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Dassault Systèmes Reports Second Quarter Results with Strong EPS Growth

PARIS — (BUSINESS WIRE) — July 28, 2010 — Dassault Systèmes (DS) (Paris: DSY) (Euronext Paris: #13065, DSY.PA) reports IFRS unaudited financial results for the second quarter and six months ended June 30, 2010. These results were reviewed by the Company’s Board of Directors on July 27, 2010.

Second Quarter Summary Highlights

Second Quarter Financial Summary

In millions of Euros, except per share data   IFRS   Non-IFRS
        Change  

Change in
cc*

      Change  

Change in
cc*

Q2 Total Revenue   385.6   24%   18%   391.9   26%   20%
Q2 Software Revenue   346.4   28%   22%   352.7   30%   24%
Q2 EPS   0.40   82%       0.58   57%    
Q2 Operating Margin   18.7%           27.9%        

*In constant currencies.

“Dassault Systèmes had a very solid second quarter, with sales above the high end of our revenue target excluding any currency benefits, and earnings and operating margin results significantly above our objectives, thanks in large measure to execution at both the sales and operational levels. In the Mainstream 3D market, SolidWorks delivered strong results with new licenses up 20%, showing an encouraging business trend in the SMB market” commented Bernard Charlès, Dassault Systèmes President and Chief Executive Officer.

“On top of the smooth integration of IBM PLM, the second quarter was a very dynamic period with new strategic customer partnerships with leading, global companies including Michelin and Gap Inc., and more on the way. We added a new addressable market in search-based applications with the Exalead acquisition, expanded V6 PLM with a new release and with the Geensoft acquisition to advance in design and simulation for smart products.

“Looking forward, we are focused on the significant opportunity ahead of us to leverage both our direct and indirect sales resources to expand our presence across the eleven industries Dassault Systèmes serves.”

DS completed the acquisition of the IBM PLM operations on March 31, 2010 and these operations were merged into the Company’s operations within its PLM business segment for the three-month period commencing April 1, 2010. Due to the deep integration of former IBM PLM employees into the Company’s operations, involving many changes in territories and responsibilities, it is not possible to track the IBM PLM revenue and profit since the acquisition date. As previously disclosed, the IBM PLM share of DS software revenue was estimated at approximately €53 million in the second quarter of 2009. The IBM PLM acquisition was a significant contributor to growth in direct sales and sales related headcount and in turn to revenue, expenses and earnings during the 2010 Second Quarter and First Half in comparison to the respective 2009 periods.

Second Quarter 2010 Financial Review

In millions of Euros   IFRS   Non-IFRS
    Q2 2010   Q2 2009  

Change in
cc*

  Q2 2010   Q2 2009  

Change in
cc*

Total Revenue   385.6   310.9   18%   391.9   311.2   20%
Software Revenue   346.4   271.3   22%   352.7   271.6   24%
Services and other Revenue   39.2   39.6   (6%)   39.2   39.6   (6%)
                         
PLM software Revenue   268.4   206.5   24%   274.7   206.8   27%
Mainstream 3D software Revenue   78.0   64.8   14%   78.0   64.8   14%
                         
Americas   116.2   96.5   12%   117.2   96.6   13%
Europe   173.7   144.2   20%   175.1   144.2   21%
Asia   95.7   70.2   22%   99.6   70.4   27%

*In constant currencies.

2010 First Half Financial Summary

In millions of Euros, except per share data   IFRS   Non-IFRS
        Change  

Change in
cc*

      Change  

Change in
cc*

YTD 2010 Total Revenue   697.5   12%   10%   703.9   13%   11%
YTD 2010 Software Revenue   626.1   15%   13%   632.5   16%   14%
YTD 2010 EPS   0.72   57%       1.01   36%    
YTD 2010 Operating Margin   17.4%           25.4%        

*In constant currencies.

In millions of Euros   IFRS   Non-IFRS
    YTD 2010   YTD 2009  

Change in
cc*

  YTD 2010   YTD 2009  

Change in
cc*

Total Revenue   697.5   620.6   10%   703.9   621.9   11%
Software Revenue   626.1   543.1   13%   632.5   544.4   14%
Services and other Revenue   71.4   77.5   (10%)   71.4   77.5   (10%)
                         
PLM software Revenue   477.2   407.2   15%   483.6   408.5   16%
Mainstream 3D software Revenue   148.9   135.9   7%   148.9   135.9   7%
                         
Americas   207.9   193.9   7%   209.0   194.4   7%
Europe   314.6   281.8   11%   316.0   281.9   12%
Asia   175.0   144.9   12%   178.9   145.6   14%

*In constant currencies.

Cash Flow and Other Financial Highlights

IFRS net operating cash flow was €132.3 million for the 2010 second quarter, up from €81.0 million in the year-ago period. IFRS net operating cash flow was €265.6 million for the first half ended June 30, 2010, compared to €177.3 million for the 2009 First Half. In the second quarter 2010, the Company completed acquisitions totaling €144 million and paid cash dividends aggregating €54.5 million.

The Company’s net financial position, representing cash and short-term investments of €1.02 billion, net of long-term debt of €306.8 million, was €714.1 million, compared to a net financial position of €858.0 million at December 31, 2009.

Annual Shareholders’ Meeting Approved Cash Dividend Payment

The Annual Shareholders’ Meeting was held on May 27, 2010. At the meeting shareholders approved for the fiscal year ended December 31, 2009 the payment of an annual cash dividend equivalent to €0.46 per share, equal to the prior year. The Company has consistently paid annual cash dividends since its initial public offering in 1996. The cash dividend was paid on June 17, 2010.

Summary Business and Corporate Highlights

DS Outlined New Five-Year Financial Objectives at Capital Markets Day, June 15, 2010. DS publicly outlined its growth plan including targeting a 30% non-IFRS margin and the five-year goal to more than double non-IFRS EPS in comparison to 2009.

Dassault Systèmes Acquired Exalead, a France-based company providing Search Platforms and Search-Based Applications (SBA) for consumer and business users. Every month, over 100 million people rely on Exalead for information search, access and reporting, including people in companies like Sanofi-Aventis and World Bank for business use, and Friendster, Lagardère Active and ViaMichelin for contextual consumer search. Exalead provides the industry’s only platform designed from the ground up to apply advanced semantic processing to Web-scale data volumes and usage. Exalead brings unique scalability, agility and usability to industries such as Banking, Retail, Publishing, Business Services, Life Sciences and Consumer Services where easy access to information is essential. The acquisition price was approximately €135 million.

DS Advances Systems Strategy with the Acquisition of Geensoft, a France-based company. Geensoft provides embedded systems development tools and professional services that help engineering teams in the aerospace, automotive, defense, energy, industrial automation, medical and transportation industries to more efficiently manage their engineering processes as well as design, verify and validate their model-based embedded systems applications. With Geensoft, the Company’s V6 portfolio is expanded by adding the capacity to model and generate the entire vehicle control software system, allowing a validation loop by connecting the physical equipment with the digital mock-up. The purchase price was approximately €5.5 million.

The Company launched V6R2011, the latest release of its PLM 2.0 platform as part of its Lifelike Experience strategy. The release includes new advances in collaborative creation with 874 new features, additional collaborative innovation enhancements, as well as an entirely new V6 Academia solution. It includes CATIA advancements in systems functionality and content, such as various automotive-focused Modelica libraries, as well as Lifelike Human and Lifelike Conveyor, two new DELMIA production solutions for enterprise resource modeling. SIMULIA V6R2011 delivers to designers the power of Abaqus technologies for complex assemblies. 3DVIA Composer continues to extend its competitive advantage in 3D lifelike technical publishing experience. V6R2011 also updates Dassault Systèmes’ PLM Express offer with new key attributes for the mid-market. V6R2011 features new capabilities in collaborative innovation, extending the depth of ready-to-use solutions in its eleven target industries, including consumer product goods, fashion, high tech, aerospace & defense, and automotive. These ENOVIA-based solutions deliver a strategic foundation for all communities to participate in the product lifecycle online.

DS introduced Abaqus Release 6.10 from SIMULIA with New Multiphysics Technology. In response to expanding industry demand for realistic simulation, the new release delivers more than 100 customer-requested enhancements for modeling, performance, usability, visualization, multiphysics, and core mechanics. Abaqus 6.10 introduces a new multiphysics capability for performing Computational Fluid Dynamics (CFD) simulation.

DS Has Launched Open Online DraftSight Community. DS has made available DraftSight.com, aimed at providing all computer-aided design (CAD) users access to new services and products to unlock valuable data stored in billions of DWG files. Building on Dassault Systèmes’ vision of enabling social innovation, the launch of this community comes as a direct result of customer demand and marks the next step in bringing DWG file management and storage into an easy-to-use, online, service-oriented environment.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “The quarter unfolded largely as we expected from a revenue perspective. We saw some upside thanks to our recurring software revenue, which has reached a positive inflection point somewhat earlier than we had estimated. Our customers are moving back to their historical subscription renewal levels, confirming the value our software brings to them. Our bottom-line performance was particularly gratifying, with a non-IFRS operating margin of 28% and an EPS growth of 57%, coming in above our objectives thanks principally to the continued positive impact of our 2009 efficiency plan and our revenue performance.

“Looking ahead we are reconfirming our second half outlook and adding to it the recently completed acquisitions, leading to an acceleration of revenue growth to about 22% to 25% in constant currencies for the 2010 second half. Taking into account the second quarter over-performance leads to an updated full year non-IFRS total revenue growth objective of 16% to 18% in constant currencies. Our objectives are consistent with our view of a gradual improvement in the economic environment.

“With respect to our earnings and operating margin objectives, we are now targeting non-IFRS EPS growth of 21% to 26% to reflect our continued focus on driving efficiencies across the business and benefiting from the progress made to date, and to take into account the currency evolution.”

The Company’s current objectives are the following:

The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the 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 2010 currency exchange rates above: deferred revenue write-downs estimated at approximately €17 million for 2010; share-based compensation expense estimated at approximately €21 million for 2010 and amortization of acquired intangibles estimated at approximately €66 million for 2010. 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 July 29, 2010.

Webcast and Conference Call Information

Dassault Systèmes will host a webcast and a conference call today, Thursday, July 29, 2010. Management will host a webcast at 9:30 AM London time/10:30 AM Paris time and will then host the conference call at 9:00 AM New York time/2:00 PM London time/3:00 PM Paris time. The webcast and conference call will be available via the Internet by accessing http://www.3ds.com/company/finance/. Please go to the website at least fifteen minutes prior to the webcast or conference call to register, download and install any necessary audio software. The webcast and conference call will be archived for 30 days.

Additional investor information can be accessed at http://www.3ds.com/company/finance/ or by calling Dassault Systèmes’ Investor Relations at 33.1.61.62.69.24.

Forward-looking Information

Statements herein that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Company’s non-IFRS financial performance objectives, are forward-looking statements.

Such forward-looking statements are based on DS management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results or performances may differ materially from those in such statements due to a range of factors. In preparing such forward-looking statements, the Company has in particular assumed an average U.S. dollar to euro exchange rate of US$1.35 per €1.00 and an average Japanese yen to euro exchange rate of JPY125 to €1.00 for 2010; however, currency values fluctuate, and the Company’s results of operations may be significantly affected by changes in exchange rates. The Company has tried to factor in the potential impact of the current global economic environment on its 2010 third quarter and full year objectives, but conditions may not improve as the Company has anticipated or could worsen. Further the Company has assumed that its increased responsibility for its direct PLM sales, in particular resulting from the integration of the IBM PLM acquisition which was completed on March 31, 2010, and the resulting commercial and management challenges, will not cause it to incur substantial unanticipated costs and inefficiencies. The Company’s actual results or performance may also be materially negatively affected by the current global economic crisis, difficulties or adverse changes affecting its partners or its relationships with its partners, including the Company’s longstanding, strategic partner, IBM; new product developments and technological changes; errors or defects in its products; growth in market share by its competitors; and the realization of any risks related to the integration of IBM PLM within DS and of any newly acquired company and internal reorganizations. Unfavorable changes in any of the above or other factors described in the Company’s regulatory reports, including the Document de référence, as filed with the French “Autorité des marchés financiers” (AMF) on April 1, 2010, could materially affect the Company’s financial position or results of operations.

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 filed with the AMF on April 1, 2010.

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 the income tax effect of the non-IFRS adjustments. 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.

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.

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 proceeding tables.

  Three months ended   Six months ended
    June 30, 2010   June 30, 2009   Change  

Change in
cc*

  June 30, 2010   June 30, 2009   Change  

Change in
cc*

Non-IFRS Revenue € 391.9   € 311.2   26%   20%   € 703.9   € 621.9   13%   11%
 
Non-IFRS Revenue breakdown by activity
Software revenue 352.7 271.6 30% 24% 632.5 544.4 16% 14%
of which new licenses revenue 85.4 69.4 23% 17% 161.5 134.0 21% 18%
of which periodic licenses, maintenance and

product development revenue

267.3 202.2 32% 26% 471.0 410.4 15% 12%
Services and other revenue 39.2 39.6 (1%) (6%) 71.4 77.5 (8%) (10%)
 
Recurring software revenue 267.0 200.8 33% 27% 470.7 407.8 15% 13%
 
Non-IFRS software revenue breakdown by product line
PLM software revenue 274.7 206.8 33% 27% 483.6 408.5 18% 16%
of which CATIA software revenue 168.1 117.9 43% 36% 288.8 234.4 23% 21%
of which ENOVIA software revenue 48.5 40.1 21% 15% 84.7 74.2 14% 12%
Mainstream 3D software revenue 78.0 64.8 20% 14% 148.9 135.9 10% 7%
 
Non-IFRS Revenue breakdown by geography
Americas 117.2 96.6 21% 13% 209.0 194.4 8% 7%
Europe 175.1 144.2 21% 21% 316.0 281.9 12% 12%
Asia   99.6   70.4   41%   27%   178.9   145.6   23%   14%
 
Non-IFRS operating income € 109.5 € 68.1 61% € 178.6 € 128.5 39%
Non-IFRS operating margin 27.9% 21.9% 25.4% 20.7%
Non-IFRS net income 70.2 43.9 60% 121.5 87.3 39%
Non-IFRS diluted net income per share   € 0.58   € 0.37   57%       € 1.01   € 0.74   36%    
Closing headcount   8,789   7,903   11%       8,789   7,903   11%    
 
Average Rate USD per Euro 1.27 1.36 (7%) 1.33 1.33 (0%)
Average Rate JPY per Euro   117.2   132.6   (12%)       121.3   127.3   (5%)    

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

  Three months ended   Six months ended
June 30,   June 30,   June 30,   June 30,
    2010   2009   2010   2009
New licenses revenue 85.4 69.4 161.5 134.0
Periodic licenses, maintenance and product development revenue 261.0 201.9 464.6 409.1
Software revenue 346.4 271.3 626.1 543.1
Services and other revenue 39.2 39.6 71.4 77.5
Total Revenue € 385.6 € 310.9 € 697.5 € 620.6
Cost of software revenue (excluding amortization of acquired intangibles) (19.4) (14.1) (35.8) (28.1)
Cost of services and other revenue (35.8) (35.6) (70.1) (73.5)
Research and development (83.2) (80.3) (160.6) (162.4)
Marketing and sales (121.5) (91.5) (213.6) (185.4)
General and administrative (29.4) (28.0) (56.9) (56.8)
Amortization of acquired intangibles (17.7) (11.9) (27.4) (22.6)
Other operating income and expense, net (6.6)   (7.1)   (11.6)   (9.2)
Total Operating Expenses (€ 313.6)   (€ 268.5)   (€ 576.0)   (€ 538.0)
Operating Income € 72.0 € 42.4 € 121.5 € 82.6
Financial revenue and other, net (3.3)   (4.5)   2.4   (4.2)
Income before income taxes 68.7 37.9 123.9 78.4
Income tax expense (20.0) (12.2) (37.4) (23.9)
Net Income 48.7 25.7 86.5 54.5
Minority interest (0.1)   (0.1)   (0.1)   (0.1)
Net Income attributable to equity holders of the parent € 48.6   € 25.6   € 86.4   € 54.4
Basic net income per share 0.41   0.22   0.73   0.46
Diluted net income per share € 0.40   € 0.22   € 0.72   € 0.46
Basic weighted average shares outstanding (in millions) 118.6   117.4   118.4   117.4
Diluted weighted average shares outstanding (in millions)   120.7   118.1   120.2   118.1

IFRS revenue variation as reported and in constant currencies

  Three months ended June 30, 2010   Six months ended June 30, 2010
    Change*   Change in cc**   Change*   Change in cc**
IFRS Revenue 24%   18%   12%   10%
IFRS Revenue by activity
Software Revenue 28% 22% 15% 13%
Services and other Revenue (1%) (6%) (8%) (10%)
IFRS Software Revenue by product line
PLM software revenue 30% 24% 17% 15%
of which CATIA software revenue 38% 32% 21% 18%
of which ENOVIA software revenue 19% 13% 13% 11%
Mainstream 3D software revenue 20% 14% 10% 7%
IFRS Revenue by geography
Americas 20% 12% 7% 7%
Europe 20% 20% 12% 11%
Asia   36%   22%   21%   12%

* 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)

  June 30,   December 31,
    2010   2009
 
ASSETS
Cash and cash equivalents 939.3 939.1
Short-term investments 81.6 118.9
Accounts receivable, net 331.0 322.3
Other current assets 119.9 121.4
Total current assets 1,471.8 1,501.7
Property and equipment, net 68.4 59.6
Goodwill and Intangible assets, net 1,322.3 660.8
Other non current assets 150.1   77.6
Total Assets   € 3,012.6   € 2,299.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 96.2 67.7
Unearned revenues 435.8 243.7
Other current liabilities 274.5 174.3
Total current liabilities 806.5 485.7
Long-term debt 306.8 200.1
Other non current obligations 233.1 165.1
Total long-term liabilities 539.9 365.2
Minority interests 1.0 1.1
Parent shareholders' equity 1,665.2   1,447.7
Total Liabilities and Shareholders' equity   € 3,012.6   € 2,299.7

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

  Three months ended   Six months ended
    June 30, 2010   June 30, 2009   Change   June 30, 2010   June 30, 2009   Change
Net Income attributable to equity holders of the parent 48.6   25.6   23.0   86.4   54.4   32.0
Minority interest 0.1   0.1   0.0   0.1   0.1   0.0
Net Income 48.7 25.7 23.0 86.5 54.5 32.0
Depreciation and amortization of property & equipment 6.1 5.9 0.2 11.4 11.5 (0.1)
Amortization of intangible assets 18.7 12.5 6.2 29.4 24.6 4.8
Other non cash P&L Items (2.5) 4.0 (6.5) 1.9 2.7 (0.8)
Changes in working capital 61.3   32.9   28.4   136.4   84.0   52.4
Net Cash provided by operating activities 132.3 81.0 51.3 265.6 177.3 88.3
 
Acquisition of assets and equity, net (1) (155.1) (10.4) (144.7) (484.9) (16.8) (468.1)
Sale of fixed assets 0.5 0.3 0.2 0.7 0.5 0.2
Sale (purchase) of short term investments, net 23.1 (41.5) 64.6 42.3 (42.1) 84.4
Loans and others 0.1   0.2   (0.1)   0.1   0.0   0.1
Net Cash provided by (used in) investing activities (131.4) (51.4) (80.0) (441.8) (58.4) (383.4)
 
Borrowings 115.0 0.0 115.0 115.0 0.0 115.0
Share repurchase 0.0 0.0 0.0 (1.5) 0.0 (1.5)
Exercise of DS stock option 22.6 0.2 22.4 24.8 0.5 24.3
Cash dividend paid (54.5)   (54.8)   0.3   (54.5)   (54.8)   0.3
Net Cash provided by (used in) financing activities 83.1 (54.6) 137.7 83.8 (54.3) 138.1
 
Effect of exchange rate changes on

cash and cash equivalents

52.4 (32.4) 84.8 92.6 (13.5) 106.1
                     
Increase in cash and cash equivalents   136.4   (57.4)   193.8   0.2   51.1   (50.9)
                         
Cash and cash equivalents at beginning of period 802.9 902.6 939.1 794.1
Cash and cash equivalents at end of period   939.3   845.2       939.3   845.2    

(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
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-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 Document de référence for the year ended December 31, 2009 filed with the AMF on April 1, 2010 To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

In millions of Euros, except per share data and percentages   Three months ended June 30,   Change
2010  

Adjustment

  2010   2009  

Adjustment

  2009   IFRS  

Non-IFRS

    IFRS  

(1)

  non-IFRS   IFRS  

(1)

  non-IFRS      

(2)

Total Revenue € 385.6 6.3 € 391.9 € 310.9 0.3 € 311.2 24% 26%
Total Revenue breakdown by activity
Software revenue 346.4 6.3 352.7 271.3 0.3 271.6 28% 30%
New Licenses 85.4 69.4 23%
Product Development 0.3 1.4
Periodic Licenses and Maintenance 260.7 6.3 267.0 200.5 0.3 200.8 30% 33%
Recurring portion of Software revenue 75% 76% 74% 74%
Services and other revenue 39.2 39.6 (1%)
Total Software Revenue breakdown by product line
PLM software revenue 268.4 6.3 274.7 206.5 0.3 206.8 30% 33%
of which CATIA software revenue 162.7 5.4 168.1 117.9 38% 43%
of which ENOVIA software revenue 47.6 0.9 48.5 40.1 19% 21%
Mainstream 3D software revenue 78.0 64.8 20%
Total Revenue breakdown by geography
Americas 116.2 1.0 117.2 96.5 0.1 96.6 20% 21%
Europe 173.7 1.4 175.1 144.2 20% 21%
Asia   95.7   3.9   99.6   70.2   0.2   70.4   36%   41%
Total Operating Expenses (€ 313.6) 31.2 (€ 282.4) (€ 268.5) 25.4 (€ 243.1) 17% 16%
Stock-based compensation expense (6.9) 6.9 - (6.4) 6.4 - - -
Amortization of acquired intangibles (17.7) 17.7 - (11.9) 11.9 - - -
Other operating income and expense, net   (6.6)   6.6   -   (7.1)   7.1   -   -   -
Operating Income € 72.0 37.5 € 109.5 € 42.4 25.7 € 68.1 70% 61%
Operating Margin 18.7% 27.9% 13.6% 21.9%
Income before Income Taxes 68.7 37.5 106.2 37.9 25.7 63.6 81% 67%
Income tax expense (20.0) (15.9) (35.9) (12.2) (7.4) (19.6) - -
Income tax adjustments (15.9) 15.9 - (7.4) 7.4 - - -
Minority interest (0.1) (0.1) -
Net Income attributable to shareholders € 48.6 21.6 € 70.2 € 25.6 18.3 € 43.9 90% 60%
Diluted Net Income Per Share (3)   € 0.40   0.18   € 0.58   € 0.22   0.15   € 0.37   82%   57%

(1) In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expenses data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense, and other operating income and expense, and (iii) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus with respect to net income and diluted net income per share, the income tax effect of the non-IFRS adjustments.

  Three months ended June 30,
In millions of Euros

2010

  Adjustment   2010  

2009

  Adjustment   2009
   

IFRS

      non-IFRS  

IFRS

      non-IFRS
Cost of services and other revenue (35.8) 0.2 (35.6) (35.6) 0.2 (35.4)
Research and development (83.2) 4.0 (79.2) (80.3) 3.7 (76.6)
Marketing and sales (121.5) 1.5 (120.0) (91.5) 1.3 (90.2)
General and administrative (29.4) 1.2 (28.2) (28.0) 1.2 (26.8)
Total stock-based compensation expense       6.9           6.4    

(2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.(3) Based on a weighted average 120.7 million diluted shares for Q2 2010 and 118.1 million diluted shares for Q2 2009.

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-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 Document de référence for the year ended December 31, 2009 filed with the AMF on April 1, 2010 To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

In millions of Euros, except per share data and percentages   Six months ended June 30,   Change
2010  

Adjustment

  2010   2009  

Adjustment

  2009   IFRS  

Non-IFRS

    IFRS  

(1)

  non-IFRS   IFRS  

(1)

  non-IFRS      

(2)

Total Revenue € 697.5 6.4 € 703.9 € 620.6 1.3 € 621.9 12% 13%
Total Revenue breakdown by activity
Software revenue 626.1 6.4 632.5 543.1 1.3 544.4 15% 16%
New Licenses 161.5 134.0 21%
Product Development 0.3 2.6
Periodic Licenses and Maintenance 464.3 6.4 470.7 406.5 1.3 407.8 14% 15%
Recurring portion of Software revenue 74% 74% 75% 75%
Services and other revenue 71.4 77.5 (8%)
Total Software Revenue breakdown by product line
PLM software revenue 477.2 6.4 483.6 407.2 1.3 408.5 17% 18%
of which CATIA software revenue 283.4 5.4 288.8 234.4 21% 23%
of which ENOVIA software revenue 83.8 0.9 84.7 74.2 13% 14%
Mainstream 3D software revenue 148.9 135.9 10%
Total Revenue breakdown by geography
Americas 207.9 1.1 209.0 193.9 0.5 194.4 7% 8%
Europe 314.6 1.4 316.0 281.8 0.1 281.9 12% 12%
Asia   175.0   3.9   178.9   144.9   0.7   145.6   21%   23%
Total Operating Expenses (€ 576.0) 50.7 (€ 525.3) (€ 538.0) 44.6 (€ 493.4) 7% 6%
Stock-based compensation expense (11.7) 11.7 - (12.8) 12.8 - - -
Amortization of acquired intangibles (27.4) 27.4 - (22.6) 22.6 - - -
Other operating income and expense, net   (11.6)   11.6   -   (9.2)   9.2   -   -   -
Operating Income € 121.5 57.1 € 178.6 € 82.6 45.9 € 128.5 47% 39%
Operating Margin 17.4% 25.4% 13.3% 20.7%
Income before Income Taxes 123.9 57.1 181.0 78.4 45.9 124.3 58% 46%
Income tax expense (37.4) (22.0) (59.4) (23.9) (13.0) (36.9) - -
Income tax adjustments (22.0) 22.0 - (13.0) 13.0 - - -
Minority interest (0.1) (0.1) -
Net Income attributable to shareholders € 86.4 35.1 € 121.5 € 54.4 32.9 € 87.3 59% 39%
Diluted Net Income Per Share (3)   € 0.72   0.29   € 1.01   € 0.46   0.28   € 0.74   57%   36%

(1) In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expenses data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense, and other operating income and expense, and (iii) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus with respect to net income and diluted net income per share, the income tax effect of the non-IFRS adjustments.

  Six months ended June 30,
In millions of Euros

2010

  Adjustment   2010  

2009

  Adjustment   2009
   

IFRS

      non-IFRS  

IFRS

      non-IFRS
Cost of services and other revenue (70.1) 0.4 (69.7) (73.5) 0.3 (73.2)
Research and development (160.6) 6.8 (153.8) (162.4) 7.4 (155.0)
Marketing and sales (213.6) 2.4 (211.2) (185.4) 2.5 (182.9)
General and administrative (56.9) 2.1 (54.8) (56.8) 2.6 (54.2)
Total stock-based compensation expense       11.7           12.8    

(2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is a non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.

(3) Based on a weighted average 120.2 million diluted shares for H1 2010 and 118.1 million diluted shares for H1 2009.


Contact:

Dassault Systèmes:
François-José Bordonado/Beatrix Martinez
33.1.61.62.69.24
or
United States and Canada:
Email Contact
or
Financial Dynamics:
Juliet Clarke/Erwan Gouraud
44.20.7831.3113
or
Eloi Perrin-Aussedat/Clément Bénétreau/
Florence de Montmarin
33.1.47.03.68.10