Jacada
Jacada
Media Contact

Cindy Curtin Knezevich
770-352-1300
cindyk@jacada.com

IR Contact

Peter L. Seltzberg
Hayden Communications
646-415-8972
peter@haydenir.com

Press Release

Jacada Announces Sale of its Application Modernization Business to Software AG for $26 Million

Company Set to Focus Exclusively on its High Growth Call Center Solutions Business

1. What is the nature of the transaction?

Jacada is selling to Software AG (SAG) products from the Jacada legacy integration and application modernization business, and the related customer contracts for those products. This includes the products:

  • Jacada Terminal Emulator
  • Jacada Studio
  • Jacada Innovator
  • Jacada Interface Server
  • Jacada Integrator (aka Jacada HostFuse)

This is a cash transaction worth $26 million paid to Jacada. Jacada retains the right to develop, market, sell and support Jacada Interface Server and Jacada HostFuse in support of its customer service and support solutions business (CSS). The Jacada product portfolio will remain:

  • Jacada WorkSpace
  • Jacada Interaction Manager
  • Jacada Fusion
    • Jacada HostFuse
    • Jacada WinFuse
    • Jacada Interface Server

2. Who owns the intellectual property (IP) for the products?

SAG has purchased the IP for the following products:

  • Jacada Terminal Emulator
  • Jacada Studio
  • Jacada Innovator
  • Jacada Interface Server
  • Jacada Integrator (aka Jacada HostFuse)

In effect, the product code base will split. SAG owns the IP for Jacada Interface Server and Jacada HostFuse and will communicate their roadmap for these products. Jacada has the right to continue to develop, market, sell and support Jacada Interface Server and Jacada HostFuse to the CSS market as described above, which is now the sole focus of the company. Jacada owns the IP for Jacada WorkSpace and Jacada WinFuse.

3. When will the transaction be effective? What is the timing of events?

The agreement was signed December 19, and announced on December 20, 2007. It is effective as of January 1, 2008. This means on January 1, 2008, the products and all assignable contracts related to this transaction will become the property of SAG, and all employees that are part of this transaction will become SAG employees.

4. What will happen to the product names/brands?

For the near term, SAG will continue to use the Jacada product names in the context of supporting and communicating with the former Jacada customers, to avoid confusion and unnecessary upgrades and changes in the product, materials and documents.

Jacada will maintain ownership of the Jacada brand and product names.

5. Who is Software AG?

Software AG is a global leader in business infrastructure software, whose shares are listed on the Frankfurt TecDAX Stock Exchange (Symbol SOW). Software AG’s industry-leading product portfolio includes best-in-class solutions for managing data, enabling service oriented architecture, and improving business processes. Software AG has more than 37 years of global IT experience and approximately 3,800 employees serving customers in 70 countries. Additional background information on Software AG can be found at www.softwareag.com.

6. Why is Jacada doing this?

Simply put – we have chosen to monetize our investment in the legacy business and focus exclusively on growth. We now have a pure-play investment vehicle to capture an exciting opportunity in a high growth market.

As of the effective date of this transaction, January 1st, 2008, we will be receiving approximately $22.5 million in cash while approximately $3.5 million will be put under a standard escrow arrangement, bringing our cash position and escrow amounts to approximately $60 million.

Our enhanced financial position will enable us to make appropriate investments in support of our growth business.

It also provides better leverage to consider opportunistic acquisitions. As we have stated previously – we currently have all the technology and resources needed to effectively compete and deliver solutions in the CSS market. However, our improved cash position gives us the additional financial flexibility to consider opportunistic acquisitions that could expand our product offering into the CSS market.

The Board of Directors has also authorized a share repurchase program, subject to, and contingent upon, court approvals and other terms and conditions set by securities and other regulatory entities. The specifics of the buyback are still being reviewed, and details will be announced publicly when available.

7. What is the CSS – Customer Service and Support market?

The industry analyst group Gartner defines the Customer Service and Support Solutions market as consisting of these five categories of solutions:

  • Call center solutions for customer service or technical support personnel
  • E-service or self-service - Used directly by end customers or partners
  • Field service applications to resolve a customer's product issues or complaints on-site in the field at the home or place of business
  • Service analytics, and
  • Workforce optimization

Today, Jacada is focused on becoming the defacto standard unified desktop solution provider for call center operations. Over time, we plan to broaden our product offering to serve other needs in the CSS market.

8. How many customers/contracts were sold as part of the transaction? How many customers does Jacada now have?

Just over 200 customer contracts were involved in the transaction. Jacada now has just under 50 end-user customers and partners as part of the CSS business going forward.

9. What does this mean for former Jacada customers that are now customers of SAG?

From a customer support perspective, actually very little changes.

Part of this transaction includes the transfer of development, support and services personnel for the legacy integration and application modernization products. SAG is acquiring sufficient resources to continue the quality support and development that Jacada customers have enjoyed.

Software AG is a leader in application modernization and will be a great steward for the Jacada modernization solution customers. And customers will benefit from the depth and breadth of the SAG solutions from application modernization through SOA Governance, B2B Integration, Enterprise Service Bus, Business Process Management and Business Activity Monitoring, and their 38 years experience in providing solutions for the mainframe, midrange and open systems solutions market.

10. What does this mean for the remaining Jacada customers?

For Jacada customers that have purchased Jacada WorkSpace and Jacada Fusion, it means that you are supported by a company that is now entirely focused on building, acquiring and delivering innovative customer service and support solutions. And Jacada is now in an even stronger financial position from which we can be both proactive and opportunistic in our search to provide a broader and deeper solution capability.

11. Did SAG get employees as part of this transaction?

Yes. In addition to acquiring the [above] products and customer contracts, SAG has hired 8 experienced Jacada employees from our development and support organization to ensure they have the expertise needed to continue to enhance the products and support the customers. So, in many cases, the same resources that have provided the quality of support for Jacada customers for so many years will now support the new SAG customers.

At the same time, Jacada has retained appropriate resources to support Jacada Interface Server and Jacada HostFuse in support of our CSS business model.

12. If both companies now have Jacada Interface Server and Jacada HostFuse, how will you not compete?

Jacada is now completely focused on the CSS market and we have the right to sell all of our products into this large and growing market.

SAG will support the existing Jacada Interface Server and Jacada Integrator customers that are part of this transaction.

13. Does Jacada owe SAG royalties for sales that include Jacada Interface Server or Jacada HostFuse?

No. In effect, the product code base will split. SAG owns the IP for Jacada Interface Server and Jacada HostFuse, and will communicate their roadmap for these products. Jacada has the right to continue to develop, market, sell and support these products to the CSS market as described above, which is now the sole focus of the company.