Oct 29, 2009

Dassault Systèmes Q3 Total Revenue at 291.7 m Euros

Q3 EPS and Operating Margin Above Company Objectives.

PARIS - Dassault Systèmes has reported IFRS unaudited financial results for the third quarter and nine-month periods ended September 30, 2009, in accordance with Article L.451-1-2 IV of the French Monetary and Financial Code (Code Monétaire et Financier). These results have been reviewed by the Company’s Board of Directors.

Third Quarter 2009 non-IFRS revenue results in line with DS Q3 objectives; non-IFRS EPS and non-IFRS operating margin above on strong cost controls; cost-savings reach €100 million year-to-date, ahead of plan. Net operating cash flow of €234 million year-to-date; cash and short-term investments of €975 million. As recently announced DS plans to acquire the IBM PLM business operations (“IBM PLM”) for approximately $600 million.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “More than ever, this quarter illustrates our ongoing commitment to reconcile short-term execution and long-term strategy.

“Looking at the third quarter, the environment continued to be challenging, similar to the second quarter.

Against this reality, our earnings and operating margin results came in above our objectives on in-line revenue results, thanks to the strong execution of our cost savings program. We are on track to not only achieve, but in fact to exceed our full year savings target, all while maintaining our R&D and customer support investments in all the industries we serve.

“The agreement with IBM is very timely to get closer to our clients delivering unique V6 value for sustainable innovation and expand our partnership with IBM in services, flexible financing and new enterprise infrastructure.”

Cash Flow and Other Financial Highlights

IFRS net operating cash flow was €56.6 million and €233.9 million for the three- and nine-month periods ended September 30, 2009, respectively.

Cash and short-term investments totaled €975.0 million at September 30, 2009, compared to €840.4 million at December 31, 2008. The Company’s net financial position amounted to €774.8 million at September 30, 2009, net of outstanding debt consisting of €200.2 million of financial long-term debt.

Key Business and Corporate Highlights

On October 26th, Dassault Systèmes and IBM announced their intent to integrate the IBM PLM sales force within DS and to sign a new global alliance to expand PLM in all industries. DS and IBM signed a definitive agreement whereby DS would acquire the IBM sales and client support business operations encompassing DS PLM software application portfolio, as well as customer contracts and related assets (“IBM PLM”), for approximately $600 million in cash. DS and IBM also defined the next steps in their long-standing relationship, with plans to establish DS as a strategic IBM global alliance partner and to expand their services partnership.

On October 21st, DS announced that HydroChina Chengdu Engineering Corporation (CHIDI), one of China’s largest hydropower investigation and design enterprises, has successfully implemented Dassault Systèmes’ PLM solutions to facilitate investigation, design, and collaborative management of hydropower plants. CHIDI has significantly shortened project timelines, reduced total costs, and improved the collaboration between cross-functional teams of designers and engineers.

On September 1st, DS announced that Boston Apparel Group has selected DS’ ENOVIA V6 solution including the ENOVIA Apparel Accelerator for Design and Development and the ENOVIA Apparel Accelerator for Sourcing and Production to provide the foundation for managing the company’s key business processes and ensuring the delivery of new product lines.

On September 1st, DS SolidWorks unveiled the SolidWorks® 2010 product line, a new set of software products that optimize the core product design functions that make designers and engineers successful every day. Through the use of CAD, simulation, data management, documentation, and environmental impact assessment, organizations will transform their inspirations into innovation, supported by a vibrant community of CAD users, content, technology, and expertise. This new SolidWorks product line also improves depth and performance by extending the DS SolidWorks tradition of including hundreds of new enhancements specifically requested by customers.

In September DS launched 3DVIA Mobile, an iPhone and iPod touch application that allows users to search, share and interact with the growing library of high quality 3D models on www.3DVIA.com. The addition of 3DVIA Mobile brings 3DVIA a powerful platform for delivering unique, online 3D experiences, directly into the hands of a fast growing community of mobile users. With 3DVIA Mobile, users can find realistic 3D content from DS’ library and immediately enrich their photos, right on the iPhone. They download and position the model on a picture for an instant 3D mash-up that blends 3D digital data with the physical world.

On August 11th, DS announced it was selected by Dana Holding Corporation for design simulation management. Dana Holding Corporation, a global vehicular supplier, has selected SIMULIA SLM as its simulation lifecycle management solution to enhance product development decision-making processes and support key business objectives.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “We were pleased to deliver strong sequential growth in both earnings and operating margin in spite of the seasonal sequential decrease in revenue. Through the dedicated efforts of all our employees worldwide we have been able to achieve €100 million in cost savings year-to-date, ahead of our plans.

“Based upon our current visibility we think it is realistic to target a full year revenue objective of about €1.24 to €1.27 billion, which is just €10 million below our former objective. Thanks to our cost reduction results, we are reconfirming our non-IFRS operating margin objective of about 25% and our non-IFRS earnings objective of €1.76 to €1.91.

“The proposed acquisition of IBM PLM, which is expected to be completed during the 2010 second quarter, should be accretive to both our earnings and operating margin on a non-IFRS basis and will be instrumental to support our long-term growth strategy.”

The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below. The Company’s current objectives are the following:

* Fourth quarter 2009 non-IFRS total revenue objective range of about €325 to €355 million and non-IFRS EPS range of about €0.58 to €0.73;
* 2009 non-IFRS total revenue objective growth range of about (10%) to (7%) in constant currencies (€1.24 to €1.27 billion based upon the 2009 currency exchange rate assumptions below);
* 2009 non-IFRS operating margin of about 25%;
* 2009 non-IFRS EPS range of about €1.76 to €1.91;
* Objectives are based upon exchange rate assumptions for the 2009 fourth quarter of US$1.50 per €1.00 and JPY140 per €1.00 and a full year average of US$1.40 per €1.00 and JPY132 per €1.00.

The non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2009 currency exchange rates above: (i) deferred revenue write-downs estimated at approximately €1 million for 2009; (ii) share-based compensation expense estimated at approximately €22 million for 2009, and (iii) amortization of acquired intangibles estimated at approximately €42 million for 2009. The above objectives do not include any impact from other operating income and expense, net principally comprised of restructuring expenses. These estimates also do not include any new stock option or share grants, or any new acquisitions or restructurings completed after October 29, 2009.