Jul 22 1999

DASSAULT SYSTEMES S.A. ANNOUNCES TOTAL REVENUE RISES 32% TO FF 781.3 MILLION (EURO 119.1 MILLION) ON 32 INCREASE IN LICENSE REVENUE

Net income per share up 40% to FF 1.36 (Euro 0.21/US$0.22)



Paris, France, July 22, 1999 -- Dassault Systèmes 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 second quarter and six months ended June 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 32% to FF 781.3 million (Euro 119.1 million) in the 1999 second quarter, compared to FF 592.3 million (Euro 90.3 million) in the year-ago period. Software license revenue grew 32%, with services and other revenue increasing 34%. Software license revenue represented 85% of total revenue, with services and other revenue accounting for 15%.

Recurring software revenue represented 44% of total software revenue in the 1999 second quarter and 45% for the first six months of 1999. During the 1999 second quarter 6,171 CATIA-CADAM and 4,502 SolidWorks seats were licensed. Year-to-date, 12,990 CATIA-CADAM and 8,484 SolidWorks seats have been licensed. The Company noted that the average price per CATIA-CADAM workstation seat increased 1% to $19,290 in the quarter in comparison to the year-ago period.

Charles Edelstenne, Dassault Systèmes’ Chairman and Chief Executive Officer, stated, "We are very pleased with the strong results the Company achieved this quarter across all major product lines, during a difficult period for the overall industry. All regions contributed to the growth this quarter, including Asia, where we are seeing initial, modest signs of improvement in the market environment."  

Dassault Systèmes’ Executive Vice President, Thibault de Tersant, said, "Looking ahead, we believe the Company is on track to meet expected second half financial results. For the full year, Dassault Systèmes is positioned to significantly outperform the MCAD industry, thanks to our strategy, product portfolio, customer relationships and sales and marketing channels."

Research and development expenses increased 30% in the 1999 second quarter to FF 247.0 million, compared to FF 190.6 million in the year-ago quarter. The Company noted that the increase in research and development costs in part reflected the completion of the Matra Datavision’s subsidiary’s acquisition in April and the resulting increase in research personnel.

Operating income increased 37% to FF 246.9 million in the 1999 second quarter, resulting in an improvement in the operating margin to 31.6%, compared to 30.4% in the 1998 period.

In the 1999 second quarter, net income increased 40% to FF 155.2 million, or FF 1.36 per share (Euro 0.21) on higher revenue, operating margin improvement and growth in financial revenue. In the second quarter of 1998, the Company recorded net income of FF 110.9 million, or FF 0.97 per share (Euro 0.15).

Bernard Charlès, Dassault Systèmes’ President, commented, "This year is has been a period of major transition for the Company, with the introduction of new product offerings for all our targeted markets, and it is very encouraging for us to see that this transition does has not negatively impacted revenue generation. In particular, CATIA performance this quarter is noteworthy. With respect to our process-centric offerings, we introduced CATIA Version 5 Release 1 in, early 1999, and this week we announced the general availability of Version 5 Release 2.

"This second release is being delivered on two fully scalable middleware platforms called P1 and P2. With P1, CATIA is targeting small and medium sized process oriented companies who want to move toward s large scale digital product definition. P1 solutions deliver core modeling, integrated applications and project data management for these process-oriented companies. Version 5 P2 Solutions are targeted at customers engaged in advanced design engineering involving integrated digital mock-up, and modeling of products, processes and resources at the same time, which is well illustrated by the first Deneb product on Version 5.

"Addressing the mainstream design-centric market, SolidWorks introduced SolidWorks 99 in June. This new release provides engineers with powerful functionality, unprecedented ease-of-use, and a simple, comprehensive migration path from 2D to 3D software. SolidWorks 99 offers major enhancements in the areas of modeling, assembly design, detailing, visual communication, ease-of-use, data sharing, piping, and sheet metal."

On June 7th, Dassault Systèmes concluded its agreement to acquire a majority interest in Smart Solutions Ltd. Smart Solutions is the leading provider of TeamPDM Solutions, with its flagship SmarTeam product. Smart Solutions is among the fastest growing providers of Windows and wWeb-based PDM solutions with over 6,500 seats and 700 customers worldwide.

For the six months ended June 30, 1999, total revenue increased 28% to FF 1.5 billion, compared to FF 1.2 billion in the respective 1998 period. Operating income totaled FF 517.1 million in the 1999 six-month period, representing an increase of 25% in comparison to FF 412.6 million in the year-ago period. For the first half of 1999 net income rose 27% to FF 322.1 million, or FF 2.82 per share (Euro 0.43), compared to FF 253.9 million, or FF 2.23 per share (Euro 0.34) in the 1998 first half.