Oct 29 - Dassault Q3 Revenue Up 6% to 318M Euros with 43M Profit

NewsBreak

Dassault Q3 Revenue Up 6% to 318M Euros with 43M Profit

See also
·	Dassault Q3 2008 Earnings Conference Call Transcript new - Seeking Alpha, Oct 29, 2008
.	Dassault Systems Website
·	CATIA directory - by TenLinks.com
·	CATIA Reading Room - articles, tutorials, reviews and news, by CADdigest.com
.	related news

PARIS, France, Oct 29, 2008 - Dassault Systems (DS) (Euronext Paris: #13065, DSY.PA) reported U.S. GAAP unaudited financial results for the third quarter and nine months ended September 30, 2008. These results have been reviewed by the Company’s Board of Directors.

Third Quarter 2008 Summary Financial Highlights

Q3 GAAP software revenue up 12% and GAAP total revenue up 10%, both in constant currencies
Q3 non-GAAP software revenue up 12% and non-GAAP total revenue up 10%, both in constant currencies
Q3 GAAP EPS up 38% to €0.36; Q3 non-GAAP EPS up 26% to €0.49;
2008 non-GAAP Objectives: Continuing to target software revenue growth objective of 12% in constant currencies; Raising EPS objective.

Third Quarter 2008 Financial Summary
(unaudited)

In M Euros,               U.S. GAAP            Non-GAAP
except per            Growth   Growth      Growth   Growth
share data                     in cc*              in cc*

Q3 Total Revenue 318.3 6%      10%    319.7 6%     10%
Q3 Software
Revenue         276.5   8%      12%    277.9 8%     12%
Q3 EPS          0.36   38%       -      0.49 26%     -
Q3 Operating
Margin          16.7%   -        -      23.7%   -     -

* In constant currencies.

Bernard Charlès, Dassault Systems President and Chief Executive Officer, commented, “Dassault Systems software revenue growth of 12% in constant currencies during the quarter reflected the increasing momentum of our strategy of diversification into new industries. Further, we saw particular strength coming from our collaboration and simulation software offerings in both the PLM and Mainstream 3D markets. Thanks to our brands and applications strategy, the strengthening of our sales channels, particularly in the mid-market, and growth in our customer base, we were able to deliver third quarter revenue at the high end of our objectives notwithstanding the economic crisis which started to impact our operations early September.

“Based upon our year-to-date performance and fourth quarter outlook, Dassault Systems is positioned for solid growth in software revenue and earnings for 2008 reflecting the valuable and measurable benefits our software applications bring to an increasingly diverse group of customers throughout the world. Our goal remains the same – to be a strategic partner to all our customers, in order to help them enhance their products and product innovation processes.”

Third Quarter 2008 Financial Highlights

GAAP and non-GAAP total revenue increased 10% in constant currencies.
By geographic region and in constant currencies, total GAAP revenue in Europe was up 12% (non-GAAP up 11%), the Americas increased 15% (non-GAAP up 16%), and Asia increased 1% (non-GAAP flat) on lower results in Japan. Revenue grew above 25% in constant currencies in the faster growing markets comprised primarily of China, India, Brazil, Eastern Europe and Russia.
GAAP and non-GAAP software revenue increased 12% in constant currencies. Non- GAAP software revenue growth of 12% reflected non-GAAP recurring software revenue growth of 18% and new licenses revenue growth of 1% (all figures in constant currencies). Recurring software revenue accounted for 67% of total software revenue in the quarter.
GAAP and non-GAAP PLM software revenue increased 11% in constant currencies. In non-GAAP, ENOVIA software revenue increased 19% in constant currencies, SIMULIA software revenue was up double-digits in constant currencies and CATIA software revenue increased 9% in constant currencies.
Mid-market PLM growth was healthy reflecting the Company’s continued progress in the transformation and expansion of its PLM mid-market sales channel.
GAAP Mainstream 3D software revenue increased 14% in constant currencies. Non- GAAP Mainstream 3D software revenue increased 13% in constant currencies on growth in SolidWorks installed base recurring revenue and sales of SolidWorks design, product data management and analysis software.
DS consulting services revenue delivered double-digit revenue growth in constant currencies and operating margin improvement in the third quarter. In total, Services and other revenue, representing 13% of total revenue, was flat in constant currencies during the third quarter, principally reflecting the effect of winding down certain historical channel management activities.
GAAP operating margin was 16.7%. Non-GAAP operating margin expanded to 23.7%, up from 22.5% in the year-ago quarter on non-GAAP operating income growth of 12%.
Financial revenue and other improved in the third quarter in relation to both the second quarter and the year-ago third quarter. Specifically, financial revenue and other increased to €9.9 million in the third quarter, up from €1.7 million in the year-ago period. Third quarter 2008 financial revenue and other was principally comprised of net interest income of €3.4 million and net exchange gains of €6.3 million.
GAAP earnings per diluted share increased 38% to €0.36. Non-GAAP earnings per diluted share increased 26% to €0.49 primarily reflecting an increase in non-GAAP operating income of 12% as well as a strong increase in financial revenue and other principally due to end-of-period foreign currency translation impacts.
New business activity by industry included, among others:
- Consumer Packaged Goods: Procter & Gamble in the Americas;
- High Tech: Panasonic and Toshiba in Asia; L-3 Communications in the Americas;
- Business Services: TUV Rheinland in Europe and American Bureau of Shipping in the Americas; 3
- Industrial Machinery: Komatsu and Sanyo Machine Works in Asia and Stara S.A. in the Americas;
- Automotive and Aerospace: EDAG and Piaggio Aero in Europe.

Cash flow and other financial highlights

Net operating cash flow in the 2008 third quarter increased to €67.5 million compared to €62.9 million in the year-ago quarter. Cash and short-term investments totaled €829.6 million and long-term debt totaled €200.8 million at September 30, 2008.

Nine Months 2008 Summary Financial Highlights

YTD 2008 GAAP software revenue up 15% and GAAP total revenue up 12%, both in constant currencies; YTD 2008 GAAP EPS up 25% to €1.06
YTD 2008 non-GAAP software revenue up 14% and non-GAAP total revenue up 11%, both in constant currencies; YTD 2008 non-GAAP EPS up 13% to €1.36
YTD 2008 net operating cash flow up 9% to €261.6 million

Nine Months 2008 Financial Summary
(unaudited)

In M Euros,          U.S. GAAP                Non-GAAP
except per        Growth     Growth      Growth     Growth
share data                   in cc*                 in cc*

YTD Total
Revenue      951.9   6%       12%     953.8 5%        11%
YTD Software
Revenue      823.6   9%       15%     825.5 8%        14%
YTD EPS      1.06    25%      -       1.36   13%       -
YTD Operating
Margin       17.9%   -        -       23.9%   -        -

* In constant currencies.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “Our third quarter financial performance came in well in line with our objectives, in fact, at the high end with software revenue up 12% in constant currencies and earnings per share rising 26%, demonstrating the inherent earnings leverage of our business model.

“Turning to our outlook, we expect 2008 to be a year of strong, organic software growth for DS. We have factored into our fourth quarter and full year outlook the signs of weakening we saw in September due to the economic crisis. However, thanks to our diversification strategy, sales channels expansion, recurring revenue model and year-to-date results, we continue to target a non-GAAP software revenue growth objective of 12% in constant currencies. Additionally, we are increasing our 2008 non-GAAP EPS objective range to €2.15 to €2.20 from €2.10 to €2.17 previously. Our fourth quarter objective assumes a US dollar to euro exchange rate of $1.45 per €1.00, reflecting the fact that the US dollar continues to be very volatile at this point in time.”

The Company’s objectives are prepared and communicated only on a non-GAAP basis and are subject to the cautionary statement set forth below. The Company’s objectives are the following:

Fourth quarter 2008 non-GAAP total revenue objective of about €385 to €395 million and non-GAAP EPS of about €0.79 to €0.84;
2008 non-GAAP software revenue growth objective of about 12% growth in constant currencies from 12-13%; 2008 non-GAAP total revenue growth objective of about 9% in constant currencies from 9-10%;
2008 reported non-GAAP revenue range of about €1.340 to €1.350 billion from €1.320 to €1.330 billion;
2008 non-GAAP operating margin improvement objective of 50 to 100 basis points (up to about 27%) from 80 to 130 basis points;
2008 non-GAAP EPS objective of about €2.15 to €2.20 per diluted share from €2.10 to €2.17 per diluted share;
Objectives based upon exchange rate assumptions for the 2008 fourth quarter of US$1.45 per €1.00 and JPY 145 per €1.00 and 2008 full year exchange rate assumptions of US$1.50 per €1.00 and JPY 157 per €1.00;

The non-GAAP objectives set forth above do not take into account the following accounting elements: deferred revenue write-downs estimated at approximately €4 million for 2008; stock-based compensation expense estimated at approximately €21 million for 2008 and amortization of acquired intangibles estimated at approximately €45 million for 2008. The above objectives do not include any impact from other operating income and expense, net comprised of income and expenses in connection with the relocation of the Company’s corporate headquarters and restructuring expenses, which totaled €6 million in the third quarter and €8.5 million year-to-date. These estimates also do not include any new stock option or share grants, or any new acquisitions or restructurings completed after October 29, 2008.

Webcast and conference call information

Dassault Systems will host a webcast and a conference call today, Wednesday, October 29, 2008. Management will host a webcast at 8:30 AM London time/9:30 AM CET time and will then host a conference call at 2:00 PM London time/3:00 PM CET/ 10:00 AM New York time. The webcast and conference call will be available via the Internet by accessing http://www.3ds.com/corporate/investors/. 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/corporate/investors/ or by calling Dassault Systems ’ Investor Relations at 33.1.40.99.69.24.

About Dassault Systems :

As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systems brings value to more than 100,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systems 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 Systems 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 Systems ’ shares are listed on Euronext Paris (#13065, DSY.PA) and Dassault Systems ’ ADRs may be traded on the U.S. Over-The-Counter (OTC) market (DASTY).

For more information, visit http://www.3ds.com.

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S. GAAP)
(in millions of Euro, except per share data, unaudited)

                   Three months ended    Nine months ended
                    Sep 30,   Sep 30,    Sep 30,    Sep 30,
                     2008      2007       2008       2007
New licenses
revenue              90.5      92.8       292.4      284.8
Periodic licenses,
maintenance and
product development
revenue             186.0     163.1       531.2      470.2
Software revenue    276.5     255.9       823.6      755.0
Services and other
revenue              41.8      43.2       128.3      140.7
Total Revenue      €318.3    €299.1      €951.9     €895.7
Cost of software
revenue (excluding
amortization of
acquired intangibles)14.3      16.0       41.7       41.8
Cost of services
and other revenue    37.6      38.4      112.1      117.1
Research and
development          78.1      76.3      228.4      228.3
Marketing and sales 91.3      83.5      279.0      254.9
General and
administrative       26.5      24.4       78.5       70.4
Amortization of
acquired intangibles 11.4      13.6       32.9       35.4
Other operating
income and
expense, net          6.0       0.0        8.5       0.0
Total Operating
Expenses           €265.2     €252.2     €781.1    €747.9
Operating Income   €53.1      €46.9      €170.8    €147.8
Financial revenue
and other, net       9.9       1.7        10.1       8.0
Income before
income taxes        63.0      48.6       180.9      155.8
Income tax expense (19.6)    (17.4)     (54.3)     (53.7)
Minority interest   (0.1)     (0.1)      (0.2)      (0.2)
Net Income         €43.3     €31.1      €126.4      €101.9
Basic net income
per share           0.37      0.27       1.08        0.88
Diluted net
income per share   €0.36      €0.26      €1.06      €0.85
Basic weighted
average shares
outstanding (in M) 117.9      116.8      117.5      116.3
Diluted weighted
average shares
outstanding (in M) 119.9      120.4      119.5      119.5

U.S. GAAP revenue variation as reported and in constant currencies

               Three months ended      Nine months ended
                   Sep 30, 2008           Sep 30, 2008
              Variation* Variation    Variation* Variation
                          in cc**                in cc**

GAAP Revenue        6%       10%           6%        12%
GAAP Revenue
by activity
Software Revenue    8%       12%           9%        15%
Services and other
Revenue            (3%)       0%          (9%)      (4%)
GAAP Software
Revenue by segment
PLM software revenue 8%      11%           9%        14%
of which CATIA
software revenue     6%       9%          11%        17%
of which ENOVIA
software revenue    16%      22%           7%        13%
Mainstream 3D
software revenue     9%      14%           9%        13%
GAAP Revenue by geography
Americas             6%      15%           2%        15%
Europe              12%      12%          12%        12%
Asia                (2%)      1%           2%         7%

* Variation compared to the same period in the prior year. ** In constant currencies.

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. GAAP)
(in millions of Euro, unaudited)

Sep 30, 2008 Dec 31, 2007

ASSETS
Cash and short-term investments    829.6          626.6
Accounts receivable, net           265.1          320.0
Other assets                     1,069.5        1,004.5
Total Assets                    €2,164.2       €1,951.1
LIABILITIES AND SHAREHOLDERS'EQUITY
Long-term debt                    200.8           202.9
Other liabilities                 651.9           552.4
Shareholders' equity            1,311.5         1,195.8
Total Liabilities and
Shareholders' equity            €2,164.2       €1,951.1

DASSAULT SYSTEMS
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (U.S. GAAP)
(in millions of Euro, unaudited)

                    Three months ended    Nine months ended
                  Sep 30, Sep 30, Varn Sep 30, Sep 30 Varn
                   2008    2007          2008    2007
Net Income         43.3    31.1   12.2   126.4 101.9 24.5
Depreciation and
Amortization of
Property, Plant &
Equipment           5.5     7.3   (1.8) 17.0   19.8 (2.8)
Amortization of
intangible assets 12.6    12.2    0.4   36.2   37.1 (0.9)
Other Non Cash
P&L Items           0.1     1.4   (1.3)   0.2   (4.2) 4.4
Changes in
working capital     6.0    10.9   (4.9) 81.8   85.5 (3.7)
Net Cash provided
by operating
activities         67.5    62.9    4.6   261.6 240.1 21.5

Acquisition of
assets and equity,
net of cash
acquired          (42.1) (30.4) (11.7) (66.7) (90.3) 23.6
Sale of assets and
equity             0.4     0.1    0.3    36.6     0.1 36.5
Loans and others (0.3)    0.2   (0.5)   (0.3)   (0.5) 0.2
Net Cash provided by
(used in)investing
activities       (42.0) (30.1) (11.9) (30.4) (90.7) 60.3

Borrowings         0.0    0.0     0.0    0.0     0.0   0.0
Share repurchase   0.0    0.0     0.0 (35.0)    0.0 (35.0)
DS Stock Option
and preferred Stock
Exercise          19.5   10.1     9.4   42.8     37.9 4.9
Cash dividend paid 0.0    0.0     0.0 (53.7)   (50.8)(2.9)
Payments on capital
lease obligations 0.0    0.0     0.0    0.0     (0.4) 0.4
Net Cash provided by
(used in) financing
activities (1)    19.5   10.1     9.4   (45.9) (13.3)(32.6)

Effect of exchange
rate changes on
treasury (2) 44.9 (16.4) 61.3 17.7 (24.2) 41.9

Increase in
treasury (2) 89.9 26.5 63.4 203.0 111.9 91.1

Treasury (2) at
beginning of period 739.7 544.6 626.6 459.2
Treasury (2) at
end of period 829.6 571.1 829.6 571.1

(1) Excluding changes in short-term investments.
(2) Treasury includes cash, cash equivalents and short-term investments.

-----------

If news like this is important to you, sign up for our TenLinks Daily at www.tenlinks.com/NEWS/sub_unsub.htm.

Source: Material used in press releases is often supplied by external sources and used as is.