1973-2003: 30 Years of Challenges and Innovation for Lectra.

Business Editors

PARIS--(BUSINESS WIRE)--Nov. 14, 2003

Lectra was established in Bordeaux (France) on November 12, 1973. Today it is an international corporation with a reputation for innovation and its capacity to anticipate future developments.

"For 30 years now, Lectra's overriding mission has been to support its clients in adapting to far-reaching economic, technological and organizational change," explained Andre Harari, Chairman of the Board of Directors and Daniel Harari, Chief Executive Officer of Lectra, on the occasion of their webcast today to their global teams. "The industrial adventure of these past 30 years has witnessed a succession of radical and ever-faster change in the world. For us it has been a human adventure first and foremost. So it is with very special feelings, mingled with pride as well as a sense of our duty and responsibility to all of our employees, customers, shareholders and other stakeholders, that we celebrate this anniversary. To sum it all up, we believe Lectra has a soul, something one cannot say for many firms."

"Thanks to Lectra's extremely solid financial fundamentals, today we have the resources to finance vigorous, sustainable double-digit organic growth as soon as the world economy picks up. Our ambition is to increase our operating margin to 15% by 2007, and to seize external growth opportunities. Lectra is thus now well-equipped to embark on a new strategy of conquest, focusing on the foremost strategic challenges we set ourselves three years ago, namely to become number one in the United States, to strengthen our leadership in Greater China and profit from that country's strong growth in demand for technology, and to accelerate the development of operations with large corporate accounts," Andre and Daniel Harari stated in conclusion.

30 years of entrepreneurship, continuously reinventing Lectra

In its first four years of existence, Lectra's founders Jean and Bernard Etcheparre, two visionary engineers from Bordeaux, developed the LECteur-TRAceur 200, a system capable of automatically calculating and tracing all sizes for a given model of apparel, and which gave the company its name: Lectra Systemes.

The company was generating EUR250,000 in annual revenues by 1976, when the founders met French venture capital pioneer Andre Harari. Andre Harari helped them frame their business plan. He also assembled the necessary capital to finance Lectra's growth, via a succession of financing rounds, until the company's IPO in 1987.

By 1986, Lectra was world leader in CAD (Computer Assisted Design) technology for the apparel industry.

Lectra experienced a serious financial crisis in 1990: stockholders' equity fell to a negative EUR17 million and financial borrowings totaled EUR55 million. The company was losing EUR150,000 a day and was on the brink of collapse. Andre and Daniel Harari, already minority stockholders (with 10% of the capital) through their investment company, which merged with Lectra in 1998, took control of the company's capital and management in 1991. They recapitalized it and launched a recovery plan. A strategic redeployment then followed that has brought the company to its present position as world number one. Today Andre and Daniel Harari are Lectra's main stockholders, with 30% of the capital. Another 50% of the capital is held by major French and international institutional investors, chiefly British and American.

They immediately embarked on a major research and development drive to revamp the company's product line from top to bottom. In the mid-1990s, Lectra began moving into new market sectors (automotive, aerospace, furniture and furnishings, and footwear) and speeded up its international expansion. With Daniel Moreau (Executive Vice President) and Jerome Viala (Chief Financial Officer), they transformed the company's business model. As a result, it now enjoys extremely solid fundamentals, further strengthened since the beginning of 2003, giving it EUR79 million in stockholders' equity and more than 50 million in net cash (and no debt).

Until 1998, Lectra grew organically, hiring staff from all over the world. This has instilled in it a powerful corporate culture rooted in its five core values, i.e. leadership, innovation, customer care, entrepreneurship, and excellence.

Ever alert to opportunities for growth, Lectra made a series of acquisitions between 1998 and 2000, namely Pan Union International (Hong Kong), Computer Design Inc (United States), Prima Design Systems (Hong Kong), Colorado International (France), and the technologies of ModaCad (United States).

Since March 2001, Lectra has successfully forged its own solutions in order to continue to grow profitably in extremely difficult economic and geopolitical conditions. It has simultaneously adapted to new macro-economic conditions through tough measures to bolster its key operating ratios, and accelerated structural programs to "re-invent" itself while steering clear of adopting a defensive strategy.

Also during this period, the company has achieved an unprecedented level of competitiveness and gained market share. It has developed an unrivalled technology and services offering, enabling its customers to develop new models of organization, production and distribution in response to their new strategic challenges. Foremost among these is the need to cut costs, compete globally, and manage delocalizations and relocations of manufacturing, while factoring in issues relating to security and geopolitical stability, and developing secure electronic information sharing platforms.

30 years to establish its number one position worldwide

The benefits of the re-organization implemented by the new management team began to be felt as early as 1995, when the company became joint-world leader in CAD/CAM (Computer Aided Design and Manufacturing) software and equipment. By 2000, Lectra was number one across all its market sectors. In May 2001, Lectra Systemes changed its name to Lectra, to reflect its goal, which was to be more than a mere supplier and to partner its customers in the true sense of the term.

In 2002, Europe accounted for 54% of Lectra's revenues, North America for 25%, and Asia-Pacific for 16%.

Today, Lectra has further consolidated its position as number one worldwide and in China, and the company is well on the way to taking the number one spot in the United States as well. Lectra has generated US$200 million in revenues, between July 1, 2002 and June 30, 2003. That is 30% more than the figure (US$153 million) reported by its main, US-based competitor, for the corresponding period of August 1, 2002 through July 31, 2003. Lectra has widened its 4% lead of one year ago by 26 percentage points, in just 12 months. For the company, this performance is reflected in significantly increased market share, especially in the United States. Its revenues in the United States now approach those of its main competitor, compared with only 10% in 1990.

In addition, Lectra's revenues are three times those of the market number three (a Spanish company).

30 years of technological innovation, Lectra's key growth driver

Lectra has continuously developed innovative solutions across all of its market sectors ever since its origins.

In the 1970s, the company foresaw the coming boom in computerization and the extraordinary potential it would unleash. It developed its own operating system and work stations in order to forge proprietary solutions. It brought its first pattern cutting and color grading systems -- the company's historical business -- to market in 1976. Even then, Lectra's offering and international expansion were responding to the needs born of an increasingly globalized economy and the demand for just-in-time manufacturing.

The first automatic cutting system came to market in 1985.

The 1990s saw the emergence of networking and electronic data exchange, and Lectra was quick to offer international access to the Internet or to private networks.

In 1993 it revolutionized CAM (Computer Assisted Manufacturing) with the global launch of its new generation of cutting systems, Vector. They have since become the international standard, and in 2002 they were specialized by market sector, another major innovation.

Then, in January 1996, Lectra carried out a second revolution, assembling more than 2,000 people from all over the world at its Bordeaux-Cestas industrial facility, for the launch of its new-generation PC-based CAD software, including the Modaris pattern making software and Diamino marker making software. These software have since sold more than 10,000 copies and are viewed as the industry standard.

Finally, in 2000-2002, Lectra unveiled its new full-line technology suite (CAD/CAM software and equipment, and a secure electronic communications platform), together with its extended services offering.

This covers a vast array of solutions, including the market's most widely-used creative design software, mass-customization solutions, Focus laser cutting systems (which now cut more than one airbag in two produced worldwide with this technology), and leather cutting for furniture & furnishings and car seating with the high-end TLS cutting systems.

This renewal is notably being enabled by the Lectra R&D team's 180 engineers and technicians spread between France (where the bulk of its teams are concentrated) and the United States. This team is roughly equal in size to those of its next three competitors combined. Lectra has consistently maintained or even increased its R&D investments (they represent 7% of revenues, currently) even in periods of business slowdown and cost-cutting.

These innovations have won numerous industry distinctions. In the past 5 years, Lectra has won the UK ASFI (Association of Suppliers to the Furnishing Industry) "Innovation Prize" for Mosaic, an automatic patterned-fabric cutting program with a built-in camera, which calculates where to cut in real time; another "Innovation Prize" was awarded to Optiplan, Lectra's cutting room "control tower" software. This was awarded in France by textile, apparel and retail industry professionals on the occasion of their 1998 "Innovation Trophies." The Institut National francais pour la Propriete Industrielle (French institute for intellectual property) also awarded Lectra its "Innovation Prize." In 1999, Mr. Ernest Antoine Seilliere, Chief Executive of the Medef (French corporations' confederation), presented Andre and Daniel Harari with the International Technology Trophy. In January 2000, for the second year running, Lectra was awarded the Adriano Ribeira prize for technical innovation in honor of its full-line offering of digital fabric printing solutions, developed in partnership with Stork. Lectra Catalog, Versalis and Lectra FitNet were selected by the Observeur du Design 2001 (2001 Design Observer) in France, for the quality of their design and ergonomy, which the jury found particularly innovative.

30 years of close customer relationships and services, supporting customers at each stage in their corporate development and helping them adapt to radical economic change

Lectra very early on adopted a strategy of nurturing direct customer relationships and developing its own network of sales and service subsidiaries -- now the only one of its size in the world and accounting for 93% of company revenues.

The company entered the Spanish and Japanese markets as far back as 1977. One year later, exports (to Austria, Benelux, Finland, Great Britain, Italy, and the United States) accounted for more than 15% of its revenues. In 1981, Lectra opened its first foreign subsidiary, in Cologne (Germany). That same year, Lectra opened for business in the United States, attacking its main competitor (a US firm) on its home ground. By 1985, Lectra already had 11 subsidiaries worldwide, and the figure has been rising ever since (Lectra now has 30 sales and service subsidiaries), confirming the company's standing as a global corporation with operations in five continents. Today, Lectra is present in more than 100 countries, employing 1,350 people of 70 different nationalities.

Lectra has consistently sought to protect and enhance its customers' technology investment, with a view to creating a climate of trust and long-term partnership. That was the thinking behind the opening of its first International Call Center at Bordeaux-Cestas (for Europe), followed by ones in Atlanta (for North America) and Hong Kong (for Asia). Today more than 60 Lectra experts work out of these centers, handling more than 25,000 calls monthly already. These International Call Centers supplement and support the company's training, consulting, installation and maintenance services, providing customers with ever faster and more effective responses to their needs.

Finally, to enable customers to discover and test the full extent of its technology offering, three International Advanced Technology Centers have been opened at Bordeaux-Cestas, Atlanta and Shanghai (the latter was inaugurated in October 2003).

About Lectra

Lectra is the world number one in the design and distribution of software and hardware dedicated to the major industrial users of textiles, leather and other soft materials, supplying a comprehensive array of associated services for the development of complete solutions, from product design to manufacture to retailing. Lectra is present on all major markets, including fashion, apparel and retailing, luggage & leather goods, footwear, furniture & furnishings, transportation (the automotive, aerospace and marine industries), together with other industries working with industrial fabrics and composite materials.

With a staff of 1,350 worldwide, Lectra generates close to 90% of its revenues outside France, thanks to its unique international network serving more than 10,000 customers in over 100 countries.

Lectra's shares (code ISIN FR0000065484) are traded on the Second Marche of the Euronext Paris exchange (in the NextEconomy segment). They figure among the European stocks making up the Euronext Next 150 index, and also among the French stocks making up the SBF 250, Midcac and Second Marche indexes of Euronext Paris.

Discover more about Lectra at www.lectra.com