<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 27, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-22250
3D SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-4431352
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) (Identification No.)
26081 AVENUE HALL, VALENCIA, CALIFORNIA 91355
(Address of Principal Executive Offices) (Zip Code)
(805) 295-5600
(Registrant's Telephone Number, Including Area Code)
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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ----
Shares of Common Stock, par value $0.001, outstanding as of April 30, 1998:
11,307,077 shares
Page 1 of 16
<PAGE>
3D SYSTEMS CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets,
December 31, 1997 and March 27, 1998..................... 3
Consolidated Statements of Operations
For the Three Month Periods Ended
March 28, 1997 and March 27, 1998........................ 4
Consolidated Statements of Cash Flows
For the Three Month Periods Ended
March 28, 1997 and March 27, 1998........................ 5
Consolidated Statements of Comprehensive Income
For the Three Month Periods Ended
March 28, 1997 and March 27, 1998........................ 6
Notes to Consolidated Financial Statements,
December 31, 1997 and March 27, 1998..................... 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K................... 15
</TABLE>
Page 2 of 16
<PAGE>
3D SYSTEMS CORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
ASSETS December 31, 1997 March 27, 1998
----------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,694,831 $ 12,585,983
Short-term investments 3,498,265 2,999,063
Accounts receivable, less allowances for doubtful accounts of
$441,399 (1997) and $612,769 (1998) 23,618,237 23,588,973
Current portion of lease receivables 1,257,006 1,336,010
Inventories (Note 2) 12,164,633 10,720,172
Deferred tax assets 3,319,651 2,489,738
Prepaid expenses and other current assets 2,305,163 2,680,404
----------------- --------------
Total current assets 58,857,786 56,400,343
Property and equipment, net (Note 3) 16,895,011 16,314,664
Licenses and patent costs, net 5,464,351 5,689,078
Deferred tax assets 3,971,000 3,971,000
Lease receivables, less current portion 3,944,462 4,216,916
Other assets 2,207,109 2,186,579
----------------- --------------
$ 91,339,719 $ 88,778,580
----------------- --------------
----------------- --------------
LIABILITY AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,885,831 $ 3,717,476
Accrued liabilities 8,814,193 7,353,430
Current portion of long-term debt 95,000 95,000
Customer deposits 238,248 291,314
Deferred revenues 6,514,868 7,591,076
----------------- --------------
Total current liabilities 20,548,140 19,048,296
Other liabilities 1,491,534 1,499,107
Long-term debt, less current portion 4,705,000 4,655,000
----------------- --------------
26,744,674 25,202,403
----------------- --------------
Stockholders' equity:
Preferred stock, $.001 par value. Authorized 5,000,000 shares;
none issued
Common stock, $.001 par value. Authorized 25,000,000 shares;
issued 11,450,071 and outstanding 11,425,071 (1997) and issued
11,477,985 and outstanding 11,252,985 (1998) 11,450 11,478
Capital in excess of par value 73,856,965 74,048,266
Accumulated deficit (8,897,605) (8,543,217)
Cumulative translation adjustment (210,827) (400,409)
Treasury stock, at cost, 25,000 shares (1997) and
225,000 shares (1998) (Note 4) (164,938) (1,539,941)
----------------- --------------
Total stockholders' equity 64,595,045 63,576,177
----------------- --------------
$ 91,339,719 $ 88,778,580
----------------- --------------
----------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3 of 16
<PAGE>
3D SYSTEMS CORPORATION
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Month Periods Ended
March 28, 1997 March 27, 1998
-------------- --------------
<S> <C> <C>
Sales:
Products $ 13,597,856 $ 14,527,349
Services 7,860,956 8,309,008
-------------- --------------
Total sales 21,458,812 22,836,357
-------------- --------------
Cost of sales:
Products 7,287,392 7,891,600
Services 5,502,589 5,555,809
-------------- --------------
Total cost of sales 12,789,981 13,447,409
-------------- --------------
Gross profit 8,668,831 9,388,948
-------------- --------------
Operating expenses:
Selling, general and administrative 6,390,691 6,638,532
Research and development 1,929,834 2,311,634
-------------- --------------
Total operating expenses 8,320,525 8,950,166
Income from operations 348,306 438,782
Interest income 351,048 178,885
Interest expense (58,783) (72,455)
-------------- --------------
Income before provision for income taxes 640,571 545,212
Provision for income taxes 253,025 190,824
-------------- --------------
Net income $ 387,546 $ 354,388
-------------- --------------
-------------- --------------
Earnings per share:
Basic $ .03 $ .03
-------------- --------------
-------------- --------------
Diluted $ .03 $ .03
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 16
<PAGE>
3D SYSTEMS CORPORATION
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 28, 1997 and March 27, 1998
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 387,546 $ 354,388
Adjustments to reconcile net income to net cash used for
operating activites:
Deferred income taxes 388,550 829,965
Depreciation and amortization 1,130,473 1,345,662
Increase(decrease) in cash resulting from changes in:
Accounts receivable (336,661) (46,831)
Lease receivables (3,098,279) (351,458)
Inventories (2,311,301) 1,410,702
Prepaid expenses and other current assets 248,511 (381,817)
Other assets (163,541) (170,953)
Accounts payable 1,980,019 (1,142,901)
Accrued liabilities (908,777) (1,428,735)
Customer deposits 4,666 53,134
Deferred revenues 1,428,224 1,073,758
Other liabilities (61,517) 13,896
----------- -----------
Net cash (used) provided by operating activities (1,312,087) 1,558,810
INVESTING ACTIVITIES:
Purchase of property and equipment (2,029,482) (1,315,112)
Disposition of property and equipment 407,581 863,784
Increase in licenses and patent costs (60,793) (330,634)
Purchase of short-term investments --- (2,999,003)
Proceeds from short-term investments 2,005,517 3,498,265
----------- -----------
Net cash provided (used) by investing activities 322,823 (282,700)
FINANCING ACTIVITIES:
Exercise of stock options and warrants 12,505 191,329
Repayments of note payable (55,000) (50,000)
Purchase of treasury stock --- (1,375,003)
----------- -----------
Net cash used by financing activities (42,495) (1,233,674)
Effect of exchange rate changes on cash (939,612) (151,284)
----------- -----------
Net decrease in cash and cash equivalents (1,971,371) (108,848)
Cash and cash equivalents at the beginning of the period 24,356,441 12,694,831
----------- -----------
Cash and cash equivalents at the end of the period $22,385,070 $12,585,983
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5 of 16
<PAGE>
3D SYSTEMS CORPORATION
Consolidated Statements of Comprehensive Income
(Unaudited)
<TABLE>
<CAPTION>
Three Month Periods Ended
March 28, 1997 March 27, 1998
-------------- --------------
<S> <C> <C>
Net income $ 387,546 $ 354,388
Foreign currency translation, net of tax (861,135) (189,582)
--------- ---------
Comprehensive (loss) income $(473,589) $ 164,806
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6 of 16
<PAGE>
3D SYSTEMS CORPORATION
Notes to Consolidated Financial Statements
December 31, 1997 and March 27, 1998
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of 3D
Systems Corporation and subsidiaries (the "Company") are prepared in
accordance with instructions to Form 10-Q and, in the opinion of
management, include all material adjustments (consisting only of normal
recurring accruals) which are necessary for the fair presentation of
results for the interim periods. The Company reports its interim
financial information on a 13 week basis ending the last Friday of each
quarter, and reports its annual financial information through the
calendar year ended December 31. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997. The results of the
three month period ended March 27, 1998 are not necessarily indicative of
the results to be expected for the full year.
(2) Inventories
<TABLE>
<CAPTION>
December 31, 1997 March 27, 1998
----------------- --------------
<S> <C> <C>
Raw materials $ 2,259,504 $ 1,784,533
Work in progress 1,141,702 745,514
Finished goods 8,763,427 8,190,125
----------- -----------
$12,164,633 $10,720,172
----------- -----------
----------- -----------
</TABLE>
(3) Property and Equipment
<TABLE>
<CAPTION>
December 31, 1997 March 27, 1998
----------------- --------------
<S> <C> <C>
Land and building $ 4,613,051 $ 4,613,051
Machinery and equipment 15,704,394 16,164,871
Office furniture and equipment 2,713,906 2,737,649
Leasehold improvements 2,100,530 2,281,144
Rental equipment 906,098 871,944
Construction in progress 1,119,065 723,327
------------ ------------
27,157,044 27,391,986
Less accumulated depreciation and
amortization (10,262,033) (11,077,322)
------------ ------------
$ 16,895,011 $ 16,314,664
------------ ------------
------------ ------------
</TABLE>
(4) Treasury Stock
On May 6, 1997, the Company announced that its Board of Directors had
authorized the Company to buy up to 1.5 million of its shares in the open
market and through private transactions. During 1997, and in the first
quarter of 1998, the Company purchased 25,000 and 200,000, respectively,
of its own shares for approximately $165,000 and $1,375,003,
respectively. The Company may continue to acquire additional shares from
time to time at the prevailing market price, at a rate consistent with
the combination of corporate cash and market conditions.
Page 7 of 16
<PAGE>
3D SYSTEMS CORPORATION
Notes to Consolidated Financial Statements (Continued)
December 31, 1997 and March 27, 1998
(Unaudited)
(5) Computation of Earnings Per Share
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings Per Share" for the year ended December 31, 1997, and
has restated earnings per common share for all periods presented in
accordance with the new standard. Net income (loss) per common share is
computed by dividing net income (loss) by the weighted average number of
shares of common stock outstanding during the period. Net income (loss)
per common share assuming dilution is computed by dividing net income
(loss) by the weighted average number of shares of common stock
outstanding plus the number of additional common shares that would have
been outstanding if all dilutive potential common shares had been issued.
Potential common shares related to stock options and stock warrants are
excluded from the computation when their effect is antidilutive.
The following is a reconciliation of the numerator and denominator of the
basic and diluted earnings per share (EPS) computations for the years
ended March 28, 1997 and March 27, 1998:
<TABLE>
<CAPTION>
1997 1998
------------- -----------
<S> <C> <C>
Numerator:
Net income - numerator for net income per
common share and net income per common share
assuming dilution $ 387,546 $ 354,388
Denominator:
Denominator for net income per common
share - weighted average shares 11,359,662 11,287,023
Effect of dilutive securities:
Stock options 397,842 249,679
Denominator for net income per common share,
assuming dilution:
Adjusted weighted average shares and assumed conversions 11,757,504 11,536,702
</TABLE>
Common shares related to stock options and stock warrants that are
antidilutive amounted to approximately 503,333 shares and 874,885 shares
for the quarters ended March 28, 1997 and March 27, 1998, respectively.
(6) Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," which requires prominent
disclosure of comprehensive income, as defined in the SFAS, including
comparative disclosure in interim financial statements.
Page 8 of 16
<PAGE>
3D SYSTEMS CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto included in Item 1 of this Quarterly
Report and the audited consolidated financial statements and notes thereto,
Management's Discussion and Analysis of Results of Operations and Financial
Condition, and Cautionary Statements and Risk Factors for the year ended
December 31, 1997 contained in the Company's 1997 Form 10-K.
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's future results could differ materially from
those discussed here. Factors that could cause or contribute to such
differences include, but are not specifically limited to: the ability to
develop and introduce cost effective new products in a timely manner;
developments in current or future litigation; the Company's ability to
successfully manufacture and sell significant quantities of equipment on a
timely basis; as well as the other risks detailed in this report and in the
Company's 1997 Form 10-K under the section entitled "Cautionary Statements
and Risk Factors."
OVERVIEW
The Company develops, manufactures and markets in the United States and
internationally both its stereolithography apparatus (SLA) and its Actua 2100
systems, each designed to rapidly produce three-dimensional objects from
computer-aided design and manufacturing generated solid or surface data.
Stereolithography is a solid imaging process whereby a laser beam exposes and
solidifies successive layers of photosensitive resin until the desired object
is formed to precise specifications in hard plastic. The Actua 2100 utilizes
Multi-Jet Modeling technology to print models in successive layers with a
special thermopolymer material. These objects can be used for concept
models, engineering prototypes, patterns and masters for molds and other
applications.
The Company has sold over 1,000 systems since 1988 and its customers include
major corporations in a broad range of industries including manufacturers of
automotive, aerospace, computer, electronic, consumer and medical products.
The Company's revenues are generated by product and service sales. Product
sales are comprised of the sale of systems and related equipment, materials,
software, and other component parts, as well as rentals of systems. Service
sales include revenues from a variety of on-site maintenance services,
services provided by the Company's Tooling Centers and customer training.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain items
from the Company's Statement of Operations and Total Revenues:
<TABLE>
<CAPTION>
Percentage of Total Revenues
Three Month Periods Ended
------------------------------
March 28, 1997 March 27, 1998
-------------- --------------
<S> <C> <C>
Sales:
Products 63.4% 63.6%
Services 36.6% 36.4%
----- -----
Total sales 100.0% 100.0%
----- -----
Cost of Sales:
Products 34.0% 34.6%
Services 25.6% 24.3%
----- -----
Total cost of sales 59.6% 58.9%
----- -----
Total gross profit 40.4% 41.1%
Gross profit - products 46.4% 45.7%
Gross profit - services 30.0% 33.1%
Selling, general and administrative expenses 29.8% 29.1%
Research and development expenses 9.0% 10.1%
Income from operations 1.6% 1.9%
Interest income, net 1.4% .5%
Provision for income taxes 1.2% .8%
Net income 1.8% 1.6%
</TABLE>
Page 9 of 16
<PAGE>
3D SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
The following table sets forth for the periods indicated total revenues
attributable to each of the Company's major products and services groups, and
those revenues as a percentage of total sales:
<TABLE>
<CAPTION>
Three Month Periods Ended
--------------------------------
March 28, 1997 March 27, 1998
--------------- ---------------
(in thousands except percentages)
<S> <C> <C>
Products:
Systems, and related equipment $ 9,814 $ 9,796
Materials 2,819 3,293
Other 965 1,438
------- -------
Total products 13,598 14,527
------- -------
Services:
Maintenance 6,267 6,911
Other 1,594 1,398
------- -------
Total services 7,861 8,309
------- -------
Total sales $21,459 $22,836
------- -------
------- -------
Products:
Systems, and related equipment 45.8% 42.9%
Materials 13.1 14.4
Other 4.5 6.3
------- -------
Total products 63.4 63.6
------- -------
Services:
Maintenance 29.2 30.3
Other 7.4 6.1
------- -------
Total services 36.6 36.4
------- -------
Total sales 100.0% 100.0%
------- -------
------- -------
</TABLE>
Page 10 of 16
<PAGE>
3D SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
THREE MONTH PERIOD ENDED MARCH 27, 1998 COMPARED TO THE THREE MONTH PERIOD
ENDED MARCH 28, 1997.
SALES. Sales during the three month period ended March 27, 1998 (the "first
quarter of 1998") were $22.8 million, an increase of 6% over the $21.5
million recorded during the three month period ended March 28, 1997 (the
"first quarter of 1997").
Product sales during the first quarter of 1998 ($14.5 million) increased
approximately $.9 million or 7% compared to the first quarter of 1997 ($13.6
million). The Company sold a total of 49 systems in the first quarter of
1998, compared to 66 systems in the first quarter of 1997. The decrease in
total systems sold in the first quarter of 1998 is largely attributable to a
decrease in the number of Actua 2100 systems sold in that quarter as compared
to the first quarter of 1997. System sales fluctuate from quarter to quarter
and the Company does not believe that the reduced number of Actua's sold in
the first quarter of 1998 is necessarily indicative of sales of the Actua
2100 system in any future quarter. This is a forward looking statement
however and is subject to uncertainties. For example, the exact timing of
customer requirements may significantly impact product sales in future
quarters. The increase in the dollar value of product sales was primarily
due to the increase in material sales and the shipment of materials and
related special equipment to the two initial customers of the Keltool
technology licensing program announced earlier in the quarter.
Orders for the Company's systems in the first quarter of 1998 (compared to
the first quarter of 1997) increased in the U.S. and Asia-Pacific and
remained approximately the same in Europe. Total system backlog at the end
of the first quarter of 1998 was approximately the same as the first quarter
of 1997. The increase in system orders in the first quarter of 1998 (when
compared to the first quarter of 1997) was due primarily to the increased
productivity of the domestic sales force and the increased sales effort in
Asia-Pacific. The Company anticipates that orders should increase during 1998
as compared to 1997 primarily as a result of an increased productivity of the
domestic sales force and the assimilation of the EOS acquisition. This is a
forward looking statement and, as with other such statements, is subject to
uncertainties. For example, European economic conditions could cause delays
in customer orders which could lead to orders being lower in 1998 than 1997.
In addition, the Company believes that system sales may fluctuate on a
quarterly basis as a result of a number of factors, including world economic
conditions, fluctuations in foreign currency exchange rates and the timing of
product shipments. Due to the price of certain systems, along with overall
low shipment volumes, the acceleration or delay of a small number of
shipments from one quarter to another can significantly affect the results of
operations for the quarters involved.
Other factors which may impact quarterly sales during 1998 are the sales mix
of the Company's products as well as the channels and markets in which the
Company distributes its products.
Service sales during the first quarter of 1998 ($8.3 million) increased
approximately $.5 million or 6% compared to the first quarter of 1997,
primarily as a result of increased maintenance revenues due to the larger
installed base of systems in the U.S. and Europe and certain one time
benefits related to the acquisition of the EOS business.
COST OF SALES. Cost of sales increased to $13.4 million or 59% of sales in
the first quarter of 1998 from $12.8 million or 59% of sales in the first
quarter of 1997.
Product cost of sales as a percentage of product sales remained at
approximately 54% for both the first quarter of 1998 and the first quarter of
1997. The Company's gross profit margins on product sales are
Page 11 of 16
<PAGE>
3D SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
affected by several factors including, among others, sales mix, distribution
channels and fluctuations in foreign currency exchange rates and, therefore,
may vary in future periods from those experienced during the first quarter of
1998.
Service cost of sales as a percentage of service sales decreased to 67%
during the first quarter of 1998 compared to 70% during the first quarter of
1997, primarily as a result of certain hardware upgrades afforded SLA-500
customers with software maintenance contracts due to the Company's new NT
version system software during the first quarter of 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("S,G&A") expenses increased approximately $250,000 or 4% in
the first quarter of 1998 compared to the first quarter of 1997, primarily
related to an increase in staffing to meet growth in Europe.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development ("R&D") expenses
during the first quarter of 1998 increased approximately $380,000 or 20%
compared to the first quarter of 1997. The increase in R&D expenses in 1998
was primarily the result of increased personnel and materials related to
certain development projects. Based on the Company's historical expenditures
related to research and development and its current development goals, the
Company anticipates for the foreseeable future, research and development
expenses will be equal to approximately 10% of sales. However, this is a
forward-looking statement and, as with any such statement, is subject to
uncertainties. For example, if total sales of the Company for any particular
period do not meet the anticipated sales of the Company for that period,
research and development expenses as a percentage of sales may exceed 10%.
OPERATING INCOME. Operating income for the first quarter of 1998 was 1.9% of
total sales compared to 1.6% of total sales in the first quarter of 1997. The
increase in the percentage of operating income to total sales in 1998 was
primarily attributable to the decreases in cost of sales of services in the
first quarter of 1998, described above. The Company believes that operating
income for the fiscal quarter ending June 26, 1998 should be up slightly as a
percent of total sales, compared to the first quarter of 1998. This is a
forward looking statement, however, and is subject to uncertainties. For
example, if the mix of products sold in the fiscal quarter ended June 26,
1998 varies significantly from the first quarter of 1998, then the resulting
gross profit and operating income may decrease as a percentage of sales.
OTHER INCOME AND EXPENSES. Interest income decreased to $178,885 during the
first quarter of 1998 from $351,048 during the first quarter of 1997,
primarily as a result of the lower investment balances due to cash used for
operating activities and investment activities since the first quarter of
1997 and the funding of certain lease receivables that occurred in the third
quarter of 1997.
Interest expense increased to $72,455 during the first quarter of 1998 from
$58,783 in the first quarter of 1997.
Page 12 of 16
<PAGE>
3D SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
December 31,1997 March 27, 1998
---------------- --------------
<S> <C> <C>
Cash and cash equivalents $ 12,694,831 $ 12,585,983
Short-term investments 3,498,265 2,999,063
Working capital 38,309,646 37,352,047
Three Month Periods Ended
------------------------------------
March 28, 1997 March 27, 1998
-------------- --------------
<S> <C> <C>
Cash provided by (used for) operating activities $ (1,312,087) $ 1,558,810
Cash provided by (used for) investing activities 322,823 (282,700)
Cash used for financing activities (42,495) (1,233,674)
</TABLE>
Net cash provided by operating activities during the first quarter of 1998
was $1.6 million. The positive cash flow from operations during the first
quarter of 1998 was comprised primarily of a decrease in inventories ($1.4
million), depreciation and amortization ($1.3 million), an increase in
deferred revenue ($1.1 million) and a decrease in deferred taxes ($.8
million), partially offset by a decrease in accounts payables and accrued
expenses ($2.6 million).
Net cash used for investing activities during the first quarter of 1998
totaled $.3 million and was primarily the result of the net additions to
property and equipment and license and patent costs ($.8 million) partially
offset by the liquidation of short-term investments ($.5 million).
Net cash used for financing activities during the first quarter of 1998 was
primarily the result of the Company's purchase of 200,000 shares of its own
stock ($1.4 million). The Company may continue to acquire additional shares
from time to time at the prevailing market price, at a rate consistent with
the combination of corporate cash and market conditions.
In August 1997, the Company extended its credit facility with Silicon Valley
Bank ("SVB") (the "Credit Facility"). Under the terms of the agreement,
which remains in effect through August 18, 1998, the Company can borrow from
SVB up to $10,000,000, at the prevailing prime rate of interest. The Credit
Facility, which is unsecured, contains certain financial covenants including
the maintenance of certain financial ratios, working capital, tangible net
worth as well as covenants limiting mergers, acquisitions, recapitalizations,
dividends, loans to others, and hypothecation of assets or corporate
guarantees. Since inception of the Credit Facility (June 1993) and at all
times through March 27, 1998, the Company has been in compliance with all
financial covenants then in effect and has not utilized the facility.
Page 13 of 16
<PAGE>
3D SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
The Company believes that funds generated from operations, existing working
capital and its current line of credit will be sufficient to satisfy its
anticipated operating requirements for at least the next twelve months.
YEAR 2000 ISSUE. Many computer systems experience problems handling dates
beyond the year 1999. Therefore, some computer hardware and software will
need to be modified prior to the year 2000 in order to remain functional.
The Company is assessing both the internal readiness of its computer systems
and the compliance of its computer products and software sold to customers
for handling the year 2000. The Company expects to implement successfully
the systems programming changes necessary to address year 2000 issues, and
does not believe that the cost of such actions will have a material effect on
the Company's results of operations or financial condition. There can be no
assurance, however, that there will not be a delay in, or increased costs
associated with the implementation of such changes, and the inability to
implement such changes could have an adverse effect on future results of
operations.
Page 14 of 16
<PAGE>
3D SYSTEMS CORPORATION
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial data schedule.
(a) Reports on Form 8-K
Report on Form 8-K (Item 5) dated February 24, 1998 to announce Fourth
Quarter 1997 results.
Page 15 of 16
<PAGE>
SIGNATURES
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.
/s/ FRANK J. SPINA 5/11/98
- -------------------------- ----------
Frank J. Spina Date
Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
(Duly authorized to sign on behalf of Registrant)
Page 16 of 16
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-27-1998
<CASH> 12,585,983
<SECURITIES> 2,999,063
<RECEIVABLES> 24,201,742
<ALLOWANCES> (612,769)
<INVENTORY> 10,720,172
<CURRENT-ASSETS> 56,400,343
<PP&E> 27,391,986
<DEPRECIATION> (11,077,322)
<TOTAL-ASSETS> 88,778,580
<CURRENT-LIABILITIES> 19,048,291
<BONDS> 4,655,000
0
0
<COMMON> 11,478
<OTHER-SE> 63,564,699
<TOTAL-LIABILITY-AND-EQUITY> 88,778,580
<SALES> 14,527,349
<TOTAL-REVENUES> 22,836,357
<CGS> 7,891,600
<TOTAL-COSTS> 13,447,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 77,716
<INTEREST-EXPENSE> (106,430)
<INCOME-PRETAX> 545,212
<INCOME-TAX> 190,824
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 354,388
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
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