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 November 28, 2003
Commission File No. 0-28578
DASSAULT SYSTEMES S.A.
----------------------
(Name of Registrant)
9, Quai Marcel Dassault, B.P. 310, 92156 Suresnes Cedex, France
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(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:
An official english translation of Dassault Systemes' unaudited consolidated and
condensed half-year financial statements and activity report from January 1,
2003 to June 30, 2003 (based on French GAAP), as published in the Bulletin des
Annonces Legales Obligatoires (BALO) on November 17, 2003.
HALF-YEAR ACTIVITY
REPORT
Period January 1, 2003 - June 30, 2003
All presented financial information is reported in accordance with French
generally accepted accounting principles.
Dassault Systemes group's total revenue for the first half of 2003 decreased by
6% to a total of 350.7 million euros. However, our revenue rose by 2% in
constant currencies.
Operating income decreased to 80.3 million euros, down 9% compared to first half
2002.
Consolidated net income was 35.1 million euros or 0.31 euro per diluted share,
compared to 34.7 million euros or 0.30 per diluted share in the first half of
2002, representing a 3% increase on a per share basis. Net income excluding
acquisition costs decreased from 54.4 million to 49.0 million euros, down 10%.
Thus, despite a tough economic environment and impacting currencies change
effects, the Company's performance was in line with its objectives and the
market expectations.
Its performance is also better than its competitors' since its software revenue
increased by 12% if expressed in dollars, whereas software revenue of its
competitors decreased by 8% in US dollars in average during first half 2003 (as
published by 7 competitors). It bears witness to the resilience of the business
model and of the strategy of Dassault Systemes.
Board of directors September 23, 2003 - Page 1 -
DASSAULT SYSTEMES - "societe anonyme" with a share capital
of 113,195,640 euros -
1. Research and development - Products, technology and development partnerships
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1.1 PLM (Product Lifecycle Management)
----------------------------------
The first half of the year 2003 was marked by announcement, on April 30, 2003,
of the launch of a new release of Version 5: V5R11 that concerns CATIA, DELMIA,
ENOVIA and SMARTEAM trademarks.
V5R11 delivers capabilities useful for creating PLM solutions with an important
level of realism and effectiveness that allow their users :
- to anticipate product and process behavior,
- to better capture the esthetic, visual design that they intend for a
product,
- to benefit from significant quality and performance improvements, in
large assembly management namely,
- to get complete entry PLM solutions in industries like Fabrication &
Assembly, Electronics and Consumer Goods,
- to deliver state of the art applications to suit automobile and
aeropsace core processes.
With major enhancements to about 100 products, with 7 new applications and 34
new V5 partner products, CATIA V5R11 improves CATIA-SMARTEAM and CATIA-ENOVIA
integrations in domains such as knowledgeware, electronics and analysis. It also
simplifies native product definition analysis through the seamless integration
of CAE and specialized design applications. It further extends knowledgeware
capabilities for optimizing analysis, mold-tooling design and real time
rendering.
DELMIA V5R11 enhances end-to-end process coverage in the automotive BIW domain.
It also reduces planning periods and the time it takes to create and validate
assembling process. It provides tools necessary to create machining process
plans for assemblies as well as knowledge-based tools and extends engineering
change tracking between the product design domain and the manufacturing process
domain.
Board of directors September 23, 2003 - Page 2 -
DASSAULT SYSTEMES - "societe anonyme" with a share capital
of 113,195,640 euros -
ENOVIA V5R11 improves product structure filtering capabilities and simplifies
change analysis to facilitate product comparisons at the sub-assembly level. It
also aligns clash management methods with the methods used by shipbuilding and
aerospace engineers, promotes 3D product visualization throughout a very large
community (whether engineers or not) with a light-weight, entry-level digital
mock-up (DMU) mechanism.
SMARTEAM V5R11 improves web collaboration and offers collaborative CAD design
based on "Shared Workspaces" concept. It offers new advanced linking
capabilities with support of CAD integration links and business rules as well as
link management capabilities to enhance knowledge capture and decision support.
Moreover, during the first half of 2003, the Company signed two main CAA V5
(Component Application Architecture) development agreements: one agreement with
Immersion Corporation under which Immersion will develop a hand-interaction
software that enable users to manipulate and feel a 3D DMU in a natural way
using their hands; another agreement with ESI Group, under which ESI group will
develop and sell its next generation solutions for digital simulation and
manufacturing process within CAA V5 platform.
1.2 SOLIDWORKS
----------
SolidWorks2003 software has been selected by readers of NASA Tech Briefs, the
United States' largest circulating engineering magazine, as Product of the Year
for 2002. It is the second time NASA Tech Briefs magazine readers have honoured
SolidWorks with the award since the company was set up.
At the end of the first half of 2003, SolidWorks was ready to launch the new
version of its software, SolidWorks2004. With more than 250 enhancements, this
new version accelerates large assembly processings and offers specific features
to machine designers and mold/tool makers.
Board of directors September 23, 2003 - Page 3 -
DASSAULT SYSTEMES - "societe anonyme" with a share capital
of 113,195,640 euros -
2. Customers, distribution networks, marketing and services
--------------------------------------------------------
Despite the difficult international economic context, and with constant
currencies, our total sales, up by 2%, increased by 17% in America and 3% in
Asia and decreased by 7% in Europe.
In the Process centric sector, we sold 14,133 CATIA licenses in the first half
of 2003, of which 69% of CATIA V5 licenses. Proportion of V5 licenses sold then
increased, since it had represented 52% of the total CATIA licenses sold during
the first half of 2002.
During the first half of 2003, the Company signed new material contracts with:
o Ford Motor Company for a worldwide integration of the whole automaker's
design and manufaturing processes,
o Audi for the planning of digital vehicle assemblies,
o Koito Manufacturing for developing automotive lighting equipment,
o China Motor Corporation for developing an automobile digital factory
project,
o Bertrandt AG for product data management in order to maximize efficiency
of automobile product development platform,
o Cimos for developing powertrain, brake and car body parts,
o ENAER for developing its aerospace products,
o Heroux-Devtek for developing landing gears,
o Daewoo for developing machinery and strengthening collaborative
environment.
Besides a partnership agreement was signed with Avatech Solutions, under which
Avatech will now distribute SMARTEAM solutions all around the United-States.
That should enable the Company to increase its market share among the American
small and medium size businesses.
In the Design centric sector, we sold 12,352 SolidWorks licenses during the
first half of 2003 (+2%). SolidWorks also shipped its 250,000th license.
According to data compiled by Daratech, SolidWorks was the worldwide leader in
the Design centric market in 2002 based upon revenues and licenses shipped.
Board of directors September 23, 2003 - Page 4 -
DASSAULT SYSTEMES - "societe anonyme" with a share capital
of 113,195,640 euros -
3. Financial results of Dassault Systemes Group subsidiaries having a
significant impact on consolidated income, by sector of activity -
Acquisitions and equity operations
-------------------------------------------------------------------
In the Design centric sector, half-yearly sales decreased by 5% in comparison
with the same period in the pevious year, but rose by 18% in US dollars.
In the Process centric sector, the Company's revenue decreased by 6% during the
first half of 2003 but increased by 1% in constant currencies compared to the
first half of 2002. In this sector, Dassault Systemes, the group's parent
company, posted sales of 216.7 million euros for the first half of 2003, down
12% in comparison with the same period last year. Half of this decrease is due
to impacting exchange rates. Operating net income decreased by 30% compared to
the first half of 2002, down to 73.1 million euros.
The PDM (Product Data Management) revenue rose by 17%, representing an increase
of 25% in constant currencies.
In addition, on May 28, 2003, the Company acquired 80% of the share capital of
the French company Athys at a price of 3,200,000 euros. It will acquire the
remaining 20% during the second haf-year 2005 for a price that will vary
according to certain conditions. Athys is specialized in the development of
workcell control software allowing to describe production systems event-based
logic.
Amortization of intangibles relative to acquisitions came to 3.5 million euros
during the first half of 2003, compared with 6.5 million euros during the first
half of 2002.
Finally, during the first half of 2003, Dassault Systemes purchased and
cancelled 1,375,201 of its own shares within the share repurchase program voted
by the joint shareholders' meeting on May 28, 2002.
Board of directors September 23, 2003 - Page 5 -
DASSAULT SYSTEMES - "societe anonyme" with a share capital
of 113,195,640 euros -
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED HALF YEAR
FINANCIAL STATEMENTS
Period from January 1st, 2003 to June 30, 2003
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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CONSOLIDATED BALANCE SHEETS
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(All amounts in thousands of euro) June 30, 2003 December 31, 2002
ASSETS
Goodwill (Note C) 32,074 42,212
Other intangible assets, net (Note C) 7,694 11,673
Property and equipment, net 60,811 59,874
Financial assets (Note D) 44,052 39,167
Investment in equity of unconsolidated affiliates-joint-ventures 408 304
Long-term deferred tax assets 15,242 15,588
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Total fixed assets 160,281 168,818
Trade accounts receivable (Note E) 132,067 229,503
Other current assets 96,408 88,733
Short-term investments 1,004 16,436
Cash and cash equivalents 415,062 371,954
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Total current assets 644,541 706,626
TOTAL ASSETS 804,822 875,444
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LIABILITIES
Share capital (Note F) 113,200 114,571
Additional paid-in capital 540 28,496
Retained earnings 391,456 339,235
Net Income 35,100 105,986
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Total Shareholders' Equity 540,296 588,288
Provisions for liabilities and charges 16,880 14,300
Long-term debt 21,358 28,571
Accounts payable 23,867 31,638
Accrued wages and other personnel costs 56,836 56,892
Sales incentive payable and unearned revenue 90,774 107,897
Other current liabilities 54,811 47,858
TOTAL LIABILITIES 804,822 875,444
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DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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CONSOLIDATED STATEMENTS OF INCOME
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Six Months ended, Year ended,
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June 30, 2003 June 30, 2002 December 31, 2002
------------- ------------- -----------------
(All amounts in thousands of euro, except per share data)
Revenue :
Software revenue 296,911 325,972 669,886
Services and other revenue 53,812 47,840 104,229
-------- -------- --------
Total revenue 350,723 373,812 774,115
Cost of revenue :
Software (11,397) (11,678) (24,475)
Services and other (46,482) (44,155) (96,795)
-------- -------- --------
Total cost of revenue (57,879) (55,833) (121,270)
Gross profit 292,844 317,979 652,845
Research and development (106,221) (111,830) (219,607)
Marketing and sales (79,723) (86,554) (168,811)
General and administration (23,036) (25,154) (47,774)
Amortization of acquired technology (3,540) (6,480) (11,098)
-------- -------- --------
Operating income 80,324 87,961 205,555
Financial revenue and other, net (Note G) (1,459) 1,640 5,834
Income before income taxes 78,865 89,601 211,389
Income tax expense (30,108) (35,148) (73,396)
Income from consolidated companies 48,757 54,453 137,993
Equity in net income of unconsolidated affiliates-joint ventures 263 -- 214
Goodwill amortization (13,920) (19,737) (32,221)
Net income 35,100 34,716 105,986
==========================================
Basic net income per share (euro) 0.31 (euro) 0.30 (euro) 0.93
Diluted net income per share (euro) 0.31 (euro) 0.30 (euro) 0.91
Basic weighted average shares outstanding (in millions) 113.2 114.1 113.7
Diluted weighted average shares outstanding (in millions) 114.0 117.6 116.7
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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June 30, 2003 December 31, 2003
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(All amounts in thousands of euro)
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income 35,100 105,986
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment 7,417 19,050
Amortization of intangible assets 18,222 46,220
Disposals of property, plant and equipment and short-term investments 659 197
Deferred tax income (3,030) (8,004)
Equity in earnings of affiliates (104) (214)
Other (5,713) 796
Changes in current assets and liabilities :
(Increase) decrease in trade accounts receivable 91,987 (29,221)
(Increase) decrease in other current assets (1,022) 11,094
Increase (decrease) in accounts payable, accrued wages and other personnel costs (8,026) (2,792)
Increase (decrease) in sales incentive payable (9,012) 2,829
Increase (decrease) in unearned revenue (3,113) 19,871
Increase (decrease) in income taxes payable (373) (20,691)
Increase (decrease) in other current liabilities 3,262 (2,395)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 126,254 142,726
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CASH FLOWS FROM INVESTING ACTIVITIES
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Proceeds from sales of property and equipment 9 216
Additions to property, equipment (1,022) (3,048)
Additions to property, intangibles (10,607) (17,379)
Short-term investments :
Purchases -- (10,351)
Proceeds from sales and maturities 15,460 --
Payment for acquisitions, net of cash acquired (3,439) (29,923)
Proceeds from sale of Revit investment -- 10,088
Increase in long term receivables (7,452) (25,601)
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NET CASH USED IN INVESTING ACTIVITES (7,051) (75,998)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Payments on capital lease obligation (926) (1,643)
Purchase and retirement of common shares (29,450) --
Proceeds from exercise of stock options 2,762 4,149
Cash dividends paid (37,225) (37,601)
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NET CASH USED IN FINANCING ACTIVITIES (64,839) (35,095)
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Effect of exchange rate changes on cash (11,256) (22,815)
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Increase (decrease) in cash and cash equivalents 43,108 8,818
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CASH AND CASH EQUIVALENTS :
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BEGINNING OF PERIOD 371,954 363,136
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END OF PERIOD 415,062 371,954
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DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
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(All amounts in thousands of euro) Currency
Common Stock Paid-in Retained translation Total
capital earnings adjustment
December 31,2001 114,446 25,228 387,152 24,052 550,878
Net income 105,986 105,986
Foreign currency translation adjustment (34,933) (34,933)
Exercise of stock-options (Note F) 125 3,268 565 3,958
Cash dividends paid (37,601) (37,601)
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December 31,2002 114,571 28,496 456,102 (10,881) 588,288
====================================================================================================================================
Net income 35,100 35,100
Foreign currency translation adjustment (16,540) (16,540)
Purchase and retirement of common shares (1,375) (28,075) (29,450)
Exercise of stock-options (Note F) 4 119 123
Cash dividend paid (37,225) (37,225)
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June 30, 2003 113,200 540 453,977 (27,421) 540,296
====================================================================================================================================
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS
NOTE A - ACCOUNTING PRINCIPLE
The consolidated financial statements of Dassault Systemes and its subsidiaries
(the "Company") are prepared in accordance with generally accepted accounting
principles in France, as defined by the January 3, 1985 French Law and by the
99-02 rule issued on June 22, 1999 by the "Comite de Reglementation Comptable".
The half-year consolidated financial statements were prepared using the same
accounting principles as those used for the annual consolidated financial
statements.
The Company also prepares separate financial statements in conformity with
accounting principles generally accepted in the United States "US GAAP".
Differences between financial statements prepared under French GAAP and US GAAP
are summarized in Note K.
The income tax provision is calculated using the estimated average annual
effective tax rate applied to the pre-tax income for the period.
Pension costs for the period were estimated based on actuarial valuations
performed in fiscal year 2002.
NOTE B - ACQUISITIONS
Acquisition of Athys SA
On May 31, 2003, Dassault Systemes acquired Athys SA, a 13-employee company
based in Grenoble, for (euro)3.3 million. As a result of this transaction, an
amount of (euro)4.5 million was recorded in goodwill. Athys specializes in the
development of work cell control software.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
--------------------------------------------------------------------------------
NOTE C - GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in goodwill and other intangible assets during the six month period
ended June 30, 2003 are presented below:
Patents and
(Euro in thousands) Goodwill Software Trademarks Total
-------------------------------------------------------------------------------------------------
Net value as of December 31, 2002 42,212 8,525 3,148 53,885
Acquisitions 4,677 1,026 5,703
Amortization of the semester (13,920) (2,383) (1,919) (18,222)
Exchange differences (895) (413) (290) (1,598)
-------------------------------------------------------------
Net value as of June 30, 2003 32,074 6,755 939 39,768
=============================================================
Goodwill and other intangible assets at June 30, 2003 consisted principally
of excess purchase price from the acquisitions of Delmia GmbH ((euro)5.0
million), Structural Research and Analysis Corp ((euro)4.3 million) and Athys
((euro)4.3 million), as well as from the purchase, in 2002, of the remaining
minority interests in SmarTeam Corp Ltd. ((euro)8.0 million).
Goodwill is amortized over three years.
NOTE D - INVESTMENTS
In April 2002, the Company signed an agreement with RAND A Technology
Corporation ("RAND") to accelerate the development of marketing, sales and
services infrastructure required to support PLM. Under the terms of this
agreement, the Company granted two 10-year convertible loans totaling (euro)24
million whereby one half of this amount may be converted to common shares in
RAND at RAND's discretion and the remainder may be converted at Dassault
Systemes' discretion. Under the terms of this financing, Dassault Systemes'
equity position in RAND will not exceed 19.9 percent of the shares outstanding.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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(Euro in thousands)
6/30/2003 12/31/2002
Investments
Avatech - Planetcad 61 67
MSC Software - AES 5,930 6,506
ImpactXoft 8,751 9,589
IMC
Autres 370
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Total 14,742 16,532
Interest
Loans receivable rate
ImpactXoft 3,422 3,814 5.0%
RAND (1) 24,292 18,821 5.5%
Avatech - Planetcad 547 5.0%
Cogito (2) 525 5.0%
Interets courus 524
------ ------
Total 29,310 22,635
Total loans and investments 44,052 39,167
(1) The loan granted to RAND may be converted into common shares of RAND.
The fair market value of this conversion option was estimated at(euro)95
thousand by the company and has not been recorded in the company's
financial statements.
(2) The loan agreement signed with Cogito relates to a USD 1,5 million
credit facility, which is made available based upon the realization of
certain economic criteria.
NOTE E - ACCOUNTS RECEIVABLE AND TRANSACTIONS WITH RELATED PARTIES
CATIA, ENOVIA and SMARTEAM products are marketed, distributed and supported
principally by IBM, pursuant to a mutually, non-exclusive agreement that
encompasses such activities.
Revenue obtained through the commercial relationship with IBM comprised 61% of
the consolidated revenues of the Company for the year ended December 31, 2002,
and the period ended June 30, 3003.
IBM is under no contractual obligation to continue to actively market and
distribute the Company's products, and IBM may choose to discontinue such
activities, without penalty, at its discretion. A decision by IBM to cease or
substantially reduce its marketing and distribution efforts would likely cause a
significant interruption in such activities which would adversely affect the
financial position and operating results of the Company, at least in the
short-term.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
--------------------------------------------------------------------------------
However, management believes its long-term relationship with IBM is based upon
mutual respect and success, and management is not aware of circumstances related
to either party, which would cause the relationship to be terminated.
Under the agreement with IBM, activity is reported monthly to the Company by
IBM. This reporting of the worldwide activity of IBM is subject to an annual
audit and adjustment process, whereby either party has the opportunity to
correct differences that may have occurred in the monthly reporting process
during the preceding year. The Company monitors possible differences based upon
historical trends and known specific situations, and defers the recognition of
revenue by IBM based upon its estimate of adjustments that will ultimately be
made.
The balances of trade accounts receivable with IBM were (euro)53,270 thousand
and (euro)117,930 thousand at June 30, 2003 and December 31, 2002,
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.
The Company and IBM entered into an arrangement that increases the share of
licensing revenue to be retained by IBM if IBM meets certain annual sales and
growth targets. Such incentive is recorded as a deduction of software revenue.
Amounts payable to IBM are denominated in U.S. Dollars.
The Company licenses products for internal use to both IBM and Dassault
Aviation, using commercial terms consistent with those granted to the Company's
other customers of similar size.
The Company also provides services and support to Dassault Aviation. These
services were provided at market conditions.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
--------------------------------------------------------------------------------
NOTE F - SHAREHOLDERS' EQUITY
Changes to Dassault Systemes share capital during the six-month period ended
June 30, 2003 are as follows:
Nominal Share
Number of value Capital
shares (in Euro) (in Euro)
Share capital issued as of January 1st, 2003 114,570,841 1.00 114,570,841
------------------------------------------------------------------------------------------------------------------------
Shares issued in 2003 pursuant to the June 28, 1996 stock option plan 1,540 1.00 1,540
Shares issued in 2003 pursuant to the December 15, 1997 stock option plan 2,502 1.00 2,502
Shares cancelled (1,375,201) 1.00 (1,375,201)
------------------------------------------------------------------------------------------------------------------------
Total 113,199,682 1.00 113,199,682
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Share repurchase plan
Pursuant to the share repurchase plan authorized by the May 28, 2002
shareholders' general meeting, the Company repurchased in successive trades
1,375,201 of its own shares. Effective May 31, 2003, these shares were
cancelled. A prospectus relating to a new share repurchase plan, dated May 9,
2003 was filed with the COB under the number 03-398.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
--------------------------------------------------------------------------------
NOTE G - FINANCIAL REVENUE AND OTHER, NET
(All amounts in thousands of euro) Six-months ended Year ended
----------------------- ----------------
30/06/2003 30/06/2002 31/12/2002
Interest income 2,283 2,609 11,611
Interest expense (816) (904) (1,682)
Foreign exchange losses, net (3,361) (2,948) (6,912)
Dividends received 976
Other, net 435 1,907 2,817
-------------------------------------------------------------- ----------------
Financial revenue, net (1,459) 1,640 5,834
--------------------------------------------------------------------------------
The Company transacts in various foreign currencies, primarily Japanese yen
and U.S. dollar. To manage this currency exposure, the Company purchases and
sells currency options (puts or calls) and may purchase other foreign exchange
contracts from time to time. The fair market values of foreign forward contracts
and options were determined by a financial institution using option pricing
models and quoted market prices.
NOTE H - SEGMENT INFORMATION
The Company operates in two segments: the "Process-Centric" segment and the
"Design-centric" segment. The "Process-centric" market serves companies seeking
to optimize their industrial processes from the design stage through to
manufacturing and maintenance, by doing away with all physical mock-ups. The
"Design-centric" market serves companies seeking to improve specific design
functions.
Data by operating segment is as follows:
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| | Six-months ended |
(in thousands | Six-months ended June 30, 2003 | June 30, 2002 | Fiscal year ended December 3, 2002
of euro) | ----------------------------------------------------------------------------------------------------------------
| Process Design | Process Design | Process Design
| centric centric Elim. Total | centric centric Total | centric centric Elim. Total
------------------------------------------------------------------------------------------------------------------------------------
Revenues | 289,432 61,879 -588 350,723 | 308,628 65,184 373,812 | 649,380 126,883 -2,148 774,115
| | |
Operating income | 62,489 17,835 80,324 | 70,732 17,229 87,961 | 174,197 31,358 205,555
| | |
Net income | 24,188 10,913 35,101 | 22,934 11,782 34,716 | 82,313 23,673 105,986
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DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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NOTE I - SCOPE OF CONSOLIDATION
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June 30, 2003 December 31, 2002
% of % of % of voting % of
voting ownership Method rights ownership Method
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Dassault Systemes
Kabushiki Kaisha 100% 100% Consolidation 100% 100% Consolidation
Dassault Data Services 95% 95% Consolidation 95% 95% Consolidation
Dassault Systemes of America Corp. and its 100% 100% Consolidation 100% 100% Consolidation
subsidiaries
SolidWorks Corporation and its subsidiaries 98% 98% Consolidation 100% 100% Consolidation
Delmia Corp. and its subsidiaries 100% 100% Consolidation 100% 100% Consolidation
Enovia Corp. 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes Corp 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes AG 100% 100% Consolidation 100% 100% Consolidation
SmarTeam Corporation Ltd. and its subsidiaries 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes Provence 100% 100% Consolidation 100% 100% Consolidation
Delmia GmbH 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes Canada Inc. 100% 100% Consolidation 100% 100% Consolidation
Safework Inc. 100% 100% Consolidation 100% 100% Consolidation
Spatial Corp. and its subsidiaries 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes Srl. 100% 100% Consolidation 100% 100% Consolidation
Structural Research and Analysis Corp. 100% 100% Consolidation 100% 100% Consolidation
Invention Machine Corp. 17% 17% Equity Method 17% 17% Equity Method
Dassault Systemes Inc. 100% 100% Consolidation 100% 100% Consolidation
Knowledge Technologies International Inc. 100% 100% Consolidation 100% 100% Consolidation
Knowledge Technologies International Limited 100% 100% Consolidation 100% 100% Consolidation
Knowledge Technologies International France 100% 100% Consolidation 100% 100% Consolidation
Dassault Systemes Switzerland 100% 100% Consolidation 100% 100% Consolidation
3D PLM Software Ltd. 30% 30% Equity method 30% 30% Equity method
Athys SA 100% 100% Consolidation
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DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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NOTE J - SEASONALITY
Quarterly operating results varied significantly and are likely to vary
significantly in the future, depending on factors such as foreign currency
exchange rates; the number, timing and significance of product enhancements or
new products by us or our competitors; our ability to develop, introduce, and
market new and enhanced versions of our products; customer order deferrals in
anticipation of new or enhanced products; the timing of revenue recognition
under our marketing and sales agreement with IBM; general conditions in the
product lifecycle management software market, computer industries and regional
economies; and other factors and events. A significant portion of sales
typically occurs in the last month of each quarter. Therefore, the timing of
orders and shipments, including unexpected delays, or actions taken by
competitors in reducing prices or introducing new products, could result in
significant quarterly fluctuations in operating results.
As is typical in the product lifecycle management software market, we normally
experience our highest licensing activity for the year in December. Software
revenue, total revenue, operating income and net income have generally been
highest in the fourth quarter of each year.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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Note K - SUMMARY OF DIFFERENCES BETWEEN FINANCIAL STATEMENTS
PREPARED UNDER FRENCH GAAP AND US GAAP
Differences between financial statements prepared under French GAAP and US GAAP
are summarized below (in thousands of euros):
Net Equity Net Income
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French GAAP 540,295 35,100
Available for sale securities (1) 2,599 2,574
Goodwill amortization (2) 44,378 13,920
Derivative instruments (3) 10,728 (209)
Accounting for issuance of SolidWorks stock (4) (2,061) (925)
Pension -- Additional minimum liability (5) 328 -
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As adjusted for U.S. GAAP 596,267 50,460
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(1) Under French GAAP, investments in equity securities are stated at the
lower of cost or fair market value. Unrealized losses are recognized in
income. Under US GAAP, in accordance with SFAS 115, available for sales
securities are accounted for at their fair market value, with the
unrealized gains or losses being recorded in the shareholders' equity,
except for the net effects of an other than temporary decline in fair
value below the cost basis.
(2) Under French GAAP, Goodwill is amortized over its useful life. Under
SFAS 141 ("Business Combinations") and SFAS 142 ("Goodwill and Other
Intangible Assets"), goodwill for which the acquisition date is after
June 30, 2001 for the year ended December 31, 2001 and all unamortized
goodwill for the period ended December 31, 2002 is not amortized.
Goodwill amortization is replaced by an annual impairment test
implemented at the reporting unit level using fair value measurement.
(3) Under French GAAP, financial instruments designated as hedging
instruments are not recognized but are disclosed as off-balance sheet
instruments. The fair market value of a financial instrument is
recognized when the hedged item is recognized in earnings. Under US
GAAP, SFAS 133 requires all derivatives instruments to be recorded on
the balance sheet at fair value. Changes in the fair value are
recognized in earnings except for certain hedging transactions, which
are reported as a component of other comprehensive income. This
exception applies to the effective portion of hedges of forecasted
transactions and hedges of a the foreign currency exposure of a net
investment in a foreign operation.
(4) Under French GAAP, the issuance of new shares by SolidWorks, which
decreased the Company's ownership, was recognized as a proceeds of
stock. Accordingly, a dilution gain was recognized in earnings. Under US
GAAP, the gain is not recognized as reacquisition of shares is
contemplated at the time of issuance. This dilution is accounted for as
an equity transaction.
DASSAULT SYSTEMES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF JUNE, 30 2003
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(5) Under US GAAP, when the accumulated benefit obligation exceeds the fair
value of plan assets, the Company shall recognize a liability in the
statement of financial position. The adjustment is reflected in other
comprehensive income, intangible assets and long-term liabilities, as
appropriate. Under French GAAP, this adjustment is recognized in
earnings.
NOTE L - SUBSEQUENT EVENTS
On September 8, 2003, the French State sold its entire 15.7% holding in Dassault
Systemes.
As of the date of these financial statements, no new shareholder has declared
ownership of more than 5% of Dassault Systemes share capital or voting rights
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: November 24, 2003 By: /s/ Thibault de Tersant
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Name: Thibault de Tersant
Title: Executive Vice President,
Finance and Administration