NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
Elizabeth Goode, Director Corporate Development
(661) 295-5600, ext. 2632
goodee@3dsystems.com
3D SYSTEMS ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2003 RESULTS
FOURTH QUARTER REVENUES UP 10% VERSUS THE PRIOR YEAR
ACHIEVING SECOND HIGHEST REVENUE QUARTER IN COMPANY'S HISTORY
VALENCIA, Calif., March 10, 2004 - 3D Systems Corporation (Nasdaq: TDSC)
announced today that its revenues grew 10.0% to $35.2 million in the fourth
quarter of 2003 compared to the 2002 period, reversing five previous quarters of
year-over-year revenue declines. Product revenues were essentially flat in the
fourth quarter of 2003 while service revenues increased by $2.9 million, or
36.5%. Gross profit as a percentage of revenue rose modestly to 42.7% in the
fourth quarter of 2003 from 42.5% in the prior-year period.
Loss from operations was $4.0 million in the fourth quarter of 2003
compared to $2.7 million in the prior-year period. Loss from operations in the
2003 period included $5.8 million of costs arising from the following items:
o Cost of sales included $0.3 million attributable to a change in
accounting principle related to the discontinuance of the
unit-of-production method of amortization for one of the Company's
patent licenses.
o Selling, general and administrative expenses included $4.7 million of
additional legal fees arising from the Company's change in accounting
principle to expense rather than capitalize legal fees incurred in
defense of its patent rights.
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o Selling, general and administrative expenses also included $0.8
million of expenses arising from the write-down of some of the
intangible assets of OptoForm Sarl, which the Company had acquired in
2001.
Net loss available to common shareholders for the quarter was $12.0
million, or $0.93 per fully diluted share, compared with $15.7 million, or $1.24
per fully diluted share, in the prior-year period. In addition to the costs
mentioned above, the Company's net loss included a $7.0 million, net of taxes,
non-cash charge arising from the cumulative effect of the two changes in
accounting principles discussed above. Net loss available to common shareholders
before the cumulative effect of the changes in accounting principles discussed
above was $4.6 million or $0.38 per fully diluted share.
Operating results improved before giving effect to the items discussed
above.
Consolidated revenues for the full year of 2003 were $110.0 million, a
decrease of 5.1% compared to $116.0 million in 2002. The decrease in revenue in
2003 was primarily the result of an $8.3 million decrease in systems revenue,
partially offset by a $2.0 million increase in service revenue and a $0.4
million increase in materials revenue. Revenues in 2003 included a favorable
effect of $3.4 million in foreign currency translation.
Gross profit as a percentage of revenue was 39.2% in 2003 versus 40.2% in
2002. Operating loss for 2003 declined 30.1% to $15.0 million, including the
$5.8 million of costs discussed above. Net loss available to common shareholders
was $26.9 million or $2.10 per fully diluted share compared to $14.9 million or
$1.16 per fully diluted share in the prior year. Net loss available to common
shareholders before the cumulative effect of the changes in accounting
principles discussed above was $19.0 million or $1.55 per fully diluted share.
"In the fourth quarter of 2003, 3D Systems delivered solid operating
improvements," said Abe Reichental, 3D Systems' Chief Executive Officer. "Among
these were a return to sales growth, positive operating cash flow and a
significantly strengthened balance sheet, which included a $24.0 million cash
balance at year-end. Additionally, during the past several months, we have
settled a number of lawsuits thus enabling us to focus more closely on our
business.
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"Going into the new year, we are positioning the Company for long-term
sustained performance with renewed emphasis on improving our customers' bottom
lines," continued Reichental. "To ensure that we execute against our strategic
priorities, we have realigned and strengthened our management team and launched
numerous growth initiatives and cost-reduction programs. During the fourth
quarter, we successfully introduced the InVision(TM) 3-D printer, our new
economically priced third-generation MJM printer for concept modeling and design
communication applications. Net sales of the InVision 3-D printer as well as
several other new products introduced in the fourth quarter were not material to
our operating results.
"In connection with our year-end audit, we decided to change two accounting
principles to more preferable methods, and recorded an asset impairment of
certain intangibles related to an earlier acquisition. We believe we are
building momentum on several fronts for an improved 2004," concluded Reichental.
3D Systems will discuss fourth-quarter and full-year 2003 results on a
conference call and audio webcast to be held at 4:30 p.m. EST (1:30 p.m. PST)
today.
FOURTH QUARTER BUSINESS HIGHLIGHTS:
o As part of the Company's strategic initiatives, four new products were
introduced in the latter part of 2003: Amethyst(TM)SL material,
primarily for jewelry manufacturers for direct investment casting in
precious metals; the InVision(TM)3-D printer, the Company's new
economically priced third-generation MJM printer using hot-melt
ink-jet technology; LaserForm(TM)A6 material for producing steel-tool
products; and hardware and software upgrades that enable customers of
our Vanguard(TM)systems to increase the output of their systems. Net
sales of these new products were not material to the Company's results
of operations in the year ended December 31, 2003. The Company also
announced the planned introduction of its Bluestone(TM)SL engineered
composite material for exceptional stiffness and strength. Plans to
introduce other products under development have been accelerated.
o Several outstanding lawsuits have been settled. Most notably, the
litigation between the Company and EOS GmbH was settled early in
February 2004. Under the terms of that settlement, the Company and EOS
waived all claims for damages with respect to their pending disputes
and litigation and licensed various patents to each other. As part of
that settlement, EOS is to pay the Company certain royalties for its
patent license, and the Company expects to
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begin selling under its own brand certain laser sintering equipment
and related products under an OEM supply agreement with EOS. In
addition, the Company settled its lawsuits with Regent Pacific
Management Corporation and E. James Selzer, former 3D Systems' Chief
Financial Officer.
o The company was recently able to remedy certain covenant defaults
under an agreement with Wells Fargo Bank relating to a letter of
credit that supports the industrial development bonds on our Grand
Junction Colorado facility. On March 4, 2004, we entered into an
amendment to the reimbursement agreement relating to the letter of
credit with Wells Fargo which states that the company is no longer in
default of its financial covenants and is no longer required to
replace the Wells Fargo letter of credit or to retire the $1.2 million
of the industrial development bonds. As part of this agreement the
Company and Wells Fargo agreed to amend certain criteria used to
measure compliance with these covenants.
3D SYSTEMS' COMPLETE SUITE OF CUSTOMER SOLUTIONS INCLUDES:
o MULTI-JET MODELING TECHNOLOGY ("MJM") OR 3-D PRINTING uses hot-melt
jetting technology to print three-dimensional physical parts by
accumulating proprietary solid imaging materials ("SIMs"), in
successive layers, dispensed by a print head comprising large numbers
of jets oriented in linear arrays. MJM technology is the basis of our
affordable three-dimensional solutions for printing any
three-dimensional part from digital data.
o STEREOLITHOGRAPHY OR SLA(R)SYSTEMS use an ultraviolet laser to convert
liquid photosensitive resins into solid cross-sections, layer by
layer, until the desired objects are complete. Our SLA(R)systems are
capable of making multiple parts at the same time and are designed to
produce prototype or end use parts that have a wide range of sizes and
shapes. An SLA(R)system can make scale models in a single build
session or, alternatively, are able to produce full-scale portions of
large objects in successive build sessions, which are then joined
together.
o SELECTIVE LASER SINTERING OR SLS(R) SYSTEMS use heat from a carbon
dioxide laser to melt and fuse, or sinter, powdered materials into
solid cross-sections, layer-by-layer, until the desired parts are
complete. SLS(R) systems can create parts from a variety of plastic
and metal powders and are capable of processing multiple parts in a
single build session. While the maximum part size from a single build
is currently limited by the size of the equipment models, customers
routinely create larger parts by joining together multiple sections.
o MATERIALS. As part of our integrated systems approach to our
customers, we blend, market and distribute consumable material
products under a variety of brand names that we sell for use in all of
our solid imaging systems. These
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products include proprietary resin materials used in our
stereolithography and multi-jet modeling product line, engineered
wax-based plastics used in our multi-jet modeling line, and specialty
powders used in our selective laser sintering product line. The family
of engineered products are designed for use with our systems and
processes to produce high-quality models, prototypes and parts. We
market our stereolithography products under the Accura(R) brand, our
selective laser sintering products under the DuraForm(TM),
LaserForm(TM) and CastForm(TM) brands, and our multi-jet modeling
products under the ThermoJet(R) and VisiJet(R) brands.
o SOFTWARE. To deliver total system integration, we provide to our
customers part-preparation software for personal computers and
engineering workstations. This unique package is designed to enhance
the interface between digital data and our solid imaging systems.
Digital data, such as solid CAD/CAM, is converted within the software
utility. Depending on the specific software package, the object can be
viewed, rotated, scaled and model structures added. Our proprietary
software package generates the information to be used by the SLS(R)
system, SLA(R)system or MJM system to create the solid images. In
addition, we team up with other software companies, where appropriate,
to develop complementary software for our systems.
o SERVICES. We provide on a global basis a comprehensive suite of
services and field support to our customers ranging from applications
development to installation, warranty and maintenance services.
BROAD APPLICATIONS AND END-USES:
o CONCEPT MODELING, THREE-DIMENSIONAL PRINTING: Solid imaging solutions
are used for concept-modeling and three-dimensional printing
applications, to produce three-dimensional shapes, primarily for
visualizing and communicating mechanical design applications as well
as for other applications including supply-chain management,
architecture, art, surgical medicine, marketing and entertainment.
o RAPID PROTOTYPING: Solid imaging solutions are used for rapid
prototyping applications, in among other ways, to generate product
concept models, functional prototypes and master-casting and tooling
patterns that are often used as an efficient, cost-effective means of
evaluating product designs.
o INSTANT MANUFACTURING: Solid imaging solutions are used for instant
manufacturing applications to manufacture end-use parts. Directly from
a digital image, our instant manufacturing customers produce end-use
parts without the
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need for expensive tooling or molds and without lengthy set-ups
resulting in significant flexibility and mass customization
capabilities.
CONFERENCE CALL AND AUDIO WEBCAST DETAILS
3D Systems will hold a conference call and audio webcast to discuss its
fourth-quarter and full-year 2003 financial results today at 4:30 p.m. EST (1:30
p.m. PST).
o To access the Conference Call, dial 877/613-8341 (or 706/679-7620 from
outside the United States). A recording will be available two hours
after completion of the call for seven days. To access the recording,
dial 800/642-1687 (or 706/645-9291 from outside the United States) and
enter 5401584, the conference call ID number.
o To access the audio webcast log on to the 3D Systems' website at:
www.3dsystems.com. The link to the webcast is provided on the homepage
of the website. To ensure timely participation and technical
capability, we recommend logging on a few minuets prior to the
Conference Call to activate your participation. The webcast will be
available for replay at:
http://www.3dsystems.com/company/investor/index.asp
FORWARD-LOOKING STATEMENTS
Certain statements made by the company in this release are forward-looking
statements. These statements include comments as to the company's beliefs and
expectations as to future events and trends affecting the company's business.
These forward-looking statements are based upon management's current
expectations concerning future events and trends and are necessarily subject to
uncertainties, many of which are outside the control of the company. The factors
stated under the heading "Forward-Looking Statements" in management's discussion
and analysis of results of operations and financial condition, which appear in
the company's most recent Quarterly Report on Form 10-Q as well as other
factors, could cause actual results to differ materially from such statements.
ABOUT 3D SYSTEMS (NASDAQ: TDSC)
Founded in 1986, 3D Systems(R), the solid imaging company(SM), provides
solid imaging products and systems solutions that reduce the time and cost of
designing products and facilitate direct and indirect manufacturing. Its systems
utilize patented proprietary technologies to create physical objects from
digital input that can be used in design communication, prototyping, and as
functional end-use parts.
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More information on the company is available at www.3dsystems.com, or by
phoning 888/337-9786, ext. 2882 (or 661/295-5600, ext. 2882 from outside the
United States), or via email at moreinfo@3dsystems.com.
The 3D logo, 3D Systems, SLA, SLS, ThermoJet and Accura are registered
trademarks and SLS, InVision, Amethyst, Bluestone, DuraForm, LaserForm and
CastForm are trademarks of 3D Systems. "the solid imaging company" is a service
mark of 3D Systems, Inc. All other product names or services mentioned are
trademarks or registered trademarks of their respective companies.
Tables Follow:
3D SYSTEMS CORPORATION
Condensed Consolidated Statements of Operations
For the Three Months and Years Ended December 31, 2003 and 2002
(in thousands, except per share amounts)
UNAUDITED
THREE MONTHS ENDED YEAR ENDED
December 31 DECEMBER 31
2003 2002 2003 2002
Revenue:
Products $ 24,398 $ 24,081 $ 73,084 $ 81,039
Services 10,795 7,909 36,931 34,922
-------------- ------------- ------------- ------------
Total Revenue 35,193 31,990 110,015 115,961
Cost of Sales
Products 13,113 12,354 39,818 43,398
Services 7,035 6,044 27,055 25,942
-------------- ------------- ------------- ------------
Total Cost of Sales 20,148 18,398 66,873 69,340
-------------- ------------- ------------- ------------
Gross profit 15,045 13,592 43,142 46,621
-------------- ------------- ------------- ------------
Operating expenses:
Selling, general and administrative 17,144 13,258 48,643 48,331
Research and development 1,851 3,022 9,031 15,366
Severance and other restructuring costs - 3 442 4,354
-------------- ------------- ------------- ------------
Total operating expenses 18,995 16,283 58,116 68,051
-------------- ------------- ------------- ------------
Loss from operations (3,950) (2,691) (14,974) (21,430)
Interest and other expense, net 621 994 2,902 2,991
Gain on arbitration settlement - - - 18,464
-------------- ------------- ------------- ------------
Loss before provision for income taxes (4,571) (3,685) (17,876) (5,957)
Provision for (benefit from) income taxes (2) 12,035 1,107 8,909
-------------- ------------- ------------- ------------
Net loss before cumulative effect of
changes in accounting principles (4,569) (15,720) (18,983) (14,866)
Cumulative effect on prior years (to December, 2002)
of expensing legal fees as incurred and change in
amortization method for patents and license costs (7,040) - (7,040) -
-------------- ------------- ------------- ------------
Net loss (11,609) (15,720) (26,023) (14,866)
Preferred stock dividend 349 - 867 -
-------------- ------------- ------------- ------------
Net loss income available to common shareholders $ (11,958) $ (15,720) $ (26,890) $ (14,866)
============== ============= ============= ============
Shares used to calculate basic and fully diluted net loss
available to common shareholders per share 12,890 12,705 12,782 12,837
============== ============= ============= ============
Basic and fully diluted net loss available to common
shareholders before cumulative effect of changes in
accounting principles, per share $ (0.38) $ (1.24) $ (1.55) $ (1.16)
Cumulative effect on prior years (to December 31, 2002) of
changes in accounting principles per share (0.55) - (0.55) -
-------------- ------------- ------------- ------------
Basic and fully diluted net loss available to common
shareholders, per share $ (0.93) $ (1.24) $ (2.10) $ (1.16)
============== ============= ============= ============
3D SYSTEMS CORPORATION
Condensed Consolidated Balance Sheets
As of December 31, 2003 and 2002
(in thousands)
UNAUDITED
ASSETS 2003 2002
--------------------- ------------------
Current Assets:
Cash and cash equivalents $ 23,954 $ 2,279
Deposits 553 -
Accounts receivable, net 22,773 27,420
Current portion of lease receivables 111 322
Inventories, net 9,694 12,564
Prepaid expenses and other current assets 2,087 3,687
--------------------- ------------------
Total current assets 59,172 46,272
Property and equipment, net 11,455 15,339
Licenses and patent costs, net 7,150 14,960
Lease receivables, less current portion 233 553
Acquired technology, net 5,498 7,647
Goodwill 44,900 44,456
Restricted cash 1,200 -
Other assets, net 1,857 3,006
--------------------- ------------------
$ 131,465 $ 132,233
===================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ - $ 2,450
Current portion of long-term debt 165 10,500
Accounts payable 7,299 10,830
Accrued liabilities 16,466 15,529
Customer deposits 771 801
Deferred revenues 15,648 14,770
--------------------- ------------------
Total current liabilities 40,349 54,880
Long-term debt, less current portion 3,925 4,090
Convertible subordinated debentures 32,704 10,000
Other liabilities 2,579 3,397
--------------------- ------------------
Total liabilities 79,557 72,367
Series B convertible redeemable preferred stock 15,210 -
Stockholders' equity:
Common stock, authorized 25,000 shares, issued and
outstanding 12,903 (2003) and 12,725 (2002) 13 13
Capital in excess of par value 85,588 84,931
Notes receivable from employees for purchases of stock (19) (59)
Treasury stock, at cost (45) -
Preferred stock dividend (867) -
Accumulated deficit in earnings (47,442) (21,419)
Accumulated other comprehensive loss (530) (3,600)
--------------------- ------------------
Total stockholders' equity 36,698 59,866
--------------------- ------------------
$ 131,465 $ 132,233
===================== ==================
3D SYSTEMS CORPORATION
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2003 and 2002
(in thousands)
UNAUDITED
2003 2002
--------------------- ------------------
Cash flows from operating activities:
Net loss $ (26,023) $ (14,866)
Adjustments to net loss:
Deferred income taxes, net of allowances - 7,813
Gain on arbitration settlement - (20,310)
Cumulative effect of changes in accounting principles 7,040 -
Write-off of intangible assets of OptoForm Sarl 847 -
Depreciation and amortization 8,427 9,902
Adjustments for accounts receivable and inventory reserves 2,745 3,527
Loss on property and equipment 386 263
Stock compensation expense 1,316 64
Changes in operating assets and liabilities:
Deposits (553) -
Accounts receivable 6,792 8,524
Lease receivables 9 1,373
Inventories 2,345 7,088
Other assets 3,182 (711)
Accounts payable (3,818) (2,575)
Other liabilities (1,513) 1,222
--------------------- ------------------
Net cash provided by operating activities 1,182 1,314
--------------------- ------------------
Cash used in investing activities:
Acquisitions - (3,319)
Additions to licenses and patents (760) (4,724)
Purchase of property and equipment (874) (3,210)
Proceeds from the sale of property and equipment 53 602
Software development costs (550) (364)
--------------------- ------------------
Net cash used in investing activities (2,131) (11,015)
--------------------- ------------------
Cash provided by financing activities:
Exercise of stock options and purchase plan 361 1,052
Net proceeds from sale of common stock - 12,492
Net proceeds from sale of preferred stock 15,178 -
Net proceeds from convertible debt issuance 22,108 400
Net borrowings/(repayments) under line of credit (2,450) 44,164
Repayment of long-term debt (10,500) (52,450)
Payment of preferred stock dividends (641) -
Stock registration costs (276) -
Restricted cash (1,200) -
Payments under obligations to former RPC stockholders (351) -
Repayment of notes receivable from employees - 185
--------------------- ------------------
Net cash provided by financing activities 22,229 5,843
Effect of exchange rate on cash 395 189
--------------------- ------------------
Net increase (decrease) in cash 21,675 (3,669)
Cash and cash equivalents at beginning of period 2,279 5,948
--------------------- ------------------
Cash and cash equivalents at end of period $ 23,954 $ 2,279
===================== ==================