SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
6-K
REPORT OF FOREIGN
PRIVATE ISSUER
PURSUANT TO RULE
13a-16 OR 15d-16 OF
THE SECURITIES
EXCHANGE ACT OF 1934
Report on Form 6-K
dated August 5, 2008
Commission File No.
0-28578
DASSAULT SYSTEMES
S.A.
(Name of
Registrant)
9, Quai Marcel Dassault,
B.P. 310, 92156 Suresnes Cedex, France
(Address of
Principal Executive Offices)
Indicate by check
mark whether the registrant files or will file annual reports under cover of
Form 20-F
or Form
40-F
Form
20-F X Form
40-F __
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation
S-T Rule
101(b)(1):
Yes __ No X
Indicate by check
mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation
S-T Rule
101(b)(7):
Yes __ No X
Indicate by check
mark whether by furnishing the information contained in this Form, the
registrant is
also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the
Securities Exchange
Act of 1934:
Yes __ No X
If “Yes” is marked,
indicate below the file number assigned to the registrant in connection with
Rule
12g3-2(b): 82-___________
ENCLOSURES:
Dassault Systemes
S.A. is furnishing under cover of Form 6-K a press release dated August 5, 2008,
announcing the filing of its Half-Year Financial Report with the French Autorité des Marchés
Financier and containing a copy of such report, which was established in
accordance with the IFRS standards for the second quarter and six months ended
June 30, 2008.
Availability
of Dassault Systèmes’ 2008 Half-Year Financial Report
(IFRS
half year consolidated accounts)
Paris, France, August 5, 2008 -
Dassault Systèmes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY.PA)
today announced the availability to the public and the filing of its Half-Year
Financial Report with the French Autorité des Marchés
Financier. The half-year condensed consolidated accounts featured in this
report are established in accordance with the IFRS standards.
This
Half-Year Financial Report is available on Dassault Systèmes’ website at
http://www.3ds.com (heading Corporate/Investors/Regulated Information). Hard
Copies of the Half-Year Financial Report are also available upon request at
Dassault Systèmes’ headquarter, 9 quai Marcel Dassault, 92150 Suresnes,
France.
About
Dassault Systèmes
As a
world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault
Systèmes brings value to more than 100,000 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 is listed on the Nasdaq (DASTY) and Euronext Paris
(#13065, DSY.PA) stock exchanges. 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.
CONTACTS :
Dassault
Systèmes :
Valérie
Agathon/Béatrix Martinez
33.1.40.99.69.24
DASSAULT
SYSTEMES
HALF-
YEAR FINANCIAL REPORT
June 30,
2008
Société
anonyme
Common
stock, nominal value €1 per share as of June 30, 2008: 117,645,813
euros
Registered
Office: 9, quai Marcel Dassault – 92150 Suresnes
Nanterre
Commercial Register under No. 322 306 440
Table
of Contents
|
1.
|
RESPONSIBILITY
|
p.2
|
|||
|
1.1
|
Person
Responsible for the Half Year Financial Report
|
p.3
|
|||
|
1.2
|
Statement
by the Person Responsible for the Half Year Financial
Report
|
p.3
|
|||
|
2.
|
HALF
YEAR ACTIVITY REPORT
|
p.4
|
|||
|
2.1
|
Summary
Description of Dassault Systèmes
|
p.4
|
|||
|
2.2
|
Risk
Factors
|
p.5
|
|||
|
2.3
|
General
Presentation
|
p.5
|
|||
|
2.3.1
|
Basis
of presentation and summary of significant accounting
policies
|
p.5
|
|||
|
2.3.2
|
Summary
overview
|
p.7
|
|||
|
2.3.3
|
Supplemental
adjusted financial information
|
p.8
|
|||
|
2.4
|
Financial
Review of Operations as of June 30, 2008
|
p.11
|
|||
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2.4.1
|
Revenue
|
p.11
|
|||
| 2.4.1.1 | Software revenue |
p.11
|
|||
| 2.4.1.2 | Services and other revenue |
p.12
|
|||
|
2.4.2
|
Operating
expenses
|
p.13
|
|||
|
2.4.3
|
Operating
income
|
p.13
|
|||
|
2.4.4
|
Financial
revenue and other, net
|
p.14
|
|||
|
2.4.5
|
Income
tax expense
|
p.14
|
|||
|
2.4.6
|
Net
income and diluted net income per share
|
p.14
|
|||
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2.4.7
|
Cash
flow
|
p.15
|
|||
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2.5
|
Related
Party Transactions
|
p.15
|
|||
|
2.6
|
Business
Highlights
|
p.15
|
|||
|
2.7
|
Important
Post-closing Events
|
p.16
|
|||
|
2.8
|
Other
Important Information
|
p.16
|
|||
|
2.9
|
Outlook
|
p.17
|
|||
| 3. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED JUNE 30, 2008 |
p.18
|
|||
| 4. | INDEPENDENT AUDITORS REPORT ON THE LIMITED REVIEW OF THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED JUNE 30, 2008 |
p.31
|
|||
1
|
1
|
RESPONSIBILITY
|
|
1.1
|
Person
Responsible for the Half Year Financial
Report
|
Bernard
Charlès, President and Chief Executive Officer.
|
1.2
|
Statement
By The Person Responsible For the Half Year Financial
Report
|
Suresnes,
August 5, 2008
“I hereby
declare that, to the best of my knowledge, the half-year condensed financial
statements have been prepared in accordance with the applicable generally
accepted accounting standards and provide a true and fair view of the Company’s
financial position and results of operations and those of all companies included
within the scope of consolidation, and that the half year business report
reflects a true view of important events which occurred during the first six
months of the year and of their impact on the half year financial statements, of
the principal transactions between related parties, as well as the main risks
and uncertainties for the remaining six months of the year.”
Bernard
Charlès
President
and Chief Executive Officer
2
|
2
|
HALF
YEAR ACTIVITY REPORT
|
|
2.1
|
Summary
Description of Dassault Systemes
|
Dassault
Systèmes, which refers to Dassault Systèmes S.A. and its subsidiaries (the
“Company”), is the world leader, based on market share, of the global market for
PLM and Mainstream 3D software solutions. Its strategic mission is to provide
software solutions and consulting services that enable its customers to:
innovate in the design and quality of products and services; accelerate the
introduction of products and services to satisfy market demand; collaborate with
partners and suppliers in product development; create and manufacture products
more cost effectively; and simulate their end-customers’ experiences
(to understand and respond to their customers’ needs and to capture such
information in order to develop, adapt or introduce new products responding to
their customers’ evolving requirements).
The
Company’s software applications address a wide range of products, from apparel,
consumer goods, machine parts and semiconductors to automobiles, aircraft, ships
and factories. Its global customer base includes companies primarily in
11 sectors: automotive; aerospace; shipbuilding; industrial equipment;
high-tech; consumer goods; consumer packaged goods; life sciences; energy;
architecture and construction; and business services.
The
Company has six brands each with its own clearly defined mission, grouped under
two reporting segments:
|
|
-
|
PLM:
CATIA, for virtual product design; SIMULIA, for virtual testing; DELMIA,
for virtual production; ENOVIA, for a global collaborative lifecycle
management; and 3DVIA, for online 3D lifelike
experiences;
|
|
|
-
|
Mainstream
3D: SolidWorks, for productive and easy-to-use 3D mechanical
design.
|
In
addition to sales of software applications, Dassault Systèmes (DS) also provides
selected services, principally to large customers. These services comprise
mainly consulting services in methodology for design, deployment and support,
training services and engineering services.
The
Company devotes significant resources each year to research and development. The
Company’s research and product development teams are located in research
laboratories in France, the United States and India (including the
employees of its 3D PLM business venture), as well as in Canada, Germany, Israel
and the United Kingdom.
The
Company’s research and development is two-fold in nature, focusing on further
advancing its current portfolio of software applications and, at the same time,
on the development of technologies and applications which it expects to bring to
market over the medium- to longer-term.
The
Company largely markets and sells its software solutions indirectly. In 2007,
approximately two-thirds of the Company’s total revenue resulted from indirect
sales, including through IBM with whom DS has had a long-standing strategic
relationship, and one third from direct sales.
Through
its investments over the last several years the Company has developed three
sales channels: (1) its PLM Business Transformation Channel, primarily
addressing large enterprises through IBM PLM and the Company’s PLM direct sales
forces, (2) its PLM Value Channel,
3
primarily
addressing small- to mid-size enterprises through a network of value-added
resellers, and (3) its 3D Professional Channel, which focuses largely on
the marketing and sales of the Company’s Mainstream 3D solutions through a
network of value-added resellers and distributors. Pursuant to a long-standing,
mutually non-exclusive agreement, IBM markets and distributes a substantial
portion of DS’ PLM products worldwide. According to the terms of the agreement,
DS licenses these products to IBM, who then sub-licenses them to
end-users.
|
2.2
|
Risk
Factors
|
The
overall economic environment has an impact on the Company’s revenue and level of
business activity. The Company also considers trends in business investment
spending and industrial production since its customers are largely composed of
manufacturing companies. However, in light of the time lag between general
economic cycles and business investment spending, the differing investment
cycles of the various industrial sectors it serves, and the specific investment
budgets and calendars of its individual customers, the Company has not
identified short- or mid-term correlation between these macro-economic
indicators and the Company’s revenues for any particular region or period. In
addition, economic indicators are frequently revised upwards or downwards, so
that their forecasting relevance is limited.
The
Company’s actual results or performance may be materially different from the
estimated results based on management’s assumptions and materially negatively
affected by known and unknown risks and uncertainties. Risks related to the
Company’s business include, but are not limited to the following
risks:
|
|
·
|
The
Company’s revenue and earnings depend on corporate spending on information
technology infrastructure, which may decrease during periods of weak
general economic growth and business conditions or due to significant
fluctuations in currency
exchange rates.
|
|
|
·
|
As
a result of its historical approach to commercializing its PLM products, a
substantial portion of the Company’s total revenue results from a
long-standing distribution agreement with IBM. Since 2005, the Company has
begun to assume much greater responsibility for the distribution of PLM
products. If it does not effectively address the related management and
commercial challenges, the Company’s revenue and ability to grow could be
negatively impacted.
|
|
|
·
|
Currency
fluctuations may significantly affect the Company’s results of operations,
in particular those related to USD and JPY relative to
EUR.
|
|
|
·
|
Claims
that its products, or any third-party components embedded in its products,
infringe the proprietary rights of others could harm the Company’s sales
and increase its costs.
|
|
|
·
|
If
the Company does not maintain and improve the technological strength of
its products, demand for them may
be reduced.
|
|
|
·
|
Errors
or defects in its products could cause the Company to incur additional
costs, lose revenue and business opportunities and expose it to potential
liability.
|
|
|
·
|
If
the Company is unable to hire or retain its key personnel and executives,
its business activities and operating results may be negatively
affected.
|
4
|
|
·
|
The
Company’s products, business development and sales could be adversely
affected if it experiences difficulties with
its partners.
|
|
|
·
|
The
regulatory environments in which the Company operates have become
increasingly complex, including with respect to accounting standards and
internal controls.
|
|
|
·
|
As
the Company’s business grows, it is increasingly exposed to the risk of
claims and lawsuits against the Company that may increase its expenses for
legal services, absorb management resources and result in adverse
outcomes.
|
|
|
·
|
If
the Company fails to adequately protect its intellectual property, its
competitive market position could
be harmed.
|
|
|
·
|
The
growth of the Company creates organizational stresses which can adversely
affect its business or financial
performance.
|
|
|
·
|
Competitive
price pressure and a longer sales cycle could negatively impact the
Company’s revenue, financial performance and market
position.
|
|
|
·
|
The
Company’s key facilities are subject to risks of damage or temporary
unavailability.
|
|
|
·
|
The
Company is subject to the risks inherent in international
operations.
|
Please
see the Company’s 2007 Document de Référence, filed with the French “Autorité des Marchés
Financiers” on April 4, 2008, for a detailed discussion of its risk
factors.
|
2.3
|
General
Presentation
|
|
2.3.1
|
Basis
of Presentation and Summary of Significant Accounting
Policies
|
The summary below highlights selected aspects of the Company’s financial results for the first half of 2008 under IFRS. The summary, the supplemental adjusted financial information and the more detailed discussion that follows should be read together with the Company’s half year consolidated financial statements and the related notes included under Section 3 of this Half Year Report.
The
interim condensed consolidated financial statements for the six months ended
June 30, 2008 have been prepared in accordance with International Accounting
Standard (“IAS”) 34, Interim Financial Reporting and as such do not include all
information required for annual financial statements. Consequently, the interim
condensed consolidated financial statements should be read in conjunction with
the Company’s annual financial statements as of December 31, 2007, prepared in
accordance with International Financial reporting Standards (“IFRS”) as adopted
in the European Union.
The
interim financial statements were prepared based on the same accounting policies
as those applied in the consolidated financial statements as of December 31,
2007, with the exceptions described below. New standards and interpretations
effective beginning on January 1, 2008 had no significant impact on the
financial position and results of operations of the Company. New standards and
interpretations effective beginning on January 1, 2009 were not early adopted by
the Company.
5
Exceptions
to the accounting policies used in the preparation of the interim financial
statements are as follows:
|
|
-
|
Income
tax expense is based on an estimate of the weighted average annual income
tax rate expected for the full financial
year.
|
|
|
-
|
Pension
costs are estimated based on the actuarial reports prepared for fiscal
year 2007.
|
In
discussing and analyzing its results of operations, the Company considers
supplemental adjusted financial information which excludes:
|
|
·
|
the
effect of adjusting the carrying value of acquired companies’ deferred
revenue,
|
|
|
·
|
the
amortization of acquired
intangibles,
|
|
|
·
|
stock-based
compensation expense and,
|
|
|
·
|
other
operating income and expense, net. In addition to the individual adjusted
financial measures described in the 2007 Document de Référence, the
Company’s IFRS 2008 periodic financial statements reflect other income and
expense comprised of income and expense related to the relocation of the
Company’s corporate headquarters and restructuring expenses. In its
supplemental adjusted financial information, the Company excludes other
operating income and expense effects because of their unusual, infrequent
or generally non-recurring nature. As a result, the Company believes that
its supplemental adjusted financial information helps investors better
understand the current trends in its operating
performance. However, other operating income and expense are
components of the Company’s income and expense for 2008 and by excluding
them, the supplemental adjusted financial information understates the
impact to its net income in 2008. Other operating income and expense are
generally not recurring, and the Company does not expect to incur other
operating income and expense as part of its normal business on a regular
basis.
|
A
reconciliation of this supplementary adjusted financial information with
information set forth in the Company’s consolidated financial statements and the
notes thereto is presented below under “Supplemental Adjusted Financial
Information”.
When the
Company believes it would be helpful for understanding trends in its business,
it restates percentage increases or decreases in selected financial data 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 below “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 period. All constant
currency information is provided on an approximate basis. Unless otherwise
indicated, the impact of exchange rate fluctuations is approximately the same
for both the Company’s IFRS and supplemental adjusted financial data for the
periods discussed below.
The
Company’s quarterly revenues have varied significantly and are likely to vary
significantly in the future. Its net income also varies considerably each
quarter, reflecting the change in revenues, since its expenses tend to be
relatively stable throughout the year. A significant portion of sales typically
occurs in the last month of each quarter, and, as is typical in the software
market, the Company normally experiences its highest licensing activity for the
year in December. Software
6
revenue,
total revenue, operating income and net income have generally been highest in
the fourth quarter of each year.
Some of
the factors causing the Company’s quarterly revenues to vary significantly
include, but are not limited to: changes in the macroeconomic environment, the
size of software transactions, the method of software licensing, the timing and
size of service engagements, the timing and size of product development software
engagements as well as the timing and level of mergers and acquisition
activities. Additionally, quarterly revenue can vary significantly due to the
varying length of time required to negotiate and complete sales contracts or to
the timing of recognition of service engagements.
|
2.3.2
|
Summary
overview
|
The table below sets forth the Company’s revenue by activity, geographic region and segment for the half years ended June 30, 2008 and 2007 and provides growth rates on an as reported basis and in constant currencies.
|
First
half ended June 30,
|
||||||||||||||||
|
(in
millions, except percentages)
|
2008
|
Variation
|
Variation
in constant currencies
|
2007
|
||||||||||||
|
Total
Revenue
|
633.6 | 6.2 | % | 13 | % | 596.6 | ||||||||||
|
Total
revenue by activity
|
||||||||||||||||
|
Software
revenue
|
547.1 | 9.6 | % | 16 | % | 499.1 | ||||||||||
|
Services
and other revenue
|
86.5 | (11.3 | %) | (6 | %) | 97.5 | ||||||||||
|
Total
revenue by geography
|
||||||||||||||||
|
Americas
|
189.8 | 0.1 | % | 15 | % | 189.7 | ||||||||||
|
Europe
|
295.8 | 12.2 | % | 12 | % | 263.6 | ||||||||||
|
Asia
|
148.0 | 3.3 | % | 10 | % | 143.3 | ||||||||||
|
Total
revenue by segment
|
||||||||||||||||
|
PLM
revenue
|
499.7 | 5.6 | % | 14 | % | 473.1 | ||||||||||
|
Mainstream
3D revenue
|
133.9 | 8.4 | % | 16 | % | 123.5 | ||||||||||
The
Company’s First Half 2008 financial performance benefited from the
diversification of its revenues by geographic region, product application and
sales channel.
|
|
·
|
All
three of the Company’s geographic regions had year-over-year revenue
growth, led by the Americas. In constant currencies as applicable, revenue
in Europe increased 12%, the Americas increased 15% and Asia grew
10%.
|
|
|
·
|
Software
revenue, representing 86% of the Company’s total revenue, was the
principal driver of its revenue growth for the 2008 first half, increasing
16% in constant currencies, with total revenue increasing 13% in constant
currencies. Services and other revenue decreased 6% in constant
currencies.
|
|
|
·
|
Software
revenue growth was well-supported by the performance of the Company’s
three largest brands with CATIA software revenue increasing 22% in
constant currencies, reflecting primarily internal growth, dynamic related
to the transformation of the
|
7
|
|
|
Company’s
sales channels as well as the acquisition of ICEM in June 2007, ENOVIA
software revenue increasing 12% in constant currencies and Mainstream 3D
software revenue increasing 16% in constant currencies led by SolidWorks.
Company’s sales channels as well as the acquisition of ICEM in June 2007,
ENOVIA software revenue increasing 12% in constant currencies and
Mainstream 3D software revenue increasing 16% in constant currencies led
by SolidWorks.
|
|
|
·
|
Services
and other revenue, representing 14% of total revenue, decreased 6% in
constant currencies. Services and other revenue growth trends during 2008
largely reflect the winding down of historical channel management
activities rendered to IBM.
|
Recurring
software revenue, which increased 20% in constant currencies, was an important
contributor to revenue growth and continues to be an important aspect of the
Company’s financial model. For the 2008 First Half recurring software revenue
represented 63% of software revenue, compared to 61% in the 2007 First Half.
Recurring software revenue includes periodic licenses and annual maintenance
revenue.
Due to
its revenue growth and profitability levels, the Company’s net cash provided by
operations increased 11.9% for the 2008 First Half to €194.8 million
compared to €174.1 million for the 2007 First Half.
Cash and
short-term investments total €739.7 million at June 30, 2008, compared
to €626.6 million at December 31, 2007. The Company’s net financial
position amounts to €539.7 million at June 30, 2008, net of
outstanding debt consisting of €200 million of financial long-term debt.
During the 2008 First Half, the Company paid cash dividends totaling
€53.7 million and completed share repurchases totaling €35.0
million.
|
2.3.3
|
Supplemental
adjusted financial information
|
Readers
are cautioned that the supplemental adjusted financial information is subject to
inherent limitations. It is not based on any comprehensive set of accounting
rules or principles and should not be considered in isolation from or as a
substitute for IFRS measurements. The supplemental adjusted financial
information should be read only in conjunction with the Company’s consolidated
financial statements prepared in accordance with IFRS. Furthermore, this
supplemental adjusted financial information may not be comparable to similarly
titled adjusted measures used by other companies.
In
evaluating and communicating its results of operations, the Company supplements
its financial results reported on an IFRS basis with adjusted financial data,
including adjusted revenue, adjusted operating income, adjusted operating
margin, adjusted net income and adjusted diluted net income per share. As
explained above in section 2.3.1, the supplemental adjusted financial
information excludes certain income statement elements: deferred revenue
adjustments for acquired companies, amortization of acquired intangibles,
including amortization of acquired software, (which arise from its acquisitions
of companies and some technology-related intangible assets) stock-based
compensation expense and other operating income and expense, net. Subject to the
limitations set forth above and in its most recent Document de Référence, the
Company believes that the supplemental adjusted financial information provides a
consistent basis for period-to-period comparisons which can improve investors’
understanding of its financial performance.
The
Company’s management uses the supplemental adjusted financial information,
together with its IFRS financial information, to evaluate its operating
performance, to make operating decisions and to plan and set objectives for
future periods. Compensation of its executive officers is based in part on the
performance of its business measured with the supplemental adjusted information.
The Company believes that the supplemental adjusted data also provides
meaningful information to
8
investors
and financial analysts who use it for comparing its operating performance to its
historical trends and to other companies in its industry, as well as for
valuation purposes.
The
following table sets forth the Company’s supplemental adjusted revenue,
operating income, operating margin, net income and diluted net income per share,
which exclude the effect of adjusting the carrying value of acquired companies’
deferred revenue, the expense for the amortization of acquired intangible
assets, stock-based compensation expense and other operating income and expense,
net. The tables also set forth the most comparable IFRS financial measure and a
reconciliation of the IFRS and adjusted information.
|
For
the First Half Ended June 30,
|
Increase
(Decrease)
|
|||||||||||||||||||||||||||||||
|
(in
millions, except percentages
and
per share data)
|
2008
IFRS
|
Adjustment(1)
|
2008
adjusted
|
2007
IFRS
|
Adjustment(1)
|
2007
adjusted
|
IFRS
|
Adjusted(2)
|
||||||||||||||||||||||||
|
Total
Revenue
|
€ | 633.6 | € | 0.5 | € | 634.1 | € | 596.6 | € | 6.9 | € | 603.5 | 6.2 | % | 5.1 | % | ||||||||||||||||
|
Total
revenue by activity
|
||||||||||||||||||||||||||||||||
|
Software
revenue
|
547.1 | 0.5 | 547.6 | 499.1 | 6.9 | 506.0 | 9.6 | % | 8.2 | % | ||||||||||||||||||||||
|
Services
and other revenue
|
86.5 | 97.5 | (11.3 | %) | ||||||||||||||||||||||||||||
|
Total
revenue by geography
|
||||||||||||||||||||||||||||||||
|
Americas
|
189.8 | 0.2 | 190.0 | 189.7 | 3.4 | 193.1 | 0.1 | % | (1.6 | %) | ||||||||||||||||||||||
|
Europe
|
295.8 | 0.2 | 296.0 | 263.6 | 2.6 | 266.2 | 12.2 | % | 11.2 | % | ||||||||||||||||||||||
|
Asia
|
148.0 | 0.1 | 148.1 | 143.3 | 0.9 | 144.2 | 3.3 | % | 2.7 | % | ||||||||||||||||||||||
|
Total
revenue by segment
|
||||||||||||||||||||||||||||||||
|
PLM
revenue
|
499.7 | 0.5 | 500.2 | 473.1 | 4.5 | 477.6 | 5.6 | % | 4.7 | % | ||||||||||||||||||||||
|
Mainstream
3D revenue
|
133.9 | 123.5 | 2.4 | 125.9 | 8.4 | % | 6.4 | % | ||||||||||||||||||||||||
|
Total
Operating Expenses
|
€ | (495.8 | ) | € | 13.7 | € | (482.1 | ) | € | (489.8 | ) | 23.6 | € | (466.2 | ) | 1.2 | % | 3.4 | % | |||||||||||||
|
Stock-based
compensation expense
|
(9.8 | ) | 9.8 | – | (7.7 | ) | 7.7 | - | n/a | n/a | ||||||||||||||||||||||
|
Amortization
of acquired
intangibles
|
(18.6 | ) | 18.6 | – | (15.9 | ) | 15.9 | - | n/a | n/a | ||||||||||||||||||||||
|
Other
operating revenue and
expense,
net
|
14.7 | (14.7 | ) | – | 0.0 | n/a | n/a | |||||||||||||||||||||||||
|
Operating
Income
|
137.8 | 14.2 | 152.0 | 106.8 | 30.5 | 137.3 | 29.0 | % | 10.7 | % | ||||||||||||||||||||||
|
PLM
Operating income
|
84.7 | 13.9 | 98.6 | 61.9 | 27.8 | 89.7 | 36.8 | % | 9.9 | % | ||||||||||||||||||||||
|
Mainstream
3D Operating income
|
53.1 | 0.3 | 53.4 | 44.9 | 2.7 | 47.6 | 18.3 | % | 12.2 | % | ||||||||||||||||||||||
|
Operating
Margin
|
21.7 | % | 24.0 | % | 17.9 | % | 22.8 | % | ||||||||||||||||||||||||
|
PLM
Operating margin
|
17.0 | % | 19.7 | % | 13.1 | % | 18.8 | % | ||||||||||||||||||||||||
|
Mainstream
3D Operating margin
|
39.7 | % | 39.9 | % | 36.4 | % | 37.8 | % | ||||||||||||||||||||||||
|
Income
before Income Taxes
|
€ | 138.0 | € | 14.2 | € | 152.2 | € | 113.1 | € | 30.5 | € | 143.6 | 22.0 | % | 6.0 | % | ||||||||||||||||
|
Income
tax expense
|
(37.7 | ) | (10.7 | ) | (48.4 | ) | (38.5 | ) | (8.7 | ) | (47.2 | ) | n/a | n/a | ||||||||||||||||||
|
Income
tax effect of adjustments above
|
10.7 | (10.7 | ) | – | 8.7 | (8.7 | ) | – | n/a | n/a | ||||||||||||||||||||||
|
Minority
interest
|
(0.1 | ) | (0.1 | ) | n/a | |||||||||||||||||||||||||||
|
Net
Income
|
€ | 100.2 | € | 3.5 | € | 103.7 | € | 74.5 | € | 21.8 | € | 96.3 | 34.5 | % | 7.7 | % | ||||||||||||||||
|
Diluted
Net Income Per Share(3)
|
€ | 0.84 | € | 0.03 | € | 0.87 | € | 0.62 | € | 0.19 | € | 0.81 | 35.5 | % | 7.4 | % | ||||||||||||||||
9
|
(1)
|
The
adjustment of stock-based compensation expense is as
follows:
|
|
For
the First Half Ended June 30,
|
||||||||||||||||||||||||
|
(in
millions)
|
2008
IFRS
|
Adjustment
|
2008
adjusted
|
2007
IFRS
|
Adjustment
|
2007
adjusted
|
||||||||||||||||||
|
Cost
of services and other revenue
|
€ | (74.5 | ) | € | 0.4 | € | (74.1 | ) | € | (78.7 | ) | € | 0.3 | € | (78.4 | ) | ||||||||
|
Research
and development
|
(150.3 | ) | 5.7 | (144.6 | ) | (152.0 | ) | 4.4 | (147.6 | ) | ||||||||||||||
|
Marketing
and sales
|
(187.7 | ) | 1.9 | (185.8 | ) | (171.4 | ) | 1.6 | (169.8 | ) | ||||||||||||||
|
General
and administrative
|
(52.0 | ) | 1.8 | (50.2 | ) | (46.0 | ) | 1.4 | (44.6 | ) | ||||||||||||||
|
Total
stock-based compensation expense
|
(9.8 | ) | 9.8 | – | (7.7 | ) | 7.7 | – | ||||||||||||||||
|
(2)
|
The
adjusted percentage increase (decrease) compares adjusted measures for the
two different periods. In the event there is an adjustment to the relevant
measure for only one of the periods under comparison, the adjusted
increase (decrease) compares the adjusted measure to the relevant
IFRS measure.
|
|
(3)
|
Based
on a weighted average 119.3 million diluted shares for the 2008 First
Half and 119.2 million diluted shares for the 2007 First
Half.
|
10
|
2.4
|
FINANCIAL
REVIEW OF OPERATIONS AS OF JUNE 30,
2008
|
|
2.4.1
|
Revenue
|
Total
revenue increased 6.2% to €633.6 million in first half 2008 compared to €596.6
million in the first half 2007 and grew 13% in constant currencies. Adjusted
total revenue increased 5.1% to €634.1 million in first half 2008 compared to
€603.5 million in the same period a year ago and increased 11% in constant
currencies. Total adjusted revenue growth was driven by software revenue growth
reaching 15% in constant currencies.
By
geographic region and in constant currencies as applicable, revenue in Europe
increased 12% (adjusted up 11%) the Americas increased 15% (adjusted up 13%) and
Asia increased 10% (adjusted up 9%).
As a
percentage of total revenue, Europe represented 47% (44% in 2007 First Half),
the Americas accounted for 30% (32% in 2007 First Half) and Asia represented 23%
(24% in 2007 First Half).
|
2.4.1.1
|
Software
Revenue
|
Software revenue is comprised of new licenses revenue and periodic licenses, maintenance and product development revenue.
The
Company’s PLM products are mainly licensed pursuant to one of two payment
structures: (i) new licenses, for which the customer pays an initial fee
for a perpetual license and subsequently pays fees for maintenance, generally on
an annual basis, or (ii) periodic (rental) licenses, for which the customer
pays equal periodic fees to keep the license active. New licenses require the
payment of fees for maintenance and product updates. Periodic (rental) licenses
entitle the customer to corrective maintenance and product updates without
additional charge. Product updates include improvements to existing products but
do not cover new products. Software revenue generated from new customers, or
from new business with existing customers, is recorded as “periodic license”
revenue if the customer chooses that payment structure. The Company’s product
development revenue relates to the development of additional functionalities of
standard products requested by customers.
Software
licenses offered by SolidWorks require the payment of a one-time fee, which is
recorded as new licenses revenue. Access to upgrades and maintenance requires
payment of an annual subscription fee, which is recorded as maintenance
revenue.
|
For
the First Half Ended June 30,
|
||||||||
|
(in millions,
except percentages)
|
2008
|
2007
|
||||||
|
Software
revenue
|
||||||||
|
New
licenses revenue
|
€ | 201.9 | € | 192.0 | ||||
|
Periodic
licenses, maintenance and product development revenue
|
345.2 | 307.1 | ||||||
|
Total
software revenue
|
€ | 547.1 | 499.1 | |||||
|
(as a
% of total revenue)
|
86.3 | % | 83.7 | % | ||||
11
Software
revenue increased 9.6% and 16% in constant currencies. Adjusted software revenue
increased 15%, with new licenses revenue growth of 11% and adjusted periodic
licenses, maintenance and product development revenue growth of 17%, all figures
in constant currencies.
PLM
software revenue increased 17% in constant currencies. Adjusted PLM software
revenue growth of 15% in constant currencies was led by CATIA with adjusted
software revenue growth of 20% in constant currencies, reflecting good dynamics
related to the transformation of the Company’s channels, and the inclusion of
ICEM. ENOVIA adjusted software revenue performance increased 6% in constant
currencies.
Mainstream
3D software revenue increased 16% in constant currencies. Adjusted Mainstream 3D
software revenue increased 14% in constant currencies on growth in maintenance
revenue, growth in sales of new licenses and growth of sales of its analysis and
product data management software.
Recurring
revenue, comprised of periodic licenses and maintenance revenue, increased 20%
in constant currencies and totaled €345.1 million for the 2008 First Half,
compared to €304.5 million in the 2007 First Half. Recurring revenue
represented 63% and 61% of software revenue in the First Half of 2008 and 2007,
respectively.
|
2.4.1.2
|
Services
and other revenue
|
Services
and other revenue are generated mainly from consulting services in methodology
for design, deployment and support, training services and engineering services.
In addition, the Company generates services revenue from the commissions it
receives as a result of its sales activities as a reseller (formerly as an IBM
Business Partner) and, since mid-2005, from fees paid by IBM for the Company’s
management of the indirect PLM Value sales channel (Channel Management Provider
or CMP). As the Company completes the transition to direct oversight of its PLM
Value Channel, it will no longer receive CMP service revenue. The Company
spun-off its DSF division on July 1, 2008, which will lead to lower commissions
from internal reseller activity as noted above. The Company also resells a
limited amount of computer hardware, for which it records only the gross margin
from these sales as service revenue. For each of the periods presented, nearly
all of the Company’s service revenue was generated principally by the
PLM segment.
|
For
the First Half Ended
June
30,
|
||||||||
|
(in millions,
except percentages)
|
2008
|
2007
|
||||||
|
Services
and other revenue
|
€ | 86.5 | € | 97.5 | ||||
|
(as a
% of total revenue)
|
13.7 | % | 16.3 | % | ||||
Services
and other revenue, representing 13.7% of total revenue, decreased approximately
6% in constant currencies. These results largely reflect the winding down of
certain historical channel management activities rendered to IBM and related fee
revenue which will continue over the course of 2008 as the Company completes the
formation of its indirect PLM channel.
12
|
2.4.2
|
Operating
expenses
|
Growth in
operating expenses of 1.2% to €495.8 million for the 2008 First Half
compared to €489.8 million for the 2007 First Half reflected principally
(i) the build-out of the Company’s sales channels, including in particular
additional marketing, sales and administrative personnel, largely offset by (ii)
other operating income and expense, in particular a gain on sale of real estate
in connection with the relocation of the Company’s headquarters. Currency had a
net favorable impact of about 7 percentage points on growth in the
Company’s operating expenses during the 2008 First Half in comparison to the
2007 First Half due to the decrease in the value of the U.S. dollar and
Japanese yen.
|
For
the First Half Ended
June 30, |
||||||||
|
(in millions)
|
2008
|
2007
|
||||||
|
Operating
expenses
|
€ | 495.8 | € | 489.8 | ||||
|
Adjustments(1)
|
(13.7 | ) | (23.6 | ) | ||||
|
Adjusted
operating expenses(1)
|
€ | 482.1 | € | 466.2 | ||||
|
(1)
|
The
adjustments and adjusted operating expenses in the table above reflect
adjustments to the Company’s financial information prepared in accordance
with IFRS by excluding (i) the amortization of acquired intangibles,
(ii) stock-based compensation expense and (iii) other operating
income and expense, net. For the reconciliation of this adjusted financial
information with information set forth in its financial statements and the
notes thereto, see “Supplemental Adjusted Financial Information”
above.
|
|
2.4.3
|
Operating
income
|
|
For
the First Half ended
June
30,
|
||||||||
|
(in millions)
|
2008
|
2007
|
||||||
|
Operating
income
|
€ | 137.8 | € | 106.8 | ||||
Operating
income increased 29.0% to €137.8 million for the 2008 First Half from
€106.8 million in the 2007 First Half. On an adjusted basis, operating
income increased 10.7% to €152.0 million from €137.3 million in the
prior year period. The increase in operating income reflected higher revenue and
higher other operating income and expense, net which was offset in part by an
increase in expenses related to personnel, particularly in marketing and sales
and to higher general and administrative expenses related to the build-out of
back office support for the Company’s PLM Value Channel. Changes in currency
values reduced the reported operating income growth rate by an estimated
5 percentage points (5 percentage points on an adjusted basis). The
operating margin increased to 21.7% from 17.9%. The adjusted operating margin
increased 1.2 percentage points to 24.0%, compared to 22.8% in the year-ago
period.
13
|
2.4.4
|
Financial
revenue and other, net
|
|
For
the First Half Ended
June
30,
|
||||||||
|
(in millions)
|
2008
|
2007
|
||||||
|
Financial
revenue and other, net
|
€ | (0.6 | ) | € | 5.6 | |||
Financial
revenue and other, net amounted to €(0.6) million for the 2008 First Half
compared to €5.6 million for the 2007 First Half. Financial revenue and
other, net was principally comprised of net interest income of €7.0 million
and exchange losses of €(7.7) million. The decrease in financial revenue and
other, net primarily reflected higher exchange losses on U.S. dollar or Japanese
yen denominated receivables and payables, as well as a slight decrease in net
interest income due to a decrease in the interest rates on investments held in
U.S. dollars.
|
2.4.5
|
Income
tax expense
|
|
For
the First Half Ended
June
30,
|
||||||||
|
(in millions,
except percentages)
|
2008
|
2007
|
||||||
|
Income
tax expense
|
€ | 37.7 | € | 38.5 | ||||
|
Effective
consolidated tax rate
|
27.3 | % | 34.0 | % | ||||
Income
tax expense decreased €0.8 million or 2.1% and the Company’s effective
consolidated tax rate decreased to 27.3% for the 2008 First Half from 34.0% for
the 2007 First Half, principally reflecting a lower rate of taxation on the gain
generated by the sale of part of the Company’s headquarters as well as the
recognition of a tax benefit resulting from the Company’s decision to use
treasury stock to fulfill its obligations under the stock grants. On
an adjusted basis, the effective consolidated tax rate was 31.8% for the 2008
First Half, compared to 32.9% for the 2007 First Half.
|
2.4.6
|
Net
income and diluted net income per
share
|
|
For
the First Half Ended
June
30,
|
||||||||
|
(in millions,
except per share data)
|
2008
|
2007
|
||||||
|
Net
income attributable to Equity holders of the Company
|
€ | 100.2 | € | 74.5 | ||||
|
Diluted
net income per share
|
€ | 0.84 | € | 0.62 | ||||
|
Diluted
weighted average shares outstanding
|
119.3 | 119.2 | ||||||
Net
income per diluted share increased 35.5%. Adjusted net income per diluted share
increased 7.4% to €0.87 reflecting an increase in adjusted operating income of
10.7% partially offset by a significant decrease in financial revenue and other,
net.
14
|
2.4.7
|
Cash
flow
|
Net operating cash flow was €194.8 million for the 2008 First Half. Cash and short-term investments totaled €739.7 million and long-term debt totaled €200.0 million at June 30, 2008.
During
the 2008 First Half, the Company repurchased 961,986 common shares for a total
cost of approximately €35 million.
At the
Annual Shareholders’ Meeting held on May 22, 2008, Dassault Systemes
stockholders approved the payment of an annual cash dividend in the amount of
€0.46 per share, or €53.7 million in the aggregate, for the fiscal year ended
December 31, 2007. The cash dividend was paid on June 20, 2008.
|
2.5
|
Related
Party Transactions
|
Related-party
transactions were identified in the “Document de Référence” of
Dassault Systèmes filed with the French Autorité des Marchés
Financiers on April 4, 2008, in Chapter 7, Section 7.10 “Related-Party
Transactions”.
Except
those described in the 2007 “Document de Référence”, no new related party
transactions occurred during the first half year 2008.
In
particular, the transactions entered into with Dassault Aviation and 3D PLM
Software Solutions Ltd during the first six months of 2008 and mentioned in the
“Document de Référence” continued without any modifications which could
significantly impact the financial position or the income of Dassault Systèmes
during the 2008 First Half.
|
2.6
|
Business
Highlights
|
On
January 24, 2008, the Company announced the launch of its new,
next-generation platform, Version 6 (V6). V6 is an open platform, embracing
SOA standards. V6 offers a single PLM platform for all PLM business
processes, available to anybody anywhere, spanning engineering groups,
businesses and end users. V6 also gives intelligent access to product
experience information no matter the data source location, with DS’ ENOVIA
MatrixOne technology built into the foundation. On May 29, 2008, the
Company introduced its first Version 6 release, V6R2009, covering business
processes designed to serve all of its 11 target industries.
This
event had no significant impact on the consolidated financial statements as of
June 30, 2008.
During
the First Half 2008, the Company repurchased 961,986 common shares under the
share repurchase program authorized by the Annual Shareholders’ Meeting of June
6, 2007.
The
Company plans to repurchase up to 2 million shares over the Second Half 2008,
subject to market conditions. At the Annual Shareholders meeting on May 22,
2008, shareholders approved the resolution authorizing the Board of Directors of
the Company to implement a new share repurchase program in order to replace the
program previously authorized.
15
|
2.7
|
Important
Post-closing Events
|
On July
21, 2008, the Company completed the acquisition of Engineous Software, a market
leader in process automation, integration and optimization for a cash purchase
price of US$40 million. This acquisition is intended to extend SIMULIA’s
leadership in providing Simulation Lifecycle Management solutions on the V6 IP
collaboration platform.
On July
1, 2008, the Company spun off Dassault Systèmes Solutions France (DSF), its PLM
sales division dedicated primarily to small and medium businesses in France,
Belgium and Luxembourg, to become Keonys, a Dassault Systèmes Value Added
Reseller (VAR). As part of Company’s plan launched in 2006 to build a PLM
indirect sales channel, the creation of Keonys is consistent with the continuous
strengthening of this channel, with a network of PLM resellers in more than 60
countries.
|
2.8
|
Other
Important Information
|
On July
29, 2008, the Board of Directors of the Company approved the voluntary delisting
of its American Depositary Shares (ADS) from Nasdaq and its voluntary
deregistration with the U.S. Securities and Exchange Commission
(SEC).
As a
result, the Company intends to file a Form 25 with the SEC in October 2008 to
effect the delisting. The delisting will be effective ten days after this
filing. The Company intends to file a Form 15F with the SEC to
deregister and terminate its reporting obligations under the U.S. Exchange Act
as soon as practicable following the effectiveness of the delisting from Nasdaq.
The deregistration will become effective 90 days after the filing of the Form
15F. The Company does not plan to publish a Form 20-F for the fiscal year ended
December 31, 2008.
The
Company intends to maintain its American Depository Receipt (ADR) program, which
will enable investors to retain their ADRs and facilitate trading on the U.S.
Over-The-Counter (OTC) market.
The
Company will continue to publish its financial reports, statements and press
releases in English as well as information for investors on its website
(www.3ds.com) pursuant to section 12g3-2(b) of the U.S. Securities Exchange
Act.
Following
the delisting of the Company’s ADS and deregistration, the Company’s shares will
remain listed on the Euronext's Eurolist.
16
|
2.9
|
Outlook
|
The
Company’s objectives are prepared and communicated only on an adjusted basis and
are subject to the cautionary statement set forth below:
The
Company indicated in its second quarter press release issued on July 31, 2008
that it was reconfirming its constant currency adjusted software revenue growth
objective of about 12% to 13% for 2008.
The
Company’s actual results or performance may be materially different from the
estimated results based on management’s assumptions as well as by known and
unknown risks and uncertainties. Actual results or performances may differ
materially from those assumptions due to a range of factors. The
Company has in particular assumed an average U.S. dollar to euro exchange
rate of US$1.60 per €1.00 and an average Japanese yen to euro exchange rate of
JPY160 to €1.00 for the 2008 third quarter and an average U.S. dollar to euro
exchange rate of US$1.57 per €1.00 and an average Japanese yen to euro exchange
rate of JPY160 to €1.00 for the full year 2008; however, currency values
fluctuate, and its results of operations may be significantly affected by
changes in exchange rates. The Company has also assumed that there will be no
substantial decline in general levels of corporate spending on information
technology, and that its increased responsibility for both indirect and direct
PLM sales channels, and the resulting commercial and management challenges, will
not prevent it from maintaining growth in revenues or cause it to incur
substantial unanticipated costs and inefficiencies. In addition, the Company’s
actual results or performance may be materially negatively affected by
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 any newly acquired company and internal
reorganizations (See section 2.2).
17
|
3
|
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED JUNE 30,
2008
|
CONSOLIDATED STATEMENTS OF
INCOME
|
Six
months ended June 30,
|
||||||||||||
|
2008
|
2007
|
|||||||||||
|
(in thousands of euros, except
per share data)
|
Note
|
(unaudited)
|
(unaudited)
|
|||||||||
|
New
licenses revenue
|
201,888 | 191,924 | ||||||||||
|
Periodic
licenses, maintenance and product development revenue
|
345,183 | 307,155 | ||||||||||
|
Software
revenue
|
5
|
547,071 | 499,079 | |||||||||
|
Services
and other revenue
|
86,495 | 97,557 | ||||||||||
|
Total
revenue
|
633,566 | 596,636 | ||||||||||
|
Cost
of software revenue
|
(27,405 | ) | (25,775 | ) | ||||||||
|
Cost
of services and other revenue
|
(74,464 | ) | (78,741 | ) | ||||||||
|
Research
and development
|
(150,270 | ) | (152,000 | ) | ||||||||
|
Marketing
and sales
|
(187,730 | ) | (171,432 | ) | ||||||||
|
General
and administrative
|
(52,002 | ) | (45,976 | ) | ||||||||
|
Amortization
of acquired intangibles
|
(18,618 | ) | (15,952 | ) | ||||||||
|
Other
operating income and expense, net
|
6
|
14,764 | - | |||||||||
|
Operating
income
|
137,841 | 106,760 | ||||||||||
|
Financial
revenue and other, net
|
7
|
(636 | ) | 5,637 | ||||||||
|
Income
from equity investees
|
817 | 695 | ||||||||||
|
Income
before income taxes
|
138,022 | 113,092 | ||||||||||
|
Income
tax expense
|
(37,646 | ) | (38,453 | ) | ||||||||
|
Net
income
|
100,376 | 74,639 | ||||||||||
|
Attributable
to:
|
||||||||||||
|
Equity
holders of the Company
|
100,236 | 74,512 | ||||||||||
|
Minority
interest
|
140 | 127 | ||||||||||
|
Basic
net income per share
|
€ | 0.86 | € | 0.64 | ||||||||
|
Diluted
net income per share
|
€ | 0.84 | € | 0.62 | ||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
18
CONSOLIDATED
BALANCE SHEETS
|
(in thousands of
euros)
|
June
30,
2008
|
December
31,
2007
|
||||||||||
|
Assets
|
Note
|
(unaudited)
|
(audited)
|
|||||||||
|
Property
and equipment, net
|
8
|
47,891 | 61,132 | |||||||||
|
Investments
and loans receivable
|
3,114 | 2,479 | ||||||||||
|
Deferred
tax assets
|
40,357 | 35,988 | ||||||||||
|
Intangible
assets, net
|
9
|
262,406 | 298,435 | |||||||||
|
Goodwill
|
9
|
401,175 | 417,800 | |||||||||
|
Total
non current assets
|
754,943 | 815,834 | ||||||||||
|
Trade
accounts receivable, net of allowance for doubtful
accounts
of €4,322 in 2008 and €4,485 in 2007
|
268,432 | 319,968 | ||||||||||
|
Prepaid
expenses and advances
|
22,981 | 19,907 | ||||||||||
|
Other
current assets
|
84,461 | 76,687 | ||||||||||
|
Short-term
investments
|
83,625 | 29,351 | ||||||||||
|
Cash
and cash equivalents
|
656,053 | 597,246 | ||||||||||
|
Total
current assets
|
1,115,552 | 1,043,159 | ||||||||||
|
Total
assets
|
1,870,495 | 1,858,993 | ||||||||||
|
Liabilities
|
||||||||||||
|
Common
stock
|
117,684 | 117,604 | ||||||||||
|
Share
premium
|
132,660 | 112,375 | ||||||||||
|
Treasury
shares
|
(23,132 | ) | - | |||||||||
|
Retained
earnings and other reserves
|
1,099,594 | 1,054,316 | ||||||||||
|
Other
items
|
(219,731 | ) | (167,355 | ) | ||||||||
|
Parent
shareholders’ equity
|
1,107,075 | 1,116,940 | ||||||||||
|
Minority
interest
|
1,410 | 1,270 | ||||||||||
|
Total
equity
|
10
|
1,108,485 | 1,118,210 | |||||||||
|
Deferred
tax liabilities
|
22,430 | 28,985 | ||||||||||
|
Borrowings
|
200,000 | 200,000 | ||||||||||
|
Other
non-current liabilities
|
69,743 | 74,625 | ||||||||||
|
Total
non-current liabilities
|
292,173 | 303,610 | ||||||||||
|
Accounts
payable
|
52,019 | 48,419 | ||||||||||
|
Accrued
wages and other personnel costs
|
102,587 | 113,605 | ||||||||||
|
Unearned
revenue
|
230,477 | 207,529 | ||||||||||
|
Income
taxes payable
|
15,816 | 2,626 | ||||||||||
|
Other
current liabilities
|
68,938 | 64,994 | ||||||||||
|
Total
current liabilities
|
469,837 | 437,173 | ||||||||||
|
Total
equity and liabilities
|
1,870,495 | 1,858,993 | ||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
19
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Six
months ended June 30,
|
||||||||||||
|
2008
|
2007
|
|||||||||||
|
(in thousands of
euros)
|
Note
|
(unaudited)
|
(unaudited)
|
|||||||||
|
Net
income attributable to equity holders of the parent
|
100,236 | 74,512 | ||||||||||
|
Minority
interest
|
140 | 127 | ||||||||||
|
Net
income
|
100,376 | 74,639 | ||||||||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
|
Gain
on sale of real estate
|
6
|
(17,529 | ) | - | ||||||||
|
Depreciation
of property and equipment
|
8
|
11,186 | 12,492 | |||||||||
|
Amortization
of intangible assets
|
9
|
20,691 | 21,038 | |||||||||
|
Deferred
income taxes
|
(8,495 | ) | (9,653 | ) | ||||||||
|
Non-cash
share-based payment expense
|
12
|
9,846 | 7,672 | |||||||||
|
Other
|
2,279 | (4,230 | ) | |||||||||
|
Changes
in current assets and liabilities:
|
||||||||||||
|
Decrease
in trade accounts receivable
|
40,417 | 42,878 | ||||||||||
|
(Increase)
in other current assets
|
(16,373 | ) | (3,630 | ) | ||||||||
|
(Decrease)
in accounts payable and accrued expenses
|
(5,594 | ) | (11,318 | ) | ||||||||
|
Increase
in income taxes payable
|
15,839 | 14,601 | ||||||||||
|
Increase
in unearned revenue
|
34,849 | 30,748 | ||||||||||
|
Increase
(Decrease) in other current liabilities
|
7,288 | (1,137 | ) | |||||||||
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
194,780 | 174,100 | ||||||||||
|
Proceeds
from sale of property
|
6
|
36,000 | - | |||||||||
|
Additions
to property, equipment and intangibles
|
(21,844 | ) | (15,693 | ) | ||||||||
|
Purchases
of short-term investments
|
(78,758 | ) | (16,361 | ) | ||||||||
|
Proceeds
from sales and maturities of short-term investments
|
21,585 | 31,195 | ||||||||||
|
Payment
for acquisition of businesses, net of cash acquired
|
(2,799 | ) | (44,266 | ) | ||||||||
|
Other
|
227 | (671 | ) | |||||||||
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(45,589 | ) | (45,796 | ) | ||||||||
|
Proceeds
from exercise of stock options
|
10
|
23,337 | 27,830 | |||||||||
|
Repurchase
of common stock
|
10
|
(35,027 | ) | - | ||||||||
|
Cash
dividends paid
|
10
|
(53,676 | ) | (50,827 | ) | |||||||
|
Principal
payments on capital lease obligations
|
- | (426 | ) | |||||||||
|
NET
CASH USED IN FINANCING ACTIVITIES
|
(65,366 | ) | (23,423 | ) | ||||||||
|
Effect
of exchange rate changes on cash
|
(25,018 | ) | (7,145 | ) | ||||||||
|
INCREASE
IN CASH AND CASH EQUIVALENTS
|
58,807 | 97,736 | ||||||||||
|
Cash
and cash equivalents at beginning of period
|
597,246 | 408,746 | ||||||||||
|
Cash
and cash equivalents at end of period
|
656,053 | 506,482 | ||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
20
CONSOLIDATED
STATEMENTS OF RECOGNIZED INCOME AND EXPENSE
|
(in
thousands of euros)
|
June
30,
2008
(unaudited)
|
December
31,
2007
(audited)
|
June
30,
2007
(unaudited)
|
|||||||||
|
Net
income
|
100,376 | 176,973 | 74,639 | |||||||||
|
Available
for sale securities
|
58 | (86 | ) | - | ||||||||
|
Derivative
gains on cash flow hedges
|
2,036 | 714 | 3,056 | |||||||||
|
Foreign
currency translation adjustment
|
(53,747 | ) | (91,130 | ) | (20,261 | ) | ||||||
|
Tax
on items taken directly to or transferred from equity
|
(723 | ) | (217 | ) | (1,052 | ) | ||||||
|
Net income recognized directly
in equity, net of
tax
|
(52,376 | ) | (90,719 | ) | (18,257 | ) | ||||||
|
Total
recognized income and expense for
the
period
|
48,000 | 86,254 | 56,382 | |||||||||
|
Attributable
to:
|
||||||||||||
|
Equity
holders of the Company
|
47,860 | 85,964 | 56,255 | |||||||||
|
Minority
interest
|
140 | 290 | 127 | |||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
21
NOTES
TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE
1.
|
DESCRIPTION
OF BUSINESS
|
Dassault
Systèmes, which refers to Dassault Systèmes S.A. and its subsidiaries (the
“Company”), develops 3D and Product Lifecycle Management (“PLM”) software
solutions powered by three-dimensional (3D) representation. The
Company provides software solutions and consulting services that enable its
customers to innovate in products and services; accelerate product design in
order to satisfy market demand; create and manufacture products more cost
effectively; and simulate their end-customers’ experiences. The Company largely
markets and sells its software solutions through indirect selling channels. With
respect to the sales of the Company’s PLM solutions, International Business
Machines Corporation (“IBM”) has been a long-standing strategic sales
partner.
The
Company has offices worldwide and specifically in Europe, the United States,
Japan and India.
Dassault
Systèmes S.A. is a société
anonyme, a form of limited liability company, incorporated under the laws
of France. The Company’s registered office is located at 9, quai Marcel
Dassault, in Suresnes, France. The Dassault Systèmes S.A. shares are listed in
France on Euronext Paris (Compartment A) and in the United States on the NASDAQ
Global Market. These interim condensed consolidated financial statements were
established under the responsibility of the Board of Directors on July 29,
2008.
22
|
NOTE
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of Presentation and Consolidation
The
interim condensed consolidated financial statements for the six months ended
June 30, 2008 have been prepared in accordance with International Accounting
Standard (“IAS”) 34, Interim Financial Reporting. The interim condensed
consolidated financial statements should be read in conjunction with the Group’s
annual financial statements as of December 31 2007, prepared in accordance with
International Financial reporting Standards (“IFRS”) as adopted in the European
Union.
The
condensed consolidated financial statements are presented in euros and rounded
to up to the nearest thousand unless otherwise indicated.
Summary
of Significant Accounting Policies
Except as
described below, the interim financial statements were prepared based on the
same accounting policies as those applied in the consolidated financial
statements as of December 31, 2007:
|
|
-
|
Income
tax expense is based on an estimate of the weighted average annual income
tax rate expected for the full financial
year.
|
|
|
-
|
Pension
costs are estimated based on the actuarial reports prepared for fiscal
year 2007.
|
The
Company’s significant accounting policies are summarized in the notes to the
annual financial statements. New standards and interpretations effective
beginning on January 1, 2008 had no significant impact on the financial position
and results of operations of the Group. New standards and interpretations
effective beginning on January 1, 2009 were not early adopted by the
Group.
Reclassifications
In 2008,
the Company elected to present the amortization of intangible assets acquired
through business combinations or acquisition of technology on a separate line in
the income statement. The 2007 income statement has been restated to conform to
the current year presentation.
|
NOTE
3.
|
SEASONALITY
|
The
Company’s business activities are influenced by certain seasonal effects.
Historically, revenue, operating income and net income tend to be the highest in
the fourth quarter.
23
|
NOTE
4.
|
SEGMENT
INFORMATION
|
Operating
segments are components of the Company for which discrete financial information
is available and whose operating results are regularly reviewed by management to
assess performance and allocate resources. The Company operates in two
reportable segments: the “PLM” segment and the “Mainstream 3D”
segment. The “PLM” market serves customers seeking to optimize their
industrial processes from the design stage through to manufacturing and
maintenance. The “Mainstream 3D” market serves companies seeking to support
product design. The accounting policies of the reportable segments are the same
as those described in Note 2. Summary of Significant Accounting
Policies.
Data by
reportable segment is as follows:
|
(in
thousands)
|
Six
months ended June 30, 2008
|
|||||||||||||||
|
PLM
|
Mainstream
3D
|
Intersegment
Elimination
|
Total
|
|||||||||||||
|
Revenue
|
€ | 501,943 | € | 134,149 | € | (2,526 | ) | € | 633,566 | |||||||
|
Operating
income
|
84,686 | 53,155 | 137,841 | |||||||||||||
|
(in
thousands)
|
Six
months ended June 30, 2007
|
|||||||||||||||
|
PLM
|
Mainstream
3D
|
Intersegment
Elimination
|
Total
|
|||||||||||||
|
Revenue
|
€ | 475,177 | € | 123,867 | € | (2,408 | ) | € | 596,636 | |||||||
|
Operating
income
|
61,877 | 44,883 | 106,760 | |||||||||||||
24
|
NOTE
5.
|
SOFTWARE
REVENUE AND TRANSACTIONS WITH IBM
|
Software
revenue
Software
revenue was comprised of the following:
|
Six
months ended June 30,
|
||||||||
|
(in
thousands)
|
2008
|
2007
|
||||||
|
New
licenses revenue
|
€ | 201,888 | € | 191,924 | ||||
|
Periodic
licenses and maintenance revenue
|
345,084 | 304,577 | ||||||
|
Product
development revenue
|
99 | 2,578 | ||||||
|
Software
revenue
|
€ | 547,071 | € | 499,079 | ||||
Transactions
with IBM
Pursuant
to the Company’s long-standing, mutually non-exclusive agreement with IBM, IBM
markets and distributes a substantial portion of the Company’s PLM products
worldwide, primarily CATIA and ENOVIA.
Revenue
obtained through the commercial relationship with IBM represented 29% and 35% of
consolidated revenues of the Company for the six months ended June 30, 2008 and
June 30, 2007, respectively.
For the
six months ended June 30, 2008 and 2007, the Company charged a sales incentive
to software revenue of €6.9 million and €6.8 million, respectively.
The
balance of trade accounts receivable with IBM was €55.5 million and €84.3
million as of June 30, 2008 and December 31, 2007, respectively, substantially
all of which relates to software revenue. Management believes that the financial
position of IBM mitigates the potential credit risk related to the concentration
of its trade accounts receivable with IBM. At June 30, 2008, 95% of such
accounts receivable were denominated in U.S. dollars (December 31, 2007: 89%),
with the remainder denominated primarily in euros.
25
|
NOTE
6.
|
OTHER
OPERATING INCOME AND EXPENSE, NET
|
|
Six
months ended June 30,
|
||||||||
|
(in
thousands)
|
2008
|
2007
|
||||||
|
Gain
on sale of real estate (1)
|
€ | 17,529 | - | |||||
|
Headquarter
relocation costs (2)
|
(1,214 | ) | - | |||||
|
Restructuring
costs (3)
|
(1,551 | ) | - | |||||
|
Other
operating revenue and expense, net
|
€ | 14,764 | - | |||||
|
(1)
|
Consideration
received for the sale of part of the Company’s headquarters in Suresnes
(France) of €36.0 million less net book value of €18.5 million. See Note
8.
|
|
(2)
|
Comprised
primarily of consulting fees for relocation of the Company’s
Headquarters.
|
|
(3)
|
Primarily
composed of severance costs relating to the termination of employees of
Delmia GmbH following the announcement of a restructuring plan by the
Company on June 27, 2008.
|
|
NOTE
7.
|
FINANCIAL
REVENUE AND OTHER, NET
|
Financial
revenue and other for the six months ended June 30, 2008 and 2007 is as
follows:
|
Six
months ended June 30,
|
||||||||
|
(in
thousands)
|
2008
|
2007
|
||||||
|
Interest
income
|
€ | 10,991 | € | 11,167 | ||||
|
Interest
expense
|
(4,000 | ) | (3,872 | ) | ||||
|
Foreign
exchange (losses) gains, net (1)
|
(7,696 | ) | (2,086 | ) | ||||
|
Other,
net
|
69 | 428 | ||||||
|
Total
|
€ | (636 | ) | € | 5,637 | |||
|
(1)
|
Foreign
exchange losses are primarily composed of exchange losses (unrealized or
realized) on U.S. dollar or Japanese yen denominated
receivables.
|
26
|
NOTE
8.
|
PROPERTY
AND EQUIPMENT
|
The
change in the carrying amount of property and equipment as of June 30, 2008 is
as follows:
|
Six
months ended June 30, 2008
|
||||||||||||||||||||
|
(in
thousands)
|
Land
and
buildings
|
Computer
equipment
|
Office
furniture
and
equipment
|
Leasehold
improvements
|
Total
|
|||||||||||||||
|
Gross
value – January 1, 2008
|
€ | 32,868 | € | 80,358 | € | 33,338 | € | 47,528 | € | 194,092 | ||||||||||
|
Accumulated
amortization – January 1, 2008
|
(14,274 | ) | (65,238 | ) | (22,458 | ) | (30,990 | ) | (132,960 | ) | ||||||||||
|
Net
value – January 1, 2008
|
€ | 18,594 | € | 15,120 | € | 10,880 | € | 16,538 | € | 61,132 | ||||||||||
|
Acquisitions
|
9,354 | 2,006 | 7,480 | 18,840 | ||||||||||||||||
|
Disposals
(1)
|
(18,471 | ) | (800 | ) | (121 | ) | (63 | ) | (19,455 | ) | ||||||||||
|
Depreciation
for the period
|
(123 | ) | (4,778 | ) | (2,380 | ) | (3,905 | ) | (11,186 | ) | ||||||||||
|
Exchange
differences
|
- | (491 | ) | (512 | ) | (437 | ) | (1,440 | ) | |||||||||||
|
Net
value – June 30, 2008
|
€ | - | € | 18,405 | € | 9,873 | € | 19,613 | € | 47,891 | ||||||||||
|
(1)
|
The
net decrease in land and buildings is a result of the sale of part of the
Company’s headquarters with a net book value of €18.5 million. The Company
leased part of land and buildings related to its premises in Suresnes,
France, under capital leases. In March 2007, the Company exercised the
option to purchase these assets for a total consideration of €1. The
Company sold these assets in February 2008 for a basis consideration of
€36 million subject to additional contingent consideration. The Company
will remain in these offices under an operating lease until the transfer
of its headquarters to a new location in Vélizy, outside Paris, France;
this transfer is expected to occur by the end of
2008.
|
27
|
NOTE
9.
|
INTANGIBLE
ASSETS AND GOODWILL
|
Intangible
assets at June 30, 2008 consisted of the following:
|
June
30, 2008
|
December
31, 2007
|
|||||||||||||||||||||||
|
(in
thousands)
|
Gross
|
Accumulated
amortization
|
Net
|
Gross
|
Accumulated
amortization
|
Net
|
||||||||||||||||||
|
Software
|
€ | 237,205 | € | (134,143 | ) | € | 103,062 | € | 243,755 | € | (126,652 | ) | € | 117,103 | ||||||||||
|
Customer
relationships
|
190,612 | (40,610 | ) | 150,002 | 204,758 | (33,696 | ) | 171,062 | ||||||||||||||||
|
Other
|
14,030 | (4,688 | ) | 9,342 | 16,448 | (6,178 | ) | 10,270 | ||||||||||||||||
|
Total
intangible assets
|
€ | 441,847 | € | (179,441 | ) | € | 262,406 | € | 464,961 | € | (166,526 | ) | € | 298,435 | ||||||||||
The change in the carrying amount of intangible assets as of June 30, 2008 is as follows:
|
(in
thousands)
|
Software
|
Customer
relationships
|
Other
intangible
assets
|
Total
intangible assets
|
||||||||||||
|
Net
intangible assets as of January 1, 2008
|
€ | 117,103 | € | 171,062 | € | 10,270 | € | 298,435 | ||||||||
|
Additions
|
2,489 | 136 | 111 | 2,736 | ||||||||||||
|
Disposals
|
(145 | ) | - | (18 | ) | (163 | ) | |||||||||
|
Other
variations (1)
|
- | (2,794 | ) | - | (2,794 | ) | ||||||||||
|
Amortization
for the period (2)
|
(10,871 | ) | (9,086 | ) | (734 | ) | (20,691 | ) | ||||||||
|
Exchange
differences
|
(5,514 | ) | (9,316 | ) | (287 | ) | (15,117 | ) | ||||||||
|
Net
intangible assets as of June 30, 2008
|
€ | 103,062 | € | 150,002 | € | 9,342 | € | 262,406 | ||||||||
|
(1)
|
Reflects
the final allocation of the purchase price of Seemage, acquired in
September 2007.
|
|
(2)
|
Amortization
amounting to €18.6 million is recorded on the line “Amortization of
acquired intangibles” in the consolidated statements of
income.
|
The
change in the carrying amount of goodwill as of June 30, 2008 is as
follows:
|
(in
thousands)
|
Goodwill
|
|||
|
Goodwill
as of January 1, 2008
|
€ | 417,800 | ||
|
Changes
to goodwill
|
3,026 | |||
|
Exchange
differences
|
(19,651 | ) | ||
|
Goodwill
as of June 30, 2008
|
€ | 401,175 | ||
At June
30, 2008, goodwill was allocated to the “Mainstream 3D” segment for €21.8
million.
28
|
NOTE
10.
|
SHAREHOLDERS’
EQUITY
|
Consolidated
statements of shareholders’ equity
|
Attributable
to equity holders of the Company
|
Minority
interest
|
Total
Equity
|
||||||||||||||||||||||||||||||
|
(in
thousands)
|
Stated
value
|
Share
premium
|
Treasury
stock
|
Retained
earnings
and
reserves
|
Other
items
|
Total
|
||||||||||||||||||||||||||
|
January
1, 2007
|
€ | 115,770 | € | 64,654 | € | - | € | 909,468 | € | (76,636 | ) | € | 1,013,256 | € | 980 | € | 1,014,236 | |||||||||||||||
|
Net income
|
74,512 | 74,512 | 127 | 74,639 | ||||||||||||||||||||||||||||
|
Net losses recognized directly in equity
|
(18,273 | ) | (18,273 | ) | 16 | (18,257 | ) | |||||||||||||||||||||||||
|
Cash dividends paid
|
(50,827 | ) | (50,827 | ) | (50,827 | ) | ||||||||||||||||||||||||||
|
Exercise of stock options
|
1,087 | 28,554 | 29,641 | 29,641 | ||||||||||||||||||||||||||||
|
Other stock transactions
|
7,672 | 7,672 | 7,672 | |||||||||||||||||||||||||||||
|
Other changes
|
(27 | ) | (27 | ) | (27 | ) | ||||||||||||||||||||||||||
|
June 30, 2007 (unaudited)
|
€ | 116,857 | € | 93,208 | € | - | € | 940,798 | € | (94,909 | ) | € | 1,055,954 | € | 1,123 | € | 1,057,077 | |||||||||||||||
|
Net income
|
102,171 | 102,171 | 163 | 102,334 | ||||||||||||||||||||||||||||
|
Net losses recognized directly in equity
|
(72,446 | ) | (72,446 | ) | (16 | ) | (72,462 | ) | ||||||||||||||||||||||||
|
Exercise of stock options
|
747 | 19,167 | 19,914 | 19,914 | ||||||||||||||||||||||||||||
|
Other stock transactions
|
10,291 | 10,291 | 10,291 | |||||||||||||||||||||||||||||
|
Other changes
|
1,056 | 1,056 | 1,056 | |||||||||||||||||||||||||||||
|
January 1, 2008
|
€ | 117,604 | € | 112,375 | € | - | € | 1,054,316 | € | (167,355 | ) | € | 1,116,940 | € | 1,270 | € | 1,118,210 | |||||||||||||||
|
Net income
|
100,236 | 100,236 | 140 | 100,376 | ||||||||||||||||||||||||||||
|
Net losses recognized directly in equity
|
(52,376 | ) | (52,376 | ) | (52,376 | ) | ||||||||||||||||||||||||||
|
Cash dividends paid
|
(53,676 | ) | (53,676 | ) | (53,676 | ) | ||||||||||||||||||||||||||
|
Exercise of stock options
|
741 | 20,285 | 21,026 | 21,026 | ||||||||||||||||||||||||||||
|
Treasury stock transactions
|
(661 | ) | (23,132 | ) | (11,234 | ) | (35,027 | ) | (35,027 | ) | ||||||||||||||||||||||
|
Other stock transactions
|
9,846 | 9,846 | 9,846 | |||||||||||||||||||||||||||||
|
Other changes
|
106 | 106 | 106 | |||||||||||||||||||||||||||||
|
June 30, 2008 (unaudited)
|
€ | 117,684 | € | 132,660 | € | (23,132 | ) | € | 1,099,594 | € | (219,731 | ) | € | 1,107,075 | € | 1,410 | € | 1,108,485 | ||||||||||||||
Common
stock
As of
June 30, 2008, Dassault Systèmes had 117,683,695 common shares issued with a
nominal value of €1 per share.
Dividends
A
dividend relating to the period ended December 31, 2007 amounting to €53.7
million was paid in June 2008.
Stock
repurchase programs
The
general meeting of shareholders authorized the Board to implement a share
repurchase program limited to 10 percent of the Company’s share capital.
During the first quarter of 2008 the Company repurchased 961,986 shares for
approximately €35 million; 300,000 of these shares were used to fulfill the
Company’s obligations under the 2005 and 2006 stock grants.
29
|
NOTE
11.
|
COMMITMENTS
AND CONTINGENCIES
|
The
Company is involved in litigation incidental to normal operations. It is not
possible to determine the ultimate liability, if any, in these matters. In the
opinion of management, after consultation with legal counsel, the resolution of
such litigation and proceedings will not have a material effect on the
consolidated financial statements of the Company.
|
NOTE
12.
|
SHARE-BASED
PAYMENTS
|
As of
June 30, 2008, compensation expense related to share-based payment awards of
€11.5 million is recorded respectively in cost of services and other revenue for
€0.4 million, in research and development for €6.3 million, in marketing and
sales for €2.5 million, and in general and administrative for €2.3
million.
As of
June 30, 2007, compensation expense related to the share-based payment awards of
€9.0 million was recorded respectively in cost of services and other revenue for
€0.3 million, in research and development for €5.0 million, in marketing and
sales for €1.9 million, and in general and administrative for €1.8
million.
The
following table summarizes the unvested options and restricted awards as of June
30, 2008 and changes during 2008:
|
Number
of
awards
|
||||
|
Unvested
at January 1, 2008
|
3,774,182 | |||
|
Granted
|
470,297 | |||
|
Vested
|
(300,000 | ) | ||
|
Forfeited
|
(92,644 | ) | ||
|
Unvested
at June 30, 2008
|
3,851,835 | |||
As of
June 30, 2008, total compensation cost related to unvested awards expected to
vest but not yet recognized was €28.8 million, and the Company expects to
recognize this expense over a weighted average period of 1.6 years.
|
NOTE
13.
|
SUBSEQUENT
EVENTS
|
On July
21, 2008, the Company completed the acquisition of Engineous Software, a
provider of process automation, integration and optimization solutions, for a
price of U.S. $40 million, paid in cash.
On July
1, 2008, the Company announced the sale of Dassault Systèmes Solutions France
(DSF), its PLM sales division dedicated primarily to small and medium businesses
in France, Belgium and Luxembourg, to Keonys. This new independent company is a
DS Value Added Reseller.
30
|
4
|
INDEPENDENT
AUDITORS REPORT ON THE LIMITED REVIEW OF THE FINANCIAL STATEMENTS FOR THE
HALF YEAR ENDED JUNE 30,
2008
|
| This is a free translation into English of the Statutory Auditors’ report issued in French language and is provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France. |
To the
shareholders
DASSAULT
SYSTEMES SA
9, Quai
Marcel Dassault
BP
310
92156
SURESNES Cedex
Pursuant
to the mission assigned to us by your general meetings, and in accordance with
the requirement of Article L.232-7 of French Commercial Law (Code de Commerce)
and L.451-1-2 III of the Financial and Monetary Code (Code Monétaire et
Financier), we performed:
|
|
-
|
The
limited review of the accompanying condensed half-year consolidated
financial statements of Dassault Systèmes, for the period from January 1
to June 30, 2008
|
|
|
-
|
The
verification of information included in the half-year activity
report.
|
These
condensed half-year consolidated statements have been established under the
responsibility of the Board of Directors. Our role is to express a conclusion on
these financial statements based on our limited review.
|
|
1.
|
Conclusion
on the financial statements
|
We
conducted our limited review in accordance with professional standards
applicable in France. A limited review consists primarily of making inquiries of
persons responsible for financial and accounting matters, and applying
analytical procedures. A limited review is substantially less in scope than an
audit conducted in accordance with professional standards applicable in France.
Consequently it does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Based on
our review, nothing has come to our attention that causes us to believe that the
accompanying condensed half-year consolidated financial statements are not
prepared, in all material respects, in accordance with IAS 34 – standard of the
IFRSs adopted by the European Union applicable to interim financial
information.
|
|
2.
|
Specific
verification
|
In
accordance with professional standards applicable in France, we have also
verified the information given in the half-year activity report commenting the
half-year consolidated financial statements subject to our limited
review.
31
We have
no matters to report as to its fair presentation and consistency with the
condensed half-year consolidated financial statements.
Neuilly-sur-Seine
and Paris-La Défense, 30 July 2008
The
Auditors
|
PricewaterhouseCoopers
Audit
|
ERNST
& YOUNG Audit
|
|
|
Xavier
Cauchois
|
Jean-Marc
Montserrat
|
* *
*
32
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
DASSAULT
SYSTEMES S.A.
|
||||
|
Date: August
5, 2008
|
By:
|
/s/ Thibault
de Tersant
|
||
|
Name:
|
Thibault de
Tersant
|
|||
|
Title:
|
Senior EVP
and Chief
|
|||
|
Financial
Officer
|
||||