UNIVERSITY OF OREGON INVESTMENT GROUP 3D Systems Corporation

Ticker: NYSE: DDD Price: 17.93 RECOMMENDATION: Buy

Price Target: 23.05

Investment Thesis
I recommend a buy for Systems Corporation under the premise that for the last nine quarters the company has improved their margins and boosted their revenue by 51.44% in the first quarter of 2011 over the same quarter last year. When 3D Systems announced a secondary public offering of their stock, interest from several institutional investors increased with the belief that earnings would spike. This caused the stock price to soar to $57.76 per share. Then when 3D Systems just met the consensus estimate of 0.28 EPS all the institutional investor left. In addition several insiders saw opportunity to cash out of their holdings to secure a solid return from the companys recent up run of 64% from December and 780% since the year prior. Both of these causes were reasons for the stocks recent fall off of 40.24% since their Quarter one earnings report. I am confident that 3D Systems has a strong financial outlook with the numerous growth opportunities the industry has to offer. I believe they are wellpositioned for the expected growth within the industry as they have a healthy balance sheet and a highly experienced management team. DDD is currently the industry leader and I see no reason why it will not stay this way. For the reasons mentioned above, I am recommending a buy for all portfolios.
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Key Statistics
52-Week Price Range 50-Day Moving Average Estimated Beta Dividend Yield Market Capitalization Quarterly Earnings Growth 17.33 - 19.10 22.9 1.47 N/A 872 238%

Stock Statistics
Diluted Shares Outstanding 48.64 Average Volume (3-Month) 998,200 (Thousand) Institutional Ownership 0.527 Insider Ownership 0.1746 Shares Short 2.19 M

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Margins and Key Ratios

Gross Margin (ttm) EBITDA Margin (ttm) EBIT Margin (ttm) Profit Margin (ttm) Debt to Equity Ratio 47.00% 19.40% 14.60% 13.86% 0.90%
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Covering Analyst: Andy Dingler Email: Adingler@uoregon.edu The University of Oregon Investment Group (UOIG) is a student run organization whose purpose is strictly educational. Member students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be. Members of UOIG may have clerked, interned or held various employment positions with firms held in UOIGs portfolio. In addition, members of UOIG may attempt to obtain employment positions with firms held in UOIGs portfolio.

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4/21/2011

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

Source: Company Reports

Business Overview In its recent move over to the NYSE, 3D Systems Corporation (DDD) recently changed its ticker symbol from TDSC. 3D Systems is headquartered in South Carolina. Charles Chuck Hull became the pioneer in the industry when he patented this technology and produced the first 3D printer in 1986. DDD became public November 1990 on the NASDAQ and had a secondary public offering in March 2011 of 1.3 million shares which resulted in $54.0 million net cash processed for the company. Today 3D Systems is a global producer that designs, develops, manufactures, markets and provides services of 3D printing portfolios. These printers print materials in a complex three-dimensional process, to manufacture objects directly from a 3D digital software image. This greatly reduces the time and cost required to produce prototypes or customized production parts. DDD also provides custom made plastic and metal parts in different finishes and colors through a growing network of custom parts service locations. Their industry can potentially be a disruptive technology that changes that way business manufacture and is usually called 3D printing, additive manufacturing or prototyping printers. How 3D Printing Works The first stage is to create a digital blueprint on a computer using computeraided design software, often referred to as CAD. Once the 3Stereolithography image. Stereolithography is an enormous series of triangular shapes put together to form an image. This file is then sliced up into many 2-Dimensional bitmaps using a rapid prototype systems software which then sent to the 3D printer. To help conceptualize this process, imagine a large inkjet printer that prints out many individual 2-Dimensional images on top of each other. There are two ways a 3D printer works. The first method is to gradually build up an object by depositing material from a nozzle. The second method works by selectively solidifying a thin layer of plastic or metal dust using tiny drops of glue, or by fusing the pieces together via ultraviolet light. This new process of printing will allow firms to print rare parts cheaply in house verses outsourcing it abroad. 3D print solutions are used by their customers to replace or complement intent, the end-result of this process can be a model or mold before full-scale manufacturing begins or it can be an end-result component used for specialty products ranging from a small lampshade to spare parts for your car. Larger items require a manufacturing or large-frame 3D printer that can produce products ranging from bicycle frames, aircraft engines to medical implants such as prosthetic limbs. Revenue by Geographic Region Currently, 3D Systems conducts their business in the United States, Germany, France, the United Kingdom, Italy, and Asia-Pacific (mainly Japan). Looking forward, management sees an increasing demand in China and India. More than half their revenue is generated outside of North America. Their main revenue segment is derived primarily through the sales of 3D printers and related printing materials used to produce the solid objects and custom parts to their customers.

Source: Company Reports

Source: Company Reports

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3D Systems Corporation

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3D Systems revenue segments Systems and Other Products Systems and other products consist of a 3D portfolio of personal, professional and production 3D printers. Sales of DDDs 3D printers have increased by 40% over the last 10 years. ABI research has estimated that 3D printers will be a big mover in the economy with $1B industry by 2015. During this same period management believes they can increase their annual shipments from 5,000 printers sold in 2009 to 85,000 printers sold in 2015. This bodes well looking forward to the long-term 3D market, as well as a potential longer-term 3D printing market for it is a disruptive technology.
Source: Company Reports

Production or Large-Frame 3D Printer Solutions The portfolio of printers in this segment is often geared towards the rapid manufacturing industry. The key revenue drivers looking forward are the dental, medical and aerospace industries. Collectively these markets have the potential to be a $1 billion opportunity. Some end-use products that these printers produce are jewelry, medical devices, medical implants, figurines, electronics, plumbing, connectors, engine parts, aerospace and automotive parts. These printers are designed to print ultra-high-definition parts made from plastics, direct metals (stainless steel, chrome cobalt, titanium) or wax. Personal 3D Printer Solutions These printers can print ready-to-use physical objects within hours at home, school or the office. In addition they are extremely cost-effective and useful for designers, engineers, hobbyists and anyone with an imagination. The personal printers are geared for desktops, offices, and are very user friendly. Once the price of personal printers reach a generally acceptable price range for most consumers and households, this segment should see a large-scale increase in unit sales. The market is becoming extremely more efficient and affordable year after year. In 2009 the cheapest printer was priced just below $15,000, compared to now where they range from $1,300 to $99,000. Professional 3D Printer Solutions These printers are ideal for engineering designed environments for product development. The professional printers range from $9,900 to $179,000 and high designed to print high-definition durable parts. These printers are guided for groupware, offices, model shops, and material properties. 3D Software Tools As part of 3D Systems integrated printer portfolio they offer content-to-print solutions through embedded proprietary part-preparation software. The CAD software enhances the customers ability to view, create or alter their 3Dimensional image and enables users to rotate, scale and add different model structures. Customers increasingly use 3D printers to print ready-touse functional parts within hours for education, transportation, healthcare, recreation and consumer products.

Source: Company Reports

Source: Company Reports

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3D Systems Corporation

http://uoig.uoregon.edu

3D Print Materials The printing materials consist of high-performance plastics, metals and composite print materials. Historically, this is 3D Systems' most profitable revenue segment, with a 62% gross margin. Going forward management feels this will be their strongest revenue driver as their most recent printers require a specifically designed material that enhance system functionality, up-time, materials shelf life and overall printer reliability with the objective of providing customers with a built-in quality management system. Services DDD has an extensive assortment of printers and on-demand 3D custom parts service. In addition they allow clients to purchase upgrade kits that allow customers to take advantage of their new enhanced system capabilities. Their main department in this segment is 3D Proparts, a rapid prototyping and printing parts service that 3D Systems introduced in 2009. They also recently purchased their main competitor of 3D Proparts in Quickparts. 3D Systems Customers DDD has a well diverse customer base throughout different industries, ranging from Ford, Caterpillar and Boeing. Their customers have complete freedom to print complex 3D plastic or metal parts directly from 3D digital data without tooling or complex setups. 3D Systems provides a compelling business model that is cost effective and can change their customers traditional design-to-manufacturing processes. Bottom Line 3D Systems has a unique business model that provides strong revenue growth without being extremely capital intensive. They are a first mover in their industry and if they see a threat to one of their revenue segments they will go out and purchase that startup company. These are two primary reasons DDD will be able to produce sustainable returns over the long-term. They are the industry leader and hold over 400 prototyping patents. Their revenue segments are geographically diversified both nationally and internationally. They are constantly improving their operating trends, and are well suited to support the future growth opportunities. BUSINESS AND GROWTH STRATEGIES Management is taking advantage of an opportunity to build a strong brand image and customer loyalty long before 3D printers become todays standard. Their goal is to expand their 3D portfolio by producing the latest technological printers months or years before they see a need. They are trying to penetrate channel expansion by accelerating the demand of personal and professional 3D printers. Doing this will allow DDD to have a high amount of recurring sales revenue of print materials and services.

Source: Company Reports

60000 50000 40000 30000 Revenue COGS

20000
10000 0

Source: UOIG Research and Company 10-K

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

2011 Benefit Cost Freedom of Creation Provides more affordable 3D print solutions N/A The3dStudio Expands 3D content-to-print with an online marketplace N/A Print 3D * Is a complementary custom parts service to Quickparts N/A Sycode Expands 3D Systems CAD software solutions N/A Accelerated Tech Expands their rapid-prototyping services $ 1,000 Quick Parts * Accelerates the adoption of print solutions and grows customer$base 22,775 National RP Support Improves 3D Sysetms customer support service $ 5,550 2010 Provel, Italys Leading Expands their current segment of 3Dproparts $ 11,955 Bits from Bytes * Producer of personal 3D printers and printer kits $ 2,185 Express Patter Expands 3D proparts and rapid prototyping portfolio $ 1,650 Design Prototyping Tech Enhances 3Dproparts online offering $ 3,600 Moeller Designs Expands 3Dproparts geographic footprint (aerospace and medical $ industry) 3,600 2009 AdvaTech Manufacturing Improves ability to provide parts to the aerospace industry $ 4,098 Key Desktop * Produces robust plastic parts and has a strong R&D department N/A * Key Acquistions

Core Business Management plans on accelerating the users effectiveness through a user friendly CAD interface solution. This will allow customers to select, design, customize and share their 3D digital data with each other in a simpler manner. This will dramatically expand the 3D printing audience and marketplace. This will help decrease or eliminate barriers of customer adoption. In addition they plan on increasing their core business by continuing to increase customers demand by providing end-to-end solutions and end-use products. In doing this, DDD will be able to defend and extend their presence within the industry while simultaneously helping to build long-term expertise. Lastly management plans on expanding new business by entering high demand and growth markets in China and India coupled with customer partnerships and acquisitions. Acquisitions 3D Systems continues to pursue strategic acquisitions by investing in any potential threat from disruptive startup companies. Just last year DDD started accelerating their strategic acquisitions using available capital. This is a direct result of the depressed market conditions allowing 3D Systems to acquire companies at bargain prices. In the last two years they have acquired twelve competitors to expand their portfolio vertically and horizontally. These acquisitions have helped enhance the performance of 3D Systems personalized manufactured items and will be a vital factor in driving the technology forward. 3D Systems growth strategy and acquisitions may change significantly as 3D printing moves from a futuristic thought to a must need manufacturing piece. MANAGEMENT AND EMPLOYEE RELATIONS As is the case in a disruptive technology industry, success depends on the businesses core executives. 3D Systems executives have the strong technical experiences required to manage in this extremely volatile business environment. Charles W. Hull Age 71, Compensation $393,385.00 Executive Vice President and Chief Technology Officer. Mr. Hull is the founder of the company and responsible for inventing the first commercial rapid prototyping technology. He is solely responsible for more than 60 U.S patents in the field of rapid prototyping. He brings a broad understanding of the technologies in the additive manufacturing industry and interesting perspectives on the companys strategy and growth. Hull has served as Chief Technology Officer since 1997 and as Executive Vice President since 2000. Abe N. Reichental Age 53, Compensation $2,847,699 President and Chief Executive Officer. Reichental became president in September 2003. He was previously employed by Sealed Air Corporation and has over 30 years of various technical, marketing, operating positions experience and leadership.

Source: UOIG Research

Source: Company Reports

Source: Company Reports

University of Oregon Investment G roup

3D Systems Corporation

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RECENT NEWS 3D Systems Partners With Autodesk - May 19, 2011 (GLOBE NEWSWIRE) Autodesk is a leader in 3D design, engineering and entertainment software and is one of the few companies who produce the necessary CAD software needed to use the 3D printers. This partnership will help provide easy to use content-to-print solutions for consumers and accelerate the adoption of affordability. 3D Systems to trade on NYSE May 13, 2011 (Yahoo finance) 3D Systems is moving from the NASDAQ stock market and changing to the NYSE and in addition will be changing their ticker symbol to DDD from TDSC. Management made this move as they feel it is an ideal platform for their continued growth strategy and global expansion. 3D Systems Earns 28 Cents per Share; Announces Two-for-One Stock Split - April 28, 2011 (GLOBE NEWSWIRE) The company announced it earned 28 cents per share on a 51% revenue increase and a 62% gross profit improvement compared to the first quarter of 2010. In addition to earnings they announced a two-for-one stock split and started traded at the adjusted split on May 19, 2011. Management did this stock split to increase their trading liquidity and draw a broader investor base. 3D Systems announce public equity offering - March 2011 (Seeking Alpha) The company opened up an additional 1.3 million shares of common stock which resulted in $54.0 million net cash processed for the company. Industry The additive manufacturing industry, commonly referred to as the 3D printing or solid image processing industry, is a futuristic and modern industry that is currently experiencing tremendous growth. The term, 3D printing, comes from the general manufacturing process with printers in which a three-dimensional object is created by adding materials a little bit at a time in successive layers to build up a full-scale model of an item. These objects created may be a visualization design for further manufacturing processes or to generate products for short-run manufacturing. This is an up and coming industry and I believe the demand from its market will continue to expand. This is not a matter of if, but rather when. Input Cost The price of certain commodities can adversely affect 3D Systems margins. The company uses raw materials including stainless steel, chrome cobalt, titanium in manufacturing the 3D printers and as the print materials to produce the end object. The price of steel is extremely volatile and is expected to increase as the demand for steel picks with the rising domestic economy. According to IBISWorld positive growth is projected in steel prices for the next five year but really will not hit the consumer until after 2015. The price of steel is expected to increase by 0.49% until 2016. Another commodity that affects the 3D printing industry is the price of plastic. The price of plastic is closely linked to the movement in oil prices.
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Price of Steel
250 200 150 100 50 Price of Steel

0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Source: IBISWorld

Price of Plastic
300
250 200 150 Price of Plastic Index 100

50
0

Source: IBISWorld

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3D Systems Corporation

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Crude oil has been on the rise since 2003 and is expected to continue this trend going forward. Since crude oil experience extremely volatile prices and is becoming more expensive to extract in some areas the price of plastic is raising too. Historically the price crude oil and plastic have experience a wide range in it prices any given year. The price of plastic is expected to increase by 1.72% until 2016. The Four Top Competitors in the Industry The main players that produce and sell 3D printers are 3D Systems Corporation, Stratasys, Inc, Z Corporation, Inc, and Objet. In addition there is Reprap centrally located in Europe, which allows the user to upload 3Dimensional images which they then print into a 3 dimensional objects and ship it to you. 3D Printing Developments As fresh as this 3D printing may seem, this industry has been around for a while as Engineers and designers have been utilizing 3D printers for over a decade. The only different is now these 3D printers are used to make inexpensive prototypes before actual embarking on producing the real objects. This trend is slowly altering the technology advances and the products are progressing towards an end-use object verse a prototype. According to a research specialist in the field, Terry Wohlers, more than 20% of the output of 3D printers is now final products and he predicts that this will rise to 50% by 2020. There has been a tremendous amount of studies on the 3D printing process and its future capabilities. Many end results from these studies concur that the 3D printing device will be a dominate factor in our economy as it follows the trend of going green while making our economy more efficient. According to Will Sillar of Legerwood, a British firm of consultants, I expect to see the emergence of what I call the digital production plant: firms will no longer need so much capital tied up in tooling costs, work-inprogress and raw materials. Moreover, the time to take a digital design from concept to production will drop, by as much as 50-80%. The ability to overcome production constraints and manufacture new products will combine with improvements to the technology and greater mechanization to make 3D printing more mainstream. 3D printing manufacturing follows the trends of the computer industry but more precisely the inkjet, document printers and printing presses. These printing machines became the industry standard and started the trend of mass-production to cut cost. They were highly efficient at printing multiple copies of the same thing but not individual documents. This is where the 3D printing or additive manufacturing will change the manufacturing industry and how the economy looks at producing personalized items. I believe the low cost 3D printers will eventual appear in the consumer market and you will not need a factory to produce items. People will be able to produce their own items in their office or at home. In 2009 3D Systems was the first 3D manufacturing company to launch a printer under $10K. To date the cheapest 3D printer in the industry is 3D Systems RapMan 3.1 with a cost of $1,137. (Using the exchange rate as of May 18 2011 1 euro = 1.43 U.S $) The real key for this industry to exceed in the future is their ability to
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3D Systems Corporation

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keep decreasing the price and making the printers more affordable while improving the 3D content. Market Outlook Stratasys business development director, Fred Fischer envisions the market developing in two directions. Demand for cheap models that can quickly produce concept models The demand for cheaper and simpler 3D printers is very clear as a company would rather print a spare part at home verses airfreight an urgently needed spare part from abroad. In addition I see the cheaper personal 3D printers producing products just like digital music is downloaded today. These unbelievable thoughts may be possible some day.
Source: ABI research

Demand for more elaborate machines that are cost effective An example of an increasing demand for more elaborate machines could be a jewelry shop. Individuals constantly visit jewelry shops with the idea of what ring they want but cannot find the right one. Using the 3D printing customers will be able to customize the ring they want using the CAD software with help from the jewelry expert to produce the product s/he is looking for. Push print and the 3D printer will start printing the end result at the store. S.W.O.T. Analysis Strengths 3D Systems biggest strength is their recurring sales buckets from print materials and services revenue segments. Secondly they have a proven research and development departments and able to produce new products to improve their additive manufacturing portfolio. Lastly DDD help cut customers cost by reducing their production lines while increasing their throughput rate by enabling them to produce single items quickly and cheap rather than exporting abroad for the rare part Weaknesses Their 3D printers are very expense to make which results in a high price for the machines and their end-use products of additive manufacturing are the most important factor in driving this technology forward. Lastly objects will become a lot easier to copy, distribute and pirate thus making it easier to breach intellectual-property laws Opportunities Their Increasing demand from growth markets of China and India and their ability to speed up the design process will have a big impact on the 3D printing industry and may ultimately replace mass-manufacturing. In addition once the printers cost decrease and their speed increases there will be a surge in demand and manufacturers will look to adopt the technology. This is because 3D printers allow for the creation of parts in shapes that conventional technique cannot achieve will result in new much more efficient designs in aircraft wings or heat exchangers.

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

Threats Their major threat is expanding too fast and becoming too diversified within the industry. In addition staying on top of the industry and being able to compete with startup firms and other business that could adversely affect DDDs revenue or gross profit margin. Also there is always a threat that the established technique of mass-manufacturing will not go away and that they cannot interrelate with 3D printers The technology does not improve and the cost of the 3D printing machines do not descend/lower to a respectful price Porters 5 Forces Analysis Supplier Power Moderate In the additive manufacturing industry there are multiple suppliers that produce their raw materials. This makes the suppliers compete for customer sales which in the end decreases the price. But some 3D printers use rare metal powders to print the objects that not all suppliers supply thus bringing up the sales price. Lastly the industries supplier cost depends on the price of the raw materials commodity price and in which will directly affect the 3D printing companies. Barriers to Entry Moderate and increasing Barriers to entry in particular for the manufacturing of the 3D printers are high as the firm will need a lot of capital and a strong research and development team to produce the technology advanced printers. Once the industry is launched the incoming firms will have to struggle to win-over the established relationships with satisfied customers. In addition new firms will have to circumvent/side step the prototyping patients owned by the main players within the industry. Buyer Power Moderate and decreasing Presently, there is not a strong demand for 3D printers throughout the world. But as the printers become more efficient and their prices fall their demand will drastically increase and more firms will want different additive manufacturing companys services. Threat of Substitutes Moderate and decreasing The additive manufacturing industry is not an essential function in companys business model as they still use mass-manufacturing machines. Recently there has been a slow trend of businesses starting to shift over to the 3D printers to become more efficient and produce personalized products. Terry Wohlers estimates that 3D printers in some way account for about 75% of sales nationally and could potentially rise to 90% in the future. Degree of Rivalry High Competitors in the 3D printing industry consist of any company that manufacture machines that make or use machines to makes models, prototypes, molds and small-volume to medium-volume manufacturing parts. There are five main competitors within the 3D printing industry and always a threat of a new startup firm entering.

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3D Systems Corporation

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Catalysts Upside The additive manufacturing industry has the potential to transform the massmanufacturing industry as it lowers the costs and risks coupled with the ability to personalize objects. There is a global market for additive manufacturing was worth $1.2 billion in 2008 and predications have it doubling in size by 2015. In addition 3D printing has been proven to work as it accounts for 20% of the output from 3D printers is now final products and could potentially rise to 50% by 2020. Also revenue and Gross margins have increased sequentially and incrementally despite the fact that 3D printing has yet to reach a full fledge market. Lastly 3D Systems has an excellent change of being acquired by bigger companies such as Apple and General Electric. Downside 3D Systems always will face exchange rate risk as half of their sales are abroad and in addition their input cost can be greatly affected by rising commodity cost of hard metals and plastic. This is will always be a problem as management does not use financial instruments to hedge commodity prices. Lastly the pace of economic recovery is uncertain and economic conditions could deteriorate in 2011 and lead to softness in demand. COMPARABLES ANALYSIS Finding peer play players for 3D Systems was hard as majority of the competitors are private. There are only three direct competitors within the industry. Z Corporation, Objet, Inc and Stratasys, Inc of which is the only publicly traded company. Next I searched for different computer-aided design software companies and came up with only two publicly traded companies in Autodesk, Inc. and Parametric Technology Corporation. Lastly I started looking at different companies who produce end parts that compete with the end-use parts that the 3D printers produce. After looking through ten different companies I chose not to use any them as a comparable as all their expected growth rates are less than 3D Systems and are trading at different multiples. All the selected peer play companies have roughly the similar top line growth, capital structure and enterprise values. Stratasys, Inc (SSYS) 70% Weighting Stratasys, Inc., together with its subsidiaries, engages in the development, manufacture, and marketing of three dimensional (3D) printing, rapid prototyping (RP), and direct digital manufacturing (DDM) systems primarily in North America, Europe, and the Asia Pacific. (Yahoo Finance) Stratasys is the best comparable by far as they are the only other publicly traded company that has the exact same risk and business model as 3D Systems. In addition they trade roughly the same, have similar market caps and have the same expected growth across the board. In addition they acquire their competitors just like 3D Systems and an example of this is their recent buyout of a private 3D printer manufacturer in Solidscape on May 3, 2011.

Expected Growth 2Yr (CAGR) TDSC SSYS ADSK PMTC

Sales 8.09% 10.44% 5.13% 7.95%

Gross Profit 11.34% 9.84% 4.96% 11.08%

EBITDA 29.88% 21.38% 8.93% 20.94%

Source: UOIG Research and FACTSet

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3D Systems Corporation

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WACC Assumptions

Tax Rate Risk-Free Rate Beta Market Risk Premium % Equity % Debt Cost of Debt CAPM
WACC

35% 3.15% 1.47 7.00% 99.12% 0.88% 7.00% 13.44%

13.36%

Autodesk, Inc (ADSK) 20% Weighting Autodesk is one of the few publicly traded computer-aided design software developer. They develop CAD software for Emerging Businesses for professional design, drafting, detailing, and visualization applications. In addition they have Autodesk 3ds Max software that offers 3D modeling, animation, and rendering solutions; and Autodesk Maya, which provides 3D modeling, animation, effects, rendering, and compositing solutions. (Yahoo Finance) Autodesk is a great equivalent as they develop the CAD software that 3D Systems customers will need to use to create their design and print their 3D objects. In addition their capital structure and top line expected growth is in line with 3D Systems. ADSK is weighted slightly higher than CGNX and PMTC because last week 3D Systems ended up partnering with Autodesk to mutually benefit each other. Parametric Technology Corporation (PMTC) 10% Weighting PMTC develops, markets, and supports product lifecycle management (PLM) software solutions and services that help companies design products, manage product information, and improve product development processes worldwide. (Yahoo Finance)

Source: UOIG Research

Sensativity Analysis 12.36% 12.96% 13.36% 13.76% 14.36%

WACC

2.0% 25.94 23.86 22.6 21.45 19.88

Terminal Growth Rate 2.5% 3.0% 26.6 27.33 24.41 25.01 23.09 23.62 21.89 22.36 20.25 20.65

3.5% 28.15 25.68 24.22 22.88 21.09

4.0% 29.06 26.43 24.87 23.46 21.57

Source: UOIG Research

I chose Parametric Technology as a comparable because they have similar expected growth and beta. They also help improve companies manufacturing development worldwide just like 3D Systems. They deserved a lower weighting than the other two competitors because they are not in the same niche market. DISCOUNTED CASH FLOW ANALYSIS Revenue Revenue was forecasted using some management guidance, idataresearch Inc, examining potential industries that the end-use product could affect, and noting numerous consultants who have followed the industry trends. In addition I researched other disruptive technology trends and their impact within the economy. Since this is a new company, the historical revenue segment is small and is just starting to hit the market with the best times lie ahead of them. 3D Systems broke up their revenue into three segments of 3D printers, print materials, and services. With the latter two segments growth being lagged a year based off of the sales of 3D printers. 3D Printers and Other Over the last ten years sales have increased at a modest compounded annual rate of 3.42%. Looking forward ABI research estimated that 3D printers will be a big mover in the economy with over $1 billion in industry sales by 2015. During this same time frame management believe they can capitalize on this by increasing printers sold annual to 85,000 by 2015. In 2010 they sold 15,000 units. The demand for production printers is moderate within the manufacturing industry. The growth looking forward depends on how the economy will accept this new technology and how fast companies can lower their price. Once personal and professional printers hit an acceptable price range their unit sales are expected to take off.
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Price Assumptions

Terminal Growth Rate Terminal Value PV of Terminal Value Sum of PV Free Cash Flows Firm Value LT Debt Cash Equity Value Diluted Share Count
Implied Price Current Price Undervalued

3.00% 4,173,200 752,741 403,984 1,156,726 7,655 70,828

1,149,071

48,642
23.62 17.93 31.75%

Source: UOIG Research

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3D Systems Corporation

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DCF Model Implied Price Mine 23.53 Management Low 32.59 Management High 43.47
Source: UOIG Research

Print Materials Print material is the companys strongest source of revenue and in addition provides the largest gross margin. This segment benefits strongly from the amount of printers sold each year and is beneficial from recurring revenue from their customers as the need to buy more print materials to continue using the 3D printers. Management provided a five year growth outlook for this revenue segment which showed they are pretty confident that demand for their product will rapidly increase in the short term. Given managements artificial/unpredictable large growth I opted out of using their number and chose to go with a more moderate growth and reaching the country at a slower pace. Print Services I forecasted that some business will opt out of buying the huge printing machines and decide to outsource their product to 3D Systems and allow them to print the product for them. I see this as another option for business and consumer to utilize in the near future as they are skeptical about the durability and efficiency of the 3D printing machines compared to their prices. Lastly I see their customers continually purchasing upgraded printer kits to take advantage of the newest technology.

1,200,000

1,000,000
800,000

600,000
400,000

Management High-Level Management Mid-Level My Forecast

200,000
2011 2012 2013 2014 2015

Print Materials Forecasted Revenue

Source: UOIG Research and Company 10-K

Gross Profit The company believes they can become more efficient on producing printer and in the long run help increase their gross margin. Looking forward I see their gross margin increasing substantially as print material becomes a larger part of their business model. Given that print materials gross margin has historically averaged around 62%, I see 3D Systems achieving their long term goal between 58 and 62% gross margin. Tax Rate 3D Systems experienced significant losses from 1997 to 2003. The company has been able to carry these losses forward and use them as tax benefits over the last three years. Management provided guidance that they are going to try and use the $65 million deferred taxes as soon as they can. 3D Systems can only use these tax benefits as fast as the U.S. Internal Revenue Service allows them. Management gave guidance that they will effectively be able to achieve an 18-22% tax rate until they run out of their deferred taxes and thereafter will move to the federal average of 35%

2010
Services 26% Printers 29%

Print Materials 45%

Source: UOIG Research

Research and Development Historically R&D has been 9.48% of revenue. For 3D Systems to continue to stay ahead of the industry they need to continually invest in their research and development. For this reason looking forward I see DDD increasing their R+D expense up to 7.1%. I believe they will do this in order to get ready for the expected increase in demand and to stay ahead of the game. Acquisition 3D Systems in the past has relied on their unrestricted cash and cash flow from operations in addition with their secondary offering proceeds to fund their acquisitions. In 2010 they acquired five companies and have keep up this pace into 2011 by already acquiring seven companies. Looking forward in the long run it is hard to believe they will be able to keep up this pace. For this reason I decided to trim their acquisitions down slightly after 2015.

12

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

Beta 3 Yr. W 3 Yr. W No Acq's 3 Yr. M 3 Yr. M No Acq 5 Yr. M (5/2/2011) 5 Yr. M (4/1/2011) HAMADA (Core) HAMADA (ALL) 1.79 1.71 2.29 1.85 1.76 1.65 1.23 1.28

Std. 0.35 0.25 0.95 0.53 0.46 0.39 0.20 0.19

Working Capital The major adjustments in my working capital were with inventory, accounts receivable and accounts payable. For these I decided to use their turnover ratios so my balance sheet line items could be in line with the companies expected growth. Historical inventory turnover ratio and felt they could improve this by 10 basis points a year and ultimately ending at an inventory turnover ratio of 7.6. For accounts receivable turnover I felt they could moderately improve this down to a turnover number of 4.2. Lastly accounts payable mainly consist of customers abroad who purchase a 3D printing machine but opt out on receiving the machine for a while. For this reason I forecasted that 3D Systems will hold more customer machines in the short run as the demand for them will spike. Looking towards the long run I see them improving their accounts payable turnover to 3.5 as they become more efficient in delivering machines to their customers. Beta I estimated the beta for 3D Systems to be 1.47 based on a 50% weighting with a three-year weekly regression against the S&P 500 while taking out the outliers of when the company purchased another company. For the last 50% I rand a three-year weekly HAMADA beta with only 3D Systems core competitors who experience the same risk. I also ran numerous regression with other betas that ranged from a three-year monthly of 2.29 to a HAMADA of 1.28 with thirteen manufacturing parts companies. I feel that my beta of 1.47 accurately represents 3D Systems as they will continue to pursue strategic acquisitions and growth opportunity of this developing industry. Terminal Value In ten years I see this industry still thriving and just entering or in its prime. For this reason I feel it is not realistic to slow down its growth to the economy average. This is why I forecasted that 3D Systems will increase their free cash flow 10% for two year and then 5% for three years following the terminal year of 2020. After 2025 I then moved it back to the economy average of 3% terminal growth rate.

Source: UOIG Research

Beta Std. Weight DDD Beta

HAMADA (Core) 3 Yr. W No Acq's 1.23 1.71 0.20 0.25 50% 50% 1.47 0.23
Source: UOIG Research

Terminal Value Yr. (1-5) Terminal Value to perpetuity Total Terminal Value PV Terminal Value Yr. (1-5) PV Terminal Value to Perpetuity Total PV Terminal Value

1,287,223 2,885,977 4,173,200 238,264 514,477 752,741

Source: UOIG Research

Valuation Method
Comparables Implied Price DCF Implied Price My Implied Price Current Price

Weight Implied Prices

30% 70% 100% 21.70 23.62 23.05 17.93

Undervalued

28.53%

Source: UOIG Research

13

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

APPENDIX 1 COMPARABLES ANALYSIS

The University of Oregon Investment Group

70.00% 20.00% 10.00%

W.A 100.00%

($ in Millions except per share data) Stock Characteristics Current Price 50 Day Moving Avg. 200 Day Moving Avg. Beta Size ST Debt (MRQ) LT Debt (MRQ) Cash and Cash Equiv. (MRQ) Diluted Share Count Market Cap Enterprise Value Profitability Margins Gross Margin EBIT Margin EBITDA Margin Net Margin Credit Metrics Interest Expense (MRQ) Debt/Equity (MRQ) Expected Growth 2YR (CAGR) Sales Gross Profit EBITDA Operating Results Revenue (2012 EST) Gross Profit (2012 EST) OCF (2012 EST) EBITDA (2012 EST) EBIT (2012 EST) Valuation
EV/Revenue EV/OCF EV/EBITDA

TDSC

SSYS

ADSK

PMTC

17.93 22.90 18.64 1.51 0.20 7.66 70.83 48.64 872 809 47.00% 14.60% 19.40% 13.86% 0.2 0.90% 8.09% 11.34% 29.88% 254 132.9 59 83 55.8
3.19 x 13.71 9.75 x

35.87 47.7 40.17 1.04

42.35 44.04 40.71 1.36

22.96 23.16 22.84 1.35 0 0 259.50 121.50 2,790 2,530 69.50% 7.90% 13.50% 2.85%

1.14 0 0 269.49 74.72 2831 2,561 64.06% 19.23% 27.34% 10.53% 0.2 0.90%

0 0 0 0 36.08 1091.40 21.65 237.10 777 10,041 740 8,950 55.90% 22.20% 29.50% 11.53% 89.90% 14.50% 26.70% 10.86%

10.44% 9.84% 21.38% 192.6 98.2 41.71 54.51 40.6

3.84 x 17.75 13.58 x

5.13% 4.96% 8.93% 2396.7 2189.4 631.6 670.7 615.3

3.73 x 14.17 13.34 x

7.95% 11.08% 20.94% 1264 905.4 225.1 275.6 239.7

2.002 11.24 9.18 x

9.13% 8.99% 18.85% 614.16 506.62 155.52 172.30 151.48 Weighted Avg.
3.64 x 16.38 x 13.09 x

Metric EV/Revenue EV/OCF EV/EBITDA

Price Target Current Price Undervalued

Implied Price 20.29 21.17 23.64

Weight 33.33% 33.33% 33.33%

21.70 17.93 21.01%

**Normalized Financial Adjustment Footnotes** 1) Diluted Shares outsanding is double because of their 2 for 1 stock split 2) SSYS EST EBITDA was not give so I took 2012 EST EBIT and added their 3-year historical average of D&A. 3) SSYS EST OCF was not given so I took 2012 EST Net Income and added their 3-year historical average of D&A.

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University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

APPENDIX 2 DISCOUNTED CASH FLOWS ANALYSIS

The University of Oregon Investment Group

($ in thousands except per share data) Total Company Revenue % Y/Y Growth Cost of Revenue % Revenue Gross Profit Gross Margin Operating Expenses SG&A % Revenue Depreciation and Ammortization % Revenue R&D % Revenue Total Operating Expenses % Revenue EBIT % Revenue Interest Expense and Other Expense, Net % Revenue Interest Expense % Revenue Pre-tax Income % Revenue Less Taxes (Benefit) Tax Rate Net Income Net Margin Add Back Depreciation and Ammortization % Revenue Add Back Interest Expense*(1-Tax Rate) % Revenue Operating Cash Flow % Revenue Current Assets % Revenue Current Liabilities % Revenue Net Working Capital % Revenue Change in Net Working Capital Capital Expenditures % Revenue Acquistions % Revenue Unlevered Free Cash Flow Discounted Unlevered Free Cash Flows 2009 112,835 -18.79% 63,105 55.93% 49,730 44.07% 29,642 26.27% 5,886 5.22% 11129 9.86% 46,657 41.35% 3,073 2.72% -1160 -1.03% 618 0.55% 1,913 1.70% 774 40.46% 1,066 0.94% 5886 5.22% 368 0.33% 7,320 6.49% 70,153 62.17% 33,435 29.63% 36,718 32.54% 1,439 974 0.86% 5243 5% (336) 2010 2011 Q1 A 159,868 47,896 41.68% 85,892 24,699 53.73% 51.57% 73,976 23,197 46.27% 48.43% 34,811 21.77% 7,520 4.70% 10725 6.71% 53,056 33.19% 20,920 13.09% -1181 -0.74% 587 0.37% 19,739 12.35% 173 0.88% 19,566 12.24% 7520 4.70% 582 0.36% 27,668 17.31% 100,140 62.64% 57,665 36.07% 42,475 26.57% 5,757 1283 0.80% 20774 13% (146) 10,554 22.04% 2,410 5.03% 2822 5.89% 15,786 32.96% 7,411 15.47% 296 0.62% 200 0.42% 7,707 16.09% 885 11.48% 6,822 14.24% 2410 5.03% 177 0.37% 9,409 19.64% 140,962 64,459 76,503 34,028 475 0.99% 22125 46% (47,219) 0.75 2011 Q234 E 176,435 84,688 48.00% 91,747 52.00% 27,473 15.57% 6,563 3.72% 10178 5.77% 44,214 25.06% 47,533 26.94% 0.0 0.0% 0.00 0.0% 47,533 26.94% 9,058 5.13% 38,475 21.81% 6563 3.72% 0 0.0% 45,025 25.52% 145,654 80,472 65,182 (11,321) 4,012 2.27% 11,525 6.53% 40,810 37,146 1.75 2012 E 291,832 30.09% 138,052 47.31% 153,780 52.69% 49,174 16.85% 11,673 4.00% 19,553 6.70% 80,400 27.55% 73,381 25.14% 0 0.0% 0 0.0% 73,381 25.14% 13,209 18.00% 60,172 20.62% 11,673 4.00% 0 0% 71,845 24.62% 195,892 67.13% 101,912 34.92% 93,980 32.20% 28,798 5,691 1.95% 14,592 5.00% 22,765 18,279 2.75 2013 E 361,462 23.86% 169,461 46.88% 192,001 53.12% 60,364 16.70% 12,651 3.50% 25,302 7.00% 98,318 27.20% 93,683 25.92% 0 0.0% 0 0.0% 93,683 25.92% 16,863 18.00% 76,820 21.25% 12,651 3.50% 0 0% 89,471 24.75% 240,032 66.41% 120,544 33.35% 119,488 33.06% 25,508 6,868 1.90% 18,073 5.00% 39,022 27,639 3.75 2014 E 445,086 23.14% 207,662 46.66% 237,424 53.34% 73,439 16.50% 15,133 3.40% 31,601 7.10% 120,173 27.00% 117,251 26.34% 0 0.0% 0 0.0% 117,251 26.34% 21,105 18.00% 96,146 21.60% 15,133 3.40% 0 0% 111,279 25.00% 291,677 65.53% 141,256 31.74% 150,421 33.80% 30,932 8,012 1.80% 22,254 5.00% 50,080 31,291 4.75 2015 E 551,669 23.95% 254,059 46.05% 297,610 53.95% 89,922 16.30% 18,205 3.30% 39,169 7.10% 147,296 26.70% 150,315 27.25% 0 0.0% 0 0.0% 150,315 27.25% 43,892 29.20% 106,423 19.29% 18,205 3.30% 0 0% 124,628 22.59% 340,384 61.70% 165,845 30.06% 174,538 31.64% 24,118 8,827 1.60% 22,067 4.00% 69,617 38,370 5.75 2016 E 658,580 19.38% 292,486 44.41% 366,094 55.59% 105,373 16.00% 19,757 3.00% 46,759 7.10% 171,889 26.10% 194,205 29.49% 0 0.0% 0 0.0% 194,205 29.49% 67,972 35.00% 126,233 19.17% 19,757 3.00% 0 0% 145,991 22.17% 401,920 61.03% 198,948 30.21% 202,972 30.82% 28,433 9,879 1.50% 26,343 4.00% 81,335 39,545 6.75 2017 E 769,334 16.82% 333,596 43.36% 435,738 56.64% 123,093 16.00% 23,080 3.00% 54,623 7.10% 200,796 26.10% 234,941 30.54% 0 0.0% 0 0.0% 234,941 30.54% 82,230 35% 152,712 19.85% 23,080 3.00% 0 0% 175,792 22.85% 464,509 60.38% 230,675 29.98% 233,835 30.39% 30,863 10,001 1.30% 23,080 3.00% 111,848 47,970 7.75 2018 E 884,205 14.93% 380,692 43.05% 503,513 56.95% 141,473 16.00% 26,526 3.00% 62,779 7.10% 230,778 26.10% 272,736 30.85% 0 0.0% 0 0.0% 272,736 30.85% 95,458 35% 177,278 20.05% 26,526 3.00% 0 0% 203,804 23.05% 533,882 60.38% 264,280 29.89% 269,602 30.49% 35,767 8,842 1.00% 26,526 3.00% 132,669 50,194 8.75 2019 E 997,091 12.77% 424,311 42.55% 572,780 57.45% 159,534 16.00% 29,913 3.00% 70,793 7.10% 260,241 26.10% 312,539 31.35% 0 0.0% 0 0.0% 312,539 31.35% 109,389 35% 203,150 20.37% 29,913 3.00% 0 0% 233,063 23.37% 601,281 60.30% 299,218 30.01% 302,063 30.29% 32,461 9,971 1.00% 24,927 2.50% 165,704 55,302 9.75 2020 E 1,107,074 11.03% 467,438 42.22% 639,636 57.78% 177,132 16.00% 33,212 3.00% 78,602 7.10% 288,946 26.10% 350,690 31.68% 0 0.0% 0 0.0% 350,690 31.68% 122,741 35% 227,948 20.59% 33,212 3.00% 0 0% 261,160 23.59% 659,234 59.55% 332,611 30.04% 326,623 29.50% 24,560 11,071 1.00% 27,677 2.50% 197,852 58,248

2011 A + E 224,331 40.32% 109,387 48.76% 114,944 51.24% 38,027 16.95% 8,973 4.00% 13,000 6.50% 60,000 26.75% 54,944 24.49% 296 0.13% 200 0.09% 55,240 24.62% 9,943 18.00% 45,297 20.19% 8,973 4.00% 164 0.07% 54,434 24.26% 145,654 64.93% 80,472 35.87% 65,182 29.06% 22,707 4,487 2.00% 33,650 15.00% (6,409)

**Normalized Financial Adjustment Footnotes** 1) Net income for 2009 includes a $73 non-controlling interest

15

University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

APPENDIX 3 REVENUE PROJECTIONS

($ In Thousands except per share data) Production Printers 2008 14,752 2009 18,606 2010 2011 Q1 A 2011 Q234 E 2011 A + E 2012 E 32,265 8,392 43,232 51,624 67,111 2013 E 80,533 2014 E 92,613 2015 E 102,800 2016 E 113,080 2017 E 123,823 2018 E 133,729 2019 E 141,752 2020 E 148,840

% Growth % of Revenue
Personal and Professional Printers

-39.91% 10.62%
26,570

26.12% 16.49%
11,895

73.41% 20.18%
22,421

17.52%
5,143

24.50%
28,489

60.00% 23.01%
33,632

30.00% 23.00%
40,358

20.00% 22.28%
48,632

15.00% 20.81%
58,844

11.00% 18.63%
71,790

10.00% 17.17%
87,584

9.50% 16.09%
103,349

8.00% 15.12%
118,851

6.00% 14.22%
134,302

5.00% 13.44%
149,075

% Growth % of Revenue
Total Printers

-20.99% 19.12%
41,322

-55.23% 10.54%
30,501

88.49% 14.02%
54,686

10.74%
13,535

16.15%
71,720

50.00% 14.99%
85,255

20.00% 13.83%
107,469

20.50% 13.45%
129,165

21.00% 13.22%
151,457

22.00% 13.01%
174,590

22.00% 13.30%
200,664

18.00% 13.43%
227,172

15.00% 13.44%
252,580

13.00% 13.47%
276,054

11.00% 13.47%
297,915

% Growth % of Revenue
Print Materials

-28.97% 29.74%
62,290

-26.19% 27.03%
50,297

79.29% 34.21%
58,431

28.26%
15,609

40.65%
53,340

55.90% 38.00%
68,949

26.06% 36.83%
86,186

20.19% 35.73%
108,594

17.26% 34.03%
139,000

15.27% 31.65%
180,700

14.93% 30.47%
222,262

13.21% 29.53%
271,159

11.18% 28.57%
328,102

9.29% 27.69%
387,161

7.92% 26.91%
445,235

% Growth % of Revenue
Service

0.52% 44.83%
35,327

-19.25% 44.58%
32,037

16.17% 36.55%
46,751

32.59%
18,752

30.23%
51,375

18.00% 30.74%
70,127

25.00% 29.53%
98,177

26.00% 30.04%
123,703

28.00% 31.23%
154,629

30.00% 32.76%
196,379

23.00% 33.75%
235,654

22.00% 35.25%
271,003

21.00% 37.11%
303,523

18.00% 38.83%
333,875

15.00% 40.22%
363,924

% Growth % of Revenue Total Revenue % Growth

-2.87% -9.31% 45.93% 25.43% 28.39% 29.24% 138,939 112,835 159,868 -11.23% -18.79% 41.68%

-59.89% 39.15% 47,896

29.12% 176,435

50.00% 31.26% 224,331 40.32%

40.00% 33.64% 291,832 30.09%

26.00% 34.22% 361,462 23.86%

25.00% 34.74% 445,086 23.14%

27.00% 35.60% 551,669 23.95%

20.00% 35.78% 658,580 19.38%

15.00% 35.23% 769,334 16.82%

12.00% 34.33% 884,205 14.93%

10.00% 9.00% 33.48% 32.87% 997,091 1,107,074 12.77% 11.03%

APPENDIX 4 GROSS PROFIT

($ in Thousands except per share data)

2008
Printers 7,971

2009
7,824

2010 2011 Q1 A 2011 Q234 E 2011 A + E 2012 E

21,352 5,493 32,019 37,512 48,791

2013 E
58,770

2014 E
69,064

2015 E
79,962

2016 E
100,332

2017 E
114,495

2018 E
127,805

2019 E
140,236

2020 E
151,639

Gross Margin Gross Margin

Services

19.29% 63.04%
8,330

25.65%
29,673

39.04%
35,724

40.58%
9,900

44.64%
34,572

44.00%
44,472

45.40%
56,883

45.50%
71,998

45.60%
91,045

45.80%
119,262

50.00%
147,582

50.40%
181,677

50.60%
222,125

50.80%
263,269

50.90%
302,760

Print Materials 39,267

59.00%
12,233

61.14%
16,900

63.42%
7,804

64.81%
25,155

64.50%
32,959

66.00%
48,107

66.30%
61,233

65.50%
77,314

66.00%
98,386

66.40%
118,181

67.00%
139,566

67.70%
153,583

68.00%
169,275

68.00%
185,237

Gross Margin Total Revenue Gross Margin

23.58% 38.18% 36.15% 138,939 112,835 159,868 39.99% 44.07% 46.27%

41.62% 47,896 48.43%

48.96% 47.00% 49.00% 49.50% 50.00% 176,435 224,331 291,832 361,462 445,086 52.00% 51.24% 52.69% 53.12% 53.34%

50.10% 551,669 53.95%

50.15% 658,580 55.59%

51.50% 769,334 56.64%

50.60% 884,205 56.95%

50.70% 50.90% 997,091 1,107,074 57.45% 57.78%

**Normalized Financial Adjustment Footnotes** 1) Quarter 1 2011, service was dragged down dramtically by 3Dproparts and without it 47%

APPENDIX 4 WORKING CAPITAL

($ in Thousands except per share data) Total Revenue 2008 2009 2010 138,939 112,835 159,868 -11.23% -18.79% 41.68% 22,164 15.95% 25,166 5.52 18.11% 21,018 6.61 15.13% 1711 1.23% 935 0.67% 3309 2.38% 74,303 53.48% 24,913 37,349 22.08% 23.36% 23,759 35,800 4.75 4.47 21.06% 22.39% 18,378 23,811 6.14 6.71 16.29% 14.89% 2415 1295 2.14% 0.81% 634 1874 0.56% 1.17% 54 11 0.05% 0.01% 70,153 100,140 62.17% 62.64% 2011 Q1 A 47,896 2011 Q234 E 176,435 2011 E 2012 E 224,331 291,832 40.32% 30.09% 56,083 70,040 25.00% 24.00% 49,851 65,580 4.50 4.45 22.22% 22.47% 32,990 42,603 6.80 6.85 14.71% 14.60% 3,926 5,107 1.75% 1.75% 2,692 12,475 1.20% 1.23% 112 88 0.05% 0.03% 145,654 195,892 64.93% 67.13% 2013 E 361,462 23.86% 83,136 23.00% 82,150 4.40 22.73% 52,386 6.90 14.49% 6,326 1.75% 15,926 1.25% 108 0.03% 240,032 66.41% 2014 E 445,086 23.14% 97,919 22.00% 102,319 4.35 22.99% 63,584 7.00 14.29% 7,789 1.75% 19,933 1.26% 134 0.03% 291,677 65.53% 2015 E 551,669 23.95% 115,851 21.00% 128,295 4.30 23.26% 77,700 7.10 14.08% 9,654 1.75% 8,718 1.30% 166 0.03% 340,384 61.70% 2016 E 658,580 19.38% 135,009 20.50% 154,960 4.25 23.53% 91,469 7.20 13.89% 11,525 1.75% 8,759 1.33% 198 0.03% 401,920 61.03% 2017 E 769,334 16.82% 154,559 20.09% 183,175 4.20 23.81% 105,388 7.30 13.70% 13,463 1.75% 7,693 1.00% 231 0.03% 464,509 60.38% 2018 E 2019E 2020 E 884,205 997,091 1,107,074 14.93% 12.77% 11.03% 177,637 20.09% 213,062 4.15 24.10% 119,487 7.40 13.51% 15,474 1.75% 7,958 0.90% 265 0.03% 533,882 60.38% 200,316 20.09% 243,193 4.10 24.39% 132,945 7.50 13.33% 17,449 1.75% 7,079 0.71% 299 0.03% 601,281 60.30% 222,411 20.09% 263,589 4.20 23.81% 145,668 7.60 13.16% 19,374 1.75% 7,860 0.71% 332 0.03% 659,234 59.55%

Current Assets Cash and Cash Equivalents % of Revenues Accounts Reciveable Accounts Reciveable Turnover % of Revenues Inventories, net Inventory Turnover % of Revenues Prepaid Expenses and Other Current Assets % of Revenues Deferred Tax Assets % of Revenues Restricted Cash % of Revenues Total Current Assets % of Revenues Current Liabilities Current Portion of Capitalized Lease Obligation % of Revenues Accounts Payable Accounts Payable Turnover % of Revenues Accrued Revenue Share Obligation and Rebates % of Revenues Customer Deposits % of Revenues Deferred Revenue % of Revenues Total Current Liabilities % of Revenues

70,828 147.88% 39,293 1.22 82.04% 26,573 1.80 55.48% 2671 5.58% 1585 3.31% 12 0.03% 140,962 294.31%

56,083 31.79% 49,851 28.25% 32,990 18.70% 3,926 2.23% 2,692 1.53% 112 0.06% 145,654 82.55%

3280 2.36% 17,133 3.68 12.33% 8,057 5.80% 1,136 0.82% 9,418 6.78% 39024 28.09%

213 0.19% 12,994 6.61 11.52% 11,114 9.85% 627 0.56% 8,487 7.52% 33435 29.63%

224 0.14% 26,556 0.93 16.61% 17,969 11.24% 2,298 1.44% 10,618 6.64% 57665 36.07%

198 0.41% 23,363 3.62 48.78% 27,439 57.29% 2,387 4.98% 11,072 23.12% 64459 134.58%

790 0.45% 25,663 3.30 14.55% 33,650 19.07% 4,487 2.54% 15,883 9.00% 80472 45.61%

790 707 0.35% 0.24% 25,663 34,726 3.30 3.15 11.44% 11.90% 33,650 40,856 15.00% 14.00% 4,487 4,961 2.00% 1.70% 15,883 20,662 7.08% 7.08% 80,472 101,912 36% 34.92%

707 0.20% 41,834 3.30 11.57% 46,990 13.00% 5,422 1.50% 25,591 7.08% 120,544 33.35%

706 0.16% 49,841 3.40 11.20% 53,410 12.00% 5,786 1.30% 31,512 7.08% 141,256 31.74%

703 0.13% 59,332 3.50 10.76% 60,684 11.00% 6,068 1.10% 39,058 7.08% 165,845 30.06%

703 0.11% 72,588 3.50 11.02% 72,444 11.00% 6,586 1.00% 46,627 7.08% 198,948 30.21%

703 0.09% 83,567 3.50 10.86% 84,627 11.00% 7,309 0.95% 54,469 7.08% 230,675 29.98%

703 703 0.08% 0.07% 95,313 108,769 3.50 3.50 10.78% 10.91% 97,263 109,680 11.00% 11.00% 8,400 9,472 0.95% 0.95% 62,602 70,594 7.08% 7.08% 264,280 299,218 29.89% 30.01%

703 0.06% 121,232 3.50 10.95% 121,778 11.00% 10,517 0.95% 78,381 7.08% 332,611 30.04%

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University of Oregon Investment G roup

3D Systems Corporation

http://uoig.uoregon.edu

APPENDIX 5 BETA SENSITIVITY ANALYSIS

Beta
1.930 1.815 1.70 1.585

St. Deviation
2.00 1.50 1.00 0.50

Implied Price Under (Over) Valued

15.84 17.37 19.14 21.20 -11.66% -3.14% 6.73% 18.22%

1.470
1.355 1.240 1.125 1.010

0.00
-0.50 -1.00 -1.50 -2.00

23.62
26.51 29.98 34.22 39.48

31.75%
47.84% 67.19% 90.84% 120.22%

APPENDIX 6 SOURCES http://www.economist.com/ https://wwws.ameritrade.com/ http://nextbigfuture.com/ http://www.sec.gov/ http://seekingalpha.com/ http://finance.yahoo.com/ http://www.marketresearch.com/ http://www.3dsystems.com/

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