8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 8-K

                             Current Report Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

         Date of report (Date of earliest event reported) July 30, 2003

                                    SPSS INC.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

           Delaware                       000-22194             36-2815480
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of          (Commission          (I.R.S. Employer
Incorporation)                           File Number)        Identification No.)

233 South Wacker Drive, Chicago, Illinois                          60606
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)                         (Zip Code)

                                 (312) 651-3000
- --------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

                                 Not Applicable
- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)



ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.

         (c)      Exhibits.

                  99.1     Transcript of SPSS Inc. Second Quarter 2003 Earnings
                           Release Conference Call, July 30, 2003, 9:00 a.m.
                           (CDT).

ITEM 12: RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         On July 30, 2003, SPSS Inc. held its publicly available Second Quarter
2003 Earnings Release Conference Call, a transcript of which is attached as
Exhibit 99.1 to this Form 8-K and is incorporated herein by reference. The
conference call discussed SPSS's second quarter results and included, among
other things, a discussion of the Earnings Release issued by SPSS on July 29,
2003 and filed as Exhibit 99.1 to SPSS's current report on Form 8-K filed with
the Securities and Exchange Commission (SEC) on July 31, 2003.

         In the conference call, SPSS discusses non-GAAP financial measures such
as EBITDA. A reconciliation of these non-GAAP financial measures is included in
the Earnings Release filed as Exhibit 99.1 to SPSS's Form 8-K filed with the SEC
on July 31, 2003 and posted on SPSS's corporate website at www.spss.com.

         The information in this Form 8-K and Exhibit 99.1 attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934 or otherwise subject to the liabilities of that section and shall not be
deemed incorporated by reference in any filing made by SPSS under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except as set forth by
specific reference in such filing.

                                       2



                                   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 hereunto duly authorized.

                                       SPSS INC.

                                       By:   /s/ Edward Hamburg
                                           -------------------------------------
                                             Edward Hamburg,
                                             Executive Vice President, Corporate
                                             Operations, Chief Financial Officer
                                             and Secretary

Dated: August 1, 2003

                                       3

EX-99.1

                                       1

                         SPSS, INC. SECOND QUARTER 2003

                        EARNINGS RELEASE CONFERENCE CALL

                            JULY 30, 2003, 9:00 a.m.

                        * * * * * * * * * * * * * * * * *

         The following is a transcript of the above-entitled matter as
transcribed from an Internet transmission by Patricia A. Dusing, CSR and Notary
Public in the County of Cook and State of Illinois.

                        * * * * * * * * * * * * * * * * *

         STEVE: Welcome to the SPSS second quarter 2003 earnings release
conference call. With the exception of historical information, the matters
discussed in this conference call include forward-looking statements that
involve risk and uncertainties including, but not limited to market conditions,
competition, and other risk indicated in the company's filing with the
Securities and Exchange Commission.

         A full safe-harbor statement is available in the second quarter 2003
press release posted at www.spss.com slash invest. Again, that's http, colon,
forward slash, forward slash, www, dot, SPSS, dot, c-o-m,




                                        2

forward slash, i-n-v-e-s-t.

         At the time I would like to introduce Mr. Jack Noonan, president and
chief executive officer, Mr. Edward Hamburg, executive vice president and chief
financial officer; and Mr. Douglas Dow, vice president of corporate development.
Please go ahead, Mr. Noonan.

         MR. NOONAN: Thanks, Steve. Good morning and thank you all for joining
us to review our second quarter 2003 earnings. During the second quarter we saw
improvement in the predictability of business, but not the closure rate. Our
expenses are under control, pipelines are growing, and market interest around
Predictive Analytics is continuing to build.

         As a result, we are successfully adapting to an extended period of long
sell cycles and smaller average transactions. The second quarter included
increases in new license revenues for our Net Genesis web analytics application,
our Clementine Enterprise Data Mining software, and the SPSS line of statistical
analysis tools.

         We are also encouraged by the



                                        3

continued adoption of our latest Predictive Analytic offering by industry
leading commercial organizations. Companies such Standard Life Assurances and
the credit card group of J.P. Morgan Chase continue to realize the benefits
provided by Net Genesis application. Such as measuring the effectiveness of on
line content, transaction, and marketing campaign.

         Sales momentums behind our integrated Clementine and SPSS Lexiquest
Text Mining offering also continue this quarter, with new sales to companies
like Biznet in Japan and Sim Zero One in France. We also close a significant
highly competitive transaction with a global business services company that will
use our software to better target retail catalog mailings.

         The high scale Predictive Analytic system we are implementing on their
behalf is based on a predictive marketing technology and will operate within a
(inaudible) linex cluster automatically deploying over 1,000 unique models and
deploying billion of customer records in a single day. This implementation is an
example



                                        4

of our ability to deliver increasingly sophisticated Predictive Analytic
solutions that transforms business profits and enhance return on information
technology investment.

         Such state-of-the-art Predictive Analytic systems enable forward
looking organizations to increase new customer acquisition, improve customer
retention, and detect and prevent fraud. Our challenge is to continue to broadly
demonstrate that our software and services provide measurable large-scale gain.

         These returns are achieved in months, not years, and at costs that are
justified by benefits of higher revenues, reduced expenses, and improved
outcome. Again, we are encouraged by our company's performance during the
quarter and maintain a guarded confidence in our ongoing performance this year.

         As shown this quarter we have leveraged our core analytic tool
business, our past strategic investments, and our diverse customer base to
create a solid foundation to execute in 2003 and beyond. Long-term we have a



                                        5

very clear goal, to make SPSS the dominant supplier in Predictive Analytic
solutions.

         At this time I would like to turn the call over to Ed Hamburg our CFO
to give you some more details on the second quarter numbers. Ed.

         MR. HAMBURG: Thank you, Jack. I want to begin my comments this morning
by going to the end of our earnings press release, or at least the formal
portion of our press release, to the chart that should be entitled performance
versus productivity and profitability goal.

         As I think that this chart really tells the story of our first half of
the year. The chart shows that we've essentially had a half year with
essentially flat revenues that has restricted our progress that we should be
making on the fact productivity metric. It also shows the degree to which we've
improved operating profitability.

         This measure is already approaching our targeted range for the 2003
fiscal year and it shows improved cash flow. With trailing 12-month EBITDA
already in the



                                        6

targeted range for the year, further supported by the cash flow statement that
shows our improvement in operating cash flow at the very end of the release.

         I want to move right now to comment on organic growth or nongrowth in
revenues of 8 percent from the second quarter of last year. As I think this
figure is an important part of the story of the current quarter. I estimate that
about one-third of the decline is due to the top comparisons that exist to a
quarter with some big deals last year and unusually high growth from the higher
education market.

         I think about another 10 percent of the drop is due to the UK
shortfall. And a full 20 percent of the drop was caused by the decline in
services revenue, which related yet as we mentioned to the drop in Showcases
sales in the current quarter, but also showed that difficulties we had in
finding new consulting deals in the troublesome March quarter of this year.

         The remainder of the decline in my



                                        7

thinking in organic growth is due to the significant drop in Showcases -- the
new sales. And from my standpoint there were two subplots to this story. The
first is the change in focus that has occurred among our sales personnel to
pursue the active demand we have for our newest offering, like predictive
marketing, Net Genesis, particularly Predictive Analytic, Incarnation, and the
Clementine Lexiquest combination.

         The other subplot is a loss of focus. A loss of focus among our sales
personnel from working the good business related to our Showcase product that we
already have before us. These thoughts enable me to move to my final comments
this morning on what I think is the projected story for the second half of 2003.

         I think you should see improvement in the measure of organic growth in
the business. At the latter half of last year was not characterized by multiple
seven-figure deals. The growth in higher education sale had already started to
come back to earth by the



                                        8

         third and fourth quarters of last year.

         The UK should have its act together. And we should do better with the
Showcase products. I think this improvement will be produced by scoring runs, by
hitting lots of singles and doubles, with an occasional three run home run. And
will continue to control cost and (inaudible) the balance sheet.

         We fought long and hard about adjusting guidance for the rest of the
year. But in the end the basis for the decision was uncomplicated. We looked at
where we were at midyear and added in the net of facts of having more unknowns
than knowns about our ability to better close business.

         But I want to already correct my comment in the press release where I
mention our incomplete attempts to understand demand conditions in the second
half of the year. I think it's a lot less about demand. The demand is there.

         The story of the next two quarters will I think be more about our
ability to execute in the field in response to this demand.



                                        9

As well as the ability of customers to pull the trigger on purchases once they
make their decision. I would like to now turn it back to Jack.

         MR. NOONAN: Thanks. Steve, I think it's now time to open it up for
questions.

         STEVE: Thank you, gentlemen. The question and answer session will be
conducted electronically today. If you would like to ask a question, please do
so by pressing the star key followed by the digit one on your touch tone
telephone.

         If you are using a speaker phone, please make sure your mute function
is turned off to allow your signal to reach our equipment. We will proceed in
the order that you signal and we will take as many questions as time permits.
Once again, please press star one to ask your telephone question.

         If you find your question has been answered, you may remove yourself
from the phone queue by pressing the pound key. Again, star one. We will pause
for just a moment to allow everyone to signal. We will take our first our



                                       10

first question from Robert Mattson from Jany, Montgomery & Scott.

         MR. MATTSON: Good morning.

         MR. NOONAN: Good morning, Robert.

         MR. MATTSON: Hey, do I hear Doug back there?

         MR. DOW: Yes, you do.

         MR. MATTSON: Hey, Doug. I will open with an obligatory Tivo (phonetic)
question for you. Where do we stand there?

         MR. HAMBURG: We continue to work with Tivo in the field. We've got some
opportunities that forces are pursuing. They are primarily through the Tivo
Integration Partners, in particular Extraprise continues to be a good
relationship for us. I think it's one where it's below progress, but we are
seeing some progress in moving this opportunity to the pipeline.

         MR. MATTSON: Ed, in the press release you mentioned about return of
renew K in the sales force. Are you seeing anything anywhere else in the
geography?

         MR. HAMBURG: No.



                                       11

         MR. MATTSON: No, okay. And Jack, could you clarify for me on the
comment that the business is improving but not the closure rate, I guess I'm
wondering to me they are kind of hand in hand. Do you think you could separate
it out and elaborate more on what you mean there?

         MR. NOON: Yeah, it was predictability. And we're able to predict longer
close cycles. Does that make sense? As simply as that. It's a very idiosyncratic
environment, but our ability to predict is getting better.

         MR. MATTSON: Now is this across -- I guess you say the (inaudible)
about a hundred thousand dollars.

         And the other question is kind of related to a later question I have,
which I will go ahead and ask now, is are you finding that you're putting more
services in as clients want you to bring your expertise to building the solution
and is that also lengthening the sell cycle because you have a lot of issues
around with the solution itself?

         MR. NOONAN: It is and it is also proof




                                       12

of concepts on the front end. You're absolutely right.

         MR. MATTSON: Okay. On the Lexiquest business, I was wondering as you're
getting these installed, are you finding that the text mining -- anything in the
text mining technology the way customers are looking to employ them is requiring
any higher or lower service component than the other solutions?

         MR. NOONAN: No, we're not actually, no, no. In fact, I hadn't thought
about it until just now, but no, we're not. No more than the data mining
implementation. Some are high and some are very low.

         MR. MATTSON: And in the large solution you mentioned, you called out,
is this no fee services?

         MR. NOONAN: No. In fact it's a small amount of services. What we have
done is we've been able to augment our -- in fact, add to our predictive
marketing technology. In fact, we sped up the development process to put a model
manager in place and increase the performance of our storing component.



                                       13

         MR. MATTSON: You notice I'm asking a lot of service questions, the
reason why was because I know a couple of quarters ago when you talked about the
new direction, you know, having the customer focus, the customer data focus,
there was a suggestion that maybe this would -- if you get more into the
solution selling you may see more pickup in the services once you're expertise
in the solution. And it sounds like you're not seeing that materializing yet.

         MR. NOONAN: No. In fact I think the comment that Ed made is the one
that is on target for this quarter. The services that will be delivered in this
quarter, much of that had to be signed last quarter. And when March disappeared
we have a service disrupt, so you always see the lag in services revenue.

         MR. MATTSON: But you're not seeing -- as you're becoming more solution
oriented, you're not seeing any more demand for services relative to your
(inaudible)?

         MR. HAMBURG: The answer is yes, we are. But also we are involving
partners in this. So we have a combination of I believe



                                       14

we're seeing a little bit of this flatten too by the involvement of our
partners, which is good for us.

         MR. MATTSON: And then a twofold question. One is if you could elaborate
on the sales forces. You mentioned about that they were loosely focused in
Showcase and you mentioned some areas where they are focusing on.

         Have you seen -- have you been able to bonafide or qualitatively talk
about part of the reorganization that you were hoping to get more product to
each salesperson's hand to sell into the client base, do you have any measures
that the people have gotten successful in selling multiple product lines in?

         MR. NOONAN: In fact we started this at the very first quarter after the
implementation. And we challenged each guy to pickup a new product. And then
we've gone through a large amount of training.

         I'm pleasantly surprised at the technology that the sales reps are
selling that they didn't have in their bag prior to the reorganization. In fact,
I've been quite



                                       15

pleased. I've been also pleased with the new vocabulary they've built as I've
done various territory reviews and account reviews.

         MR. MATTSON: Did I miss it or did you highlight some areas that the
sales force is gravitating to?

         MR. NOONAN: Well, specifically the guys that were involved in the OF
stuff predominantly in the Showcase phase, we have -- they've been selling data
mining technology, they have been selling text mining technology. We have a
number of opportunities for predictive marketing in the pipelines for these
guys.

         So across the board they've dramatically expanded the number of
offerings that they have in their pipeline. Most of these guys had a single
offering that they were selling the hell out of and now they've gone back to the
same prospects and customers and broaden that set of offerings, which is good.
That's why we see the pipeline growing. And now we have to close this stuff.

         MR. MATTSON: Now on the execution issue, you mentioned some sales from
execution.



                                       16

Is there anything Brian and you are doing now going into the back half of the
year internal, either incentives or initiatives to, you know, kind of not meet
the sale force, but drive them into closing the deals and executing them better?

         MR. HAMBURG: Yeah, in fact, we are slowly but precisely taking our
sales force in aligning them around the verticals where they've shown specific
expertise and prospect base. And that will improve their effectiveness because
that will -- they will have a single customer vocabulary now that we've built
the product vocabulary for them.

         MR. MATTSON: Is that becoming more of a matrix portion, some
geographic, some verticals?

         MR. HAMBURG: Yeah, In fact it's vertical within geographic --
geography. So the smaller the geography the fewer verticals you have.

         MR. MATTSON: And Ed, on the organic growth, do you have last quarter's
number?

         MR. HAMBURG: Yes.




                                       17

         MR. MATTSON: Can we get it?

         MR. NOONAN: He's not trying to hide it from you. He's flipping through
his book right here.

         MR. MATTSON: And I guess while you're doing that, the other thing was
in your guidance remaining of the year, if you have it or if you ball park, what
does that imply on organic growth in the last half of the year?

         MR. HAMBURG: Robert, in the press release from the first quarter in my
opening comment it said the company's internal rate of growth, that you called
organic, the company's internal rate of growth was down just under 4 percent.

         MR. MATTSON: Okay.

         MR. HAMBURG: So that's on Page 6 of last quarter's press release. And
while I was looking through the book I missed your question.

         MR. MATTSON: The second question was, even if it's just a ball park,
what is your -- the guidance you're giving for the last half of the year, what
does that imply under organic solutions?



                                       18

         MR. HAMBURG: I'm suggesting that it gets out of the negative territory.
And by the way, Robert, on this notion of second half, I don't think it's as
much about fogging the sales guys to do their job. As I had a bunch of calls
over the past two weeks from reps who were essentially requiring some executive
assistance to get decisions that were already made moved to closure because of
budgetary constraints or, you know, lack of -- lack of motivation in higher
levels of the organization. So they want us to kind of break down some barriers
there.

         MR. MATTSON: You mean assistance with the customer, not internally
(inaudible) you said.

         MR. NOONAN: Yeah, with the customer. So while I'm never opposed to
foggy sales personnel, I mean, I just don't think that's the main event going
forward.

         MR. MATTSON: Fair enough. Well, that's enough, I will turn it over to
somebody else. Thanks a lot.

         STEVE: Moving on we will hear from Patrick Snow with Robert W. Barrett.



                                       19

         MR. SNOW: Good morning. A couple of questions here. First on the -- on
your guidance for the second half you implied there would be a -- the comparison
would be easier because there wouldn't be as many large seven-figure deal
comparisons.

         What were the seven -- the count of large deals in the second half of
last year? What's the bogey that you have to compare against?

         MR. HAMBURG: Well, Pat, it's Ed. I think it's about three.

         MR. SNOW: Three per quarter?

         MR. HAMBURG: No, three for this whole second half.

         MR. SNOW: And that compares to -- what was the first half of this year,
do you by chance have that?

         MR. HAMBURG: The first half of this year is three. Oh, this year, this
year. I was answering last year, I'm sorry.

         MR. SNOW: It was three you said?

         MR. HAMBURG: Yeah.

         MR. SNOW: On the currency impact, what



                                       20

was the impact the benefit that you realized on the revenue side?

         MR. HAMBURG: Well, the organic rate of change is -- that really
controls the currency effect as well as others. But it's almost -- this quarter
if you want to know the effects of currency, a lot of it is explained between
the difference of organic and the reported numbers. On profitability, it's about
a penny.

         MR. SNOW: A penny. Okay. And then if you could just add up for us if
it's possible, there's a lot of commentary about the different analytic
solutions, but in total what was the growth for decline of the analytic
solutions area?

         MR. HAMBURG: You mean in the old reporting category?

         MR. SNOW: Yeah, because it sounded like Clementine and Net Genesis did
pretty well, so.

         MR. HAMBURG: It was up about 4 percent.

         MR. SNOW: And how many of the larger deals in the quarter were
Clementine related,



                                       21

was it all of them?

         MR. HAMBURG: One.

         MR. SNOW: And in the third quarter, what's the typical mix for the U.S.
federal government, what's the historical mix you've realized and what is the
outlook for the U.S. federal government performance in this year's third
quarter, what kind of insight do you have going into it?

         MR. HAMBURG: I will speak to the first part, Pat, and let Jack do the
second. And we've talking about a percentage of new sale, because you throw in
total you've got, third quarter is a strong recurring part of the year, that the
feds can makeup as much as 10 percent.

         MR. SNOW: Okay.

         MR. HAMBURG: Of the quarter in terms of new sales.

         MR. SNOW: Okay. And this year's third quarter what's the outlook for
that vertical?

         MR. NOONAN: The head of the group has made her numbers the last I think
five quarters in a row and she tells me she's going to do it again. The outlook
is pretty reasonable.



                                       22

         MR. SNOW: And in terms of the cost structure, just to clarify, to what
extent will you be able to bring the cost structure down further or is it now
just simply leveraging the expense base you have?

         MR. NOONAN: This is leveraging the expense base we have. We're on the
program of execution now.

         MR. SNOW: And on the capitalized software, what was the capitalized
software, what was amortized for the quarter?

         MR. HAMBURG: We capitalized about a million five and we amortized about
a million three.

         MR. SNOW: And the last question just on the competitive environment.
What are you seeing differently, if anything, out of SAS or some of your primary
competitors in terms of pricing intensity or just other aggressive tactics to
close business, was that at all a factor in the quarter's performance?

         MR. NOONAN: We are not seeing price pressure as much as you would think
that we should be, we're not seeing price pressure. The



                                       23

R alone on this stuff is very compelling. The issue is getting guys to make the
decision.

         MR. SNOW: And just for total clarity here, so your early comment about
adapting to longer sales cycles, specifically how are you doing that so I make
sure that I've got that correct?

         MR. NOONAN: A lot of involvement by a lot of folks. I mean, that's what
you do.

         MR. SNOW: So verticalizing the sales force.

         MR. NOONAN: Absolutely. And all kinds of review going on and involving
- -- you just heard Ed's comment about being involved in sales. The executive team
here is involved in this stuff.

         MR. HAMBURG: And I think it also, Pat, involves if you're going to run
a strategy of scoring runs with singles and doubles, you've got to adapt to an
execution strategy.

         You've got to move runners along at the right time. And you've got to
take advantage of the bigger opportunities when they hit. But you have to adapt
yourself to the



                                       24

point where you're not going to win games by depending on home runs being hit.

         MR. SNOW: Okay.

         MR. DOW: Yeah, Pat, the other thing is continued focus of pipeline
building. You've to get more and more in the pipeline and that's been a
continued focus over the last couple of quarters.

         MR. SNOW: Just lastly, on the Showcase business, so the pipeline for
Showcase how would you characterize that?

         MR. NOONAN: It's stronger than it's ever been. And I think this is
clearly one of focus.

         MR. SNOW: Thank you.

         STEVE: Moving on we'll here from Patrick Walravens with JMP Securities.

         MR. WALRAVENS: Hi.

         SPEAKER: Hi, Pat.

         MR. WALRAVENS: Let's see. Can you start by telling me what sort of new
product deliveries do you have lined up for the next couple of quarters in
predictive analytic material?



                                       25

         MR. NOONAN: Well, I'll start with the tools area. We have a new release
of SPSS, which is probably one of the most exciting releases that we have done
in the last five years. A whole new graphics capability and a number of customer
care items. So it's a substantial release that the folks are excited about.

         MR. WALRAVENS: And that's version...?

         MR. NOONAN: Version 12.

         MR. WALRAVENS: And when is general (inaudible) event?

         MR. NOONAN: It should be at the end of August.

         MR. WALRAVENS: Okay.

         MR. NOONAN: And we're looking at Clementine. We have a new release of
Clementine in October. And we have a new release of the Showcase strategy in the
third quarter, also.

         MR. WALRAVENS: Okay.

         MR. NOONAN: And we will also be adding two modules to predictive
marketing, because of the work that I talked about in this offering with the
customer we're involved in with this



                                       26

quarter. So we will be adding two components to predictive market, also, in the
second half.

         MR. WALRAVENS: And what are those called?

         MR. NOONAN: One is an updated scoring engine and the other one is a
model manager.

         MR. WALRAVENS: And what happened to -- was there going to be like a
warranty claims product and a fraud product that the government -- a Medicaid
fraud product, what happened to those?

         MR. NOONAN: In fact we are doing that with a partner.

         MR. WALRAVENS: Okay.

         MR. NOONAN: And that product has -- that capability has been delivered
to the partner. And they are integrating it with their stuff as we speak.

         MR. WALRAVENS: For which one?

         MR. NOONAN: For the Medicaid fraud.

         MR. WALRAVENS: Okay. And what about the warranty claims idea?

         MR. NOONAN: That's a -- we're doing that one through a partner, also,
and that is in



                                       27

the web services area and that one is active.

         MR. WALRAVENS: Okay. So at this point to see the cash flow for
authorizations was negative for Q-2. What happened there and what are you going
to do about that?

         MR. HAMBURG: Well, we can slow down paying our bills.

         MR. WALRAVENS: Yeah.

         MR. HAMBURG: And I mean, if you looked at the numbers there, Pat, cash
is down 1.1, but we reduced the receivables pretty -- we reduced the payables.
We also made some royalty payments. So -- we were still cash flow positive in
the second quarter, but it just wasn't at the same level as the first.

         MR. WALRAVENS: Not from operations. From operations he has 1.5 million.
He just backed out your Q-1 from your six months.

         MR. HAMBURG: We were at 12 at the end of three months. And we're at 13
at the end of six.

         MR. WALRAVENS: Maybe I'm doing my math wrong. Okay. What is going on
with AOL?

         MR. HAMBURG: We're working the issue



                                       28

and we'll let you know in the coming months.

         MR. WALRAVENS: And what are the options there?

         MR. HAMBURG: The options are to continue as we are. The option is to
stop the deal. And the third option is to modify the deal. And all of those
three options are being very actively explored.

         MR. WALRAVENS: Okay. I mean, how long is this going to take? What do
you give yourselves in terms of is it six months, is it two months, is it a
year?

         MR. HAMBURG: It's in months. And I would be disappointed if we didn't
have something to talk about by the next conference call.

         MR. WALRAVENS: Where was your services utilization this quarter?

         MR. NOONAN: I -- and in fact Ed is looking at me too, I don't remember
the number off the top of my head, but we had -- we didn't have all (inaudible)
in the seat this quarter for sure.

         MR. WALRAVENS: At what point do you



                                       29

say, okay, we're going to stop saving the capacity and we're just going to let
some of these people go?

         MR. NOONAN: You're actually seeing some of that depending on the
geography.

         MR. WALRAVENS: Okay.

         MR. HAMBURG: Services engagement, however, in the June quarter were
actually up. Meaning, there were a bunch signed this past quarter. Again,
there's that lag, so let's talk about this at the next conference call.

         MR. WALRAVENS: Okay. And then, you know, I forget, weren't you guys
keep providing the revenue break out by product category?

         MR. HAMBURG: Yeah, we're working on it.

         MR. WALRAVENS: Okay. All right. That's it. Thank you very much.

         STEVE: Just a reminder to our audience if you have a question or a
follow-up question, it's star one on the touch tone telephone. We have a
follow-up from Robert Mattson with Jany, Montgomery & Scott.

         MR. MATTSON: Quick question. You all



                                       30

made a comment on building the pipeline one of the things that you've got to do.
On the marketing side and in the field, what is being done differently say going
into the latter half to build the pipeline?

         And then I know you talked about how once that was built you're going
to get the executives more involved in supporting the field to close. If you
could talk about any other changes that are going on in relationship to the
marketing commission.

         MR. NOONAN: Well, two things. One is we did a -- we continued to tune
the reorganization. We aligned all field marketing under a single guide, which
is both field marketing and product market under a single guide.

         The other thing that we're doing, this isn't just executing on the
things that work. And it's driving folks into revenues and then following up.
And most of ours is you show it, you tell it. And so it's a combination of
things we are doing with partners. We have a number of road shows. We continue
to do all the




                                       31

direct mail on the product side.

         We've centralized that on the product side marketing around the world,
so I think we're going to see some synergies out of the marketing activity
there. And I think that's about -- that's pretty much the extent of the
business.

         There is a set of events coming up. I think we have a market research
conference coming up later in the year. And so it's just the standard set of
activities that you would be involved in which are a lot more focused.

         MR. MATTSON: So outside of kind of reorganizing who does what, there's
no real new initiatives from what you've been doing up to this point?

         MR. NOONAN: No, it's just executing.

         MR. MATTSON: On the AOL contract negotiations, the contract you
currently have the way it's written, if you offed up, would you owe a cash
payment to AOL?

         MR. HAMBURG: We continue to make the payments for six more months.



                                       32

         MR. MATTSON: Okay. So it's like giving a six month --

         MR. HAMBURG: That's correct.

         MR. MATTSON: And then at the final six months, do you owe any final
payment or is it just a monthly payment or a quarterly payment?

         MR. HAMBURG: That's it.

         MR. MATTSON: Okay. Great. Thanks.

         STEVE: Next is Joan Tong with Fedodi & Company.

         MS. TONG: Good morning. I actually got a question for Ed. Actually I
believe in the March quarter is -- not the March quarter, it could be the
December quarter, there were some deferrals of revenue recognitions. Do you see
any in this quarter? Are you foreseeing any in the next couple quarters?

         MR. HAMBURG: Joan, I think what you're referring to are not necessarily
accounting deferrals, but deals that we couldn't recognize in the quarter. Is
that what you are asking about?

         MS. TONG: Yes.

         MR. HAMBURG: Actually we did not have



                                       33

any deal that we closed but couldn't recognize. We had a bunch of business that
didn't close the way it should have. But we had no business this quarter that
closed because we were unable to recognize.

         MS. TONG: Okay. And another question is actually more like a big
picture question. You said that during the quarter you saw improvement in the
predictability of the business. I just wonder did you close any deal that you
are not exact to close at all for, like on the upside surprise, do you see any
of those?

         MR. NOONAN: Yes, there were a few surprises, but they were very small
deals. These are the telesales guys got their surprises, which they typically do
because of their short sell cycle. We didn't get any surprises in the big one.
They were all in the pipeline and we worked them all.

         MS. TONG: Okay. Thank you.

         STEVE: As a final reminder to our phone audience, if you do have a
question press star one on your touch tone telephone. We will pause for just a
moment to see if anyone else



                                       34

has a question.

         And gentlemen, it appears nobody else is signaling for a question. So I
will turn it back over to you, Mr. Noonan, for any closing or additional
remarks.

         MR. NOONAN: Thanks Steve. And thanks everyone for taking the time to
hear about SPSS and our second quarter results.

         STEVE: That does conclude today's conference call. We thank you very
much and please have a good day.

                              (End of Transmission)



                                       35

         I, PATRICIA A. DUSING, CSR, do hereby certify that I am a court
reporter doing business in the City of Chicago, State of Illinois; and that I
reported in shorthand the above proceedings by Internet transmission to the best
of my ability.

         /s/ Patricia A. Dusing
         -----------------------------
         CERTIFIED SHORTHAND REPORTER
         CSR No. 084-004071