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                                                                      EXHIBIT 11

                   MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES

                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
 in thousands, except share and per share data                       1996           1995           1994
-----------------------------------------------------------------------------------------------------------------
 <S>                                                                <C>            <C>            <C>
 PRIMARY EARNINGS PER SHARE:
   Net income  . . . . . . . . . . . . . . . . . . . . . . . . .    $       2,071  $       1,381  $         450
   Accretion of value of warrants  . . . . . . . . . . . . . . .               --            234            664
                                                                    -------------  -------------  -------------
   Net income (loss) available to common shareholders  . . . . .    $       2,071  $       1,147  $        (214)
                                                                    =============  =============  ============= 

   Weighted average common shares outstanding  . . . . . . . . .        4,990,215      3,256,694      3,162,431
   Shares issued below fair market value   . . . . . . . . . . .               --         47,250         47,250
   Converted preferred shares  . . . . . . . . . . . . . . . . .               --        484,758        484,758
   Effect of stock options and warrants  . . . . . . . . . . . .           78,813         61,112             --
                                                                    -------------  -------------  -------------
     Pro forma adjusted shares outstanding                              5,070,028      3,849,824      3,694,439
                                                                    =============  =============  =============
   Pro forma net income (loss) per common share  . . . . . . . .    $         .41  $         .30  $        (.06)
                                                                    =============  =============  ============= 

   FULLY DILUTED EARNINGS PER SHARE:
   Net income (loss) available to common shareholders  . . . . .    $       2,071  $       1,147  $        (214)
                                                                    =============  =============  ============= 

   Weighted average common shares outstanding  . . . . . . . . .        4,990,215      3,256,694      3,162,431
   Shares issued below fair market value   . . . . . . . . . . .               --         47,250         47,250
   Converted preferred shares  . . . . . . . . . . . . . . . . .               --        484,758        484,758
   Effect of stock options and warrants  . . . . . . . . . . . .          113,691         75,020             --
                                                                    -------------  -------------  -------------
     Pro forma adjusted shares outstanding                              5,070,028      3,863,722      3,694,439
                                                                    =============  =============  =============
   Pro forma net income (loss) per common share  . . . . . . . .    $         .41  $         .30  $        (.06)
                                                                    =============  =============  ============= 
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