ILOG Creates Industry Leader in Optimization Software; CPLEX solvers to join ILOG's Optimization Suite.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Aug. 25, 1997--ILOG's (NASDAQ:ILOGY) $30 million acquisition of CPLEX Optimization last week creates a worldwide leader in optimization software. The combined company offers a unique range of technologies for improving business operations, and can now solve a wider range of optimization problems than ever before.

Optimization software allows businesses to reduce costs and exploit opportunities more effectively, which can mean significant improvements in profitability. Optimization can improve utilization and yield, in some cases shaving 5% or more off costs and improving throughput by 10%. By precisely adjusting the mix and timing of resources applied to carefully selected task sequences, optimization reduces the impact of bottlenecks in communication networks, industrial processes, transportation systems, and numerous others. Chrysler Corporation will save $7 million this year by optimizing their business with ILOG.

Analyst reaction

"The combination of ILOG and CPLEX technologies will be a real win for customers in the supply chain market," said Ann Grackin of Benchmarking Partners, Inc. "With the cooperating solver technologies now available from one vendor, customers can solve a range of problems from strategic planning, supply chain design, and resource allocation all the way through to scheduling and sequencing. This will mean operational cost savings for manufacturers, distributors, shippers, and retailers. ILOG has proven that it can support high quality, fast implementations that optimize the business process and bring in return on investment for their customers."

"ILOG and CPLEX have both been leaders in their respective parts of the optimization market. By combining their technologies, they are really trying to change the rules for optimizing in supply chain, telecom, financial, aerospace, and a range of other industries," said Tim Harmon, program director for Application Deployment Strategies at the Meta Group. "They will be able to offer new alternatives to developers in both IT shops and ISVs."

Industry analysts have long heralded both companies' optimization technologies. "ILOG Solver(TM) is the de facto standard for constraint based programming," said Eric Brethenoux of the Gartner Group's Advanced Technology Architectures service in 1994. In its 1997 report, International Data Corporation (IDC) wrote, "ILOG Solver and its add ons offer solution sets that almost no competitor can match."(1)

Customer reaction

"We have been using CPLEX and ILOG technologies for several years in our transportation optimization projects around the world, and their optimization technology is without peer in the industry," said Barry Smith, Senior Vice President of Research in The SABRE Group. "For optimizing transportation and distribution systems, ILOG and CPLEX are able to handle the toughest problems."

"The flexibility of CPLEX products and strong support of their personnel allowed us to integrate CPLEX smoothly into our own system. And with CPLEX, we can now successfully solve our largest and most complex models...on personal computers," said Gary Orkin of Chevron, Inc.

Sumantra Sengupta, the senior manager of Ernst and Young LLP's Supply Chain Knowledge Team, said, "ILOG's acquisition of CPLEX Optimization, which has for many years provided leading edge mathematical programming algorithms and stretched the boundaries of computational efficiency, is a very positive step. This will enhance the possible set of solution techniques that can be used to efficiently solve large and complex supply chain problems in production and manufacturing planning. I look forward to the opportunity of continuing work with the expanded set of options."

Commitment to optimization

Both ILOG and CPLEX have been technology leaders in optimization software. Among the combined company's industry firsts: -0-

-- First commercial high performance, portable linear programming

callable library

-- First commercial object oriented constraint programming system

-- First commercial implementation of the edge finder scheduling

algorithm

-- First commercial barrier algorithm implementation with high

performance crossover to a basic solution

-- First commercial implementation of an object oriented linear

solver

-- First commercial implementation of a parallel linear

programming solver achieving 5 gigaflop computational speed

on real world problems

-- Set record performance solving a 13 million variable problem

in less than 4.3 minutes

-- Solved the world's largest traveling salesperson problem

(involving 7397 cities) ever solved using linear programming

-- First company to offer integer, linear and constraint solvers

in a single product line.

-0-

ILOG and CPLEX technology has been used to solve with high precision some of the largest, most difficult linear and mixed integer problems in the world. CPLEX has been successfully used on commercial problems with over 1 million rows or 13 million variables. Both ILOG and CPLEX have been dramatically improving performance with third generation solvers. On industry standard benchmarks, CPLEX has shown more than a thousand-fold increase in algorithmic performance since the first release in 1988; by fully exploiting today's faster hardware, CPLEX has achieved nearly a million-fold performance improvement.

Todd Lowe, Executive Vice President of ILOG's CPLEX business, commented, "The combination of ILOG and CPLEX technologies creates a remarkably complete and powerful arsenal of optimization and application building tools. Our products will empower users of decision support and operations management applications to achieve optimal results. ILOG's acquisition doubles the size of our optimization team, and will be a quantum leap in sales, support and consulting capabilities."

Post-acquisition business goals

ILOG and CPLEX have excelled in providing advanced algorithms with industry leading performance and outstanding software quality. Both companies have been dedicated for more than a decade to developing and supporting software components used to create strategic business applications.

"ILOG and CPLEX share a common vision about the need for embeddable optimization software for solving dynamic resource allocation problems in a wide range of industries," commented Pierre Haren, ILOG's President and CEO. "CPLEX's high visibility in the U.S. operations research world complements ILOG's established position in Europe. This business combination will provide our customers the very best libraries of linear, mixed integer, quadratic and constraint based programming algorithms, and creates a worldwide leader in optimization software."

ILOG will sell the CPLEX line of solvers in two ways -0-

-- For customers in the math programming and operations research

community, CPLEX products will be developed, sold and

supported as they have been in the past via ILOG's

CPLEX division in Incline Village, Nevada. Outside the

U.S., ILOG expects its international to supplement

the sales and support activities for the CPLEX

line of solvers.

-- For the object oriented and constraint programming community,

ILOG will integrate the CPLEX solvers into the ILOG

Optimization Suite. This fourth generation product line

provides a single framework for modeling problems and

developing heuristics. The ILOG Optimization Suite will

allow users to choose which solver or solvers participate

in a solution. The company expects to have a smooth

transition for ILOG Planner users to upgrade to the higher

performance CPLEX engines. The ILOG Optimization Suite will

continue to be sold and supported by ILOG internationally

as it is today. -0-

ILOG and CPLEX have large installed bases that have been growing steadily for more than a decade. The combined companies have more than 20,000 users at more than 2,000 named accounts worldwide. The companies have more than 100 VAR, ISV and SI partners. Existing customer contracts, levels of service and vendor relationships will be honored, and the company expects to attract new customers as a result of increased sales depth. ILOG's International Business Development program and extensive direct sales and support capabilities should make it easier than ever to buy and deploy the best optimization technologies.

CPLEX and ILOG have built an unrivaled team of operations research, math programming and object oriented developers. The combined teams include 14 PhDs who will continue to work in Mountain View, California, Incline Village, Nevada, and France. ILOG now offers consulting services to customers needing assistance in problem definition, modeling, benchmarking and software implementation. ILOG's direct operations in seven countries and distributor network will facilitate sales, support and consulting for customers around the world.

About ILOG

ILOG is the world's leading provider of advanced software components for graphics and resource optimization. ILOG products deliver: high performance data visualization for 2D and 3D user interfaces; integer, linear and constraint solvers for resource optimization, scheduling, logistics and planning applications; dynamic rule systems for intelligent agents and real time data flow control, and components for integrating modules with real time and relational data sources. ILOG was founded in 1987, and now employs approximately 290 people in 7 countries. ILOG recently acquired CPLEX, the world leader in linear optimization. Visit http://www.ilog.com/ for more information.

This release contains "forward looking" information within the meaning of the United States Securities laws that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Potential risks and uncertainties include, without limitation, the company's lengthy sales process, the early development stage of the market for the company's products, the timing of significant revenues, the economic, political and currency risks associated with the company's European, North American and Asian operations, and the company's ability to integrate CPLEX's business into its operations.

(1) International Data Corporation (IDC) Feb. 1997, IDC No. 12904; "ILOG: High-Value Components" Analyst: Jagi Shahani. Contact Capstone Communications for a free copy of the full IDC report. -0-

Note to Editors: ILOG, CPLEX, ILOG Optimization Suite and ILOG Solver are trademarks of ILOG.

CONTACT: ILOG Inc.

David Taber, 650/944-7139

[e-mail]

or

Capstone Communications Inc.

Cynthia Loux, 510/428-4141

[e-mail]