Dassault Systemes Reports Solid First Quarter Performance, with Revenue, Operating Margin and EPS above Objectives
Dassault Systemes: via BizWire
PARIS--(BUSINESS WIRE)--April 29, 2004--Dassault Systemes (DS)
(Nasdaq: DASTY; Euronext Paris: #13065, DSY.PA), a worldwide leading
software developer of product lifecycle management (PLM) solutions,
reported financial results for the first quarter ended March 31, 2004.
First Quarter Financial Highlights
-- Total revenue EUR 176.2 million, up 4% as reported and up 10%
in constant currencies
-- Software revenue EUR 148.9 million, up 3% as reported and up
9% in constant currencies
-- PDM revenue up 15% as reported and 22% in constant currencies
-- Design-centric revenue up 7% as reported (up 25% in U.S.
dollars)
-- Operating margin 24.3% and EPS EUR 0.24 on U.S. GAAP Basis
-- EPS excluding acquisition costs up 19% to EUR 0.25 per diluted
share in the 2004 first quarter on 3 percentage point
operating margin improvement to 24.7% before acquisitions
costs
"The first quarter was a period of very solid performance for
Dassault Systemes. Our financial results exceeded our objectives, with
revenue, operating margin and earnings per share coming in higher than
targeted. These results are mainly attributable to our better than
anticipated performance in Europe. We continued to benefit from our
diversification strategy, as illustrated by the good growth of our PDM
business. SolidWorks also had a good start to the year, with revenue
increasing 25% in U.S. dollars during the first quarter. We are
raising our revenue and earnings growth objectives for 2004 to reflect
the fact that our first quarter came in above our objectives,"
commented Bernard Charles, President and Chief Executive Officer of
Dassault Systemes.
Revenue
In the first quarter of 2004, total revenue increased 4% to EUR
176.2 million as reported and increased 10% in constant currencies,
compared to the 2003 first quarter. Both software and services posted
year-over-year growth as reported and in constant currencies.
Software revenue increased 3% as reported and 9% in constant
currencies in the 2004 first quarter in comparison to the first
quarter of 2003. Software revenue, accounting for 85% of total
revenue, totaled EUR 148.9 million in the first quarter of 2004,
compared to EUR 145.1 million in the year-ago quarter. Recurring
software revenue represented 56% of total software revenue in the 2004
first quarter. New CATIA and SolidWorks seats licensed in the 2004
first quarter increased 9% to 14,082 seats, compared to 12,917 seats
in the 2003 first quarter. Service revenue, representing 15% of total
revenue, increased 12% to EUR 27.3 million in the 2004 first quarter,
compared to EUR 24.3 million in the year-ago period.
Thibault de Tersant, Executive Vice President and CFO of Dassault
Systemes, commented, "The Company continued the positive momentum from
the second half of 2003, with software revenue showing year-over-year
growth for the third quarter in a row. From a regional perspective, we
are seeing signs of improvement in Europe slightly earlier than
anticipated, with our revenue increasing 4% compared to the year-ago
quarter. In the U.S., business activity continued to reflect the more
positive trends of 2003, leading to 13% revenue growth in constant
currencies for the Americas region in the first quarter. Asia,
following on a very strong showing in the fourth quarter, achieved
record revenue results in the first quarter with total revenue up 12%
as reported and 19% in constant currencies in comparison to the first
quarter of 2003. Within the Asian region, our strongest performance
came from Japan, with a good level of activity from our PLM businesses
and our design-centric segment."
PLM performance in the first quarter improved over the year-ago
period, led by activity in the aerospace end-market. Process-centric
revenue, including PDM revenue, totaled EUR 143.6 million in the 2004
first quarter, an increase of 3% as reported and an increase of 9% in
constant currencies. PDM revenue increased 15% as reported and 22% in
constant currencies in comparison to the year-ago period. PDM revenues
totaled EUR 19.9 million in the 2004 first quarter and represented 11%
of total revenue. PDM end-user software revenue totaled US$33.5
million in the first quarter of 2004. PLM orders in the first quarter
included customers such as The Boeing Company, Beneteau Group, Meyer
Werft Shipyard and Sunten Electric Co. Ltd.
Design-centric revenue totaled EUR 32.6 million in the 2004 first
quarter, up 7% compared to the 2003 first quarter. Design-centric
revenue increased 25% if reported in U.S. dollars, the reporting
currency of most of its competitors. In addition to business with
existing customers, SolidWorks added over 2,400 new customers in the
quarter.
Operating Income and Margin, EPS and Financial Position
As reported, operating income increased 24% to EUR 42.9 million in
the first quarter of 2004 (24.3% operating margin), compared to EUR
34.7 million in the 2003 first quarter (20.5% operating margin).
Operating income before acquisition costs increased 18% to EUR 43.5
million in the 2004 first quarter, up sharply from EUR 36.8 million in
the 2003 first quarter. The operating margin before acquisition costs
increased 3 percentage points to 24.7% in the first quarter of 2004,
compared to the year-ago quarter where the operating margin was 21.7%
before acquisition costs.
Earnings per share increased 20% to EUR 0.24 per diluted share in
the first quarter of 2004, up from EUR 0.20 per diluted share in the
year-ago first quarter. Earnings per share before acquisition costs
increased 19% to EUR 0.25 per diluted share in the 2004 first quarter,
up from EUR 0.21 per diluted share in the 2003 first quarter. The
strong increase in earnings per share, as reported and before
acquisition costs, reflected the growth in revenue and the significant
increase in the operating margin over the year-ago quarter. For the
first quarter of 2004 net income totaled EUR 28.2 million, up 26%
compared to EUR 22.3 million in the 2003 first quarter. Net income
before acquisition costs totaled EUR 28.6 million in the 2004 first
quarter, up 18% compared to EUR 24.2 million in the year-ago quarter.
Dassault Systemes continued to maintain a strong financial
position with cash and short-term investments totaling EUR 560.5
million at March 31, 2004, up from EUR 439.7 million at December 31,
2003. Net cash provided by operations was EUR 106.5 million for the
first quarter of 2004.
Strategy, Technology and Partnerships
Mr. Charles stated, "During the first quarter we made excellent
progress in realizing key business initiatives. We were very pleased
to announce Boeing's decision to develop the 7E7 using our PLM Version
5 software solutions. This will be a broad deployment of all our PLM
brands to deliver very significant savings in development time and
manufacturing costs and will truly transform the development of
aircraft. From a technology perspective, we introduced Version 5
Release 13 (V5R13), our newest release for the PLM market. V5R13
includes a number of advances. In particular, ENOVIA VPM Navigator
provides unprecedented data management capabilities from within the
familiar environment of CATIA. We continued to pursue our successful
diversification strategy, and are excited about our decision to enter
the automation market, a new market with significant long-term
opportunities for Dassault Systemes, through our recently announced
partnership with Schneider Electric."
The Boeing Company announced that it has selected Dassault
Systemes' latest generation of PLM solutions, including CATIA, ENOVIA,
SMARTEAM and DELMIA, as its company-wide product development platform
to develop the 7E7 and future projects. Working together, Boeing and
DS are creating a virtual collaborative development workspace known as
the 7E7 Global Collaboration Environment (GCE), where Boeing and all
its partners will design, build and test every aspect of the 7E7
airplane and its manufacturing processes digitally before production
begins using the full suite of DS PLM software solutions.
DS introduced Version 5 Release 13 (V5R13), "PLM Workspace for
Collective Innovation" in March of 2004. CATIA, DELMIA, ENOVIA AND
SMARTEAM V5R13 product portfolios bring business value to
manufacturers by enabling them and their supply chain to deploy
competitive new PLM best practices that reduce development cycles
significantly. A major innovation in the V5R13 release is the new
ENOVIA VPM Navigator product that enables manufacturers to take
maximum advantage of relational design, integrating ENOVIA's virtual
product definition into CATIA's easy-to-use design environment.
DS and Schneider Electric, the world's Power & Control specialist,
entered into a business partnership pursuant to which Schneider
Electric will sell DELMIA solutions and develop Consulting and
Services for the Automation and Production Engineering markets through
a newly formed company called Dextus, fully owned by Schneider
Electric. The DELMIA solutions that will be distributed pursuant to
this partnership will include a new product line called DELMIA
Automation, dedicated to define, control and monitor automated
systems.
DS and Rand A Technology Corporation, operating as RAND Worldwide,
announced plans to create RAND North America, Inc. (Rand Americas), a
new joint venture focused on increasing sales of DS PLM software in
North America. Subject to the closing of the transaction, Rand
Americas will become a subsidiary of Dassault Systemes and will be 60%
owned by DS and 40% owned by RAND Worldwide.
Charles Edelstenne, Chairman of Dassault Systemes, concluded, "All
major product lines and geographies contributed to our revenue growth
in the first quarter, which drove strong increases in our operating
margin and earnings per share."
Business Outlook
"We are increasing our revenue growth objective for 2004 to about
8% growth in constant currencies, reflecting higher activity in the
first quarter and our new North American joint venture with Rand in
PLM," Thibault de Tersant stated. "Due to the strengthening of the
U.S. dollar during the first quarter, we think it is appropriate to
assume a U.S. dollar to Euro exchange rate of $1.25 per EUR 1.00 for
purposes of calculating reported revenue, operating margin and EPS
objectives, leading to a reported revenue objective of about EUR 785
million and an EPS objective before acquisition costs of about EUR
1.30 - EUR 1.32 for 2004. Our objective for 2004 is to deliver a
stable to slightly increasing operating margin before acquisition
costs in comparison to the 29.0% achieved in 2003. Our revenue
objective for the second quarter is about EUR 180 - EUR 185 million,
based upon a U.S. dollar to Euro exchange rate of $1.25 per EUR 1.00."
Major Press Release Highlights
----------------------------------------------------------------------
April 16, 2004. Schneider Electric and Dassault Systemes partner to
bring next-generation services and Digital
Solutions to Automation and Production Engineering
Markets.
----------------------------------------------------------------------
April 15, 2004. Dassault Systemes and RAND Worldwide announce Joint
Venture for PLM sales in North America.
----------------------------------------------------------------------
April 7, 2004. Beneteau Group selects PLM Shipbuilding Solutions
from IBM and Dassault Systemes.
----------------------------------------------------------------------
March 30, 2004. Aesculap breaks into New Healthcare Markets with
PLM Solutions from IBM and Dassault Systemes.
----------------------------------------------------------------------
March 29, 2004. Jackel speeds OEM product design for global
customers such as E. Arden, Bath & Body Works with
SolidWorks software.
----------------------------------------------------------------------
March 22, 2004. Zyvex uses SolidWorks software to design nano scale
devices for building and testing MEMS, carbon
nanotubes.
----------------------------------------------------------------------
March 18, 2004. Meyer Werft, builder of world's most innovative and
comfortable cruise ships, signs major three-year
contract for PLM Solutions from IBM and Dassault
Systemes.
----------------------------------------------------------------------
March 9, 2004. Announcement of V5R13 PLM portfolio.
----------------------------------------------------------------------
February 19, 2004. SUNTEN (China's leading Electrical Network
Equipment Supplier) chooses PLM Solutions from IBM
and Dassault Systemes.
----------------------------------------------------------------------
February 12, 2004. Boeing signs long-term contract with IBM and
Dassault Systemes to standardize PLM Platform on
Version 5.
----------------------------------------------------------------------
February 12, 2004. Boeing and Dassault Systemes - Partners in
Innovation for 7E7 Dreamliner.
----------------------------------------------------------------------
Annual Shareholders' Meeting Date and Cash Dividend Recommendation
The Annual Shareholders' Meeting has been scheduled for June 2,
2004. The Board of Directors of Dassault Systemes has recommended an
increase in the annual cash dividend for the fiscal year ended
December 31, 2003 to EUR 0.34 per share (excluding avoir fiscal). The
declaration and payment of any cash dividend is subject to approval by
shareholders at the Annual Shareholders' Meeting.
Endnotes:
1. All comparative figures are given on a year-over-year basis
unless specified otherwise.
2. All financial information is unaudited and reported in
accordance with U.S. generally accepted accounting principles (U.S.
GAAP). Additional financial information is also presented that is not
in conformity with U.S. GAAP, in particular the presentation of
operating income, operating margin and earnings per share before
acquisition costs (acquisition costs are primarily comprised of
technology amortization in addition to other acquisition- related
costs). The Company has provided in the tables to this press release
and on its website http://www.3ds.com/en/investors/presentation.asp
reconciliations between U.S. GAAP and non-U.S. GAAP figures.
3. The Company uses constant currency revenue growth to evaluate
its financial performance in comparison to prior periods and as a
measure of expected growth in planning and setting objectives for
future periods. The Company believes this measure is an important
indicator of the Company's progress and outlook because it provides a
better gauge of the level of change in the business activity as it
eliminates any changes arising from currency fluctuations. The Company
believes the presentation of this measure is relevant and useful for
investors because it allows investors to view revenue growth in a
manner similar to the method used by the Company's management, helps
improve investors' ability to understand the Company's revenue growth,
and makes it easier to compare DS' results with other companies,
including competitors, whose reporting currency may be different from
DS. Constant currency revenue growth, as calculated by the Company,
may not be comparable to similarly titled measures employed by other
companies.
Conference call information
The Company will host a teleconference call today, Thursday, April
29, 2004 at 4:00 PM CET/3:00 PM London/10:00 AM New York. The
conference call will be available via the Internet by accessing
http://www.3ds.com/en/investors/index.asp. Please go to the website at
least fifteen minutes prior to the call to register, download and
install any necessary audio software. The webcast teleconference will
be archived for 30 days. Financial information to be discussed in the
call will be available on the Company's website prior to commencement
of the teleconference http://www.3ds.com/en/investors/earnings.asp.
Additional investor information can be accessed at
http://www.3ds.com/en/investors/index.asp or by calling Dassault
Systemes' Investor Relations at 33.1.40.99.69.24.
Statements above that are not historical facts but express
expectations or objectives for the future, including but not limited
to statements regarding the Company's objectives for 2004 second
quarter revenue, 2004 revenue growth in constant currencies, 2004
reported revenue growth, 2004 operating margin growth objective before
acquisition costs and 2004 EPS objective before acquisitions costs are
forward-looking statements (within the meaning of Section 21E of the
1934 Securities Exchange Act, as amended). Such forward-looking
statements are based on 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, among other factors: (i) currency fluctuations, (ii) global
economic conditions, (iii) market demand for our products and
services, (iv) new product developments and technological changes, and
(v), our ability to recruit and retain skilled personnel. Unfavorable
changes in any of the above or other factors described in the
Company's SEC reports, including the Form 20-F for the year ended
December 31, 2002, which was filed with the SEC on May 15, 2003, could
materially affect the Company's financial position or results of
operations.
ABOUT DASSAULT SYSTEMES
As world leader in PLM (Product Lifecycle Management) solutions,
the Dassault Systemes group brings value to more than 70,000 customers
in 80 countries. A pioneer in the 3D software market since 1981,
Dassault Systemes develops and markets PLM application software and
services that support industrial processes and provide a 3D vision of
the entire life cycle of products from conception to maintenance. Its
offering includes integrated PLM solutions for product development
(CATIA(R), DELMIA(TM), ENOVIA(R), SMARTEAM(R)), mainstream product
design tools (SolidWorks(R)), and 3D components (ACIS(R)) from Spatial
Corp. Dassault Systemes is listed on the Nasdaq (DASTY) and Euronext
Paris (#13065, DSY.PA) stock exchanges. For more information, visit
http://www.3ds.com
(Tables to follow)
DASSAULT SYSTEMES
NON-U.S. GAAP KEY FIGURES
1st QUARTER
-----------
in millions of Euro, except per share data, headcount and exchange
rates.
1Q04 1Q03 Variation
---------------------------------
Process-Centric excluding PDM 123.7 121.6 2%
PDM 19.9 17.3 15%
Design-Centric 32.6 30.5 7%
Revenue 176.2 169.4 4%
Americas 49.5 51.0 (3%)
Europe 81.9 78.4 4%
Asia 44.8 40.0 12%
Operating Income (1) 43.5 36.8 18%
Operating Margin (1) 24.7% 21.7%
Net Income (1) 28.6 24.2 18%
EPS (1) 0.25 0.21 19%
Closing Headcount 4,185 3,994 5%
Average Rate USD per Euros 1.25 1.07 17%
Average Rate JPY per Euros 134 128 5%
(1) Excluding acquisition costs. For U.S. GAAP figures, please refer
to reconciliation tables
DASSAULT SYSTEMES
CONSOLIDATED STATEMENT OF INCOME DATA PREPARED IN ACCORDANCE
WITH U.S. GAAP
(in millions of Euro, except per share data)
Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Software 148.9 145.1
Service and Other 27.3 24.3
--------- ---------
Total Revenue EUR 176.2 EUR 169.4
Software 4.8 5.8
Service and Other 24.7 21.9
--------- ---------
Total Cost of Revenue EUR 29.5 EUR 27.7
Gross Profit EUR 146.7 EUR 141.7
Research and Development 54.1 53.6
Marketing and Sales 37.8 39.6
General Administration 11.3 11.7
Acquisition Costs 0.6 2.1
--------- ---------
Total Research, Selling, Administration
and Acquisition expenses EUR 103.8 EUR 107.0
========= =========
Operating Income (1) EUR 42.9 EUR 34.7
Financial revenue and Other 1.4 2.0
Income before income taxes 44.3 36.7
Income tax expense (16.1) (14.4)
--------- ---------
Net Income (1) EUR 28.2 EUR 22.3
========= =========
Basic net income per share EUR 0.25 EUR 0.20
========= =========
Diluted net income per share (1) EUR 0.24 EUR 0.20
========= =========
Basic weighted average shares
outstanding (in millions) 113.1 113.5
========= =========
Diluted weighted average shares
outstanding (in millions) 115.8 114.0
(1) Excluding acquisition costs, operating income and net income would
have been as follows:
Operating Income EUR 43.5 EUR 36.8
========= =========
Net Income EUR 28.6 EUR 24.2
========= =========
Diluted net income per share EUR 0.25 EUR 0.21
========= =========
Supplemental Disclosures Regarding Non-U.S. GAAP Financial
Information: Excluding Acquisition Costs
The following table sets forth the Company's Consolidated
Statement of Income Data excluding acquisition costs for the three
months ended March 31, 2004. In particular, the table presents
operating income, operating margin and earnings per share before
acquisition costs (acquisition costs are primarily comprised of
technology amortization in addition to other acquisition-related
costs).
The Company uses these non-U.S. GAAP measures, among other things,
to evaluate the Company's operating performance and for planning and
setting objectives for future periods. The Company believes these
non-U.S. GAAP measures are useful to investors because they provide an
alternative method for measuring the operating performance of the
Company's business by isolating the effect of acquisition costs, which
do not impact the underlying business. In addition, these measures are
among the primary measures used externally by analysts for purposes of
valuation and the comparing operating performance of the Company to
other companies in the industry.
Since these measures of performance are not calculated in
accordance with U.S. GAAP, they should not be considered in isolation
of, or as a substitute for, operating income, operating margin and
earnings per share including acquisition costs, as an indicator of
operating performance.
DASSAULT SYSTEMES
NON-U.S. GAAP CONSOLIDATED STATEMENT OF INCOME DATA
PERCENTAGE VARIANCE
(EXCLUDING ACQUISITION COSTS)
(in millions of Euro, except per share data)
Three Months Ended
March 31, 2004 March 31, 2003 Variation
-------------- -------------- ---------
Software 148.9 145.1 2.6%
Service and Other 27.3 24.3 12.3%
---------- ----------
Total Revenue EUR 176.2 EUR 169.4 4.0%
Software 4.8 5.8 (17.2)%
Service and Other 24.7 21.9 12.8%
---------- -----------
Total Cost of Revenue EUR 29.5 EUR 27.7 6.5%
Gross Profit EUR 146.7 EUR 141.7 3.5%
Research and Development 54.1 53.6 0.9%
Marketing and Sales 37.8 39.6 (4.5)%
General Administration 11.3 11.7 (3.4)%
---------- -----------
Total Research, Selling,
Administration EUR 103.2 EUR 104.9 (1.6)%
========== =========== ========
Operating Income EUR 43.5 EUR 36.8 18.2%
Financial revenue and Other 1.4 2.0 (30.0)%
Income before income taxes 44.9 38.8 15.7%
Income tax expense (16.3) (14.6) N/M
Net Income EUR 28.6 EUR 24.2 18.2%
========== =========== ========
Diluted net income per share EUR 0.25 EUR 0.21 19.0%
========== =========== ========
Diluted weighted average
shares outstanding (in
millions) 115.8 114.0
DASSAULT SYSTEMES
CONSOLIDATED STATEMENT OF INCOME DATA
RECONCILIATIONS NON-U.S. GAAP / U.S. GAAP
(in millions of Euro, except per share data)
Three Months Ended
March 31, 2004
----------------------------------------
Excluding
Reported Acquisition Acquisition
Amount Costs Costs
----------------------------------------
Software 148.9 148.9
Service and Other 27.3 27.3
---------- ----------
Total Revenue EUR 176.2 EUR 176.2
Software 4.8 4.8
Service and Other 24.7 24.7
---------- ----------
Total Cost of Revenue EUR 29.5 EUR 29.5
Gross Profit EUR 146.7 EUR 146.7
Research and Development 54.1 54.1
Marketing and Sales 37.8 37.8
General Administration 11.3 11.3
Acquisition Costs 0.6 (0.6) -
---------- ==========
Total Research, Selling,
Administration EUR 103.8 EUR 103.2
========== ==========
Operating Income EUR 42.9 EUR 43.5
Financial revenue and Other 1.4 1.4
Income before income taxes 44.3 44.9
Income tax expense (16.1) (0.2) (16.3)
Net Income EUR 28.2 EUR 28.6
========== ==========
Diluted net income per
share EUR 0.24 EUR 0.25
========== ==========
Diluted weighted average
shares outstanding
(in millions) 115.8 115.8
March 31, 2003
----------------------------------------
Excluding
Reported Acquisition Acquisition
Amount Costs Costs
----------------------------------------
Software 145.1 145.1
Service and Other 24.3 24.3
---------- ----------
Total Revenue EUR 169.4 EUR 169.4
Software 5.8 5.8
Service and Other 21.9 21.9
---------- ----------
Total Cost of Revenue EUR 27.7 EUR 27.7
Gross Profit EUR 141.7 EUR 141.7
Research and Development 53.6 53.6
Marketing and Sales 39.6 39.6
General Administration 11.7 11.7
Acquisition Costs 2.1 (2.1) -
========== ==========
Total Research, Selling,
Administration EUR 107.0 EUR 104.9
========== ==========
Operating Income EUR 34.7 EUR 36.8
Financial revenue and Other 2.0 2.0
Income before income taxes 36.7 38.8
Income tax expense (14.4) (0.2) (14.6)
Net Income EUR 22.3 EUR 24.2
========== ==========
Diluted net income per
share EUR 0.20 EUR 0.21
========== ==========
Diluted weighted average
shares outstanding (in
millions) 114.0 114.0
DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions of Euro)
March 31, 2004 December 31, 2003
-------------- -----------------
ASSETS
Cash and short-term investments 560.5 439.7
Accounts receivable, net 147.5 227.6
Other assets 292.9 297.2
------------ -----------
Total assets EUR 1,000.9 EUR 964.5
LIABILITIES
AND SHAREHOLDERS' EQUITY
Total liabilities 299.2 306.8
Shareholders' equity 701.7 657.7
------------ -----------
Total liabilities and
shareholders' equity EUR 1,000.9 EUR 964.5