Michele Katz - US Investor Relations Executive Bernard Charles - President and Chief Executive Officer Thibault de Tersant - Executive Vice President and Chief Financial Officer

Matthew Hammond - Credit Suisse Ariel Bauer - ABN Amro Jay Vleeschhouwer - Merrill Lynch>

Thank you for standing by and welcome to the Dassault Systemes Q2 2006 Results Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday 27th of July 2006. I would now like to hand the conference over to your host speaker today, Michele Katz. Please go ahead. Michele Katz - US Investor Relations Executive: Thank you for joining us for a review and discussion of our financial performance and business progress for the second quarter and first half, ended June 30. Bernard Charles - President and Chief Executive Officer: Enovia had a very good quarter with software revenue of 26% in constant currency before including MatrixOne. On the new expanded Enovia at an equally good quarter, with revenues higher by 90% in constant currency. MatrixOne is delivering on all of our acquisition objective with strong revenue heads -- Increasing 22% in constant currency. At this point I will turn the call over to Thibault for a detailed review of our financial performance. And then I will discuss some of the key highlights of the Q2 and the first half of 2006. Thibault de Tersant - Executive Vice President and Chief Financial Officer: Thank you Bernard, let me begin with a brief review of our debts and then get figures for the Q2. Non-GAAP revenue in the Q2 excludes € 6 million of deferred revenue write-down. Operating income, operating margin and earnings per share exclude this similar level of deferred revenue write-downs, and our before acquisition cost of € 12.2 million and share-based compensation of €2.3 million for the quarter. For clarity, my remarks on our revenue figures are in constant currency and on a non-GAAP basis, and profitability figures are on a non-GAAP basis. Let me start with a quick overview. For the Q2 revenue increased 33% in constant currency. We reported total revenue of €286 million coming in above our revenue objectives range of €275 million to €280 million excluding ABAQUS and MatrixOne revenue increased 14% in constant currency. Our operating margin was also above our objectives as 24.5% benefiting from higher revenue activity. EPS increased 12% to 37% coming in above our objectives of 35% to 36%. There are two other figures I would like to highlight that demonstrate the strength of the quarter. First, total software revenue increase 36% in constant currencies and if you exclude ABAQUS on MatrixOne software revenue grew 17% in constant currencies in the quarter. It was stressing the very central dynamics of our business. From a geographic prospective Asia has the strongest growth in the Q2 similar to the trends of the first, same one from 2006 with revenues increasing 49% percent in constant currency. The year-over-year growth in Asia was broadly with strong results from both PLM mainstream CD. In Europe revenues increased 35%. We have particularly strong growth for CATIA and ENOVIA. We observed an important level of activity in Germany particularly in PLM and the external with our CMP operations as they continue to ramp up and we benefited from higher activity in amble space. Revenues in the America increased to 19% in constant currency while the growth was less than in the other regions. I would remind you that we had a test compare as the America’s grew 41% in the June 2005 quarter. The Q2 was mixed experience with total CATIA and SolidWorks units increasing 15% to 20,485 for the first half units has grown 13%. CATIA license fees increased 20% to 9,100 in the Q2 and for the first half license fees are higher by 7%. For the year we are expecting a more moderate level of growth. ABAQUS version 5 and you see revenue proceed, was 32% in constant currency to €13,136 for Q2 and is higher by 1% in constant currency for the first half. SolidWorks new fees license increased 19% to €11,685 in the quarter and also increased 19% for the first half. SolidWorks average end-user revenue proceeds increased 4% in constant currency and it’s higher by 6% in constant currency for the first half. For the second half our planning assumes stable to modestly positive pricing comparison. Services and other revenue increased 17% in constant currency in Q2 with a lower of them anticipated from consulting activity leading to services gross margin of 14.5% compared to 19.5% in Q1. In comparison for to the Q1 makes more sense as we had very high service gross margin in the year ago quarter related to specialized work we were doing. Looking at the first half comparison we are somewhat below the present the general level of last year. Our operations and testing have grown in efficiency reflecting the acquisitions and investments we have made. At the same time we are managing them carefully. For Q2 revenue was about €10 million higher than plan which operates in the expenses about €4 million higher of which semi-variable and fluctuates with revenue. Consequently we were able to leverage our better revenue performance benefiting both operating margin and in per shares result. Reserve for financial and other revenue reflects the trends in our net cash position following the aggregate fresh payments of about €517 million for the acquisitions of ABAQUS and MatrixOne. In 2005, we had net interest had grown almost about €3.5 million per quarter. Recent income grown is says to mitigate expense of last year such as those we had this quarter are rising from the significant but as you just see in currency expense rates in Q3 as well as the quarter ends. We continue to generate a very good cash flow from our provisions. For Q2 and first half net operating cash flow was €64 million and €155 million respectively. At the annual meeting our shareholders approved there is an 11% increase in the cash dividend for the 2005 fiscal year. The cash dividend was paid in July and an aggregate amount of €48 million. Now let’s turn to our views in 2006 and the Q3. We are raising our full year objective for revenue and earnings. First we are increasing our revenue growth objective in constant currency to 27% to 28% from a formal estimate of 25% to 26%. This reflects a higher level of activity and they all grow €15 million for the year. This leads to a repulsive revenue ramps of about €1.175 billion to €1.185 million up new updated currency spend rate assumption. We are reconfirming our operating margin objective of about 27%, which includes an expected 1.5 percentage long-term dilutions from MatrixOne. We are increasing our earning per share objective to about €1.77 to €1.79 compared to our previous objective of €1.75 to €1.77. This represents year-over-year growth of 11% to 13% compared to our previous objectives of 10% to 11%. Our financial objectives assume fix turn rate of $1.30 per euro increasing from 1.25, and the Japanese yen of 145 per euro from a 130 for Q3 and Q4 of this year. For the 2006 Q3 we have set a revenue objective of about €290 million to €295 million representing a year-over-year growth rate of 36% to 38% income spend on currency. Our EPS objective is about $0.33 to $0.34 with enough working margin objective of about 22%. I would now like turn the call back to Bernard.

Thank you Thibault. Let’s begin with some news we released this morning after our earnings press release. I am happy to announce that DS is expanding its relationship with Airbus. That’s just then you know, on ABAQUS products are all used by Airbus. Last quarter I’ve mentioned that Airbus was expanding its usage of DELMIA having DELMIA V5 Robotics to simulate, validate on program of robotic assembly lines in association with our CAA V5 partner Phoenix. Airbus has been using DELMIA’s ergonomics and assembly simulation tools for sometime now. This morning we announced that Airbus is supervising product development processes on CATIA V5 on ENOVIA VPLM for all new programs is that I think to fulfill Airbus’s requirements for configured digital mock-up to enable everyone to be an actor in ambling integration across all disciplines. I’m pleased to share with you that, foremost our company is also confirming on expanding its commitment to all our V5 PLM solutions. First CATIA V5 has been designated as the global design and engineering product for all new vehicle development. This includes (inaudible), taxi, electrical of (inaudible) train systems. Secondly our ENOVIA engineering has been selected by both as a co-enabler for collaborative digital mock-up. We were extremely gratified early this month when Boeing indicated in the press release that it expects achieve breakthroughs in maintenance on planning of our V5 PLM solution enabling them to digitally deliver up to airlines, documentation that is now introduced as interactive so that mechanics can easily trouble shoot and understand the clear method. This gives a good demonstration of how our V5 solution can progress a complete end-to-end process coverage for Boeing indeed that’s the definition of PLM. Turning to our acquisition, I would like to begin with ABAQUS. At the core of our SIMULIA upfront. This acquisition has been a true success across virtually all matrix. For the first half of this year all top line and bottom line performances are thoroughly in line or had ahead of plan. The company has an excellent financial modem. We got very high level of recurring revenue. Customers truly appreciate the power of this software extending on the expanding the deployment of ABAQUS solutions, which means the opportunity for growth in the in built customer base is significant. And as you may recall our plans include a meaningful increase in sales of technical personnel, to build our field capacity, to take advantage of the growth opportunities in these markets around the world. In some we are well on track here. Now how is the new ENOVIA doing? I say great. The transition has gone more smoothly than anyone expected. The combined group has hit the ground running. An initial result indicates the positive nature of this combination. In total, I believe we have put together a fairly compelling offering for all our customers, but you don’t need to hear these from me. The number of emails we received from customers as well as what they say in their email, demonstrate a very good reception under here on to the -- that customers have saw the new ENOVIA. Moreover, we received the orders from several customers using ENOVIA, MatrixOne in conjunction with ENOVIA VPLM or ENOVIA SMARTEAM including CATIA, (inaudible)and DELMIA. At the same time when this find a potential concerns that somewhat view as in the events on community. I want to probably discuss our progress with you on all, we can alleviate the concerns being as transparent as possible first. These matrix have a very different type of company compared to others we have acquired. No, we don’t think so. Our primary reason for acquiring MatrixOne is identical to the past acquisition. We will as we have developed on acquiring the best technology to turn our vision for the future into a reality. From our perspective MatrixOne brings unique on complimentary assets to VM. With some of them last ENOVIA VPLM. In fact we see a huge potential possibly new markets where companies are just beginning to learn the benefit of PLM as well as working in combination with our ENOVIA VPLM solution now our largest industrial vertical. Second, we understand how to make business with winners, both technologically and financially. We are strengthening to MatrixOne organization and we had put in place a unified structure for the ENOVIA, which we will be responsible probably on entire ENOVIA portfolio. In addition our regional teams are also stocking to what totally we MatrixOne. Longer-term, we see significant opportunities in geographies where MatrixOne are only a small presence today. With that said, let see some -- let see what ENOVIA MatrixOne have achieved in the first fix week of operation. As we moved into Q2, whereas €80 million ahead of our €50 million target. It achieved break-even results for the period. An important component of this acquisition has been to extend that well presence into a new vertical. We saw the ENOVIA MatrixOne certainly confirm that we are. In total seven of the ten largest transactions were outside our largest vertical. Especially in the semiconductor industry we closed 18 transactions including significant orders from Qualcomm on net users and expended our presence in the power sector with (inaudible) and quick silver. Not best but at least we have a very strong ENOVIA executive team lead by Joel Lemke, CEO of ENOVIA, what been extremely well accepted by the MatrixOne executive team. Well, know on SolidWorks we have got it’s a market position on latest product release to the year of 2007 exemplified that however on simplicity are a winning combination. It continued to our third good revenue and see growth unstable fixed pricing. The highlight of the quarter was the introduction of SolidWorks 2007. Introducing it’s evolutionary strict technology, SolidWorks intelligent feature of technology to enable a user to be as lined like a mixture of 3D cut user. Essentially the technology does a heavy lifting to facilitate design changes. Additionally the software has introduced low stock sketching, promising existing to the excerpters to power 3D design and more powerful standing capabilities. And finally I would like to congratulate the entire SolidWorks organization. That’s just saw an excellent performance that also for creating an environment and culture of team work. So they are four year in a row, SolidWorks has been named one of the best places to work in Massachusetts. Turning to SMB’s channel initially, the last quarter we spoke extensively about our safe standard initiatives, so I will not repeat that here. Our objectives to continue to expand at our safe standard in order to grow our penetration in this smaller mean type business on emerging markets for both PLN and SolidWorks. Looking at our specific PLN state channel initiatives, we are pleased to probably renewed our CMP channel management provider agreement with IBM. Under this agreement, we are responsible for managing the relationship with IBM’s business partners. Development continues with the same countries, Germany, Switzerland, UK Russia and the US we get to France and Belgium where as of July 1st we are beginning direct channel management. As some of you know, we have had a long history of acting as the larger business partner to IBM in France. So it is natural to take these steps in order to simplify the sales organization structure. It is consistent with our efforts with IBM to rationalize the PLN sales channels. IBM will continue to sell to large accounts in these countries. We had essentially produced ENOVIA 3-D live to put up artificial intelligence on the web. What is it? In the phrase it is on Google or Yahoo search engine for 3D. ENOVIA 3D live I our first online application simple to install with just one click and easy to use in the earlier time. You can find see or manipulate any data. It is truly a dream application. Our initial target audience is all users needing access to product lifecycle information ordered by an engineering department including purchasers, marketers, product planners, product engineers and technical writers. These tool enables us to significantly enlarge our basic users market as the creator of 3D data may relationship with end different types of users as an example. These new product is our first V5 SOA, and so our service oriented architecture application based up on IBM standards and Microsoft middleware and is a good example of these benefits. I encourage you to go through our website and take a look at our presentation from this morning for more detailed information. In summary DS is fairly well positioned for growth in 2006 and the coming years as the leading provider of PLN solutions which is mission critical for product development performance on innovation. And as our results demonstrates we have continued to gain market share in to first half of 2006. We follow-on recent acquisition of ABAQUS and MatrixOne as well also our key strategic investments we have made we are further expanding our addressable market, working together with our customers and partners we expect to continue to expand our global leadership, the value of PLN and its reach in the markets. With that we would be happy to take your questions.

[Operator instructions]. The first question comes from Jay Vleeschhouwer, Merrill Lynch please go ahead. Jay Vleeschhouwer - Merrill Lynch: Thanks, good morning Bernard and good morning Thibault.

Good morning Jay. Jay Vleeschhouwer - Merrill Lynch: A question regarding Matrix first and you offered some comments on what occurred into the acquisition, could you say a bit more perhaps about what you’ve done and used the VP integration in terms of reductions of expense, personnel and so forth and you did say it was not particularly unusual or a typical acquisition for you, but you did previously acknowledge that there were some significant changes you might need to make in infrastructure, you could address that.

I will let Thibault discuss about the cost structure, we saw that Jay we had the following key things. Make sure that over the time we see the same vision, make sure we have a common strategy, make sure we have one single executive team, all this has been achieved extremely well, as I mentioned in the call Joel Lemke has been really taking over the lead for the other ENOVIA portfolio and extremely well received by people. So yeah his level of enthusiasm which is very significant, very significant. As a matter of fact the team is good on the number of wins they got in the first week, in the first eight weeks and that’s a very strong dynamics. Of course we committed to savings, obviously in the G&A I mean you have some authentication may be if you go you want to come on that along the line of what we said, when we did announced the MatrixOne acquisition.

Okay, what we have done so far Jay, its really essentially what we said, you know, there are, first of all very easy because which are all the ones we did to the pretty big companies that is for MatrixOne and these are quite expensive ones actually. We also would advanced on our front over use of our existing infrastructure being IT or being even facilities which is also bringing some savings. We have slightly reduced this setting, but as we see, you know, the overall workforce reduction is not more than 5%. So, its not a very serious fact as you can see and there are some areas where we are still working like for example the services facilities they use some (inaudible) and code and they are leading to a MatrixOne product from external consulting also that is being used. So there is the combination of the actions launched. We will presently leaders to achieve targeted goal of saving $8 million in the second half.

Okay, with respect to CMP, how would you describe the level of productivity for average reseller today versus where they might have been a year or more ago when IBM is still responsible for the channel. For those number of resellers that now work with you more directly and have there in fact being meaningful improvements in the productivity by virtue of your oversight.

On these transitions I think that our first priority is really to improve and increase the level of knowledge on PLM business prophecies, as everyone knows you know, selling PLM is not like selling CAT and not only when you sell but when you put the roadmap with the customer to implement, and the -- the first priority we have been going through that transition we just referred to and then to increase the level of knowledge. From that perspective, the dynamic is going very well, the objective from a measurement standpoint is for our business partners to be able to add to their software sale the proper level of consulting and system integration knowledge on business practice knowledge and so that’s the first measure we -- we took and the -- the trends are very clear there on -- on the fact that we could work directly as it is giving results on the productivity itself. At this point of, in time it’s quite difficult to measure for a very simple reason. The first as I said priority is to freely transform our -- what was called SMB channel to a PLM SMB, value based SMB channel. When you do that, you do savings and you do immediate investments for the skills that goes around the selling because you want to improve the transaction value, which is tangible cost. So, I think you know, we will be in a better position to provide a good answer in this area on both the value creation and productivity. It’s a little bit too early I think we -- we still need probably six months. On the end of this year when we do the full year review we will -- we will have more precise data. Jay Vleeschhouwer - Merrill Lynch: Okay and product question perhaps in two-dimensions. One is to what extend are you seeing an increasing level of sales either directly or -- or through the channel of multi-product sales CATIA plus ENOVIA plus something else as opposed to single product sales. And secondly, at the Analyst meeting, you made an interesting point about simplifying the CATIA portfolio down to four dozen or so modules or packages from -- from the number that you had before. How were you thinking about that set of CATIA modules now in terms of your forecast, are you expressively as making any assumptions about how well are you going to do with this nominally more simplified CATIA portfolio?

On the first question, clearly it’s obvious that more and more depend on customer decisions, it covers -- it covers multi products, it’s not frequent anymore to a -- to a CATIA only, to a CATIA, SMARTEAM or US CATIA VPLM, ENOVIA VPLM or you are moving forward CATIA MatrixOne, that’s -- that’s very becoming more and more common. The second aspect is that when someone is starting, started PLM deployments when it comes to renewal of contract, very often not only it’s a renewal and expansion of contract but to expand with DELMIA for manufacturing because as you have started that front-end profit for PLM, you want to expose, expand it to -- to manufacturing and we have observed this very clearly in the last, I think three or four quarters. Of course, the very first customer who committed to PLM had done that earlier, but we see that trend. Therefore, so I confirmed that observations in, moving to the next part of your question, the new CATIA packaging per se is not going to be a CATIA centric packaging. It’s going to be a CATIA PLM packaging. What it means is that, in the near future the core of the argument while in for CATIA will in most of the cases use the SMARTEAM infrastructure or the ENOVIA VPLM infrastructure. So that’s the way customers are asking us to package the -- the solutions for true conquer on PLM. This is why we don’t call it, you know CATIA packages but we called them CATIA PLM packages because it can be with small soft multi-module, some of the PLM modules or sometimes from DELMIA, from DELMIA process running module and we see these being driven by two factors, industry, the package is being visualized by industry as opposed to the best-value (inaudible) and the second trend is business processing. So that’s in short, the two minimums I would -- I would add to what we said during general meetings. Jay Vleeschhouwer - Merrill Lynch: And I guess lastly, it’s interesting that we are seeing both you and at least one of your major competitors PTC yesterday of course, having better quarters, better than expected quarters which is UG’s sides, when they report and this is out of time when it’s more and more concerned about the economy. Do you find it perhaps somewhat curious that there is -- there is a concern, are we using investment community that is going to be some slow in the economy and you know, PLM standing is improving seemingly the environment is getting better for that, where several years ago the economy was pretty good and PLM was flat.

Well, I think two years ago, PLM was not as well as understood as it is now. So the comment about how does it fit in the -- with the economical context, I would -- I would make the two following remarks. Number one, PLM is a new domain as compared to ERP or CRM. We have been taking about it and explaining it since 2000, but it takes time for customer to understand what is the difference between a design centric environment on the global product life-cycle management approach. And the successes, we have done in this area, is driving -- are driving the dynamic sort of, PLM adoption, some of the announcements even be today was some of the large customers, it’s really not only a selection of our solutions. It's an endorsement of the PLM approach as a mission critical system. That’s one to come up. So it’s not easy to conquer because the market-understanding customer understanding a PLM has changed, I believe this will accelerate. The second factor related to the economy is the fact that clearly PLM is focused on top line generation for company. If -- if you don’t create innovation, if you don’t create you know, efficient new business model to get lot of your products and so use them, I think it is going to be very difficult to be competitive. So you can see that even in -- in industries where there is an incredible -- incredible pressure on you know, from a competitive standpoint, we can provide significant value, not only that, we are organized to provide a significant value and lastly I would say the comparison you -- you did with the -- with the competitor, is an interesting one. I have the impression that -- that all glows are not equal. Jay Vleeschhouwer - Merrill Lynch: Or one quarter doesn’t make a trend.

To show you a better, and the footprint is a -- is a good one to measure for the future. Jay Vleeschhouwer - Merrill Lynch: Right, thanks for that.

Your next question is from Ariel Bauer of ABN Amro, please go ahead. Ariel Bauer - ABN Amro: And I have got two quick questions, the first one MatrixOne. Well thank you for your presentation and it looks like you are expecting MatrixOne to be breakeven for the reminder of the year as well is that correct?

Yes. Ariel Bauer - ABN Amro: Yes.

Yes sir. Ariel Bauer - ABN Amro: Can you – Can, you may be confirmed what -- what savings in dollar terms it involves?

Will, you may want to take the question?

Yes this actually, does involve the level of savings that we are targeting which is $8 million in the second half incurred up. Ariel Bauer - ABN Amro: Okay and moving into ‘07 and maybe ’08, I guess your -- your target was to bring the MatrixOne back to level of margin closer to the group, may be not exactly the same level but it's close, you see confident in achieving this?

I think we are -- we are very cautious about providing VGV to regions in probably’07 I think we give some inputs self quarter. So, if I expand your question not to 2007 and 2008 but move on to a generic question , I would say that there is no reason why it should not match or even be, a significant contributor to continue to well improve the overall group operating margin. I think that clearly MatrixOne is the powerful technology for business process model, modeling in PLM, I think that it has been undervalued. So the safe process that was used for many reasons if they want to comeback to and I don’t want to judge them, but I know that we are going to send a solution, it is our own approach, it’s going to very specific by industry’s high value and the transactions are not going to be the same on clearly in eight weeks we did a lot of changes even in the safe team mindset to really explain that you know, a software contract is not done from the schedule, it's done to the most recent value of what it is, and this mindset is changing and should be a significant upside. Now I don’t want to extrapolate anything from that what I want to say, we can save on value that MatrixOne and this was not the case before Number one or number two, companies who have started the MatrixOne are very satisfied. And I have been astonished in the last two months, basically eight weeks, to see the number of win backs we have done under competition. We, not only on the benchmark that’s after a try from the customer to try to implement a competitor’s product on making the decision to stop on coming to us. So, that’s why those are sub elements, result on taking them in numbers, that -- that really could be considered as -- as a way to illustrate how much we believe that this can be a strong dynamics form for the overall ENOVIA portfolio Ariel Bauer - ABN Amro: Okay, and I’ve got one last question on services actually and obviously the services were little bit weaker than expected, but if you strip out the contribution -- the likely contribution for MatrixOne and Abacus. It look like your underlining organic services went down quite substantially, is that correct and is there a specific reason for this?

Thibault, some comments on that?

Sure. Actually yes, there was a little bit of a decline in services. We still have some productivity in, you know, so this is rather new form of different reasons and has finished in past quarters and actually second quarter -- second quarter of 2005 was a good quarter for services in both revenue and margins. So -- so, there was this operation I would see and -- and also probably more focused puts based in their operations for service revenue growth in this -- in this first half. I have been saying it whole, you know that would encourage you to look at our services may be, you know, not exactly quarter by quarter, but was a half year by half year or even for the full year and for the full year actually we don’t see -- we don’t see reasons to -- to were if you modify objectives to those services. Ariel Bauer - ABN Amro: Okay thank you.

Welcome.

Your next question is from Matthew Hammond at Credit Suisse, please go ahead. Matthew Hammond - Credit Suisse: Thank you. It’s quick ones too actually, at this -- at the of the first quarter you are very much sort of indicating that CATIA was expected to have -- not a modest rest of the year, but certainly not the sort of rates that you have being seeing through the loss -- through the loss sort of 18 months. You then so, point to quick acceleration in the second quarter. Should we take this as -- as the one often and get it sort of, revert back to you, your previous thoughts of a more modest growth rate or is that you just found out something a little bit better?

Well, we are very glad about the growth of the CATIA and unit volume in Q2. I think that’s built on this, the -- the guidance we have for license growth for CATIA was between 0 and 5%. I think the new one I can say now is that we will be at the top of our range for the full year.

Great, thank you.

Okay, next question is from (inaudible) please go ahead.

Hi good afternoon. I just want to drill down into the couple of the announcements you made, the sample of placed your results. The first one being airbus, I just want to tick at a better understanding of the boundaries between your ENOVIA VPLM deployments and the Windshield deployment. Always determining is from airbus is that their target solution is still CATIA on Windshield. So, just to understand you know, the stick between the two what you have in that first instance.

Well I don’t know here you got the understanding that CATIA on the windshield because they simply said that’s not the case. There is no possibility to do the system mock-up without VPLM and I guess Airbus wants to do this mock-up and it's very urgent to address that about that issue and that’s why VPLM ENOVIA is becoming a very core element of the future for them. And we are very confident on this, this is -- this is something that has been demonstrated at some of the new programs that needs to be generalized.

Okay.

So with that being said, what is the result, when the customer or anyone who is using CATIA and ENOVIA VPLM is basically the entire car, plane or ship these indeed generated, configured and on manage on the collaborative standpoint using those infrastructures. If you want to save when everything is over, some of those information somewhere else you can but very quickly any customers will discover that is useless because it creates a new dual database, which is unnecessary. So the remaining question is what about the (inaudible) gets the data that we would not address in their plain definition of manufacturing processes, there might be step spec documents and these kind of things, their marginal value, marginal number of users and our view is that long run for any customers implementing digital Mock-Up, everything comes back around this backbone on that. So this is -- this is a significant announcement and it gives you an idea of about not only the boundary today but how it’s going to evolve.

Sure it's just -- just a fabrication and this is around DMU initially but it is to some extend the diminishments of the row within PTC within the accounts and it is you know, we are providing the product data management, but then we are potentially providing the product data management plan over time. Is that -- is that correct? Is it important that you like that?

No. I’m speaking for myself, yeah that’s on Airbus because I want to speak for Airbus on that aspect as you said the initial phase, the initial mock-up configured, obviously it’s urgent and it was a failure on the products approach and indeed it was. So the – but what I when I say the customer experience and I look at that one we have been doing digital broadcast full speech at full, fully. The needs of things around for the data management around is marginal. That’s what I’m trying to say here. So overtime the trends appear except you know (inaudible) wants to see the copy but I think it will be contrary the experience we have seen.

Okay thanks and then just secondly on that Airbus again, I understand that that target solutions designed to them again I guess again with them you know for the 8350 and 8400 is CATIA and there’s also the 838 yeah it's currently is on -- on the CAD system, it's done by PTC yet, as far as -- again, you said there will be a migration to CATIA, pretension in the second half in the UK and enjoy selling for the other parts of Airbus and I wondered if some of the surprising, we are not surprised, before the strength we have seen in CATIA is related to that this sort of pool forward of their plan is to migrate from CAD to CATIA and It’s not, then is that a strength to come through, should we profile it or you know, plus more significant ramp in two of this as we go through the year.

Well in large accounts like Ford on many user accounts the -- the in these such kind of business confirmation because this is not software installation only. This is about new methods, new collaborative processes, or if I don’t with is not you know our capacity to deploy or install or even the needs, it’s about making sure that the organization and the business processes and practices evolves with it. So, you know, this has been a very -- a very typical key question in past contracts, you remember the first one we were asked about these questions with Toyota also, on many of our customers. I think we should be careful about doing -- doing the modeling of the gross which would be too deep I mean, too aggressive because there are armatures here which are very difficult to estimate right now as we speak.

Okay thanks and just finally on the Ford announcement, almost exchanged was already global design standards so is to make sure the extension, the adoption of the engineering hub, and kind of, so the commentary suggested that was you know probably associated with CATIA yet, some understanding was the engineering hub was actually you know, the ENOVIA related to deployment so I just want to, if you could clarify that would be helpful.

Yeah, thank you -- thank you for the questions. This is an important one, of course as the previous one but this is key. First of all as you -- as you on the previous topic you understand that both CATIA and the PLM ENOVIA because you see it cannot be done with CATIA only. That’s one point. So, yes, you are very right. The most important information in the Ford press release is the fact that the engineering staff is at the heart of all new product development processes for the Ford Motor Company. Therefore the VPLM product family of ENOVIA. So, your -- your comment is the right one but there is a little bit more because yes, CATIA was using in body electrical assistant. Now what the press release says, and of course this is Ford validated into customer is that each does more of a design system from everything and of course once again it takes time on to be deployed in the old core processes but I think if we move step by step, for 15 years now that the system has been clearly mentioning very simple things. Number one, there is no way to reduce that more stock with multiple task. What is very interesting here in the last four years, Ford customers who have tried to it are failed. So this industry trend to go, these should unlock, that’s the first thing we said. We integrated design tools all be specifically as a mechanical, electrical systems and so one is vary too. The certain factor of that and that’s not the simplification --- that’s what is happening. So I don’t think it’s easy to have more cost that was done between 95 on 2000. This is not the digital Mock-Up we are doing in the years of 2006. In 2006 we are doing configure Digital Mock-Up. Why? Because most of those companies they don’t develop one product type, they do one product type of multiple versions of it, simultaneously which was not the case before but because of that it’s almost impossible to develop a program result highly integrated configuration and that’s why the winner on that kind of topic is ENOVIA VPLM.

That’s great, thanks very much.

Your next question is from Michael Briest of UBS, please go ahead. Michael Briest - UBS: Thank you, good afternoon. In terms of the revenue you guys, you obviously listed that quite nicely about 5 million to 15 million excluding the currency effect. But the margin guidance, that will need to change. Can you focus through that, is that purely the currency effect or is there most investment in there and then just a number in the past, you have given us the amount of revenues generated by the Channel Management program. Could you give us that figure?

Thibault you, yes, that I’m sure you have something to say here.

I knew. The margin stays the same and it is essentially to -- to take into account the fact that so yet we have continued to have a downward pressure on the -- on margin, and also because 27 is very good and rounded figure. But Japanese Yen will have immediate impact on both operating margin and EPS so this is restored into the -- the guidance.

Channel management program revenues.

Yeah, the Channel management program revenue is not something that -- that we break down but what I can share with you is that -- is that , we have been contributing so much to the next generation of revenue growths in the countries where we archiving, visibility for -- for ideas and you know the some other writes off, with each of these both constant avenues of revenues and countries, where there is always going to be a revenue where we end off that that task.

Okay one, it's final one. That just in terms of the capital unit growth to 12%. Are you suggesting them, the Ford or Airbus were pretty immaterial in driving that, could you then, if that’s true can you then suggest what was actually driving that, is it t big market.

Although, we were dynamic on the market I think has been the biggest driver for their first time unit growth.

Okay, thank you.

Your next question is from (inaudible) please go ahead.

Good afternoon guys and congratulations on our very solid quarter. I just had a couple of questions for I keep around the numbers in the announcement. I think firstly just it’s great using the strong incremental demands on the aerospace sector, which is baring an airbus in particular. Do you have a sense of when the revenue growth that you achieved from those two customers might actually start to peak, I get the sense there out the most that you achieve for most of your customers might actually start to speak, I got this sense right at the moment we are still in the acceleration phase, I mean its kind of that follow up.

Was this is -- this is a -- it’s a difficult question for the following reason. If you look at what we were selling to those customers two years ago, only two years ago, even three years ago, but even only two years ago, the scope of what we were selling was completely different from what the scope we are addressing now. Let me give you an example, when you look at Boeing 787. When we did the 777 program, the difficult one couple was done we sketched that before. The 787 program going PLM, CATIA, ENOVIA, DELMIA, ABAQUS and even set by Mr. Bear, even the both of the program really, he wants to do leverage is its still IP across the life cycle as mentioning in one of his press release, here last week by providing a difficult information for airlines and basically their tool is being used there. So if I try to put the roadmap for our leading edge customers about what they are going to do in the next five years and if I took that simply said, three factors. Number one, the number of programs they launch. Number two, the scope of the PLM they want to exploit and number three, there a difficult and to price mainly the suppliers. I think those factors they came into account make the answer to your question quiet difficult and we need a lot of discussions, but the simple answer is I don’t see peak suite accept to us to leverage those three factors.

Okay, simple thank you and just couple of more quick one if I may just a question here achieved there, which is the numbers in the quarter. On an organic basis, it seems to me that the price eccentric XPDM growth. We are not actually up about 8% or 9% in both Q1 and Q2 2006 and not despite very low percentage unit growth in 1Q and very high percentage unit growth in 2Q. Given that CATIA is a majority of price eccentric XPDM and you have seen those unit growths quite diverse from the organic growth in that segments each quarter. Can you just tell me as I may be what I am over looking here why the link between the two of those seems to be that closer?

Actually, I think the even excluding ENOVIA create in growth is some what higher then there when you just mentioned, because its quite usually in line actually we are noting that growth and there is the green line, that’s 19% it will be a massive growth in this second quarter with the PNM growth excluding ABAQUS and MatrixOne. So I’m quite not sure of -- maybe we can follow up offline as I just I mean -- if I don’t think eventful, because you know I don’t the disconnects those few highlight but that can be -- I will do a couple of computations in weekends, but at the first glance I think the ENOVIA fronts has been in the Q2 average than we seen it out for the PDM ones.

Okay and that’s –- we follow up, fine and because I just looking at I mean when I look at what contributed to price that (inaudible) PDM in the quarter just out of the reported number I mean its excluding a little bit of virtue its mainly ABAQUS from I guess part of that and it seems like you did about $26 million of that in the quarter. So if I just take the price of centric growth and take off the 26 million look at the growth then it seems to be a way below on organic basis but we’ll follow up offline after some time.

Okay.

Your next question from (inaudible) Research please go ahead.

Yes good afternoon. Just I’m trying to, bit of a clarification on your IBM relationship and friends indulge and as I understand you exactly to say that IBM will continue to sell into the large accounts in these two markets.

Yes.

And how did you define large accounts in your new agreement with IBM exactly?

Well it’s a very simple as before. Today independently of that topic the way the global route to market is managed. It’s managed by two things a collection or list of names of customers in each country in each view, by which we will sell, IBM sells directly with their own resources and then everything else is done referred the channel partner network. So that –- slip with the wish, that territory management is going to continue to be the same.

Okay so is there a notion of sizes or is it just the relationship –-

Its both, but its something we –- its both because it also depend on the customer maturity you know it intend to adopt PLM in a big way. So even mid-sized companies if they are going with a big road map for PLM adoption and the last hope could be in this between code name account list but the point is this is defined very early on in the year so it does not create confusion for territory management.

Sure and just –- the other European markets that you mentioned I mean are there any plans to move to similar there and if it is what timeframe?

What we have decided to do with IBM is very simple we have decided together to continue to work on the optimization of our work channel management front on efficiency and this process is going very well between us and this is what lead to the situation you just describe here for France or Belgium but those kind of decisions are going to be made together based on how we can continue to improve the critical thing for us is to make sure that our channel and so we can continue to improve. The difficult thing for is to make sure that our channel can scale up with PLM value, and then probably and then get knowledge and so on, but this is something we will we do in conjunction with IBM

Okay and just, you know, the comments that you were making earlier on the rising interest in multi-product relationships and longer term customer commitments the PLM, are you seeing a change in the way that you are engaging with customers, and most of your frame agreements that we have heard elsewhere, where the customer may commit the commercial terms over a longer period and saves the business. To what extent are you seeing this and how do you expect this could, if you are seeing it affects your traditional license seasonality.

Well, that’s a very good question on, first of all we see multi-complex and we are very familiar with those, when we work with the big names, you know from the list of companies we have clearly, we have been working with most of these sometimes before, on IBM, managing these contracts and agreements. Now, but if I drill in a little bit and I understand the context of your question, I think there are, the core objective we have is really to sell PLM on value. I really don’t like these counts. I think we need to continue to sell on value. I think many software companies have been putting themselves in trouble, not being able to articulate the value they bring and clearly I could give you hundreds of examples. I think some of the competitors whom we have are playing that game right now but I don’t think it will disturb us because we continue on that same situation where our offer was between two to five times higher. Two to five times, I am not saying 20%, two to five time higher and in software, I am not even talking about service and deployment and the customer we go and we will because, because this is a big deal for them and if you put the leveraging factor on their business operation versus the, you know, program investment they are doing versus the cost of the pure software, its marginal. So, its up to us to continue to establish those kind of relationship with, this is the market we are looking for. This is how we are willing to act as we move on. So, based on whole (inaudible) simplifying is not the kind of approach we want to have right now as this PLM market is emerging and growing.

Okay, thank you.

Welcome, I think, lets take the last question if any of the lines we --

We have no questions at this time please continue.

Okay, thank you very much, thank you for all of you for participating, for following our companies and first you all are always welcome to call us directly and get some additional information as required. Have a good day and talk to you next quarter at least, bye now.

That does complete our conference today, thank you for participating and you may disconnect.