1999. Other income increased to $1.2 million for the nine months ended December 31, 2000 from $855,000 for the nine months ended 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 were $200,000 for the three months ended December 31, 2000 and 1999. Income taxes remained at $500,000 for the nine months ended 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 $805,000 for the nine months ended December 31, 2000 and used cash of $3.1 million for the nine months ended December 31, 1999. Cash used in operating activities for the nine months ending 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 net loss of $2.9 million partially offset by an increase in deferred revenue. 11 Investing activities provided cash of $6.3 million for the nine months ended December 31, 2000 and used cash of $26.4 million for the nine months ended December 31, 1999. The principal source of cash in investing activities for the nine months ended 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 nine months ended 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 $402,000 and $24.6 million in the nine months ended December 30, 2000 and 1999, respectively. For the nine months ended December 31, 2000, cash provided by financing activities consisted primarily of the receipt of proceeds from the exercise of stock options. For the nine months ended December 31, 1999, cash provided by financing activities consisted primarily of proceeds from our initial public offering. Our sources of liquidity at December 31, 2000 consisted principally of cash and marketable securities of $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 nine months ended 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 None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K: 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: February 12, 2001 By: /s/ Craig W. Allen ------------------ Craig W. Allen Chief Financial Officer (Duly authorized officer and principal financial and accounting officer) 14