SHANGHAI, China, Oct. 25 /PRNewswire-FirstCall/ -- ILOG(R) (Nasdaq: ILOG; Euronext: ILO, ISIN: FR0004042364) and Shanghai Baosight Software Joint Stock Limited Company today announced a strategic business relationship that will enable ILOG to further strengthen its presence in the Chinese market. ILOG will pay CNY 14.4 million ($1.8 million) to acquire 35 percent ownership interest in Shanghai FirstTech Co., Ltd. (FirstTech). Baosight Software will maintain a 41 percent stake in the company, and First Technologies (Cayman), Ltd. Baosight Software's original joint venture partner in FirstTech, will hold 24 percent. Baosight Software is ranked 25th in the China High-Tech 100 listing for 2005, according to China's DigitalTimes magazine. FirstTech Cayman, which specializes in developing and marketing manufacturing and insurance software solutions, has been ILOG's partner for the Chinese market since 2004.

As a result of the agreement, ILOG's executive vice-president for Asia, Bounthara Ing, and Foo Jong Tong, ILOG's Asia Pacific general manager will join First Tech's board of directors. The agreement will have no material impact on ILOG's net revenues or operating expenses and the transaction is not expected to have a significant impact on the company's 2007 fiscal year net income.

By strengthening their alliance, ILOG and FirstTech expect to benefit from the anticipated growth in the Chinese IT market and the related need for process automation as well as planning and scheduling solutions that will help companies deal with this growth, which demands flexible and agile IT systems. According to a Forrester Research study "China's IT Budget Outlook for 2006," more than half of Chinese firms will increase IT budgets in 2006. The report noted, "The data suggests that Chinese firms will continue to spend to build out their IT infrastructure."

"A leading international software company, ILOG has proven its value as a strategic technology provider to Baosteel and other top companies in China," said Kevin Zhu, FirstTech VP and member of board of directors of Baosight, "This alliance with ILOG will help FirstTech further establish itself as a leading solutions provider to the Chinese IT market, at a time when the Chinese government is encouraging home-grown innovation."

"Today's announcement represents a new chapter in our successful business partnership with ILOG, which is a leading provider of technology that our clients find strategic to their business operations," said FirstTech CEO, Winston Chang. "We look forward to the opportunity to expand our partnership with ILOG, and consider the alliance key to helping us continue to grow and innovate in China and Worldwide."

"Our expanded relationships with FirstTech and Baosight Software is an important part of our strategy to accelerate the adoption of ILOG solutions in China," said Bounthara Ing, ILOG executive vice president for Asia. "Since the Chinese market for IT is expected to grow substantially in the next five years, we should be well positioned with a strong local partner that is as committed as we are to helping customers succeed through better decision support and process automation solutions."

ILOG has had a presence in the Chinese market since 2002 when it opened a sales office in Beijing. ILOG employees in China will continue to work collaboratively with FirstTech on new business opportunities. ILOG's customers in China include leading financial institutions such as China Construction Bank, Everbright Bank, Taiping Life Insurance, as well as major telecom service and equipment providers like Huawei are also ILOG customers. The Company has also developed close ties with several leading Chinese universities, including Tsinghua University, Fudan University, Xian Jiaotong University, Beihang University, among many others.

Using ILOG optimization technology, FirstTech delivered a supply chain management solution for Baosteel that has cut production cycle time nearly in half -- from 41 to 21 days. First Tech also built an ILOG JRules-based solution for Taiping Life Insurance that has enabled them to process 432,000 insurance policy applications a day, equivalent to the daily workload of 2,000 underwriters.

About FirstTech

Founded in March 2003, FirstTech Cayman provides professional consulting services and IT solutions to empower its customers' business operations. With competencies in Banking, Insurance, Semiconductor/LCD and Metal, FirstTech has partnered with several worldwide technology leaders, such as ILOG, Prima and Sun Microsystems, Systems. FirstTech has provided the state-of-art rule-based insurance underwriting/claim/billing solution, supply chain management solution, and Semiconductor TCTM (Total Cycle Time Management) solutions to industry-leading customers such as Baosteel, Taiping Life, and HeJian Semiconductor. For more information, please visit http://www.firsttech-soft.com/.

About Baosight Software

Shanghai Baosight Software Joint Stock Limited Company is the IT subsidiary of Baosteel Group, China's largest iron and steel-maker. Listed on the Shanghai Stock Exchange and with annual revenues in 2005 of CNY 1370 million, Baosight Software provides research, design, development, integration and maintenance services for computers, automation equipment, network communications and software/hardware and employs 2,600 people.

About ILOG

ILOG delivers software and services that empower customers to make better decisions faster and manage change and complexity. Over 2,500 corporations and more than 465 leading software vendors rely on ILOG's market-leading business rule management system (BRMS), optimization and visualization software components, to achieve dramatic returns on investment, create market-defining products and services, and sharpen their competitive edge. ILOG was founded in 1987 and employs more than 730 people worldwide. For more information, please visit http://www.ilog.com/ .

Forward-looking Information

All of the statements included in this release, as well as oral statements that may be made by us or by officers, directors or employees acting on our behalf, that are not statements of historical fact, constitute or are based upon "forward-looking statements" within the meaning of the United States Securities laws that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward- looking statements. Among the factors that could cause our actual results to differ materially are those risks identified in "Item 3. Key Information-Risk Factors," "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects" of the Company's most recent Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the "SEC") and its other filings and submissions with the SEC, including, without limitation, quarterly fluctuations in our operating results; competition in our industry; the extended length of our sales cycle which impacts our ability to forecast revenues; our dependence on certain major independent software vendors; our investments in vertical markets; the increasing number of fixed price consulting agreements; decreased investment in our sales and marketing forces; changing market requirements; our ability to provide professional services activities that satisfy customer expectations; errors in our software products; the loss of key personnel; logistical difficulties, cultural differences, product localization costs, import and tariff restrictions, adverse foreign tax consequences and fluctuations in currencies resulting from our global operations; changes in tax laws or an adverse tax audit; our significant dependence on our proprietary technology; the impact of intellectual property infringement disputes; the impact of dilutive share issuances or the incurrence of debt and contingent liabilities and write-offs resulting from acquisitions; changes in accounting principles; and other matters not yet known to us or not currently considered material by us. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, the Company undertakes no obligation to revise these forward-looking statements to reflect new information or events, circumstances, changes in expectations or otherwise that arise after the date hereof.

NOTE: ILOG is a registered trademark of ILOG Inc and ILOG S.A. All other trademarks are the properties of their respective owners.

CONTACT: investors, Jerome Arnaud, +1-650-567-8103, or jarnaud@ilog.com,
or media, Susan Peters, +1-650-567-8109, or speters@ilog.com, both of ILOG

Web site: http://www.ilog.com/
http://www.firsttech-soft.com/