Dassault Systemes Extends Worldwide Market Leadership in PLM With Solid Fourth Quarter and Full Year Financial Performance

PARIS--(BUSINESS WIRE)--Feb. 6, 2003--Dassault Systemes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY PA):

-- Fourth Quarter Results Above Consensus and In Line With DS Objectives With Revenue Euro 224.4 Million, Operating Margin 37.2% and EPS Euro 0.46 Before Acquisition Costs
-- 2002 Revenue Up 4% to Euro 774.1 Million, Operating Margin 27.7% and EPS Euro 1.17 Before Acquisition Costs
-- PDM Business Delivers 33% Revenue Growth In Fourth Quarter and 25% For Full Year
-- On A Constant Exchange Rate Basis, DS Revenue Grew 5% For The Fourth Quarter and 7% For 2002

Dassault Systemes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY PA), a worldwide leading software developer of product lifecycle management (PLM) solutions, today reported financial results for the fourth quarter and year ended December 31, 2002.

Acquisition costs include goodwill, technology amortization and other related costs. All financial figures in this press release are before these acquisition costs unless otherwise noted. Amortization of goodwill has ceased effective December 31, 2001. All financial information is unaudited and reported in accordance with US generally accepted accounting principles (US GAAP). In addition, all comparative figures are given on a year over year basis unless specified otherwise.


Fourth Quarter

Total revenue in the 2002 fourth quarter was Euro 224.4 million, essentially level with 2001 fourth quarter total revenue of Euro 225.3 million. On a constant currency basis, total revenue increased 5%.

Software revenue, representing 87% of total revenue in the 2002 fourth quarter, increased 1% to Euro 194.4 million. Recurring software revenue was 42% of total software revenue in the 2002 fourth quarter, compared to 40% in the 2001 fourth quarter. Seats licensed in the quarter totaled 16,216 with 10,196 CATIA and 6,020 SolidWorks seats. Services and other revenue, representing 13% of total revenue, decreased 11% to Euro 30.0 million in the 2002 fourth quarter.

Process-centric revenue, including PDM revenue, totaled Euro 193.7 million in the 2002 fourth quarter, increasing 1% in comparison to Euro 191.3 million in the year-ago period and represented 86% of total revenue. On a stand-alone basis, PDM revenue was up sharply in the 2002 fourth quarter, increasing 33% to Euro 30.9 million, up from Euro 23.3 million in the year-ago quarter and accounted for 14% of total revenue in the 2002 fourth quarter. PDM end-user software revenue totaled Euro 54.2 million for the 2002 fourth quarter. Design-centric revenue, representing 14% of total revenue, decreased 10% to Euro 30.7 million, compared to Euro 34.0 million in the year-ago quarter.

Net income excluding acquisition costs was Euro 53.2 million or Euro 0.46 per share in the 2002 fourth quarter, a 2% decrease on a per share basis compared to Euro 54.8 million or Euro 0.47 per share in the 2001 fourth quarter. On a US GAAP basis, which includes acquisition costs, net income increased 22.1% to Euro 51.4 million or Euro 0.45 per share in the 2002 fourth quarter compared to Euro 42.1 million or Euro 0.36 per share in the year-ago quarter.

The Company had a strong balance sheet with cash and short-term investments totaling Euro 388.4 million and no bank debt at December 31, 2002.

Full Year 2002

In 2002 total revenue increased 4% to Euro 774.1 million and on a constant currency basis total revenue increased 7%. In 2001 total revenue was Euro 746.1 million. Software revenue increased 4% to Euro 669.9 million and services increased 1% to Euro 104.2 million in 2002. Recurring software revenue represented 48% of total software revenue in 2002.

Net income excluding acquisition costs totaled Euro 136.0 million or Euro 1.17 per share in 2002, compared to Euro 144.0 million or Euro 1.23 per share in 2001, representing a per share decrease of 5%. On a US GAAP basis, which includes acquisition costs, net income was Euro 126.4 million or Euro 1.09 per share in 2002, up 43% compared to Euro 88.7 million or Euro 0.76 per share in 2001. For the full year, 57,934 seats were licensed, comprising 34,308 CATIA and 23,626 SolidWorks seats.

Process-centric revenue, including PDM revenue, increased 5% in 2002 to Euro 647.9 million, compared to Euro 617.9 million in 2001. PDM revenue on a stand-alone basis increased 25% to Euro 82.7 million, up from Euro 65.9 million in 2001. PDM end-user software revenue was Euro 134.1 million. Design-centric revenue decreased 2% to Euro 126.2 million from Euro 128.2 million in 2001.

Charles Edelstenne, Chairman of DS, stated, "Within a difficult economic environment, DS continued to lead the PLM market as reflected by our business successes over the course of 2002. In addition, I believe our performance ranks us among the top-performing software companies in the world as evidenced by our financial results for 2002. Our results illustrate the resilience and flexibility of our business model."

Bernard Charles, President and Chief Executive Officer, commented, "2002 was a solid year for DS as we clearly increased our market leadership in PLM. I believe we gained three points of market share in 2002. It was a year highlighted by a number of important PLM customer decisions and I am delighted to announce the most recent today. Ford Motor Company has decided to standardize all vehicle programs worldwide on our CATIA and ENOVIA PLM solutions. This win truly illustrates the interest of customers in the compelling benefits of our V5 PLM solutions. V5 provides an enterprise-wide collaborative development environment that fosters innovation, shortens development cycles and increases built-in flexibility.

"2002 was a breakout year for our PDM business as we outperformed our top competitors by a wide margin. PDM revenue grew 25% in 2002, with strong fourth quarter finishes by both ENOVIA and SmarTeam. These results illustrate the success of our strategy to provide customers with robust solutions truly addressing and responding to their complex business needs. At the same time our success in PDM validates the adoption of our PLM strategy.

"SolidWorks continues to deliver good performance under the difficult market conditions existing in the design-centric market where smaller companies are generally more affected by the weak economic environment.

"Looking ahead to 2003, I believe we are well-positioned to increase our worldwide market leadership in PLM with our software solutions. Our product releases scheduled for 2003 are designed to widen the technology gap between our competitors and us. And our financial objective is to deliver continued strong operating profitability."

Thibault de Tersant, Executive Vice President and CFO, commented, "Our financial results for the fourth quarter exceeded expectations. In spite of the weak economy and continued significant currency fluctuations, we reported growth in software revenue and total revenue for the year. And, on a constant currency basis, revenue grew 5% in the fourth quarter of 2002 and 7% for the full year.

"In particular, we were pleased to achieve a fourth quarter operating margin of 37.2%, representing a one percentage point improvement over last year on a similar revenue base. I believe the cost initiatives we have taken as reflected by our fourth quarter expense levels indicate that we are well positioned as we enter the year to maintain a stable to slightly improving operating margin and have good operating leverage for the future.

"We are maintaining our revenue objective for 2003 on a constant currency basis, where we are targeting similar growth to the 7% (in constant currencies) achieved in 2002. Assuming a Euro to US Dollar exchange rate of 1.10, our actual revenue would be similar to or slightly higher than the Euro 774 million reported in 2002. Considering the uncertainty of the economic environment, we believe a revenue objective of approximately Euro 165 - 170 million in the 2003 first quarter is appropriate."

The Company announced today that its Board of Directors has approved a share repurchase program for up to 3% of the common shares outstanding.


PLM Version 5 Release 10 (V5R10) was introduced with CATIA for collaborative product development, and ENOVIA and SMARTEAM for collaborative life cycle management. Concurrently, DS announced V5R10 of DELMIA for lean manufacturing processes engineering. "Connected by Knowledge" is the core concept of V5R10. It characterizes the unmatched level of integration achieved across the portfolio, as well as the resulting knowledge exchange and high-value business interaction it enables between customers. V5R10 enables best practices deployment in product engineering, manufacturing, collaboration, and lifecycle management, providing value to customers in these areas.

CATIA V5R10 contributes to the V5R10 "Connected by Knowledge" core concept through the pervasiveness of knowledge in CATIA V5R10 products as well as the new BKT product (Business Process Knowledge Template) that enables customers to capture and deploy their best practices through custom-built applications. CATIA V5R10 highlights also include entry PLM products for small and medium sized businesses, extended end-to-end processes coverage for OEMs, and a CATIA-ENOVIA Work Package Exchange for supply chain collaboration.

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