3D SYSTEMS CORPORATION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________to____________

Commission File No. 001-34220

__________________________

3D SYSTEMS CORPORATION

(Exact name of Registrant as specified in its Charter)

__________________________

Delaware

95-4431352

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

333 Three D Systems Circle

Rock Hill, South Carolina 29730

(Address of Principal Executive Offices and Zip Code)

(Registrant’s Telephone Number, Including Area Code): (803) 326-3900

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol Name of each exchange on which registered

Common Stock, par value $0.001 per share DDD New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for

such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the

definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under

Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant on June 30, 2020 was $868,521,480. For purposes of this computation, it has been assumed

that the shares beneficially held by directors and executive officers of the registrant were “held by affiliates.” This assumption is not to be deemed an admission by these persons that they are

affiliates of the registrant.

The number of shares of the registrant's Common Stock outstanding as of February 22, 2021: 124,128,509

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into

Part III of this Form 10-K.

3D SYSTEMS CORPORATION
Annual Report on Form 10-K
For the Year Ended December 31, 2020
TABLE OF CONTENTS
PART I 4
Item 1.    Business 4
Item 1A. Risk Factors 11
Item 1B. Unresolved Staff Comments 22
Item 2.    Properties 22
Item 3.    Legal Proceedings 22
Item 4.    Mine Safety Disclosures 22
PART II 22
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22
Item 6.    Selected Financial Data 24
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations 25
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37
Item 8.    Financial Statements and Supplementary Data 38
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 38
Item 9A. Controls and Procedures 38
Item 9B. Other Information 39
PART III 39
Item 10.  Directors, Executive Officers and Corporate Governance 40
Item 11.  Executive Compensation 40
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 40
Item 13.  Certain Relationships and Related Transactions and Director Independence 40
Item 14.  Principal Accounting Fees and Services 40
PART IV 40
Item 15.  Exhibits, Financial Statement Schedules 41
Item 16.  Form 10-K Summary 44
3

ThisAnnual Report onForm10-K (“Form 10-K”)contains forward-looking statements, within themeaning of thePrivate Securities Litigation Reform Actof

1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading

“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements involve known and unknown risks,

uncertaintiesandotherfactorsthatmaycauseouractualresults,performanceorachievementstobemateriallydifferentfromhistoricalresultsorfromanyfuture

results expressed or implied by such forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “believes,”

“belief,”“expects,”“may,”“will,”“estimates,”“intends,”“anticipates,”or“plans”orthenegativeofthesetermsorothercomparableterminology.Forward-

lookingstatementsarebaseduponmanagement’sbeliefs,assumptionsandcurrentexpectationsconcerningfutureeventsandtrends,usinginformationcurrently

available,andarenecessarilysubjecttouncertainties,manyofwhichareoutsideourcontrol.Althoughwebelievethattheexpectationsreflectedintheforward-

lookingstatementsarereasonable,forward-lookingstatementsarenot,andshouldnotberelieduponasaguaranteeoffutureperformanceorresults,norwill

theynecessarilyprovetobeaccurateindicationsofthetimesatorbywhichanysuchperformanceorresultswillbeachieved.Anumberofimportantfactorscould

causeactualresultstodiffermateriallyfromthoseexpressedinorimpliedbytheforward-lookingstatements.Factorsthatcouldcausesuchdifferencesinclude,

butarenotlimitedto,thosediscussedinPartI,Item1AofthisForm10-Kundertheheading“RiskFactors.”Allsubsequentwrittenandoralforward-looking

statementsattributabletotheCompanyortoindividualsactingonourbehalfareexpresslyqualifiedintheirentiretybythisdiscussion.TheCompanyassumesno

obligationtoreviseorupdateanyforward-lookingstatementsforanyreason,exceptasrequiredbylaw.

PART I

Item 1. Business

General

3D Systems Corporation (“3D Systems” or the “Company” or “we” or “us”) markets our products and services through subsidiaries in North America and South

America (collectively referred to as “Americas”), Europe and the Middle East (collectively referred to as “EMEA”) and the Asia Pacific region (“APAC”). We

provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, on demand

manufacturing services and digital design tools. Our solutions support advanced applications in two key industry verticals: Healthcare (which includes dental,

medical devices and personalized health services) and Industrial (which includes aerospace, defense, transportation and general manufacturing).

Customers can use our 3D solutions to design and manufacture complex and unique parts, eliminate expensive tooling, consolidate multiple parts into a single

assembly, reduce product weight, produce parts locally or in small batches and reduce lead times and time to market. A growing number of customers are shifting

from prototyping applications to also using 3D printing for production. We believe this shift will be further driven by our continued advancement and innovation of

3D printing solutions that improve durability, reliability, repeatability and total cost of operations.

Our Healthcare solutions capabilities include simulation; Virtual Surgical Planning (VSP )(“VSP”), with associated accessories, software and data visualization

tools; and printing of medical and dental devices, models, and surgical guides and instruments.

We have over 30 years of experience and expertise which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions which

enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.

In August 2020, we announced a new strategic focus to accelerate the adoption of additive manufacturing solutions for applications in growing markets that

demand high reliability products. We focus on markets and applications where a premium is placed upon performance and reliability; with engineering/technology

cultures that seek product innovation as a means of delivering value to their customers; and with processes that tend to be highly controlled. Thanks to our unique

offering of hardware, software, materials and services, combined with our leadership in application knowledge, we believe we are best-positioned to provide

additive manufacturing solutions for specific, high-value applications in growing markets like healthcare, transportation, aerospace and defense. We have a

demonstrated capability to be successful in these markets, with our technologies and process knowledge today enabling more than a half-million production parts

to be made through additive manufacturing each day.

To accelerate value creation for our customers, we simplified and focused our organization by realigning the Company’s breadth of capabilities into two key

market verticals - Healthcare and Industrial. The Healthcare and Industrial vertical teams drive application specific solutions within their market verticals and

focused sub-segments. For Healthcare, these sub-segments include dental, medical devices, simulations and surgical planning. For Industrial, key sub-segments

include Aerospace & Defense, Transportation & Motorsports, Energy, Semiconductor, Service Bureaus, Investment Castings, Jewelry and Consumer Durables.

We work with customers as a full solution provider. In this regard, we offer an integrated set of capabilities to enable customers to adopt additive manufacturing

into their prototyping or production workflows. These capabilities include a range of 3D printer hardware with multiple additive manufacturing technologies that

address differing application needs. In addition, we have a portfolio of materials that are developed with varying performance characteristics to address a breadth

of customer application requirements. Our software offerings are a key component of our solutions and enable customers to manage their print process and

production workflows. Supporting our printer, materials and software are services capabilities including application engineers that support application

development, advanced manufacturing and customer innovation centers to help customers adopt production workflows, quality and regulatory experts for specific

industries, and service technicians that provide post-purchase maintenance and support.

Products

We offer a comprehensive range of 3D printers, materials, software, haptic design tools, 3D scanners and virtual surgical simulators.

3D Printers and Materials

Our 3D printers transform digital data input generated by 3D design software, Computer Aided Design (“CAD”) software or other 3D design tools, into printed

parts using several unique print engines that employ proprietary, additive layer by layer building processes with a variety of materials. As part of our solutions

oriented strategy, we offer a broad range of 3D printing technologies including Stereolithography (“SLA”), Selective Laser Sintering (“SLS”), Direct Metal

Printing (“DMP”), MultiJet Printing (“MJP”) and ColorJet Printing (“CJP”), which are discussed in more detail below.

Our printers utilize a wide range of materials, the majority of which are proprietary materials that we develop, blend and market. Our comprehensive range of

materials includes plastic, nylon, metal, composite, elastomeric, wax, polymeric dental materials and bio-compatible materials. We augment and complement our

portfolio of engineered materials with materials that we purchase or develop with third parties under private label and distribution arrangements.

We work closely with our customers to optimize the performance of our materials in their applications. Our expertise in materials science and formulation,

combined with our processes, software and equipment, enables us to provide unique solutions and help our customers select the material that best meets their needs

with optimal cost and performance results.

As part of our solutions approach, our currently offered printers, with the exception of direct metal printers, have built-in intelligence to make them integrated,

closed systems. For these integrated printers, we furnish materials specifically designed for use in those printers, which are packaged in smart cartridges and utilize

material delivery systems. These integrated materials are designed to enhance system functionality, productivity, reliability and materials shelf life, in addition to

providing our customers with a built-in quality management system and a fully integrated workflow solution.

SLAPrinters

Our SLA 3D printers cure liquid resin materials with light or a laser to produce durable plastic parts with surface smoothness, high resolution, edge definition and

tolerances that rival the accuracy of machined or molded plastic parts. We offer SLA printers with a wide range of materials, sizes and price points, which are

designed for prototyping, end-use part production, casting patterns, molds, tooling, fixtures and medical models.

Figure 4™, a light-based SLA platform, also sometimes referred to as digital light processing (“DLP”), is an ultra-fast additive manufacturing technology with a

discrete module design. This design allows a range of products and configurations to meet customer needs from a stand-alone product to modular products to fully-

automated solutions. Figure 4 is capable of manufacturing parts in hybrid materials (multi-mode polymerization) that offer toughness, durability, biocompatibility,

high temperature deflection and elastomeric properties. Figure 4 is also the first additive manufacturing product which can achieve six sigma repeatability. These

capabilities enable new end-use applications in healthcare, dental, durable goods, automotive, aerospace and other verticals.

For SLA printers, we offer a variety of liquid resin materials, primarily under the Accura® brand name. The resins are designed to mimic specific, engineered

thermoplastics and provide a wide range of characteristics, including tough, durable, clear, castable, polypropylene-like, ABS-like, high-temperature resistant and

bio-compatible materials. We also offer dental materials for light-based SLA 3D printers under our NextDent™ brand name.

SLSPrinters

Our SLS 3D printers use a laser beam to melt and fuse powder-based nylon, engineered plastic and composite materials to produce very strong and durable parts.

Customer uses of our SLS printers include functional test models and end-use parts, such as housings, machinery components, ducting, tooling, jigs and fixtures,

medical devices and personalized surgery kits and guides.

Our proprietary SLS materials include a range of flexible and rigid plastics, nylons and composite materials marketed under the DuraForm®, LaserForm® and

CastForm™ brand names. These materials are available in a variety of lightweight, tough, versatile, high temperature, flexible, biocompatible and durable

formulations.

DMPPrinters

Our DMP solutions use a laser beam to sinter powders in a variety of metals to produce fully dense parts with outstanding purity, surface finish and resolution. We

offer DMP solutions that can process a wide range of materials and powders, including materials with very fine granularity and proven manufacturing applications.

We sell DMP systems in various sizes and configurations. Certain models are optimized for specific metals, including titanium, stainless steel and nickel super

alloys. Our DMP printers are used in medical and dental implants, aerospace, automotive, semiconductor, and other hi-tech and industrial applications, such as

conformal cooling, enhanced fluid flow and other complex, lightweight parts.

We offer metal powder materials for our DMP printers, including titanium, stainless steels, tool steels, super alloys, non-ferrous alloys, precious metals and

aluminum.

MJPPrinters

Our MJP 3D printers utilize jetting head technology to deliver precise, tough parts with exceptional resolution in plastic, wax, elastomeric, biocompatible and

engineered materials that we sell under the VisiJet® brand name. Our MJP printers offer the capability to print in real wax as well as rigid and flexible plastics and

multiple materials in one build, making them ideal for mechanical functional testing, rapid tooling, jigs and fixtures, casting and foundry patterns and medical

models.

CJPPrinters

Our CJP 3D printers produce parts using our VisiJet branded, powder-based ceramic-like materials. CJP printers build high-definition, full-color parts that can be

sanded, drilled, infiltrated, painted and electroplated, which further expands the options available for finished part characteristics. CJP printers are ideal for

producing models used in mechanical design, healthcare, architecture, education, entertainment and packaging applications.

Software and Related Products

We provide digital design tools, including software, scanners and haptic devices. We offer solutions for product design, mold and die design, 3D scan-to-print,

reverse engineering, production machining, metrology and inspection. These products are designed to enable a seamless workflow for customers, and are marketed

under brand names such as Geomagic®. We also offer 3D Sprint and 3DXpert, proprietary software to prepare and optimize CAD data and manage the additive

manufacturing processes. These software products provide automated support building and placement, build platform management and print queue management

capabilities. The outcome is the ability to improve the quality of prints, optimize design structure, shorten design to manufacturing lead time and minimize

manufacturing costs.

Other Products

We offer 3D virtual reality simulators and simulator modules for medical applications. These 3D simulators are sold under our Simbionix™ brand name and offer

clinicians a realistic, hands-on experience to master critical skills, prepare for upcoming procedures and create patient specific simulations and operating room

environments through augmented reality and virtual reality. We also provide digitizing scanners for medical and mechanical applications.

Services

Maintenance and Training Services

We provide a variety of customer services, local application support and field support on a worldwide basis for our products, including installation of new printers

at customers’ sites, maintenance agreements, periodic hardware upgrades and software updates. We also provide services to assist our customers and partners in

developing new applications for our technologies, to facilitate the use of our technology for specific applications, to train customers on the use of our printers and

to maintain our printers at customers’ sites.

We provide these services, spare parts and field support either directly or through a network of reseller partners. We employ customer-support sales engineers to

support our worldwide customer base, and we seek to continue to strengthen and enhance our partner network and service offerings.

Our 3D printers are sold with a warranty period ranging from 90 days to one year. After the warranty period, we generally offer service contracts that enable our

customers to continue service and maintenance coverage. These service contracts are offered with various levels of support and options, and are priced

accordingly. Our service engineers provide regularly scheduled preventive maintenance visits to customer sites, we provide training to our partners to enable them

to perform these services, and we are adding remote monitoring and maintenance capabilities through our 3DConnect software.

From time to time, we also offer upgrade kits for certain of our printers that enable our existing customers to take advantage of new or enhanced printer

capabilities. In some cases, we have discontinued upgrade support and maintenance agreements for certain of our older legacy printers.

On Demand Solutions

We provide on demand manufacturing services through facilities worldwide in the Americas and EMEA regions. We provide a broad range of prototyping,

production and finishing capabilities for precision plastic and metal parts and tooling with a wide range of additive and traditional manufacturing processes.

In addition to the sales of parts to customers, we, and our partners, utilize our on demand services as a sales and lead generation tool. Third-party preferred service

providers also use our on demand manufacturing service as their comprehensive order-fulfillment center, and customers can use our facilities as fulfillment centers

in disaster recovery plans.

Advanced Manufacturing

As part of our strategy to help customers adopt additive manufacturing, we offer advanced manufacturing services through facilities in the Americas and EMEA

regions. These facilities, which include our Customer Innovation Centers, supplement customer manufacturing environments by allowing them to test and ramp

production using our solutions before transitioning production to their environment. This allows us to provide application and production expertise and refine the

production process as part of our solutions approach. As the process is validated and volumes ramp, customers may choose to move production to their facilities

using equipment, materials, software and services that they purchase from us. These facilities operate under stringent quality systems and are also utilized by

customers in regulated industries such as healthcare and aerospace & defense for sustained outsourced production of hundreds of thousands of parts per year.

Software Services

In addition to our software license products described above, we offer software maintenance, which includes updates and support for our software products. Our

software is sold with maintenance service that generally covers a period of one year. After this initial period, we offer single and multi-year maintenance contracts

that enable our customers to continue coverage. These software service contracts typically include free software updates and various levels of technical support.

Healthcare Services

As part of our precision healthcare services, we provide surgical planning, modeling, prototyping and manufacturing services. We offer printing and finishing of

medical and dental devices, anatomical models and surgical guides and tools, as well as modeling, design and planning services, including VSP™. We also provide

service and maintenance for our surgical simulator products.

Global Operations

We operate in the Americas, EMEA and APAC regions, and market our products and services in those areas as well as to other parts of the world.

In maintaining operations outside the United States (the “U.S.”), we expose our business to risks inherent in such operations, including currency exchange rate

fluctuations. Information on foreign exchange risk appears in Part I, Item 1A, “Risk Factors,” Part II, Item 7A, “Quantitative and Qualitative Disclosures about

Market Risk” and Part II, Item 8, “Financial Statements and Supplementary Data,” of this Form 10-K.

Marketing and Customers

Our sales and marketing strategy focuses on an integrated approach that is directed at providing comprehensive solutions designed to meet customer needs. We use

a full range of marketing and lead generation tools to promote our products and services on a worldwide basis. Our marketing department supports our global sales

organization and distribution channels by providing marketing materials, targeted marketing campaigns, sales leads and demand generation activities.

We sell our solutions globally through a direct sales force, partner channel and in certain geographies, appointed distributors. Our go-to-market and sales

organization includes regional general managers, channel managers, direct sales people and application engineers and other support staff throughout the Americas,

EMEA and APAC regions, who are responsible for the sale of products and services and for the management of our network of channel partners.

Additionally, our application engineers provide pre-sales and post-sales support, assist customers with leveraging our latest solutions and production techniques

and help identify new applications and sales opportunities. Our on demand and advanced manufacturing service also expands our customer relationships and

enables lead generation for future sales.

Our customers include major companies as well as small and midsize businesses in a broad range of industries, including medical, dental, automotive, aerospace,

durable goods, government, defense, technology, jewelry, electronics, education, consumer goods, energy and others. For the years ended December 31, 2020,

2019, and 2018, one customer accounted for approximately 13%, 11% and 13% of our consolidated revenue, respectively. We expect to maintain our relationship

with this customer.

Production and Suppliers

We outsource our 3D printer assembly and refurbishment activities to selected design, engineering and manufacturing companies in the U.S., Switzerland and

Belgium. We purchase finished printers from these suppliers pursuant to forecasts and customer orders that we supply to them. These suppliers also carry out

quality control procedures on our printers prior to their shipment to customers. As part of these activities, these suppliers have responsibility for procuring the

components and sub-assemblies either from us or third-party suppliers. While the outsourced suppliers of our printers have responsibility for the supply chain and

inventory of components for the printers they assemble, the components, parts and sub-assemblies that are used in our printers are generally available from several

potential suppliers. We produce our Simbionix branded 3D simulators in Airport City, Israel.

We produce materials at our facilities in Rock Hill, South Carolina, Marly, Switzerland and Soesterberg, Netherlands. We also have arrangements with third

parties who blend certain materials according to our specifications that we sell under our own brand names, and we purchase certain materials from third parties for

resale to our customers.

Our equipment assembly and materials blending activities, on demand and advanced manufacturing services and certain research and development activities are

subject to compliance with applicable federal, state and local provisions regulating the storage, use and discharge of materials into the environment. We believe

that we are in compliance, in all material respects, with such regulations as currently in effect, and we expect continued compliance with them will not have a

material adverse effect on our capital expenditures, results of operations or consolidated financial position.

As a company with global operations, we are subject to the laws of the U.S. and multiple foreign jurisdictions in which we operate and the rules and regulations of

various governing bodies, which may differ among jurisdictions. Compliance with these laws, rules and regulations has not had, and is not expected to have, a

material effect on our capital expenditures, results of operations or competitive position as compared to prior periods.

Research and Development

The 3D printing industry continues to experience rapid technological change and developments in hardware, software and materials. Consequently, we have

ongoing research and development programs to develop new products and to enhance our portfolio of products and services, as well as to improve and expand the

capabilities of our solutions. Our efforts are often augmented by development arrangements with research institutions, customers, suppliers, assembly and design

firms, engineering companies, materials companies and other partners.

In addition to our internally developed technology platforms, we have acquired products and technologies developed by others by acquiring business entities that

held ownership rights to such products and technologies. In other instances, we have licensed or purchased the intellectual property rights of technologies

developed by third parties through agreements that may obligate us to pay a license fee or royalty, typically based upon a dollar amount per unit or a percentage of

the revenue generated by such products.

Intellectual Property

We regard our technology platforms and materials as proprietary and seek to protect them through copyrights, patents, trademarks and trade secrets. At December

31, 2020 and 2019 we held 1,269 and 1,256 patents worldwide, respectively. At December 31, 2020 and 2019, we had 312 and 322 pending patent applications

worldwide, respectively. The principal issued patents covering aspects of our various technologies will expire at varying times through the year 2034.

In addition, we are a party to various licenses that have had the effect of broadening the range of the patents, patent applications and other intellectual property

available to us.

We have also entered into licensing or cross-licensing arrangements with various companies in the U.S. and other countries that enable those companies to utilize

our technologies in their products or that enable us to use their technologies in our products. Under certain of these licenses, we are entitled to receive, or we are

obligated to pay, royalties for the sale of licensed products in the U.S. or in other countries. The amount of such royalties was not material to our results of

operations or financial position for the three-year period ended December 31, 2020.

We believe that, while our patents and licenses provide us with a competitive advantage, our success also depends on our marketing, business development,

applications know-how and ongoing research and development efforts. Accordingly, we believe the expiration of any of the patents, patent applications or licenses

discussed above would not be material to our business or financial position.

Competition

We compete with other suppliers of 3D printers, materials, software and healthcare solutions as well as with suppliers of conventional manufacturing solutions. We

compete with these suppliers for customers as well as channel partners for certain of our products. We also compete with businesses and service bureaus that use

such equipment to produce models, prototypes, molds and end-use parts. Development of new technologies or techniques not encompassed by the patents that we

own or license may result in additional future competition.

Our competitors operate both globally and regionally, and many of them have well-recognized brands and product lines. Additionally, certain of our competitors

are well established and may have greater financial resources than us.

We believe principal competitive factors include technology capabilities, materials, process and application know-how, total cost of operation of solution, product

reliability and the ability to provide a full range of products and services to meet customer needs. We believe that our future success depends on our ability to

provide high quality solutions, introduce new products and services to meet evolving customer needs and market opportunities, and extend our technologies to new

applications. Accordingly, our ongoing research and development programs are intended to enable us to continue technology advancement and develop innovative

new solutions for the marketplace.

Human Capital Resources

At December 31, 2020, we had 1,995 full-time and part-time employees, compared to 2,472 at December 31, 2019. None of our U.S. employees are covered by

collective bargaining agreements, however, some of our employees outside the U.S. are subject to local statutory employment and labor arrangements. We have

not experienced any material work stoppages and believe that our relations with our employees are satisfactory.

Through our operating history and experience with technological innovation, we appreciate the importance of retention, growth and development of our

employees. We believe we offer competitive compensation (including salary, incentive bonus and equity) and benefits packages at each of our locations around the

globe. Further, we have development programs and on-demand opportunities to cultivate talent throughout the Company. We believe that conducting business with

integrity, valuing diversity in people and ideas, and being a positive force for action in our Company and communities are vital to our success and the right thing to

do. We are focused on our values to grow profitability and win, deliver "extraordinary" to our customers, innovate with purpose, trust and empower, and build

great teams. These values articulate what we do to achieve meaningful results and make a difference to our customers, stakeholders and each other.

In 2020 we announced the launch of our global responsibility and sustainability initiative dedicated to environmental responsibility, social responsibility and

responsible practices and governance (ESG).

Available Information

Our website address is www.3DSystems.com. The information contained on our website is neither a part of, nor incorporated by reference into, this Form 10-K or

any other document that we file with or furnish to the Securities and Exchange Commission (“SEC”). We make available free of charge through our website our

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports and other documents that we file

with the SEC, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.

Many of our corporate governance materials, including our Code of Conduct, Code of Ethics for Senior Financial Executives and Directors, Corporate Governance

Guidelines, current charters of each of the standing committees of the Board of Directors and our corporate charter documents and by-laws are available on our

website.

Information about our Executive Officers

The information appearing in the table below sets forth the position or positions held by each of our executive officers and his age as of March 5, 2021. All of our

executive officers serve at the pleasure of the Board of Directors. There are no family relationships among any of our executive officers or directors.

Name and Current Position Age as of March 5, 2021

Jeffrey A. Graves 59

President and Chief Executive Officer

Jagtar Narula 50

Executive Vice President and Chief Financial Officer

Jeff Blank 52

Executive Vice President, Engineering and Product Development

Charles W. Hull 81

Executive Vice President and Chief Technology Officer

Andrew M. Johnson 46

Executive Vice President, Chief Legal Officer and Secretary

Menno Ellis 48

Executive Vice President, Healthcare Solutions

Reji Puthenveetil 52

Executive Vice President, Industrial Solutions

Jeffrey A. Graves, PresidentandChiefExecutiveOfficer. Dr. Graves was appointed the Company’s President and Chief Executive Officer in May 2020. Prior to

joining the Company, from 2012 to May 2020, Dr. Graves served as Chief Executive Officer, President and Director of MTS Systems Corporation, a global

supplier of test, simulation, and measurement systems. From 2005 until 2012, Dr. Graves served as President and Chief Executive Officer of C&D Technologies,

Inc. Dr. Graves also held leadership roles with Kemet Corporation as Chief Operating Officer (2001-2003) and Chief Executive Officer (2003-2005). Previously,

he held a number of leadership and technical roles with General Electric, Rockwell Automation and Howmet Corporation. In addition to serving on the Company's

Board of Directors, Dr. Graves serves on the board of directors of FARO Technologies and Hexcel Corporation.

Jagtar Narula, ExecutiveVicePresidentandChief FinancialOfficer. Mr. Narula was appointed the Company’s Executive Vice President and Chief Financial

Officer in September 2020. Prior to joining the Company, Mr. Narula served as Senior Vice President of Corporate Strategy and Business Development for

Blackbaud, Inc. where he also previously led investor relations and financial planning. Additionally, he held finance leadership positions of increasing

responsibility at Xerox, General Electric and with private equity.

Jeff Blank, Executive Vice President, Engineering and Product Development. Mr. Blank has served as Executive Vice President, Engineering and Product

Development since January 2021. He joined the Company in January 2014 as Vice President New Business Development. He also served as Senior Vice President

Product Development of the Plastics Business Unit. Prior joining the Company, Mr. Blank spent more than 19 years as an engineering leader at Xerox and

Tektronix delivering highly complex and reliable 2D printing products, and more than 4 years at Sandia National Laboratories. He received a bachelor’s degree in

Mechanical Engineering from Oregon State University, a master’s in Mechanical Engineering from Stanford University, and a Masters of Business Administration

from University of Portland.

Charles W. Hull, ExecutiveVicePresident,ChiefTechnologyOfficer. Mr. Hull is a founder of the Company and has served on our Board of Directors since 1993.

He has served as Chief Technology Officer since 1997 and as Executive Vice President since 2000. Mr. Hull has also previously served in various other executive

capacities at the Company since 1986, including Chief Executive Officer, Vice Chairman of the Board of Directors and President and Chief Operating Officer.

Andrew M. Johnson, ExecutiveVicePresident,ChiefLegalOfficerandSecretary. Mr. Johnson has served as Executive Vice President and Chief Legal Officer

since November 2014. He served as Interim President and Chief Executive Officer, Chief Legal Officer and Secretary from October 2015 to April 2016 and as

Vice President, General Counsel and Secretary from April 2012 to November 2014. Previously, he served as Assistant General Counsel and Assistant Secretary.

Menno Ellis, ExecutiveVicePresident,HealthcareSolutions. Mr. Ellis has served as Executive Vice President, Healthcare Solutions since July 2020. He joined

the Company in December 2016 as Senior Vice President Strategy and Vertical Markets. He served as Senior Vice President and General Manager of the Plastics

Business Unit, and is now responsible for the Healthcare Solutions group, which encompasses Dental, Medical and Simulations businesses. Prior to joining the

Company, he spent 20 years in management and business consulting services with an emphasis on sustainable, long-term revenue growth.

Reji Puthenveetil, ExecutiveVicePresident,IndustrialSolutions. Mr. Puthenveetil has served as Executive Vice President, Industrial Solutions since July 2020.

Prior to joining the Company, Mr. Puthenveetil spent 25 years as a management consultant helping companies across multiple industries design a clear strategy for

growth and ensuring organizational capability and alignment for execution.

Item 1A. Risk Factors

You should carefully read the following discussion of significant factors, events and uncertainties when evaluating our business and the forward-looking

information contained in this Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our business, operating

results, liquidity and financial condition. While we believe we have identified and discussed below the key risk factors affecting our business, these risk factors do

not identify all the risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be

significant that may have a material adverse effect on our business, performance or financial condition in the future.

Operational & Financial Risk Factors

Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable.

Our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter’s total sales occur towards the end of the quarter, in

particular for sales of hardware. This uneven sales pattern makes predicting net revenue, earnings, cash flow from operations and working capital for each financial

period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition and places pressure on our inventory management and

logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory. Alternatively, if orders substantially exceed predicted

demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled. Depending on when they occur in a quarter,

developments such as an information systems failure, component pricing movements, component shortages or global logistics disruptions could adversely impact

our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected.

The variety of products that we sell could cause significant quarterly fluctuations in our gross profit margins, and those fluctuations in margins could

cause fluctuations in operating income or loss and net income or loss.

We continuously work to expand and improve our products, materials and services offerings, geographic areas in which we operate and the distribution channels

we use to reach various target product applications and customers. This variety of products, applications, channels and regions involves a range of gross profit

margins that can cause substantial quarterly fluctuations in gross profit and gross profit margins depending upon the mix of product shipments from quarter to

quarter. Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to

manufacturing ramp-up and start-up costs. We may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the

impact of the mix of products, channels or geographic areas in which we sell our products from period to period.

Our products and services may experience quality problems from time to time that can result in decreased sales and operating margin, product returns,

product liability, warranty or other claims that could result in significant expenses and harm to our reputation.

We sell complex hardware and software products, materials and services that can contain undetected design and manufacturing defects or errors when first

introduced or as enhancements are released that, despite testing, are not discovered until after the product has been installed and used by customers. Sophisticated

software and applications, such as those sold by us, may contain “bugs” that can unexpectedly interfere with the software’s intended operation. Defects may also

occur in components and products we purchase from third parties. There can be no assurance we will be able to detect and fix all defects in the hardware, software,

materials and services we sell. Failure to do so could result in lost revenue, product returns, product liability, delayed market acceptance of those products and

services, claims from distributors, end-users or others, increased end-user service and support costs, and significant warranty claims and other expenses to correct

the defects, diversion of management time and attention and harm to our reputation.

Changes in, or interpretation of, tax rules and regulations may impact our effective tax rate and future profitability.

We are a U.S. based, multinational company subject to taxation in multiple U.S. and foreign tax jurisdictions. Our future effective tax rates could be adversely

affected by changes in statutory tax rates or interpretation of tax rules and regulations in jurisdictions in which we do business, changes in the amount of revenue or

earnings in the countries with varying statutory tax rates, or by changes in the valuation of deferred tax assets and liabilities. The U.S. Tax Cuts and Jobs Act is one

such example of legislation that impacts our effective tax rate and tax posture. For additional details see Note 21 to the consolidated financial statements in Item 8

of this Form 10-K.

In addition, we are subject to audits and examinations of previously filed income tax returns by the Internal Revenue Service and other domestic and foreign tax

authorities. We regularly assess the potential impact of such examinations to determine the adequacy of our provision for income taxes and have reserved for

potential adjustments that we expect may result from the current examinations. We believe such estimates to be reasonable; however, there is no assurance that the

final determination of any examination will not have an adverse effect on our operating results and financial position.

Changes in business conditions may cause goodwill and other intangible assets to become impaired.

Goodwill and other intangible assets are subject to an impairment test on an annual basis and when circumstances indicate that an impairment is more likely than

not. Such circumstances include a significant adverse change in the business climate or a decision to dispose of a business or product line. We face some

uncertainty in our business environment due to a variety of challenges, including changes in customer demand. While we recorded an impairment to our goodwill

in 2020, we may experience additional unforeseen circumstances that adversely affect the value of our goodwill or intangible assets and trigger an evaluation of the

amount of the recorded goodwill and intangible assets. Future write-offs of goodwill or other intangible assets as a result of an impairment in the business could

materially adversely affect our results of operations and financial condition.

The COVID-19 pandemic could materially adversely affect our financial condition and results of operations.

The novel strain of the coronavirus identified in China in late 2019 (COVID-19) has globally spread throughout other areas such as Asia, Europe, the Middle East,

and North America and has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the

virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns. These measures have impacted

and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners. Each of the

countries in which we operate has been affected by the outbreak and taken measures to try to contain it. The ultimate impact and efficacy of government measures

and potential future measures is currently unknown.

There is continued uncertainty regarding the business impacts from such measures and potential future measures. While we have been able to continue our

operations through a combination of work-from-home and social distancing policies implemented to protect employees, these measures have resulted in reduced

workforce availability at some of our sites. Restrictions on our access to customer facilities may impact our ability to meet customer demand and could have a

material adverse effect on our financial condition and results of operations, particularly if prolonged. Our customers have experienced, and may continue to

experience, disruptions in their operations, which can result in delayed, reduced, or canceled orders, or collection risks, and which may adversely affect our results

of operations.

The pandemic has significantly increased economic and demand uncertainty. It is possible that the current outbreak and continued spread of COVID-19 will

continue to cause an economic slowdown. There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or

recession. Risks related to a slowdown or recession may harm our long-term ability to do business, adversely affect our sales, costs, results of operations and cash

flow. Given the significant economic uncertainty and volatility created by the pandemic, it is difficult to predict the nature and extent of impacts on demand for our

products and services. These expectations are subject to change without warning and investors are cautioned not to place undue reliance on them.

The pandemic led to increased disruption and volatility in capital markets and credit markets. We implemented temporary salary decreases for executives, 2-week

furloughs for non-essential employees, and suspension of all non-essential capital expenditures measures to strengthen our liquidity position given the uncertainty

regarding the length and severity of the pandemic and ongoing economic uncertainty. Unanticipated consequences of the pandemic and resulting economic

uncertainty could result in a breach of the debt financial covenant, thus adversely affecting our liquidity and capital resources in the future, as well as incurring

additional costs if an amendment to the credit agreement is required.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical

participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities

or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce

additional operational risks, including cybersecurity risks, and have affected the way we conduct our product development and testing, customer support, and other

activities, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus,

and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.

We depend on outsourcing partners for assembly of our 3D printers and our supply chain for spare parts and for raw materials used in our materials.

The ongoing COVID-19 pandemic has caused supply and logistical disruptions for both our outsourcing partners and supply chain partners. If these

relationships were to terminate or these disruptions worsen, our business could be disrupted while we locate alternative suppliers and our expenses may

increase.

We have outsourced selected design and manufacturing companies to assemble our printers. In carrying out these outsourcing activities, we face a number of risks,

including, among others, the following:

• The risk that the parties that we retain to perform assembly activities may not perform in a satisfactory manner;

• The risk of disruption in the supply of printers or other products to our customers if such third parties either fail to perform in a satisfactory manner or are

unable to supply us with the quantity of printers or other products that are needed to meet then current customer demand;

• The risk of work delays or supply chain disruptions stemming from governmental efforts to contain the COVID-19; and

• The risk of insolvency of suppliers, as well as the risks that we face, as discussed below, in dealing with a limited number of suppliers.

We purchase components and sub-assemblies for our printers from third-party suppliers that we provide to our customers as spare parts. Additionally, we purchase

raw materials that are used in our materials, as well as certain of those materials, from third-party suppliers.

While there are several potential suppliers of parts for our products, we currently choose to use only one or a limited number of suppliers for several of these items,

including our lasers, materials and certain jetting components. Our reliance on a single or limited number of suppliers involves many risks, including, among

others, the following:

• Potential shortages of some key components;

• Disruptions in the operations of these suppliers;

• Product performance shortfalls; and

• Reduced control over delivery schedules, assembly capabilities, quality and costs.

The recent situation brought on by COVID-19 pandemic has created minor delays on the inbound supply chain at our partners and our own facilities. Additional

delays on both inbound and outbound logistics have also created challenges. We have been able to identify alternative solutions such that none of the issues have

had a material impact on our ability to fulfill demand.

While we believe that, if necessary, we can obtain all the components necessary for our spare parts and materials from other manufacturers, we require any new

supplier to become “qualified” pursuant to our internal procedures, which could involve evaluation processes of varying durations. Our spare parts and raw

materials used in our materials production are subject to various lead times. In addition, at any time, certain suppliers may decide to discontinue production of a

part or raw material that we use. Any unanticipated change in the sources of our supplies, or unanticipated supply limitations, could increase production or related

costs and consequently reduce margins.

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 flow,

profitability and results of operations. Inversely, we may lose orders if our forecast is low and we are unable to meet demand. There is considerable uncertainty on

the business impact from current measures and potential future measures to contain the spread of the COVID-19 pandemic on our vendors, suppliers, and partners,

especially if such measures are in effect for an extended period of time. If disruptions to global businesses from the pandemic continue or worsen, our business

could face greater supply chain delays and difficulty shipping or receiving products and materials, which could have a material adverse effect on our financial

condition and results of operations.

Our restructuring activities may result in disruption to our business, we may not fully realize the expected benefits of our restructuring plans or other

operating or cost-saving initiatives and the cost of the restructuring activities may be more than anticipated.

On August 5, 2020, we announced a plan to restructure our businesses to streamline the company’s operations to align our cost structure to the current level of

revenues. The restructuring plan includes, in conjunction with other cost reduction measures, a reduction of annualized costs by approximately $80 million by the

end of 2021, with additional savings of approximately $20 million dependent on potential divestitures. Other cost reduction efforts include reducing the number of

facilities and examining every aspect of the company’s manufacturing and operating costs. The company incurred certain incremental costs such as severance,

facility closing and other restructuring costs, primarily in the second half of 2020. The company may incur additional charges in 2021 as it finalizes all the actions

to be taken.

These restructuring activities may yield unintended consequences and costs, such as attrition beyond our intended reduction in force, the distraction of our

employees, additional charges for severance and severance-related costs and the loss of in-house knowledge in connection with the planned reduction in our

workforce. This type of restructuring activity also may result in business disruptions and may not produce the full efficiency and cost reduction benefits

anticipated. Further, the benefits may be realized later than expected and the cost of implementing these measures may be greater than anticipated. If these

measures are not successful, we may need to undertake additional cost reduction efforts, which could result in future charges. Moreover, the restructuring plan may

cause business disruptions with customers and elsewhere if our cost reduction efforts prove ineffective, and our business may not be more efficient or effective

than prior to implementation of the plan. Our restructuring activities, including the related charges and the impact of the related workforce reduction, could have a

material adverse effect on our business, operating results and financial condition.

The loss of, continued reduction or substantial decline in revenue from larger clients could have a material adverse effect on our revenues, profitability

and liquidity.

We experience revenue concentration with a large customer that represents over 10% of our consolidated revenue. Generally, our contracts do not contain

guarantees of minimum duration, revenue levels, or profitability. This customer may terminate their contracts or materially reduce their requested levels of service

at any time. The loss of, deterioration of the financial condition of, or a significant change to the business of this customer could have a material adverse effect on

our business, financial condition, and results of operations. Additionally, this concentration exposes us to concentrated credit risk, as a significant portion of our

accounts receivable may be from a single customer. If we are unable to collect our receivables, or are required to take additional reserves, our results and cash

flows will be adversely affected.

Business Strategy Risk Factors

We have made, and may make in the future, strategic acquisitions and divestitures that may involve significant risks and uncertainties. We may not

realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disrupt our business and divert management

attention. Likewise, our potential future divestitures may be unsuccessful and negatively impact our business.

From time to time, we evaluate acquisition candidates that fit our business objectives. Acquisitions involve certain risks and uncertainties, including, among others,

the following:

• Difficulty in integrating newly acquired businesses and operations in an efficient and cost-effective manner, which may also impact our ability to realize

the potential benefits associated with the acquisition;

• The risk that significant unanticipated costs or other problems associated with integration may be encountered;

• The challenges in achieving strategic objectives, cost savings and other anticipated benefits;

• The risk that our marketplaces do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in the

marketplaces that we serve;

• The risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any

indemnifying party;

• The inability to maintain a relationship with key customers, vendors and other business partners of the acquired businesses;

• The difficulty in maintaining controls, procedures and policies during the transition and integration;

• The potential loss of key employees of the acquired businesses;

• The risk of diverting management attention from our existing operations;

• Difficulties in coordinating geographically disparate organizations and corporate cultures and integrating management personnel with different business

backgrounds;

• The potential failure of the due diligence process to identify significant problems, liabilities or other challenges of an acquired company or technology;

• The risk that we incur significant costs associated with such acquisition activity that may negatively impact our operating results before the benefits of

such acquisitions are realized, if at all;

• The entry into marketplaces where we have no or limited direct prior experience and where competitors have stronger marketplace positions;

• The exposure to litigation or other claims in connection with our assuming claims or litigation risks from terminated employees, customers, former

shareholders or other third parties; and

• The risk that historical financial information may not be representative or indicative of our results as a combined company.

Historically, we have grown organically and from acquisitions, and we intend to continue to grow. Our infrastructure will require, among other things, continued

development of our financial and management controls and management information systems, management of our sales channel, continued capital expenditures,

the ability to attract and retain qualified management personnel and the training of new personnel. We cannot be sure that our infrastructure, systems, procedures,

business processes and managerial controls will be adequate to support the growth in our operations. Any delays in, or problems associated with, implementing, or

transitioning to, new or enhanced systems, procedures, or controls to accommodate and support the requirements of our business and operations and to effectively

and efficiently integrate acquired operations may adversely affect our ability to meet customer requirements, manage our product inventory, and record and report

financial and management information on a timely and accurate basis. These potential negative effects could prevent us from realizing the benefits of an

acquisition transaction or other growth opportunity.

Likewise, we have in the past, and may in the future, divest certain business operations. Divestitures involve a number of risks, including the diversion of

management's attention, significant costs and expenses, goodwill and other intangible asset impairment charges, the loss of customer relationships and cash flow,

and the disruption of operations in the affected business. Failure to timely complete or consummate a divestiture may negatively affect valuation of the affected

business or result in restructuring charges.

In the event an unsuccessful acquisition or divestiture, our competitive position, revenues, results of operations and financial condition could be adversely affected.

Regulatory, Legislative and Legal Risk Factors

We are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions and similar laws and regulations. Our failure to comply with

these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation.

Doing business on a worldwide basis requires us to comply with the laws and regulations of the U.S. government and various foreign jurisdictions. These laws and

regulations place restrictions on our operations, trade practices, partners and investments.

In particular, our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the Foreign Corrupt Practices Act

(“FCPA”) and United Kingdom Bribery Act (the “Bribery Act”), export controls and economic sanctions programs, including those administered by the

U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the State Department's Directorate of Defense Trade Controls (“DDTC”) and the Bureau

of Industry and Security (“BIS”) of the Department of Commerce. As a result of doing business in foreign countries and with foreign customers, we are exposed to

a heightened risk of violating anti-corruption and trade control laws and sanctions regulations.

As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA’s

prohibition on providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. In

addition, the provisions of the Bribery Act extend beyond bribery of foreign public officials and also apply to transactions with individuals that a government does

not employ. Some of the international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. Our

continued expansion outside the U.S., including in Brazil, China, India and developing countries, and our development of new partnerships worldwide, could

increase the risk of FCPA, OFAC or Bribery Act violations in the future.

As an exporter, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and other countries having

jurisdiction over our operations. In the U.S., these laws include the International Traffic in Arms Regulations (“ITAR”) administered by the DDTC, the Export

Administration Regulations (“EAR”) administered by the BIS and trade sanctions against embargoed countries and destinations administered by OFAC. The EAR

governs products, parts, technology and software which present military or weapons proliferation concerns, so-called “dual use” items, and ITAR governs military

items listed on the United States Munitions List. Prior to shipping certain items, we must obtain an export license or verify that license exemptions are available.

Any failures to comply with these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our products, and repeat

failures could carry more significant penalties.

Violations of anti-corruption and trade control laws and sanctions regulations are punishable by civil penalties, including fines, denial of export privileges,

injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment and could

harm our reputation, create negative shareholder sentiment and affect our share value. We have established policies and procedures designed to assist our

compliance with applicable U.S. and international anti-corruption and trade control laws and regulations, including the FCPA, the Bribery Act and trade controls

and sanctions programs administered by OFAC, the DDTC and BIS, and have trained our employees to comply with these laws and regulations. However, there

can be no assurance that all of our employees, consultants, agents or other associated persons will not take actions in violation of our policies and these laws and

regulations. Additionally, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every

transaction in which we may engage or provide a defense to any alleged violation. In particular, we may be held liable for the actions that our joint venture partners

take inside or outside of the United States, even though our partners may not be subject to these laws. Such a violation, even if our policies prohibit it, could have

an adverse effect on our reputation, business, financial condition and results of operations. In addition, various state and municipal governments, universities and

other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries, persons and entities, which could

adversely affect our reputation, business, financial condition and results of operations.

We disclosed potential violations of U.S. export controls laws to the U.S. federal government that resulted in multiple investigations. We have

implemented compliance processes and procedures to identify and prevent potential future violations of export control laws, trade sanctions, and

government contracting laws and regulations, and continue to review our government contracting compliance risks and potential violations. Based on the

disclosures and investigations, the U.S. Air Force temporarily suspended us from certain new federal contracts and orders in July 2019 and lifted that

suspension in September 2019 following the execution of an Administrative Agreement with the Company. Failure to comply with the terms of the

Administrative Agreement or the commencement of a separate action by another governmental agency would result in decreased revenues and additional

harm to our reputation and otherwise adversely affect our business, operating results and financial condition.

In October 2017, we received an administrative subpoena from BIS requesting the production of records in connection with possible violations of U.S. export

control laws, including with regard to our Quickparts.com, Inc. subsidiary. In addition, while collecting information responsive to the above-referenced subpoena,

our internal investigation identified potential violations of ITAR administered by DDTC and potential violations of the Export Administration Regulations

administered by BIS.

On June 8, 2018 and thereafter, we submitted voluntary disclosures to BIS and DDTC identifying numerous potentially unauthorized exports of technical data. As

part of our ongoing review of trade compliance risks and our cooperation with the government, on November 20, 2019, we submitted to the U.S. Treasury

Department’s Office of Foreign Assets Control (“OFAC”) an initial notice of voluntary disclosure regarding potential violations of economic sanctions related to

Iran. We continued to investigate this issue and filed a final disclosure with OFAC on May 20, 2020. We have and will continue to implement compliance

enhancements to our export controls, trade sanctions, and government contracting compliance program to address the issues identified through our ongoing internal

investigation and will cooperate with DDTC and BIS, as well as the U.S. Departments of Justice, Defense, Homeland Security and Treasury in their ongoing

reviews of these matters. In connection with these ongoing reviews, in August 2020, the Company received two federal grand jury subpoenas issued by the U.S.

District Court for the Northern District of Texas. The Company responded to these two subpoenas and will continue to fully cooperate with the U.S. Department of

Justice in the related investigation.

In addition, on July 19, 2019, we received a notice of immediate suspension of federal contracting from the United States Air Force, pending the outcome of an

ongoing investigation. The suspension applied to 3D Systems, its subsidiaries and affiliates, and was related to export controls violations involving 3D Systems’

On Demand manufacturing business described above. Under the suspension, we were generally prohibited from receiving new federal government contracts or

subcontracts from any executive branch agency as described in the provisions of 48 C.F.R Subpart 9.4 of the Federal Acquisition Regulation. The suspension

allowed us to continue to perform current federal contracts, and also to receive awards of new subcontracts for items under $35,000 and for items considered

commercially available off-the-shelf items. The Air Force lifted the suspension on September 6, 2019 following the execution of a two-year Administrative

Agreement with the Company. The Company is now eligible to obtain and perform U.S. government contracts and subcontracts without restrictions. Under the

Administrative Agreement, the Company will be monitored and evaluated by independent monitors who will report to the Air Force on the Company’s compliance

with the terms of the Company’s Ethics & Compliance Program, including its overall culture, government contracting compliance program, and export controls

compliance program. The Company’s failure to comply fully with the terms of the Administrative Agreement or the commencement of separate actions by other

agencies of the federal government could result in reinstatement of the suspension or debarment from future federal contracting, which would result in decreased

revenues and additional harm to our reputation and otherwise adversely affect our business, operating results and financial condition.

Although we cannot predict the ultimate resolution of these matters, we have incurred and expect to continue to incur significant legal costs and other expenses in

connection with responding to the U.S. government agencies.

Since 2018, we have implemented new compliance procedures to identify and prevent potential violations of export controls laws, trade sanctions, and government

contracting laws and regulations and created a Compliance Committee of the Board of Directors to further enhance board oversight of compliance risks. As we

continue to implement additional compliance enhancements, we may discover additional potential violations of export controls laws, trade sanctions, and/or

government contracting laws in the future. If we identify any additional potential violations, we will submit voluntary disclosures to the relevant agencies and

cooperate with such agencies on any related investigations. Independent monitors will observe and evaluate the Company’s continued compliance with its Ethics &

Compliance Program during the term of the Administrative Agreement.

If the U.S. government finds that we have violated one or more export controls laws, trade sanctions, or government contracting laws, we could be subject to

various civil or criminal penalties. By statute, these penalties can include but are not limited to fines, which by statute may be significant, denial of export

privileges, and suspension or debarment from participation in U.S. government contracts. We may also be subject to contract claims based upon such violations.

Any assessment of penalties or other liabilities incurred in connection with these matters could harm our reputation and customer relationships, create negative

investor sentiment, and affect our share value. In connection with any resolution, we may also be required to undertake additional remedial compliance measures

and program monitoring. We cannot at this time predict when the U.S. government agencies will conclude their investigations or determine an estimated cost, if

any, or range of costs, for any penalties, fines or other liabilities to third parties that may be incurred in connection with these matters.

We derive a significant portion of our revenue from business conducted outside the U.S. and are subject to the risks of doing business outside the U.S.

We face many risks inherent in conducting business activities outside the U.S. that, unless managed properly, may adversely affect our profitability, including our

ability to collect amounts due from customers. While most of our operations outside the U.S. are conducted in highly developed countries, our operations could be

adversely affected by, among others, the following:

• Unexpected changes in laws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the

activities of U.S. companies abroad;

• Changes in regulatory requirements, including export controls, tariffs and embargoes, other trade restrictions, competition, corporate practices and data

privacy concerns;

• Political policies, political or civil unrest, terrorism or epidemics and other similar outbreaks;

• Fluctuations in currency exchange rates;

• Limited protection for the enforcement of contract and intellectual property rights in some countries;

• Difficulties in staffing and managing foreign operations;

• Operating in countries with a higher incidence of corruption and fraudulent business practices;

• Effects of the implementation of the U.K.’s departure from the European Union, known as Brexit;

• Potentially adverse changes in taxation;

• The impact of public health epidemics on employees and the global economy; and

• Other factors, depending upon the specific country in which we conduct business.

These uncertainties may make it difficult for us and our customers to accurately plan future business activities and may lead our customers in certain countries to

delay purchases of our products and services. More generally, these geopolitical, social and economic conditions could result in increased volatility in global

financial markets and economies.

The consequences of terrorism or armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our market

opportunities or our business. We are uninsured for losses and interruptions caused by terrorism, acts of war and similar events.

While the geographic areas outside the U.S. in which we operate are generally not considered to be highly inflationary, our foreign operations are sensitive to

fluctuations in currency exchange rates arising from, among other things, certain intercompany transactions that are generally denominated, for example, in U.S.

dollars rather than their respective functional currencies.

Moreover, our operations are exposed to market risk from changes in interest rates and foreign currency exchange rates and commodity prices, which may

adversely affect our results of operations and financial condition. We seek to minimize these risks through regular operating and financing activities and, when we

consider it to be appropriate, through the use of derivative financial instruments. However, our efforts to minimize our exposure to market risks from changes in

interest rates, foreign currency exchange rates and commodity prices may prove to be insufficient or unsuccessful.

We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or

other proceedings.

In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights or disputes related to the

validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, and may in the future be, subject to claims,

negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be costly and can be disruptive to our business operations by

diverting attention and energies of management and key technical personnel, and by increasing our costs of doing business. Although we have successfully

defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes, which could adversely affect our results of

operations and financial condition.

Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on

unfavorable terms, prevent us from assembling or licensing certain of our products, subject us to injunctions restricting our sale of products, cause severe

disruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including

contractual provisions under various license arrangements. In addition, we may incur significant costs in acquiring the necessary third-party intellectual property

rights for use in our products. Any of these could seriously harm our business.

We may not be able to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or

unauthorized copying, use or disclosure.

Although we defend our intellectual property rights and endeavor to combat unlicensed copying and use of our digital content and intellectual property rights

through a variety of techniques, preventing unauthorized use or infringement of our rights (“piracy attacks”) is inherently difficult. If our intellectual property

becomes subject to piracy attacks, our business may be harmed.

Additionally, we endeavor to protect the secrecy of our digital content, confidential information and trade secrets. If unauthorized disclosure of our trade secrets

occurs, we could potentially lose trade secret protection. The loss of trade secret protection could make it easier for third parties to compete with our products by

copying previously confidential features, which could adversely affect our business, results of operations, revenue and operating margins. We also seek to protect

our confidential information and trade secrets through the use of non-disclosure agreements. However, there is a risk that our confidential information and trade

secrets may be disclosed or published without our authorization, and in these situations it may be difficult and/or costly for us to enforce our rights.

Material weaknesses in our internal control over financial reporting could result in material misstatements in our financial statements not being

prevented or detected, which could affect investor confidence in the accuracy and completeness of our financial statements and could negatively impact

on our stock price and financial condition.

As a public company, we are required to comply with Section 404 of the Sarbanes-Oxley Act. If we fail to abide by the applicable requirements of Section 404,

regulatory authorities, such as the SEC, could subject us to sanctions or investigation, and our independent registered public accounting firm may not be able to

certify as to the effectiveness of our internal control over financial reporting pursuant to an audit of our controls. Even effective internal controls can provide only

reasonable assurance with respect to the preparation and fair presentation of financial statements. Accordingly, our internal control over financial reporting may not

prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.

During the preparation of our financial statements for the period ended December 31, 2020, management identified two material weaknesses in our internal control

over financial reporting related to a lack of certain controls, or improper execution of designed control procedures, (1) for certain non-standard contracts and non-

standard contract terms and (2) over the review of internally prepared reports and analyses utilized in the financial closing process. These control deficiencies were

partially related to employee turnover, resulting in a temporary shortage of personnel with appropriate knowledge or skills to perform an effective review during

our financial statement close process. In addition, certain control deficiencies related to the completeness and review of transactions that were infrequent in nature.

These control deficiencies could have resulted in a misstatement of accounts and disclosures that could have resulted in a material misstatement of our annual or

interim consolidated financial statements that would not have been prevented or detected. Accordingly, management has determined that these control deficiencies

constitute material weaknesses.

As further described in Item 9A, Management's Report on Internal Control over Financial Reporting, we are working to remediate the material weaknesses through

the development and implementation of more formal policies, processes and documentation procedures relating to our financial reporting, the hiring of additional

accounting personnel and the training of new personnel and existing personnel in new roles on proper execution of designed control procedures. In addition, we

may engage outside consultants to advise on changes in the design of our controls and procedures or to advise on technical accounting matters.

While we believe our remediation plans described above should remediate the material weaknesses, we cannot provide assurance of when the material weaknesses

will be remediated, nor can we be certain of whether additional actions will be required or the costs of any such actions. Moreover, we cannot provide assurance

that additional material weaknesses will not arise in the future. While the material weaknesses discussed in Item 9A, Management's Report on Internal Control over

Financial Reporting, did not result in material misstatements of our annual or interim consolidated financial statements, any failure to remediate the material

weaknesses, or the identification of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial

statements that may continue undetected, negatively impacting the public perception of the Company and our securities and cause us to fail to meet our reporting

and financial obligations or incur significant additional costs to remediate the material weaknesses, each of which could negatively affect our stock price, harm our

ability to raise capital on favorable terms in the future or otherwise have a negative impact on our financial condition.

General Risk Factors

We believe that our future success depends on our ability to deliver products and services that meet changing technology and customer needs.

Our business may be 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, any of which could render our existing products and proprietary

technology obsolete. Accordingly, our ongoing research and development programs are intended to enable us to maintain technological leadership. We believe that

to remain competitive we must continually enhance and improve the functionality and features of our products, services and technologies. However, there is a risk

that we may not be able to:

• Develop or obtain leading technologies useful in our business;

• Enhance our existing products;

• Develop new products, services and technologies that address the increasingly sophisticated and varied needs of prospective customers, particularly in the

area of printer speeds and materials functionality;

• Respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis; or

• Recruit or retain key technology employees.

If we are unable to meet changing technology and customer needs, our competitive position, revenue, results of operations and financial condition could be

adversely affected.

If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected

and we may not be able to execute our growth strategy.

We cannot assure you that we will generate cash from operations or other potential sources to fund future working capital needs and meet capital expenditure

requirements.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring or incurring additional debt

or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to obtain additional capital or refinance any indebtedness will

depend on, among other things, the capital markets, our financial condition at such time and the terms and conditions of any such financing or indebtedness. We

may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

The lack of additional capital resulting from any inability to generate cash flow from operations or to raise equity or debt financing could force us to substantially

curtail or cease operations and would, therefore, have an adverse effect on our business and financial condition. Furthermore, we cannot assure you that any

necessary funds, if available, would be available on attractive terms or that they would not have a significantly dilutive effect on our existing stockholders. If our

financial condition were to worsen and we become unable to attract additional equity or debt financing or enter into other strategic transactions, we would not be

able to execute our growth strategy and we could become insolvent or be forced to declare bankruptcy.

Our business could be adversely impacted in the event of a failure of our information technology infrastructure or adversely impacted by a successful

cyber-attack.

We have experienced cyber security threats, threats to our information technology infrastructure and unauthorized attempts to gain access to our sensitive

information. Prior cyber-attacks directed at us have not had a material impact on our business or financial results; however, this may not continue to be the case in

the future. Cyber security assessment analyses undertaken by us have identified and prioritized steps to fortify our cyber security safeguards. We have and will

continue to implement additional security measures and processes which enhance our ability to detect and respond to a cyber-attack. We have increased our cyber

breach insurance and implemented company-wide cyber security awareness training as well as dedicated certain personnel to address this threat. Despite the

implementation of these new safeguards, there can be no assurance that we will adequately protect our information or that we will not experience any future

successful attacks. The threats we face vary from attacks common to most industries to more advanced and persistent, highly organized adversaries who target us

because of the products and services we provide. If we are unable to protect sensitive information, our customers or governmental authorities could question the

adequacy of our threat mitigation and detection processes and procedures. Due to the evolving nature of these security threats, however, the impact of any future

incident cannot be predicted.

We may need to expend significant additional resources to modify our cyber security protective measures, to investigate and remediate vulnerabilities or other

exposures or to make required notifications, and we may be subject to litigation and financial losses. These costs related to cyber or other security threats or

disruptions may not be fully insured or indemnified by other means. Occurrence of any of these events could adversely affect our internal operations, the services

we provide to our customers, our financial results or our reputation; or such events could result in the loss of competitive advantages derived from our research and

development efforts or other intellectual property or early obsolescence of our products and services.

Our operations could suffer if we are unable to attract and retain key management or other key employees.

Our success depends upon the performance of our senior management and other key personnel. Our senior executive team is critical to the management of our

business and operations, as well as to the development and execution of our strategy. When changes occur at our senior management level, as well as for key

personnel, we typically incur incremental costs including search costs and relocation costs. High demand exists for senior management and other key personnel

(including scientific, technical and sales personnel) in the 3D printing industry, and there can be no assurance that we will be able to attract and retain such

personnel. We experience intense competition for qualified personnel.

While we intend to continue to provide competitive compensation packages to attract and retain key personnel and engage in regular succession planning for these

positions, some of our competitors for these employees have greater resources and more experience, making it difficult for us to compete successfully for key

personnel. If we cannot attract and retain sufficiently qualified technical employees for our research and development and manufacturing operations, we may be

unable to develop and commercialize new products or new applications for existing products. Furthermore, possible shortages of key personnel, including

engineers, in the regions surrounding our facilities could require us to pay more to hire and retain key personnel, thereby increasing our costs.

Our common stock price has been and may continue to be volatile.

The market price of our common stock has experienced, and may continue to experience, considerable volatility. Between January 1, 2019 and December 31,

2020, the trading price of our common stock has ranged from a low of $4.60 per share to a high of $14.50 per share. Numerous factors could have a significant

effect on the price of our common stock, including those described or referred to in this “Risk Factors” section of this Form 10-K, as well as, among other things:

• Our perceived value in the securities markets;

• Overall trends in the stock market;

• Announcements of changes in our forecasted operating results or the operating results of one or more of our competitors;

• Compliance with the terms of our Administrative Agreement with the U.S. Air Force;

• The impact of changes in our results of operations, our financial condition or our prospects;

• Market conditions for providers of products and services such as ours;

• Executive level management uncertainty or change;

• Changes in recommendations or revenue or earnings estimates by securities analysts; and

• Announcements of acquisitions by us or one of our competitors.

Item 1B.Unresolved Staff Comments

None.

Item 2. Properties

Our headquarters are located in Rock Hill, South Carolina. As of December 31, 2020, we owned minimal facilities and we leased approximately 1.0 million square

feet in the U.S (624 thousand square feet), EMEA (302 thousand square feet) and APAC (28 thousand square feet).

Our headquarters also serve as a research and development site. Other major research and development locations include Cary, North Carolina; San Diego,

California; Seoul, South Korea; Tel Aviv, Israel; Valencia, California, Leuven Belgium and Wilsonville, Oregon. We believe our existing facilities and equipment

are in good operating condition and are suitable for our business in the manner that it is currently conducted. We expect to continue to make investments in capital

equipment as needed to meet anticipated demand for our products and evaluate our existing real estate portfolio for potential consolidation and efficiencies. See

“Item 1. Business – Production and Supplies” of this Form 10-K for further discussion of our facilities.

Item 3. Legal Proceedings

Information relating to legal proceedings is included under the header "Litigation" in Note 22 to the consolidated financial statements in Item 8 of this Form 10-K,

which is incorporated by reference into this Item 3.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the trading symbol “DDD.”

As of February 22, 2021, our outstanding common stock was held by approximately 1,113 stockholders of record. This figure does not reflect the beneficial

ownership of shares held in the nominee name.

Dividends

We do not currently pay, and have not paid, any dividends on our common stock, and we currently intend to retain any future earnings for use in our business. Any

future determination as to the declaration of dividends on our common stock will be made at the discretion of the Board of Directors and will depend on our

earnings, operating and financial condition, capital requirements and other factors deemed relevant by the Board of Directors, including the applicable

requirements of the Delaware General Corporation Law, which provides that dividends are payable only out of surplus or current net profits.

The payment of dividends on our common stock may be restricted by the provisions of credit agreements or other financing documents that we may enter into or

the terms of securities that we may issue from time to time. Currently, no such agreements or documents limit our declaration of dividends or payments of

dividends, other than our $200.0 million 5-year term and revolving senior secured credit facility, which limits the amount of cash dividends that we may pay in any

one fiscal year to $30.0 million.

Issuance of Unregistered Securities and Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities in the open market during the year ended 2020, however, shares of common stock were surrendered to us for

payment of tax withholding obligations in connection with the vesting of restricted stock awards pursuant to our 2015 Incentive Stock Plan. For information

regarding the securities authorized for issuance under our equity compensation plans, see “Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters–Equity Compensation Plans” in Item 12 of this Form 10-K. Also see Note 16 to the consolidated financial statements in Item 8 of this

Form 10-K. We did not engage in any unregistered sales of equity securities in 2020.

Issuerpurchasesofequitysecurities

Total number of shares

(or units) purchased

Average price paid

per share (or unit)

October 1, 2020 - October 31, 2020 — $ —

November 1, 2020 - November 30, 2020 3,158 7.12

December 1, 2020 - December 31, 2020 7,619 10.40

Total

10,777 $ 9.44

a. Represents shares of common stock surrendered to us for payment of tax withholding obligations in connection with the vesting of restricted stock.

b. The average price paid reflects the average market value of shares withheld for tax purposes.

Stock Performance Graph

The graph below shows, for the five years ended December 31, 2020, the cumulative total return on an investment of $100 assumed to have been made on

December 31, 2015 in our common stock. For purposes of the graph, cumulative total return assumes the reinvestment of all dividends. The graph compares such

return with those of comparable investments assumed to have been made on the same date in (a) the NYSE Composite Index, and (b) the S&P Small-Cap 600

Information Technology Index which are published market indices with which we are sometimes compared.

Although total return for the assumed investment assumes the reinvestment of all dividends on December 31 of the year in which such dividends were paid, we

paid no cash dividends on our common stock during the periods presented.

a b

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN

December 31,

2015

December 31,

2016

December 31,

2017

December 31,

2018

December 31,

2019

December 31,

2020

3D Systems Corporation $ 100 $ 153 $ 99 $ 117 $ 101 $ 121

NYSE Composite Index 100 112 133 122 153 164

S&P Small-Cap 600 Information

Technology Index

100 134 148 134 188 240

Item 6. Selected Financial Data

None.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with the selected consolidated financial data and our consolidated financial statements and notes

thereto included in Item 8 of this Form 10-K. Certain statements contained in this discussion may constitute forward-looking statements within the meaning of the

Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to

differ materially from those reflected in any forward-looking statements, as discussed more fully in this Form 10-K. See “Forward-Looking Statements” and “Risk

Factors” in Part I, Item 1A.

For discussion related to the results of operations and changes in financial condition for fiscal 2019 compared to fiscal 2018, refer to Part II, Item 7. Management’s

Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2019 Form 10-K, which was filed with the SEC on February 26, 2020.

Overview and Strategy

We combine customer collaboration and innovation with the expertise of our people to execute on a strategy of providing digital manufacturing solutions. These

ongoing efforts resulted in the creation of nearly 130 million production parts by our customers in 2020.

We architect solutions specific to customers’ needs through a combination of materials, hardware platforms, software and professional services – creating a path to

integrating additive into traditional production environments. As a result, manufacturers achieve design freedom, increase agility, scale production and improve

overall total cost of operation.

Digital Manufacturing Solutions for a Breadth of Industries

Our digital manufacturing solutions customers span a range of industries including Aerospace and Defense, Automotive, Dental, Durable Goods and Healthcare.

• IndustrialSolutions

◦ Aerospace and Defense: Aerospace and defense customers use our solutions to achieve manufacturing productivity improvements such as

increased speed and reliability of quality assurance and validation processes, lowered fuel costs through lightweighting and parts consolidation,

increased manufacturing productivity through innovative 3D printed casting patterns, 3D data recovery, injection-mold design and direct metal

printing of airworthy parts.

◦ Automotive: Our production solutions are used by automotive manufacturers to develop lighter weight parts to drive down manufacturing costs,

design and produce innovative assemblies that reduce part counts, provide greater strength and efficiency and create realistic prototypes that

reduce time from the product development process.

◦ Durable Goods: Manufacturers of durable goods use our solutions to increase factory automation and connectivity, create greater product

personalization and achieve just-in-time manufacturing. Our products and services help reduce mass production, one-size-fits-all manufacturing,

long lead time and large inventories for our durable goods customers.

• HealthcareSolutions

◦ Dental: We offer a broad range of clinically validated digital dentistry technologies and materials that allow dental labs to access advanced

digital workflows, driving speed, efficiency and precision of a range of indications delivered to patients.

◦ Healthcare: We partner with surgeons, healthcare professionals and medical device manufacturers to offer a range of precision healthcare

solutions, including 3D printed anatomical models, VSP and patient-specific surgical guides, instrumentation and implants.

Accelerating Additive Manufacturing Adoption

We partner with our customers in their progression in the use of additive manufacturing to help accelerate the adoption of additive manufacturing within their

existing production environments. This process focuses on the customer’s desired application in order to design the solutions to achieve their needs and address

challenges. Customers regularly engage with one of our Customer Innovation Centers (CIC), where a customized production workflow solution is designed to

accelerate the development of advanced applications by providing customers with access to solutions, domain expertise and state-of-the-art technology. The

process often includes our software as the core to the overall solution. Customers are able to scan and digitize solutions when digital files do not exist, and then

prepare their CAD file for 3D printing. This preparation includes importing part data, orienting the part on the build plate, optimizing the geometry and creating

supports to ensure the final part matches the design intent. The part is then created using our additive manufacturing hardware platforms. After printing, the part is

post-processed and our software provides inspection capabilities.

On Demand Solutions Provide Supply Chain Flexibility

Our On Demand solutions facilitate supply chain flexibility by leveraging the same production solutions available direct to customers. Our On Demand solutions

can provide single part production, or hundreds of parts, within days. Customers have access to a global network of facilities and nearly four decades of experience

in 3D printing and advanced manufacturing solutions.

Digital Factory Software

Our extensive software portfolio allows manufacturers to deliver physical products with digital precision and speed. We provide manufacturers with access to

additive technologies to create their products, streamlining manufacturing processes from digitization and design to manufacturing, inspection and production

management.

Integrated Production Solutions

Our additive manufacturing solutions can complement our customers’ traditional workflows to create a competitive advantage. Our strategic partnership with GF

Machining Solutions is designed to help more manufacturers take advantage of additive technology. This partnership combines our innovation and expertise in

additive manufacturing with GF Machining Solutions’ leadership in precision machining, enabling manufacturers to combine additive and subtractive technologies

to more efficiently produce complex metal parts within tight tolerances, and reduce total cost of operation.

COVID-19 Pandemic Response

We continue to closely monitor the COVID-19 pandemic and our top priority remains the health and safety of our employees and their families and communities.

Our Crisis Response Steering Committee regularly reviews and adapts our protocols based on evolving research and guidance related to the virus. While essential

operations continue, we continue to restrict travel and meetings, publish pertinent information, and adapt to a world where many in our workforce are remote and

those coming on-site are following new safety measures. We have a multi-phase plan to return to working on-site, and remain committed to protecting our

employees, delivering for our customers and supporting our communities.

2020 Summary

Consolidated revenue for the year ended December 31, 2020 decreased by 12.4%, or $79.1 million, to $557.2 million, compared to $636.4 million for the year

ended December 31, 2019. Current year revenue was adversely impacted by COVID-19, the effects of which occurred most severely at the onset of the pandemic,

in the latter part of the first quarter and into the second quarter, as many of our customers were shutdown or on a significantly reduced level of activity. The third

quarter experienced a partial return in activity, though levels remained lower than that of prior year. The fourth quarter experienced a stronger return in activity,

with results surpassing that of the prior year quarter by 2.6%.

Revenue from Healthcare increased 9.1% to $245.4 million for the year ended December 31, 2020, compared to $224.8 million for the year ended December 31,

2019, driven by stronger sales to the dental market. Industrial sales decreased 24.2% to $311.9 million for the year ended December 31, 2020, compared to $411.5

million for the year ended December 31, 2019; decreases were in all products and services across all geographies.

For the year ended December 31, 2020, total software revenue from products and services decreased by 12.7% to $86.0 million, 15.4% of total revenue, compared

to $98.5 million, 15.5% of total revenue, for the year ended December 31, 2019.

Gross profit for the year ended December 31, 2020 decreased by 20.4%, or $57.2 million, to $223.4 million, compared to $280.5 million for the year ended

December 31, 2019. Gross profit margin for the years ended December 31, 2020 and 2019 was 40.1% and 44.1%, respectively. Gross profit margin decreased

primarily due to lower sales volume and the under absorption of supply chain overhead resulting from lower production.

Operating expenses for the year ended December 31, 2020 increased by 1.4%, or $4.7 million, to $342.3 million, compared to $337.6 million for the year ended

December 31, 2019. Selling, general and administrative expenses for the year ended December 31, 2020 decreased by 13.5%, or $34.5 million, to $219.9 million,

compared to $254.4 million for the year ended December 31, 2019. Research and development expenses for the year ended December 31, 2020 decreased by

11.0%, or $9.1 million, to $74.1 million, compared to $83.3 million for the year ended December 31, 2019. In the third quarter of 2020, we recorded a non-cash

goodwill impairment charge of $48.3 million. See Note 9 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion. No similar

charge was recorded in the prior year. Excluding the goodwill impairment charge, our lower operating expenses reflect reduced hiring and lower travel expenses

incurred in the current year, resulting from the COVID-19 pandemic, as well as savings achieved in the current year from cost restructuring activities, including

personnel and marketing activities; partially offset by costs associated with restructuring efforts including employee severance and facility closings and related

impairment charges.

Our operating loss for the year ended December 31, 2020 was $119.0 million, compared to an operating loss of $57.1 million for the year ended December 31,

2019.

For the year ended December 31, 2020, we used $20.1 million of cash from operations. For the year ended December 31, 2019, we generated $31.6 million of cash

from operations. In total, our unrestricted cash balance at December 31, 2020 and December 31, 2019, was $75.0 million and $133.7 million, respectively. The

lower cash balance primarily resulted from $20.1 million for operations, $26.8 million for repayments of debt, $12.5 million for payments to purchase

noncontrolling interests and $13.6 million for capital expenditures, offset by net proceeds of $24.7 million from third quarter common stock issuances under our

At-the-Market equity offering program ("ATM Program") pursuant to which we could issue and sell, from time to time, shares of our common stock up to an

aggregate gross sales price of $150 million. See Note 18 and Note 26 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion.

On August 5, 2020, we announced, in connection with the new strategic focus and organizational realignment, a restructuring plan intended to align our operating

costs with current revenue levels and better position the Company for future sustainable and profitable growth. See Note 24 in Item 8 of this Form 10-K.

Results of Operations for 2020 and 2019

Comparison of revenue

Current year revenue was adversely impacted by COVID-19, as many of our customers were shutdown or on a significantly reduced level of activity for a portion

of the year. Excluding impacts due to the pandemic, due to the relatively high price of certain 3D printers and a corresponding lengthy selling cycle as well as

relatively low unit volume of the higher priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to

another can affect reported revenue in any given period.

In addition to changes in sales volumes, there are two other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes

in product mix and average selling prices and (2) the impact of fluctuations in foreign currencies. As used in this Management’s Discussion and Analysis, the price

and mix effects relate to changes in revenue that are not able to be specifically related to changes in unit volume.

We earn revenue from the sale of products and services. The products category includes 3D printers and corresponding materials, healthcare simulators and

digitizers, software licenses, 3D scanners and haptic devices. The majority of materials used in our 3D printers are proprietary. The services category includes

maintenance contracts and services on 3D printers and simulators, software maintenance, on demand solutions and healthcare services.

The following table sets forth changes in revenue for the years ended December 31, 2020 and 2019.

Table 1

(Dollars in thousands) Products Services Total

Revenue — 2019 $ 389,337 61.2 % $ 247,017 38.8 % $ 636,354 100.0 %

Change in revenue:

Volume (56,395) (14.5)% (20,238) (8.2)% (76,633) (12.0)%

Price/Mix (222) (0.1)% 1 — % (221) — %

Foreign currency translation 79 — % (2,339) (0.9)% (2,260) (0.4)%

Net change (56,538) (14.5)% (22,576) (9.1)% (79,114) (12.4)%

Revenue — 2020

$ 332,799

59.7 %

$ 224,441

40.3 %

$ 557,240

100.0 %

Consolidated revenue decreased 12.4%, predominantly due to lower products volume, driven by decreased sales of printers and corresponding materials, and lower

on demand volume. The lower demand was due to COVID-19, as many of our customers were shutdown or on a significantly reduced level of activity starting in

the latter part of the first quarter.

For the year ended December 31, 2020 and 2019, revenue from printers contributed $99.2 million and $123.9 million, respectively. Software revenue included in

the products category contributed $43.7 million and $53.7 million for the year ended December 31, 2020 and 2019, respectively. Materials revenue included in the

products category contributed $157.1 million and $169.1 million for the year ended December 31, 2020 and 2019, respectively.

Revenue from services decreased 9.1%, or $22.6 million, as compared to the year ended December 31, 2019. The decrease was primarily comprised of a 20.3%, or

$18.8 million, decline in our on demand manufacturing services. The remaining decrease resulted from maintenance contracts and services on printers and

simulators, software maintenance and healthcare services.

For the years ended December 31, 2020 and 2019, revenue from operations outside the U.S. was 50.6% and 51.3% of total revenue, respectively.

Gross profit and gross profit margins

The following table sets forth gross profit and gross profit margins for the years ended December 31, 2020 and 2019.

Table 2

Year Ended December 31,

2020 2019 Change in Gross Profit Change in Gross Profit Margin

(Dollars in thousands) Gross Profit

Gross Profit

Margin Gross Profit

Gross Profit

Margin $ %

Percentage

Points %

Products $ 105,118 31.6 % $ 154,756 39.7 % $ (49,638) (32.1)% (8.1) (20.4)%

Services 118,257 52.7 % 125,785 50.9 % (7,528) (6.0)% 1.8 3.5 %

Total

$ 223,375

40.1 %

$ 280,541

44.1 %

$ (57,166)

(20.4)%

(4.0)

(9.1)%

The decrease in total consolidated gross profit was predominantly due to the lower sales volume as previously discussed, as well as end-of-life inventory charges of

$12.4 million. Excluding the end-of-life inventory charge, total gross profit margin would have been 42.3%. See Note 6 to the consolidated financial statements in

Item 8 of this Form 10-K for additional discussion.

Products gross profit decreased primarily due to the lower sales volume, as previously discussed, and the under absorption of supply chain overhead resulting from

lower production, as well as an end-of-life inventory charge of $12.4 million, partially offset by savings achieved in the current year from cost restructuring

activities. Excluding the end-of-life inventory charge, products gross profit margin would have been 35.3%. See Note 6 to the consolidated financial statements in

Item 8 of this Form 10-K for additional discussion.

Operating expenses

The following table sets forth the components of operating expenses for the years ended December 31, 2020 and 2019.

Table 3

Year Ended December 31,

2020 2019 Change

(Dollars in thousands) Amount % Revenue Amount % Revenue $ %

Selling, general and administrative expenses $ 219,895 39.5 % $ 254,355 40.0 % $ (34,460) (13.5)%

Research and development expenses 74,143 13.3 % 83,290 13.1 % (9,147) (11.0)%

Impairment of goodwill 48,300 8.7 % — — % 48,300 100.0 %

Total operating expenses

$ 342,338 61.4 % $ 337,645 53.1 % $ 4,693

1.4 %

Selling, general and administrative expenses decreased due to an employee furlough program in the second quarter of 2020; reduced hiring and lower travel

expenses incurred in the current year, resulting from the COVID-19 pandemic; savings achieved in the current year from cost restructuring activities, including

personnel and marketing activities; reduced litigation and legal fees incurred in the current year; and the run-out of certain intangible amortization. These savings

were partially offset by restructuring efforts, predominantly employee severance and facility closings, and related impairment charges. See Note 24 to the

consolidated financial statements in Item 8 of this Form 10-K for additional discussion regarding restructuring charges. See Note 7 to the consolidated financial

statements in Item 8 of this Form 10-K for additional discussion regarding facility closings and related impairment charges.

Research and development expenses decreased due to an employee furlough program in the second quarter of 2020, current year savings achieved from cost

restructuring activities, including personnel, originating in 2019, as well as lower overall program spend; partially offset by an increase in materials spend.

For the year ended December 31, 2020, we recorded a non-cash goodwill impairment charge of $48.3 million, related to the EMEA reporting unit, that was

ultimately due to the negative impact on the business environment as a result of the COVID-19 pandemic. See Note 9 to the consolidated financial statements in

Item 8 of this Form 10-K for additional discussion.

Loss from operations

The following table sets forth loss from operations for the years ended December 31, 2020, and 2019.

Table 4

Year Ended December 31,

(Dollars in thousands) 2020 2019

Loss from operations:

$ (118,963) $ (57,104)

See “Revenue,” “Grossprofitandgrossprofitmargins” and “Operatingexpenses” above.

Interest and other expense, net

The following table sets forth the components of interest and other expense, net, for the years ended December 31, 2020 and 2019.

Table 5

Year Ended December 31,

(Dollars in thousands) 2020 2019

Interest and other expense, net

Foreign exchange loss $ (4,762) $ (2,287)

Interest expense, net (3,991) (3,233)

Other expense, net (15,694) (2,476)

Total interest and other expense, net

$ (24,447) $ (7,996)

Total interest and other expense, net, for the year ended December 31, 2020 as compared to the year ended December 31, 2019 resulted in additional expense due

to withholding taxes related to the Cimatron divestiture, loss on the divestiture of our Australia ODM and Wuxi Easyway businesses, as well as amounts previously

recognized in Accumulated Other Comprehensive Loss ("AOCL") were released in the second quarter of 2020 and reclassified to "Interest and other expense, net,"

as a result of the reduction in the interest rate swap. See Note 13 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion. For

the years ended December 31, 2020 and 2019, losses on equity investments were recorded in both periods to "Other expense, net".

Benefit and provision for income taxes

We recorded a $6.2 million and a $4.5 million provision for income taxes for the years ended December 31, 2020 and 2019, respectively.

In 2020, our provision reflected $1.8 million in U.S. tax expense and $4.4 million of tax expense in foreign jurisdictions. In 2019, our provision reflected $0.3

million in U.S. tax benefit and $4.9 million of tax expense in foreign jurisdictions.

During 2020 and 2019, we concluded that it is more likely than not that our deferred tax assets will not be realized in certain jurisdictions, including the U.S. and

certain foreign jurisdictions; therefore, we have a valuation allowance recorded against our deferred tax assets on our consolidated balance sheets totaling $123.1

million and $109.6 million as of December 31, 2020 and 2019, respectively.

For further discussion, see Note 2 and Note 21 to the consolidated financial statements in Item 8 of this Form 10-K.

Net loss attributable to 3D Systems

The following table sets forth the primary components of net loss attributable to 3D Systems for the years ended December 31, 2020 and 2019.

Table 6

Year Ended December 31,

(Dollars in thousands) 2020 2019 Change

Loss from operations $ (118,963) $ (57,104) $ (61,859)

Other non-operating items:

Interest and other expense, net (24,447) (7,996) (16,451)

Provision for income taxes (6,184) (4,532) (1,652)

Net loss (149,594) (69,632) (79,962)

Less: net income attributable to noncontrolling interests — 248 (248)

Net loss attributable to 3D Systems Corporation $ (149,594) $ (69,880) $ (79,714)

Weighted average shares, basic and diluted 117,579 113,811

Loss per share, basic and diluted

$ (1.27) $ (0.61)

The increase in net loss for the year ended December 31, 2020, as compared to the year ended December 31, 2019, was primarily driven by an increase in loss

from operations. See “Grossprofitandgrossprofitmargins” and “Operatingexpenses” above.

Liquidity and Capital Resources

Table 7

Change

(Dollars in thousands) December 31, 2020 December 31, 2019 $ %

Cash and cash equivalents

$ 75,010 $ 133,665 $ (58,655) (43.9)%

Accounts receivable, net 114,254 109,408 4,846 4.4 %

Inventories 116,667 111,106 5,561 5.0 %

305,931 354,179 (48,248)

Less:

Current portion of long term debt 2,051 2,506 (455) (18.2)%

Current right of use liabilities 9,534 9,569 (35) (0.4)%

Accounts payable 45,174 49,851 (4,677) (9.4)%

Accrued and other liabilities 69,812 63,095 6,717 10.6 %

126,571 125,021 1,550

Operating working capital $ 179,360 $ 229,158 $ (49,798)

(21.7)%

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our

current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash

requirements primarily consist of funding working capital and capital expenditures.

Cash flow from operations, cash and cash equivalents, and other sources of liquidity such as bank credit facilities and issuing equity or debt securities, are expected

to be available and sufficient to meet foreseeable cash requirements. We hold a 5-year $100.0 million senior secured term loan facility (the “Term Facility”) and a

5-year $100.0 million senior secured revolving credit facility (the “Revolving Facility,” and, together with the Term Facility, the “Senior Credit Facility”) to

support working capital and general corporate purposes. As of December 31, 2020, we have availability under the Revolving Facility of $62.0 million, and an

outstanding balance on the Term Facility of $21.4 million. For additional information on the Senior Credit Facility, see Note 12 to the consolidated financial

statements in Item 8 of this Form 10-K.

On January 1, 2021, the Company completed the sale of 100% of the issued and outstanding equity interests of Cimatron Ltd., the subsidiary that operated the

Company’s Cimatron integrated CAD/CAM software for tooling business and its GibbsCAM CNC programming software business, for approximately $64.2

million, after certain adjustments and excluding $9.2 million of cash amounts transferred to the purchaser. See Note 26 to the consolidated financial statements in

Item 8 of this Form 10-K. A portion of the proceeds from the sale were used to repay the outstanding balance on the Term Facility

Cash held outside the U.S. at December 31, 2020 was $49.7 million, or 66.2% of total cash and cash equivalents, compared to $75.7 million, or 56.5% of total cash

and cash equivalents at December 31, 2019. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of

these earnings to the U.S. would not incur significant federal and state taxes. However, these dividends are subject to foreign withholding taxes that are estimated

to result in the Company incurring tax costs in excess of the cost to obtain cash through other means. Cash equivalents are comprised of funds held in money

market instruments and are reported at their current carrying value, which approximates fair value due to the short term nature of these instruments. We strive to

minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See

“Cashflow” discussion below.

Days sales outstanding (DSO) was 69 at December 31, 2020, compared to 67 days for the year at December 31, 2019. Accounts receivable more than 90 days past

due decreased to 6.9% of gross receivables at December 31, 2020, from 12.1% at December 31, 2019. We review specific receivables periodically to determine the

appropriate reserve for accounts receivable.

The majority of our inventory consists of finished goods, including products, materials and service parts. Inventory also consists of raw materials for certain

printers and service products. Inventory balances may fluctuate during cycles of new product launch, commercialization and timing of ramp up of production and

sales of products.

The changes that make up the other components of working capital not discussed above resulted from the ordinary course of business. Differences between the

amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign

currency translation adjustments.

Cash flow

Cash flow from operations

Cash used in operating activities for the year ended December 31, 2020 was $20.1 million and cash provided by operating activities for the year ended December

31, 2019 was $31.6 million. Excluding non-cash charges from depreciation and amortization of $44.6 million, stock-based compensation of $17.7 million and

other expenses of $73.6 million, the net loss used cash of $13.7 million and provided cash of $6.3 million for the years ended December 31, 2020 and December

31, 2019, respectively. Non-cash charges generally consist of depreciation, amortization, inventory obsolescence, stock-based compensation and goodwill

impairment.

Working capital requirements used cash of $6.5 million for the year ended December 31, 2020 and working capital improvements provided cash of $25.3 million

for the year ended December 31, 2019. For the year ended December 31, 2020, drivers of working capital related to cash outflows were an increase in inventory

and prepaid expenses and other current assets and a decrease in accounts payable; partially offset by an increase in accrued and other liabilities and deferred

revenue and customer deposits.

Cash flow from investing activities

The primary outflow of cash from investing activities for the years ended December 31, 2020 and 2019 relate to purchases of noncontrolling interests and capital

expenditures. Purchases of noncontrolling interests were $10.0 million, related to Robtec, and $2.5 million, related to Wuxi Easyway, for the year ended December

31, 2020. See Note 19 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion. Capital expenditures were $13.6 million and

$24.0 million for the years ended December 31, 2020 and 2019, respectively. The lower expenditures in 2020 reflect the reduced spending due to the lower

revenue volume because of the pandemic.

Cash flow from financing activities

Cash used in financing activities was $7.0 million for the year ended December 31, 2020, while cash provided by financing activities was $18.7 million for the year

ended December 31, 2019. The primary outflow of cash for the year ended December 31, 2020 relates to repayment of the Term Facility and settlements of stock-

based compensation, partially offset by net proceeds from issuances of common stock under our ATM Program and proceeds from an inventory financing

agreement. The primary source of cash for the year ended December 31, 2019 relates to borrowing on the Term Facility, partially offset by repayments under the

Prior Credit Agreement and Term Facility and settlement of stock-based compensation.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements and do not utilize any “structured debt,” “special purpose” or similar unconsolidated entities for liquidity or financing

purposes.

Contractual Obligations and Commercial Commitments

The table below summarizes our contractual obligations as of December 31, 2020.

Table 9

Payments Due by Period

(Dollars in thousands) Less than 1 year 1-3 years 4-5 years After 5 years Total

Long-term debt obligations $ 2,051 6,740 $ 12,601 $ — $ 21,392

Operating lease obligations 11,206 16,528 11,552 19,801 59,087

Finance lease obligations 1,624 3,242 2,998 6,845 14,709

Purchase commitments 55,317 — — — 55,317

Total

$ 70,198 $ 26,510 $ 27,151 $ 26,646 $ 150,505

a. We lease certain facilities under non-cancelable operating and finance agreements. The leases are generally on a net-rent basis, under which we pay taxes, maintenance

and insurance. For further discussion, see Note 5 to the consolidated financial statements in Item 8 of this Form 10-K.

b. Includes amounts committed under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. For further

discussion, see Note 22 to the consolidated financial statements in Item 8 of this Form 10-K.

Other Contractual Commitments

Credit facilities

On February 27, 2019, we entered into the Senior Credit Facility, which replaced the Prior Credit Agreement. Borrowings under the Senior Credit Facility were

used to refinance the existing indebtedness under the Prior Credit Agreement and were used to support working capital and for general corporate purposes. For

further discussion of the Senior Credit Facility, see Note 12 to the consolidated financial statements in Item 8 of this Form 10-K.

We were in compliance with all covenants as of December 31, 2020 and December 31, 2019.

Indemnification

In the normal course of business we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement

made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable

to estimate the maximum potential impact of these indemnification provisions on our future results of operations.

To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences while the director or officer is, or was,

serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these

indemnification obligations is unlimited; however, we have directors’ and officers’ insurance coverage that may enable us to recover future amounts paid, subject

to a deductible and to the policy limits.

Financial Instruments

We conduct business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a

result, we are subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement

dates will result in a foreign exchange gain or loss. When practicable, we endeavor to match assets and liabilities in the same currency on our balance sheet and

those of our subsidiaries in order to reduce these risks. We also, when we consider it to be appropriate, enter into foreign currency contracts to hedge exposures

arising from those transactions. We had $101.8 million and $102.4 million in notional foreign exchange contracts outstanding as of December 31, 2020 and 2019,

respectively. The fair value of these contracts was not material. For our hedges of foreign exchange rates, we have elected to not prepare and maintain the

documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, changes in fair value are recognized in

interest and other expense, net in the consolidated statements of operations and comprehensive loss and, depending on the fair value at the end of the reporting

period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.

We use derivative financial instruments to manage our exposure to changes in interest rates on outstanding debt instruments. For those instruments that qualify and

where we elect to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “DerivativesandHedging,” related gains and

losses (realized or unrealized) related to derivative instruments are recognized in accumulated other comprehensive income (loss) and are reclassified into earnings

when the underlying transaction is recognized in net earnings and, depending on the fair value at the end of the reporting period, derivatives are recorded either in

prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.

We do not hedge for trading or speculative purposes, and our foreign currency contracts are generally short-term in nature, typically maturing in 90 days or less.

See Note 13 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.

Critical Accounting Policies and Significant Estimates

We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP). In doing so, we have to make

estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, expenses, gains and losses, as well as related disclosure of contingent

assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in the accounting estimates

are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material

differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience

and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting

estimates of this type as critical accounting policies and estimates, which we discuss further below. We have reviewed our critical accounting policies and

estimates with the audit committee of our board of directors.

Please see Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a summary of significant accounting policies and the effect on our

financial statements.

Revenue recognition

Revenue is recognized when control of the promised products or services is transferred to customers in an amount that reflects the consideration we expect to

receive in exchange for those products or services. A majority of our revenue is recognized at the point in time when products are shipped or services are delivered

to customers.

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate

performance obligations. Many of its contracts with customers include multiple performance obligations. For such arrangements, we allocate revenue to each

performance obligation based on its relative standalone selling price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation

in a contract. For the majority of items, we estimate SSP using historical transaction data. We use a range of amounts to estimate SSP when we sell each of the

products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In

instances where SSP is not directly observable, such as when the product or service is not sold separately, we determine the SSP using information that may

include market conditions and other observable inputs.

In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers,

geographic region or other factors. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP.

The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.

The nature of our marketing incentives may lead to consideration that is variable. Judgment is exercised at contract inception to determine the expected value of the

contract and resulting transaction price. Ongoing assessments are performed to determine if updates are needed to the original estimates.

See Note 2 and Note 4 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.

Allowance for doubtful accounts

In evaluating the collectability of our accounts receivable, we assess a number of factors, including specific customers’ abilities to meet their financial obligations

to us, the length of time receivables are past due and historical collection experience. Based on these assessments, we may record a reserve for specific customers,

as well as a general reserve and allowance for returns and discounts. If circumstances related to specific customers change, or economic conditions deteriorate such

that our past collection experience is no longer relevant, our estimate of the recoverability of our accounts receivable could be further reduced from the levels

provided for in the consolidated financial statements.

We evaluate specific accounts for which we believe a customer may have an inability to meet their financial obligations (for example, aging over 90 days past due

or bankruptcy). In these cases, we use our judgment, based on available facts and circumstances, and record a specific reserve for that customer to reduce the

receivable to an amount we expect to collect. These specific reserves are re-evaluated and adjusted as additional information is received that impacts the amount

reserved.

Income taxes

We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our

provision for income taxes.

Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be

different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent

that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes and the effective tax

rate in the period in which such determination is made.

The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate as well as the related net interest

and penalties. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Services (“IRS”) and other tax

authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to

determine the adequacy of our provision for income taxes.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method.

The inventory reserve is a critical estimate as there is rapid technological change in our industry impacting the market for our products and there is significant

judgment in estimating the amount of spare parts to keep on hand to service previously sold printers for periods of up 10 or more years.

See Note 6 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.

Goodwill

We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the

carrying value of the asset may not be recoverable. We assess the recoverability of the carrying value of assets held for use based on a review of undiscounted

projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived asset over its estimated fair value as

determined by discounted projected cash flows.

Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. We review

goodwill for impairment annually or when circumstances indicate that the likelihood of an impairment is greater than 50%. Such circumstances include a

significant adverse change in the business climate for one of our reporting units or a decision to dispose of a reporting unit or a significant portion of a reporting

unit. The test for goodwill impairment compares the fair value of each of reporting unit to its respective carrying value. The process requires a significant level of

estimation and use of judgment by management, particularly the estimate of the fair value of our reporting units. Our reporting units are Americas, EMEA and

APAC.

We estimate the fair value of our reporting units based primarily on the discounted projected cash flows of the underlying operations, which requires us to make

assumptions about estimated cash flows, including profit margins, long-term forecasts, discount rates and terminal growth rates. We developed these assumptions

based on the market and geographic risks unique to each reporting unit.

Our EMEA, APAC and Americas reporting units carry approximately $127.6 million, $34.2 million and zero of goodwill, respectively, as of December 31, 2020.

Goodwill in the Americas region was written off in 2015. The net carrying values of our long-lived assets in the EMEA, APAC, and Americas regions are

approximately $49.2 million, $5.5 million, and $48.8 million, respectively.

As of September 30, 2020, we experienced a triggering event due to a drop in our stock price, which ultimately had been negatively impacted by the business

environment as a result of the COVID-19 pandemic, and performed a quantitative analysis for potential impairment of our goodwill and long-lived asset balances.

Based on available information and analysis as of September 30, 2020, we determined the carrying value of the EMEA reporting unit exceeded its fair value and

recorded a non-cash goodwill impairment charge of $48.3 million. We determined the fair value of the Americas and APAC reporting units exceeded their carrying

values and the carrying value of our long-lived assets is recoverable for all reporting units.

Fair value was determined using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash

flows discounted to its present value, and a market approach. The valuation methodology and underlying financial information included in the Company's

determination of fair value required significant judgments by management. The principal assumptions used in the Company's discounted cash flow analysis

consisted of (a) the long-term projections of future financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the risk

attributable to the Company and the industry in which it operates. Under the market approach, the principal assumption included an estimate for a control premium.

We conducted our annual impairment testing for the years ended December 31, 2020 and 2019 as of November 30, 2020 and 2019, respectively. There was no

additional goodwill impairment for the years ended December 31, 2020 and 2019.

Contingencies

We record an estimated loss from a contingency when information indicates that it is probable that an asset has been impaired or a liability has been incurred at the

date of the financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies requires us to use our judgment and the

ultimate resolution of our exposure related to these matters may change as further facts and circumstances become known.

See Note 22 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.

Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for recently issued accounting standards, including the expected dates of adoption

and expected impact to the consolidated financial statements upon adoption.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks from fluctuations in interest rates, foreign currency exchange rates and commodity prices, which may adversely affect our results

of operations and financial condition. We seek to minimize these risks through regular operating and financing activities and, when we consider it to be

appropriate, through the use of derivative financial instruments. We do not purchase, hold or sell derivative financial instruments for trading or speculative

purposes.

Interest rates

Our earnings exposure related to movements in interest rates is primarily derived from variable interest rate borrowings. At December 31, 2020, we had

$21.4 million in variable-rate debt, of which $6.4 million was not subject to interest rate swap agreements. A hypothetical interest rate change of 10% would not

have a material impact on annualized interest expense.

Foreign exchange rates

Because we conduct our operations in many areas of the world involving transactions denominated in a variety of currencies, our results of operations as expressed

in U.S. dollars may be significantly affected by fluctuations in rates of exchange between currencies. These fluctuations could be significant. In 2020,

approximately 50.6% of our net sales and a significant portion of our costs were denominated in currencies other than the dollar. We generally are unable to adjust

our non-dollar local currency sales prices to reflect changes in exchange rates between the dollar and the relevant local currency. As a result, changes in exchange

rates between the euro, Japanese yen, British pound, South Korean won or other currencies in which we receive sale proceeds and the dollar have a direct impact

on our operating results. There is normally a time lag between our sales and collection of the related sales proceeds, exposing us to additional currency exchange

rate risk.

When practicable, we endeavor to match assets and liabilities in the same currency on our U.S. balance sheet and those of our subsidiaries in order to reduce these

risks. We also, when we consider it appropriate, enter into foreign currency contracts to hedge exposures arising from those transactions.

At December 31, 2020, a hypothetical change of 10% in foreign currency exchange rates would cause a change in revenue of approximately $24.1 million,

assuming all other variables remained constant.

We enter into foreign currency forward contracts to reduce the effect of fluctuating foreign currencies. At December 31, 2020, we had notional forward exchange

contracts outstanding of $101.8 million. We believe these foreign currency forward contracts and the offsetting underlying commitments, when taken together, do

not create material market risk.

Commodity prices

We are exposed to price volatility related to raw materials and energy products in conjunction with our printer assembly and print materials blending processes.

Generally, we acquire such components at market prices and do not use financial instruments to hedge commodity prices. At December 31, 2020, a hypothetical

10% change in commodity prices for raw materials would cause a change to cost of sales of approximately $5.1 million.

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements and the related notes, together with the Report of Independent Registered Public Accounting Firm thereon, are set forth

below beginning on page F-1 and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and

procedures, pursuant to Exchange Act Rule 13a-15(e), as of December 31, 2020. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer

concluded as of December 31, 2020 that our disclosure controls and procedures were not effective at the reasonable assurance level because of material weaknesses

described below.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control framework and processes were

designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of financial reporting and the preparation of our

consolidated financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and

procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• Provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with GAAP and

that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a

material effect on the consolidated financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect

misstatements. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time.

Management assessed the effectiveness of our internal control over financial reporting based on the framework described in Internal Control - Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Because of the material weaknesses described

below, our management believes that, as of December 31, 2020, our internal control over financial reporting was not effective.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a

material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

During the preparation and audit of our financial statements for the period ended December 31, 2020, we and our independent registered public accounting firm

identified two material weaknesses in our internal control over financial reporting related to a lack of certain controls, or improper execution of designed control

procedures, (1) for certain non-standard contracts and non-standard contract terms and (2) over the review of internally prepared reports and analyses utilized in the

financial closing process. These control deficiencies were partially related to employee turnover, resulting in a temporary shortage of personnel with appropriate

knowledge or skills to perform an effective review during our financial statement close process. In addition, certain control deficiencies related to the completeness

and review of transactions that were infrequent in nature.

While these control deficiencies did not result in material misstatements of our annual or interim consolidated financial statements, they did result in immaterial

out-of-period adjustments that were recorded in the quarter ended December 31, 2020. Material weaknesses create a reasonable possibility that a material

misstatement of account balances or disclosures in annual or interim consolidated financial statements may not be prevented or detected in a timely manner.

Accordingly, our management concluded that the control deficiencies represent material weaknesses in our internal control over financial reporting and, therefore,

our internal control over financial reporting was not effective as of December 31, 2020.

The Company’s independent registered public accounting firm, BDO USA, LLP, which audited the 2020 consolidated financial statements included in this Form

10-K, has expressed an adverse opinion on the operating effectiveness of the Company's internal control over financial reporting. BDO USA, LLP’s report appears

on pages F-2 to F-6 of this Form 10-K.

Remediation Plan

We are working to remediate the material weaknesses through the development and implementation of more formal policies, processes and documentation

procedures relating to our financial reporting as well as the hiring of additional accounting personnel and the training of new personnel and existing personnel in

new roles on proper execution of designed control procedures. In addition, we may engage outside consultants to advise on changes in the design of our controls

and procedures or to advise on technical accounting matters. We believe that our remediation plan will be sufficient to remediate the identified material

weaknesses and strengthen our internal control over financial reporting. However, as we continue to evaluate, and work to improve, our internal control over

financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

Therefore, we cannot assure you when the Company will remediate such weaknesses, nor can we be certain that additional actions will not be required or the costs

of any such additional actions. Moreover, we cannot assure you that additional material weaknesses will not arise in the future.

Changes in Internal Controls over Financial Reporting

The material weaknesses described above were identified after December 31, 2020. The Company is in the process of implementing certain changes in its internal

controls to remediate the material weaknesses described above. The implementation of the material aspects of this remediation began in the first quarter of fiscal

year 2021; therefore, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have

materially affected, or are reasonably likely to materially effect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required in response to this Item will be set forth in our Proxy Statement for our 2021 Annual Meeting of Stockholders (“Proxy Statement”) under

the captions “Proposal One: Election of Directors,” “Corporate Governance Matters,” “Delinquent Section 16(a) Reports,” “Corporate Governance Matters—Code

of Conduct and Code of Ethics,” “Corporate Governance Matters—Corporate Governance and Nominating Committee,” and “Corporate Governance Matters—

Audit Committee.”

Item 11. Executive Compensation

The information in response to this Item will be set forth in our Proxy Statement under the captions “Director Compensation,” “Executive Compensation,”

“Corporate Governance Matters—Compensation Committee,” and “Executive Compensation—Compensation Committee Report.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except as set forth below, the information required in response to this Item will be set forth in our Proxy Statement under the caption “Security Ownership of

Certain Beneficial Owners and Management.”

Equity Compensation Plans

The following table summarizes information about the equity securities authorized for issuance under our compensation plans as of December 31, 2020. For a

description of these plans, please see Note 16 to the consolidated financial statements in Item 8 of this Form 10-K.

(in thousands, except exercise price)

Number of securities to be issued

upon exercise of outstanding stock

options, warrants and rights

Weighted average exercise price of

outstanding options, warrants and

rights

Number of securities remaining

available for future issuance under

equity compensation plans

Equity compensation plans approved by stockholders:

Stock options 420 $ 13.26

Restricted stock units 1,100

Total

1,520

6,312

a. The weighted-average exercise price is only applicable to stock options.

b. The number of securities remaining available for future issuance for stock options, restricted stock units, and stock awards for non-employee directors is approved in total

and not individually with respect to these items.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required in response to this Item will be set forth in our Proxy Statement under the captions “Corporate Governance Matters—Director

Independence” and “Corporate Governance Matters—Related Party Transaction Policies and Procedures.”

Item 14. Principal Accounting Fees and Services

The information in response to this Item will be set forth in our Proxy Statement under the caption “Proposal Three: Ratification of Selection of Independent

Registered Accounting Firm—Fees of Independent Registered Public Accounting Firm.”

a b

PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(3) Exhibits
The following exhibits are included as part of this filing and incorporated herein by this reference:
 
2.1 Share Purchase Agreement, dated November 2, 2020, by and among 3D Systems, Inc., 3D Systems Corporation and ST Acquisition Co.
(Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed November 4, 2020.)
2.2 First Amendment to Share Purchase Agreement, dated December 31, 2020, by and among ST Acquisition Co., 3D Systems, Inc. and 3D
Systems Corporation (Incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K, filed January 4, 2021.)
3.1 Certificate of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-B filed on August 16, 1993, and the
amendment thereto, filed on Form 8-B/A on February 4, 1994.)
 
3.2 Amendment to Certificate of Incorporation filed on May 23, 1995. (Incorporated by reference to Exhibit 3.2 to Registrant’s Registration
Statement on Form S-2/A, filed on May 25, 1995.)
 
3.3 Certificate of Amendment of Certificate of Incorporation filed with Secretary of State of Delaware on May 19, 2004. (Incorporated by
reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, filed on August 5, 2004.)
 
3.4 Certificate of Amendment of Certificate of Incorporation filed with Secretary of State of Delaware on May 17, 2005. (Incorporated by
reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005, filed on August 1, 2005.)
 
3.5 Certificate of Amendment of Certificate of Incorporation filed with the Secretary of State of Delaware on October 7, 2011. (Incorporated by
reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on October 7, 2011.)
 
3.6 Certificate of Amendment of Certificate of Incorporation filed with the Secretary of State of Delaware on May 21, 2013. (Incorporated by
reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on May 22, 2013.)
 
3.7 Amended and Restated By-Laws. (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K, filed on March 15,
2018.)
 
4.1 Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-3
(Registration No. 333-182065), filed on June 12, 2012.)
4.2 Description of Common Stock. (Incorporated by reference to Exhibit 4.2 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 2020, filed on February 26, 2020.)
4.3* Amended and Restated 2015 Incentive Plan of 3D Systems Corporation effective September 3, 2020. (Incorporated by reference to Exhibit 4.1
to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 5, 2020.)
 
4.4* Appendix A to the 2015 Incentive Plan of 3D Systems Corporation effective May 19, 2015. (Incorporated by reference to Exhibit 10.3 to
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 6, 2015.)
 
4.5*† Form of Restricted Stock Award Agreement under the Amended and Restated 2015 Incentive Plan.
 
4.6*† Form of Restricted Stock Unit Award Agreement under the Amended and Restated 2015 Incentive Plan.
 
4.7* Form of Stock Option Award Agreement under the Amended and Restated 2015 Incentive Plan. (Incorporated by reference to Exhibit 4.10 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 26, 2020.)
 
4.8* Form of Restricted Stock Award Agreement with Share Price Vesting Conditions (Incorporated by reference to Exhibit 4.17 to Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 28, 2017.)
 
41

4.9* Form of Performance-Based Restricted Stock Unit Award Agreement under the Amended and Restated 2015 Incentive Plan. (Incorporated by
reference to Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 26, 2020.)
4.10*† Revised Form of Performance-Based Restricted Stock Unit Award Agreement under the Amended and Restated 2015 Incentive Plan.
 
10.1 Lease Agreement dated February 8, 2006 between the Registrant and KDC-Carolina Investments 3, LP. (Incorporated by reference to
Exhibit 99.1 to Registrant’s Current Report on Form 8-K, filed on February 10, 2006.)
 
10.2 First Amendment to Lease Agreement dated August 7, 2006 between the Registrant and KDC-Carolina Investments 3, LP. (Incorporated by
reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, filed on August 14, 2006.)
 
10.3 Second Amendment to Lease Agreement effective as of October 6, 2006 to Lease Agreement dated February 8, 2006 between 3D Systems
Corporation and KDC-Carolina Investments 3, LP. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K,
filed on October 10, 2006.)
 
10.4 Third Amendment to Lease Agreement effective as of December 18, 2006 to Lease Agreement dated February 8, 2006 between 3D Systems
Corporation and KDC-Carolina Investments 3, LP. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K,
filed on December 20, 2006.)
 
10.5 Fourth Amendment to Lease Agreement effective as of February 26, 2007 to Lease Agreement dated February 8, 2006 between 3D Systems
Corporation and KDC-Carolina Investments 3, LP. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K,
filed on March 1, 2007.)
10.6 Fifth Amendment to Lease Agreement effective as of March 17, 2011 to Lease Agreement dated February 8, 2006 between 3D Systems
Corporation and KDC-Carolina Investments 3, LP. (Incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, filed on March 21,
2011.)
10.7† Amended and Restated Lease Agreement dated February 25, 2021 between 3D Systems Corporation and 3D Fields, LLC.
 
10.8 Credit Agreement, dated as of October 10, 2014, among 3D Systems Corporation, the Guarantors party thereto, PNC Bank, National
Association, as Administrative Agent, PNC Capital Markets LLC, as Sole Lead Arranger and Sole Bookrunner, HSBC Bank USA, N.A., as
Syndication Agent, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-
K, filed on October 14, 2014.)
10.9 Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC Bank USA, National Association, as Administrative
Agent, Sole Lead Arranger and Sole Bookrunner, the guarantors party thereto, and the other lenders party thereto. (Incorporated by reference
to Exhibit 10.10 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019).
10.10 Security Agreement, dated  February 27, 2019, among 3D Systems Corporation, 3D Holdings, LLC, 3D Systems, Inc., and HSBC Bank USA,
National Association, as Administrative Agent. (Incorporated by reference to Exhibit 10.11 of the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2018, filed on February 28, 2019).
10.11 First Amendment, dated September 30, 2019, to the Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC
Bank USA, National Association, as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, the guarantors party thereto, and the
other lenders party thereto. (Incorporated by reference to Exhibit 10.2 of the Registrant's Annual Report on Form 10-Q for the quarter ended
September 30, 2019, filed on October 30, 2019).
10.12
Second Amendment, dated October 9, 2020, to the Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC Bank
USA, National Association, as Administrative Agent, Swing Loan Lender and Issuing Lender, the guarantors party thereto, and the other
lenders party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed October 14, 2020.)
10.13* Charles W. Hull Consulting Arrangement (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2010, filed on July 29, 2010.)
 
10.14* Employment Agreement, dated August 4, 2016, between 3D Systems Corporation and Charles W. Hull. (Incorporated by reference to Exhibit
10.1 to Registrant's Current Report on Form 8-K, filed August 8, 2016.)
42

10.15* Employment Agreement, dated April 1, 2016, between 3D Systems Corporation and Vyomesh I. Joshi. (Incorporated by reference to Exhibit
10.1 to Registrant’s Current Report on Form 8-K, filed on April 4, 2016.)
10.16* Advisory Agreement, dated February 6, 2020 between 3D Systems Corporation and Vyomesh I. Joshi. (Incorporated by reference to Exhibit
10.1 of the Registrant's Current Report on Form 8-K , filed February 6, 2020.)
10.17* Employment Agreement between 3D Systems Corporation and Todd Booth, dated August 15, 2019. (Incorporated by reference to Exhibit
10.1 to Registrant's Current Report on Form 8-K, filed on August 19, 2019.)
10.18* Employment Agreement, dated June 15, 2016, between 3D Systems Corporation and Andrew M. Johnson. (Incorporated by reference to
Exhibit 10.2 to Registrant’s Current Report on Form 8-K, filed on June 16, 2016.)
10.19* Employment Agreement, dated September 5, 2016, between 3D Systems SA and Herbert Koeck. (Incorporated by reference to exhibit 10.24
of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019).
10.20* Letter of Secondment, dated March 5, 2018, between 3D Systems Corporation and Herbert Koeck. (Incorporated by reference to exhibit
10.25 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019).
10.21* Second Letter of Secondment, dated January 8, 2020, between 3D Systems Corporation and Herbert Koeck. (Incorporated by reference to
Exhibit 10.19 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 26, 2020.)
10.22
Amendment to the Second Letter of Secondment, dated August 13, 2020, between 3D Systems Corporation and Herbert Koeck (Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A filed August 17, 2020.)
10.23* Employment Agreement, dated August 24, 2016, between 3D Systems Corporation and Philip Schultz. (Incorporated by reference to exhibit
10.26 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019).
10.24* 3D Systems Corporation Change of Control Severance Policy (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K, filed February 23, 2018.)
10.25* Employment Agreement, dated May 11, 2020, between 3D Systems Corporation and Dr. Jeffrey A. Graves (Incorporated by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 14, 2020.)
10.26* Executive Services Agreement, dated May 19, 2020, between 3D Systems Corporation and Wayne Pensky (Incorporated by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 19, 2020.)
10.27* Employment Agreement, dated August 21, 2020, between 3D Systems Corporation and Jagtar Narula (Incorporated by reference to Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed August 26, 2020.)
10.28* Employment Agreement, dated November 21, 2016, between 3D Systems Corporation and Menno Ellis (Incorporated by reference to
Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.)
10.29* Employment Agreement, dated October 1, 2020, between 3D Systems Corporation and Reji Puthenveetil (Incorporated by reference to
Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.)
10.30*† Amendment No. 1 to the Employment Agreement, dated February 22, 2021, between 3D Systems Corporation and Reji Puthenveetil.
10.31* Consulting Agreement, dated October 1, 2020, between 3D Systems Corporation and Reji Puthenveetil (Incorporated by reference to Exhibit
10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.)
10.32*† Amended and Restated Employment Agreement, dated January 1, 2021, between 3D Systems Corporation and Jeff Blank.
10.33 Equity Distribution Agreement, dated August 5, 2020, by and among 3D Systems Corporation and Truist Securities, Inc. and HSBC
Securities (USA) Inc. (Incorporated by reference to Exhibit 1.1 of Registrant’s Current Report on Form 8-K filed on August 5, 2020.)
43

21.1† Subsidiaries of Registrant.

23.1† Consent of Independent Registered Public Accounting Firm.

31.1† Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 5, 2021.

31.2† Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 5, 2021.

32.1† Certification of Principal Executive Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002 dated March 5, 2021.

32.2† Certification of Principal Financial Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002 dated March 5, 2021.

101.INS† Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because the its XBRL tags are

embedded within the Inline XBRL document.In

101.SCH† Inline XBRL Taxonomy Extension Scheme Document

101.CAL† Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF† Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB† Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE† XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File - this data file does not appear in the Interactive Data file because its XBRL tags are embedded within the

Inline XBRL document.

* Management contract or compensatory plan or arrangement

† Exhibits filed herein. All exhibits not so designated are incorporated by reference to a prior filing, as indicated.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on our behalf by

the undersigned, thereunto duly authorized.

3D Systems Corporation

By: /s/ DR. JEFFREY A. GRAVES

Dr. Jeffrey A. Graves

President, Chief Executive Officer and Director

Date: March 5, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of registrant and in the

capacities and on the dates indicated.

Signature Title Date

/s/ DR. JEFFREY A. GRAVES Chief Executive Officer, President and Director March 5, 2021

Dr. Jeffrey A. Graves (principal executive officer)

/s/ JAGTAR NARULA Executive Vice President and Chief Financial Officer March 5, 2021

Jagtar Narula (principal financial officer)

/s/ CHARLES W. HULL Executive Vice President, Chief Technology March 5, 2021

Charles W. Hull Officer and Director

/s/ ANTHONY J. GRABENAU Vice President, Global Corporate Controller March 5, 2021

Anthony J. Grabenau (principal accounting officer)

/s/ CHARLES G. MCCLURE, JR Chairman of the Board of Directors March 5, 2021

Charles G. McClure, Jr.

/s/ MALISSIA R. CLINTON Director March 5, 2021

Malissia R. Clinton

/s/ WILLIAM E. CURRAN Director March 5, 2021

William E. Curran

/s/ THOMAS W. ERICKSON Director March 5, 2021

Thomas W. Erickson

/s/ WILLIAM D. HUMES Director March 5, 2021

William D. Humes

/s/ JIM D. KEVER Director March 5, 2021

Jim D. Kever

/s/ KEVIN S. MOORE Director March 5, 2021

Kevin S. Moore

/s/ VASANT PADMANABHAN Director March 5, 2021

Vasant Padmanabhan

/s/ JOHN J. TRACY Director March 5, 2021

Dr. John J. Tracy

/s/ JEFFREY WADSWORTH Director March 5, 2021

Dr. Jeffrey Wadsworth

3D Systems Corporation
Index to Consolidated Financial Statements
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm F-2
Report of Independent Registered Public Accounting Firm F-5
Consolidated Balance Sheets as of December 31, 2020 and 2019 F-7
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 F-8
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020, 2019 and 2018 F-9
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018 F-10
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018 F-11
Notes to Consolidated Financial Statements for the Years Ended December 31, 2020, 2019 and 2018 F-12
F-1

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

3D Systems Corporation

Rock Hill, South Carolina

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of 3D Systems Corporation (the “Company”) as of December 31, 2020 and 2019, the related

consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020,

and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three

years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal

control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 5, 2021 expressed an adverse opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect

to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and

performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated

or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on

the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the

critical audit matters or on the accounts or disclosures to which they relate.

F-2

Assessment of Goodwill Recoverability

As described in Notes 2 and 9 to the Company’s consolidated financial statements, goodwill totaled $161.8 million as of December 31, 2020. The carrying values

of goodwill for the Europe and Middle East (“EMEA”), Asia Pacific (“APAC”), and Americas reporting units were $127.6 million, $34.2 million, and $0,

respectively, as of December 31, 2020. The Company performs an annual assessment of the recoverability of its goodwill during the fourth quarter, and also

performs an assessment on an interim basis when events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

As a result of triggering events identified by the Company during the first and third quarters of 2020, including the impact of COVID-19 pandemic on its revenue

and earnings, the Company performed interim goodwill impairment tests in each of these quarterly periods. One of the valuation methods utilized by the Company

to estimate the fair value of its reporting units is based on the discounted projected cash flows of the underlying operations. At September 30, the Company

recognized a non-cash impairment charge of $48.3 million reducing the carrying value of goodwill in the EMEA reporting unit as a result of an interim goodwill

impairment assessment performed during the third quarter of the fiscal year.

We identified the evaluation of goodwill for impairment for the EMEA reporting unit as of March 31 and as of September 30 as a critical audit matter. The

determination of the fair value of the reporting unit requires management to estimate the future cash flows which include significant judgments about revenues,

profit margins, long-term operating forecasts, country-specific risk premiums, terminal growth rates, and discount rates. These judgments are subject to inherent

economic and other uncertainties, including the projected impact from the COVID-19 pandemic, and changes in the mix of sales and ordering patterns from certain

enterprise customers. Auditing management’s significant assumptions used in the assessment of the recoverability of goodwill involved especially challenging and

subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge

needed.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of controls related to management’s forecasting process, including controls over the data, inputs, and

assumptions utilized to determine the fair value of the EMEA reporting unit, including the assessment of historical information utilized, revenues, profit

margins, long-term operating forecasts, terminal growth rates, and discount rates.

• Evaluating management’s ability to forecast and the reasonableness of management’s assumptions used to develop cash flow forecasts and projections by

comparing them to prior period forecasts, historical operating performance, internal and external communications made by the Company, guidance

released by customers and competitors, and forecasted information included in industry reports, including external reports related to forecasted economic

recovery from COVID-19 related business disruptions.

• Testing the completeness, accuracy, and relevance of the underlying data used in the discounted cash flow analysis.

• Performing sensitivity analyses to assess the impact that fluctuations in the projected growth rates might have on the estimated fair value of the reporting

unit.

• Utilizing professionals with specialized skills and knowledge in valuation to assist in evaluating the appropriateness of the country-specific risk premium,

terminal growth rate, and discount rate assumptions used to estimate the fair value of the EMEA reporting unit.

Revenue from Collaboration and Licensing Agreements

As described in Note 4 to the consolidated financial statements, the Company recognizes revenue when control of the promised products or services is transferred

to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company recognized

approximately $6.9 million related to collaboration arrangements with customers for the year ended December 31, 2020. The nature of the activities performed,

and consideration exchanged through the Company’s collaborative agreements, varies such that certain agreements meet the definition of customer relationships

for which revenue is recorded, while others do not meet this definition. The Company’s collaborative revenue contracts may contain multiple performance

obligations and may contain fees for licensing, research and development services, contingent milestone payments upon achievement of developmental contractual

criteria, and/or royalty fees based on the licensees' product revenue.

F-3

We identified revenue recognition from collaborative agreements with customers as a critical audit matter. Management makes significant judgments in identifying

customer relationships and in determining revenue recognition for its collaborative agreements with customers, including the evaluation of distinct performance

obligations, the identification and evaluation of material rights, the estimation of variable consideration, and the determination of the pattern of transfer of control

for each distinct performance obligation. Auditing management’s judgments and estimates required significant audit effort and auditor subjectivity and in addition,

as described in the “Opinion on Internal Control over Financial Reporting” section above, a material weakness was identified that encompasses this matter.

The primary procedures we performed to address this critical audit matter included:

• Assessing the completeness of collaboration arrangements that require assessment for proper accounting treatment by inspecting Company press releases,

Committee meeting minutes, and credits within Research & Development expense general ledger accounts.

• Evaluating the reasonableness of management’s judgments to determine whether customer relationships exist in its collaborative arrangements.

• Examining a sample of revenue contracts and other source documents to test management's identification of significant terms for completeness and

assessing the appropriateness of the treatment for such terms, including the identification of distinct performance obligations, material rights, and variable

consideration.

• Evaluating the reasonableness of management’s judgments and estimates to calculate variable consideration, and the timing of recognizing the related

revenue subject to any constraints.

• Evaluating the appropriateness of management’s determination of whether identified performance obligations meet the criteria for over-time revenue

recognition.

• Evaluating the appropriateness of the method used to recognize revenue and testing the relevant inputs and assumptions to the revenue recognition

calculations.

We have served as the Company's auditor since 2003.

/s/ BDO USA, LLP

Charlotte, North Carolina

March 5, 2021

F-4

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

3D Systems Corporation

Rock Hill, South Carolina

Opinion on Internal Control over Financial Reporting

We have audited 3D System Corporation’s (the “Company’s”) internal control over financial reporting as of December 31, 2020, based on criteria established in

InternalControl–IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our

opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO

criteria.

We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date

of management’s assessment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance

sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash

flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as “the financial statements”) and our report

dated March 5, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal

control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”. Our responsibility

is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB

and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the

design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered

necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a

material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses regarding

management’s failure to design and maintain controls over the identification and review of contracts with financial accounting implications and the financial

reporting and close process have been identified and described in management’s assessment. These material weaknesses were considered in determining the nature,

timing, and extent of audit tests applied in our audit of the 2020 financial statements, and this report does not affect our report dated March 5, 2021 on those

financial statements.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the

preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of

financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-5

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with

the policies or procedures may deteriorate.

/s/ BDO USA, LLP

Charlotte, North Carolina

March 5, 2021

F-6

3D SYSTEMS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value) December 31, 2020 December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents $ 75,010 $ 133,665

Accounts receivable, net of reserves — $4,392 (2020) and $8,762 (2019) 114,254 109,408

Inventories 116,667 111,106

Prepaid expenses and other current assets 33,145 18,991

Current assets held for sale 18,439 —

Total current assets 357,515 373,170

Property and equipment, net 75,356 92,940

Intangible assets, net 28,083 48,338

Goodwill 161,765 223,176

Right of use assets 48,620 36,890

Deferred income tax asset 6,247 5,408

Assets held for sale 31,684 —

Other assets 23,785 27,390

Total assets

$ 733,055 $ 807,312

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long term debt $ 2,051 $ 2,506

Current right of use liabilities 9,534 9,569

Accounts payable 45,174 49,851

Accrued and other liabilities 69,812 63,095

Customer deposits 7,750 5,712

Deferred revenue 30,302 32,231

Current liabilities held for sale 11,107 —

Total current liabilities 175,730 162,964

Long-term debt, net of deferred financing costs 19,218 45,215

Long-term right of use liabilities 48,469 35,402

Deferred income tax liability 4,716 4,027

Liabilities held for sale 2,952 —

Other liabilities 51,247 45,808

Total liabilities 302,332 293,416

Commitments and contingencies (Note 22)

Stockholders’ equity:

Common stock, $0.001 par value, authorized 220,000 shares; issued 127,626 (2020) and 121,266 (2019) 128 120

Additional paid-in capital 1,404,964 1,371,564

Treasury stock, at cost — 3,494 shares (2020) and 3,670 shares (2019) (22,590) (18,769)

Accumulated deficit (943,303) (793,709)

Accumulated other comprehensive loss (8,476) (37,047)

Total 3D Systems Corporation stockholders' equity 430,723 522,159

Noncontrolling interests — (8,263)

Total stockholders’ equity 430,723 513,896

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$ 733,055 $ 807,312

See accompanying notes to consolidated financial statements.

F-7

3D SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

(in thousands, except per share amounts) 2020 2019 2018

Revenue:

Products $ 332,799 $ 389,337 $ 433,100

Services 224,441 247,017 258,445

Total revenue 557,240 636,354 691,545

Cost of sales:

Products 227,681 234,581 233,678

Services 106,184 121,232 133,473

Total cost of sales 333,865 355,813 367,151

Gross profit 223,375 280,541 324,394

Operating expenses:

Selling, general and administrative 219,895 254,355 272,287

Research and development 74,143 83,290 95,298

Impairment of goodwill 48,300 — —

Total operating expenses 342,338 337,645 367,585

Loss from operations (118,963) (57,104) (43,191)

Interest and other expense, net (24,447) (7,996) (37)

Loss before income taxes (143,410) (65,100) (43,228)

Provision for income taxes (6,184) (4,532) (2,035)

Net loss (149,594) (69,632) (45,263)

Less: net income attributable to noncontrolling interests — 248 242

Net loss attributable to 3D Systems Corporation

$ (149,594) $ (69,880) $ (45,505)

Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted

$ (1.27) $ (0.61) $ (0.41)

See accompanying notes to consolidated financial statements.

F-8

3D SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Year Ended December 31,

(in thousands, except per share amounts) 2020 2019 2018

Net loss $ (149,594) $ (69,632) $ (45,263)

Other comprehensive income (loss), net of taxes:

Pension adjustments 783 (1,060) (92)

Derivative financial instruments (403) (318) —

Foreign currency translation 28,752 2,996 (17,068)

Total other comprehensive income (loss), net of taxes: 29,132 1,618 (17,160)

Total comprehensive loss, net of taxes (120,462) (68,014) (62,423)

Comprehensive income attributable to noncontrolling interests — 191 524

Comprehensive loss attributable to 3D Systems Corporation

$ (120,462) $ (68,205) $ (62,947)

See accompanying notes to consolidated financial statements.

F-9

3D SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

(in thousands) 2020 2019 2018

Cash flows from operating activities:

Net loss $ (149,594) $ (69,632) $ (45,263)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization 44,595 50,396 59,293

Stock-based compensation 17,725 23,587 29,253

Provision for inventory obsolescence and revaluation 12,373 — —

Loss on hedge accounting de-designation 1,235 — —

Provision for bad debts 457 1,308 1,824

Loss on the disposition of property, equipment and other assets 5,274 2,282 —

Provision for deferred income taxes (1,206) (3,354) (2,990)

Impairment of assets 55,484 1,728 1,998

Changes in operating accounts:

Accounts receivable (6,052) 15,071 599

Inventories (9,901) 18,447 (34,035)

Prepaid expenses and other current assets (16,218) 9,150 40,922

Accounts payable (6,653) (16,846) 11,559

Deferred revenue and customer deposits 3,231 677 (2,383)

Accrued and other liabilities 28,286 (1,346) (57,212)

All other operating activities 843 113 1,231

Net cash (used in) provided by operating activities (20,121) 31,581 4,796

Cash flows from investing activities:

Purchases of property and equipment (13,643) (23,985) (40,694)

Proceeds from sale of assets 1,554 1,620 333

Purchase of noncontrolling interest (12,500) (2,500) —

Other investing activities 356 (2,007) (1,466)

Net cash used in investing activities (24,233) (26,872) (41,827)

Cash flows from financing activities:

Proceeds from revolving credit facilities 20,000 — —

Payments on revolving credit facilities (20,000) — —

Proceeds from borrowings — 100,000 25,000

Repayment of borrowings/long term debt (26,840) (76,768) —

Proceeds from issuance of common stock 24,702 — —

Payments related to net-share settlement of stock based compensation (5,138) (3,194) (7,367)

Payments on earnout consideration — — (2,675)

Other financing activities 296 (1,338) (694)

Net cash (used in) provided by financing activities (6,980) 18,700 14,264

Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,428 289 (3,145)

Net increase (decrease) in cash, cash equivalents and restricted cash (49,906) 23,698 (25,912)

Cash, cash equivalents and restricted cash at the beginning of the period 134,617 110,919 136,831

Cash, cash equivalents and restricted cash at the end of the period

$ 84,711 $ 134,617 $ 110,919

Supplemental cash flow information

Lease assets obtained in exchange for new lease liabilities (excludes adoption) $ 23,309 $ 8,662 $ —

Cash interest payments $ 2,109 $ 3,715 $ 542

Cash income tax payments, net $ 3,706 $ 10,722 $ 8,964

Transfer of equipment from inventory to property and equipment, net $ 1,055 $ 3,187 $ 5,612

Transfer of equipment to inventory from property and equipment, net $ — $ 32 $ 2,563

Noncash financing activity

Purchase of noncontrolling interest $ — $ (11,000) $ —

(a) The amounts for cash and cash equivalents shown above include restricted cash of $540, $952 and $921 as of December 31, 2020, 2019 and 2018, respectively, which were included in

Other assets, net, and $9,161 as of December 31, 2020, which was included in Current assets held for sale in the consolidated balance sheets.

(b) Inventory is transferred from inventory to property and equipment at cost when we require additional machines for training or demonstration or for placement into on demand

manufacturing services locations.

(c) In general, an asset is transferred from Property and equipment, net, into inventory at its net book value when we have identified a potential sale for a used machine.

(d) Purchase of noncontrolling interest to be paid in installments over a four-year period recorded to Accrued and other liabilities and Other liabilities on the consolidated balance sheets.

See accompanying notes to consolidated financial statements.

F-10

3D SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years Ended December 31, 2020, 2019 and 2018

Common Stock

(in thousands, except par value)

Par Value

$0.001

Additional

Paid In

Capital

Treasury

Stock

Accumulated

Deficit

Accumulated

Other

Comprehensive

Income (Loss)

Total 3D

Systems

Corporation

Stockholders'

Equity

Attributable to

Noncontrolling

Interests

Total

Stockholders'

Equity

December 31, 2017 $ 115 $ 1,326,250 $ (8,203) $ (677,772) $ (21,536) $ 618,854 $ (2,906) $ 615,948

Issuance (repurchase) of stock 2 — (7,369) — — (7,367) — (7,367)

Cumulative impact of change in accounting

policy

— — — 576 — 576 — 576

Stock-based compensation expense — 29,253 — — — 29,253 — 29,253

Net income (loss) — — — (45,505) — (45,505) 242 (45,263)

Pension adjustment — — — — (92) (92) — (92)

Foreign currency translation adjustment — — — — (17,350) (17,350) 282 (17,068)

December 31, 2018 117 1,355,503 (15,572) (722,701) (38,978) 578,369 (2,382) 575,987

Issuance (repurchase) of stock 3 — (3,197) — — (3,194) — (3,194)

Acquisition of non-controlling interest — (7,526) — — 256 (7,270) (6,072) (13,342)

Adjustment of RNCI carrying value — — — (1,128) — (1,128) — (1,128)

Stock-based compensation expense — 23,587 — — — 23,587 — 23,587

Net income (loss) — — — (69,880) — (69,880) 248 (69,632)

Pension adjustment — — — — (1,060) (1,060) — (1,060)

Derivative financial instrument adjustment — — — — (318) (318) — (318)

Foreign currency translation adjustment — — — — 3,053 3,053 (57) 2,996

December 31, 2019 120 1,371,564 (18,769) (793,709) (37,047) 522,159 (8,263) 513,896

Issuance (repurchase) of stock 8 23,377 (3,821) — — 19,564 — 19,564

Acquisition of non-controlling interest — (7,702) — — (561) (8,263) 8,263 —

Stock-based compensation expense — 17,725 — — — 17,725 — 17,725

Net loss — — — (149,594) — (149,594) — (149,594)

Pension adjustment — — — — 783 783 — 783

Derivative financial instrument loss — — — — (1,638) (1,638) — (1,638)

De-designation of derivative instrument — — — — 1,235 1,235 — 1,235

Foreign currency translation adjustment — — — — 28,752 28,752 — 28,752

December 31, 2020

$ 128 $ 1,404,964 $ (22,590) $ (943,303) $ (8,476) $ 430,723 $ — $ 430,723

See accompanying notes to consolidated financial statements.

F-11

(1) Basis of Presentation

The consolidated financial statements include the accounts of 3D Systems Corporation and all majority-owned subsidiaries and entities in which a controlling

interest is maintained (“3D Systems” or the “Company” or “we” or “us”). A non-controlling interest in a subsidiary is considered an ownership interest in a

majority-owned subsidiary that is not attributable to the parent. We include noncontrolling interests as a component of total equity in the consolidated balance

sheets and the net income (loss) attributable to noncontrolling interests is presented as an adjustment from net loss used to arrive at net loss attributable to 3D

Systems Corporation in the consolidated statements of operations and comprehensive loss. Our annual reporting period is the calendar year.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All

significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the

current year presentation.

Our operations in North America and South America (collectively referred to as "Americas"), Europe and the Middle East (collectively referred to as "EMEA")

and the Asia Pacific region ("APAC") expose us to risks associated with public health crises and epidemics/pandemics, such as the COVID-19 pandemic. While

the COVID-19 pandemic has impacted the Company’s reported results for the year ended December 31, 2020, we are unable to predict the longer-term impact that

the pandemic may have on our business, results of operations, financial position or cash flows. The extent to which our operations may be impacted by the

dynamic nature of the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including

new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact.

Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the financial markets remain

unknown.

All dollar amounts presented in the accompanying footnotes are presented in thousands, except for per share information.

(2) Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and

liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during

the reporting period. We base our estimates on historical experience, currently available information and various other assumptions that we believe are reasonable

under the circumstances. Actual results could differ from these estimates.

Revenue Recognition

We account for revenue in accordance with Accounting Standard Codification ("ASC") Topic 606, “RevenuefromContractswithCustomers,” which we adopted

on January 1, 2018, using the modified-retrospective method. Collaborative revenue contracts in which the collaboration partner meets the definition of a customer

are recorded in accordance with ASC Topic 606, otherwise recorded in accordance with ASC 808. See Note 4 for further discussion.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when acquired.

F-12

Cash and cash equivalents by geographic region for the years ended December 31, 2020, and 2019 were as follows:

Year Ended December 31,

(in thousands) 2020 2019

Americas $ 27,562 $ 63,374

EMEA 24,875 $ 44,283

APAC 22,573 $ 26,008

Total $ 75,010 $ 133,665

Investments

Investments in non-consolidated affiliates (20-50 percent owned companies and joint ventures) are accounted for using the equity method. Investments through

which we are not able to exercise significant influence over the investee and which we do not have readily determinable fair values are generally accounted for

under the cost method. We did not hold any equity method investments at December 31, 2020 or 2019.

We assess declines in the fair value of investments to determine whether such declines are other-than-temporary. Other-than-temporary impairments of

investments are recorded to interest and other expense, net, in the period in which they become impaired.

For the years ended December 31, 2020 and 2019, we recorded impairment charges of $2,361 and $927, respectively, related to certain cost-method investments.

The aggregate carrying amount of all investments accounted for under the cost method totaled $5,016 and $8,327 at December 31, 2020 and 2019, respectively,

and is included in other assets, net, on our consolidated balance sheets.

Accounts Receivable and Allowances for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. In evaluating the collectability of accounts receivable, we assess a number

of factors, including specific customers’ ability to meet their financial obligations to us, the length of time receivables are past due and historical collection

experience. Based on these assessments, we may record a reserve for specific customers, as well as a general reserve and allowance for returns and discounts. If

circumstances related to specific customers change, or economic conditions deteriorate such that our past collection experience is no longer relevant, our estimate

of the recoverability of accounts receivable could be further reduced from the levels provided for in the consolidated financial statements.

The following presents the changes in the balance of our allowance for doubtful accounts:

Year Ended Item

Balance at beginning

of year

Additions charged to

expense Other

Balance at end of

year

2020 Allowance for doubtful accounts $ 8,762 $ 457 $ (4,827) $ 4,392

2019 Allowance for doubtful accounts 8,423 1,308 (969) 8,762

2018 Allowance for doubtful accounts 10,258 1,824 (3,659) 8,423

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method.

F-13

Long-Lived Assets and Goodwill

We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the

carrying value of the asset may not be recoverable. Recoverability is assessed for the carrying value of assets held for use based on a review of undiscounted

projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived asset over its estimated fair value as

determined by discounted projected cash flows. No impairment charges for intangible assets with finite lives were recorded for the years ended December 31, 2020

and 2019.

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not

amortized. Goodwill is tested for impairment annually on November 30 of each year, and is tested for impairment between annual tests if an event occurs or

circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level, with all goodwill

assigned to a reporting unit.

Our reporting units are Americas, EMEA and APAC. We completed the required annual goodwill impairment test as of November 30, 2020. The goodwill

impairment test compared the fair value of each reporting unit to their carrying value. We estimated the fair value of our reporting units based primarily on the

discounted projected cash flows of the underlying operations. The estimated fair value for each of our reporting units was in excess of their respective carrying

values as of December 31, 2020.

For a summary of our goodwill by reporting unit and discussion of goodwill impairment in 2020, see Note 9.

Assets and Liabilities Held for Sale

Once management has committed to disposal of a component of the Company and it is probable of being completed within one year, the assets and liabilities are

reclassified as held for sale and net income continues to be reported as from continuing operations, unless it meets requirements to be reclassified as a discontinued

operation. See Note 3.

Contingencies

We follow the provisions of ASC 450, “Contingencies,” which requires that an estimated loss from a loss contingency be accrued by a charge to income if it is

both probable that an asset has been impaired or that a liability has been incurred and that the amount of the loss can be reasonably estimated.

Foreign Currency Translation

Local currencies generally are considered the functional currencies outside the United States. Assets and liabilities for operations in local-currency environments

are translated at month-end exchange rates of the period reported. Income and expense items are translated at average exchange rates of each applicable month.

Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.

Derivative Financial Instruments

We are exposed to market risk from changes in interest rates, foreign currency exchange rates and commodity prices, which may adversely affect our results of

operations and financial condition. We seek to minimize these risks through regular operating and financing activities and, when we consider it to be appropriate,

through the use of derivative financial instruments. We do not purchase, hold or sell derivative financial instruments for trading or speculative purposes.

We use derivative financial instruments to manage our exposure to changes in interest rates on outstanding debt instruments. For those instruments that qualify and

where we elect to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “DerivativesandHedging,” related gains and

losses (realized or unrealized) related to derivative instruments are recognized in accumulated other comprehensive income (loss) and are reclassified into earnings

when the underlying transaction is recognized in net earnings and, depending on the fair value at the end of the reporting period, derivatives are recorded either in

prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.

F-14

We and our subsidiaries conduct business in various countries using both their functional currencies and other currencies to effect cross border transactions. As a

result, we and our subsidiaries are subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their

respective settlement dates will result in a foreign exchange gain or loss. When practicable, we endeavor to match assets and liabilities in the same currency on our

U.S. balance sheet and those of our subsidiaries in order to reduce these risks. We, when we consider it to be appropriate, enter into foreign currency contracts to

hedge the exposure arising from those transactions. See Note 13. For our hedges of foreign exchange rates and commodity prices, we have elected to not prepare

and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “DerivativesandHedging,” and therefore, changes in fair value are

recognized in interest and other expense, net in the consolidated statements of operations and comprehensive loss and, depending on the fair value at the end of the

reporting period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.

We are exposed to credit risk if the counterparties to such transactions are unable to perform their obligations. However, we seek to minimize such risk by entering

into transactions with counterparties that are believed to be creditworthy financial institutions.

Research and Development Costs

Research and development costs are expensed as incurred.

Earnings (Loss) per Share

Basic earnings (loss) per share are calculated on the weighted-average number of common shares outstanding during each period. Diluted earnings per share

include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive. See Note

18.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs, including trade shows, were $7,561, $13,732 and $13,562 for the years ended December 31, 2020,

2019 and 2018, respectively.

Pension costs

We sponsor a retirement benefit for one of our non-U.S. subsidiaries in the form of a defined benefit pension plan. Accounting standards require the cost of

providing this pension benefit be measured on an actuarial basis. Actuarial gains and losses resulting from both normal year-to-year changes in valuation

assumptions and differences from actual experience are deferred and amortized. The application of these accounting standards require us to make assumptions and

judgements that can significantly affect these measurements. Our critical assumptions in performing these actuarial valuations include the selection of the discount

rate to determine the present value of the pension obligations that affects the amount of pension expense recorded in any given period. Changes in the discount rate

could have a material effect on our reported pension obligations and related pension expense. See Note 17.

Equity Compensation Plans

We recognize compensation expense for our stock-based compensation programs, which include stock options, restricted stock, restricted stock units (“RSU”) and

performance shares. For service-based awards, stock-based compensation is estimated at the grant date based on the fair value of the awards expected to vest and

recognized as expense ratably over the requisite service period of the award. For stock options and awards with market conditions, compensation cost is

determined at the individual tranche level. We recognize forfeitures when they occur.

Income Taxes

We and the majority of our domestic subsidiaries file a consolidated U.S. federal income tax return, while four of our domestic entities file separate U.S. federal

income tax returns. Our non-U.S. subsidiaries file income tax returns in their respective jurisdictions.

F-15

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax benefit

carryforwards. Deferred income tax liabilities and assets at the end of each period are determined using enacted tax rates.

We establish a valuation allowance for those jurisdictions in which the expiration date of tax benefit carryforwards or projected taxable earnings leads us to

conclude that it is “more likely than not” that a deferred tax asset will not be realized. The evaluation process includes the consideration of all available evidence

regarding historical results and future projections including the estimated timing of reversals of existing taxable temporary differences and potential tax planning

strategies. Once a valuation allowance is established, it is maintained until a change in factual circumstances gives rise to sufficient income of the appropriate

character and timing that will allow a partial or full utilization of the deferred tax asset.

In accordance with ASC 740, “IncomeTaxes,” the impact of an uncertain tax position on our income tax returns is recognized at the largest amount that is more

likely than not to be required to be recognized upon audit by the relevant taxing authority.

We include interest and penalties accrued in the consolidated financial statements as a component of income tax expense.

See Note 21 for further discussion.

Operating and Finance Leases

We determine if an arrangement contains a lease at inception. Some leases include the options to purchase, terminate or extend for one or more years; these options

are included in the right of use ("ROU") asset and liability lease term when it is reasonably certain an option will be exercised. Our leases do not contain any

material residual value guarantees or material restrictive covenants.

Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate based on the information available at the commencement date

to determine the present value of the future lease payments.

Certain of our leases include variable costs. Variable costs include non-lease components that were incurred based upon actual terms rather than contractually fixed

amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the ROU asset recorded on the balance

sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated in the ROU

asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term. See Note 5.

Recent Accounting Pronouncements

RecentlyAdoptedAccountingStandards

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-13, “MeasurementofCreditLosseson

FinancialInstruments” (“ASU 2016-13”), as revised in July 2018, which provides guidance regarding the measurement of credit losses for financial assets and

certain other instruments that are not accounted for at fair value through net income, including trade and other receivables, debt securities, net investment in sales

type and direct financing leases, and off-balance sheet credit exposures. The new guidance requires companies to replace the current incurred loss impairment

methodology with a methodology that measures all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and

supportable forecasts. The Company adopted this guidance during the first quarter of 2020. The implementation did not have a material effect on our financial

position or results of operations.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-GoodwillandOther(Topic350),SimplifyingtheTestforGoodwillImpairment” (“ASU 2017-

04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead

compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds

the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting

unit when measuring the goodwill impairment loss. The Company adopted this guidance during the first quarter of 2020.

F-16

In November 2018, the FASB issued ASU 2018-18, "CollaborativeArrangements(ASC808),ClarifyingtheInteractionbetweenASC808andASC606" (“ASU

2018-18”). This ASU clarified when transactions between collaborative participants are in the scope of ASC 606. The ASU also provides some guidance on

presentation of transactions not in the scope of ASC 606. After adoption during the fourth quarter of 2020 the Company determined it was appropriate to recast the

presentation of our previously reported statement of operations for the years ended December 31, 2019 and 2018. The Company acknowledges this standard should

have been adopted January 1, 2020. The adoption of this standard did not change the Company's previously reported net loss or loss from operations for the years

ended December 31, 2019 or 2018 or any individual quarter therein and the effect on the individual quarters in 2020 was immaterial. The following schedule

depicts the annual effect of the adoption on our previously reported statements of operations:

Year Ended December 31,

2019 2018

As reported Change Revised As reported Change Revised

Revenue:

Products $ 384,577 $ 4,760 $ 389,337 $ 429,215 $ 3,885 $ 433,100

Services 244,517 2,500 247,017 258,445 — 258,445

Total revenue 629,094 7,260 636,354 687,660 3,885 691,545

Cost of sales:

Products 229,821 4,760 234,581 229,793 3,885 233,678

Services 121,232 — 121,232 133,473 — 133,473

Total cost of sales 351,053 4,760 355,813 363,266 3,885 367,151

Gross profit 278,041 2,500 280,541 324,394 — 324,394

Operating expenses:

Selling, general and administrative 254,355 — 254,355 272,287 — 272,287

Research and development 80,790 2,500 83,290 95,298 — 95,298

Total operating expenses 335,145 2,500 337,645 367,585 — 367,585

Loss from operations

(57,104) — (57,104) (43,191) — (43,191)

RecentlyIssuedAccountingStandards

In December 2019, the FASB issued ASU 2019-12, “IncomeTaxes(Topic740)-SimplifyingtheAccountingforIncomeTaxes,” which simplifies the accounting

for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes. It also clarifies certain aspects of the existing guidance to

promote more consistent application. This standard is effective for calendar-year public business entities in 2021 and interim periods within that year, and early

adoption is permitted. We are in the process of evaluating the impact the new standard will have on our consolidated financial statements.

No other new accounting pronouncements, issued or effective during 2020, have had or are expected to have a significant impact on our consolidated financial

statements.

(3) Dispositions

In November 2020, we sold our Australia ODM business in an asset sale for $685. The carrying value of the assets, including net working capital and allocable

goodwill, was $1,482. In December 2020, we sold our Wuxi Easyway business in an asset sale for $79. The carrying value of the assets, including net working

capital and allocable goodwill, was $3,806. Recognized losses of $4,524 were included in interest and other expense, net on the consolidated statement of

operations.

F-17

On January 1, 2021, the Company completed the sale of 100% of the issued and outstanding equity interests of Cimatron Ltd.("Cimatron"), the subsidiary that

operated the Company’s Cimatron integrated CAD/CAM software for tooling business and its GibbsCAM CNC programming software business for approximately

$64,200, after certain adjustments and excluding $9,161 of cash amounts transferred to the purchaser. The assets and liabilities of Cimatron were reclassified to

held for sale on the consolidated balance sheet as of December 31, 2020. See Note 26.

The components of Cimatron's assets and liabilities recorded as held for sale on the consolidated balance sheet at December 31, 2020 were as follows:

(in thousands) December 31, 2020

Assets

Cash and cash equivalents $ 9,161

Accounts receivable, net of reserves of $1,154 5,361

Inventories 155

Prepaid expenses and other current assets 3,762

Total current assets held for sale 18,439

Property and equipment, net 202

Intangible assets, net 6,642

Goodwill 21,385

Right of use assets 898

Deferred income tax asset 560

Other assets 1,997

Total assets held for sale

$ 50,123

Liabilities

Current right of use liabilities $ 445

Accounts payable 654

Accrued and other liabilities 5,631

Customer deposits 25

Deferred revenue 4,352

Total current liabilities held for sale 11,107

Long-term right of use liabilities 518

Other liabilities 2,434

Total liabilities held for sale

$ 14,059

(4) Revenue

We account for revenue in accordance with ASC Topic 606, “RevenuefromContractswithCustomers,” which we adopted on January 1, 2018, using the modified-

retrospective method.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract’s

transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

At December 31, 2020, we had $111,833 of outstanding performance obligations. We expect to recognize approximately 94 percent of our remaining performance

obligations as revenue within the next twelve months, an additional 4 percent by the end of 2022 and the balance thereafter.

F-18

Revenue Recognition

Revenue is recognized when control of the promised products or services is transferred to customers in an amount that reflects the consideration we expect to

receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally

capable of being distinct and accounted for as separate performance obligations. Many of our contracts with customers include multiple performance obligations.

For such arrangements, we allocate revenue to each performance obligation based on its relative stand-alone selling price (“SSP”). Revenue is recognized net of

allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. The amount of consideration received

and revenue recognized may vary based on changes in marketing incentive programs offered to our customers. Our marketing incentive programs take many

forms, including volume discounts, trade-in allowances, rebates and other discounts.

A majority of our revenue is recognized at the point in time when products are shipped or services are delivered to customers. Please see below for further

discussion.

Hardware and Materials

Revenue from hardware and material sales is recognized when control has transferred to the customer, which typically occurs when the goods have been shipped to

the customer, risk of loss has transferred to the customer and we have a present right to payment for the hardware. In limited circumstances, when printer or other

hardware sales include substantive customer acceptance provisions, revenue is recognized either when customer acceptance has been obtained, customer

acceptance provisions have lapsed, or we have objective evidence that the criteria specified in the customer acceptance provisions have been satisfied.

Printers and certain other products include a warranty under which we provide maintenance for periods up to one year. For these initial product warranties,

estimated costs are accrued at the time of the sale of the product. These cost estimates are established using historical information on the nature, frequency and

average cost of claims for each type of printer or other product as well as assumptions about future activity and events. Revisions to expense accruals are made as

necessary based on changes in these historical and future factors.

Software

We also market and sell software tools that enable our customers to capture and customize content using our printers, design optimization and simulation software,

and reverse engineering and inspection software. Software does not require significant modification or customization and the license provides the customer with a

right to use the software as it exists when made available. Revenue from these software licenses is recognized either upon delivery of the product or of a key code

which allows the customer to download the software. Customers may purchase post-sale support. Generally, the first year is included but subsequent years are

optional. This optional support is considered a separate obligation from the software and is deferred at the time of sale and subsequently recognized ratably over

future periods.

Collaboration and Licensing Agreements

We enter into collaboration and licensing agreements with third parties. The nature of the activities to be performed and the consideration exchanged under the

agreements varies on a contract by contract basis. We evaluate these agreements to determine whether they meet the definition of a customer relationship for which

revenue is recorded. These contracts may contain multiple performance obligations and may contain fees for licensing, research and development services,

contingent milestone payments upon the achievement of developmental contractual criteria and/or royalty fees based on the licensees’ product revenue. We

determine the revenue to be recognized for these agreements based on an evaluation of the distinct performance obligations, the identification and evaluation of

material rights, the estimation of variable consideration and the determination of the pattern on transfer of control for each distinct performance obligation. The

Company recognized $6,953, $7,260 and $3,885 in revenue related to collaboration arrangements with customers for the years ended December 31, 2020, 2019,

and 2018, respectively.

F-19

Services

We offer training, installation and non-contract maintenance services for our products. Additionally, we offer maintenance contracts customers can purchase at

their option. For maintenance contracts, revenue is deferred at the time of sale based on the stand-alone selling prices of these services and costs are expensed as

incurred. Deferred revenue is recognized ratably over the term of the maintenance period on a straight-line basis. Revenue from training, installation and non-

contract maintenance services is recognized at the time of performance of the service.

On demand manufacturing and healthcare service sales are included within services revenue and revenue is recognized upon shipment or delivery of the parts or

performance of the service, based on the terms of the arrangement.

Terms of sale

Shipping and handling activities are treated as fulfillment costs rather than as an additional promised service. We accrue the costs of shipping and handling when

the related revenue is recognized. Our incurred costs associated with shipping and handling are included in product cost of sales.

Credit is extended, and creditworthiness is determined, based on an evaluation of each customer’s financial condition. New customers are generally required to

complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness. Customers with a favorable profile may

receive credit terms that differ from our general credit terms. Creditworthiness is considered, among other things, in evaluating our relationship with customers

with past due balances.

Our terms of sale generally provide payment terms that are customary in the countries where we transact business. To reduce credit risk in connection with certain

sales, we may, depending upon the circumstances, require significant deposits or payment in full prior to shipment. For maintenance services, we either bill

customers on a time-and-materials basis or sell maintenance contracts that provide for payment in advance on either an annual or other periodic basis.

Significant Judgments

Our contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, we allocate revenues to each

performance obligation based on its relative SSP.

Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, we estimate SSP using historical

transaction data. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a

discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product

or service is not sold separately, we determine the SSP using information that may include market conditions and other observable inputs.

In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers,

geographic region or other factors. In these instances, it may use information such as the size of the customer and geographic region in determining the SSP.

The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.

The nature of our marketing incentives may lead to consideration that is variable. Judgment is exercised at contract inception to determine the most likely outcome

of the contract and resulting transaction price. Ongoing assessments are performed to determine if updates are needed to the original estimates.

F-20

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer deposits

and deferred revenues (contract liabilities) on the consolidated balance sheets. Timing of revenue recognition may differ from the timing of invoicing to customers.

We record a receivable when revenue is recognized at the time of invoicing, or unbilled receivables when revenue is recognized prior to invoicing. For most of our

contracts, customers are invoiced when products are shipped or when services are performed resulting in billed accounts receivables for the remainder of the owed

contract price. Unbilled receivables generally result from items being shipped where the customer has not been charged, but for which revenue had been

recognized. In our on demand manufacturing business, customers may be required to pay in full before work begins on their orders, resulting in customer deposits.

We typically bill in advance for installation, training and maintenance contracts as well as extended warranties, resulting in deferred revenue. Changes in contract

asset and liability balances were not materially impacted by any other factors for the period ended December 31, 2020.

Through December 31, 2020, we recognized revenue of $30,635 related to our contract liabilities at December 31, 2019. Through December 31, 2019, we

recognized revenue of $26,486 related to our contract liabilities at December 31, 2018. Through December 31, 2018, we recognized revenue of $37,206 related to

our contract liabilities at January 1, 2018.

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling, general

and administrative expenses.

Revenue and Asset Concentrations

We operate as one segment and conduct our business through various offices and facilities located throughout the Americas region (United States, Canada, Brazil,

Mexico and Uruguay), EMEA region (Belgium, France, Germany, Israel, Italy, the Netherlands, Switzerland and the United Kingdom), and APAC region

(Australia, China, India, Japan and Korea). The Americas, EMEA and APAC regions have been our reporting units for the purposes of testing the recoverability of

goodwill. This test is performed on an annual basis each November 30 and more often in the occurrence of a triggering event.

Concurrent with our new strategic focus announced in August 2020, we have begun to undertake initiatives to simplify our organization by realigning the

Company’s breadth of capabilities into two key market verticals. This realignment continues to evolve, and as of December 31, 2020 we continue to pursue

initiatives that will provide reliable and complete information to our chief operating decision maker to allow him to make operational decisions around the

allocation of resources and assessing performance for these key market verticals. As of December 31, 2020, we continue to operate in one reportable segment.

Revenue by geographic region for the years ended December 31, 2020, 2019, and 2018 were as follows:

Year Ended December 31,

(in thousands) 2020 2019 2018

Americas $ 280,028 $ 323,085 $ 344,650

EMEA 213,575 240,403 237,462

APAC 63,637 72,866 109,433

Total $ 557,240 $ 636,354 $ 691,545

United States (Included in Americas above) $ 275,145 $ 313,910 $ 336,496

For the years ended December 31, 2020, 2019, and 2018, one customer accounted for approximately 13%, 11% and 13% of our consolidated revenue, respectively.

We expect to maintain our relationship with this customer.

F-21

Assets by geographic region for the years ended December 31, 2020, and 2019 were as follows:

Year Ended December 31,

(in thousands) 2020 2019

Americas $ 251,456 $ 263,758

EMEA 394,868 447,810

APAC 86,731 95,744

Total $ 733,055 $ 807,312

(5) Leases

We have various lease agreements for our facilities, equipment and vehicles with remaining lease terms ranging from one to sixteen years.

Components of lease cost (income) were as follows:

(in thousands) Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease cost $ 13,937 $ 14,743

Finance lease cost - amortization expense 937 737

Finance lease cost - interest expense 664 477

Short-term lease cost 159 114

Variable lease cost 1,363 245

Sublease income (615) (84)

Total

$ 16,445 $ 16,232

Rent expense for the year ended December 31, 2018, accounted for under the previous guidance at ASC 840 Leases, was $15,809.

Balance sheet classifications at December 31, 2020 and 2019 are summarized below:

December 31, 2020 December 31, 2019

(in thousands) Right of use assets

Current right of use

liabilities

Long-term right of

use liabilities Right of use assets

Current right of use

liabilities

Long-term right of use

liabilities

Operating Leases

$ 40,586 $ 8,562 $ 38,296 $ 28,571 $ 9,231 $ 24,835

Finance Leases 8,034 972 10,173 8,319 338 10,567

Total

$ 48,620 $ 9,534 $ 48,469 $ 36,890 $ 9,569 $ 35,402

On September 1, 2020, we closed two facilities in connection with our restructuring plan. These facilities occupied leased office space that terminates in 2024. In

conjunction with these closings, we recorded impairment charges totaling $1,627 related to our ROU assets and impairment charges totaling $1,953 related to

leasehold improvements.

During the 2020 fourth quarter, we recorded ROU assets and liabilities related to lease extensions and renewals that were entered into during the 2019 fourth

quarter, 2020 second quarter and 2020 third quarter of approximately $1,469, $2,021, and $3,467, respectively. There was not a material income statement impact

from recording these lease extensions and renewals during the 2020 fourth quarter.

F-22

Our future minimum lease payments as of December 31, 2020 under operating lease and finance leases, with initial or remaining lease terms in excess of one year,

were as follows:

December 31, 2020

(in thousands) Operating Leases Finance Leases

Years ending December 31:

2021 $ 11,206 $ 1,624

2022 9,046 1,625

2023 7,482 1,617

2024 6,570 1,544

2025 4,982 1,454

Thereafter 19,801 6,845

Total lease payments 59,087 14,709

Less: imputed interest (12,229) (3,564)

Present value of lease liabilities

$ 46,858 $ 11,145

Supplemental cash flow information related to our operating leases for the years ending December 31, 2020, and 2019 was as follows:

(in thousands) December 31, 2020 December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflow from operating leases $ 13,151 $ 15,602

Operating cash outflow from finance leases $ 661 $ 456

Financing cash outflow from finance leases $ 496 $ 725

Weighted-average remaining lease terms and discount rate for our operating leases for the year ending December 31, 2020, were as follows:

December 31, 2020

Operating Financing

Weighted-average remaining lease term 7.5 years 9.4 years

Weighted-average discount rate 6.10 % 5.92 %

(6) Inventories

Components of inventories at December 31, 2020 and 2019 are summarized as follows:

(in thousands) 2020 2019

Raw materials $ 23,762 $ 42,066

Work in process 5,912 5,496

Finished goods and parts 86,993 63,544

Inventories

$ 116,667 $ 111,106

We record a reserve to the carrying value of our inventory to reflect the rapid technological change in our industry that impacts the market for our products. The

inventory reserve was $20,125 and $12,812 as of December 31, 2020 and 2019, respectively.

In June 2020, as part of our assessment of prospective sales and evaluation of inventory, we determined the end-of-life for certain product lines. The end-of-life

determination for these products reflects management's plans to focus our resources that are better aligned with our new strategic focus, as further discussed in

Note 24. As a result, for year ended December 31, 2020, we recorded a charge of $10,894 to products costs of sales, primarily attributable to inventory, accessories

and inventory commitments for these products. We have ceased production for these items.

F-23

(7) Property and Equipment

Property and equipment at December 31, 2020 and 2019 are summarized as follows:

(in thousands) 2020 2019 Useful Life (in years)

Land $ 541 $ 541 N/A

Building 5,422 5,093 25-30

Machinery and equipment 163,688 158,753 2-7

Capitalized software 24,814 22,928 3-5

Office furniture and equipment 5,106 4,618 1-5

Leasehold improvements 32,349 33,444 Life of lease

Construction in progress 4,910 9,944 N/A

Total property and equipment 236,830 235,321

Less: Accumulated depreciation and amortization (161,474) (142,381)

Total property and equipment, net

$ 75,356 $ 92,940

a. Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful life, or (ii) the estimated or contractual life of the related

lease.

We include all depreciation from assets attributable to the generation of revenue in the cost of sales line item in the Statement of Operations. Depreciation related

to assets that are not attributable to the generation of revenue are included in the research and development and selling and general administrative line items in the

Statement of Operations. Depreciation expense on property and equipment for the years ended December 31, 2020, 2019 and 2018 was $28,397, $29,982 and

$29,302, respectively.

For the years ended December 31, 2020, 2019 and 2018, we recognized impairment charges of $3,406, $181 and $625, respectively, on property and equipment,

net included in the selling and general administrative line item in the Statement of Operations.

(8) Intangible Assets

Intangible assets, net, other than goodwill, at December 31, 2020 and 2019 are summarized as follows:

2020 2019

(in thousands) Gross

Accumulated

Amortization Net Gross

Accumulated

Amortization Net

Weighted Average

Useful Life

Remaining (in

years)

Intangible assets with finite lives:

Customer relationships $ 71,123 $ (56,682) $ 14,441 $ 103,661 $ (77,021) $ 26,640 2.4

Acquired technology 42,472 (41,201) 1,271 54,378 (51,875) 2,503 5.6

Trade names 17,477 (16,506) 971 23,907 (19,133) 4,774 1.1

Patent costs 19,828 (10,999) 8,829 11,760 (9,535) 2,225 4.0

Trade secrets 20,188 (18,216) 1,972 19,494 (15,714) 3,780 1.5

Acquired patents 16,317 (15,723) 594 16,215 (14,706) 1,509 2.6

Other 19,793 (19,788) 5 26,256 (19,349) 6,907 0.0

Total intangible assets

$ 207,198 $ (179,115) $ 28,083 $ 255,671 $ (207,333) $ 48,338

2.8

a. Change in gross carrying amounts consists primarily of charges for license and patent costs and foreign currency translation.

Amortization expense related to intangible assets was $15,810, $20,312 and $29,722 for the years ended December 31, 2020 2019 and 2018, respectively.

a a

F-24

Annual amortization expense for intangible assets is expected to be $11,475 in 2021, $7,278 in 2022, $2,143 in 2023, $1,487 in 2024 and $1,460 in 2025.

(9) Goodwill

The following are the changes in the carrying amount of goodwill by reporting unit:

(in thousands) Americas EMEA APAC Total

Balance at December 31, 2018 $ — $ 184,020 $ 37,314 $ 221,334

Effect of foreign currency exchange rates — 2,675 (833) 1,842

Balance at December 31, 2019 — 186,695 36,481 223,176

Dispositions and impairments — (69,685) (4,699) (74,384)

Effect of foreign currency exchange rates — 10,582 2,391 12,973

Balance at December 31, 2020

$ — $ 127,592 $ 34,173 $ 161,765

a. Includes $21,385 of goodwill held for sale related to Cimatron in EMEA and $4,699 of goodwill related to the sale of our Australia ODM and Wuxi Easyway

businesses in APAC. See Note 3.

The effect of foreign currency exchange in this table reflects the impact on goodwill of amounts recorded in currencies other than the U.S. dollar on the financial

statements of subsidiaries in these geographic areas resulting from the yearly effect of foreign currency translation between the applicable functional currency and

the U.S. dollar.

As of September 30, 2020, we experienced a triggering event due to a drop in our stock price, which ultimately had been negatively impacted by the business

environment as a result of the COVID-19 pandemic, and performed a quantitative analysis for potential impairment of our goodwill and long-lived asset balances.

Based on available information and analysis as of September 30, 2020, we determined the carrying value of the EMEA reporting unit exceeded its fair value and

recorded a non-cash goodwill impairment charge of $48,300. We determined the fair value of the Americas and APAC reporting units exceeded their carrying

values and the carrying value of our long-lived assets is recoverable for all reporting units.

Goodwill was recorded at fair value on a non-recurring basis using level 3 inputs and was determined using a combination of an income approach, which estimates

fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value, and a market approach. The valuation methodology

and underlying financial information included in the Company's determination of fair value required significant judgments by management. The principal

assumptions used in the Company's discounted cash flow analysis consisted of (a) the long-term projections of future financial performance and (b) the weighted-

average cost of capital of market participants, adjusted for the risk attributable to the Company and the industry in which it operates. Under the market approach,

the principal assumption included an estimate for a control premium.

We completed our annual test of goodwill as of November 30, 2020 and determined the fair value exceeded the carrying value for all reporting units.

(10) Employee Benefits

We sponsor a Section 401(k) plan (the “Plan”) covering substantially all our eligible U.S. employees. The Plan entitles eligible employees to make contributions to

the Plan after meeting certain eligibility requirements. Contributions are limited to the maximum contribution allowances permitted under the Internal Revenue

Code. We match 50.0% of contributions on the first 6.0% of the participant’s eligible compensation.

For the years ended December 31, 2020, 2019 and 2018, we expensed $2,456, $2,688 and $2,606, respectively, for matching contributions to the defined

contribution plan.

F-25

(11) Accrued and Other Liabilities

Accrued liabilities at December 31, 2020 and 2019 are summarized as follows:

(in thousands) 2020 2019

Compensation and benefits $ 24,629 $ 21,139

Accrued taxes 14,952 9,840

Vendor accruals 18,762 9,734

Payable to owners of redeemable noncontrolling interests — 10,000

Arbitration awards — 2,256

Product warranty liability 2,348 2,908

Accrued other 6,138 4,223

Accrued professional fees 1,773 1,545

Royalties payable 1,210 1,450

Total

$ 69,812 $ 63,095

Other liabilities at December 31, 2020 and 2019 are summarized as follows:

(in thousands) 2020 2019

Long term employee indemnity $ 12,228 $ 14,408

Long term tax liability 15,532 5,011

Defined benefit pension obligation 10,228 10,357

Long term deferred revenue 6,163 7,370

Other long term liabilities 7,096 8,662

Total

$ 51,247 $ 45,808

Changes in product warranty obligations, including deferred revenue on extended warranty contracts, for the years ended December 31, 2020, 2019 and 2018, are

summarized below:

(in thousands) Beginning Balance

Additional Accrual/

Revenue Deferred

Costs Incurred/

Deferred Revenue

Amortization Ending Balance

Year Ended December 31,

2020 $ 6,192 $ 6,454 $ (6,266) $ 6,380

2019 7,660 8,124 (9,592) 6,192

2018 10,202 9,347 (11,889) 7,660

(12) Borrowings

Credit Facility

We hold a 5-year $100,000 senior secured term loan facility (the “Term Facility”) and a 5-year $100,000 senior secured revolving credit facility (the “Revolving

Facility” and, together with the Term Facility, the “Senior Credit Facility”) to support working capital and general corporate purposes. The Senior Credit Facility is

guaranteed by certain of our subsidiaries. The guarantors guarantee, among other things, all our obligations and each other guarantor's obligations under the Senior

Credit Facility. From time to time, we may be required to cause additional domestic subsidiaries to become guarantors under the Senior Credit Facility. The Senior

Credit Facility is scheduled to mature on February 26, 2024, at which time all amounts outstanding thereunder will be due and payable. However, the maturity date

of the Revolving Facility may be extended at our election with the consent of the lenders subject to the terms set forth in the Senior Credit Facility. The Senior

Credit Facility contains customary covenants, some of which require us to maintain certain financial ratios that determine the amounts available and terms of

borrowings and events of default. We were in compliance with all covenants at December 31, 2020 and 2019.

F-26

The payment of dividends on our common stock is restricted under provisions of the Senior Credit Facility, which limits the amount of cash dividends that we may

pay in any one fiscal year to $30,000. We currently do not pay, and have not paid, any dividends on our common stock, and currently intend to retain any future

earnings for use in our business.

Borrowings under the Senior Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused

commitment. At December 31, 2020, our floating interest rate was 1.90% and commitment fees for the years ended December 31, 2020 and 2019 were $325 and

$374, respectively. Subject to certain terms and conditions contained in the Revolving Facility, we have the right to request up to four increases to the amount of

the Revolving Facility in an aggregate amount not to exceed $100,000. As of December 31, 2020, there was $10,000 of outstanding letters of credit and $62,000 of

available borrowings under the Revolving Facility.

At December 31, 2020, we had a balance of $21,392 outstanding on the Term Facility, whereby future payments under the Term Facility are expected to be $2,051

in 2021, $3,223 in 2022, $3,517 in 2023 and $12,601 in 2024. Unamortized deferred financing costs were $123. In January 2021, the Company paid off the

remaining outstanding balances under the Term Facility with proceeds from the sale of Cimatron Ltd. See Note 26.

As a result of the Term Facility, we have exposure to floating interest rates. To manage interest expense, we entered into a floating to fixed interest rate swap to

reduce exposure to changes in floating interest rates on the Term Facility. The interest rate swap has a notional value of $15.0 million and will expire on February

26, 2024, concurrent with the Term Facility. The notional value will decline over the term of the interest rate swap as amortization payments reduce the principal

amount of the Term Facility. As a result of the interest rate swap, the percentage of total principal debt (excluding capital leases) that is subject to floating interest

rates is approximately 30%. Due to an amendment to the swap on June 30, 2020, the swap is no longer designated as a cash flow hedge for accounting treatment

purposes. See Note 13 for additional information. In January 2021, the Company terminated this agreement in connection with repayment of the Term Facility. See

Note 26.

Interest Income and Expense

Interest income totaled $400, $1,209 and $789 for the years ended December 31, 2020, 2019 and 2018, respectively.

Interest expense totaled $4,391, $4,442 and $1,188 for the years ended December 31, 2020, 2019 and 2018, respectively.

(13) Hedging Activities and Financial Instruments

Derivatives Designated as Hedging Instruments

On July 8, 2019, we entered into a $50,000 interest rate swap contract, designated as a cash flow hedge, to minimize the risk associated with the variability of cash

flows in interest payments from variable-rate debt due to fluctuations in the one-month USD-LIBOR, subject to a 0% floor, through February 26, 2024. Changes in

the interest rate swap are expected to offset the changes in cash flows attributable to fluctuations of the one-month USD-LIBOR for the interest payments

associated with our variable-rate debt.

On June 30, 2020, we executed an amendment to the swap which reduced the notional amount to $15,000 and resulted in the de-designation as a cash flow hedge.

The reduction required a mark-to-market settlement of $1,253 paid in July 2020. Amounts previously recognized in Accumulated Other Comprehensive Loss

("AOCL") of $1,235 were released and reclassified into Interest and other expense, net on the accompanying consolidated statements of operations and

comprehensive loss for the year ended December 31, 2020. Subsequent to June 2020, changes in the swap’s fair value are recognized currently in earnings and

included in the line item Interest and other expense, net and the remaining $721 in AOCL as of December 31, 2020 will be amortized to Interest and other expense,

net when those future cash flows are expected to occur.

The notional amount and fair value of the derivative on our balance sheet at December 31, 2020 are disclosed below:

(in thousands) Balance Sheet location Notional amount Fair value

December 31, 2020

Interest rate swap contract Other liabilities $ 15,000 $ (700)

December 31, 2019

Interest rate swap contract Other liabilities $ 40,000 $ (318)

F-27

Amounts released from AOCL and reclassified into Interest and other expense, net did not have a material impact on our consolidated statements of operations and

comprehensive loss for the years ended December 31, 2020 and 2019. The net amount of AOCL expected to be reclassified to earnings in the next 12 months is

$721, as January 2021, the Company terminated this agreement in connection with repayment of the Term Facility. See Note 26.

Derivatives Not Designated as Hedging Instruments

We conduct business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a

result, we are subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement

dates will result in a foreign exchange gain or loss. When practicable, we endeavor to match assets and liabilities in the same currency on our balance sheet and

those of our subsidiaries in order to reduce these risks. When appropriate, we enter into foreign currency contracts to hedge exposures arising from those

transactions. We have elected not to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and

Hedging,” and therefore, all gains and losses (realized or unrealized) are recognized in Interest and other expense, net in the consolidated statements of operations

and comprehensive loss. Depending on their fair value at the end of the reporting period, derivatives are recorded either in prepaid expenses and other current

assets or in accrued liabilities on the consolidated balance sheet.

We had $101,781 and $102,407 in notional foreign exchange contracts outstanding as of December 31, 2020 and 2019, respectively. The fair values of these

contracts were not material.

We translate foreign currency balance sheets from each international businesses’ functional currency (generally the respective local currency) to U.S. dollars at

end-of-period exchange rates and statements of earnings at average exchange rates for each period. The resulting foreign currency translation adjustments are a

component of other comprehensive income (loss). We do not hedge the fluctuation in reported revenue and earnings resulting from the translation of these

international operations' results into U.S. dollars.

(14) Inventory Financing Agreements

On December 1, 2018 and January 17, 2020, we entered into a Manufacturing Services Agreement and Amendment One to Manufacturing Services Agreement

(together, the "Agreement"), with an assembling manufacturer to produce products on behalf of 3D Systems Corporation. During the quarter ended March 31,

2020, as part of the Agreement, we sold $12,100 of inventory to the assembling manufacturer that we have an obligation to repurchase. At December 31, 2020, our

obligation to repurchase inventory, included in Accrued and other liabilities on our consolidated balance sheets, was $287, relating to the initial sale of inventory to

the assembly manufacturer and adjusted for transactions. The inventory sold consisted of raw materials, packaging materials and consumables representing stock

on hand related to certain product families for which the manufacturing has been outsourced to the assembling manufacturer. Although the assembling

manufacturer holds legal title, we account for the inventory similar to a product financing arrangement; therefore, the inventories sold to the assembling

manufacturer will continue to be included in Inventories on our consolidated balance sheets until processed into finished goods and sold back to us. At December

31, 2020, inventory held at assemblers was $3,889.

Additionally, as part of the Agreement, we have a commitment to purchase certain materials and supplies that the assembling manufacturer purchased from third

parties. At December 31, 2020, we had a commitment of $4,199 with the assembling manufacturer.

(15) Preferred Stock

We had 5,000 shares of preferred stock that were authorized but unissued at December 31, 2020 and 2019.

(16) Stock-Based Compensation

Effective May 19, 2004, we adopted our approved 2004 Restricted Stock Plan for Non-Employee Directors, as further amended and restated on April 1, 2013 (the

“Director Plan”). On May 19, 2015, our stockholders approved the 2015 Incentive Plan of 3D Systems Corporation and further amended and restated it on May 19,

2020 to, among other things, increase the number of shares reserved for issuance by 4,860 shares (as amended and restated, the “2015 Plan”).

The 2015 Plan authorizes shares of restricted stock, RSUs, stock appreciation rights, cash incentive awards and the grant of options to purchase shares of our

common stock. The 2015 Plan also designates measures that may be used for performance awards. The Director Plan authorizes shares of restricted stock for our

non-employee directors.

F-28

Generally, awards granted vest one third each year over 3 years.

Stock-based compensation expense (income) is included in selling, general and administrative expenses in the consolidated statements of operations and

comprehensive income (loss). The following table details the components of stock-based compensation expense (income) recognized in net earnings in each of the

past three years:

Year Ended December 31,

(in thousands) 2020 2019 2018

Restricted Stock $ 24,088 $ 25,154 $ 24,933

Stock Options (6,363) (1,567) 4,320

Total stock-based compensation expense

$ 17,725 $ 23,587 $ 29,253

Restricted Stock

We determine the fair value of restricted stock and RSUs based on the closing price of our stock on the date of grant. We generally recognize compensation

expense related to restricted stock and RSUs on a straight-line basis over the period during which the restriction lapses. Forfeitures are recognized in the period in

which they occur. A summary of restricted stock and RSU activity during December 31, 2020 follows:

(in thousands, except per share amounts) Number of Shares/Units

Weighted Average

Grant Date Fair

Value

Outstanding at beginning of period — unvested 4,582 $ 11.42

Granted 4,228 7.57

Canceled (1,859) 10.30

Vested (3,411) 9.56

Outstanding at end of period — unvested

3,540

$ 8.81

Included in the outstanding balance above are 100 shares of restricted stock that vest under specified market conditions and 374 shares of restricted stock that vest

under specified Company performance measures. The specified market condition shares were awarded to certain employees in 2016 and were generally awarded in

two equal tranches of market condition restricted stock that immediately vests when our common stock trades at either $30 or $40 per share for ninety consecutive

calendar days.

Some RSUs are granted with a performance measure derived from non-GAAP-based management targets. Depending on our performance with respect to this

metric, the number of RSUs earned may be less than, equal to or greater than the original number of RSUs awarded, subject to a payout range.

At December 31, 2020, there was no unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards with market conditions.

At December 31, 2020, there was $21,020 of unrecognized pre-tax stock-based compensation expense related to all other non-vested restricted stock award shares

and units, which we expect to recognize over a weighted-average period of 1.8 years.

Stock Options

During the year ended December 31, 2016, we awarded certain employees market condition stock options under the 2015 Plan, included in the activity above, that

vest under specified market conditions. Each employee was generally awarded two equal tranches of market condition stock options that immediately vest when

our common stock trades at either $30 or $40 per share for ninety consecutive calendar days.

We recognize compensation expense related to stock options on a straight-line basis over the derived term of the awards. Forfeitures are recognized in the period in

which they occur. The fair value of stock options with market conditions is estimated using a binomial lattice Monte Carlo simulation model.

F-29

Stock option activity for the year ended December 31, 2020 was as follows:

Year Ended December 31, 2020

(in thousands, except per share amounts) Number of Shares

Weighted Average

Exercise

Weighted Average

Remaining Contractual

Term (in years)

Aggregate Intrinsic

Value (in thousands)

Stock option activity:

Outstanding at beginning of period 1,240 $ 14.43 6.5 —

Granted — — — —

Exercised — — — —

Forfeited and expired (820) 15.03 — —

Outstanding at end of period

420

$ 13.26 5.7 —

In the table above, intrinsic value is calculated as the excess, if any, between the market price of our stock on the last trading day of the year and the exercise price

of the options. Because the market price was lower than the exercise price, the intrinsic value is zero.

At December 31, 2020, there was no of unrecognized pre-tax stock-based compensation expense related to stock options.

(17) International Retirement Plan

We sponsor a non-contributory defined benefit pension plan for certain employees of a non-U.S. subsidiary initiated by a predecessor of the subsidiary. We

maintain insurance contracts that provide an annuity that is used to fund the current obligations under this plan. The following table provides a reconciliation of the

changes in the projected benefit obligation for the years ended December 31, 2020 and 2019:

(in thousands) 2020 2019

Reconciliation of benefit obligations:

Obligations as of January 1 $ 10,497 $ 8,658

Service cost 204 166

Interest cost 84 151

Actuarial loss (gain) (1,222) 1,815

Benefit payments (151) (139)

Effect of foreign currency exchange rate changes 979 (154)

Benefit obligations as of December 31 10,391 10,497

Fair value of assets as of December 31 3,844 3,343

Funded status as of December 31, net of tax benefit

$ (6,547) $ (7,154)

a. No change in underlying asset value for the periods.

We recognized the following amounts in the consolidated balance sheets at December 31, 2020 and 2019:

(in thousands) 2020 2019

Other assets $ 3,844 $ 3,343

Accrued liabilities (163) (140)

Other liabilities (10,228) (10,357)

Net liability

$ (6,547) $ (7,154)

F-30

The following projected benefit obligation and accumulated benefit obligation were estimated as of December 31, 2020 and 2019:

(in thousands) 2020 2019

Projected benefit obligation $ 10,391 $ 10,497

Accumulated benefit obligation $ 9,343 $ 9,351

The following table shows the components of net periodic benefit costs and the amounts recognized in “Accumulated other comprehensive income (loss)” as of

December 31, 2020, 2019 and 2018:

(in thousands) 2020 2019 2018

Net periodic benefit cost:

Service cost $ 204 $ 166 $ 155

Interest cost 84 151 148

Amortization of actuarial loss 351 200 177

Total net periodic pension cost

639 517 480

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

Net loss (gain) (1,223) 1,815 453

Amortization of prior years' unrecognized loss (351) (200) (177)

Tax (benefit) provision 791 (555) (88)

Total recognized as accumulated other comprehensive income (loss) (783) 1,060 188

Total expense recognized in net periodic benefit cost and other comprehensive income $ (144) $ 1,577 $ 668

The following assumptions are used to determine benefit obligations as of December 31, 2020 and 2019:

2020 2019

Discount rate 1.3% 0.8%

Rate of compensation 3.0% 3.0%

The following benefit payments, including expected future service cost, are expected to be paid:

(in thousands)

Estimated future benefit payments:

2021 $ 190

2022 196

2023 200

2024 202

2025 204

2026-2030 1,557

F-31

(18) Net Loss Per Share

We compute basic loss per share using net loss attributable to 3D Systems Corporation and the weighted average number of common shares outstanding during the

applicable period. Diluted loss per share incorporates the additional shares issuable upon assumed exercise of stock options and the release of restricted stock and

RSUs, except in such case when their inclusion would be anti-dilutive.

Year Ended December 31,

(in thousands, except per share amounts) 2020 2019 2018

Numerator for basic and diluted net loss per share:

Net loss attributable to 3D Systems Corporation $ (149,594) $ (69,880) $ (45,505)

Denominator for basic and diluted net loss per share:

Weighted average shares 117,579 113,811 112,327

Net loss per share - basic and diluted

$ (1.27) $ (0.61) $ (0.41)

For the years ended December 31, 2020, 2019 and 2018 the effect of dilutive securities, including non-vested stock options and restricted stock awards/units, was

excluded from the denominator for the calculation of diluted net loss per share because we recognized a net loss for the period and their inclusion would be anti-

dilutive. Dilutive securities excluded were 3,960, 5,822 and 5,015 shares for the years ended December 31, 2020, 2019 and 2018, respectively.

On August 5, 2020, we entered into an Equity Distribution Agreement for an At-The-Market equity offering program (“ATM Program”) where we may issue and

sell, from time to time, shares of our common stock. Our ATM Program allowed for an aggregate gross sales price of up to a total of $150,000, depending upon

market conditions and our liquidity requirements, through Truist Securities, Inc. and HSBC Securities (USA) Inc. For the year ended December 31, 2020, we sold

4,616 shares of our common stock under our ATM Program for net proceeds of $24,664, net of $849 in fees, commissions and other costs. As of December 31,

2020, we had $124,487 in availability remaining under the ATM Program, however, on January 6, 2021, we terminated the ATM Program. See Note 26.

(19) Noncontrolling Interests

As of December 31, 2020, we owned 100% of the capital and voting rights of Robtec, a service bureau and distributor of 3D printing and scanning products in

Brazil. Approximately 70% of the capital and voting rights of Robtec was acquired on November 25, 2014. On January 7, 2020, we made a payment equal to the

redemption price of $10,000 and acquired the remaining 30% of the capital and voting rights.

(20) Fair Value Measurements

Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the

risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation

techniques maximize the use of observable inputs and minimize use of unobservable inputs.

Cash equivalents, Israeli severance funds and derivatives are valued utilizing the market approach to measure fair value for financial assets and liabilities. The

market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

F-32

Assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements as of December 31, 2020

(in thousands) Level 1 Level 2 Level 3 Total

Description

Cash equivalents $ 199 $ — $ — $ 199

Israeli severance funds $ — $ 6,422 $ — $ 6,422

Derivative financial instruments $ — $ (700) $ — $ (700)

Fair Value Measurements as of December 31, 2019

(in thousands) Level 1 Level 2 Level 3 Total

Description

Cash equivalents $ 20,869 $ — $ — $ 20,869

Israeli severance funds $ — $ 7,449 $ — $ 7,449

Derivative financial instruments $ — $ (318) $ — $ (318)

a. Cash equivalents include funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term

nature of these instruments and are included in cash and cash equivalents in the consolidated balance sheet.

b. We partially fund a liability for our Israeli severance requirement through monthly deposits into fund accounts, the value of these contributions are recorded to non-

current assets on the consolidated balance sheet.

c. Derivative instruments are reported based on published market prices for similar assets or are estimated based on published market prices for similar assets or are

estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices and spot and future exchange rates. See Note 13

for additional information on our derivative financial instruments.

We did not have any transfers of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy during the year ended

December 31, 2020.

In addition to the assets and liabilities included in the above table, certain of our assets and liabilities are to be initially measured at fair value on a non-recurring

basis. This includes goodwill and other intangible assets measured at fair value for impairment assessment. For further discussion on the valuation techniques and

inputs used in the fair value measurement of goodwill and other intangible assets, see Notes 2, 8 and 9.

(21) Income Taxes

The components of our income before income taxes are as follows:

2020 2019 2018

Income (Loss) before income taxes:

Domestic $ (45,973) $ (79,821) $ (59,233)

Foreign (97,437) 14,721 16,005

Total

$ (143,410) $ (65,100) $ (43,228)

The components of income tax provision for the years ended December 31, 2020, 2019 and 2018 are as follows:

F-33

2020 2019 2018

Current:

U.S. federal $ 1,294 $ (135) $ (5,882)

State 451 801 286

Foreign 5,645 7,220 10,621

Total 7,390 7,886 5,025

Deferred:

U.S. federal 67 (1,008) (322)

State — — 3

Foreign (1,273) (2,346) (2,671)

Total (1,206) (3,354) (2,990)

Total income tax provision

$ 6,184 $ 4,532 $ 2,035

The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2020, 2019 and 2018 as follows:

% of Pretax Loss

2020 2019 2018

Tax provision based on the federal statutory rate 21.0 % 21.0 % 21.0 %

Increase in valuation allowances (8.5) (21.3) (34.8)

Dividends Not Taxable 9.5 — —

Net Operating Loss Carryback Claim 6.2 — —

Change in Carryforward Attributes (3.2) — —

Global intangible low-taxed income inclusion (0.3) (7.0) (6.6)

One-Time transition tax — — (2.8)

Nondeductible expenses (13.5) (1.8) (2.3)

Taxes related to distributions — (0.8) (2.3)

Foreign income tax rate differential (3.3) 1.0 (1.5)

Deemed income related to foreign operations (1.6) (0.5) (1.5)

Tax rate change (0.3) (1.1) (1.4)

Employee share-based payments (1.4) — 0.1

Other (0.4) (0.9) 0.6

Deferred and payable adjustments (2.6) 3.3 0.9

ASU 842 Adoption — (0.1) —

State taxes, net of federal benefit, before valuation allowance 0.5 2.8 2.4

Return to provision adjustments 0.9 (2.5) 2.7

Other tax credits 0.2 (1.9) 5.1

U.S. Tax Cuts and Jobs Act - rate change adjustment — — 6.4

Uncertain tax positions and audit settlements (7.5) 2.8 9.4

Effective tax rate

(4.3)% (7.0)% (4.6)%

The difference between our effective tax rate for 2020 and the federal statutory rate was 25.3 percentage points. The difference in the effective rate is primarily due

to valuation allowance changes, nondeductible impairment charges, dividends not taxable, net operating loss carryback claim, and adjustments to uncertain tax

positions.

The difference between our effective tax rate for 2019 and the federal statutory rate was 28.0 percentage points. The difference in the effective rate is primarily due

to valuation allowance changes, provisions for GILTI, prior period adjustments and adjustments to uncertain tax positions.

F-34

The difference between our effective tax rate for 2018 and the federal statutory rate was 25.6 percentage points. The difference in the effective rate is primarily due

to the impact of the Tax Act, including adjustments related to the Tax Act, the new provisions for GILTI, tax credits, adjustments to uncertain tax positions related

to statute of limitations expiration and change in valuation allowances. For the report year ending December 31, 2018, we had completed our accounting for all of

the enactment date income tax effects of the Tax Act, and we recorded an adjustment of a $1,524 tax benefit, which was offset by an adjustment to our valuation

allowance of $1,524 tax expense.

In 2020, 2019 and 2018, there were no significant changes to our valuation allowance assertions. We continue to review results of operations and forecast estimates

to determine if it is more likely than not that the deferred tax assets will be realized.

The components of our net deferred income tax assets and net deferred income tax (liabilities) at December 31, 2020 and 2019 are as follows:

(in thousands) 2020 2019

Deferred income tax assets:

Intangibles $ 17,395 $ 20,624

Stock options and restricted stock awards 2,544 6,065

Reserves and allowances 10,450 11,959

Net operating loss carryforwards 67,025 57,782

Tax credit carryforwards 18,813 12,749

Accrued liabilities 6,077 3,218

Deferred revenue 4,637 3,940

Lease Tax Asset 8,343 5,970

163(j) Limitation Carryforward 2,854 1,519

Valuation allowance (123,113) (109,643)

Total deferred income tax assets 15,025 14,183

Deferred income tax liabilities:

Intangibles 2,548 4,495

Property, plant and equipment 2,662 3,282

Lease Tax Liability 6,379 4,195

Liabilities related to distributions — —

Other 1,345 830

Total deferred income tax liabilities 12,934 12,802

Deferred income tax asset held for sale $ 560 $ —

Net deferred income tax assets

$ 1,531 $ 1,381

At December 31, 2020, $67,025 of our deferred income tax assets was attributable to $417,802 of gross net operating loss carryforwards, which consisted of

$223,724 of loss carryforwards for U.S. federal income tax purposes, $155,366 of loss carryforwards for U.S. state income tax purposes and $38,713 of loss

carryforwards for foreign income tax purposes.

The net operating loss carryforwards for U.S. federal income tax purposes begin to expire in 2035. The net operating loss carryforwards for U.S. state income tax

purposes began to expire in 2018. In addition, certain loss carryforwards for foreign income tax purposes begin to expire in 2020 and certain other loss

carryforwards for foreign purposes do not expire.

F-35

At December 31, 2020, tax credit carryforwards included in our deferred income tax assets consisted of $6,359 of research and experimentation credit

carryforwards for U.S. federal income tax purposes, $4,037 of research and experimentation tax credit carryforwards for U.S. state income tax purposes, $6,629 of

foreign tax credits for U.S. federal income tax purposes, $1,059 of research and experimentation tax credit carryforwards for foreign income tax purposes and $729

of other state tax credits. Certain state research and experimentation and other state credits begin to expire in 2021. We have recorded a valuation allowance related

to the U.S. federal and state tax credits.

Due to the one time transition tax, our previously unremitted earnings have been subjected to U.S. federal income tax, although, other additional taxes such as,

withholding tax, could be applicable. We intend to permanently reinvest its earnings outside the U.S. and as such, have not provided for any additional taxes on

approximately $189,699 of unremitted earnings. We believe the unrecognized deferred tax liability related to these earnings is approximately $7,114.

Including interest and penalties, we decreased our unrecognized benefits by $788 for the year ended December 31, 2020 and increased our unrecognized tax

benefits by $11,223 for the year ended December 31, 2020. The decrease was primarily related to the release of unrecognized tax benefits due to the expiration of

statute of limitations. The increase was primarily related to the net operating loss carryback claim. We do not anticipate any additional unrecognized tax benefits

during the next 12 months that would result in a material change to its consolidated financial position. The total amount of unrecognized tax benefits that, if

recognized, would affect the effective tax rate is $15,380. We include interest and penalties in the consolidated financial statements as a component of income tax

expense. On February 2, 2021, the Company received two private letter rulings from the IRS, which triggered the release of a reserve for uncertain tax position of

$8,900 in the first quarter of 2021. See Note 26.

Unrecognized Tax Benefits*

(in thousands)

2020 2019 2018

Balance at January 1

$ (15,467) $ (13,031) $ (18,310)

Increases related to prior year tax positions (10,426) (2,684) (1,400)

Decreases related to prior year tax positions 788 857 8,272

Increases related to current year tax positions (797) (609) (1,593)

Balance at December 31

$ (25,902) $ (15,467) $ (13,031)

* The unrecognized tax benefit balance includes an insignificant amount of interest and penalties.

Tax years 2013 through 2019 remain subject to examination by the U.S. Internal Revenue Service (“IRS”). State income tax returns are generally subject to

examination for a period of three to four years after filing the respective tax returns. The tax years 2015 through 2019 remain open to examination by the various

foreign taxing jurisdictions to which the Company is subject.

The following presents the changes in the balance of our deferred income tax asset valuation allowance:

Year Ended Item

Balance at beginning

of year

Additions

(reductions) charged

to expense Other

Balance at end of

year

2020 Deferred income tax asset valuation allowance $ 109,643 $ 13,470 $ — $ 123,113

2019 Deferred income tax asset valuation allowance 95,398 14,245 — 109,643

2018 Deferred income tax asset valuation allowance 80,796 14,602 — 95,398

(22) Commitments and Contingencies

We lease certain of our facilities and equipment under non-cancelable operating and finance leases. See Note 5.

We have an inventory purchase commitment with an assembling manufacturer. See Note 14.

Supply commitments totaled $55,317 and $53,562 as of December 31, 2020 and 2019, respectively. Commitments for printer assemblies and inventory items at

December 31, 2020 and 2019 were $27,030 and $34,570, respectively. Commitments for operating costs and capital expenditures at December 31, 2020 and 2019

were $28,287 and $18,992, respectively.

F-36

Indemnification

In the normal course of business, we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement

made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant, and we are

unable to estimate the maximum potential impact of these indemnification provisions on its future results of operations.

To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences while the director or officer is, or was,

serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these

indemnification obligations is unlimited; however, we have directors and officers insurance coverage that may enable us to recover future amounts paid, subject to

a deductible and the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.

Litigation

ExportControlsandGovernmentContractsComplianceMatter

In October 2017, we received an administrative subpoena from the Bureau of Industry and Security of the Department of Commerce (“BIS”) requesting the

production of records in connection with possible violations of U.S. export control laws, including with regard to our Quickparts.com, Inc. subsidiary. In addition,

while collecting information responsive to the above-referenced subpoena, our internal investigation identified potential violations of the International Traffic in

Arms Regulations (“ITAR”) administered by the Directorate of Defense Trade Controls of the Department of State (“DDTC”) and potential violations of the

Export Administration Regulations administered by the BIS.