10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

OR

¨ 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)	(Zip Code)

(803) 326-3900

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).      Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if smaller reporting company)	Smaller reporting company	¨

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ¨    No  ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Shares of Common Stock, par value $0.001, outstanding as of July 20, 2012: 55,402,822

3D SYSTEMS CORPORATION

Quarterly Report on Form 10-Q for the

Quarter Ended June 30, 2012

TABLE OF CONTENTS

PART I. — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35
PART II — OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 6. Exhibits	36
Exhibit 31.1	39
Exhibit 31.2	40
Exhibit 32.1	41
Exhibit 32.2	42

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PART I. — FINANCIAL INFORMATION

Item 1. Financial Statements.

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
(in thousands, except par value)	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	158,501		$	179,120
Accounts receivable, net of allowance for doubtful accounts of $3,792 (2012) and $3,019 (2011)		63,901			51,195
Inventories, net of reserves of $3,804 (2012) and $2,542 (2011)		39,994			25,283
Prepaid expenses and other current assets		2,766			2,241
Current deferred income taxes		7,413			3,528
Restricted cash		12			13
Total current assets		272,587			261,380
Property and equipment, net		35,705			29,594
Intangible assets, net		99,156			54,040
Goodwill		217,275			107,651
Long term deferred income taxes		460			3,195
Other assets, net		7,155			7,114
Total assets	$	632,338		$	462,974
LIABILITIES AND EQUITY
Current liabilities:
Current portion of capitalized lease obligations	$	157		$	163
Accounts payable		34,225			25,911
Accrued and other liabilities		19,254			16,816
Customer deposits		3,785			3,398
Deferred revenue		15,659			12,735
Total current liabilities		73,080			59,023
Long term portion of capitalized lease obligations		7,534			7,609
Convertible senior notes, net		132,798			131,107
Deferred income tax liability		23,627			3,666
Other liabilities		11,226			6,781
Total liabilities		248,265			208,186
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, authorized 5,000 shares, none issued		—			—
Common stock, $0.001 par value, authorized 120,000 shares; 55,841 (2012) and 50,975 (2011) issued		56			51
Additional paid-in capital		391,143			274,542
Treasury stock, at cost: 343 (2012) and 324 shares (2011)		(228	)		(214	)
Accumulated deficit		(8,019	)		(22,531	)
Accumulated other comprehensive income		1,121			2,940
Total stockholders’ equity		384,073			254,788
Total liabilities and stockholders’equity	$	632,338		$	462,974

See accompanying notes to condensed consolidated financial statements.

3

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2012			2011			2012			2011
Revenue:
Products	$	52,275		$	32,610		$	101,672		$	61,754
Services		31,335			22,518			59,858			41,271
Total revenue		83,610			55,128			161,530			103,025
Cost of sales:
Products		23,845			15,971			46,892			29,723
Services		16,797			13,954			32,817			24,902
Total cost of sales		40,642			29,925			79,709			54,625
Gross profit		42,968			25,203			81,821			48,400
Operating expenses:
Selling, general and administrative		24,048			14,159			47,998			27,123
Research and development		4,921			3,043			9,854			5,865
Total operating expenses		28,969			17,202			57,852			32,988
Income from operations		13,999			8,001			23,969			15,412
Interest and other expense (income), net		3,740			107			6,422			(189	)
Income before income taxes		10,259			7,894			17,547			15,601
Provision for (benefit of) income taxes		1,935			(5,479	)		3,035			(4,594	)
Net income	$	8,324		$	13,373		$	14,512		$	20,195
Other comprehensive income
Unrealized gain on pension obligation	$	13		$	2		$	7		$	5
Foreign currency translation gain (loss)		(3,016	)		1,501			(1,826	)		2,622
Comprehensive income	$	5,321		$	14,876		$	12,693		$	22,822
Net income per share — basic	$	0.16		$	0.27		$	0.28		$	0.41
Net income per share — diluted	$	0.16		$	0.26		$	0.28		$	0.40

See accompanying notes to condensed consolidated financial statements.

4

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(in thousands)	2012			2011
Cash flows from operating activities:
Net income	$	14,512		$	20,195
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (benefit of) deferred income taxes		1,301			(5,472	)
Depreciation and amortization		10,678			5,000
Non-cash interest on convertible notes		1,942			—
Provision for bad debts		904			558
Stock-based compensation		2,480			1,234
(Gain) loss on the disposition of property, equipment and investments		(454	)		—
Changes in operating accounts:
Accounts receivable		(4,980	)		(1,696	)
Inventories		(9,453	)		(3,900	)
Prepaid expenses and other current assets		20			(951	)
Accounts payable		4,111			(3,750	)
Accrued liabilities		129			(3,377	)
Customer deposits		(280	)		(929	)
Deferred revenue		718			(903	)
Other operating assets and liabilities		(250	)		223
Net cash provided by operating activities		21,378			6,232
Cash flows from investing activities:
Purchases of property and equipment		(1,552	)		(978	)
Additions to license and patent costs		(389	)		(211	)
Cash paid for acquisitions, net of cash assumed		(147,511	)		(27,975	)
Net cash used in investing activities		(149,452	)		(29,164	)
Cash flows from financing activities:
Proceeds from issuance of common stock		106,912			62,054
Proceeds from exercise of stock options and restricted stock		897			2,281
Repayment of capital lease obligations		(81	)		(112	)
Restricted cash		1			(207	)
Net cash provided by financing activities		107,729			64,016
Effect of exchange rate changes on cash		(274	)		576
Net increase (decrease) in cash and cash equivalents		(20,619	)		41,660
Cash and cash equivalents at the beginning of the period		179,120			37,349
Cash and cash equivalents at the end of the period	$	158,501		$	79,009
Supplemental Cash Flow Information:
Interest payments	$	4,303		$	282
Income tax payments		771			445
Non-cash items:
Transfer of equipment from inventory to property and equipment, net(a)		1,580			1,102
Transfer of equipment to inventory from property and equipment, net(b)		(1,009	)		38
Stock issued for acquisitions of businesses		6,604			2,042

(a) Inventory is transferred from inventory to property and equipment at cost when the Company requires additional machines for training, training, demonstration or short-term rentals.

(b) In general, an asset is transferred from property and equipment, net into inventory at its net book value when the Company has identified a potential sale for a used machine. The machine is removed from inventory upon recognition of the sale.

See accompanying notes to condensed consolidated financial statements.

5

3D SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

	Common Stock							Treasury Stock								Accumulated
(In thousands, except par value)	Shares		Par Value $0.001			Additional Paid In Capital		Shares		Amount			Accumulated Deficit			Other Comprehensive Income			Total Stockholders’ Equity
Balance at December 31, 2011		50,975	$	51		$	274,542		324	$	(214	)	$	(22,531	)	$	2,940		$	254,788
Exercise of stock options		105		—	(a)		562		—		—			—			—			562
Issuance (repurchase) of restricted stock, net		347		—	(a)		347		19		(14	)		—			—			333
Issuance of common stock		4,151		5			106,909													106,914
Issuance of stock for acquisitions		263		—	(a)		6,603													6,603
Stock-based compensation expense		—		—			2,180		—		—			—			—			2,180
Net income		—		—			—		—		—			14,512			—			14,512
Gain on pension plan – unrealized		—		—			—		—		—			—			7			7
Foreign currency translation adjustment		—		—			—		—		—			—			(1,826	)		(1,826	)
Balance at June 30, 2012		55,841	$	56		$	391,143		343	$	(228	)	$	(8,019	)	$	1,121		$	384,073

^(a)  Amounts not shown due to rounding.

See accompanying notes to condensed consolidated financial statements.

6

3D SYSTEMS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of 3D Systems Corporation and its subsidiaries (collectively, the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2011.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the quarter and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates and assumptions.

Certain prior period amounts presented in the accompanying footnotes have been reclassified to conform to current year presentation.

All amounts presented in the accompanying footnotes are presented in thousands, except for per share information.

The Company has evaluated subsequent events from the date of the condensed consolidated balance sheet through the date of the filing of this Form 10-Q. During this period, the Company closed the acquisition of Viztu Technologies, Inc. See Note 2 and Note 16 for a description of subsequent events.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the second quarter of 2012 have had or are expected to have a significant impact on the Company’s consolidated financial statements.

(2) Acquisitions

The Company completed acquisitions in the second quarter of 2012, which are discussed below.

On April 5, 2012, the Company acquired the outstanding shares of Fresh Fiber B.V. (“Fresh Fiber”), moving from a minority shareholder to 100% ownership. Fresh Fiber designs and markets innovative 3D printed accessories for retail consumer electronics. Fresh Fiber’s operations have been integrated into the Company and are included in products revenue. The fair value of the consideration paid for this acquisition, net of cash acquired, was $1,243, based on the Euro exchange rate at the date of acquisition, of which $848 was paid in cash and $395 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions. The Fresh Fiber acquisition is not significant to the Company’s financial statements.

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount pursuant to an earnout formula over a three-year period as set forth in the acquisition agreement. As of June 30, 2012, an accrued liability of approximately $1,779 was recorded for the earnout. The earnout was determined to be acquisition consideration and therefore is reflected as part of goodwill.

7

On April 10, 2012, the Company acquired Kodama Studios, LLC, which operates My Robot Nation, (“My Robot Nation”), a consumer technology platform that provides intuitive, game-like content creation for 3D printing. My Robot Nation’s operations have been integrated into the Company and future revenue from this acquisition will be reported in services revenue. The fair value of the consideration paid for this acquisition, net of cash acquired, was $2,749, of which $1,499 was paid in cash and $1,250 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on the estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions. The My Robot Nation acquisition is not significant to the Company’s financial statements.

On April 17, 2012, the Company acquired the assets of Paramount Industries (“Paramount”), a direct rapid manufacturing provider of product development solutions for aerospace and medical device applications, from design to production of certified end-use parts and products. Paramount’s operations have been integrated into the Company and future revenue from this acquisition will be reported in services revenue. The fair value of the consideration paid for this acquisition, net of cash acquired, was $7,953, of which $6,138 was paid in cash and $1,815 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on the estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions. The Paramount acquisition is not significant to the Company’s financial statements.

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount pursuant to an earnout formula over a five-year period as set forth in the acquisition agreement. As of June 30, 2012, an accrued liability of approximately $2,420 was recorded for the earnout. The earnout was determined to be acquisition consideration and therefore is reflected as part of goodwill. In connection with the acquisition the Company entered into a lease agreement with the former owner of Paramount Industries pursuant to which the Company agreed to lease the facilities at which Paramount Industries conducts its operations. The lease provides for an initial term of five years, with options for two successive three-year terms.

On May 23, 2012, the Company acquired the shares of Bespoke Innovations, Inc. (“Bespoke”), a startup that is bringing a more personal approach to the way a broad spectrum of medical devices are developed and used. Bespoke develops proprietary, integrated scan, design and print technology that is designed to deliver custom fit prosthetics, orthotics and orthopedic devices that improve treatment and lifestyle outcomes. Bespoke’s operations have been integrated into the Company and future revenue from this acquisition will be reported in products revenue. The fair value of the consideration paid for this acquisition, net of cash acquired, was $7,903 of which $4,064 was paid in cash and $3,144 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. Subject to the terms and conditions of the acquisition agreement, the sellers have the right to a deferred payment of $695. The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed, based on the estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions. The Bespoke acquisition is not significant to the Company’s financial statements.

The Company’s purchase price allocations for acquired companies are preliminary and subject to revision as more detailed analyses are completed and additional information about fair value of assets and liabilities becomes available. The amounts related to the acquisitions of these businesses were allocated to the assets acquired and the liabilities assumed and included in the Company’s condensed consolidated balance sheet at June 30, 2012 as follows:

(in thousands)	2012
Fixed assets	$	3,367
Intangible assets		21,500
Other liabilities, net of cash acquired and assets assumed		(5,019	)
Net assets acquired	$	19,848

Subsequent acquisitions

In July 2012, the Company acquired the shares of Viztu Technologies, Inc. (“Viztu”), the developer of Hypr3D, an online platform that allows anyone to turn their pictures and videos into printable 3D creations. The fair value of the consideration paid for this acquisition, net of cash acquired, was $1,000, based on the exchange rate at the date of acquisition, of which $500 was paid in cash and $500 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. Due to the timing of this acquisition, the Company is in the process of allocating the fair values of the assets purchased, liabilities assumed and other intangibles identified as of the acquisition date, with any excess to be recorded as goodwill. The Company plans to integrate Viztu into consumer solutions and future revenue from this acquisition will be reported in services revenue. The Viztu acquisition is not significant to the Company’s financial statements.

8

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount up to $1,000, pursuant to an earnout formula over a four-year period as set forth in the acquisition agreement.

(3) Inventories

Components of inventories, net at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012			2011
Raw materials	$	12,554		$	8,797
Work in process		1,392			606
Finished goods and parts		29,852			18,422
Total cost		43,798			27,825
Less: reserves		(3,804	)		(2,542	)
Inventories, net	$	39,994		$	25,283

(4) Property and Equipment

Property and equipment at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012			2011			Useful Life (in years)
Land	$	541		$	541			N/A
Building		9,204			9,204			25
Machinery and equipment		46,366			36,773			3-7
Capitalized software — ERP		3,173			3,141			5
Office furniture and equipment		3,252			3,138			5
Leasehold improvements		6,463			5,996			Life of  lease	(1)
Rental equipment		54			56			5
Construction in progress		618			980			N/A
Total property and equipment		69,671			59,829
Less: Accumulated depreciation and amortization		(33,966	)		(30,235	)
Total property and equipment, net	$	35,705		$	29,594

(1) Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.

Depreciation and amortization expense on property and equipment for the quarter and six months ended June 30, 2012 were $2,162 and $4,134, respectively, compared to $1,480 and $3,049, respectively, for the quarter and six months ended June 30, 2011.

9

(5) Intangible Assets

Intangible assets other than goodwill at June 30, 2012 and December 31, 2011 were as follows:

	2012							2011
(in thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses	$	5,875	$	(5,875	)	$	—	$	5,875	$	(5,875	)	$	—
Patent costs		19,970		(13,933	)		6,037		16,379		(13,846	)		2,533
Acquired technology		25,920		(11,003	)		14,917		11,015		(10,345	)		670
Internally developed software		17,847		(10,704	)		7,143		17,847		(9,983	)		7,864
Customer relationships		56,520		(4,577	)		51,943		32,974		(1,798	)		31,176
Non-compete agreements		11,564		(2,750	)		8,814		8,976		(1,890	)		7,086
Trade names		4,330		(438	)		3,892		1,951		(180	)		1,771
Other		6,335		(2,695	)		3,640		1,986		(1,746	)		240
Intangibles with indefinite lives:
Trademarks		2,770		—			2,770		2,700		—			2,700
Total intangible assets	$	151,131	$	(51,975	)	$	99,156	$	99,703	$	(45,663	)	$	54,040

For the six months ended June 30, 2012 and 2011, the Company capitalized $389 and $211, respectively, of costs incurred to acquire, develop and extend patents in the United States and various other countries.

Amortization expense for intangible assets for the quarter and six months ended June 30, 2012 was $3,021 and $6,440, respectively, compared to $1,111 and 1,951 for the quarter and six months ended June 30, 2011.

Annual amortization expense for intangible assets for 2012, 2013, 2014, 2015 and 2016 is expected to be $13,610, $12,682, $12,656, $11,364 and $10,255, respectively.

(6) Accrued and Other Liabilities

Accrued liabilities at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012		2011
Compensation and benefits	$	9,222	$	7,036
Vendor accruals		1,479		1,640
Accrued professional fees		457		326
Accrued taxes		4,314		3,500
Royalties payable		557		302
Accrued interest		416		950
Earnouts and deferred payments related to acquisitions		2,087		1,384
Accrued other		722		1,678
Total	$	19,254	$	16,816

Other liabilities at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012		2011
Defined benefit pension obligation	$	3,734	$	3,884
Long-term tax liability		808		827
Earnouts and deferred payments related to acquisitions		6,458		1,898
Other long-term liabilities		226		172
Total	$	11,226	$	6,781

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(7) Hedging Activities and Financial Instruments

The Company conducts business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a result, the Company is 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, the Company endeavors to match assets and liabilities in the same currency on its balance sheet and those of its subsidiaries in order to reduce these risks. When appropriate, the Company enters into foreign currency contracts to hedge exposures arising from those transactions. The Company has 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 (income), net” in the condensed consolidated statements of operations and comprehensive income. 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 condensed consolidated balance sheet.

There were no foreign currency contracts outstanding at June 30, 2012 or December 31, 2011.

The total impact of foreign currency transactions on the condensed consolidated statements of operations and comprehensive income for the quarter and six months ended June 30, 2012 reflected a loss of $1,035 and $515, respectively, compared to a gain of $56 and $611, respectively, for the quarter and six months ended June 30, 2011.

(8) Borrowings

5.5% senior convertible notes and interest expense

In November 2011, the Company issued $152,000 of 5.50% senior convertible notes due December 2016. These notes are senior unsecured obligations and rank equal in right of payment with all the Company’s existing and future senior unsecured indebtedness. They are also senior in right of payment to any subordinated indebtedness that the Company may incur in the future.

The notes accrue interest at the rate of 5.50% per year payable in cash semi-annually on June 15 and December 15 of each year.

The following table summarizes the principal amounts and related unamortized discount on convertible notes at June 30, 2012 and December 31, 2011:

(in thousands)	2012			2011
Principal amount of convertible notes	$	152,000		$	152,000
Unamortized discount on convertible notes		(19,202	)		(20,893	)
Net carrying value	$	132,798		$	131,107

These notes are convertible into shares of the Company’s Common Stock at an initial conversion rate equivalent to 46.6021 shares of Common Stock per $1 principal amount of notes, which represents an initial conversion rate of approximately $21.46 per share of Common Stock. The conversion rate is subject to adjustment in certain circumstances as more fully set forth in the indenture covering the notes. As of June 30, 2012, the stock price condition for convertibility of the notes was satisfied. The notes are convertible in the quarter ending September 30, 2012.

If converted, the aggregate principal amount of the notes then outstanding may be settled in cash, shares of common stock, or a combination thereof, at the Company’s election. Subject to the terms of the indenture, holders may convert their notes at any time. The number of shares of common stock the notes are convertible into is approximately 7,084. In certain circumstances provided for in the indenture, the number of shares of common stock issuable upon conversion of the notes may be increased, and with it the aggregate principal amount of the notes. Unless earlier repurchased, redeemed or converted, the notes will mature on December 15, 2016.

The notes were issued with an effective yield of 5.96% based upon an original issue discount at 98.0%. The net proceeds from the issuance of these notes, after deducting original issue discount and capitalized issuance costs of $6,634, amounted to $145,366. The capitalized issuance costs are being amortized to interest expense over the life of the notes.

Upon certain terms and conditions, the Company may elect to satisfy its conversion obligation with respect to the notes by paying cash, in whole or in part, for specified aggregate principal amount of the notes. In the event of certain types of fundamental changes, the Company will increase the conversion rate by a number of additional shares, up to a maximum of 9,031 shares, which equates to a conversion price of approximately $16.83 per share.

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(9) Stock-based Compensation Plans

The Company records stock-based compensation expense in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income. Stock-based compensation expense for the quarter and six months ended June 30, 2012 and 2011 was as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Restricted stock awards	$	1,304	$	847	$	2,480	$	1,234

The number of shares of restricted common stock awarded and the weighted average fair value per share during the quarter and six months ended June 30, 2012 and 2011 were as follows:

	Quarter Ended June 30,
	2012				2011
(in thousands, except per share amounts)	Shares Awarded		Weighted Average Fair Value		Shares Awarded		Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan		73	$	26.31		62	$	25.80
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors		11		27.42		16		18.23
Total restricted stock awards		84	$	26.45		78	$	24.20
	Six Months Ended June 30,
	2012				2011
(in thousands, except per share amounts)	Shares Awarded		Weighted Average Fair Value		Shares Awarded		Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan		157	$	24.22		154	$	19.82
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors		11		27.42		16		18.23
Total restricted stock awards		168	$	24.43		170	$	19.67

In the six months ended June 30, 2012, the Company granted restricted stock awards covering 157 shares of common stock pursuant to the Company’s 2004 Incentive Stock Plan. Of the 157 shares granted in the first six months of 2012, 13 of the shares were awarded to executive officers of the Company. Additionally, of the 157 shares granted in the first six months of 2012, 71 remained subject to acceptance at June 30, 2012. In the first six months of 2011, the Company granted restricted stock awards covering 154 shares of common stock pursuant to the Company’s 2004 Incentive Stock Plan; 10 of which were awarded to executive officers of the Company.

In the first six months of 2012 and 2011, respectively, the Company granted 11 shares and 16 shares, respectively, of common stock pursuant to the Company’s 2004 Restricted Stock Plan for Non-Employee Directors and stock compensation expense for Non-Employee Directors for the first six months of 2012 or 2011 was $300 and $300, respectively.

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(10) International Retirement Plan

The following table shows the components of net periodic benefit costs and other amounts recognized in the condensed consolidated statements of operations and comprehensive income for the quarter and six months ended June 30, 2012 and 2011:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Service cost	$	18	$	43	$	37	$	57
Interest cost		31		48		64		64
Total	$	49	$	91	$	101	$	121

(11) Earnings Per Share

The Company presents basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the applicable period. Diluted EPS is calculated by dividing net income by the weighted average number of common and common equivalent shares outstanding during the applicable period.

The following table reconciles basic weighted average outstanding shares to diluted weighted average outstanding shares at June 30, 2012 and 2011:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2012		2011		2012		2011
Numerator:
Net income – numerator for basic net earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Add: Effect of dilutive securities
Interest expense on 5.50% convertible notes (after-tax)(1)		—		—		—		—
Stock options and other equity compensation		—		—		—		—
Numerator for diluted earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Denominator:
Weighted average shares – denominator for basic net earnings per share		51,779		50,298		51,048		48,950
Add: Effect of dilutive securities
Stock options and other equity compensation		841		1,049		851		1,054
5.50% convertible notes (after-tax)(1)		—		—		—		—
Denominator for diluted earnings per share		52,620		51,347		51,899		50,004
Earnings per share
Basic	$	0.16	$	0.27	$	0.28	$	0.41
Diluted	$	0.16	$	0.26	$	0.28	$	0.40
Interest expense excluded from diluted earnings per share (1)	$	2,654		—	$	5,262		—
5.50% Convertible notes shares excluded from diluted earnings per share (1)	$	7,084		—	$	3,522		—

⁽¹⁾ Average outstanding diluted earnings per share calculation excludes shares that may be issued upon conversion of the outstanding senior convertible notes since the effect of their inclusion would have been anti-dilutive.

For the quarter ended June 30, 2012, average common shares for basic and diluted earnings per share were 51,779 and 52,620, respectively, and basic and diluted earnings per share were both $0.16. For the quarter ended June 30, 2011, average common shares for basic and diluted earnings per share were 50,298 and 51,347 respectively, and basic and diluted earnings per share were $0.27 and $0.26, respectively.

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For the six months ended June 30, 2012, average common shares for basic and diluted earnings per share were 51,048 and 51,899, respectively, and basic and diluted earnings per share were both $0.28. For the six months ended June 30, 2011, average common shares for basic and diluted earnings per share were 48,950 and 50,004 respectively, and basic and diluted earnings per share were $0.41 and $0.40, respectively.

(12) Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

For the Company, the above standard applies to cash equivalents and senior convertible notes. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements as of June 30, 2012
(in thousands)	Level 1		Level 2		Level 3		Total
Description
Cash equivalents (1)	$	117,418	$	—	$	—	$	117,418

⁽¹⁾ 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.

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the quarter and six months ended June 30, 2012.

The carrying value of the senior convertible notes as of June 30, 2012 and December 31, 2011 was $132,798 and $131,107, respectively, net of the unamortized discount. As of June 30, 2012 and December 31, 2011, the estimated fair value of the senior convertible notes was $150,508 and $149,615, respectively, based on quoted market prices. The Company determined the fair value of the convertible notes utilizing transactions in the listed markets for identical or similar liabilities. As such, the fair value of the senior convertible notes is considered Level 2.

In addition to the financial assets included in the above table, certain of our non-financial assets and liabilities are to be initially measured at fair value on a non-recurring basis. This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and non-financial, long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets and liabilities including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when impairment is recognized. The Company has not recorded any impairments related to such assets and has had no other significant non-financial assets or non-financial liabilities requiring adjustments or write-downs to fair value as of June 30, 2012 or December 31, 2011.

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(13) Income Taxes

The Company’s effective tax rates were 18.9% and 17.3% for the quarter and six months ended June 30, 2012, respectively, compared to (69.4%) and (29.4%) for the quarter and six months ended June 30, 2011, respectively.

The Company has utilized a portion of its U.S. net deferred tax assets, against which there is a valuation allowance, in determining its effective tax rate for 2012. The remainder of its U.S. net deferred assets, against which there are valuation allowances, had been offset by the recognition of deferred income tax liabilities from the acquisitions of Z Corp, Vidar, My Robot Nation and Bespoke. These acquisitions resulted in recognizing $502 of deferred income tax assets and $18,308 of deferred income tax liabilities.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company assesses the possibility of releasing the valuation allowance remaining on its U.S. net deferred tax assets. There were no releases of the valuation allowance on deferred tax assets during the first six months of 2012; however, the Company’s effective tax rate has been reduced as a result of the use of U.S. net deferred tax assets against which there is a valuation allowance. During the first six months ended June 30, 2011, the Company reversed $17,000 of the valuation allowance applied to U.S. net deferred tax assets. The reversal of the valuation allowance resulted in a non-cash income tax benefit of $6,221, which resulted in a benefit of 12 cents per share for the first six months of 2011. As of June 30, 2012, the Company has a valuation allowance remaining on its U.S. net deferred tax assets of $4,999.

Tax years 2008 to 2011 remain subject to examination by the U.S. Internal Revenue Service. The Company has utilized a portion of its U.S. loss carryforwards covering the years 1997 through 2003. Should the Company utilize any of its remaining losses, which date back to 2003, these would be subject to examination. The Company files income tax returns (which are open to examination beginning in the year shown in parentheses) in France (2005), Germany (2007), Japan (2006), Italy (2006), Switzerland (2006), the United Kingdom (2008), the Netherlands (2006), India (2011) and Australia (2007).

(14) Segment Information

The Company operates in one reportable business segment. The Company conducts its business through subsidiaries in the United States, a subsidiary in Switzerland that operates a research and production facility, and sales and services offices, including custom parts services, operated by subsidiaries in Europe (France, Germany, the United Kingdom, Italy and the Netherlands) and in Asia-Pacific (Australia, China and Japan). The Company has historically disclosed summarized financial information for the geographic areas of operations as if they were segments in accordance with ASC 280, “Segment Reporting.”

Summarized financial information concerning the Company’s geographical operations is shown in the following tables:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Revenue from unaffiliated customers:
United States	$	46,761	$	28,609	$	92,670	$	51,486
Germany		9,896		8,306		17,319		15,042
Other Europe		14,757		10,261		28,045		21,640
Asia Pacific		12,196		7,952		23,496		14,857
Total	$	83,610	$	55,128	$	161,530	$	103,025

The Company’s revenue from unaffiliated customers by type were as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Printers and other products	$	26,071	$	16,193	$	50,790	$	29,728
Materials		26,204		16,417		50,882		32,026
Services		31,335		22,518		59,858		41,271
Total revenue	$	83,610	$	55,128	$	161,530	$	103,025

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Intercompany sales were as follows:

	Quarter Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	4,369	$	2,899	$	692	$	7,960
Germany		14		—		873		177		1,064
Other Europe		3,384		36		61		108		3,589
Asia Pacific		14		7		—		—		21
Total	$	3,412	$	4,412	$	3,833	$	977	$	12,634

	Quarter Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	3,912	$	1,765	$	698	$	6,375
Germany		15		—		433		—		448
Other Europe		2,978		—		—		—		2,978
Asia Pacific		—		—		—		—		—
Total	$	2,993	$	3,912	$	2,198	$	698	$	9,801

	Six Months Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	8,270	$	6,004	$	1,539	$	15,813
Germany		128		—		1,033		177		1,338
Other Europe		6,661		52		139		122		6,974
Asia Pacific		44		7		—		—		51
Total	$	6,833	$	8,329	$	7,176	$	1,838	$	24,176

	Six Months Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	7,297	$	3,952	$	2,130	$	13,379
Germany		110		—		1,403		—		1,513
Other Europe		5,872		1		12		—		5,885
Asia Pacific		—		—		—		—		—
Total	$	5,982	$	7,298	$	5,367	$	2,130	$	20,777

All revenue between geographic areas is recorded at prices that provide for an allocation of profit (loss) between entities. Income from operations and assets for each geographic area were as follows:

	Quarter Ended June 30,					Six Months Ended June 30,
(in thousands)	2012			2011		2012		2011
Income from operations:
United States	$	7,550		$	3,570	$	13,006	$	7,109
Germany		563			417		816		828
Other Europe		2,423			1,148		3,432		2,659
Asia Pacific		3,464			2,795		6,619		4,770
Subtotal		14,000			7,930		23,873		15,366
Inter-segment elimination		(1	)		71		96		46
Total	$	13,999		$	8,001	$	23,969	$	15,412

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(in thousands)	June 30, 2012		December 31, 2011
Assets:
United States	$	515,560	$	346,350
Germany		17,774		20,285
Other Europe		74,267		71,202
Asia Pacific		24,737		25,137
Total	$	632,338	$	462,974

(15) Commitments and Contingencies

The Company leases office space under various non-cancelable operating leases. Rent expense under operating leases was $1,164 and $2,336 for the quarter and six months ended June 30, 2012, respectively, compared to $649 and $1,269 for the quarter and six months ended June 30, 2011, respectively.

As of June 30, 2012, the Company has supply commitments with third party assemblers for printer assembly for the third quarter of 2012 that total $8,896, compared to $13,301 at June 30, 2011.

For certain of the acquisitions, the Company is obligated for deferred purchase price commitments totaling $1,787, which are due in 2012 and 2013. Certain of our recent acquisitions contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. The total liabilities recorded for these earnouts as of June 30, 2012 was $6,062. As of June 30, 2011, the Company had recorded $3,297 of liabilities for earnouts related to acquisitions. See Note 2 for details of acquisitions and related commitments.

Litigation

In 2008, DSM Desotech Inc. filed a complaint, which it has subsequently amended, in an action titled DSM Desotech Inc. v. 3D Systems Corporation and 3D Systems, Inc. in the United States District Court for the Northern District of Illinois (Eastern Division) asserting that the Company engaged in anticompetitive behavior with respect to resins used in certain of its stereolithography machines. The complaint further asserted that the Company is infringing upon two of DSM Desotech’s patents relating to stereolithography machines.

The Company filed answers to DSM Desotech’s complaint in which, among other things, the Company denied the material allegations of DSM Desotech’s complaint. In 2010, the Court issued a decision relating to the construction of the claims of the patents-in-suit following a Markman hearing held in 2009. In that decision, the Court generally adopted the claim constructions that the Company proposed.

Fact discovery, including expert discovery, regarding the claims pending in this case concluded in 2011. The Company filed motions for summary judgment in December 2011 that seek rulings in its favor on all of DSM Desotech’s claims in the litigation. As of the date of this Form 10-Q, the Court has not yet ruled on those motions.

The Company understands that DSM Desotech estimates the damages associated with its claims to be in excess of $40,000. The Company intends to continue to vigorously contest all the claims asserted by DSM Desotech.

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The Company has been pursuing patent infringement litigation against EnvisionTEC, Inc. and certain of its related companies since 2005. In this litigation, the Company asserted that EnvisionTEC infringed the Company’s patents covering various three-dimensional solid imaging products and methods for creating physical three-dimensional models of an object and has sought injunctive relief and damages. EnvisionTEC’s Perfactory machine and Vanquish machine (the Vanquish is now marketed as the PerfactoryXede and PerfactoryXtreme) are the two products accused of patent infringement.

In 2008 the Court issued Markman claim constructions that generally adopted the claim constructions the Company proposed. Following a subsequent jury trial and certain other proceedings, the Court issued a judgment, as amended through 2011, to the effect that EnvisionTEC’s Perfactory and Vanquish machines infringe certain claims of one of our patents and its Vanquish machines infringe certain claims of another of our patents.

On October 13, 2011, EnvisionTEC’s motion to stay damages discovery was denied by the Court, and damages discovery is underway. The Company intends to pursue its claims for damages against EnvisionTEC.

On October 17, 2011, EnvisionTEC filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit seeking judicial review of the Court’s judgment, and the Company filed a motion to dismiss that appeal on December 12, 2011. As of the date of this Form 10-Q, the Court of Appeals has not yet ruled.

In 2010, MSK K.K., a Japanese company, filed a complaint against the Company’s Japanese subsidiary in the Tokyo District Court asserting, among other things, various contract claims associated with two laser sintering machines purchased from the Company’s Japanese subsidiary in 2007.

The plaintiff is seeking damages in excess of the Japanese Yen equivalent of $2,101. Several hearings have been held in the Tokyo District Court with respect to these claims. The Company’s Japanese subsidiary is vigorously contesting all of the claims asserted by the plaintiff.

The Company is also involved in various other legal matters incidental to its business. The Company believes, after consulting with counsel, that the disposition of these other legal matters will not have a material effect on our consolidated results of operations or consolidated financial position.

Indemnification

In the normal course of business the Company periodically enters into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of the Company’s 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 our future results of operations.

To the extent permitted under Delaware law, the Company indemnifies directors and officers for certain events or occurrences while the director or officer is, or was serving, at the Company’s 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, the Company has directors and officers insurance coverage that may enable the Company 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.

(16) Subsequent Events

In July 2012, the Company acquired the shares of Viztu Technologies, Inc. (“Viztu”). Viztu is the developer of Hypr3D, an online platform that allows anyone to turn their pictures and videos into printable 3D creations. The Company plans to integrate Viztu into its consumer solutions and future revenue from this acquisition will be reported in services revenue. The Viztu acquisition is not significant to the Company’s financial statements. See Note 2.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q (“Form 10-Q”).

We are subject to a number of risks and uncertainties that may affect our future performance that are discussed in greater detail in the sections entitled “Forward-Looking Statements” and “Cautionary Statements and Risk Factors” at the end of this Item 2 and that are discussed or referred to in Item 1A of Part II of this Form 10-Q.

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Business Overview

We are a global provider of three-dimensional (“3D”) content-to-print solutions including 3D printers, print materials, on-demand custom parts services and creative content development, design productivity tools and curation services and downloads for professionals and consumers alike. Our integrated solutions enable complex three-dimensional objects to be produced directly from 3D digital data without tooling, greatly reducing the time and cost required to produce prototypes or customized production parts. Through our custom parts services, which consists of our 3Dproparts™ and Quickparts^® brands, we also supply a wide variety of custom-made plastic and metal parts as well as assembly and production jigs, fixtures and casting patterns in different finishes and colors through a growing network of custom parts service locations.

We derive our consolidated revenue primarily from the sale of our printers, the sale of the related print materials used by the printers to produce solid objects and the provision of printer services and custom parts services to our customers.

Recent Developments

In 2012, we have continued to execute on our strategic initiatives, including growing our on-demand custom parts services, accelerating personal, professional and production 3D printer penetration by expanding our distribution channel of reseller partners, continuing to expand our healthcare solutions offerings and continuing to execute on our initiative to build 3D consumer content products and services.

In April, we acquired Fresh Fiber and My Robot Nation. Fresh Fiber designs and markets 3D printed accessories for retail consumer electronics. My Robot Nation is a consumer technology platform that provides game-like content creation for 3D printing. We have integrated Fresh Fiber into our consumer solutions products and services and integrated My Robot Nation into Cubify.com.

In April, we acquired Paramount Industries, a direct manufacturing and product development solutions provider for aerospace and medical device applications, further enhancing our on-demand parts services and healthcare solutions applications.

In May, we began commercial shipments of the Cube^®, the first affordable plug and play consumer 3D printer designed for children and adults alike, and we increased our production capacity to stay ahead of growing demand. During the second quarter, Cubify^® also went live. Cubify^® is our online marketplace and meeting place where users can create, sell, upload, download and print 3D designs, providing individuals and garage entrepreneurs access to 3D design tools and printing resources.

In May, we acquired Bespoke Innovations, Inc. (“Bespoke”), a startup that is bringing a more personal approach to the way a broad spectrum of medical devices are developed and used. Bespoke develops proprietary, integrated scan, design and print technology that is designed to deliver custom fit prosthetics, orthotics and orthopedic devices that improve treatment and lifestyle.

During the second quarter, we announced the immediate availability of our new ProJet™ 3500, ZPrinter^® 850 and ProJet™ 7000 3D printers. The ProJet™ 3500 professional series 3D printers is available in eight configurations with nine new performance tailored VisiJet^® print materials for greater ease of use with enhanced high definition printability and performance for functional prototyping and investment casting patterns for healthcare, automotive and aerospace manufacturing applications. The extended range of new VisiJet^® print materials available for the ProJet™ 3500 covers the widest array of customer applications including high-impact, durable plastic for functional testing, cast-friendly wax for rapid-foundry production, and specialized materials for the digital production of jewelry, dental prosthesis, dental models and medical implants. The ZPrinter^® 850 is the largest format ZPrinter^® with higher print volume, greater productivity and vibrant full color that empowers designers, engineers, and architects to create more and larger parts faster. The ProJet™ 7000 combines push button simplicity with SLA^® printability to deliver the highest quality, most accurate parts and patterns available. Its large build volume and fast build speed provides up to 4 times the production capacity of other printers in its class and comes in three models: the SD for affordable high definition parts, the HD for ultra-high definition precision part manufacturing and the MP for dental and medical manufacturing applications.

In connection with our healthcare solutions initiative, in June, we expanded our offerings for professional materials and with several of our VisiJet^® materials meeting rigorous requirements for USP Class VI certification, including biocompatibility for healthcare applications. Class VI plastics can be used to produce medical devices, surgical guides and other implements used in and around the human body. These VisiJet^® materials are now approved for use in a broad set of applications that improve treatment outcomes and patient experience. Through enhanced bio-mimicry, individualized fit and accelerated delivery, medical and dental treatment quality can be enhanced at higher provider productivity and lower costs.

In June, we filed an updated shelf registration, under which we may issue, from time to time, up to $300.0 million of common stock, preferred stock, debt securities or warrants for debt or equity securities or units of such securities, in one or more offerings. On June 19, 2012 we completed an offering of 4.2 million shares of common stock, including the underwriter’s exercised over-allotment option to purchase an additional 0.5 million shares. The offering raised approximately $106.9 million of cash proceeds, net of offering expenses, in the second quarter of 2012.

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In July, we acquired Viztu Technologies, the developer of Hypr3D, an online platform that allows anyone to turn their pictures and videos into printable 3D creations. We plan to integrate Viztu into our consumer solutions and future revenue from this acquisition will be reported in services revenue.

Results of Operations

Summary of 2012 financial results

Our operating activities generated $21.4 million of cash during the first six months of 2012, which is discussed in further detail below. We used $149.5 million to fund our strategic investing activities, including acquisition of businesses. Financing activities during the first six months of 2012 provided $107.7 million of cash. In total, our unrestricted cash balance at June 30, 2012 was $158.5 million compared to $179.1 million at December 31, 2011. The June 30, 2012 balance includes net proceeds of $106.9 million from the common stock offering we completed in June 2012. The December 31, 2011 balance included $145.4 million of net proceeds from the issuance of senior convertible notes in November 2011, of which $141.3 million was used to complete the financing transaction and subsequent acquisition of Z Corp and Vidar on January 3, 2012.

During the second quarter of 2012 we reported improved revenue and profit results as compared to the second quarter of 2011 as our worldwide businesses continued to expand both organically and through acquisitions. Revenue for the second quarter of 2012 increased by 51.7% over the second quarter of 2011. This increase in revenue was led by a $9.9 million, or 61.0%, increase in sales of printers and other products together with a $9.8 million, or 59.6%, increase in print material sales and an $8.8 million, or 39.2%, increase in services revenue year-over-year. Higher revenue combined with increased selling, general and administrative expenses primarily related to compensation and acquisition expenses and interest expense on the convertible notes resulted in net income of $8.3 million for the second quarter of 2012, compared to net income of $13.4 million for the same period in 2011, which included a $6.2 million benefit from the release of valuation allowance on deferred tax assets. Revenue for Z Corp and Vidar for the second quarter of 2012 was $14.4 million and the operating loss was $2.6 million, after taking into account the integration and severance costs.

Printers and other products revenue increased by $9.9 million from the second quarter of 2011, to $26.1 million, both organically and through acquisitions. Printer units increased 117.0% compared to the second quarter of 2011 from both organic growth and acquired growth from the addition of Z Corp and Vidar in 2012.

Print materials sales for the second quarter of 2012 were $26.2 million, an increase of $9.8 million from the second quarter of 2011 as revenue from materials was favorably impacted by continued expansion of printers installed over past periods through both organic growth and acquisitions.

Revenue from services increased by $8.8 million to $31.3 million in the second quarter of 2012 from $22.5 million in the same quarter in 2011. The increase in services revenue reflects revenue from our custom parts services and increased revenue from printer service components, from both organic growth and acquisitions. Service revenue from custom parts services was $20.5 million, or 65.5%, of total service revenue for the second quarter of 2012.

For the second quarter of 2012, healthcare solutions revenue made up 15%, or $12.2 million, of our total revenue compared to 12%, or $6.5 million, in the second quarter of 2011, primarily due to our increased penetration into healthcare applications and to our acquisition of Vidar. Healthcare solutions revenue includes sales of printers, print materials, and services for hearing aid, dental, medical device and other health-related applications.

Our gross profit in the second quarter and first six months of 2012 improved primarily from our higher level of revenue from increases across all revenue categories, including increased revenue from our higher gross profit margin print materials, coupled with continued cost containment. Our gross profit margin increased to 51.4% in the second quarter of 2012 from 45.7% in the second quarter of 2011 due to product mix, with an increased portion of sales of higher margin print materials, improvements in our cost structure and on-demand parts gross profit margin and the addition of higher margin Z Corp and Vidar printers.

Our total operating expenses increased by $11.8 million in the second quarter of 2012 to $29.0 million from $17.2 million in the 2011 quarter. The increase reflected higher selling, general and administrative expenses primarily due to higher commissions and staffing from our acquisitions, and acquisition and severance costs of $0.7 million during the second quarter of 2012 and $3.1 million during the first six months of 2012, from which we expect annual savings of $5.0 million to $5.5 million. This is consistent with our previous expectations of achieving between $5.0 million and $10.0 million in synergies. The increase also reflected a $1.9 million increase in research and development expenses related to our new products and consumer solutions development and acquired R&D expenses. We expect to continue to increase operating leverage as we reduce costs as a percent of revenue.

20

Our operating income for the second quarter of 2012 increased to $14.0 million from $8.0 million in the 2011 quarter. This improvement in operating income improved from higher revenues and increased gross profit, partially offset by higher operating expenses, including acquisition expenses incurred, as discussed below.

Second quarter comparison of revenue by class of product and service

Table 1 sets forth our change in revenue by class of product and service for the second quarter of 2012 compared to the second quarter of 2011:

Table 1

(Dollars in thousands)	Printers and Other Products					Print Materials					Services					Totals
Revenue – 2nd quarter 2011	$	16,193		29.4	%	$	16,417		29.8	%	$	22,518		40.8	%	$	55,128		100	%
Change in revenue:
Volume
Core products and services		22,893		141.4	%		(1,150	)	(7.0	)		9,134		40.6			30,877		56.0
New products and services		6,945		42.9			7,412		45.1			545		2.4			14,902		27.0
Price/Mix		(19,068	))	(117.8	)		4,231		25.8			—		—			(14,837	)	(26.9	)
Foreign currency translation		(892	)	(5.5	)		(706	)	(4.3	)		(862	)	(3.8	)		(2,460	)	(4.5	)
Net change		9,878		61.0			9,787		59.6			8,817		39.2			28,482		51.7
Revenue – 2nd quarter 2012	$	26,071		31.2	%	$	26,204		31.3	%	$	31,335		37.5	%	$	83,610		100	%

We earn revenues from the sale of printers and other products, print materials and services. On a consolidated basis, revenue for the second quarter of 2012 increased by $28.5 million, or 51.7%, compared to the second quarter of 2011 primarily due to increased sales of printers from acquired and organic growth, coupled with increased print materials and on-demand parts service revenue from acquired and organic growth.

The increase in revenue from printers and other products compared to the second quarter of 2011 is primarily due to increased printer unit sales volume for the second quarter of 2012, driven by increased demand for personal and professional printers and acquired printers revenue from the Z Corp and Vidar acquisitions that we completed in the first quarter of 2012.

Production printers made up $8.2 million, or 32.0%, of total printers revenue for the second quarter of 2012, compared to $8.9 million, or 54.9% for the second quarter of 2011. The decrease in production printers revenue is consistent with our ongoing plan to accelerate production printer adoption by introducing lower priced production printers, which are capable of using the same amount of materials as our higher priced production printers. The percent of revenue decrease was also due to the acquisition of Z Corp and Vidar in 2012, which added only personal and professional printers.

Due to the relatively high price of certain production printers and a corresponding lengthy selling cycle and relatively low unit volume of these higher priced production printer sales in any particular period, a shift in the timing and concentration of orders and shipments of a few printers from one period to another can significantly affect reported revenue in any given period. Revenue reported for printers sales in any particular period is also affected by revenue recognition rules prescribed by generally accepted accounting principles.

Personal and professional printers made up $17.4 million, or 68.0%, of total printers revenue for the second quarter of 2012, compared to $7.3 million, or 45.1%, for the second quarter of 2011. This represented a 138.3% increase in personal and professional printers revenue over the 2011 quarter, including revenue and units from Z Corp and Vidar which were acquired in 2012.

The $9.8 million increase in revenue from print materials was aided by the improvement in printers sales and by the continued expansion of printers installed over past periods and by increased materials sales from the acquisitions of RenShape^® and Z Corp print materials. Sales of integrated materials represented 61.4% of total materials revenue in the second quarter of 2012 compared to 53.5% in the second quarter of 2011.

21

The increase in services revenue primarily reflects revenue from our on-demand parts services from both organic growth and acquisitions. Service revenue from on-demand parts services was $20.5 million, or 65.5% of total service revenue for the second quarter of 2012 compared to $14.2 million, or 62.9% of total service revenue in the 2011 period.

For the second quarter of 2012, Z Corp and Vidar contributed $14.4 million of revenue. For the second quarter of 2011, Z Corp and Vidar had revenue of $13.4 million. This increase in revenue reflects the strength of our combined channels selling our entire printer portfolio, which more than offset the lost revenue contributions of the OEM ZBuilder^® printer in the 2011 period, which was discontinued for the 2012 period. If Z Corp and Vidar had been included in our revenue for 2011, our overall corporate growth rate would have been 22.1%.

Taking into account all acquired businesses that we have owned for less than one year, our organic growth rate for the second quarter of 2012 was 19.9%.

At June 30, 2012 our backlog was $12.3 million, compared to backlogs of $8.3 million at December 31, 2011 and $7.4 million at June 30, 2011. Production and delivery of our printers is generally not characterized by long lead times, backlog is more dependent on timing of customers requested delivery. In addition, custom parts services lead time and backlog depends on whether orders are for rapid prototyping or longer-range production runs. The June 30, 2012 backlog was well distributed with a significant portion from each of our revenue categories and included personal, professional and production printers, as well as from print materials and on-demand parts. The backlog at June 30, 2012 includes $6.2 million of custom parts services orders, compared to $4.2 million at June 30, 2011.

In addition to changes in sales volumes, including the impact of revenue from acquisitions, there are two other primary drivers of changes in revenues from one period to another: the combined effect of changes in product mix and average selling prices, sometimes referred to as price and mix effects, and 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. Among these changes are changes in the product mix of our materials and our systems as the trend toward smaller, lower-priced printers has continued and the influence of new printers and print materials on our operating results has grown.

Change in second quarter revenue by geographic region

Each geographic region contributed to our higher level of revenue in second quarter of 2012. Table 2 sets forth the change in revenue by geographic area for the second quarter of 2012 compared to the second quarter of 2011:

Table 2

(Dollars in thousands)	U.S.					Europe					Asia-Pacific					Total
Revenue – 2nd quarter 2011	$	28,610		51.9	%	$	18,566		33.7	%	$	7,952		14.4	%	$	55,128		100	%
Change in revenue:
Volume		30,508		106.6			10,658		57.4			4,613		58.0			45,779		83.0
Price/Mix		(12,357	)	(43.2	)		(1,900	)	(10.2	)		(580	)	(7.3	)		(14,837	)	(26.9	)
Foreign currency translation		—		—			(2,671	)	(14.4	)		211		2.7			(2,460	)	(4.5	)
Net change		18,151		63.4			6,087		32.8			4,244		53.4			28,482		51.7
Revenue – 2nd quarter 2012	$	46,761		55.9	%	$	24,653		29.5	%	$	12,196		14.6	%	$	83,610		100	%

Revenue from U.S. operations in the second quarter of 2012 increased by $18.2 million, or 63.4%, to $46.8 million in 2012 from $28.6 million in the second quarter of 2011. The increase was due to higher volume, partially offset by the unfavorable combined effect of price and mix.

Revenue from non-U.S. operations in the second quarter of 2012 increased by $10.3 million, or 39.0%, to $36.8 million from $26.5 million in 2011. Revenue from non-U.S. operations as a percent of total revenue was 44.1% and 48.1%, respectively, at June 30, 2012 and 2011. The increase in non-U.S. revenue, excluding the effect of foreign currency translation, was 48.2% in the second quarter of 2012 compared to 36.0% in the second quarter of 2011.

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Revenue from European operations increased by $6.1 million, or 32.8%, to $24.7 million from $18.6 million in the prior year period. This increase was due to a $10.7 million increase in volume, partially offset by $1.9 million unfavorable combined effect of price and mix and a $2.7 million unfavorable impact of foreign currency translation.

Revenue from Asia-Pacific operations increased by $4.2 million, or 53.4%, to $12.2 million from $8.0 million in the prior year period due primarily to the favorable $4.6 million increase in volume combined with a $0.2 million favorable impact of foreign currency translation, partially offset by a $0.6 million unfavorable impact of foreign currency translation.

Gross profit and gross profit margins

Table 3 sets forth gross profit and gross profit margin for our products and services for the second quarters of 2012 and 2011:

Table 3

	Quarter Ended June 30,
	2012					2011
(Dollars in thousands)	Gross Profit		Gross Profit Margin			Gross Profit		Gross Profit Margin
Printers and other products	$	11,237		43.1	%	$	5,981		36.9	%
Print materials		17,193		65.6			10,658		64.9
Services		14,538		46.4			8,564		38.0
Total	$	42,968		51.4	%	$	25,203		45.7	%

On a consolidated basis, gross profit for the second quarter of 2012 increased by $17.8 million to $43.0 million from $25.2 million in the second quarter of 2011, primarily as a result of higher sales from all revenue categories and helped by an increase in our gross profit margin.

Consolidated gross profit margin in the second quarter of 2012 increased by 5.7 percentage points to 51.4% of revenue from 45.7% of revenue for the 2011 quarter. The higher gross profit margin reflected improvements in printers gross profit margin due to the addition of higher margin Z Corp and Vidar printers which more than offset the shift towards lower gross profit margin personal and production printers, coupled with improvements in print materials and on-demand parts gross profit margins.

Printers and other products gross profit for the second quarter of 2012 increased to $11.2 million from $6.0 million for the 2011 quarter, and gross profit margin for printers increased by 6.2 percentage points to 43.1% from 36.9% in the 2011 quarter primarily due to the addition of higher gross profit margin Z Corp and Vidar printers coupled with increased sales of software and products with higher gross profit margins, which more than offset the lower margin printers.

Print materials gross profit for the second quarter of 2012 increased by $6.5 million, or 61.3%, to $17.2 million from $10.7 million for the 2011 quarter, and gross profit margin for print materials increased by 0.7 percentage points to 65.6% from 64.9% in the 2011 quarter primarily due to the favorable shift of the mix of materials towards higher gross profit margin personal and professional print materials and integrated materials.

Gross profit for services for the second quarter of 2012 increased by $5.9 million, or 69.8%, to $14.5 million from $8.6 million for the 2011 quarter, and gross profit margin for services increased by 8.4 percentage points to 46.4% from 38.0% in the 2011 quarter. The increase in gross profit was due primarily to higher levels of revenue associated with our custom parts services. The increase in gross profit margin for services is primarily due to increased synergies from the integration of acquired custom parts services coupled with the increase in gross profit margin on printer services. On-demand custom parts services gross profit margin improved 12.4 percentage points to 44.7% for the second quarter of 2012 from 32.3% in the second quarter of 2011. Printer services has a gross profit margin of 48.3% compared to 47.2% for the second quarter of 2011.

Operating expenses

As shown in Table 4, total operating expenses increased by $11.8 million, or 68.4%, to $29.0 million in the second quarter of 2012 from $17.2 million in the second quarter of 2011. This increase was due to higher selling, general and administrative expenses and higher research and development expenses, both of which are discussed below.

Table 4

	Quarter Ended June 30,
	2012					2011
(Dollars in thousands)	Amount		% Revenue			Amount		% Revenue
Selling, general and administrative expenses	$	24,048		28.8	%	$	14,159		25.7	%
Research and development expenses		4,921		5.9			3,043		5.5
Total operating expenses	$	28,969		34.6	%	$	17,202		31.2	%

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Selling, general and administrative expenses increased by $9.8 million to $24.0 million in the second quarter of 2012 compared to $14.2 million in the second quarter of 2011, and increased to 28.8% of revenue in 2012 compared to 25.7% for 2011. The increase was due primarily to a $5.1 million increase in compensation costs due to commissions on higher revenues and higher staffing from acquisitions and integration activities. SG&A expenses included $0.6 million of acquisition and severance expenses. Additionally, SG&A expenses were impacted by a $1.8 million increase in amortization expense due to acquired intangibles, a $0.4 million increase in marketing expenses and a $0.3 million increase in occupancy costs related to additional acquired locations and a $0.7 million increase in travel expenses, partially offset by a $1.2 million improvement in legal expenses.

Research and development expenses increased by $1.9 million, or 61.7%, to $4.9 million in the second quarter of 2012 from $3.0 million in the second quarter of 2011, principally due to a $0.6 million increase in compensation expense, $0.4 million increase in operating supplies and a $0.3 million increase in building rent in the 2012 quarter related to new products and consumer solutions development.

Income from operations

Our income from operations of $14.0 million for the second quarter of 2012 improved from $8.0 million in 2011. See Gross profit and gross profit margins and Operating expenses above.

The following table sets forth operating income by geographic area for the second quarter of 2012 compared to 2011:

Table 5

	Quarter Ended June 30,
(Dollars in thousands)	2012			2011
Income from operations
United States	$	7,550		$	3,563
Germany		563			417
Other Europe		2,423			1,155
Asia Pacific		3,464			2,795
Subtotal		14,000			7,930
Inter-segment elimination		(1	)		71
Total	$	13,999		$	8,001

With respect to the U.S., in 2012 and 2011, the changes in operating income by geographic area reflected the same factors discussed above in Gross profit and gross profit margins and Operating expenses.

As most of our operations outside the U.S. are conducted through sales and marketing subsidiaries, the changes in operating income in our operations outside the U.S. in 2012 and 2011 resulted primarily from changes in transfer pricing which is a function of revenue levels.

Interest and other expense (income), net

Interest and other expense (income), net was $3.7 million of expense, net in the second quarter of 2012 compared with $0.1 million of expense, net in the 2011 quarter. The higher interest and other expense primarily reflected the interest related to the senior convertible notes issued in 2011, which amounted to $3.1 million of interest expense, of which $1.0 million represents non-cash amortization. Interest and other expense (income), net in the second quarter of 2012 also reflected a foreign exchange loss of $1.0 million. The $0.1 million of interest and other expense, net in the second quarter of 2011 reflected a foreign exchange gain and other income of $0.1 million, that was more than fully offset by $0.1 million of interest expense and $0.1 million of other expense.

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Provision for income taxes

We recorded a $1.9 million provision for income taxes in the second quarter of 2012 and a $5.5 million benefit for income taxes in the second quarter of 2011. Our 2012 provision for income taxes reflects deferred U.S. income taxes associated with the use of net operating loss carryforwards and tax expense associated with income taxes in non-U.S. jurisdictions. We released a portion of the valuation allowance related to our U.S. net deferred tax assets during 2011. The 2011 provision for income taxes primarily reflects tax expense associated with income taxes in non-U.S. jurisdictions.

We utilized U.S. net deferred tax assets, specifically net operating loss carryforwards and U.S. federal tax credits, in determining the effective tax rate for the year. This resulted in a reduction our effective tax rate. Absent the use of these net operating loss carryforwards and tax credits, income tax expense would have been $3.7 million and the income tax rate would have been 36.1 percent. Due to our U.S. net operating loss carryforwards, our rate of cash taxes was 12.6 percent of taxable income.

Our U.S. deferred income tax assets, against which there is a valuation allowance, have been partially utilized in determining the effective tax rate for 2012, with the remainder offset by the recognition of $18.3 million of deferred income tax liabilities from the acquisitions of Z Corp, Vidar, My Robot Nation and Bespoke. We will continue our ongoing review of actual results and anticipated future earnings, and their impact on future releases of valuation allowances. As of June 30, 2012, the Company has a $5.0 million valuation allowance remaining on its U.S. net deferred tax assets.

Net income

Our net income for the second quarter of 2012 decreased $5.1 million to $8.3 million compared to $13.4 million in the second quarter of 2011. The principal reasons for the decrease, which are discussed in more detail above, were:

• the $3.6 million increase in interest and other expense (income), net, and

• the $7.4 million increase in our tax provision;

• partially offset by the $6.0 million increase in operating income as discussed above.

For the quarter ended June 30, 2012, average common shares for basic and diluted earnings per share were 51.8 million and 52.6 million, respectively, and basic and diluted earnings per share were $0.16. For the quarter ended June 30, 2011, average common shares for basic and diluted earnings per shares were 50.3 million and 51.3 million, respectively, and basic and diluted earnings per share were $0.27 and $0.26, respectively.

Results of Operations – Six Months Comparison

Six months comparison of revenue by class of product and service

Table 6 sets forth our change in revenue by class of product and service for the first six months of 2012 compared to the first six months of 2011:

Table 6

(Dollars in thousands)	Printers and Other Products					Print Materials					Services					Total
Revenue – six months 2011	$	29,728		28.9	%	$	32,026		31.1	%	$	41,271		40.1	%	$	103,025		100	%
Change in revenue:
Volume
Core products and services		55,289		186.0			238		0.7			18,843		45.7			74,370		72.2
New products and services		3,203		10.8			14,695		45.9			805		2.0			18,703		18.2
Price/Mix		(36,322	)	(122.2	)		4,833		15.1			—		—			(31,489	)	(30.6	)
Foreign currency translation		(1,108	)	(3.7	)		(910	)	(2.8	)		(1,061	)	(2.6	)		(3,079	)	(3.0	)
Net change		21,062		70.8			18,856		58.9			18,587		45.0			58,505		56.8
Revenue – six months 2012	$	50,790		31.4	%	$	50,882		31.5	%	$	59,858		37.1	%	$	161,530		100	%

25

We earn revenues from the sale of printers and other products, print materials and services. On a consolidated basis, revenue for the first six months of 2012 increased by $58.5 million, or 56.8%, compared to the first six months of 2011 primarily due to increased sales of printers and other products, from acquired and organic growth, coupled with increased print materials and on-demand parts service revenue from acquired and organic growth.

The increase in revenue from printers and other products compared to the first six months of 2011 is primarily due to increased printer unit sales volume for the first six months of 2012, driven by increased demand for personal and professional printers and acquired printers revenue from the Z Corp and Vidar acquisitions that we completed in the first quarter of 2012.

Production printers made up $15.5 million, or 31.2%, of total printers revenue for the first six months of 2012, compared to $17.3 million, or 58.2% for the first six months of 2011. The decrease in production printers revenue is consistent with our ongoing plan to accelerate production printer adoption by introducing lower priced production printers, which are capable of using the same amount of materials as our higher priced production printers.

Due to the relatively high price of certain production printers and a corresponding lengthy selling cycle and relatively low unit volume of these higher priced production printer sales in any particular period, a shift in the timing and concentration of orders and shipments of a few printers from one period to another can significantly affect reported revenue in any given period. Revenue reported for printers sales in any particular period is also affected by revenue recognition rules prescribed by generally accepted accounting principles.

Personal and professional printers made up $34.3 million, or 68.8%, of total printers revenue for the first six months of 2012, compared to $12.4 million, or 41.8%, for the first six months of 2011. This represented a 176.1% increase in personal and professional printers revenue over the 2011 period.

The $18.9 million increase in revenue from print materials was aided by the improvement in printers sales and by the continued expansion of printers installed over past periods and by increased materials sales from the acquisitions of RenShape^® and Z Corp print materials. Sales of integrated materials represented 62.4% of total materials revenue in the first six months of 2012 compared to 51.8% in the first six months of 2011.

The increase in services revenue primarily reflects revenue from our on-demand parts services from both organic growth and acquisitions. Service revenue from on-demand parts services was $38.2 million, or 63.8% of total service revenue for the first six months of 2012 compared to $24.4 million, or 59.2% of total service revenue in the 2011 period.

For the first six months of 2012, Z Corp and Vidar contributed $26.8 million of revenue. For the first six months of 2011, Z Corp and Vidar had revenue of $27.4 million. This decrease in revenue was primarily attributed to the revenue contributions of the OEM ZBuilder^® printer in the 2011 period, which was discontinued for the 2012 period. If Z Corp and Vidar had been included in our revenue for 2011, our overall corporate growth rate would have been 23.8%.

Taking into account all acquired businesses that we have owned for less than one year, our organic growth rate for the first six months of 2012 was 22.8%.

In addition to changes in sales volumes, including the impact of revenue from acquisitions, there are two other primary drivers of changes in revenues from one period to another: the combined effect of changes in product mix and average selling prices, sometimes referred to as price and mix effects, and 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. Among these changes are changes in the product mix of our materials and our systems as the trend toward smaller, lower-priced printers has continued and the influence of new printers and print materials on our operating results has grown.

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Change in first six months revenue by geographic region

Each geographic region contributed to our higher level of revenue in first six months of 2012. Table 7 sets forth the change in revenue by geographic area for the first six months of 2012 compared to the first six months of 2011:

Table 7

(Dollars in thousands)	U.S.					Europe					Asia-Pacific					Total
Revenue – six months 2011	$	51,486		50.0	%	$	36,682		35.6	%	$	14,857		14.4	%	$	103,025		100	%
Change in revenue:
Volume		66,179		128.5			16,398		44.7			10,496		70.6			93,073		90.3
Price/Mix		(24,995	)	(48.5	)		(4,196	)	(11.4	)		(2,298	)	(15.5	)		(31,489	)	(30.6	)
Foreign currency translation		—		—			(3,520	)	(9.6	)		441		3.0			(3,079	)	(3.0	)
Net change		41,184		80.0			8,682		23.7			8,639		58.1			58,505		56.8
Revenue – six months 2012	$	92,670		57.4	%	$	45,364		28.1	%	$	23,496		14.5	%	$	161,530		100	%

Revenue from U.S. operations increased by $41.2 million, or 80.0%, to $92.7 million in 2012 from $51.5 million in the first six months of 2011. The increase was due to higher volume, partially offset by the unfavorable combined effect of price and mix.

Revenue from non-U.S. operations in the first six months of 2012 increased by $17.3 million, or 33.0%, to $68.8 million from $51.5 million in 2011. Revenue from non-U.S. operations as a percent of total revenue was 42.6% and 50.0%, respectively, for the first six months of 2012 and 2011. The increase in non-U.S. revenue, excluding the effect of foreign currency translation, was 39.6% in the first six months of 2012 compared to 38.2% in the first six months of 2011.

Revenue from European operations increased by $8.7 million, or 23.7%, to $45.4 million from $36.7 million in the prior year period. This increase was due to a $16.4 million increase in volume, partially offset by $4.2 million unfavorable combined effect of price and mix and a $3.5 million unfavorable impact of foreign currency translation.

Revenue from Asia-Pacific operations increased by $8.6 million, or 58.1%, to $23.5 million from $14.9 million in the prior year period due primarily to the favorable $10.5 million increase in volume combined with a favorable $0.4 million favorable impact of foreign currency translation, partially offset by a $2.3 unfavorable combined effect of price and mix.

Gross profit and gross profit margins

Table 8 sets forth gross profit and gross profit margin for our products and services for the first six months of 2012 and 2011:

Table 8

	Six Months Ended June 30,
	2012					2011
(Dollars in thousands)	Gross Profit		Gross Profit Margin			Gross Profit		Gross Profit Margin
Printers and other products	$	20,812		41.0	%	$	11,474		38.6	%
Print Materials		33,968		66.8			20,558		64.2
Services		27,041		45.2			16,368		39.7
Total	$	81,821		50.7	%	$	48,400		47.0	%

On a consolidated basis, gross profit for the first six months of 2012 increased by $33.4 million to $81.8 million from $48.4 million in the first six months of 2011, primarily as a result of higher sales from all revenue categories and helped by an increase in our gross profit margin.

Consolidated gross profit margin in the first six months of 2012 increased by 3.7 percentage points to 50.7% of revenue from 47.0% of revenue for the 2011 quarter. The higher gross profit margin reflected improvements in print materials and on-demand parts gross profit margins, coupled with higher gross profit margin printers from Z Corp and Vidar which more than offset the shift towards lower gross profit margin personal and production printers.

Printers and other products gross profit for the first six months of 2012 increased to $20.8 million from $11.5 million for the 2011 quarter, and gross profit margin for printers increased by 2.4 percentage points to 41.0% from 38.6% in the 2011 period primarily due to the addition of higher margin Z Corp and Vidar printers and increased sales of higher margin software and other products.

Print materials gross profit for the first six months of 2012 increased by $13.4 million, or 65.2%, to $34.0 million from $20.6 million for the 2011 quarter, and gross profit margin for print materials increased by 2.6 percentage points to 66.8% from 64.2% in the 2011 period, primarily due to the favorable shift of the mix of materials towards personal and professional print materials and integrated materials.

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Gross profit for services for the first six months of 2012 increased by $10.6 million, or 65.2%, to $27.0 million from $16.4 million for the 2011 period, and gross profit margin for services increased by 5.5 percentage points to 45.2% from 39.7% in the first six months of 2011. The increase in gross profit was due primarily to increased gross profit margin of on-demand custom parts which made up an increased portion of service revenue. The increase in gross profit margin for services is primarily due to increased synergies from the integration of acquired custom parts services coupled with improved gross profit margin on printer services. On-demand custom parts services gross profit margin improved 7.8 percentage points to 43.0% for the first six months of 2012 from 35.2% in the first six months of 2011. Printer services has a gross profit margin of 48.1% compared to 45.8% for the first six months of 2011.

Operating expenses

As shown in Table 9, total operating expenses increased by $24.9 million, or 75.4%, to $57.9 million in the first six months of 2012 from $33.0 million in the first six months of 2011. This increase was due to higher selling, general and administrative expenses and higher research and development expenses, both of which are discussed below.

Table 9

	Six Months Ended June 30,
	2012					2011
(Dollars in thousands)	Amount		% Revenue			Amount		% Revenue
Selling, general and administrative expenses	$	47,998		29.7	%	$	27,123		26.3	%
Research and development expenses		9,854		6.1			5,865		5.7
Total operating expenses	$	57,852		35.8	%	$	32,988		32.0	%

Selling, general and administrative expenses increased by $20.9 million to $48.0 million in the first six months of 2012 compared to $27.1 million in the first six months of 2011, and increased to 29.7% of revenue in 2012 compared to 26.3% for 2011. The increase was due primarily to a $12.0 million increase in compensation costs due to commissions on higher revenues and higher staffing from acquisitions and bonuses associated with the 2012 acquisition and integration activities. SG&A expenses included $2.7 million of acquisition and severance expenses, from which we expect to realize annual savings of $5.0 million to $5.5 million. Additionally, SG&A expenses were impacted by a $4.4 million increase in amortization expense due to acquired intangibles, a $1.7 million increase in marketing expenses and a $1.0 million increase in occupancy costs related to additional acquired locations, a $0.9 million increase in travel expenses and a $0.7 million increase in bad debts and bank fees, partially offset by a $1.5 million improvement in legal expenses.

Research and development expenses increased by $4.0 million, or 68.0%, to $9.9 million in the first six months of 2012 from $5.9 million in the first six months of 2011, principally due to a $1.8 million increase in compensation expense and a $0.6 million increase in operating supplies, a $0.3 million increase in R&D materials and a $0.3 million increase in occupancy costs.

Income from operations

Our income from operations of $24.0 million for the first six months of 2012 improved from $15.4 million in 2011. See Gross profit and gross profit margins and Operating expenses above.

The following table sets forth operating income by geographic area for the first six months of 2012 compared to 2011:

Table 10

	Six Months Ended June 30,
(Dollars in thousands)	2012		2011
Income from operations
United States	$	13,006	$	7,102
Germany		816		828
Other Europe		3,432		2,666
Asia Pacific		6,619		4,770
Subtotal		23,873		15,366
Inter-segment elimination		96		46
Total	$	23,969	$	15,412

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With respect to the U.S., in 2012 and 2011, the changes in operating income by geographic area reflected the same factors discussed above in Gross profit and gross profit margins and Operating expenses.

As most of our operations outside the U.S. are conducted through sales and marketing subsidiaries, the changes in operating income in our operations outside the U.S. in 2012 and 2011 resulted primarily from changes in transfer pricing which is a function of revenue levels.

Interest and other expense (income), net

Interest and other expense (income), net was $6.4 million of expense, net in the first six months of 2012 compared with $0.2 million of income, net in the 2011 period. The higher interest and other expense primarily reflected the interest related to the senior convertible notes issued in 2011, which amounted to $6.1 million of interest expense, of which $1.9 million represents non-cash amortization. Interest and other expense (income), net in the first six months of 2012 also reflected foreign exchange loss of $0.5 million. The $0.2 million of interest and other income, net in the first six months of 2011 reflected foreign exchange gain of $0.6 million, partially offset by $0.3 million of interest expense and $0.2 million of other expense.

Provision for income taxes

We recorded a $3.0 million provision for income taxes in the first six months of 2012 and a $4.6 million benefit for income taxes in the first six months of 2011. Our 2012 provision for income taxes reflects deferred U.S. income taxes associated with the use of net operating loss carryforwards. We released a portion of the valuation allowance related to our U.S. net deferred tax assets during 2011. The 2011 provision for income taxes primarily reflects tax expense associated with income taxes in non-U.S. jurisdictions.

We utilized U.S. net deferred tax assets, specifically net operating loss carryforwards and U.S. federal tax credits, in determining the effective tax rate for the year. This resulted in a reduction our effective tax rate. Absent the use of these net operating loss carryforwards and tax credits, income tax expense would have been $5.9 million and the income tax rate would have been 33.8 percent. Due to our U.S. net operating loss carryforwards, our rate of cash taxes was 11.7 percent of taxable income.

Our U.S. deferred income tax assets, against which there is a valuation allowance, have been partially utilized in determining the effective tax rate for 2012, with the remainder offset by the recognition of $18.3 million of deferred income tax liabilities from the acquisitions of Z Corp, Vidar, My Robot Nation and Bespoke. We will continue our ongoing review of actual results and anticipated future earnings, and their impact on future releases of valuation allowances. As of June 30, 2012, the Company has a $5.0 million valuation allowance remaining on its U.S. net deferred tax assets.

Net income

Our net income for the first six months of 2012 decreased $5.7 million to $14.5 million compared to $20.2 million in the first six months of 2011. The principal reasons for the decrease, which are discussed in more detail above, were:

• the $6.6 million increase in interest and other expense (income), net, and

• the $7.6 million increase in our tax provision;

• partially offset by the $8.6 million increase in operating income as discussed above.

For the six months ended June 30, 2012, average common shares for basic and diluted earnings per share were 51.0 million and 51.9 million, respectively, and basic and diluted earnings per share were $0.28. For the six months ended June 30, 2011, average common shares for basic and diluted earnings per shares were 49.0 million and 50.0 million, respectively, and basic and diluted earnings per share were $0.41 and $0.40, respectively.

Other Financial Information

In addition to our results determined under U.S. generally accepted accounting principles (“GAAP”) discussed above, management believes non-GAAP financial measures, which adjust net income and earnings per share are useful to investors in evaluating our operating performance.

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We use non-GAAP financial measures of adjusted net income and adjusted earnings per share to supplement our unaudited condensed consolidated financial statements presented on a GAAP basis to facilitate a better understanding of the impact that several strategic acquisitions had on our financial results.

These non-GAAP financial measures have not been prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and they are subject to inherent limitations as they reflect the exercise of judgments by our management about which costs, expenses and other items are excluded from our GAAP financial statements in determining our non-GAAP financial measures. We have sought to compensate for these limitations by analyzing current and expected future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP financial statements as required in our public disclosures as well as reconciliations of our non-GAAP financial measures of adjusted net income and adjusted earnings per share to our GAAP financial statements.

The presentation of our non-GAAP financial measures which adjust net income and earnings per share are not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. These non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

Our non-GAAP financial measures which adjust net income and earnings per share are adjusted for the following:

Stock-based compensation expenses. We exclude the tax-effected stock-based compensation expenses from non-GAAP measures primarily because they are non-cash.

Amortization of intangibles. We exclude the tax-effected amortization of intangible assets. The increase in recent periods is primarily in connection with acquisitions of businesses.

Acquisition and severance expenses. We exclude the tax-effected charges associated with the acquisition of businesses and the related severance expenses.

Non-cash interest expenses. We exclude tax-effected, non-cash interest expenses, primarily related to the amortization costs associated with our outstanding senior convertible notes.

Release of valuation allowance on deferred tax assets. We exclude the tax-effected, non-cash benefit of the releases of portions of the valuation allowance on deferred tax assets.

Reconciliation of GAAP Net Income to Non-GAAP Financial Measures

	Quarter Ended June 30,					Six Months Ended June 30,
(Dollars in thousands, except per share)	2012		2011			2012		2011
GAAP net income	$	8,324	$	13,373		$	14,512	$	20,195
Stock-based compensation		1,226		847			2,261		1,234
Amortization of intangibles (a) (b)		2,840		1,111			5,849		1,952
Acquisition and severance expenses		633		607			2,735		706
Non-cash interest expense		924		—			1,769		—
Release of valuation allowance on deferred tax assets		—		(6,221	)		—		(6,221	)
Non-GAAP adjusted net income	$	13,947	$	9,717		$	27,126	$	17,866
Non-GAAP adjusted basic earnings per share	$	0.27	$	0.19		$	0.53	$	0.36
Non-GAAP adjusted diluted earnings per share	$	0.27	$	0.19		$	0.52	$	0.36

(a) Represents amortization expense for the quarter ended June 30, 2012 and 2011, of which $50 and $105, respectively, is included in cost of sales and the remaining $2,790 and $1,006, respectively, is included in operating expenses.

(b) Represents amortization expense for the six months ended June 30, 2012 and 2011, of which $91 and $149, respectively, is included in cost of sales and the remaining $5,758 and $1,803, respectively, is included in operating expenses.

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Financial Condition and Liquidity

Table 11

(Dollars in thousands)	June 30, 2012		December 31, 2011
Cash and cash equivalents	$	158,501	$	179,120
Working capital	$	199,507	$	202,357
Total stockholders’ equity	$	384,073	$	254,788

Our unrestricted cash and cash equivalents decreased by $20.6 million to $158.5 million at June 30, 2012 from $179.1 million at December 31, 2011. The balance at June 30, 2012 included $106.9 million of net proceeds from our common stock offering completed in June 2012. The balance at December 31, 2011 included $145.4 million of net proceeds from senior convertible notes, of which $141.3 million was used to complete the financing transaction and subsequent acquisition of Z Corp and Vidar on January 3, 2012. Excluding the proceeds of the convertible notes and common stock offering, cash increased $17.9 million. We generated $21.4 million of cash from operating activities, consisting of $16.9 million of non-cash charges that were included in our net income, our $14.5 million net income and $10.0 million of cash used by net changes in operating accounts. We used $149.5 million of cash in investing activities. See Cash flow and Capitalized lease obligations below.

Cash equivalents comprise 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 minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending on credit quality.

Our net working capital decreased by $2.9 million to $199.5 million at June 30, 2012 from $202.4 million at December 31, 2011, primarily due to the factors discussed below.

Our unrestricted cash and cash equivalents decreased by $20.6 million to $158.5 million at June 30, 2012 from $179.1 million at December 31, 2011. This decrease primarily was due to the balance at December 31, 2011 including $145.4 million of net proceeds from senior convertible notes, of which $134.9 million was used to complete the acquisition of Z Corp and Vidar on January 3, 2012. This decrease was partially offset by cash from operations of $21.4 million and $107.7 million from financing activities in the first six months of 2012 which included $106.9 million of net proceeds from our common stock offering completed in the second quarter of 2012.

Accounts receivable, net, increased by $12.7 million to $63.9 million at June 30, 2012 from $51.2 million at December 31, 2011. Our gross accounts receivable increased by $13.5 million from December 31, 2011, primarily due to acquiring the receivables of Z Corp and Vidar and our changing business model, which includes custom parts services and increasing materials, both of which are generally sold on credit terms and which make up a larger percent of our total sales. With an increased portion of our sales on credit terms, our days sales outstanding increased to 70 days at June 30, 2012 from 67 days at December 31, 2011 and accounts receivable more than 90 days past due increased to 12.1% of gross receivables from 11.9% at December 31, 2011.

Inventories, net increased by $14.7 million to $40.0 million at June 30, 2012 from $25.3 million at December 31, 2011. This increase resulted primarily from a $11.4 million increase in finished goods inventory due to the acquisition of Z Corp and Vidar and due to the timing of sales and revenue recognition at quarter-end, which also impacts our backlog, and a $3.8 million increase in raw materials primarily related to the timing of deliveries of raw materials and printer assembly parts. We maintained $3.8 million of inventory reserves at June 30, 2012 and $2.5 million of such reserves at December 31, 2011.

The majority of our inventory consists of finished goods, including primarily printers, print materials and service parts. Inventory also consists of raw materials and spare parts for the in-house assembly and support service for personal and professional 3D printers. We outsource the assembly and refurbishment of production printers; therefore, we generally do not hold in inventory most parts for production printer assembly or refurbishment.

Accounts payable increased by $8.3 million to $34.2 million at June 30, 2012 from $25.9 million at December 31, 2011. The increase primarily related to the normal timing of our scheduled expense payments, an increase in payables related to our acquisition of Z Corp and Vidar, and the increase in inventories, which is explained above.

Accrued and other liabilities increased by $2.5 million to $19.3 million at June 30, 2012 from $16.8 million at December 31, 2011. This increase is primarily due to an increase in accrued compensation related to higher compensation costs and earnouts related to acquisitions.

The changes in the first six months of 2012 that make up the other components of working capital not discussed above arose in the ordinary course of business.

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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.

We have relied on our unrestricted cash, cash flow from operations and capital markets transactions to meet our cash requirements for working capital, capital expenditures and acquisitions. However, it is possible that we may need to raise additional funds to finance our activities beyond the next twelve months or to consummate significant acquisitions of other businesses, assets, products or technologies. If needed, we may be able to raise such funds by issuing equity or debt securities to the public or selected investors, or by borrowing from financial institutions, selling assets or restructuring debt.

Cash flow

Table 12 summarizes the cash provided by or used in operating activities, investing activities and financing activities, as well as the effect of changes in foreign currency exchange rates on cash, for the first six months of 2012 and 2011.

Table 12

	Six Months Ended June 30,
(Dollars in thousands)	2012			2011
Cash provided by operating activities	$	21,378		$	6,232
Cash used in investing activities		(149,452	)		(29,164	)
Cash provided by financing activities		107,729			64,016
Effect of exchange rate changes on cash		(274	)		576
Net (decrease) increase in cash and cash equivalents	$	(20,619	)	$	41,660

Cash flow from operating activities

For the six months ended June 30, 2012, our operating activities provided $21.4 million of net cash. This source of cash consisted primarily of net income plus the effects of non-cash items and changes in working capital, which are described above.

For the six months ended June 30, 2011, our operating activities provided $6.2 million of net cash. This source of cash consisted of our $20.2 million net income, $1.3 million of non-cash items included in our net income and $15.3 million of cash used by net changes in operating accounts.

Cash flow from investing activities

Net cash used in investing activities in the first six months of 2012 increased to $149.5 million from $29.2 million for the first six months of 2011. This increase was primarily due to $147.5 million of cash paid for acquisitions in the first six months of 2012 compared to $28.0 million paid for acquisitions in the 2011 period.

Cash flow from financing activities

Net cash provided by financing activities increased to $107.7 million for the six months ended June 30, 2012 compared to $64.0 million in the 2011 period. Cash from financing activities in the first six months of 2012 was from $106.9 million of net proceeds from our Common Stock offering in the second quarter and $0.9 million of stock-based compensation proceeds, partially offset by capital lease payments. Cash from financing activities in the six months ended June 30, 2011 included $62.1 million of net proceeds resulting from our Common Stock offering in March 2011 coupled with $2.3 million of stock-based compensation proceeds.

Contractual commitments and off-balance sheet arrangements

Debt

As discussed above, in November 2011, we issued 5.50% Senior Convertible Notes due 2016 (“the Notes”) in an aggregate principal amount of $152.0 million. These Notes bear interest at a fixed rate of 5.50% per annum, payable June 15 and December 15 of each year while they are outstanding, beginning June 15, 2012. The net proceeds of the Notes were used to fund the acquisition of Z Corp and Vidar and for general corporate purposes. See Notes 2 and 8 to the unaudited condensed consolidated financial statements.

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The Notes have an initial conversion rate of 46.6021 shares of Common Stock per $1,000 principal amount of Notes, which amounts to a conversion price of $21.46 per common share. Upon conversion, the Company has the option to pay cash or issue Common Stock, or a combination thereof. As of June 30, 2012, the stock price condition for convertibility of the Notes was satisfied. The Notes are convertible in the quarter ending September 30, 2012. The aggregate principal amount of these Notes then outstanding matures on December 15, 2016, unless earlier converted, redeemed or repurchased in accordance with the terms of the Notes.

The Notes contain a number of covenants covering, among other things, payment of notes, reporting, maintenance of existence and payment of taxes. Failure to comply with these covenants, or any other event of default, could result in acceleration of the principal amount and accrued and unpaid interest on the notes. We were in compliance with all covenants as of June 30, 2012. See Note 8 to the unaudited condensed consolidated financial statements.

Capitalized lease obligations

Our principal contractual commitments consist of capitalized lease obligations. Our capitalized lease obligations, which primarily relate to a lease agreement that we entered into during 2006, with respect to our Rock Hill facility which covers the facility itself, decreased to $7.7 million at June 30, 2012 from $7.8 million at December 31, 2011 primarily due to scheduled payments of principal on capital lease installments.

Our outstanding capitalized lease obligations carrying values at June 30, 2012 and December 31, 2011 were as follows:

Table 13

(Dollars in thousands)	June 30, 2012		December 31, 2011
Capitalized lease obligations:
Current portion of capitalized lease obligations	$	157	$	163
Capitalized lease obligations, long-term portion		7,534		7,609
Total capitalized lease obligations	$	7,691	$	7,772

Other contractual commitments

For certain of our recent acquisitions we are obligated for the payment of deferred purchase price totaling $1.8 million, due in 2012 and 2013, compared to $1.4 million at December 31, 2011. Certain of our recent acquisitions contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. The total amount of liabilities recorded for these earnouts at June 30, 2012 is $6.1 million, compared to $1.9 million at December 31, 2011. See Note 2 for details of acquisitions and related commitments.

As of June 30, 2012, we have supply commitments related to printer assembly that total $8.9 million compared to $10.9 million at December 31, 2011.

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.

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 do not hedge or trade for speculative purposes, and our foreign currency contracts are generally short-term in nature, typically maturing in 90 days or less. We have elected not to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, we recognize all gains and losses (realized or unrealized) in interest and other expense (income), net in our unaudited condensed consolidated statements of operations and comprehensive income.

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There were no foreign exchange contracts at June 30, 2012 or December 31, 2011. See Note 7 of the unaudited condensed consolidated financial statements.

Changes in the fair value of derivatives are recorded in interest and other expense (income), net, in our unaudited condensed consolidated statements of operations and comprehensive income. Depending on their fair value at the end of the reporting period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in our unaudited condensed consolidated balance sheets.

The total impact of foreign currency related items on our unaudited condensed consolidated statements of operations and comprehensive income was a $0.5 million loss for the six months ended June 30, 2012 and a $0.6 million gain for the six months ended June 30, 2011.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 1 to the unaudited condensed consolidated financial statements.

Critical Accounting Policies and Significant Estimates

For a discussion of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2011.

Forward-Looking Statements

Certain statements made in this Form 10-Q that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the cautionary statements and risk factors set forth below as well as other statements made in the Form 10-Q that may 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 addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in future or conditional tenses or that include terms such as “believes,” “belief,” “expects,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations as to future events and trends affecting our business. Forward-looking statements are based upon management’s current expectations concerning future events and trends and are necessarily subject to uncertainties, many of which are outside of our control. The factors stated under the heading “Cautionary Statements and Risk Factors” set forth below and those described in our other SEC reports, including our Form 10-K for the year ended December 31, 2011, as well as other factors, could cause actual results to differ materially from those reflected or predicted in forward-looking statements.

Any forward-looking statements are based on management’s beliefs and assumptions, using information currently available to us. We assume no obligation, and do not intend, to update these forward-looking statements.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from those reflected in or suggested by forward-looking statements. Any forward-looking statement you read in this Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified or referred to in this Form 10-Q and our other SEC reports, including our Annual Report on Form 10-K for the year ended December 31, 2011, which would cause actual results to differ from those referred to in forward-looking statements.

Cautionary Statements and Risk Factors

We recognize that we are subject to a number of risks and uncertainties that may affect our future performance. The risks and uncertainties described in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2011 are not the only risks and uncertainties that we face. Additional risks and uncertainties not currently known to us or that we currently deem not to be material also may impair our business operations. If any of these risks actually occur, our business, results of operations and financial condition could suffer. In that event the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks discussed in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2011 also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.

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Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For a discussion of market risks at December 31, 2011, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2011. During the first six months of 2012, there were no material changes or developments that would materially alter the market risk assessment performed as of December 31, 2011.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

As of June 30, 2012, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. These controls and procedures were designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner to allow timely decisions regarding required disclosures. Based on this evaluation, including an evaluation of the rules referred to above in this Item 4, management has concluded that our disclosure controls and procedures were effective as of June 30, 2012 to provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, in a manner to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting

There were no material changes in our internal controls over financial reporting during the period covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The information set forth in Note 15 of the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4. Mine Safety Disclosures.

Item 6. Exhibits.

The following exhibits are included as part of this filing and incorporated herein by this reference:

3.1	Certificate of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1 to 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 Designation of Rights, Preferences and Privileges of Preferred Stock. (Incorporated by reference to Exhibit 2 to Registrant’s Registration Statement on Form 8-A filed on January 8, 1996.)
3.4	Certificate of Designation of the Series B Convertible Preferred Stock, filed with the Secretary of State of Delaware on May 2, 2003. (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K, filed on May 7, 2003.)
3.5	Certificate of Elimination of Series A Preferred Stock filed with the Secretary of State of Delaware on March 4, 2004. (Incorporated reference to Exhibit 3.6 of Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 15, 2004.)
3.6	Certificate of Elimination of Series B Preferred Stock filed with the Secretary of State of Delaware on June 9, 2006. (Incorporated reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K, filed on June 9, 2006.)
3.7	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 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, filed on August 5, 2004.)
3.8	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 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005, filed on August 1, 2005.)
3. 9	Certificate of Designations, Preferences and Rights of Series A Preferred Stock, filed with the Secretary of State of Delaware on December 9, 2008. (Incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K, filed on December 9, 2008.)
3.10	Certificate of Elimination of Series A Preferred Stock, filed with the Secretary of State of Delaware on November 14, 2011. (Incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K, filed on November 15, 2011.)
3.11	Amended and Restated By-Laws. (Incorporated by reference to Exhibit 3.2 of Registrant’s Current Report on Form 8-K filed on December 1, 2006.)
3.12	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 of the Registrant’s Current Report on Form 8-K, filed on October 7, 2011.)
31.1	Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 26, 2012.
31.2	Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 26, 2012.

36

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 July 26, 2012.
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 July 26, 2012.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended, and is otherwise not subject to liability under these sections.

37

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

3D SYSTEMS CORPORATION
By	/s/ DAMON J. GREGOIRE
	Damon J. Gregoire
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)
	(Duly Authorized Officer)

Date: July 26, 2012

38

EX-31.1

Exhibit 31.1

Certification of

Principal Executive Officer of

3D Systems Corporation

I, Abraham N. Reichental, certify that:

1. I have reviewed this report on Form 10-Q of 3D Systems Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ ABRAHAM N. REICHENTAL
	Abraham N. Reichental
	Title: President and Chief Executive Officer
	(Principal Executive Officer)

Date: July 26, 2012

39

EX-31.2

Exhibit 31.2

Certification of

Principal Financial Officer of

3D Systems Corporation

I, Damon J. Gregoire, certify that:

1. I have reviewed this report on Form 10-Q of 3D Systems Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ DAMON J. GREGOIRE
	Damon J. Gregoire
	Title: Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Date: July 26, 2012

40

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 30, 2012 of 3D Systems Corporation (the “Issuer”).

I, Abraham N. Reichental, the Principal Executive Officer of the Issuer, certify that, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(i) the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

/s/ ABRAHAM N. REICHENTAL

Name: Abraham N. Reichental

Date: July 26, 2012

A signed original of this written statement required by Section 906 has been provided to 3D Systems Corporation and will be retained by 3D Systems Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

41

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 30, 2012 of 3D Systems Corporation (the “Issuer”).

I, Damon J. Gregoire, the Principal Financial Officer of the Issuer, certify that, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(i) the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

/s/ DAMON J. GREGOIRE

Name: Damon J. Gregoire

Date: July 26, 2012

A signed original of this written statement required by Section 906 has been provided to 3D Systems Corporation and will be retained by 3D Systems Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

42

XML

Property And Equipment (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Property And Equipment [Abstract]
Depreciation and amortization expense	$ 2,162	$ 1,480	$ 4,134	$ 3,049

XML

Fair Value Measurements (Summary Of Assets And Liabilities Measured At Fair Value On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 117,418	[1]
Convertible senior notes, net	132,798		131,107
Estimated fair value of senior convertible notes	150,508		149,615
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 117,418	[1]

[1] 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.

XML

Stock-Based Compensation Plans (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded	84	78	168	170
2004 Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded	73	62	157	154
Shares remaining to grant			71
Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense recognized			300	300
Non-Employee Directors [Member] | 2004 Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded			11	16
Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded				10
Executive Officer [Member] | 2004 Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded			13

XML

Income Taxes (Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Taxes [Line Items]
Effective tax rate	18.90%	(69.40%)	17.30%	(29.40%)
Deferred income tax liabilities recognized	$ 18,308		$ 18,308
Valuation allowance	4,999		4,999
Adjustment of valuation allowance (reverse)				(17,000)
Non-cash income tax benefit				6,221
Non-cash tax benefit per share				$ 0.12
U.S. Deferred Tax Assets [Member]
Income Taxes [Line Items]
Deferred income tax assets recognized	$ 502		$ 502

XML

Borrowings (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Nov. 30, 2011 Institutional And Accredited Investor [Member]
Debt Instrument [Line Items]
Initial conversion rate	$ 21.46
Original issue discount	98.00%
Interest rate	5.50%
Private placement of senior convertible notes	$ 152,000,000	$ 152,000,000	$ 152,000,000
Issuance costs	6,634,000
Proceeds from issuance of notes	145,366,000
Converted number of common stock shares	46.6021
Debt instrument periodic payment of interest	payable in cash semi-annually on June 15 and December 15 of each year
Convertible Senior Notes principal amount	$ 1
Shares of common stock that are convertible	7,084,000
Notes issued with an effective yield	5.96%
Redeemable convertible securities maximum, shares	9,031,000
Redeemable convertible securities price per share	$ 16.83
Maturity date	Dec. 15, 2016

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share, Basic And Diluted [Abstract]

Schedule Of Earnings Per Share Reconciliation

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2012		2011		2012		2011
Numerator:
Net income – numerator for basic net earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Add: Effect of dilutive securities
Interest expense on 5.50% convertible notes (after-tax)(1)		—		—		—		—
Stock options and other equity compensation		—		—		—		—
Numerator for diluted earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Denominator:
Weighted average shares – denominator for basic net earnings per share		51,779		50,298		51,048		48,950
Add: Effect of dilutive securities
Stock options and other equity compensation		841		1,049		851		1,054
5.50% convertible notes (after-tax)(1)		—		—		—		—
Denominator for diluted earnings per share		52,620		51,347		51,899		50,004
Earnings per share
Basic	$	0.16	$	0.27	$	0.28	$	0.41
Diluted	$	0.16	$	0.26	$	0.28	$	0.40
Interest expense excluded from diluted earnings per share (1)	$	2,654		—	$	5,262		—
5.50% Convertible notes shares excluded from diluted earnings per share (1)	$	7,084		—	$	3,522		—
_________
(1)       Average outstanding diluted earnings per share calculation excludes shares that may be issued upon conversion of the outstanding senior convertible notes since the effect of their inclusion would have been anti-dilutive.

XML

Segment Information (Schedule Of Revenue From Unaffiliated Customers By Product) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information [Line Items]
Revenue	$ 83,610	$ 55,128	$ 161,530	$ 103,025
Printers And Other Products [Member]
Segment Reporting Information [Line Items]
Revenue	26,071	16,193	50,790	29,728
Materials [Member]
Segment Reporting Information [Line Items]
Revenue	26,204	16,417	50,882	32,026
Services [Member]
Segment Reporting Information [Line Items]
Revenue	$ 31,335	$ 22,518	$ 59,858	$ 41,271

XML

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Purchase Price Allocation To Assets Acquired And Liabilities Assumed

(in thousands)	2012
Fixed assets	$	3,367
Intangible assets		21,500
Other liabilities, net of cash acquired and assets assumed		(5,019	)
Net assets acquired	$	19,848

XML

Stock-Based Compensation Plans (Summary Of Stock Options Outstanding) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Awards, Weighted Average Fair Value	$ 26.45	$ 24.20	$ 24.43	$ 19.67
Shares Awarded	84	78	168	170
2004 Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Awards, Weighted Average Fair Value	$ 26.31	$ 25.80	$ 24.22	$ 19.82
Shares Awarded	73	62	157	154
2004 Incentive Stock Plan [Member] | Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Awarded			11	16
2004 Director Plan [Member] | Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Awards, Weighted Average Fair Value	$ 27.42	$ 18.23	$ 27.42	$ 18.23
Shares Awarded	11	16	11	16

XML

Intangible Assets (Intangible Assets Other Than Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets, Gross	$ 151,131	$ 99,703
Intangible assets, Accumulated Amortization	(51,975)	(45,663)
Intangible assets, Net	99,156	54,040
Trademarks [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	2,770	2,700
Licenses [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	5,875	5,875
Intangible assets with finite lives: Accumulated Amortization	(5,875)	(5,875)
Patent Costs [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	19,970	16,379
Intangible assets with finite lives: Accumulated Amortization	(13,933)	(13,846)
Intangible assets with finite lives: Net	6,037	2,533
Acquired Technology [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	25,920	11,015
Intangible assets with finite lives: Accumulated Amortization	(11,003)	(10,345)
Intangible assets with finite lives: Net	14,917	670
Internally Developed Software [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	17,847	17,847
Intangible assets with finite lives: Accumulated Amortization	(10,704)	(9,983)
Intangible assets with finite lives: Net	7,143	7,864
Customer Relationships [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	56,520	32,974
Intangible assets with finite lives: Accumulated Amortization	(4,577)	(1,798)
Intangible assets with finite lives: Net	51,943	31,176
Non-Compete Agreements [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	11,564	8,976
Intangible assets with finite lives: Accumulated Amortization	(2,750)	(1,890)
Intangible assets with finite lives: Net	8,814	7,086
Trade Names [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	4,330	1,951
Intangible assets with finite lives: Accumulated Amortization	(438)	(180)
Intangible assets with finite lives: Net	3,892	1,771
Other [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets with finite lives: Gross	6,335	1,986
Intangible assets with finite lives: Accumulated Amortization	(2,695)	(1,746)
Intangible assets with finite lives: Net	$ 3,640	$ 240

XML

Acquisitions (Purchase Price Allocation To Assets Acquired And Liabilities Assumed) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Acquisitions [Abstract]
Fixed assets	$ 3,367
Intangible assets	21,500
Other liabilities, net of cash acquired and assets assumed	(5,019)
Net assets acquired	$ 19,848

XML

Earnings Per Share (Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share, Basic And Diluted [Abstract]
Average common shares for basic earnings per share	51,779	50,298	51,048	48,950
Average common shares diluted for diluted earnings per share	52,620	51,347	51,899	50,004
Earnings (loss) per share - basic	$ 0.16	$ 0.27	$ 0.28	$ 0.41
Earnings (loss) per share - diluted	$ 0.16	$ 0.26	$ 0.28	$ 0.40

XML

Commitments And Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 item	Jun. 30, 2011
Rent expense under operating leases	$ 1,164	$ 649	$ 2,336	$ 1,269
Supply commitments, printer assembly	8,896	13,301	8,896	13,301
Business acquisition, deferred purchase price	1,787		1,787
Accrued liability recorded for earnouts	6,062	3,297	6,062	3,297
Amount of damages plaintiff seeking			2,101
Number of productions accused of patent infringement			2
DSM Desotech [Member]
Estimates of the damages associated with claims	$ 40,000		$ 40,000

XML

Borrowings (Principal Amounts And Related Unamortized Discount On Convertible Notes) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Borrowings [Abstract]
Principal amount of convertible notes	$ 152,000	$ 152,000
Unamortized discount on convertible notes	(19,202)	(20,893)
Net carrying value	$ 132,798	$ 131,107

XML

Acquisitions

6 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Acquisitions

(2) Acquisitions

The Company completed acquisitions in the second quarter of 2012, which are discussed below.

On April 5, 2012, the Company acquired the outstanding shares of Fresh Fiber B.V. (“Fresh Fiber”), moving from a minority shareholder to 100% ownership.Fresh Fiber designs and markets innovative 3D printed accessories for retail consumer electronics.Fresh Fiber’s operations have been integrated into the Company and are included in products revenue.The fair value of the consideration paid for this acquisition, net of cash acquired, was $1,243, based on the Euro exchange rate at the date of acquisition, of which $848 was paid in cash and $395 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933.The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the acquisition date, with any excess recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions.The Fresh Fiber acquisition is not significant to the Company’s financial statements.

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount pursuant to an earnout formula over a three-year period as set forth in the acquisition agreement. As of June 30, 2012, an accrued liability of approximately $1,779 was recorded for the earnout.The earnout was determined to be acquisition consideration and therefore is reflected as part of goodwill.

On April 10, 2012, the Company acquired Kodama Studios, LLC, which operates My Robot Nation, (“My Robot Nation”), a consumer technology platform that provides intuitive, game-like content creation for 3D printing. My Robot Nation’s operations have been integrated into the Company and future revenue from this acquisition will be reported in services revenue. The fair value of the consideration paid for this acquisition, net of cash acquired, was $2,749, of which $1,499 was paid in cash and $1,250 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933.The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on the estimated fair values as of the acquisition date, with any excess recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions.The My Robot Nation acquisition is not significant to the Company’s financial statements.

On April 17, 2012, the Company acquired the assets of Paramount Industries (“Paramount”), a direct rapid manufacturing provider of product development solutions for aerospace and medical device applications, from design to production of certified end-use parts and products. Paramount’s operations have been integrated into the Company and future revenue from this acquisition will be reported in services revenue.The fair value of the consideration paid for this acquisition, net of cash acquired, was $7,953, of which $6,138 was paid in cash and $1,815 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933.The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed based on the estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions.The Paramount acquisition is not significant to the Company’s financial statements.

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount pursuant to an earnout formula over a five-year period as set forth in the acquisition agreement. As of June 30, 2012, an accrued liability of approximately $2,420 was recorded for the earnout.The earnout was determined to be acquisition consideration and therefore is reflected as part of goodwill.In connection with the acquisition the Company entered into a lease agreement with the former owner of Paramount Industries pursuant to which the Company agreed to lease the facilities at which Paramount Industries conducts its operations. The lease provides for an initial term of five years, with options for two successive three-year terms.

On May 23, 2012, the Company acquired the shares of Bespoke Innovations, Inc. (“Bespoke”), a startup that is bringing a more personal approach to the way a broad spectrum of medical devices are developed and used. Bespoke develops proprietary, integrated scan, design and print technology that is designed to deliver custom fit prosthetics, orthotics and orthopedic devices that improve treatment and lifestyle outcomes. Bespoke’s operations have been integrated into the Company and future revenue from this acquisition will be reported in products revenue.The fair value of the consideration paid for this acquisition, net of cash acquired, was $7,903 of which $4,064 was paid in cash and $3,144 was paid in shares of the Company’s common stock.These shares were issued in a private transaction exempt from registration under the Securities Act of 1933. Subject to the terms and conditions of the acquisition agreement, the sellers have the right to a deferred payment of $695. The fair value of the consideration paid for this acquisition was allocated to the assets purchased and liabilities assumed, based on the estimated fair values as of the acquisition date, with any excess to be recorded as goodwill, and is included in the table below which summarizes second quarter 2012 acquisitions.The Bespoke acquisition is not significant to the Company’s financial statements.

The Company’s purchase price allocations for acquired companies are preliminary and subject to revision as more detailed analyses are completed and additional information about fair value of assets and liabilities becomes available. The amounts related to the acquisitions of these businesses were allocated to the assets acquired and the liabilities assumed and included in the Company’s condensed consolidated balance sheet at June 30, 2012 as follows:

(in thousands)	2012
Fixed assets	$	3,367
Intangible assets		21,500
Other liabilities, net of cash acquired and assets assumed		(5,019	)
Net assets acquired	$	19,848

Subsequent acquisitions

In July 2012, the Company acquired the shares of Viztu Technologies, Inc. (“Viztu”), the developer of Hypr3D, an online platform that allows anyone to turn their pictures and videos into printable 3D creations.The fair value of the consideration paid for this acquisition, net of cash acquired, was $1,000, based on the exchange rate at the date of acquisition, of which $500 was paid in cash and $500 was paid in shares of the Company’s common stock. These shares were issued in a private transaction exempt from registration under the Securities Act of 1933.Due to the timing of this acquisition, the Company is in the process of allocating the fair values of the assets purchased, liabilities assumed and other intangibles identified as of the acquisition date, with any excess to be recorded as goodwill.The Company plans to integrate Viztu into consumer solutions and future revenue from this acquisition will be reported in services revenue.The Viztu acquisition is not significant to the Company’s financial statements.

Subject to the terms and conditions of the acquisition agreement, the seller has the right to earn an additional amount up to $1,000, pursuant to an earnout formula over a four-year period as set forth in the acquisition agreement.

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Accrued And Other Liabilities (Schedule Of Accrued Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accrued And Other Liabilities [Abstract]
Compensation and benefits	$ 9,222	$ 7,036
Vendor accruals	1,479	1,640
Accrued professional fees	457	326
Accrued taxes	4,314	3,500
Royalties payable	557	302
Accrued interest	416	950
Earnouts and deferred payments related to acquisitions	2,087	1,384
Accrued other	722	1,678
Total	$ 19,254	$ 16,816

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Accrued And Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Accrued And Other Liabilities [Abstract]

Schedule Of Accrued Liabilities

(in thousands)	2012		2011
Compensation and benefits	$	9,222	$	7,036
Vendor accruals		1,479		1,640
Accrued professional fees		457		326
Accrued taxes		4,314		3,500
Royalties payable		557		302
Accrued interest		416		950
Earnouts and deferred payments related to acquisitions		2,087		1,384
Accrued other		722		1,678
Total	$	19,254	$	16,816

Schedule Of Other Liabilities

(in thousands)	2012		2011
Defined benefit pension obligation	$	3,734	$	3,884
Long-term tax liability		808		827
Earnouts and deferred payments related to acquisitions		6,458		1,898
Other long-term liabilities		226		172
Total	$	11,226	$	6,781

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Intangible Assets [Abstract]

Intangible Assets Other Than Goodwill

	2012							2011
(in thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses	$	5,875	$	(5,875	)	$	—	$	5,875	$	(5,875	)	$	—
Patent costs		19,970		(13,933	)		6,037		16,379		(13,846	)		2,533
Acquired technology		25,920		(11,003	)		14,917		11,015		(10,345	)		670
Internally developed software		17,847		(10,704	)		7,143		17,847		(9,983	)		7,864
Customer relationships		56,520		(4,577	)		51,943		32,974		(1,798	)		31,176
Non-compete agreements		11,564		(2,750	)		8,814		8,976		(1,890	)		7,086
Trade names		4,330		(438	)		3,892		1,951		(180	)		1,771
Other		6,335		(2,695	)		3,640		1,986		(1,746	)		240
Intangibles with indefinite lives:
Trademarks		2,770		—			2,770		2,700		—			2,700
Total intangible assets	$	151,131	$	(51,975	)	$	99,156	$	99,703	$	(45,663	)	$	54,040

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Segment Information (Schedule Of Revenue From Unaffiliated Customers By Geographic Area) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011 segment
Segment Reporting Information [Line Items]
Number of reportable segments				1
Revenue from unaffiliated customers	$ 83,610	$ 55,128	$ 161,530	$ 103,025
United States [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	46,761	28,609	92,670	51,486
Germany [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	9,896	8,306	17,319	15,042
Other Europe [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	14,757	10,261	28,045	21,640
Asia Pacific [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	$ 12,196	$ 7,952	$ 23,496	$ 14,857

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Accrued And Other Liabilities (Schedule Of Other Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accrued And Other Liabilities [Abstract]
Defined benefit pension obligation	$ 3,734	$ 3,884
Long-term tax liability	808	827
Earnouts and deferred payments related to acquisitions	6,458	1,898
Other long-term liabilities	226	172
Total	$ 11,226	$ 6,781

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Borrowings (Tables)

6 Months Ended

Jun. 30, 2012

Borrowings [Abstract]

Principal Amounts And Related Unamortized Discount On Convertible Notes

(in thousands)	2012			2011
Principal amount of convertible notes	$	152,000		$	152,000
Unamortized discount on convertible notes		(19,202	)		(20,893	)
Net carrying value	$	132,798		$	131,107

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Stock-Based Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation Plans [Abstract]

Schedule Of Stock-Based Compensation Expense

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Restricted stock awards	$	1,304	$	847	$	2,480	$	1,234

Schedule Of Stock-Based Compensation, Restricted Stock Units Award Activity

	Quarter Ended June 30,
	2012			2011
(in thousands, except per share amounts)	Shares Awarded	Weighted Average Fair Value		Shares Awarded	Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan	73	$	26.31	62	$	25.80
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors	11		27.42	16		18.23
Total restricted stock awards	84	$	26.45	78	$	24.20
	Six Months Ended June 30,
	2012			2011
(in thousands, except per share amounts)	Shares Awarded	Weighted Average Fair Value		Shares Awarded	Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan	157	$	24.22	154	$	19.82
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors	11		27.42	16		18.23
Total restricted stock awards	168	$	24.43	170	$	19.67

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Basis Of Presentation

6 Months Ended

Jun. 30, 2012

Basis Of Presentation [Abstract]

Basis Of Presentation

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of 3D Systems Corporation and its subsidiaries (collectively, the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2011.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the quarter and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates and assumptions.

Certain prior period amounts presented in the accompanying footnotes have been reclassified to conform to current year presentation.

All amounts presented in the accompanying footnotes are presented in thousands, except for per share information.

The Company has evaluated subsequent events from the date of the condensed consolidated balance sheet through the date of the filing of this Form 10-Q. During this period, the Company closed the acquisition of Viztu Technologies, Inc. See Note 2 and Note 16 for a description of subsequent events.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the second quarter of 2012 have had or are expected to have a significant impact on the Company’s consolidated financial statements.

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International Retirement Plan (Tables)

6 Months Ended

Jun. 30, 2012

International Retirement Plan [Abstract]

Components Of Net Periodic Benefit Costs And Other Amounts Recognized In Other Comprehensive Income

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Service cost	$	18	$	43	$	37	$	57
Interest cost		31		48		64		64
Total	$	49	$	91	$	101	$	121

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Property And Equipment (Schedule Of Property And Equipment) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012		Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 69,671		$ 59,829
Less: Accumulated depreciation and amortization	(33,966)		(30,235)
Total property and equipment, net	35,705		29,594
Land [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	541		541
Building [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	9,204		9,204
Property and equipment, useful life, in years	25 years
Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	46,366		36,773
Capitalized Software - ERP [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	3,173		3,141
Property and equipment, useful life, in years	5 years
Office Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	3,252		3,138
Property and equipment, useful life, in years	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	6,463		5,996
Leasehold improvements useful life	Life of lease (1)	[1]
Rental Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	54		56
Property and equipment, useful life, in years	5 years
Construction In Progress [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 618		$ 980
Maximum [Member] | Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life, in years	7 years
Minimum [Member] | Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life, in years	3 years

[1] Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.

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Earnings Per Share (Schedule Of Earnings Per Share Reconciliation) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Earnings Per Share, Basic And Diluted [Abstract]
Net income - numerator for basic net earnings per share	$ 8,324		$ 13,373		$ 14,512		$ 20,195
Interest expense on 5.50% convertible notes (after-tax)		[1]		[1]		[1]		[1]
Stock options and other equity compensation
Numerator for dilutive earnings per share	8,324		13,373		14,512		20,195
Weighted average shares - denominator for basic net earnings per share	51,779		50,298		51,048		48,950
Stock options and other equity compensation	841		1,049		851		1,054
5.50% convertible notes (after-tax)		[1]		[1]		[1]		[1]
Denominator for dilutive net earnings per share	52,620		51,347		51,899		50,004
Earnings per share, basic	$ 0.16		$ 0.27		$ 0.28		$ 0.41
Earnings per share, diluted	$ 0.16		$ 0.26		$ 0.28		$ 0.40
Interest expense excluded from diluted earnings per share	2,654	[1]			5,262	[1]
5.5% Convertible notes shares excluded from diluted earnings per share	$ 7,084	[1]			$ 3,522	[1]

[1] Average outstanding diluted earnings per share calculation excludes shares that may be issued upon conversion of the outstanding senior convertible notes since the effect of their inclusion would have been anti-dilutive.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 158,501	$ 179,120
Accounts receivable, net of allowance for doubtful accounts of $3,792 (2012) and $3,019 (2011)	63,901	51,195
Inventories, net of reserves of $3,804 (2012) and $2,542 (2011)	39,994	25,283
Prepaid expenses and other current assets	2,766	2,241
Current deferred income taxes	7,413	3,528
Restricted cash	12	13
Total current assets	272,587	261,380
Property and equipment, net	35,705	29,594
Intangible assets, net	99,156	54,040
Goodwill	217,275	107,651
Long term deferred income taxes	460	3,195
Other assets, net	7,155	7,114
Total assets	632,338	462,974
LIABILITIES AND EQUITY
Current portion of capitalized lease obligations	157	163
Accounts payable	34,225	25,911
Accrued and other liabilities	19,254	16,816
Customer deposits	3,785	3,398
Deferred revenue	15,659	12,735
Total current liabilities	73,080	59,023
Long-term portion of capitalized lease obligations	7,534	7,609
Convertible senior notes, net	132,798	131,107
Deferred income tax liability	23,627	3,666
Other liabilities	11,226	6,781
Total liabilities	248,265	208,186
Commitments and Contingencies
Stockholders' equity:
Preferred Stock, authorized 5,000 shares, none issued
Common stock, $0.001 par value, authorized 120,000 shares; 55,403 (2012) and 50,975 (2011) issued	56	51
Additional paid-in capital	391,143	274,542
Treasury stock, at cost: 343 (2012) and 324 shares (2011)	(228)	(214)
Accumulated deficit	(8,019)	(22,531)
Accumulated other comprehensive income	1,121	2,940
Total stockholders' equity	384,073	254,788
Total liabilities and stockholders' equity	$ 632,338	$ 462,974

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Hedging Activities And Financial Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Hedging Activities And Financial Instruments [Abstract]
Foreign currency gain (loss)	$ (1,035)	$ 56	$ (515)	$ 611

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Consolidated Statements Of Stockholders' Equity (USD $) In Thousands	Common Stock [Member]		Additional Paid In Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance, Value at Dec. 31, 2011	$ 51		$ 274,542	$ (214)	$ (22,531)	$ 2,940	$ 254,788
Balance, Shares at Dec. 31, 2011	50,975
Treasury stock, Shares at Dec. 31, 2011				324			324
Exercise of stock options, Value		[1]	562				562
Exercise of stock options, Shares	105
Issuance (repurchase) of restricted stock, net, Value		[1]	347	(14)			333
Issuance (repurchase) of restricted stock, net, Shares	347			19
Issuance of common stock, Value	5		106,909				106,914
Issuance of common stock, Shares	4,151						55,841
Issuance of stock for acquisitions, Value		[1]	6,603				6,603
Issuance of stock for acquisitions, Shares	263
Stock-based compensation expense, Value			2,180				2,180
Net income					14,512		14,512
Gain on pension plan - unrealized						7	7
Foreign currency translation adjustments						(1,826)	(1,826)
Balance, Value at Jun. 30, 2012	$ 56		$ 391,143	$ (228)	$ (8,019)	$ 1,121	$ 384,073
Balance, Shares at Jun. 30, 2012	55,841
Treasury stock, Shares at Jun. 30, 2012				343			343

[1] Amounts not shown due to rounding.

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Segment Information (Schedule Of Income Or Loss From Operations By Geographic Area) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information [Line Items]
Income (loss) from operations	$ 13,999	$ 8,001	$ 23,969	$ 15,412
United States [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	7,550	3,570	13,006	7,109
Germany [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	563	417	816	828
Other Europe [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	2,423	1,148	3,432	2,659
Asia Pacific [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	3,464	2,795	6,619	4,770
Subtotal [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	14,000	7,930	23,873	15,366
Inter-Segment Elimination [Member]
Segment Reporting Information [Line Items]
Income (loss) from operations	$ (1)	$ 71	$ 96	$ 46

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Schedule Of Revenue From Unaffiliated Customers By Geographic Area

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Revenue from unaffiliated customers:
United States	$	46,761	$	28,609	$	92,670	$	51,486
Germany		9,896		8,306		17,319		15,042
Other Europe		14,757		10,261		28,045		21,640
Asia Pacific		12,196		7,952		23,496		14,857
Total	$	83,610	$	55,128	$	161,530	$	103,025

Schedule Of Revenue From Unaffiliated Customers By Product

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Printers and other products	$	26,071	$	16,193	$	50,790	$	29,728
Materials		26,204		16,417		50,882		32,026
Services		31,335		22,518		59,858		41,271
Total revenue	$	83,610	$	55,128	$	161,530	$	103,025

Schedule Of Intercompany Sales By Geographic Area

	Quarter Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	4,369	$	2,899	$	692	$	7,960
Germany		14		—		873		177		1,064
Other Europe		3,384		36		61		108		3,589
Asia Pacific		14		7		—		—		21
Total	$	3,412	$	4,412	$	3,833	$	977	$	12,634
	Quarter Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	3,912	$	1,765	$	698	$	6,375
Germany		15		—		433		—		448
Other Europe		2,978		—		—		—		2,978
Asia Pacific		—		—		—		—		—
Total	$	2,993	$	3,912	$	2,198	$	698	$	9,801
	Six Months Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	8,270	$	6,004	$	1,539	$	15,813
Germany		128		—		1,033		177		1,338
Other Europe		6,661		52		139		122		6,974
Asia Pacific		44		7		—		—		51
Total	$	6,833	$	8,329	$	7,176	$	1,838	$	24,176
	Six Months Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	7,297	$	3,952	$	2,130	$	13,379
Germany		110		—		1,403		—		1,513
Other Europe		5,872		1		12		—		5,885
Asia Pacific		—		—		—		—		—
Total	$	5,982	$	7,298	$	5,367	$	2,130	$	20,777

Schedule Of Income Or Loss From Operations By Geographic Area

	Quarter Ended June 30,					Six Months Ended June 30,
(in thousands)	2012			2011		2012		2011
Income from operations:
United States	$	7,550		$	3,570	$	13,006	$	7,109
Germany		563			417		816		828
Other Europe		2,423			1,148		3,432		2,659
Asia Pacific		3,464			2,795		6,619		4,770
Subtotal		14,000			7,930		23,873		15,366
Inter-segment elimination		(1	)		71		96		46
Total	$	13,999		$	8,001	$	23,969	$	15,412

Schedule Of Assets By Geographic Area

	June 30,		December 31,
(in thousands)	2012		2011
Assets:
United States	$	515,560	$	346,350
Germany		17,774		20,285
Other Europe		74,267		71,202
Asia Pacific		24,737		25,137
Total	$	632,338	$	462,974

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Commitments And Contingencies

6 Months Ended

Jun. 30, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

(15)  Commitments and Contingencies

The Company leases office space under various non-cancelable operating leases. Rent expense under operating leases was $1,164 and $2,336 for the quarter and six months ended June 30, 2012, respectively, compared to $649 and $1,269 for the quarter and six months ended June 30, 2011, respectively.

As of June 30, 2012, the Company has supply commitments with third party assemblers for printer assembly for the third quarter of 2012 that total $8,896, compared to $13,301 at June 30, 2011.

For certain of the acquisitions, the Company is obligated for deferred purchase price commitments totaling $1,787, which are due in 2012 and 2013. Certain of our recent acquisitions contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts.The total liabilities recorded for these earnouts as of June 30, 2012 was $6,062.As of June 30, 2011, the Company had recorded $3,297 of liabilities for earnouts related to acquisitions.See Note 2 for details of acquisitions and related commitments.

Litigation

In 2008, DSM Desotech Inc. filed a complaint, which it has subsequently amended, in an action titled DSM Desotech Inc. v. 3D Systems Corporation and 3D Systems, Inc. in the United States District Court for the Northern District of Illinois (Eastern Division) asserting that the Company engaged in anticompetitive behavior with respect to resins used in certain of its stereolithography machines. The complaint further asserted that the Company is infringing upon two of DSM Desotech’s patents relating to stereolithography machines.

The Company filed answers to DSM Desotech’s complaint in which, among other things, the Company denied the material allegations of DSM Desotech’s complaint. In 2010, the Court issued a decision relating to the construction of the claims of the patents-in-suit following a Markman hearing held in 2009.In that decision, the Court generally adopted the claim constructions that the Company proposed.

Fact discovery, including expert discovery, regarding the claims pending in this case concluded in 2011. The Company filed motions for summary judgment in December 2011 that seek rulings in its favor on all of DSM Desotech’s claims in the litigation.As of the date of this Form 10-Q, the Court has not yet ruled on those motions.

The Company understands that DSM Desotech estimates the damages associated with its claims to be in excess of $40,000. The Company intends to continue to vigorously contest all the claims asserted by DSM Desotech.

The Company has been pursuing patent infringement litigation against EnvisionTEC, Inc. and certain of its related companies since 2005.In this litigation, the Company asserted that EnvisionTEC infringed the Company’s patents covering various three-dimensional solid imaging products and methods for creating physical three-dimensional models of an object and has sought injunctive relief and damages.  EnvisionTEC's Perfactory machine and Vanquish machine (the Vanquish is now marketed as the PerfactoryXede and PerfactoryXtreme) are the two products accused of patent infringement.  

In 2008 the Court issued Markman claim constructions that generally adopted the claim constructions the Company proposed.Following a subsequent jury trial and certain other proceedings, the Court issued a judgment, as amended through 2011, to the effect that EnvisionTEC’s Perfactory and Vanquish machines infringe certain claims of one of our patents and its Vanquish machines infringe certain claims of another of our patents.

On October 13, 2011, EnvisionTEC’s motion to stay damages discovery was denied by the Court, and damages discovery is underway.  The Company intends to pursue its claims for damages against EnvisionTEC.

On October 17, 2011, EnvisionTEC filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit seeking judicial review of the Court’s judgment, and the Company filed a motion to dismiss that appeal on December 12, 2011.As of the date of this Form 10-Q, the Court of Appeals has not yet ruled.

In 2010, MSK K.K., a Japanese company, filed a complaint against the Company’s Japanese subsidiary in the Tokyo District Court asserting, among other things, various contract claims associated with two laser sintering machines purchased from the Company’s Japanese subsidiary in 2007.

The plaintiff is seeking damages in excess of the Japanese Yen equivalent of $2,101. Several hearings have been held in the Tokyo District Court with respect to these claims. The Company’s Japanese subsidiary is vigorously contesting all of the claims asserted by the plaintiff.

The Company is also involved in various other legal matters incidental to its business. The Company believes, after consulting with counsel, that the disposition of these other legal matters will not have a material effect on our consolidated results of operations or consolidated financial position.

Indemnification

In the normal course of business the Company periodically enters into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of the Company’s 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 our future results of operations.

To the extent permitted under Delaware law, the Company indemnifies directors and officers for certain events or occurrences while the director or officer is, or was serving, at the Company’s 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, the Company has directors and officers insurance coverage that may enable the Company 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.

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Acquisitions (Narrative) (Details) (USD $) In Thousands, unless otherwise specified			6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Fresh Fiber [Member]	Apr. 05, 2012 Fresh Fiber [Member]	Jun. 30, 2012 Kodama Studios, LLC [Member]	Apr. 10, 2012 Kodama Studios, LLC [Member]	Jun. 30, 2012 Paramount Industries [Member]	Apr. 17, 2012 Paramount Industries [Member]	Jun. 30, 2012 Bespoke Innovations, Inc. [Member]	May 23, 2012 Bespoke Innovations, Inc. [Member]	Jun. 30, 2012 Two Successive Terms [Member] Paramount Industries [Member] agreement	Jun. 30, 2012 Subsequent Event [Member] Vistu [Member]
Business Acquisition [Line Items]
Date of acquisition			Apr. 05, 2012		Apr. 10, 2012		Apr. 17, 2012		May 23, 2012
Business acquisition, ownership percentage				100.00%
Consideration paid for this acquisition, net of cash acquired				$ 1,243		$ 2,749		$ 7,953		$ 7,903		$ 1,000
Cash paid for business acquisition				848		1,499		6,138		4,064		500
Value of shares paid for acquisition				395		1,250		1,815		3,144		500
Business acquisition, deferred payment										695
Additional amount pursuant to an earnout formula												1,000
Right to earn additional pursuant, in years				3 years				5 years				4 years
Accrued liability recorded for earnouts	$ 6,062	$ 3,297		$ 1,779			$ 2,420
Facilities lease term, in years							5 years				3 years
Number of lease terms											2

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Basis Of Presentation (Policy)

6 Months Ended

Jun. 30, 2012

Basis Of Presentation [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the second quarter of 2012 have had or are expected to have a significant impact on the Company’s consolidated financial statements.

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Consolidated Statements Of Stockholders' Equity (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Statement Of Equity [Abstract]
Common stock, Par Value	$ 0.001	$ 0.001

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 3,792	$ 3,019
Inventories, reserves	$ 3,804	$ 2,542
Preferred Stock, shares authorized	5,000	5,000
Preferred Stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	120,000	120,000
Common stock, shares issued	55,841	50,975
Treasury stock, shares	343	324

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International Retirement Plan

6 Months Ended

Jun. 30, 2012

International Retirement Plan [Abstract]

International Retirement Plan

(10)  International Retirement Plan

The following table shows the components of net periodic benefit costs and other amounts recognized in the condensed consolidated statements of operations and comprehensive income for the quarter and six months ended June 30, 2012 and 2011:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Service cost	$	18	$	43	$	37	$	57
Interest cost		31		48		64		64
Total	$	49	$	91	$	101	$	121

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Document And Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 20, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Entity Registrant Name	3D SYSTEMS CORP
Entity Central Index Key	0000910638
Trading Symbol	ddd
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		55,402,822

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Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

(11)  Earnings Per Share

The Company presents basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net incomeavailable to common stockholders by the weighted average number of common shares outstanding during the applicable period. Diluted EPS is calculated by dividing net income by the weighted average number of common and common equivalent shares outstanding during the applicable period.

The following table reconciles basic weighted average outstanding shares to diluted weighted average outstanding shares at June 30, 2012 and 2011:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2012		2011		2012		2011
Numerator:
Net income – numerator for basic net earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Add: Effect of dilutive securities
Interest expense on 5.50% convertible notes (after-tax)(1)		—		—		—		—
Stock options and other equity compensation		—		—		—		—
Numerator for diluted earnings per share	$	8,324	$	13,373	$	14,512	$	20,195
Denominator:
Weighted average shares – denominator for basic net earnings per share		51,779		50,298		51,048		48,950
Add: Effect of dilutive securities
Stock options and other equity compensation		841		1,049		851		1,054
5.50% convertible notes (after-tax)(1)		—		—		—		—
Denominator for diluted earnings per share		52,620		51,347		51,899		50,004
Earnings per share
Basic	$	0.16	$	0.27	$	0.28	$	0.41
Diluted	$	0.16	$	0.26	$	0.28	$	0.40
Interest expense excluded from diluted earnings per share (1)	$	2,654		—	$	5,262		—
5.50% Convertible notes shares excluded from diluted earnings per share (1)	$	7,084		—	$	3,522		—
_________
(1)       Average outstanding diluted earnings per share calculation excludes shares that may be issued upon conversion of the outstanding senior convertible notes since the effect of their inclusion would have been anti-dilutive.

For the quarter ended June 30, 2012, average common shares for basic and diluted earnings per share were 51,779 and 52,620, respectively, and basic and diluted earnings per share were both $0.16. For the quarter ended June 30, 2011, average common shares for basic and diluted earnings per share were 50,298 and 51,347 respectively, and basic and diluted earnings per share were $0.27 and $0.26, respectively.

For the six months ended June 30, 2012, average common shares for basic and diluted earnings per share were 51,048 and 51,899, respectively, and basic and diluted earnings per share were both $0.28. For the six months ended June 30, 2011, average common shares for basic and diluted earnings per share were 48,950 and 50,004 respectively, and basic and diluted earnings per share were $0.41 and $0.40, respectively.

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Condensed Consolidated Statements Of Operations And Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue:
Products	$ 52,275	$ 32,610	$ 101,672	$ 61,754
Services	31,335	22,518	59,858	41,271
Total revenue	83,610	55,128	161,530	103,025
Cost of sales:
Products	23,845	15,971	46,892	29,723
Services	16,797	13,954	32,817	24,902
Total cost of sales	40,642	29,925	79,709	54,625
Gross profit	42,968	25,203	81,821	48,400
Operating expenses:
Selling, general and administrative	24,048	14,159	47,998	27,123
Research and development	4,921	3,043	9,854	5,865
Total operating expenses	28,969	17,202	57,852	32,988
Income from operations	13,999	8,001	23,969	15,412
Interest and other expense (income), net	3,740	107	6,422	(189)
Income before income taxes	10,259	7,894	17,547	15,601
Provision (benefit of) for income taxes	1,935	(5,479)	3,035	(4,594)
Net income	8,324	13,373	14,512	20,195
Other comprehensive income:
Unrealized gain (loss) on pension obligation	13	2	7	5
Foreign currency translation gain (loss)	(3,016)	1,501	(1,826)	2,622
Comprehensive income	$ 5,321	$ 14,876	$ 12,693	$ 22,822
Net income per share - basic	$ 0.16	$ 0.27	$ 0.28	$ 0.41
Net income per share - diluted	$ 0.16	$ 0.26	$ 0.28	$ 0.40

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Intangible Assets

6 Months Ended

Jun. 30, 2012

Intangible Assets [Abstract]

Intangible Assets

(5)  Intangible Assets

Intangible assets other than goodwill at June 30, 2012 and December 31, 2011 were as follows:

	2012							2011
(in thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Licenses	$	5,875	$	(5,875	)	$	—	$	5,875	$	(5,875	)	$	—
Patent costs		19,970		(13,933	)		6,037		16,379		(13,846	)		2,533
Acquired technology		25,920		(11,003	)		14,917		11,015		(10,345	)		670
Internally developed software		17,847		(10,704	)		7,143		17,847		(9,983	)		7,864
Customer relationships		56,520		(4,577	)		51,943		32,974		(1,798	)		31,176
Non-compete agreements		11,564		(2,750	)		8,814		8,976		(1,890	)		7,086
Trade names		4,330		(438	)		3,892		1,951		(180	)		1,771
Other		6,335		(2,695	)		3,640		1,986		(1,746	)		240
Intangibles with indefinite lives:
Trademarks		2,770		—			2,770		2,700		—			2,700
Total intangible assets	$	151,131	$	(51,975	)	$	99,156	$	99,703	$	(45,663	)	$	54,040

For the six months ended June 30, 2012 and 2011, the Company capitalized $389 and $211, respectively, of costs incurred to acquire, develop and extend patents in the United States and various other countries.

Amortization expense for intangible assets for the quarter and six months ended June 30, 2012 was $3,021 and $6,440, respectively, compared to $1,111 and 1,951 for the quarter and six months ended June 30, 2011.

Annual amortization expense for intangible assets for 2012, 2013, 2014, 2015 and 2016 is expected to be $13,610, $12,682, $12,656, $11,364 and $10,255, respectively.

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Property And Equipment

6 Months Ended

Jun. 30, 2012

Property And Equipment [Abstract]

Property And Equipment

(4)  Property and Equipment

Property and equipment at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012			2011			Useful Life (in years)
Land	$	541		$	541		N/A
Building		9,204			9,204		25
Machinery and equipment		46,366			36,773		3-7
Capitalized software — ERP		3,173			3,141		5
Office furniture and equipment		3,252			3,138		5
Leasehold improvements		6,463			5,996		Life of lease (1)
Rental equipment		54			56		5
Construction in progress		618			980		N/A
Total property and equipment		69,671			59,829
Less: Accumulated depreciation and amortization		(33,966	)		(30,235	)
Total property and equipment, net	$	35,705		$	29,594

(1)Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.

Depreciation and amortization expense on property and equipment for the quarter and six months ended June 30, 2012 were $2,162 and $4,134, respectively, compared to $1,480 and $3,049, respectively, for the quarter and six months ended June 30, 2011.

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

(16)  Subsequent Events

In July 2012, the Company acquired the shares of Viztu Technologies, Inc. (“Viztu”).Viztu is the developer of Hypr3D, an online platform that allows anyone to turn their pictures and videos into printable 3D creations. The Company plans to integrate Viztu into its consumer solutions and future revenue from this acquisition will be reported in services revenue.The Viztu acquisition is not significant to the Company’s financial statements.See Note 2.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

(12)  Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities;

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

For the Company, the above standard applies to cash equivalents and senior convertible notes. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements as of June 30, 2012
(in thousands)		Level 1		Level 2		Level 3		Total
Description
Cash equivalents (1)	$	117,418	$	—	$	—	$	117,418

__________

⁽¹⁾ 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.

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the quarter and six months ended June 30, 2012.

The carrying value of the senior convertible notes as of June 30, 2012 and December 31, 2011 was $132,798 and $131,107, respectively, net of the unamortized discount.As of June 30, 2012 and December 31, 2011, the estimated fair value of the senior convertible notes was $150,508 and $149,615, respectively, based on quoted market prices. The Company determined the fair value of the convertible notes utilizing transactions in the listed markets for identical or similar liabilities.As such, the fair value of the senior convertible notes is considered Level 2.

In addition to the financial assets included in the above table, certain of our non-financial assets and liabilities are to be initially measured at fair value on a non-recurring basis.This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and non-financial, long-lived assets measured at fair value for an impairment assessment.In general, non-financial assets and liabilities including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when impairment is recognized.The Company has not recorded any impairments related to such assets and has had no other significant non-financial assets or non-financial liabilities requiring adjustments or write-downs to fair value as of June 30, 2012 or December 31, 2011.

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Borrowings

6 Months Ended

Jun. 30, 2012

Borrowings [Abstract]

Borrowings

(8) Borrowings

5.5% senior convertible notes and interest expense

In November2011, the Company issued $152,000 of 5.50% senior convertible notes due December 2016.These notes are senior unsecured obligations and rank equal in right of payment with all the Company’s existing and future senior unsecured indebtedness.They are also senior in right of payment to any subordinated indebtedness that the Company may incur in the future.

The notes accrue interest at the rate of 5.50% per year payable in cash semi-annually on June 15 and December 15 of each year.

The following table summarizes the principal amounts and related unamortized discount on convertible notes at June 30, 2012 and December 31, 2011:

(in thousands)	2012			2011
Principal amount of convertible notes	$	152,000		$	152,000
Unamortized discount on convertible notes		(19,202	)		(20,893	)
Net carrying value	$	132,798		$	131,107

These notes are convertible into shares of the Company’s Common Stock at an initial conversion rate equivalent to 46.6021 shares of Common Stock per $1 principal amount of notes, which represents an initial conversion rate of approximately $21.46 per share of Common Stock.The conversion rate is subject to adjustment in certain circumstances as more fully set forth in the indenture covering the notes.As of June 30, 2012, the stock price condition for convertibility of the notes was satisfied.The notes are convertible in the quarter ending September 30, 2012.

If converted, the aggregate principal amount of the notes then outstanding may be settled in cash, shares of common stock, or a combination thereof, at the Company’s election.Subject to the terms of the indenture, holders may convert their notes at any time. The number of shares of common stock the notes are convertible into is approximately 7,084. In certain circumstances provided for in the indenture, the number of shares of common stock issuable upon conversion of the notes may be increased, and with it the aggregate principal amount of the notes. Unless earlier repurchased, redeemed or converted, the notes will mature on December 15, 2016.

The notes were issued with an effective yield of 5.96% based upon an original issue discount at 98.0%.The net proceeds from the issuance of these notes, after deducting original issue discount and capitalized issuance costs of $6,634, amounted to $145,366. The capitalized issuance costs are being amortized to interest expense over the life of the notes.

Upon certain terms and conditions, the Company may elect to satisfy its conversion obligation with respect to the notes by paying cash, in whole or in part, for specified aggregate principal amount of the notes. In the event of certain types of fundamental changes, the Company will increase the conversion rate by a number of additional shares, up to a maximum of 9,031 shares, which equates to a conversion price of approximately $16.83 per share.

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Segment Information (Schedule Of Assets By Geographic Area) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Assets	$ 632,338	$ 462,974
United States [Member]
Segment Reporting Information [Line Items]
Assets	515,560	346,350
Germany [Member]
Segment Reporting Information [Line Items]
Assets	17,774	20,285
Other Europe [Member]
Segment Reporting Information [Line Items]
Assets	74,267	71,202
Asia Pacific [Member]
Segment Reporting Information [Line Items]
Assets	$ 24,737	$ 25,137

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Accrued And Other Liabilities

6 Months Ended

Jun. 30, 2012

Accrued And Other Liabilities [Abstract]

Accrued And Other Liabilities

(6)  Accrued and Other Liabilities

Accrued liabilities at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012		2011
Compensation and benefits	$	9,222	$	7,036
Vendor accruals		1,479		1,640
Accrued professional fees		457		326
Accrued taxes		4,314		3,500
Royalties payable		557		302
Accrued interest		416		950
Earnouts and deferred payments related to acquisitions		2,087		1,384
Accrued other		722		1,678
Total	$	19,254	$	16,816

Other liabilities at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012		2011
Defined benefit pension obligation	$	3,734	$	3,884
Long-term tax liability		808		827
Earnouts and deferred payments related to acquisitions		6,458		1,898
Other long-term liabilities		226		172
Total	$	11,226	$	6,781

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Hedging Activities And Financial Instruments

6 Months Ended

Jun. 30, 2012

Hedging Activities And Financial Instruments [Abstract]

Hedging Activities And Financial Instruments

(7)  Hedging Activities and Financial Instruments

The Company conducts business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a result, the Company is 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, the Company endeavors to match assets and liabilities in the same currency on its balance sheet and those of its subsidiaries in order to reduce these risks. When appropriate, the Company enters into foreign currency contracts to hedge exposures arising from those transactions. The Company has 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 (income), net”in the condensed consolidated statements of operations and comprehensive income. 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 condensed consolidated balance sheet.

There were no foreign currency contracts outstanding at June 30, 2012or December 31, 2011.

The total impact of foreign currency transactions on the condensed consolidated statements of operations and comprehensive income for the quarter and six months ended June 30, 2012 reflected a loss of$1,035 and $515, respectively, compared to a gain of $56 and $611, respectively, for the quarter and six months ended June 30, 2011.

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Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation Plans [Abstract]

Stock-Based Compensation Plans

(9)  Stock-based Compensation Plans

The Company records stock-based compensation expense in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income. Stock-based compensation expense for the quarter and six months ended June 30, 2012 and 2011 was as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Restricted stock awards	$	1,304	$	847	$	2,480	$	1,234

The number of shares of restricted common stock awarded and the weighted average fair value per share during the quarter and six months ended June 30, 2012 and 2011 were as follows:

	Quarter Ended June 30,
	2012			2011
(in thousands, except per share amounts)	Shares Awarded	Weighted Average Fair Value		Shares Awarded	Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan	73	$	26.31	62	$	25.80
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors	11		27.42	16		18.23
Total restricted stock awards	84	$	26.45	78	$	24.20
	Six Months Ended June 30,
	2012			2011
(in thousands, except per share amounts)	Shares Awarded	Weighted Average Fair Value		Shares Awarded	Weighted Average Fair Value
Restricted stock awards:
Granted under the 2004 Incentive Stock Plan	157	$	24.22	154	$	19.82
Granted under the 2004 Restricted Stock Plan for Non-Employee Directors	11		27.42	16		18.23
Total restricted stock awards	168	$	24.43	170	$	19.67

In the six months ended June 30, 2012, the Company granted restricted stock awards covering 157 shares of common stock pursuant to the Company’s 2004 Incentive Stock Plan.Of the 157 shares granted in the first six months of 2012, 13 of the shares were awarded to executive officers of the Company.Additionally, of the 157 shares granted in the first six months of 2012, 71 remained subject to acceptance at June 30, 2012.In the first six months of 2011, the Company granted restricted stock awards covering 154 shares of common stock pursuant to the Company’s 2004 Incentive Stock Plan; 10 of which were awarded to executive officers of the Company.

In the first six months of 2012 and 2011, respectively, the Company granted 11 shares and 16 shares, respectively, of common stock pursuant to the Company’s 2004 Restricted Stock Plan for Non-Employee Directors and stock compensation expense for Non-Employee Directors for the first six months of 2012 or 2011 was $300 and $300, respectively.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Summary Of Assets And Liabilities Measured At Fair Value On Recurring Basis

	Fair Value Measurements as of June 30, 2012
(in thousands)		Level 1		Level 2		Level 3		Total
Description
Cash equivalents (1)	$	117,418	$	—	$	—	$	117,418

__________

⁽¹⁾ 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.

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International Retirement Plan (Components Of Net Periodic Benefit Costs And Other Amounts Recognized In Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
International Retirement Plan [Abstract]
Service cost	$ 18	$ 43	$ 37	$ 57
Interest cost	31	48	64	64
Total	$ 49	$ 91	$ 101	$ 121

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Segment Information

(14)  Segment Information

The Company operates in one reportable business segment. The Company conducts its business through subsidiaries in the United States, a subsidiary in Switzerland that operates a research and production facility, and sales and services offices, including custom parts services, operated by subsidiaries in Europe (France, Germany, the United Kingdom, Italy and the Netherlands) and in Asia-Pacific (Australia, China and Japan). The Company has historically disclosed summarized financial information for the geographic areas of operations as if they were segments in accordance with ASC 280, “Segment Reporting.”

Summarized financial information concerning the Company’s geographical operations is shown in the following tables:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Revenue from unaffiliated customers:
United States	$	46,761	$	28,609	$	92,670	$	51,486
Germany		9,896		8,306		17,319		15,042
Other Europe		14,757		10,261		28,045		21,640
Asia Pacific		12,196		7,952		23,496		14,857
Total	$	83,610	$	55,128	$	161,530	$	103,025

The Company’s revenue from unaffiliated customers by type were as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2012		2011		2012		2011
Printers and other products	$	26,071	$	16,193	$	50,790	$	29,728
Materials		26,204		16,417		50,882		32,026
Services		31,335		22,518		59,858		41,271
Total revenue	$	83,610	$	55,128	$	161,530	$	103,025

Intercompany sales were as follows:

	Quarter Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	4,369	$	2,899	$	692	$	7,960
Germany		14		—		873		177		1,064
Other Europe		3,384		36		61		108		3,589
Asia Pacific		14		7		—		—		21
Total	$	3,412	$	4,412	$	3,833	$	977	$	12,634
	Quarter Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	3,912	$	1,765	$	698	$	6,375
Germany		15		—		433		—		448
Other Europe		2,978		—		—		—		2,978
Asia Pacific		—		—		—		—		—
Total	$	2,993	$	3,912	$	2,198	$	698	$	9,801
	Six Months Ended June 30, 2012
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	8,270	$	6,004	$	1,539	$	15,813
Germany		128		—		1,033		177		1,338
Other Europe		6,661		52		139		122		6,974
Asia Pacific		44		7		—		—		51
Total	$	6,833	$	8,329	$	7,176	$	1,838	$	24,176
	Six Months Ended June 30, 2011
	Intercompany Sales to
(in thousands)	United States		Germany		Other Europe		Asia Pacific		Total
United States	$	—	$	7,297	$	3,952	$	2,130	$	13,379
Germany		110		—		1,403		—		1,513
Other Europe		5,872		1		12		—		5,885
Asia Pacific		—		—		—		—		—
Total	$	5,982	$	7,298	$	5,367	$	2,130	$	20,777

All revenue between geographic areas is recorded at prices that provide for an allocation of profit (loss) between entities. Income from operations and assets for each geographic area were as follows:

	Quarter Ended June 30,					Six Months Ended June 30,
(in thousands)	2012			2011		2012		2011
Income from operations:
United States	$	7,550		$	3,570	$	13,006	$	7,109
Germany		563			417		816		828
Other Europe		2,423			1,148		3,432		2,659
Asia Pacific		3,464			2,795		6,619		4,770
Subtotal		14,000			7,930		23,873		15,366
Inter-segment elimination		(1	)		71		96		46
Total	$	13,999		$	8,001	$	23,969	$	15,412

	June 30,		December 31,
(in thousands)	2012		2011
Assets:
United States	$	515,560	$	346,350
Germany		17,774		20,285
Other Europe		74,267		71,202
Asia Pacific		24,737		25,137
Total	$	632,338	$	462,974

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Inventories (Tables)

6 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Components Of Inventories

(in thousands)	2012			2011
Raw materials	$	12,554		$	8,797
Work in process		1,392			606
Finished goods and parts		29,852			18,422
Total cost		43,798			27,825
Less: reserves		(3,804	)		(2,542	)
Inventories, net	$	39,994		$	25,283

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Stock-Based Compensation Plans (Status Of The Company's Stock Options) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stock-Based Compensation Plans [Abstract]
Restricted stock awards	$ 1,304	$ 847	$ 2,480	$ 1,234

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Intangible Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Intangible Assets [Abstract]
Costs incurred to acquire, develop and extend patents			$ 389	$ 211
Amortization expense for intangible assets	3,021	1,111	6,440	1,951
Annual estimated amortization expense, in 2012	13,610		13,610
Annual estimated amortization expense, in 2013	12,682		12,682
Annual estimated amortization expense, in 2014	12,656		12,656
Annual estimated amortization expense, in 2015	11,364		11,364
Annual estimated amortization expense, in 2016	$ 10,255		$ 10,255

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 14,512		$ 20,195
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (benefit of) deferred income taxes	1,301		(5,472)
Depreciation and amortization	10,678		5,000
Non-cash interest on convertible notes	1,942
Provision for bad debts	904		558
Stock-based compensation	2,480		1,234
Gain on the disposition of property and equipment and investments	(454)
Changes in operating accounts:
Accounts receivable	(4,980)		(1,696)
Inventories	(9,453)		(3,900)
Prepaid expenses and other current assets	20		(951)
Accounts payable	4,111		(3,750)
Accrued liabilities	129		(3,377)
Customer deposits	(280)		(929)
Deferred revenue	718		(903)
Other operating assets and liabilities	(250)		223
Net cash provided by operating activities	21,378		6,232
Cash flows from investing activities:
Purchases of property and equipment	(1,552)		(978)
Additions to license and patent costs	(389)		(211)
Cash paid for acquisitions, net of cash assumed	(147,511)		(27,975)
Net cash used in investing activities	(149,452)		(29,164)
Cash flows from financing activities:
Proceeds from issuance of common stock	106,912		62,054
Proceeds from exercise of stock options and restricted stock	897		2,281
Repayment of capital lease obligations	(81)		(112)
Restricted cash	1		(207)
Net cash provided by financing activities	107,729		64,016
Effect of exchange rate changes on cash	(274)		576
Net increase (decrease) in cash and cash equivalents	(20,619)		41,660
Cash and cash equivalents at the beginning of the period	179,120		37,349
Cash and cash equivalents at the end of the period	158,501		79,009
Supplemental Cash Flow Information:
Interest payments	4,303		282
Income tax payments	771		445
Non-cash items:
Transfer of equipment from inventory to property and equipment, net	1,580	[1]	1,102	[1]
Transfer of equipment to inventory from property and equipment, net	(1,009)	[2]	38	[2]
Stock issued for acquisitions of business	$ 6,604		$ 2,042

[1] Inventory is transferred from inventory to property and equipment at cost when the Company requires additional machines for training, training, demonstration or short-term rentals.

[2] In general, an asset is transferred from property and equipment, net into inventory at its net book value when the Company has identified a potential sale for a used machine. The machine is removed from inventory upon recognition of the sale.

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Inventories

6 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Inventories

(3)  Inventories

Components of inventories, net at June 30, 2012 and December 31, 2011 were as follows:

(in thousands)	2012			2011
Raw materials	$	12,554		$	8,797
Work in process		1,392			606
Finished goods and parts		29,852			18,422
Total cost		43,798			27,825
Less: reserves		(3,804	)		(2,542	)
Inventories, net	$	39,994		$	25,283

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Segment Information (Schedule Of Intercompany Sales By Geographic Area) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information [Line Items]
Intercompany Sales	$ 12,634	$ 9,801	$ 24,176	$ 20,777
United States [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	7,960	6,375	15,813	13,379
Germany [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	1,064	448	1,338	1,513
Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	3,589	2,978	6,974	5,885
Asia Pacific [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	21		51
Intercompany Sales To United States [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	3,412	2,993	6,833	5,982
Intercompany Sales To United States [Member] | Germany [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	14	15	128	110
Intercompany Sales To United States [Member] | Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	3,384	2,978	6,661	5,872
Intercompany Sales To United States [Member] | Asia Pacific [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	14		44
Intercompany Sales To Germany [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	4,412	3,912	8,329	7,298
Intercompany Sales To Germany [Member] | United States [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	4,369	3,912	8,270	7,297
Intercompany Sales To Germany [Member] | Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	36		52	1
Intercompany Sales To Germany [Member] | Asia Pacific [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	7		7
Intercompany Sales To Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	3,833	2,198	7,176	5,367
Intercompany Sales To Other Europe [Member] | United States [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	2,899	1,765	6,004	3,952
Intercompany Sales To Other Europe [Member] | Germany [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	873	433	1,033	1,403
Intercompany Sales To Other Europe [Member] | Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	61		139	12
Intercompany Sales To Asia Pacific [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	977	698	1,838	2,130
Intercompany Sales To Asia Pacific [Member] | United States [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	692	698	1,539	2,130
Intercompany Sales To Asia Pacific [Member] | Germany [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	177		177
Intercompany Sales To Asia Pacific [Member] | Other Europe [Member]
Segment Reporting Information [Line Items]
Intercompany Sales	$ 108		$ 122

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Property And Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property And Equipment [Abstract]

Schedule Of Property And Equipment

(in thousands)	2012			2011			Useful Life (in years)
Land	$	541		$	541		N/A
Building		9,204			9,204		25
Machinery and equipment		46,366			36,773		3-7
Capitalized software — ERP		3,173			3,141		5
Office furniture and equipment		3,252			3,138		5
Leasehold improvements		6,463			5,996		Life of lease (1)
Rental equipment		54			56		5
Construction in progress		618			980		N/A
Total property and equipment		69,671			59,829
Less: Accumulated depreciation and amortization		(33,966	)		(30,235	)
Total property and equipment, net	$	35,705		$	29,594

(1)Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.

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Inventories (Components Of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventories [Abstract]
Raw materials	$ 12,554	$ 8,797
Work in process	1,392	606
Finished goods and parts	29,852	18,422
Total cost	43,798	27,825
Less: reserves	(3,804)	(2,542)
Inventories, net	$ 39,994	$ 25,283

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

(13)  Income Taxes

The Company’s effective tax rates were 18.9% and 17.3% for the quarter and six months ended June 30, 2012, respectively, compared to (69.4%) and (29.4%) for the quarter and six months ended June 30, 2011, respectively.

The Company has utilized a portion of its U.S. net deferred tax assets, against which there is a valuation allowance, in determining its effective tax rate for 2012.The remainder of its U.S. net deferred assets, against which there are valuation allowances, had been offset by the recognition of deferred income tax liabilities from the acquisitions of Z Corp, Vidar, My Robot Nation and Bespoke.These acquisitions resulted in recognizing $502 of deferred income tax assets and $18,308 of deferred income tax liabilities.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company assesses the possibility of releasing the valuation allowance remaining on its U.S. net deferred tax assets.There were no releases of the valuation allowance on deferred tax assets during the first six months of 2012; however, the Company’s effective tax rate has been reduced as a result of the use of U.S. net deferred tax assets against which there is a valuation allowance.During the first six months ended June 30, 2011, the Company reversed $17,000 of the valuation allowance applied to U.S. net deferred tax assets.The reversal of the valuation allowance resulted in a non-cash income tax benefit of $6,221, which resulted in a benefit of 12 cents per share for the first six months of 2011.As of June 30, 2012, the Company has a valuation allowance remaining on its U.S. net deferred tax assets of $4,999.

Tax years 2008 to 2011 remain subject to examination by the U.S. Internal Revenue Service. The Company has utilized a portion of its U.S. loss carryforwards covering the years 1997 through 2003.Should the Company utilize any of its remaining losses, which date back to 2003, these would be subject to examination. The Company files income tax returns (which are open to examination beginning in the year shown in parentheses) in France (2005), Germany (2007), Japan (2006), Italy (2006), Switzerland (2006), the United Kingdom (2008), the Netherlands (2006), India (2011) and Australia (2007).