PELION SYSTEMS ANNOUNCES ADDITIONAL FUNDING FROM UPS STRATEGIC ENTERPRISE FUND

LAFAYETTE, COLO. – February 8, 2005 – Pelion Systems, the market leader in Manufacturing Process Optimization (MPO) solutions, today announced that the UPS Strategic Enterprise Fund has invested in the company. Terms of the investment were not disclosed.

“The fact that Pelion fits the investment profile of the UPS Strategic Enterprise Fund says volumes about our technology,” said Dave Alcala, president and CEO for Pelion. “This investment will bring additional experience and business development opportunities to Pelion as we continue to ramp up our market growth and expansion efforts in line with our growing roster of customers.”

UPS Strategic Enterprise Fund joins existing investors Inverness Capital Partners, L.P. and Cordova Ventures’ Industrial Technology Ventures (ITV) Fund as the lead institutional investors in Pelion.

“The UPS Strategic Enterprise Fund’s investment in Pelion provides UPS additional insight into a particular technology, as well as how various process disciplines optimize manufacturing flow through the supply chain,” said Alan Koenning of the UPS Strategic Enterprise Fund. “We see this investment supplying UPS with potential knowledge returns that will ultimately help us better understand the business needs of our manufacturing customers and further improve UPS’s supply chain solutions strategy over time.”

Offered through an enterprise suite of integrated software components, Pelion MPO is powered by advanced lean and flow algorithms supplemented with “drag-and-drop” visual modeling to help manufacturers quickly analyze, optimize and design shop floor configurations and operations processes. By modeling the unique manufacturing and shop floor processes of each facility, Pelion MPO implements rapidly without operational disruption or costly software modification. It provides a standard methodology and technology supported by ongoing mathematical calculations and operating data to help customers quickly respond to changes in mix or volume while balancing line and load requirements. Pelion MPO integrates all of the data management tools needed to visualize and immediately analyze and respond to changes in production, supply chain and distribution requirements based on real-time demand.

“The results of our recent Manufacturing Performance Management Strategies Benchmark Report clearly indicates that best-in-class manufacturers use applications to help improve current manufacturing performance and enable continuous improvement strategies such as Lean, Six Sigma, and Flow,” said Chris Jones, Senior Vice President, Research for Aberdeen Group. “Our study indicates that manufacturers want these new capabilities delivered in a closed-loop management paradigm that allows them to plan, execute, control, and analyze performance in real-time. Despite a widely held market belief, 80 percent of the respondents have yet to implement these capabilities – whether it be custom or commercial solutions. This finding points to the market opportunity that vendors have if they can deliver these integrated capabilities and domain expertise required by manufacturers.”

About The UPS Strategic Enterprise Fund
The UPS Strategic Enterprise Fund is the private equity strategic investment arm of UPS. The Fund is a corporate venture capital group which focuses on developing critical partnerships and acquiring knowledge returns from its investments in information technology companies and emerging market-spaces. UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.

About Pelion Systems
Pelion Systems provides lean operations management solutions for executives, plant and material managers, change agents and operators to power and sustain world-class business performance. Pelion integrates easily with existing systems and delivers rapid business value through exceptional operational and customer service performance. Teams using Pelion solutions make better and faster strategic, tactical, and operational decisions with a smart operations model that represents the value stream. Pelion Systems is headquartered in Boulder, Colorado, with sales offices in Detroit and Chicago. For more information about Pelion’s product and service offerings visit www.pelionsystems.com or call 877-669-4324.