PROSPECTUS
3D SYSTEMS CORPORATION
1,175,366 SHARES OF COMMON STOCK
We issued 1,125,000 shares of our common stock in a private placement in
May 2002. The parties listed in this prospectus under the caption "Selling
Security Holders" may from time to time offer and sell up to 1,175,366 shares of
our common stock. This includes 50,366 shares of our common stock held by a
single stockholder to whom we have granted registration rights. The Selling
Security Holders may offer their shares through public or private transactions,
on or off the Nasdaq National Market, at prevailing market prices or at
privately negotiated prices. We will not receive any of the proceeds from the
sale of these shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"TDSC." On May 10, 2002, the closing sale price of a share of our common stock,
as reported on the Nasdaq National Market, was $14.12.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" COMMENCING ON PAGE 3.
THE SECURITIES OFFERED OR SOLD UNDER THIS PROSPECTUS HAVE NOT BEEN APPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 21, 2002
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. WE URGE YOU TO READ THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE
"RISK FACTORS" SECTION.
THE COMPANY
We develop and manufacture solid imaging systems that we market to a
worldwide customer base. Solid imaging systems are designed to rapidly produce
three-dimensional physical objects from digital data using computer aided design
and manufacturing software utilities and related computer applications. Our
hardware products include SLA(R) industrial systems, ThermoJet(R) solid object
printers, and SLS(R) systems. We market and distribute consumable materials used
in these systems, and, in the case of the ThermoJet printers, we also produce
the materials. Since 1990, we have jointly developed resins for our SLA systems
with Vantico International, S.A., which we refer to in this prospectus as
Vantico, and we have served as the exclusive worldwide distributor (except for
Japan) of all of Vantico's stereolithography photopolymer liquid resins. Our
joint development and distribution arrangements with Vantico terminated on April
22, 2002. On September 20, 2001, we acquired RPC, Ltd., which we refer to in
this prospectus as RPC, a developer and manufacturer of materials for
stereolithography equipment. RPC has developed 16 stereolithography materials
for SLA systems to date. RPC's materials are fully compatible with our product
line and provide a variety of properties, including durability, heat resistance
and detailed surface finish.
SLA systems use our proprietary stereolithography technology, a solid
imaging process that uses a laser beam to expose and solidify successive layers
of a photosensitive liquid until the desired object is formed to precise
specifications in epoxy or acrylic resin. SLS systems use computer-generated,
three-dimensional drawings to rapidly produce parts by fusing powdered materials
into solid objects with a laser. ThermoJet solid object printers, which are
about the size of office copiers and are designed for operation in engineering
and design office environments, employ hot-melt ink jet technology to build
three-dimensional models in successive layers using our proprietary
thermoplastic material.
Parts produced by our systems can be used for concept models, engineering
prototypes, patterns and masters for molds, consumable tooling or short-run
manufacturing of final product, among other applications. Our technologies can
provide users with significant product development time-savings, cost reductions
and improved quality compared to traditional modeling, tooling and
pattern-making techniques. Designers, engineers, and other users of CAD/CAM
utilities can incorporate our printers into office networks as a shared
resource, to rapidly produce models of products under development for design
concept communication and validation. In addition, objects produced by our
ThermoJet printers can be used as patterns and molds and, when combined with
other secondary processes, such as investment casting, can produce parts with
representative end-use properties.
We market directly and through secondary distribution channels to customers
in the United States, Europe and Asia, and through distributors and sales agents
in other countries. Our customers include major corporations throughout the
world in a broad range of industries including manufacturers of automotive,
aerospace, computer, electronic, consumer and medical products. We also sell SLA
and SLS systems and ThermoJet printers to government agencies, universities and
to independent service bureaus that, for a fee, provide stereolithography, laser
sintering and three-dimensional printing services to their customers. We
provide, either directly or through our network of authorized distributors, a
variety of processing materials and on-site maintenance services for SLA and SLS
systems and ThermoJet printers.
Our principal executive offices are located at 26081 Avenue Hall, Valencia,
California 91355. Our telephone number is (661) 295-5600.
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RISK FACTORS
The securities offered by this prospectus are highly speculative and
involve a high degree of risk. You should not purchase these securities unless
you can afford a loss of your entire investment. In addition to the other
information provided in this prospectus, you should carefully consider the
following risk factors before purchasing any shares of our common stock.
TERRORISM AND THE UNCERTAINTY OF WAR MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
OPERATING RESULTS.
The terrorist attacks that took place in the United States on September 11,
2001 were unprecedented events that have created many economic and political
uncertainties, some of which may materially harm our business and revenues. The
disruption of our business as a result of these terrorist attacks, including
disruptions and deferrals of customer purchasing decisions, had an immediate
adverse impact on our business. The long-term effects of the September 11, 2001
attacks on our customers, the market for our common stock, the markets for our
services and the U.S. economy are uncertain. The consequences of any terrorist
attacks, or any armed conflicts that may result, are unpredictable, and we may
not be able to foresee events that could have an adverse effect on our markets,
or our business.
OUR RESEARCH AND DISTRIBUTION AGREEMENTS WITH VANTICO TERMINATED ON APRIL 22,
2002. IF WE ARE UNABLE TO TIMELY AND COST EFFECTIVELY DEVELOP RESINS ADEQUATE
FOR USE WITH OUR PRODUCTS, WE MAY LOSE CUSTOMERS AND MARKET SHARE AND OUR
REVENUES AND PROFITABILITY MAY DECLINE.
If we cannot develop sufficient quantities of resins for use in
stereolithography which are commercially accepted, we may lose customers, our
revenues may decline and our results of operations may be adversely affected.
Our research and distribution agreements with Vantico terminated on April 22,
2002.
Under these agreements, we had jointly developed liquid photopolymers with
Vantico and served as the exclusive worldwide distributor (except in Japan) of
these materials, manufactured by Vantico for use in stereolithography. Sales of
these materials accounted for 15.5% and 16.7% of our total revenues for the
three months ended March 29, 2002 and the year ended December 31, 2001. On
September 20, 2001, we acquired RPC, an independent supplier of
stereolithography resins. We may not be able to timely and cost-effectively
develop adequate enhancements to the existing RPC product line, or if developed,
produce sufficient quantities of RPC resins and other materials that meet the
needs of our customers or otherwise develop or obtain materials adequate for use
with our products that are commercially accepted. If we are able to develop or
otherwise obtain commercially accepted materials, we will face significant
competition for materials sales from various suppliers, including Vantico. A
substantial majority of our current SLA system customer base uses Vantico
resins. As a result, we may lose customers and market share, our revenues may
decline and our results of operations may be materially and adversely affected.
WE DO NOT HAVE SUBSTANTIAL EXPERIENCE OPERATING A MATERIALS MANUFACTURING
BUSINESS. IF WE CANNOT COST-EFFECTIVELY MANAGE THE MATERIALS BUSINESS AND THE
ASSOCIATED RISKS, OUR REVENUE, MARKET SHARE AND PROFITABILITY WILL DECLINE.
Our business strategy includes the operation and substantial expansion of
the RPC materials business. If we cannot operate the RPC business effectively,
or complete the expansion timely and cost-effectively, our revenue and
profitability will decline and we may lose customers and market share. Our
management team does not have substantial experience in the materials
manufacturing business and may not be able timely to identify or anticipate all
of the material risks associated with operating that business. In addition, the
materials business increases some of the existing risks we face, which we
explain in our discussion in this prospectus of other risks facing our business,
and poses new risks to our company. For example, we must comply with all
applicable environmental laws, rules and regulations associated with large scale
manufacturing of resins in Switzerland. Our compliance with these laws may
increase our cost of production and reduce our margins and any failure to comply
with these laws may result in legal or regulatory action instituted against us,
substantial monetary fines or other damages. Also, we intend to substantially
increase production of the RPC product line which will require the retention and
training of qualified employees and the timely implementation of a large scale
manufacturing system capable of large volume resin production. We may not be
able to retain a sufficient number of additional qualified employees on a timely
basis, or at all. If we cannot timely and cost-effectively expand and manage the
RPC business, we will lose revenue, customers and market share, and our results
of operations will be materially adversely affected.
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OUR DIVESTITURE OF ASSETS UNDER THE CONSENT DECREE ISSUED BY THE U.S. DEPARTMENT
OF JUSTICE MAY NOT BE ON TERMS ADVANTAGEOUS TO US AND MAY ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
Under a settlement agreement with the Department of Justice relating to our
merger with DTM, we must license certain of our patents for use in the
manufacture and sale of either stereolithography or laser sintering products,
but not both, in North America. We refer to this settlement agreement as the
Final Judgment. The Final Judgment requires that, by five days after we receive
notice that the court has entered the Final Judgment, we must have completed the
license to a company that currently manufactures either stereolithography or
laser sintering machines. On February 15, 2002, we executed a license agreement
and submitted it to the Department of Justice. On May 2, 2002, we received
notice the court entered the Final Judgment on April 17, 2002. Under the terms
of the Final Judgment, we cannot complete this license until it is approved. On
May 31, 2002, we received written notice from the Department of Justice
disapproving the February 15 license agreement and licensee. In June 2002, we
entered into a second technology license agreement, pursuant to which the
licensee would receive a license to certain of our patents and software
copyrights for use solely in the field of stereolithography in North America,
together with a list of our North American stereolithography customers. This
second agreement is contingent on approval by the Department of Justice.
If we cannot complete the license within the time period provided under the
Final Judgment, the Department of Justice may ask the court to appoint a
trustee, who will be empowered to complete the license to a purchaser acceptable
to the Department of Justice, on terms then obtainable by the trustee using its
reasonable efforts. Any proposed license agreement is subject to Department of
Justice consent. Thus, the Department of Justice may reject the licensee or seek
amendment to the terms of the proposed license agreement. Consequently, we may
have to license these patents on terms we do not believe are advantageous to us,
and on terms that we believe may materially and adversely affect our results of
operations.
OUR SUBSTANTIAL DEBT COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND AFFECT OUR
ABILITY TO RUN OUR BUSINESS.
We have a significant amount of debt outstanding. As of March 29, 2002, our
debt was $33.6 million. You should be aware that this level of debt could have
important consequences to you as a holder of shares. Below we have identified
for you some of the material potential consequences resulting from this
significant amount of debt.
o We may be unable to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes.
o A significant portion of our cash flow from operations must be
dedicated to the repayment of indebtedness, thereby reducing the
amount of cash we have available for other purposes.
o Our ability to adapt to changing market conditions may be hampered. We
may be more vulnerable in a volatile market and at a competitive
disadvantage to our competitors that have less debt.
o Our operating flexibility is more limited due to financial and other
restrictive covenants, including restrictions on incurring additional
debt, creating liens on our properties, making acquisitions and paying
dividends.
o We will be subject to the risks that interest rates and our interest
expense will increase.
o Our ability to plan for, or react to, changes in our business is more
limited.
Under certain circumstances, we may be able to incur additional
indebtedness in the future. If we add new debt, the related risks that we now
face could intensify.
WE REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR DEBT.
Our substantial amount of debt requires us to dedicate a significant
portion of our cash flow from operations to pay down our indebtedness, thereby
reducing the funds available to us for working capital, capital expenditures and
general corporate purposes. Our ability to make payments on our debt will depend
on our ability to generate cash in the future. Insufficient cash flow could
place us at risk of default under our debt agreements or
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could prevent us from expanding our business as planned. Our ability to generate
cash is subject to general economic, financial, competitive, regulatory and
other factors that are beyond our control. Our business may not generate
sufficient cash flow from operations, our strategy to increase operating
efficiencies may not be realized and future borrowings may not be available to
use under our credit facility in an amount sufficient to enable us to fund our
liquidity needs.
OUR FAILURE TO SATISFY COVENANTS IN OUR DEBT INSTRUMENTS WILL CAUSE A DEFAULT
UNDER THOSE INSTRUMENTS.
In addition to imposing restrictions on our business and operations, our
debt instruments include a number of covenants relating to financial ratios and
tests. The covenants include requirements that we meet certain earning levels
relative to our debt. For the year ended December 31, 2001 and the quarter ended
March 29, 2002, we experienced a net loss. If we continue to have losses and we
achieve no further reductions in our debt level, it will have a negative impact
on our ability to comply with this requirement. In addition, our ability to
comply with these covenants may be affected by events beyond our control,
including prevailing economic, financial and industry conditions. The breach of
any of these covenants would result in a default under these instruments. An
event of default would permit our lenders to declare all amounts borrowed from
them to be due and payable, together with accrued and unpaid interest. Moreover,
these lenders would have the option to terminate any obligation to make further
extensions of credit under these instruments. If we are unable to repay debt to
our senior lenders, these lenders could proceed against our assets.
THE SIGNIFICANT COMPETITION WE FACE COULD CAUSE US TO LOSE MARKET SHARE OR
REDUCE PRICES.
To compete effectively, in this dynamic and changing business area, we may
be required to reduce prices for our products, increase our operating costs, or
take other measures that could adversely impact our business. We compete for
customers with a wide variety of producers of models, prototypes and other
3-dimensional objects, ranging from traditional model makers and
subtractive-type producers, such as CNC machine makers, to a wide variety of
additive solid imaging system manufacturers as well as service bureaus that
provide any or all of these types of technology. Consequently, we are subject to
the effects of technological change, innovation, and new product introductions.
Some of our existing and potential competitors are researching, designing,
developing and marketing other types of equipment, materials and services. In
addition, we face substantial competition for stereolithography materials as a
result of the termination of our distribution agreement with Vantico on April
22, 2002. Many of these competitors have financial, marketing, manufacturing,
distribution and other resources substantially greater than ours. In many cases,
the existence of these competitors extends the purchase decision time as
customers investigate the alternative products and solutions. Also, these
competitors have marketed these products successfully to our existing and
potential customers.
We expect further competition will arise from the technology license
agreement to be entered into pursuant to the Final Judgment issued by the U.S.
Department of Justice. Under the terms of the Final Judgment, we are required to
license our existing patents with respect to either our stereolithography or
laser sintering technology to a viable and ongoing commercial enterprise capable
of competing effectively in the applicable market. The licensee may introduce
its existing product line into the United States, and may enhance this product
line or develop new products, in either case, under the license of our existing
patents. As a consequence of our license of these patents, we may lose market
share and/or be required to reduce prices or take other measures that could
adversely affect our results of operations in an effort to remain competitive.
We also expect future competition may arise from the termination of our
distribution agreement with Vantico, the development of allied or related
techniques, both additive and subtractive, that are not encompassed by our
patents, the issuance of patents to other companies that inhibit our ability to
develop certain products, and the improvement to existing technologies. We have
determined to follow a strategy of continuing product development and aggressive
patent prosecution to protect our position to the extent practicable. We cannot
assure you that we will be able to maintain our current position in the field or
continue to compete successfully against current and future sources of
competition.
WE, AS SUCCESSOR TO DTM, CURRENTLY ARE INVOLVED IN INTELLECTUAL PROPERTY
LITIGATION, THE OUTCOME OF WHICH COULD MATERIALLY AND ADVERSELY AFFECT US.
On August 24, 2001, we completed our acquisition of DTM. As the successor
to DTM, we face direct competition for selective laser sintering equipment and
materials outside the United States from EOS GmbH of
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Planegg, Germany, which we refer to as EOS. Prior to our acquisition, DTM had
been involved in significant litigation with EOS in France, Germany, Italy,
Japan and the United States with regard to its proprietary rights to selective
laser sintering technology. EOS also has challenged the validity of patents
related to laser sintering in the European Patent Office and the Japanese Patent
Office. In addition, EOS filed a patent infringement suit against DTM in federal
court in California alleging that DTM infringed certain U.S. patents that we
license to EOS.
We cannot assure you that we will successfully defend against the claims of
invalidity and infringement. Our inability to resolve the claims or to prevail
in any related litigation could result in a finding of infringement of our
licensed patents. Additionally, one EOS patent is asserted which, if found valid
and infringed, could preclude the continued development and sale of certain of
our laser sintering products that incorporate the intellectual property that is
the subject of the patent. In addition, we may become obligated to pay
substantial monetary damages for past infringement. Regardless of the outcome of
these actions we will continue to incur significant related expenses and costs
that could have a material adverse effect on our business and operations.
Furthermore, these actions could involve a substantial diversion of the time of
some members of management. The failure to preserve our laser sintering
intellectual property rights and the costs associated with these actions could
have a material adverse effect on our results of operations, liquidity and
financial condition and could cause significant fluctuations in operating
results from quarter to quarter.
THE MIX OF PRODUCTS WE SELL AFFECTS OUR OVERALL PROFIT MARGINS.
We continuously expand our product offerings, including our materials, and
work to increase the number of geographic markets in which we operate and the
distribution channels we use in order to reach our various target markets and
customers. This variety of products, markets and channels results in a range of
gross margins and operating income which can cause substantial quarterly
fluctuations depending on the mix of product shipments from quarter to quarter.
We may experience significant quarterly fluctuations in gross margins or net
income due to the impact of the mix of products, channels, or geographic markets
utilized from period to period. More recently, our mix of products sold has
reflected increased sales of our lower end systems which have reduced gross
margins as compared to the high end SLA systems. If this trend continues over
time, we may experience lower average gross margins and returns.
OUR OPERATING RESULTS VARY FROM QUARTER TO QUARTER, WHICH COULD IMPACT OUR STOCK
PRICE.
Our operating results fluctuate from quarter to quarter and may continue to
fluctuate in the future. In some quarters it is possible that results could be
below expectations of analysts and investors. If so, the price of our common
stock may decline.
Many factors, some of which are beyond our control, may cause these
fluctuations in operating results. These factors include:
o Acceptance and reliability of new products in the market,
o Size and timing of product shipments,
o Currency and economic fluctuations in foreign markets and other
factors affecting international sales,
o Price competition,
o Delays in the introduction of new products,
o General worldwide economic conditions,
o Changes in the mix of products and services sold,
o Impact of ongoing litigation, and
o Impact of changing technologies.
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In addition, certain of our components require an order lead time of three
months or longer. Other components that currently are readily available may
become more difficult to obtain in the future. We may experience delays in the
receipt of some key components. To meet forecasted production levels, we may be
required to commit to long lead time items prior to receiving orders for our
products. If our forecasts exceed actual orders, we may hold large inventories
of slow moving or unusable parts, which could have an adverse effect on our cash
flows, profitability and results of operations.
WE DEPEND ON A SINGLE OR LIMITED NUMBER OF SUPPLIERS FOR SPECIFIED COMPONENTS.
IF THESE RELATIONSHIPS TERMINATE, OUR BUSINESS MAY BE DISRUPTED WHILE WE LOCATE
AN ALTERNATIVE SUPPLIER.
We subcontract for manufacture of material laser sintering components,
powdered sintering materials and accessories from a single-source third-party
supplier. There are several potential suppliers of the material components,
parts and subassemblies for our stereolithography products. However, we
currently use only one or a limited number of suppliers for several of the
critical components, parts and subassemblies, including our lasers, materials
and certain ink jet components. Our reliance on a single or limited number of
vendors involves many risks including:
o Shortages of some key components,
o Product performance shortfalls, and
o Reduced control over delivery schedules, manufacturing capabilities,
quality and costs.
If any of our suppliers suffers business disruptions, financial
difficulties, or if there is any significant change in the condition of our
relationship with the supplier, our costs of goods sold may increase or we may
be unable to obtain these key components for our products. In either event, our
revenues, results of operations, liquidity and financial condition would be
adversely affected. While we believe we can obtain most of the components
necessary for our products from other manufacturers, any unanticipated change in
the source of our supplies, or unanticipated supply limitations, could adversely
affect our ability to meet our product orders.
IF WE DO NOT KEEP PACE WITH TECHNOLOGICAL CHANGE AND INTRODUCE NEW PRODUCTS, WE
MAY LOSE REVENUE AND MARKET SHARE.
To remain competitive, we must continue to enhance and improve the
functionality and features of our products, services and technologies. We are
affected by rapid technological change, changes in user and customer
requirements and preferences, frequent new product and service introductions
embodying new technologies and the emergence of new standards and practices.
These developments could render our existing products and proprietary technology
and systems obsolete. Our success will depend, in part, on our ability to:
o Obtain leading technologies useful in our business,
o Enhance our existing products,
o Develop new products and technology that address the increasingly
sophisticated and varied needs of prospective customers, particularly
in the area of material functionality,
o Respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis, and
o Retain key technology employees.
Also, new technologies or materials that render our existing products and
services obsolete may be developed. We believe that our future success will
depend on our ability to deliver products that meet changing technology and
customer needs. We expect that our merger with DTM and our acquisitions of RPC
and OptoForm SARL will allow us to expand our product offerings and increase
capabilities to expand into advanced digital manufacturing and rapid tooling. We
cannot assure you, however, that we will develop the OptoForm technology on a
cost-effective basis or at all, or if developed, that it will lead to
commercially viable products. In addition, we
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cannot assure you that the acquisition of DTM or RPC will enable us to further
expand into advanced digital manufacturing and rapid tooling.
OUR NEW PRODUCTS MAY REQUIRE REFINEMENT FOLLOWING INTRODUCTION AND MAY NOT BE
COMMERCIALLY ACCEPTED.
In July 2001 our newest SLA and SLS systems were introduced. Although these
products undergo thorough quality assurance testing, we have encountered
problems in connection with prior new product introductions, and we cannot
assure you that we will be able to fix any new problems that arise in a timely
manner, or at all. Also, we cannot assure you that any new products we develop
will be commercially accepted. If there are material problems with our new
products, or if the marketplace does not accept these products, our revenues and
profitability may decline and we may lose market share.
WE FACE RISKS ASSOCIATED WITH CONDUCTING BUSINESS INTERNATIONALLY AND IF WE DO
NOT MANAGE THESE RISKS, OUR RESULTS OF OPERATIONS MAY SUFFER.
A material portion of our sales is to customers in foreign countries. There
are many risks inherent in our international business activities that, unless
managed properly, may adversely affect our profitability. Our foreign operations
could be adversely affected by:
o Unexpected changes in regulatory requirements,
o Export controls, tariffs and other barriers,
o Social and political risks,
o Fluctuations in currency exchange rates,
o Seasonal reductions in business activity in certain parts of the
world, particularly during the summer months in Europe,
o Reduced protection for intellectual property rights in some countries,
o Difficulties in staffing and managing foreign operations,
o Taxation, and
o Other factors, depending on the country in which an opportunity
arises.
In order to manage our exposure to risks associated with fluctuations in
foreign currency exchange rates, we have entered into hedging transactions.
These hedging transactions include purchases of options or forward contracts to
minimize the risk associated with cash payments from foreign subsidiaries to 3D
Systems, Inc. However, we cannot assure you that our hedging transactions will
provide us adequate protection in our foreign operations, and consequently our
overall revenues and results of operations may be adversely affected.
WE HAVE INCURRED AND MAY CONTINUE TO INCUR SUBSTANTIAL EXPENSE PROTECTING OUR
PATENTS AND PROPRIETARY RIGHTS, WHICH WE BELIEVE ARE CRITICAL TO OUR BUSINESS.
We regard our copyrights, service marks, trademarks, trade secrets, patents
and similar intellectual property as critical to our business. Third parties may
infringe or misappropriate our proprietary rights, and we intend to pursue
enforcement and defense of our patents and other proprietary rights. We have
incurred, and may continue to incur, significant expenses in preserving our
proprietary rights, and these costs could have a material adverse effect on our
results of operations, liquidity and financial condition and could cause
significant fluctuations in our operating results from quarter to quarter.
As of December 31, 2001, we held 301 patents, which include 143 in the
United States, 101 in Europe, 13 in Japan, and 44 in other foreign
jurisdictions. At that date, we had 33 pending patent applications with the
United States, 75 in the Pacific Rim, 43 in Europe, 7 in Canada and 1 in Latin
America. As we discover new developments
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and components to our technology, we intend to apply for additional patents.
Effective trademark, service mark, copyright, patent and trade secret protection
may not be available in every country in which our products and services are
made available. We cannot assure you that the pending patent applications will
be granted or that we have taken adequate steps to protect our proprietary
rights, especially in countries where the laws may not protect our rights as
fully as in the United States. We currently are involved in several patent
infringement actions. In addition, our competitors may independently develop or
initiate technologies that are substantially similar or superior to ours. We
cannot be certain that we will be able to maintain a meaningful technological
advantage over our competitors.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS.
Products as complex as those we offer may contain undetected defects or
errors when first introduced or as enhancements are released that, despite our
testing, are not discovered until after the product has been installed and used
by customers, which could result in delayed market acceptance of the product or
damage to our reputation and business. We attempt to include provisions in our
agreements with customers that are designed to limit our exposure to potential
liability for damages arising from defects or errors in our products. However,
the nature and extent of these limitations vary from customer to customer, and
it is possible that these limitations may not be effective as a result of
unfavorable judicial decisions or laws enacted in the future. The sale and
support of our products entails the risk of product liability claims. Any
product liability claim brought against us, regardless of its merit, could
result in material expense to us, diversion of management time and attention,
and damage to our business reputation and ability to retain existing customers
or attract new customers.
OUR STOCK PRICE IS VOLATILE.
Our future earnings and stock price may be subject to significant
volatility, particularly on a quarterly basis. Shortfalls in our revenues or
earnings in any given period relative to the levels expected by securities
analysts could immediately, significantly and adversely affect the trading price
of our common stock.
Historically, our stock price has been volatile. The prices of the common
stock have ranged from $9.16 to $18.52 during the 52-week period ended May 10,
2002.
Factors that may have a significant impact on the market price of our
common stock include:
o Future announcements concerning our developments or those of our
competitors, including the receipt of substantial orders for products,
o Quality deficiencies in services or products,
o Results of technological innovations,
o New commercial products,
o Changes in recommendations of securities analysts,
o Proprietary rights or product, patent or other litigation, and
o Sales or purchases of substantial blocks of stock.
THE LOSS OF MEMBERS OF THE MANAGEMENT TEAM PROVIDED BY REGENT PACIFIC MANAGEMENT
CORPORATION FOR OUR EXECUTIVE MANAGEMENT MAY DISRUPT OUR BUSINESS.
We depend on the management and leadership of a team provided to us by
Regent Pacific Management Corporation. The loss of any member of this team could
materially adversely affect our business. The management services provided under
our agreement with Regent Pacific include the services of Brian K. Service as
President and Chief Executive Officer and other executives. Our agreement with
Regent Pacific expires on September 9, 2002. If the agreement with Regent
Pacific were canceled, the loss of the Regent Pacific personnel could have a
material adverse effect on our operations, especially during any transition
phase to new management. Similarly, if any
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adverse change in our relationship with Regent Pacific occurs, it could hinder
management's ability to direct our business and materially and adversely affect
our results of operations and financial condition.
TAKEOVER AND DEFENSE PROVISIONS MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR
COMMON STOCK.
Various provisions of our corporate governance documents and of Delaware
law, together with our shareholders rights plan, may inhibit changes in control
not approved by our Board of Directors and may have the effect of depriving you
of an opportunity to receive a premium over the prevailing market price of our
common stock in the event of an attempted hostile takeover.
The Board is authorized to issue up to five million shares of preferred
stock. The Board also is authorized to determine the price, rights, preferences
and privileges of those shares without any further vote or action by the
stockholders. The rights of the holders of any preferred stock may adversely
affect the rights of holders of common stock. Our ability to issue preferred
stock gives us flexibility concerning possible acquisitions and financing, but
it could make it more difficult for a third party to acquire a majority of our
outstanding voting stock. In addition, any preferred stock to be issued may have
other rights, including economic rights, senior to the common stock, which could
have a material adverse effect on the market value of the common stock. In
addition, provisions of our Certificate of Incorporation and Bylaws could have
the effect of discouraging potential takeover attempts or making it more
difficult for stockholders to change management.
We are subject to Delaware laws that could have the effect of delaying,
deterring or preventing a change in control of our company. One of these laws
prohibits us from engaging in a business combination with any interested
stockholder for a period of three years from the date that the person became an
interested stockholder, unless certain conditions are met.
In addition, we have adopted a Shareholders Rights Plan. Under the
Shareholders Rights Plan, we distributed a dividend of one right for each
outstanding share of our common stock. These rights will cause substantial
dilution to the ownership of a person or group that attempts to acquire us on
terms not approved by our Board of Directors and may have the effect of
deterring hostile takeover attempts.
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF OUR CONVERTIBLE
DEBENTURES COULD DILUTE YOUR OWNERSHIP AND NEGATIVELY IMPACT THE MARKET PRICE
FOR OUR COMMON STOCK.
In December 2001, we issued $10 million aggregate principal amount of 7%
convertible subordinated debentures. These debentures are convertible into
common stock at the holders' option at a conversion price of $12.00 per share.
If the holders elect to convert all $10 million principal amount of these
debentures, we would be obligated to issue 833,333 shares of our common stock.
To the extent that all of the debentures are converted, a significantly greater
number of shares of our common stock will be outstanding and the interests of
our existing stockholders may be diluted. Moreover, future sales of substantial
amounts of our stock in the public market, or the perception that these sales
could occur, could adversely affect the market price of our common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Selling Security
Holders' shares in this offering. All proceeds from the sale of these shares
will be for the accounts of the Selling Security Holders described below.
Page 10
SELLING SECURITY HOLDERS
The following table sets forth the names of the Selling Security Holders
and the maximum number of shares of our common stock that may be offered for the
accounts of the Selling Security Holders under this prospectus.
Number of Number of Percentage of
Shares of Common Shares of Outstanding
Common Stock Stock Common Stock Common Stock
Owned Prior Offered Owned After Owned After
Name of Selling Security Holders to Offering Hereby Offering (1) Offering
-------------------------------- ------------- ---------- ------------ -------------
Edward M. Giles IRA 40,000 40,000 0 0
Isles Capital 5,000 5,000 0 0
John D. Hogan IRA 5,000 5,000 0 0
Avanti Partners III, L.P. 52,500 43,000 9,500 *
T. Rowe Price Small-Cap Value
Fund, Inc. (2) 1,032,000 1,032,000 0 0
Vantico Inc. 50,366 50,366 0 0
TOTAL 1,184,866 1,175,366 9,500 *
---------------------
(1) Assumes the sale of all shares of the Selling Security Holder being
offered. Because the Selling Security Holders may offer all, some, or none
of their respective shares of common stock, no definitive estimate as to
the number of shares thereof that will be held by the Selling Security
Holders after the offering can be provided.
(2) T. Rowe Price Associates, Inc., as investment adviser to T. Rowe Price
Small-Cap Value Fund, Inc., may be deemed to be the beneficial owner of
these shares with the power to vote and /or dispose of these shares. T.
Rowe Price Associates, Inc. disclaims such beneficial ownership.
* less than 1%
The term "Selling Security Holders" includes the holders listed in any
supplement to this prospectus and any beneficial owners of the common stock and
their transferees, pledgees, donees, or other successors. Any supplement will
contain information about the Selling Security Holders and the number of shares
of common stock beneficially owned by the Selling Security Holders that may be
offered pursuant to this prospectus. We will obtain that information from the
Selling Security Holders.
Under the Securities Exchange Act of 1934, which we will refer to in this
prospectus as the Exchange Act, and its rules and regulations, any person
distributing the common stock offered by this prospectus may not simultaneously
engage in market making activities with respect to our common stock during the
applicable "cooling off" periods prior to beginning the distribution. In
addition, the Selling Security Holders will need to comply with applicable
provisions of the Exchange Act and its rules and regulations including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
shares of common stock by the Selling Security Holders. Regulation M contains
limitations and prohibitions intended to prevent issuers, selling security
holders, and other participants in a distribution of securities from
conditioning the market through manipulative or deceptive devices to facilitate
the distribution.
We will bear all costs, expenses, and fees in connection with the
registration of the Selling Security Holders' shares. All brokerage commissions,
if any, attributable to the sale of the Selling Security Holders' shares will be
borne by them.
Page 11
PLAN OF DISTRIBUTION
We are registering 1,175,366 shares of our common stock on behalf of the
Selling Security Holders.
The Selling Security Holders have advised us that the sale or distribution
of the common stock may be effected directly to purchasers or through one or
more underwriters, brokers, dealers or agents from time to time in one or more
types of transactions (which may involve crosses or block transactions). The
Selling Security Holders may sell the securities by one or more of the following
methods, without limitation:
o on the Nasdaq National Market or on another exchange,
o in negotiated transactions,
o through put or call options transactions relating to the shares,
o an exchange distribution in accordance with the rules of the
applicable exchange,
o a combination of these methods of sale, at market prices prevailing at
the time of sale, or at negotiated prices, or
o any other method permitted pursuant to applicable law.
These transactions may or may not involve brokers or dealers. The Selling
Security Holders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities, nor is there an underwriter or coordinated broker
acting in connection with the proposed sale of shares by the Selling Security
Holders.
The Selling Security Holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with these
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with Selling Security
Holders. The Selling Security Holders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery to those broker-dealers or other financial institutions of shares
offered by this prospectus, which shares the broker-dealer or other financial
institution may resell pursuant to this prospectus (as amended or supplemented
to reflect such transaction).
The Selling Security Holders may make these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. The broker-dealers may receive compensation in the form of
discounts, concessions or commissions from Selling Security Holders and/or the
purchasers of shares for whom the broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
From time to time, one or more of the Selling Security Holders may pledge,
hypothecate or grant a security interest in some or all of the securities owned
by them. The pledgees, secured parties or person to whom the securities have
been hypothecated will, upon foreclosure in the event of default, be deemed to
be Selling Security Holders. The number of a Selling Security Holder's
securities offered under this prospectus will decrease as and when it takes such
actions. The plan of distribution for that Selling Security Holder will
otherwise remain unchanged.
The Selling Security Holders and any broker-dealers that act in connection
with the sale of shares may be deemed "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by those
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The Selling Security Holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against specified liabilities, including liabilities arising
under the Securities Act.
Because Selling Security Holders may be deemed "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Security Holders may
be subject to the prospectus delivery requirements of the
Page 12
Securities Act. We have informed the Selling Security Holders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling Security Holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon notification to us by a Selling Security Holder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of each such Selling Security Holder and of the participating
broker-dealer(s),
o the number of shares involved,
o the initial price at which such shares were sold,
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
o that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, and
o other facts material to the transactions.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our bylaws provide that we will indemnify our directors and executive
officers and any of our other officers, employees and agents to the fullest
extent permitted by Delaware law. Our bylaws also empower us to enter into
indemnification agreements with any of these persons and to purchase insurance
on behalf of any person whom we are required or permitted to indemnify.
Our certificate of incorporation provides that, pursuant to Delaware law,
our directors shall not be liable for monetary damages for breach of the
director's fiduciary duty of care to us and to our stockholders. This provision
does not eliminate the duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. Each director continues to be subject to liability
for breach of the director's duty of loyalty, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, which we refer to in this prospectus as the Securities Act, may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, which we refer to in this prospectus as the
SEC, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-3 with
respect to this offering of our common stock. This prospectus only constitutes
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, its exhibits, and its schedules.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for additional information on the public
Page 13
reference rooms. Our common stock is listed for quotation on The Nasdaq National
Market. Our periodic reports, proxy statements and other information can be
inspected at the offices of The Nasdaq Stock Market at 1735 K Street, NW,
Washington, DC, 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them. This prospectus incorporates important business and financial
information about us, which is not included in or delivered with this
prospectus. The information incorporated by reference is an important part of
this prospectus, and information that we file later with the SEC will
automatically update and supersede this information.
We incorporate by reference:
(1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2001;
(2) Our Quarterly Report on Form 10-Q for the three-months ended March 29,
2002;
(3) Our Current Reports on Form 8-K filed on March 21 and April 2, 2002;
(4) Our Definitive Proxy Statement filed on March 28, 2002;
(5) The description of our common stock contained in our Registration
Statement on Form 8-B filed on August 16, 1993; and
(6) Future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act until all of the shares offered by the
Selling Security Holders have been sold.
You may obtain a copy of these filings without charge by writing or calling us
at:
3D Systems Corporation
26081 Avenue Hall, Valencia, CA 91355
Attention: General Counsel
(661) 295-5600
You should rely only on the information incorporated by reference or
provided in this Prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer to sell these securities
or soliciting an offer to buy these securities in any state where the offer or
sale is not permitted. You should not assume that the information in this
prospectus or the documents we have incorporated by reference is accurate as of
any date other than the date on the front of those documents.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
EXPERTS
The financial statements of 3D Systems Corporation for the year ended
December 31, 1999, incorporated in this Prospectus by reference to our Annual
Report on Form 10-K for the year ended December 31, 2001 have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing. The financial statements and the related financial
statement schedule as of December 31, 2001 and 2000, and for each of the years
then ended, incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 2001 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The financial statements and
financial statement schedule of DTM Corporation as of December 31, 2000 and
1999, and for the years ended December 31, 2000, 1999, and 1998 incorporated by
reference from our Form 8-K/A filed on November 5, 2001, have been audited by
Ernst & Young
Page 14
LLP, independent accountants, as stated in their reports, and have been so
incorporated by reference in reliance upon reports such firm given upon their
authority as experts in accounting and auditing.
Page 15
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YOU MAY RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION
DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS 1,175,363 SHARES
PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS 3D SYSTEMS CORPORATION
PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT COMMON STOCK
AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES OF COMMON
STOCK IN ANY CIRCUMSTANCES UNDER WHICH
THE OFFER OR SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
PAGE
Prospectus Summary.......................2
The Company..............................2
Risk Factors.............................3
Use of Proceeds.........................10
Selling Security Holders................11
Plan of Distribution....................12
Disclosure of Commission Position PROSPECTUS
On Indemnification ...................13
Where You Can Find Additional JUNE 21, 2002
Information...........................13
Incorporation by Reference..............14
Legal Matters...........................14
Experts.................................14
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