Fourth Quarter and Full Year Highlights
-- Strong Growth Across Software and Services and Core Margin Improvement Drove Fourth Quarter and Full Year Financial Performance
-- 2005 Total Revenue up 17% on GAAP and up 18% on Non-GAAP Basis
-- 2005 EPS Up 10% on GAAP and Up 17% on Non-GAAP Basis
-- DS Extends PLM Market Leadership With Further Market Share Gain of 1 Percentage Point in 2005; DS Adds 8 Percentage Points Over 2001-2005 Period
-- DS Reconfirms 2006 Financial Objectives
Bernard Charles, Dassault Systemes' President and Chief Executive Officer, commented, "Dassault Systemes had a great finish to a very successful year. During 2005 revenues increased 18% and earnings rose 17%. These achievements reflect the powerful combination of significant V5 PLM implementations, the competitive advantages of our brands and the strong performance of our alliance with IBM, our partners and our investments.
"Our largest brand CATIA, for design excellence, had a good year. Our PDM solutions, with ENOVIA for collaborative lifecycle management and SMARTEAM for TeamPDM, delivered 20% revenue growth and added more than 1,000 new customers. DELMIA, for production performance, had strong revenue growth as it also broadened its customer base. And our newest brand, SIMULIA, for virtual simulation, had a remarkable start. SolidWorks, addressing the Mainstream 3D market, continued to demonstrate the strength of its offerings, delivering 25% revenue growth. The SolidWorks community continued its expansion, approaching the half million users' milestone at the end of 2005.
"2005 was a year where we significantly expanded our addressable markets through technological innovation and complementary acquisitions. We acquired ABAQUS as the core of our realistic simulation offerings. In "3D for All" we are seeing traction from the Virtools acquisition and from our 3D XML technology. Moreover, we were pleased to receive AMR Research's innovation award for our "3D for All" strategy and product roll-outs.
"At the heart of our vision is our belief in the power, enormous potential and pervasive applicability of 3D technology to enhance communication, businesses and the environment at large."
Dassault Systemes completed the acquisition of ABAQUS, Inc. in October, 2005 and has accounted for the acquisition pursuant to U.S. GAAP (hereinafter GAAP) purchase accounting rules. Certain supplementary information is provided in this press release which are not in conformity with GAAP, including: (i) Non-GAAP total revenue, Non-GAAP software revenue and Non-GAAP PLM (process-centric) revenue, which differ from such GAAP figures due to the exclusion of EUR 9.1 million of deferred revenue write-downs for the fourth quarter and full year; and (ii) Non-GAAP operating income, Non-GAAP operating margin and Non-GAAP EPS, which exclude acquisition costs totaling EUR 8.7 million for the fourth quarter and EUR 9.8 million for the full year and the impacts of the deferred revenue write-downs of EUR 9.1 million for both the fourth quarter and full year. See tables for a reconciliation of 2005 and 2004 fourth quarter and full year GAAP and non-GAAP financial data.
Fourth Quarter Financial Results
Fourth Quarter Highlights
-- GAAP total revenue of EUR 304.2 million (up 27%) and GAAP EPS of EUR 0.58 (up 14%)
-- PLM revenue up sharply on solid performance across all PLM brands
-- ENOVIA and SMARTEAM drove PDM revenue up 32% as reported and up 29% in constant currencies
-- SolidWorks revenue EUR 51.9 million, up 26% as reported and up 23% in constant currencies
Non-GAAP supplementary information excluding deferred revenue write-down and acquisition costs:
-- Total revenue of EUR 313.3 million, up 31% and up 27% in constant currencies
-- EPS up 29% to EUR 0.67
-- Software revenue up 27% to EUR 261.3 million and up 24% in constant currencies
-- PLM (process-centric) revenue of EUR 261.4 million, up 32% and 28% in constant currencies
Revenue
GAAP total revenue increased 27% to EUR 304.2 million in the 2005 fourth quarter, compared to EUR 239.9 million in the year-ago quarter. Non-GAAP total revenue was EUR 313.3 million, representing increases of 31% and 27% in constant currencies compared to the year-ago period. Strong growth in both software and services revenues drove the year-over-year increase in Non-GAAP total revenue. In addition, fourth quarter 2005 financial results included ABAQUS, which the Company acquired in early October, 2005. For the 2005 fourth quarter, ABAQUS' revenue contribution totaled EUR 22 million before the impact of deferred revenue write-downs required under GAAP purchase accounting treatment. Software and service revenue represented 83% and 17% of non-GAAP total revenue in the fourth quarter of 2005.
In the 2005 fourth quarter, Non-GAAP software revenue increased 27% to EUR 261.3 million and increased 24% in constant currencies on strong growth across all the Company's software applications and the inclusion of ABAQUS. In the year-ago quarter software revenue was EUR 206.4 million. New CATIA and SolidWorks seats licensed in the 2005 fourth quarter increased 14% to 22,484 seats, compared to 19,726 seats in the year-ago quarter.
Non-GAAP PLM (Process-centric) revenue increased 32% and 28% in constant currencies in the fourth quarter of 2005 reflecting strong software growth across design, digital manufacturing and PDM applications and the inclusion of ABAQUS. Non-GAAP PLM revenue totaled EUR 261.4 million in the 2005 fourth quarter, compared to EUR 198.6 million in the year-ago fourth quarter. PDM revenue, on a stand-alone basis, increased 32% as reported to EUR 47.1 million and increased 29% in constant currencies in the 2005 fourth quarter, compared to EUR 35.6 million in the year-ago period. PDM software end-user revenue increased 22% in the 2005 fourth quarter, compared to the year-ago fourth quarter. For the 2005 fourth quarter, CATIA licenses increased 6% year over year to 11,416.
In the Mainstream market, SolidWorks revenue increased 26% as reported and 23% in constant currencies to EUR 51.9 million in the 2005 fourth quarter, compared to EUR 41.3 million in the year-ago period. SolidWorks seats licensed increased 24% to 11,068 licenses.
As anticipated, service and other revenue increased significantly in the fourth quarter. Specifically, service and other revenue increased 55% as reported to EUR 52.0 million and increased 52% in constant currencies, compared to EUR 33.5 million in the fourth quarter of 2004.
In the 2005 fourth quarter, Europe represented 52% of non-GAAP total revenue, with the Americas representing 27% and Asia accounting for 21%. From a regional perspective, growth was strongest in Europe with Non-GAAP total revenue increasing 35%, reflecting strong software results for the Company's PLM and Mainstream businesses as well as a sharp increase in services revenue as noted above. In the Americas, Non-GAAP total revenue increased 25% and 15% in constant currencies. And in Asia, Non-GAAP total revenue increased 28% and 27% in constant currencies. All regions benefited from the inclusion of ABAQUS in the Company's 2005 fourth quarter results.
The fourth quarter was an active period of new contracts across all software applications, end markets and regionally.
-- CATIA V5 wins including Dong Feng Electric Machinery Works and BT Industry.
-- Joint CATIA-SMARTEAM wins in E&E, Automotive and F&A industries in the fourth quarter including: Alpine Electronics, and NIKON.
-- DELMIA wins including Tata Motors in automotive in India and Aermacchi in aerospace in Italy and key reorder activity in the U.S. and Canada among aerospace customers.
-- Numerous reorder activities for ENOVIA in the aerospace and automotive industry.
-- SolidWorks continued to broaden its community with new customers including: Duracell and Wabash National in the U.S., LSW Maschinenfabrik and Schmitz Cargobull in Germany and Cosmos Machinery Limited in China.
Operating Income and Margin and EPS
GAAP earnings per diluted share increased 14% to EUR 0.58 in the 2005 fourth quarter, compared to earnings per diluted share of EUR 0.51 in the year-ago quarter. GAAP operating income increased 14% to EUR 100.7 million (33.1% operating margin), compared to EUR 88.3 million in the year-ago period (36.8% operating margin).
Non-GAAP earnings per diluted share increased 29% to EUR 0.67 in the fourth quarter of 2005, compared to EUR 0.52 in the year-ago period. Non-GAAP operating income increased 34% to EUR 118.5 million in the 2005 fourth quarter, up from EUR 88.4 million in the year-ago quarter. The Non-GAAP operating margin improved to 37.8% in the 2005 fourth quarter, compared to 36.8% in the year-ago period.
Full Year Financial Results
Full Year 2005 Highlights
-- GAAP total revenue of EUR 934.5 million (up 17%) and GAAP EPS of EUR 1.49 (up 10%)
-- PDM revenue up 20% to EUR 121.9 million on record year for ENOVIA
-- SolidWorks revenue up 25% as reported and in constant currencies
Non-GAAP supplementary information excluding deferred revenue write-down and acquisition costs:
-- Total revenue of EUR 943.6 million up 18% and up 19% in constant currencies
-- Revenue growth before inclusion of ABAQUS up 16% and up 16% in constant currencies
-- EPS up 17% to EUR 1.59
-- Software revenue up 18% to EUR 792.7 million and up 19% in constant currencies
Revenue
GAAP total revenue increased 17% to EUR 934.5 million in 2005. Non-GAAP total revenue increased 18% and 19% in constant currencies on strong growth in both software and services. Specifically, Non-GAAP total revenue was EUR 943.6 million in 2005, up from EUR 796.6 million in 2004. In 2005 Non-GAAP software revenue increased 18% to EUR 792.7 million, from EUR 670.9 million in 2004 and increased 19% in constant currencies. Service and other revenue increased 20% to EUR 150.9 million in 2005 compared to EUR 125.7 million in 2004 and increased 21% in constant currencies. Services gross margin improved to 23.6% in 2005, compared to19.6% in 2004. Non-GAAP software revenue represented 84% of Non-GAAP total revenue with service and other revenue accounting for 16%. Recurring licenses revenue continued to represent a large component of Non-GAAP software revenue, representing 50% of Non-GAAP software revenue in 2005. Total CATIA and SolidWorks seats licensed in 2005 were 72,078, representing an increase of 15% above 2004 where seats licensed totaled 62,577. Seat pricing trends for the full year 2005 remained stable in comparison to 2004.
DS benefited from strong growth across its PLM software applications in 2005 as well as the inclusion of ABAQUS for one quarter. Non-GAAP PLM (Process-centric) revenue totaled EUR 761.8 million in 2005, increasing 17% and 18% in constant currencies in comparison to 2004 where PLM (process-centric) revenue totaled EUR 650.7 million. The recent acquisition of ABAQUS accounted for approximately 3 percentage points of growth in revenue for 2005 before the deferred revenue write-down. In 2005 PDM revenue on a stand-alone basis totaled EUR 121.9 million, increasing 20% as reported and in constant currencies. CATIA licenses increased 6% to 34,798 in 2005, compared to 32,695 in 2004.
In 2005, SolidWorks revenue increased 25% as reported and in constant currencies to EUR 181.8 million and increased 25% in U.S. dollars, the reporting currency of its peer group. SolidWorks seats licensed increased 25% to 37,280 seats in 2005 on strong demand across all major geographic markets. SolidWorks accounted for 19% of Non-GAAP total revenue in 2005.
From a regional perspective, the Americas delivered the strongest growth in 2005, increasing 24% in constant currencies, with Europe growing 19% and Asia posting an increase of 13% in constant currencies. As a percentage of Non-GAAP total revenue, Europe accounted for 47%, followed by the Americas at 30% and Asia at 23%.
Operating Income and Margin, EPS and Financial Position
Thibault de Tersant, Dassault Systemes' Executive Vice President and CFO, commented, "We have been able to maintain a relatively stable level of operating margin performance in 2005 compared to 2004. This achievement reflects the positive underlying trends and improvements in our businesses, which have enabled us to absorb more than one point of dilution from our recent acquisitions as well as currency impacts."
GAAP earnings per diluted share increased 10% to EUR 1.49 in 2005, compared to earnings per diluted share of EUR 1.35 in 2004. GAAP operating income increased 9% to EUR 251.0 million (26.9% operating margin) in 2005, compared to EUR 229.8 million in 2004 (28.8% operating margin).
Non-GAAP earnings per diluted share increased 17% to EUR 1.59 in 2005, compared to EUR 1.36 in 2004. Non-GAAP Operating income increased 17% to EUR 269.9 million in 2005, up from EUR 231.2 million in 2004. The Non-GAAP operating margin was 28.6% in 2005, compared to 29.0% in 2004.
Dassault Systemes had a strong financial position with cash and short-term investments totaling EUR 379.9 million at December 31, 2005. In addition, net cash provided by operations was EUR 196.7 million for 2005. During 2005, the Company paid cash dividends aggregating EUR 43.1 million and completed acquisitions, net of cash acquired, totaling EUR 329.4 million which were funded from cash and short-term investments.
The Company has adopted SFAS 123(R), Share-Based Payments, as of January 1, 2006. For share-based compensations granted by December 31, 2005 and not vested as of that date, the Company estimates share-based compensation expenses of about EUR 9.2 million for the full year 2006. This amount does not include new grants that could occur in 2006.
Strategy, Technology and Partnerships
DS PLM solutions are driving a multi-national collaborative global design and manufacturing project.
In a separate press release also issued today, DS announces that the complex SEVAN Stabilized Platform (SSP) 300 global project, including China-based Yantai Raffles Shipyard, Norwegian offshore technology company Sevan Marine and Brazil's state-run oil company, Petrobras, are utilizing CATIA, ENOVIA and DELMIA solutions for this next generation, oil platform project.
Customers can reap the benefit of customized solutions without the costs with DS' new Business Process Content Industry Solutions. Recently, DS rolled out an exciting new concept in the world of PLM, which will make key business processes from DS Industry Solutions available to customers of all sizes. The new products, known as Business Process Content (BPC), are flexible software assets, enabling customers to implement and adapt Industry Solutions to meet their specific needs, without the cost of tailor-made software. DS' state-of-the-art Industry Solutions are based on industry-specific PLM Practices, covering innovative and well-proven industry scenarios in the form of methodology and documentation. BPCs are easily implemented and allow customers to adapt their solution, leading to increased productivity, profitability, and rapid return on investment. DS develops BPCs by identifying customers' specific needs and the associated industrial processes.
Fostering innovation and helping to accelerate decision-making by opening 3D collaboration to the extended enterprise. Following the successful integration of 3DXML, DS' universal lightweight format for 3D, with IBM Lotus Notes and Domino(R), announced in the third quarter of 2005, IBM and DS have integrated 3D XML inside IBM Workplace portfolio of software products and solutions, making 3D accessible to all users, beyond the engineering departments, and becoming the vehicle for better collaboration and decision-making. Workers can now share product information on all office desktops through their familiar Lotus Notes and IBM Workplace messaging e-mail interfaces. With the integrated 3DXML Player, all users benefit from an intuitive and real 3D experience and collaborate around 3D products.
Leading industry analyst firm AMR Research awards DS for its visionary "3D For All" strategy.
DS has received the Innovation Award from AMR Research for its thought leadership and vision of 3D as a democratizing force in industry and society. The company's "3D For All" initiative, including its acquisition of pioneering 3D behavior company Virtools, as well as its development and roll-out of the Cosmic Blobs 3D design software for children, were cited by AMR Research as illustrative of how Dassault Systemes is working to take 3D beyond the confines of the engineering domain.
Lockheed Martin moves ahead with DS PLM Solutions for the F-35 Joint Strike Fighter Program. Chosen as the prime contractor for this strategic project, Lockheed Martin has set aggressive goals and made the decision to migrate as soon as possible from CATIA V4 to CATIA V5 for product development and DELMIA for manufacturing simulation, both PLM solutions developed by DS. This will enable its teams to benefit from long-term cost savings and efficiencies at the enterprise level, including in the maintenance phase.
V5R16, DS' latest release for PLM, empowers Innovation Networks. V5R16 helps customers create more innovative products and leverage the talents of their global supply chains. V5R16 delivers powerful new collaboration capabilities within ENOVIA V5 VPM Navigator and SMARTEAM TeamPDM, enabling extended networks of partners to work together in globally distributed 3D environments. Entire engineering packages can now be shared and managed bi-directionally while protecting intellectual property, enabling true concurrent engineering across the value chain. More broadly, V5R16 increases the power of the V5 PLM platform in three ways: by delivering unified PLM solutions for unrivalled gains in productivity; by extending the reach of 3D XML within the enterprise for ease of communication; and by accelerating performance with Microsoft Windows 64-bit support.
SolidWorks World Sets Record Attendance with over 3,500 participants. SolidWorks held its annual international user and exposition conference, SolidWorks World 2006, in January 2006. The conference set a record for participation with over 3,500 participants.
Business Outlook
Thibault de Tersant, Executive Vice President and CFO, stated, "After a very good 2005 performance, we have carefully reviewed our objectives for 2006, which we provided at the time of our third quarter earnings announcement. We are pleased to reconfirm our objectives for 2006 revenue, operating margin and EPS."
-- First quarter Non-GAAP total revenue of about EUR 248-253 million, which excludes deferred revenue write-down;
-- First quarter Non-GAAP EPS of about EUR 0.31-0.32, which excludes deferred revenue write-down, acquisition costs and share-based compensation expenses;
-- 2006 Non-GAAP total revenue objective of about EUR 1.105-1.115 billion, representing 17-18% growth in constant currencies, with about 7 points of growth from ABAQUS before the deferred revenue write-down adjustment of approximately EUR 8-9 million;
-- 2006 Non-GAAP operating margin stable with 2005;
-- 2006 Non-GAAP EPS of about EUR 1.79-1.81, which excludes deferred revenue write-down, acquisition costs and share-based compensation expenses;
-- No change to currency exchange rate assumption of US$1.25 to 1 euro;
-- Average share count assumption of 119.2 million for the 2006 first quarter and full year.
Endnotes:
1. All comparative figures are given on a year-over-year basis
unless specified otherwise. All EPS figures refer to fully
diluted earnings per share, unless otherwise noted.
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 revenue before deferred revenue
write-down, and operating income, operating margin and
earnings per share excluding acquisition costs (acquisition
costs are primarily comprised of technology and other acquired
intangible assets amortization in addition to other
acquisition-related costs) and before deferred revenue
write-down and share-based compensation expenses. The Company
believes this information, which is not in conformity with
U.S. GAAP, is helpful supplemental information in order to
better understand its past and future performance. In
addition, the Company's management uses this information in
its planning. This information provided by the Company may not
be comparable to similarly titled measures employed by other
companies. The Company has provided in the tables to this
press release and on its website
http://www.3ds.com/corporate/investors/ reconciliations
between U.S. GAAP and Non-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 the
Company's results with other companies, including competitors,
whose reporting currency may be different from Dassault
Systemes. Constant currency revenue growth, as calculated by
the Company, may not be comparable to similarly titled
measures employed by other companies.
Conference call information
Dassault Systemes will host a teleconference call today, Thursday, February 9, 2006 at 3:00 PM CET/2:00 PM London/9:00 AM New York. The 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 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 at http://www.3ds.com/corporate/investors/. Additional investor information can be accessed at http://www.3ds.com/corporate/investors/ 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 our: a) 2006 revenue growth objective in constant currencies, calculation of a 2006 revenue range, 2006 operating margin outlook and 2006 EPS growth objective, all such figures before deferred revenue write-down and excluding acquisition costs and share-based payments as applicable ; b) first quarter 2006 revenue objective range and first quarter EPS, both figures before deferred revenue write-down and excluding acquisition costs and share-based payments, as applicable; and c) ABAQUS estimated contribution to our 2006 revenue growth objective before deferred revenue write-down and ABAQUS estimated deferred revenue write-down for the full year 2006 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, particularly the value of the U.S. dollar or Japanese yen with respect to the euro; (ii) reduced corporate spending on information technology as a result of changing economic or business conditions that could negatively affect market demand for our products and services; (iii) difficulties or adverse changes affecting our partners or our relationships with our partners, including our longstanding, strategic partner, IBM; (iv) new product developments and technological changes; (v) errors or defects in our products; (vi) growth in market share by our competitors; and (vii) the realization of any risks related to the integration of ABAQUS or any newly acquired company and internal reorganizations. 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, 2004, which was filed with the SEC on June 28, 2005, could materially affect the Company's financial position or results of operations.
About Dassault Systemes
As world leader in 3D and Product Lifecycle Management (PLM) solutions, the Dassault Systemes group brings value to more than 90,000 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. Our offering includes integrated PLM solutions for product development (CATIA(R), DELMIA(R), ENOVIA(R), SMARTEAM(R)), mainstream product 3D design tools (SolidWorks(R)), 3D components (Spatial/ACIS(R)) and SIMULIA(R), DS' open scientific platform for realistic simulation. 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 GAAP KEY FIGURES
Non GAAP data exclude amortization of acquired intangible assets and
the effect of adjusting the carrying value of acquired companies'
deferred revenue.
4th QUARTER
in millions of Euro, except per share data, headcount and exchange
rates.
4Q05 4Q04 Variation
------ ------ ---------
Process-Centric
excluding PDM 214.3 163.0 31%
PDM 47.1 35.6 32%
Design-Centric 51.9 41.3 26%
Revenue 313.3 239.9 31%
Americas 85.7 68.6 25%
Europe 161.4 119.6 35%
Asia 66.2 51.7 28%
Operating Income 118.5 88.4 34%
Operating Margin 37.8% 36.8%
Net Income 80.0 60.2 33%
EPS 0.67 0.52 29%
Closing headcount 5,693 4,456 28%
Average Rate USD per Euros 1.19 1.30 (8%)
Average Rate JPY per Euros 139.4 137.1 2%
FULL YEAR
in millions of Euro, except per share data, headcount and exchange
rates.
2005 2004 Variation
------ ------ ---------
Process-Centric
excluding PDM 639.9 549.0 17%
PDM 121.9 101.7 20%
Design-Centric 181.8 145.9 25%
Revenue 943.6 796.6 18%
Americas 286.3 230.9 24%
Europe 441.8 371.0 19%
Asia 215.5 194.7 11%
Operating Income 269.9 231.2 17%
Operating Margin 28.6% 29.0%
Net Income 187.2 157.6 19%
EPS 1.59 1.36 17%
Average Rate USD per Euros 1.24 1.24 0%
Average Rate JPY per Euros 136.9 134.4 2%
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 Twelve months
ended ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
New licenses revenue 134.2 109.8 375.6 312.1
Recurring licenses and
product development
revenue 118.0 96.6 408.0 358.8
---------- ---------- ---------- ----------
Software revenue 252.2 206.4 783.6 670.9
Service and other revenue 52.0 33.5 150.9 125.7
---------- ---------- ---------- ----------
Total Revenue (1) EUR 304.2 EUR 239.9 EUR 934.5 EUR 796.6
Software 8.3 6.7 26.8 21.7
Service and other 33.0 25.1 115.3 101.0
---------- ---------- ---------- ----------
Total Cost of Revenue EUR 41.3 EUR 31.8 EUR 142.1 EUR 122.7
Gross Profit EUR 262.9 EUR 208.1 EUR 792.4 EUR 673.9
Research and Development 70.1 59.3 250.0 221.9
Marketing and Sales 66.5 47.9 223.0 173.7
General Administration 16.9 12.5 58.6 47.1
Amortization of acquired
intangibles 8.7 0.1 9.8 1.4
---------- ---------- ---------- ----------
Total Research, Selling,
Administration and
Acquisition expenses EUR 162.2 EUR 119.8 EUR 541.4 EUR 444.1
========== ========== ========== ==========
Operating Income (1) EUR 100.7 EUR 88.3 EUR 251.0 EUR 229.8
Financial revenue and
Other 2.6 0.6 15.3 7.5
---------- ---------- ---------- ----------
Income before income
taxes 103.3 88.9 266.3 237.3
Income tax expense (34.3) (28.8) (90.8) (80.9)
---------- ---------- ---------- ----------
Net Income (1) EUR 69.0 EUR 60.1 EUR 175.5 EUR 156.4
========== ========== ========== ==========
Basic net income per
share EUR 0.60 EUR 0.53 EUR 1.54 EUR 1.38
========== ========== ========== ==========
Diluted net income per
share (1) EUR 0.58 EUR 0.51 EUR 1.49 EUR 1.35
========== ========== ========== ==========
Basic weighted average
shares outstanding (in
millions) 114.6 113.4 114.0 113.2
========== ========== ========== ==========
Diluted weighted average
shares outstanding (in
millions) 119.2 116.8 117.6 116.2
(1) Non GAAP total revenue, operating income, net income and diluted
EPS would have been as follows:
Total Revenue EUR 313.3 EUR 239.9 EUR 943.6 EUR 796.6
========== ========== ========== ==========
Operating Income EUR 118.5 EUR 88.4 EUR 269.9 EUR 231.2
========== ========== ========== ==========
Net Income EUR 80.0 EUR 60.2 EUR 187.2 EUR 157.6
========== ========== ========== ==========
Diluted net
income per share EUR 0.67 EUR 0.52 EUR 1.59 EUR 1.36
========== ========== ========== ==========
Supplemental Disclosures Regarding Non GAAP Financial Information: Excluding amortization of acquired intangible assets and the effect of adjusting the carrying value of acquired companies' deferred revenue
The following table sets forth the Company's Consolidated Statement of Income Data excluding amortization of acquired intangible assets and the effect of adjusting the carrying value of acquired companies' deferred revenue for the three months and twelve months ended December 31, 2005. In particular, the table presents revenue, operating income, operating margin and earnings per share excluding amortization of acquired intangible assets and the effect of adjusting the carrying value of acquired companies' deferred revenue (amortization of acquired intangible assets are primarily comprised of technology amortization in addition to other acquisition-related amortization).
The Company uses these Non 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 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 amortization of acquired intangible assets and the effect of adjusting the carrying value of acquired companies' deferred revenue, 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 for 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 U.S. GAAP revenue, operating income, operating margin and earnings per share, as an indicator of operating performance.
DASSAULT SYSTEMES
NON GAAP CONSOLIDATED STATEMENT OF INCOME
(in millions of Euro, except per share data)
Non GAAP data exclude amortization of acquired intangible assets and
the effect of adjusting the carrying value of acquired companies'
deferred revenue.
Three Months ended
December 31, December 31, Variation
2005 2004
-------------- -------------- ---------
New licenses revenue 134.2 109.8 22.2%
Recurring licenses and
product development revenue 127.1 96.6 31.6%
-------------- --------------
Software revenue 261.3 206.4 26.6%
Service and other revenue 52.0 33.5 55.2%
-------------- --------------
Total Revenue EUR 313.3 EUR 239.9 30.6%
Software 8.3 6.7 23.9%
Service and other 33.0 25.1 31.5%
-------------- --------------
Total Cost of Revenue EUR 41.3 EUR 31.8 29.9%
Gross Profit EUR 272.0 EUR 208.1 30.7%
Research and Development 70.1 59.3 18.2%
Marketing and Sales 66.5 47.9 38.8%
General Administration 16.9 12.5 35.2%
-------------- --------------
Total Research, Selling,
Administration. EUR 153.5 EUR 119.7 28.2%
============== ==============
Operating Income EUR 118.5 EUR 88.4 34.0%
Financial revenue and Other 2.6 0.6 333,3%
-------------- --------------
Income before income taxes 121.1 89.0 36.1%
Income tax expense (41.1) (28.8)
-------------- --------------
Net Income EUR 80.0 EUR 60.2 32.9%
============== ==============
Diluted net income per share EUR 0.67 EUR 0.52 28.8%
============== ==============
Diluted weighted average
shares outstanding (in
millions) 119.2 116.8
DASSAULT SYSTEMES
CONSOLIDATED STATEMENT OF INCOME
RECONCILIATIONS NON GAAP / U.S. GAAP
(in millions of Euro, except per share data)
Three Months ended
December 31, 2005 December 31, 2004
-------------------------- --------------------------
Ad- Ad-
U.S. GAAP just- Non GAAP U.S. GAAP just- Non GAAP
ments ments
(1) (1)
--------- ------ --------- --------- ------ ---------
New licenses
revenue 134.2 134.2 109.8 109.8
Recurring
licenses and
product
development
revenue 118.0 9.1 127.1 96.6 96.6
--------- --------- --------- ---------
Software
revenue 252.2 9.1 261.3 206.4 206.4
Service and
other revenue 52.0 52.0 33.5 33.5
--------- --------- --------- ---------
Total Revenue EUR 304.2 EUR 313.3 EUR 239.9 EUR 239.9
Software 8.3 8.3 6.7 6.7
Service and
other 33.0 33.0 25.1 25.1
--------- --------- --------- ---------
Total Cost of
Revenue EUR 41.3 EUR 41.3 31.8 31.8
Gross Profit EUR 262.9 EUR 272.0 EUR 208.1 EUR 208.1
Research and
Development 70.1 70.1 59.3 59.3
Marketing and
Sales 66.5 66.5 47.9 47.9
General
Administration 16.9 16.9 12.5 12.5
Amortization of
acquired
intangibles 8.7 (8.7) - 0.1 (0.1) -
--------- --------- --------- ---------
Total Research,
Selling,
Adminis-
tration
and EUR 162.2 EUR 153.5 EUR 119.8 EUR 119.7
Acquisition
expenses
========= ========= ========= =========
Operating
Income EUR 100.7 EUR 118.5 EUR 88.3 EUR 88.4
Financial
revenue and
Other 2.6 2.6 0.6 0.6
--------- --------- --------- ---------
Income before
income taxes 103.3 121.1 88.9 89.0
Income tax
expense (34.3) (6.8) (41.1) (28.8) (28.8)
--------- --------- --------- ---------
Net Income EUR 69.0 EUR 80.0 EUR 60.1 EUR 60.2
========= ========= ========= =========
Diluted net
income per
share EUR 0.58 EUR 0.67 EUR 0.51 EUR 0.52
========= ========= ========= =========
Diluted
weighted
average shares
outstanding
(in millions) 119.2 119.2 116.8 116.8
========= ========= ========= =========
(1) Adjustments include amortization of acquired intangible assets and
the effect of adjusting the carrying value of acquired companies'
deferred revenue.
DASSAULT SYSTEMES
NON GAAP CONSOLIDATED STATEMENT OF INCOME
(in millions of Euro, except per share data)
Non GAAP data exclude amortization of acquired intangible assets and
the effect of adjusting the carrying value of acquired companies'
deferred revenue.
Twelve Months ended
December 31, December 31, Variation
2005 2004
--------------- ------------- ---------
New licenses revenue 375.6 312.1 20.3%
Recurring licenses and
product development revenue 417.1 358.8 16.2%
--------------- -------------
Software revenue 792.7 670.9 18.2%
Service and other revenue 150.9 125.7 20.0%
--------------- -------------
Total Revenue EUR 943.6 EUR 796.6 18.5%
Software 26.8 21.7 23.5%
Service and other 115.3 101.0 14.2%
--------------- -------------
Total Cost of Revenue EUR 142.1 EUR 122.7 15.8%
Gross Profit EUR 801.5 EUR 673.9 18.9%
Research and Development 250.0 221.9 12.7%
Marketing and Sales 223.0 173.7 28.4%
General Administration 58.6 47.1 24.4%
--------------- -------------
Total Research, Selling,
Administration. EUR 531.6 EUR 442.7 20.1%
=============== =============
Operating Income EUR 269.9 EUR 231.2 16.7%
Financial revenue and Other 15.3 7.5 104.0%
--------------- -------------
Income before income taxes 285.2 238.7 19.5%
Income tax expense (98.0) (81.1)
--------------- -------------
Net Income EUR 187.2 EUR 157.6 18.8%
=============== =============
Diluted net income per share EUR 1.59 EUR 1.36 16.9%
=============== =============
Diluted weighted average
shares outstanding (in
millions) 117.6 116.2
DASSAULT SYSTEMES
CONSOLIDATED STATEMENT OF INCOME
RECONCILIATIONS NON GAAP / U.S. GAAP
(in millions of Euro, except per share data)
Twelve Months ended
December 31, 2005 December 31, 2004
-------------------------- --------------------------
Ad- Ad-
U.S. GAAP just- Non GAAP U.S. GAAP just- Non GAAP
ments ments
(1) (1)
--------- ----- --------- --------- ------ ---------
New licenses
revenue 375.6 375.6 312.1 312.1
Recurring
licenses and
product
development
revenue 408.0 9.1 417.1 358.8 358.8
--------- --------- --------- ---------
Software revenue 783.6 9.1 792.7 670.9 670.9
Service and
other revenue 150.9 150.9 125.7 125.7
--------- --------- --------- ---------
Total Revenue EUR 934.5 EUR 943.6 EUR 796.6 EUR 796.6
Software 26.8 26.8 21.7 21.7
Service and
other 115.3 115.3 101.0 101.0
--------- --------- --------- ---------
Total Cost of EUR 142.1 EUR 142.1 EUR 122.7 EUR 122.7
Revenue
Gross Profit EUR 792.4 EUR 801.5 EUR 673.9 EUR 673.9
Research and
Development 250.0 250.0 221.9 221.9
Marketing and
Sales 223.0 223.0 173.7 173.7
General
Administration 58.6 58.6 47.1 47.1
Amortization of
acquired
intangibles 9.8 (9.8) - 1.4 (1.4) -
--------- --------- --------- ---------
Total Research,
Selling,
Administration EUR 541.4 EUR 531.6 EUR 444.1 EUR 442.7
and Acquisition
expenses
========= ========= ========= =========
Operating
Income EUR 251.0 EUR 269.9 EUR 229.8 EUR 231.2
Financial
revenue and
Other 15.3 15.3 7.5 7.5
--------- --------- --------- ---------
Income before
income taxes 266.3 285.2 237.3 238.7
Income tax
expense (90.8) (7.2) (98.0) (80.9) (0.2) (81.1)
--------- --------- --------- ---------
Net Income EUR 175.5 EUR 187.2 EUR 156.4 EUR 157.6
========= ========= ========= =========
Diluted net
income per EUR 1.49 EUR 1.59 EUR 1.35 EUR 1.36
share
========= ========= ========= =========
Diluted weighted
average shares
outstanding (in
millions) 117.6 117.6 116.2 116.2
(1) Adjustments include amortization of acquired intangible assets and
the effect of adjusting the carrying value of acquired companies'
deferred revenue.
DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions of Euro)
December 31, December 31,
2005 2004
-------------- --------------
ASSETS
Cash and short-term investments 379.9 552.8
Accounts receivable, net 287.8 237.8
Other assets 745.6 308.6
-------------- --------------
Total assets EUR 1,413.3 EUR 1,099.2
LIABILITIES
AND SHAREHOLDERS' EQUITY
Total liabilities 427.2 340.0
Shareholders' equity 986.1 759.2
-------------- --------------
Total liabilities and shareholders' EUR 1,413.3 EUR 1,099.2
equity
DASSAULT SYSTEMES
CONDENSED CASH FLOW STATEMENT
(in millions of Euro)
Three Months ended Twelve Months ended
December December December December
31, 31, Variation 31, 31, Variation
2005 2004 2005 2004
-------- -------- --------- -------- -------- ---------
Net Profit 69.0 60.1 8.9 175.5 156.4 19.1
Changes in
working
capital and
non-cash P&L
items (32.1) (21.9) (10.2) 21.2 52.5 (31.3)
-------- -------- --------- -------- -------- ---------
Net Cash
provided by
operating
activities 36.9 38.2 (1.3) 196.7 208.9 (12.2)
Acquisition
and sale of
assets 0.2 (6.5) 6.7 (22.0) (23.7) 1.7
Acquisitions
net of cash (305.0) (1.3) (303.7) (329.4) (4.1) (325.3)
Loans (0.4) (1.1) 0.7 (2.3) (5.8) 3.5
-------- -------- --------- -------- -------- ---------
Net Cash
provided
(used) in
investing
activities (305.2) (8.9) (296.3) (353.7) (33.6) (320.1)
Share
repurchase
and proceeds
from stock
option
exercise,
net (4.9) (5.6) 0.7 (1.8) (7.0) 5.2
Dividend 0.0 0.0 0.0 (43.1) (38.4) (4.7)
-------- -------- --------- -------- -------- ---------
Net Cash
provided
(used) in
financing
activities
(1) (4.9) (5.6) 0.7 (44.9) (45.4) 0.5
Effect of
exchange
rate changes
on treasury
(2) 1.7 (22.3) 24.0 29.0 (16.8) 45.8
======== ======== ========= ======== ======== =========
Increase
(Decrease)
in treasury
(2) (271.5) 1.4 (272.9) (172.9) 113.1 (286.0)
Treasury (2)
at beginning
of period 651.4 551.4 552.8 439.7
Treasury (2)
at end of
period 379.9 552.8 379.9 552.8
(1) Excluding changes in short term investments.
(2) Treasury includes cash, cash equivalent and short term
investments.
Contact:
Dassault Systemes: Valerie Agathon or Geraldine Nithart-Riva 33.1.40.99.69.24 or Financial Dynamics: Harriet Keen, 44 20 7831 3113 or Pierre Mas Jean-Benoit Roquette Nelly Dimey 33.1.47.03.68.10