MCAD/MCAE Industry View - A March 2011 Update

“Working with customers in more than 80 countries across a diverse set of industries, Dassault Systèmes has a strong global presence. We are also focused on continuing to develop our local teams to serve our customers and are already well positioned thanks to the extraordinary value brought by our employees, representing more than 90 different nationalities, and to the leadership of Jeff Ray who was recently appointed to lead Geography Operations.

Jeff Ray

Tersant continued, “Looking forward, both our fourth quarter sales as well as the pipeline of opportunities we have entering 2011 support our view of a pattern of progressive improvement in customer investments. At the same time, we believe the overall global economic environment could continue to be volatile. Taking into account these factors, we are targeting new license revenue growth of about 15% in constant currencies, a healthy increase in our recurring revenue, even with the important level of one-time maintenance recoveries we had in 2010, and further improvement of our operating margin.”

The Company’s initial 2011 non-IFRS * financial objectives are the following:

- First quarter 2011 non-IFRS total revenue objective of about €390 to €400 million, non-IFRS operating margin of about 25% to 26% and non-IFRS EPS of about €0.53 to €0.57;

- 2011 non-IFRS revenue growth objective range of about 9% to 11%; (€1.68 to €1.71 billion based upon the 2011 currency exchange rate assumptions below);

- 2011 non-IFRS operating margin of about 29.0%;

- 2011 non-IFRS EPS range of about €2.64 to €2.75, representing growth of about 6% to 10%;

- Objectives are based upon exchange rate assumptions for the 2011 first quarter and full year of US$1.40 per €1.00 and JPY120 per €1.00.

* While the MCAD/MCAE Commentary focuses 99% on IFRS or GAAP numbers, Dassault chooses to state its objectives only on a non-IFRS basis and are subject to the Company’s cautionary statement set forth below:

The non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2011 currency exchange rates above: deferred revenue write-downs estimated at approximately €1 million for 2011; share-based compensation expense estimated at approximately €15 million for 2011 and amortization of acquired intangibles estimated at approximately €80 million for 2011. The above objectives do not include any impact from other operating income and expense, net principally comprised of, acquisition, integration and restructuring expenses. These estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after February 10, 2011.

Dassault Systèmes self description

As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 130,000 customers in more than 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 NYSE 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 December 14, 2010 the ESI GROUP (Compartment C of NYSE Euronext Paris) reported financial results for the first nine (9) months of its 2010/2011 fiscal year, the period ending October 31, 2010.

It has been the practice of the writer of the MCAD/MCAE Commentary to call the ESI Group’s “Quarter N”, as our nominal “Quarter N+1”. Thus the ESI Group’s fiscal Q3 ending October 31, 2010 becomes our nominal Q4 2010 for consistent reporting purposes.

Thus this boxed chart that comes directly from the ESI Group December 14, 2010 news release, not only provides the revenue for “our Q4 2010” report as 16.0 million, but also it serves to confirm our arithmetic when we “calculated” ESI Group revenue for “our Q3 2010” report three months ago as 17.4 million.

MCAD Commentary Q4 2010 Q3 2010 Q2 2010 Q4 2009 Q3 2009 Q2 2009

ESI Group reported that revenue for Q4 2010 was up 15.5% compared to the same quarter last year (although 16.0 divided by 13.8 yields 15.94%), but was down 8.04% sequentially compared to Q3 2010. For the nine months, revenue this fiscal year is 49.3 vs. nine months last year of 45.0, yielding +9.55%.

The company also reports acceleration in the growth of Licenses activity (+24%); an increase in the installed base (+20%) and strong surge in New Business (+59%); all with positive exchange rate effects.

Because ESI Group profitability or loss is reported only by half year increments, and because to date the numbers have been small, the practice of omitting ESI quarterly earnings/losses in G5 totals (e.g. Table 2) will continue.

Alain de Rouvray
, ESI Group’s Chairman and CEO, declared, “ESI has recorded a good third quarter of fiscal year 2010/11 (a.k.a. our Q4 2010) pursuing the trends observed since the (just-previous) second quarter of the fiscal year. Beyond a sustained growth in the Licenses installed base, amplified by positive foreign exchange rate effects, we are particularly satisfied with the buoyant increase in New Business. Indeed, the acceleration in New Licenses sales shows the increasing appeal of our solutions, which are an essential factor for increasing the competitiveness of manufacturing industries. We are confident that our growth will continue throughout the fourth quarter, which remains our most important quarter due to the strong seasonality effect of our Licensing revenues.

Q4 2010 Revenue

Revenue for the quarter totaled 16.0 million euros, reflecting a purely organic growth of +15.5% in current currency rates and +6.2% at constant foreign exchange rates. The growth in Licenses activity further accelerated, as it was up +23.5% and +12.2% by volume, with revenue totaling 10.6 million euros. It was driven on the one hand by a +19.6% increase in the installed base to 6.4 million euros with a high repeat business rate of 89.2%, and on the other hand by a surge in New Business, which jumped by +59.2% to 2.9 million euros. Pursuing the trend observed since the start of the year, Services activity remained relatively stable, increasing by +2.7% in current currencies to 5.4 million euros but down -3.6% by volume.

Nine-months Revenue

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