3D Systems Reports Q3 Revenue

Gross profit increased by 6% to $14.9 million for the 2005 quarter and by 10% to $42.2 million in the first nine months of 2005. Gross profit margin declined by 1.5 percentage points in the third quarter compared to last year's quarter reflecting primarily the effect of our shift in service strategy but increased by a modest amount in the first nine months of 2005 compared to the 2004 period.

Product cost of sales continued to benefit from outsourcing activities but was adversely impacted during the nine-month period by the unfavorable effect of foreign currency transaction items and higher warranty costs. Service cost of sales was adversely affected by increased spending for field service and training activities associated with the significant number of new product introductions and a special compensation-related charge.

                         Gross Profit Margins
                            ($ in millions)
                                Third Quarter      First Nine Months
                             2005  2004 % Change  2005  2004 % Change
Products                    $12.1  $9.9          $32.5  $27.0
   % Revenue                   53%   50%   22%      49%    47%    20%
Services                     $2.8  $4.1           $9.7  $11.4
    % Revenue                  30%   42%  (34)%     33%    38%   (14)%
Total                       $14.9 $14.1          $42.2  $38.4
    % Revenue                  46%   47%    6%      44%    44%    10%

Total operating costs increased by 1.8 percentage points to 41% of revenue in the third quarter but declined by 3.6 percentage points to 39% of revenue in the first nine months of 2005 compared to the corresponding period of 2004.

Selling, general and administrative expenses increased $1.2 million in the third quarter primarily due to the absence in the 2005 period of the benefit in 2004 of reductions in certain accruals. The $0.4 million decrease during the first nine months arose predominantly from lower legal fees.

Strategic and tactical R&D expenditures increased to $3.4 million in the third quarter of 2005 from $2.6 million in 2004, and increased by $1.1 million for the first nine months of 2005. In both periods, these costs related to activity with selected R&D projects and R&D costs associated with new products. The company expects R&D expenditures to be in the range of 7.5% to 8.5% of total revenue for the full year 2005.

"We believe that we are benefiting increasingly from our strategic initiatives, and it is worth noting that on a year-to-date basis we are achieving far greater results from comparable expenditures," continued Reichental. "We are very pleased with the positive and enthusiastic reception we experienced from early adopters of our new Sinterstation(R) Pro and Viper(TM) Pro systems and with the continued strong top-line growth in the third quarter from our rapid manufacturing and 3-D printing initiatives, validating our ongoing investments in R&D and other related field service operations. We believe that the continued strong growth of our materials' revenue justifies the cost of our investment in previous quarters in connection with marketing campaigns to attract additional customers to our new and differentiated value proposition," said Reichental.

Despite investments of $9.5 million during the quarter in inventory, progress payments to contract manufacturers and R&D associated with new product roll-out and development, cash and cash equivalents declined only $2.1 million during the quarter to $26.0 million at September 30, 2005. Accounts receivable days' sales outstanding increased by less than one day compared to 2004's third-quarter.

"We are very fortunate to have the resources that enable us to make substantial investments to enhance our overall business model, further optimize our cost structure and continue to improve our customer's overall satisfaction and bottom line.

"In keeping with our objectives, we are announcing separately today that we are embarking on a program to move to a new headquarters and R&D facility that will combine our Valencia, California and Grand Junction, Colorado facilities. This program should enable us to effect cost savings, gain further efficiencies and enhance customer responsiveness. We are also currently devoting significant resources to converting our global information technology systems to an Oracle-based ERP system. We expect this system to be implemented during the first and second quarters of 2006. And we are continuing with substantial R&D spending for new systems and new engineered materials and composites," concluded Reichental.

3D Systems will discuss its operating results for the third quarter and first nine months of 2005, as well as its relocation plans, 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.

Third-quarter business highlights:

-- Announced the availability of Viper(TM) Pro SLA(R) system, an advanced, flexible, high-capacity stereolithography manufacturing system. The modular Viper Pro SLA system enables customers to mass customize and produce high-quality, end-use parts, patterns, wind tunnel models, fixtures and tools consistently and economically. The modular system is available in three configurations, including a "dual vat" configuration, that enables customers to build parts from different materials simultaneously, and a single, extra-large vat configuration, that enables customers to build parts as large as 1.5 meters.

-- Announced a company-wide campaign to raise disaster relief funds for victims of Hurricane Katrina.

-- Announced that a major Japanese automaker purchased a Sinterstation(R) Pro SLS(R) system, model 230, to create fully functional parts and assemblies to test and incorporate into concept vehicles.

-- Settled pending patent litigation with Objet Geometries, Ltd. on a favorable basis that is not material to 3D Systems. Under the terms of the settlement, 3D Systems and Objet waived all claims for damages with respect to the pending litigation. Both companies licensed various patents relating to 3-D printing to each other.

-- Announced the purchase of a Sinterstation(R) Pro SLS(R) system, model 230, by Butler Tool & Design.

Conference Call and Webcast Details

Subject: Third-quarter and nine-month 2005 financial results and
         relocation plans

Date:    November 3, 2005

Time:    8:00 a.m. PST (11:00 a.m. EST)

Access:  To access the conference call, dial 877-791-4796 (or
               706-679-6014  from  outside  the  United  States).  The  conference
                  call  will  be  webcast  live  on  3D  Systems'  web  site  at
  www.3dsystems.com    under  the  Investor  Relations'  section.
                  Listeners  should  go  to  the  web  site  prior  to  the  call  to
                  register  and  to  download  and  install  any  necessary  audio

                  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  9428384,  the  conference  call  ID  number.  The  
                  recorded  webcast  will  also  be  available  at  
  www.3dsystems.com  .

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