Mechanical Dynamics Reports Q2 Earnings
22 July 1997
Mechanical Dynamics' Second-Quarter Earnings Rise 5.0% on 15.4% Higher Revenue
ANN ARBOR, Mich., July 22 -- Mechanical Dynamics, Inc.
, a worldwide supplier of software and services for the virtual
prototyping market, reported today that its net income for the second quarter
of fiscal 1997, ended June 30, increased 5.0% to $589,000, compared with
$561,000 for the three months ended June 30, 1996. Second-quarter revenue
increased 15.4% to $7.2 million, compared with $6.2 million in the same
quarter last year. Earnings per share for the second quarter were $0.10,
based on 5,828,778 average common shares outstanding. This compared to 1996's
second-quarter earnings per share of $0.12, based on 4,729,217 average common
shares outstanding.
For the six months ended June 30, 1997, Mechanical Dynamics' net income
increased 14.4% to $1.1 million, compared with $932,000 for the first six
months of 1996. Revenue for this time period increased 13.2% to
$13.9 million, from $12.3 million in the prior year. Earnings per share for
the six-month period were $0.18, compared with $0.22 for the first six months
of 1996.
Michael E. Korybalski, the chairman of the board and chief executive
officer of Mechanical Dynamics, said, "While we are pleased with our second-
quarter results, our revenue from international operations, particularly in
Japan and Germany, continued to be negatively impacted by the strength of the
U.S. dollar. At the same time, our strong business performance in Europe
contributed significantly to our overall growth and profitability."
According to Korybalski, Mechanical Dynamics received cumulative orders
valued at over $100,000 from each of nine different companies during the
second quarter. These large orders came from Audi, BMW, Fiat, Ford, General
Motors, Nissan, Samsung, Square D, and Volkswagen. Significant orders of less
than $100,000 each came from a range of customers, including Borg-Warner,
Hitachi, Peugeot, Rockwell, TRW, and Williams Grand Prix, among others.
Korybalski added, "Over the past three months, we have continued to make
significant progress towards achieving the company's 1997 objectives, as
outlined for our shareholders in our 1996 annual report. Our recent
achievements have included the successful release of an enhanced version of
our flagship ADAMS software, an increased focus on providing industry- and
application-specific versions of ADAMS for strategic customers such as Nissan
and other large automotive manufacturers, and the expansion of our sales and
support infrastructure, particularly in North America and the Asia-Pacific
region. We believe our ongoing efforts will be successful, and that they will
continue to result in expanded usage of virtual prototyping worldwide."
Mechanical Dynamics pioneered the field of virtual prototyping, and has
remained focused on this technology since its founding in 1977. Engineering
teams use the company's ADAMS software to simulate on their computers, both
visually and mathematically, the full-motion behavior of complex mechanical
system designs. This can help users reduce the number of costly physical
prototypes, improve design quality, and significantly shorten product
development cycles. ADAMS virtual prototyping products are used by
engineering teams in the automotive, defense, aerospace, aircraft, off-highway
equipment, railway, shipbuilding, industrial machinery, electronics,
biomechanics, and sports equipment industries, among others.
Except for historical information contained herein, some matters discussed
in this news release constitute forward-looking statements that 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 2301 Commonwealth Boulevard, Ann Arbor, Michigan
48105. Phone: 313-994-3800. Fax: 313-994-6418. E-mail: info@adams.com.
World Wide Web: http://www.mdii.com.
MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
in thousands 1997 1996
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $20,784 $20,570
Accounts receivable 5,954 5,019
Prepaid and deferred expenses 1,079 1,074
Total current assets 27,817 26,663
Net property and equipment 1,913 1,643
Total other assets 1,485 1,506
Total assets $31,215 $29,812
Liabilities And Shareholders' Equity:
Current liabilities:
Borrowings under lines of
credit $38 $45
Accounts payable 508 762
Accrued expenses 2,755 2,982
Deferred revenue 3,928 3,671
Total current liabilities 7,229 7,460
Minority interest 448 0
Redeemable common stock 167 167
Shareholders' equity:
Common stock 19,713 19,583
Preferred Stock 0 0
Retained earnings 3,612 2,546
Cumulative translation
adjustment 46 56
Total shareholders' equity 23,371 22,185
Total liabilities and
shareholders' equity $31,215 $29,812
MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
in thousands except share
and per share data 1997 1996 1997 1996
Revenue:
Software licenses $3,996 $3,678 $7,916 $7,519
Services 3,209 2,563 5,990 4,770
Total revenue 7,205 6,241 13,906 12,289
Cost of revenue:
Software licenses 189 158 292 358
Services 1,658 1,332 3,262 2,693
Total cost of revenue 1,847 1,490 3,554 3,051
Gross profit 5,358 4,751 10,352 9,238
Operating expenses:
Sales and marketing 2,897 2,453 5,491 4,797
Research and
development 1,061 869 2,135 1,755
General and
administrative 772 685 1,584 1,369
Total operating
expenses 4,730 4,007 9,210 7,921
Operating income 628 744 1,142 1,317
Other income, net 189 75 356 76
Income before income taxes
and minority interest 817 819 1,498 1,393
Provision for income
taxes 247 258 451 461
Net income before minority
interest 570 561 1,047 932
Minority interest in net
income (loss)
of subsidiary (19) 0 (19) 0
Net income $589 $561 $1,066 $932
Net income per common
share $0.10 $0.12 $0.18 $0.22
Common and common
equivalent shares 5,828,778 4,729,217 5,877,117 4,294,985
SOURCE Mechanical Dynamics, Inc.