Mr. Ryan: Mechanical Dynamics Inc. (NASDAQ: MDII) is the global leader in providing virtual prototyping solutions to major manufacturers in the automotive, aerospace, and general machinery industries. Historically, manufacturing companies relied on the time-intensive process of building and testing hardware prototypes to ensure proper performance of their new products before they began manufacturing them. With the dramatic push to reduce cycle times and the increasingly high cost of product failures, manufacturers need to reduce their reliance on hardware prototypes while simultaneously managing risk and gaining greater assurance of product performance prior to product launch. Mechanical Dynamics provides them with a proven method to dramatically reduce cost and time and lower product risk by replacing hardware prototype testing with computer simulation-based virtual prototype testing and redesign. For instance, one of our clients, Ford Motor Company, has completely eliminated one entire phase of hardware prototypes from their development process using this virtual prototyping technology. In three recent vehicle programs, they achieved more than $40 million savings in engineering costs and more than $1 billion savings in manufacturing rework. Mechanical Dynamics went public in 1996 and reported $40 million in revenue in calendar year 1999.
TWST: How does the business break down within the several customer
groups you mentioned?
Mr. Ryan: Revenues are well-balanced geographically, with roughly 35%
coming from North America, 35% from Europe, and 30% from Asia.
Industrially, revenues from vehicle manufacturers and suppliers (car,
truck, bus, off-highway) account for about 55% of our business. Clients
include Toyota, General Motors, Fiat, Volkswagen, Delphi, Visteon,
Bosch, Navistar, Freightliner, Caterpillar, Deere, Komatsu, and ADTranz,
among others. Revenues derived from aerospace and defense clients
account for roughly 15% of the total. Clients include Lockheed Martin,
Boeing, Airbus, Bombardier, Embraer, NASA, and Sikorsky. The remainder
is derived primarily from manufacturers in the electro-mechanical and
general machinery marketplaces. These clients include Sony, Canon,
Nikon, Whirlpool, Proctor & Gamble, 3M, Xerox, and Kodak.
Tickers included in this excerpt: MDII
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