DASSAULT SYSTEMES REPORTS 1999 REVENUE INCREASES 22.1% TO FF 3.3 BILLION, NET INCOME RISES 16.6% TO FF 733.3 MILLION AND EPS GROWS 15.8% TO FF 6.40

Fourth Quarter Revenues up 17.7% to FF 967.8 Million, Net Income Up 8.1% to FF 242.2 Million and EPS Up 6.8% to FF 2.10

Paris, France, February 8, 2000--Dassault Systemes S.A. (Nasdaq: DASTY; Bourse de Paris), a worldwide leading software developer of CAD/CAM/CAE/PDM II products, today announced financial results for the fourth quarter and year ended December 31, 1999.

Acquisition costs and non-recurring expenses include goodwill amortization related to the acquisitions of Deneb, ProductManager, Matra Datavision Software and SmartSolutions. All financial figures in this press release are before these acquisition costs unless otherwise noted.

Fourth Quarter Results

Total revenue increased 17.7% to FF 967.8 million (Euro 147.5 million) in the 1999 fourth quarter, compared to FF 822.3 million (Euro 125.4 million) in the 1998 fourth quarter. Software license revenue grew 16.2% to FF 829.2 million and represented 85.7% of total revenue. Recurring software revenue represented 39% of total software revenue in the 1999 fourth quarter, compared to 36% in the year-ago period. .

Services and other revenue increased substantially, rising 27.3%. Services and other revenue represented 14.3% of total revenue in the 1999 fourth quarter, compared to 13.2% of total revenue in the year-ago quarter. For the quarter, 8,721 CATIA and 4,656 SolidWorks new seats were licensed.

Charles Edelstenne, Chairman and Chief Executive Officer of Dassault Systemes, commented, “The fourth quarter continued a year of progress and achievements for the Company. Our software and revenue results during the quarter were in line with expectations. The Company continued to outperform the market, both in the fourth quarter and for the year. This reflects the strength of our operations and business strategy as well as the quality and performance of our entire product line. ”

While revenue increased rose 17.7%, operating income increased 5.5% in the 1999 fourth quarter to FF 371.1 million (Euro 56.6 million), reflecting increased higher investments in research and development and marketing and sales. The operating margin was 38.3% in the 1999 fourth quarter. The higher investments in 1999 for research and development were focused on preparing the Company to address the large opportunity and demand for digital enterprise business processes among the Company’s customer base. The increase in sales and marketing was made in order to enhance the sales and marketing efforts to small and medium enterprises.

For the 1999 fourth quarter, net income increased 8.1% to FF 242.2 million, or FF 2.10 per share (Euro 36.9 million and Euro 0.32). In the year-ago period, net income totalled FF 224.0 million, or FF 1.97 per share (Euro 34.1 million and Euro 0.30).

1999 Results

For the year ended December 31, 1999, total revenue increased 22.1% to FF 3,310.4 million (Euro 504.7 million), compared to FF 2,711.6 million in 1998 (Euro 413.5 million). In 1999 Recurring software revenue represented 44% of total revenue, similar to 1998. Operating income increased 12.8% to FF 1,157.5 million, compared to FF 1,026.5 million in the prior year. As expected, the operating margin in 1999 decreased to 35.0% from 37.9% in 1998 reflecting the addition of resources to research and development and marketing and sales. Net income increased 16.6% to FF 733.3 million, or FF 6.40 per share (Euro 111.8 million and Euro 0.98) in 1999, up from FF 628.8 million, or FF 5.53 per share (Euro 95.9 million and Euro 0.84) in 1998..

Bernard Charles, President, said, “Several important achievements during the year furthered our business strategies and prepared the Company for its next stage of development. CATIA’s small account sales represented 45% of revenue in 1999, up from about 40% of revenue in 1998. This reflects our success in broadening our CATIA customer base, one of our targeted objectives for 1999. For the year, we experienced very satisfactory growth in total unit sales, with CATIA/CADAM seats increasing 11% to approximately 28,700 seats. CATIA sales continued to reflect the strong reception for CATIA particularly the newest Version 4 release. We were also pleased to announce the general availability of our third release for Version 5. The launch of SolidWorks 99 was another highlight of the year and contributed to SolidWorks’ strong performance, heightened brand awareness and increased market share. SolidWorks seats increased 24% in 1999 to over 17,000 seats.

“Smart Solutions met with great success in increasing its customer base. During the year, Smart Solutions added over 450 new customers, representing the fastest growth in its marketplace. Enovia made an important advance with the commercial introduction of Enovia Portfolio. This set of Digital Enterprise Solutions for small and large manufacturers is essential to our ability to deliver business process support capabilities across the product lifecycle. By using these solutions, our customers can harness the power of the Internet to become more efficient and more profitable."

Thibault de Tersant, Executive Vice President, noted, “Throughout In 1999, we competed successfully for a growing market share. We ended the year having we increased our market share to 21%. Equally important, our strong performance extends across each of our geographic regions. For the year, we achieved 24% growth in Europe and 20% in both Asia and the Americas. Our success in gaining market share demonstrates that Dassault Systemes products are enjoying increasing acceptance. We are also pleased to report that the average price per CATIA/CADAM workstation seat remained relatively leveldecreased only modestly in U.S. dollars and was stable in French francs in comparison to with 1998, in contrast with initial expectations at the outset of the year.” The Company commented that in 1999 the average price per workstation seat decreased 5% in 1999 to $ 18,425, from $19,295 in 1998. In French francs, the average price per workstation seat was stable, at FF 113,500 in 1999, compared to FF 113,800 in 1998.

Highlights of the Quarter

 

* Depth, Breadth Added To Customer Base. During the quarter, the Company’s announced a number of customer wins and developments. Prévost Car adopted CATIA Solutions to optimize its design and production processes and shorten its design cycle to create a competitive advantage as it pursues emerging opportunities in North America. The West McLaren Mercedes team chose CATIA solutions to design its car for the Year 2000 Formula One World Championship.

The Claas Group selected ENOVIA’s Enterprise product data management (PDM II) solution for worldwide implementation, including 70 seats in 1999 and an estimated 140 additional seats by 2001. Claas will use ENOVIAVPM to manage the hundreds of thousands of complex components, part assemblies and designs used in the development of its sophisticated agricultural machinery.

Daewoo Motors invested in Deneb Robotics’ Digital Manufacturing suite of solutions to reduce production time and cost. Daewoo Motors began utilizing the Company’s CATIA solutions in 1984. Deneb/IGRIP® was chosen by the Boeing Company Airlift and Tanker Programs for digital manufacturing applications on one of the world’s largest pieces of robotic machinery, a Brotje riveting machine.

Ritvik Holdings, Inc., Canada’s largest toy manufacturer and the world’s second largest marketer of building blocks under the MEGA BLOKS® brand, selected SolidWorks software as the standard for its engineering desktops. Creo Products Inc. selected SolidWorks software as the standard for its engineering desktops company-wide. Its 89 SolidWorks seats will be used by Creo’s engineering teams to design state-of-the-art computer-to-plate imaging systems for the printing and graphic arts industries.

* SolidWorks, eDrawings Honored. For the second consecutive year, Solidworks earned an Editors’ Choice Award from CADENCE Magazine, which recognized the 3D data translation, dynamic assembly motion capabilities, and real-time collision detection of the company’s Windows™-native 3D mechanical design software. SolidWorks Corporation was named an "Exceptional Partner" by the E-source Team at Sandia National Laboratories.

Finally, eDrawings, announced in October, was one of seven CAD-related products to receive an All-Star Award from CADALYST Magazine. The compressed electronic drawing file enables engineers to create, view, send, and receive mechanical design drawings via email. The editors of CADALYST Magazine cited eDrawings’ overall product excellence, animation capabilities, innovative 3D pointer, built-in viewer, and compact size.

* Human Modeling Software Company Acquired. The Company announced its acquisition of SAFEWORK, a private company whose advanced turn-key human modeling software provides users with anthropometrically-correct mannequins used within a digital environment to simulate, demonstrate and optimize how a specific task may be carried out. The integration of SAFEWORK technology within the CATIA, DENEB and ENOVIA portfolios is expected to benefit users by creating better products and optimizing manufacturing workplaces with increased efficiency, quality, productivity and competitiveness. The acquisition was completed on January 19, 2000.

* CATIA Version 5 Release 3. The Company announced general availability of CATIA Version 5 Release 3 for Windows and UNIX from December 8, 1999. The new release maximizes the benefits of knowledgeware technology throughout the product life cycle and extends customers’ ability to optimize digital product creation in machinery, consumer goods and consumer electronics industries.

* IBM Relationship Expands. Building on the success of their 18-year-old relationship, IBM and Dassault Systemes announced they are expanding their e-business solutions to support the deployment of the digital enterprise in medium and large accounts and to address the e-business needs of new opportunities presented by the fast growing Small and Medium Enterprise market.