UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM ~~10‑Q~~

10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~

2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________to____________

Commission File No. 001-34220

__________________________

3D SYSTEMS CORPORATION

(Exact name of Registrant as specified in its Charter)

~~____________________________________________~~

__________________________



~~DELAWARE~~ Delaware		~~95‑4431352~~ 95-4431352
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


~~333 THREE D SYSTEMS CIRCLE~~ ~~ROCK HILL, SOUTH CAROLINA~~		~~29730~~
333 Three D Systems Circle
Rock Hill	South Carolina	29730
(Address of Principal Executive ~~Offices)~~			(Offices and Zip Code)

(Registrant’s Telephone Number, Including Area Code): ~~(803)~~ (803) 326‑3900

~~__________________________~~

_________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒		Accelerated filer	☐

Non-accelerated filer	☐	(Do not check if smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section ~~7(a)(2)(B)~~13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act.) Yes ☐ No ☒



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	DDD	New York Stock Exchange

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Shares of Common Stock, par value $0.001, outstanding as of ~~October 27, 2017: 113,862,256~~

July 29, 2019: 118,152,271

3D SYSTEMS CORPORATION

~~Quarterly Report on~~

Form 10-Q ~~for~~

For the

Quarter and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~

2019

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations..	19 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	29 33
Item 4. Controls and Procedures.	29 33
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.	30 33
Item 1A. Risk Factors.	30 33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	30 35
Item 6. Exhibits.	31 36

Exhibit 31.1
Exhibit ~~31.1~~ 31.2
Exhibit ~~31.2~~ 32.1
~~Exhibit 32.1~~
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

September 30,
2017
(unaudited)

December 31,
2016
ASSETS

Current assets:

Cash and cash equivalents

$
138,332

$
184,947
Accounts receivable, net of reserves — $11,607 (2017) and $12,920 (2016)

122,420

127,114
Inventories

100,578

103,331
Prepaid expenses and other current assets

21,344

17,558
Total current assets

382,674

432,950
Property and equipment, net

91,473

79,978
Intangible assets, net

106,632

121,501
Goodwill

227,820

181,230
Long term deferred income tax asset

5,173

8,123
Other assets, net

27,602

25,371
Total assets

$
841,374

$
849,153
LIABILITIES AND EQUITY

Current liabilities:

Current portion of capitalized lease obligations

$
632

$
572
Accounts payable

46,388

40,514
Accrued and other liabilities

55,866

49,968
Customer deposits

5,249

5,857
Deferred revenue

37,311

33,494
Total current liabilities

145,446

130,405
Long term portion of capitalized lease obligations

7,230

7,587
Long term deferred income tax liability

16,644

17,601
Other liabilities

48,529

57,988
Total liabilities

217,849

213,581
Redeemable noncontrolling interests

8,872

8,872
Commitments and contingencies (Note 14)

Stockholders’ equity:

Common stock, $0.001 par value, authorized 220,000 shares; issued 115,798 (2017) and 115,113 (2016)

115

115
Additional paid-in capital

1,320,074

1,307,428
Treasury stock, at cost — 1,982 shares (2017) and 1,498 shares (2016)

(7,153)

(2,658)
Accumulated deficit

(667,638)

(621,787)
Accumulated other comprehensive loss

(27,706)

(53,225)
Total 3D Systems Corporation stockholders' equity

617,692

629,873
Noncontrolling interests

(3,039)

(3,173)
Total stockholders’ equity

614,653

626,700
Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$
841,374

$
849,153



(In thousands, except par value)	June 30, 2019 (unaudited)			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	150,397		$	109,998
Accounts receivable, net of reserves — $8,509 (2019) and $8,423 (2018)	114,093			126,618
Inventories	133,936			133,161
Prepaid expenses and other current assets	29,471			27,697
Total current assets	427,897			397,474
Property and equipment, net ⁽¹⁾	97,664			103,252
Intangible assets, net	57,267			68,275
Goodwill	222,293			221,334
Right of use assets⁽¹⁾	37,626			4,466
Deferred income tax asset	5,420			4,217
Other assets, net	29,384			26,814
Total assets	$	877,551		$	825,832
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long term debt	$	4,050		$	—
Current right of use liabilities ⁽¹⁾	11,451			654
Accounts payable	59,197			66,722
Accrued and other liabilities	59,730			59,265
Customer deposits	4,882			4,987
Deferred revenue	41,690			32,432
Total current liabilities	181,000			164,060
Long-term debt	75,378			25,000
Long-term right of use liabilities ⁽¹⁾	35,273			6,392
Deferred income tax liability	6,541			6,190
Other liabilities	42,041			39,331
Total liabilities	340,233			240,973
Redeemable noncontrolling interests	8,872			8,872
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.001 par value, authorized 220,000 shares; issued 120,506 (2019) and 118,650 (2018)	120			117
Additional paid-in capital	1,361,569			1,355,503
Treasury stock, at cost — 3,182 shares (2019) and 2,946 shares (2018)	(16,519		)	(15,572		)
Accumulated deficit	(771,025		)	(722,701		)
Accumulated other comprehensive loss	(37,313		)	(38,978		)
Total 3D Systems Corporation stockholders' equity	536,832			578,369
Noncontrolling interests	(8,386		)	(2,382		)
Total stockholders’ equity	528,446			575,987
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	877,551		$	825,832

⁽¹⁾ For comparative purposes, prior year finance lease assets have been reclassified from "Property and equipment, net" to "Right of use assets." Prior year finance lease liabilities have been reclassified as right of use liabilities.

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTSOFOPERATIONS ~~AND COMPREHENSIVE LOSS~~

(Unaudited)

Quarter Ended September 30,

Nine Months Ended September 30,
(in thousands, except per share amounts)
2017

2016

2017

2016
Revenue:

Products
$
87,626

$
94,543

$
276,777

$
280,406
Services

65,281

61,819

192,028

186,622
Total revenue

152,907

156,362

468,805

467,028
Cost of sales:

Products

59,467

56,321

150,769

146,682
Services

34,918

31,104

98,655

93,485
Total cost of sales

94,385

87,425

249,424

240,167
Gross profit

58,522

68,937

219,381

226,861
Operating expenses:

Selling, general and administrative

66,497

64,814

195,990

202,009
Research and development

24,360

26,140

71,661

67,345
Total operating expenses

90,857

90,954

267,651

269,354
Loss from operations

(32,335)

(22,017)

(48,270)

(42,493)
Interest and other expense, net

(1,257)

(1,624)

(123)

(1,290)
Loss before income taxes

(33,592)

(23,641)

(48,393)

(43,783)
Provision (benefit) for income taxes

3,723

(2,214)

6,831

665
Net loss

(37,315)

(21,427)

(55,224)

(44,448)
Less: net income (loss) attributable to noncontrolling interests

355

(214)

833

(799)
Net loss attributable to 3D Systems Corporation
$
(37,670)

$
(21,213)

$
(56,057)

$
(43,649)

Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted
$
(0.34)

$
(0.19)

$
(0.50)

$
(0.39)

Other comprehensive income:

Pension adjustments, net of taxes
$
(24)

$
18

$
(105)

$
54
Foreign currency translation gain

4,904

4,282

25,785

5,567
Total other comprehensive income

4,880

4,300

25,680

5,621
Less foreign currency translation gain attributable to noncontrolling interests

26

22

161

68
Other comprehensive income attributable to 3D Systems Corporation

4,854

4,278

25,519

5,553

Comprehensive loss

(32,435)

(17,127)

(29,544)

(38,827)
Less comprehensive income (loss) attributable to noncontrolling interests

381

(192)

994

(731)
Comprehensive loss attributable to 3D Systems Corporation
$
(32,816)

$
(16,935)

$
(30,538)

$
(38,096)



	Quarter Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2019			2018			2019			2018
Revenue:
Products	$	93,758		$	110,785		$	186,105		$	216,231
Services	63,514			65,783			123,147			126,206
Total revenue	157,272			176,568			309,252			342,437
Cost of sales:
Products	53,005			57,500			108,765			113,618
Services	30,968			32,906			61,483			64,788
Total cost of sales	83,973			90,406			170,248			178,406
Gross profit	73,299			86,162			139,004			164,031
Operating expenses:
Selling, general and administrative	71,654			71,172			136,761			140,625
Research and development	20,811			22,712			42,714			48,594
Total operating expenses	92,465			93,884			179,475			189,219
Loss from operations	(19,166		)	(7,722		)	(40,471		)	(25,188		)
Interest and other (expense) income, net	(2,755		)	1,661			(3,957		)	108
Loss before income taxes	(21,921		)	(6,061		)	(44,428		)	(25,080		)
Provision for income taxes	(1,938		)	(2,539		)	(3,782		)	(4,493		)
Net loss	(23,859		)	(8,600		)	(48,210		)	(29,573		)
Less: net income attributable to noncontrolling interests	70			262			114			246
Net loss attributable to 3D Systems Corporation	$	(23,929	)	$	(8,862	)	$	(48,324	)	$	(29,819	)

Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted	$	(0.21	)	$	(0.08	)	$	(0.43	)	$	(0.27	)

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVELOSS

(Unaudited)



	Quarter Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2019			2018			2019			2018
Net loss	$	(23,859	)	$	(8,600	)	$	(48,210	)	$	(29,573	)
Other comprehensive income (loss), net of taxes:
Pension adjustments	24			164			116			147
Foreign currency translation	1,999			(18,612		)	1,247			(11,196		)
Total other comprehensive income (loss), net of taxes:	2,023			(18,448		)	1,363			(11,049		)
Total comprehensive loss, net of taxes	(21,836		)	(27,048		)	(46,847		)	(40,622		)
Comprehensive income attributable to noncontrolling interests	44			554			68			539
Comprehensive loss attributable to 3D Systems Corporation	$	(21,880	)	$	(27,602	)	$	(46,915	)	$	(41,161	)

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,
(In thousands)

2017

2016
Cash flows from operating activities:

Net loss
$
(55,224)

$
(44,448)
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

46,146

45,731
Stock-based compensation

21,084

28,405
Lower of cost or market adjustment

12,883

10,723
Provision for bad debts

1,297

1,488
Provision for (benefit of) deferred income taxes

1,674

(5,464)
Impairment of assets

324

8,590
Changes in operating accounts, net of acquisitions:

Accounts receivable

10,777

36,357
Inventories

(13,959)

(26,236)
Prepaid expenses and other current assets

(2,939)

(1,619)
Accounts payable

3,463

(9,938)
Accrued and other current liabilities

(4,734)

(10,841)
Deferred revenue

2,869

1,763
All other operating activities

(5,985)

3,729
Net cash provided by operating activities

17,676

38,240
Cash flows from investing activities:

Cash paid for acquisitions, net of cash assumed

(36,541)

—
Purchases of property and equipment

(21,072)

(12,014)
Additions to license and patent costs

(875)

(790)
Other investing activities

(2,350)

(1,000)
Proceeds from disposition of property and equipment

271

—
Net cash used in investing activities

(60,567)

(13,804)
Cash flows from financing activities:

Payments on earnout consideration

(3,206)

—
Payments related to net-share settlement of stock-based compensation

(4,494)

(1,507)
Repayment of capital lease obligations

(297)

(786)
Net cash used in financing activities

(7,997)

(2,293)
Effect of exchange rate changes on cash and cash equivalents

4,273

1,572
Net (decrease) increase in cash and cash equivalents

(46,615)

23,715
Cash and cash equivalents at the beginning of the period

184,947

155,643
Cash and cash equivalents at the end of the period
$
138,332

$
179,358

Cash interest payments
$
378

$
633
Cash income tax payments, net
$
4,715

$
8,040
Transfer of equipment from inventory to property and equipment, net (a)
$
8,964

$
9,395
Transfer of equipment to inventory from property and equipment, net (b)
$
364

$
349
Stock issued for acquisitions
$
3,208

$
—



	Six Months Ended June 30,
(in thousands)	2019			2018
Cash flows from operating activities:
Net loss	$	(48,210	)	$	(29,573	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,574			29,948
Stock-based compensation	13,592			13,734
Provision for bad debts	1,169			1,356
Loss on the disposition of property, equipment and other assets	1,103			—
Provision for deferred income taxes	(852		)	(2,287		)
Impairment of assets	1,728			1,411
Changes in operating accounts:
Accounts receivable	11,213			(3,384		)
Inventories	(3,124		)	(14,937		)
Prepaid expenses and other current assets	(1,494		)	(6,739		)
Accounts payable	(7,560		)	2,762
Deferred revenue and customer deposits	9,300			4,268
Accrued and other current liabilities	(2,333		)	14,940
All other operating activities	2,445			(2,328		)
Net cash provided by operating activities	3,551			9,171
Cash flows from investing activities:
Purchases of property and equipment	(14,353		)	(18,095		)
Other investing activities	105			(514		)
Net cash used in investing activities	(14,248		)	(18,609		)
Cash flows from financing activities:
Proceeds from borrowings	100,000			—
Repayment of borrowings/long term debt	(45,000		)	—
Purchase of noncontrolling interest	(2,500		)	—
Payments on earnout consideration	—			(2,675		)
Other financing activities	(1,898		)	(2,148		)
Net cash provided by (used in) financing activities	50,602			(4,823		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	517			(2,502		)
Net increase (decrease) in cash, cash equivalents and restricted cash	40,422			(16,763		)
Cash, cash equivalents and restricted cash at the beginning of the period ^(a)	110,919			136,831
Cash, cash equivalents and restricted cash at the end of the period ^(a)	$	151,341		$	120,068



Supplemental cash flow information
Cash interest payments	$	1,975	$	236
Cash income tax payments, net	$	6,739	$	3,925
Transfer of equipment from inventory to property and equipment, net ^(b)	$	2,034	$	3,618
Transfer of equipment to inventory from property and equipment, net ^(c)	$	29	$	369



Noncash financing activity
Purchase of noncontrolling interest ^(d)	$	(11,000	)	$	—


(a)	The amounts for cash and cash equivalents shown above include restricted cash of $944 and $755 as of June 30, 2019 and 2018, respectively, and $921 and $487 as of December 31, 2018, and 2017, respectively, which were included in Other assets, net, in the condensed consolidated balance sheets.


(b)	Inventory is transferred from inventory to property and equipment at cost when the Company requires additional machines for training or demonstration or for placement into ~~on-demand~~on demand manufacturing services locations.

	^(b)
(c)		In general, an asset is transferred from ~~property~~Property and equipment, net, into inventory at its net book value when the Company has identified a potential sale for a used machine.


(d)	Purchase of noncontrolling interest to be paid in installments over a four-year period recorded to Accrued and other liabilities and Other liabilities on the condensed consolidated balance sheets.

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Common Stock

Treasury Stock

(In thousands, except par value)
Shares

Par Value $0.001

Additional Paid In Capital

Shares

Amount

Accumulated Deficit

Accumulated Other Comprehensive Loss

Total 3D Systems Corporation Stockholders' Equity

Equity Attributable to Noncontrolling Interests

Total Stockholders' Equity
Balance at December 31, 2016
115,113

$
115

$
1,307,428

1,498

$
(2,658)

$
(621,787)

$
(53,225)

$
629,873

$
(3,173)

$
626,700
Issuance (repurchase) of stock
493

—

—

484

(4,495)

—

—

(4,495)

—

(4,495)
Issuance of stock for acquisitions
192

—

3,208

—

—

—

—

3,208

—

3,208
Purchase of subsidiary shares from
noncontrolling interest
—

—

(1,440)

—

—

—

50

(1,390)

(860)

(2,250)
Cumulative impact of change
in accounting policy
—

—

(10,206)

—

—

10,206

—

—

—

—
Stock-based compensation expense
—

—

21,084

—

—

—

—

21,084

—

21,084
Net income (loss)
—

—

—

—

—

(56,057)

—

(56,057)

833

(55,224)
Pension adjustment
—

—

—

—

—

—

(105)

(105)

—

(105)
Foreign currency translation adjustment
—

—

—

—

—

—

25,574

25,574

161

25,735
Balance at September 30, 2017
115,798

$
115

$
1,320,074

1,982

$
(7,153)

$
(667,638)

$
(27,706)

$
617,692

$
(3,039)

$
614,653

Common Stock

Treasury Stock

(In thousands, except par value)
Shares

Par Value $0.001

Additional Paid In Capital

Shares

Amount

Accumulated Deficit

Accumulated Other Comprehensive Loss

Total 3D Systems Corporation Stockholders' Equity

Equity Attributable to Noncontrolling Interests

Total Stockholders' Equity
Balance at December 31, 2015
113,115

$
113

$
1,279,738

892

$
(1,026)

$
(583,368)

$
(39,548)

$
655,909

$
(1,263)

$
654,646
Issuance (repurchase) of stock
1,186

1

(1,240)

438

(268)

—

��
—

(1,507)

—

(1,507)
Stock-based compensation expense
—

—

28,405

—

—

—

—

28,405

—

28,405
Net loss
—

—

—

—

—

(43,649)

—

(43,649)

(799)

(44,448)
Pension adjustment
—

—

—

—

—

—

54

54

—

54
Foreign currency translation adjustment
—

—

—

—

—

—

5,499

5,499

68

5,567
Balance at September 30, 2016
114,301

$
114

$
1,306,903

1,330

$
(1,294)

$
(627,017)

$
(33,995)

$
644,711

$
(1,994)

$
642,717



	Quarters Ended
	Common Stock
(in thousands, except par value)	Par Value $0.001		Additional Paid In Capital		Treasury Stock			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total 3D Systems Corporation Stockholders' Equity			Equity Attributable to Noncontrolling Interests			Total Stockholders' Equity
March 31, 2019	$	118	$	1,354,683	$	(16,056	)	$	(747,096	)	$	(39,362	)	$	552,287		$	(8,430	)	$	543,857
Issuance (repurchase) of stock	2		—		(463		)	—			—			(461		)	—			(461		)
Acquisition of non-controlling interest	—		—		—			—			—			—			—			—
Stock-based compensation expense	—		6,886		—			—			—			6,886			—			6,886
Net income (loss)	—		—		—			(23,929		)	—			(23,929		)	70			(23,859		)
Pension adjustment	—		—		—			—			24			24			—			24
Foreign currency translation adjustment	—		—		—			—			2,025			2,025			(26		)	1,999
June 30, 2019	$	120	$	1,361,569	$	(16,519	)	$	(771,025	)	$	(37,313	)	$	536,832		$	(8,386	)	$	528,446

March 31, 2018	$	116	$	1,333,378	$	(9,041	)	$	(698,153	)	$	(14,137	)	$	612,163		$	(2,921	)	$	609,242
Issuance (repurchase) of stock	—		—		(966		)	—			—			(966		)	—			(966		)
Acquisition of non-controlling interest	—		—		—			—			—			—			—			—
Stock-based compensation expense	—		6,606		—			—			—			6,606			—			6,606
Net income (loss)	—		—		—			(8,862		)	—			(8,862		)	262			(8,600		)
Pension adjustment	—		—		—			—			164			164			—			164
Foreign currency translation adjustment	—		—		—			—			(18,905		)	(18,905		)	292			(18,613		)
June 30, 2018	$	116	$	1,339,984	$	(10,007	)	$	(707,015	)	$	(32,878	)	$	590,200		$	(2,367	)	$	587,833

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)

(Unaudited)



	Six Months Ended
	Common Stock
(in thousands, except par value)	Par Value $0.001		Additional Paid In Capital			Treasury Stock			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total 3D Systems Corporation Stockholders' Equity			Equity Attributable to Noncontrolling Interests			Total Stockholders' Equity
December 31, 2018	$	117	$	1,355,503		$	(15,572	)	$	(722,701	)	$	(38,978	)	$	578,369		$	(2,382	)	$	575,987
Issuance (repurchase) of stock	3		—			(947		)	—			—			(944		)	—			(944		)
Acquisition of non-controlling interest	—		(7,526		)	—			—			256			(7,270		)	(6,072		)	(13,342		)
Stock-based compensation expense	—		13,592			—			—			—			13,592			—			13,592
Net income (loss)	—		—			—			(48,324		)	—			(48,324		)	114			(48,210		)
Pension adjustment	—		—			—			—			116			116			—			116
Foreign currency translation adjustment	—		—			—			—			1,293			1,293			(46		)	1,247
June 30, 2019	$	120	$	1,361,569		$	(16,519	)	$	(771,025	)	$	(37,313	)	$	536,832		$	(8,386	)	$	528,446

December 31, 2017	$	115	$	1,326,250		$	(8,203	)	$	(677,772	)	$	(21,536	)	$	618,854		$	(2,906	)	$	615,948
Issuance (repurchase) of stock	1		—			(1,804		)	—			—			(1,803		)	—			(1,803		)
Cumulative impact of change in accounting policy	—		—			—			576			—			576			—			576
Stock-based compensation expense	—		13,734			—			—			—			13,734			—			13,734
Net income (loss)	—		—			—			(29,819		)	—			(29,819		)	246			(29,573		)
Pension adjustment	—		—			—			—			147			147			—			147
Foreign currency translation adjustment	—		—			—			—			(11,489		)	(11,489		)	293			(11,196		)
June 30, 2018	$	116	$	1,339,984		$	(10,007	)	$	(707,015	)	$	(32,878	)	$	590,200		$	(2,367	)	$	587,833

See accompanying notes to condensed consolidated financial statements.

3D SYSTEMS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of 3D Systems Corporation and ~~its~~

all majority-owned subsidiaries ~~(collectively,~~and entities in which a controlling interest is maintained (the “Company”). A non-controlling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the ~~“Company”).~~parent. The Company includes noncontrolling interests as a component of total equity in the condensed consolidated balance sheets and the net income attributable to noncontrolling interests are presented as an adjustment from net loss used to arrive at net loss attributable to 3D Systems Corporation in the condensed consolidated statements of operations and comprehensive loss. All significant intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 (“2018 Form 10-K”).

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the quarter ~~and nine months~~ ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results to be expected for the full year. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates and assumptions. Certain prior period amounts presented in the condensed consolidated financial statements and accompanying footnotes have been reclassified to conform to current year presentation.

All dollar amounts presented in the accompanying footnotes are presented in thousands, except for per share information.

Recently Adopted Accounting ~~Pronouncements~~

~~In the first quarter of 2017,~~Standards

On January 1, 2019, the Company adopted the Financial Accounting Standards Board ~~(“FASB”~~("FASB")~~Accounting Standards Update (“ASU”)~~ ASU No. ~~2016-09,~~2016-02, “~~Compensation – Stock Compensation~~Leases (Topic ~~718)~~842), ~~Improvements~~” which requires the recognition of right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted ASU 2016-02 effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.

As permitted under ASU 2016-02, the Company applied practical expedients that allowed it to ~~Employee Share-Based Payment Accounting”. The following summarizes~~not (1) reassess historical lease classifications, (2) recognize short-term leases on the ~~effects~~balance sheet, nor (3) separate lease and non-lease components for its real estate leases.

As a result of the adoption of ASU 2016-02 on January 1, 2019, the Company recorded operating lease liabilities and ROU assets of $38,415. The adoption of ASU 2016-02 had an immaterial impact on the ~~Company’s unaudited~~Company's condensed consolidated ~~financial statements:~~

~~Forfeitures~~ ~~- Prior to adoption, share-based compensation expense was recognized on a straight-line basis, net~~statement of ~~estimated forfeitures, such that expense was recognized only for share-based awards that were expected to vest. A forfeiture rate was estimated annually~~operations and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company no longer applies a forfeiture rate and instead accounts for forfeitures as they occur. The change was applied on a modified retrospective basis resulting in a cumulative effect adjustment to retained earningscondensed consolidated statement of ~~$10,206 as of January 1, 2017. Prior periods were not adjusted.~~

~~Statement of Cash Flows~~ - The Company historically accounted for excess tax benefits related to share-based compensation on the Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows ~~as an operating activity. The Company has elected to adopt this portion of~~for the ~~standard on a prospective basis beginning in 2017. Prior periods were not adjusted.~~

~~Income taxes -~~ Upon adoption of this standard, all excess tax benefits and tax deficiencies related to share-based compensation are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Prior periods were not adjusted.

~~Recently~~six months ended June 30, 2019. For additional information about leases, see Note 3.

Accounting Standards Issued ~~Accounting Pronouncements~~

But Not Yet Adopted

In August ~~2017,~~2018, the FASB issued ASU ~~No. 2017-12,~~ ~~“Derivatives~~2018-15, "Intangibles - Goodwill and ~~Hedging (Topic 815): Targeted Improvements to Accounting~~Other - Internal-Use Software (Subtopic 350-40)," which aligns the requirements for ~~Hedging Activities”~~ ~~(“ASU 2017-12”),~~capitalizing implementation costs incurred in ~~order to create more transparency around how economic results are presented within both the financial statements and in the footnotes and to better align the results~~a service contract hosting arrangement with those of ~~cash flow and fair value hedge accounting with risk management activities. ASU 2017-12~~developing or obtaining internal-use software. This standard is effective for ~~fiscal years~~interim and annual reporting periods beginning after December 15, ~~2018, with~~2019, and early adoption is permitted. The Company is ~~currently in~~evaluating the ~~process of evaluating when it~~impact the new standard will ~~adopt ASU 2017-12 and its impact~~have on its consolidated financial statements.

~~In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting~~” (“ASU 2017-09”), in an effort to reduce diversity and clarify what constitutes a modification, as it relates to the change in terms or conditions of a share-based payment award. According to ASU 2017-09, the Company should account for the effects of a modification unless all of the following are met: (1) the fair value of the modified award is the same as the fair value the original award immediately before the original award is modified, (2) the vesting conditions of the modified award are the same as the vesting conditions

of the original award immediately before the original award is modified, and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.The amendments in ASU 2017-09 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company will adopt ASU 2017-09 beginning January 1, 2018 and does not expect the implementation of this guidance to have a material effect on its consolidated financial statements.

~~In March 2017, the FASB issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”), which standardizes the presentation~~of net benefit cost in the income statement and on the components eligible for capitalization in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods. The amendments in ASU 2017-07 should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company will adopt ASU 2017-07 in the first quarter of 2018 and does not expect the implementation of this guidance to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s

fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. The standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual impairment tests performed on testing dates after January 1, 2017. The Company ~~is currently in~~has elected not to adopt the ~~process~~provisions of ~~evaluating when it~~this standard early but will ~~adopt ASU 2017-04 and~~re-evaluate as part of performing its ~~impact on its consolidated financial statements.~~

2019 impairment analysis.

In ~~October~~June 2016, the FASB issued ASU ~~No. 2016-16, “Income Taxes~~2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"), which provides guidance regarding the measurement of credit losses for financial assets and certain other instruments that are not accounted for at fair value through net income, including trade and other receivables, debt securities, net investment in leases, and off-balance sheet credit exposures. The new guidance requires companies to replace the current incurred loss impairment methodology with a methodology that measures all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance expands the disclosure requirements regarding credit losses, including the credit loss methodology and credit quality indicators. In May 2019, the FASB issued ASU 2019-05, "Financial Instruments—Credit Losses (Topic ~~740): Intra-Entity Transfers of Assets Other Than Inventory” (“~~326)," which provides transition relief to entities adopting ASU ~~2016-16”).~~2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU ~~2016-16 permits the recognition of income tax consequences related to an intra-entity transfer of an asset other than inventory when the transfer occurs. It is~~2016-13 will be effective for annual reporting periods, including interim reporting within those periods, beginning after December 15, ~~2017 and interim periods within those annual periods.~~2019. Early adoption is permitted for ~~any~~annual reporting periods, including interim ~~or annual period.~~periods after December 15, 2018 and will be applied using a modified retrospective approach. The Company is ~~currently in the process of~~ evaluating the impact of adoption of ~~ASU 2016-16~~this standard on its consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments~~” (“ASU 2016-15”). With the objective of reducing the existing diversity in practice, ASU 2016-15 addresses the manner in which certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017. The amendments should be applied retrospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company expects that the implementation of this guidance will not have a material effect on its consolidated financial statements.

~~In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)~~” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize assets and liabilities arising from operating leases on the balance sheet. It is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Though still evaluating the impact of ASU 2016-02, the Company expects changes to its balance sheet due to the recognition of right-of-use assets and lease liabilities related to its real estate leases, but it does not anticipate material impacts to its results of operations or liquidity.

~~In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers~~” (“ASU 2014-09”). The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU.

The Company intends to use the modified retrospective method of adoption effective January 1, 2018, the cumulative effect of which would be recognized at the date of initial application with an adjustment to the opening balance of retained earnings. Under the modified retrospective approach, prior periods are not restated; however, it effectively requires a company to apply both the new revenue standard and the previous revenue guidance in the year of adoption. During the year of adoption, both quantitative and qualitative disclosures are required as to the impact of the new standard compared to the previous revenue guidance.

The Company has performed an assessment of the impact that the new standard will have on its financial statements. The assessment included the identification of key revenue streams and a review of a sample contracts across the various businesses and geographies. The assessment also identified certain potential accounting differences that may arise from the application of the new standard. The

Company is in the process of evaluating its accounting policies related to the potential differences and expects to reach conclusions on new accounting policies or changes to existing accounting policies in the fourth quarter of 2017. Further, the Company has evaluated the impact of the new disclosure requirements, which are expected to be significant, specifically, disclosure of contract assets and contract liabilities as well as a disaggregated view of revenue. In addition, the Company has begun designing changes to business processes, systems and controls to support recognition and disclosure under the new standard, including the implementation of a revenue management system.

While efforts are ongoing, the Company believes the most significant impacts relate to certain software revenues deferred under previous guidance that may be recognized earlier since revenue is allocated to performance obligations either based on observable inputs or estimated stand-alone selling price.

No other new accounting pronouncements, issued or effective during ~~2017,~~2019, have had or are expected to have a significant impact on the Company’s consolidated financial statements.

(2) ~~Acquisitions~~

OnRevenue

The Company accounts for revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers,” which it adopted on January ~~31, 2017,~~1, 2018, using the modified-retrospective method.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

At June 30, 2019, the Company ~~acquired 100~~had $128,384 of outstanding performance obligations. The Company expects to recognize approximately 93 percent of its remaining performance obligations as revenue within the ~~shares~~next twelve months, an additional 3 percent by the end of ~~Vertex-Global Holding B.V. (“Vertex”), a provider of dental materials worldwide under~~2020 and the ~~Vertex and NextDent brands. The cash portion~~balance thereafter.

Revenue Recognition

Revenue is recognized when control of the promised products or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Many of its contracts with customers include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price (“SSP”). Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. The amount of consideration received and revenue recognized may vary based on changes in marketing incentive programs offered to our customers. The Company's marketing incentive programs take many forms, including volume discounts, trade-in allowances, rebates and other discounts.

A majority of the Company’s revenue is recognized at the point in time when products are shipped or services are delivered to customers. Please see below for further discussion.

Hardware and Materials

Revenue from hardware and material sales is recognized when control has transferred to the customer which typically occurs when the goods have been shipped to the customer, risk of loss has transferred to the customer and the Company has a present right to payment for the hardware. In limited circumstances when a printer or other hardware sales include substantive customer acceptance

provisions, revenue is recognized either when customer acceptance has been obtained, customer acceptance provisions have lapsed, or the Company has objective evidence that the criteria specified in the customer acceptance provisions have been satisfied.

Software

The Company also markets and sells software tools that enable our customers to capture and customize content using our printers, design optimization and simulation software, and reverse engineering and inspection software. Software does not require significant modification or customization and the license provides the customer with a right to use the software as it exists when made available. Revenue from these software licenses is recognized either upon delivery of the product or of a key code which allows the customer to download the software. Customers may purchase ~~price~~post-sale support. Generally, the first year is included but subsequent years are optional. This optional support is considered a separate obligation from the software and is deferred at the time of sale and subsequently recognized ratably over future periods.

Services

The Company offers training, installation and non-contract maintenance services for its products. Additionally, the Company offers maintenance contracts customers can purchase at their option. For maintenance contracts, revenue is deferred at the time of sale based on the stand-alone selling prices of these services and costs are expensed as incurred. Deferred revenue is recognized ratably over the term of the maintenance period on a straight-line basis. Revenue from training, installation and non-contract maintenance services is recognized at the time of performance of the service.

On demand manufacturing and healthcare service sales are included within services revenue and revenue is recognized upon shipment or delivery of the parts or performance of the service, based on the terms of the arrangement.

Terms of sale

Shipping and handling activities are treated as fulfillment costs rather than as an additional promised service. The Company accrues the costs of shipping and handling when the related revenue is recognized. Costs incurred by the Company associated with shipping and handling are included in ~~cash paid for acquisitions, net~~product cost of ~~cash assumed,~~sales.

Credit is extended, and creditworthiness is determined, based on an evaluation of each customer’s financial condition. New customers are generally required to complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness. Customers with a favorable profile may receive credit terms that differ from the Company’s general credit terms. Creditworthiness is considered, among other things, in evaluating the Company’s relationship with customers with past due balances.

The Company’s terms of sale generally provide payment terms that are customary in the ~~unaudited Condensed Consolidated Statement~~countries where it transacts business. To reduce credit risk in connection with certain sales, the Company may, depending upon the circumstances, require significant deposits or payment in full prior to shipment. For maintenance services, the Company either bills customers on a time-and-materials basis or sells maintenance contracts that provide for payment in advance on either an annual or other periodic basis.

See Note 12 for additional information related to revenue by reportable segment and major lines of ~~Cash Flows.~~ business.

Significant Judgments

The ~~share portion~~Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, the Company allocates revenues to each performance obligation based on its relative SSP.

Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, the Company estimates SSP using historical transaction data. The Company uses a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, the Company determines the SSP using information that may include market conditions and other observable inputs.

In some circumstances, the Company has more than one SSP for individual products and services due to the stratification of those products and services by customers, geographic region or other factors. In these instances, it may use information such as the size of the customer and geographic region in determining the SSP.

The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.

The nature of the Company’s marketing incentives may lead to consideration that is variable. Judgment is exercised at contract inception to determine the most likely outcome of the contract and resulting transaction price. Ongoing assessments are performed to determine if updates are needed to the original estimates.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer deposits and deferred revenues (contract liabilities) on the consolidated balance sheets. Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized at the time of invoicing, or unbilled receivables when revenue is recognized prior to invoicing. For most of the Company’s contracts, customers are invoiced when products are shipped or when services are performed resulting in billed accounts receivables for the remainder of the owed contract price. Unbilled receivables generally result from items being shipped where the customer has not been charged, but for which revenue had been recognized. In the Company’s on demand manufacturing business, customers may be required to pay in full before work begins on their orders, resulting in customer deposits. The Company typically bills in advance for installation, training and maintenance contracts as well as extended warranties, resulting in deferred revenue. Changes in contract asset and liability balances were not materially impacted by any other factors for the period ended June 30, 2019.

Through June 30, 2019, the Company recognized revenue of $18,521 related to our contract liabilities at January 1, 2019.

Practical Expedients and Exemptions

The Company generally expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling, general and administrative expenses.

(3) Leases

The Company has various lease agreements for its facilities, equipment and vehicles with remaining lease terms ranging from one to seventeen years. The Company determines if an arrangement contains a lease at inception. Some leases include the options to purchase, ~~price is included in issuance of stock~~terminate or extend for ~~acquisitions in the unaudited Condensed Consolidated Statement of Equity. The operating results of Vertex have been~~one or more years; these options are included in the ~~Company’s reported results since the closing date.~~ROU asset and liability lease term when it is reasonably certain an option will be exercised. The ~~purchase price~~Company's leases do not contain any material residual value guarantees or material restrictive covenants.

Most of the ~~acquisition has been allocated~~Company's leases do not provide an implicit rate, therefore the Company uses its incremental borrowing rate based on the information available at the commencement date to determine the ~~estimated fair~~present value of ~~net tangible and intangible assets acquired, with any excess purchase price~~the future lease payments.

Certain of the Company’s leases include variable costs. Variable costs include non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the right of use asset recorded ~~as goodwill.~~

~~The Company had no acquisition activity~~on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the ~~second~~rate or ~~third quarters~~index that were not contemplated in the right of ~~2017~~use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.

Components of lease cost were as follows:



(in thousands)	Quarter ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	$	3,675	$	7,464
Finance lease cost - amortization expense	212		418
Finance lease cost - interest expense	115		230
Short-term lease cost	26		50
Variable lease cost	94		35
Total	$	4,122	$	8,197

Balance sheet classifications at June 30, 2019 are summarized below:



	June 30, 2019
(in thousands)	Right of use assets		Current right of use liabilities		Long-term right of use liabilities
Operating Leases	$	33,305	$	10,732	$	29,012
Finance Leases	4,321		719		6,261
Total	$	37,626	$	11,451	$	35,273

The Company’s future minimum lease payments as of June 30, 2019 under operating lease and finance leases, with initial or remaining lease terms in ~~fiscal~~excess of one year, ~~2016.~~

~~(3)~~were as follows:



	June 30, 2019
(in thousands)	Operating Leases			Finance Leases
Years ending June 30:
2020	$	7,070		$	583
2021	9,895			1,098
2022	7,498			811
2023	6,977			813
2024	5,833			804
Thereafter	10,602			6,009
Total lease payments	47,875			10,118
Less: imputed interest	(8,144		)	(3,125		)
Present value of lease liabilities	$	39,731		$	6,993

Supplemental cash flow information related to our operating leases for the period ending June 30, 2019, was as follows:



(in thousands)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	7,610
Operating cash outflow from finance leases	$	229
Financing cash outflow from finance leases	$	338

Weighted-average remaining lease terms and discount rate for our operating leases for the period ending June 30, 2019, were as follows:

(4) Inventories

Components of inventories ~~as of September~~at June 30, ~~2017~~2019 and December 31, ~~2016 were~~2018 are summarized as follows:



(in thousands)	2017		2016		2019		2018
Raw materials	$	39,402	$	38,383	$	49,393	$	49,624
Work in process		3,822		3,109	8,483		2,969
Finished goods and parts		57,354		61,839	76,060		80,568
Inventories	$	100,578	$	103,331	$	133,936	$	133,161

During the quarter ended September 30, 2017 the Company recorded inventory adjustments totaling $12.9 million resulting from its lower of cost or market analysis. The charge was effected because of ongoing efforts to focus and prioritize the Company’s portfolio based on year-to-date demand, market trends and a better understanding of where the Company’s offerings meet and will continue to meet customers’ needs and demand. The inventory adjustments related primarily to legacy plastics printers, refurbished and used metals printers and parts which have shown little to no use over extended periods.

~~(4) Property and Equipment~~

~~Property and equipment, net, as of September 30, 2017 and December 31, 2016 were as follows:~~

(in thousands)
2017

2016

Useful Life (in years)
Land
$
903

$
903

N/A
Building

11,276

11,122

25-30
Machinery and equipment

128,614

108,682

2-7
Capitalized software

8,809

8,651

3-5
Office furniture and equipment

4,606

3,130

1-5
Leasehold improvements

30,043

24,423

Life of lease (a)
Rental equipment

349

144

5
Construction in progress

10,947

7,760

N/A
Total property and equipment

195,547

164,815

Less: Accumulated depreciation and amortization

(104,074)

(84,837)

Total property and equipment, net
$
91,473

$
79,978

^(a)

~~Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.~~

Depreciation expense on property and equipment was $6,497 and $18,767 for the quarter and nine months ended September 30, 2017, respectively, compared to $6,176 and $18,386 for the quarter and nine months ended September 30, 2016, respectively.

(5) Intangible Assets

Intangible assets, net, other than goodwill, ~~as of September~~at June 30, ~~2017~~2019 and December 31, ~~2016 were~~2018 are summarized as follows:

2017

2016

(in thousands)
Gross

Accumulated Amortization

Net

Gross

Accumulated Amortization

Net

Useful Life (in years)

Weighted Average Useful Life Remaining (in years)
Intangible assets with finite lives:

Customer relationships
$
106,674

$
(56,538)

$
50,136

$
99,067

$
(46,252)

$
52,815

1-14

6
Acquired technology

55,148

(37,324)

17,824

52,881

(27,543)

25,338

1-16

4
Trade names

27,764

(16,322)

11,442

28,110

(16,015)

12,095

1-8

5
Patent costs

17,135

(6,794)

10,341

16,263

(5,873)

10,390

1-20

9
Trade secrets

19,443

(11,016)

8,427

19,134

(9,383)

9,751

7

4
Acquired patents

16,655

(11,556)

5,099

16,965

(10,674)

6,291

1-6

4
Other

25,683

(22,320)

3,363

23,431

(18,610)

4,821

2-4

2
Total intangible assets
$
268,502

$
(161,870)

$
106,632

$
255,851

$
(134,350)

$
121,501

1-20

4



	2019							2018
(in thousands)	Gross ^(a)		Accumulated Amortization			Net		Gross ^(a)		Accumulated Amortization			Net		Weighted Average Useful Life Remaining (in years)
Intangible assets with finite lives:
Customer relationships	$	103,638	$	(72,745	)	$	30,893	$	103,332	$	(67,129	)	$	36,203	5
Acquired technology	53,745		(50,279		)	3,466		52,691		(47,546		)	5,145		2
Trade names	23,937		(18,001		)	5,936		25,096		(17,669		)	7,427		5
Patent costs	11,548		(8,914		)	2,634		11,032		(8,382		)	2,650		14
Trade secrets	19,432		(14,639		)	4,793		19,374		(13,574		)	5,800		3
Acquired patents	16,215		(13,958		)	2,257		16,212		(13,160		)	3,052		7
Other	26,457		(19,169		)	7,288		26,551		(18,553		)	7,998		1
Total intangible assets	$	254,972	$	(197,705	)	$	57,267	$	254,288	$	(186,013	)	$	68,275	5

^(a) Change in gross carrying amounts consists primarily of charges for license and patent costs and foreign currency translation.

Amortization expense related to intangible assets was ~~$8,845~~$5,718 and ~~$26,661~~$11,238 for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, respectively, compared to ~~$8,857~~$7,836 and ~~$26,536~~$15,903 for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2018, respectively.

(6) Accrued and Other Liabilities

Accrued liabilities ~~as of September~~at June 30, ~~2017~~2019 and December 31, ~~2016 were~~2018 are summarized as follows:



(in thousands)	2017		2016		2019		2018
Compensation and benefits	$	19,075	$	22,771	$	21,498	$	23,787
Arbitration award		11,282		—
Accrued taxes		9,106		9,831	17,204		17,246
Vendor accruals		7,297		8,231	8,274		6,895
Accrued earnouts related to acquisitions		3,971		3,238
Product warranty liability					3,629		3,788
Arbitration awards					2,256		2,256
Accrued professional fees					2,117		1,657
Accrued other		2,726		2,956	3,460		2,219
Royalties payable		1,707		2,092	1,292		1,417
Accrued professional fees		664		810
Accrued interest		38		39
Total	$	55,866	$	49,968	$	59,730	$	59,265

Other liabilities ~~as of September~~at June 30, ~~2017~~2019 and December 31, ~~2016~~2018 are summarized as follows:



(in thousands)	2019		2018
Long term employee indemnity	$	14,369	$	13,609
Long term tax liability	3,851		4,168
Defined benefit pension obligation	8,472		8,518
Long term deferred revenue	6,910		8,121
Other long term liabilities	8,439		4,915
Total	$	42,041	$	39,331

(7) Borrowings

Credit Facility

On February 27, 2019, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into a 5-year $100,000 senior secured term loan facility (the “Term Facility”) and a 5-year $100,000 senior secured revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facility”). The Senior Credit Facility replaced the Company's prior $150,000 5-year revolving, unsecured credit facility(the "Prior Credit Agreement"), which was terminated on February 27, 2019 in connection with the entry into the Senior Credit Facility. The proceeds of the Senior Credit Facility were ~~as follows:~~

used to refinance existing indebtedness of $25,000 outstanding under the Prior Credit Agreement and will be used to support working capital and for general corporate purposes. Subject to certain terms and conditions contained in the Revolving Facility, the Company has the right to request up to four increases to the amount of the Revolving Facility in an aggregate amount not to exceed $100,000. The Senior Credit Facility is scheduled to mature on February 26, 2024, at which time all amounts outstanding thereunder will be due and payable. However, the maturity date of the Revolving Facility may be extended at the election of the Company with the consent of the lenders subject to the terms set forth in the Senior Credit Facility.

(in thousands)
2017

2016
Long term employee indemnity
$
13,646

$
11,152
Arbitration award

—

11,282
Defined benefit pension obligation

8,576

7,613
Other long term liabilities

7,775

5,726
Long term tax liability

7,124

7,183
Long term deferred revenue

7,062

7,464
Long term earnouts related to acquisitions

4,346

7,568
Total
$
48,529

$
57,988

~~(7)~~

Pursuant to the Senior Credit Facility, the guarantors guarantee, among other things, all of the obligations of the Company and each other guarantor under the Senior Credit Facility. From time to time, the Company may be required to cause additional domestic subsidiaries to become guarantors under the Senior Credit Facility.

The Senior Credit Facility contains customary covenants, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings and events of default. The Company was in compliance with all covenants at June 30, 2019.

The payment of dividends on the Company’s common stock is restricted under provisions of the Senior Credit Facility, which limits the amount of cash dividends that the Company may pay in any one fiscal year to $30,000. The Company currently does not pay, and has not paid, any dividends on its common stock, and currently intends to retain any future earnings for use in its business.

The Company had a balance of $80,000 outstanding on the Term Facility at June 30, 2019 at an interest rate of 4.9%, with $4,050 in principal payments due in the next twelve months.

(8) Hedging Activities and Financial Instruments

The Company conducts business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a result, the Company is subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement dates will result in a foreign exchange gain or loss. When practicable, the Company endeavors to match assets and liabilities in the same currency on its balance sheet and those of its subsidiaries in order to reduce these risks. When appropriate, the Company enters into foreign currency contracts to hedge exposures arising from those transactions. The Company has elected not to prepare and maintain the documentation to qualify for hedge accounting treatment under ~~Accounting Standards Codification (“ASC”)~~ASC 815, “Derivatives and Hedging,” and therefore, all gains and losses (realized or unrealized) are recognized in “Interest and other expense, net” in the condensed consolidated statements of operations and comprehensive loss. Depending on their fair value at the end of the reporting period, derivatives are recorded either in prepaid expenses and other current assets or in accrued liabilities on the condensed consolidated balance sheet.

The Company had ~~$39,029~~$88,304 and $75,304 in notional foreign exchange contracts outstanding as of ~~September~~June 30, ~~2017, for which the~~2019 and December 31, 2018, respectively. The fair ~~value was not material. No foreign exchange~~values of these contracts were ~~outstanding as of December 31, 2016.~~

not material.

The Company translates foreign currency balance sheets from each international businesses' functional currency (generally the respective local currency) to U.S. dollars at end-of-period exchange rates, and statements of earnings at average exchange rates for each period. The resulting foreign currency translation adjustments are a component of other comprehensive income (loss).

The Company does not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations' results into U.S. dollars. The impact of translating the Company’s non-U.S. operations’ revenue and earnings into U.S. dollars was not material to the Company’s results of operations for the quarters and nine months ended September 30, 2017 and 2016.

~~(8) Borrowings~~

~~Credit Facility~~

As of September 30, 2017, the Company had a $150,000 revolving, unsecured credit facility (the “Credit Agreement”) with a syndicate of banks, to be used for general corporate purposes and working capital needs. The Credit Agreement is scheduled to expire in October 2019. The Credit Agreement includes provisions for the issuance of letters of credit and swingline loans and contains certain restrictive covenants, which include the maintenance of a maximum consolidated total leverage ratio. The Company was in compliance with those covenants at September 30, 2017 and December 31, 2016. There were no outstanding borrowings as of September 30, 2017.

~~Capitalized Lease Obligations~~

The Company’s capitalized lease obligations primarily include a lease agreement that was entered into during 2006 with respect to the Company’s corporate headquarters located in Rock Hill, SC. The change in capitalized lease obligations, as presented in the Condensed Consolidated Balance Sheets, was due to the normal scheduled timing of payments.

(9) ~~Pension Benefits~~

The components of the Company’s pension cost recognized in the condensed consolidated statements of operations and comprehensive loss for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

Quarter Ended September 30,

Nine Months Ended September 30,
(Dollars in thousands)
2017

2016

2017

2016
Service cost
$
75

$
59

$
212

$
202
Interest cost

72

51

205

176
Amortization of actuarial loss

64

32

182

97
Total periodic cost
$
211

$
142

$
599

$
475

~~(10)~~ Net Loss Per Share

The Company computes basic loss per share using net loss attributable to 3D Systems Corporation and the weighted average number of common shares outstanding during the applicable period. Diluted loss per share incorporates the additional shares issuable upon assumed exercise of stock options and the release of restricted stock and restricted stock units, except in such case when their inclusion would be anti-dilutive.



	Quarter Ended September 30,				Nine Months Ended September 30,				Quarter Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2017		2016		2017		2016		2019			2018			2019			2018
Numerator:
Numerator for basic and diluted net loss per share:
Net loss attributable to 3D Systems Corporation	$	(37,670)	$	(21,213)	$	(56,057)	$	(43,649)	$	(23,929	)	$	(8,862	)	$	(48,324	)	$	(29,819	)

Denominator for basic and diluted net loss per share:
Weighted average shares		111,697		111,008		111,467		111,194	113,433			111,920			113,350			111,870

Net loss per share - basic and diluted	$	(0.34)	$	(0.19)	$	(0.50)	$	(0.39)	$	(0.21	)	$	(0.08	)	$	(0.43	)	$	(0.27	)

For the quarters ended June 30, 2019 and ~~nine months ended September 30, 2017 and 2016,~~2018, the effect of dilutive securities, including non-vested stock options and restricted stock awards/units, was excluded from the denominator for the calculation of diluted net loss per share because the Company recognized a net loss for the period and their inclusion would be anti-dilutive. ~~The effect of dilutive~~Dilutive securities excluded ~~was 5,145 weighted average shares and 5,361 weighted average shares~~ for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019 were 7,117 compared to ~~2,223 weighted average shares~~4,168 and ~~1,585 weighted average shares~~4,167 for the quarter ended and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~

~~(11)~~2018.

(10) Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs that may be used to measure fair value:

~~Level 1~~ ~~- Quoted prices in active markets for identical assets or liabilities;~~

Level 1 - Quoted prices in active markets for identical assets or liabilities;

~~Level 2~~ - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

~~Level 3~~ ~~- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

For the Company, the above standard applies to cash equivalents and ~~earnout consideration.~~Israeli severance funds. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements as of September 30, 2017
(in thousands)

Level 1

Level 2

Level 3

Total
Description

Cash equivalents (a)
$
18,224

$
—

$
—

$
18,224
Earnout consideration (b)
$
—

$
—

$
8,317

$
8,317

Fair Value Measurements as of December 31, 2016
(in thousands)

Level 1

Level 2

Level 3

Total
Description

Cash equivalents (a)
$
25,206

$
—

$
—

$
25,206
Earnout consideration (b)
$
—

$
—

$
10,806

$
10,806



	Fair Value Measurements as of June 30, 2019
(in thousands)	Level 1		Level 2		Level 3		Total
Description
Cash equivalents^(a)	$	41,077	$	—	$	—	$	41,077
Israeli severance funds ^(b)	$	—	$	7,115	$	—	$	7,115

	Fair Value Measurements as of December 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Description
Cash equivalents ^(a)	$	6,141	$	—	$	—	$	6,141
Israeli severance funds ^(b)	$	—	$	6,822	$	—	$	6,822


(a)		Cash equivalents include funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in the consolidated balance sheet.


(b)		The ~~fair~~Company partially funds the liability for its Israeli severance requirement through monthly deposits into fund accounts, the value of ~~the earnout consideration, which is based~~these contributions are recorded to non-current assets on the present value of the expected future payments to be made to the sellers of the acquired businesses, was derived by analyzing the future performance of the acquired businesses using the earnout formula and performance targets specified in each purchase agreement and adjusting those amounts to reflect the ability of the acquired entities to achieve the stated targets. Given the significance of the unobservable inputs, the valuations are classified in Level 3 of the fair value hierarchy. The change in earnout consideration reflects a $3,206 payment, partially offset by $717 of accretion. consolidated balance sheet.

The Company did not have any transfers of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy during the quarter ~~or nine months~~ ended ~~September~~June 30, ~~2017.~~

2019.

In addition to the assets and liabilities included in the above table, certain of our assets and liabilities are to be initially measured at fair value on a non-recurring basis. This includes goodwill and other intangible assets measured at fair value for impairment assessment, in addition to redeemable noncontrolling interests. For additional discussion, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates” in the ~~Company’s~~2018 Form 10-K.

~~(12)~~

(11) Income Taxes

For the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the Company recorded ~~provisions~~expense of ~~$3,723~~$1,938 and ~~$6,831, respectively,~~$3,782, resulting in effective tax rates of ~~11.1%~~8.8% and ~~14.1%~~8.5%, respectively. For the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2018, the Company recorded ~~a benefit~~expense of ~~$2,214~~$2,539 and ~~a provision of $665, respectively,~~$4,493, resulting in effective tax rates of ~~9.4%~~41.9% and ~~1.5%~~17.9%, respectively.

The difference between the statutory rate and the effective tax rate in 2019 is mainly driven by the Company recording a valuation allowance on one of its foreign subsidiaries in China, withholding tax expense, release of a liability for uncertain tax positions related to a German tax audit, foreign rate differential between the U.S. tax rate and foreign tax rates, as well as the impact of the change in valuation allowances that the Company has recorded in the U.S. and other foreign jurisdictions, while in 2018 the impact was mainly driven by the change in valuation allowance that the Company has recorded in the U.S. and other foreign jurisdictions and foreign rate differential between the U.S. tax rate and foreign tax rates.

Due to the one time transition tax, the majority of the Company’s previously unremitted earnings have now been subjected to U.S. federal income tax, although, other additional taxes such as withholding tax could be applicable. The Company continues to assert that its foreign earnings are indefinitely reinvested in our overseas operations. As such, it has not provided for any additional taxes on approximately $100,268 of unremitted earnings. The Company believes the ~~unremitted earnings of its foreign subsidiaries, as the Company intends to permanently reinvest all such earnings outside of the U.S. We believe a calculation of the~~unrecognized deferred tax liability ~~associated with~~related to these ~~undistributed~~ earnings is ~~impracticable.~~

approximately $15,100.

Tax years ~~2003 through 2015~~2013 and 2014 remain subject to examination by the U.S. Internal Revenue Service ~~with most of the~~("IRS") for certain credit carryforwards, while tax years 2015 through 2017 remain open to examination ~~due~~by the IRS. State income tax returns are generally subject to examination for a period of three to four years after filing the ~~generation and utilization of various~~respective tax ~~credits.~~returns. The Company files income tax returns (which are open to examination beginning in the year shown in parentheses) in Australia ~~(2012)~~(2014), Belgium ~~(2013)~~(2015), Brazil ~~(2011)~~(2013), China ~~(2015)~~(2016), France ~~(2014)~~(2016), Germany ~~(2013)~~(2015), India ~~(2013)~~(2014), Israel ~~(2012)~~(2014), Italy ~~(2011)~~(2013), Japan ~~(2012)~~(2014), Korea ~~(2012)~~(2013), Mexico ~~(2011)~~(2013), Netherlands ~~(2011)~~(2013), Switzerland ~~(2011)~~(2013), the United Kingdom ~~(2015)~~(2017) and Uruguay ~~(2011)~~(2014).

~~(13)~~

(12) Segment Information

The Company operates inas one ~~reportable business segment. The Company~~segment and conducts its business through various offices and facilities located throughout the ~~Asia Pacific~~Americas region ~~(Australia, China, India, Japan~~(United States, Canada, Brazil, Mexico and ~~Korea)~~Uruguay), EMEA region (Belgium, France, Germany, Israel, Italy, the Netherlands, Switzerland and the United Kingdom), ~~Latin America (Brazil, Mexico~~ and ~~Uruguay)~~Asia Pacific region (Australia, China, India, Japan and ~~the United States.~~Korea). The Company has historically disclosed summarized financial information for the geographic areas of operations as if they were segments in accordance with ASC 280, “Segment Reporting.” Financial information concerning the Company’s geographical locations is based on the location of the selling entity. Such summarized financial information concerning the Company’s geographical operations is shown in the following tables:

Quarter Ended September 30,

Nine Months Ended September 30,
(in thousands)

2017

2016

2017

2016
Revenue from unaffiliated customers:

United States

$
75,402

$
84,768

$
234,195

$
246,150
Other Americas

3,534

2,122

8,300

7,831
Germany

20,761

16,796

60,908

56,225
Other EMEA

31,696

26,948

97,956

83,704
Asia Pacific

21,514

25,728

67,446

73,118
Total revenue

$
152,907

$
156,362

$
468,805

$
467,028

Quarter Ended September 30,

Nine Months Ended September 30,
(in thousands)

2017

2016

2017

2016
Revenue by class of product and service:

Products

$
48,227

$
56,484

$
150,681

$
163,301
Materials

39,399

38,059

126,096

117,105
Services

65,281

61,819

192,028

186,622
Total revenue

$
152,907

$
156,362

$
468,805

$
467,028

Quarter Ended September 30, 2017

Intercompany Sales to
(in thousands)

Americas

Germany

Other EMEA

Asia Pacific

Total
Americas

$
554

$
9,439

$
2,325

$
5,390

$
17,708
Germany

945

—

1,645

259

2,849
Other EMEA

15,112

2,006

635

726

18,479
Asia Pacific

613

—

8

772

1,393
Total intercompany sales

$
17,224

$
11,445

$
4,613

$
7,147

$
40,429

Quarter Ended September 30, 2016

Intercompany Sales to
(in thousands)

Americas

Germany

Other EMEA

Asia Pacific

Total
Americas

$
733

$
6,163

$
2,244

$
6,322

$
15,462
Germany

240

—

976

105

1,321
Other EMEA

14,972

562

1,236

1,053

17,823
Asia Pacific

606

—

113

1,053

1,772
Total intercompany sales

$
16,551

$
6,725

$
4,569

$
8,533

$
36,378



	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2019		2018		2019		2018
Revenue from unaffiliated customers:
United States	$	80,415	$	86,028	$	151,815	$	168,741
Other Americas	2,397		2,228		4,701		4,045
EMEA	55,776		56,859		115,420		114,280
Asia Pacific	18,684		31,453		37,316		55,371
Total revenue	$	157,272	$	176,568	$	309,252	$	342,437



	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2019		2018		2019		2018
Revenue by class of product and service:
Products	$	52,530	$	65,741	$	103,447	$	128,368
Materials	41,228		45,044		82,658		87,863
Services	63,514		65,783		123,147		126,206
Total revenue	$	157,272	$	176,568	$	309,252	$	342,437

Nine Months Ended September 30, 2017

Intercompany Sales to
(in thousands)

Americas

Germany

Other EMEA

Asia Pacific

Total
Americas

$
1,452

$
27,147

$
7,267

$
14,243

$
50,109
Germany

1,434

—

5,347

261

7,042
Other EMEA

49,327

3,951

3,716

2,639

59,633
Asia Pacific

1,492

—

165

2,921

4,578
Total intercompany sales

$
53,705

$
31,098

$
16,495

$
20,064

$
121,362

Nine Months Ended September 30, 2016

Intercompany Sales to
(in thousands)

Americas

Germany

Other EMEA

Asia Pacific

Total
Americas

$
2,011

$
21,377

$
8,313

$
15,882

$
47,583
Germany

3,604

—

2,254

169

6,027
Other EMEA

44,946

1,740

3,601

3,301

53,588
Asia Pacific

2,270

—

132

2,859

5,261
Total intercompany sales

$
52,831

$
23,117

$
14,300

$
22,211

$
112,459

Quarter Ended September 30,

Nine Months Ended September 30,
(in thousands)

2017

2016

2017

2016
Loss from operations:

Americas

$
(34,255)

$
(21,525)

$
(63,344)

$
(40,458)
Germany

193

2,761

1,978

7,732
Other EMEA

(1,775)

(11,043)

481

(27,225)
Asia Pacific

3,891

8,434

14,064

19,537
Subtotal

(31,946)

(21,373)

(46,821)

(40,414)
Intercompany elimination

(389)

(644)

(1,449)

(2,079)
Total

$
(32,335)

$
(22,017)

$
(48,270)

$
(42,493)

~~(14)~~



	Quarter ended June 30, 2019
	Intercompany Sales to
(in thousands)	Americas		EMEA		Asia Pacific		Total
Americas	$	544	$	8,757	$	4,620	$	13,921
EMEA	18,758		14,914		757		34,429
Asia Pacific	697		18		687		1,402
Total intercompany sales	$	19,999	$	23,689	$	6,064	$	49,752



	Quarter ended June 30, 2018
	Intercompany Sales to
(in thousands)	Americas		EMEA		Asia Pacific		Total
Americas	$	738	$	14,243	$	6,992	$	21,973
EMEA	16,611		5,372		1,224		23,207
Asia Pacific	1,223		—		878		2,101
Total intercompany sales	$	18,572	$	19,615	$	9,094	$	47,281



	Six Months Ended June 30, 2019
	Intercompany Sales to
(in thousands)	Americas		EMEA		Asia Pacific		Total
Americas	$	990	$	25,465	$	8,456	$	34,911
EMEA	35,434		21,856		2,326		59,616
Asia Pacific	1,444		39		1,489		2,972
Total intercompany sales	$	37,868	$	47,360	$	12,271	$	97,499



	Six Months Ended June 30, 2018
	Intercompany Sales to
(in thousands)	Americas		EMEA		Asia Pacific		Total
Americas	$	1,022	$	30,224	$	12,415	$	43,661
EMEA	33,212		11,752		3,136		48,100
Asia Pacific	2,645		1		1,773		4,419
Total intercompany sales	$	36,879	$	41,977	$	17,324	$	96,180



	Quarter Ended June 30,						Six Months Ended June 30,
(in thousands)	2019			2018			2019			2018
(Loss) income from operations:
Americas	$	(24,025	)	$	(13,539	)	$	(50,857	)	$	(33,523	)
EMEA	3,477			(2,119		)	6,395			(3,334		)
Asia Pacific	1,382			7,936			3,991			11,669
Total	$	(19,166	)	$	(7,722	)	$	(40,471	)	$	(25,188	)

(13) Commitments and Contingencies

The Company leases certain of its facilities and equipment under non-cancelable operating leases. For the quarter and nine months ended September 30, 2017, rent expense under operating leases was $4,009 and $11,461, respectively, compared to $3,542 and $9,717 for the quarter and nine months ended September 30, 2016, respectively.

Certain of the Company’s acquisition agreements contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. The total liability recorded for these earnouts at September 30, 2017 and December 31, 2016 was $8,317 and $10,806, respectively. See Note 6.

Put Options

Owners of interests in a certain subsidiary have the right in certain circumstances to require the Company to acquire either a portion of or all of the remaining ownership interests held by them. The owners’ ability to exercise any such “put option” right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise. In addition, these rights cannot be exercised prior to a specified exercise date. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts in 2019.

Management estimates, assuming that the subsidiary owned by the Company at ~~September~~June 30, ~~2017,~~2019, performs over the relevant future periods at its forecasted earnings levels, that these rights, if exercised, could require the Company, in future periods, to pay approximately $8,872 to the owners of such rights to acquire such ownership interests in the relevant subsidiary. This amount has been recorded as redeemable noncontrolling interests on the Consolidated Balance Sheet at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016.~~2018. The ultimate amount payable relating to this transaction will vary because it is dependent on the future results of operations of the subject business.

Litigation

~~Securities and~~

Derivative Litigation

The Company and certain of its former executive officers have been named as defendants in a consolidated putative stockholder class action lawsuit pending in the United States District Court for the District of South Carolina. The consolidated action is styled KBC Asset Management NV v. 3D Systems Corporation, et al., Case No. 0:15-cv-02393-MGL. The Amended Consolidated Complaint (the “Complaint”), which was filed on December 9, 2015, alleges that defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions and that the former officers are control persons under Section 20(a) of the Exchange Act. The Complaint was filed on behalf of stockholders who purchased shares of the Company’s common stock between October 29, 2013, and May 5, 2015 and seeks monetary damages on behalf of the purported class. Defendants filed a motion to dismiss the Complaint in its entirety on January 14, 2016, which was denied by Memorandum Opinion and Order dated July 25, 2016 (the “Order”). Defendants filed a motion for reconsideration of the Order on August 4, 2016, which was denied by Order dated February 24, 2017.

Nine related derivative complaints have been filed by purported Company stockholders against certain of the Company’s former executive officers and members of its Board of Directors. The Company is named as a nominal defendant in all nine actions. The ~~derivatives~~derivative complaints are styled as follows: (1) Steyn v. Reichental, et al., Case No. 2015-CP-46-2225, filed on July 27, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Steyn”); (2) Piguing v. Reichental, et al., Case No. 2015-CP-46-2396, filed on August 7, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Piguing”); (3)Booth v. Reichental, et al., Case No. 15-692-RGA, filed on August 6, 2015 in the United States District Court for the District of Delaware; (4) Nally v. Reichental, et al., Case No. 15-cv-03756-MGL, filed on September 18, 2015 in the United States District Court for the District of South Carolina (“Nally”); (5) Gee v. Hull, et al., Case No. BC-610319, filed on February 17, 2016 in the Superior Court for the State of California, County of Los Angeles (“Gee”); (6) Foster v. Reichental, et al., Case No. 0:16-cv-01016-MGL, filed on April 1, 2016 in the United States District Court for the District of South Carolina (“Foster”); (7) Lu v. Hull, et al., Case No. BC629730, filed on August 5, 2016 in the Superior Court for the State of California, County of Los Angeles (“Lu”); (8) Howes v. Reichental, et al., Case No. 0:16-cv-2810-MGL, filed on August 11, 2016 in the United States District Court for the District of South Carolina (“Howes”); and (9) Ameduri v. Reichental, et al., Case No. 0:16-cv-02995-MGL, filed on September 1, 2016 in the United States District Court for the District of South Carolina (“Ameduri”). Steyn and Piguing were consolidated into one action styled as In re 3D Systems Corp. Shareholder Derivative Litig., Lead Case No. 2015-CP-46-2225 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina. Gee and Lu were consolidated into one action styled as Gee v. Hull, et al., Case No. BC610319 in the Superior Court for the State of California,

County of Los Angeles. Nally, Foster, Howes, and Ameduri were consolidated into one action in the United States District Court for the District of South Carolina with Nally as the lead consolidated case.

The derivative complaints allege claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment and seek, among other things, monetary damages and certain corporate governance actions.

All of the derivative complaints listed above have been ~~stayed until~~stayed.

The parties to the ~~earlier~~derivative actions listed above, following negotiations with the assistance of a mediator, have reached an agreement in principle to resolve all of the ~~close~~above actions, subject to execution of ~~discovery or~~a stipulation of settlement and court approval. The parties intend to file and seek approval of the ~~deadline for appealing a dismissal~~settlement in the ~~KBC Asset Management NV securities class action.~~

~~The Company believes~~derivative action captioned Nally v. Reichental, et al., Docket No. 0:15-cv-03756-MGL (D.S.C. Sept. 18, 2015), pending before Hon. Mary Geiger Lewis of the ~~claims alleged in~~U.S. District Court for the ~~putative securities class action and the derivative lawsuits are without merit and intends to defend the Company and its officers and directors vigorously.~~

District of South Carolina.

Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, et. al.

On August 23, 2013, Ronald Barranco, a former Company employee, filed two lawsuits against the Company and certain officers in the United States District Court for the District of Hawaii. The first lawsuit (“Barranco I”) is captioned Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, 3D Systems, Inc., and Damon Gregoire, Case No. CV 13-411 LEK RLP, and alleges seven causes of action relating to the Company’s acquisition of Print3D Corporation (of which Mr. Barranco was a 50% shareholder) and the subsequent employment of Mr. Barranco by the Company. The second lawsuit (“Barranco II”) is captioned Ronald Barranco v. 3D Systems Corporation, 3D Systems, Inc., Abraham Reichental, and Damon Gregoire, Case No. CV 13-412 LEK RLP, and alleges the same seven causes of action relating to the Company’s acquisition of certain website domains from Mr. Barranco and the subsequent employment of Mr. Barranco by the Company. Both Barranco I and Barranco II allege the Company breached certain purchase agreements in order to avoid paying Mr. Barranco additional monies pursuant to royalty and earn out provisions in the agreements. The Company and its officers timely filed responsive pleadings on October 22, 2013 seeking, inter alia, to dismiss Barranco I due to a mandatory arbitration agreement and for lack of personal jurisdiction and to dismiss Barranco II for lack of personal jurisdiction.

With regard to Barranco I, the Hawaii district court, on February 28, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina for the convenience of the parties. However, the Hawaii court recognized that ~~the plaintiff’s~~Barranco’s claims ~~are~~were all subject to mandatory and binding arbitration in Charlotte, North Carolina. Because the Hawaii court was without authority to compel arbitration outside of Hawaii, the court ordered that the case be transferred to the district court encompassing Charlotte (the United States District Court for the Western District of North Carolina) so that court could compel arbitration in Charlotte. On April 17, 2014, Barranco I was transferred to the United States District Court for the Western District of North Carolina. Plaintiff filed a demand for arbitration on October 29, 2014. On December 9, 2014, the Company filed its answer to plaintiff’s demand for arbitration. On February 2, 2015, plaintiff filed an amended demand that removed Mr. Gregoire as a defendant from the matter, and on February 4, 2015 the Company filed its amended answer. The parties selected an arbitrator and arbitration took place in September 2015 in Charlotte, North Carolina.

On September 28, 2015, the arbitrator issued a final award in favor of ~~Mr.~~ Barranco with respect to two alleged breaches of contract and implied covenants arising out of the contract. The arbitrator found that the Company did not commit fraud or make any negligent misrepresentations to ~~Mr.~~ Barranco. Pursuant to the award, the Company iswas directed to pay approximately $11,282, which includes alleged actual damages of $7,254, fees and expenses of $2,318 and prejudgment interest of $1,710. ~~The Company disagrees with the single arbitrator’s findings and conclusions and believes the arbitrator’s decision exceeds his authority and disregards the applicable law. As~~

On August 3, 2018, following an initial response, the Company filed a motion for modification on September 30, 2015, based on mathematical errors in the computation of damages and fees. On October 16, 2015, the arbitrator issued an order denying the Company’s motion and sua sponte issuing a modified final award in favor of Mr. Barranco in the same above-referenced amounts, but making certain substantive changesunsuccessful appeal to the award, which changes the Company believes were improper and outside the scope of his authority and the American Arbitration Association rules. On November 20, 2015, the Company filed a motion to vacate the arbitration award in the federal court in the United States District Court for the Western District of North Carolina. Claimants also filed a motion to confirm the arbitration award. A hearing was held on the motions on September 29, 2016 in federal court in the Western District of North ~~Carolina. The court requested supplemental briefing by the parties, which briefs were filed on July 11, 2016.~~

~~On August 31, 2016, the court issued an order granting in part~~Carolina and denying in part Plaintiff’s motion to confirm the arbitration award and for judgment, entering judgment in the principal amount of the arbitration award and denying Plaintiff’s motion for fees and costs. The court denied the Company’s motion to vacate. On September 7, 2016, Plaintiff filed a motion to amend the judgment to include prejudgment interest. The Company opposed that motion and the parties submitted briefing. On September 28, 2016 the Company filed a motion to alter or amend the judgment. Plaintiff opposed the motion and the parties submitted briefing. On May 18, 2017, the court issued an opinion and order denying the Company’s motion to alter or amend and denying Plaintiff’s motion for prejudgment interest. On September 16, 2017, the Company filed a notice of appeal with the United States Court of Appeals for the Fourth ~~Circuit. The~~Circuit, the Company paid $9,127 of the Barranco I judgment, net setoff. On September 28, 2018, the parties filed a Consent Stipulation Resolving Motion for Setoff of Judgment, stipulating that subject only to vacatur or amendment reducing the Barranco II judgment in Barranco’s appeal ~~is pending.~~to the Ninth Circuit related to the Barranco II action discussed below, the Barranco II judgment in the amount of $2,182 was setoff against the Barranco I judgment (“Stipulated Setoff”). The Company ~~filed its Opening Brief and~~paid Barranco the ~~Joint Appendix on August 28, 2017. Plaintiff filed its Opening Brief on September 11, 2017. The Company filed its Reply Brief on September 25, 2017.~~

~~Notwithstanding~~$101 balance remaining due after the Company’s right to appeal, given the arbitrator’s decision, the Company recorded an $11,282 expense provision for this matter in the quarter ended September 30, 2015. The provision is subject to adjustment based on the ultimate outcome of the Company’s appeal. If it is ultimately determined that money is owed following the full appellate process in federal court, the Company intends to fund any amounts to be paid from cash on hand. This amount has been classified as a current liability given the timeline of the appeals process.

Stipulated Setoff.

With regard to Barranco II, the Hawaii district court, on March 17, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina. However, the Hawaii court dismissed Count II in plaintiff’s complaint alleging breach of the employment agreement. The Company filed an answer to the complaint in the Hawaii district court on March 31, 2014. On November 19, 2014, the Company filed a motion for summary judgment on all claims which was heard on January 20, 2015. On January 30, 2015, the court entered an order granting in part and denying in part the Company’s motion for summary judgment. The Order narrowed the plaintiff’s claim for breach of contract and dismissed the plaintiff’s claims for fraud and negligent misrepresentation. As a result, Messrs. Reichental and Gregoire were dismissed from the lawsuit. The case was tried to a jury in Hawaii district court in May 2016, and on May 27, 2016 the jury found that the Company was not liable for either breach of contract or breach of the implied covenant of good faith and fair dealing. Additionally, the jury found in favor of the Company on its counterclaim against ~~Mr.~~ Barranco and determined that ~~Mr.~~ Barranco violated his non-competition covenant with the Company. On ~~July 5, 2017,~~March 30, 2018, the court entered Findings of Fact and Conclusions of Law and Order requiring Barranco to disgorge, and the Company recover, $523, representing all but four months of the full amount paid to Barranco as salary during his employment with the Company as well as a portion of the up front and buyout payments made to Barranco in connection with the purchase of certain web domains. In addition, the court ordered ~~a bench trial regarding causation and damages with respect~~Barranco to pay pre-judgment interest to the ~~equitable accounting~~Company to be calculated beginning as of his first breach of the non-competition covenant in August 2011. Judgment was entered thereafter on April 2, 2018.

On September 13, 2018, the ~~Company’s prevailing counterclaim against Mr. Barranco. The bench trial has been set for November 20, 2017.~~

Hawaii district court entered its Amended Judgment in a Civil Case, awarding the Company a final amended judgment of $2,182. On September 19, 2018, Barranco filed an Amended Notice of Appeal. On January 13, 2019, Barranco filed Appellant’s Opening Brief in the Ninth Circuit. On March 15, 2019, the Company filed its Answering Brief. On April 14, 2019, Barranco filed his Reply Brief. The Company ~~is involved in various other legal matters incidental~~intends to ~~its business. Although~~defend the Company cannot predict the results of litigation with certainty, the Company believes that the disposition of all current legal matters will not have a material adverse effect on its consolidated results of operations, consolidated statement of cash flows or consolidated financial position.

appeal.

Export Controls and Government Contracts Compliance Matter

In October 2017 the Company received an administrative subpoena from the Bureau of Industry and Security of the Department of Commerce (“BIS”) requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to ~~its~~the On Demand manufacturing business done by our subsidiary, Quickparts.com, Inc. ~~subsidiary.~~In addition, while collecting information responsive to the above-referenced subpoena, the Company identified potential violations of the International Traffic in Arms Regulations (“ITAR”) administered by the Directorate of Defense Trade Controls of the Department of State (“DDTC”) and potential violations of the Export Administration Regulations administered by the BIS.

On June 8, 2018 and thereafter, the Company submitted voluntary disclosures to BIS and DDTC identifying numerous potentially unauthorized exports of technical data, which supplemented an initial notice of voluntary disclosure that the Company submitted to DDTC in February 2018. The Company has and will continue to implement compliance enhancements to export controls, trade sanctions, and government contracting compliance to address the issues identified through its internal investigation and cooperate with DDTC and BIS, as well as the U.S. Departments of Justice, Defense, and Homeland Security, in their reviews of these matters.

In addition, on July 19, 2019, the Company received a notice of immediate suspension of federal contracting from the United States Air Force, pending the outcome of an ongoing investigation. The suspension applies to 3D Systems, its subsidiaries and affiliates, and is ~~cooperating fully~~related to the potential export controls violations involving the Company’s On Demand manufacturing business described above. Under the suspension, the Company is generally prohibited from receiving new federal government contracts or subcontracts from any executive branch agency as described in the provisions of 48 C.F.R Subpart 9.4 of the Federal Acquisition Regulation. The suspension allows the Company to continue to perform current federal contracts, and also to receive awards of new subcontracts for items under $35 and for items considered commercially available off-the-shelf items. The Company has implemented significant compliance enhancements related to export controls designed to address the issues raised by the June 2018 disclosure and are engaging with the ~~investigation, but~~Air Force to lift the federal contracting suspension as soon as possible.

Although the Company cannot predict ~~its~~the ultimate ~~resolution. The~~resolution of these matters, the Company has incurred and expects to continue to incur significant legal costs and other expenses in connection with responding to the ~~investigation.~~

~~If the~~ U.S. government ~~finds~~agencies.

Other

The Company is involved in various other legal matters incidental to its business. Although the Company cannot predict the results of the litigation with certainty, the Company believes that the ~~Company has violated one~~disposition of all these various other legal matters will not have a material adverse effect, individually or ~~more export control laws or trade sanctions,~~in the Company could be subject to various penalties. By statute, these penalties can include but are not limited to fines, which by statute may be significant, denial of export privileges, and debarment from participation in U.S. government contracts; and any assessment of penalties could also harm the Company’s reputation, create negative investor sentiment, and affect the Company’s share value. The Company cannot at this time predict when BIS will conclude its investigation or determine an estimated cost, if any, or range of costs, for any penalties or fines that may be incurred upon resolution of this matter.

~~Indemnification~~

In the normal course of business, the Company periodically enters into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of the Company’s products. Historically, costs related to these indemnification provisions have not been significant, and the Company is unable to estimate the maximum potential impact of these indemnification provisionsaggregate, on its ~~future~~consolidated results of ~~operations.~~

~~To the extent permitted under Delaware law, the Company indemnifies its directors and officers for certain events~~operations, consolidated cash flows or occurrences while the director or officer is, or was, serving at the Company’s request in such capacity, subject to limited exceptions. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited; however, the Company has directors and officers insurance coverage that may enable the Company to recover future amounts paid, subject to a deductible and the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.

~~(15)~~consolidated financial position.

(14) Accumulated Other Comprehensive Loss

The changes in the balances of accumulated other comprehensive loss by component are as follows:



(in thousands)	Foreign currency translation adjustment		Defined benefit pension plan			Total	Foreign currency translation adjustment			Defined benefit pension plan			Liquidation of non-US entity and purchase of non-controlling interests		Total
Balance at December 31, 2016	$	(50,450)	$	(2,775)	$	(53,225)
Balance at December 31, 2018							$	(36,669	)	$	(2,647	)	$	338	$	(38,978	)
Other comprehensive income (loss)		25,624		(105)		25,519	1,293			116			256		1,665
Balance at September 30, 2017	$	(24,826)	$	(2,880)	$	(27,706)
Balance at June 30, 2019							$	(35,376	)	$	(2,531	)	$	594	$	(37,313	)

The amounts presented in the table above are in other comprehensive loss and are net of taxes. For additional information about foreign currency translation, see Note 7.

~~(16)~~8.

(15) Noncontrolling Interests

As of ~~September~~June 30, ~~2017,~~2019, the Company owned approximately 70% of the capital and voting rights of Robtec, a service bureau and distributor of 3D printing and scanning products in Brazil. Robtec was acquired on November 25, 2014.

As of ~~September~~June 30, ~~2017,~~2019, the Company owned ~~approximately 70%~~100% of the capital and voting rights of Easyway, a service bureau and distributor of 3D printing and scanning products in China. Approximately 65% of the capital and voting rights of Easyway were acquired on April

2, 2015, and an additional 5% of the capital and voting rights of Easyway were acquired on July 19, 2017 for ~~$2.3 million.~~

$2,300. The remaining 30% of the capital and voting rights of Easyway were acquired on January 21, 2019 for $13,500 to be paid in installments over four years, with the first installment of $2,500 paid in March 2019.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 (the “Financial Statements”) of this Quarterly Report on Form 10-Q (“Form 10-Q”). We are subject to a number of risks and uncertainties that may affect our future performance that are discussed in greater detail in the sections entitled “Forward-Looking Statements” at the end of this Item 2 and that are discussed or referred to in Item 1A of Part II of this Form 10-Q.

Business Overview

3D Systems Corporation (“3D Systems” or the “Company” or “we” or “us”) is a holding company incorporated in Delaware in 1993 that markets our products and services through subsidiaries in North America and South America (collectively referred to as “Americas”), Europe and the Middle East (collectively referred to as “EMEA”), and the Asia Pacific region (“APAC”). We provide comprehensive 3D printing solutions, including 3D printers, ~~print~~ materials, software, ~~on-demand~~on demand manufacturing services and digital design tools. Our solutions support advanced applications in a wide range of industries and key verticals including healthcare, aerospace, automotive and durable goods. Our precision healthcare capabilities include simulation, Virtual Surgical Planning (“VSP™”), and printing of medical and dental devices, ~~and~~models, surgical guides and instruments. ~~3D Systems has a 30 year history of~~Our solutions, experience and expertise ~~which~~provide an end-to-end digital workflow from design to prototyping to production. As the originator of 3D printing and a shaper of future 3D solutions, for over 30 years we have ~~proven vital~~been enabling professionals and companies to ~~our development of an ecosystem that enables customers to~~ optimize ~~product~~ designs, transform workflows, bring innovative products to market and drive new business models.

Customers can use our 3D solutions to design and manufacture complex and unique parts, eliminate expensive tooling, produce parts locally or in small batches and reduce lead times and time to market. A growing number of customers are shifting from prototyping applications to also using 3D printing for production. We believe this shift will be further driven by our continued advancement and innovation of 3D printing solutions that improve durability, repeatability, productivity and total cost of ~~operations.~~

operation.

Summary of ~~Third~~Second Quarter ~~2017~~2019 Financial Results

Total consolidated revenue for the quarter ended ~~September~~June 30, ~~2017~~2019 decreased by ~~2.2%~~10.9%, or ~~$3.5~~$19.3 million, to ~~$152.9~~$157.3 million, compared to ~~$156.4~~$176.6 million for the quarter ended ~~September~~June 30, ~~2016.~~2018. These results reflect a decrease primarily in ~~products~~printers revenue ~~partially offset by an increase~~due to the timing of shipping of metals solutions and large enterprise customer's orders in ~~materials~~the prior year, as discussed below, as well as industrial softness, particularly in automotive and ~~services revenue, as further discussed below.~~

European customers.

Healthcare revenue includes sales of products, materials and services for healthcare-related applications, including simulation, training, ~~and~~ planning, ~~3D printing of~~anatomical models, surgical guides and instruments and medical and dental devices. For the quarter ended ~~September~~June 30, ~~2017,~~2019, healthcare revenue ~~increased~~decreased by ~~9.7%~~8.1%, to ~~$46.6~~$56.4 million, and made up ~~30.5%~~35.8% of total revenue, compared to ~~$42.5~~$61.4 million, or ~~27.2%~~34.7% of total revenue, for the quarter ended ~~September~~June 30, ~~2016.~~2018. The ~~increase~~decrease primarily reflects the impact of the timing of orders of a large enterprise customer which was partially offset by increases in ~~healthcare revenue is driven by growth in~~both materials ~~sales, including the acquisition of Vertex,~~ and services ~~sales which include virtual surgical planning and contract manufacturing services.~~

revenues.

For the quarter ended ~~September~~June 30, ~~2017,~~2019, total software revenue from products and services ~~remained relatively flat at $21.3~~decreased by 0.5% to $25.1 million, and made up ~~14.0%~~16.0% of total revenue, compared to ~~$21.4~~$25.3 million, or ~~13.7%~~14.3% of total revenue, for the quarter ended ~~September 30, 2016.~~

~~As of September 30 and~~ June 30, ~~2017, our backlog was $26.6 million and $32.4 million, respectively. Production and delivery of our printers is generally not characterized~~2018, driven by long lead times; backlog is more dependent on timing of customers’ requested deliveries. In addition, on-demand manufacturing services lead time and backlog depends on whether orders are for rapid prototyping or longer-range production runs. As of September 30, 2017, backlog included $8.9 million of on-demand manufacturing service orders, compared to $9.6 million at June 30, 2017.

weakness in the automotive vertical which offset increased revenue from additive focused software solutions.

Gross profit for the quarter ended ~~September~~June 30, ~~2017~~2019 decreased by ~~15.1%~~14.9%, or ~~$10.4~~$12.9 million, to ~~$58.5~~$73.3 million, compared to ~~$68.9~~$86.2 million for the quarter ended ~~September~~June 30, ~~2016.~~2018. Gross profit margin for the quarters ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 was ~~38.3%~~46.6% and ~~44.1%~~48.8%, respectively. ~~Gross profit margin~~

Operating expenses for the ~~third~~ quarter ~~of 2017 and 2016 included charges of $12.9~~ended June 30, 2019 decreased by 1.5%, or $1.4 million, ~~and $10.7~~to $92.5 million, ~~respectively, related~~compared to ~~the write-off of excess and obsolete inventory.~~

~~Operating expenses remained relatively flat at $90.9~~$93.9 million for the quarter ended ~~September~~June 30, ~~2017 as~~2018. Selling, general and administrative expenses for the quarter ended June 30, 2019 increased by 0.7%, or $0.5 million, to $71.7 million, compared to ~~$91.0~~$71.2 million for the quarter ended ~~September~~June 30, ~~2016, including continued investments in R&D, go~~2018. Research and development expenses for the quarter ended June 30, 2019 decreased by 8.4%, or $1.9 million, to ~~market and IT infrastructure.~~ $20.8 million, compared to $22.7 million for the quarter ended June 30, 2018.

Our operating loss for the quarter ended ~~September~~June 30, ~~2017~~2019 was ~~$32.3~~$19.2 million, compared to an operating loss of ~~$22.0~~$7.7 million for the quarter ended ~~September~~June 30, ~~2016.~~

2018.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, we generated ~~$17.7~~$3.6 million and ~~$38.2~~$9.2 million of cash from operations, respectively, as further discussed below. In total, our unrestricted cash balance at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018, was ~~$138.3~~$150.4 million and ~~$184.9~~$110.0 million, respectively. ~~A key driver for the lower~~The higher cash balance was the ~~Company’s acquisition~~result of ~~Vertex Global (“Vertex”) for approximately $34.3 million.~~

our borrowing on the Senior Credit Facility, offset by

~~Results~~

repayment of ~~Operations~~

~~Comparison of revenue by class~~

~~We earn revenue from~~amounts outstanding on the ~~sale of products, materials and services. The products category includes 3D printers, healthcare simulators and digitizers,~~Prior Credit Agreement as well as ~~software, 3D scanners~~investments in our facilities and ~~haptic devices. The materials category includes a wide range~~IT infrastructure. For information on the Senior Credit Facility and the Prior Credit Agreement, see Note 7.

Results of ~~print materials to be used with our 3D printers, the majority~~Operations

Comparison of which are proprietary, as well as acquired conventional dental materials. The services category includes warranty and maintenance on 3D printers and simulators, software maintenance, on-demand manufacturing solutions and healthcare services.

revenue

Due to the relatively high price of certain 3D printers and a corresponding lengthy selling cycle and relatively low unit volume of the higher priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can affect reported revenue in any given period. ~~Revenue reported in any particular period is also affected by timing of revenue recognition under rules prescribed by U.S. generally accepted accounting principles (“GAAP”).~~

In addition to changes in sales volumes, ~~and the impact of revenue from acquisitions,~~ there are two other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes in product mix and average selling prices ~~sometimes referred to as price and mix effects,~~ and (2) the impact of fluctuations in foreign currencies. As used in this Management’s Discussion and Analysis, the price and mix effects relate to changes in revenue that are not able to be specifically related to changes in unit volume.

Comparison of revenue by geographic region

The following tables set forth changes in revenue by geographic region for the quarters and six months ended June 30, 2019 and 2018.

Table 1



(Dollars in thousands)	Americas					EMEA					Asia Pacific					Total
Revenue — second quarter 2018	$	88,256		50.0	%	$	56,859		32.2	%	$	31,453		17.8	%	$	176,568		100.0	%
Change in revenue:
Volume	(11,379		)	(12.9	)%	4,028			7.1	%	(10,840		)	(34.5	)%	(18,191		)	(10.3	)%
Price/Mix	6,090			6.9	%	(2,425		)	(4.3	)%	(1,080		)	(3.4	)%	2,585			1.5	%
Foreign currency translation	(155		)	(0.2	)%	(2,686		)	(4.7	)%	(849		)	(2.7	)%	(3,690		)	(2.1	)%
Net change	(5,444		)	(6.2	)%	(1,083		)	(1.9	)%	(12,769		)	(40.6	)%	(19,296		)	(10.9	)%
Revenue — second quarter 2019	$	82,812		52.6	%	$	55,776		35.5	%	$	18,684		11.9	%	$	157,272		100.0	%

Consolidated revenue decreased by 10.9%, predominantly driven by lower sales volume in the Americas and Asia Pacific regions, which was largely driven by the higher volume of orders from a large enterprise customer in 2018, partially offset by favorable price/mix in the Americas primarily driven by favorable pricing for production printers.

For the quarters ended June 30, 2019 and 2018, revenue from operations outside the U.S. was 48.9% and 51.3% of total revenue, respectively.

Table 2 ~~below~~



(Dollars in thousands)	Americas					EMEA					Asia Pacific					Total
Revenue — six months 2018	$	172,786		50.5	%	$	114,280		33.4	%	$	55,371		16.2	%	$	342,437		100.0	%
Change in revenue:
Volume	(24,443		)	(14.1	)%	10,460			9.2	%	(14,470		)	(26.1	)%	(28,453		)	(31.0	)%
Price/Mix	8,610			5.0	%	(2,006		)	(1.8	)%	(2,006		)	(3.6	)%	4,598			(0.4	)%
Foreign currency translation	(437		)	(0.3	)%	(7,314		)	(6.4	)%	(1,579		)	(2.9	)%	(9,330		)	(9.6	)%
Net change	(16,270		)	(9.4	)%	1,140			1.0	%	(18,055		)	(32.6	)%	(33,185		)	(9.7	)%
Revenue — six months 2019	$	156,516		50.6	%	$	115,420		37.3	%	$	37,316		12.1	%	$	309,252		100.0	%

Consolidated revenue decreased 9.7%, predominantly driven by lower sales volume in the Americas and Asia Pacific regions which was largely driven by the timing of orders from a large enterprise customer and the unfavorable impact of foreign currency, particularly in EMEA, partially offset by increased volume for services and printers in EMEA and favorable price/mix in the Americas driven by materials and production printers.

For the six months ended June 30, 2019 and 2018, revenue from operations outside the U.S. was 50.9% and 50.7% of total revenue, respectively.

Comparison of revenue by class

We earn revenue from the sale of products, materials and services. The products category includes 3D printers, healthcare simulators and digitizers, software licenses, 3D scanners and haptic devices. The materials category includes a wide range of materials to be used with our 3D printers, the majority of which are proprietary, as well as acquired conventional dental materials. The services category includes maintenance contracts and services on 3D printers and simulators, software maintenance, on demand solutions and healthcare services.

The following tables set forth the change in revenue by class for the ~~quarter~~quarters and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively~~:

2019 and 2018.

Table 1

(Dollars in thousands)

Products

Materials

Services

Totals
Revenue – third quarter 2016

$
56,484

36.1
%

$
38,059

24.4
%

$
61,819

39.5
%

$
156,362

100
%
Change in revenue:

Volume

(6,019)

(10.7)

3,740

9.8

2,548

4.1

269

0.1

Price/Mix

(3,129)

(5.5)

(2,883)

(7.6)

—

—

(6,012)

(3.8)

Foreign currency translation

891

1.6

483

1.3

914

1.5

2,288

1.5

Net change

(8,257)

(14.6)

1,340

3.5

3,462

5.6

(3,455)

(2.2)

Revenue – third quarter 2017

$
48,227

31.5
%

$
39,399

25.8
%

$
65,281

42.7
%

$
152,907

100
%



(Dollars in thousands)	Products					Materials					Services					Total
Revenue — second quarter 2018	$	65,741		37.2	%	$	45,044		25.5	%	$	65,783		37.3	%	$	176,568		100.0	%
Change in revenue:
Volume	(12,343		)	(18.8	)%	(5,121		)	(11.4	)%	(727		)	(1.1	)%	(18,191		)	(10.3	)%
Price/Mix	314			0.5	%	2,271			5.0	%	—			—	%	2,585			1.5	%
Foreign currency translation	(1,182		)	(1.8	)%	(966		)	(2.1	)%	(1,542		)	(2.3	)%	(3,690		)	(2.1	)%
Net change	(13,211		)	(20.1	)%	(3,816		)	(8.5	)%	(2,269		)	(3.4	)%	(19,296		)	(10.9	)%
Revenue — second quarter 2019	$	52,530		33.4	%	$	41,228		26.2	%	$	63,514		40.4	%	$	157,272		100.0	%

Consolidated revenue decreased ~~2.2%~~10.9%, predominantly driven by the products revenue category which was driven by the impact of timing of orders of printers by a ~~decrease~~large enterprise customer including large orders in ~~products volume~~the prior year and ~~a shift in product mix,~~timing of shipments of metals printers, only partially offset by ~~increased volumes in both materials and services and the favorable impact of foreign currency.~~

~~Products~~ revenue ~~decreased because of lower volumes and changes in product mix and average selling prices, including increased demand for lower priced printers and softer demand for simulators during the quarter.~~from recently launched printer models. For the quarters ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, revenue from printers ~~was $29.4~~contributed $30.0 million and ~~$33.0~~$41.3 million, respectively. Software revenue included in the products category, including scanners and haptic devices, contributed ~~$10.6~~$13.7 million and ~~$10.8~~$14.1 million for the quarters ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Materials revenue decreased due to lower sales volume offset by a change in price/mix. The ~~increase~~decline in volume is driven by weaker demand for materials revenue primarily reflects higher demand from healthcare customers including those of Vertex and NextDent dental materials, both part of the first quarter 2017 Vertex acquisition. This increased demand wasutilized in older printer models, only partially offset by ~~a decrease related to a shift in product mix.~~

demand for new materials.

Services revenue ~~increased~~decreased due to ~~higher~~lower revenue from on demand ~~for~~solutions and from the entertainment business, which the company exited in 2019, and the unfavorable impact of foreign currency translation, partially offset by increased revenue from healthcare ~~services and on-demand manufacturing~~ services. For the quarters ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, revenue from ~~on-demand~~on demand manufacturing services contributed ~~$27.2~~$24.0 million and ~~$26.5~~$27.4 million, respectively. For the quarters ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, software services revenue ~~remained relatively flat at $10.7~~contributed $11.4 million and ~~$10.5~~$11.2 million, respectively.

Table 2

(Dollars in thousands)

Products

Materials

Services

Totals
Revenue – nine months 2016

$
163,301

35.0
%

$
117,105

25.1
%

$
186,622

39.9
%

$
467,028

100
%
Change in revenue:

Volume

(8,726)

(5.3)

14,833

12.7

6,085

3.3

12,192

2.6

Price/Mix

(4,165)

(2.6)

(4,794)

(4.1)

—

—

(8,959)

(1.9)

Foreign currency translation

271

0.2

(1,048)

(0.9)

(679)

(0.4)

(1,456)

(0.3)

Net change

(12,620)

(7.7)

8,991

7.7

5,406

2.9

1,777

0.4

Revenue – nine months 2017

$
150,681

32.1
%

$
126,096

26.9
%

$
192,028

41.0
%

$
468,805

100
%

~~Total consolidated~~



(Dollars in thousands)	Products					Materials					Services					Total
Revenue — six months 2018	$	128,368		37.5	%	$	87,863		25.7	%	$	126,206		36.9	%	$	342,437		100.0	%
Change in revenue:
Volume	(24,054		)	(18.7	)%	(4,951		)	(5.6	)%	552			0.4	%	(28,453		)	(23.9	)%
Price/Mix	2,410			1.9	%	2,188			2.5	%	—			—	%	4,598			4.4	%
Foreign currency translation	(3,277		)	(2.6	)%	(2,442		)	(2.8	)%	(3,611		)	(2.9	)%	(9,330		)	(8.3	)%
Net change	(24,921		)	(19.4	)%	(5,205		)	(5.9	)%	(3,059		)	(2.4	)%	(33,185		)	(9.7	)%
Revenue — six months 2019	$	103,447		33.5	%	$	82,658		26.7	%	$	123,147		39.8	%	$	309,252		100.0	%

Consolidated revenue ~~remained relatively flat as increases~~decreased 9.7%, predominantly driven by the products revenue category which was impacted by the timing of orders from a large enterprise customer, including large orders in ~~volume for materials~~the prior year, timing of shipping metals printers and ~~services were~~unfavorable impacts of foreign currency translation, only partially offset by ~~a decrease in volume for products and a shift in product mix.~~

~~Products~~ revenue ~~decreased due to lower~~from recently launched printer ~~volume and a shift in product mix and average selling prices.~~models. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016, printer~~2018, revenue from printers contributed ~~$88.5~~$59.9 million and ~~$98.2~~$83.4 million, respectively. Software revenue

included in the products category, including scanners and haptic devices, contributed ~~$33.2~~$25.9 million and ~~$31.7~~$25.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Materials revenue decreased due to lower sales volume and the unfavorable impact of foreign currency, offset by a favorable impact from price/mix. The ~~increase~~decline in volume is driven by weaker demand for materials ~~revenue primarily reflects higher demand from healthcare and industrial customers including those of Vertex and NextDent dental materials, both part of the first quarter 2017 Vertex acquisition,~~utilized in older printer models, only partially offset by ~~decreases related~~demand for new materials.

Services revenue decreased due to ~~a shift in product mix and an~~the unfavorable impact of foreign currency ~~impact.~~

~~Services revenue increased due to higher demand for healthcare services, partially offset by a decrease in on-demand manufacturing services.~~translation. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, revenue from ~~on-demand~~on demand manufacturing services contributed ~~$78.1~~$46.6 million and ~~$80.3~~$53.1 million, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, software services revenue contributed ~~$32.5~~$22.2 million and ~~$31.9~~$22.1 million, respectively.

~~Comparison of revenue by geographic region~~

~~Table 3 and Table 4 below set forth change in revenue by geographic area for the quarter and nine months ended September 30, 2017, respectively:~~

~~Table 3~~

(Dollars in thousands)

Americas

EMEA

Asia Pacific

Total
Revenue – third quarter 2016

$
86,890

55.6
%

$
43,744

28.0
%

$
25,728

16.4
%

$
156,362

100
%
Change in revenue:

Volume

(4,905)

(5.6)

7,958

18.2

(2,784)

(10.8)

269

0.1

Price/Mix

(3,160)

(3.6)

(1,727)

(3.9)

(1,125)

(4.4)

(6,012)

(3.8)

Foreign currency translation

111

0.1

2,482

5.7

(305)

(1.2)

2,288

1.5

Net change

(7,954)

(9.1)

8,713

20.0

(4,214)

(16.4)

(3,455)

(2.2)

Revenue – third quarter 2017

$
78,936

51.6
%

$
52,457

34.3
%

$
21,514

14.1
%

$
152,907

100
%

Lower sales volumes in the Americas and APAC as well as a shift in product mix and average selling prices across all geographic regions, offset by higher sales volume in EMEA and the favorable impact of foreign currency, primarily drive the decrease in consolidated revenue.

The decrease in revenue in the Americas region primarily reflects lower sales volumes and a shift in product mix and average selling prices. The increase in revenue in the EMEA region primarily reflects higher sales volumes, primarily driven by printer sales, Vertex materials, and the favorable impact of foreign currency. These impacts are slightly offset by a shift in product mix and average selling prices. The decrease in revenue in the Asia Pacific region primarily reflects lower demand combined with a shift in product mix and average selling prices.

~~For the quarters ended September 30, 2017 and 2016, revenue from operations outside the U.S., including Latin America, EMEA and APAC, was 50.7% and 45.8% of total revenue, respectively.~~

~~Table 4~~

(Dollars in thousands)

Americas

EMEA

Asia Pacific

Total
Revenue – nine months 2016

$
253,981

54.4
%

$
139,929

30.0
%

$
73,118

15.6
%

$
467,028

100
%
Change in revenue:

Volume

(7,018)

(2.8)

20,442

14.6

(1,232)

(1.7)

12,192

2.6

Price/Mix

(4,870)

(1.9)

(661)

(0.5)

(3,428)

(4.7)

(8,959)

(1.9)

Foreign currency translation

402

0.2

(846)

(0.6)

(1,012)

(1.4)

(1,456)

(0.3)

Net change

(11,486)

(4.5)

18,935

13.5

(5,672)

(7.8)

1,777

0.4

Revenue – nine months 2017

$
242,495

51.7
%

$
158,864

33.9
%

$
67,446

14.4
%

$
468,805

100
%

Consolidated revenue remained relatively flat as increases in sales volume were offset by decreases related to shifts in product mix and average selling prices. The decrease in revenue in the Americas region primarily reflects lower sales volumes and a shift in product mix and average selling prices. The increase in revenue in the EMEA region reflects higher sales volumes, primarily driven by Vertex materials and printer sales, offset slightly by a shift in product mix and average selling prices. The decrease in revenue in the Asia Pacific region primarily reflects a shift in product mix and lower volumes.

~~For the nine months ended September 30, 2017 and 2016, revenue from operations outside the U.S., including Latin America, EMEA and APAC, was 50.0% and 47.3% of total revenue, respectively.~~

Gross profit and gross profit margins

~~Table 5 and Table 6 below~~

The following tables set forth gross profit and gross profit ~~margin~~margins for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016, respectively:~~

2018.

Table 5

Quarter Ended September 30,

2017

2016

Change in Gross Profit

Change in Gross Profit Margin
(Dollars in thousands)
Gross Profit

Gross Profit Margin

Gross Profit

Gross Profit Margin

$

%

Percentage Points

%
Products
$
(360)

(0.7)
%

$
9,288

16.4
%

$
(9,648)

(103.9)
%

(17.1)

(104.3)
%
Materials

28,519

72.4

28,934

76.0

(415)

(1.4)

(3.6)

(4.7)

Services

30,363

46.5

30,715

49.7

(352)

(1.1)

(3.2)

(6.4)

Total
$
58,522

38.3
%

$
68,937

44.1
%

$
(10,415)

(15.1)
%

(5.8)

(13.2)
%



	Quarter Ended June 30,
	2019				2018				Change in Gross Profit					Change in Gross Profit Margin
(Dollars in thousands)	Gross Profit		Gross Profit Margin		Gross Profit		Gross Profit Margin		$			%		Percentage Points		%
Products	12,345		23.5	%	21,041		32.0	%	(8,696		)	(41.3	)%	(8.5	)	(26.6	)%
Materials	28,408		68.9	%	32,244		71.6	%	(3,836		)	(11.9	)%	(2.7	)	(3.8	)%
Services	32,546		51.2	%	32,877		50.0	%	(331		)	(1.0	)%	1.2		2.4	%
Total	$	73,299	46.6	%	$	86,162	48.8	%	$	(12,863	)	(14.9	)%	(2.2	)	(4.5	)%

The decrease in total consolidated gross profit is driven by changes in product mix. Also contributing to the decrease were the inventory adjustments totaling $12.9 million versus adjustments of $10.7 million in the same period of 2016. The 2017 inventory adjustment resulted from a comprehensive review of our portfolio and inventory during the quarter ended September 30, 2017. The 2017 inventory adjustment primarily related to legacy plastics printers, refurbished and used metals printers and parts that have shown little to no use over extended periods. The majority of this adjustment relates to the products category. Gross profit margin for materials decreased primarily due to the mix of sales, including the addition of Vertex traditional dental materials that carry lower margins. Gross profit margin for services decreased slightly, predominantly due to the decrease in ~~on-demand~~product sales, primarily lower sales of printers.

Products gross profit margin decreased primarily due to under absorption of supply chain overhead resulting from lower production, in addition to the impact of the mix of sales. Materials gross profit margin decreased as a result of the mix of sales. A favorable mix of sales towards higher gross profit margin service offerings and improvements in printer service margins drove services gross profit margin improvements. On demand manufacturing services gross profit margin increased to ~~40.9%~~39.8% for the quarter ended ~~September~~June 30, ~~2017 as~~2019, compared to ~~43.7%~~39.6% for the quarter ended ~~September~~June 30, ~~2016.~~

2018.

Table 6

Nine Months Ended September 30,

2017

2016

Change in Gross Profit

Change in Gross Profit Margin
(Dollars in thousands)
Gross Profit

Gross Profit Margin

Gross Profit

Gross Profit Margin

$

%

Percentage Points

%
Products
$
34,255

22.7
%

$
43,790

26.8
%

$
(9,535)

(21.8)
%

(4.1)

(15.3)
%
Materials

91,753

72.8

89,934

76.8

1,819

2.0

(4.0)

(5.2)

Services

93,373

48.6

93,137

49.9

236

0.3

(1.3)

(2.6)

Total
$
219,381

46.8
%

$
226,861

48.6
%

$
(7,480)

(3.3)
%

(1.8)

(3.7)
%



	Six Months Ended June 30,
	2019				2018				Change in Gross Profit					Change in Gross Profit Margin
(Dollars in thousands)	Gross Profit		Gross Profit Margin		Gross Profit		Gross Profit Margin		$			%		Percentage Points		%
Products	20,095		19.4	%	39,717		30.9	%	(19,622		)	(49.4	)%	(11.5	)	(37.2	)%
Materials	57,245		69.3	%	62,896		71.6	%	(5,651		)	(9.0	)%	(2.3	)	(3.2	)%
Services	61,664		50.1	%	61,418		48.7	%	246			0.4	%	1.4		2.9	%
Total	$	139,004	44.9	%	$	164,031	47.9	%	$	(25,027	)	(15.3	)%	(3.0	)	(6.3	)%

The decrease in total consolidated gross profit is ~~driven by changes in product mix. Also contributing~~due to the decrease ~~were the inventory adjustments totaling $12.9 million versus adjustments~~in product sales, primarily lower sales of $10.7 million in the same period of 2016. The 2017 inventory adjustment resulted from a comprehensive review of our portfolio and inventory during the quarter ended September 30, 2017. The 2017 inventory adjustment primarily related to legacy plastics printers, refurbished and used metals printers and parts that have shown little to no use over extended periods. The majority of this adjustment relates to the products category. Grossprinters.

Products gross profit margin ~~for materials~~ decreased primarily due to under absorption of supply chain overhead resulting from lower production and lower revenue, in addition to the impact of the mix of ~~sales, including the addition of Vertex traditional dental materials that carry lower margins. Gross~~sales. Materials gross profit margin ~~for services increased slightly, due to~~decreased as a result of the mix of sales. Services gross profit margin improved from a favorable mix of sales towards higher gross profit margin service offerings and improvements in ~~healthcare and other services margins, offset by on-demand~~printer service margin. On demand manufacturing services gross profit margin ~~that~~ decreased to ~~43.3%~~38.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, compared to ~~44.1%~~39.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

2018.

Operating expenses

~~Table 7 and Table 8 below~~

The following tables set forth the components of operating expenses for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016, respectively:~~

2018.

Table 7

Quarter Ended September 30,

2017

2016

Change
(Dollars in thousands)
Amount

% Revenue

Amount

% Revenue

$

%
Selling, general and administrative expenses
$
66,497

43.5
%

$
64,814

41.5
%

$
1,683

2.6
%
Research and development expenses

24,360

15.9

26,140

16.7

(1,780)

(6.8)

Total operating expenses
$
90,857

59.4
%

$
90,954

58.2
%

$
(97)

(0.1)
%

~~Total operating expenses remained relatively flat for the quarter ended September 30, 2017 as compared to the quarter ended September 30, 2016. The increase in selling,~~



	Quarter Ended June 30,
	2019				2018				Change
(Dollars in thousands)	Amount		% Revenue		Amount		% Revenue		$			%
Selling, general and administrative expenses	71,654		45.6	%	71,172		40.3	%	482			0.7	%
Research and development expenses	20,811		13.2	%	22,712		12.9	%	(1,901		)	(8.4	)%
Total operating expenses	$	92,465	58.8	%	$	93,884	53.2	%	$	(1,419	)	(1.5	)%

Selling, general and administrative expenses isincreased primarily due to ~~investment~~legal expenses, including a settlement in gothe second quarter of 2019, and a loss recorded on the disposal of property as a result of exiting the Entertainment business, which were offset by decreased personnel and facility expenses related to ~~market and IT infrastructure, including additional talent and resources.~~ cost optimization efforts as well as lower amortization expense.

Research and development expenses ~~excluding the $6.1 million impact of charges~~decreased as we have completed projects related to new products and ~~write-offs~~platforms brought to market in ~~the prior year due to an updated strategy~~2018, and ~~project reprioritization, increased primarily due to investment~~prioritized investments in ~~plastics, in particular our Figure 4 platform, metals,~~ materials and ~~software as well as additional talent and resources.~~

software.

Table 8

Nine Months Ended September 30,

2017

2016

Change
(Dollars in thousands)
Amount

% Revenue

Amount

% Revenue

$

%
Selling, general and administrative expenses
$
195,990

41.8
%

$
202,009

43.3
%

$
(6,019)

(3.0)
%
Research and development expenses

71,661

15.3

67,345

14.4

4,316

6.4

Total operating expenses
$
267,651

57.1
%

$
269,354

57.7
%

$
(1,703)

(0.6)
%

Total operating expenses decreased modestly for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, reflecting lower selling, general and administrative expenses, offset by higher research and development expenses.



	Six Months Ended June 30,
	2019				2018				Change
(Dollars in thousands)	Amount		% Revenue		Amount		% Revenue		$			%
Selling, general and administrative expenses	136,761		44.2	%	140,625		41.1	%	(3,864		)	(2.7	)%
Research and development expenses	42,714		13.8	%	48,594		14.2	%	(5,880		)	(12.1	)%
Total operating expenses	$	179,475	58.0	%	$	189,219	55.3	%	$	(9,744	)	(5.1	)%

Selling, general and administrative expenses decreased ~~largely~~primarily due to ongoing reduced personnel and facility expenses related cost optimization efforts as well as lower ~~stock compensation expense due to the impact of adopting a new accounting standard that allowed us to change our policy for accounting for award forfeitures. The increase in research~~amortization from previously acquired intangible assets.

Research and development expenses ~~excluding the $6.1 million impact from charges~~decreased as we have completed projects related to new products and ~~write-offs~~platforms brought to market in ~~the prior year due to an updated strategy~~2018, and ~~project reprioritization, was primarily due to~~prioritized investments in ~~plastics, in particular our Figure 4 platform, metals,~~ materials and ~~software as wells as additional talent and resources.~~

software.

Loss from operations

~~Table 9 below~~

The following table sets forth ~~operating loss~~(loss) income from operations by geographic ~~area~~region for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016, respectively:~~

2018.

Table 9

Quarter Ended September 30,

Nine Months Ended September 30,
(in thousands)

2017

2016

2017

2016
Income (loss) from operations:

Americas

$
(34,255)

$
(21,525)

$
(63,344)

$
(40,458)
EMEA

(1,582)

(8,282)

2,459

(19,493)
Asia Pacific

3,891

8,434

14,064

19,537
Subtotal

(31,946)

(21,373)

(46,821)

(40,414)
Intercompany elimination

(389)

(644)

(1,449)

(2,079)
Total

$
(32,335)

$
(22,017)

$
(48,270)

$
(42,493)

The loss from operations increased $10.3 million and $5.8 million for the quarter and nine months ended September 30, 2017, respectively, when compared to the same periods at September 30, 2016. The operating loss changes were primarily driven



	Quarter Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2019			2018			2019			2018
(Loss) income from operations:
Americas	(24,025		)	(13,539		)	(50,857		)	(33,523		)
EMEA	3,477			(2,119		)	6,395			(3,334		)
Asia Pacific	1,382			7,936			3,991			11,669
Total	$	(19,166	)	$	(7,722	)	$	(40,471	)	$	(25,188	)

See “Comparison of revenue by ~~changes in gross profit and operating expenses. See “Gross~~geographic region,” “Gross profit and gross profit ~~margins”~~margins” and ~~“Operating expenses”~~“Operating expenses” above.

With respect to the Americas, for the quarter and nine months ended September 30, 2017, as compared to the same periods of 2016, operating losses increased primarily due to the impact of inventory adjustments as described in Note 3 to the condensed consolidated financial statements and under Table 5 above. The Americas region also contains a significant portion of our corporate costs, which negatively impacts profitability compared to the other regions. Operating losses for the regions are also impacted by our transfer pricing policies on intercompany transactions between the regions.

The improvements in operating results for the EMEA region in the quarter and nine months ended September 30, 2017, as compared to the same periods of 2016, primarily reflect increased revenue, including the contribution of the acquisition of Vertex.

~~The decrease in income from operations in the Asia Pacific region for the quarter and nine months ended September 30, 2017, as compared to the same periods of 2016, reflects decreases in revenues.~~

Interest and other (expense) income, net

~~Table 10 below~~

The following table sets forth the components of interest and other (expense) income, net, for the quarters and six months ended June 30, 2019 and 2018.

Table 10



	Quarter Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2019			2018			2019			2018
Interest and other (expense) income, net
Foreign exchange (loss) gain	(70		)	1,776			(1,109		)	1,853
Interest expense, net	(864		)	(220		)	(1,441		)	(448		)
Other (expense) income, net	(1,821		)	105			(1,407		)	(1,297		)
Total interest and other (expense) income, net	$	(2,755	)	$	1,661		$	(3,957	)	$	108

The increase in total interest and other expense, net for the ~~quarters~~quarter and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, as compared to the quarter and ~~2016, respectively:~~

~~Table 10~~

six months ended June 30, 2018, was primarily driven by the impairment of assets to be sold with the Entertainment business, higher interest expense resulting from the Senior Credit Facility put in place in the first quarter of 2019 and reduced volatility caused by foreign exchange as a result of improved foreign currency risk management activities, partially off-set for the six month period by an adjustment to the fair value of certain cost method investments in the first quarter of 2018.

Quarter Ended September 30,

Nine Months Ended September 30,
(Dollars in thousands)
2017

2016

2017

2016
Interest and other expense, net:

Interest income
$
(227)

$
(153)

$
(555)

$
(600)
Foreign exchange (gain) loss

822

1,123

(712)

(340)
Interest expense

237

272

699

1,053
Other (income) expense, net

425

382

691

1,177
Total interest and other income, net
$
1,257

$
1,624

$
123

$
1,290

Net loss

~~Table 11 and Table 12 below~~ attributable to 3D Systems

The following tables set forth the primary components of net loss attributable to 3D Systems for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016, respectively:~~

2018.

Table11

Quarter Ended September 30,

(Dollars in thousands)
2017

2016

Change
Operating loss
$
(32,335)

$
(22,017)

$
(10,318)
Less:

Interest and other expense, net

1,257

1,624

(367)
Provision for income taxes

3,723

(2,214)

5,937
Net income (loss) attributable to noncontrolling interests

355

(214)

569
Net loss attributable to 3D Systems
$
(37,670)

$
(21,213)

$
(16,457)

Net loss per share — basic and diluted
$
(0.34)

$
(0.19)



	Quarter Ended June 30,
(Dollars in thousands)	2019			2018			Change
Loss from operations	$	(19,166	)	$	(7,722	)	$	(11,444	)
Other non-operating items:
Interest and other (expense) income, net	(2,755		)	1,661			(4,416		)
Provision for income taxes	(1,938		)	(2,539		)	601
Net loss	(23,859		)	(8,600		)	(15,259		)
Less: net income attributable to noncontrolling interests	70			262			(192		)
Net loss attributable to 3D Systems Corporation	$	(23,929	)	$	(8,862	)	$	(15,067	)

Table12

Nine Months Ended September 30,

(Dollars in thousands)
2017

2016

Change
Operating loss
$
(48,270)

$
(42,493)

$
(5,777)
Less:

Interest and other expense, net

123

1,290

(1,167)
Provision for income taxes

6,831

665

6,166
Net income (loss) attributable to noncontrolling interests

833

(799)

1,632
Net loss attributable to 3D Systems
$
(56,057)

$
(43,649)

$
(12,408)

Net loss per share — basic and diluted
$
(0.50)

$
(0.39)



	Six Months Ended June 30,
(Dollars in thousands)	2019			2018			Change
Loss from operations	$	(40,471	)	$	(25,188	)	$	(15,283	)
Other non-operating items:							—
Interest and other (expense) income, net	(3,957		)	108			(4,065		)
Provision for income taxes	(3,782		)	(4,493		)	711
Net loss	(48,210		)	(29,573		)	(18,637		)
Less: net income attributable to noncontrolling interests	114			246			(132		)
Net loss attributable to 3D Systems Corporation	$	(48,324	)	$	(29,819	)	$	(18,505	)

The increase in net loss for the quarter and six months ended June 30, 2019, as compared to the quarter and six months ended June 30, 2018, was primarily driven by an increase in loss from operations. See “Gross profit and gross profit margins” and “Operating expenses” above.

Liquidity and Capital Resources

Table13

Change
(Dollars in thousands)
September 30, 2017

December 31, 2016

$

%
Cash and cash equivalents
$
138,332

$
184,947

$
(46,615)

(25.2)
%
Accounts receivable, net

122,420

127,114

(4,694)

(3.7)

Inventories

100,578

103,331

(2,753)

(2.7)

361,330

415,392

(54,062)

Current portion of capitalized lease obligations

632

572

60

10.5

Accounts payable

46,388

40,514

5,874

14.5

Accrued and other liabilities

55,866

49,968

5,898

11.8

102,886

91,054

11,832

Operating working capital
$
258,444

$
324,338

$
(65,894)

(20.3)
%



					Change
(Dollars in thousands)	June 30, 2019		December 31, 2018		$			%
Cash and cash equivalents	$	150,397	$	109,998	$	40,399		36.7	%
Accounts receivable, net	114,093		126,618		(12,525		)	(9.9	)%
Inventories	133,936		133,161		775			0.6	%
	398,426		369,777		28,649
Less:
Current portion of long term debt	4,050		—		4,050			—	%
Current right of use liabilities	11,451		654		10,797			1650.9	%
Accounts payable	59,197		66,722		(7,525		)	(11.3	)%
Accrued and other liabilities	59,730		59,265		465			0.8	%
	134,428		126,641		7,787
Operating working capital	$	263,998	$	243,136	$	20,862		8.6	%

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements primarily consist of funding of working capital and funding of capital expenditures.

~~We believe our existing~~

Cash flow from operations, cash and cash equivalents, ~~will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments~~ and other sources of liquidity requirements associated with our existing operations in the foreseeable future, or to consummate significant acquisitions of other businesses, assets, products or technologies. However, it is possible that, in the future, we may need to raise additional funds to finance our activities. If needed, we may be able to raise such ~~funds by~~as bank credit facilities and issuing equity or debt securities, are expected to be available and sufficient to meet foreseeable cash requirements. During the ~~public or selected investors, by borrowing from financial institutions, drawing down on our~~first quarter of 2019, we entered into a 5-year $100.0 million senior secured term loan facility (the “Term Facility”) and a 5-year $100.0 million senior secured revolving credit facility ~~or selling assets.~~

(the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facility”), which replaced the Company's prior $150.0 million 5-year revolving, unsecured credit facility (the "Prior Credit Agreement"), which was terminated in connection with entry into the Senior Credit Facility. Borrowings under the Senior Credit Facility were used to refinance existing indebtedness of $25,000 outstanding under the Prior Credit Agreement and will be used to support working capital and for general corporate purposes. For additional information on the Senior Credit Facility and the Prior Credit Agreement, see Note 7.

As a result of the Term Facility, the Company has exposure to floating interest rates. To manage interest expense, the Company evaluates an appropriate mix of fixed and floating rate debt. In July 2019, the Company entered into a floating to fixed interest rate swap to reduce exposure to changes in floating interest rates on the Term Facility. The interest rate swap has a notional value of $50,000 and will expire on February 26, 2024, concurrent with the Term Facility. The notional value will decline over the term of the interest rate swap as amortization payments reduce the principal amount of the Term Facility. As a result of the interest rate swap, the percentage of total principal debt (excluding capital leases) that is subject to floating interest rates is approximately 37%. The Company designated the swap as a cash flow hedge for accounting treatment.

Cash held outside the U.S. at ~~September~~June 30, ~~2017~~2019 was ~~$88.8~~$80.7 million, or ~~64.2%~~53.7% of total cash and equivalents, compared to ~~$83.5~~$73.3 million, or ~~45.2%~~66.7% of total cash and equivalents at December 31, ~~2016. Cash held outside~~2018. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. ~~is used in~~would not incur significant additional taxes related to such amounts. However, our ~~foreign operations for working capital purposes~~estimates are provisional and ~~is considered~~subject to ~~be permanently invested; consequently, we have not provided for any taxes on repatriation.~~further analysis. Cash equivalents ~~comprise~~are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See “Cash flow ~~Credit facilities and Capitalized lease obligations~~” discussion below.

Days’ sales outstanding (DSO) was ~~74 days~~66 at ~~September~~June 30, ~~2017~~2019, compared to 7069 days for the year at December 31, ~~2016 and accounts~~2018. Accounts receivable more than 90 days past due ~~decreased~~increased to ~~11.3%~~11.1% of gross receivables at June 30, 2019, from ~~12.5%~~8.9% at December 31, ~~2016.~~2018. We review specific receivables periodically to determine the appropriate reserve for accounts receivable.

The majority of our inventory consists of finished goods, including products, materials and service parts. Inventory also consists of raw materials ~~and spare parts~~ for ~~the in-house assembly~~certain printers and ~~support~~ service products. ~~We outsource the assembly~~Inventory balances may fluctuate during cycles of ~~certain 3D printers; therefore, we generally do not hold most parts for the assembly~~new product launch, commercialization and timing of ~~these printers in inventory.~~

ramp of production and sales of products.

The changes that make up the other components of working capital not discussed above resulted from the ordinary course of business. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.

Cash flow

~~Table 14 summarizes the~~

The following tables set forth components of cash ~~provided by (used in) operating activities, investing activities and financing activities, as well as the effect of changes in foreign currency exchange rates on cash,~~flow for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016:~~

2018.

Table14

Nine Months Ended September 30,

2017

2016
(Dollars in thousands)

Cash provided by operating activities

$
17,676

$
38,240
Cash used in investing activities

(60,567)

(13,804)
Cash used in financing activities

(7,997)

(2,293)
Effect of exchange rate changes on cash

4,273

1,572
Net increase (decrease) in cash and cash equivalents

$
(46,615)

$
23,715



	Six Months Ended June 30,
(Dollars in thousands)	2019			2018
Net cash provided by operating activities	$	3,551		$	9,171
Net cash used in investing activities	(14,248		)	(18,609		)
Net cash provided by (used in) financing activities	50,602			(4,823		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	517			(2,502		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	40,422		$	(16,763	)

Cash flow from ~~operating activities~~

operations

Table 15 ~~summarizes the components of cash~~



	Six Months Ended June 30,
(Dollars in thousands)	2019			2018
Net loss	$	(48,210	)	$	(29,573	)
Non-cash charges	43,314			44,162
Changes in working capital and all other operating assets	8,447			(5,418		)
Net cash provided by operating activities	$	3,551		$	9,171

Cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016:~~

~~Table 15~~

Nine Months Ended September 30,

2017

2016
(Dollars in thousands)

Net loss

$
(55,224)

$
(44,448)
Non-cash charges

83,408

89,473
Changes in working capital and all other operating assets

(10,508)

(6,785)
Net cash provided by operating activities

$
17,676

$
38,240

~~Net cash provided by operating activities for the nine months ended September~~June 30, ~~2017~~2018 was ~~$17.7 million.~~$3.6 million and $9.2 million, respectively. Excluding non-cash charges, the net ~~income~~loss resulted in a use of cash of $4.9 million for the six months ended June 30, 2019 and provided ~~$28.2~~cash of $14.6 million ~~of cash.~~for the six months ended June 30, 2018. Non-cash charges ~~primarily~~generally consist of depreciation, amortization, and stock-based ~~compensation~~compensation.

Improvements in working capital provided cash of $8.4 million for the six months ended June 30, 2019 and ~~inventory adjustments. Working~~working capital requirements used ~~$10.5~~cash of $5.4 million for the six months ended June 30, 2018. In the six months ended June 30, 2019, drivers of ~~cash. The primary driver of the~~ working capital ~~outflow was increased spend for inventory of $13.9 million, payments of current liabilities of $4.7 million~~related to cash inflows were a decrease in accounts receivable and ~~other operating activities of $6.0 million. These amounts were~~an increase in deferred revenues related to software and system maintenance contracts, partially offset by ~~lower~~a decrease in accounts payable and an increase in inventory. In the six months ended June 30, 2018, cash outflows were driven by increases in inventory, prepaid expenses and accounts receivable, ~~of $10.8 million and~~partially offset by increases in ~~account payables and~~accrued liabilities, deferred revenues ~~of $3.5 million~~ and ~~$2.9 million, respectively. Differences between the amounts of working capital item changes in~~

accounts payable.

~~the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.~~

Cash flow from investing activities

Table 16 ~~summarizes the components~~



	Six Months Ended June 30,
(Dollars in thousands)	2019			2018
Purchases of property and equipment	$	(14,353	)	$	(18,095	)
Other investing activities	105			(514		)
Net cash used in investing activities	$	(14,248	)	$	(18,609	)

The primary outflow of cash ~~used in investing activities for the nine months ended September 30, 2017 and 2016:~~

~~Table 16~~

Nine Months Ended September 30,

2017

2016
(Dollars in thousands)

Cash paid for acquisitions, net of cash assumed

$
(36,541)

$
—
Purchases of property and equipment

(21,072)

(12,014)
Proceeds from disposition of property and equipment

271

—
Other investing activities

(2,350)

(1,000)
Additions to license and patent costs

(875)

(790)
Net cash used in investing activities

$
(60,567)

$
(13,804)

~~The primary outflows of cash relate~~relates to ~~the acquisition of Vertex, which we acquired for an aggregate purchase price of $34.3 million, net of cash acquired, and~~ investments in ~~property, plant~~our facilities including our customer innovation centers and ~~equipment~~healthcare and on-demand facilities as ~~we invest~~well as continued investments in ~~infrastructure, add to~~ our ~~on-demand manufacturing service and equip facilities for new product development efforts.~~

IT infrastructure.

Cash flow from financing activities

Table 17 ~~summarizes~~



	Six Months Ended June 30,
(Dollars in thousands)	2019			2018
Proceeds from borrowings	$	100,000		$	—
Repayment of borrowings/long term debt	(45,000		)	—
Purchase of noncontrolling interest	(2,500		)	—
Payments on earnout consideration	—			(2,675		)
Other financing activities	(1,898		)	(2,148		)
Net cash provided by (used in) financing activities	$	50,602		$	(4,823	)

Cash provided by financing activities was $50.6 million for the ~~components of~~six months ended June 30, 2019 and cash used in financing ~~activities~~was $4.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016:~~

~~Table 17~~

Nine Months Ended September 30,

2017

2016
(Dollars in thousands)

Payments on earnout consideration

$
(3,206)

$
—
Payments related to net-share settlement of stock-based compensation

(4,494)

(1,507)
Repayment of capital lease obligations

(297)

(786)
Net cash used in financing activities

$
(7,997)

$
(2,293)

~~Contractual commitments and off-balance sheet arrangements~~

~~Credit facilities~~

~~In October 2014, we entered into a $150.0 million five-year revolving, unsecured credit facility.~~2018. The ~~agreement provides~~primary inflow of cash for ~~advances in~~ the ~~initial aggregate principal amount of up~~six months ended June 30, 2019 relates to $150.0 million. Subject to certain terms and conditions contained in the agreement, we may, at our option, request an increase in the aggregate principal amount available under the credit facility by an additional $75.0 million. As of September 30, 2017 and December 31, 2016, ~~there was no outstanding balance~~borrowing on the ~~credit facility. Based on current financial covenant limitations at September 30, 2017, availability on~~Term Facility, partially offset by repayments of the ~~credit facility would be approximately $150.0 million. Future results may impact availability.~~ ~~See~~Prior Credit Facility and Term Facility.

Recent Accounting Pronouncements

Refer to Note 81 - Basis of Presentation of the Notes to ~~the~~Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.

Critical Accounting Policies and Significant Estimates

Our condensed consolidated financial ~~statements.~~

~~Capitalized lease obligations~~

~~Our capitalized lease obligations include a lease agreement that we entered into during 2006 with respect to our Rock Hill, SC facility,~~statements are prepared in ~~addition to other lease agreements assumed through acquisitions. In~~ accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

Except for the accounting policies related to lease accounting that were updated as a result of adopting ASC ~~840, “Leases,” we are considered an owner of the properties, therefore, we~~Topic 842, there have ~~recorded these amounts in~~been no changes to our consolidated balance sheet with a corresponding capitalized lease obligation in the liabilities section of the consolidated balance sheet. Our outstanding capitalized lease obligations carrying value at September 30, 2017 and December 31, 2016 was $7.9 million and $8.2 million, respectively.

~~Other contractual arrangements~~

We lease certain of our facilities and equipment under non-cancelable operating leases. For the quarters ended September 30, 2017 and 2016, rent expense under operating leases was $4.0 million and $3.5 million, respectively.

Certain of our acquisition purchase agreements contain earnout payment provisions under which the sellers of the acquired businesses can earn additional amounts. The total amount of liabilities recorded for these earnouts is $8.3 million and $10.8 million at September 30, 2017 and December 31, 2016, respectively.

~~Off-balance sheet arrangements~~

~~We have no off-balance sheet arrangements and do not utilize any “structured debt,” “special purpose,” or similar unconsolidated entities for liquidity or financing purposes.~~

~~Recent Accounting Pronouncements~~

~~Our~~ critical accounting policies ~~are disclosed~~and estimates described in ~~our~~the Annual Report on Form 10-K for the year ended December 31, ~~2016 (“~~2018 ("2018 Form ~~10-K”~~10-K"), filed with the Securities and Exchange Commission ("SEC") ~~and Note 1 to our condensed consolidated financial statements. The only change to our critical accounting policies during the~~ ~~nine months ended~~ ~~September 30, 2017 was a modification to the way in which we account for forfeitures of share-based awards. Specifically, beginning in the first quarter of 2017, we~~ recognize forfeitures of share-based awards as they occur in the period of forfeiture rather than estimating the number of awards expected to be forfeited at the grant date and subsequently adjusting the estimate when awards are actually forfeited. ~~This change did not~~on February 28, 2019, that have had a material impact on our ~~results of operations in the current period, and is not expected to have a material impact on results of operations in subsequent periods.~~

~~Critical Accounting Policies and Significant Estimates~~

Except as described below, there have been no material changes from the Critical Accounting Policies and Significant Estimates as previously disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates” in our Form 10-K.

~~Contingencies~~

We account for contingencies in accordance with ASC 450, “Contingencies” (“ASC 450”). ASC 450 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of thecondensed consolidated financial statements and related notes, other than the ~~amount~~following.

Our EMEA and APAC reporting units carry approximately $185.5 million and $36.8 million of goodwill, respectively, as of June 30, 2019. In our 2018 impairment testing, we determined both reporting units had fair values substantially in excess of their carrying values (>100%). This headroom was driven by our forecasts of future operating performance as well as external market indicators. Based on operating performance for the six months ended June 30, 2019 as well as a decline in the market price of our common stock since our 2018 goodwill impairment test, we evaluated the risk our EMEA and APAC reporting units would fail step one of a goodwill impairment test. Based on currently available information, the Company continues to believe the fair value of the ~~loss can be reasonably estimated. Accounting for contingencies such as legal matters requires us~~reporting units exceeds their carrying values. Should future operating performance continue to ~~use our judgment. See Note 14 to the Financial Statements~~fall materially below prior forecasts it is possible we may reach a different conclusion in ~~Part I, Item 1 of this Form 10-Q and Note 22 to the consolidated financial statements in our Form 10-K.~~

future periods.

Forward-Looking Statements

Certain statements made in this Form 10-Q that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates,” or “plans” or the negative of these terms or other comparable terminology.

Forward-looking statements are based upon management’s beliefs, assumptions and current expectations concerning future events and trends, using information currently available, and are necessarily subject to uncertainties, many of which are outside our control. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include without limitation:

~~competitive industry pressures;~~

~~our ability to deliver products that meet changing technology and customer needs;~~

~~our ability to identify strategic acquisitions, to integrate such acquisitions into our business without disruption and to realize the anticipated benefits of such acquisitions;~~

competitive industry pressures;

~~impact of future write-off or write-downs of intangible assets;~~

our ability to deliver products that meet changing technology and customer needs;

~~our ability to acquire and enforce intellectual property rights and defend such rights against third party claims;~~

~~our ability to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure;~~

our ability to identify strategic acquisitions, to integrate such acquisitions into our business without disruption and to realize the anticipated benefits of such acquisitions;

~~failure of our information technology infrastructure or inability to protect against cyber-attack;~~

impact of future write-off or write-downs of intangible assets;

~~our ability to generate net cash flow from operations;~~

our ability to acquire and enforce intellectual property rights and defend such rights against third party claims;

~~our ability to obtain additional financing on acceptable terms;~~

our ability to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure;

~~impact of global economic, political and social conditions and financial markets on our business;~~

failure of our information technology infrastructure or inability to protect against cyber-attack;

~~fluctuations in our gross profit margins, operating income or loss and/or net income or loss;~~

our ability to generate net cash flow from operations;

~~our ability to efficiently conduct business outside the U.S.;~~

our ability to obtain additional financing on acceptable terms;

~~our dependence on our supply chain for components and sub-assemblies used in our 3D printers and other products and for raw materials used in our print materials;~~

our ability to comply with the covenants in our borrowing agreements;

~~our ability to manage the costs and effects of litigation, investigations or similar matters involving us or our subsidiaries;~~

impact of global economic, political and social conditions and financial markets on our business;

~~product quality problems that result in decreased sales and operating margin, product returns, product liability, warranty or other claims;~~

fluctuations in our gross profit margins, operating income or loss and/or net income or loss;

~~our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs;~~

our ability to efficiently conduct business outside the U.S.;

~~our exposure to product liability claims and other claims and legal proceedings;~~

our dependence on our supply chain for components and sub-assemblies used in our 3D printers and other products and for raw materials used in our print materials;

~~disruption in our management information systems for inventory management, distribution, and other key functions;~~

our ability to manage the costs and effects of litigation, investigations or similar matters involving us or our subsidiaries;

~~compliance with U.S. and other anti-corruption laws, data privacy laws, trade controls, economic sanctions, and similar laws and regulations;~~

product quality problems that result in decreased sales and operating margin, product returns, product liability, warranty or other claims;

~~changes in, or interpretation of, tax rules and regulations; and~~

our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs;

~~compliance with, and related expenses and challenges concerning, conflict-free minerals regulations; and~~

our exposure to product liability claims and other claims and legal proceedings;

the other factors discussed in the reports we file with or furnishes to the Securities and Exchange Commission (“SEC”) from time to time, including the risks and important factors set forth in additional detail in “Risk Factors” in Part I, Item 1A of our Form 10-K filed with the SEC.

disruption in our management information systems for inventory management, distribution, and other key functions;

compliance with U.S. and other anti-corruption laws, data privacy laws, trade controls, economic sanctions, and similar laws and regulations;

changes in, or interpretation of, tax rules and regulations; and

compliance with, and related expenses and challenges concerning, conflict-free minerals regulations; and

the other factors discussed in the reports we file with or furnishes to the SEC from time to time, including the risks and important factors set forth in additional detail in Item 1A. “Risk Factors” in the 2018 Form 10-K and in Part II, Item 1A. “Risk Factors” in the Qarterly Report on Form 10-Q for the quarter ended March 31, 2019 (the “2019 Q1 Form 10-Q”).

Certain of these and other factors are discussed in more detail in ~~“Item~~Item 1A. ~~Risk~~“Risk Factors” ~~of our~~in the 2018 Form ~~10-K.~~10-K, the 2019 Q1 Form 10-Q, and this Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise. All subsequent written or oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by the cautionary statements referenced above.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For a discussion of market risks at December 31, ~~2016,~~2018, refer to Item ~~7A,~~7A. “Quantitative and Qualitative Disclosures about Market ~~Risk,”~~Risk” in ~~our Form 10-K.~~the 2018 Form10-K. During the first ~~nine~~six months of ~~2017,~~2019, there were no material changes or developments that would materially alter the market risk assessment performed as of December 31, ~~2016.~~

2018.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

As of ~~September~~June 30, ~~2017,~~2019, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. These controls and procedures were designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner to allow timely decisions regarding required disclosures. Based on this evaluation, ~~including an evaluation of the rules referred to above in this Item 4,~~ management has concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, 2017 to provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, in a manner to allow timely decisions regarding required disclosures.

2019.

Changes in Internal Controls over Financial Reporting

There were no material changes in our internal controls over financial reporting during the period covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting~~reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The information set forth in “Litigation” and “Export Compliance Matter” in Note 1413 – Commitments and Contingencies to the Financial Statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors.

~~Except as described below, there have been no material changes from~~

We disclosed potential violations of U.S. export controls laws to the ~~risk factors as previously disclosed~~U.S. federal government that resulted in ~~our Form 10-K.~~

multiple investigations. We have ~~added~~implemented compliance processes and procedures to identify and prevent potential future violations of export control laws, trade sanctions, and government contracting laws and regulations, and continue to review our government contracting compliance risks and potential violations. Based on the ~~following risk factor titled “Export Compliance Exposure”:~~

~~Export Compliance Exposure~~

disclosures and investigations, on July 19, 2019, the Air Force suspended us from certain new federal contracts and orders. We are engaging with the Air Force to lift or modify the suspension as soon as possible. The refusal by the Air Force to lift or modify the suspension in a timely manner, would result in decreased revenues and additional harm to our reputation and otherwise adversely affect our business, operating results and financial condition.

In October 2017, ~~the Company~~we received an administrative subpoena from the Bureau of Industry and Security ~~of the Department of Commerce~~ (“BIS”) requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to ~~its~~the On Demand manufacturing business done by our subsidiary, Quickparts.com, Inc. ~~subsidiary.~~In addition, while collecting information responsive to the above-referenced subpoena, our internal investigation identified potential violations of the International Traffic in Arms Regulations (“ITAR”) administered by the State Department’s Directorate of Defense Trade Controls (“DDTC”) and potential violations of the Export Administration Regulations administered by BIS. On June 8, 2018 and thereafter, we submitted voluntary disclosures to BIS and DDTC identifying numerous potentially unauthorized exports of technical data, which supplemented an initial notice of voluntary disclosure that we submitted to DDTC in February 2018. We have and will continue to implement compliance enhancements to our export controls, trade sanctions, and government contracting compliance to address the issues identified through our internal investigation and cooperate with DDTC and BIS, as well as the U.S. Departments of Justice, Defense, and Homeland Security, in their reviews of these matters.

In addition, on July 19, 2019, we received a notice of immediate suspension of federal contracting from the United States Air Force, pending the outcome of an ongoing investigation. The ~~Company~~suspension applies to 3D Systems, its subsidiaries and affiliates, and is ~~cooperating fully~~related to export controls violations involving 3D Systems’ On Demand manufacturing business described above. Under the suspension, we are generally prohibited from receiving new federal government contracts or subcontracts from any executive branch agency as described in the provisions of 48 C.F.R Subpart 9.4 of the Federal Acquisition Regulation. The suspension allows us to continue to perform current federal contracts, and also to receive awards of new subcontracts for items under $35,000 and for items considered commercially available off-the-shelf items. As discussed further below, we have implemented significant compliance enhancements related to export controls designed to address the issues raised by the June 2018 disclosure and are engaging with the ~~investigation, but~~Air Force to lift or modify the federal contracting suspension as soon as possible. Refusal of the Air Force to lift or modify the suspension in a timely manner would result in decreased revenues and additional harm to our reputation and otherwise adversely affect our business, operating results and financial condition.

Although we cannot predict ~~its~~the ultimate ~~resolution. The Company expects~~resolution of these matters, we have incurred and expect to continue to incur significant legal costs and other expenses in connection with responding to the ~~investigation.~~

U.S. government agencies.

Throughout 2018, we implemented new compliance procedures to identify and prevent potential violations of export controls laws, trade sanctions, and government contracting laws and regulations and created a Compliance Committee of the Board of Directors to further enhance board oversight of compliance risks. As a result of these compliance enhancements, we identified additional potential violations of ITAR, and submitted related voluntary disclosures to DDTC. As we continue to implement additional compliance enhancements throughout 2019, we may discover additional potential violations of export controls laws, trade sanctions, and/or government contracting laws in the future. If we identify any additional potential violations, we will submit voluntary disclosures to the relevant agencies and cooperate with such agencies on any related investigations.

If the U.S. government finds that ~~the Company has~~we have violated one or more export ~~control~~controls laws, or trade sanctions, ~~the Company~~or government contracting laws, we could be subject to various civil or criminal penalties. By statute, these penalties can include but are not limited to fines, which by statute may be significant, denial of export privileges, and suspension or debarment from participation in U.S. government ~~contracts; and any~~contracts. We may also be subject to contract claims based upon such violations. Any assessment of penalties or other liabilities incurred in connection with these matters could ~~also~~ harm ~~the Company’s~~our reputation and customer relationships, create negative investor sentiment, and affect ~~the Company’s~~our share value. ~~The Company~~In connection with any resolution, we may also be required to undertake additional remedial compliance measures and program monitoring. We cannot at this time predict when ~~BIS~~the U.S. government agencies will conclude ~~its investigation~~their investigations or determine an estimated cost, if any, or range of costs, for any penalties, fines or ~~fines~~other liabilities to third parties that may be incurred ~~upon resolution~~in connection with these matters.

Our common stock price has been and may continue to be volatile.

The market price of our common stock has experienced, and may continue to experience, considerable volatility. Between January 1, 2018 and July 31, 2019, the trading price of our common stock has ranged from a low of $7.81 per share to a high of $21.78 per share. Numerous factors could have a significant effect on the price of our common stock, including those described or referred to in this ~~matter.~~

“Risk Factors” section of the Form 10-K and the 2019 Q1 Form 10-Q, as well as, among other things:

Our perceived value in the securities markets;

Overall trends in the stock market;

Announcements of changes in our forecasted operating results or the operating results of one or more of our competitors;

Continued suspension from federal contracting for an extended period of time;

The impact of changes in our results of operations, our financial condition or our prospects;

Future sales of our common stock or other securities (including any shares issued in connection with earn-out obligations for any past or future acquisition);

Market conditions for providers of products and services such as ours;

Executive level management uncertainty or change;

Changes in recommendations or revenue or earnings estimates by securities analysts; and

Announcements of acquisitions by us or one of our competitors.

There have been no other material changes to the risk factors as previously disclosed in the 2018 Form 10-K and the 2019 Q1 Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Issuances of Unregistered Securities

None.

Issuer Purchases of Equity Securities

~~We did not repurchase any~~

The following table provides information about purchases of ~~our~~ equity securities ~~during~~that are registered pursuant to Section 12 of the Exchange Act for the quarter ~~or nine months~~ ended ~~September~~June 30, ~~2017, except for unvested restricted stock awards repurchased or forfeited pursuant to our 2004 and 2015 Incentive Stock Plans.~~

2019:

Total number of shares (or units) purchased

Average price paid per share (or unit)

Total number of shares (or units) purchased as part of publicly announced plans or programs

Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
January 1, 2017 - January 31, 2017
31,761

$
13.69

—

$
—
February 1, 2017 - February 28, 2017
35,710

16.61

—

—
March 1, 2017 - March 31, 2017
2,285

14.49

—

—
April 1, 2017 - April 30, 2017
20,369

14.87

—

—
May 1, 2017 - May 31, 2017
17,777

21.65

—

—
June 1, 2017 - June 30, 2017
9,229

20.67

—

—
July 1, 2016 - July 31, 2016
13,687

17.13

—

—
August 1, 2016 - August 31, 2016
127,259

17.08

—

—
September 1, 2016 - September 30, 2016
12,970

12.93

—

—
Total
271,047
(a)
$
16.57
(b)
—

$
—



	Total number of shares (or units) purchased		Average price paid per share (or unit)
Shares delivered or withheld pursuant to restricted stock awards
April 1, 2019 - April 30, 2019	23,079		$	14.11
May 1, 2019 - May 31, 2019	15,972		$	9.47
June 1, 2019 - June 30, 2019	8,312		$	8.16
	47,363	(a)	$	11.50	(b)


(a)		Reflects shares of common stock surrendered to the Company for payment of tax withholding obligations in connection with the vesting of restricted stock.


(b)		The average price paid reflects the average market value of shares withheld for tax purposes.

Item 6. Exhibits.



3.1	Certificate of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1 to Form 8-B filed on August 16, 1993, and the amendment thereto, filed on Form 8-B/A on February 4, 1994.)

3.2	Amendment to Certificate of Incorporation filed on May 23, 1995. (Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form S-2/A, filed on May 25, 1995.)

3.3	Certificate of Amendment of Certificate of Incorporation filed with Secretary of State of Delaware on May 19, 2004. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, filed on August 5, 2004.)

3.4	Certificate of Amendment of Certificate of Incorporation filed with Secretary of State of Delaware on May 17, 2005. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005, filed on August 1, 2005.)

3.5	Certificate of Amendment of Certificate of Incorporation filed with the Secretary of State of Delaware on October 7, 2011. (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on October 7, 2011.)

3.6
~~3.6~~	Certificate of Amendment of Certificate of Incorporation filed with the Secretary of State of Delaware on May 21, 2013. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed on May 22, 2013.)

3.7	Amended and Restated By-Laws of 3D Systems Corporation. (Incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed on ~~December 28, 2016.~~March 15, 2018.)

~~31.1~~ 10.1*	Severance Agreement between 3D Systems Corporation and Kevin McAlea, dated May 10, 2019. (Incorporated by reference to Exhibit 10.1 to Registrant's current report on Form 8-K filed on May 15, 2019.)

31.1	Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated ~~October 31, 2017.~~ August 7, 2019.

31.2	Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated ~~October 31, 2017.~~ August 7, 2019.

32.1	Certification of Principal Executive Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated ~~October 31, 2017.~~ August 7, 2019.

32.2	Certification of Principal Financial Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated ~~October 31, 2017.~~ August 7, 2019.

101.INS	XBRL Instance ~~Document.~~ Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	XBRL Taxonomy Extension Schema Document.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File - this data file does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.

* Management contract or compensatory plan or arrangement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	3D Systems Corporation

	By	/s/ John N. McMullen
		John N. McMullen
		ExecutiveVice President and Chief Financial Officer
		(principal financialand accounting officer)
		(duly authorized officer)

Date: ~~October 31, 2017~~

August 7, 2019


(in thousands, except par value)		September 30, 2017 (unaudited)		December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	138,332	$	184,947
Accounts receivable, net of reserves — $11,607 (2017) and $12,920 (2016)		122,420		127,114
Inventories		100,578		103,331
Prepaid expenses and other current assets		21,344		17,558
Total current assets		382,674		432,950
Property and equipment, net		91,473		79,978
Intangible assets, net		106,632		121,501
Goodwill		227,820		181,230
Long term deferred income tax asset		5,173		8,123
Other assets, net		27,602		25,371
Total assets	$	841,374	$	849,153
LIABILITIES AND EQUITY
Current liabilities:
Current portion of capitalized lease obligations	$	632	$	572
Accounts payable		46,388		40,514
Accrued and other liabilities		55,866		49,968
Customer deposits		5,249		5,857
Deferred revenue		37,311		33,494
Total current liabilities		145,446		130,405
Long term portion of capitalized lease obligations		7,230		7,587
Long term deferred income tax liability		16,644		17,601
Other liabilities		48,529		57,988
Total liabilities		217,849		213,581
Redeemable noncontrolling interests		8,872		8,872
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.001 par value, authorized 220,000 shares; issued 115,798 (2017) and 115,113 (2016)		115		115
Additional paid-in capital		1,320,074		1,307,428
Treasury stock, at cost — 1,982 shares (2017) and 1,498 shares (2016)		(7,153)		(2,658)
Accumulated deficit		(667,638)		(621,787)
Accumulated other comprehensive loss		(27,706)		(53,225)
Total 3D Systems Corporation stockholders' equity		617,692		629,873
Noncontrolling interests		(3,039)		(3,173)
Total stockholders’ equity		614,653		626,700
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	841,374	$	849,153


	Quarter Ended September 30, 2017
	Intercompany Sales to
(in thousands)	Americas		Germany		Other EMEA		Asia Pacific		Total
Americas	$	554	$	9,439	$	2,325	$	5,390	$	17,708
Germany		945		—		1,645		259		2,849
Other EMEA		15,112		2,006		635		726		18,479
Asia Pacific		613		—		8		772		1,393
Total intercompany sales	$	17,224	$	11,445	$	4,613	$	7,147	$	40,429

	Quarter Ended September 30, 2016
	Intercompany Sales to
(in thousands)	Americas		Germany		Other EMEA		Asia Pacific		Total
Americas	$	733	$	6,163	$	2,244	$	6,322	$	15,462
Germany		240		—		976		105		1,321
Other EMEA		14,972		562		1,236		1,053		17,823
Asia Pacific		606		—		113		1,053		1,772
Total intercompany sales	$	16,551	$	6,725	$	4,569	$	8,533	$	36,378

	Nine Months Ended September 30, 2017
	Intercompany Sales to
(in thousands)	Americas		Germany		Other EMEA		Asia Pacific		Total
Americas	$	1,452	$	27,147	$	7,267	$	14,243	$	50,109
Germany		1,434		—		5,347		261		7,042
Other EMEA		49,327		3,951		3,716		2,639		59,633
Asia Pacific		1,492		—		165		2,921		4,578
Total intercompany sales	$	53,705	$	31,098	$	16,495	$	20,064	$	121,362

	Nine Months Ended September 30, 2016
	Intercompany Sales to
(in thousands)	Americas		Germany		Other EMEA		Asia Pacific		Total
Americas	$	2,011	$	21,377	$	8,313	$	15,882	$	47,583
Germany		3,604		—		2,254		169		6,027
Other EMEA		44,946		1,740		3,601		3,301		53,588
Asia Pacific		2,270		—		132		2,859		5,261
Total intercompany sales	$	52,831	$	23,117	$	14,300	$	22,211	$	112,459


					Change
(Dollars in thousands)	September 30, 2017		December 31, 2016		$		%
Cash and cash equivalents	$	138,332	$	184,947	$	(46,615)	(25.2)	%
Accounts receivable, net		122,420		127,114		(4,694)	(3.7)
Inventories		100,578		103,331		(2,753)	(2.7)
		361,330		415,392		(54,062)

Current portion of capitalized lease obligations		632		572		60	10.5
Accounts payable		46,388		40,514		5,874	14.5
Accrued and other liabilities		55,866		49,968		5,898	11.8
		102,886		91,054		11,832

Operating working capital	$	258,444	$	324,338	$	(65,894)	(20.3)	%

June 30, 2019

Weighted-average remaining lease term

Weighted-average discount rate