Oct 23 2001

DASSAULT SYSTEMES (dsweb.com) REPORTS 15% INCREASE IN THIRD QUARTER REVENUE AND 20% INCREASE IN REVENUE FOR THE FIRST NINE MONTHS OF 2001

Third Quarter Revenue of  € 178.8 Million and Earnings Per Share of  € 0.25 In Line With Expectations

Adjusting Q4 Revenue Estimate by € 10 Million Resulting In Full Year Revenue Growth of 18% For 2001

Revenue and Operating Margin Goals for 2002



PARIS, FRANCE, October 23, 2001--Dassault Systemes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY PA), a worldwide leading software developer of product lifecycle management (PLM) solutions, today reported financial results for the third quarter and nine months ended September 30, 2001.

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

FINANCIAL HIGHLIGHTS

Total revenue increased 15% to € 178.8 million in the third quarter of 2001, up from € 155.4 million in the 2000 third quarter.   Net income totaled € 28.3 million or € 0.25 per share, somewhat better than expected, reflecting tighter expense controls.  In the 2000 third quarter net income was € 33.0 million or € 0.28 per share.

Software license revenue, representing 87% of total revenue in the third quarter, grew 15% to € 155.3 million.  In the year-ago quarter, software license revenue was € 134.8 million.  Recurring revenue represented 49% of software license revenue in the 2001 third quarter.  Service revenue increased 14% to € 23.5 million in the third quarter of 2001, compared to € 20.6 million in the year-ago period.  7,940 CATIA and 6,888 SolidWorks seats were licensed in the third quarter of 2001.

For the nine months ended September 30, 2001, total revenue rose 20% to € 520.8 million, compared to € 435.9 million in the first nine months of 2000.  Net income for the first nine months of 2001 was € 89.2 million, compared to the year-ago period where net income totaled € 92.2 million.  Earnings per share of € 0.77 were essentially level with the year-ago nine-month period where earnings per share totaled € 0.78.

Charles Edelstenne, Chairman of DS, commented, “DS continues to successfully navigate the turbulent economic waters of 2001.  We did so in the first half of 2001 and we are continuing to achieve success in the second half of the year as reflected in the strong revenue results DS is reporting this quarter.  While the Company is not immune to the weakening economic environment and currency fluctuations, our performance is clear evidence that DS is further strengthening its leadership position in key market segments.”

Bernard Charles, President, commented,  “All areas of our business and all geographies contributed to the Company’s solid results in the third quarter.  Process-centric revenues increased 10% and accounted for 73% of total revenue.  CATIA V5 is well on its way to representing approximately 40% of CATIA licenses for 2001.   SolidWorks, the number one player in the design-centric market, grew 31%, with over 70% of revenue coming from new customers.  Our PDM business, with ENOVIA and SmarTeam, increased 32%.  Our global geographic reach was a major contributor to the quarter, with Asia growing 29% and solid contributions from both the Americas and Europe.”

“DS is very well positioned as we prepare to enter 2002.  The Company is on target to introduce two major 3D PLM releases in the first half of 2002 enabling 3D PLM processes for our core market segments.  These releases represent a significant milestone for DS and are unique to our industry.  No other company provides this spectrum of integration across products, processes and resources.  Moreover, they represent a significant step forward in enabling DS to become a provider of solutions to manage intellectual property (I.P.) for industrial companies.  2002 will also be a year where we continue to invest in our business as we have done in the past, notwithstanding the more difficult economic environment, as we move forward our vision for the future.”

Thibault de Tersant, Executive Vice President, stated, “Third quarter financial results were in line with our expectations, and, in fact, earnings per share were slightly better reflecting the favorable impact of diligent cost controls made without affecting a continued investment in our business that we believe appropriate.  Based upon the sudden and unexpected weakening in the economic environment, we are reducing our fourth quarter revenue outlook by € 10 million.   As a result, revenues will grow approximately 15% year over year in the fourth quarter, similar to the growth rate achieved this quarter.  Based upon nine-month financial results and our outlook for the fourth quarter, full year revenue growth should approximate 18%.  At the same time our operating margin target for 2001 remains unchanged at 30%.  

“Looking ahead to 2002, we believe DS is positioned to show a good level of growth over 2001 due to the Company’s   leadership position in the 3D PLM market, our continued penetration of new target markets and significant strengthening of our product portfolio.  Specifically, we expect total revenue to grow approximately 15% and our operating margin to continue at 30% in 2002.  Our outlook conservatively assumes a soft economic environment throughout 2002.”  

NEW PRODUCT LAUNCHES  

SolidWorks unveiled SolidWorks Office, a comprehensive set of 3D CAD tools allowing users to design products quickly and easily at an affordable price. SolidWorks Office combines SolidWorks 2001, and six of the Company's most popular add-on applications in one easy-to-use and install package. The product suite gives users a broad range of design functionality from part and assembly modeling, drawing generation, and data interoperability to photo-realistic rendering, standard part libraries, design animation, 3D Web publishing, feature recognition, and design analysis tools.

SolidWorks launched four new certified gold products that reduce design time, minimize errors, and speed products to market.  These products enable users to click on an icon and immediately begin using the application. SolidWorks' certification of these new products signals the Certified Gold Product program's growing momentum and brings the list of certified products to 29.

Structural Research, recently acquired by DS, released COSMOS/DesignSTAR 3.0. The new version includes major enhancements in the areas of shell and contact stress analysis, processing speed, large model performance, ease-of-use, and accuracy.

ADDITIONAL HIGHLIGHTS

JUN-AIR has selected CATIA V5 to create complex and geometrical designs for silent compressors and vacuum pumps. CATIA’s multi-body functionality makes it possible to divide complex parts into smaller units called bodies, which can then be manipulated individually. This function makes CATIA Version 5 stand out from traditional feature-based CAD systems and it makes the design of complex objects much faster and easier.

Tigercat Industries, Inc. purchased SolidWorks 3D CAD software to design its entire line of forestry products. SolidWorks’ software will enable Tigercat engineers to automate complex sheet metal calculations and conduct detailed stress load analyses so the company can accelerate design time and production while ensuring that each product meets strict quality standards.

Brembo S.p.A, one of the world's first names in high-end brake design, chose CATIA and ENOVIA for its e-collaboration project to shorten time-to-market and streamline engineering processes. Brembo has chosen to implement a company-wide online design collaboration environment using ENOVIA Portal Solutions to assist the research and design departments to streamline their engineering processes and produce high-quality customized braking components in 30% less time.

Texas A&M University's Department of Mechanical Engineering purchased 500 licenses of SolidWorks 3D CAD software as a core design tool in the Dwight Look College of Engineering due to its much shorter learning curve. Students using SolidWorks software quickly and easily create 3D solid models, giving them valuable experience. TAMU's students will use SolidWorks software in a wide range of projects sponsored by the automotive, aerospace, microelectronic, and energy industries.

El-Op ElectroOptics Industries is using SolidWorks software to design and develop products quickly and efficiently. SolidWorks increases designers' productivity at El-Op with features such as large assembly creation and advanced surfacing techniques. By enabling collaborators to share 3D content over the Internet, SolidWorks reduces their design time and errors, saves money, and speeds products into manufacturing.

Shipbuilder, HDW AG, selected CATIA and ENOVIA PLM solutions for use in building a new series of technologically advanced submarines. This agreement represents the first phase of their e-collaboration project that will soon cover surface military vessels and commercial ships, as well.

BMW Group selected CATIA V5 for the design, analysis and manufacture of chassis systems. The agreement includes the purchase of both CATIA and ENOVIAVPM software to create and manage the design of chassis systems for upcoming premium passenger cars.  BMW Group expects substantial improvements in product development time with the implementation of CATIA V5. CATIA V5 addresses important criteria defined by BMW engineering for its new vehicles, including high performance modification capabilities that help increase productivity when designing chassis parts.

PARTNERSHIPS/ACQUISITIONS

City University of Hong Kong signed a co-operation agreement with Dassault Systemes and MTECH Engineering Co. Ltd.  This agreement raises knowledge levels and the timely adoption of PLM technology in order to enhance innovation, productivity and competitiveness. This agreement contributes to the advancement of PLM technology by designing and supervising postgraduate research projects related to PLM, to promote and prepare the adoption of the technology.

SmarTeam joined Check Point Software Technologies' OPSEC alliance program. This partnership delivers best-of-breed data security for SmarTeam Collaborative Product Commerce Solutions. As a member of the OPSEC Alliance, SmarTeam demonstrates its commitment to technology leadership in the Collaborative Product Commerce industry.  

On July 20, 2001 Dassault Systemes closed the acquisition of the consulting and services business of Alliance Commerciale Technologique in a cash transaction for CAN$12 million. This acquisition is a step forward in consolidating a global PLM services force within the DS Group to respond to the increasing demand from partners and customers for highly qualified expertise to support the introduction and an accelerated deployment of PLM solutions. This transaction reinforces DS' presence in the Americas and complements its existing services groups within ENOVIA and DELMIA.

DELMIA announced that METROLOGIC GROUP has joined the Software Community Program as a Gold Partner. Through this development partnership METROLOGIC GROUP will develop, market and sell applications based on the V5 architecture, integrated and complementary to CATIA, ENOVIA and DELMIA V5 solutions.

DS and NK-EXA joined forces, further extending the design automation of the inner shape design of molded parts for Product Lifecycle Management. Under the agreement, NK-EXA will provide a strategic component of the end-to-end V5 PLM "style to manufacturing" solution for plastic molded parts and DS continues its focus on the styling, detailed design, feasibility analysis, mold design and manufacturing steps required for the complete process coverage.

Zuken joined DS' V5 Software Community Program. Zuken provides a strategic component of the end-to-end V5 PLM electromechanical solution, delivering V5 interfaced and integrated solutions and addressing the logical steps of the cabling design through their leading Cabling Designer product. ZUKEN and DS' primary targeted markets are the Automotive and E/E industries. Together with its partners, DS is building on the V5 technology -- the most comprehensive electromechanical solution available today.

AWARDS

SolidWorks and SmarTeam were among a select group of companies named “Hottest Companies” of the year by Start magazine for their consistent focus on improvement and overall product excellence.

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 objective for 2001 revenue and EPS and 2002 financial objectives, are forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, 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 20F for the year ended December 31, 2000, which was filed with the SEC on April 27, 2001, could materially affect the Company's financial position or results of operations.