QAD Achieves Significant Milestone in AIAG Interoperability Initiative; QAD Plays Driving Role to Help Automotive Industry Define Standard for Communicating Inventory Information

DETROIT--Aug. 3, 20041, 2004--At Auto-Tech, the premier U.S. gathering of global automotive manufacturers, QAD Inc. today announced its contribution to the automotive industry's emerging standard for inventory information exchange. As a participant in the development and proof of the Automotive Industry Action Group (AIAG) Inventory Visibility & Interoperability (IV&I) standard, QAD is one of the first software providers to demonstrate the exchange of automotive inventory data over public networks, using XML, and independent of originating applications. Auto-Tech 2004 conference-goers will be able to view the IV&I proof of concept incorporating QAD Supply Visualization, an inventory visibility application, at booth 616 and at the AIAG booth 216 at Auto-Tech.

By taking part in the AIAG IV&I initiative, QAD and other industry members are collaborating on a business process and technology standard to improve manufacturer and supplier interaction, and eliminate the need for trading partners to maintain multiple proprietary software applications in order to exchange inventory data with one another. This initiative is designed to help the automotive industry improve collaboration by reducing complexity and streamlining communications about inventory, and will enable each tier of the automotive supply chain to gain efficiencies and improve responsiveness. QAD and IV&I work group members defined the business process for communicating inventory balance within minimum/maximum levels (MIN/MAX), determined business documents required for the business process, and defined a transport infrastructure.

QAD then developed an adaptor for Supply Visualization and executed the standard in a rigorous proof-of-concept in the National Institute of Standards and Technologies (NIST) Interoperability test bed. "Establishing a Standard for Automotive Inventory Visibility & Interoperability: QAD's Role in the AIAG Inventory Visibility & Interoperability Initiative" explains QAD's approach and is available at www.qadauto.com and at QAD Auto-Tech booth number 616.

"The IV&I proof of concept, documentation of the standard and related technical efforts will provide valuable insight and guidance for industry members to enhance a fundamental business process," said Andrew J. Cummins, executive director of AIAG. "Having defined a methodology and an infrastructure technology protocol, the next phase of the interoperability initiative will be to apply these standards to resolve other supply chain obstacles brought on by incompatibility of competing technologies."

According to a study commissioned by NIST, the annual cost of inadequate supply chain infrastructure in the automotive industry exceeds $5 billion. The study, "Economic Impact of Inadequate Infrastructure for Supply Chain Integration," reported in June 2004 that "almost all of this cost could be eliminated if firms implemented true interoperability."

"The IV&I protocol represents tremendous progress toward reducing cost and balancing supply with demand for lean operations," said Pamela Lopker, QAD president and chairman of the board. "We believe the IV&I standard's definition of a business process and technical specifications have relevance for other aspects of supply chain interaction, such as logistics. At QAD, we envision a reduction in supply chain response time from six weeks to six hours, and after more than two decades' focus on solving real-world manufacturing problems, QAD remains intensely committed to advancing automotive industry standards that will make that vision reality."

The IV&I project is sponsored by AIAG and the Original Equipment Supplier Association (OESA) and Odette, an industry association of European automotive manufacturers. This initial phase of the IV&I project yielded protocols in compliance with the Open Application Group, Inc. (OAGI) Business Object Document (BOD) specifications for business processes related to inventory management.

About QAD

QAD enterprise applications leverage advances in Internet and enabling technologies to provide critical functionality for managing manufacturing resources and operations within and beyond the enterprise, enabling global manufacturers to collaborate with their customers, suppliers and partners to make and deliver the right product, at the right cost and at the right time. Manufacturers of automotive, consumer products, electronics, food and beverage, industrial and medical products use QAD applications at approximately 5,200 licensed sites in more than 80 countries and in as many as 26 languages. For more information about QAD, telephone +1 805 684 6614, or visit the QAD Web site at: www.qad.com. To receive any of QAD's press releases via facsimile, contact +1 800 356 0747, or outside the U.S. contact +1 213 253 5647.

"QAD" and "MFG/PRO" are registered trademarks of QAD Inc. All other products or company names herein may be trademarks of their respective owners.

Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. These risks include, but are not limited to, evolving demand for the company's software products and products that operate with the company's products; the company's ability to sustain strong licensing demand; the ability to sustain customer renewal rates at current levels; the publication of opinions by industry analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; difficulties relating to integration of a new business; the entry of new competitors and their technological advances; delays in localizing the company's products for new markets; delays in sales as a result of lengthy sales cycles; changes in operating expenses, pricing, timing of new product releases, the method of product distribution or product mix; general economic conditions, exchange rate fluctuations and the global political environment. In addition, revenue and earnings in the enterprise resource planning (ERP), e-business and distributed order management software industries are subject to fluctuations. Software license revenue, in particular, is subject to variability with a significant proportion of revenue earned in the last month of each quarter. Given the high margins associated with license revenue, modest fluctuations can have a substantial impact on net income. Investors should not use any one quarter's results as a benchmark for future growth. For a more detailed description of the risk factors associated with the company and the industries in which it operates, please refer to the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2004.