ROCK HILL, S.C.—(BUSINESS WIRE)—March 19, 2007— 3D Systems Corporation (NASDAQ: TDSC), a leading provider of Rapid 3-D Modeling, Prototyping and Manufacturing solutions, announced that it filed today with the Securities and Exchange Commission ("SEC") a Form 12b-25 indicating that it was unable to file its Annual Report on Form 10-K by Friday's initial filing deadline. A Form 12b-25 filing provides the company an automatic fifteen-day extension of the time for it to file its Annual Report on Form 10-K and still be considered timely under SEC rules.
The company also delayed issuing its 2006 year-end operating
results but is reporting today its preliminary expectations for its
operating results for the fourth quarter of 2006. The company will
hold a conference call and simultaneous webcast to discuss this delay
and its preliminary results tomorrow morning, March 20, 2007, at
8:30 a.m., Eastern Time.
The company's delay in completing its financial statements for
2006 is due primarily to the time that it took to complete the
restated financial statements and its Form 10-Q for the third quarter
of 2006 that the company filed with the SEC on February 2, 2007. As a
result of the work necessary to complete these restatements, the
company was not able to begin to work on closing its fourth-quarter or
full-year 2006 financial statements until after these activities were
completed. The company intends to file its Form 10-K and issue its
fourth-quarter and year-end 2006 operating results as soon as
The company expects to report revenue for the fourth quarter of
2006 in the range of $42 million to $44 million with approximately $5
million of backlog that the company was not able to ship or recognize
as revenue prior to year-end.
The company expects to report that sales of its engineered
materials and composites continued to increase at a double-digit rate
for the fourth quarter of 2006, reflecting the continued strong demand
for these products.
The company also expects to report that its service revenue
rebounded back to its fourth-quarter 2005 level. Service revenue
includes installation, training, service contract revenue and deferred
warranty revenue. The company believes the fourth quarter's service
revenue was not impeded by issues related to the ERP implementation
and change in parts distribution that were previously encountered
during the second and third quarters of 2006.
The company expects to report gross profit in the range of $16
million to $17 million for the fourth quarter of 2006. Gross profit is
expected to be lower than that for the fourth-quarter 2005 as a result
of changes in revenue mix and the lingering effects of disruptions
that the company encountered earlier in the year related to the
implementation of its new ERP system, supply chain and logistics
disruptions and special accommodations that the company extended to
certain customers who experienced systems' delays or disruptions.
Lower gross profit also reflects lower profitability of the company's
service activities due to the absence of system upgrade sales, which
the company had in 2005 and decided to discontinue in 2006 as part of
its overall strategy.
The company expects to report that its operating expenses for the
fourth quarter were in the range of $19 million to $21 million
reflecting the residual expenses of its relocation to Rock Hill, S.C.,
ERP implementation costs and abnormally high expenses incurred in
connection with its financial restatements.
The company also expects to report a net pre-tax loss in the range
of $3 million to $5 million for the fourth quarter of 2006.
The company also expects to report that at year-end 2006 it had
$14 million of unrestricted cash on hand, of which approximately
$8 million was drawn from its bank credit facility.
There can, of course, be no assurance that the final results that
the company reports will be within the ranges set forth above.
"Last year was a very difficult and challenging year for us as we
executed a series of critical infrastructure and strategic projects,
including the implementation of our new ERP system and our relocation
to Rock Hill that I have described on numerous occasions as our
company's much-needed invasive surgery," said Abe Reichental, 3D
Systems' president and chief executive officer. "Although there is
never a perfect time to embark on a major business transformation,
after extensive planning, we decided to make 2006 the year in which we
would invest heavily in our company to give us the systems, facilities
and products necessary to scale up and achieve the kind of sustained
profitable growth to which we aspire.
"Ever mindful of the scope and duration of such invasive
initiatives, we decided to condense as much as possible the exposure
period by running multiple projects concurrently. Early in 2006, we
commenced with the execution of our ambitious plan," continued
"Regretfully, implementing these significant initiatives resulted
in temporary disruptions that adversely affected our ability to
adequately support our customers. We believed that we had all the
required resources in place to complete these activities smoothly.
Clearly, in hindsight we did not," added Reichental. "However, I am
pleased to share with you that I believe we have passed the critical
point and are transitioning to a point where our recent choices and
their resulting new products and capabilities are now being validated
by the very same customers who already are beginning to experience the
difference and are responding favorably to our new products.
"Throughout 2006, we continued to realign, restructure and
strengthen our team, and we have already managed to deliver
encouraging results. Despite all of our 2006 disruptions, we expect to
report that materials' revenue increased some 17% over 2005 and at the
end of 2006 represented some 39% of our annual revenue. We believe
that the increased demand for our materials, even during this
challenging period, is an early indication that our overall product
portfolio transformation strategy is working.
"Our growing installed base, coupled with the integration of our
new systems with proprietary materials cartridges and our continuum of
expert solutions, should improve the profitability of our business as
revenue from materials continues to outpace our growth in systems.
Accordingly, the stability of our revenue base should improve as
consumables' sales rise as a percentage of the product mix relative to
systems," continued Reichental.
"We are also gratified with the sequential-quarter progress in
revenue growth that we have made since the second quarter of 2006.
While not yet back to our 2005 levels, our steady sequential-quarterly
revenue growth during the latter part of 2006 suggests that we are
making tangible progress and that the way in which we accommodated our
customers during this difficult period is also bearing fruit as they
continue to increase their business with us.
"During the fourth quarter of 2006, we continued to fund the
remainder of our infrastructure investments as well as the abnormal
costs we incurred in connection with our restatement activities to the
tune of approximately $4 million. Notwithstanding the higher level of
expenditures during the quarter, we expect to report that we ended the
year with approximately $14 million of unrestricted cash, of which $8
million was drawn against our revolver. Our year-end cash position
reflects in part our continued efforts to improve our working capital
management, which we expect to report included in the fourth quarter
of 2006 a further reduction in our days sales outstanding." concluded
Conference Call and Audio Webcast Details
3D Systems will hold a conference call and audio Webcast to
discuss its delay in reporting its fourth quarter and full year 2006
financial results tomorrow morning at 8:30 a.m., Eastern Time.
-- To access the Conference Call, dial 1-888-336-3485 (or
706-634-0653 from outside the United States). A recording will
be available two hours after completion of the call for three
days. To access the recording, dial 1-800-642-1687 (or
706-645-9291 from outside the United States) and enter
3129215, the conference call ID number.
-- To access the audio Webcast, log onto 3D Systems' website at
www.3dsystems.com. The link to the Webcast is provided on the
homepage 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 Webcast will be available for replay beginning
approximately 48 hours after completion of the call at:
www.3dsystems.com under the Investor Relations' section.