MCAD/MCAE Industry View – A May 2010 Update

Business Outlook:

The following statements are forward-looking statements which are based on current Autodesk management expectations and which involve risks and uncertainties. Autodesk is only providing revenue and earnings per share guidance for its nominal second quarter of 2010 at this time.

Second Quarter Q2 2010:

Net revenue for the second quarter is expected to be in the range of $435 million and $460 million. On a GAAP basis, earnings per diluted share are expected to be in the range of $0.12 and $0.17. This second quarter outlook assumes an effective tax rate of 26% for GAAP results.

Full Year 2010:

As stated above, Autodesk is not providing specific revenue or EPS guidance for the full year at this time. However, GAAP operating margin for the full year is expected to increase significantly compared to last year.

On April 29, 2010 Dassault Systèmes (DS) (Euronext Paris: #13065, DSY.PA) reported its IFRS unaudited financial results for the Q1 2010, the quarter ending March 31, 2010.

To start the DS report this quarter, Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, had these remarks, “Business activity improved across our major brands during the first quarter. We had a good dynamic with high tech and energy companies, in particular, contributing to ENOVIA's 29% increase in new license revenue in constant currencies. This quarter also highlighted our operating leverage and our strong cash flow from operations. Beyond the benefits of the gradually improving economic environment, 2010 marks the beginning of a new stage of growth for Dassault Systèmes, driven by the adoption of our Version 6 online architecture, the expansion of our target audience and our sales channels, uniquely positioned to work closely with our customers.”

First Quarter 2010 DS Financial Review:

Total Revenue in Q1 2010 was 311.9 million euros compared to 309.7 million euros in Q1 2009, up 1% year-over-year. Software revenue was up 4%, but services revenue was down 14%. But as the foregoing Table 1 vendor list reveals, DS total revenues in Q1 2010 were no match for its traditionally strong sequential Q4 2009.

The growth in new licenses revenue in Q1 2010 vs Q1 2009 was broad-based with DS's largest software applications, including CATIA, ENOVIA, and SolidWorks, all showing double-digit new license revenue growth.

Year-over-year growth in new business activity was reported in each of DS's three sales channels, led by its PLM channel for the SMB market.

Recurring software revenue, representing 73% of total software revenue in the first quarter, was lower by 1% in constant currencies in comparison to the year-ago quarter.

Q1 2010 revenue from the Americas was 91.7 million euros, from Europe 140.9 million euros, and from Asia 79.3 million euros.

Overall DS Earnings per diluted share increased 33% to €0.32 in Q1 2010, up from €0.24 in Q1 2009.

DS completed the acquisition of IBM PLM sales and customer support operations, encompassing DS' PLM software application portfolio, on March 31, 2010. The purchase price was US$600 million less assumed liabilities. In early April 2010 DS entered into a loan facility in Japan for JPY 14.5 billion (the equivalent of 160 million US$), in order to finance a portion of the acquisition of IBM PLM. The acquisition is said to help fuel IBM's focus on PLM integration through middleware, business transformation, application services and dynamic infrastructure. Dassault Systèmes plans that PLM clients will benefit from a strong, unified go-to-market model encompassing the entire DS portfolio and providing a complete PLM value proposition under one umbrella. Fully integrated R&D, sales and support teams should bring DS closer to its customers. This move will presumably streamline customer engagements, improving their overall experiences.

The DS Board of Directors has recommended an annual cash dividend equivalent to €0.46 per share, representing about €54 million in the aggregate, for the fiscal year ended December 31, 2009, equal to the prior year's dividend per share. The dividend is subject to approval by DS shareholders at the Annual Shareholders' Meeting on May 27, 2010.

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “The first quarter (of 2010) was a rewarding period as we completed the acquisition of IBM PLM, and welcomed our new colleagues to DS offices in 27 countries. Thanks to strong execution and focus on our customers, we did this without disruption to our sales activity, enabling DS to achieve first quarter results well in line with our objectives. While we observed some further encouraging indicators in the (first) quarter, including double-digit growth in our new licenses revenue, the overall environment confirmed our views that the economic recovery will be a progressive one. Within this framework, nonetheless, we were able to deliver operating margin leverage and earnings per share growth.”

A French company, DS reports its financial results in euros but provides average conversion factors to US dollars for each quarter. These factors were used to calculate euro conversion to US dollar numbers in this Commentary. Exchange rate assumptions for the 2010 second quarter are US$1.40 per €1.00 and JPY125 per €1.00 and a full year average of US$1.40 per €1.00 and JPY130 per €1.00.

Dassault Systèmes' self description:

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

On March 15, 2010 ESI Group reported partial financial results for the quarter ended January 31, 2010. [Note: Consistent with past reporting practice in these MCAD COMMENTARIES, the ESI Group results for the quarters ended January 31 will be treated as Q1's].

As seen below, revenue numbers are reported by ESI Group in euros for all the quarters for the two fiscal ESI years ending January 31, 2010 and January 31, 2009.

Breakdown in ESI Sales by ESI fiscal quarters:

Using the time periods defined for these COMMENTARIES, Total Sales for Q1 2010 of the ESI Group reached 30.1 million euros, up +9.6% in actual terms over 27.5 million euros and +10.1% by volume (constant exchange rates) on Q1 of the previous financial year. (Note: Reflecting the Group's Licenses activities' substantial seasonal effects, Q1 Sales usually account for 40% of total annual activity).

ESI Group does not report profits by quarter.

Alain de Rouvray, ESI Group's Chairman and CEO, commented on the quarter just closed: “We have recorded a strong quarter, beating our expectations, and have achieved a good overall 2009/10 financial year given the economic situation. This performance highlights two major lessons. Firstly, it provides confirmation of our business model solidity, based on the annual rental of our licenses and benefiting from a high level of repeat business, which generates an enviable visibility in the current economic context. Secondly, it vindicates the endurance of our activity, which reflects the high value proposition of our 'Virtual Prototyping Solutions' sources of strategic advantages increasingly sought-after in the current competitive environment. This performance was achieved whilst keeping costs under control and our teams on board. These factors give us confidence in the continuity of our growth and profitability amplified by the gains of our business sectors diversification.”

On April 28, 2010 ESI Group reported financial results for the full year ended January 31, 2010.

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