my opinion only this is a short term, near term and long term buy :
Mechanical Dynamics Reports 19% Revenue Growth for Q3 2000; Operating Profits Up
Sharply
ANN ARBOR, Mich., Oct. 24 /PRNewswire/ -- Continued strong growth in software
license and maintenance revenues drove Mechanical Dynamics, Inc. (Nasdaq: MDII -
news), a worldwide supplier of software and services for the functional virtual prototyping
market, to a 19% increase in third quarter 2000 revenue, totaling $11.6 million compared
to $9.7 million for the corresponding period in 1999.
The company reported third quarter 2000 net income of $668,000, or $0.11 diluted
earnings per share, compared to net income of $640,000, or $0.10 diluted earnings per
share, in Q3 1999. The company's 1999 net income included a one-time benefit of
$504,000 in research and development tax credits realized during the third quarter of
1999.
Michael E. Korybalski, chairman and chief executive officer of Mechanical Dynamics,
said, ``The need for manufacturers to increase overall product testing and quality
assurance while reducing their reliance on hardware prototyping is driving heightened
global demand for our unique functional virtual prototyping software and services. We're
pleased to report continued progress in our goals of delivering to expectations,
strengthening our balance sheet, improving revenue visibility, and expanding our product
offerings. We are successfully executing to plan, and translating revenue growth into
profit, as evidenced by the consistent increases in our software license and maintenance
revenue and the significant growth in our operating income -- from $69,000 in Q3 1999 to
$810,000 in Q3 2000.''
Korybalski said the company's balance sheet was strengthened by an additional $1.1
million in cash generated during Q3 2000. On a year-over-year basis, deferred revenue
increased 34% to $6.9 million compared to $5.2 million a year ago. The company closed
the third quarter with more than $20.6 million in cash and investments, no long-term debt,
and a net book value of $4.44 per share.
During the quarter, each of the company's geographic regions posted gains. Asia
generated 51% growth over Q3 1999, with Japan alone charting a 47% increase. In
Europe, the company generated revenue growth of 12%, but the region lost
approximately $570,000 of Q3 revenue due to currency degradation. In constant
currencies, Europe grew approximately 30% over Q3 1999.
``Europe's results were highlighted by more than $170,000 in business from Minsk
Automobile Plant, our first notable customer in Russia,'' Korybalski said. ``This deal was
landed by our Eastern European sales team headquartered in the Czech Republic, which
was established in late 1999.''
During the third quarter, Mechanical Dynamics received cumulative orders valued at
more than $100,000 from each of 23 different companies, including Audi, BMW, Canon,
Dortec Industries, Ford, Honda, MTS Systems Corp., Rover Group, Suzuki, Toyota, TRW
Automotive, Volkswagen, and Volvo, among others. Significant orders of less than
$100,000 each came from a number of customers, including Bombardier, Borg-Warner,
General Motors, Kubota Solid Technology Corp., Michelin, Mitsubishi Electric, Mitsubishi
Motors, Nippon Denso, Nortel Networks, Robert Bosch Corp., and Toshiba, among
others.
Another positive highlight for the quarter, Korybalski said, was the 92% growth posted by
the company's Dynamic Designer line of products for the midrange computer-aided
design (CAD) market. ``Our new product offerings and continual channel expansion
efforts are paying off in terms of greater momentum in this critical market,'' he said.
Korybalski reported that the company has repurchased 129,300 shares of MDII stock to
date under the stock repurchase plan authorized by the board of directors in April 2000.
``Security and Exchange Commission regulations have limited the amount of shares that
the company could repurchase in any single day,'' he said.
``I continue to be confident that our operating plans for the balance of this year and for the
year 2001 will enable us to drive the expansion of our marketplace, while we strengthen
our position relative to our competition,'' Korybalski said. ``We remain optimistic about
the long-term prospects for Mechanical Dynamics and believe we are well-positioned to
capitalize on the growth forecasted for the virtual prototyping market in the years ahead.''
Mechanical Dynamics pioneered the field of mechanical system simulation with its
market-leading ADAMS® 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 2301 Commonwealth Boulevard, Ann Arbor, Michigan 48105. Phone:
734-994-3800. Fax: 734-994-6418. E-mail: info@adams.com . Online: www.adams.com
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