3D Systems Corp. Announces Q1 2003 Results
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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

CONTACT: 3D Systems Corp.
             Elizabeth Goode, 661-295-5600, ext. 2632
Email Contact
             Self & Associates
             Trudy Self, 909-336-5685 (Investor Relations)
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