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This is a dated announcement. The material in this announcement could be superceded by more current announcements.

SPSS Inc. Reports Third Quarter 2003 Results

CHICAGO, 10/28/03 —

SPSS Inc. (Nasdaq: SPSS), the leading provider of predictive analytics technology and services, today announced results for its third quarter ended Sept. 30, 2003.

Revenues and diluted earnings per share were $52.1 million and $0.19 in the quarter, as compared to $52.7 million and a loss per share of $(0.26) in the same period last year, respectively. Operating income improved to $4.6 million in the quarter from an operating loss of $(7.4) million in the same period last year. Included in the results for the quarter ended Sept. 30, 2002, were technology write-offs, restructuring costs and other nonrecurring charges of $10.9 million.

The company’s improved profitability was primarily due to expense reduction programs implemented in the third quarter of 2002, which included a field operations restructuring, the downsizing or closing of certain facilities and the termination of certain investments. SPSS also increased its cash flow from operations to $18.8 million in the first nine months of the year, up from $13.4 million in the first half of 2003 and $(1.5) million in the same nine month period last year.

"We saw no changes this quarter in closure rates, sales cycles or transaction values,” said Jack Noonan, SPSS Inc. president and chief executive officer. “And despite increased activity in almost every part of our business, there was still little sense of urgency exhibited by customers in making purchasing decisions. Some evidence suggests that organizations will be more motivated in the coming quarters. While we are prepared for this possible change, we are not counting on it.”

Revenues and diluted earnings per share for the first nine months of 2003 were $152.5 million and $0.39, as compared to $155.3 million and a loss per share of $(0.42) in the same period last year, respectively. Operating income improved to $10.2 million in the first nine months of 2003 from an operating loss of $(13.5) million in the same period last year. Included in the results for the nine months ended Sept. 30, 2002, were technology write-offs, restructuring costs and acquisition and other nonrecurring charges of $16.5 million.

“Federal sales were strong this quarter, particularly for homeland security and fraud detection applications,” Noonan continued. “There was also a nice rebound in Japan and good improvement in revenues from higher education customers in North America. These positives, however, were offset by weak performance throughout Europe and continued lower sales to state and local governments in the United States.”

Noonan said, “A genuine bright spot in the quarter was provided by sales of our text mining technology, which were the highest since our acquisition of LexiQuest Inc. in Jan. 2002. Homeland security is a current driver of these revenues, along with corporate and academic customers in the United States and Japan. This increased interest in text mining is understandable, since nearly 80 percent of all data today is in an unstructured form, such as text in e-mails or call center notes. SPSS technologies make it possible to analyze both structured and unstructured data, enabling organizations to get more complete views of their enterprise, transform business processes and improve returns on investments.

“Three new OEM agreements were another positive in the quarter,” Noonan concluded. “The largest was signed with HP (NYSE: HPQ), which will use our ClementineÒ data mining workbench and real-time scoring technology to develop a module for its Fraud Management System (FMS). FMS enables telecommunications providers to more accurately detect and prevent fraud. We also made progress delivering predictive analysis capabilities to business users in the form of pre-packaged analytic applications. Through our partnership with Bull Systems, our joint application for predicting Medicaid fraud was selected during the quarter by Nassau County, N.Y., and submitted for legislative approval.”

Revenue Performance

Software Licenses

Revenues from new software licenses declined 1 percent to $21.5 million in the quarter from $21.8 million in the same period last year. This decrease was primarily due to lower sales of desktop products for scientific analysis, the impact of certain discontinued products on new sales and declines in revenues from the company’s NetGenesisÒ Web analytics application and ShowCaseÒ business intelligence tools. Partially offsetting this decline were higher sales of SPSS data mining tools, applications for market research and desktop statistical analysis tools, as well as changes in currency exchange rates.

New sales of SPSS data mining tools increased by 26 percent from the third quarter in 2002, largely driven by new licenses of the company’s text mining technology. Also contributing to this growth were higher new sales of Clementine and server versions of the SPSS statistical analysis tools. For example, Sallie Mae, the nation’s leading provider of education funding, selected Clementine to better provide guaranteed student loans as well as information to students, parents and guidance professionals. DIRECTV, Inc., the nation’s leading digital multi-channel television service provider, purchased LexiQuestÔ to incorporate unstructured customer data from call center interactions into its overall CRM analysis initiatives. Other new licenses of SPSS data mining tools in the quarter included:

• The United States Postal Service
• MSN in the U.K.
• The United States Army
• Nifty, the largest Internet services provider (ISP) in Japan
• The United States Department of Justice

New license revenue from desktop SPSS statistical analysis tools increased 4 percent from the third quarter of 2002. This increase was primarily driven by the launch of a new release of these products, which featured enhanced data visualization and additional analytical capabilities.

New revenues from the SPSS applications for market research increased by 10 percent compared to the third quarter of 2002. Significant sales included an enterprise license agreement with Research International, one of the world’s leading market research firms.

New sales of ShowCase business intelligence tools were down 5 percent from the same period last year. SPSS released new versions of these offerings during the quarter.

Maintenance and Services

Revenues from maintenance agreements and renewals of annual licenses increased 1 percent to $22.4 million in the quarter from $22.2 million in the same period last year. This growth was due to steady renewal rates for the company’s major offerings as well as changes in currency exchange rates. Maintenance revenues increased as a percentage of total revenues to 43 percent in the current quarter from 42 percent in the third quarter of 2002.

Service revenues declined 5 percent to $8.2 million in the quarter from $8.6 million in the same period last year. This was primarily due to a decrease in ShowCase implementation services as well as a drop in training revenues. Revenues from the SPSS Online (AOL) business were up sequentially and compared to the third quarter of 2002. Service revenues were constant at 16 percent of total revenues.

Financial Commentary

Speaking to other aspects of the third quarter, Edward Hamburg, SPSS executive vice president and chief financial officer, said, “The company’s internal rate of revenue growth was flat compared to the third quarter in 2002, which tells much of the story in the current quarter. In short, revenue increases in particular product lines, vertical markets or geographies were offset by decreases in others. Almost $2 million of growth in new sales of data mining tools countered the combined declines in revenues from services, discontinued products, NetGenesis and ShowCase. Japan made up for Europe, and in the United States, growth from federal and higher education sales matched flat revenues from corporate customers and lower sales to state and local government organizations. Overall, we are holding our own in a market characterized by continued uncertainty.”

Hamburg continued, “We also have the fundamentals of the business under control. Expenses are at levels that will enable us to benefit from any potential up-tick in revenues and our cash position has markedly improved from Dec. 2002. Moreover, the company’s already strengthened balance sheet will get even stronger in the fourth quarter when it reflects the terms of our new agreement with AOL.”

Hamburg also provided the following detail on other financial aspects of the quarterly periods:

Outlook

Hamburg concluded, "Our current sense of the business suggests that the low-end to the mid-point of guidance for the company’s performance in 2003 is achievable. Consistent with earlier disclosures of annual guidance, the low-end of these estimates assumes no improvement in the current business climate while the mid-point considers increased fourth quarter spending by organizations worldwide.”

The following summary table describes the company’s performance during the trailing twelve months ended Sept. 30, 2003, compared to 2002, as well as its current fiscal year and 2006 goals for productivity and profitability:

Conference Call

The company will host a conference call to discuss its results at 9:00 a.m. CDT on Wednesday, October 29, 2003. These proceedings will be broadcast online at www.spss.com/invest. Please dial 800.967.7140 in the United States or 719.457.2629 internationally to participate. A replay will be available for one week after the call and accessible by dialing 888.203.1112 in the United States or 719.457.0820 internationally; use access code 718181. An archived version of the conference call will also be made available online at www.spss.com/invest.

About SPSS Inc.

SPSS Inc. [Nasdaq: SPSS] is the world's leading provider of predictive analytics technology and services. The company’s predictive analytics technology connects data to effective action by drawing reliable conclusions about current conditions and future events. More than 250,000 commercial, academic, and public sector customers rely on SPSS technology to help increase revenue, reduce costs, improve processes, and detect and prevent fraud. Founded in 1968, SPSS is headquartered in Chicago, Illinois. For additional information, please visit www.spss.com.

Safe Harbor Statement

The following constitutes the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended: Certain statements in this press release are forward-looking statements. Such statements can be identified by phrases such as “should be,” “planning” and “expects.” Such statements also involve known and unknown risks, including market conditions and competition, which may cause the company’s actual results, performance, achievements, or industry results, to be materially different than any future results, performance or achievements expressed or implied in or by such forward-looking statements. By way of example and not limitation, known risks and uncertainties include changes in: market conditions, especially in Asia; changes and/or product demand and acceptance; the competitive environment; product release schedules; and currency fluctuations. In light of these and other risks and uncertainties, the inclusion of a forward-looking statement in this release should not be regarded as a representation by the company that any future results, performance or achievements will be attained. The company assumes no obligation to update the information contained in this press release. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s periodic reports (copies of which are available from SPSS upon request).

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