A Message From the CEO Concerning the Recent Software Division Spin-Off

top letterhead

Side letterheadFebruary 6, 2004

Message from CFDRC President and CEO

Subject: New Opportunity with Added Value for our Customers

Dear Customer:

The purpose of this letter is to inform you about the exciting new business development at CFDRC that will provide better value to you and your organization. The Software Products Division of CFDRC has been acquired by the ESI-Group, and the two companies have signed a long-term, collaborative development agreement to better serve our customers. ESI-Group is a world leader in digital simulation software with global infrastructure for marketing, sales, and support. This letter explains what this really means and how our service to you will be improved. We want to assure you of our continued commitment.

As part of the Software Division spin-off, the associated personnel have been transferred to the new business unit, which is dedicated to improve, support and market CFDRC software products (CFD-ACE+, CFD-FASTRAN, CFD-VisCART, CFD-CADalyzer, and CFD-TOPO). This business unit will continue to be headed by Karlheinz Peters, who has headed CFDRC's Software Operations since July 2001. All personnel, including sales and support, will continue to work from their current locations in Huntsville, AL, Santa Clara, CA, and Stuttgart, Germany. Our goal is to ensure that there is no interruption in the quality of service you have come to expect from CFDRC.

In association with the collaborative agreement, CFDRC has a perpetual license to use and modify the software products for various R&D and Service contracts. By focusing on what CFDRC does best, i.e., advanced developments and applications, we plan to grow and produce innovative solutions at an even faster pace. This includes new numerical and physical models, software customizations, as well as innovative designs and prototypes.

CFDRC will remain an independent Small Business and continue to participate in various SBIR, BAA, ATP, PRDA, NRA, and other technology-development programs. We will also work on advanced applications projects, including proprietary and exclusive projects for various government and private organizations. All existing customer agreements will continue as they are, and will be fully honored. All sensitive data (e.g., Proprietary, No-foreign, or Classified) provided to CFDRC in the past, or in the future, will be fully protected by following our well-established Data Protection Procedures.


The CFDRC-ESI Group collaboration will be able to offer better value, i.e., leveraged solutions, to our customers in several ways, including:

  1. Further improved functionality and quality of software through the addition of ESI technology and implementation of quality assurance processes from ESI Group (ISO 9000 certified).
  2. Continued technological innovation, leveraging long-term research, which has been a traditional hallmark of CFDRC. This will be accomplished by:
    a) Providing "Research Versions" of relevant software modules to the sponsors of R&D projects to facilitate their active participation in new innovations;
    b) Facilitating faster dissemination of integrated, customized software. This will include new modules and the baseline software, with sublicenses as appropriate;
    c) Providing opportunities for early adoption of emerging capabilities to the interested software licensees when appropriate, with subcontracts for CFDRC's R&D expertise;
    d) Systematically transitioning relevant new capabilities to the commercial versions of software.
  3. More comprehensive solutions for complex systems and multidisciplinary problems by undertaking joint projects with the expanded portfolio of CFDRC and ESI products and services.

We are excited about the opportunity that this partnership provides, and would like to encourage you to contact us for additional information and clarifications. Thank you again for your continued support.

Yours truly,

Signature

Ashok K. Singhal, Ph.D.
President & CEO
Ph: (256) 726-4841 Fax: (256) 726-4807
Web: http://www.cfdrc.com

AKS/mls

Attachment (Spin-Off Announcement)