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DS Reports Third Quarter EPS and Operating Margin Above Company Objectives PARIS--(BUSINESS WIRE)--Regulatory News: Dassault Systèmes (DS) (Paris:DSY - News) (Euronext Paris: #13065, DSY.PA) reports IFRS unaudited financial results for the third quarter and nine-month periods ended September 30, 2009, in accordance with Article L.451-1-2 IV of the French Monetary and Financial Code (Code Monétaire et Financier). These results have been reviewed by the Company’s Board of Directors.
Summary Financial Highlights
Third Quarter 2009 Financial Summary
Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “More than ever, this quarter illustrates our ongoing commitment to reconcile short-term execution and long-term strategy. “Looking at the third quarter, the environment continued to be challenging, similar to the second quarter. Against this reality, our earnings and operating margin results came in above our objectives on in-line revenue results, thanks to the strong execution of our cost savings program. We are on track to not only achieve, but in fact to exceed our full year savings target, all while maintaining our R&D and customer support investments in all the industries we serve. “The agreement with IBM is very timely to get closer to our clients delivering unique V6 value for sustainable innovation and expand our partnership with IBM in services, flexible financing and new enterprise infrastructure.” Third Quarter 2009 Financial Review
Nine-Month 2009 Financial Summary
Cash Flow and Other Financial Highlights IFRS net operating cash flow was €56.6 million and €233.9 million for the three- and nine-month periods ended September 30, 2009, respectively. Cash and short-term investments totaled €975.0 million at September 30, 2009, compared to €840.4 million at December 31, 2008. The Company’s net financial position amounted to €774.8 million at September 30, 2009, net of outstanding debt consisting of €200.2 million of financial long-term debt. Key Business and Corporate Highlights On October 26th, Dassault Systèmes and IBM announced their intent to integrate the IBM PLM sales force within DS and to sign a new global alliance to expand PLM in all industries. DS and IBM signed a definitive agreement whereby DS would acquire the IBM sales and client support business operations encompassing DS PLM software application portfolio, as well as customer contracts and related assets (“IBM PLM”), for approximately $600 million in cash. DS and IBM also defined the next steps in their long-standing relationship, with plans to establish DS as a strategic IBM global alliance partner and to expand their services partnership. On October 21st, DS announced that HydroChina Chengdu Engineering Corporation (CHIDI), one of China’s largest hydropower investigation and design enterprises, has successfully implemented Dassault Systèmes’ PLM solutions to facilitate investigation, design, and collaborative management of hydropower plants. CHIDI has significantly shortened project timelines, reduced total costs, and improved the collaboration between cross-functional teams of designers and engineers. On September 1st, DS announced that Boston Apparel Group has selected DS’ ENOVIA V6 solution including the ENOVIA Apparel Accelerator for Design and Development and the ENOVIA Apparel Accelerator for Sourcing and Production to provide the foundation for managing the company’s key business processes and ensuring the delivery of new product lines. On September 1st, DS SolidWorks unveiled the SolidWorks® 2010 product line, a new set of software products that optimize the core product design functions that make designers and engineers successful every day. Through the use of CAD, simulation, data management, documentation, and environmental impact assessment, organizations will transform their inspirations into innovation, supported by a vibrant community of CAD users, content, technology, and expertise. This new SolidWorks product line also improves depth and performance by extending the DS SolidWorks tradition of including hundreds of new enhancements specifically requested by customers. In September DS launched 3DVIA Mobile, an iPhone and iPod touch application that allows users to search, share and interact with the growing library of high quality 3D models on www.3DVIA.com. The addition of 3DVIA Mobile brings 3DVIA a powerful platform for delivering unique, online 3D experiences, directly into the hands of a fast growing community of mobile users. With 3DVIA Mobile, users can find realistic 3D content from DS’ library and immediately enrich their photos, right on the iPhone. They download and position the model on a picture for an instant 3D mash-up that blends 3D digital data with the physical world. On August 11th, DS announced it was selected by Dana Holding Corporation for design simulation management. Dana Holding Corporation, a global vehicular supplier, has selected SIMULIA SLM as its simulation lifecycle management solution to enhance product development decision-making processes and support key business objectives. Business Outlook Thibault de Tersant, Senior Executive Vice President and CFO, commented, “We were pleased to deliver strong sequential growth in both earnings and operating margin in spite of the seasonal sequential decrease in revenue. Through the dedicated efforts of all our employees worldwide we have been able to achieve €100 million in cost savings year-to-date, ahead of our plans. “Based upon our current visibility we think it is realistic to target a full year revenue objective of about €1.24 to €1.27 billion, which is just €10 million below our former objective. Thanks to our cost reduction results, we are reconfirming our non-IFRS operating margin objective of about 25% and our non-IFRS earnings objective of €1.76 to €1.91. “The proposed acquisition of IBM PLM, which is expected to be completed during the 2010 second quarter, should be accretive to both our earnings and operating margin on a non-IFRS basis and will be instrumental to support our long-term growth strategy.” 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 Company’s current objectives are the following:
The non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2009 currency exchange rates above: (i) deferred revenue write-downs estimated at approximately €1 million for 2009; (ii) share-based compensation expense estimated at approximately €22 million for 2009, and (iii) amortization of acquired intangibles estimated at approximately €42 million for 2009. The above objectives do not include any impact from other operating income and expense, net principally comprised of restructuring expenses. These estimates also do not include any new stock option or share grants, or any new acquisitions or restructurings completed after October 29, 2009. Webcast and Conference Call Information Dassault Systèmes will host an analyst meeting in London which will be webcasted and a conference call today, Thursday, October 29, 2009. Management will host the webcast at 8:30 AM London time/9:30 AM CET time and will then host the conference call at 10:00 AM New York time /2:00 PM London time/3:00 PM CET. 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$1.40 per €1.00 and an average Japanese yen to euro exchange rate of JPY132 to €1.00 for the 2009 full year; 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 crisis on its 2009 fourth quarter and full year objectives, but conditions could worsen. Further the Company has assumed that its increased responsibility for both indirect and direct PLM sales channels, 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 2, 2009, 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, 2008 included in the Company’s 2008 Document de référence filed with the AMF on April 2, 2009. 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 2008 Document de référence). 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 designing the virtual product - SolidWorks for 3D mechanical design - DELMIA for virtual production - SIMULIA for virtual testing - 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 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.
DASSAULT SYSTEMES
DASSAULT SYSTEMES
DASSAULT SYSTEMES
DASSAULT SYSTEMES 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, 2008 filed with the AMF on April 2, 2009. 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.
(1) In the reconciliation schedule above, (i) all non-IFRS adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment; (ii) non-IFRS adjustments to operating expense data reflect the exclusion of the amortization of acquired intangibles, other operating income and expense, net and stock-based compensation expense (as detailed below); and (iii) all non-IFRS adjustments to IFRS net income data reflect the combined effect of these non-IFRS adjustments with their related tax effects.
(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 118.6 million diluted shares for Q3 2009 and 119.9 million diluted shares for Q3 2008.
DASSAULT SYSTEMES 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, 2008 filed with the AMF on April 2, 2009. 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.
(1) In the reconciliation schedule above, (i) all non-IFRS adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment; (ii) non-IFRS adjustments to operating expense data reflect the exclusion of the amortization of acquired intangibles, other operating income and expense, net and stock-based compensation expense (as detailed below); and (iii) all non-IFRS adjustments to IFRS net income data reflect the combined effect of these non-IFRS adjustments with their related tax effects.
(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 118.3 million diluted shares for YTD 2009 and 119.5 million diluted shares for YTD 2008. Contact: Dassault Systèmes: François-José Bordonado/Beatrix Martinez 33.1.61.62.69.24 or United States and Canada: Michele Katz Michele.Katz@3DS.com 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 Source: Dassault Systèmes
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