Operating Income and Net Income Per Share Up 16% After a 30% Increase in Investments for R&D and Marketing & Sales

Paris, France, April 22, 1999 -- 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 first quarter ended March 31, 1999.

Acquisition costs include goodwill amortization related to the acquisitions of Deneb and ProductManager. All financial figures in this press release are before these Acquisition Costs unless otherwise noted.

In the 1999 first quarter total revenue increased 24% to FF 738.4 million (Euro 112.6 million), compared to FF 596.2 million (Euro 90.9 million) in the 1998 first quarter. Software revenue increased 22% in the 1999 first quarter and represented 87% of total revenue. Services and other revenue grew 41% to FF 93.4 million in the 1999 first quarter and accounted for 13% of total revenue. The Company commented that the level of growth in service revenues primarily reflects increased consulting related to digital mock-up.

Recurring software revenue represented 46% of total software revenue in the 1999 first quarter. During the 1999 first quarter 6,819 CATIA-CADAM and 3,982 SolidWorks seats were licensed.

Charles Edelstenne, Dassault Systemes’ Chairman and Chief Executive Officer, stated, "The first quarter was a period of solid financial performance. From a geographic standpoint, revenue growth during the quarter was strongest in Europe, with revenue increasing 37%. Europe represented 57% of total revenue in the 1999 first quarter. The Americas increased 19% and accounted for 29% of total revenue in the first quarter. Asia, which represented 14% of total revenue, had mixed results and recorded a 4% decrease in revenue during the period."

Research and development expenses increased 20% in the quarter and totaled FF 209.5 million, compared to FF 174.7 million in the 1998 first quarter. Marketing and sales expenses were FF 131.7 million, representing a year over year increase of 50% in comparison to the first quarter of 1998.

Operating income in the 1999 first quarter increased 16% to FF 270.3 million as the Company reinvested a higher portion of revenue in research and development, and marketing and sales. As a result, the operating margin was 36.6% in the first quarter of 1999, compared to 39.0% in the year-ago quarter.

Net income increased 17% to FF 166.9 million in the 1999 first quarter, compared to FF 142.9 million in the year-ago quarter. Net income per diluted share was FF 1.46 (Euro 0.22), representing an increase of 16% in comparison to the 1998 first quarter where net income per diluted share was FF 1.26 (Euro 0.19).

Bernard Charlès, Dassault Systemes’ President, commented, "The Company had a very good start in 1999, with major product releases, important design wins, key acquisitions and new distribution partners. As our strategies progressed company-wide, each of our businesses contributed to the success of the quarter.

"In March we announced the general availability of both CATIA Version 5 Release 1 and CATIA Version 4 Release 2.1. The simultaneous release was designed to allow customers to use Version 5 Release 1 as a stand-alone product or in conjunction with Version 4 Release 2.1. CATIA Version 5 Release 1 is implementable for both native Windows NT and UNIX. With scalable architecture and exceptional ease of use, Version 5 Release 1 addresses companies and users with all levels of design complexity and CAD/CAM experience.

"As part of our plan to address the process-centric needs of small and medium size enterprises we announced two initiatives in early April. We entered into an alliance with Advanced Enterprise Solutions (AES), one of the leading value added resellers and systems integrators. Pursuant to the agreement, Dassault Systemes will merge its North American sales division with AES. AES will continue to operate as a private company, and after the combination will have approximately 200 sales and support personnel in over 20 offices in North America. At the same time, we also announced the expansion of our existing relationship with INCAT, a long-standing business partner. Both companies will take their knowledge of process-centric solutions and address North American small and medium size enterprises."

"Most recently, we signed a definitive agreement to acquire Smart Solutions Ltd., one of the fastest growing companies in the "TeamPDM market." This acquisition, similar to that of SolidWorks, is a very important component of our strategy to increase the available market we address. It represents a significant growth potential.

"Smart Solutions provides small and medium size customers as well as teams within large enterprises affordable and easy to use TeamPDM solutions. With ENOVIA and Smart Solutions, we are now positioned to meet the needs of customers at all levels of product and process complexity," Mr. Charles stated.

Dassault Systemes’ Executive Vice President, Thibault de Tersant, said, "A long-standing cornerstone of our strategy has been our discipline in making the appropriate investments in our businesses. Dassault Systemes has always maintained a high level of investment in research and development. In the area of marketing and sales we have been adding resources on an accelerated basis over the last several years. Dassault Systemes’ total headcount is 31% higher today in comparison to one year ago. Our full year operating plan for 1999 already envisions making increased investments in marketing and sales to take advantage of the significant opportunities we see for Deneb, Enovia and SolidWorks."

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