3D Systems Reports Record Second-Quarter Revenue; Net Income Rises to $0.05 Per Share on 17% Revenue Growth.VALENCIA Valencia, region, Spain Valencia (välān`thēä), autonomous region (1990 pop. 3,902,429) and former kingdom, E Spain, on the Mediterranean. It now comprises the provinces of Alicante, Castellón, and Valencia. , Calif. -- 3D Systems Corporation (Nasdaq: TDSC TDSC Thai Development Support Committee TDSC Time Domain Signal Coding TDSC Test Driver System - Charlie TDSC Time-Domain Spreading Code ), a leading provider of rapid 3-D printing, prototyping (1) Creating a demo of a new system. Prototyping is essential for clarifying information requirements. The design of a system (functional specs) must be finalized before the system can be built. and manufacturing solutions, announced today that revenue increased 17% in the second quarter of 2005 and 10% in the first six months of 2005 compared to the corresponding 2004 periods. Revenue from systems increased 35% in the second quarter and 11% in the first six months of 2005 compared with the prior-year periods reflecting continuing strong unit growth from new systems, including InVision In`vi´sion n. 1. Lack of vision or of the power of seeing. (TM) 3-D Printers, introduced since the latter part of 2003. In a quarterly reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of the trend of declining sales of mature systems, unit volume from the sale of those systems increased. Revenue from materials increased by 22% in the second quarter and 19% in the first six months compared to the respective 2004 periods, primarily reflecting strong unit growth in the sale of new materials. Revenue from services declined modestly in the second quarter, primarily due to lower revenue from customer training and a decision to cease providing system enhancements for certain older legacy systems, but increased modestly in the first six months of 2005 compared to the 2004 periods reflecting relatively stronger performance in the first quarter of 2005. Revenue increased at double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rates in each geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. area in which the company conducts business in the second quarter of 2005 compared to the 2004 quarter and increased at double-digit rates in the U.S. and the Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). region in the first six months of 2005 compared to the 2004 period. Without the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect of foreign currency translation, revenue would have increased 16% for the second quarter and 8% for the first half of 2005. With this higher level of revenue, for the second quarter of 2005: --the company reported $1.7 million of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. due to its higher revenue and higher gross profit, sharply higher than its $0.1 million of operating income in the second quarter of 2004; and --the company reported $0.9 million of net income available to common stockholders, a $2.1 million improvement over its $1.2 million loss in the 2004 period. and for the first six months of 2005: --the company reported $3.4 million of operating income compared to a $1.1 million operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the first six months of 2004; and --the company reported $1.6 million of net income available to common stockholders, a $5.4 million improvement over its $3.8 million loss in the 2004 period. "The strong revenue growth in the second quarter of 2005 continues to reflect the positive underlying trends and successful early results from the fundamental changes in the company's business model that we implemented during 2004," said Abe Reichental, 3D Systems' president and chief executive officer. "Our efforts to accelerate product mix changes from aging, large-frame systems and materials to new 3-D printing and rapid manufacturing Building parts out of plastic or metal one layer at a time using a method of additive fabrication such as 3D printing. Multiple pieces, either similar or dissimilar, can be built simultaneously. solutions, our initiatives to increase recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue from materials and composites, the 2004 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). of the U.S. sales organization and our decision to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: quarter-end discounts all contributed to the higher level of revenue in the second quarter," continued Reichental. "Sales of new products and services, which include the increasing revenue contributions of InVision(TM) 3-D printers, grew to 22% of total revenue in the quarter and 21% of total revenue in the first six months of the year. During the last few weeks of the second quarter, we began shipping our new integrated manufacturing-capable Sinterstation(R) Pro SLS (Selective Laser Sintering) See laser sintering and 3D printing. (R) (selective laser sintering See laser sintering and 3D printer. ) systems. Revenue generated from this new and exciting product line was not material to the second-quarter results," continued Reichental. "In a quarterly reversal of the trend of declining sales of the company's mature equipment models, revenue from these mature systems increased by $1.2 million compared to the second quarter of 2004. During the second quarter, we also recovered approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. half of the revenue that we believe we gave up in the first quarter when we turned down deeply discounted customer orders late in the quarter, after certain of the customers involved resubmitted orders on terms more favorable to us," concluded Reichental.
Operating Highlights
Second Quarter and First Six Months of 2005
($ in millions except for per share amounts)
----------------------------------------------------------------------
Second Quarter First Six Months
------------------------------------------------
% %
Operating Highlights 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Revenue $32.8 $27.9 17% $63.2 $57.4 10%
----------------------------------------------------------------------
Gross profit $14.3 $12.3 $27.4 $24.3
% of Revenue 44% 44% 17% 43% 42% 12%
----------------------------------------------------------------------
Operating expenses $12.6 $12.2 $24.0 $25.4
% of Revenue 38% 44% 4% 38% 44% (6)%
----------------------------------------------------------------------
Operating income $1.7 $0.1 $3.4 $(1.1)
% of Revenue 5% 1% NM 5% (2)% NM
----------------------------------------------------------------------
Net income (loss) to $0.9 $(1.2) $1.6 $(3.8)
common stockholders
% of Revenue 3% (4)% NM 3% (7)% NM
----------------------------------------------------------------------
Diluted income (loss)
per share to common
stockholders $0.05 $(0.10) NM $0.10 $(0.29) NM
----------------------------------------------------------------------
Unrestricted cash $28.1 $20.0 41% $28.1 $20.0 41%
----------------------------------------------------------------------
Depreciation and $1.6 $1.6 $3.1 $3.3
amortization
% of Revenue 5% 6% (4)% 5% 6% (7)%
----------------------------------------------------------------------
NM = not meaningful
The company experienced strong revenue growth from its operations outside of the U.S., which rose 16% in the second quarter and 8% in the first six months of 2005. Revenue in the U.S. increased 19% in the second quarter of 2005 and 12% in the first six months of 2005 due to higher unit volume as the company began to realize the benefits of the 2004 restructuring and realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of its U.S. sales organization. Revenue from European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations increased by $1.6 million or 14% in the second quarter and by $0.8 million or 3% in the first half, overcoming their seasonally slower first quarter. Revenue from Asia-Pacific operations increased by $0.9 million in the second quarter and by $1.8 million in the first half, representing 22% and 23% growth, respectively, in each period, with strong growth from systems and materials. Revenue from systems and materials increased at double-digit rates for the second quarter and first six months. Revenue increases in these product classes for each period were driven by unit-volume increases in each product class and in each geographic area. Service revenue increased modestly in the six-month period while declining modestly in the second quarter.
Revenue By Class of Product and Service
($ in millions)
----------------------------------------------------------------------
Second Quarter First Six Months
------------------------------------------------
% %
Product or Service 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Systems and other
products $11.8 $8.7 35% $21.9 $19.7 11%
----------------------------------------------------------------------
Materials $10.9 $8.9 22% $21.0 $17.6 19%
----------------------------------------------------------------------
Services $10.1 $10.3 (2)% $20.3 $20.1 1%
----------------------------------------------------------------------
Total $32.8 $27.9 17% $63.2 $57.4 10%
----------------------------------------------------------------------
Gross profit increased in both the second quarter and the first six months of 2005 compared to the corresponding 2004 periods. Gross profit increased to $14.3 million for the 2005 quarter from $12.3 million in the 2004 quarter and to $27.4 million in the first six months of 2005 from $24.3 million in the first half of 2004. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. declined by 0.3 percentage points in the second quarter compared to the second quarter of 2004 but increased by 0.9 percentage points in the first six months of 2005 compared to the 2004 period. Cost of sales continued to benefit from our outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. activities during the second quarter and first six months of 2005, and during the second quarter of 2005 it benefited from the favorable effect of foreign currency transaction items. For the second quarter of 2005, foreign currency transaction items had a $0.2 million favorable effect on cost of sales compared with the 2004 quarter. For the six-month period, foreign currency transaction items had a $0.8 million unfavorable effect on cost of goods compared with the first six months of 2004. For the second quarter of 2005, product cost of sales was adversely affected by certain performance enhancements activities associated with our InVision(TM) 3-D Printers, and service cost of sales increased as a result of increased spending for our U.S. and Asia-Pacific training and field-service operations.
Gross Profit Margins
($ in millions)
----------------------------------------------------------------------
Second Quarter First Six Months
------------------------------------------------
% %
2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Products $10.4 $8.3 $20.4 $17.1
% Revenue 46% 47% 26% 47% 46% 19%
----------------------------------------------------------------------
Services $3.9 $4.0 $7.0 $7.2
% Revenue 39% 39% (2)% 34% 36% (3)%
----------------------------------------------------------------------
Total $14.3 $12.3 $27.4 $24.3
% Revenue 44% 44% 17% 43% 42% 12%
----------------------------------------------------------------------
Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased by $0.5 million in the second quarter of 2005 but decreased $1.4 million in the six-month period compared to the corresponding 2004 periods. Total operating costs operating costs npl → gastos mpl operacionales declined to 38% of revenue in the second quarter and first six months of 2005 compared to 44% of revenue in the second quarter and the first half of 2004. Selling, general and administrative expenses increased $0.4 million in the second quarter primarily due to the absence in the 2005 period of last year's $0.4 million reduction in an accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for healthcare costs and a variety of other costs, partially offset by $1.0 million of lower legal costs and by lower provisions for bad debts. For the six-month period, SG&A expenses declined by $1.5 million due to $2.7 million of lower legal costs and the other factors affecting the second quarter discussed above. Strategic and tactical R&D expenditures increased to $2.7 million in the second quarter of 2005 from $2.6 million in 2004, and increased modestly for the first six months of 2005. The Company continues to expect R&D expenditures to be in the range of 7-8% of total revenue for the full year 2005. "We continue to be extremely pleased with the significant and continuing improvement in the company's profitability," said Reichental. "With the strong top-line growth in the second quarter from new products as well as the contributions to higher revenue in the quarter made by core products and systems, we believe that we are benefiting increasingly from our strategic initiatives. "We are continuing to focus on broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad our product portfolio consistent with our key initiatives to grow the company's rapid manufacturing and 3-D printing base. We recognize the importance of developing specific solutions to improve our customer's bottom line through an unwavering commitment to R&D which in turn fuels our top-line growth," continued Reichental. "During the second quarter, we announced the introduction of the company's Sinterstation(R) Pro SLS(R) systems, an advanced new line of automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. selective laser sintering manufacturing systems. These systems have been well received by customers, and we began to ship them late in the second quarter. "We also announced during the second quarter the availability of three new laser sintering Building prototypes and finished parts in a machine from powdered thermoplastics and metals that are cured by heat from a laser. From CAD drawings that have been cross sectioned into thousands of layers, the machine builds up the part by curing one layer at a time. materials that are designed for rapid manufacturing applications: DuraForm(R) Flex A development system for Flash-based applications from Adobe. Introduced in 2004 as a J2EE application, Flex compiles ActionScript code and XML-based user interface descriptions (MXML) into binary Flash files (SWF files). Plastic, a new rubber-like, tear-resistant, flexible plastic; DuraForm(R) AF Plastic, a new cast-aluminum-like engineered composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate for use in the company's selective laser sintering systems; and DuraForm(R) FR plastic, a new flame-retardant flame-re·tar·dant adj. Resistant to catching fire. flame  -re·tar material, for exclusive use in Sinterstation(R) Pro
SLS(R) systems.
"We also announced plans to introduce later this year the InVision(TM) LD 3-D Printer, the first ever affordable desk-top 3-D printer. We expect the addition of this printer to nicely complement our growing family of InVision(TM) 3-D Printers. "We very much appreciate the confidence expressed in us by Align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. Technology, one of our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. customers, which recently placed orders for several million dollars worth of 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. (R) 7000 systems for delivery through the end of 2006. Align's recent orders along with positive trends in the hearing aid industry and dental dental /den·tal/ (den´t'l) pertaining to a tooth or teeth. den·tal adj. 1. Of, relating to, or for the teeth. 2. Of, relating to, or intended for dentistry. molding molding, in architecture, furniture, and decorative objects, a surface or group of surfaces of projecting or receding contours. A molding may serve as a defining element, terminating a unit or an entire composition (e.g. sector reinforce re·in·force v. 1. To give more force or effectiveness to something; strengthen. 2. To reward an individual, especially an experimental subject, with a reinforcer subsequent to a desired response or performance. 3. our commitment to accelerating the development of additional rapid manufacturing opportunities. "We were pleased with the continuing improvement in the company's balance-sheet management during the first six months of 2005. Net working capital rose by $9.8 million to $38.1 million while the company reduced net trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed by $2.9 million, maintained inventory in the range of $9.3 million, and increased its cash balance by $1.8 million," concluded Reichental. 3D Systems will discuss its operating results for the second quarter and first half of 2005 on a conference call and audio web cast to be held at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) today. Details are set forth below. Second-quarter business highlights: During the second quarter, 3D Systems: --Announced the availability of Sinterstation(R) Pro SLS(R) systems, Models 140 and 230, which are automated selective laser sintering (SLS(R)) manufacturing systems designed to enable the company's customers to mass customize and produce high-quality end-use parts, patterns, fixtures and tools consistently and economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: from the company's proprietary engineered plastics, on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. and on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front . --Introduced DuraForm(R) FR plastic, a new flame-retardant material, for exclusive use in Sinterstation(R) Pro SLS(R) systems. --Introduced DuraForm(R) Flex plastic, a rubber-like, tear-resistant, flexible plastic that can be used in the company's selective laser sintering systems to produce functional prototypes and end-use parts for which rubber-like, flexible characteristics are useful. --Introduced DuraForm(R) AF plastic, a cast-aluminum-like engineered composite for use in the company's selective laser sintering systems that has the appearance of aluminum. --Introduced the InVision(TM) LD 3-D Printer, the third 3-D printer to be added to the company's 3-D printer product line. The InVision LD 3-D printer uses a layered deposition Deposition Christ is taken from the cross and enshrouded. [N.T.: Matthew 27:57–60; Christian Art: Appleton, 55] See : Passion of Christ technology that builds complex geometrical ge·o·met·ric also ge·o·met·ri·cal adj. 1. a. Of or relating to geometry and its methods and principles. b. Increasing or decreasing in a geometric progression. 2. shapes one slice thickness thickness (thik´nes) a measurement across the smallest dimension of an object. triceps skinfold (TSF) thickness at a time, and is designed for communication and concept modeling applications. --Introduced the VisiJet(R) SR 200 plastic for the InVision(TM) SR 3-D printer. This material mimics the general performance characteristics of high-volume thermoplastics thermoplastics, materials that soften or melt when heated and harden when cooled. Thermoplastic polymers consist of long polymer molecules that are not linked to each other. i.e., have no cross-links. such as polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. and ABS (Automatic Backup System) See backup program. . --Announced the availability of the ProCure To cause something to happen; to find and obtain something or someone. Procure refers to commencing a proceeding; bringing about a result; persuading, inducing, or causing a person to do a particular act; obtaining possession or control over an item; or making a person (TM) system, a stainless steel stainless steel: see steel. stainless steel Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. part-curing system for parts produced on certain of the company's SLA(R) systems. 3D Systems' complete suite of customer solutions includes --3-D Printing systems, which accept digital input from a three-dimensional three-di·men·sion·al adj. 1. Of, relating to, having, or existing in three dimensions. 2. Having or appearing to have extension in depth. 3. CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. station, convert the digital file one horizontal horizontal /hor·i·zon·tal/ (hor?i-zon´t'l) 1. parallel to the plane of the horizon. 2. occupying or confined to a single level in a hierarchy. horizontal parallel to the plane of the horizon. slice at a time. The standard (SR) and high resolution (HR) printers use jet hot-melted plastic material in an additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and layer-by-layer build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. to create a solid part. The LD unit uses layered deposition (LD) technology to build complex geometrical shapes one slice thickness at a time. 3-D Printers enable designers, engineers, architects and marketers to communicate their concepts frequently, and to substantially reduce the time it takes to bring new products to market. --Stereolithography or SLA(R) systems convert proprietary materials and composites into solid cross-sections, layer by layer, until the desired parts are built. SLA(R) systems are capable of making multiple parts of different geometries and shapes at the same time and are designed to produce prototypes, patterns or end-use parts that have a wide range of sizes and shapes. --Selective Laser Sintering or SLS(R) systems use heat to melt and fuse, or sinter sinter Mineral deposit with a porous or vesicular texture (having small cavities). Siliceous sinter is a deposit of opaline or amorphous silica that occurs as an incrustation around hot springs and geysers and sometimes forms conical mounds (geyser cones) or terraces. , powdered pow·der n. 1. A substance consisting of ground, pulverized, or otherwise finely dispersed solid particles. 2. Any of various preparations in the form of powder, as certain cosmetics and medicines. 3. materials into solid cross-sections, layer by layer, until the desired parts are complete. SLS(R) systems can create parts from a variety of plastic and metal materials and composites and are capable of processing multiple parts within the same build cycle. --Engineered materials and composites that the company blends and markets under a variety of brand names for use in all of the company's systems to produce high-quality models, prototypes and parts. Stereolithography The first 3D printing technology, which was pioneered by Chuck Hull of 3D Systems. See 3D printing. materials are marketed under the Accura(R) brand, selective laser sintering materials under the DuraForm(R), LaserForm(TM) and CastForm(TM) brands, and 3-D printing materials under the VisiJet(R) brand. The company also distributes additional materials and composites that are manufactured by DSM 1. DSM - Data Structure Manager. An object-oriented language by J.E. Rumbaugh and M.E. Loomis of GE, similar to C++. It is used in implementation of CAD/CAE software. DSM is written in DSM and C and produces C as output. Somos(R) and Dreve in order to enhance the portfolio of solutions available from the company. --Software for proprietary part preparation for use on personal computers and engineering workstations. These proprietary software packages generate the information required by the company's SLS(R), SLA(R) and 3-D printing systems to create three-dimensional models and parts. --Services that the company provides include a suite of comprehensive customer services and local field support that are provided on a worldwide basis for all of the company's systems. Such services and support include extended system warranties warranties, n.pl the details of a contract; considered less important than the conditions. Whereas the penalty for breach of conditions is the termination of the contract, the penalty for breach of warranties is payment of damages to the innocent party. , an extensive menu of annual service agreement options, and a wide variety of software and hardware upgrades and performance enhancement packages for legacy systems. Broad Applications and End-Uses: --3-D Printing system solutions are used for concept-modeling and three-dimensional printing applications. 3-D printed parts are used primarily for visualizing visualizing, v 1., holding an image in one's mind. 2., forming an image of a goal or destination in one's mind before undertaking it, so as to facilitate success. and communicating mechanical design applications. They are also used for other applications including supply-chain management, architecture, art, surgical modeling, marketing and entertainment. --Rapid prototyping system solutions are used for 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. applications, including the generation of product concept models, functional prototypes and master-casting and tooling patterns that are often used as an efficient, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. means of evaluating product designs. --Rapid manufacturing system solutions are used for rapid manufacturing applications to manufacture end-use parts, jigs, fixtures, tools and patterns directly from a digital image. The company's rapid manufacturing customers produce end-use parts without the need for expensive tooling or molds and without lengthy set-ups, resulting in significant savings, flexibility and mass customization capabilities. Conference Call and Audio Web Cast Details 3D Systems will hold a conference call and audio web cast to discuss its second-quarter and first half 2005 financial results today at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). --To access the Conference Call, dial 877-791-4796 (or 706-679-6014 from outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ). A recording will be available two hours after completion of the call for seven days. To access the recording, dial 800-642-1687 (or 706-645-9291 from outside the United States) and enter 7677566, the conference call ID number. --To access the audio web cast, log onto 3D Systems' website at www.3dsystems.com. The link to the web cast is provided on the home page of the website. To ensure timely participation and technical capability, we recommend logging on a few minutes prior to the conference call to activate your participation. The web cast will be available 72 hours after the presentation for replay at: http://www.3dsystems.com/company/investor/index.asp. The web cast will be available for review for 90 days. 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. Certain statements made in this release are forward-looking statements. These statements include comments as to the company's beliefs and expectations as to future events and trends affecting its business. These forward-looking statements are based upon management's current expectations concerning future events and trends and are necessarily subject to uncertainties, many of which are outside the control of the company. The factors stated under the heading "Forward-Looking Statements" and "Cautionary Statements and Risk Factors" in management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of results of operations and financial condition, which appear in the company's periodic filings with the Securities and Exchange Commission, as well as other factors, could cause actual results to differ materially from such statements. About 3D Systems Corporation 3D Systems is a leading provider of rapid 3-D printing, prototyping and manufacturing solutions. Its systems and materials reduce the time and cost of designing products and facilitate direct and indirect manufacturing by creating actual parts directly from digital input. These solutions are used for design communication and prototyping as well as for production of functional end-use parts: Transform your products. More information on the company is available at www.3dsystems.com, or by phoning 888-337-9786, ext. 2882 (or 661-295-5600, ext. 2882 from outside the United States), or via email at moreinfo@3dsystems.com. Note to editors: 3D Systems, SLA, SLS, DuraForm, Sinterstation, VisiJet and Accura are registered trademarks and SLS, InVision, VisiJet, LaserForm, CastForm, ProCure and Viper are trademarks of 3D Systems. All other product names or services mentioned are trademarks or registered trademarks of their respective companies.
3D SYSTEMS CORPORATION
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 2005 and June 30, 2004
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Revenue:
Products $ 22,657 $ 17,613 $ 42,903 $ 37,342
Services 10,112 10,280 20,298 20,066
--------- --------- --------- ---------
Total revenue 32,769 27,893 63,201 57,408
Cost of sales:
Products 12,231 9,318 22,529 20,225
Services 6,193 6,272 13,322 12,846
--------- --------- --------- ---------
Total cost of sales 18,424 15,590 35,851 33,071
----------------------------------------
Gross profit 14,345 12,303 27,350 24,337
----------------------------------------
Operating expenses:
Selling, general and
administrative 9,900 9,504 18,596 20,132
Research and development 2,701 2,644 5,376 5,141
Severance and restructuring 7 8 7 141
----------------------------------------
Total operating expenses 12,608 12,156 23,979 25,414
----------------------------------------
Income (loss) from operations 1,737 147 3,371 (1,077)
Interest and other expense,
net 185 514 530 981
--------- --------- --------- ---------
Income (loss) before provision
for income taxes 1,552 (367) 2,841 (2,058)
Provision for income taxes 253 501 347 983
----------------------------------------
Net income (loss) 1,299 (868) 2,494 (3,041)
Preferred stock dividends 444 381 856 710
----------------------------------------
Net income (loss) available to
common stockholders $ 855 $ (1,249)$ 1,638 $ (3,751)
========================================
Shares used to calculate basic
net income (loss) available
to common stockholders per
share (1) 14,792 13,142 14,684 13,049
========================================
Basic net income (loss)
available to common
stockholders per share (1) $ 0.06 $ (0.10)$ 0.11 $ (0.29)
========================================
Shares used to calculate fully
diluted net income (loss)
available to common
stockholders per share (1) 15,900 13,142 15,858 13,049
========================================
Diluted net income (loss)
available to common
stockholders per share (1) $ 0.05 $ (0.10)$ 0.10 $ (0.29)
========================================
(1) See Schedule 1 for the calculation of basic and diluted net income
(loss) available to common stockholders per share.
3D SYSTEMS CORPORATION
Condensed Consolidated Balance Sheets
June 30, 2005 and December 31, 2004
(in thousands)
June 30, 2005 December 31, 2004
(Unaudited) (2)
--------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 28,121 $ 26,276
Accounts receivable, net 19,294 22,209
Inventories, net 9,319 9,512
Prepaid expenses and other current
assets 8,979 5,507
------------- --------------
Total current assets 65,713 63,504
Property and equipment, net 9,256 9,500
Goodwill 44,795 45,135
Intangible assets, net 9,655 10,808
Restricted cash 1,200 1,200
Other assets, net 1,164 1,349
------------- --------------
$ 131,783 $ 131,496
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt $ 190 $ 180
Accounts payable 5,153 6,937
Accrued liabilities 9,025 13,447
Customer deposits 927 819
Deferred revenue 12,275 13,797
------------- --------------
Total current liabilities 27,570 35,180
Long-term debt, less current
portion 3,645 3,745
Convertible subordinated
debentures 22,604 22,704
Other liabilities 1,063 1,607
------------- --------------
Total liabilities 54,882 63,236
Series B convertible redeemable
preferred stock 15,211 15,196
Stockholders' equity:
Common stock, authorized 60,000
shares, issued and
outstanding 15,123 (2005) and
14,490 (2004) 15 14
Additional paid-in capital 106,697 97,859
Deferred compensation (1,774) (45)
Treasury stock, at cost (68) (68)
Accumulated deficit in earnings (42,387) (44,881)
Accumulated other comprehensive
income (loss) (793) 185
------------- --------------
Total stockholders' equity 61,690 53,064
------------- --------------
$ 131,783 $ 131,496
============= ==============
(2) The balance sheet at December 31, 2004 has been derived from the
audited financial statements at that date but omits certain of the
information required by generally accepted accounting principles
for complete financial statements.
3D SYSTEMS CORPORATION
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2005 and June 30, 2004
(in thousands)
Six Months Ended June 30,
-------------------------
2005 2004
------- -------
(Unaudited)
Cash flows from operating activities:
Net income (loss) $ 2,494 $(3,041)
Adjustments to reconcile net income (loss) to net
cash used in operating activities :
Depreciation and amortization 3,122 3,349
Bad debt provision (benefit) (122) 195
Stock-based compensation expense 551 355
Payment of interest on employee's note with stock - (4)
Loss on disposition of property and equipment 38 121
Changes in operating accounts:
Accounts receivable 1,699 4,251
Inventories, net (934) (4,196)
Prepaid expenses and other current assets (3,406) 680
Other assets 54 -
Accounts payable (1,682) 269
Accrued liabilities (3,459) (3,247)
Customer deposits 109 (62)
Deferred revenue (930) (765)
Other liabilities (419) (850)
------- --------
Net cash used in operating activities (2,885) (2,945)
------- -------
Cash flows from investing activities:
Purchase of property and equipment (788) (283)
Additions to licenses and patents (238) (190)
Software development costs (444) (54)
------- --------
Net cash used in investing activities (1,470) (527)
------- -------
Cash flows from financing activities:
Stock option, stock purchase plan and restricted
stock proceeds 7,240 1,442
Repayment of long-term debt (90) (80)
Payments under obligation to former 3D Systems S.A.
stockholders (439) (442)
Payment of preferred stock dividends (785) (632)
Stock registration costs (103) (388)
Payment of accrued liquidated damages (36) (100)
------- --------
Net cash provided by (used in) financing activities 5,787 (200)
Effect of exchange rate changes on cash 413 (311)
-------- --------
Net increase (decrease) in cash and cash equivalents 1,845 (3,983)
Cash and cash equivalents at the beginning of the
period 26,276 23,954
-------- --------
Cash and cash equivalents at the end of the period $28,121 $19,971
======== ========
Selected Supplemental Cash Flow Information:
Interest payments $ 738 $ 1,077
Income tax payments 1,132 1,552
Non-cash items:
Conversion of 6% convertible subordinated
debentures $ 100 $ -
Conversion of convertible preferred stock 26 44
Accrued dividends on preferred stock 816 710
Accrued liquidated damages - 385
Transfer of equipment from inventory to property
and equipment, net 2,096 753
Transfer of equipment to inventory from property
and equipment, net 1,449 478
Schedule 1
The following is a reconciliation of the numerator and denominator of
the basic and diluted net income (loss) available to common
stockholders per share computations:
Three Months Ended Six Months Ended
June 30, June 30,
-----------------------------------------
2005 2004 2005 2004
-----------------------------------------
(Unaudited) (Unaudited)
Basic net income (loss) available to common
stockholders per share:
Numerator:
Net income (loss) available
to common stockholders $ 855 $(1,249) $ 1,638 $(3,751)
========================================
Denominator:
Weighted average common
shares outstanding 14,792 13,142 14,684 13,049
========================================
Basic net income (loss)
available to common
stockholders, per share $ 0.06 $ (0.10) $ 0.11 $ (0.29)
========================================
Diluted net income (loss) available to common
stockholders per share:
Numerator:
Net income (loss) available
to common stockholders $ 855 $(1,249) $ 1,638 $(3,751)
Add: Preferred stock dividend - - - -
Add: Interest on 6%
convertible subordinated
debentures - - - -
Add: Interest on 7%
convertible subordinated
debentures (a) - - - -
----------------------------------------
Diluted net income (loss)
available to common
stockholders, per share $ 855 $(1,249) $ 1,638 $(3,751)
========================================
Denominator:
Weighted average common
shares outstanding 14,792 13,142 14,684 13,049
Add: Effect of assumed
exercise of options and
vesting of restricted stock 1,108 - 1,174 -
Add: Effect of assumed
conversion of 6%
subordinated convertible
debentures - - - -
Add: Effect of assumed
conversion of 7%
subordinated convertible
debentures (a) - - - -
Add: Effect of assumed
conversion of preferred
stock - - - -
----------------------------------------
Diluted weighted average
common shares outstanding 15,900 13,142 15,858 13,049
========================================
Diluted net income (loss) per
common share $ 0.05 $ (0.10) $ 0.10 $ (0.29)
========================================
(a) All outstanding 7% convertible subordinated debentures had been
converted into Common Stock as of December 31, 2004.
For the three months and six months ended June 30, 2005, shares of
common stock issuable upon the conversion of outstanding convertible
preferred stock and convertible subordinated debentures were excluded
from the calculation of diluted net income per share because their
effects would have been anti-dilutive; that is, they would have
increased net income per share. Weighted average shares outstanding
for the quarterly and year-to-date periods used to calculate diluted
net income per share include the effect of the assumed exercise of
1,887 and 2,294 of in-the-money stock options outstanding throughout
each respective period together with the dilutive effect of those in-
the-money stock options that were canceled or exercised in each
period, prorated for the period of time they remained outstanding.
Pursuant to the treasury-stock method, the assumed exercise of these
options resulted in the inclusion of a net 1,095 and 1,152 diluted
shares of common stock, respectively.
At June 30, 2005, there were 4,887 potentially dilutive securities
that were not included in the diluted calculation comprised of 50
out-of-the-money stock options, 2,617 shares issuable upon conversion
of preferred stock and 2,220 shares issuable upon conversion of the 6%
convertible subordinated debentures.
For the three months and six months ended June 30, 2004, shares of
common stock issuable upon the conversion of convertible preferred
stock, convertible subordinated debentures and the exercise of stock
options were excluded from the calculation of diluted net loss per
share because their effects would have been anti-dilutive; that is,
they would have reduced net loss per share.
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