Bernard Charles - President and CEO Thibault de Tersant - EVP and CFO

James Clark - Credit Suisse Adam Wood - Exane BNP Paribas Stefan Slowinski - Societe Generale Bernard Charles - President and Chief Executive Officer: Good morning, welcome. Once a year Thibault and I share the same presentation where it used to be one in London, one in Paris. This time so we are going to go through a very comprehensive agenda and let's start right away. You have looked at the numbers I suspect this morning. So I just made this general comment about our 2007 achievement. First of all, I think further from the revenues standpoint, you are all familiar with this table that we present as a summary. For the revenues standpoint, we think we have done what we have said we would do. With the revenue growth at 14% total revenue and 16% for the software. On the ENOVIA side, we have achieved the numbers we were looking at doing in 2007 both with and without MatrixOne. On the operating margin as you have seen we are below what we said we would do. I think there are two reasons for that and Thibault will make the comments; one is very specific one related to the lower than expected service revenue and give you more detail in a minute, on the effect of the yen mainly at exchange rate. On the EPS side, we said that we would be between 7% and 9% growth. So we have achieved that objective too. We have massively transformed our go-to-market. I will come on that and explain where we are in this area and we have prepared... this was started three years ago, we have prepared the next generation of PLM, we call it PLM 2.0 on the Version 6 and this is, I think, going to be a very interesting dynamic to expand our footprint on which new types of customers I will give you some additional comments there and finally I think I would like to recap the wins we have done in diversification of the PLM in 2007, because I think they are great references to replicate this year. With that what we want to cover, and of course we are going to come back on each of those critical points. What we are going to cover with Thibault is, number one, the comments on the... the management comments on the numbers. For the first time, you will see that we published the cash flow number; those of you who have been asking many questions about the cash flow number, you are going to see interesting data here. Second, I will cover the transformation of our go-to-market. So quick comments on the announcement on what is coming with PLM 2.0 and the Version 6, and of course we will conclude with the objective of 2008, with that, Thibault? Thibault de Tersant - Executive Vice President and Chief Financial Officer: Good morning. So first of all our revenue in 2007; we grew 14% of 2007 revenue and 12% in Q4. The software growth was 16% for both the full year and the fourth quarter. And so the dynamic of a software revenue growth has been very good during the whole year and this is across our major product lines. The service revenue was 6%, a modest growth, for the full year and a decrease of 7% in fourth quarter. The reasons for this decrease of 7% are twofold. The first reason is certainly a high base of comparison we had which you will remember a very good quarter for service revenue in fourth quarter of 2006. The other reason is that we had in Q4 amidst our consulting operations were good and according to our plan, we know that in our service revenue we've three components... three elements; consulting for PLM project, this activity is going well and is driven by the software growth you see from PLM, which is also about 16%. We have the support to IBM to manage the biggest software network they have which is something which is starting to decline slightly and will essentially vanish in 2008, because we've now conferred this channel to us. And the third element, all the services that we render in operations which were formally IBM business partners and very clearly in -- specially in fourth quarter, also this has been to prepare the last transitions and to support our vast channel other than do a lot of anxiety... put a lot of anxiety on services to mid-size companies. So these services to mid-sized companies in those operations that we have, have outperformed; it is simply for that reason. And it's very local issue that we don't believe is going to be difficult to seek at all. The hyperlink option of our software revenue continues to increase. Recurring was 50% of our software revenue in 2005; it is now 60% in 2007. This is driven by both in maintenance renewals in a much higher installed base for our products and also a continued dynamic offsetting rental licenses. For example SIMULIA is for 90% of its software business and other rental model and of course we also have large customers that are... and this very same system. The geographic split of our revenue shows that we have the good dynamic in Asia that is continuing, 24% growth in Asia for the full year, 22% growth in the fourth quarter followed by Americas, 19% for the year, 10% in the fourth quarter and here I assure you we have questions on whether there is here a pattern of deceleration in America for us and maybe I don't also... the time has come for it. But actually I don't think that we are facing such an issue in Americas, in general, and the software revenue in Americas in Q4 was quite good. There is a good part of the expedition coming from services in this 10% growth in America. And in Europe there is stable growth, 7% for the full year, 8% for the fourth quarter. By product line, PLM software growth; here is a breakdown of software. We are now looking at services separate from software because it's becoming very difficult to assign services to the different elements of our product lines, what is in a service engagement for customers; the portion that we can attribute to CATIA versus the portion to SIMULIA or the portion to ENOVIA is very arbitrarily exceeding. So if you look at this breakdown from a software revenue, what we see is 17% growth in PLM software in Q4 which is quite good, 16% for the full year and we are now highlighting to capture our revenue growth which is excluding ICEM because ICEM seems to belong to CATIA but I don't want to pollute this goal with ICEM acquisition; 12% in Q4, 11% in... for the full year. And I know that for some observers CATIA growth has been mysterious because of unit goal, price per seat dynamic, and so I think the best answer is now to publish the CATIA revenue and the CATIA growth and this is what we are now doing. I must say that interest become difficult to have a good picture of the CATIA business by simply looking at number of licenses in ASP. Because we have CATIA components in other brands and the CATIA configuration is that we feel also embed now data management products quite often. But the revenue is something that is very serious and can be looked at in other projects, the growth of this mature products. ENOVIA goal was for the full year 32%, 16% in the fourth quarter. I want to highlight here that if we only look at our historical ENOVIA products which are VPLM and SmarTeam, the combination of those two grew by 15% on top of our range if you remember in our guidance, 15% for the full year. And so there is no cannibalization by ENOVIA made fix funds. And the combination of SolidWorks and COSMOSWorks grew by 14% for the year, 12% in Q4. In terms of units we grew units by 7% both for the fourth quarter and for the full year. So we sold 84,000 licensees, card licensees in 2007. We had a flat unit count for CATIA with a goal in the fourth quarter of 2% and 13% growth for SolidWorks for the year, 12% in fourth quarter. In terms of margin, our software margin is now very stable as you can see. If you look at it, for the full year we have some seasonality quarter-by-quarter, but for the full year we are now 95% gross margin in software which has been relatively stable across 2006 and 2007. In terms of service, the performance in service had some impact on the margin. As you can see we have a full-year margin of 20% in services, which is a decrease based on the service performance in 2007, particularly in fourth quarter. Operating income and margin. I think that here what I would like to highlight is that we did a 35% operating margin in Q4. So we are short of our expectation of having a 36% margin in fourth quarter. While the difference between both margin rates is a bit less than $4 million, so not to ask for any excuse, but without this local weakness in services we would have reached our goal of 36% margin in fourth quarter. I would like to mention that this margin for fourth quarter, up 34.9% to be precise, is increasing by 60 basis points compared to fourth quarter of 2006. So in 2007 this is our first sign of improving operating margin which is going to be a major theme for us in 2008. So I think it is good to see that our actions are starting to pay and to deliver this margin improvement that we're targeting for 2008 and future years. For the full year, we did a 26.2% margin; it's a bit short of market and even us, our expectation of 26.7%. It's the same explanation, but there is also another way to look at it and the way to look at it, if I may, do address the one minute of marketing is that the entire difference of margin for us between 2006 and 2007 is explained by the yen weakening. The rate of the yen depreciation in 2007 does explain 7- to 70-basis-point difference in our operating margin and so this means that all the investments we've done in our channels at the end, but certainly of course the PLM in the right channel is probably the important investment we've done. All these investment have been financed by the operating leverage we've in our core activity. What are the areas of expenses? Well that looks too difficult to figure out. We've been growing expenses in marketing and sales and in G&A that's very bad... given G&A, I know. But it is also very necessary when we put all this infrastructure to take over this PLM channel and grow it and develop it with the right processes. When we say 25 countries, actually it's 25 regions, but what you have to keep in mind is that as of the first quarter of 2008, we are totally supporting and selling in 60 countries in the world in the PLM in the right channel which is an important task. That has been done with an increase in those administrative functions of 12% only, I would like to say, and the 13% in the marketing and sales. In R&D, we continue to invest, and Bernard will take you through what we do in R&D and I think we are... we have a lot to report for 2007 and so our staffing and R&D grew by 6% during the year. We have been able to manage the cost per person in R&D, but certainly there is the staffing increase which is substantial. Looking now at our net income, well the net income in Q4 and for the full year has been driven by a 6% increase in operating income of 7% in Q4 and then a good dynamic in financial income compensated by some exchange losses. Particularly at the end of the year, we had a weakening of currencies in Q4 generating some losses, and an improvement in tax rate, which helped deliver an increase in EPS of 9% for the full year and 10% in fourth quarter. The EPS growth was therefore 8% both for fourth quarter and the full year and what I'd like to point out is that without currency movements, our EPS growth would have been 19% and I know... I mean, certainly I don't want to consider that but when comparing with U.S. based software companies and our competitors which are U.S. based as well, it's not... they don't have a neutral currency. In fact they have a positive impact coming from currency. So had we been a U.S. based company, our EPS would have grown certainly north of 19%, probably 23%, 24%. It's just a side remark. Our currency breakdown has evolved in 2007 when we now look at the actions for one clear event. We have had a very good dynamic in Asia and particularly in Japan. So in the breakdown as you can see, compared to our estimate, Japan is now... and the Yen is now 17% of our revenue compared to an estimate of 14% and the cost base is 6% in the yen, so we have an 11 point exposure up to the yen. And the turnover is a little bit more modest at 38% of total revenue and 42% of the expense base. So there's no impact coming from the dollar or the operating margin level but there is one coming from the yen and of course both have an impact on EPS. The balance sheet is strong, so this is those group showed up equity at €1.2 billion and with a cash position of €630 million less that of €210 million. And the cash flow from operations of €611 million is also, I think, a good indicator of our dynamic. It is an increase of 18% compared to 2006. So it's, I think, a pretty good result. We have distributed €51 million of dividend in 2007. It was about one-third of the net income in GAAP and we're now allocating €35 million to do some share buybacks. From now at least in the windows where we can do them and until our shareholders meeting which is end of May where we need to have a renewal of the authorization to do a share buyback. Let me now turn the call to Bernard. Bernard Charles - President and Chief Executive Officer: Yes, thanks Thibault. I would like to tell you a little bit more about the full-year results relating to the conformation of our go-to market. And I think it was an exceptional year for us in terms of how to prefer the future result disturbing the current recent activities. When you look at the way we are distributing now around the world. I think you can be sure at least the three first lines. The SolidWorks operational channel... the SolidWorks channel is becoming the provisional channel. Why, because it's going to become multi-brand distribution channel. As you know what we refer, and as Thibault referred to the mainstream, call it mainstream revenue, it's SolidWorks plus COSMOSWorks for example which are tools for analysis, on the operating and this channel also; 3DVIA Composer, the resulting product from the acquisition of Seemage last September. So this channel is a critical channel moving forward not only that, so multi-brand. Second thing, that's what... that happened in 2007. Second thing is the PLM channel to take over of the indirect channel is a significant piece of work to help beat future growth and I will explain why in a moment. Thus I will give you some data. The search channel which basically line item number one here is the direct sales channel. As you know we have been selling directly with the ABMC direct sales force plus our whole direct sales force. Today our direct sales force are selling specialized applications DELMIA, SIMULIA, et cetera. What we have done in 2007, we have reached a capacity level for our direct sales force which is equivalent to the IBM direct sales force, and we are going to leverage that moving forward. And let's speak today about the internet go-to-market. I think it's too early to do it. I just want to mention that we are not... that we don't forget that. We are thinking about un-starting it, but there is no... there will be marginal effect on 2008. So there is no need to talk about it right now. So, if I look at now the why do... why are we doing this transformation? First of all, as Thibault said we are selling directly or indirectly at least with our own contract in 60 countries. The reason why this is so critical for us is to really move from a model where we are three payers; Dassault Systemes, IBM and a partner to a two-tier model where we have Dassault Systemes, the partner on that... our PLM solution, and this condition has been going well. We achieved our revenue on the software side by this massive transformation. The second thing that we have done is that we have repackaged our offer so the channel can be leveraged to create growth there, so simplifying the packaging. On the... I think there was a lot of concern at the beginning of the year in 2007 about how deceptive will this be and I think we have demonstrated that we could deliver the number where we are transforming the system. Not only that we have increased the coverage. I will give you a very precise example. In Latin America IBM had two partners, we have now 14 partners. Now, are they going to sell immediately? They won't no of course, but they will be expanding. So the capacity is now something we measure. We have been doing it for the professional channel, the red line, but we need to be doing it for the PLM channel. So when we believe we have increased our safe capacity in the PLM in direct channel by 20%, and this is a key potential moving forward. If I look at now the PLM channel, the direct sales force, as I said it represents 55% of the revenue and we have now equivalent capacity in direct sales force as the IBM direct sales force capacity. What we are changing this year is we are enabling those sales people to sell more than the products that we are supposed to sell. For example, DELMIA sales people will be able to sell more than DELMIA. If he wants to sell PLM to manufacturing company for factory management, he can sell now with DELMIA, and you can do any kind of combined configuration of those packages. The reason why this is happening is because we believe the market is changing and the decision process is evolving from buying products for design assimilation or collaboration to buying a total solution for PLM. So I think this will be an interesting dynamic for the direct sales force. We have demonstrated that we could deliver in this area to double-digit growth and we continue to increase the capacity, both through IBM and through our own sales force. Now, if you look at the diversification aspect, which is very critical. There are three things we want to do. One is to expand what we sell in our current customer base. The second is to reach new industries and the third is growing the install base connecting with older suppliers. I think we have being doing extremely well in 2007 to demonstrate that we can expand the PLM offering. When you see the growth of ENOVIA VPLM without MatrixOne at 15%, it's coming from there; what we called core of ENOVIA before we did the acquisition of MatrixOne. Now when you look at new industries, the growth is coming from the new ENOVIA with MatrixOne. And customers like LG where we are installing now 15,000 user access replacing our competitors' installation, so it's not a win, it's a win back. And there are many of those... Gucci Group, Yves Saint Laurent, all these brands inside Gucci Group as well as under... and there are more few names here. We demonstrate that PLM can be used in the automotive sector, consumer packaged groups in new sectors. I think those differences are typical, because they are going to help us demonstrate that PLM is indeed a value for those new markets. So the commitment we did to cover... to go from five to seven and then to 11 industries, I think, is happening and that's the track record we have been doing in 2007 that we want to leverage of course moving forward. And the last point here, which is the last tier, is the connectivity between large OEMs, large companies and their suppliers is increasing and basically they want to have online consistent environmental collaboration. Now, if I look at the mid-tier PLM, which is a critical element, first of all, we have continued to expand the professional channel capacity by... it did represent 20% of the Dassault Systemes revenue as you look at the mainstream market. And it has delivered 14% growth. We have increased the capacity of the regional channel for the professional channel by 20% last year. And we are reorganizing Japan. It was a double tier, on that we are coming back to one tier. It's well under way and we are starting the multi-brand approach. So we will leverage that channel too. If you look at the emerging countries, are we creating head count fees to beat industries that are in those countries as we did in the past in Europe or America? No one disputes the fact that Dassault Systemes is in a good industry super [ph] enabled space today with the PLM... our PLM solution, while we believe we still have a lot of growth to do in expanding the PLM. Nobody disputes or discuss our position in automotive sector [ph]. But we are doing that in emerging... by the way I am not sure it's emerging countries anymore. In new countries where they have... with high growth. With new customer wins in China whether they are in automotive, aerospace, whether it's in every industry or energy, we are creating references which are very significant for future growth. I have many examples in mind. Of course I will not take the possession over to IRO but let's talk about hydraulic sector. Schneider [ph] is a big customer to us. What they do is they use... escalate the build hydraulic installations. They will digitize a complete add-in. Take the data and pour them in CATIA due to modeling of the hydraulic fit installation, plan the construction virtually and do old management of the construction site with the different world. I mean those are references which are becoming very critical, they are not doing me too, they are indeed adopting PLM for new projects. In India the same thing, if you look at the contract we have with Tata, Larsen and Toubro, heavy industries in the emerging sector on shipyard like... by the way shipyard... many companies there. So I think we leverage that growth moving forward as well as the Eastern country you see here some of the number one automotive player here is adopting our solution to and more. So this dynamic of not selling a secondary offer but a primary offer to those countries is also a very strong aspect of our go-to-market strategy. I have mentioned new references in industry; look at what it was announcing in 2007. We plan to continue to expand on those; in ITECH sector, LG, Freescale, Qualcomm, Nokia, those are references that were not bigger... were not bigger references two years ago. And they are becoming big references from a revenue standpoint. Should be up in LG construction, I mentioned that already as well as consumer package goods you see here at B. Braun. So the short message here is PLM is not only for manufactured products, it can be used in also industries and that's what we want to leverage moving forward. Now when I look at now where we go on the technology on product solution. We have announced at the beginning of the year the results of three years of massive R&D investment to create a next generation PLM. We call it PLM 2.0. Why 2.0? Very easy. As we talk about Web 2.0, PLM 2.0, what is the difference between Web 1.0 and Web 2.0? It's about connection; it's about interaction, communities and a new user experience. What we want to do in PLM 2.0 is online interaction on new user experience. So that's why we have and I think this complete leadership will... I believe change again the competitive landscape. When Dassault Systemes committed between 1990 and 2000, they said we are going to do not part design, we are going to do digital markup and we will be the best to do that. We created that growth for 10 years. When we announced version 5 in June 2000 and we said we are moving from design tools to life cycle management tools PLM 1.0, we created the goals you have seen from 2000 to now. I believe that on Web churns there are competitive landscape. We have less and less competitors, we are not fully in a position to completely leverage the price power, yet it's coming. It's really coming and I want to be clear we will leverage that. When there is a high value to use PLM solutions for Airbus 380, customer will have to pay, it's not going to be discounted. So the price leveraging factor I think is going to be something that we will have to use to get the proper value for what we bring to the customer. So that's the dynamic which is now going on. How are we preparing that? We are preparing that with... that was not... that do not add this, we've removed that piece but I can make some comments on this one. This was used for something else. There was an interesting study as I sign out I will go quickly on that... it's not in the part of your presentation. That was done by business week and many accompanying IBM team the one on innovation I think they have published a report. On that they have observed the top 50 most innovative companies and they came to a very quick conclusion. By the way top 35 of those customers of the top 50 are our customers and they came to three things. They said what those companies want to add is new ways to create user experience with the product they do through innovation, new ways to design and new ways to manage ecosystem. So just a side note, but I think it's an excellent projection to explain what PLM 2.0 is about. This is where it is, it is to provide to any user an online environment to orally follow and contribute to the design stimulation, construction on life cycle management, cost analogy, supply chain management, whether you are doing apparel lie Gap or airplane like Boeing, the supply chain management, the sourcing of all the knowledge you need to have to create those new collection is a process which is becoming common. That's what we want to do with PLM 2.0. The second thing is we want to go upon our shopping experience; people want to buy 3D online they will be able to have a real time shopping experience. So I feel it's a real new wave, it's not going to be expansion of what we've been doing. How are we connecting those things together? You have seen a collection of acquisition in the last 10 years. We've acquired the key pieces to create the industrial platform which will enable people to basically define the experience design, stimulate, produce and sell, that's what we call PLM tool, and manage it. Let me... it was announced in June; let me show you what is the effect of that. First of all, the management of the ecosystem which will be more... much more consistent with the big... between the big companies and the small players. Second, the users will fall in three categories, the one creating, the one connected, and the one consuming that content. The three layers that you see blue, silver and orange. Version 6 is about creating this global collaborative platform, it's about creating lifecycle experience... life like experience. It's about online creation. The initial example you see of our 3DVIA Shape inside just... or outside in 3dvia.com is a good illustration of what is happening, a single platform. So I think in the product creation, on production we want to do at SAP in ERP, but I think it's now connecting all small, medium and large companies together. And that's what we are doing with... in reality we've... with Toyota, the Boeing, on those companies. And of course changing the way modeling is done by enabling to do of course shape, managing requirements, managing collaboration or simulation, on providing ready-to-use business processes. When we go to a micro course or when we go to GAAP, what we do is we come with a business process. Do you want to do sourcing for your apparel collection; we have a business process for that. When we are going to go to a new automotive industry, do you want to do body design, that's the design of this... of the door or the hood, but the full car design, we provide a business process. So we are going to change with PLM 2.0 on Version 6 the way we deliver the offer to the customers. And finally, low cost of ownership. The reason why we want that LG was because the cost of ownership to run and support 15000 users was 10 time less than Team Thumpter [ph], one of our competitor. This is an illustration of how things are changing in the way PLM works. The symbol of version 6 is about enabling people to connect in forward direction, the people doing shapes, the people doing structure, structure on the phone, structure on the plane, people doing the sourcing, people being able to do the knowledge that enables to produce on design note. And so you see here, for example the revolutionary new user interface. Even Version 6 demonstration was done to customers that have all accrued that set a change... and to change the way we innovate. That is much less menus, it's extremely simplified when you connect... you have to click on an object, you know when the owner is online, exactly like instant messaging and it goes through the firewalls, it goes outside the company. Before it was enterprise system connected inside, and it was very difficult to go through the firewalls because of technology limitation. We have solved all those issues and then of course you want to do the life cycle management. Here you see traditional equipment something that we do. But when you are doing sourcing for apparel and buying different equipment that will go on the collection, it's a really completely different process. And we do it seamlessly now in an integrated system. I think it's going to change the game plan. It's fun on... most importantly customer likes it, so that's the highlight of what is PLM 2.0 and what is Version 6; 217 products will be delivered in May. So the goal here is to provide PLM to more customers. For each of the customers we have to increase the value by reaching more users on the... to really provide a way to connect to legacy environment with Version 6 for example, we will be natively reading, all our competitors' data format online. And basically take those data and map them in Version 6. So that's a way for customers to simplify their [indiscernible] use of environment. On the cost of ownership, it's very critical. Let me give you an example of that. Today when you design an airplane, car or phone, when you are... before doing this on parts you need to send data back on forth between sites. With the next generation system there is no need to even move the data. You come from anywhere around the world through 3G at an ADSL line, navigate on a full airplane without sending the data somewhere. So what has happened on the image system where the only image system used to be on the desktop and when they... now they are online. The same thing is happening for us. I think that Dubai is going to be very difficult for our competitors to reach and we are the one to exploit that. That's why managing our own direct fiscals as well as the indirect PLM channel is so critical because the speed at which we can leverage these technology breakthrough is critical. With that, that's a quick update. So I think we have built in 2007 a new infrastructure, collection of new technology, collection of breakthrough approach, and that's what we want to leverage for the future. So I have an impression that, from that standpoint we're in a very strong position to continue to be in market share. As a fine note we cannot really communicate older data and back-ups. But I believe what I meant to say now but I believe in the next two months we will be able to confirm that we have at least gained one... between one and two-points market share again in 2007. All the numbers are not published but I believe that this will be the result on the bottom line. So remember in the last 10 years... in the last five years we gained 10-point market share and we've increased the market... the reachable market by significant numbers. So it's not saturated, it's fun despite the depressed stock market, it's really fun and I think our customers are going to continue to expand the solution with us. With that Thibault will talk to you about the 2008 objectives in this challenging economical environment. Thank you. Thibault de Tersant - Executive Vice President and Chief Financial Officer: So essentially our 2008 objectives are a confirmation of the revenue growth that we have shared with you with our third quarter results which is the 10% foreign currency impact, total revenue growth, and 12% for software revenue growth. We are now providing you with more details on operating margin and EPS and the operating margin will expand by... between 80 and 130 basis points to about 27% to 27.5% operating margin in 2008 and our EPS based on all of this will increase between 10% and 12%. This with currency expectations of a... the dollar to euro conversion rate of 1.45, and surely the current one, and the yen conversion rate of 160 which are both necessary in order to develop this EPS forecast. For the first quarter we are essentially aligned on the full year expectation in both total revenue and software revenue, 8% to 10% growth in total revenue, 11% to 12% in software revenue and we are... as you can see a target in EPS between $0.40 and $0.42. Something with the economic environment has changed. So there is something I need to share with you first, which is that these objectives are non-GAAP. So we have factored all the... first of all a very modest difference on the top-line between GAAP and non-GAAP, we have just a deferred revenue write-down of about €1 million for the whole 2008 year. So it's very modest. And the share based compensation expense we have factored excluded in non-GAAP is about €18 million but equivalent to 2007, and the amortization of acquired intangibles is about $12 million per quarter. There is another impact that I think we are going to exclude in our non-GAAP financials which is the fact that we are moving. Our headquarter Suresnes has become saturated and so we need to move to a newer headquarter campus. We go little bit further... so we don't go Paris downtown, we go to Diligent [ph]. And so we have impact in two directions. We have moving and double rent expenses on one side. On the other side, we are filling one of the buildings where we are today with a nice profit, we are able to close that transaction just before, so we seeing deterioration in real estate prices. Actually we closed it a little bit after, but we are able to save it. And so the global net impact is a positive on EPS, but we want to... not have always one-time affects in our non-GAAP measures. So we are going to exclude a positive impact. And what are the drivers for objective? I think that the main drivers for objective are first of all, the new license sales growth. And we are going to see a better revenue in new license revenue in 2008 compared to 2007 where we had a very good growth in recurring revenue. In 2008, based on the capacity in our channels, the verification we have done, the growth of new license revenue will be better. This is really the result of the work we have been doing in the past two years and the heavy investments we have been doing in the past two years. The recurring revenue growth will continue, of course, at a slower pace, but it will continue to be very dynamic, because of the maintenance days we have which is still growing fast, and whose renewal rates are very good and the rental licenses model that we keep. And lastly, as Bernard mentioned, I think that with V6 PLM 2.0 and everything we're doing we're at the core of what customers are trying to do in innovation. There is very high seniority between what they need to do in design with the views, leading an ecosystem in collaboration, lowering the cost of their infrastructure, accelerating the ROI and what we are going to deliver. So I think we have a very decent visibility on our future revenue because of the recurring portion of it. I think we have a very diversified exposure from a geographic standpoint and for us U.S. is not truly an issue. It's not truly an issue because of the very high level of recurring revenue we have in the U.S. and as the progress made in our channels and also because in the industries where we're sitting in the U.S., we don't see a big impact from the current environment circumstances in machinery, in apparel, in those global industries where we're fitting. We don't see this type of impact. And we continue to be very dynamic in Asia and of course to known the so called emerging country. And finally, I would just point out that we're very... we don't have an exposure to financial services nor to real estate. So I think the industry verticals where we are playing will continue to show good prospects for us. And the next point is when we place the 2008 expectations on the curve for our 2010 plan, what we see immediately is that without the currency impact we are above the curve, slightly below, taking into account the currency impact, and as I stand here in front of you, I am convinced that we are going to reach our 2010 goal. Thank you for your attention. I think we can now answer any questions you have. Question And Answer

Good morning Bernard and Thibault. Can you just drill into that guidance a little bit. You talk about big acceleration in license growth in 2008. And can you walk us through what sort of macro assumptions you have built into that by region and then specifically in terms of the products, is it the channel that will be the primary contributor to that acceleration or is it the growth in the channel that you have transitioned from IBM and what sort of risks there are in potentially the near-term with Japan and Germany still to be transferred in Q1 and then I have a follow-up. Thibault de Tersant - Executive Vice President and Chief Financial Officer: Well, we are hesitant to share attention from a macroeconomic standpoint because if I am wrong, it's bad, if I am right, it's bad. So I don't like so much that game. But from a macroeconomic standpoint, if I just have to share with you what I believe is that there will be an essential year, flat GDP in the U.S. and a decrease that will be substantial in industry investments pending in the world of at least 2 points. So it's not the best economic environment you can dream of and this is certainly carefully considered in the guidance that we are giving. So we are relying upon truly the work we have done, what we see today in the pipeline and what our customers need to face this situation to provide you with the objective. I don't know if I answered exactly your question but --

And just on... where you think, from a standpoint, that acceleration is driven from in-store, predominantly the channel, a swing in the channel or PLM 2.0? Bernard Charles - President and Chief Executive Officer: Well on this, I think, the two channels, the professional channel as well as that we are doing multiple on the sales, as well as the PLM Value Channel are going to be the key drivers. I don't think the risk you mentioned explicitly on your... question, explicitly the risk in Japan and in Germany due to the transition; I don't think it's a risk factor across the world, because we know we have been doing it all along the year last year. So we know exactly the process we must follow and it has been improving quarter after quarter in order to make this transition seamless from a performance standpoint. The teams are strong teams in both countries and the process Thibault mentioned the importance of the infrastructure in the company to the contract, the OTC, and on the order to cash and all these kind of things, we have been going through this learning curve last year. So those tools are available for this transition to happen, specifically on this question. I believe that quality to the true liberator of Version 6, I think it will have an effect for us to accelerate our expansion in new sectors. But those new sectors are still relatively smaller in terms of our revenue contribution. So it will be growing faster than the other one, but I feel this will be the first play. On the second play for this is adding new things to the existing core sectors, new functions and new solutions to the existing heavy Industry. The sign we are getting from customers and partners is the like, they have very exiting user trend. I think in the kind of markets we grew, it's very important to create a positive dynamic of adoption. I don't think it will be a replacement, we have always said that Version 6 will be online of what Version 5 was doing. We should buy 2012, 2001, whatever between 2010 and 2015 progressively condition Version 5 applications, which are installed locally to Version 6, yes. But for the time being it's to add online functions to traditional PLM implementation.

As a follow-up, can I ask what's CATIA growth or are you expecting double-digit CATIA growth as disclosed in software revenues in '08. Thibault de Tersant - Executive Vice President and Chief Financial Officer: Yes absolutely. Bernard Charles - President and Chief Executive Officer: We're expecting a double-digit CATIA growth in '08.

And just a final follow up. In terms of the margin leverage and the total revenue loss second half skewed, if you look out sort of medium term, can you give us a feel for where will this business go back up to the kind of historical 29% margins that we are seeing, or is this going to be just one year of sort of leverage and kind of doing the margins better. Bernard Charles - President and Chief Executive Officer: What I think is that we can manage essentially one-point margin improvement a year. Based on what we've done in the past, investments we've done, I think we're now going to able to be able show our true operating leverage which is about one point. Now there is a point where you need to stop this process and that's a more delicate question, but the fact that we would go back to both 30% operating margin is certainly what we're targeting.

So it's not mentioned. Bernard Charles - President and Chief Executive Officer: What is your question?

Given the huge discrepancy in the growth rate that we have seen between the recurring part and the upfront part regarding software sales, is that true, should we expect more evenly balanced kind of growth rate in 2009, i.e., close to 12% or should we expect even more growth coming from Dassault license sales in 2008? Bernard Charles - President and Chief Executive Officer: Well there, you are right. The expectation is relatively balanced growth now between recurring and one time licenses. And you have seen in Q4 by the way, the beginning of this trend we are not exactly at this point in Q4, but such a new way we've been delivering and 10% growth in new license revenue in Q4.

And I have a follow-up. With regards to the services business that disappointed in Q4, what is the total amount of these kind of businesses that will... moving forward go back or go through the bar, is there are any kind of risk that it should or that it will disappoint again in the coming quarter? Bernard Charles - President and Chief Executive Officer: Well, first of all the evolution of this service, particular service revenue is one taking into account in the guidance for 2008. So we have thoroughly reviewed it and made our best certainly not to have a bad surprise anymore. And that's the reason for the disconnecting between the software growth 12% and total overall growth of 10%. So this is this 2008 transition that is included in the guidance. Thibault de Tersant - Executive Vice President and Chief Financial Officer: As you can imagine when you look at the trends, if you come back three years ago in order to prepare the transition to the PLM channel we took over certain activities in the current geographies and became a business. So locally our self a business partner to our channel, namely IBM. The service we are referring to is the service that goes down in this business partners' activity which is relatively contained. As we are taking over the channel on the relationship with the business partners, we are becoming a partner to our self. I don't want this to continue, and this will not continue. So the local activities here and there were because we are taking over the channel; it's more important to develop the partners than it is to develop our own structure locally which were very limited once again. There is one in France, for example. So in the long term we don't want to keep that activity. And that my answer is different from explanation of the revenue drop beginning in the service. But it says one thing, in the long-term we'll not continue such kind of activity and it will probably be done by sell off to partners. James Clark - Credit Suisse: Thank you. James Clark from Credit Suisse. I noticed in your guidance for 2008 and that you are looking for software growth of around 12%. Could you give us a sense of the standard deviation of that sort of plus or minus 50 basis points. So that's plus or minus the whole percent in your assumptions for this year given that perhaps it's more difficulty thinking on that backdrop that you painted? Bernard Charles - President and Chief Executive Officer: Well I think first of all, I believe in the software side we have a track record and the track record is a track record where we, I believe, at least from what I observe on the comments I see is that we try to provide numbers that we will reach. It's unpleasant to say bit on the service side but I think on the software side we have a strong track record. We've taken the same figures of the previous year to establish the numbers. James Clark - Credit Suisse: So 13% would perhaps be too optimistic for us to achieve... and so around --? Bernard Charles - President and Chief Executive Officer: Well, I don't want to claim 12% and then coming out from this meeting side but by the way they said 13%. So... but I think... that I think what I'm hearing from your comment, so, it was at 12%. James Clark - Credit Suisse: Thank you. Adam Wood - Exane BNP Paribas: Adam Wood from Exane BNP Paribas. I've got a couple of questions. On the China-India and Russia businesses you obviously highlighted them in the presentation. Could you give us a feel for percentage there or total revenues, more growth ratio or so in 2007 in those markets? And then on the indirect channel you talked about that now representing 25% of group revenues. Is that going to be roughly the same in 08 or is that going to be bigger with Germany and Japan. On that topic you talked about 20% expansion on channel capacity and SolidWorks that led to a 20% increase in sales growth. Could we expect a similar trajectory on the PLM indirect channel given that capacity expansion? Thanks. Bernard Charles - President and Chief Executive Officer: Well the growth rate in emerging countries, so called emerging countries, is a very good one, it's north of 25%. The dynamic in the PLM indirect channel is certainly going to continue. In terms of proportion of our total revenue, in proportion of the software revenue, it's going to increase, the 25% figure is in proportion of the total revenue, and here there is the service migration, so it will more modestly increase in that regard. And for SolidWorks, we don't see any reason right now for the dynamic to decelerate. There was a less capacity increase in the channel and that dynamic is well established, and the results we get in this channel in light of the reorganization in Japan, as you can figure out had been very good. Thibault de Tersant - Executive Vice President and Chief Financial Officer: And please keep in mind that the way to leverage the professional channel capacity that we want to play with those resource not only for SolidWorks, but as I said for 3DVIA Composer, on those products to expand the portfolio through this pipeline, and as a capacity there we need to leverage it. So it's not SolidWorks only, that's why we call it in the report mainstream.

And on that front, outside of SolidWorks, Cosmos and 3D Composer, what could be used that this channel can leverage? Bernard Charles - President and Chief Executive Officer: Well first of all, those products are creating very nice growth in terms also of value... the value we can sell for each transaction. It's a little bit too early to discuss it. But one thing that I could comment, as you notice if you remember we did this small acquisition for our PDMWorks; not that I mean [ph] but this is part now of this channel too. We don't sell it as a PDM system; we sell it just as a useful tool to do the management of the design work within the SolidWorks install base. And I believe that we will leverage more and more Version 6 component to provide new products to this channel, but it's too early to speak about what those products are right now. But the pipeline of the product portfolio through the professional channel will grow.

Okay. And just a short follow-up. When you say that PLM software sales grew 17%, with CATIA growing 12% and ENOVIA 16%, should we conclude that DELMIA is finally taking up or is it SIMULIA that you --? Bernard Charles - President and Chief Executive Officer: No. I think it's too early to conclude that DELMIA is taking off. The DELMIA business has been challenging business for us, not really related to the competitive landscape, but related to the market maturity or readiness to adapt the solution. We have outstanding showcases. We have strong customer implementation. And where the customer have made a decision is going very well and we mentioned many of those big names. The adoption by new customers about digital manufacturing is a slow process. I think that Version 6 will change that for very simple reason is that the level of integration is going to be such that customer would not need to commit to digital manufacturing as a starting point. They will be able to just expand what they have. To be precise, they will be able to take only some pieces of DELMIA, not the full digital manufacturing and deploy it step-by-step. So the Version 6, I think, is going to help from that standpoint to leverage this growth on the digital manufacturing side. It is complex, it's tough, it's a domain which is complex.

Okay. Based... Orel [ph]. I have got some questions for you. First of all you said that you want to change the way of selling for what you say of course if you will allow them to sell al the products in a... within an account. How do you manage any frustration with them for the day. Third question on the tax rate. Also, could you maybe explain why it was so low this quarter, was it already scheduled in the guidance and how do you schedule anything on the tax rates for 2008 and also could you give us a split of the buyers for the say, by industry and also dynamics within those industries? Thanks. Bernard Charles - President and Chief Executive Officer: I suspect that one, for the first part of your question you might be referring to potential frustration from the sales force? In fact on the sales force standpoint, it's not the frustration, it's totally the opposite. We have been... it's totally the opposite. We have been in a situation where as we were beating up those drums, we are on a highly specialized sales force and because the IBM territory for large account was not so clear two years ago, as I am used to say it was an open space, say that what you want. And this has changed where now it's as TIBOR and we explained this main list of customers for large customers. Now we can leverage our own direct sales force because basically what IBM covers and what they don't cover. So from our sales force standpoint it's a great news to be able to sell more than the prime expertise, to be very precise. Sales people from DELMIA have been dreaming to sell pieces of ENOVIA for digital manufacturing. And that we'll do that now. People from SIMULIA have started. I don't know if you noticed but a few weeks ago we announced SLM Scientific Lifecycle Management. This is integration of ENOVIA pieces with SIMULIA and SLM will be sold by those people. So in short it's a very positive news for the team. On the live hit and they will be able to increase how we need to put the system in place. But I think from a mindset and an attitude standpoint it's very positive. On the tax side? Thibault de Tersant - Executive Vice President and Chief Financial Officer: Tax rate we're doing three things. Clearly we have been doing a... restructuring our tax growth in the U.S. and we have made the financing contractual acquisitions of ABAQUIS [ph], SIMULIA, ENOVIA and MatrixOne which is positive on our tax rate. The second element is the fact that we have improved profitability in some of our operations which were actually driving the tax rate too high and has now seen profitability, for example, in Israel, where we have essentially no tax rate at all, has been good in fourth quarter. So this we benefited from. And the last point is the first adoption of FIN 48 that we did in 2007. So of those three elements two are going to remain. The work we do on the profitability on our operations in general and particularly ENOVIA SmarTeam and some others. And the financing construct for ABAQUIS [ph] and MatrixOne will continue to provide benefit in 2008. Right now our advice for the tax rate in 2008 is around 31.5%. But this item has to be monitored quarter-after-quarter quite closely.

And by industrial, could you give us the best stage each industry represents in your sales, and also the growth of each of them? Thanks. Bernard Charles - President and Chief Executive Officer: We are still working. And on the revenue by industry, it's a long task to get the data from IBM integrated with our old revenue, not the different... the industry segmentation. So this is not finished yet. But I think all the indicators are there to show that the diversification that we have started is working. Stefan Slowinski - Societe Generale: Stefan Slowinski from Societe Generale. I had a question regarding the cash flow and the balance sheet, cash flow from operations €311 million including €132 million of positive working capital movements on the back of 2006 when we had €83 million of positive working capital movement. It's quite a good conversion in terms of percent of percent of revenue and percent of operating income. Is that due to MatrixOne restructuring or is that a conversion rate that we can expect to continue going forward in terms of the free cash flow generation? Bernard Charles - President and Chief Executive Officer: Well I think... well it's certainly a good result in cash flow from operations. A little bit of help maybe in 2007 but not far from what we believe we can continue to deliver. Stefan Slowinski - Societe Generale: So roughly between 80% and 90% of operating income on adjusted basis could be converted into cash flow operations? Bernard Charles - President and Chief Executive Officer: Exactly right, that was my answer. Stefan Slowinski - Societe Generale: Okay. And looking at the €400 million of net cash, you said €35 million for share buyback, why not more, and also what else could you do with that cash potential revision of the dividend policy or further acquisitions so that by the end of this year you will have even more cash on top of that. Bernard Charles - President and Chief Executive Officer: We want to add more cash, seriously. Thibault de Tersant - Executive Vice President and Chief Financial Officer: I think we need to have the flexibility. There is nothing about surprises or things we changing directions. But I think we have set a policy for... multi-year policy for shareholder or equity and I see this policy is reviewed every year. There is no major reason why we do a U-Turn or a change there on the dividend side. This kind of approach of one-third, one-third, as we say it is a... has been well accepted by key shareholders. And I think we need for cash because we need the flexibility to do any kind of moves. I don't see any specific moves right now, once again, and of course we talk about that. But I think for the size of the company we have I don't think it's an urgent topic to solve any kind of extra cash availability for the time being; at least for 2008, we will see 2009, but then based on the -- Stefan Slowinski - Societe Generale: And in terms of the acquisition policy for 2008? Bernard Charles - President and Chief Executive Officer: Well as I said the... what we have built right now with PLM 2.0 on V6s, it's really a very large product portfolio. And I feel the scope of the portfolio will accelerate faster than the scope... the scope will accelerate faster than the cost, because we are reducing massively the cost of developing new product lines with this next-generation platform. So the leveraging to add €1 for R&D and what we can get from it based on the massive use of component across the group is higher than ever with Version 6, which was the limit with the multi-brand approach, we will keep the multi-brand, but all common architecture. This is going to be a good leveraging factor, I think. So as we will continue to expand now our footprint there, the number of players, competitors, when you look at all of them, I think we are changing the landscape again and we need to be able to take advantage of the value creation out of these, but it has to be demonstrated before we can claim it.

Thank you.

There's [ph] one, could you really... could you share with us what are your plans in terms of headcount growth which has been quite sustained over the next few years for '08... for 2008? Bernard Charles - President and Chief Executive Officer: Well what... right now we're expecting between 5% and 6% headcount growth in '08. Yes. Okay. So we conclude on that Thibault. Thank you very much for participating in this analyst meeting and thank you very much for your support. I think this is going to be an interesting year once again. We're confident about it and we will see how the stock market goes.