3D Systems Announces 2002 Results.Business Editors VALENCIA, Calif.--(BUSINESS WIRE)--June 30, 2003 3D Systems Corp. (Nasdaq:TDSCE) announced today revenue for the year ended December 31, 2002 was $116.0 million compared with revenue of $118.8 million in the previous year. Net loss for 2002 was $14.9 million or $1.16 per share compared with a net loss of $2.4 million or $.19 in 2001. Included in the results are severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs of $4.4 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc reductions in personnel in 2002 and the closure of the DTM DTM dermatophyte test medium. facility in Austin, TX. Also included in the 2002 results is a provision for income taxes of $8.9 million compared with a benefit from taxes of $1.0 million in 2001. The Company also recorded a gain of $18.5 million as a result of the Vantico arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the . "2002 was a very challenging, and ultimately disappointing year for 3D Systems," said Brian K. Service, chief executive officer. "The worldwide decrease in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by corporate purchasers and general economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. after September 2001 impacted both the number of systems sold and the product mix, and as a result, the Company was forced into significant additional restructuring with respect to the DTM acquisition and integration. Material sales were impacted by the termination of the 13 year resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing development and distribution agreement with Vantico, the concurrent acquisition of RPC (Remote Procedure Call) A programming interface that allows one program to use the services of another program in a remote machine. The calling program sends a message and data to the remote program, which is executed, and results are passed back to the calling Ltd., and launch of our own competing range of SL resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. . Subsequent to year-end, in February 2003 the Company's outside auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , Deloitte & Touche, LLP LLP - Lower Layer Protocol informed the Company that they had questions regarding the revenue recognition of approximately $3.0 million recorded in 4th Quarter 2002, which was subsequently reversed. "We sold fewer large frame systems as many of our rapid prototyping Building a part one layer at a time using a method of additive fabrication such as 3D printing. Such parts are used for concept modeling to determine if the product design meets the customer's expectations. corporate customers tried to make do with the systems they had or chose to buy the least expensive systems available to meet their most immediate needs. Sales of our large frame SLA (1) (StereoLithography Apparatus) See 3D printing. (2) (Service Level Agreement) A contract between the provider and the user that specifies the level of service expected during its term. systems decreased by 26% from 2001. Sales of our smallest MJM MJM Multi-Jet Modeling (prototyping manufacturing) MJM Metropolitan Japanese Ministry MJM Married Jewish Male (Multi-Jet Modeling) systems also decreased as we began the transition to, but were forced to delay the launch of a third generation MJM system, the InVision(TM) 3-D printer," Service continued. "On a more positive note, results for our advanced digital manufacturing (ADM See add/drop multiplexer. (language) ADM - A picture query language, extension of Sequel2. ["An Image-Oriented Database System", Y. Takao et al, in Database Techniques for Pictorial Applications, A. Blaser ed, pp. 527-538]. (SM)) systems were much as expected with ADM revenues for 2002 rising to $37.2 million from $28 million in 2001, an increase of 33%. In 2002, we sold 79 systems (SLA(R) and SLS (Selective Laser Sintering) See laser sintering and 3D printing. (R) systems) to ADM customers and four new ADM centers opened in 2002, one for motorsport applications, one for aerospace applications and two devoted to hearing aid shell production. Given the opportunities available for ADM applications, we believe that ADM will continue to show similar sustainable growth in the future. "We also recovered approximately 50% of the worldwide market for SL resins used in our SLA systems by year-end, generating approximately the same annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. margin dollars as in prior periods," Service added. "And although sales, general and administrative, and research and development expenses rose in 2002 reflecting an increase in professional and other fees and development costs related to the InVision 3-D printer, in July, the Company instituted an aggressive cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. program and accompanying personnel reductions to substantially reduce operating costs operating costs npl → gastos mpl operacionales for 2003. We are continuing to pursue a program to increase margins and continue to work to contain costs, however the accounting and audit fees associated with the audit committee investigation will be a substantial additional cost in the first half of 2003," Service concluded. In response to the questions raised by Deloitte regarding the revenue recognition of certain transactions, the Audit Committee of the Board of Directors commenced an investigation and retained Morgan Lewis People named Morgan Lewis include:
BDO Banco de Oro (Philippines) BDO 1,4-Butanediol BDO British Darts Organisation BDO Block Development Officer BDO Big Dumb Object ) to assist. As a result of the investigation, we restated our previously issued financial statements for the years ended December 31, 2001 and 2000. The restatements arose from the adjustments of certain income statement items which principally relate to the treatment and timing of revenue recognition of a small percentage of total equipment sales transactions. The effect of the adjustments for the year ended December 31, 2001 is to decrease the Company's previously reported fiscal 2001 consolidated revenues from $121.2 million to $118.7 million, increase net loss from $1.3 million to $2.4 million and increase diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share from $0.11 to $0.19. For the year ended December 31, 2000, the effect of these adjustments is to decrease the Company's previously reported fiscal 2000 consolidated revenues from $109.7 million to $109.3 million, decrease net income from $8.1 million to $7.9 million and decrease diluted income per share from $0.63 to $0.61. Following the completion of the investigation, changes have been made in personnel, systems and procedures and 3D Systems is in the process of implementing all of the recommendations made by BDO. The Company's financial statements for 2002 include a going concern qualification. On May 5, 2003, the Company completed a private placement of approximately 2.6 million shares of its Series B Convertible Preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". for an aggregate consideration of $15.8 million. Of these proceeds, $9.6 million was used to pay down the bank debt incurred in conjunction with the acquisition of DTM in 2001. The Company is working to obtain alternate financing to replace its revolving debt by September 30, 2003 and currently has accepted a proposal from Congress Financial, a subsidiary of Wachovia, to provide, subject to due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , a secured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility of up to $20 million. The going concern reflects the uncertainty that the Company will be able to raise capital in order to fund operations and obtain a commitment letter from a qualified lending institution Noun 1. lending institution - a financial institution that makes loans financial institution, financial organisation, financial organization - an institution (public or private) that collects funds (from the public or other institutions) and invests them in by September 30, 2003, to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. all of the outstanding obligations (approximately $8.5 million) with US Bank. At June 13, 2003, the Company had cash balances of $6 million. 3D Systems expects to release results for Q1 2003 on or before July 14, 2003 and will hold a conference call following the release of those results. About 3D Systems Founded in 1986, 3D Systems(R), the solid imaging company(SM), provides solid imaging products and solutions that reduce the time and cost of designing products and facilitate direct and indirect manufacturing. Its systems utilize patented technologies to create physical objects from digital input that can be used in design communication, prototyping, and as functional end-use parts. 3D Systems currently offers the ThermoJet(R) solid object printer, SLA(R) (stereolithography The first 3D printing technology, which was pioneered by Chuck Hull of 3D Systems. See 3D printing. ) systems, SLS(R) (selective laser sintering See laser sintering and 3D printer. ) systems, and Accura(R) materials (including photopolymers, metals, nylons, engineering plastics, and thermoplastics). 3D Systems is the originator Originator A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting of the advanced digital manufacturing (ADM(SM)) solution for manufacturing applications. ADM is the utilization of 3D Systems solid imaging technologies to accelerate production of smaller volumes of customized/specialized parts. A typical ADM center is expected to contain multiple 3D Systems' SLA, MJM and/or SLS systems dedicated to full-time manufacturing applications. Product pricing in the U.S. ranges from $49,995, for the ThermoJet printer, to $799,000 for the high-end SLA 7000 system. 3D Systems' multiple platform product line enables companies to choose the most appropriate systems for applications ranging from the creation of design communication models to prototypes to production parts. More information on the company is available at www.3dsystems.com, or by phoning 888/337-9786, or 661/295-5600 ext. 2882 internationally. An investor packet can be obtained by calling 800/757-1799. Note to editors: ADM and "the solid imaging company" are service marks; and si2 is a trademark; and ThermoJet, SLA, SLS, Accura, 3D Systems and the 3D logo are registered trademarks of 3D Systems Inc. Certain statements in this news release may include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that express the expectation, prediction, belief or projection of 3D Systems. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and achievement of 3D Systems to be materially and adversely different from any future results, performance or achievement expressed or implied by these forward-looking statements. Factors that may cause actual results to differ from the forward-looking statements contained in this release and that may affect the company's prospects in general include, but are not limited to, the failure to file the 10-Q within the extended time period granted by Nasdaq, disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. caused by the reconfiguration of the management team, the receipt of a commitment letter by September 30, 2003 to refinance the outstanding obligations with US Bank, funding of amounts of capital adequate to provide for the working capital needs of the Company, actions of competitors and customers; the Company's ability to successfully design and produce new products, customer acceptance of new products, the Company's ability to enter into successful relationships with new customers to fully exploit its products, the Company's ability to successfully implement all elements of its restructuring and cost savings program, and such other factors as are described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statements.
3D SYSTEMS CORPORATION
Consolidated Balance Sheets
(in thousands)
(Audited)
ASSETS 12/31/2002 12/31/2001
(As Restated)
Current Assets:
Cash and cash equivalents $2,279 $5,948
Accounts receiveable, less allowances for
doubtful accounts of $3,068 (2002) and
$1,755 (2001) 27,420 36,262
Current portion of lease receivables 322 498
Inventories 12,564 18,546
Deferred tax assets - 5,271
Prepaid expenses and other current assets 3,687 2,817
Total Current Assets 46,272 69,342
Property and equipment, net 15,339 17,864
Licenses and patent costs, net 14,960 12,314
Deferred tax assets - 6,750
Lease receivables, less current portion and
net of allowance of $414 (2002) and
$247 (2001) 553 1,750
Acquired technology, net 7,647 9,192
Goodwill 44,456 44,158
Other Assets 3,006 3,572
$132,233 $164,942
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of Credit $2,450 $6,151
Accounts payable 10,830 12,819
Accrued liabilities 15,529 15,608
Current portion of long-term debt 10,500 3,135
Customer deposits 801 1,624
Deferred revenues 14,770 13,997
Total current liabilities 54,880 53,334
Deferred tax liabilities - 4,210
Other liabilities 3,397 3,329
Long-term debt, less current portion 4,090 16,240
Subordinated debt 10,000 9,400
72,367 86,513
Stockholders' equity:
Preferred stock, authorized 5,000 shares, none
issued
Common stock, authorized 25,000 shares, issued
and outstanding 12,725 (2002) and issued 13,357
and outstanding 13,132 (2001) 13 13
Capital in excess of par value 84,931 93,173
Notes receivable from officers and employees (59) (244)
Retained earnings (loss) (21,419) (6,553)
Accumulated other comprehensive loss (3,600) (6,420)
Treasury stock, at cost, 225 shares (2001) - (1,540)
Total stockholders' equity 59,866 78,429
$132,233 $164,942
3D SYSTEMS CORPORATION
Consolidated Statements of Operations
(in thousands except per share amounts)
(Audited)
Years Ended
12/31/2002 12/31/2001
(As Restated)
Sales:
Products $81,039 $84,558
Services 34,922 34,182
Total sales 115,961 118,740
Cost of Sales:
Products 43,398 42,278
Services 25,942 24,961
Total cost of sales 69,340 67,239
Gross Profit 46,621 51,501
Operating expenses:
Selling, general and administrative 48,331 42,807
Research and development 15,366 11,010
Severance and other restructuring cost 4,354 -
Total operating expenses 68,051 53,817
Income (loss) from operations (21,430) (2,316)
Interest and other income (expense), net (2,991) (1,033)
Gain on arbitration settlement 18,464 -
Income (loss) before provision for
income taxes (5,957) (3,349)
Provision for (benefit from) income taxes 8,909 (992)
Net income (loss) $(14,866) $(2,357)
Shares used to calculate basic net
income (loss) per share 12,837 12,579
Basic net income (loss) per share $(1.16) $(0.19)
Shares used to calculate diluted net
income (loss) per share 12,837 12,579
Diluted net income (loss) per share $(1.16) $(0.19)
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