Mechanical Dynamics Reports 14% Growth in Revenue For Q1
24 April 2000
Mechanical Dynamics Reports 14% Growth in Software Licenses Revenue For the First Quarter; Board Authorizes Stock Repurchase Plan
ANN ARBOR, Mich., April 20 Mechanical Dynamics, Inc.
(Nasdaq: MDII), a worldwide supplier of software and services for the virtual
prototyping market, today reported revenue of $10.7 million for the first
quarter ended March 31, 2000, compared to $10.4 million in revenue for the
corresponding period in 1999. The company reported 2000 first quarter net
income of $241,000, or $0.04 diluted earnings per share, compared to net
income of $474,000, or $0.08 per share, in the first quarter of 1999.
Michael E. Korybalski, chairman and chief executive officer of Mechanical
Dynamics, said, "We are pleased to report a solid quarter in which we
delivered to expectations while strengthening our balance sheet and improving
revenue visibility. We're particularly pleased with the significant increase
in software licenses and maintenance revenue, which indicates continuing
strong demand for our functional virtual prototyping solutions."
"Geographically, the quarter was highlighted by a very strong Japan, which
generated 25% growth over Q1 1999," Korybalski continued. "Eight of the
quarter's 22 large sales orders, those in excess of $100,000, came from
Japanese customers, leading the region to post software licenses revenue
growth of 123%. We generated 8% growth in North America during the quarter,
while European revenue dipped slightly, due in part to currency degradation."
During the first quarter of 2000, Mechanical Dynamics received cumulative
orders valued at more than $100,000 from each of 22 different companies.
These large orders came from Borg-Warner, British Aerospace, Ford, General
Motors, Hendrickson, Honda R&D, Komatsu, Lockheed Martin, Mitsubishi Motors,
Newtech Brake, Nissan, Orion Bus, Renault, Steyr-Daimler Puch, Toyota,
Volkswagen, Volvo, and Western Star Trucks, among others. Significant orders
of less than $100,000 each came from a number of customers, including American
Axle, Audi, Bridgestone Corporation, Canon, China Motor Corporation, Daihatsu,
Funai Electric, Goodyear, Instron, Lucas Varity, Mead Engineering, MSX
International, PPI Motorsports, Saab, Shanghai Tire and Rubber, and TRW, among
others.
Korybalski said, "Q1 software licenses revenue returned to double-digit
growth, driven by many of the large ADAMS orders mentioned above, as well as
the 30% growth posted by our mid-range Dynamic Designer business. Software
maintenance services jumped 23% over the first quarter of 1999, marking its
tenth straight quarter of 20+% growth. Looking forward, future software
growth will benefit from several key products released during the first
quarter, including ADAMS/Insight, our new web collaboration tool, as well as a
new version of Dynamic Designer/Motion for use within Unigraphics Solutions'
popular Solid Edge environment."
Korybalski also announced that the company's board of directors has
authorized a stock repurchase plan of up to 1,000,000 shares of its common
stock -- an amount constituting approximately 16% of the company's outstanding
shares.
"We will evaluate market conditions to determine the timing and volume of
any stock purchases under this plan," Korybalski said. "We continue to be
confident in the long-term prospects for Mechanical Dynamics, and believe we
are well-positioned to take advantage of the growth and opportunities
presented by the functional virtual prototyping market."
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" 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
March 31, December 31,
in thousands 2000 1999
Assets: (Unaudited)
Current assets:
Cash and cash equivalents $17,813 $17,741
Accounts receivable, net 11,069 10,454
Prepaid and deferred expenses 2,203 2,755
Total current assets 31,085 30,950
Property and equipment, net 2,877 3,118
Goodwill, net 3,317 3,436
Other assets 935 685
Total assets $38,214 $38,189
Liabilities and Shareholders' Equity:
Current liabilities:
Borrowings under lines of credit $60 $14
Accounts payable 1,458 1,447
Accrued expenses 2,718 3,246
Deferred revenue 6,081 5,832
Total current liabilities 10,317 10,539
Minority interest 506 479
Shareholders' equity:
Common stock 22,637 22,586
Preferred stock 0 0
Retained earnings 4,409 4,168
Accumulated other comprehensive
income 345 417
Total shareholders' equity 27,391 27,171
Total liabilities and
shareholders' equity $38,214 $38,189
Mechanical Dynamics, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended
March 31,
in thousands except share and per share data 2000 1999
(Unaudited)
Revenue:
Software licenses $6,036 $5,276
Software maintenance services 2,253 1,832
Professional services and other 2,450 3,258
Total revenue 10,739 10,366
Cost of revenue:
Software licenses 1,099 868
Services 2,554 2,689
Total cost of revenue 3,653 3,557
Gross profit 7,086 6,809
Operating expenses:
Sales and marketing 4,203 3,920
Research and development 1,446 1,322
General and administrative 1,026 953
Goodwill amortization 114 113
Total operating expenses 6,789 6,308
Operating income 297 501
Other income, net 85 196
Income before income taxes and minority interest 382 697
Provision for income taxes 114 209
Net income before minority interest 268 488
Minority interest in net income of subsidiary 27 14
Net income $241 $474
Basic net income per common share $0.04 $0.08
Weighted average common shares 6,286,725 6,235,247
Diluted net income per common share $0.04 $0.08
Weighted average common and common
equivalent shares 6,287,077 6,247,630