3D Systems Reports Third-Quarter Operating Results.

VALENCIA, Calif.--(BUSINESS WIRE)--Nov. 4, 1999--

3D Systems Corp. (Nasdaq/NM:TDSC) Thursday reported a net loss of $1.0 million, or 9 cents a share, for the third quarter ended Oct. 1, which included a non-recurring charge of $1.2 million, on revenue of $23.9 million.

Without this non-recurring charge, the company would have reported a net loss of $.2 million, or 1 cent a share. Last year, the company reported third-quarter net income of $.5 million, or 4 cents a share, on revenue of $23.3 million.

The non-recurring charge included in this year's third quarter is related to the recent change of the company's chief executive officer.

For the first nine months of this year, the company posted a net loss of $7.0 million, or 61 cents a share, on revenue of $68.6 million. This compares with net income of $1.4 million, equal to 12 cents a share, on revenue of $70.9 million a year ago.

Total unit shipments rose almost 40 percent in the third quarter, compared with the prior year's quarter, as a result of an increase in small-frame solid imaging systems.

"Gross profit margin, while not at the same level as last year, is showing improvement from previous quarters," said Brian Service, president and chief executive officer. "We are encouraged by the growth in large system sales, which are returning to historical levels. In addition, we are seeing an increase in high-margin material sales, and multiple unit sales, which is right in line with our strategy.

"We have also begun implementation of our new strategic operating plan, which has been designed to include manufacturing margin improvements, workforce reductions and other cost-cutting efforts, which should lead to greater profitability in the coming year."

3D Systems' cash balance remains solid at $10.7 million, relatively unchanged from the previous quarter. Continued Service: "We are seeing great progress in North American sales, which had been below expectations in previous quarters. We also see improving trends in the marketplace, which bodes well for the company and the solid imaging industry at large.

"Finally, our new management team is now in place to effect positive change within the company and aggressively address the issues at hand. As a result of these many factors, we look forward to finishing out the year in a position of strength."

About 3D Systems

3D Systems provides solid imaging products and services that allow users to move quickly from three-dimensional designs to finished parts, at a significantly lower cost and higher quality than more traditional methods.

The company's systems utilize patented technologies that fabricate solid objects from digital input. These processes offer significant competitive advantages by substantially reducing the time and cost required to design, develop and manufacture products.

The company also licenses 3D Keltool(R), a commercially proven moldmaking solution that produces prototype, bridge and production tooling inserts.

Based in Valencia, 3D Systems was founded in 1986 and is recognized as the world technology and market leader in solid imaging. For additional information, visit the company's Web site at www.3dsystems.com or phone [phone] ext. 720. For investor information, call the company's shareholder communications service at 800/757-1799.

Note to Editors: 3D Systems and SLA are trademarks, and 3D Keltool and the 3D logo are registered trademarks, of 3D Systems.

Except for the historical information contained in this news release, the matters discussed include forward-looking statements that involve risks and uncertainties including the ability of the company to successfully implement and carry out its new strategic operating plan, and the success of that plan, the availability and acceptance of new products, the impact of competitive products and pricing, the ability of the company to continue to contain expenses, dependence on key personnel, industrywide domestic and international economic conditions, and other risks detailed in the company's Securities and Exchange Commission reports on Form 10-K for the year ended Dec. 31, 1998, and reports on Form 10-Q filed by the company with the SEC during the current fiscal year. -0-

                        3D SYSTEMS CORPORATION
                      Consolidated Balance Sheets
                              (Unaudited)

                                         Dec. 31, 1998   Oct. 1, 1999
   ASSETS
Current assets:
 Cash and cash equivalents                $15,911,793    $10,714,719
 Short-term investments                     3,484,641             --
 Accounts receivable, less
  allowances for doubtful
  accounts of $944,144 (1998)
  and $1,547,440 (1999)                    24,486,730     27,123,541
 Current portion of lease receivables       2,069,126      1,205,649
 Inventories                               10,829,346     12,739,539
 Deferred tax assets                        2,063,163      2,063,163
 Prepaid expenses and other
  current assets                            1,916,149      2,055,113

   Total current assets                    60,760,948     55,901,724

Property and equipment, net                16,327,078     15,487,445
Licenses and patent costs, net              5,120,672      9,450,453
Deferred tax assets                         5,069,796      6,763,777
Lease receivables, less current portion     5,801,788      2,242,328
Other assets                                2,022,316      1,733,327

                                          $95,102,598    $91,579,054

   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                         $ 4,849,905    $ 6,471,878
 Accrued liabilities                        8,161,684      8,842,318
 Current portion of long-term debt            100,000        110,000
 Customer deposits                            330,162        515,484
 Deferred revenues                          9,013,559      7,345,934

   Total current liabilities               22,455,310     23,285,614

Other liabilities                           1,485,378      4,619,348
Long-term debt, less current portion        4,605,000      4,495,000

                                           28,545,688     32,399,962

Stockholders' equity:
 Preferred stock, $.001 par value.
  Authorized 5,000,000 shares; none issued
 Common stock, $.001 par value.
  Authorized 25,000,000 shares; issued
  11,614,317 and outstanding 11,389,317
  (1998) and issued 11,637,065 and
  outstanding 11,412,065 (1999)                11,614         11,649
 Capital in excess of par value            74,834,225     74,979,474
 Notes receivable from officers              (360,000)      (300,000)
 Accumulated deficit                       (6,765,447)   (13,717,437)
 Accumulated other comprehensive
  income (loss)                               376,459       (254,653)
 Treasury stock, at cost, 225,000 shares
  (1998) and 225,000 shares (1999)         (1,539,941)    (1,539,941)

   Total stockholders' equity              66,556,910     59,179,092

                                          $95,102,598    $91,579,054

See accompanying notes to consolidated financial statements.

                        3D SYSTEMS CORPORATION
                 Consolidated Statements of Operations
                              (Unaudited)

                                      Three Month Periods Ended
Sales:                         September 25, 1998  October 1, 1999

 Products                          $14,665,015       $16,264,271
 Services                            8,676,773         7,633,281
   Total sales                      23,341,788        23,897,552

Cost of sales:
 Products                            7,628,473         8,452,602
 Services                            5,631,317         5,336,624
   Total cost of sales              13,259,790        13,789,226

Gross profit                        10,081,998        10,108,326

Operating expenses:
 Selling, general and
  administrative                     7,559,076         8,367,967
 Research and development            1,946,984         2,015,712
 Other                                                 1,195,875
   Total operating expenses          9,506,060        11,579,554

Income (loss) from operations          575,938        (1,471,228)

Interest income                        264,969           141,401
Interest and other expense            (139,553)          (77,248)
Income before provision for
 income taxes                          701,354        (1,407,075)

Provision for (benefit from)
 income taxes                          224,433          (393,982)

Net income (loss)                  $   476,921       $(1,013,093)

Weighted average shares
 outstanding                        11,362,729        11,287,842

Net income (loss) per
 common share                      $      0.04       $     (0.09)

Weighted average shares
 outstanding and dilutive shares    11,565,468        11,287,842

Net income (loss) per common
 share assuming dilution           $      0.04       $     (0.09)

See accompanying notes to consolidated financial statements.

                                     Nine Month Periods Ended
                               September 25, 1998  October 1, 1999

Sales:

 Products                          $45,907,372       $46,299,386
 Services                           24,943,325        22,294,838
   Total sales                      70,850,697        68,594,224

Cost of sales:
 Products                           23,957,050        25,602,259
 Services                           16,671,213        15,310,913
   Total cost of sales              40,628,263        40,913,172

Gross profit                        30,222,434        27,681,052

Operating expenses:
 Selling, general and
  administrative                    21,677,645        26,929,476
 Research and development            6,827,029         6,891,099
 Other                                                 3,895,875
   Total operating expenses         28,504,674        37,716,450

Income (loss) from operations        1,717,760       (10,035,398)

Interest income                        649,611           404,578
Interest and other expense            (312,136)         (210,981)
Income before provision for
 income taxes                        2,055,235        (9,841,801)

Provision for (benefit from)
 income taxes                          698,291        (2,889,811)

Net income (loss)                  $ 1,356,944       $(6,951,990)

Weighted average shares
 outstanding                        11,333,189        11,319,951

Net income (loss) per
 common share                      $      0.12       $     (0.61)

Weighted average shares
 outstanding and dilutive shares    11,535,928        11,319,951

Net income (loss) per common
 share assuming dilution           $      0.12       $     (0.61)

See accompanying notes to consolidated financial statements.