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We describe a conversational mode speech understanding system which enables its user to make airline reservations and obtain timetable information through a spoken dialog. The system is structured as a three level hierarchy consisting of an acoustic word recognizer, a syntax analyzer and a semantic processor. The semantic level controls an audio response system making two way speech communication possible. The system is highly robust and operates on-line in a few times real time on a laboratory minicomputer. The speech communication channel is a standard telephone set connected to the computer by an ordinary dialed-up line.