Vitria Extends Collaborative Value Chain Solution With Acquisition of XMLSolutions Corporation

Business Wire, March 26, 2001

Business Editors/High-Tech Writers

SUNNYVALE, Calif.--(BUSINESS WIRE)--March 26, 2001

Vitria (Nasdaq:VITR), a leading integration server provider, today announced that the company has entered into a definitive agreement to acquire XMLSolutions Corporation.

XMLSolutions has developed XML transformation maps for over 3,100 of the world's most frequently used EDI document formats. EDI is the most prevalent standard for business-to-business collaboration, with over 300,000 companies using EDI in the US alone. XML is the emerging standard for Internet-based collaboration. XMLSolutions' technology bridges the gap between the old economy standard and the new economy standard. Using their transformation technology, companies can exchange business documents -- such as purchase orders, invoices, and shipment notices -- with any trading partner or exchange without worrying about the specific EDI and XML format requirements of each partner or exchange. In addition, companies can leverage and extend their substantial investment in existing EDI systems to quickly and easily exchange XML business documents with small and medium-sized trading partners who cannot afford to use complex and expensive EDI software.

"The combination of XMLSolutions' collaboration technology and Vitria's EAI, B2Bi, and Business Process Management solution will help us to define the platform upon which the next generation of ebusiness -- value chain collaboration -- will be conducted," said JoMei Chang, president and CEO of Vitria. "The acquisition of XMLSolutions will also provide us with a talented group of employees who will help us to quickly bring this enhanced solution to heavy EDI users across multiple industries, including aerospace, automotive, retail, and transportation."

The Market Opportunity for EDI and XML Transformation

Vitria believes that there is a substantial market opportunity for this type of integration solution. Industry analysts estimate that 95% of Fortune 500 companies use EDI, that 80% of all B2B transactions between Fortune 500 companies use EDI, and that approximately $3 trillion worth of business will be transacted via EDI in 2003. However, given the complexity and cost of EDI software, most companies only use EDI to communicate with the top 15-20% of their trading partners. The remaining 80-85% of trading partners need a simpler, less expensive solution that leverages the emerging XML standard for information exchange over the Internet.

"Some suggest that XML will rapidly replace EDI in the

thousands of instances where EDI provides B2B connectivity.

Quite to the contrary, many enterprises will stick with their

EDI-based links because these connections work and because

there are lots of other challenges that require more immediate

attention. We won't preside over the funeral for EDI for many

years."

Ross Altman, Research Director, Gartner Group

"META Group's research indicates that enterprises must make

significant investments in skills, organization, and

technology to achieve IEI (Inter-enterprise Integration).

Organizations should expect emerging XML standards to augment,

rather than replace, EDI for the foreseeable future."

Morgan Gerhart, Vice President, Server Infrastructure

Strategies, META Group

Deal Structure and Timing

The total purchase price for the transaction will be approximately $15 million, of which $7 million will be paid at the closing in cash to preferred shareholders, and $8 million will be used to retire short-term debt and other liabilities of XMLSolutions. The closing of the acquisition is subject to the approval of the shareholders of XMLSolutions, as well as the satisfaction of certain customary closing conditions. Vitria will account for the acquisition as a purchase and expects to complete the transaction in early April.

"The acquisition will add approximately $4.5 million in expense to our second fiscal quarter, and approximately $3.5 million per quarter thereafter," said Paul Auvil, chief financial officer of Vitria. "We do not expect the acquisition to add incremental revenues in the short term. However, we do expect the acquisition to help accelerate the expansion of our business into new vertical markets, such as manufacturing, financial services, and energy, where companies are looking to leverage and extend their significant investment in EDI."

About XMLSolutions

XMLSolutions Corporation (www.xmls.com) enables the secure, real-time B2B exchange of transactions over the Internet. By eliminating a company's EDI and XML dialect dependencies, XMLSolutions removes trade barriers, enabling uniform transactions among customers, exchanges, and trading partners of all sizes. The XMLSolutions integrated solution includes support for XML-to-XML transformations; EDI-to-XML translation; and over 3,100 mission-critical, industry-specific EDI business documents. XMLSolutions is headquartered in Northern Virginia's technology corridor.

About Vitria

Vitria Technology, Inc. is a leading integration server provider. Vitria BusinessWare integrates applications and automates mission-critical business processes within and across the extended enterprise, reducing time to market, shortening lead times, lowering operating costs, and increasing customer satisfaction. Vitria is a publicly traded company (Nasdaq:VITR) based in Sunnyvale. For more information, call 408/212-2700, visit the company's Web site at www.vitria.com or send email to info@vitria.com.