Dassault Systèmes Reports Strong Third Quarter Results With New Licenses Revenue up 54% in Constant Currencies

Non-IFRS Financial Information

Readers are cautioned that the supplemental non-IFRS (previously referred to as “adjusted IFRS”) information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s annual report for the year ended December 31, 2009 included in the Company’s 2009 Document de référence and 2010 First Half Report filed with the AMF on April 1, 2010 and August 2, 2010, respectively.

In the tables accompanying this press release the Company sets forth its supplemental non-IFRS figures for revenue, operating income, operating margin, net income and diluted earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, stock-based compensation expense, the expenses for the amortization of acquired intangible assets and other income and expense, net (in each case, as explained respectively in the Company’s 2009 Document de référence filed with the AMF on April 1, 2010 and 2010 First Half Report) and the income tax effect of the non-IFRS adjustments and certain one-time tax effects. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.

Information in Constant Currencies

When the Company believes it would be helpful for understanding trends in its business, the Company provides percentage increases or decreases in its revenue (in both IFRS as well as non-IFRS) to eliminate the effect of changes in currency values, particularly the U.S. dollar and the Japanese yen, relative to the euro. When trend information is expressed herein "in constant currencies", the results of the "current" period have first been recalculated using the average exchange rates of the comparable period in the preceding year, and then compared with the results of the comparable period in the preceding year.

This press release constitutes the quarterly financial information required by article L.451-1-2 IV of the French Monetary and Financial Code (Code Monétaire et Financier).

About Dassault Systèmes

As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 115,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systèmes develops and markets PLM application software and services that support industrial processes and provide a 3D vision of the entire lifecycle of products from conception to maintenance to recycling. The Dassault Systèmes portfolio consists of CATIA for virtual product design - SolidWorks 3D for Professionals - DELMIA for virtual production - SIMULIA for realistic simulation - ENOVIA for global collaborative lifecycle management, and 3DVIA for online 3D lifelike experiences. Dassault Systèmes’ shares are listed on Euronext Paris (#13065, DSY.PA) and Dassault Systèmes’ ADRs may be traded on the US Over-The-Counter (OTC) market (DASTY). For more information, visit http://www.3ds.com

CATIA, DELMIA, ENOVIA, SIMULIA, SolidWorks and 3DVIA are registered trademarks of Dassault Systèmes or its subsidiaries in the US and/or other countries.

(Tables to follow)

TABLE OF CONTENTS

Non-IFRS key figures

Condensed consolidated statements of income

Condensed consolidated balance sheets

Condensed consolidated cash flow statements

IFRS – non-IFRS reconciliation

DASSAULT SYSTEMES

NON-IFRS KEY FIGURES

(unaudited; in millions of Euros, except per share data, headcount and exchange rates)

Non-IFRS key figures exclude the effects of adjusting the carrying value of acquired companies’ deferred revenue, stock-based compensation expense, amortization of acquired intangible assets, and other operating income and expense, net.

Comparable IFRS financial information and a reconciliation of the IFRS and non-IFRS measures are set forth in the separate tables within this Attachment.

                                 
  Three months ended   Nine months ended
   

September 30,
2010

 

September 30,
2009

  Change  

Change in
cc*

 

September 30,
2010

 

September 30,
2009

  Change  

Change in
cc*

Non-IFRS Revenue € 408.8   € 291.8   40 %   32 %   € 1,112.7   € 913.7   22 %   18 %
 
Non-IFRS Revenue breakdown by activity
Software revenue 371.9 255.7 45 % 37 % 1,004.4 800.1 26 % 21 %
of which new licenses revenue 96.6 59.0 64 % 54 % 258.1 193.0 34 % 29 %

of which periodic licenses, maintenance and product development revenue

275.3 196.7 40 % 32 % 746.3 607.1 23 % 19 %
Services and other revenue 36.9 36.1 2 % (4 %) 108.3 113.6 (5 %) (8 %)
 
Recurring software revenue 274.9 196.4 40 % 32 % 745.6 604.2 23 % 19 %
 
Non-IFRS software revenue breakdown by product line
PLM software revenue 292.1 194.8 50 % 42 % 775.7 603.3 29 % 24 %
of which CATIA software revenue 175.7 118.8 48 % 40 % 464.5 353.2 32 % 27 %
of which ENOVIA software revenue 52.6 30.0 75 % 64 % 137.3 104.2 32 % 27 %
Mainstream 3D software revenue 79.8 60.9 31 % 22 % 228.7 196.8 16 % 12 %
 
Non-IFRS Revenue breakdown by geography
Americas 118.7 89.2 33 % 20 % 327.7 283.6 16 % 11 %
Europe 174.5 134.8 29 % 29 % 490.5 416.7 18 % 17 %
Asia   115.6     67.8     71 %   53 %   294.5     213.4     38 %   26 %
 
Non-IFRS operating income € 114.5 € 74.5 54 % € 293.1 € 203.0 44 %
Non-IFRS operating margin 28.0 % 25.5 % 26.3 % 22.2 %
Non-IFRS net income 79.3 52.2 52 % 200.8 139.5 44 %
Non-IFRS diluted net income per share   € 0.65   € 0.44   48 %       € 1.67   € 1.18   42 %    
Closing headcount   8,892     7,812     14 %       8,892     7,812     14 %    
 
Average Rate USD per Euro 1.29 1.43 (10 %) 1.31 1.37 (4 %)
Average Rate JPY per Euro   110.7     133.8     (17 %)       117.7     129.5     (9 %)    

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IFRS)
(unaudited; in millions of Euros, except per share data)

                 
  Three months ended   Nine months ended
September 30,   September 30,   September 30,   September 30,
    2010   2009   2010   2009
New licenses revenue 96.6 59.0 258.1 193.0
Periodic licenses, maintenance and product development revenue 270.1     196.6     734.7     605.7  
Software revenue 366.7 255.6 992.8 798.7
Services and other revenue 36.9     36.1     108.3     113.6  
Total Revenue € 403.6 € 291.7 € 1,101.1 € 912.3
Cost of software revenue (excluding amortization of acquired intangibles) (19.6 ) (12.7 ) (55.4 ) (40.8 )
Cost of services and other revenue (36.2 ) (32.3 ) (106.3 ) (105.8 )
Research and development (83.8 ) (73.3 ) (244.4 ) (235.7 )
Marketing and sales (128.5 ) (81.7 ) (342.1 ) (267.1 )
General and administrative (31.5 ) (22.9 ) (88.4 ) (79.7 )
Amortization of acquired intangibles (20.9 ) (9.6 ) (48.3 ) (32.2 )
Other operating income and expense, net (7.3 )   (2.5 )   (18.9 )   (11.7 )
Total Operating Expenses (€ 327.8)   (€ 235.0)   (€ 903.8)   (€ 773.0)
Operating Income € 75.8 € 56.7 € 197.3 € 139.3
Financial revenue and other, net (4.4 )   (0.8 )   (2.0 )   (5.0 )
Income before income taxes 71.4 55.9 195.3 134.3
Income tax expense (16.0 ) (17.4 ) (53.4 ) (41.3 )
Net Income 55.4 38.5 141.9 93.0
Minority interest 0.0     (0.1 )   (0.1 )   (0.2 )
Net Income attributable to equity holders of the parent € 55.4   € 38.4   € 141.8   € 92.8
Basic net income per share 0.47     0.33     1.20     0.79  
Diluted net income per share € 0.46   € 0.32   € 1.18   € 0.78
Basic weighted average shares outstanding (in millions) 119.1     117.6     118.6     117.5  
Diluted weighted average shares outstanding (in millions)   121.5     118.6     120.0     118.3  

 

IFRS revenue variation as reported and in constant currencies

Three months ended September 30, 2010   Nine months ended September 30, 2010
    Change*   Change in cc**   Change*   Change in cc**
IFRS Revenue 38 % 30 % 21 % 17 %
IFRS Revenue by activity
Software Revenue 43 % 35 % 24 % 20 %
Services and other Revenue 2 % (4 %) (5 %) (8 %)
IFRS Software Revenue by product line
PLM software revenue 47 % 39 % 27 % 23 %
of which CATIA software revenue 45 % 37 % 29 % 25 %
of which ENOVIA software revenue 72 % 60 % 30 % 25 %
Mainstream 3D software revenue 31 % 22 % 16 % 12 %
IFRS Revenue by geography
Americas 31 % 18 % 15 % 10 %
Europe 28 % 28 % 17 % 17 %
Asia   69 %   51 %   36 %   24 %
 

* Variation compared to the same period in the prior year. ** In constant currencies.

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS (IFRS)
(unaudited; in millions of Euros)

                 
  September 30,   December 31,
    2010   2009
   
ASSETS
 
Cash and cash equivalents 920.6 939.1
Short-term investments 78.7 118.9
Accounts receivable, net 323.5 322.3
Other current assets 119.2 121.4
 
Total current assets 1,442.0 1,501.7
 
Property and equipment, net 65.8 59.6
 
Goodwill and Intangible assets, net 1,234.6 660.8
 
Other non current assets 144.3       77.6    
 
Total Assets   € 2,886.7       € 2,299.7    
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Accounts payable 76.3 67.7
Unearned revenues 365.4 243.7
Other current liabilities 282.3 174.3
 
Total current liabilities 724.0 485.7
 
Long-term debt 302.1 200.1
Other non current obligations 238.1 165.1
 
Total long-term liabilities 540.2 365.2
 
Minority interests 1.0 1.1
 
Parent shareholders' equity 1,621.5       1,447.7    
 
Total Liabilities and Shareholders' equity   € 2,886.7       € 2,299.7    

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (IFRS)
(unaudited; in millions of Euros)

                         
  Three months ended   Nine months ended
   

September 30,
2010

 

September 30,
2009

  Change  

September 30,
2010

 

September 30,
2009

  Change
Net Income attributable to equity holders of the parent 55.4   38.4   17.0   141.8   92.8   49.0
Minority interest

0.0

0.1

(0.1

)

0.1

0.2

(0.1

)

Net Income 55.4 38.5 16.9 141.9 93.0 48.9
Depreciation of property & equipment 5.9 5.5 0.4 17.3 17.0 0.3
Amortization of intangible assets 22.0 10.9 11.1 51.4 35.5 15.9
Other non cash P&L Items 13.7 3.4 10.3 15.6 6.1 9.5
Changes in working capital (45.9 )   (1.7 )   (44.2 )   90.5     82.3     8.2  
 
Net Cash provided by operating activities 51.1 56.6 (5.5 ) 316.7 233.9 82.8
 
Acquisition of assets and equity, net (1) (9.5 ) (1.6 ) (7.9 ) (494.4 ) (18.4 ) (476.0 )
Sale of fixed assets 0.3 0.0 0.3 1.0 0.5 0.5
Sale (purchase) of short term investments, net (0.7 ) (56.7 ) 56.0 41.6 (98.8 ) 140.4
Loans and others (1.4 )   0.3     (1.7 )   (1.3 )   0.3     (1.6 )
 
Net Cash provided by (used in) investing activities (11.3 ) (58.0 ) 46.7 (453.1 ) (116.4 ) (336.7 )
 
Proceeds (Repayments) of short-term and long-term debt 0.0 (0.1 ) 0.1 115.0 (0.1 ) 115.1
Share repurchase (5.7 ) 0.0 (5.7 ) (7.2 ) 0.0 (7.2 )
Exercise of DS stock option 15.0 1.5 13.5 39.8 2.0 37.8
Cash dividend paid 0.0     0.0     0.0     (54.5 )   (54.8 )   0.3  
 
Net Cash provided by (used in) financing activities 9.3 1.4 7.9 93.1 (52.9 ) 146.0
 

Effect of exchange rate changes on cash and cash equivalents

(67.8 ) (13.7 ) (54.1 ) 24.8 (27.2 ) 52.0
                     
Increase in cash and cash equivalents   (18.7 )   (13.7 )   (5.0 )   (18.5 )   37.4     (55.9 )
                         
Cash and cash equivalents at beginning of period 939.3 845.2 939.1 794.1
Cash and cash equivalents at end of period   920.6     831.5         920.6     831.5      
 

(1) The acquisition of the IBM PLM operations is presented net of payments received from IBM in connection with the settlement of royalties due as of March 31, 2010. As a result, reported cash flows from operations are lower in the periods presented above (and for the remainder of 2010) than they would have been had this transaction not occurred.

DASSAULT SYSTEMES

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