3D Systems Corp. Announces Q1 2003 Results

VALENCIA, Calif.--(BUSINESS WIRE)--July 15, 2003--3D Systems Corp. (Nasdaq: TDSCE) announced today revenue for the quarter ended March 28, 2003 was $23.0 million compared with revenue of $27.5 million (restated) in the quarter ended March 29, 2002, a decrease of 16.3%. Net loss for Q1 2003 was $6.9 million or $.54 per share, compared with a profit of $8.7 million or $.66 in Q1 2002. Included in the Q1 2002 results is a pretax gain of $18.5 million resulting from the Vantico arbitration settlement. Included in the results for Q1 2003 are expenses related to the recently completed investigation of revenue recognition issues by the Audit Committee of the Board of Directors.

"The worldwide decrease in capital spending continued to impact sales in the first quarter, particularly the sales of our larger frame systems," said Brian K. Service, chief executive officer for 3D Systems. "Q1 2003 sales of these systems decreased over Q1 2002 as many of our customers chose to either delay purchase decisions or purchase less expensive systems. Weakness in U.S. sales in Q1 was attributable to a number of factors including: (1) geopolitical concerns prior to the invasion of Iraq; (2) the substantial time and attention, at all levels of management, required in connection with the investigation conducted by the Audit Committee which began in February 2003; and (3) efforts required to complete the 2002 audit. Since April 1st and with the 2002 audit now complete, we have seen a noticeable increase in purchase inquiries," he added.

"Material sales were lower in Q1 2003 than the previous year period. This reflects a shift from the sales of Vantico SL materials to the sales of our proprietary Accura(R) SL materials, as well as fewer initial vat fill revenues resulting from a decrease in the number of systems sold in Q1. After the settlement with Vantico, we recovered approximately 50% worldwide volume market share for SL materials used in our SLA(R) systems. The sales from our Accura SL materials generate approximately the same margin dollars as previous sales of Vantico SL material, as our sales margin is higher on the Accura SL materials than revenue received from distributing Vantico produced materials," he said.

"Sales for systems sold for advanced digital manufacturing (ADM(SM)) solutions continue to rise as interest in ADM applications increases," Service added.

"Toward the end of 2002 we moved to aggressively control costs and expenditures, and the results of these programs are beginning to have a positive effect. Overall operating costs decreased to $13.3 million compared with $14.9 million in Q1 2002, a decrease of 10.7%. In the coming quarters, we intend to focus our attention on continuing to control costs while aggressively moving to take advantage of opportunities for ADM solutions and to stabilize our RP sales," he concluded.

Subsequent to the end of the quarter, on May 5, 2003, the Company completed a private placement resulting in net proceeds to the Company of $15.2 million. Of these proceeds, $9.6 million was used to pay down bank debt incurred in conjunction with the acquisition of DTM Corp. in 2001, and the Company has agreed to obtain alternate financing of its revolving debt ($8.5 million of which is currently outstanding) by September 30, 2003. At June 27, 2003, the Company had cash balances of $8.4 million.

3D Systems will hold a conference call today to discuss the 2002 and first quarter 2003 results at 9:30 a.m. Eastern Daylight Time (6:30 a.m. Pacific Daylight Time). To access the call, dial 877-613-8341 or 706-679-7620 internationally. A recording of the call will be available two hours after the completion of the call for seven days. To access the recording, dial 800-642-1687 or 706-645-9291 internationally and enter 1709511, the conference call ID number.

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) systems, SLS(R) (selective laser sintering) systems, and Accura(R) materials (including photopolymers, metals, nylons, engineering plastics, and thermoplastics).

3D Systems is the originator 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 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, disruption 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; the 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
              As of March 28, 2003 and December 31, 2002
                            (in thousands)

                                                (unaudited) (audited)
                     ASSETS                      3/28/2003 12/31/2002

Current Assets:
Cash and cash equivalents                           $3,510     $2,279
Accounts receivable, less allowances for
 doubtful accounts of $2,607 and $3,068             20,133     27,420
Current portion of lease receivables                   322        322
Inventories, net of reserves of $2,111 and
 $1,876                                             13,997     12,564
Prepaid expenses and other current assets            3,169      3,687

    Total Current Assets                            41,131     46,272

Property and equipment, net                         14,138        15,339
Licenses  and  patent  costs,  net                                            16,051          14,960

Lease  receivables,  less  current  portion,  net  of
  allowance  of  $463  and  $414                                                        459                553
Acquired  technology,  net                                                          7,240            7,647
Goodwill                                                                                        44,499          44,456
Other  Assets,  net                                                                        2,682            3,006

                                                                                                    $126,200      $132,233


Current  liabilities:
    Line  of  Credit                                                                        $6,350          $2,450
    Accounts  payable                                                                    10,173          10,830
    Accrued  liabilities                                                              14,618          15,529
    Current  portion  of  long-term  debt                                    9,755          10,500
    Customer  deposits                                                                        700                801
    Deferred  revenues                                                                  14,009          14,770

        Total  current  liabilities                                              55,605          54,880

    Other  liabilities                                                                    3,275            3,397
    Long-term  debt,  less  current  portion                              4,010            4,090
    Subordinated  debt                                                                  10,000          10,000

        Total  Liabilities                                                              72,890          72,367

Stockholders'  equity:
    Preferred  stock,  authorized  5,000  shares,  none
      issued                                                                                            ---                ---

    Common  stock,  authorized  25,000  shares,  issued
      and  outstanding  12,734  and  issued  and
      outstanding  12,725                                                                      13                  13
    Capital  in  excess  of  par  value                                        84,970          84,931
    Notes  receivable  from  officers                                              (59)              (59)
    Accumulated  deficit                                                            (28,290)      (21,419)
    Accumulated  other  comprehensive  loss                            (3,324)        (3,600)

        Total  stockholders'  equity                                            53,310          59,866
                                                                                                    $126,200      $132,233

                                                3D  SYSTEMS  CORPORATION
                                Consolidated  Statements  of  Operations
          For  the  Three  Months  Ended  March  28,  2003  and  March  29,  2002
                              (in  thousands,  except  per  share  amounts)

                                                                                                Three  Months  Ended
                                                                                          03/28/2003      As  Restated

    Products                                                                            $14,737              $19,261
    Services                                                                                8,280                  8,253
        Total  sales                                                                    23,017                27,514

Cost  of  Sales:
    Products                                                                                8,501                10,880
    Services                                                                                7,021                  6,314
        Total  cost  of  sales                                                    15,522                17,194

Gross  Profit                                                                            7,495                10,320

Operating  expenses:
    Selling,  general  and  administrative                        10,656                10,970
    Research  and  development                                                2,600                  3,928
        Total  operating  expenses                                          13,256                14,898

Loss  from  operations                                                          (5,761)              (4,578)

Interest  and  other  income  (expense),  net                      (894)                  (700)
Gain  on  arbitration  settlement                                            ---                18,464

Loss  from  operations                                                          (6,655)              13,186
Provision  for  income  taxes                                                    216                  4,492

Net  (loss)  income                                                              $(6,871)              $8,694

Shares  used  to  calculate  basic  net  (loss)
  income  per  share                                                                12,724                13,132

Basic  net  (loss)  income  per  share                                $(0.54)                $0.66

Shares  used  to  calculate  diluted  net  (loss)
  income  per  share                                                                12,724                14,651

Diluted  net  (loss)  income  per  share                            $(0.54)                $0.59

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