Mechanical Dynamics Reports Record Revenue and
Profit in Q4 2000; EPS up 63%
ANN ARBOR, Mich., Jan. 30 Significant client account wins,
sustained growth in software license and maintenance revenues, and continued
expansion of its market-leading functional virtual prototyping solutions drove
Mechanical Dynamics, Inc. to a 20% increase in fourth quarter
2000 revenue, totaling $13.2 million compared to $11.0 million for the
corresponding period in 1999. This is the largest quarterly revenue in the
company's history. The company reported fourth quarter 2000 net income of
$780,000, or $0.13 diluted earnings per share, compared to net income of
$484,000, or $0.08 diluted earnings per share, in Q4 1999.
For the year ended December 31, 2000, Mechanical Dynamics reported revenue
of $46.6 million, up 16% from 1999. The company's 2000 net income grew 98% to
$2.2 million, or $0.35 diluted earnings per share. In 1999, the company
reported revenue of $40.3 million and net income of $1.1 million, or $0.18
diluted earnings per share.
Michael E. Korybalski, chairman and chief executive officer of Mechanical
Dynamics, said, "I am extremely pleased with our results for the year 2000.
This is our thirteenth consecutive quarter of 20-percent-plus growth in
software maintenance revenues, and we realized 24% growth in software licenses
for the year. This strong demand reflects the continuing success of our ADAMS
product line, which expanded by eight new modules during 2000. The
introduction of our Functional Digital Car concept is just one example of how
we are building on our expertise and expanding our product capabilities to
develop a complete technological solution for our customers.
"We completed significant sales deals throughout the year," Korybalski
continued, "and in December, we closed the strategic acquisition of ESTECH.
This acquisition not only increases our presence in the Asia/Pacific region,
but expands our expertise in key application areas such as virtual testing,
structural simulation, and control system simulation. In the future, we
expect to leverage this expertise at customer accounts around the globe."
During Q4 2000, each of the company's geographic regions posted gains.
Asia generated 65% growth over Q4 1999, with Japan alone charting a 53%
increase, highlighted by more than $300,000 in new business from Toyota. In
Europe, the company generated revenue growth of 3%, but the region lost
approximately $670,000 of Q4 revenue due to currency degradation. In constant
currencies, Europe grew approximately 19% over Q4 1999. Europe's results in
2000 included a strategic, enterprise-wide sales agreement with Fiat, which is
expected to generate as much as $400,000 in annual revenue for Mechanical
Dynamics going forward. North America posted 7% growth during the quarter,
led by continued business at Ford and General Motors, as well as substantial
new business from several automotive suppliers, including Bosch, Dana, and
Visteon.
Korybalski added that the fourth quarter represented the company's second
straight quarter of 90-percent-plus growth in revenue from its Dynamic
Designer line of products for the midrange computer-aided design (CAD) market.
During the fourth quarter, Mechanical Dynamics received cumulative orders
valued at more than $100,000 from each of 22 different companies, including
BMW, Bosch, DaimlerChrysler, Dana Corporation, Fiat, Ford, General Motors,
Honda, Hyundai Motor Company, Kozo Keikaku Engineering, Lockheed Martin,
Navistar, NTN Corporation, Renault, Ricoh, Sumitomo, Toyoda Automatic Loom
Works, Toyota, Visteon, Volkswagen, Volvo, and Yulon Motor Company, among
others. Significant orders of less than $100,000 each came from a number of
customers, including Audi, Canon, Computer Sciences Corp., Dortec Industries,
Government of India, Mitsubishi, National Renewal Energy Laboratory, Nissan
Forklift, Orion Bus, Peugeot, Saab, Scania, Tremec, TRW, and United
Technologies, among others.
Korybalski noted the company's continuing strong balance sheet, with $18
million in cash and investments, no long-term debt, and a net book value of
$4.49 per share. On a year-over-year basis, deferred revenue increased 19% to
$6.9 million compared to $5.8 million a year ago. He also reported that the
company has repurchased 219,000 shares of MDII stock to date under the stock
repurchase plan authorized by the board of directors in April 2000.
"Through our efforts in 2000, we've positioned Mechanical Dynamics for
growth in both revenue and earnings in the years ahead," Korybalski said.
"We've executed well on our plan to increase our software revenue growth rates
and market share, in part through an expanded product line that takes our
expertise in functional virtual prototyping into critical new areas of the
product development process. I am confident that our operating plans for 2001
will enable us to continue the expansion of our market, and that the drivers
are in place to deliver 20-percent-plus revenue growth in 2001. I remain very
optimistic about the long-term prospects for Mechanical Dynamics."
Mechanical Dynamics pioneered the field of mechanical system simulation
with its market-leading ADAMS(R) software, and has remained committed to
extending the capabilities of this technology to benefit manufacturers in
every industry worldwide. Engineering teams use ADAMS to build and test
functional virtual prototypes of their complex mechanical system designs.
Mechanical Dynamics also offers a full range of implementation services,
including consulting and training. In this way, the company partners with its
customers to help reduce the time, costs, and risks of the product development
process and meet the "Smarter to Market(TM)" challenge.
Except for historical information contained herein, some matters discussed
in this news release constitute forward-looking statements which involve risks
and uncertainties that could cause actual results to differ materially from
those projected. These include possible delays in developing, completing, or
shipping new or enhanced products, as well as other risks or uncertainties
that are detailed from time to time in reports filed by Mechanical Dynamics,
Inc. with the Securities and Exchange Commission, including Mechanical
Dynamics, Inc.'s registration statement on Form S-1 and related prospectus
dated May 14, 1996 and the "Risk Factors" described therein.
Additional information about Mechanical Dynamics can be obtained by
writing to the company at 2300 Traverwood Drive, Ann Arbor, Michigan 48105.
Phone: 734-994-3800. Fax: 734-994-6418. E-mail: info@adams.com . Online:
http://www.adams.com .
ADAMS and the Mechanical Dynamics logo are registered trademarks of
Mechanical Dynamics, Inc. All other company, brand, or product names are or
may be trademarks of their respective holders.
Mechanical Dynamics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, December 31,
in thousands 2000 1999
Assets:
Current assets:
Cash and cash equivalents $17,961 $17,741
Accounts receivable, net 11,442 10,454
Prepaid and deferred expenses 3,356 2,755
Total current assets 32,759 30,950
Property and equipment, net 3,677 3,118
Goodwill, net 6,799 3,436
Other assets 1,844 685
Total assets $45,079 $38,189
Liabilities and Shareholders' Equity:
Current liabilities:
Borrowings under lines of credit $49 $14
Accounts payable 2,466 1,447
Accrued expenses 7,426 3,246
Deferred revenue 6,936 5,832
Total current liabilities 16,877 10,539
Minority interest 539 479
Shareholders' equity:
Common stock 21,998 22,586
Preferred stock 0 0
Retained earnings 5,819 4,168
Accumulated other comprehensive income (154) 417
Total shareholders' equity 27,663 27,171
Total liabilities and shareholders' equity $45,079 $38,189
Mechanical Dynamics, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended Twelve Months Ended
December 31, December 31,
in thousands except share 2000 1999 2000 1999
and per share data (Unaudited)
Revenue:
Software licenses $6,543 $5,291 $23,784 $19,159
Software maintenance
services 2,907 2,245 10,775 7,941
Professional services
and other 3,726 3,466 12,018 13,155
Total revenue 13,176 11,002 46,577 40,255
Cost of revenue:
Software licenses 1,172 953 4,214 3,473
Services 3,239 2,952 11,369 11,306
Total cost of revenue 4,411 3,905 15,583 14,779
Gross profit 8,765 7,097 30,994 25,476
Operating expenses:
Sales and marketing 4,901 3,978 17,599 15,394
Research and development 1,670 1,485 6,118 5,603
General and administrative 1,222 915 4,304 3,685
Goodwill amortization 134 114 474 454
Total operating expenses 7,927 6,492 28,495 25,136
Operating income 838 605 2,499 340
Other income, net 284 99 680 514
Income before income taxes
and minority interest 1,122 704 3,179 854
Provision (credit) for
income taxes 336 210 951 (249)
Net income before
minority interest 786 494 2,228 1,103
Minority interest in net income
of subsidiary 6 10 60 8
Net income $780 $484 $2,168 $1,095
Basic net income
per common share $0.13 $0.08 $0.35 $0.18
Weighted average common
shares 6,148,864 6,273,483 6,225,970 6,254,308
Diluted net income
per common share $0.13 $0.08 $0.35 $0.18
Weighted average common and
common equivalent shares 6,159,884 6,273,526 6,229,750 6,254,376
