Oct 21 1999

DASSAULT SYSTEMES REPORTS THIRD QUARTER REVENUES INCREASE 17% TO FF 822.9 MILLION (EURO 125.5 MILLION) AND NINE-MONTH REVENUES UP 24% TO FF 2.3 BILLION (EURO 357.2 MILLION)

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 third quarter and nine months ended September 30, 1999.



Acquisition costs 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.

Total revenue increased 17% to FF 822.9 million (Euro 125.5 million) in the 1999 third quarter, compared to FF 700.8 million (Euro 106.8 million) in the 1998 third quarter. Software license revenue grew 15% and represented 84% of total revenue. Services and other revenue increased substantially, rising 34%. Services and other revenue represented 16% of total revenue in the 1999 third quarter, compared to 14% of total revenue in the year-ago quarter.

Charles Edelstenne, Chairman and Chief Executive Officer of Dassault Systemes, commented, "Third quarter results came in very much as anticipated. This is due to the solid contribution of each of our product lines and the strong visibility provided by our business model. "  

Bernard Charles, President of Dassault Systemes, stated, "Our expanded Strategic Partnership with IBM, which we announced October 5, is a significant new step toward delivering and implementing e-business solutions to address the product creation and product life pipeline for both Global and Medium to Small companies in multiple industries. In addition, through a reorganization of the IBM sales force by market segment in an enhanced relationship with IBM Global Services, we will focus on Digital Enterprise deployment projects.

"During the quarter, the Company introduced ENOVIA Portfolio, which is organized in five foundations: 3D Portal, Life Cycle Applications, Product Processes and Resources Hub, Enterprise Architecture, and Rapid Application Development. ENOVIA is uniquely positioned to serve the Virtual Enterprise requirements (B-to-B) as well as to provide Digital Product availability to consumers (B-to-C). It leverages the Digital Product and Process Definition across all phases of the Product Life cycle. Through the integration of CATIA, ENOVIA and DENEB, our customers benefit from the largest and most comprehensive product portfolio to implement their Digital Enterprise model."

Thibault de Tersant, Executive Vice President, said, "Notwithstanding this near term period of expected slower revenue growth, we are continuing to make significant investments in research and development and marketing and sales, to seize the enormous Digital Enterprise opportunity we see in front of us."

Recurring software revenue represented 48% of total software revenue in the 1999 third quarter and 46% year-to-date. For the third quarter 7,000 CATIA and 4,000 SolidWorks seats were licensed. For the 1999 nine-month period, 20,000 CATIA and 12,500 SolidWorks seats were licensed. As anticipated, the average price per CATIA-CADAM workstation seat decreased in the quarter to $18,100, a reduction of 4% in comparison to the 1998 third quarter.

Operating income increased 3% in the 1999 third quarter to FF 269.3 million (Euro 41.1 million). The operating margin, however, decreased to 32.7% from 37.4% due to a higher mix of service revenue and increased investments in Research and Development and marketing and sales.

For the 1999 third quarter, net income increased 12% to FF 169.0 million, or FF 1.48 per share (Euro 25.8 million and Euro 0.23). In the year-ago period, net income totaled FF 151.0 million, or FF 1.32 per share (Euro 23.0 million and Euro 0.20).

For the nine months ended September 30, 1999, total revenue increased 24% to FF 2.3 billion (Euro 357.2 million), compared to FF 1.9 billion in the 1998 period. Operating income increased 17% to FF 786.4 million, compared to FF 674.9 million in the year-ago period. Net income increased 21% to FF 491.1 million, or FF 4.30 per share (Euro 74.9 million and Euro 0.66) in the 1999 nine-month period, up from FF 405.0 million, or FF 3.56 per share (Euro 61.7 million and Euro 0.54) in the respective 1998 period.