DS Reports 2008 Third Quarter Financial Results Well in Line With its Objectives

Non-GAAP financial information

Readers are cautioned that the supplemental non-GAAP 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 U.S. GAAP measurements. Also, our supplemental non-GAAP financial information may not be comparable to similarly titled non-GAAP measures used by other companies. Further specific limitations for individual non-GAAP measures, and the reasons for presenting non-GAAP financial information, are set forth in the Companys annual report for the year ended December 31, 2007 on Form 20-F filed with the SEC on April 4, 2008 and in the paragraph below.

In addition to the individual non-GAAP measures described in our most recent Form 20-F, our unaudited U.S. GAAP 2008 quarterly financial statements may reflect other operating income and expense, net comprised of income and expenses related to the relocation of the Companys corporate headquarters and restructuring expenses. In our supplemental non-GAAP financial information, we exclude other operating income and expense effects because of their infrequent or non-recurring nature. As a result, we believe that our supplemental non-GAAP financial information helps investors better understand the current trends in our operating performance. However, other operating income and expense, net are components of our income and expenses for 2008 and by excluding them the supplemental non-GAAP financial information understates the net impact to our net income in 2008. Other operating income and expense, net are generally not recurring, and we do not expect to incur other operating income and expense, net as part of our normal business on a regular basis.

To compensate for these limitations, the supplemental non-GAAP financial information should be read not in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

The tables on pages 11 and 12 of this press release set forth our supplemental non-GAAP 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, the expenses for the amortization of acquired intangible assets and stock-based compensation expense (in each case, as explained in our Form 20-F), as well as other operating income and expense, net (as explained above). The tables also set forth the most comparable GAAP financial measure and a reconciliation of the GAAP and non-GAAP 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 U.S. GAAP and on a non-GAAP basis) 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.

About Dassault Systèmes:

As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 100,000 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 designing the virtual product - SolidWorks for 3D mechanical design - DELMIA for virtual production - SIMULIA for virtual testing - 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 U.S. 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.

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (U.S. GAAP)

(in millions of Euro, except per share data, unaudited)

 

                 
  Three months ended   Nine months ended
Sept. 30,   Sept. 30,   Sept. 30,   Sept. 30,
    2008   2007   2008   2007
New licenses revenue 90.5 92.8 292.4 284.8
Periodic licenses, maintenance and product development revenue 186.0   163.1   531.2   470.2
Software revenue 276.5 255.9 823.6 755.0
Services and other revenue 41.8   43.2   128.3   140.7
Total Revenue 318.3 299.1 951.9 895.7
Cost of software revenue (excluding amortization of acquired intangibles) 14.3 16.0 41.7 41.8
Cost of services and other revenue 37.6 38.4 112.1 117.1
Research and development 78.1 76.3 228.4 228.3
Marketing and sales 91.3 83.5 279.0 254.9
General and administrative 26.5 24.4 78.5 70.4
Amortization of acquired intangibles 11.4 13.6 32.9 35.4
Other operating income and expense, net 6.0   0.0   8.5   0.0
Total Operating Expenses 265.2   252.2   781.1   747.9
Operating Income 53.1 46.9 170.8 147.8
Financial revenue and other, net 9.9   1.7   10.1   8.0
Income before income taxes 63.0 48.6 180.9 155.8
Income tax expense (19.6) (17.4) (54.3) (53.7)
Minority interest (0.1)   (0.1)   (0.2)   (0.2)
Net Income 43.3   31.1   126.4   101.9
Basic net income per share 0.37   0.27   1.08   0.88
Diluted net income per share 0.36   0.26   1.06   0.85
Basic weighted average shares outstanding (in millions) 117.9   116.8   117.5   116.3
Diluted weighted average shares outstanding (in millions)   119.9   120.4   119.5   119.5
 

U.S. GAAP revenue variation as reported and in constant currencies

                 
Three months ended Sept. 30, 2008   Nine months ended Sept. 30, 2008
    Variation*   Variation in cc**   Variation*   Variation in cc**
GAAP Revenue 6% 10% 6% 12%
GAAP Revenue by activity
Software Revenue 8% 12% 9% 15%
Services and other Revenue (3%) 0% (9%) (4%)
GAAP Software Revenue by segment
PLM software revenue 8% 11% 9% 14%
of which CATIA software revenue 6% 9% 11% 17%
of which ENOVIA software revenue 16% 22% 7% 13%
Mainstream 3D software revenue 9% 14% 9% 13%
GAAP Revenue by geography
Americas 6% 15% 2% 15%
Europe 12% 12% 12% 12%
Asia   (2%)   1%   2%   7%

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

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. GAAP)

(in millions of Euro, unaudited)

 

   
         
Sept. 30, Dec. 31,
    2008   2007
 
ASSETS
Cash and short-term investments 829.6 626.6
Accounts receivable, net 265.1 320.0
Other assets 1,069.5   1,004.5
Total Assets   2,164.2   1,951.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt 200.8 202.9
Other liabilities 651.9 552.4
Shareholders' equity 1,311.5   1,195.8
Total Liabilities and Shareholders' equity   2,164.2   1,951.1

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (U.S. GAAP)

(in millions of Euro, unaudited)

 

           
                         
Three months ended   Nine months ended
    Sept. 30, 2008   Sept. 30, 2007   Variation   Sept. 30, 2008   Sept. 30, 2007   Variation
Net Income 43.3 31.1 12.2 126.4 101.9 24.5
Depreciation and Amortization of Property, Plant & Equipment 5.5 7.3 (1.8) 17.0 19.8 (2.8)
Amortization of intangible assets 12.6 12.2 0.4 36.2 37.1 (0.9)
Other Non Cash P&L Items 0.1 1.4 (1.3) 0.2 (4.2) 4.4
Changes in working capital 6.0   10.9   (4.9)   81.8   85.5   (3.7)
Net Cash provided by operating activities 67.5 62.9 4.6 261.6 240.1 21.5
 
Acquisition of assets and equity, net of cash acquired (42.1) (30.4) (11.7) (66.7) (90.3) 23.6
Sale of assets and equity 0.4 0.1 0.3 36.6 0.1 36.5
Loans and others (0.3)   0.2   (0.5)   (0.3)   (0.5)   0.2
Net Cash provided by (used in) investing activities (42.0) (30.1) (11.9) (30.4) (90.7) 60.3
 
Borrowings 0.0 0.0 0.0 0.0 0.0 0.0
Share repurchase 0.0 0.0 0.0 (35.0) 0.0 (35.0)
DS Stock Option and preferred Stock Exercise 19.5 10.1 9.4 42.8 37.9 4.9
Cash dividend paid 0.0 0.0 0.0 (53.7) (50.8) (2.9)
Payments on capital lease obligations 0.0   0.0   0.0   0.0   (0.4)   0.4
Net Cash provided by (used in) financing activities (1) 19.5 10.1 9.4 (45.9) (13.3) (32.6)
 
Effect of exchange rate changes on

treasury (2)

44.9 (16.4) 61.3 17.7 (24.2) 41.9
                     
Increase in treasury (2)   89.9   26.5   63.4   203.0   111.9   91.1
                         
Treasury (2) at beginning of period 739.7 544.6 626.6 459.2
Treasury (2) at end of period   829.6   571.1       829.6   571.1    

(1) Excluding changes in short-term investments.

(2) Treasury includes cash, cash equivalents and short-term investments.

DASSAULT SYSTEMES

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