SPSS Reports Record Fourth Quarter and Fiscal Year Revenues and Record Operating Income.

EPS Reduced by A Non-Cash Income Tax Charge

CHICAGO -- SPSS Inc. (NASDAQ:SPSS), a worldwide provider of predictive analytics software, today announced revenues and earnings for its fourth quarter and fiscal year ended December 31, 2006.

The company reported 2006 fourth quarter revenues of $71.1 million, an increase of 14 percent from the same quarter of 2005, driven by increased sales across all product lines and major geographical regions. New license revenues for the 2006 fourth quarter were $35.8 million, up 20 percent over the fourth quarter of 2005.

Revenues in the 2006 fiscal year were $261.5 million, an 11 percent increase from $236.1 million in the 2005 fiscal year. New license revenues for the 2006 fiscal year were $125.0 million, up 16 percent from $107.6 million in the 2005 fiscal year.

"Our strong revenue growth for the fourth quarter and full year reflect solid product advancements and a go-to-market strategy that is gaining momentum in the predictive analytics market," said Jack Noonan, SPSS president and chief executive officer. "Simply put, the predictive analytics market continues to expand and we are leveraging our leadership position in that market."

Operating income in the 2006 fourth quarter increased 36 percent to $11.7 million, or 16 percent of total revenues, from $8.6 million, or 14 percent of total revenues, in the same quarter of 2005. Operating income for the 2006 fiscal year increased 22 percent to $34.3 million, or 13 percent of total revenues, from $28.0 million, or 12 percent of total revenues, for the 2005 fiscal year. 2006 operating income includes the effect of expenses for share-based compensation of $1.7 million and $6.7 million in the fourth quarter and full-year periods, respectively. Excluding share-based compensation expenses, 2006 operating income would have been $13.4 million for the fourth quarter, or 19 percent of total revenues, and $41.0 million for the fiscal year, or 16 percent of total revenues. (See attached reconciliation table for effects of share based compensation expense and comparison with prior year periods.)

Noonan further said, "We are realizing the benefits of the organizational and operational changes we implemented over the past two years. With the convergence of the right people, the right products, and the right market conditions, we are well positioned to build on the successes of 2006."

In connection with its ongoing worldwide income tax audits, the company recently became aware of information relating to open tax years and has estimated that certain deferred tax assets on its balance sheet may no longer be realizable. Due to the possible loss of these tax attributes, the company recorded a non-cash charge of $6.9 million to income tax expense in the 2006 fourth quarter to establish a valuation allowance with a corresponding reduction in deferred income taxes on the company's balance sheet. The effect of this income tax charge was to reduce 2006 diluted earnings per share (EPS) by $0.33 for the fourth quarter and by $0.34 for the fiscal year.

As a result of this income tax reserve, reported EPS for the 2006 fourth quarter were $0.10 compared to $0.30 for the same period of 2005. EPS for the 2006 fiscal year were $0.73, compared to $0.85 for the 2005 fiscal year. The effective income tax rates for the 2006 fourth quarter and fiscal year were 85 percent and 56 percent, respectively, compared to effective income tax rates of 40 percent and 41 percent in the same periods of 2005.

Cash totaled $140.2 million as of December 31, 2006, compared with $84.4 million as of December 31, 2005 and $119.5 million as of September 30, 2006. Cash flow from operations in the 2006 fourth quarter was $22.3 million compared with $17.4 million for the same period in 2005. For the 2006 fiscal year, cash flow from operations was $48.2 million.

Product Leadership Continues to Bring Marquee-Name Customers

New license sales in the 2006 fourth quarter were driven by a significantly increased number of sales transactions over $100,000, including:

* GfK AG, a market research firm based in Germany, expanded its investment in SPSS technology to better analyze the results of its market research activities.

* Clementine[R] was purchased by music company Live Nation for customer segmentation analyses; Musicians Friend, an online provider of musical products and instruments for market basket analysis, customer segmentation and up-sell/cross-sell opportunities; and The Bon-Ton Stores, Inc., to better understand and predict the future behavior of its customers toward increasing sales and customer satisfaction.

* Bernett Research, a market research and data collection firm, purchased Dimensions[TM] to expand the mix of their existing call center business, conduct studies for varied sets of marketing research companies, and offer a more cost-effective interviewing service to their customer base.

* BZ WBK S.A. Bank, a commercial bank based in Poland licensed Clementine[TM], Predictive Enterprise Services[TM] and Text Mining for Clementine[R] to improve their marketing campaign optimization, and to serve as the bank's corporate data mining system. This implementation will be used for customer relationship management (CRM) projects, as well as credit risk analysis and for fraud prevention.

* Hewitt Associates, Inc. purchased Dimensions[TM] to create an embedded survey research platform for conducting their clients' employee opinion surveys.

SPSS also continued to upgrade its market-leading software, issuing several new versions with advanced functions and capabilities, including:

* One of the most robust versions of its market-leading data mining software, Clementine 11.0, with dramatically enhanced solutions through the addition of data analytic techniques and innovative graphic capabilities. A key component of the company's market-leading predictive analytics offerings, this release now tightly integrates with the SPSS statistical products, giving users easy access to statistical and data management capabilities.

* The latest version of its flagship statistical software package, SPSS 15.0. The product's new features improve graphical and other output functionality, data and access management, as well as advanced analytics and connectivity with other SPSS products.

* An upgraded version of its survey research product suite, Dimensions 4.0[TM], which enables clients to further optimize customer-centric research processes and organizations to make stronger business decisions.

Outlook and Guidance

"Our 2006 financial results reflect solid execution and worldwide productivity improvements," said Raymond Panza, SPSS executive vice president and chief financial officer. "Going forward, we expect to see the continued positive effects of disciplined financial management throughout the organization. With a continuing focus on cash, we expect to continue to build our financial foundation to support future growth."

Panza continued, "For the 2007 first quarter, revenues are expected to be between $68.0 million and $70.0 million with EPS in the range of $0.23 to $0.27. For the 2007 fiscal year, we expect revenues of between $285.0 million and $295.0 million, with EPS in the range of $1.20 to $1.30. This guidance assumes an expected effective income tax rate of 38 percent and includes expected expense for share based compensation of $0.06 and $0.26 for the 2007 first quarter and fiscal year, respectively."

Conference Call

The company will host a conference call at 5:00 p.m. CT on February 13, 2007, to discuss its financial results. The live call will be broadcast online at www.spss.com/invest. Those interested in participating in the live call should dial 800-510-9661 in the United States and 617-614-3452 internationally. The live call pass code is 87163601. A replay will be available via phone for one week after the call. To access it, participants should dial 888-286-8010 in the United States or 617-801-6888 internationally. Access code 40082257 is required for the replay.

An archived version of the call will also be made available online at www.spss.com/invest approximately two hours after the live call.

About SPSS Inc.

SPSS Inc. (NASDAQ: SPSS) is a leading worldwide provider of predictive analytics software and solutions. The company's offerings connect data to effective action by drawing reliable conclusions about current conditions and future events. More than 250,000 public sector, academic, and commercial customers, including 95 percent of the Fortune 1000 companies, rely on SPSS software to increase revenues, reduce costs, improve critical business 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

This press release contains forward-looking information made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by phrases such as "anticipates," "believes," "estimates," "expects," "plans," "intends," "could," "designed," "should be" and other similar expressions which denote expectations of future events rather than statements of fact. These forward-looking statements involve factors that are subject to risks and uncertainties. These risks and uncertainties, which may not be currently ascertainable and many of which are beyond the Company's control, may cause the Company's actual results, performance or achievements to be materially different than the results, performance or achievements expressed in or implied by the forward-looking statements. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission ("SEC"). Copies of these filings are available either on the SEC's website at www.sec.gov or from the Company's investor relations department. In light of these risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that any future results, performance or achievements will be attained. These forward-looking statements speak only as of the date on which they are made. The Company assumes no obligation to update the forward-looking statements contained in this press release.

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