Second Quarter Financial Highlights

  • Total revenue €192.5 million, up 6% as reported and up 8% in constant currencies
  • Software revenue €158.9 million, up 5% as reported and up 6% in constant currencies
  • PDM revenue up 11% as reported and up 13% in constant currencies
  • Design-centric revenue up 19% as reported (up 26% in U.S. dollars)
  • EPS €0.31 on U.S. GAAP basis
  • EPS excluding acquisition costs up 19% to €0.31 per diluted share

PARIS, FRANCE, July 29, 2004 – Dassault Systèmes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY.PA), a worldwide leading software developer of product lifecycle management (PLM) solutions, reported financial results for the second quarter and six months ended June 30, 2004.

“Dassault Systèmes has delivered another good quarter. Our strong performance has solid and consistent underpinnings. In the design-centric market, SolidWorks continues to offer the compelling benefits of its software solutions to 2D users migrating to 3D, as illustrated by its 26% revenue growth in U.S. dollars. Our PDM business, with 13% revenue growth (in constant currencies), constitutes one of the key elements of our integrated V5 PLM offer which aims to increase innovation by creating a truly collaborative environment for Product Lifecycle Management,” commented Bernard Charles, President and Chief Executive Officer of Dassault Systèmes.

Mr. Charles added, “We are seeing signs of higher demand and renewed growth as companies are increasing their investments in an expanding PLM market. We are entering the second half of the year with good visibility and a high level of confidence based upon discussions with customers and sales channels. We are raising our 2004 growth objectives for revenue, operating income and earnings to reflect our higher than anticipated second quarter results.”


Total revenue increased 6% to €192.5 million as reported and increased 8% in constant currencies in the second quarter of 2004 compared to the year-ago quarter. In the 2004 second quarter software revenue increased 5% as reported and 6% in constant currencies with service revenue increasing 14% as reported and 16% in constant currencies, both in comparison to the year-ago period. The increase in software revenue reflected growth of PLM software solutions as well as design-centric software solutions. Service revenue increased sharply reflecting work on the 7E7 project with Boeing, and an increase in PLM projects in general, including a number of projects focused on best practices.

Software revenue, representing 83% of total revenue, totaled €158.9 million in the second quarter of 2004, compared to €151.8 million in the second quarter of 2003. Recurring software revenue represented 54% of total software revenue in the second quarter of 2004. New CATIA and SolidWorks seats licensed in the second quarter of this year increased 9% to 14,767 seats, compared to 13,568 seats in the year-ago period. CATIA and SolidWorks licenses increased 4% and 15%, respectively. Service revenue, representing 17% of total revenue, was €33.6 million in the second quarter, up from €29.5 million in the year-ago quarter.

Thibault de Tersant, Executive Vice President and CFO of Dassault Systèmes, commented, “Regionally, Asia continues to lead delivering year-over-year growth of 12% in constant currencies reflecting strong interest in our PLM and design-centric software solutions. For the second consecutive quarter, Europe’s revenue results exceeded our expectations, with revenue growing 6%. The economic signals continue to be somewhat mixed in the Americas, where our growth this quarter was about 7% in constant currencies.”

Process-centric revenue, including PDM revenue, totaled €155.5 million in the second quarter, an increase of 4% as reported and an increase of 5% in constant currencies in comparison to the year-ago quarter. PDM revenue increased 11% as reported and 13% in constant currencies in comparison to the year-ago period. PDM revenues totaled €22.5 million in the second quarter of 2004 and represented 12% of total revenue. PDM end-user software revenue totaled US$35.2 million in the second quarter of 2004. PLM orders in the second quarter included repeat orders from large accounts for PLM deployment as well as further penetration of the SMB markets. Among the new PLM orders were such customers as Sukhoi Civil Aircraft in Russia, Beiqi Foton Motor in China, Kikuchi in the F&A industry in Japan and EDAG, a leading German automotive supplier, which has selected CATIA V5 for its new R&D center in China.

In the second quarter of 2004 design-centric revenue increased 19% to €37.0 million, up from €31.2 million in the year-ago quarter and increased 26% if reported in U.S. dollars. SolidWorks’ wins in the second quarter included Sulzer Chemtech AG in Switzerland, Sargent Manufacturing in the United States and Shenyang Heavy Machinery in China.

Operating Income and Margin, EPS and Financial Position

Revenue growth again translated into operating leverage with strong increases in the Company’s operating income, operating margin, net income and earnings per share in the second quarter. Operating income increased 15% to €52.5 million in the second quarter of 2004 (27.3% operating margin), compared to €45.6 million in the second quarter of 2003 (25.2% operating margin). Operating income before acquisition costs increased 13% to €53.0 million in the second quarter, up from €47.0 million in the year-ago period. The operating margin before acquisition costs increased 1.6 percentage points to 27.5% in the second quarter of 2004, compared to the year-ago quarter where the operating margin was 25.9% before acquisition costs.

Earnings per share increased 24% to €0.31 per diluted share in the second quarter of 2004, up from €0.25 per diluted share in the second quarter of 2003. Earnings per share before acquisition costs increased 19% to €0.31 per diluted share in the second quarter of 2004, up from €0.26 per diluted share in the year-ago quarter. The sharp increase in earnings per share, as reported and before acquisition costs, reflected the growth in revenue and strong increase in operating income as well as a higher level of financial revenue. Net income increased 27% to €35.8 million, in the recently completed quarter, compared to €28.2 million in the year-ago quarter. Net income before acquisition costs increased 25% to €36.5 million in the second quarter of 2004, compared to €29.3 million in the respective 2003 quarter.

Dassault Systèmes continued to maintain a strong financial position with cash and short-term investments totaling €544.6 million at June 30, 2004, after payment of cash dividends totaling €38 million. Net cash provided by operations was €34.6 million for the second quarter of 2004.

First Half Financial Highlights

  • Total revenue €368.7 million, up 5% as reported and up 9% in constant currencies
  • Software revenue €307.8 million, up 4% as reported and up 8% in constant currencies
  • Process-centric revenue €299.1 million, up 3% as reported and up 7% in constant currencies
  • PDM revenue €42.4 million, up 13% as reported and up 17% in constant currencies
  • Design-centric revenue €69.6 million, up 13% as reported (up 25% in U.S. dollars)
  • EPS €0.55 on U.S. GAAP basis
  • EPS excluding acquisition costs up 19% to €0.56 per diluted share


Strategy, Technology and Partnerships

DS and IBM introduced a new specialized product lifecycle management industry solution (including software and best practices) for Electronics manufacturers, designed to help them better manage the growing complexity of electronic product development. Collaborative Systems Engineering for Electronics (CSE-E) optimizes the early definition stages of product development when companies establish the requirements, functions and systems architecture of a new product, and generally commit up to 80% of its cost. CSE-E also shortens time-to-market by facilitating design reuse from the earliest stages of the development process, and reduces the costs and risks associated with the launch of a new product.

DS and Lattice Technology have entered into a long-term strategic partnership to create a significantly more open and efficient 3D XML solution enabling the exchange of 3D data among manufacturers and suppliers, partners and customers. Using Lattice Technology’s applications, users will be able to generate 3D manuals, parts lists, marketing brochures, assembly instructions, and parts databases. The solutions will provide functions to create 3D interactive Web pages or office documents enabling users to combine 3D data, 2D images, structured data, text and graphics together in a single lightweight document. Founded in 1997 with headquarters in Tokyo, Japan, Lattice Technology provides global companies with proven solutions for the propagation of 2D/3D design data across the enterprise.

SolidWorks® 2005 was introduced delivering new features to make design engineers and others faster, more accurate and more productive as they bring their innovations to market. SolidWorks 2005 software delivers powerful drawing capabilities, significant ease of use, and a number of new productivity features. With more than 250 customer-requested features and enhancements SolidWorks 2005 includes significant new features for machine, mold and consumer product designers. SolidWorks 2005 uniquely encompasses 3D design, analysis, product data management, collaboration, and injection-molded plastic part validation software in a single offering.

DS and Rand A Technology Corporation, operating as RAND Worldwide, have completed the creation of RAND North America, Inc. (Rand Americas), a new joint venture focused on increasing sales of DS PLM software in North America.

Annual Shareholders’ Meeting Summary

The Annual Shareholders’ Meeting was held on June 2, 2004. Shareholders approved an increase of 3% in the cash dividend to €0.34 per share (excluding avoir fiscal) for the fiscal year ended December 31, 2003. Cash dividends, totaling €38 million in the aggregate and representing approximately 28% of 2003 net income, were paid on June 22, 2004.

Charles Edelstenne, Chairman of Dassault Systèmes, concluded, “Our focus is on bringing value to our shareholders by delivering on our financial objectives, consistently investing in our future and sharing a significant portion of the net income of the Company with shareholders.”

Business Outlook

“We are increasing our 2004 growth objectives for revenue and EPS before acquisition costs to reflect the higher than anticipated level of activity in the second quarter. Our revenue growth objective is about 9% in constant currencies, and our EPS before acquisition costs objective is 13% to 15% growth in constant currencies,” Thibault de Tersant stated.

“For the purposes of calculating reported revenue, operating margin and EPS objectives, we are maintaining our previous assumption of a U.S. dollar to euro exchange rate of $1.25 per €1.00 leading to a reported revenue objective of about €795 million, up from €785 million and an EPS before acquisition costs objective of about €1.33 – €1.35 for 2004, up from €1.30 – €1.32.previously.

“Based upon our first half results and second half outlook, our operating margin before acquisition costs is likely to be slightly better than our 2003 operating margin of 29.0%. Our revenue objective for the third quarter is about €183 – €188 million, based upon a U.S. dollar to Euro exchange rate of $1.25 per €1.00,” Thibault de Tersant concluded.

Major Press Release Highlights

July 9, 2004. Start magazine names SolidWorks one of manufacturing’s ‘hottest’ companies for third time in four years.

July 9, 2004. Cosmos 2005 packs 100 enhancements and advanced analysis into affordable, easy-to-use applications.

June 23, 2004. CENIT AG Systemhaus Achieves Dassault Systèmes Certified Education Partner Status.

May 25, 2004 .Tata Technologies, IBM and Dassault Systèmes Join Forces to Meet Growing Demand for PLM Solutions in India.

May 24, 2004. Dassault Aviation and Dassault Systèmes Make Industry History – Falcon 7X Jet Becomes First Aircraft Entirely Developed on Virtual Platform.

May 19, 2004. French Yacht Architectural Firm Berret-Racoupeau Chooses PLM Solutions from Dassault Systèmes and IBM.

May 17, 2004. Dassault Systèmes, Hong Kong Polytechnic University and MTECH Extend Partnership

May 6, 2004. Russia’s Sukchoi Civil Aircraft to Develop Regional Jet Fleet Using PLM Solutions from Dassault Systèmes and IBM.

May 5, 2004. Whirlpool Adopts Digital Manufacturing Solutions from Delmia Corp.

May 4, 2004. Enovia Corp. and Galaxia Inc. Form CAA V5 Software Partnership for Enterprise Collaborative Business Process Management Applications

April 26, 2004. MSC.Software Becomes First Dassault Systèmes’ Certified Education Partner in the Americas.

April 21, 2004. AVIC Information Technology Opens Competency Center in China for Dassault Systèmes PLM Solutions.


  • 1.All comparative figures are given on a year-over-year basis unless specified otherwise.
  • 2.All financial information is unaudited and reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Additional financial information is also presented that is not in conformity with U.S. GAAP, in particular the presentation of operating income, operating margin and earnings per share before acquisition costs (acquisition costs are primarily comprised of technology amortization in addition to other acquisition- related costs). The Company has provided in the tables to this press release and on its website www.3ds.com/en/investors/presentation.asp reconciliations between U.S. GAAP and non-U.S. GAAP figures.
  • 3.The Company uses constant currency revenue growth to evaluate its financial performance in comparison to prior periods and as a measure of expected growth in planning and setting objectives for future periods. The Company believes this measure is an important indicator of the Company’s progress and outlook because it provides a better gauge of the level of change in the business activity as it eliminates any changes arising from currency fluctuations. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view revenue growth in a manner similar to the method used by the Company’s management, helps improve investors’ ability to understand the Company’s revenue growth, and makes it easier to compare DS’ results with other companies, including competitors, whose reporting currency may be different from DS. Constant currency revenue growth, as calculated by the Company, may not be comparable to similarly titled measures employed by other companies.


Conference call information

The Company will host a teleconference call today,

Thursday, July 29, 2004 at 4:00 PM CET/3:00 PM London/10:00 AM New York.

The conference call will be available via the Internet by accessing www.3ds.com/en/investors/index.asp. Please go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. The webcast teleconference will be archived for 30 days. Financial information to be discussed in the call will be available on the Company’s website prior to commencement of the teleconference www.3ds.com/en/investors/earnings.asp. Additional investor information can be accessed at www.3ds.com/en/investors/index.asp or by calling Dassault Systèmes’ Investor Relations at

Statements above that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Company’s objectives for 2004 third quarter revenue, 2004 revenue growth in constant currencies, 2004 reported revenue growth, 2004 operating margin growth objective before acquisition costs and 2004 EPS objective before acquisitions costs are forward-looking statements (within the meaning of Section 21E of the 1934 Securities Exchange Act, as amended). Such forward-looking statements are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results or performances may differ materially from those in such statements due to, among other factors: (i) currency fluctuations, (ii) global economic conditions, (iii) market demand for our products and services, (iv) new product developments and technological changes, and (v), our ability to recruit and retain skilled personnel. Unfavorable changes in any of the above or other factors described in the Company’s SEC reports, including the Form 20-F for the year ended December 31, 2003, which was filed with the SEC on June 30, 2004, could materially affect the Company's financial position or results of operations.

About Dassault Systèmes

Dassault Systèmes, the 3DEXPERIENCE® Company, is a catalyst for human progress. We provide business and people with collaborative virtual environments to imagine sustainable innovations. By creating virtual twin experiences of the real world with our 3DEXPERIENCE platform and applications, our customers can redefine the creation, production and life-cycle-management processes of their offer and thus have a meaningful impact to make the world more sustainable. The beauty of the Experience Economy is that it is a human-centered economy for the benefit of all – consumers, patients and citizens. Dassault Systèmes brings value to more than 300,000 customers of all sizes, in all industries, in more than 150 countries. For more information, visit https://www.3ds.com