Mechanical Dynamics Reports Earnings
21 October 1997
Mechanical Dynamics Reports Earnings Per Share of $0.11 On 15% Higher Revenue for Third Quarter 1997
ANN ARBOR, Mich., Oct. 21 -- Mechanical Dynamics, Inc.
, a worldwide supplier of software and services for the virtual
prototyping market, today reported net income of $649,000 for the third
quarter ended September 30, 1997, compared with $713,000 for the same quarter
last year. Third-quarter revenue increased 15.2% to $7.7 million, compared
with $6.7 million in the third quarter of 1996.
Earnings per share for the quarter were $0.11, based on 5,842,828 average
common shares outstanding. This compared to 1996's third-quarter earnings per
share of $0.12, based on 5,862,102 average common shares outstanding.
For the nine months ended September 30, 1997, Mechanical Dynamics reported
net income of $1.7 million, compared with $1.6 million for the same period
last year. Revenue for this period increased 13.9% to $21.6 million in 1997,
from $19.0 million in 1996. Earnings per share for the nine-month period were
$0.29 based on 5,870,694 average common shares outstanding, compared with
$0.34 based on 4,808,581 average common shares outstanding for the first nine
months of 1996.
Michael E. Korybalski, chairman of the board and chief executive officer
of Mechanical Dynamics, said, "We are pleased to report solid earnings in line
with expectations, along with continued strong revenue growth. While the
strength of the U.S. dollar continues to negatively affect our business to
some extent, our performance this quarter was significantly enhanced by
increasing worldwide demand for our commercial software products, as evidenced
by new order billings growth exceeding 50 percent."
Mechanical Dynamics received cumulative orders valued at more than
$100,000 from each of 10 different companies during the third quarter,
according to Korybalski. These large orders came from All American Racers,
Daewoo Corporation, Ford, General Motors, Goodyear, Honda, Mitsubishi, Nissan,
Rover, and Toyota. Significant orders of less than $100,000 each came from a
number of customers, including Beijing Jeep Corporation Ltd., BMW, Borg-
Warner, Hyundai, Korea Railroad Research Institute, Porsche, TRW, and Volvo,
among others.
Korybalski added, "During the quarter, we returned to growth in excess of
30% in Asia, led by Toyota's significant initial investment in the company's
ADAMS/Car technology. Similar to our continuing business with Nissan, which
adopted ADAMS/Car in 1996, Toyota's recent purchase is expected to generate
ongoing revenue for the company over the next 12 to 36 months."
Korybalski said the appointment of Shunichi Yamauchi as president of the
company's Japanese subsidiary, Mechanical Dynamics Japan K.K., indicates
Mechanical Dynamics' commitment to growing the Japanese market by providing
customers with high-quality sales, service, and consulting support. Yamauchi,
formerly director of business development in Japan for Dassault Systemes, has
more than 30 years of experience in sales, sales management, and marketing
management within the industrial and high-technology sectors.
Korybalski said, "We are also pleased with our performance during the
third quarter in Europe, which continues to generate strong growth over 1996.
In each of the five European countries where we currently have offices, actual
results exceeded our internal expectations for the quarter. In addition, we
continue to see a growing commitment to the company's ADAMS/Car technology by
key automotive customers throughout Europe, most notably BMW, Rover, and
Volvo."
Korybalski noted that the company recently appointed Bill Moylan as vice
president of North American sales and service, and has charged him with the
responsibility of growing the company's North American sales channel. "Bill
brings a strong track record and a solid understanding of our market, and we
expect him to help drive Mechanical Dynamics to higher levels of sales
performance," Korybalski said.
Moylan, who has 14 years of experience in technology sales and sales
management, was with Mercury Interactive Corporation prior to joining
Mechanical Dynamics. He previously served as a major account manager,
district manager, and regional director for Parametric Technology Corp. (PTC).
Mechanical Dynamics pioneered the field of mechanical system simulation,
and has remained focused on this technology since its founding in 1977.
Thousands of engineering teams from nearly every manufacturing industry today
use the company's ADAMS software to build and test virtual prototypes,
realistically simulating on their computers the full-motion behavior of
complex mechanical system designs. Using ADAMS can help manufacturers reduce
their dependence on costly physical prototypes, improve design quality, and
significantly shorten product development cycles.
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.adams.com.
MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
in thousands 1997 1996
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $21,038 $20,570
Accounts receivable 6,408 5,019
Prepaid and deferred expenses 938 1,074
Total current assets 28,384 26,663
Net property and equipment 2,037 1,643
Other assets 1,543 1,506
Total assets $31,964 $29,812
Liabilities And Shareholders' Equity:
Current liabilities:
Borrowings under lines of credit $0 $45
Accounts payable 817 762
Accrued expenses 2,834 2,982
Deferred revenue 3,700 3,671
Total current liabilities 7,351 7,460
Minority interest 448 0
Redeemable common stock 0 167
Shareholders' equity:
Common stock 19,952 19,583
Preferred Stock 0 0
Retained earnings 4,261 2,546
Cumulative translation adjustment (48) 56
Total shareholders' equity 24,165 22,185
Total liabilities and
shareholders' equity $31,964 $29,812
MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
in thousands except share
and per share data 1997 1996 1997 1996
Revenue:
Software licenses $4,568 $3,592 $12,484 $11,111
Services 3,111 3,071 9,101 7,841
Total revenue 7,679 6,663 21,585 18,952
Cost of revenue:
Software licenses 271 114 563 472
Services 1,606 1,733 4,868 4,426
Total cost of revenue 1,877 1,847 5,431 4,898
Gross profit 5,802 4,816 16,154 14,054
Operating expenses:
Sales and marketing 3,087 2,450 8,578 7,247
Research and development 1,223 871 3,358 2,626
General and administrative 799 683 2,383 2,052
Total operating expenses 5,109 4,004 14,319 11,925
Operating income 693 812 1,835 2,129
Other income, net 236 235 592 311
Income before income taxes
and minority interest 929 1,047 2,427 2,440
Provision for income taxes 280 334 731 795
Net income before minority
interest 649 713 1,696 1,645
Minority interest in net income
(loss) of subsidiary 0 0 (19) 0
Net income $649 $713 $1,715 $1,645
Net income per common share $0.11 $0.12 $0.29 $0.34
Common and common equivalent
shares 5,842,828 5,862,102 5,870,694 4,808,581
SOURCE Mechanical Dynamics, Inc.