SolidWorks Revenue Increases 62%: PDM Revenue Grows By 85%

Paris, France, October 24, 2000--Dassault Systemes (Nasdaq: DASTY; Bourse de Paris), a worldwide leading software developer of product lifecycle management (PLM) solutions, today announced financial results for the 2000 third quarter.

Acquisition costs include goodwill and technology amortization and other related acquisition costs. All financial figures in this press release are before these acquisition costs unless otherwise noted.

Total revenue increased 24% to Euro 155.4 million in the 2000 third quarter, compared to Euro 125.5 million in the 1999 third quarter. Software license revenue grew 28% to Euro 134.8 million and represented 87% of total revenue.

Charles Edelstenne, Chairman and Chief Executive Officer of Dassault Systemes, commented, "Dassault Systemes continued its record of strong performance during the third quarter. Asia grew 36% and accounted for 18% of total revenue for the quarter. Europe and the Americas also experienced very good revenue growth of 24% and 17%, and accounted for 52% and 30% of total revenue, respectively."

Recurring software revenue represented 45% of total software revenue in the 2000 third quarter and 45% for the first nine months of 2000. During the 2000 third quarter 7,720 CATIA and 5,550 SolidWorks seats were licensed. Year-to-date, 22,220 CATIA and 15,632 SolidWorks seats have been licensed

Operating income increased 20% in the 2000 third quarter to Euro 51.4 million. The operating margin was 33% in the 2000 third quarter.

For the 2000 third quarter, net income increased 22% to Euro 33.0 million, or Euro 0.28 per share. In the year-ago period, net income was Euro 27.1 million, or Euro 0.24 per share.

Bernard Charles, President, said, "Dassault Systemes had another very productive quarter. Our results reflect the Company’s growth and leadership in its target markets and the continued positive response to our products by both new and repeat customers.

"SolidWorks had an outstanding quarter, achieving particularly strong results. With this high volume of business, SolidWorks passed an important milestone in August with the shipment of the 100,000th SolidWorks seat.

"Our PDM business experienced an 85% growth rate during the quarter. ENOVIA had major customer wins with Volkswagen announcing today its decision to use ENOVIA to support its Design processes and Boeing and EADS, which made public their ENOVIA commitment for Product Lifecycle Management earlier in the quarter. Thanks to significant wins from Enovia and Smart Solutions, our PDM customer base now exceeds 1,300, the highest in the industry. PDM is now positioned to be an increasingly important driver of our growth going forward.

"We were very encouraged during the quarter by the continued positive response to CATIA V5R4, which offers a wide range of integrated e-business solutions, and furthers our strategy for enabling small, medium and large companies to integrate Product Lifecycle Management in their strategic business processes. CATIA V5 has already been put into production within more than 800 customers.

"Looking ahead, Dassault Systemes is very well positioned for further success with each of our product families. We continue to make investments in research and development to deliver integrated product lifecycle management applications, as well as significant expansion of our collaborative e-business environment. We are confident of further success in bringing our vision to the marketplace," Mr. Charles concluded.

Thibault de Tersant, Executive Vice President, noted "Dassault Systemes diversification strategy in new market segments is proving successful. The resulting broadening of our total available market translates into accelerated growth and margin improvement in the second half of 2000."

For the nine months ended September 30, 2000, total revenue increased 22% to Euro 435.9 million, compared to Euro 357.2 million in the respective 1999 period. Operating income totaled Euro 141.7 million in the 2000 nine-month period, representing an increase of 13% in comparison to Euro 125.8 million in the year-ago period. For the first nine months of 2000, net income rose 16% to Euro 92.2 million, or Euro 0.78 per share, compared to Euro 79.4 million, or Euro 0.70 per share in the 1999 nine-month period.

New Product Launches

During the quarter, Dassault Systemess announced the availability of CATIA Version 5 Release 4 (V5R4) for Windows and UNIX and CATIA Solutions Version 4 Release 2.3 (V4R2.3).

CATIA V5R4 integrates Product Lifecycle Management into the strategic business processes of small, medium and large companies. CATIA V5R3, Release 4 provides users with twice as many products and twice as many capabilities as all previously announced CATIA V5 products. It offers a wide range of integrated e-business solutions, including 12 new products and 39 enhanced ones across CATIA platforms P1 and P2. Among its new functions are direct, flexible model manipulation in space and full associativity between model geometries. CATIA V5R4 offers 2D and 3D design capabilities, native Windows features and a user interface that is easy-to-use, easy-to-learn and friendly for even the most novice designers. Its expanded product functions provide full process coverage, from product design and detailing, through integrated analysis, to manufacturing. Plus, CATIA V5R4 includes enhancements that give small and medium size companies leading-edge capabilities and enable PLM integration. For large businesses, in addition to these capabilities, V5R4 represents a set of flexible, integrated solutions supporting e-business throughout the digital enterprise.

CATIA V4R2.3 delivers more than 200 productivity-enhancing innovations that improve process coverage in product design and manufacturing, supply chain communications and customer competitiveness. Designed to meet the requirements of the aerospace, automotive, plant, and shipbuilding industries, it allows users to integrate specific processes from early product definition to manufacturing. V4R2.3 integrates seamlessly with ENOVIA Portfolio 2, a set of Product Lifecycle Management tools that support e-business throughout the extended enterprise.

In late September, SolidWorks Corporation announced 3D Instant Website, which enables SolidWorks users to create and publish live Web pages with 3D interactive content with a single mouse click. Visitors to the password-protected site can view, rotate, zoom, and pan 3D models without manually downloading or installing any additional viewers or CAD software. This improves communication across the extended design team and eliminates the need for users to have any Web server infrastructure.

SolidWorks further strengthened its commitment to delivering 3D Internet solutions with two additional announcements made at the start of the current quarter. With the launch of 3D PartStream.NET, manufacturers have the tools necessary to integrate live 3D models into Web-based product catalogs and e-commerce systems. The service allows potential buyers to view 3D product models and drawings from all angles, configure them to their own specifications, and download them into their own product designs in a wide variety of file formats. Based on the Microsoft .NET framework, it contributes to Microsoft's next generation vision for the Internet.

In addition, SolidWorks, VerticalNet and Microsoft announced an agreement to deliver 3D-Powered Storefronts to companies in North America. 3D-Powered Storefronts employ viewing technology used by 3D PartStream.NET. Microsoft will sponsor one thousand 3D-Powered Storefronts over the next year, which offers manufacturers the opportunity to reach new customers, generate sales leads, and increase their market presence without any upfront investment.

Also during the quarter, DELMIA announced the availability of DELMIA Version 5 Release 4 for native Windows NT and IBM, SUN and SGI UNIX Platforms. The product is the first in a family of Digital Process for Manufacturing (DPM) solutions. Built on the same infrastructure as CATIA V5 and ENOVIA V5, the geometry-based DPM Assembly Process Simulation was created for the planning and verification of assembly operations. It has the ability to link and view the product date from any major CAD system, author and view the assembly sequences an processes, and link each process step to the manufacturing resources utilizing a single, unified user interface.

In September, SmarTeam announced the launch of mySmarTeam.com, an engineering portal that enables Web-based communication among all members of virtual development communities, with availability in early 2001. Using mySmarTeam.com, product development teams can store, search, view, download and review product specifications and configurations, CAD drawings, Bills of Material, and any other type of documents on the Web. In addition to downloading, reviewing and revising drawings and documents and then republishing them on the Web to share with others, users can track the revision history of all design documents. Companies can choose from two solutions, one that allows them to host private portals, and a second that includes a Web subscription and hosting service.

Additional Highlights of the Quarter

In July, IBM and Dassault Systemes announced the signing of a 7-year agreement under which Airbus Industrie will purchase and deploy more than 2500 seats. Airbus will use CATIA for product creation and simulation and ENOVIA to establish an integrated design through manufacturing solution and to serve as the link to the Airbus PDM system. Airbus also is considering the purchase of DELMIA software.

In July, IBM and the Company announced that ENOVIA and Boeing Corporation are deploying an e-business product development solution that encompasses implementation of new IBM servers, workstations and DB2 Universal Database, CATIA CAD solutions and ENOVIA Product Lifecycle Management solutions as well as training for Boeing designers, engineers and manufacturing personnel.

In September, the European Aeronautic, Defense and Space Company’s EADS Military Aircraft Business Unit selected ENOVIA as its e-business solution. The company will purchase 280 ENOVIA licenses for use in managing the designs of tens of thousands of parts for its aircraft programs in Germany. on IBM RS/6000™ workstations in conjunction with CATIA Solutions.

Another key customer win was announced early in the current quarter, when ENOVIA announced that It has been selected by F.X. Meiller for its Product Lifecycle Management processes. The agreement includes the purchase of ENOVIA licenses to manage the large number of CATIA Solutions models and assemblies used in the manufacture of Meiller products for the commercial vehicle industry. This will allow Meiller engineers and customers to collaborate directly on CATIA models, which will reduce overall product development time and simplify the fabrication of parts.

In September, Dassault Systemes and Albert-Battaglin Consulting announced the creation of the Sharing Knowledge Innovation and Leadership (SKIL) consortium. Participants in the worldwide initiative include Alstom Power, Audi, DaimlerChrysler, Honeywell, Krebs Engineering, Lignum Technical-Homag, SA, Valeo Essuyage, Valmet, and the University of Darmstadt.