EX-99 3 exh_992.htm EXHIBIT 99.2
Exhibit 99.2

3D SYSTEMS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of 3D Systems Corporation and Provel S.r.l. after giving effect to 3D Systems’ acquisition of Provel S.r.l. on October 12, 2010 and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements.
 
The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheets of 3D Systems Corporation and Provel S.r.l., giving effect to the acquisition as if it had been consummated on September 30, 2010.
 
The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 combine the historical consolidated statements of operations of 3D Systems Corporation and Provel S.r.l., giving effect to the acquisition as if it had been consummated on January 1, 2009.
 
The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of our consolidated results of operations or financial position that we would have reported had the acquisition been completed as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position.  The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies.
 
The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of 3D Systems Corporation included in the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
 
 
 
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3D SYSTEMS CORPORATION
 
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
 
SEPTEMBER 30, 2010
 
(in thousands of dollars)
 
                           
                           
   
Historical
   
Pro Forma
     
Pro Forma
 
ASSETS
 
3D Systems
   
Provel
   
Adjustments
     
Combined
 
Current assets:
                         
Cash
  $ 33,811     $ 1,780     $ (9,064 ) a   $ 26,527  
Receivables
    26,620       10,491       (8,183 ) b     28,928  
Inventory
    20,750       109       300   c     21,159  
Prepaid expenses and other current assets
    2,143       573       (502 ) d     2,214  
Total current assets
    83,324       12,953       (17,449 )       78,828  
Property, plant and equipment, net
    26,796       2,278       (1,302 ) e     27,772  
Intangible assets, net
    7,852       -       7,583   f     15,435  
Goodwill
    49,961       -       6,588   g     56,549  
Other
    2,916       -                 2,916  
Total assets
  $ 170,849     $ 15,231     $ (4,580 )     $ 181,500  
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                 
Current liabilities
                                 
Current portion of capitallzed lease obligations
  $ 226     $ -     $         $ 226  
Accounts payable
    13,998       732       -         14,730  
Other accrued liabilties
    24,008       408       4,737   h     29,153  
Total current liablities
    38,232       1,140       4,737         44,109  
Long-term portion of capitalized lease obligations
    8,084       -                 8,084  
Long-term debt
    -       379       (379 ) i     -  
Other long-term liabilities
    3,928       2,835       575   j     7,338  
Total liabilities
    50,244       4,354       4,933         59,531  
Commitments and Contingencies
                                 
Stockholders' Equity
                                 
Preferred stock
    -       -                 -  
Common stock
    23       -                 23  
Additional paid in capital
    182,936       14       1,350   k     184,300  
Treasury stock
    (154 )     -                 (154 )
Retained earnings (accumulated deficit)
    (67,368 )     10,863       (10,863 ) l     (67,368 )
Accumulated other comprehensive income
    5,168       -                 5,168  
Total stockholders' equity
    120,605       10,877       (9,513 )       121,969  
  Total liabliities and stockholders' equity
  $ 170,849     $ 15,231     $ (4,580 )     $ 181,500  
 
 
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3D SYSTEMS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2010
(in thousands of dollars except per share data)
                           
   
Historical
   
Pro Forma
     
Pro Forma
 
   
3D Systems
   
Provel S.r.l.
   
Adjustment
     
Combined
 
Revenue
                         
Products
  $ 75,783     $ -     $ -       $ 75,783  
Services
    32,490       3,928       (12 ) m     36,406  
Total
    108,273       3,928       (12 )       112,189  
Cost of goods sold
                                 
Products
    38,381       -       -         38,381  
Services
    20,787       2,530       (58 ) n     23,259  
Total
    59,168       2,530       (58 )       61,640  
Gross profit
    49,105       1,398       46         50,549  
Operating expenses
                                 
Selling, general and administrative
    29,894       526       423   o     30,843  
Research and development
    7,979       -       -         7,979  
Total
    37,873       526       423         38,822  
Operating income
    11,232       872       (377 )       11,727  
Interest expense
    442       30       (30 ) p     442  
Other (income) expense
    (100 )     (5 )               (105 )
Profit before taxes
    10,890       847       (347 )       11,390  
Provision for taxes
    767       335       (95 ) q     1,007  
Net income (loss)
  $ 10,123     $ 512     $ (252 )     $ 10,383  
                                   
Earnings per share:
                                 
Basic
  $ 0.44                       $ 0.45  
Diluted
  $ 0.43                       $ 0.44  
                                   
Weighted average common shares outstanding
                                 
Basic
    23,010                         23,096  
Diluted
    23,302                         23,388  


 
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3D SYSTEMS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1.  Basis of Pro Forma Presentation
 
On October 12, 2010, 3D Systems and its Italian subsidiary acquired all of the outstanding capital stock of Provel S.r.l., an Italian company that provides rapid prototyping and tooling solutions, with a particular focus in the automotive industry and other industrial and design fields.  Under the terms of the acquisition agreement, 3D Systems Corporation paid an initial installment of the purchase price to the sellers consisting of approximately $8,700,000 in cash and 85,612 newly issued shares of the registrant’s common stock.  In addition 3D Systems Corporation is obligated to pay an additional installment of the purchase price equal to approximately €3,600,000 (approximately $5,000,000 at current exchange rates), and the sellers have the right to earn an additional amount of up to €1,000,000 (approximately $1,400,000 at current exchange rates) pursuant to an earn-out formula for a period of 12 months which is expected to commence on February 1, 2011 and end on January 31, 2012.
 
The accompanying Unaudited Pro Forma Condensed Combined Financial Statements were prepared in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations.  In accordance with ASC 805, we recognize separately from goodwill, the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in an acquiree, generally at the acquisition date fair value as defined by ASC 820, Fair Value Measurements and Disclosures.  Goodwill as of the acquisition date is measured as the excess of consideration transferred, which is also generally measured at fair value, and the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.
 
The accompanying Unaudited Pro Forma Condensed Combined Financial Statements present the pro forma consolidated financial position and results of operations of the combined company based upon the historical financial statements of 3D Systems Corporation and Provel S.r.l., after giving effect to the adjustments described in these notes, and are intended to reflect the impact of the acquisition on 3D Systems Corporation’s consolidated financial statements.  The historical financial statements of Provel S.r.l. were translated into U.S. dollars at the following exchange rates (Euros to Dollars):
 
·  
Statement of Operations for the nine months ended September 30, 2010 – 1.3136
 
·  
Balance Sheet at September 30, 2010 – 1.3639
 
The accompanying Unaudited Pro Forma Condensed Combined Financial Statements are presented for illustrative purposes only and do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings due to operating efficiencies or revenue synergies expected to result from the acquisition.
 
The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the acquisition as if it had been consummated on September 30, 2010 and includes pro forma adjustments for the valuations of assets acquired and liabilities assumed.  The Unaudited Pro Forma Condensed Combined Statements of Operations give effect to the acquisition as if it had been consummated on January 1, 2009.  The historical consolidated financial statements of Provel S.r.l. have been adjusted to reflect certain reclassifications in order to conform with 3D Systems financial statement presentation.
 
The purchase price is calculated as follows (in thousands except share and stock price):

 
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Cash
  $ 8,744  
Fair value of 3D Systems common stock
    1,391  
Fair value of additional installment of purchase price
    4,737  
Fair value of earnout
    1,077  
Total
    15,949  
Change in exchange rates
    (27 )
Total estimated purchase price
  $ 15,922  
         
Shares issued
    85,612  
Average 5-day 3D Systems' stock price
  $ 16.25  
Fair value of common stock
    1,391  

The earnout formula is based upon Provel S.r.l. achieving a certain level of earnings over a 12 month period.  We expect Provel S.r.l. to achieve the maximum amount of such payment and have reflected the fair value of such amount in the purchase price.

The table below represents an allocation of the total consideration to tangible and intangible assets and liabilities of Provel S.r.l. based upon their fair values as of September 30, 2010:
 
(in thousands)
Cash and cash equivalents
  $ 8,635  
Other current assets
    2,788  
Property and equipment
    975  
Goodwill
    6,588  
Identified intangibles
    7,583  
Total liabilities
    (10,647 )
Total purchase price
  $ 15,922  
 
1.  
Pro Forma Adjustments
 
The Unaudited Pro Forma Condensed Combined Financial Statements reflect the following adjustments:
 
 
(a)
Cash – To record (1) the cash payment of $15,922 by 3D Systems Corporation for the common stock of Provel S.r.l.; (2) the collection of an accounts receivable on Provel S.r.l of $8,183 paid in conjunction with the closing date of the acquisition; and (3) settlement of certain obligations, $1,325.
 
 
(b)
Receivables – (1) To record the collection of an accounts receivable on Provel S.r.l. of $8,183 paid in conjunction with the closing date of the acquisition.
 
 
(c)
Inventory – To adjust inventory to fair value.
 
 
(d)
Prepaid and other current assets – To eliminate insurance policies excluded from the transaction.
 
 
(e)
Property, plant and equipment – (1) Eliminate the amount of assets excluded from the acquisition and (2) to record the difference between the historical amounts of Provel S.r.l.’s property, plant and equipment, net and fair values of these assets.
 
 
(f)
Intangible assets, net – To record the fair value of the intangible assets acquired as follows:
 
 
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Trade names
  $ 177  
Customer relationships
    6,233  
Non-compete agreement
    1,105  
Backlog
    68  
    $ 7,583  
 
 
(g)
Goodwill – To record goodwill.
 
 
(h)
Other accrued liabilities – To accrue: (1) the fair value of the additional installment of the purchase price, $3,655; and (2) the additional payment for the excess working capital transferred, $1,082.
 
 
(i)
Long-term debt – To eliminate indebtedness excluded from the acquisition.
 
 
(k)
Additional paid in capital – Eliminate Provel S.r.l. paid in capital, $(14); record issuance of common stock in connection with the acquisition, $1,391 ($1,364 after translation impact).
 
 
(l)
Retained earnings (accumulated deficit) – To eliminate the retained earnings of Provel S.r.l.
 
 
(m)
Services revenue – Eliminate the sales amount between 3D Systems Corporation and Provel S.r.l.
 
 
(n)
Cost of goods sold – (1) to eliminate the cost of sales associated with service revenue between 3D Systems Corporation and Provel S.r.l. and (2) to record the difference in depreciation expense based upon the fair values of property, plant and equipment.
 
 
(o)
Selling, general and administrative – To record the amortization expense of intangible assets.
 
 
(p)
Interest expense – To eliminate the interest on the associated debt of Provel S.r.l. that was excluded from the acquisition.
 
 
(q)
Provision for taxes – To reflect the tax impact on the pro forma adjustments.
 
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