JCDA Jacada Ltd. - Ordinary Shares (MM)

Jacada Ltd. (Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, today reported financial results for the fourth quarter and for the fiscal year ended December 31, 2008.

For the fourth quarter of 2008, total reported revenues were $5.5 million compared to $6.1 million in the fourth quarter of 2007. Total reported revenues for the fiscal year 2008 rose 73% to $23 million compared to $13.3 million for the fiscal year 2007.

Non-GAAP gross profit for the fourth quarter was $2.7 million, or 49% gross margin, compared to $2.5 million in gross profit, or 41% gross margin in the fourth quarter last year. For the fiscal year 2008, non-GAAP gross profit was $12.1 million, or 53% gross margin, compared to $6.2 million or 47% gross margin for the fiscal year 2007.

The fourth quarter non-GAAP net loss from continuing operations improved 36% to ($1.5 million), or ($0.9) per share, when compared to ($2.3 million), or ($0.11) per share in the fourth quarter of 2007. Non-GAAP net loss for the fiscal year 2008 improved 52% to ($5.3 million) compared to a net loss of ($11 million) for the fiscal year 2007.

Total GAAP gross profit was $2.7 million, or 49% gross margin, compared to $2.3 million and 37%, respectively, in last year�s fourth quarter. For the fiscal year 2008, GAAP gross profit was $11.9 million, or 52% gross margin, compared to $5.8 million or 43% gross margin for the fiscal year 2007.

�We are pleased to have exceeded both our revenue and bottom-line guidance for 2008,� commented Paul O�Callaghan, chief executive officer for Jacada. �Our record annual revenue growth was led by a 106% increase in software license revenue. This record growth combined with improved services margins and continued improvement in operational efficiency contributed to our exceeding expectations for our bottom-line results as well. We believe we have demonstrated strong fiscal management and performance over the past eight quarters, and have managed well through this difficult period. During the fourth quarter we instituted a reduction in force and other expense containment strategies as part of our ongoing focus on reducing costs and improving our bottom line results. We remain committed to continue to make significant progress towards improving margins and reducing losses, while working hard to win new business.�

Overall GAAP net loss for the fourth quarter of 2008 was ($2.6 million), or ($0.16) per share, which includes ($1.0 million) of net loss from continuing operations and a ($1.6 million) net loss from discontinued operations. This is compared to a GAAP net income of $5.4 million or $0.26 per share for the fourth quarter of fiscal year 2007, which includes $3.3 million of net income from continuing operations and $2.1 million of net income from discontinued operations. GAAP net income for the fiscal year 2008 was $13.2 million, or $0.68 per share, which includes ($5.0 million) of net loss from continuing operations and $18.2 million of capital gain net of taxes from discontinued operations. This is compared to a GAAP net income of $4.1 million or $0.20 per share for the fiscal year 2007, which includes ($3.4 million) of net loss from continuing operations and $7.5 million of net income from discontinued operations.

�Our core value proposition of improving customer retention and reducing operating expense is a message that continues to resonate with our target markets,� continued O�Callaghan. �Our ability to implement in as little as four months, and deliver a complete return on investment in less than 12 months is seen as a very attractive alternative to large scale systems replacements, especially in a market that now demands quick time-to-value and has little appetite for long, expensive and risky large-scale application implementation projects.�

At the end of the fourth quarter of 2008 cash and investments including restricted cash were $33.1 million, compared to $33.8 million reported on December 31, 2007. The restricted cash includes $2.6 million, which is being held in escrow as part of the sale of the company�s legacy business to Software AG.

During the year, the company:

• Signed and announced eight material software and/or services contracts with new and existing customers, the most in the company�s history. The company defines a material contract as one with an initial value of $1 million or more.
• Successfully deployed the Jacada unified desktop solution in eight new customer accounts, three of which were delivered by strategic systems integration partners.
• Announced a major new release of the flagship product Jacada WorkSpace, with first-time support for the IBM WebSphere platform. Previous versions of the product were available on the BEA (Oracle) WebLogic application server only.
• Gained industry recognition when Nationwide Insurance won the prestigious InfoWorld 100 Award for their Jacada unified desktop project.
• Signed a reseller agreement with Tieto (OMX: TIE1V), a large global IT services firm. Active in more than 25 countries with approximately 16,000 employees and nearly $3 billion in revenue, Tieto is one of the largest IT services providers in Europe.

�Due to the uncertain nature of the economy and lack of visibility regarding the impact of these market conditions on our customers, we are suspending our traditional guidance at this time,� concluded O�Callaghan. �As we all await an economic recovery, Jacada will continue to manage what we can manage, and focus on the bottom line through tight expense management and other initiatives to expand our margins.�

Conference Call Details

Jacada management will host a conference call at 10:30 a.m. Eastern Time on February 12, 2009, to discuss the results with the investment community. To participate in the teleconference, please call toll-free 866-783-2144, or 857-350-1603 for international callers, and provide passcode 98976117 approximately 10 minutes prior to the start time. A (live audio) webcast will also be available over the Internet at www.jacada.com (under "About Us" then "Investors") or www.earnings.com. A replay of the teleconference will be available for three days beginning at 12:30 p.m. ET on February 12, 2009. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide passcode 29134328.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Jacada uses non-GAAP measures of operating income (loss), net income (loss) and income (loss) per share, which are adjustments from results based on GAAP to exclude discontinued operations, taxes, non-cash stock-based compensation expenses in accordance with SFAS 123R, amortization of acquired intangible assets related to acquisitions effected by Jacada in previous years, restructuring costs and devaluation of ARS. Jacada management believes the non-GAAP financial information provided in this release is useful to investors� understanding and assessment of the on-going core operations of Jacada and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors.

About Jacada

Jacada is a leading global provider of unified service desktop and process optimization solutions that simplify and automate customer service processes. By bridging disconnected systems into a single, intelligent desktop, Jacada solutions create greater operational efficiency and increase agent and customer satisfaction. Founded in 1990, Jacada operates globally with offices in Atlanta, Georgia; Herzliya, Israel; London, England and Munich, Germany. Jacada can be reached at www.jacada.com.

Forward Looking Statement

This news release may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. The words "may," "could," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions or variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance and involve risks and uncertainties, many of which are beyond the Company�s ability to control. Actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the performance and continued acceptance of our products, general economic conditions and other Risk Factors specifically identified in our reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made. Jacada is a trademark of Jacada Inc. All other brands or product names are trademarks of their respective owners.

Jacada is a trademark of Jacada Ltd. All other brands or product names are trademarks of their respective owners.

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data

� � Year ended

December 31,

� Three months ended

December 31,

� 2008 � � � 2007 � � 2008 � � � 2007 � Unaudited Revenues: Software licenses $ 7,647 $ 3,706 $ 1,275 $ 1,693 Services 13,230 7,824 3,714 3,823 Maintenance � 2,178 � � 1,812 � � 534 � � 633 � �

Total revenues

� 23,055 � � 13,342 � � 5,523 � � 6,149 � � Cost of revenues: Software licenses 544 449 77 258 Services 9,728 6,354 2,573 3,418 Maintenance � 856 � � 745 � � 187 � � 198 � �

Total cost of revenues

� 11,128 � � 7,548 � � 2,837 � � 3,874 � � Gross profit � 11,927 � � 5,794 � � 2,686 � � 2,275 � � Operating expenses: Research and development 4,819 4,402 1,111 1,175 Sales and marketing 8,829 9,787 1,650 2,530 General and administrative 5,583 5,249 1,571 1,673 Restructuring � 451 � � - � � 451 � � - � �

Total operating expenses

� 19,682 � � 19,438 � � 4,783 � � 5,378 � � Operating loss (7,755 ) (13,644 ) (2,097 ) (3,103 ) Financial income (expenses), net � 715 � � 1,548 � � (308 ) � 335 � � Pretax loss from continuing operations (7,040 ) (12,096 ) (2,405 ) (2,768 ) Tax benefit � 2,043 � � 8,672 � � 1,404 � � 6,117 � Net income (loss) from continuing operations (4,997 ) (3,424 ) (1,001 ) 3,349 Net income (loss) from discontinued operations, net of taxes �

18,234

� �

7,540

� � (1,624 ) � 2,054 � � Net income (loss) $ 13,237 � $ 4,116 � $ (2,625 ) $ 5,403 � � Basic and diluted net income (loss) per share: Continuing operations $ (0.26 ) $ (0.17 ) $ (0.06 ) $ 0.16 Discontinued operations $ 0.94 � $ 0.37 � $ (0.10 ) $ 0.10 � Total $ 0.68 � $ 0.20 � $ (0.16 ) $ 0.26 � � Weighted average number of shares used in computing basic and diluted net income (loss) per share � 19,354,810 � � 20,364,752 � � 16,460,779 � � 20,563,369 �

NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data

� � Year ended

December 31,

� Three months ended

December 31,

� 2008 � � � 2007 � � 2008 � � � 2007 � Unaudited Revenues: Software licenses $ 7,647 $ 3,706 $ 1,275 $ 1,693 Services 13,230 7,824 3,714 3,823 Maintenance � 2,178 � � 1,812 � � 534 � � 633 � �

Total revenues

� 23,055 � � 13,342 � � 5,523 � � 6,149 � � Cost of revenues: Software licenses 426 120 51 57 Services 9,649 6,262 2,573 3,395 Maintenance � 853 � � 740 � � 187 � � 196 � �

Total cost of revenues

� 10,928 � � 7,122 � � 2,811 � � 3,648 � � Gross profit � 12,127 � � 6,220 � � 2,712 � � 2,501 � � Operating expenses: Research and development 4,747 4,325 1,104 1,151 Sales and marketing 8,625 9,535 1,629 2,480 General and administrative � 5,081 � � 4,884 � � 1,510 � � 1,583 � �

Total operating expenses

� 18,453 � � 18,744 � � 4,243 � � 5,214 � � Operating loss (6,326 ) (12,524 ) (1,531 ) (2,713 ) Financial income, net � 1,068 � � 1,548 � � 45 � � 335 � � Pretax loss from continuing operations (5,258 ) (10,976 ) (1,486 ) (2,378 ) Tax (expense) benefit � (83 ) � (54 ) � 4 � � 41 � � Net loss from continuing operations $ (5,341 ) $ (11,030 ) $ (1,482 ) $ (2,337 ) � Basic and diluted net loss per share $ (0.28 ) $ (0.54 ) $ (0.09 ) $ (0.11 ) � Weighted average number of shares used in computing basic and diluted net loss per share � 19,354,810 � � 20,364,752 � � 16,460,779 � � 20,563,369 �

RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data

� � Year ended December 31, 2008 GAAP � Adjustments � Non-GAAP Amortization of acquired intangible assets � Stock-based compensation expenses � Income from discontinued operations � Tax benefit associated with discontinued operations � Restructuring � Other than temporary impairment on marketable securities � Revenues: Software licenses $ 7,647 7,647 Services 13,230

13,230

Maintenance � 2,178 � � � � �

�

� � 2,178 � �

Total revenues

� 23,055 � � � � � � � � 23,055 � � Cost of revenues: Software licenses 544 (118 ) 426 Services 9,728 (79 ) 9,649 Maintenance � 856 � � � (3 ) � � � � � 853 � �

Total cost of revenues

� 11,128 � � (118 ) � (82 ) � � � � � 10,928 � � Gross profit � 11,927 � � 118 � � 82 � � � � � � 12,127 � � Operating expenses: Research and development 4,819 (72 ) 4,747 Sales and marketing 8,829 (204 ) 8,625 General and administrative 5,583 (502 ) 5,081 Restructuring � 451 � � � � � � (451 ) � � - � �

Total operating expenses

� 19,682 � � � (778 ) � � � (451 ) � � 18,453 � � Operating loss (7,755 ) 118 860 451 (6,326 ) Financial income, net � 715 � � � � � � � 353 � 1,068 � � Pretax loss (7,040 ) 118 860 451 (5,258 ) Tax (expense) benefit � 2,043 � � � � � (2,126 ) � � � (83 ) � Income (loss) from continuing operations (4,997 ) 118 860 (2,126 ) 451 353 (5,341 ) Income from discontinued operations � 18,234 � � � � (18,234 ) � � � � - � � Net income (loss) $ 13,237 � $ 118 � $ 860 � $ (18,234 ) $ (2,126 ) $ 451 � $ 353 $ (5,341 ) � Basic and diluted net income (loss) per share: Continuing operations $ (0.26 ) $ (0.28 ) Discontinued operations � 0.94 � � - � � Total $ 0.68 � $ (0.28 ) � Weighted average number of shares used in computing basic and diluted net income (loss) per share � 19,354,810 � � 19,354,810 �

RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data

� � Three months ended December 31, 2008 (unaudited) GAAP � Adjustments � Non-GAAP Amortization of acquired intangible assets � Stock-based compensation expenses � Income from discontinued operations � Tax benefit associated with discontinued operations � Restructuring � Other than temporary impairment on marketable securities � Revenues: Software licenses $ 1,275 $ 1,275 Services 3,714 3,714 Maintenance � 534 � � � � � � � � 534 � �

Total revenues

� 5,523 � � � � � � � � 5,523 � � Cost of revenues: Software licenses 77 (26 ) 51 Services 2,573 2,573 Maintenance � 187 � � � � � � � � 187 � �

Total cost of revenues

� 2,837 � � (26 ) � � � � � � 2,811 � � Gross profit � 2,686 � � 26 � � � � � � � 2,712 � � Operating expenses: Research and development 1,111 (7 ) 1,104 Sales and marketing 1,650 (21 ) 1,629 General and administrative 1,571 (61 ) 1,510 Restructuring � 451 � � � � � � (451 ) � � - � �

Total operating expenses

� 4,783 � � � (89 ) � � � (451 ) � � 4,243 � � Operating loss (2,097 ) 26 89 451 (1,531 ) Financial income, net � (308 ) � � � � � � 353 � 45 � � Pretax loss (2,405 ) 26 89 451 (1,486 ) Tax benefit � 1,404 � � � � � (1,400 ) � � � 4 � � Loss from continuing operations (1,001 ) 26 89 1,624 (1,400 ) 451 353 (1,482 ) Loss from discontinued operations � (1,624 ) � � � � � � � - � � Net loss $ (2,625 ) $ 26 � $ 89 � $ 1,624 $ (1,400 ) $ 451 � $ 353 $ (1,482 ) � Basic and diluted net loss per share: Continuing operations $ (0.06 ) $ (0.09 ) Discontinued operations � (0.10 ) � - � � Total $ (0.16 ) $ (0.09 ) � Weighted average number of shares used in computing basic and diluted net loss per share � 16,460,779 � � 16,460,779 �

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

� � December 31, 2008 December 31, 2007 Unaudited Unaudited ASSETS � CURRENT ASSETS: Cash and cash equivalents *) $ 11,059 $ 5,960 Marketable securities *) 8,915 10,869 Trade receivables 4,713 3,613 Restricted cash *) 3,199 - Other current assets 2,022 1,736 Assets held for sale � 64 � � 7,752 � �

Total current assets

� 29,972 � � 29,930 � � LONG-TERM INVESTMENTS: Marketable securities *) 9,896 16,995 Severance pay fund � 586 � � 970 � �

Total long-term investments

� 10,482 � � 17,965 � � PROPERTY AND EQUIPMENT, NET � 1,266 � � 992 � � OTHER ASSETS, NET: Other intangibles, net - 118 Goodwill � 3,096 � � 3,096 � �

Total other assets

� 3,096 � � 3,214 � �

Total assets

$ 44,816 � $ 52,101 � � *) Total Cash and Investments including restricted cash $ 33,069 � $ 33,824 � � LIABILITIES AND SHAREHOLDERS EQUITY � CURRENT LIABILITIES: Trade payables $ 1,245 $ 1,167 Deferred revenues 1,006 1,893 Accrued expenses and other liabilities 3,096 3,308 Liabilities held for sale � 1,363 � � 4,246 � �

Total current liabilities

� 6,710 � � 10,614 � � LONG-TERM LIABILITIES: Deferred revenues - 61 Accrued severance pay 1,120 1,522 Other liabilities � 185 � � - � �

Total long-term liabilities

� 1,305 � � 1,583 � � SHAREHOLDERS' EQUITY: Share capital 60 59 Additional paid-in capital 75,173 73,393 Treasury shares (17,863 ) - Accumulated other comprehensive profit 160 418 Accumulated deficit � (20,729 ) � (33,966 ) �

Total shareholders' equity

� 36,801 � � 39,904 � �

Total liabilities

$ 44,816 � $ 52,101 �

CONSOLIDATED CASH FLOWS

U.S. dollars in thousands

� � Year ended December 31, 2008

Three months ended December 31, 2008

Unaudited

Cash flows from operating activities:

Net income (loss) $ 13,237 $ (2,625 ) Less: net loss (income) from discontinued operations, net of taxes � (18,234 ) � 1,624 � � Net loss from continuing operations � (4,997 ) � (1,001 ) Adjustments required to reconcile net loss from continuing operations to net cash used in operating activities from continuing operations: Depreciation and amortization 817 358 Stock-based compensation related to options granted to employees and directors 860 89 Stock-based compensation related to options granted to non-employees 7 - Accrued interest and amortization of premium on marketable securities 259 310 Loss (gain) on sales of marketable securities 19 (72 ) Impairment of marketable securities 353 353 Accrued severance pay, net (18 ) (32 ) Increase in trade receivables, net (1,100 ) (911 ) Increase in other current assets (478 ) (203 ) Increase in trade payables 78 28 Decrease in deferred revenues (948 ) (442 ) Decrease in accrued expenses and other liabilities (212 ) (93 ) Increase (decrease) in other long-term liabilities 185 (18 ) Other � 4 � � 1 � � Net cash used in operating activities from continuing operations (5,171 ) (1,633 ) Net cash used in operating activities from discontinued operations � (1,685 ) � (1,443 ) � Net cash used in operating activities � (6,856 ) � (3,076 ) �

Cash flows from investing activities:

Investment in available-for-sale marketable securities (29,316 ) (3,900 ) Proceeds from sale and redemption of available-for-sale marketable securities 37,672 7,483 Purchase of property and equipment (987 ) (116 ) Increase in restricted cash � (570 ) � (570 ) � Net cash used in investing activities from continuing operations 6,799 2,897 Proceeds from sale of discontinued operations, net � 22,105 � � - � � Net cash provided by investing activities � 28,904 � � 2,897 � �

Cash from financing activities:

Purchase of treasury shares (17,863 ) (1 ) Proceeds from exercise of stock options � 914 � � 192 � � Net cash provided by (used in) financing activities from continuing operations � (16,949 ) � 191 � � Increase in cash and cash equivalents 5,099 12 Cash and cash equivalents at the beginning of the year/quarter � 5,960 � � 11,047 � � Cash and cash equivalents at the end of the period 11,059 11,059 Marketable securities 18,811 18,811 Restricted cash � 3,199 � � 3,199 � � Total cash and investments at the end of the period including restricted cash � 33,069 � � 33,069 �