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Micro Engineering Solutions Acquisition

On October 16, 1992, Autodesk announced that it was acquiring Micro Engineering Solutions, Inc., developer of SOLUTION 3000 and other mechanical CAD/CAM products, with the intention of integrating their NURBS-based surface modeling technology into the AutoCAD family. This represented a significant change of direction in Autodesk's mechanical strategy: beforehand, it was envisioned that AME would be extended by integrating the ACIS modeler, with the bulk of the work being done in-house.

In November 1993, AutoSurf Release 2 was announced, which provides the first true integration of the MES modeler into AutoCAD.

Len Rand on the MES Acquisition

Comments from Len Rand, VP of the AutoCAD division, to accompany MES acquisition news release:

“I have great news for you and Autodesk in general. We acquired Micro Engineering Solutions (MES) Inc., (see accompanying news release and Q&A).

Autodesk acquired MES, a leading developer and marketer of manufacturing CAD/CAM software, because we wanted to strengthen our 3D modeling, design, and manufacturing capabilities. One of our main CAD strategies is to become a major player in the MCAD market, a significant and fast-growing market, and MES provides us with a lot of ammunition to take advantage of this tremendous opportunity and really give the competition a run for its money.”

Today, Ken Spenser, president and CEO of MES, said: ‘People need to recognize this acquisition is more than just a purchase—it represents a commitment to supplying world class MCAD products to customers worldwide.’

Situated in Novi, Michigan—the heart of the U.S. manufacturing industry—MES is a privately held, five-year-old company that is recognized as a quality supplier of MCAD software. The founders of the company are from GM and the relationships they have built in the automotive industry are very strong. In addition, the 50 employees not only share our vision for our future role in MCAD, but they also have a similar culture to ours and will be great to work with.

We welcome this addition to the Autodesk team. MES will continue to work in Michigan, and we invite you to send your warm greetings when possible. On behalf of Autodesk, we are sending MES a videotape—a welcome from the management team—as well as a case of champagne (plus, of course, some T-shirts).

Please join us in making them feel at home here at Autodesk.”


Press Release

The following information was released today, Friday, October 16, at 1:15 p.m. PDT:

For Release at 1:15 p.m. PDT


Micro Engineering Solutions Joins Ranks of
Leading PC-CAD Software Company

SAUSALITO, Calif.—October 16, 1992—Autodesk Inc. announced today that it acquired Micro Engineering Solutions (MES) Inc., a leading developer and marketer of manufacturing CAD/CAM software. MES, based in Novi, Michigan, provides sophisticated 3D surface modeling and manufacturing technology to various industries, including the automotive sector. Autodesk, with revenues of $285 million, is the sixth-largest PC-software company in the world and the producer of the worldwide de facto standard in desktop CAD—AutoCAD(R) software.

“The acquisition brings together two companies who have complementary strengths. Autodesk gains the expertise and technology of a proven performer in the mechanical and manufacturing markets while MES receives the benefits of our established worldwide marketing support and distribution channels,” said Carol Bartz, president, CEO, and chairman of Autodesk. “Together, we expect to become a major player in the MCAD marketplace.”

Currently, MES product distribution is focused on the company's existing distributor relationships in North America, Germany, and Asia. The two companies are developing a program for increased U.S. distribution and coverage throughout the rest of the world.

“MES's technology is based upon sophisticated manufacturability requirements,” said Len Rand, vice president, Autodesk's AutoCAD division. “We will deliver technologically superior engineering solutions that address the entire product development process from conceptualization through manufacturing, emphasizing design-for-manufacturability. This acquisition is the catalyst for Autodesk's Mechanical CAD strategy and will reinforce Autodesk's reputation as the value supplier.”

Terms of the acquisition were not disclosed. According to Bartz, the approximately 50 employees of MES—a five-year-old, privately held company—will continue to work out of their Michigan offices.

MES has been a Registered AutoCAD Developer since January 1992. The underlying technologies in both companies' products are complementary.

“This acquisition is an example of Autodesk's ongoing commitment to provide ‘best-value’ solutions to its customers,” said Ken Spenser, president and CEO of MES. “While Autodesk clearly possesses the financial resources to create much of the technology we provide, I believe the company deserves great credit for building its presence in this market by acquiring our proven technology and people that are already closely tied to applications and end users.”

“We're excited about the future because of the strong technical fit between our respective product lines and the strong cultural fit between our employees,” Spenser continued. “People need to recognize this acquisition is more than just a purchase—it represents a commitment to supplying worldclass 3D CAD/CAM products to customers worldwide.”

Currently, through its open-architecture DOS- and UNIX-based SOLUTION 3000(R) product line, MES provides:


Q&A On MES Acquisition

The following Q&A is being sent concurrently to all Autodesk and MES employees. Please note that this is an internal document for employees only and should not be distributed outside the company.

Q: What is the news?
A: Autodesk has acquired a software company, Micro Engineering Solutions Inc.

Q: When was this announced?
A: Autodesk management announced the acquisition Friday, October 16, in San Francisco, at a meeting with securities analysts. We also issued a press release, and an email to all employees. Letters and calls to dealers and developers are in progress.

Q: Who is Micro Engineering Solutions (MES)?
A: MES is a 5-year-old manufacturing software company. It is privately held, with approximately 50 employees, headquartered in Novi, Michigan, the heart of North America's manufacturing industry.

Q: What are the terms of the deal?
A: Autodesk acquired MES for just under US$15 million.

Q: What products does MES make?
A: MES provides DOS- and UNIX-based 3D surface modeling and machining software technology. It has shipped over 1400 licenses to companies involved in manufacturing, particularly in the automotive industry. Its products are sold under the SOLUTION 3000(R) product line name.

Q: Why has Autodesk acquired MES?
A: The managements of Autodesk and MES believe an acquisition is in the mutual interest of both companies. Autodesk gains the people, products, expertise, customer base, and other assets of MES while MES joins Autodesk, with our worldwide channel and distribution strength and our proven history of bringing innovative CAD, multimedia, scientific modeling, and other technology to the desktop.

Q: What will happen to current MES management?
A: We believe they are doing an excellent job and we expect them to play key roles in the new organization. They are excited about joining Autodesk and look forward to leading the MCAD market with us in the future.

Q: Do you intend to close or relocate MES operations?
A: Over time our intention is to integrate SOLUTION 3000 development and marketing with that of Autodesk. We fully intend that MES remain intact located in the heart of U.S. manufacturing. Furthermore, development and support of the SOLUTION 3000 product will continue.

Q: How many MES employees are affected? Will there be layoffs?
A: MES has approximately 50 employees. We do not anticipate layoffs.

Q: How will this acquisition impact Autodesk's revenues?
A: We not anticipate a significant immediate impact on revenues.

Q: What impact will this acquisition have on Autodesk's earnings?
A: We expect no impact on earnings—i.e., continued steady, sustained growth—for the next two quarters.

Q: Can SOLUTION 3000 be used in non-automotive applications?
A: Yes. MES's strategy before the Autodesk acquisition was to focus on the automotive and tooling segment. However, SOLUTION 3000 is also marketed to aerospace, consumer products, and defense segments. Autodesk believes that SOLUTION 3000 solves the most difficult modeling and manufacturing problems and is broadly applicable across multiple industry segments.

Q: What percentage of MES's customer base is active outside the automotive industry?
A: Autodesk estimates that 10 to 20 percent of MES's customer base is using MES products for non-automotive applications.

Q: This acquisition would seem to indicate that Autodesk is seeking to compete in the market for manufacturing software. What does Autodesk hope to gain with this acquisition?
A: AutoCAD already has a strong position in mechanical design and drafting with AutoCAD. We believe this acquisition will rapidly expand our position in 3D modeling, design, and manufacturing. It also represents a key step in our longer-term strategy to provide solutions that address the entire mechanical product development process from concept through manufacturing.

Q: Technically speaking, what are the key features of SOLUTION 3000?
A: SOLUTION 3000's key features/strengths include:

Q: What is the competitive positioning of SOLUTION 3000 as compared to products from PTC, SDRC, CV?
A: Autodesk believes MES's technology provides an excellent answer to the needs of customers who need to do 3D design and manufacturing. We believe the acquisition of MES allows us to continue providing market-proven, “best-value” software solutions in the 3D design and manufacturing segment via our strong channels of distribution. Our advantage with SOLUTION 3000 against the major competitors mentioned will include:

Q: Won't SOLUTION 3000 compete with AutoCAD?
A: Not really. AutoCAD has a very broad applications base, and is heavily used in many other markets—e.g., AEC, GIS—besides mechanical. SOLUTION 3000 is not only focused on 3D design, it has a specific emphasis on manufacturing industries. In fact, SOLUTION 3000 and AutoCAD are functionally quite complementary.

Q: Does this mean that AutoCAD will be offering some of the features currently in SOLUTION 3000 like surfaces and NC?
A: Our intent is to integrate the underlying technology acquired from MES for 3D surface modeling and manufacturing into the AutoCAD family of products in the future. However there are no specific plans available for doing that at this time, and SOLUTION 3000 will continue as a standalone product line for the foreseeable future.

Q: Will you have a translator available between SOLUTION 3000 and AutoCAD?
A: We're currently evaluating that option.

Q: Are there any planned changes to software and support pricing?
A: For the immediate future, MES product pricing for software and support remains the same as it was prior to the acquisition.

Q: Are foreign-language versions of SOLUTION 3000 available? Are you planning to make international versions available later?
A: MES currently offers Japanese (Kanji) and German language versions. Autodesk will continue to offer these versions of the product. In addition, the SOLUTION 3000 user interface is completely programmable by dealers. As time progresses, other localizations are expected, both by Autodesk and by distributors.

Q: What are the implications of this acquisition for AME (AutoCAD's Advanced Modeling Extension)?
A: AME remains a viable and inexpensive low-end solid modeling product that serves to introduce users to the benefits of solid modeling as well as addressing basic conceptual design and assembly problems. We will continue to sell and support it. In addition, we are exploring various migration paths for users of AME who have a need for the surface modeling and manufacturing capabilities offered by SOLUTION 3000.

Q: How will this acquisition affect Autodesk's relationships with independent developers in the MCAD market?
A: We will continue to work closely with our independent developer community and remain sensitive to their interests and concerns. In the specific case of MES, the SOLUTION 3000 focus on high-end machining leaves ample room for independent development in other segments of that market. We will continue to aggressively pursue core technologies and/or business opportunities that we deem to be in the best interests of our company and our customers.

Q: How will current Autodesk independent application developers who were SOLUTION 3000 competitors (the CAM-only competitors—e.g., CNC Software, Point Control) respond to this news?
A: Like AutoCAD, SOLUTION 3000 is an open system with a strong application programming language called S3L. We hope our independent application developers will take the opportunity to work with us using SOLUTION 3000 as a platform. SOLUTION 3000 does have strong NC capabilities. However, our focus is on integrated CAD/CAM, rather than CAM-only applications. Since SOLUTION 3000 provides solutions for the more complex, multiple-surface machining problems within the manufacturing market, we believe there will continue to be opportunities for Autodesk independent CAM application developers who do not position their products against SOLUTION 3000, and we will continue to work with them in this regard.

Q: Until now, SOLUTION 3000 has been sold directly, with a lot of support from MES. Autodesk mainly sells through indirect channels and counts mainly on its dealers to support its products. How will this difference be handled?
A: We will continue to sell through our highly effective reseller channels, using support from MES salespeople to help ensure the success of our dealers. In addition, we are phasing in a special MCAD dealer training and certification program that is intended to bring on a highly qualified group of AutoCAD mechanical dealers throughout the coming months.

Q: What will happen to MES's current dealers and distributors?
A: Autodesk is currently evaluating how to best transition current MES dealers and distributors into Autodesk. However, the intent is for all current SOLUTION 3000 dealers to continue to carry the product. In addition, Autodesk will make SOLUTION 3000 available to its current mechanical and manufacturing-focused dealer community. For the foreseeable future, SOLUTION 3000 dealers and distributors will continue to work with MES as they have in the past.

Q: SOLUTION 3000 uses HOOPS, and Autodesk owns 20 percent of Ithaca software, the developer of HOOPS. Does this have any implications?
A: Not really. Autodesk invested in Ithaca Software because it is an important graphics standard for use in a variety of software applications. MES made the decision several years ago to use HOOPS because of the advantages of portability which HOOPS provides. MES made this decision independently of the current acquisition and Autodesk relationship.

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