Descartes And DSD Solutions Announce Letter Of Intent For Creation Of New Direct Store Delivery Software Solutions Vendor.

Business Editors

WATERLOO, Ontario--(BUSINESS WIRE)--March 7, 2000

Accretive Transaction to make Descartes a Pure B2B e-Commerce Company

The Descartes Systems Group Inc. (NASDAQ: DSGX) (TSE: DSG), a leading provider of B2B e-fulfillment solutions, today announced a letter of intent for its participation in the creation of DSD Solutions, Inc., a new, privately-held direct store delivery (DSD) solutions vendor focused on providing enterprise software and services to the Direct Store Delivery marketplace.

Descartes will contribute its DSD-focused technology, including Sales & Delivery Management Systems and Mobile solutions along with its existing customer relationships to the new company. In addition, it is anticipated that as many as 157 of Descartes' 600+ employees will join DSD Solutions. As well, DSD Solutions will purchase certain assets from Descartes worth approximately US$7 million. In exchange for its contribution, Descartes will hold a 20% stake in DSD Solutions with an option on an additional 20% and collect a royalty on technology licenses sold by the new company. In addition, DSD Solutions will be assuming certain liabilities related to the contributed assets.

In addition to Descartes' contribution, Mark Lee, co-founder of Descartes, major shareholder and board member, is expected to resign from Descartes' board of directors upon completion of the deal and assume the role of DSD Solutions Chairman. Mr. Lee will contribute up to US$20 million to capitalize DSD Solutions Inc., holding 80% equity in the new venture.

"This transaction creates focus for Descartes and for DSD Solutions. Customers will be the real winners," said Peter Schwartz, Chairman and Chief Executive Officer at Descartes. "In addition, by moving enterprise revenues and expenses to this new venture, Descartes' business will approach a pure B2B e-commerce vendor. We also expect this transaction to be immediately accretive to Descartes." Schwartz continued.

"DSD Solutions will be dedicated to the unique needs of the enterprise DSD marketplace. We are excited about working closely with our DSD customers to continue to bring world-class solutions to market." said Mark Lee, Chairman of DSD Solutions.

Seasoned Industry Expert Announced as DSD Solutions' Chief Executive Officer

Seasoned industry expert Ed Diamond, former Director of IT at Pepsi Americas, the fourth largest Pepsi bottler in the world and one of Descartes' largest and longest-standing DSD customers, joins DSD Solutions, Inc. as Chief Executive Officer. Diamond has served in executive positions in Sales, Finance, Operations, Mergers & Acquisitions and Information Technology, with a combined 15 years industry experience at ITT Programming North America, American Express, PepsiCo, 3RE.com and Pepsi Americas. As a customer of Descartes at Pepsi Americas, Diamond headed the Advisory Council for Descartes, focusing on future development direction and product needs of the DSD and CPG industry.

"DSD Solutions will be heavily focused on delivering high-performance DSD solutions, focusing on the technology and architecture that will drive profitable growth for our customers' businesses," said Diamond. "Our immediate focus will also be to deliver on current customer commitments, building an organization that is centered on the DSD customer."

DSD Solutions, Inc. Launches DSDPortal.com

DSD Solutions, Inc. also announced today the creation of DSDPortal.com, a new vertical portal for the DSD marketplace. DSDPortal.com will be built on Descartes' B2B e-fulfillment infrastructure ("e-Frame") and will be connected to the Global Logistics Network. More details will be released shortly.

Transaction Conditions

Descartes participation in the formation and capitalization of DSD Solutions is subject to the parties negotiating definitive agreements and approval of the transaction by Descartes' board of directors. Subject to satisfaction of these conditions, the transaction is expected to close in the second quarter of 2000.

About Descartes

Descartes is a leading provider of end-to-end logistics solutions that facilitate B2B e-commerce. Descartes' e-fulfillment software and exchange solutions enable companies to create high-speed, high-performance fulfillment networks - aka DeliveryNets(TM). DeliveryNet solutions empower organizations to deliver reliable, responsive customer service in a profitable manner and to create innovative new products and services. DeliveryNet solutions leverage Descartes' Internet-based Global Logistics Network to integrate the internal and external logistics and fulfillment processes of shippers, receivers, carriers, logistics service providers, e-marketplaces, vertical portals and transportation exchanges. The result is a global e-fulfillment information infrastructure that provides cost saving and revenue opportunities for businesses that need to manage physical product movement. Descartes products are licensed today by more than 850 companies in 35 vertical industries and 50 countries worldwide. For more information about Descartes, visit www.descartes.com

All registered and unregistered trademarks mentioned in this release are the property of their respective owners.

This release contains statements relating to market and customer dynamics, future operating strategy, revenue and expense growth, revenue composition and other matters that constitute forward-looking statements that involve risks and uncertainties. Descartes' actual results may differ from the results discussed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to: risks associated with uncertainty and unanticipated delays in closing customer orders; uncertainty associated with the shift from enterprise applications to e-business markets; dependence on and increasing use of the Internet and the growth of electronic commerce, risks associated with acceptance of licensing models for electronic commerce market, competition or consolidation within the industry; management of growth; Descartes' dependence on certain industries, markets and clients; Descartes' dependence on key personnel, proprietary technology and a limited number of products; acquisitions; software defects; the ability to enhance current products and to introduce new products in a timely fashion at competitive prices; third party claims of infringement; reliance on third party licenses; limited profitability; lengthy sales and implementation cycles and increasing size of orders; and the potential volatility of share prices; potential fluctuations in quarterly results; the need to enhance management systems; currency risk; and international sales; and other factors discussed in the section entitled, "Risk Factors" in documents filed with the Securities and Exchange Commission, the Ontario Securities Commission and other securities commissions across Canada.