Mechanical Dynamics Reports Record Revenue for the Fourth Quarter of 1999
2 February 2000
Mechanical Dynamics Reports Record Revenue for the Fourth Quarter of 1999
ANN ARBOR, Mich., Feb. 1 -- Mechanical Dynamics, Inc.
, a worldwide supplier of software and services for the virtual
prototyping market, today reported revenue of $11.0 million for the fourth
quarter ended December 31, 1999, a 2% increase over the corresponding period
in 1998 and the highest quarterly revenue amount in the company's history.
The company reported 1999 fourth quarter net income of $484,000, or $0.08
diluted earnings per share, compared to a net income before acquisition-
related and non-recurring charges of $477,000, or $0.08 per share, in the
fourth quarter of 1998.
For the year ended December 31, 1999, Mechanical Dynamics reported revenue
of $40.3 million, up 10% from 1998. The company reported 1999 net income of
$1.1 million, or $0.18 diluted earnings per share. Excluding acquisition-
related and non-recurring charges, net income for the year ended December 31,
1998 was $1.4 million, or $0.23 per share.
Michael E. Korybalski, chairman and chief executive officer of Mechanical
Dynamics, said, "I'm pleased by our continued progress during the fourth
quarter of 1999. We reported record revenue in line with expectations, which
represented exceptional sequential growth over the third quarter of the year,
and modest growth over an extremely strong 1998 fourth quarter. In addition,
we executed well on our short-term objective of controlling costs and thereby
realized a 39 percent increase in operating profit before acquisition-related
costs over the fourth quarter of 1998."
Korybalski added, "I'm particularly pleased to note that we continued to
receive significant commitments for our products and services from a broad
range of customers, as indicated by the number of orders in excess of $100,000
during the quarter. Even more notable, however, is the fact that no single
customer represented more than 5 percent of our revenue during the fourth
quarter, which testifies to the steady expansion and growing diversity of our
customer base."
During the fourth quarter of 1999, Mechanical Dynamics received cumulative
orders valued at more than $100,000 from each of 19 different companies.
These large orders came from BMW, Bridgestone Corporation, Continental AG,
DaimlerChrysler, Dana Corporation, Ford, General Motors, Goodyear, Lockheed
Martin, Orion Bus, Navistar, Nissan, Renault, Rolls Royce, Toyota, and
Volkswagen, among others. Significant orders of less than $100,000 each came
from a number of customers, including Audi, Borg-Warner, Bosch, Fuji, General
Dynamics, Honda, Hyundai, John Deere, Newport News Shipbuilding, Nissei
Plastic Industrial Co., Patrick Racing, Steyr-Daimler Puch, and Whirlpool,
among others.
Korybalski continued, "The fourth quarter marked the culmination of a
challenging but exciting year for Mechanical Dynamics. Our 10% revenue growth
in 1999 marked the fifth straight year in which we outpaced the overall
revenue growth rate realized by the CAD/CAM/CAE marketplace at large.
"More importantly, 1999 was a very strong year for Mechanical Dynamics
from a product standpoint. Our new ADAMS/Hydraulics and ADAMS/Engine
offerings extended the range of virtual prototyping and strengthened our
leadership position within the automotive industry. We also improved our
stand-alone graphics interface with the release of our new ADAMS/PostProcessor
module.
"Beyond our standalone ADAMS product line, we've made significant progress
in our embedded product offerings. We now have very good integration with all
of the major high-end and mid-range computer-aided design systems, such as
CATIA, Unigraphics, I-DEAS, Solid Designer, SolidWorks, Solid Edge, AutoCAD,
and Pro/ENGINEER, and many of the top computer-aided engineering products as
well. This is something that none of our competitors can offer. From a
technology standpoint, we made some important strides in 1999 that will fuel
our growth and continued market leadership in 2000 and beyond."
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.
ADAMS users also take advantage of a full range of implementation services,
including consulting and training. In this way, Mechanical Dynamics partners
with its customers to help reduce the time, costs, and risks of the product
development process and meet the "Smarter to Market" 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 2301 Commonwealth Boulevard, 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 1999 1998
Assets:
Current assets:
Cash and cash equivalents $17,741 $16,843
Accounts receivable, net 10,454 9,893
Prepaid and deferred expenses 2,755 1,873
Total current assets 30,950 28,609
Property and equipment, net 3,118 3,674
Goodwill, net 3,436 3,820
Other assets 685 144
Total assets $38,189 $36,247
Liabilities and Shareholders' Equity:
Current liabilities:
Borrowings under lines of credit $14 $105
Accounts payable 1,447 1,781
Accrued expenses 3,246 3,544
Deferred revenue 5,832 4,745
Total current liabilities 10,539 10,175
Minority interest 479 472
Shareholders' equity:
Common stock 22,586 22,332
Preferred stock 0 0
Retained earnings 4,168 3,073
Cumulative translation adjustment 417 195
Total shareholders' equity 27,171 25,600
Total liabilities and
shareholders' equity $38,189 $36,247
Mechanical Dynamics, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
(Unaudited)
in thousands except share and per share data
Revenue:
Software licenses $5,291 $6,129 $19,159 $19,659
Services 5,711 4,626 21,096 16,916
Total revenue 11,002 10,755 40,255 36,575
Cost of revenue:
Software licenses 953 990 3,473 2,479
Services 2,952 2,681 11,306 9,581
Total cost of
revenue 3,905 3,671 14,779 12,060
Gross profit 7,097 7,084 25,476 24,515
Operating expenses:
Sales and marketing 3,978 4,168 15,394 14,245
Research and
development 1,485 1,395 5,603 5,265
General and
administrative 915 902 3,685 3,472
Goodwill amortization 114 184 454 341
Acquisition-related and
non-recurring charges 0 345 0 1,748
Total operating
expenses 6,492 6,994 25,136 25,071
Operating income (loss) 605 90 340 (556)
Other income, net 99 206 514 828
Income before income taxes
and minority interest 704 296 854 272
Provision (credit) for
income taxes 210 63 (249) 479
Net income (loss) before
minority interest 494 233 1,103 (207)
Minority interest in net
income (loss) of subsidiary 10 (16) 8 10
Net income (loss) $484 $249 $1,095 ($217)
Net income (loss) per
common share $0.08 $0.04 $0.18 ($0.04)
Common and common
equivalent shares 6,273,526 6,270,773 6,254,376 6,186,469