10-K
2021
____________________________________________
| Delaware | 95-4431352 | |||||
|
| |||||
(State or Other Jurisdiction of | (I.R.S. Employer | |||||
|
| |||||
|
| |||||
326-3900 Title of each class Trading Symbol Common Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ February 23, 2022: 128,309,940 2021 specialized laboratory software. tools. and extrusion and SLA based bioprinting. Our printers utilize a wide range of materials, the majority of which are proprietary materials that we develop, blend, and market. Our comprehensive range of materials includes plastic, nylon, metal, composite, elastomeric, wax, polymeric dental materials and Software and Related Products optimized biomaterial presets. We provide these services, spare parts and field support either directly or through a network of reseller partners. We employ customer-support sales engineers to support our worldwide customer base, and we network and service offerings. Another contract entitlement on select printer models is proactive remote troubleshooting capability through our 3DConnect Service IoT platform. From time to time, we also offer upgrade kits for certain of our printers that enable our existing customers to take advantage of new or enhanced printer capabilities. In some cases, we have discontinued upgrade support and maintenance agreements for certain of our older legacy printers. Software Services In addition, we offer Oqton as a cloud based-manufacturing operating system designed to automate digital production workflows, enable machine monitoring, end-to-end manufacturing visibility and production traceability. For our cloud subscription solutions, customer support and software updates are included as part of the solution. solutions. outreach, and event and targeted vertical seminar engagements. technology, software, materials and services to develop advanced applications across healthcare and industrial segments. Additionally, our software through these manufacturers. 2021, 2020, and 2019, one customer accounted for approximately 22%, 13% and 11% of our consolidated revenue, respectively. We expect to maintain our relationship with this customer. We outsource new products that we will market directly or in conjunction with development or channel partners. 2034. 2021. Name and Current Position Age as of March President and Chief Executive Officer Jagtar Narula Executive Vice President and Chief Technology Officer Andrew M. Johnson Executive Vice President, Chief Legal Officer and Secretary Executive Vice President, Executive Vice President, Industrial Solutions Chief Technology Officer for Regenerative Medicine Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable. Our products and services may experience quality problems from time to time that can result in decreased sales and operating margin, product returns, product liability, warranty or other claims that could result in significant expenses and harm to our reputation. position. Additionally, this concentration exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from a single customer. If we are unable to collect our receivables, or are required to take additional reserves, our results and cash flows will be adversely affected. and commercialize new products or new applications for existing products. Furthermore, possible shortages of key personnel, including engineers, in the regions surrounding our facilities could require us to pay more to hire and retain key personnel, thereby increasing our costs. new products that aim to address similar indications. Commerce. As a result of doing business in foreign countries and with foreign customers, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations. laws, trade sanctions, and government contracting laws and regulations, and continue to review our government contracting compliance risks and potential violations. Failure to comply with the terms of the Administrative Agreement or the commencement of a separate action by another governmental agency would result in decreased revenues and additional harm to our reputation and otherwise adversely affect our business, operating results and financial condition. the U.S. government agencies. •Announcements of changes Square Feet (in thousands) Americas EMEA APAC TOTAL Leased Owned Leased Owned Leased Owned Leased Owned Primary Function Category: Corporate headquarters — — — — — — Manufacturing and warehouse — — — — — Research and development — — — — — Services — — Sales, general and other administrative — — — — — — Total square feet — — Year Period High Low 2016 Q1 $ 15.90 $ 6.00 Q2 19.76 11.59 Q3 18.23 11.98 Q4 18.51 12.34 2017 Q1 $ 17.68 $ 13.40 Q2 23.70 14.12 Q3 19.06 12.02 Q4 14.44 7.92 Issuance of Unregistered Securities and Issuer Purchases of Equity Securities consolidated financial statements in Item 8 of this Form 10-K. We did not engage in any unregistered sales of equity securities in 2021. Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs January 1, 2017 - January 31, 2017 $ — $ — February 1, 2017 - February 28, 2017 — — March 1, 2017 - March 31, 2017 — — April 1, 2017 - April 30, 2017 — — May 1, 2017 - May 31, 2017 — — June 1, 2017 - June 30, 2017 — — July 1, 2017 - July 31, 2017 — — August 1, 2017 - August 31, 2017 — — September 1, 2017 - September 30, 2017 — — October 1, 2017 - October 31, 2017 — — November 1, 2017 - November 30, 2017 — — December 1, 2017 - December 31, 2017 — — Total (a) $ (b) — $ — 12/12 12/13 12/14 12/15 12/16 12/17 3D Systems Corporation $ $ $ $ $ $ NYSE Composite Index S&P 500 Information Technology Index S&P 500 Mid-Cap 400 Index Year ended December 31, (in thousands, except per share amounts) 2017 2016 2015 2014 2013 Consolidated Statement of Income (Loss) and Other Comprehensive Income (Loss) Data: Consolidated Revenue: Products $ $ $ $ $ Materials Services Total Gross profit Impairment of goodwill and other intangible assets (a) — — — — Income (loss) from operations Net income (loss) Net income (loss) available to common stockholders Net income (loss) available to common stockholders per share: Basic and diluted $ $ $ $ $ Consolidated Balance Sheet Data: Working capital $ $ $ $ $ Total assets Current portion of debt and capitalized lease obligations Long term debt and capitalized lease obligations, less current portion Total stockholders' equity Other Data: Depreciation and amortization $ $ $ $ $ Interest expense Capital expenditures All amounts are in thousands, except share and per share amounts, or as otherwise indicated. which $24.8 million was paid in cash and the remainder was paid via the issuance of 720,022 shares of the Company's common stock. Additional payments of up to $355.0 million are possible which are linked to the attainment of several non-financial milestones through December 31, 2030 and 2035 and continued employment of certain key individuals from Volumetric. Any additional payments made will be paid approximately half in cash and half in shares of the Company’s common stock. The additional payments are considered compensation expense which will be recorded ratably from the time a milestone is deemed is probable of achievement to the estimated date of achievement. Any compensation expense recorded will be reversed if the milestone is no longer probable of achievement. Volumetric will be part of the Healthcare reporting unit and segment. The acquisition’s near- Total consolidated revenue for the year ended December 31, the Healthcare 2021 divestitures, partly offset by continued strengthening of the economy in 2021. better absorption of supply chain overhead in 2021 resulting from higher production. 2020 (Dollars in thousands) Americas EMEA Asia Pacific Total Revenue – 2016 $ % $ % $ % $ % Change in revenue: Volume Price/Mix Foreign currency translation Net change Revenue – 2017 $ % $ % $ % $ % (Dollars in thousands) Americas EMEA Asia Pacific Total Revenue – 2015 $ % $ % $ % $ % Change in revenue: Volume — Price/Mix Foreign currency translation Net change Revenue – 2016 $ % $ % $ % $ % volume, foreign exchange and divestitures. 2020. (Dollars in thousands) Products Materials Services Totals Revenue – 2016 $ % $ % $ % $ % Change in revenue: Volume Price/Mix — — Foreign currency translation Net change Revenue – 2017 $ % $ % $ % $ % The increase in (Dollars in thousands) Products Materials Services Totals Revenue – 2015 $ % $ % $ % $ % Change in revenue: Volume Price/Mix — — Foreign currency translation Net change Revenue – 2016 $ % $ % $ % $ % The higher services revenue in Healthcare was due to strong sales in medical devices, partially offset by divestitures. The lower services revenue in Industrial was due to divestitures, partially offset by the impact of less severe COVID restrictions in 2021. 2020. Year Ended December 31, 2017 2016 Change in Gross Profit Change in Gross Profit Margin (Dollars in thousands) Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin $ % Percentage Points % Products $ % $ % $ % % Materials Services Total $ % $ % $ % % Year Ended December 31, 2016 2015 Change in Profit Change in Gross Profit Margin (Dollars in thousands) Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin $ % Percentage Points % Products $ % $ % $ % % Materials Services Total $ % $ % $ % % 2020. Year Ended December 31, 2017 2016 Change (Dollars in thousands) Amount % Revenue Amount % Revenue $ % Selling, general and administrative expenses $ % $ % $ % Research and development expenses Total operating expenses $ % $ % $ % Year Ended December 31 2016 2015 Change (Dollars in thousands) Amount % Revenue Amount % Revenue $ % Selling, general and administrative expenses $ % $ % $ % Research and development expenses Impairment of goodwill and other intangible assets — — Total operating expenses $ % $ % $ % Year Ended December 31, (Dollars in thousands) 2017 2016 2015 Income (loss) from operations Americas $ $ $ EMEA Asia Pacific Subtotal Inter-segment elimination Total $ $ $ Year Ended December 31, (Dollars in thousands) 2017 2016 2015 Interest and other expense, net: Interest income $ $ $ Foreign exchange (gain) loss Interest expense Other (income) expense, net Interest and other expense, net $ $ $ Benefit and provision for income taxes Net income (loss) 2020. Year Ended December 31, (Dollars in thousands) 2017 2016 Change Operating loss $ $ $ Less: Interest and other expense, net Provision (benefit) for income taxes Net loss attributable to noncontrolling interests Net loss attributable to 3D Systems $ $ $ Weighted average shares, basic and diluted Loss per share, basic and diluted $ $ Year Ended December 31, (Dollars in thousands) 2016 2015 Change Operating loss $ $ $ Less: Interest and other expense, net Provision (benefit) for income taxes Net loss attributable to noncontrolling interests Net loss attributable to 3D Systems $ $ $ Weighted average shares, basic and diluted Loss per share, basic and diluted $ $ For the Year Ended December 31, Change (Dollars in thousands) 2017 2016 $ % Cash and cash equivalents $ $ $ % Accounts receivable, net Inventories Less: Current portion of capitalized lease obligations Accounts payable Accrued and other liabilities Operating working capital $ $ $ % market conditions, will be available and sufficient to meet all foreseeable cash requirements. Cash Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Cash provided by (used in) operating activities $ $ $ Cash used in investing activities Cash used in financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents $ $ $ Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Net loss $ $ $ Non-cash charges Changes in working capital and all other operating assets Net cash provided by (used in) operating activities $ $ $ Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Cash paid for acquisitions, net of cash assumed $ $ — $ Purchases of property and equipment Additions to license and patent costs Purchase of noncontrolling interest — Proceeds from disposition of property and equipment — Other investing activities Net cash used in investing activities $ $ $ Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Payments related to net-share settlement of stock-based compensation $ $ $ Payments on earnout consideration — — Repayment of capital lease obligations Net cash used by financing activities $ $ $ payments related to previously purchased non-controlling interests. The primary outflow of cash for the year ended December 31, 2020 related to partial repayment of the Term Facility, payments related to previously purchased non-controlling interests, and settlements of stock-based compensation, partially offset by proceeds from the issuance of common stock. Years Ending December 31, (Dollars in thousands) 2018 2019-2020 2021-2022 Later Years Total Capitalized lease obligations $ $ $ $ $ Non-cancelable operating leases (a) Purchase commitments (b) — — — Earnouts related to acquisitions (c) — — Total $ $ $ $ $ 2021. the reporting period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in the consolidated balance sheets. consolidated financial statements in Item 8 of this Form 10-K for further discussion. factors. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. consolidated financial statements. One customer represents significant concentration of credit risk, as they represent greater than 10% of our total accounts receivable. taxes. Contingencies consolidated financial statements in Item 8 of this Form 10-K for further discussion. purposes. annualized interest income. transactions. calculation of the Company's provision for income taxes including for material non-routine transactions. The combination of control deficiencies that resulted in these material weaknesses were partially related to employee training, resulting in a lack of knowledge or skill level to properly execute the designed controls or perform an effective review over certain manual controls related to the financial statement close process. In addition, certain control deficiencies related to the timely review of transactions that were infrequent in nature. Number of securities to be issued upon exercise of outstanding stock options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights (a) Number of securities remaining available for future issuance under equity compensation plans (b) Equity compensation plans approved by stockholders: Stock options $ Restricted stock units Total (a)(3) Exhibits The following exhibits are included as part of this filing and incorporated herein by this reference: 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 Inline XBRL Instance Document Inline XBRL Taxonomy Extension Scheme Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Inline XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document 3D Systems Corporation President, Chief Executive Officer Date: March Signature Title Date /s/ Chief Executive Officer, President and Director /s/ Executive Vice President and Chief Financial Officer March (principal financial /s/ CHARLES W. HULL Executive Vice President, Chief Technology March Charles W. Hull Officer and Director /s/ MICHAEL CRIMMINS Chairman of the Board of Directors March Charles G. /s/ MALISSIA R. CLINTON Director March Jim D. Kever /s/ KEVIN S. MOORE Director March Kevin S. Moore /s/ Director March /s/ JOHN J. TRACY Director March Dr. John J. Tracy /s/ JEFFREY WADSWORTH Director March Dr. Jeffrey Wadsworth Consolidated Financial Statements statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. December 31, December 31, (in thousands, except par value) 2017 2016 ASSETS Current assets: Cash and cash equivalents $ $ Accounts receivable, net of reserves — $10,258 (2017) and $12,920 (2016) Inventories Insurance proceeds receivable — Prepaid expenses and other current assets Total current assets Property and equipment, net Intangible assets, net Goodwill Deferred income tax asset Other assets, net Total assets $ $ LIABILITIES AND EQUITY Current liabilities: Current portion of capitalized lease obligations $ $ Accounts payable Accrued and other liabilities Accrued litigation settlement — Customer deposits Deferred revenue Total current liabilities Long term portion of capitalized lease obligations Deferred income tax liability Other liabilities Total liabilities Redeemable noncontrolling interests Commitments and contingencies (Note 21) Stockholders’ equity: Common stock, $0.001 par value, authorized 220,000 shares; issued 117,025 (2017) and 115,113 (2016) Additional paid-in capital Treasury stock, at cost — 2,219 shares (2017) and 1,498 shares (2016) Accumulated deficit Accumulated other comprehensive loss Total 3D Systems Corporation stockholders' equity Noncontrolling interests Total stockholders’ equity Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ $ See accompanying notes to (in thousands, except per share amounts) 2017 2016 2015 Revenue: Products $ $ $ Services Total revenue Cost of sales: Products Services Total cost of sales Gross profit Operating expenses: Selling, general and administrative Research and development Impairment of goodwill and other intangible assets — — Total operating expenses Loss from operations Interest and other expense, net Loss before income taxes Provision (benefit) for income taxes Net loss Less: net income (loss) attributable to noncontrolling interests Net loss attributable to 3D Systems Corporation $ $ $ Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted $ $ $ Other comprehensive income: Pension adjustments, net of taxes $ $ $ Gain on liquidation of non-US entity — — Foreign currency translation gain (loss) Total other comprehensive income Less foreign currency translation gain (loss) attributable to noncontrolling interests Other comprehensive income (loss) attributable to 3D Systems Corporation Comprehensive loss Less comprehensive income (loss) attributable to noncontrolling interests Comprehensive loss attributable to 3D Systems Corporation $ $ $ Common Stock Treasury Stock (In thousands, except par value) Shares Par Value $0.001 Additional Paid In Capital Shares Amount Accumulated Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Total 3D Systems Corporation Stockholders' Equity Equity Attributable to Noncontrolling Interests Total Stockholders' Equity Balance at December 31, 2014 $ $ $ $ $ $ $ $ Tax provision from share-based payment arrangements — — — — — — — Issuance (repurchase) of stock — — — Stock-based compensation expense — — — — — — — Net loss — — — — — — Noncontrolling interests for business combinations — — — — — — — — Pension adjustment — — — — — — — Foreign currency translation adjustment — — — — — — Balance at December 31, 2015 $ $ $ $ $ $ $ $ Issuance (repurchase) of stock — — — Acquisition of noncontrolling interest — — — — — — Stock-based compensation expense — — — — — — — Net loss — — — — — — Pension adjustment — — — — — — — Liquidation of non-US entity — — — — — — — Foreign currency translation adjustment — — — — — — Balance at December 31, 2016 $ $ $ $ $ $ $ $ Issuance (repurchase) of stock — — — — — Issuance of stock for acquisitions — — — — — — Purchase of subsidiary shares from noncontrolling interest — — — — — Cumulative impact of change in accounting policy — — — — — — — — Stock-based compensation expense — — — — — — — Net income (loss) — — — — — — Pension adjustment — — — — — — — Foreign currency translation adjustment — — — — — — Balance at December 31, 2017 $ $ $ $ $ $ $ $ (In thousands) 2017 2016 2015 Cash flows from operating activities: Net loss $ $ $ Adjustments to reconcile net loss to net cash provided by (used in) Depreciation and amortization Stock-based compensation Lower of cost or market adjustment Impairment of assets Provision for bad debts Provision for arbitration award — — Provision for deferred income taxes (Gain) loss on the disposition of property and equipment — Changes in operating accounts, net of acquisitions: Accounts receivable Inventories Prepaid expenses and other current assets Accounts payable Accrued and other current liabilities All other operating activities Net cash provided by (used in) operating activities Cash flows from investing activities: Cash paid for acquisitions, net of cash assumed — Purchases of property and equipment Additions to license and patent costs Proceeds from disposition of property and equipment — Purchase of noncontrolling interest — Other investing activities Net cash used in investing activities Cash flows from financing activities: Payments related to net-share settlement of stock-based compensation Payments on earnout consideration — — Repayment of capital lease obligations Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period $ $ $ Cash interest payments $ $ $ Cash income tax payments, net Transfer of equipment from inventory to property and equipment, net (a) Transfer of equipment to inventory from property and equipment, net (b) Stock issued for acquisitions of businesses — — further discussion. our consolidated balance sheets. consolidated financial statements. One customer represents a significant concentration of credit risk, as they represent greater than 10% of our total accounts receivable. Year Ended Item Balance at beginning of year Additions charged to expense Other Balance at end of year 2017 Allowance for doubtful accounts $ $ $ $ 2016 Allowance for doubtful accounts 2015 Allowance for doubtful accounts Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized. Goodwill is tested for impairment annually 4. 19. 12. These amounts were immaterial for 2021, 2020 and 2019. right of use ("ROU") asset and liability lease term when it is reasonably certain an option will be exercised. Our leases do not contain any material residual value guarantees or material restrictive covenants. financial position. In position, results of operations or cash flows. position, results of operations or cash flows. 2020 was immaterial. (in thousands) 2017 2016 Raw materials $ $ Work in process Finished goods and parts Inventories, net $ $ (in thousands) 2017 2016 Useful Life (in years) Land $ $ N/A Building 25-30 Machinery and equipment 2-7 Capitalized software 3-5 Office furniture and equipment 1-5 Leasehold improvements Life of lease (a) Construction in progress N/A Total property and equipment Less: Accumulated depreciation and amortization Total property and equipment, net $ $ 2017 2016 (in thousands) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Useful Life (in years) Weighted Average Useful Life Remaining (in years) Intangible assets with finite lives: Customer relationships $ $ $ $ $ $ 1-14 6 Acquired technology 1-16 2 Trade names 1-8 6 Patent costs 1-20 15 Trade secrets 7 4 Acquired patents 1-6 8 Other 2-4 2 Total intangible assets $ $ $ $ $ $ 1-20 6 (in thousands) Americas EMEA Asia Pacific Total Balance at December 31, 2015 $ — $ $ $ Acquisitions and adjustments — Effect of foreign currency exchange rates — Balance at December 31, 2016 — Acquisitions and adjustments — Effect of foreign currency exchange rates — Balance at December 31, 2017 $ — $ $ $ (in thousands) 2017 2016 Compensation and benefits $ $ Accrued taxes Arbitration awards — Vendor accruals Product warranty liability Accrued earnouts related to acquisitions Accrued other Royalties payable Accrued professional fees Accrued interest Total $ $ (in thousands) 2017 2016 Long term employee indemnity $ $ Defined benefit pension obligation Other long term liabilities Long term deferred revenue Long term tax liability Long term earnouts related to acquisitions Arbitration award — Total $ $ (in thousands) Beginning Balance Additional Accrual/ Revenue Deferred Costs Incurred/ Deferred Revenue Amortization Ending Balance Year Ended December 31, 2017 $ $ $ $ 2016 2015 (in thousands) Capitalized Leases Operating Leases Years ending December 31: 2018 $ $ 2019 2020 2021 2022 Later years Total minimum lease payments $ Less: amounts representing imputed interest Present value of minimum lease payments Less: current portion of capitalized lease obligations Capitalized lease obligations, excluding current portion $ Year Ended December 31, (in thousands) 2017 2016 2015 Restricted Stock $ $ $ Stock Options — Total stock-based compensation expense $ $ $ (in thousands, except per share amounts) Number of Shares/Units Weighted Average Grant Date Fair Value Outstanding at beginning of period — unvested $ Granted Cancelled Vested Outstanding at end of period — unvested $ Year Ended December 31, 2017 2016 2015 Stock option assumptions: Weighted-average fair value $ — $ $ — Expected volatility — — Risk-free interest rate — 0.76%-1.46 — Expected dividend yield — — Derived term in years — — Year Ended December 31, 2017 (in thousands, except per share amounts) Number of Shares Weighted Average Exercise Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Stock option activity: Outstanding at beginning of period $ — — Granted — — — — Exercised — — — — Forfeited and expired — — Outstanding at end of period $ — (in thousands) 2017 2016 Reconciliation of benefit obligations: Obligations as of January 1 $ $ Service cost Interest cost Actuarial (gain) loss Benefit payments Effect of foreign currency exchange rate changes Obligations as of December 31 Funded status as of December 31 (net of tax benefit) $ $ (in thousands) 2017 2016 Accrued liabilities $ $ Other liabilities Projected benefit obligation Accumulated other comprehensive income Total $ $ (in thousands) 2017 2016 Projected benefit obligation $ $ Accumulated benefit obligation $ $ (in thousands) 2017 2016 Net periodic benefit cost: Service cost $ $ Interest cost Amortization of actuarial loss Total $ $ Other changes in plan assets and benefit obligations recognized in other comprehensive income: Net (gain) loss Total expense recognized in net periodic benefit cost and other comprehensive income $ $ 2017 2016 Discount rate 1.80% 1.60% Rate of compensation 3.00% 3.00% (in thousands) Estimated future benefit payments: 2018 $ 2019 2020 2021 2022 2023-2027 (in thousands, except per share amounts) 2017 2016 2015 Numerator for basic and diluted net loss per share: Net loss attributable to 3D Systems Corporation $ $ $ Denominator for basic and diluted net loss per share: Weighted average shares Net loss per share, basic and diluted $ $ $ $2,300. The remaining 30% of the capital and voting rights of Easyway were acquired on January 21, 2019 for $13,500 to be paid in installments over four years for which $6,300 and $2,500 were paid in 2021 and 2020, respectively. Fair Value Measurements as of December 31, 2017 (in thousands) Level 1 Level 2 Level 3 Total Description Cash equivalents (a) $ $ — $ — $ Earnout consideration (b) $ — $ — $ $ Fair Value Measurements as of December 31, 2016 (in thousands) Level 1 Level 2 Level 3 Total Description Cash equivalents (a) $ $ — $ — $ Earnout consideration (b) $ — $ — $ $ 2021. 2017 2016 2015 Income (loss) before income taxes: Domestic $ $ $ Foreign Total $ $ $ The components of income tax provision for the years ended December 31, 2017 2016 2015 Current: U.S. federal $ $ $ State Foreign Total Deferred: U.S. federal — State — Foreign Total Total income tax (benefit) provision $ $ $ % of Pretax Income 2017 2016 2015 Tax provision based on the federal statutory rate % % % Increase in valuation allowances Other Foreign tax rate change Return to provision adjustments State taxes, net of federal benefit, before valuation allowance Deferred tax adjustments — Uncertain tax positions Nondeductible expenses Deemed income related to foreign operations Employee share-based payments — — One-Time transition tax — — U.S. Tax Cuts and Jobs Act - rate change — — Foreign exchange loss — — Impairment of definite lived intangibles — — Foreign income tax rate differential — Impairment of goodwill with no tax basis — — Foreign tax credits related to above — Effective tax rate % % % adjustments to uncertain tax positions, provisions for GILTI, and non-deductible expenses. positions. The components of (in thousands) 2017 2016 Deferred income tax assets: Intangibles $ $ Stock options and restricted stock awards Reserves and allowances Net operating loss carryforwards Tax credit carryforwards Accrued liabilities Deferred revenue Valuation allowance Total deferred income tax assets Deferred income tax liabilities: Intangibles Property, plant and equipment Other — Total deferred income tax liabilities Net deferred income tax liabilities $ $ is approximately $5,210. Unrecognized Tax Benefits (in thousands) 2017 2016 2015 Balance at January 1 $ $ $ Increases related to prior year tax positions — Decreases related to prior year tax positions — Increases related to current year tax positions — Decreases related to current year tax positions — — — Decreases in unrecognized liability due to settlements with foreign tax authorities — — — Balance at December 31 $ $ $ is subject. Year Ended Item Balance at beginning of year Additions (reductions) charged to expense Other Balance at end of year 2017 Deferred income tax asset valuation allowance $ $ $ $ 2016 Deferred income tax asset valuation allowance 2015 Deferred income tax asset valuation allowance — — (in thousands) 2017 2016 2015 Revenue from unaffiliated customers: United States $ $ $ Other Americas EMEA Asia Pacific Total revenue $ $ $ (in thousands) 2017 2016 2015 Revenue by class of product and service: Products $ $ $ Materials Services Total revenue $ $ $ Year Ended December 31, 2017 Intercompany Sales to (in thousands) Americas Germany Other EMEA Asia Pacific Total Americas $ $ $ $ $ EMEA Asia Pacific — Total $ $ $ $ $ Year Ended December 31, 2016 Intercompany Sales to (in thousands) Americas Germany Other EMEA Asia Pacific Total Americas $ $ $ $ $ EMEA Asia Pacific — Total $ $ $ $ $ Year Ended December 31, 2015 Intercompany Sales to (in thousands) Americas Germany Other EMEA Asia Pacific Total Americas $ $ $ $ $ EMEA Asia Pacific Total $ $ $ $ $ (in thousands) 2017 2016 2015 Income (loss) from operations: Americas $ $ $ EMEA Asia Pacific Subtotal Inter-segment elimination Total $ $ $ (in thousands) 2017 2016 2015 Depreciation and amortization: Americas $ $ $ EMEA Asia Pacific Total $ $ $ (in thousands) 2017 2016 2015 Capital expenditures: Americas $ $ $ EMEA Asia Pacific Total $ $ $ At December 31, (in thousands) 2017 2016 2015 Assets: Americas $ $ $ EMEA Asia Pacific Total $ $ $ At December 31, (in thousands) 2017 2016 2015 Cash and cash equivalents: Americas $ $ $ EMEA Asia Pacific Total $ $ $ At December 31, (in thousands) 2017 2016 2015 Long-lived assets: Americas $ $ $ EMEA Asia Pacific Total $ $ $ 7. Loss (in thousands) Foreign currency translation adjustment Defined benefit pension plan Liquidation of non-US entity and purchase of non-controlling interests Total Balance at December 31, 2015 $ $ $ — $ Other comprehensive income (loss) Balance at December 31, 2016 Other comprehensive income Balance at December 31, 2017 $ $ $ $ 12. 2017 Quarter Ended (in thousands, except per share amounts) December 31 September 30 June 30 March 31 Consolidated revenue $ $ $ $ Gross profit Total operating expenses Loss from operations (a) Provision for income taxes Net loss attributable to 3D Systems Basic and diluted net loss per share $ $ $ $ 2016 Quarter Ended (in thousands, except per share amounts) December 31 September 30 June 30 March 31 Consolidated revenue $ $ $ $ Gross profit Total operating expenses Income (loss) from operations Provision (benefit) for income taxes Net income (loss) attributable to 3D Systems Basic and diluted net income (loss) per share $ $ $ $ 2015 Quarter Ended (in thousands, except per share amounts) December 31 September 30 June 30 March 31 Consolidated revenue $ $ $ $ Gross profit Total operating expenses Loss from operations (a) Provision (benefit) for income taxes Net loss attributable to 3D Systems Basic and diluted net loss per share $ $ $ $ 333 Three D Systems CircleRock Hill, South Carolina 29730(Address of Principal Executive Offices and Zip Code)(Registrant’s Telephone Number, Including Area Code): (803) 326‑3900_________________________Securities registered pursuant to Section 12(b) of the Act:Name of each exchange on which registered stock,Stock, par value $0.001 per shareThe DDDNew York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None__________________________Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐1Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”filer”, “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): (Do not check if smaller reporting company)If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the ExchangeSecurities Act.☐Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑212b-2 of the Exchange Act.) Yes ☐ No ☒The aggregate market value of the registrant’s common stockCommon Stock held by non-affiliates of the registrant on June 30, 20172021 was $1,979,637,446.$4,883,584,523. For purposes of this computation, it has been assumed that the shares beneficially held by directors and executive officers of the registrant were “held by affiliates.” This assumption is not to be deemed an admission by these persons that they are affiliates of the registrant.The number of outstanding shares of the registrant’s common stockregistrant's Common Stock outstanding as of March 7, 2018 was 113,805,067.DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement for its 20182022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.A23D SYSTEMS CORPORATIONAnnual Report on Form 10‑K for10-KFor the2017TABLE OF CONTENTS102021212424272846474747484848484848494949533This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “believes,” “belief,” “expects,” “may”, “will”,“may,” “will,” “estimates,” “intends,” “anticipates,” or “plans” or the negative of these terms or other comparable terminology. Forward-looking statements are based upon management’s beliefs, assumptions and current expectations concerning future events and trends, using information currently available, and are necessarily subject to uncertainties, many of which are outside our control.Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. A number of important factors could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.” All subsequent written and oral forward-looking statements attributable to the Company or to individuals acting on our behalf are expressly qualified in their entirety by this discussion. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.PART IGeneral3D Systems Corporation (“3D Systems” or the “Company” or “we” or “us”) is a holding company incorporatedprovides comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics, metals, wax and bioinks, materials, software, advanced manufacturing services and digital design tools. Our solutions support advanced applications in Delaware in 1993 that marketstwo key industry verticals: Healthcare (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial (which includes aerospace, defense, transportation and general manufacturing). We market our products and services through subsidiaries and channel partners in North America and South America (collectively referred to as “Americas”), Europe, and the Middle East, and Africa (collectively referred to as “EMEA”"EMEA") and Asia-Pacific and Oceania (collectively referred to as "APAC").Business StrategyAccelerating Additive Manufacturing AdoptionWe partner with customers to enable them to adopt and scale additive manufacturing in their production environments. We believe that our additive manufacturing capabilities can help customers solve a number of design and manufacturing challenges – such as improved lead times, enhanced design freedom, part consolidation and the Asia Pacific region (“APAC”).ability for mass customization. We provide comprehensive 3Dbelieve we have both the scale and the breadth of technologies, encompassing hardware platforms, materials and software, that our customers require for the successful implementation of additive manufacturing into their design and manufacturing processes. Using a strong application focus in each of our two business segments, we integrate our printer, material and software technologies in unique combinations to solve a customer’s product need. Once complete, we can scale the process for the customer to a certain production level through our Advanced Manufacturing solutions, and, with increasing demand, we can enable a customer to continue scaling to high volumes.This transfer of the workflow involves providing the printing solutions, including 3D printers,systems, materials and software, on demand manufacturing services and digital design tools. Our solutions support advanced applicationsalong with the process definition, that results in a wideseamless transfer of capability to the manufacturer. We expect the result of this approach to drive recurring revenue streams as customers adopt additive manufacturing solutions and consume materials to produce parts, utilize software to manage the print process and manufacturing operations, and make use of our service offerings for maintenance and upgrades. Our proficiency in providing industry focused application and solution development for customers includes a number of internal assets and capabilities, including:a.A full range of industriesadditive manufacturing hardware technologies and key verticalsmaterials to address needs in metals, plastics, wax and bioprintingb.A services infrastructure that includes industry and technology application experts, customer innovation and advanced manufacturing centers and post-sale service and supportc.A software suite that enables end-to-end additive manufacturing including healthcare, aerospace, automotivedesign, simulation, process management and durable goods. Our precision healthcare capabilities include simulation, Virtual Surgical Planning (“VSP™”),manufacturing execution4d.Scale that includes significant and printingdiverse experience in production parts and applications combined with a global reach to service our customers worldwideAs part of medical and dental devices, anatomical models, and surgical guides and instruments. We have over 30 years of experience and expertise which have proven vitalour strategy to our development of end-to-end solutions that enable customers to optimizeadopt additive manufacturing, in November 2021 we acquired Oqton, a software company that is a leader in the creation of a new breed of intelligent, cloud-based Manufacturing Operating System (MOS) platform. This platform is tailored for flexible production environments that increasingly utilize a range of advanced manufacturing and automation technologies, including additive manufacturing solutions, in their production workflows. The cloud-based solution leverages the Industrial Internet of Things, artificial intelligence, and machine learning technologies to deliver solutions to customers seeking to automate their digital manufacturing workflows, scale their operations and enhance their competitive position.In addition, in May 2021, we announced the acquisition of Additive Works, a Germany-based software company focused upon simulation-based optimization and automation of the additive manufacturing print preparation and workflow. This highly automated simulation software increases productivity by reducing set-up time while improving product designs, transform workflows, bring innovative productsyield, throughput, and component performance.Investing in Regenerative MedicineAs an early and continuing innovator in additive manufacturing, we have significant experience in bringing this technology to marketnew markets. In 2021, we announced an expansion of our focus and drive new business models.Customers caninvestments in the application of additive manufacturing for regenerative medicine. Our approach in regenerative medicine involves three strategies. The first strategy is the use of additive manufacturing for human organ transplantation. Each year, end-stage organ failure kills millions of people. However, the supply of donated organs is insufficient to meet the needs of patients seeking transplantation. In 2021, we announced an expansion of our organ printing development program, including our work with a key strategic partner. This program was first established in 2017 and combines our 3D solutionsprinting expertise with the regenerative medicine and biotechnology expertise of our partner. To date, our program has had a focus on developing the capability to designprint scaffolds for human lungs, with a long-term goal of allowing all patients with end-stage lung disease to receive transplants which will enable them to enjoy long and manufacture complexactive lives. Based upon the progress made toward this goal, the program was expanded to include two additional human organs.Our second strategy involves the application of our bio-printing technology to non-organ human applications. We are focused on internal development, often in conjunction with strategic or development partners, of applications that combine our bio-printing and materials expertise with the application expertise of our partners.Our third regenerative medicine strategy extends our bio-printing technologies into research labs, providing advanced printing systems and unique parts, eliminate expensive tooling, produce parts locally orbiological materials to those that advance the science of medicine. We believe our ability to print high-precision, three-dimensional vascularized cellular structures can be used in small batches and reduce lead times and time to market. A growinga number of customers are shifting from prototyping applicationsresearch areas such as the development of new, more effective drug therapies.To support our regenerative medicine efforts, in December 2021 we acquired Volumetric, a biotech company whose mission is to alsodevelop the ability to manufacture human organs using 3D printing for production. We believe this shift will be further driven bybioprinting methods and the underlying technologies required to create these highly complex biological structures. This acquisition is expected to supplement and expand our continued advancementexisting capabilities in bioprinting and innovationregenerative medicine. In addition, in May 2021, we announced the acquisition of 3D printingAllevi, a developer of bioprinting solutions, that improve durability, repeatability, productivitycomprising of bioprinters, biomaterials, and total cost of operations.ProductsWe offer our customers a comprehensive range of 3D printers, materials, software, hapticand digital design tools, 3D scanners and virtual surgical simulators.3D Printers and MaterialsOur 3D printers transform digital data input generated by 3D design software, CADComputer Aided Design (“CAD”) software or other 3D design tools, into printed parts using several unique print engines that employ proprietary, additive layer by layer building processes with a variety of materials. WeAs part of our solutions oriented strategy, we offer a broad range of 3D printing technologies including Stereolithography (“SLA”)(SLA), Selective Laser Sintering, (“SLS”), Direct Metal Printing, (“DMP”), MultiJet Printing, (“MJP”) and ColorJet Printing (“CJP”), which are discussed in more detail below.Class IV bio-compatiblebiocompatible materials. We augment and complement our portfolio of engineered materials with materials that we purchase or develop with third parties under private label and distribution arrangements.45We work closely with our customers to optimize the performance of our materials in their applications. Our expertise in materials science and formulation, combined with our processes, software and equipment, enables us to provide unique and highly specialized materialssolutions and help our customers select the material that best meets their needs with optimal cost and performance results.As part of our solutions approach, our currently offered printers, with the exception of direct metal printers and bioprinters, have built-in intelligence to make them integrated, closed systems. For these integrated printers, we furnish materials specifically designed for use in those printers, which are packaged in smart cartridges and utilize material delivery systems. These integrated materials are designed to enhance system functionality, productivity, reliability and materialsmaterials' shelf life, in addition to providing our customers with a built-in quality management system and a fully integrated workflow solution.SLAPrintersOur SLA 3D printers cure liquid resin materials with light or a laser to produce durable plastic parts with surface smoothness, high resolution, edge definitionFor our bioprinting solutions, we also offer research protocols that include bioink, consumable and tolerances that rival the accuracyreagent recommendations. These protocols cover pre-print preparation of machined or molded plastic parts. We offer SLA printers with a wide range of materials, sizescells and price points, which are designed for prototyping, end-use part production, casting patterns, molds, tooling, fixtures and medical models.Figure 4™, a light-based SLA platform, is an ultra-fast additive manufacturing technology with a discrete module design. This design allows a range of products and configurations to meet customer needs from a stand-alone product to modular products to fully-automated solutions, all of which we plan to bring to market in 2018. Unlike other photopolymerbiomaterials, 3D printing Figure 4 is capable of manufacturing parts in hybrid materials (multi-mode polymerization) that offer toughness, durability, biocompatibility, high temperature deflectionparameter setting, and elastomeric properties. These capabilities enable new end-use applications in healthcare, dental, durable goods, automotive, aerospacepost-print processes. Our protocols are utilized by research organizations to run experiments, share research findings, and other verticals.For SLA printers, we offer a variety of liquid resin materials, primarily underenhance the Accura® brand name. The resins are designed to mimic specific, engineered thermoplastics and provide a wide range of characteristics, including tough, durable, clear, castable, polypropylene-like, ABS-like, high-temperature resistant and Class IV bio-compatible materials. We also offer dental materials for light-based SLA 3D printers under our NextDent™ brand name.SLS PrintersOur SLS 3D printers use a laser beam to melt and fuse powder-based nylon, engineered plastic and composite materials to produce very strong and durable parts. Customer usesutilization of our SLS printers include functional test models and end-use parts, such as housings, machinery components, ducting, tooling, jigs and fixtures and medical devices and personalized surgery kits and guides. Our proprietary SLS materials include a range of flexible and rigid plastics, nylons and composite materials marketed under the DuraForm®, LaserForm® and CastForm™ brand names. These materials are available in a variety of lightweight, tough, versatile, high temperature, flexible and durable formulations.DMP PrintersOur DMP solutions use a laser beam to sinter powders in a variety of metals to produce fully dense parts with outstanding purity, surface finish and resolution. We offer DMP solutions that can process a wide range of materials and powders, including materials with very fine granularity and proven manufacturing applications. We sell DMP systems in various sizes and configurations. Certain models are optimized for specific metals, including titanium, stainless steel and nickel super alloys. Our DMP printers are used in medical and dental implants, aerospace, automotive and hi-tech and industrial applications, such as conformal cooling, enhanced fluid flow and other complex, lightweight parts.We offer metal powder materials for our DMP printers, including titanium, stainless steels, tool steels, super alloys, non-ferrous alloys, precious metals and aluminum.MJP PrintersOur MJP 3D printers utilize jetting head technology to deliver precise, tough parts with exceptional resolution in plastic, wax, elastomeric and engineered materials that we sell under the VisiJet® brand name. Our MJP printers offer the capability to print in real wax as well as rigid and flexible plastics and multiple materials in one build, making them ideal for mechanical functional testing, rapid tooling, jigs and fixtures, casting patterns, over-molding and medical models.5CJP PrintersOur CJP 3D printers produce parts from our VisiJet branded, powder-based ceramic-like materials. CJP printers build high-definition, full-color parts that can be sanded, drilled, infiltrated, painted and electroplated, which further expands the options available for finished part characteristics. CJP printers are ideal for producing models used in mechanical design, healthcare, architecture, education, entertainment and packaging applications.We also provide digital design tools, including software, scanners and haptic devices. We offer solutions for product design, simulation, mold and die design, 3D scan-to-print, reverse engineering, production machining, metrology, inspection and inspection.manufacturing workflows. These products are designed to enable a seamless workflow for customers and are marketed under ourbrand names such as Geomagic®, Cimatron® and GibbsCAM® brand names.. We also offer 3D Sprint and 3DXpert, proprietary software to prepare and drivers with our printers thatoptimize CAD data and manage the additive manufacturing processes. These software products provide part review, part preparation, part placement, automated support building and placement, build platform management, print simulation and print queue management capabilities.Other ProductsAs part The outcome is the ability to improve the quality of prints, optimize design structure, shorten design to manufacturing lead time and minimize manufacturing costs.For our portfolio of precision healthcare solutions,bioprinters, we offer 3D virtual reality simulatorsBioprint Pro as a software solution that allows researchers to design and simulator modules for medical applications. These 3D simulators are sold under our Simbionix™ brand namebioprint repeatable experiments. Bioprint Pro includes experiment-based workflows, basic CAD modeling, and offer clinicians a realistic, hands-on experience to master critical skills, prepare for upcoming procedures and create patient specific simulations and operating room environments through augmented reality and virtual reality. We also provide digitizing scanners for medical and mechanical applications.ServicesWarranty, Maintenance and Training ServicesWe provide a variety of customer services, local application support and field support on a worldwide basis for our products, including installation of new printers at customers’ sites, printer warranties, maintenance agreements, periodic hardware upgrades and software updates. We also provide services to assist our customers and partners in developing new applications for our technologies, to facilitate the use of our technology for specific applications, to train customers on the use of our printers and to maintain our printers at customers’ sites.are continuingseek to continue to strengthen and enhance our partner network.Our 3D printers are sold with maintenance support that generally covers a warranty period ranging from 90 days to one year. WeAfter the warranty period, we generally offer service contracts that enable our customers to continue service and maintenance coverage beyond the initial warranty period.coverage. These service contracts are offered with various levels of support and options, and are priced accordingly. OurOne entitlement of our service contracts is our service engineers provide regularly scheduled preventive maintenance visits to customer sites, andsites. Additionally, we also provide training to our partners to enable them to also perform these services.On DemandAdvanced Manufacturing SolutionsWe provide on demandAs part of our strategy to help customers adopt additive manufacturing, we offer advanced manufacturing services through facilities worldwide in the Americas and EMEA regions. These facilities supplement customer manufacturing environments by allowing them to test and APAC. Weramp production using our solutions before transitioning production to their environment. This allows us to provide a broad rangeapplication and production expertise and refine the production process as part of prototyping,our solutions approach. As the process is validated and volumes ramp, customers may choose to move production to their facilities using equipment, materials, software and finishing capabilitiesservices that they purchase from us. These facilities operate under stringent quality systems and are also utilized by customers in regulated industries such as healthcare and aerospace & defense for precision plastic and metal parts and tooling with a wide rangesustained outsourced production of additive and traditional manufacturing processes.In addition to the sales6hundreds of thousands of parts to customers, we, and our partners, utilize our on demand manufacturing operation as a sales and lead generation tool. Third party preferred service providers also use our on demand manufacturing service as their comprehensive order-fulfillment center, and customers can use our facilities as fulfilment centers in disaster recovery plans. We also provide professional 3D scanning, printing and parts production related to the entertainment industry through our Gentle Giant™ brand.per year.6In addition to our software license products, described above, we offer software maintenance and cloud-software subscriptions, which includes updates and support for our licensed software products. Our licensed software is sold with a maintenance service that generally covers a period of one year. After this initial period, we offer single and multi-year maintenance contracts that enable our customers to continue coverage. These software service contracts typically include free software updates and various levels of technical support.Healthcare ServicesAs part of our precision healthcare services, we provide surgical planning, modeling, prototyping and manufacturing services. We offer printing and finishing of medical and dental devices, anatomical models and surgical guides and tools, as well as modeling, design and planning services, including virtualVSP™ surgical planning VSP™. We also provide service and maintenance for our surgical simulator products.Global OperationsWe operate in the Americas, EMEA and APAC regions, and market our products and services in those areas as well as to other parts of the world.In maintaining operations outside the United States (the “U.S.”), we expose our business to risks inherent in such operations, including currency exchange rate fluctuations. Information on foreign exchange risk appears in Part I, Item 1A, “Risk Factors”,Factors,” Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” and Part II, Item 8, “Financial Statements and Supplementary Data,” of this Form 10-K.Financial information about geographic areas, including revenue, long-lived assets and cash balances, appears in Note 20to the Consolidated Financial Statements and in Part I, Item 1A, “Risk Factors”, Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” and Part II, Item 8, “Financial Statements and Supplementary Data,” of this Form 10-K.Marketing and CustomersOur sales and marketingGo-to-Market strategy focuses on an integrated approach that is directed at providing comprehensive design to manufacturing solutions designed to meetmeeting the broad spectrum of our customer needs. We useutilize a fullwide range of marketing and lead generation tools to promotegenerate demand and create awareness for our products and services on a worldwide basis.worldwide. Our marketing department supportsand communications teams support our global sales organization and distribution channelsdemand generation activities by providing marketing materials, potential sales leadscampaigns, digital presence and co-marketing funds.We promote and sell our solutions globally through a direct sales force, partner channel partners and, in certain geographies, appointed distributors. Our go-to-market and salescustomer success organization includes regional general managers, channel managers, direct sales people andprofessionals, application engineers, vertical specialists, and other support staffteams throughout the Americas, EMEA and APAC whoregions. These teams are responsible for providing complete service to our customers and channel partners, from a technical consultation to the sale of productsour software, printer, and services products.Our application engineers collaborate closely with our customers to solve complex design and for the management ofadditive manufacturing challenges, leveraging our network of channel partners.application engineersCustomer Innovation Centers provide pre-salesaccess to the resources necessary to develop, validate, and post-sales support, assistcommercialize customer applications.We sell our software solutions, including our Oqton manufacturing operating system software, through a dedicated software sales team. Our software may be sold to customers with leveraging3D printing equipment from competitive equipment manufacturers and, in some cases, we resell our latest solutions and production techniques and help identify new applications and sales opportunities. Our on demand manufacturing service also expands our customer relationships and generates leads for future sales.Our customers include major companies as well as small and midsize businesses in a broad range of industries, including medical, dental, automotive, aerospace, durable goods, government, defense, technology, jewelry, electronics, education, consumer goods, energy, biotechnology and others. No single customer accounted for more than 10 percent of our consolidated revenue forFor the years ended December 31, 2017, 2016 or 2015.7Production and SuppliesAt our Rock Hill, South Carolina location, we assemble MJP, CJP and certain models of our SLA 3D printers, as well as other equipment related to these printers. We assemble certain models of our DMP printers in our Riom, France facility. We produce our Simbionix branded 3D simulators in Airport City, Israel.7certain SLA, SLS and DMPour 3D printer assembly and refurbishment activities to selected design, engineering and manufacturing companies in the U.S., Switzerland and Belgium. We purchase finished printers from these suppliers pursuant to forecasts and customer orders that we supply to them. These suppliers also carry out quality control procedures on our printers prior to their shipment to customers. As part of these activities, these suppliers have responsibility for procuring the components and sub-assemblies either from us or third-party suppliers.suppliers, which are sourced from a geographically diverse mix of countries. While the outsourced suppliers of our printers have responsibility for the supply chain and inventory of components for the printers they assemble, the components, parts and sub-assemblies that are used in our printers are generally available from several potential suppliers.We produce materials at our facilities in Rock Hill, South Carolina, Marly, Switzerland and Soesterberg, Netherlands. We also have arrangements with third parties who blend certain materials according to our specifications that we sell under our own brand names, and we purchase certain complementary materials from third parties for resale to our customers.Our equipment assembly and materials blending activities, on demandadvanced manufacturing services and certain research and development activities are subject to compliance with applicable federal, state and local provisions regulating the storage, use and discharge of materials into the environment. We believe that we are in compliance, in all material respects, with such regulations as currently in effect, and we expect continued compliance with them will not have a material adverse effect on our capital expenditures, results of operations or consolidated financial position.As a company with global operations, we are subject to the laws of the U.S. and multiple foreign jurisdictions in which we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions. Compliance with these laws, rules and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations or competitive position as compared to prior periods.Research and DevelopmentThe 3D printing industry continues to experience rapid technological change and developments in hardware, software and materials. Consequently, we have ongoing research and development programs to develop new products and to enhance our portfolio of products and services, as well as to improve and expand the capabilities of our solutions. Our efforts are often augmented by development arrangements with research institutions, including universities, customers, suppliers, assembly and design firms, engineering companies, materials companies, governments and other partners.ResearchWe are also engaged in various research and development expenses were $94.6 million, $88.4 millionefforts related to regenerative medicine. These efforts include the application of 3D printing technologies to the development of transplantable organs and $92.8 millionnon-organ human applications. These efforts are expected to result in 2017, 2016 and 2015, respectively.In addition to our internally developed technology platforms, we have acquired products and technologies developed by others by acquiring business entities that held ownership rights to such products and technologies. In other instances, we have licensed or purchased the intellectual property rights of technologies developed by third parties through agreements that may obligate us to pay a license fee or royalty, typically based upon a dollar amount per unit or a percentage of the revenue generated by such products.Intellectual PropertyWe regard our technology platforms and materials as proprietary and seek to protect them through copyrights, patents, trademarks and trade secrets. We held 1,171 patents worldwide at both December 31, 2017 and 2016. At December 31, 20172021 and 2016,2020 we held 1,332 and 1,269 patents worldwide, respectively. At December 31, 2021 and 2020, we had 271261 and 249312 pending patent applications worldwide, respectively. The principal issued patents covering aspects of our various technologies will expire at varying times through the year 2027.In addition, we are a party to various licenses that have had the effect of broadening the range of the patents, patent applications and other intellectual property available to us.8We have also entered into licensing or cross-licensing arrangements with various companies in the U.S. and other countries that enable those companies to utilize our technologies in their products or that enable us to use their technologies in our products. Under certain of these licenses, we are entitled to receive, or we are obligated to pay, royalties for the sale of licensed products in the U.S. or in other countries. The amount of such royalties was not material to any of our annual results of operations or financial position for the three-year period ended December 31, 2017.We believe that, while our patents and licenses provide us with a competitive advantage, our success also depends on our marketing, business development, applications know-how and ongoing research and development efforts. Accordingly, we believe the expiration of any of the patents, patent applications, or licenses discussed above would not be material to our business or financial position.We compete with other suppliers of 3D printers, materials, software and healthcare solutions as well as with suppliers of conventional manufacturing solutions. We compete with these suppliers for customers as well as channel partners for certain of our products. We also8compete with businesses and service bureaus that use such equipment to produce models, prototypes, molds and end-use parts. Development of new technologies or techniques not encompassed by the patents that we own or license may result in additional future competition.Our competitors operate both globally and regionally, and many of them have well-recognized brands and product lines. Additionally, certain of our competitors are well established and may have greater financial resources than us.We believe principal competitive factors include the functionality and breadth of our technology capabilities,and materials, process and application know-how, total cost of operation of the solution, product reliability and the ability to provide a full range of products and servicescomplete solution to meet customer needs. We believe that our future success depends on our ability to provide high qualityhigh-quality solutions, introduce new products and services to meet evolving customer needs and market opportunities, and extend our technologies to new applications. Accordingly, our ongoing research and development programs are intended to enable us to continue technology advancement and develop innovative new solutions for the marketplace.Human CapitalAt 3D Systems, our purpose is to deliver leading additive solutions for industrial and healthcare applications. In support of this purpose, our priority is to invest in our people by focusing on bringing in top talent, providing training and development opportunities to strengthen capabilities and skills, and ensuring a safe and healthy work environment. As of December 31, 2017, we had 2,6662021, 1,721 full-time and part-time employees, compared to 2,445 at1,995 full-time and part-time employees as of December 31, 2016.2020, were employed at 3D Systems. None of our U.S. employees are covered by collective bargaining agreements,agreements; however, some of our employees outside the U.S. are subject to local statutory employment and labor arrangements. We have not experienced any material work stoppages and believe that our relations with our employees are satisfactory.Talent Development & EngagementThrough our operating history and experience with technological innovation, we appreciate the importance of retention, growth, and development of our employees – our employees are key to achieving long-term success. Our goal is to foster a workplace culture and employee experience that drives innovation with purpose, profitable growth, and delivers ‘extraordinary’ to our customers. To do so, we have programs for acquiring strategic talent, developing our teams to build key capabilities and skills, and engaging, motivating, and retaining our employees to do their best work. We regularly survey our employees to seek their feedback in areas such as culture, career development, inclusivity, integrity, and employee success. To address the evolving needs of our business, we perform strategic workforce and succession planning as well as ongoing evaluation of our organizational design, culture, and values.Diversity, Equity & InclusionEmployees span the Americas (54%), Europe, Middle East and Africa (36%), and Asia-Pacific (10%) with approximately 819 employees located outside the U.S. This global representation promotes diversity of thought, experiences, culture, and backgrounds that enhances our ability to deliver innovative solutions to our customers, in support of our company value to ‘build great teams.’ We are committed to fostering an engaged, diverse, inclusive, safe, and purpose-driven culture where employees have equitable opportunities for success. As we execute our talent management strategy, diversity, equity, and inclusion is a key element that influences our measures of success. We monitor the representation of our global employees across the company.Compensation & Benefits9We design our compensation programs to be competitive and equitable to support employees in sharing in the success of 3D Systems. We tailor our compensation programs to attract and retain top talent to drive success in our current business priorities and emerging strategies. Additionally, we recognize that employees thrive when they have the resources to meet their needs and the time and support to succeed in their professional and personal lives. In support of this, we offer a wide variety of market competitive benefits to employees around the world. Our Compensation Committee of the Board of Directors oversees the design of executive compensation and equity plans, which are designed to align executive pay to the delivery of long-termshareholder value.Workplace Health & SafetyWe are committed to creating a safe, secure, healthy, and injury-free work environment for our employees, customers, partners,and visitors. Our focus is on reducing significant safety risks and driving a strong safety culture through communication, awareness, and visible leadership. To assist in achieving this commitment, we provide substantial safety trainings and necessary equipment at all facilities, educating and encouraging our employees to proactively identify and eliminate unsafe actions and conditions. We have specific safety programs in place for those working in potentially high-hazard environments. We monitor injury and illness health and safety metrics across our organization to continually evaluate our safety programs to meet the needs of our teams.COVID-19Our top priority is the health and safety of our employees and their families and communities, as we continue to manage our business through the COVID-19 pandemic. Throughout the COVID-19 pandemic, our leadership regularly reviewed and adapted our COVID-19 protocols based on evolving research and guidance. We have reopened our offices and begun business travel, with safety measures in place and in accordance with local guidance. Additionally, we implemented a hybrid-work program globally, providing more flexibility for employees to work remotely. We continue to monitor local transmission rates and regulatory guidance, and remain committed to protecting our employees, delivering for our customers, and supporting our communities. We are subject to vaccination and workplace safety protocols of the United States Federal Government Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors, and the COVID-19 Workplace Safety Guidance for Federal Contractors and Subcontractors issued by the Safer Federal Workforce Task Force. In support of a safe work environment, we have a vaccine policy for our U.S. employees, and a visitor policy to ensure those visiting our sites are taking the necessary health and safety precautions.Refer to our website to learn more about our company culture, code of conduct, values, and sustainability initiatives. Our website address is www.3DSystems.com. The information contained on our website is neither a part of, nor incorporated by reference into, this Form 10-K or any other document that we file with or furnish to the Securities and Exchange Commission (“SEC”). We make available free of charge through our website our Annual Reports on Form 10 K,10-K, Quarterly Reports on Form 10 Q,10-Q, Current Reports on Form 8 K,8-K, amendments to those reports and other documents that we file with the SEC, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The public may read and copy materials we file with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room can be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, from which investors can electronically access our SEC filings.Many of our corporate governance materials, including our Code of Conduct, Code of Ethics for Senior Financial Executives and Directors, Corporate Governance Guidelines, current charters of each of the standing committees of the Board of Directors and our corporate charter documents and by-laws are available on our website.Information about our Executive OfficersThe information appearing in the table below sets forth the position or positions held by each of our executive officers and his or her age as of March 14, 2018.1, 2022. All of our executive officers serve at the pleasure of the Board of Directors. There are no family relationships among any of our executive officers or directors.1014, 2018Vyomesh I. Joshi60 6351 Executive Vice President and Chief Financial Officer Charles W. Hull 82 7847 43Kevin P. McAlea49 and Chief Operating Officer, Healthcare59John N. McMullen53 David Leigh 54 Executive Vice President, Chief FinancialTechnology Officer For Additive Manufacturing59Phyllis Nordstrom 43 Executive Vice President, Chief People and Culture Officer and Chief Compliance Officer 9Mr. JoshiJeffrey A. Graves, President and Chief Executive Officer. Dr. Graves was appointed the Company’s President and Chief Executive Officer effective April 1, 2016.in May 2020. Prior to joining the Company, from 2012 to May 2020, Dr. Graves served as Chief Executive Officer, President and Director of MTS Systems Corporation, a global supplier of test, simulation, and measurement systems. From 2005 until 2012, Dr. Graves served as President and Chief Executive Officer of C&D Technologies, Inc. Dr. Graves also held leadership roles with Kemet Corporation, an electronic component manufacturing company, as Chief Operating Officer from 2001 to 2003 and Chief Executive Officer from 2003 to 2005. Previously, he held a number of leadership and technical roles with General Electric, Rockwell Automation and Howmet Corporation. In addition to serving on the Company's Board of Directors, Dr. Graves serves on the board of directors of Hexcel Corporation.Jagtar Narula, Executive Vice President and Chief Financial Officer. Mr. Narula was appointed the Company’s Executive Vice President and Chief Financial Officer in September 2020. Prior to joining the Company, Mr. Joshi workedNarula served as Senior Vice President of Corporate Strategy and Business Development for Blackbaud, Inc. where he also previously led investor relations and financial planning. Additionally, he held finance leadership positions of increasing responsibility at Hewlett-Packard Company (“HP”) from 1980 until his retirement on March 21, 2012. From 2001 to 2012, he was Xerox, General Electric and with private equity.Charles W. Hull, Executive Vice President, of HP’s Imaging and Printing Group, following two decades of research, engineering and management in HP’s imaging and printing systems. In addition to his service on our Board of Directors, Mr. Joshi currently serves on the Board of Directors of Harris Corporation and formerly served on the Board of Directors at Yahoo! Inc. and Wipro Ltd.and as Executive Vice President since 2000. He2000 and as Chief Technology Officer for Regenerative Medicine since 2021. Mr. Hull has also previously served in various other executive capacities at the Company since 1986, including Chief Executive Officer, Vice Chairman of the Board of Directors and President and Chief Operating Officer.Andrew M. Johnson, Executive Vice President, Chief Legal Officer and Secretary. Mr. Johnson has served as Executive Vice President and Chief Legal Officer since November 2014. He served as Interim President and Chief Executive Officer, Chief Legal Officer and Secretary from October 2015 to April 2016 and as Vice President, General Counsel and Secretary from April 2012 to November 2014. Previously, he served as Assistant General Counsel and Assistant Secretary.Dr. McAlea currently servesMenno Ellis, Executive Vice President, Healthcare Solutions. Mr. Ellis has served as Executive Vice President, General Manager, Metals & Healthcare. Dr. McAleaHealthcare Solutions since July 2020. He joined the Company in 2001December 2016 as Senior Vice President Strategy and Vertical Markets. He served as Senior Vice President and General Manager of the Plastics Business Unit, and is now responsible for the Healthcare Solutions group, which encompasses Dental, Medical and Simulations businesses. Prior to joining the Company, he spent 20 years in management and business consulting services with an emphasis on sustainable, long-term revenue growth.11Reji Puthenveetil, Executive Vice President, Industrial Solutions. Mr. Puthenveetil has served in various executive positionsas Executive Vice President, Industrial Solutions since that time. Mr. McMullen joinedJuly 2020. Prior to joining the Company, Mr. Puthenveetil spent 25 years as a management consultant for Group Newhouse helping companies, such as Lockheed Martin, Xcel Energy, Kia Motors, and Thales Group. Mr. Puthenveetil's work across multiple industries led to the design of a clear strategy for growth and ensuring organizational capability and alignment for execution.David Leigh, Executive Vice President, Chief Technology Officer Additive Manufacturing. Dr. Leigh has served as Executive Vice President, Chief FinancialTechnology Officer for Additive Manufacturing since June 2021. He has more than 30 years of experience in July 2016. From 2014the additive manufacturing industry. Prior to 2016,his role with 3D Systems, from January 2019 to May 2021 Dr. Leigh served as the Chief Technology Officer (global) and Chief Operations Officer (North America) for EOS GmbH, an additive manufacturing equipment vendor, and from August 2015 to December 2018 he was Chief Financial Officer of Eastman Kodak Company, a technology company focused on imaging. Before that, Mr. McMullen had a 32 year career at HP and its acquired companies, including positionsserved as Senior Vice President of FinanceEmerging Technologies for Vulcan Labs, a subsidiary of Stratasys, Ltd. Dr. Leigh also founded Harvest Technologies which was a pioneer in end-use parts applications in aerospace and Corporate Treasurerestablished one of HP, Chief Financial Officer of HP’s Imaging and Printing Group andthe first AS9100 certified additive manufacturing facilities.Phyllis Nordstrom, Executive Vice President, Chief People and Culture Officer and Chief Compliance Officer. Ms. Nordstrom has served as Executive Vice President, Chief People and Culture Officer and Chief Compliance Officer since August 2021. Prior to joining 3D Systems, from May 2016 to July 2021, Ms. Nordstrom was Senior Vice President and Chief Risk & Compliance Officer at MTS Systems Corporation where she was the leader of Financecorporate sustainability, business ethics, internal audit, and Strategy for Compaq’s Worldwide Salescorporate compliance. Over her 22 year career, Ms. Nordstrom has also held multiple leadership roles at PricewaterhouseCoopers, Target, and Services Group.US Bank.Item 1A. Risk FactorsThe risksYou should carefully read the following discussion of significant factors, events and uncertainties described below are not the only risks that we face. Additional risks not currently known to us or that we currently deem not to be material also may impair our business operations, results of operations and financial condition. If any of the risks described below or if any other risks not currently known to us or that we currently deem not to be material actually occurs, our business, results of operations and financial condition could be materially adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock. We face significant competition in many aspects of our business, which could cause our revenue and gross profit margins to decline. Competition could also cause us to reduce sales prices or to incur additional marketing or production costs, which could result in decreased revenue, increased costs and reduced margins.We compete for customers with a wide variety of producers of equipment and software for models, prototypes, other three-dimensional objects and end-use parts as well as producers of materials and services for this equipment. Some of our existing and potential competitors are researching, designing, developing and marketing other types of competitive equipment and software, materials and services. Certain of these competitors may have financial, marketing, manufacturing, distribution and other resources substantially greater than ours.We also expect that future competition may arise from the development of allied or related techniques for equipment and materials that are not encompassed by our patents, from the issuance of patents to other companies that may inhibit our ability to develop certain products and from improvements to existing materials and equipment technologies.Some of our patents have recently expired and others will expire in coming years. Upon expiration of those patents, our competitors may introduce products using the technology previously protected by the expired patents and those products may have lower prices than those of our products. To compete, we may need to reduce our prices for those products, which could adversely affect our revenues, margins and profitability. Additionally, the expiration of our patents could reduce barriers to entry into additive manufacturing, which could result in the reduction of our sales and earnings potential. If competitors using technology previously protected by our expired patents were to introduce products of inferior quality, our potential customers may view the technology negatively, which would have an adverse effect on our image and reputation and on our ability to compete with systems using other additive fabrication technologies.We intend to follow a strategy of continuing product development to enhance our position to the extent practicable. We cannot assure you that we will be able to maintain our current position in the field or continue to compete successfully against current and future sources of competition. If we do not keep pace with technological change and introduce new products, we may lose revenue and demand10for our products. We also incur significant costs associated with the investment in our product development in furtherance of our strategy that may not result in increased revenue or demand for our products and that could negatively affect our operating results.We believe that our future success depends on our ability to deliver products that meet changing technology and customer needs.Our business may be affected by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new standards and practices, any of which could render our existing products and proprietary technology obsolete. Accordingly, our ongoing research and development programs are intended to enable us to maintain technological leadership. We believe that to remain competitive we must continually enhance and improve the functionality and features of our products, services and technologies. However, there is a risk that we may not be able to:·Develop or obtain leading technologies useful in our business;·Enhance our existing products;·Develop new products, services and technologies that address the increasingly sophisticated and varied needs of prospective customers, particularly in the area of printer speeds and materials functionality;·Respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis; or·Recruit or retain key technology employees.If we are unable to meet changing technology and customer needs, our competitive position, revenue, results of operations and financial condition could be adversely affected.We have made, and may make in the future, strategic acquisitions that may involve significant risks and uncertainties. We may not realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disruptwhen evaluating our business and divert management attention.From time to time, we evaluate acquisition candidates that fit our business objectives. For example,the forward-looking information contained in January 2017, we acquired Vertex-Global Holding B.V. (“Vertex”), a provider of dental materials. Acquisitions involve certain risksthis Form 10-K. The events and uncertainties, including, among others, the following:·Difficulty in integrating newly acquired businesses and operations in an efficient and cost-effective manner, which may also impact our ability to realize the potential benefits associated with the acquisition;·The risk that significant unanticipated costs or other problems associated with integration may be encountered;·The challenges in achieving strategic objectives, cost savings and other anticipated benefits;·The risk that our marketplaces do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in the marketplaces that we serve;·The risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying party;·The inability to maintain a relationship with key customers, vendors and other business partners of the acquired businesses;·The difficulty in maintaining controls, procedures and policies during the transition and integration;·The potential loss of key employees of the acquired businesses;·The risk of diverting management attention from our existing operations;·Difficulties in coordinating geographically disparate organizations and corporate cultures and integrating management personnel with different business backgrounds;11·The potential failure of the due diligence process to identify significant problems, liabilities or other challenges of an acquired company or technology;·The risk that we incur significant costs associated with such acquisition activity that may negatively impact our operating results before the benefits of such acquisitions are realized, if at all;·The risk of incurring significant goodwill and other intangible asset impairment charges;·The risk of incurring significant exit costs if products or services are unsuccessful;·The entry into marketplaces where we have no or limited direct prior experience and where competitors have stronger marketplace positions;·The exposure to litigation or other claims in connection with our assuming claims or litigation risks from terminated employees, customers, former shareholders or other third parties; and·The risk that historical financial information may not be representative or indicative of our results as a combined company.Historically, we have grown organically and from acquisitions, and we intend to continue to grow. Our infrastructure will require, among other things, continued development of our financial and management controls and management information systems, management of our sales channel, continued capital expenditures, the ability to attract and retain qualified management personnel and the training of new personnel. We cannot be sure that our infrastructure, systems, procedures, business processes and managerial controls will be adequate to support the growthconsequences discussed in our operations. Any delays in, or problems associated with, implementing, or transitioning to, new or enhanced systems, procedures, or controls to accommodate and support the requirements of our business and operations and to effectively and efficiently integrate acquired operations may adversely affect our ability to meet customer requirements, manage our product inventory, and record and report financial and management information on a timely and accurate basis. These potential negative effects could prevent us from realizing the benefits of an acquisition transaction or other growth opportunity. In that event, our competitive position, revenues, results of operations and financial condition could be adversely affected.Changes in business conditions may cause goodwill and other intangible assets to become impaired.Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is not amortized and remains on our balance sheet indefinitely unless there is an impairment or a sale of a portion of the business. Goodwill is subject to an impairment test on an annual basis and when circumstances indicate that an impairment is more likely than not. Such circumstances include a significant adverse change in the business climate or a decision to dispose of a business or product line. We face some uncertainty in our business environment due to a variety of challenges, including changes in customer demand. We may experience unforeseen circumstances that adversely affect the value of our goodwill or intangible assets and trigger an evaluation of the amount of the recorded goodwill and intangible assets. Future write-offs of goodwill or other intangible assets as a result of an impairment in the businessthese risk factors could materially adversely affect our results of operations and financial condition.We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings.In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights or disputes related to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, and may in the future be, subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be costly and can be disruptive to our business operations by diverting attention and energies of management and key technical personnel, and by increasing our costs of doing business. Although we have successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes, which could adversely affect our results of operations and financial condition. Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from assembling or licensing certain of our products, subject us to injunctions restricting our sale of products, cause severe disruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements. In 12addition, we may incur significant costs in acquiring the necessary third-party intellectual property rights for use in our products. Any of these could seriously harm our business.We may not be able to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure.Although we defend our intellectual property rights and endeavor to combat unlicensed copying and use of our digital content and intellectual property rights through a variety of techniques, preventing unauthorized use or infringement of our rights (“piracy attacks”) is inherently difficult. If our intellectual property becomes subject to piracy attacks, our business may be harmed.Additionally, we endeavor to protect the secrecy of our digital content, confidential information and trade secrets. If unauthorized disclosure of our trade secrets occurs, we could potentially lose trade secret protection. The loss of trade secret protection could make it easier for third parties to compete with our products by copying previously confidential features, which could adversely affect our business, operating results, of operations, revenueliquidity and operating margins. We also seek to protect our confidential information and trade secrets through the use of non-disclosure agreements. However, there is a risk that our confidential information and trade secrets may be disclosed or published without our authorization, and in these situations it may be difficult and/or costly for us to enforce our rights. Our business could be adversely impacted in the event of a failure of our information technology infrastructure or adversely impacted by a successful cyber-attack.We have experienced cyber security threats, threats to our information technology infrastructure and unauthorized attempts to gain access to our sensitive information. Prior cyber-attacks directed at us have not had a material impact on our business or financial results; however, this may not continue to be the case in the future. Cyber security assessment analyses undertaken by uscondition. While we believe we have identified and prioritized steps to enhancediscussed below the key risk factors affecting our cyber security safeguards. We are inbusiness, these risk factors do not identify all the process of implementing these recommendations to enhance our threat detectionrisks we face, and mitigation processesthere may be additional risks and procedures. Despite the implementation of these new safeguards, there can be no assuranceuncertainties that we will adequately protect our informationdo not presently know or that we will not experience any future successful attacks. The threats we face vary from attacks common to most industries to more advanced and persistent, highly organized adversaries who target us because of the products and services we provide. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures. Due to the evolving nature of these security threats, however, the impact of any future incident cannot be predicted.We may be required to expend significant additional resources to modify our cyber security protective measures, to investigate and remediate vulnerabilities or other exposures or to make required notifications, and we may be subject to litigation and financial losses. These costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Occurrence of any of these events could adversely affect our internal operations, the services we provide to our customers, our financial results or our reputation; or such events could result in the loss of competitive advantages derived from our research and development efforts or other intellectual property or early obsolescence of our products and services.If we do not generate net cash flow from operations and if we are unablecurrently believe to raise additional capital, our financial condition could be adversely affected and we may not be able to execute our growth strategy.We cannot assure you that we will generate cash from operations or other potential sources to fund future working capital needs and meet capital expenditure requirements.If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring or incurring additional debt or obtaining additional equity capital on termssignificant that may be onerous or highly dilutive. Our ability to obtain additional capital or refinance any indebtedness will depend on, among other things, the capital markets, our financial condition at such time and the terms and conditions of any such financing or indebtedness. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result inhave a default on our debt obligations.The lack of additional capital resulting from any inability to generate cash flow from operations or to raise equity or debt financing could force us to substantially curtail or cease operations and would, therefore, have anmaterial adverse effect on our business, and financial condition. Furthermore, we cannot assure you that any necessary funds, if available, would be available on attractive termsperformance or that they would not have a significantly dilutive effect on our existing stockholders. If our financial condition were to worsen and we become unable to attract additional equity or debt financing or enter into other strategic transactions, we could become insolvent or be forced to declare bankruptcy, and we would not be able to execute our growth strategy.13Global economic, political and social conditions and financial markets may harm our ability to do business, adversely affect our sales, costs, results of operations and cash flow. We are subject to global economic, political and social conditions that may cause customers to delay or reduce technology purchases due to economic downturns, difficulties in the financial services sector and credit markets, geopolitical uncertainties and other macroeconomic factors affecting spending behavior. We face risks that may arise from financial difficulties experienced by our suppliers, resellers or customers, including, among others, the following:·Customers or partners to whom we sell our products and services may face financial difficulties or may become insolvent, which could lead to our inability to obtain payment of accounts receivable that those customers may owe;
Operational & Financial Risk Factors·Customers and potential customers may experience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products;·Key suppliers of raw materials, finished products or components used in the products that we sell may face financial difficulties or may become insolvent, which could lead to disruption in the supply of printers, materials or spare parts to our customers; and·The inability of customers, including resellers, suppliers and contract manufacturers, to obtain credit financing to finance purchases of our products and raw materials used to build those products.Our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter’s total sales occursoccur towards the end of the quarter.quarter, in particular for sales of hardwareand software products. This uneven sales pattern makes predicting net revenue, earnings, cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be cancelled.canceled. Depending on when they occur in a quarter, developments such as an information systems failure, component pricing movements, component shortages or global logistics disruptions could adversely impact our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected.The variety of products that we sell could cause significant quarterly fluctuations in our gross profit margins, and those fluctuations in margins could cause fluctuations in operating income or loss and net income or loss.We continuously work to expand and improve our products, materials and services offerings, the number of geographic areas in which we operate and the distribution channels we use to reach various target product applications and customers. This variety of products, applications, channels and channelsregions involves a range of gross profit margins that can cause substantial quarterly fluctuations in gross profit and gross profit margins depending upon the mix of product shipments from quarter to quarter. Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to manufacturing ramp-up and start-up costs. We may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the impact of the mix of products, channels or geographic areas in which we sell our products from period to period.We derive a significant portion of our revenue from business conducted outside the U.S. and are subject to the risks of doing business outside the U.S.We face many risks inherent in conducting business activities outside the U.S. that, unless managed properly, may adversely affect our profitability, including our ability to collect amounts due from customers. While most of our operations outside the U.S. are conducted in highly developed countries, our operations could be adversely affected by, among others, the following:·Unexpected changes in laws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad;·Changes in regulatory requirements, including export controls, tariffs and embargoes, other trade restrictions, competition, corporate practices and data privacy concerns;1214·Political policies, political or civil unrest, terrorism or epidemics and other similar outbreaks;·Fluctuations in currency exchange rates;·Limited protection for the enforcement of contract and intellectual property rights in some countries;·Difficulties in staffing and managing foreign operations;·Operating in countries with a higher incidence of corruption and fraudulent business practices;·Potentially adverse changes in taxation; and·Other factors, depending upon the specific country in which we conduct business.These uncertainties may make it difficult for us and our customers to accurately plan future business activities and may lead our customers in certain countries to delay purchases of our products and services. More generally, these geopolitical, social and economic conditions could result in increased volatility in global financial markets and economies.The consequences of terrorism or armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our market opportunities or our business. We are uninsured for losses and interruptions caused by terrorism, acts of war and similar events.While the geographic areas outside the U.S. in which we operate are generally not considered to be highly inflationary, our foreign operations are sensitive to fluctuations in currency exchange rates arising from, among other things, certain intercompany transactions that are generally denominated, for example, in U.S. dollars rather than their respective functional currencies.Moreover, our operations are exposed to market risk from changes in interest rates and foreign currency exchange rates and commodity prices, which may adversely affect our results of operations and financial condition. We seek to minimize these risks through regular operating and financing activities and, when we consider it to be appropriate, through the use of derivative financial instruments. However, our efforts to minimize our exposure to market risks from changes in interest rates, foreign currency exchange rates and commodity prices may prove to be insufficient or unsuccessful.We depend on our supply chain for components and sub-assemblies used in our 3D printers and other products and for raw materials used in our materials. If these relationships were to terminate or be disrupted, our business could be disrupted while we locate alternative suppliers and our expenses may increase.We have outsourced the assembly of certain of our printers to third party suppliers. In addition, we purchase components and sub-assemblies for our printers from third-party suppliers, and we purchase raw materials that are used in our materials, as well as certain of those materials, from third-party suppliers.While there are several potential suppliers of the components, parts and sub-assemblies for our products, we currently choose to use only one or a limited number of suppliers for several of these components, including our lasers, materials and certain jetting components. Our reliance on a single or limited number of suppliers involves many risks, including, among others, the following:·Potential shortages of some key components;·Disruptions in the operations of these suppliers;·Product performance shortfalls; and·Reduced control over delivery schedules, assembly capabilities, quality and costs.While we believe that we can obtain all the components necessary for our products from other manufacturers, we require any new supplier to become “qualified” pursuant to our internal procedures, which could involve evaluation processes of varying durations. We generally have our printers and other products assembled based on our internal forecasts and the supply of raw materials, assemblies,15components and finished goods from third parties, which are subject to various lead times. In addition, at any time, certain suppliers may decide to discontinue production of an assembly, component or raw material that we use. Any unanticipated change in the sources of our supplies, or unanticipated supply limitations, could increase production or related costs and consequently reduce margins.If our forecasts exceed actual orders, we may hold large inventories of slow-moving or unusable parts, which could have an adverse effect on our cash flow, profitability and results of operations. Inversely, we may lose orders if our forecast is low and we are unable to meet demand.We have engaged selected design and manufacturing companies to assemble certain of our production printers. In carrying out these outsourcing activities, we face a number of risks, including, among others, the following:·The risk that the parties that we retain to perform assembly activities may not perform in a satisfactory manner;·The risk of disruption in the supply of printers or other products to our customers if such third parties either fail to perform in a satisfactory manner or are unable to supply us with the quantity of printers or other products that are needed to meet then current customer demand; and·The risk of insolvency of these suppliers, as well as the risks that we face, as discussed above, in dealing with a limited number of suppliers.We sell complex hardware and software products, materials and services that can contain undetected design and manufacturing defects or errors when first introduced or as enhancements are released that, despite testing, are not discovered until after the product has been installed and used by customers. Sophisticated software and applications, such as those sold by us, may contain “bugs” that can unexpectedly interfere with the software’s intended operation. Defects may also occur in components and products we purchase from third parties. There can be no assurance we will be able to detect and fix all defects in the hardware, software, materials and services we sell. Failure to do so could result in lost revenue, product returns, product liability, delayed market acceptance of those products and services, claims from distributors, end-users or others, increased end-user service and support costs, and significant warranty claims and other expenses to correct the defects, diversion of management time and attention and harm to our reputation.Changes in, or interpretation of, tax rules and regulations may impact our effective tax rate and future profitability. We are a U.S. based, multinational company subject to taxation in multiple U.S. and foreign tax jurisdictions. Our future effective tax rates could be adversely affected by changes in statutory tax rates or interpretation of tax rules and regulations in jurisdictions in which we do business, changes in the amount of revenue or earnings in the countries with varying statutory tax rates, or by changes in the valuation of deferred tax assets and liabilities. The costsU.S. Tax Cuts and effectsJobs Act is one such example of litigation, investigations or similar matters involving us orlegislation that impacts our subsidiaries, oreffective tax rate and tax posture. For additional details see Note 22 to the consolidated financial statements in Item 8 of this Form 10-K.In addition, we are subject to audits and examinations of previously filed income tax returns by the Internal Revenue Service and other domestic and foreign tax authorities. We regularly assess the potential impact of such examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that we expect may result from the current examinations. We believe such estimates to be reasonable; however, there is no assurance that the final determination of any examination will not have an adverse facts and developments related thereto, could materially affecteffect on our business, operating results and financial condition.Changes in business conditions may cause goodwill and other intangible assets to become impaired.Goodwill and other intangible assets are subject to an impairment test on an annual basis and when circumstances indicate that an impairment is more likely than not. Such circumstances include a significant adverse change in the business climate or a decision to dispose of a business or product line. We may be involved from timeface some uncertainty in our business environment due to time in a variety of litigation, investigations, inquiries or similar matters arising outchallenges, including changes in customer demand. While we have not recorded an impairment to our goodwill since the third quarter of 2020, we may experience additional unforeseen circumstances that adversely affect the value of our goodwill or intangible assets and trigger an evaluation of the amount of the recorded goodwill and intangible assets. Future write-offs of goodwill or other intangible assets as a result of an impairment in the business includingcould materially adversely affect our results of operations and financial condition.The COVID-19 pandemic could materially adversely affect our financial condition and results of operations.The novel strain of the coronavirus identified in China in late 2019 (“COVID-19”) has globally spread throughout other areas such as Asia, Europe, the Middle East, and North America and has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those describedof our respective vendors, suppliers, and partners. Each of the countries in Note 21which we operate has been affected by the outbreak and new variants and taken measures to try to contain it. The ultimate impact and efficacy of government measures and potential future measures is currently unknown.There is continued uncertainty regarding the business impacts from such measures and potential future measures. While we have been able to continue our operations through a combination of work-from-home, social distancing and mandatory vaccinations in certain geographies – policies implemented to comply with government regulations and protect employees, these measures have resulted in reduced workforce availability at some of our sites. Restrictions on our access to customer facilities may impact our ability to meet customer demand and could have a material adverse effect on our financial condition and results of operations, particularly if prolonged. Our customers have experienced, and may continue to experience, disruptions in their operations, which can result in delayed, reduced, or canceled orders, or collection risks, and which may adversely affect our results of operations.13The pandemic has significantly increased economic and demand uncertainty. It is possible that the current outbreak and continued spread of COVID-19 and new variants will continue to cause an economic slowdown. There is a significant degree of uncertainty and lack of visibility as to the Consolidated Financial Statements. We cannotextent and duration of any such slowdown or recession. Risks related to a slowdown or recession may harm our long-term ability to do business, adversely affect our sales, costs, results of operations and cash flow. Given the significant economic uncertainty and volatility created by the pandemic, it is difficult to predict the outcomenature and extent of impacts on demand for our products and services. These expectations are subject to change without warning and investors are cautioned not to place undue reliance on them.The spread of COVID-19 has caused us to continuously evaluate and, in some cases, modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our product development and testing, customer support, and other activities, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.We depend on external vendors, suppliers and outsourcing partners for the components, assembly and spare partsof our 3D printers and for chemicals and packaging used in our materials. The ongoing COVID-19 pandemic has caused supply and logistical disruptions for both our outsourcing partners and supply chain partners. If these relationships were to terminate or these disruptions worsen, our business could be disrupted while we locate alternative sources of supply and our expenses may increase.We have outsourced to selected design and manufacturing companies the assembly of our printers. In carrying out these outsourcing activities, we face a number of risks, including, among others, the following:•The risk that the parties that we retain to perform assembly activities may not perform in a satisfactory manner;•The risk of disruption in the supply of printers or other products to our customers if such third parties either fail to perform in a satisfactory manner or are unable to supply us with the quantity of printers or other products that are needed to meet then current customer demand;•The risk of work delays or supply chain disruptions stemming from governmental efforts to contain the COVID-19 pandemic; and•The risk of insolvency of suppliers, as well as the risks that we face, as discussed below, in dealing with a limited number of suppliers.We purchase components and sub-assemblies for our printers from third-party suppliers that we provide to our customers as spare parts. Additionally, we purchase raw chemicals and packaging that are used in our materials, as well as certain of those materials, from third-party suppliers.While there are typically several potential suppliers of parts for our products, we currently choose to use only one or a limited number of suppliers for several of these items, including our lasers, materials and certain jetting components. Our reliance on a single or limited number of suppliers involves many risks, including, among others, the following:•Potential shortages of some key components;•Disruptions in the operations of these suppliers;•Product performance shortfalls; and•Reduced control over delivery schedules, assembly capabilities, quality and costs.The COVID-19 pandemic has created sporadic delays on the inbound supply chain at our partners and our own facilities. Additional delays on both inbound and outbound logistics have also created challenges. We continue to identify alternative solutions, but an inability to source from alternative suppliers in a timely manner could impact on our ability to fulfill demand.While we believe that, if necessary, we can obtain all the components necessary for our spare parts and materials from other manufacturers, we require any other legal matters.new supplier to become “qualified” pursuant to our internal procedures, which could involve evaluation processes of varying durations. Our spare parts and raw chemicals used in our materials production are subject to various lead times. In addition, at any time, certain suppliers may decide to discontinue production of a part or raw material that we use. Any unanticipated change in the future,sources of our supplies, or unanticipated supply limitations, could increase production or related costs and consequently reduce margins.14If our forecasts exceed actual orders, we may needhold large inventories of slow-moving or unusable parts, which could have an adverse effect on our cash flow, profitability and results of operations. Inversely, we may lose orders if our forecast is low and we are unable to record litigation reservesmeet demand. There is considerable uncertainty on the business impact from current measures and potential future measures to contain the spread of the COVID-19 pandemic on our vendors, suppliers, and partners, especially if such measures are in effect for an extended period of time. If disruptions to global businesses from the pandemic continue or worsen, our business could face greater supply chain delays and difficulty shipping or receiving products and materials, which could have a material adverse effect on our financial condition and results of operations.The loss of, continued reduction or substantial decline in revenue from larger clients could have a material adverse effect on our revenues, profitability and liquidity.We experience revenue concentration with respectalarge customer that represents over 20% of our consolidated revenue. Generally, our contracts do not contain guarantees of minimum duration, revenue levels, or profitability. This customer may terminate their contracts or materially reduce their requested levels of products or services at any time. The loss of, deterioration of the financial condition of, or a significant change to these matters because our insurance may not cover all claims that may be asserted against us. Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage, theybusiness of this customer could have a material adverse effect on our business, financial condition, and results of operations.If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected and we may not be able to execute our growth strategy.We cannot assure you that we will continue to generate cash from operations or identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring or incurring additional debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to obtain additional capital or refinance any indebtedness will depend on, among other things, the capital markets, our financial condition at such time and the terms and conditions of any such financing or indebtedness. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.The lack of additional capital resulting from any inability to generate cash flow from operations or to raise equity or debt financing could force us to substantially curtail or cease operations and would, therefore, have an adverse effect on our business and financial condition. Furthermore, we cannot assure you that any necessary funds, if available, would be available on attractive terms or that they would not have a significantly dilutive effect on our existing stockholders. If our financial condition were to worsen and we become unable to attract additional equity or debt financing or enter into other strategic transactions, we would not be able to execute our growth strategy and we could become insolvent or be forced to declare bankruptcy.Our business could be adversely impacted in the event of a failure of our information technology infrastructure or adversely impacted by a successful cyber-attack.We have experienced cyber security threats, threats to our information technology infrastructure and unauthorized attempts to gain access to our sensitive information. Prior cyber-attacks directed at us have not had a material impact on our business or financial results; however, this may not continue to be the case in the future. Cyber security assessment analyses undertaken by us have identified and prioritized steps to fortify our cyber security safeguards. We have and will continue to implement additional security measures and processes which enhance our ability to detect and respond to a cyber-attack. We have increased our cyber breach insurance and implemented company-wide cyber security awareness training as well as dedicated certain personnel to address this threat. Despite the implementation of these safeguards, there can be no assurance that we will adequately protect our information or that we will not experience any future successful attacks. The threats we face vary from attacks common to most industries to more advanced and persistent, highly organized adversaries who target us because of the products and services we provide. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures. Due to the evolving nature of these security threats, however, the impact of any future incident cannot be predicted.15We may need to expend significant additional resources to modify our cyber security protective measures, to investigate and remediate vulnerabilities or other exposures or to make required notifications, and we may be subject to litigation and financial losses. These costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Occurrence of any of these events could adversely affect our internal operations, the services we provide to our customers, our financial results or our reputation; or such events could result in the loss of competitive advantages derived from our research and development efforts or other intellectual property or early obsolescence of our products and services.Our operations could suffer if we are unable to attract and retain key management or other key employees.Our success depends upon the continued service and performance of our senior management and other key personnel. Our senior executive team is critical to the management of our business and operations, as well as to the development and execution of our strategy. The loss of the services of one or more members of our senior executive team could delay or prevent the successful implementation of our growth strategy, or our commercialization of new applications for our systems or other products, or could otherwise adversely affect our ability to manage our company effectively and carry out our business plan. Members ofWhen changes occur at our senior management team may resign at any time.level, as well as for key personnel, we typically incur incremental costs including search costs and relocation costs. High demand exists for senior management and other key personnel (including scientific, technical and sales personnel) in the 3D printing industry, and there can be no assurance that we will be able to attract and retain such personnel. We experience intense competition for qualified personnel.While we intend to continue to provide competitive compensation packages to attract and retain key personnel and engage in regular succession planning for these positions, some of our competitors for these employees have greater resources and more experience, making it difficult for us to compete successfully for key personnel. If we cannot attract and retain sufficiently qualified technical employees for our research and development and manufacturing operations, we may be unable to achieve the synergies expected from mergers and acquisitions that we may effect from time to time, or to develop16Servicing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 0% convertible senior notes due 2026 ("the Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change.As of December 31, 2021 we had $460 million outstanding of the Notes. Our ability to refinance our indebtedness, including the Notes, or to make cash payments in connection with any conversions of the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive.Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.We may not be subjectable to product liability claims,engage in any of these activities or engage in these activities on desirable terms, which could result in material expense, diversion of management time and attention and damage toa default on our business reputation. The sale and supportdebt obligations.products entails the risk of product liability claims.From time to time,wefuture debt agreements may become subject to product liability claimscontain restrictive covenants that could lead to significant expenses. The risk may be heightened when we provide products into certain markets, such as healthcare, aerospace and automotive industries.This risk of product liability claims may also be greater due to the use of certain hazardous chemicals used in the production of certain of our products, including irritants, harmful chemicals and chemicals dangerous to the environment. We may also be subject to claims that our products have been, or may be used to, create parts that are not in compliance with legal requirements or that infringe on the intellectual property rights of others.We attempt to include provisions in our agreements with customers that are designed to limit our exposure to potential liability for damages arisingprohibit us from defects or errors in our products and other issues. However, the nature and extentadopting any of these limitations vary from customeralternatives.customer. Their effect is subject to a variety of legal limitations and it is possible thatcomply with these limitations may not be effective as a result of unfavorable judicial decisions or laws enacted in the future.Any claim brought against us, regardless of its merit,covenants could result in significant expense, diversionan event of management time and attention, damage todefault which, if not cured or waived, could result in the acceleration of our business reputation and failure to retain existing customers or to attract new customers. Although we maintain product liability insurance, such insurancedebt.In the event the conditional conversion feature of the Notes is subject to deductibles and there is no guarantee that such insurancetriggered, holders of Notes will be availableentitled to convert the Notes at any time during specified periods at their option.If one or adequatemore holders elect to protect against all such claims. Costs or payments made in connection with product liability claimsconvert their Notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity.In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.In addition, holders of the Notes have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased. If the Notes have not previously been converted or repurchased, we will be required to repay such Notes in cash at maturity.16Our ability to make required cash payments in connection with conversions of the Notes, repurchase the Notes in the event of a fundamental change, or to repay or refinance the Notes at maturity will depend on market conditions and our future performance, which is subject to economic, financial, condition and results of operations.We rely on our management information systems for inventory management, distributioncompetitive, and other key functions. Iffactors beyond our information systems failcontrol. We also may not use the cash proceeds we raised through the issuance of the Notes in an optimally productive and profitable manner. As a result, we may not have enough available cash or be able to adequately performobtain financing at the time we are required to repurchase or repay the Notes or pay cash with respect to Notes being converted.Business Strategy Risk FactorsWe have made, and may make in the future, strategic acquisitions and divestitures that may involve significant risks and uncertainties. We may not realize the anticipated benefits of past or future acquisitions and integration of these functions, or if we experience an interruption in their operation, our business and operating results could be adversely affected.The efficient operation of our business is dependent on our management information systems. We rely on our management information systems to, among other things, effectively manage our accounting and financial functions, including maintaining our internal controls; to manage our manufacturing and supply chain processes; and to maintain our research and development data. The failure of our management information systems to perform properly couldacquisitions may disrupt our business and product development,divert management attention. Likewise, our potential future divestitures may be unsuccessful and negatively impact our business.From time to time, we evaluate acquisition candidates that fit our business objectives. Acquisitions involve certain risks and uncertainties, including, among others, the following:•Difficulty in integrating newly acquired businesses and operations in an efficient and cost-effective manner, which may resultalso impact our ability to realize the potential benefits associated with the acquisition;•The risk that significant unanticipated costs or other problems associated with integration may be encountered;•The challenges in decreasedachieving strategic objectives, cost savings and other anticipated benefits;•The risk that our marketplaces do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in the marketplaces that we serve;•The risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying party;•The inability to maintain a relationship with key customers, vendors and other business partners of the acquired businesses;•The difficulty in maintaining controls, procedures and policies during the transition and integration;•The potential loss of key employees of the acquired businesses;•The risk of diverting management attention from our existing operations;•Difficulties in coordinating geographically disparate organizations and corporate cultures and integrating management personnel with different business backgrounds;•The potential failure of the due diligence process to identify significant problems, liabilities or other challenges of an acquired company or technology;•The risk that we incur significant costs associated with such acquisition activity that may negatively impact our operating results before the benefits of such acquisitions are realized, if at all;•The entry into marketplaces where we have no or limited direct prior experience and where competitors have stronger marketplace positions;•The exposure to litigation or other claims in connection with our assuming claims or litigation risks from terminated employees, customers, former shareholders or other third parties; and•The risk that historical financial information may not be representative or indicative of our results as a combined company.Historically, we have grown organically and from acquisitions, and we intend to continue to grow in such manner. Our infrastructure will require, among other things, continued development of our financial and management controls and management information systems, management of our sales increased overhead costs, excesschannel, continued capital expenditures, the ability to attract and retain qualified management personnel and the training of new personnel. We cannot be sure that our infrastructure, systems, procedures, business processes and managerial controls will be adequate to support the growth in our operations. Any delays in, or obsolete inventory,problems associated with, implementing, or transitioning to, new or enhanced systems, procedures, or controls to accommodate and product shortages, causingsupport the requirements of our business and operating resultsoperations and to suffer. Although we take stepseffectively and efficiently integrate acquired operations may adversely affect our ability to securemeet customer requirements, manage our product inventory, and record and report financial and management information systems, including our computer systems, intraneton a timely and Internet sites, email andaccurate basis. These potential negative effects could prevent us from realizing the benefits of an acquisition transaction or other telecommunications and data networks, the security measuresgrowth opportunity.Likewise, we have implementedin the past, and may not be effective and our systems may be vulnerable to theft, loss, damage and interruption fromin the future, divest certain business operations. Divestitures involve a number of potential sourcesrisks, including the diversion of management's attention, significant costs and events, including unauthorized accessexpenses, goodwill and other intangible asset impairment charges, the loss of customer relationships and cash flow, and the disruption of operations in the affected business. Failure to timely complete or security breaches, naturalconsummate a divestiture may negatively affect valuation of the affected business or man-made disasters, cyber-attacks, computer viruses, power lossresult in restructuring charges.17In the event of an unsuccessful acquisition or other disruptive events. Our reputationdivestiture, our competitive position, revenues, results of operations and financial condition could be adversely affected.We believe that our future success depends on our ability to deliver products and services that meet changing technology and customer needs.Our business may be affected if, asby rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new standards and practices, any of which could render our existing products and proprietary technology obsolete. Accordingly, our ongoing research and development programs are intended to enable us to maintain technological leadership. We believe that to remain competitive we must continually enhance and improve the functionality and features of our products, services and technologies. However, there is a resultrisk that we may not be able to:•Develop or obtain leading technologies useful in our business;•Enhance our existing products;•Develop new products, services and technologies that address the increasingly sophisticated and varied needs of prospective customers, particularly in the area of printer speeds and materials functionality;•Respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis; or•Recruit or retain key technology employees.If we are unable to meet changing technology and customer needs, our competitive position, revenue, results of operations and financial condition could be adversely affected.The success of our regenerative medicine efforts depends on developing and commercializing products, either ourselves or in conjunction with development partners, that are subject to technical and market risks.Our regenerative medicine business requires us to develop products that enable the application of additive manufacturing to human organ transplantation and other non-organ human applications. These initiatives may require significant cyber event or otherwise, our operations are disrupted or shut down; our confidential, proprietary information is stolen or disclosed; we incur costs or are requiredinvestment and technical achievement of viable product candidates may not be achieved. Our development efforts remain subject to pay fines in connection with stolen customer, employee,risks including but not limited to unanticipated technical or other confidential information; we must dedicate significant resourceshurdles to system repairscommercialization. Any products developed through our research efforts are subject to safety, regulatory and efficacy risks that may result in delays to commercialization, cause us to incur additional expenses or increase cyber security protection;fail to achieve commercialization. In addition, any products that achieve commercialization and regulatory approval are subject to market risks including reimbursement from third-party payers and competition from existing or we otherwise incur significant litigation or other costs.Regulatory, Legislative and Legal Risk FactorsWe are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions and similar laws and regulations. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation.Doing business on a worldwide basis requires us to comply with the laws and regulations of the U.S. government and various foreign jurisdictions. These laws and regulations place restrictions on our operations, trade practices, partners and investments.In particular, our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the Foreign Corrupt Practices Act (“FCPA”) and United Kingdom Bribery Act (the “Bribery Act”), export controls and economic sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the State Department's Directorate of Defense Trade Controls (“DDTC”) and the Bureau of Industry and Security (“BIS”)of the Department of17As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA’s prohibition on providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. In addition, the provisions of the Bribery Act extend beyond bribery of foreign public officials and also apply to transactions with individuals that a government does not employ. Some of the international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. Our continued expansion outside the U.S., including in Brazil, China, India and developing countries, and18our development of new partnerships and joint venture relationships worldwide, could increase the risk of FCPA, OFAC or Bribery Act violations in the future.As an exporter, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and other countries having jurisdiction over our operations. In the U.S., these laws include the International Traffic in Arms Regulations (“ITAR”) administered by the DDTC, the Export Administration Regulations (“EAR”) administered by the BIS and trade sanctions against embargoed countries and destinations administered by OFAC. The EAR governs products, parts, technology and software which present military or weapons proliferation concerns, so-called “dual use” items, and ITAR governs military items listed on the United States Munitions List. Prior to shipping certain items, we must obtain an export license or verify that license exemptions are available. Any failures to comply with these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our products, and repeat failures could carry more significant penalties. Violations of anti-corruption and trade control laws and sanctionssanction regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment and could harm our reputation, create negative shareholder sentiment and affect our share value. We have established policies and procedures designed to assist our compliance with applicable U.S. and international anti-corruption and trade control laws and regulations, including the FCPA, the Bribery Act and trade controls and sanctions programs administered by OFAC, the DDTC and BIS, and have trained our employees to comply with these laws and regulations. However, there can be no assurance that all of our employees, consultants, agents or other associated persons will not take actions in violation of our policies and these laws and regulations. Additionally, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage or provide a defense to any alleged violation. In particular, we may be held liable for the actions that our joint venture partners take inside or outside of the United States, even though our partners may not be subject to these laws. Such a violation, even if our policies prohibit it, could have an adverse effect on our reputation, business, financial condition and results of operations. In addition, various state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries, persons and entities, which could adversely affect our reputation, business, financial condition and results of operations.We have received an administrative subpoena from the Bureau of Industry and Security of the Department of Commerce requesting information related to possibledisclosed potential violations of U.S. export controls laws to the U.S. federal government that resulted in multiple investigations. We have implemented compliance processes and procedures to identify and prevent potential future violations of export control laws.In October 2017, we received an administrative subpoena from the BIS requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to our former Quickparts.com, Inc. (“Quickparts”) subsidiary. In addition, while collecting information responsive to the above-referenced subpoena, weour internal investigation identified potential violations of the ITAR administered by the DDTC and potential violations of the Export Administration Regulations administered by the BIS.On February 12,June 8, 2018 and thereafter, we submitted voluntary disclosures to BIS and DDTC identifying numerous potentially unauthorized exports of technical data. As part of our ongoing review of trade compliance risks and our cooperation with the government, on November 20, 2019, we submitted to OFAC an initial notice of voluntary disclosure regarding potential violations of economic sanctions related to Iran. We continued to investigate this issue and filed final disclosures with OFAC on May 20, 2020 and December 21, 2021.We have and will continue to implement compliance enhancements to our export controls, trade sanctions, and government contracting compliance program to address the issues identified through our ongoing internal investigation and will cooperate with DDTC and BIS, as well as the U.S. Departments of Justice, Defense, Homeland Security and Treasury in whichtheir ongoing reviews of these matters. In connection with these ongoing reviews, in August 2020, the Company received two federal grand jury subpoenas issued by the U.S. District Court for the Northern District of Texas. The Company responded to these two subpoenas and will continue to fully cooperate with the U.S. Department of Justice in the related investigation.Although we identified certain potentially unauthorized exports of technical data. We are continuing to conduct an internal review and are cooperating fully with BIS and DDTC, but cannot at this time predict the ultimate resolution of this matter. Wethese matters, we have incurred and expect to continue to incur significant legal costs and other expenses in connection with responding to these inquiries.19Since 2018, we have implemented new compliance procedures to identify and prevent potential violations of export controls laws, trade sanctions, and government contracting laws and regulations and created a Compliance Committee of the Board of Directors to further enhance board oversight of compliance risks. As noted above, ifwe continue to implement additional compliance enhancements, we may discover additional potential violations of export controls laws, trade sanctions, and/or government contracting laws in the future. If we identify any additional potential violations, we will submit voluntary disclosures to the relevant agencies and cooperate with such agencies on any related investigations.If the U.S. government finds that we have violated one or more export controlcontrols laws, or trade sanctions, or government contracting laws, we could be subject to various civil or criminal penalties. By statute, these penalties can include but are not limited to fines, which by statute may be significant, denial of export privileges, and suspension or debarment from participation in U.S. government contracts; and anycontracts. We may also be subject to contract claims based upon such violations. Any assessment of penalties or other liabilities incurred in connection with these matters could also harm our reputation and customer relationships, create negative investor sentiment, and affect the trading price of our common stock.share value. In connection with any resolution, we may also be required to undertake additional remedial compliance measures and program monitoring. We cannot at this time predict when BIS and/or DDTCthe U.S. government agencies will conclude their investigations or determine an estimated cost, if any, or range of costs, for any penalties, fines or finesother liabilities to third parties that may be incurred upon resolutionin connection with these matters.We derive a significant portion of this matter.18Changes in, or interpretation of, tax rulesour revenue from business conducted outside the U.S. and regulations may impact our effective tax rate and future profitability. We are a U.S. based, multinational company subject to taxationthe risks of doing business outside the U.S.We face many risks inherent in multipleconducting business activities outside the U.S. and foreign tax jurisdictions. Our future effective tax ratesthat, unless managed properly, may adversely affect our profitability, including our ability to collect amounts due from customers. While most of our operations outside the U.S. are conducted in highly developed countries, our operations could be adversely affected by, among others, the following:•Unexpected changes in statutory tax rateslaws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad;•Changes in regulatory requirements, including export controls, tariffs and embargoes, other trade restrictions, competition, corporate practices and data privacy concerns;•Political policies, political or interpretationcivil unrest, terrorism or epidemics and other similar outbreaks;•Fluctuations in currency exchange rates;•Limited protection for the enforcement of tax rulescontract and regulationsintellectual property rights in jurisdictionssome countries;•Difficulties in staffing and managing foreign operations;•Operating in countries with a higher incidence of corruption and fraudulent business practices;•Potentially adverse changes in taxation;•The impact of public health epidemics on employees and the global economy; and•Other factors, depending upon the specific country in which we doconduct business.These uncertainties may make it difficult for us and our customers to accurately plan future business changesactivities and may lead our customers in the amount of revenue or earnings in thecertain countries with varying statutory tax rates, or by changes in the valuation of deferred tax assets and liabilities. The U.S. Tax Cuts and Jobs Act (“Tax Act”) is one such example of recent legislation that impacts the effective rate and tax posture of the Company. For additional details see Note 19 to the Consolidated Financial Statements.In addition, we are subject to audits and examinations of previously filed income tax returns by the Internal Revenue Service and other domestic and foreign tax authorities. We regularly assess the potential impact of such examinations to determine the adequacydelay purchases of our provision for income taxesproducts and have reserved for potential adjustmentsservices. More generally, these geopolitical, social and economic conditions could result in increased volatility in global financial markets and economies.The consequences of terrorism or armed conflicts are unpredictable, and we may not be able to foresee events that we expect may result from the current examinations. We believe such estimates to be reasonable; however, there is no assurance that the final determination of any examination will notcould have an adverse effect on our operating resultsmarket opportunities or our business. We are uninsured for losses and financial position.Regulation ininterruptions caused by terrorism, acts of war and similar events.While the geographic areas of privacy, data protection and information security could increase our costs and affect or limit our business opportunities and how we collect and/or use personal information.As privacy, data protection and information security laws, including data localization laws, are interpreted and applied, compliance costs may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place. In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information security inoutside the U.S. and in various countries in which we operate.In addition, state and federal legislators and/or regulators in the U.S. and other countries in which we operate are increasingly adopting or revising privacy, data protectiongenerally not considered to be highly inflationary, our foreign operations are sensitive to fluctuations in currency exchange rates arising from, among other things, certain intercompany transactions that are generally denominated, for example, in U.S. dollars rather than their respective functional currencies.Moreover, our operations are exposed to market risk from changes in interest rates and information security laws that potentially could have significant impact on our currentforeign currency exchange rates and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer and/or employee information, and some of our current or planned business activities. New legislation or regulation could increase our costs of compliance and business operations and could reduce revenues from certain business initiatives. Moreover, the application of existing or new laws to existing technology and practices can be uncertain andcommodity prices, which may lead to additional compliance risk and cost.Compliance with current or future privacy, data protection and information security laws relating to consumer and/or employee data could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could materially and adversely affect our profitability. Our failureresults of operations and financial condition. We seek to comply with privacy, data protectionminimize these risks through regular operating and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, customer attrition, decreases in the use or acceptance of our productsfinancing activities and, services and damagewhen we consider it to our reputation and our brand.Our business involvesbe appropriate, through the use of hazardous materials,derivative financial instruments. However, our efforts to minimize our exposure to market risks from changes in interest rates, foreign currency exchange rates and we must comply with environmental, healthcommodity prices may prove to be insufficient or unsuccessful.We may incur substantial costs enforcing or acquiring intellectual property rights and safety laws and regulations, which can be expensive and restrict how we do business. Our business involves the blending, controlled storage, use and disposal of hazardous materials. We and our suppliers are subject to federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. Although we believe the safety procedures we utilized for handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, local, state, federal or foreign authorities may curtail the use of these materials and interrupt our business operations. If we are subject to any liabilitydefending against third-party claims as a result of activities involving hazardous materials,litigation or other proceedings.20In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights or disputes related to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, and may in the future be, subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be costly and can be disruptive to our business operations by diverting attention and energies of management and key technical personnel, and by increasing our costs of doing business. Although we have successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes, which could adversely affect our results of operations and financial conditioncondition.Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from assembling or licensing certain of our products, subject us to injunctions restricting our sale of products, cause severe disruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements. In addition, we may incur significant costs in acquiring the necessary third-party intellectual property rights for use in our products. Any of these could seriously harm our business.We may not be adversely affectedable to protect our intellectual property rights and confidential information, including our reputationdigital content, from third-party infringers or unauthorized copying, use or disclosure.Although we defend our intellectual property rights and endeavor to combat unlicensed copying and use of our digital content and intellectual property rights through a variety of techniques, preventing unauthorized use or infringement of our rights (“piracy attacks”) is inherently difficult. If our intellectual property becomes subject to piracy attacks, our business may be harmed.Additionally, we endeavor to protect the secrecy of our digital content, confidential information and trade secrets. If unauthorized disclosure of our trade secrets occurs, we could potentially lose trade secret protection. The loss of trade secret protection could make it easier for third parties to compete with our products by copying previously confidential features, which could adversely affect our business, results of operations, revenue and operating margins. We also seek to protect our confidential information and trade secrets through the use of non-disclosure agreements. However, there is a risk that our confidential information and trade secrets may be disclosed or published without our authorization, and in these situations it may be difficult and/or costly for us to enforce our rights.Material weaknesses in our internal control over financial reporting could result in material misstatements in our financial statements not being prevented or detected, which could affect investor confidence in the accuracy and completeness of our financial statements and could negatively impact on our stock price and financial condition.As a public company, we are required to comply with Section 404 of the Sarbanes-Oxley Act. If we fail to abide by the applicable requirements of Section 404, regulatory authorities, such as the SEC, could subject us to sanctions or investigation, and our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting pursuant to an audit of our controls. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. Accordingly, our internal control over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.During the preparation of our financial statements for the period ended December 31, 2020, management identified two material weaknesses in our internal control over financial reporting related to a lack of certain controls, or improper execution of designed control procedures, (1) for certain non-standard contracts and non-standard contract terms and (2) over the review of internally prepared reports and analyses utilized in the financial closing process. These combination of control deficiencies were partially related to employee turnover, resulting in a temporary shortage of personnel with appropriate knowledge or skills to perform an effective review during our financial statement close process. In addition, certain control deficiencies related to the completeness and review of transactions that were infrequent in nature. These control deficiencies could have resulted in a misstatement of accounts and disclosures that could have resulted in a material misstatement of our annual or interim consolidated financial statements that would not have been prevented or detected.Accordingly, management has determined that these control deficiencies constitute material weaknesses.During the preparation of our financial statements for the period ended December 31, 2021, management completed its assessment of the effectiveness of our internal controls over financial reporting and concluded that the two previously identified material weaknesses had not been fully remediated, although the number of control deficiencies that resulted in these material weaknesses had been reduced. An additional material weakness was identified relating to the calculation of the Company's21provision for income taxes, including for material non-routine transactions. The control deficiencies outstanding at December 31, 2021 were partially related to employee training, resulting in a lack of knowledge or skill level to properly execute the designed controls or perform an effective review over certain manual controls related to the financial statement close process. In addition, certain control deficiencies related to the timely review of transactions that were infrequent in nature.As further described in Item 9A, Management's Report on Internal Control over Financial Reporting, we began implementing a remediation plan in January 2021 designed to improve our internal control over financial reporting through the development and implementation of more formal policies, processes and documentation procedures relating to our financial reporting, the hiring of additional accounting personnel and the training of new personnel and existing personnel in new roles on proper execution of designed control procedures. In 2021, we engaged outside consultants to advise on changes in the design of our controls and procedures and to advise on technical accounting matters. In continuation of this remediation plan and to address the additional tax material weakness, in 2022, we plan to hire additional staff with appropriate accounting, finance, operational and technology knowledge and experience in the design and execution of controls, redesign ineffective controls or processes, implement software to enhance our financial close and reporting and tax processes as well as establish a formal controls governance committee.While we believe our remediation plans described above should remediate the material weaknesses, we cannot provide assurance of when the material weaknesses will be remediated, nor can we be certain of whether additional actions will be required or the costs of any such actions. Moreover, we cannot provide assurance that additional material weaknesses will not arise in the future. While the material weaknesses discussed in Item 9A, Management's Report on Internal Control over Financial Reporting, did not result in material misstatements of our annual or interim consolidated financial statements, any failure to remediate the material weaknesses, or the identification of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements that may continue undetected, negatively impacting the public perception of the Company and our securities and cause us to fail to meet our reporting and financial obligations or incur significant additional costs to remediate the material weaknesses, each of which could negatively affect our stock price, harm our ability to raise capital on favorable terms in the future or otherwise have a negative impact on our financial condition.General Risk FactorsOur common stock price has been and may continue to be volatile.The market price of our common stock has experienced, and may continue to experience, considerable volatility. Between January 1, 20162020 and December 31, 2017,2021, the trading price of our common stock has ranged from a low of $6.00$4.60 per share to a high of $23.70$56.50 per share. Numerous factors could have a significant effect on the price of our common stock, including those described or referred to in this “Risk Factors” section of this Form 10-K, as well as, among other things:·Our perceived value in the securities markets;19•Overall trends in the stock market;·Overall trends in the stock market;· in our forecasted operating results or the operating results of one or more of our competitors;·The impact of changes in our results of operations, our financial condition or our prospects;·Future sales of our common stock or other securities (including any shares issued in connection with earn-out obligations for any past or future acquisition);·Market conditions for providers of products and services such as ours;·Executive level management uncertainty or change;·Changes in recommendations or revenue or earnings estimates by securities analysts; and·Announcements of acquisitions by us or one of our competitors.Some anti-takeover provisions contained in our certificateforecasted operating results or the operating results of incorporation and bylaws, as well as provisionsone or more of Delaware law, could impair a takeover attempt.We have provisionsour competitors;•The impact of changes in our certificateresults of incorporation and by-laws each of which could have the effect of rendering more difficult or discouraging an acquisition of the Company deemed undesirable byoperations, our Board of Directors. These include provisions:·Authorizing blank check preferred stock, which we could issue with voting, liquidation, dividend and other rights superior to our common stock;·Limiting the liability of, and providing indemnification to, our directors and officers;·Specifying that our stockholders may take action only at a duly called annual or special meeting of stockholders and otherwise in accordance with our bylaws and limiting the ability of our stockholders to call special meetings;·Requiring advance notice of proposals by our stockholders for business to be conducted at stockholder meetings and for nominations of candidates for election to our Board of Directors; and·Controlling the procedures for conduct of our Board of Directors and stockholder meetings and election, appointment and removal of our directors.These provisions, alone or together, could deter or delay hostile takeovers, proxy contests and changes in controlfinancial condition or our management. As a Delaware corporation, we are also subject to provisionsprospects;•Market conditions for providers of Delaware law, including Section 203products and services such as ours;•Executive level management uncertainty or change;•Changes in recommendations or revenue or earnings estimates by securities analysts; and•Announcements of the Delaware General Corporation Law, which prevents some stockholders from engaging in certain business combinations without approval of the holders of substantially allacquisitions by us or one of our outstanding common stock.Any provision of our certificate of incorporation or by-laws or Delaware law that has the effect of delaying or deterring a change in control of the Company could limit the opportunity for our stockholders to receive a premium for their shares of our stock and also could affect the price that some investors are willing to pay for our stock.None.20Our headquarters isare located in Rock Hill, South Carolina. As of December 31, 2017,2021, we ownedown minimal facilities and we leasedlease approximately 1.11.0 million square feet, primarily located in the U.S.U.S (624 thousand square feet), as summarized below.80 80 381 172 553 166 28 194 147 44 71 21 239 44 12 12 774 44 255 49 1,078 44 Our headquarters also serves as a researchEMEA (302 thousand square feet) and development site. Other major research and development locations include Cary, North Carolina; San Diego, California; Seoul, Korea; Tel Aviv, Israel; Valencia, California and Wilsonville, Oregon, among others. We believe our existing facilities and equipmentAPAC (28 thousand square feet). The Healthcare segment accounted for approximately 252 thousand square feet, while the industrial segment accounted for approximately 457 thousand square feet. Approximately 300 thousand square feet are in good operating condition and are suitable for our business in the manner that it is currently conducted. We expect to continue to make investments in capital equipment as needed to meet anticipated demand for our products. See “Item 1. Business – Production and Supplies” and Notes 12 and 20 to the Consolidated Financial Statements for further discussion of ourmixed use facilities.22Item 3. Legal ProceedingsSecurities and Derivative LitigationThe Company and certain of its former executive officers have been named as defendants in a consolidated putative stockholder class action lawsuit pending in the United States District Court for the District of South Carolina. The consolidated action is styled KBC Asset Management NV v. 3D Systems Corporation, et al., Case No. 0:15-cv-02393-MGL. The Amended Consolidated Complaint (the “Complaint”), which was filed on December 9, 2015, alleges that defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions and that the former officers are control persons under Section 20(a) of the Exchange Act. The Complaint was filed on behalf of stockholders who purchased shares of the Company’s common stock between October 29, 2013, and May 5, 2015 and seeks monetary damages on behalf of the purported class. Defendants filed a motion to dismiss the Complaint in its entirety on January 14, 2016, which was denied by Memorandum Opinion and Order dated July 25, 2016 (the “Order”). Defendants filed a motion for reconsideration of the Order on August 4, 2016, which was denied by Order dated February 24, 2017. On September 28, 2017, the court granted Lead Plaintiff’s Motion for Class Certification. On February 15, 2018, following mediation, the parties entered into a Stipulation of Settlement that provides for, among other things, payment of $50 million by the Company’s insurance carriers and a mutual exchange of releases. The Stipulation of Settlement calls for a dismissal of all claims against the Company and the individual defendants with prejudice following Court approval, a denial by defendants of any wrongdoing, and no admission of liability. On February 15, 2018, Lead Plaintiff filed an Unopposed Motion for Preliminary Approval of Class Action Settlement. On February 21, 2018, the Court entered an Order Preliminarily Approving Settlement and Providing for Notice. The final approval hearing has been scheduled for June 25, 2018.Nine related derivative complaints have been filed by purported Company stockholders against certain of the Company’s former executive officers and members of its Board of Directors. The Company is named as a nominal defendant in all nine actions. The derivative complaints are styled as follows: (1) Steyn v. Reichental, et al., Case No. 2015-CP-46-2225, filed on July 27, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Steyn”); (2) Piguing v. Reichental, et al., Case No. 2015-CP-46-2396, filed on August 7, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Piguing”); (3) Booth v. Reichental, et al., Case No. 15-692-RGA, filed on August 6, 2015 in the United States District Court for the District of Delaware; (4) Nally v. Reichental, et al., Case No. 15-cv-03756-MGL, filed on September 18, 2015 in the United States District Court for the District of South Carolina (“Nally”); (5) Gee v. Hull, et al., Case No. BC-610319, filed on February 17, 2016 in the Superior Court for the State of California, County of Los Angeles (“Gee”); (6) Foster v. Reichental, et al., Case No. 0:16-cv-01016-MGL, filed on April 1, 2016 in the United States District Court for the District of South Carolina (“Foster”); (7) Lu v. Hull,21et al., Case No. BC629730, filed on August 5, 2016 in the Superior Court for the State of California, County of Los Angeles (“Lu”); (8) Howes v. Reichental, et al., Case No. 0:16-cv-2810-MGL, filed on August 11, 2016 in the United States District Court for the District of South Carolina (“Howes”); and (9) Ameduri v. Reichental, et al., Case No. 0:16-cv-02995-MGL, filed on September 1, 2016 in the United States District Court for the District of South Carolina (“Ameduri”). Steyn and Piguing were consolidated into one action styled as In re 3D Systems Corp. Shareholder Derivative Litig., Lead Case No. 2015-CP-46-2225 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina. Gee and Lu were consolidated into one action styled as Gee v. Hull, et al., Case No. BC610319 in the Superior Court for the State of California, County of Los Angeles. Nally, Foster, Howes and Ameduri were consolidated into one action in the United States District Court for the District of South Carolina with Nally as the lead consolidated case.The derivative complaints allege claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment and seek, among other things, monetary damages and certain corporate governance actions.All of the derivative complaints listed above have been stayed until the earlier of the close of discovery or the deadline for appealing a dismissal in the KBC Asset Management NV securities class action.The Company believes the claims alleged in the derivative lawsuits are without merit and intends to defend the Company and its officers and directors vigorously.Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, et. al. On August 23, 2013, Ronald Barranco, a former Company employee, filed two lawsuits against the Company and certain officers in the United States District Court for the District of Hawaii. The first lawsuit (“Barranco I”) is captioned Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, 3D Systems, Inc., and Damon Gregoire, Case No. CV 13-411 LEK RLP, and alleges seven causes of actionInformation relating to legal proceedings is included under the Company’s acquisition of Print3D Corporation (of which Mr. Barranco was a 50% shareholder) and the subsequent employment of Mr. Barranco by the Company. The second lawsuit (“Barranco II”) is captioned Ronald Barranco v. 3D Systems Corporation, 3D Systems, Inc., Abraham Reichental, and Damon Gregoire, Case No. CV 13-412 LEK RLP, and alleges the same seven causes of action relatingheader "Litigation" in Note 23 to the Company’s acquisition of certain website domains from Mr. Barranco and the subsequent employment of Mr. Barranco by the Company. Both Barranco I and Barranco II allege the Company breached certain purchase agreementsconsolidated financial statements in order to avoid paying Mr. Barranco additional monies pursuant to royalty and earn out provisions in the agreements. The Company and its officers timely filed responsive pleadings on October 22, 2013 seeking, inter alia, to dismiss Barranco I due to a mandatory arbitration agreement and for lack of personal jurisdiction and to dismiss Barranco II for lack of personal jurisdiction.With regard to Barranco I, the Hawaii district court, on February 28, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina for the convenience of the parties. However, the Hawaii court recognized that the plaintiff’s claims are all subject to mandatory and binding arbitration in Charlotte, North Carolina. Because the Hawaii court was without authority to compel arbitration outside of Hawaii, the court ordered that the case be transferred to the district court encompassing Charlotte (the United States District Court for the Western District of North Carolina) so that court could compel arbitration in Charlotte. On April 17, 2014, Barranco I was transferred to the United States District Court for the Western District of North Carolina. Plaintiff filed a demand for arbitration on October 29, 2014. On December 9, 2014, the Company filed its answer to plaintiff’s demand for arbitration. On February 2, 2015, plaintiff filed an amended demand that removed Mr. Gregoire as a defendant from the matter, and on February 4, 2015 the Company filed its amended answer. The parties selected an arbitrator and arbitration took place in September 2015 in Charlotte, North Carolina.On September 28, 2015, the arbitrator issued a final award in favor of Mr. Barranco with respect to two alleged breaches of contract and implied covenants arising out of the contract. The arbitrator found that the Company did not commit fraud or make any negligent misrepresentations to Mr. Barranco. Pursuant to the award, the Company is to pay approximately $11,282, which includes alleged actual damages of $7,254, fees and expenses of $2,318 and prejudgment interest of $1,710. The Company disagrees with the single arbitrator’s findings and conclusions and believes the arbitrator’s decision exceeds his authority and disregards the applicable law. As an initial response, the Company filed a motion for modification on September 30, 2015, based on mathematical errors in the computation of damages and fees. On October 16, 2015, the arbitrator issued an order denying the Company’s motion and sua sponte issuing a modified final award in favor of Mr. Barranco in the same above-referenced amounts, but making certain substantive changes to the award, which changes the Company believes were improper and outside the scope of his authority and the American Arbitration Association rules. On November 20, 2015, the Company filed a motion to vacate the arbitration award in the federal court in the United States District Court for the Western District of North Carolina. Claimants also filed a motion to confirm the arbitration award. A hearing was held on the motions on September 29, 2016 in federal court in the Western District of North Carolina. The court requested supplemental briefing by the parties, which briefs were filed on July 11, 2016.22On August 31, 2016, the court issued an order granting in part and denying in part Plaintiff’s motion to confirm the arbitration award and for judgment, entering judgment in the principal amount of the arbitration award and denying Plaintiff’s motion for fees and costs. The court denied the Company’s motion to vacate. On September 7, 2016, Plaintiff filed a motion to amend the judgment to include prejudgment interest. The Company opposed that motion and the parties submitted briefing. On September 28, 2016 the Company filed a motion to alter or amend the judgment. Plaintiff opposed the motion and the parties submitted briefing. On May 18, 2017, the court issued an opinion and order denying the Company’s motion to alter or amend and denying Plaintiff’s motion for prejudgment interest. On September 16, 2017, the Company filed a notice of appeal with the United States Court of Appeals for the Fourth Circuit. The appeal is pending. The Company filed its Opening Brief and the Joint Appendix on August 28, 2017. Plaintiff filed its Opening Brief on September 11, 2017. The Company filed its Reply Brief on September 25, 2017.Notwithstanding the Company’s right to appeal, given the arbitrator’s decision, the Company recorded an $11,282 expense provision for this matter in the quarter ended September 30, 2015. The provision is subject to adjustment based on the ultimate outcome of the Company’s appeal. If it is ultimately determined that money is owed following the full appellate process in federal court, the Company intends to fund any amounts to be paid from cash on hand. This amount has been classified as a current liability given the timeline of the appeals process. With regard to Barranco II, the Hawaii district court, on March 17, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina. However, the Hawaii court dismissed Count II in plaintiff’s complaint alleging breach of the employment agreement. The Company filed an answer to the complaint in the Hawaii district court on March 31, 2014. On November 19, 2014, the Company filed a motion for summary judgment on all claims which was heard on January 20, 2015. On January 30, 2015, the court entered an order granting in part and denying in part the Company’s motion for summary judgment. The order narrowed the plaintiff’s claim for breach of contract and dismissed the plaintiff’s claims for fraud and negligent misrepresentation. As a result, Messrs. Reichental and Gregoire were dismissed from the lawsuit. The case was tried to a jury in May 2016, and on May 27, 2016 the jury found that the Company was not liable for either breach of contract or breach of the implied covenant of good faith and fair dealing. Additionally, the jury found in favor of the Company on its counterclaim against Mr. Barranco and determined that Mr. Barranco violated his non-competition covenant with the Company. On July 5, 2017, the court ordered a bench trial regarding causation and damages with respect to the equitable accounting on the Company’s prevailing counterclaim against Mr. Barranco. The bench trial took place on November 20, 2017. The Court ordered the submission of proposed findings of fact and conclusions of law. The Company submitted its proposed Findings of Fact and Conclusions of Law on January 12, 2018. Barranco submitted his on February 2, 2018. The Company submitted its Reply on February 16, 2018. The Court is expected to rule on the accounting thereafter.Export Compliance MatterIn October 2017, the Company received an administrative subpoena from the BIS requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to its Quickparts subsidiary. In addition, while collecting information responsive to the above-referenced subpoena, the Company identified potential violations of the ITAR administered by the DDTC and potential violations of the Export Administration Regulations administered by the BIS. On February 12, 2018, the Company submitted an initial notice of voluntary disclosure to DDTC in which the Company identified certain potentially unauthorized exports of technical data. The Company is continuing to conduct and internal review and cooperating fully with the investigation, but cannot predict the ultimate resolutionItem 8 of this matter. The Company expects to incur significant legal costs and other expenses in connection with responding to these inquiries. See “Risk Factors - We have received an administrative subpoena from the Bureau of Industry and Security of the Department of Commerce requesting information related to possible violations of U.S. export control laws” under Part I,Form 10-K, which is incorporated by reference into this Item 1A.The Company is involved in various other legal matters incidental to its business. Although the Company cannot predict the results of litigation with certainty, the Company believes that the disposition of all current legal matters will not have a material adverse effect on its consolidated results of operations, consolidated statement of cash flows or consolidated financial position.Not applicable.23Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock is listed on the New York Stock Exchange (“NYSE”) under the trading symbol “DDD.” The following table sets forth, for the periods indicated, the range of high and low prices of our common stock, $0.001 par value, as quoted on the NYSE.As of March 7, 2018,February 23, 2022, our outstanding common stock was held by approximately 973 stockholders1,503 stockholders of record. This figure does not reflect the beneficial ownership of shares held in the nomineea nominee's name.We do not currently pay, and have not paid, any dividends on our common stock, and we currently intend to retain any future earnings for use in our business. Any future determination as to the declaration of dividends on our common stock will be made at the discretion of the Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by the Board of Directors, including the applicable requirements of the Delaware General Corporation Law, which provides that dividends are payable only out of surplus or current net profits.Thepayment of dividends on our common stock may be restricted by the provisions of credit agreements or other financing documents that we may enter into or the terms of securities that we may issue from time to time. Currently, no such agreements or documents limit our declaration of dividends or payments of dividends, other than our $150.0 million five-year revolving, unsecured credit facility with PNC Bank, National Association, which limits the amount of cash dividends that we may pay in any one fiscal year to $30.0 million.dividends.24We did not repurchase any of our equity securities in the open market during the year ended 2017, except2021, however, shares of common stock were surrendered to us for unvestedpayment of tax withholding obligations in connection with the vesting of restricted stock awards repurchased or forfeited pursuant to our 2004 and 2015 Incentive Stock Plans.Plan. For information regarding the securities authorized for issuance under our equity compensation plans, see “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Matters–Equity Compensation Plans” under Part III,in Item 12 of this Form 10-K. Also see Note 1418 to the Consolidated Financial Statements.Issuer purchases of equity securities31,761 13.69 35,710 16.61 2,285 14.49 20,369 14.87 17,777 21.65 9,229 20.67 13,687 17.13 127,259 17.08 12,970 12.93 5,701 12.00 134,889 8.38 3,247 9.40 414,884 13.85 Total number of shares (or units) purchased Average price paid per share (or unit) October 1, 2021 - October 31, 2021 14,885 $ 27.67 November 1, 2021 - November 30, 2021 15,650 24.33 December 1, 2021 - December 31, 2021 67,252 21.54 Total 97,787 a $ 22.92 b (a)Includes shares of common stock surrendered to the Company for payment of tax withholding obligations in connection with the vesting of restricted stock.
a.Represents shares of common stock surrendered to us for payment of tax withholding obligations in connection with the vesting of restricted stock.(b)The average price paid reflects the average market value of shares withheld for tax purposes.2523The graph below shows, for the five years ended December 31, 2017,2021, the cumulative total return on an investment of $100 assumed to have been made on December 31, 20122016 in our common stock. For purposes of the graph, cumulative total return assumes the reinvestment of all dividends. The graph compares such return with those of comparable investments assumed to have been made on the same date in (a) the NYSE Composite Index, and (b) the S&P 500Small-Cap 600 Information Technology Index and (c) the S&P Mid-Cap 400 Index, which are published market indices with which we are sometimes compared.Although total return for the assumed investment assumes the reinvestment of all dividends on December 31 of the year in which such dividends were paid, we paid no cash dividends on our common stock during the periods presented.
100 261 92 24 37 24 100 126 135 130 145 173 100 128 154 163 186 258 100 134 147 143 173 201 26December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 3D Systems Corporation $ 100 $ 65 $ 77 $ 66 $ 79 $ 162 NYSE Composite Index 100 119 108 136 146 176 S&P Small-Cap 600 Information Technology Index 100 110 100 140 179 227 Item 6. Selected Financial DataThe selected consolidated financial data set forth below for the five years ended December 31, 2017 have been derived from our historical Consolidated Financial Statements. You should read this information together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, and our Consolidated Financial Statements and the notes thereto included in this Form 10-K.210,280 223,544 257,379 283,339 227,627 168,846 156,839 150,740 158,859 128,405 266,943 252,582 258,044 211,454 157,368 646,069 632,965 666,163 653,652 513,400 304,839 309,751 291,809 317,434 267,594 537,179 (53,973) (38,420) (641,924) 26,315 80,861 (65,323) (39,265) (663,925) 11,946 44,119 (66,191) (38,419) (655,492) 11,637 44,107 (0.59) (0.35) (5.85) 0.11 0.45 231,293 302,545 286,996 432,864 416,399 896,764 849,153 891,959 1,530,310 1,097,856 644 572 529 684 187 7,078 7,587 8,187 8,905 18,693 615,948 626,700 654,646 1,294,125 933,792 62,041 60,535 83,069 55,188 30,444 919 1,282 2,011 1,227 3,425 30,881 16,567 22,399 22,727 6,972 (a)For further discussion of goodwill and other intangible assets impairment charges recorded in 2015, see Notes 2, 6 and 7 to the Consolidated Financial Statements.2427The following discussion and analysis should be read together with the selected consolidated financial data and our Consolidated Financial Statementsconsolidated financial statements and notes thereto included in Item 8 of this Form 10-K. Certain statements contained in this discussion may constitute forward‑lookingforward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those reflected in any forward-looking statements, as discussed more fully in this Form 10-K. See “Forward-Looking Statements” and “Risk Factors” in Part I, Item 1A.For discussion related to the results of operations and changes in financial condition for fiscal 2020 compared to fiscal 2019, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2020 Form 10-K, which was filed with the SEC on March 5, 2021.Overview and StrategyWe provide comprehensive 3D printingIn May 2020, our Chief Executive Officer and President, Dr. Jeffrey Graves, was hired. Dr. Graves undertook an initial assessment of the Company and developed the purpose statement to be the leader in enabling additive manufacturing solutions including 3D printers, materials, software, onfor applications in growing markets that demand manufacturinghigh reliability products. He announced a four-phased plan to enable this vision: reorganize into two key industry verticals (Healthcare and Industrial), restructure to gain efficiencies, divest non-core assets, and invest for future growth.As part of our strategic plan, we have organized into two key verticals. This structure allows us to align our solution-oriented approach with deep industry and customer knowledge. Our two key verticals span a range of industries. Healthcare includes dental, medical devices, personalized health services and digital design tools.regenerative medicine. Our Industrial vertical includes aerospace, defense, transportation and general manufacturing. We architect solutions supportspecific to customers’ needs through a combination of materials, hardware platforms, software, professional services and advanced applications inmanufacturing – creating a wide range of industries and key verticals including healthcare, aerospace, automotive and durable goods. Our precision healthcare capabilities include simulation, Virtual Surgical Planning (“VSP™”), and printing of medical and dental devices, models, surgical guides and instruments. Our experience and expertise have proven vitalpath to our development of an ecosystem and end-to-end digital workflow which enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.We are pursuing a strategy focused on offering a comprehensive ecosystem that provides solutions aimed at healthcare, dental, aerospace, automotive and durable goods verticals to address professional and industrial applications. We believe a shift in 3D printing from prototyping to also usingintegrating additive manufacturing into traditional production environments. As a result, manufacturers achieve design freedom, increase agility, scale production and improve overall total cost of operation. Our technologies and process knowledge enable hundreds of thousands of production parts to be made through additive manufacturing each day.We completed our restructuring efforts in the second quarter of 2021. Cost reduction efforts have included reducing the number of facilities and examining every aspect of our manufacturing and operating costs.DivestituresIn conjunction with our four-phased plan, we divested parts of our business that did not align with our strategic focus on additive manufacturing. In January 2021 we sold Cimatron Ltd., which operated our Cimatron integrated CAD/CAM software for production is underway. the tooling business and its GibbsCAM CNC programming software business, for $64.2 million. In August 2021 we sold our Simbionix line of surgical simulators for $305.0 million, and in September 2021 we sold our On Demand Manufacturing ("ODM") business for $82.0 million. All sale amounts are before customary closing adjustments.We have now completed our planned divestitures of non-core assets and are focused on innovationthe strategic growth of our core additive manufacturing business.AcquisitionsOn November 1, 2021, we acquired Oqton, Inc. (“Oqton”), for $188.2 million, excluding customary closing adjustments. We paid $107.5 million in cash and new products to drive expansion into 3D production through improving durability, reliability, repeatability and total costissued 2,552,904 shares of the Company’s Common Stock. The acquisition’s near term impact on the Company’s results of operations and cash flows are expected to be dilutive. Oqton's operating results will be reported in the Industrial segment.On December 1, 2021, we acquired Volumetric Biotechnologies, Inc. (“Volumetric”), for $40.2 million of 3D printing solutions.25term impact on the Company's results of operations and cash flows are expected to be dilutive.COVID-19 Pandemic ResponseOur top priority is the health and safety of our employees and their families and communities, as we continue to manage our business through the COVID-19 pandemic. Throughout this past year, our leadership regularly reviewed and adapted our COVID-19 protocols based on evolving research and guidance. We have launched new 3D printersreopened our offices and begun business travel, with increased speedssafety measures in place and capabilities as well as introduced materialsin accordance with improved strength, durability, elasticity and high temperature capabilities, developmentslocal guidance. Additionally, we believe are well suitedimplemented a hybrid-work program globally, providing more flexibility for advanced and demanding applications.employees to work remotely. We have also expanded and strengthened our software portfolio to help enhance our customers’ workflows from digitize to design to simulate to manufacture, inspect and manage. We plan to continue to invest in development of hardware, software, materialsmonitor local transmission rates and servicesregulatory guidance, and remain committed to provide comprehensive solutions in plasticsprotecting our employees, delivering for our customers, and metals to address significant market opportunities with a use-case by use-case approach, focusing on solving specific customer applications and needs withinsupporting our targeted vertical markets.To execute this strategy, we are focusing on an operating framework and go-to-market model that drives sustainable, long-term growth and profitability.communities. We are balancing investmentssubject to vaccination and workplace safety protocols of the United States Federal Government Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors, and the COVID-19 Workplace Safety Guidance for Federal Contractors and Subcontractors issued by the Safer Federal Workforce Task Force. In support process improvements, infrastructure enhancementsof a safe work environment, we have a vaccine policy for our U.S. employees, and focused innovationa visitor policy to transformensure those visiting our sites are taking the necessary health and safety precautions.262021 SummaryYear Ended December 31, (in thousands, except per share amounts) 2021 2020 Revenue: Products $ 428,742 $ 332,799 Services 186,897 224,441 Total revenue 615,639 557,240 Cost of sales: Products 245,169 220,415 Services 106,692 113,450 Total cost of sales 351,861 333,865 Gross profit 263,778 223,375 Operating expenses: Selling, general and administrative 227,697 219,895 Research and development 69,150 74,143 Impairment of goodwill — 48,300 Total operating expenses 296,847 342,338 Loss from operations $ (33,069) $ (118,963) On August 5, 2020, we announced, in connection with the new strategic focus and organizational realignment, a restructuring plan intended to align our operating costs with current revenue levels and better position the Company while also driving an appropriate cost structure. We expect to be able to support growth by prioritizingfor future sustainable and focusing our resources, leveraging our technology and domain expertise and maintaining and expanding strong customer and partner relationships. As with any growth strategy, there can be no assurance that we will succeedprofitable growth. See Note 25 in accomplishing our strategic initiatives.Recent DevelopmentsIn November 2017, we held a Launch Event at our Denver, Colorado facility which showcased our innovation and unveiled our next generation additive manufacturing solutions, which we plan to roll out and make commercially available throughout 2018. We unveiled new plastic and metal 3D printers, a rangeItem 8 of materials and new software releases, and we also demonstrated our unmatched healthcare solutions workflow and production facility. In February 2018, we introduced the NextDent 5100, a Figure 4-based 3D printer specifically designed for dental labs. The NextDent 5100 is our first entry to market with our scalable Figure 4 platform, which we believe is a breakthrough product for digital dentistry in terms of cost and capabilities. At the same time, we launched several new materials, bringing the total number to 30 dental-specific materials for the NextDent 5100. In February, we also launched the FabPro 1000, our new low cost, high productivity DLP-based 3D printer designed for dental and jewelry production as well as high functionality and throughput, industrial prototyping. During the first quarter, we plan to begin shipping our next generation SLS printer, the ProX SLS 6100, with six production-grade materials to deliver superior part quality with greater efficiency and lower total cost of operation versus competitors. Over the following months, we plan to launch additional Figure 4 products designed to meet various production environment needs from a standalone unit to modular to fully automated production solutions. Later in 2018, we also plan to launch a scalable, automated, fully integrated, next generation metals platform, the DMP 8500, to deliver an end-to-end solution for metal additive manufacturing. We believe the DMP 8500 will offer the industry’s largest part diameter compared to current systems as well as an expanded materials portfolio, durable and removable print modules, powder management modules and fully integrated 3DXpert software to help streamline the production of parts.282017 Summary20172021 increased by 2.1%,10.5% or $13.1$58.4 million, despite divesting non-core businesses in 2021, to $646.1$615.6 million, compared to $633.0$557.2 million for the year ended December 31, 2016. These results reflect an increase2020, driven by growth in materials and services revenue, partially offset by a decrease in products revenue, as further discussed below.revenue includes sales of products, materials and services for healthcare-related applications, including simulation, training, planning, 3D printing of anatomical models, surgical guides and instruments and medical and dental devices. For the year ended December 31, 2017, healthcare revenuesegment.Revenue from Healthcare increased by 18.5%,24.2% to $188.7$306.2 million and made up 29.2% of total revenue, compared to $159.3 million, or 25.2% of total revenue, for the year ended December 31, 2016. The increase in healthcare revenue is driven by growth in products, including printers, materials, including the acquisition of Vertex-Global Holding B.V. (“Vertex”), a provider of dental materials worldwide under the Vertex and NextDent brands, and services, including virtual surgical planning and contract manufacturing services.For the year ended December 31, 2017, total software revenue from products and services increased 4.5% to $91.7 million, and made up 14.2% of total revenue,2021, compared to $87.7$246.4 million or 13.9% of total revenue for the year ended December 31, 2016.As2020, driven by strong demand for dental applications partly offset by the impact of 2021 divestitures. Industrial sales decreased 0.4% to $309.5 million for the year ended December 31, 2017 and 2016, our backlog was $33.12021, compared to $310.8 million and $31.7 million, respectively. Production and delivery of our printers is generally not characterized by long lead times; backlog is more dependent on timing of customers’ requested deliveries. In addition, on demand manufacturing services lead time and backlog depends on whether orders are for rapid prototyping or longer-range production runs. As of boththe year ended December 31, 2017 and 2016, backlog included $9.2 million2020, primarily due to the impact of on demand manufacturing service orders.Gross profit for the year ended December 31, 2017 decreased2021 increased by 1.6%18.1%, or $4.9$40.4 million, to $304.8$263.8 million, compared to $309.8$223.4 million for the year ended December 31, 2016.2020. Gross profit margin for the years ended December 31, 20172021 and 20162020 was 47.2%42.8% and 48.9%40.1%, respectively. GrossThe increase in gross profit margin for the years endedwas primarily a result of 2017prior year end of life inventory charges and 2016 included charges of $12.9 million and $10.7 million, respectively, related to the write-off of excess and obsolete inventorycost optimization expenses, as well as to maintain alignment with our strategy.Operating expenses for the year ended December 31, 2017 increased2021 decreased by 3.1%13.3%, or $10.6$45.5 million, to $358.8$296.8 million, compared to $348.2$342.3 million for the year ended December 31, 2016.2020 primarily due to significantly lower cost optimization expenses in 2021 and a goodwill impairment charge incurred in 2020, with no similar goodwill impairment in 2021. Selling, general and administrative ("SG&A") expenses for the year ended December 31, 20172021 increased by 1.7%3.5%, or $4.4$7.8 million, to $264.2$227.7 million, compared to $259.8$219.9 million for the year ended December 31, 2016, predominantly2020, primarily due to our investmenthigher incentive compensation resulting from better than expected performance in go2021 compared to marketinternal targets, a one-time $9.8 million bonus paid to Simbionix employees in connection with the divestiture, investments in the business, increase in stock compensation expenses, and IT infrastructure.expenses related to acquisitions, partially offset by a decrease in cost optimization expenses. Research and development ("R&D") expenses for the year ended December 31, 2017 increased2021 decreased by 7.1%6.7%, or $6.2$5.0 million, to $94.6$69.2 million, compared to $88.4$74.1 million for the year ended December 31, 2016, predominantly2020, primarily due to increased researchdivestitures and development relatedcost savings from the prior year restructuring program. In 2020, we recorded a non-cash goodwill impairment charge of $48.3 million compared to our updated strategy and project reprioritization. no impairment charge in 2021. See Note 11 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion.27Our operating loss for the year ended December 31, 20172021 was $54.0$33.1 million, compared to an operating loss of $38.4$119.0 million for the year ended December 31, 2016.For2020. The lower loss was driven by higher revenue and gross profit dollars, benefits from the year ended December 31, 20172020 cost optimization plan, and 2016, we generated $25.9 millionthe absence of a goodwill impairment charge and $57.5 million of cash from operations, respectively,reduced cost optimization expenses in 2021, partly offset by higher net SG&A expenses as further discussed below. In total, our unrestricted cash balance at December 31, 2017 and 2016 was $136.3 million and $184.9 million, respectively. A key driver for the lower cash balance was the Company’s acquisition of Vertex for approximately $37.6 million, of which $34.3 million was in cash, net of cash assumed.29Results of Operations for 2017, 20162021 and 2015Comparison of revenue by geographic region2017 compared to 2016The following table sets forth the change inCurrent year revenue by geographic region for the years ended December 31, 2017 and 2016:Table 1340,885 53.9 193,141 30.5 98,939 15.6 632,965 100 3,808 1.1 25,240 13.1 11,281 11.4 40,329 6.4 (11,420) (3.4) (2,515) (1.3) (17,809) (18.0) (31,744) (5.0) 503 0.1 4,491 2.3 (475) (0.5) 4,519 0.7 (7,109) (2.2) 27,216 14.1 (7,003) (7.1) 13,104 2.1 333,776 51.7 220,357 34.1 91,936 14.2 646,069 100 Consolidated revenue increased 2.1%, driven by higher sales volume in the EMEA and Asia Pacific regions as wellhas improved as the favorable impactprior year was negatively impacted by the effects of foreign currency, offset bythe COVID-19 pandemic, most severely during the first half of 2020, as many of our customers were shutdown or on a shift in product mix and average selling price across all geographic regions. The increase in revenue in the EMEA region primarily reflects higher sales volume, including the additionsignificantly reduced level of Vertex and NextDent branded dental materials, and the favorable impact of foreign currency,activity, partially offset by a shift in product mix and average selling price. The decrease in revenue in the Americas and Asia Pacific regions are primarily due to a shift in product mix and average selling price, partially offset by an increase in sales volume in the Asia Pacific region.For the years ended December 31, 2017 and 2016, revenue from operations outside the U.S., including Latin America, EMEA and APAC, was 50.1% and 47.9%impact of total revenue, respectively.2016 compared to 2015The following table sets forth the change in revenue by geographic region for the years ended December 31, 2016 and 2015:Table 2357,976 53.7 200,104 30.0 108,083 16.3 666,163 100 550 0.2 (58) (1,765) (1.6) (1,273) (0.2) (16,619) (4.6) (4,066) (2.0) (8,226) (7.6) (28,911) (4.3) (1,022) (0.3) (2,839) (1.4) 847 0.8 (3,014) (0.5) (17,091) (4.7) (6,963) (3.4) (9,144) (8.4) (33,198) (5.0) 340,885 53.9 193,141 30.5 98,939 15.6 632,965 100 Consolidated revenue decreased 5.0% across all regions, primarily reflective of lower sales of 3D printers and on demand manufacturing services, partially offset by increased sales from materials, software and healthcare-related solutions.For the years ended December 31, 2016 and 2015, revenue from operations outside the U.S., including Latin America, EMEA and APAC, was 47.9% and 49.0% of total revenue, respectively.30Comparison of revenue by classWe earn revenue from the sale of products, materials and services. The products category includes 3D printers, healthcare simulators and digitizers, as well as software, 3D scanners and haptic devices. The materials category includes a wide range of materials to be used with our 3D printers, the majority of which are proprietary, as well as acquired conventional dental materials. The services category includes warranty and maintenance on 3D printers and simulators, software maintenance, on demand manufacturing solutions and healthcare services.Due todivestitures. Additionally, given the relatively high price of certain 3D printers and a corresponding lengthy selling cycle, andas well as relatively low unit volume of the higher priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can affect reported revenue in any given period. Revenue reported in any particular period is also affected by timing of revenue recognition under rules prescribed by U.S. generally accepted accounting principles (“GAAP”).In addition to changes in sales volumes, and the impact of revenue from acquisitions, there are twothree other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes in product mix and average selling prices, sometimes referred to as price and mix effects, and (2) the impact of fluctuations in foreign currencies.currencies and (3) the impact of business divested in 2021. 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.2017 compared to 2016We earn revenue from the sale of products and services through our Healthcare and Industrial segments. The products categories include 3D printers and corresponding materials, healthcare simulators (which was divested in the third quarter of 2021), digitizers, software licenses, 3D scanners and haptic devices. The services category includes maintenance contracts and services on 3D printers and simulators (which was divested in the third quarter of 2021), software maintenance and cloud-based software subscriptions, on-demand solutions (which was divested in the third quarter of 2021) and healthcare services.The following table sets forth the changechanges in revenue by class for the years ended December 31, 20172021 and 2016. Table 31(Dollars in thousands) Products Services Total 223,544 35.3 156,839 24.8 252,582 39.9 632,965 100 Revenue — 2020 Revenue — 2020 $ 332,799 59.7 % $ 224,441 40.3 % $ 557,240 100.0 % Change in revenue: (319) (0.1) 27,501 17.5 13,147 5.2 40,329 6.4 Volume 137,856 41.4 % 16,386 7.3 % 154,242 27.7 % Divestitures Divestitures (26,050) (7.8) % (57,134) (25.5) % (83,184) (14.9) % (15,979) (7.1) (15,765) (10.1) (31,744) (5.0) Price/Mix (21,885) (6.6) % 92 — % (21,793) (3.9) % 3,034 1.4 271 0.2 1,214 0.5 4,519 0.7 Foreign currency translation 6,022 1.8 % 3,112 1.4 % 9,134 1.6 % (13,264) (5.8) 12,007 7.6 14,361 5.7 13,104 2.1 Net change 95,943 28.8 % (37,544) (16.7) % 58,399 10.5 % 210,280 32.5 168,846 26.1 266,943 41.3 646,069 100 Revenue — 2021 Revenue — 2021 $ 428,742 69.6 % $ 186,897 30.4 % $ 615,639 100.0 % ConsolidatedTotal consolidated revenue increased 2.1%, driven by increased10.5%. In addition to changes in sales volumevolumes, there are three other primary drivers of changes in both materials and services as well asrevenue from one period to another: (1) the favorable impactcombined effect of foreign currency, offset by a shift in product mix and average selling prices.Products revenue decreased due to changes in product mix and average selling prices, including a shift(2) the impact of fluctuations in demand for lower priced printersforeign currencies and a moderate decrease3) the impact of businesses divested in sales volume. For2021. As used in this Management’s Discussion and Analysis, the years ended December 31, 2017price and 2016,mix effects relate to changes in revenue from printers contributed $123.4that are not able to be specifically related to changes in unit volume, foreign exchange and divestitures. Recurring revenue, which includes service and materials, was $396.9 million and $133.3 million, respectively. Software revenue included in the products category, including scanners and haptic devices, contributed $47.8 million and $44.5$381.6 million for the years ended December 31, 20172021 and 2016,2020, respectively.materialsrecurring revenue reflects continued utilization by the installed base and demand from healthcare customers, including acquired Vertex and NextDent dental materials. This increased demandin 2021 was primarily due to an increase in material sales volume, partially offset by a decrease related to a shift in product mix and average selling prices.Services revenue increased primarily due to higher demand for healthcare services. divestitures.For the years ended December 31, 20172021 and 2016,2020, products revenue from on demand manufacturing servicesHealthcare contributed $104.6217.7 million and $159.6 million, respectively, and products revenue from Industrial contributed $211.0 million and $104.4$173.2 million, respectively. ForThe higher products revenue in Healthcare was primarily due to continued strength in the years ended December 31, 2017dental market. The increased products revenue in Industrial was primarily due to higher volumes, favorable price/mix and 2016, software services revenue contributed $43.9 million and $43.2 million, respectively.312016 compared to 2015The following table sets forth the change in revenue by class for the years ended December 31, 2016 and 2015.Table 4257,379 38.6 150,740 22.6 258,044 38.8 666,163 100 (19,336) (7.5) 21,685 14.4 (3,622) (1.4) (1,273) (0.2) (13,786) (5.4) (15,125) (10.0) (28,911) (4.3) (713) (0.3) (461) (0.3) (1,840) (0.7) (3,014) (0.5) (33,835) (13.2) 6,099 4.1 (5,462) (2.1) (33,198) (5.0) 223,544 35.3 156,839 24.8 252,582 39.9 632,965 100 Consolidated revenue decreased 5.0%, driven by a decrease in products volume, services volume, and a shift in product mix,foreign currency impact, partially offset by higher materials revenue and software revenue.The discontinuation of consumer products coupled with lower sales of professional printers offset higher sales of production printers, resulting in overall lower revenue from 3D printers. For the year ended December 31, 2016, software revenue included in the products category, including scanners and haptic devices, contributed $44.5 million, compared to $44.3 million for the year ended December 31, 2015.The increase in materialsdivestitures.28Services revenue for the year ended December 31, 20162021 decreased primarily reflects increased demand for materials drivendue to divestitures, partially offset by industrial customers with production printers.The decreasethe impact of less severe COVID restrictions in services revenue for2021 and the year ended December 31, 2016 was primarily driven by a decrease in on demand manufacturing services which more than offset the growth in healthcare and software services revenue. For the year ended December 31, 2016, services revenue from on demand manufacturing decreased 18.1%, to $104.4 million, compared to $127.4 for the year ended December 31, 2015.favorable impact of foreign currency translation. For the years ended December 31, 20162021 and 2015, software2020, services revenue included in the services categoryfrom Healthcare contributed $43.2$88.4 million and $33.8$86.9 million, respectively, and services revenue from Industrial contributed $98.5 million and $137.6 million, respectively.For the years ended December 31, 2021 and 2020, revenue from operations outside the U.S. was 44.6% and 50.6% of total revenue, respectively.Gross profit and gross profit margins2017 compared to 2016The following table sets forth gross profit and gross profit margins for the years ended December 31, 20172021 and 2016.Table 52Year Ended December 31, 2021 2020 Change in Gross Profit Change in Gross Profit Margin (Dollars in thousands) Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin $ % Percentage Points % 52,585 25.0 63,925 28.6 (11,340) (17.7) (3.6) (12.6) Products $ 183,573 42.8 % $ 112,384 33.8 % $ 71,189 63.3 % 9.0 26.6 % 123,014 72.9 121,030 77.2 1,984 1.6 (4.3) (5.6) 129,240 48.4 124,796 49.4 4,444 3.6 (1.0) (2.0) Services 80,205 42.9 % 110,991 49.5 % (30,786) (27.7) % (6.6) (13.3) % 304,839 47.2 309,751 48.9 (4,912) (1.6) (1.7) (3.5) Total $ 263,778 42.8 % $ 223,375 40.1 % $ 40,403 18.1 % 2.7 6.7 % The decreaseincrease in total consolidated gross profit is predominantly drivenmargin was primarily a result of prior year end of life inventory charges and cost optimization expenses, as well as better absorption of supply chain overhead in 2021 resulting from higher production, offset by changes in product mix. Also contributingthe impact of divestitures. See Note 8 to the decrease were the inventory adjustments totaling $12.9 millionconsolidated financial statements in 2017 versus adjustments of $10.7 million in the same period of 2016. The 2017 inventory adjustment resulted from a comprehensive review of our portfolio and inventory during the year ended December 31, 2017. The 2017 inventory adjustment primarily related to legacy plastics printers, refurbished and used metals printers and parts that have32shown little to no use over extended periods. The majorityItem 8 of this adjustment relatesForm 10-K for additional discussion..Products gross profit increased primarily due to higher sales volume as well as significantly improved capacity utilization and the products category. Grossend-of-life inventory charge of $10.9 million recorded in 2020. Services gross profit for materials decreased primarily due to the additionimpact of Vertex’s conventional dental materials, which are lower gross profit margin than 3D printing materials. Gross profit margin for services decreased due to lower gross profit margins in printer services as we invested in addressing legacy issues and building out our service model, which offset the benefit of higher demand for healthcare services. On demand manufacturing services gross profit margin remained flat at 43.1% for the year ended December 31, 2017, compared to 43.0% for the year ended December 31, 2016divestitures.2016 compared to 2015Operating expensesThe following table sets forth gross profit and gross profit margins for the years ended December 31, 2016 and 2015.Table 663,925 28.6 50,304 19.5 13,621 27.1 9.1 46.6 121,030 77.2 114,176 75.7 6,854 6.0 1.5 1.9 124,796 49.4 127,329 49.3 (2,533) (2.0) 0.1 0.2 309,751 48.9 291,809 43.8 17,942 6.1 5.1 11.7 The increase in total consolidated gross profit is primarily driven by higher products and materials gross profit. Gross profit margin for products increased, primarily due to cost reduction measures and favorable impact of sales mix from our shift away from lower margin consumer products. Additionally, cash and non-cash charges recorded in the fourth quarter of 2015 related to the end-of-life of the Cube 3D printer and our shift away from consumer products in 2015 were higher than charges recorded in the third quarter of 2016 related to product and project discontinuations in connection with our updated strategy. Gross profit margin for materials increased, reflecting the favorable impact of mix. Gross profit margin for services stayed flat, driven by higher revenues from healthcare and software solutions and partially offset by lower on demand manufacturing margin. On demand manufacturing services gross profit margin decreased to 43.0% for the year ended December 31, 2016, compared to 43.9% for the year ended December 31, 2015.Operating expenses2017 compared to 2016The following table sets forth the components of operating expenses for the years ended December 31, 20172021 and 2016.Table 73Year Ended December 31, 2021 2020 Change (Dollars in thousands) Amount % Revenue Amount % Revenue $ % 264,185 40.9 259,776 41.0 4,409 1.7 Selling, general and administrative expenses $ 227,697 37.0 % $ 219,895 39.5 % $ 7,802 3.5 % 94,627 14.6 88,395 14.0 6,232 7.1 Research and development expenses 69,150 11.2 % 74,143 13.3 % (4,993) (6.7) % Impairment of goodwill Impairment of goodwill — — % 48,300 8.7 % (48,300) (100.0) % 358,812 55.5 348,171 55.0 10,641 3.1 Total operating expenses $ 296,847 48.2 % $ 342,338 61.4 % $ (45,491) (13.3) % Total operatingSG&A expenses increased primarily due to higher incentive compensation resulting from better than expected performance in 2021 compared to internal targets, a one-time $9.8 million bonus paid to Simbionix employees in connection with the divestiture, investments in the business, increase in stock compensation expenses, and expenses related to acquisitions, partially offset by a decrease in cost optimization expenses. SG&A expenses for 2020 included $20.1 million of restructuring expenses related to our 2020 cost optimization program. See Note 25 to the consolidated financial statements for additional discussion regarding restructuring.R&D expenses decreased primarily due to divestitures and cost savings from the prior year restructuring program.For the year ended December 31, 2021, there were no impairment charges to goodwill. For the year ended December 31, 2020, we recorded a non-cash goodwill impairment charge of $48.3 million, related to the EMEA reporting unit, that was ultimately29due to the negative impact on the business environment as a result of the COVID-19 pandemic. See Note 11 to the consolidated financial statements in Item 8 of this Form 10-K for additional discussion.Loss from operationsThe following table sets forth loss from operations for the years ended December 31, 2021, and 2020.Table 4Year Ended December 31, (Dollars in thousands) 2021 2020 Loss from operations: $ (33,069) $ (118,963) The decrease in loss from operations for the year ended December 31, 20172021, as compared to the prior year period, was primarily driven by an increase in revenue and gross profit, cost savings from the prior year cost optimization program, the absence of a goodwill impairment charge and reduced restructuring expenses related to our 2020 cost optimization program and divestitures, partly offset by higher stock and incentive compensation expenses, as previously discussed.See “Comparison ofRevenue,” “Gross profit and gross profit margins” and “Operating expenses” above.Interest and other income (expense), netThe following table sets forth the components of interest and other income (expense), net, for the years ended December 31, 2021 and 2020.Table 5Year Ended December 31, (Dollars in thousands) 2021 2020 Interest and other income (expense), net Foreign exchange loss $ 1,681 $ (4,762) Interest expense, net (1,902) (3,991) Other income (expense), net 352,830 (15,694) Total interest and other expense, net $ 352,609 $ (24,447) Foreign exchange gain (loss), net, for the year ended December 31, 2021, as compared to the prior year period, improved due to the favorable movements in the EUR/USD and GBP/USD exchanges rates.Interest expense, net, decreased for the year ended December 31, 2021, as compared to the prior year period primarily due to lower interest expense due to the repayment of the 5-year $100 million senior secured term loan facility (the "Term Facility") in the first quarter of 2021 and interest income related to cash proceeds from the Cimatron, ODM, and Simbionix divestitures as well as our $460 million convertible notes offering. The year over year benefits for the year ended December 31, 2021 were partially offset by the realization of losses previously recognized in accumulated other comprehensive loss resulting from the termination of the interest rate swap in the first quarter of 2021.Other income (expense), net, for the year ended December 31, 2021, as compared to the year ended December 31, 2016, due to both increased investments in research and development and higher selling, general and administrative expense. Selling, general and administrative expenses2020, increased primarily due to our investments in go-to-marketthe $350.9 million gain on the divestitures of Cimatron, ODM and IT infrastructure and additional talent and resources, as well as repairs and maintenance costs, offset by lower stock compensation expense due to the impact of adopting a new accounting standard which resulted in a change in our policy for accounting for award forfeitures. Research and development expenses increased due to focused innovation to drive customers’ shift to 3D production,Simbionix, including investment in plastics, in particular our Figure334 platform, metals, materials and software as well as the addition of talent and resources. Research and development for 2016 included $4.6an $8.9 million of expense related to charges and write-offs in connection with our updated strategy and project reprioritization.2016 compared to 2015The following table sets forth the components of operating expenses for the years ended December 31, 2016 and 2015.Table 8259,776 41.0 303,784 45.6 (44,008) (14.5) 88,395 14.0 92,770 13.9 (4,375) (4.7) 537,179 80.6 (537,179) (100.0) 348,171 55.0 933,733 140.1 (585,562) (62.7) Total operating expenses decreased for the year ended December 31, 2016 as compared to the year ended December 31, 2015, primarily due to lower selling, general and administrative expenses, lower research and development expenses and the non-recurrence of impairment charges related to goodwill and other intangible assets recorded in 2015. Selling, general and administrative expenses decreased primarily due to a $25.9 million decrease in amortization expense, an $11.5 million decrease in litigation costs primarilyfavorable foreign exchange gain related to the non-recurrence of an arbitration award provision recorded in the third quarter of 2015Cimatron and a $5.8 million decrease in compensation costs, driven by lower stock-based compensation expense. Research and development expenses decreased primarily due to a $4.1 million decrease in outside services associated with product development, a $3.1 million decrease in compensation costs and a $2.2 million decrease in purchased materials, partially offset by $4.6 million of expenses related to our updated strategy and re-prioritization of certain research and development projects and a $1.1 million increase in depreciation expense.Income (loss) from operationsThe following table sets forth income (loss) from operations by geographic region for the years ended December 31, 2017, 2016 and 2015.Table 9(71,951) (53,725) (596,283) (292) (1,613) (71,201) 20,173 19,591 27,432 (52,070) (35,747) (640,052) (1,903) (2,673) (1,872) (53,973) (38,420) (641,924) The increase in operating loss for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily driven by a decrease in gross profit and an increase in operating expenses. See “Gross profit and gross profit margins” and “Operating expenses” above.The decrease in operating loss for the year ended December 31, 2016 over the year ended December 31, 2015 was primarily driven by lower operating expenses and the intangible impairment charges taken in 2015. See “Gross profit and gross profit margins” and “Operating expenses” above.34Interest and other expenses, netThe following table sets forth the components of interest and other expenses, net, for the years ended December 31, 2017, 2016 and 2015.Table 10(784) (807) (521) 908 (94) 3,263 919 1,282 2,011 2,505 1,011 8,276 3,548 1,392 13,029 The increase in interest and other expense, net, for the year ended December 31, 2017, as compared to the year ended December 31, 2016, is primarily due to the impact of foreign currency as well as impairment charges, related to certain minority investments of less than 20% ownership, for which we do not exercise significant influence, of $1.7 million and $1.2 million in 2017 and 2016, respectively. See Note 2 to the Consolidated Financial Statements.The decrease in interest and other expense, net, for the year ended December 31, 2016, as compared to the year ended December 31, 2015, is primarily due to impairment charges of $1.2 million and $7.4 million in 2016 and 2015, respectively, related to certain minority investments of less than 20% ownership, for which we do not exercise significant influence. See Note 2 to the Consolidated Financial Statements. Also contributing to the decrease was the impact of foreign currency and reductions in imputed interest over time.We recorded a $7.8$2.5 million tax benefit and a $6.2 million provision for income taxes for the yearyears ended December 31, 20172021 and a $0.52020, respectively.In 2021, our benefit reflected $6.6 million benefit for income taxes for the year ended December 31, 2016. In 2015, we recorded a provision for income taxes of $9.0 million.In 2017, our provision reflected a $1.8 millionin U.S. tax expensebenefit and $6.0$4.1 million of tax expense in foreign jurisdictions. In 2016, this benefit primarily2020, our provision reflected a $3.3$1.8 million in U.S. tax benefitexpense and $2.8$4.4 million of tax expense in foreign jurisdictions. In 2015, this expense primarily reflected a $5.5 million U.S. tax expense30During 2021 and $3.5 million of tax expense in foreign jurisdictions.During 2017 and 2016,2020, we concluded that it is more likely than not that our deferred tax assets will not be realized in certain jurisdictions, including the U.S. and certain foreign jurisdictions; therefore, we have a valuation allowance recorded against our deferred tax assets on our consolidated balance sheets totaling $80.8$91.2 million and $109.9$123.1 million as of December 31, 20172021 and 2016,2020, respectively.For further discussion, see NotesNote 2 and 19Note 22 to the Consolidated Financial Statements.consolidated financial statements in Item 8 of this Form 10-K.35loss attributable to 3D Systems2017 compared to 2016The following table sets forth the primary components of net lossincome (loss) attributable to 3D Systems for the years ended December 31, 20172021 and 2016.Table 116(53,973) (38,420) (15,553) 3,548 1,392 2,156 7,802 (547) 8,349 868 (846) 1,714 (66,191) (38,419) (27,772) 111,554 111,189 (0.59) (0.35) Year Ended December 31, (Dollars in thousands) 2021 2020 Change Loss from operations $ (33,069) $ (118,963) $ 85,894 Other non-operating items: Interest and other income (expense), net 352,609 (24,447) 377,056 Benefit (provision) for income taxes 2,512 (6,184) 8,696 Net income (loss) $ 322,052 $ (149,594) $ 471,646 Weighted average shares, basic 122,867 117,579 Weighted average shares, diluted 126,334 117,579 Income (loss) per share, basic $ 2.62 $ (1.27) Income (loss) per share, diluted $ 2.55 $ (1.27) The increase in net lossincome for the year ended December 31, 20172021, as compared to the net loss for year ended December 31, 2016 is2020, was primarily due to driven by a decrease in gross profit, an increase in selling, general and administrative expenses due to investment in go to market and IT infrastructure, an increase in research and development expenses due to our continued investment in plastics, including our Figure 4 platform, metals, materials and software, loss from operations and the effectgain on the divestitures of income taxes; which combined to offset the increase in revenue.Cimatron, ODM and Simbionix, as previously discussed. See “Comparison of revenue by geographic region,” “Gross profit and gross profit margins”, “Operating expenses”, and “Operating expenses” above.2016 compared to 2015The following table sets forth the primary components of net loss attributable to 3D Systems for the years ended December 31, 2016 and 2015.Table 12(38,420) (641,924) 603,504 1,392 13,029 (11,637) (547) 8,972 (9,519) (846) (8,433) 7,587 (38,419) (655,492) 617,073 111,189 111,969 (0.35) (5.85) The decrease in net loss for the year ended December 31, 2016 as compared to the year ended December 31, 2015 is primarily due to an increase in gross profit, a decrease in selling, general and administrative expenses due to the non-recurrence of impairment charges related to goodwillInterest and other intangible assets which were recorded in 2015 a decrease in selling, general and administrative expenses due to the non-recurrence of costs associated with acquisitions which were recorded in 2015 and a decrease in research and development expenses due to the non-recurrence of costs associated with portfolio expansion and development of new products which were recorded in 2015. See “Gross profit and gross profit margins” and “Operating expenses”income (expense), net above.36Liquidity and Capital ResourcesTable 137Change (Dollars in thousands) December 31, 2021 December 31, 2020 $ % 136,344 184,947 (48,603) (26.3) Cash and cash equivalents $ 789,657 $ 75,010 $ 714,647 952.7 % 129,879 127,114 2,765 2.2 Accounts receivable, net 106,540 114,254 (7,714) (6.8) % 103,903 103,331 572 0.6 Inventories 92,887 116,667 (23,780) (20.4) % 370,126 415,392 (45,266) 989,084 305,931 683,153 Less: 644 572 72 12.6 Current portion of long term debt Current portion of long term debt — 2,051 (2,051) (100.0) % Current right of use liabilities Current right of use liabilities 8,344 9,534 (1,190) (12.5) % 55,607 40,514 15,093 37.3 Accounts payable 57,366 45,174 12,192 27.0 % 65,899 55,187 10,712 19.4 Accrued and other liabilities 76,994 69,812 7,182 10.3 % 122,150 96,273 25,877 142,704 126,571 16,133 247,976 319,119 (71,143) (22.3) Operating working capital $ 846,380 $ 179,360 $ 667,020 371.9 % We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements, excluding acquisitions, primarily consist of funding of working capital and funding of capital expenditures.We believe our existing31At December 31, 2021, cash on hand which includes; cash and cash equivalents will be sufficient to satisfy our working capital needs,and restricted cash totaled $790.0 million, increased $705.3 million since December 31, 2020. The higher cash balance resulted from proceeds of $421.1 million from the Cimatron, ODM, and Simbionix divestitures, $446.5 million of proceeds from the issuance of convertible notes, and $48.1 million of cash flow from operations, partially offset by $21.4 million for repayments of debt, $18.8 million for capital expenditures, outstanding commitments$139.7 million for current acquisitions, $12.6 million related to net settlement of stock-based compensation, and $6.3 million of payments related to previously purchased non-controlling interests. Cash flow from operations was negatively impacted by withholding taxes of $6.6 million related to the Cimatron divestiture.We expect that cash flow from operations, cash and cash equivalents, and other sources of liquidity, requirements associated with our existing operations in the foreseeable future, or to consummate significant acquisitions of other businesses, assets, products or technologies. However, it is possible that, in the future, we may need to raise additional funds to finance our activities. If needed, we may be able to raise such funds byas issuing equity or debt securities subject to the public or selected investors, by borrowing from financial institutions, drawing down on our credit facility, or selling assets.Cash held outside the U.S. at December 31, 20172021 was $88.9$62.7 million, or 65.2%7.9% of total cash and cash equivalents, compared to $83.5$49.7 million, or 45.2%66.2% of total cash and cash equivalents, at December 31, 2016.2020. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant additional taxes related to such amounts.federal and state taxes. However, our estimatesthese dividends are provisional and subject to further analysis.foreign withholding taxes that are estimated to result in the Company incurring tax costs in excess of the cost to obtain cash through other means. Cash equivalents are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See “Cash flow”, “Credit facilities” and “Capitalized lease obligations”“Cash flow” discussion below.We acquired one business, Vertex, in 2017 for consideration of approximately $37.6 million, net of cash assumed, related to expanding our healthcare solutions portfolio, particularly within the dental vertical. Consideration consisted of approximately $34.3 in cash, net of cash assumed, and approximately $3.2 million in shares of the Company’s common stock. See Note 3 to the Consolidated Financial Statements.Days’ sales outstanding was 73 days at December 31, 2017 and 2016, while accounts receivable more than 90 days past due decreased to 9.1% of gross receivables at December 31, 2017, from 12.5% at December 31, 2016. We review specific receivables periodically to determine the appropriate reserve for accounts receivable.The majority of our inventory consists of finished goods, including products, materials and service parts. Inventory also consists of raw materials and spare parts for the in-house assembly and support service products. We outsource the assembly of certain 3D printers; therefore, we generally do not hold most parts for the assembly of these printers in inventory.The changes that make up the other components of working capital not discussed above resulted from the ordinary course of business. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.adjustments, acquisitions and divestitures.37FlowThe following tables set forth componentsflowCash flow from operationsCash provided by operating activities for the year ended December 31, 2021 was $48.1 million and cash used in operating activities for the year ended December 31, 2020 was $20.1 million.Working capital used cash of $0.7 million for the year ended December 31, 2021 and used cash of $7.3 million for the year ended December 31, 2020. For the year ended December 31, 2021, working capital changes related to cash inflows were a decrease in inventory and an increase in accounts payable, partially offset by an increase in accounts receivable, and prepaid expenses and other current assets, and a decrease in deferred revenue, and other liabilities.For the year ended December 31, 2020, drivers of working capital related to cash outflows were an increase in accounts receivable, inventory, and prepaid expenses and other current assets, and a decrease in accounts payable, partially offset by an increase in deferred revenue and customer deposits and accrued and other current liabilities.Cash flow from investing activitiesFor the year ended December 31, 2021, cash flow provided from investing activities was $260.6 million compared to $11.7 million of cash flowused in investing activities for the year ended December 31, 2020. Cash inflows related to the net proceeds from the divestitures of Cimatron, ODM and Simbionix, partially offset by capital expenditures and payments related to current acquisitions. For the year ended December 31, 2020, the primary outflows of cash related to capital expenditures. Capital expenditures were $18.8 million and $13.6 million for the years ended December 31, 2017, 20162021 and 2015,2020, respectively.Table 1425,941 57,481 (2,831) (70,659) (21,882) (120,855) (9,188) (3,926) (2,157) 5,303 (2,369) (3,376) (48,603) 29,304 (129,219) 32Cash flow from operationsTable 15(65,323) (39,265) (663,925) 100,095 107,952 696,093 (8,831) (11,206) (34,999) 25,941 57,481 (2,831) Cash generatedprovided by operating activities for 2017 and 2016 was $25.9 million and $57.5 million, respectively. Operating activities used $2.8 million of cash in 2015. Excluding non-cash charges, net income provided cash of $34.8 million in 2017, $68.7 million in 2016 and $32.2 million in 2015. Non-cash charges generally consist of depreciation, amortization, stock-based compensation and inventory adjustments. In 2015, there were also non-cash charges for impairment of goodwill and intangibles.Working capital requirements used cash of $8.8 million in 2017, $11.2 million in 2016 and $35.0 million in 2015. Spend on inventory was the primary driver of the working capital outflows in all years and it was partially offset by other working capital items. Cash flow from investing activitiesTable 16(34,291) (91,799) (30,881) (16,567) (22,399) (1,159) (1,132) (907) (2,250) (3,533) 273 350 (2,351) (1,000) (5,750) (70,659) (21,882) (120,855) Cash used by investingfinancing activities was $70.7$405.8 million in 2017, $21.9 million in 2016 and $120.9 million in 2015. The primary outflows of cash were acquisitions and capital expenditures.38Growth in capital expenditures is driven by our continued investment in our on demand manufacturing services, facilities for new product development efforts, and investment in go to market and IT infrastructure.AcquisitionsAs noted above, we acquired Vertex in 2017.We made no acquisitions during the year ended December 31, 2016.We acquired four businesses2021, while cash used in 2015 for cash consideration of $91.8 million, net of cash acquired, with an additional $0.7 million of consideration paid in the form of forgiveness of a note. Two of the acquisitions were related to expanding our software solutions, one acquisition was related to expanding our global on demand manufacturing services and printer sales footprint, and one acquisition was related to expanding our offering related to the education marketplace opportunity. See Note 3 to the Consolidated Financial Statements.Cash flow from financing activitiesTable 17(5,545) (2,871) (1,108) (3,206) (437) (1,055) (1,049) (9,188) (3,926) (2,157) Cash used by financing activities was $9.2$19.5 million in 2017, $3.9 million in 2016 and $2.2 million in 2015. The primary outflows of cash relate tofor the settlement of stock-based compensation. Additionally, in 2017 we paid $3.2 million related to earnout provisions related to one of our acquisitions.We may issue additional securities from time to time as necessary to provide flexibility to execute our growth strategy. No securities were issued during the yearsyear ended December 31, 2017, 20162020. The primary inflow of cash for the year ended December 31, 2021 related to proceeds from the issuance of the convertible note partially offset by the repayment of the Term Facility, the settlements of stock-based compensation and 2015.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements and do not utilize any “structured debt,” “special purpose,”purpose” or similar unconsolidated entities for liquidity or financing purposes.39Material Cash RequirementsContractual ObligationsThe Company's material cash requirements consist of the following contractual and Commercial CommitmentsThe table below summarizes our contractual obligations as ofother obligations:IndebtednessAt December 31, 2017.Table 181,373 2,193 1,490 6,739 11,795 15,930 19,768 10,972 9,738 56,408 83,305 83,305 2,772 2,343 5,115 103,380 24,304 12,462 16,477 156,623
2021, we had $460,000 of outstanding 0% convertible notes which mature in November of 2026. Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations or other strategic opportunities, which could result in higher financing costs.(a)We lease certain facilities under non-cancelable operating leases expiring through 2027. The leases are generally on a net-rent basis, under which we pay taxes, maintenance and insurance.(b)Includes amounts committed under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. For further discussion, see Note 21 to the Consolidated Financial Statements.
Purchase Commitments(c)Certain of our acquisition agreements contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. We have purchase commitments under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery.LeasesThe Company has operating and financing lease obligations of $69,849 at December 31, 2021, primarily related to real estate and equipment leases, of which approximately $11,000 in payments are expected over the next twelve months. Additionally, the Company has $31,108 in lease obligations for which the leases have not commenced as the facilities are under construction by the landlord. For more information on the Company's leases, refer to Note 7 to the consolidated financial statements.Sources of Funding to Satisfy Material Cash RequirementsThe Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive operating cash flow in 2022. Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various sources as described above.Other Contractual CommitmentsCredit facilitiesIn October 2014, we entered into a $150.0 million five-year revolving, unsecured credit facility. The agreement provides for advances in the initial aggregate principal amount of up to $150.0 million. Subject to certain terms and conditions contained in the agreement, we may, at our option, request an increase in the aggregate principal amount available under the credit facility by an additional $75.0 million. As of December 31, 2017 and December 31, 2016, there was no outstanding balance on the credit facility. The credit facility contains customary covenants, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings and events of default. The Company wasConvertible NoteWe were in compliance with all covenants at bothof the Note as of December 31, 2017 and December 31, 2016. See Note 11 to the Consolidated Financial Statements.Redeemable noncontrolling interestsThe minority interest shareholders of a certain subsidiary have the right to require us to acquire either a portion of or all ownership interest under certain circumstances pursuant to a contractual arrangement, and we have a similar call option under the same contractual terms. The amount of consideration under the put and call rights is not a fixed amount, but rather is dependent upon various valuation formulas and on future events, such as revenue and gross margin performance of the subsidiary through the date of exercise, as described in Note 21 to the Consolidated Financial Statements. Management estimates, assuming that the subsidiary owned by us at December 31, 2017 performs over the relevant future periods at its forecasted earnings levels, that these rights, if exercised, could require us in a future period to pay a maximum amount of approximately $8.9 million to the owners of such put rights. This amount has been recorded as redeemable noncontrolling interests on the balance sheet at December 31, 2017 and 2016.IndemnificationIn the normal course of business we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.4033To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences while the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have directors’ and officers’ insurance coverage that may enable us to recover future amounts paid, subject to a deductible and to the policy limits.Financial InstrumentsWe 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, whenWhen appropriate, we consider it to be appropriate, enter into foreign currency contracts to hedge exposures arising from those transactions. The CompanyWe had $39.6$43.0 million and $101.8 million in notional foreign exchange contracts outstanding as of December 31, 2017,2021 and 2020, respectively. The fair value of these contracts was not material. We have elected not to prepare and maintain the documentation to qualify for whichhedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, all gains and losses (realized or unrealized) are recognized in Interest and other expense, net in the consolidated statements of operations and comprehensive income (loss). Depending on the fair value was not material. No foreign exchange contracts were outstanding asat the end of December 31, 2016.We do not hedge for trading or speculative purposes, and our foreign currency contracts are generally short-term in nature, typically maturing in 90 days or less. 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, net in our Consolidated Statements of Operations and Other Comprehensive Loss.Changes in the fair value of derivatives are recorded in interest and other expense, net, in our Consolidated Statements of Operations and Other Comprehensive Loss. 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 Consolidated Balance Sheets.See Note 1015 to the Consolidated Financial Statements.We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). In doing so, we have to make estimates and analysisassumptions that affect our reported amounts of assets, liabilities, revenues, expenses, gains and losses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations and financial condition set forth in this Form 10-K is based on our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make critical accounting estimates that directly impact our Consolidated Financial Statements and related disclosures.Critical accounting estimates are estimates that meet two criteria:·The estimates require that we make assumptions about matters that are highly uncertain at the time the estimates are made; and·There exist different estimates that could reasonably be used in the current period, or changes in the estimates used are reasonably likely to occur from period to period, both of which would have a material impact on our results of operations or financial condition.On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, the allowance for doubtful accounts, income taxes, inventories, pensions, goodwill and other intangible and long-lived assets and contingencies.will be affected. We base our estimates and assumptions on historicalpast experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ fromwe evaluate these estimates under different assumptions or conditions.The following paragraphs discuss the items that we believe are theon an ongoing basis. We refer to accounting estimates of this type as critical accounting policies most affected by significant managementand estimates, and judgments. Management has discussed and periodically reviews thesewhich we discuss further below. We have reviewed our critical accounting policies the basis for their underlying assumptions and estimates with the audit committee of our board of directors.See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a summary of significant accounting policies and the natureeffect on our financial statements.Revenue recognitionRevenue is recognized when control of the promised products or services is transferred to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. A majority of our related disclosures herein with the Audit Committee of the Board of Directors.41Revenue recognitionNet revenue is derived primarily fromrecognized at the salepoint in time when products are shipped or services are delivered to customers.We enter into contracts that can include various combinations of products and services. The following revenue recognition policies define the manner inservices, which we accountare generally capable of being distinct and accounted for sales transactions.We recognize revenue when persuasive evidenceas separate performance obligations. Many of a sale arrangement exists, delivery has occurred or services are rendered, the sales price or fee is fixed or determinable and collectability is reasonably assured. Revenue generally is recognized net of allowances for returns and any taxes collected fromour contracts with customers and subsequently remitted to governmental authorities. We sell our products through our direct sales force and through authorized resellers. We recognize revenue on sales to reseller partners at the time of sale when the partner has economic substance apart from us, andinclude multiple performance obligations. For such arrangements, we have completed our obligations related to the sale.We enter into sales arrangements that may provide for multiple deliverables to a customer. Sales of printers may include ancillary equipment, materials, warranties on the equipment, training and installation. We identify all goods and/or services that are to be delivered separately under a sales arrangement and allocate revenue to each deliverableperformance obligation based on either vendor-specific objective evidence (“VSOE”) or if VSOE is not determinable then we use best estimatedits relative standalone selling price (“BESP”SSP”) of each deliverable. We establish VSOE of selling price using the price charged for a deliverable when sold separately. The objective of BESP. Judgment is required to determine the price at whichSSP for each distinct performance obligation in a contract. For the majority of items, we would transactestimate SSP using historical transaction data. We use a sale ifrange of amounts to estimate SSP when we sell each of the deliverable was sold regularlyproducts and services separately and need to determine whether there is a discount to be allocated based on a stand-alone basis. We consider multiple factors including, butthe relative SSP of the various products and services. In instances where SSP is not limited to, market conditions, geographies, competitive landscape and entity-specific factorsdirectly observable, such as internal costs, gross margin objectives and pricing practices when estimating BESP. Consideration in a multiple element arrangement is then allocated to the elements on a relative sales value basis using either VSOE or BESP for all the elements. We also evaluate the impact of undelivered items on the functionality of delivered items for each sales transaction and, where appropriate, defer revenue on delivered items when that functionality has been affected. Functionality is determined to be met if the delivered products or services represent a separate earnings process. HardwareUnder our standard terms and conditions of sale, title and risk of loss transfers to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. We defer the estimated revenue associated with post-sale obligations that are not essential to the functionality of the delivered items, and recognize revenue in the future as the conditions for revenue recognition are met.SoftwareWe also market and sell software tools that enable our customers to capture and customize content using our printers, as well as reverse engineering and inspection software. The software does not require significant modification or customization. We apply the guidance in ASC 985-605, Software-Revenue Recognition (“ASC 985”) in recognizing revenue when software is more than incidental to the product or service as a whole based on fair value using vendor-specific objective evidence. Revenue from perpetual software licenses is recognized either upon delivery of the product or delivery of a key code which allows the customer to access the software. In instances where software access is provided for a trial period, revenue is not recognized until the customer has purchased the software at the expiration of the trial period. We use the residual method to allocate revenue to software licenses at the inception of the license term when VSOE of fair value for all undelivered elements, such as maintenance, exists and all other revenue recognition criteria have been satisfied. In instances in which customers purchase post sale support, it is considered a separate element from the software and is deferred at the time of sale and subsequently amortized in future periods.We also sell equipment with embedded software to our customers. The embedded software is not sold separately, it is not a significant focus ofwe determine the marketing effort and we do not provide post-contract customer support specific to the software or incur significant costsSSP using information that are within the scope of ASC 985. Additionally, the functionality that the software provides is marketed as part of the overall product. The software embedded in the equipment is incidental to the equipment as a whole such that ASC 985 is not applicable. Sales of these products are recognized in accordance with ASC 605-25, “Multiple-Element Arrangements.”ServicesPrinters and certain other productsmay include a warranty under which we provide maintenance for periods up to one year. We also offer training, installation and non-contract maintenance services for our products. Additionally, we offer extended warranties and maintenance contracts customers can purchase at their option. For initial product warranties, revenue is recognized and estimated costs are accrued at the time of the sale of the product. These cost estimates are established using historical information on the nature, frequency and average cost of claims for each type of printer or other product as well as assumptions about future activity and events.42Revisions to expense accruals are made as necessary based on changes in these historical and future factors. For optional warranty or maintenance contracts, revenue is deferred at the time of sale based on the relative fair value of these services and costs are expensed as incurred. Deferred revenue is recognized ratably over the term of the warranty or maintenance period on a straight-line basis. Revenue from training, installation and non-contract maintenance services is recognized at the time of performance of the service.On demand manufacturing service sales and healthcare services are included within services revenue and revenue is recognized upon shipment or delivery of the parts or performance of the service, based on the terms of the sales arrangement.Terms of saleShipping and handling costs billed to customers for equipment sales and sales of materials are included in product revenue in the consolidated statements of operationsmarket conditions and other comprehensive loss. Costs we incur associated with shipping and handling are included in product cost of sales in the consolidated statements of operations and other comprehensive loss.Credit is extended, and creditworthiness is determined, based on an evaluation of each customer’s financial condition. New customers are generally required to complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness. Customers with a favorable profile may receive credit terms that differ from our general credit terms. Creditworthiness is considered, among other things, in evaluating our relationship with customers with past due balances.Our terms of sale generally require payment within 30 to 60 days after shipment of a product, although we also recognize that longer payment periods are customary in some countries where we transact business. To reduce credit risk in connection with printer sales, we may, depending upon the circumstances, require significant deposits prior to shipment and may retain a security interest in a system sold until fully paid. observable inputs.34In some circumstances, we may require payment in fullhave more than one SSP for ourindividual products priorand services due to shipmentthe stratification of those products and may require internationalservices by customers, to furnish letters of credit. For maintenance services, we either bill customers on a time-and-materials basis or sell customers service agreements that are recorded as deferred revenue and provide for payment in advance on either an annualgeographic region or other periodic basis.The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.The nature of our marketing incentives may lead to consideration that is variable. Judgment is exercised at contract inception to determine the expected value of the contract and resulting transaction price. Ongoing assessments are performed to determine if updates are needed to the original estimates.See Note 2 and Note 5 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.Allowance for doubtful accountsIn evaluating the collectability of our accounts receivable, we assess a number of factors, including specific customers’ abilities to meet their financial obligations to us, the length of time receivables are past due and historical collection experience. Based on these assessments, we may record a reserve for specific customers, as well as a general reserve and allowance for returns and discounts. If circumstances related to specific customers change, or economic conditions deteriorate such that our past collection experience is no longer relevant, our estimate of the recoverability of our accounts receivable could be further reduced from the levels provided for in the Consolidated Financial Statements.We evaluate specific accounts for which we believe a customer may have an inability to meet their financial obligations (for example, aging over 90 days past due or bankruptcy). In these cases, we use our judgment, based on available facts and circumstances, and record a specific reserve for that customer to reduce the receivable to an amount we expect to collect. These specific reserves are re-evaluated and adjusted as additional information is received that impacts the amount reserved. Our bad debt expense was $1.1 million, $1.6 million and $3.8 million for the years ended December 31, 2017, 2016 and 2015.We believe that our allowance for doubtful accounts is a critical accounting estimate because it is susceptible to change and dependent upon events that may or may not occur and because the impact of recognizing additional allowances for doubtful accounts may be material to the assets reported on our balance sheet and in our results of operations. See Liquidity and Capital Resources above.Income taxes We and the majority of our domestic subsidiaries file a consolidated U.S. federal income tax return; we have four entities that file separate U.S. federal tax returns. Our non-U.S. subsidiaries file income tax returns in their respective local jurisdictions. We provide for income taxes on those portions of our foreign subsidiaries’ accumulated earnings (deficit) that we believe are not reinvested indefinitely in their businesses.We account for income taxes under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax benefit carryforwards. Deferred income tax liabilities and assets at the end of each period are determined using enacted tax rates.43Under the provisions of ASC 740, “Income Taxes” (“ASC 740”) we establish a valuation allowance for those jurisdictions in which the expiration date of tax benefit carryforwards or projected taxable earnings leads us to conclude that it is “more likely than not” that a deferred tax asset will not be realized. The evaluation process includes the consideration of all available evidence regarding historical results and future projections including the estimated timing of reversals of existing taxable temporary differences and potential tax planning strategies. Once a valuation allowance is established, it is maintained until a change in factual circumstances gives rise to sufficient income of the appropriate character and timing that will allow a partial or full utilization of the deferred tax asset.We believe that our estimate of deferred income tax assets and our maintenance of a valuation allowance against such assets are critical accounting estimates because they are subject to among other things, an estimate of future taxable income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in other non-U.S.evaluating our uncertain tax jurisdictions, which are susceptible to changepositions and dependent upon events that may or may not occur, and because the impact ofdetermining our valuation allowance may be material to the assets reported on our balance sheet and in our results of operations.The determination of ourprovision for income tax provision is complex becausetaxes.Although we believe we have operations in numerousadequately reserved for our uncertain tax jurisdictions outsidepositions, no assurance can be given that the U.S. that are subject to certain risks that ordinarily wouldfinal tax outcome of these matters will not be expecteddifferent. We adjust these reserves in light of changing facts and circumstances, such as the U.S. Tax regimes in certain jurisdictions are subject to significant changes, which may be applied onclosing of a retroactive basis. If this were to occur, our tax expense could be materiallyaudit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts reported.We periodically estimaterecorded, such differences will affect the probableprovision for income taxes and the effective tax obligations using historical experience in tax jurisdictions and our informed judgment. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which we transact business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to, or further interpretations of, regulations. Income tax expense is adjustedrate in the period in which these events occur,such determination is made.The provision for income taxes includes the effect of reserve provisions and these adjustmentschanges to reserves that are included inconsidered appropriate as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our Consolidated Statements of Operations and Other Comprehensive Loss. If such changes take place, there is a risk that our effective tax rate may increase or decrease in any period.Income taxes – Tax Cuts and Jobs ActOn December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“Tax Act”) that significantly revised U.S. corporate income tax law that, amongreturns by the Internal Revenue Service (“IRS”) and other things, reducedtax authorities which may assert assessments against us. We regularly assess the corporatelikelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income tax rate to 21%, implemented a modified territorial tax system that includes a one-time transition tax on U.S. shareholder’s historical undistributed earnings of foreign affiliates, imposed a new minimum tax on global intangible low-taxed income (“GILTI”), and implemented the immediate expensing of certain capital investments. Although the Tax Act is generally effective January 1, 2018, GAAP requires recognition of the tax effects of new legislation on the date of enactment.See Note 19 to the Consolidated Financial Statements. InventoriesInventories are stated at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method.We believe that the allowance forThe inventory obsolescencereserve is a critical accounting estimate because itas there is susceptiblerapid technological change in our industry impacting the market for our products and there is significant judgment in estimating the amount of spare parts to change and dependent uponkeep on hand to service previously sold printers for periods of up to 10 or more years.See Note 8 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.35Goodwill & Other Long-Lived Assets, Including Intangible AssetsWe review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that may orthe carrying value of the asset may not occur and becausebe recoverable. We assess the impactrecoverability of recognizing lowerthe carrying value of cost or net realizable value adjustments may be material to the assets reportedheld for use based on our balance sheet and in our resultsa review of operations.See Note 4 to the Consolidated Financial Statements.GoodwillGoodwill reflectsundiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the consideration transferred pluscarrying value of the long-lived asset over its estimated fair value as determined by discounted projected cash flows.Goodwill represents the purchase price paid in excess of the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. Goodwill is not amortized but rather is tested for impairment annually, or whenever events or circumstances present an indication of impairment. Goodwill is an asset representing the future economic benefits arising from othertangible and intangible assets acquired in a business combinationcombination. We review goodwill for impairment annually or when circumstances indicate that are not individually identified and separately recognized. The primary items that generate goodwillthe likelihood of an impairment is greater than 50%. Such circumstances include a significant adverse change in the value of the synergies between the acquired companies and us and the acquired assembled workforce, neither of which qualifiesbusiness climate for recognition as an identifiable intangible asset.The annual impairment testing required by ASC 350, “Intangibles – Goodwill and Other” requires us to use judgment and could require us to write down the carrying valueone of our goodwill in future periods. We allocate goodwill to our identifiable geographic reporting units the Americas, EMEA and APAC regions, which are testedor a decision to dispose of a reporting unit or a significant portion of a reporting unit. The test for goodwill impairment using a two-step process. The first step requires44comparingcompares the fair value of each of reporting unit withto its respective carrying value. The process requires a significant level of estimation and use of judgment by management, particularly the carrying amount, including goodwill. If that fair value exceeds the carrying amount, the second step of the process is not required to be performed, and no impairment charge is required to be recorded. If that fair value does not exceed that carrying amount, we must perform the second step, which requires an allocationestimate of the fair value of theour reporting unit to all assets and liabilities of that unit as if the reporting unit had been acquired in a purchase business combination and the fair value of the reporting unit was the purchase price. The goodwill resulting from that purchase price allocation is then compared to the carrying amount with any excess recorded as an impairment charge.The evaluation of goodwill impairment requires us to make assumptions about future cash flows of the reporting unit being evaluated that include, among others, growth in revenues, margins realized, level of operating expenses and cost of capital. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.Goodwill set forth on the Consolidated Balance Sheet as of December 31, 2017 arose from acquisitions carried out from 2009 to 2017 and in years prior to December 31, 2007.Goodwill arising from acquisitions prior to 2007 was allocated to geographicunits. Our reporting units based on the percentage of SLS printers then installed by geographic area. Goodwill arising from acquisitions in 2009are Healthcare and Industrial. Prior to 2017 was allocated to geographic reporting units based on geographic dispersion of the acquired companies’ sales or capitalization at the time of their acquisition.We conducted our annual impairment testing for the years ended December 31, 2017 and 2016 in the fourth quarters of 2017 and 2016, respectively. There was no goodwill impairment for the years ended December 31, 2017 and 2016.We conducted our annual impairment testing for the year ended December 31, 2015 in the fourth quarter of 2015. The results of the first step of our annual impairment testing indicated the carrying amount of goodwill assigned to the Americas and EMEA reporting units exceeded fair value and that the carrying amount of goodwill assigned to APAC did not exceed fair value. Based on these results, management completed the second step of annual impairment testing for the Americas and EMEA reporting units. Management determined that the fair value associated with goodwill assigned to the Americas was zero, resulting in a non-cash, non-tax deductible impairment charge of $382.3 million for the year ended December 31, 2015. Management determined that the carrying amount of the goodwill assigned to the EMEA reporting unit exceeded fair value by approximately 29%, resulting in a non-cash, non-tax deductible impairment charge of $61.4 million for the year ended December 31, 2015. See Notes 2 and 7 to our Consolidated Financial Statements.We will monitorJanuary 1, 2021 our reporting units in an effort to determine whether eventswere the Americas, EMEA and circumstances warrant further interim impairment testing. We could be required to write off or write down additional amounts in the future in the event of deterioration in our future performance, sustained slower growth or other circumstances. Other Intangible AssetsIntangibleAPAC.Long-lived assets other than goodwill primarily represent acquired(including ROU Assets) and amortizable intangible assets including licenses, patent costs, acquired technology, internally developed technology, customer relationships, non-compete agreements, trade names and trademarks. Intangible assets with finite lives are amortized using the straight-line method over their estimated useful life, which is determined by identifying the period over which most of the cash flows are expected to be generated.For intangibles with finite lives, we review the carrying amountsreviewed for potential impairment whenrecoverability whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ExamplesWe estimate the fair value of such a change in circumstances include a significant decrease in selling price, a significant adverse change inour reporting units based primarily on the extent or manner in which an asset is being used or a significant adverse change in the legal or business climate. In evaluating recoverability, we group assets and liabilities at the lowest level such that the identifiable cash flows relating to the group are largely independent of thediscounted projected cash flows of other assetsthe underlying operations, which requires us to make assumptions about estimated cash flows, including profit margins, long-term forecasts, discount rates and liabilities.terminal growth rates. We then comparedeveloped these assumptions based on the market risks unique to each reporting unit.As of December 31, 2021, we have approximately $0.6 million of goodwill that is deductible for tax purposes.As of September 30, 2020, we experienced a triggering event due to a drop in our stock price, which ultimately had been negatively impacted by the business environment as a result of the COVID-19 pandemic, and performed a quantitative analysis for potential impairment of our goodwill and long-lived asset balances. Based on available information and analysis as of September 30, 2020, we determined the carrying amountsvalue of the assets or asset groups with the related estimated undiscounted future cash flows. In the event impairment exists, anEMEA reporting unit exceeded its fair value and recorded a non-cash goodwill impairment charge is recorded asof $48.3 million. We determined the amount by whichfair value of the Americas and APAC reporting units exceeded their carrying values and the carrying amountvalue of the asset or asset group exceeds the fair value. our long-lived assets is recoverable for all reporting units.Fair value iswas determined by reference to estimated selling values of assets in similar condition or by using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value, and a market approach. The valuation methodology and underlying financial information included in the Company's determination of fair value required significant judgments by management. The principal assumptions used in the Company's discounted cash flow model. In addition,analysis consisted of (a) the remaining amortization periodlong-term projections of future financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the impaired asset would be reassessedrisk attributable to the Company and if necessary, revised.Nothe industry in which it operates. Under the market approach, the principal assumption included an estimate of multiples of various financial metrics of comparable companies.We conducted our annual goodwill impairment charges for intangible assets with finite lives were recordedtest for the years ended December 31, 20172021 and 2016. We recorded non-cash2020 as of November 30, 2021 and 2020, respectively. There was no goodwill impairment charges of $93.5 million as a result of our other intangible assets impairment testing for the year ended December 31, 2015.See Notes 2 and 6 to2021. We had an immaterial amount of other long lived asset impairment charges for the Consolidated Financial Statements.45Stock-based compensationWe maintain stock-based compensation plans that are described more fully in Note 14 to the Consolidated Financial Statements. For service-based awards, stock-based compensation is estimated at the grant date based on the fair value of the awards expected to vest and recognized as expense ratably over the requisite service period of the award. For stock options and awards with market conditions, compensation cost is determined at the individual tranche level.We account for contingencies in accordance with ASC 450, “Contingencies” (“ASC 450”). ASC 450 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as legal matters requires us to use our judgment. judgment and the ultimate resolution of our exposure related to these matters may change as further facts and circumstances become known.See Note 2123 to the Consolidated Financial Statements.See Note 2 to the Consolidated Financial Statements includedconsolidated financial statements in Item 8 of this reportForm 10-K for recently issued accounting standards, including the expected dates of adoption and expected impact to the Consolidated Financial Statementsconsolidated financial statements upon adoption.36We are exposed to market risks from fluctuations in interest rates, foreign currency exchange rates and commodity prices, which may adversely affect our results of operations and financial condition. We seek to minimize these risks through regular operating and financing activities and, when we consider it to be appropriate, through the use of derivative financial instruments. We do not purchase, hold or sell derivative financial instruments for trading or speculative purposes.Interest ratesBecauseOur earnings exposure related to movements in interest rates is primarily derived from variable interest rate deposits. At December 31, 2021, we had no outstanding debt subject to interest rate risk, a$585.4 million in variable-rate accounts. A hypothetical interest rate change of 10% would not have a material impact on the fair value of our indebtedness.Foreign exchange ratesBecause we conduct our operations in many areas of the world involving transactions denominated in a variety of currencies, our results of operations as expressed in U.S. dollars may be significantly affected by fluctuations in rates of exchange between currencies. These fluctuations could be significant. In 2017,2021, approximately 50%44.6% of our net sales and a significant portion of our costs and were denominated in currencies other than the dollar. We generally are unable to adjust our non-dollar local currency sales prices to reflect changes in exchange rates between the dollar and the relevant local currency. As a result, changes in exchange rates between the euro,U.S. Dollar and the Euro, Japanese yen,Yen, British pound,Pound, South Korean wonWon or other currencies in which we receive sale proceeds and the dollar have a direct impact on our operating results. These impacts are partly offset by expenses incurred in the same currency as the sales. There is normally a time lag between our sales and collection of the related sales proceeds, exposing us to additional currency exchange rate risk.When practicable, we endeavor to match assets and liabilities in the same currency on our U.S. balance sheet and those of our subsidiaries in order to reduce these risks. We also, when we consider it appropriate, enter into foreign currency contracts to hedge exposures arising from those transactionsAt December 31, 2017,2021, a hypothetical change of 10% in foreign currency exchange rates would cause a change in revenue and expense of approximately $21$27.5 million and $15.7 million, respectively, assuming all other variables remained constant.We enter into foreign currency forward contracts to reduce the effect of fluctuating foreign currencies. At December 31, 2021, we had notional forward exchange contracts outstanding of $39.6 million on December 31, 2017.$43.0 million. We believe these foreign currency forward contracts and the offsetting underlying commitments, when taken together, do not create material market risk.46For the year ended December 31, 2021 the aggregate foreign currency gain or loss included in net income was $1.7 million.Commodity pricesWe are exposed to price volatility related to raw materials and energy products in conjunction with our printer assembly and print materials blending processes. Generally, we acquire such components at market prices and do not use financial instruments to hedge commodity prices. At December 31, 2017,2021, a hypothetical 10% change in commodity prices for raw materials would cause a change to cost of sales of approximately $3$7.1 million.Our Consolidated Financial Statementsconsolidated financial statements and the related notes, together with the Report of Independent Registered Public Accounting Firm thereon, are set forth below beginning on page F-1 and are incorporated herein by reference.Not applicable.Evaluation of Disclosure Controls and Procedures3D37Our management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b)13a-15(e), as of December 31, 2017. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2017 that the Company’s disclosure2021. Disclosure controls refer to controls and other procedures were effective in ensuringdesigned to ensure that information required to be disclosed byin the Company in reports that it fileswe file or submitssubmit under the Exchange Act has beenis recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms of the SEC, and to provide reasonable assurance that we accumulate and communicate such information has been accumulated and communicated to the Company’sour management, including itsour Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regardingabout required disclosure.Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting, as further described below.Management’s Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting.reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control framework and processes were designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:·Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;·Provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and Directors; and
• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.dispositions of our assets;• Provide reasonable assurance that transactions are recorded properly to allow for the preparation of financialstatements in accordance with GAAP and that our receipts and expenditures are being made only in accordance withauthorizations of our management and directors; and• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of our assets that could have a material effect on the consolidated financial statements.Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time. Management assessedUnder the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we performed an assessment of the effectiveness of our internal control over financial reporting and concluded that, as of December 31, 2017, such internal control was effective atbased on the reasonable assurance levelframework described above. In making this assessment, management used the criteria set forthin Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework (2013)(COSO). Management has excluded from the scope of itsBased on this assessment, ofwe concluded that we did not maintain effective internal control over financial reporting as of December 31, 2021, due to an aggregation of certain control deficiencies that resulted in three material weaknesses identified below, although the operationsvolume of control deficiencies that aggregated into our previously reported material weakness has been significantly reduced.A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.The material weaknesses present relate to a lack of certain controls, or improper execution of designed control procedures (1) for certain non-standard contracts and related assets Vertex-Global Holding B.V. (“Vertex”) whichnon-standard contract terms; (2) over the Company began consolidating in January 2017. The operationsreview of internally prepared reports and related assets of Vertex were includedanalyses utilized in the consolidated financial statements of 3D Systemsclosing process; and constituted 5 percent of total assets and less than 1 percent of consolidated net loss as of and(3) for the year ended December 31, 2017.The effectiveness of our internal control over financial reporting as of December 31, 20172021 has been audited by BDO USA, LLP, an independent registered public accounting firm, as stated in their report included in Item 8 of this Form 10-K.4738ChangesRemediation Plan for Material Weaknesses as of December 31, 2020To address the two material weaknesses identified at December 31, 2020, we began implementing a remediation plan in Internal Controls over Financial ReportingIn connection with the evaluation by 3D management, including the Chief Executive Officer and Chief Financial Officer, ofJanuary 2021 designed to improve our internal control over financial reporting pursuantand remediate the related control deficiencies that led to Exchange Act Rule 13a-15(d)these material weaknesses. The remediation plan included the following remedial actions:a.Formally enhanced, developed, and implemented policies, procedures and processes relating to our financial reporting.b.Hired an experienced Chief Accounting Officer (CAO), along with additional accounting personnel some of whom possess public company accounting and reporting technical expertise.c.Engaged outside consultants to advise on changes in the design of our controls and procedures, implementation of our remediation activities and to advise on technical accounting matters.d.Enhanced the global control environment, including testing in 2021 of a significant number of additional business process and information technology controls.e.Trained new and existing accounting and finance personnel as well as key personnel in other functions such as, but not limited to, operations, sales, business development, human resources, legal and supply chain on the newly enhanced, developed and implemented policies and procedures.f.Trained personnel noted in the above bullet as to the proper design and execution of control procedures and noted the importance of the ongoing execution and maintenance of control process and procedures.g.Implemented software to manage and administer account reconciliations.h.Modified existing software to capture non-standard terms and conditions related to customer contracts.i.Enhanced the monthly close process to improve the timeliness of recording entries which permits more time to review and analyze financial statement accounts and to execute control procedures.j.Revamped and expanded our internal disclosure processes to provide greater representation across functions and improve opportunities to identify matters requiring accounting disposition or disclosures.After an assessment of the impact of the remediation actions commenced in 2021, we determined that the two material weaknesses identified at December 31, 2020 were not fully remediated as of December 31, 2021, but the volume of control deficiencies that aggregated into the previously reported material weaknesses has been significantly reduced. To fully remediate these material weaknesses, we plan to continue enhancements to our internal controls over financial reporting in 2022. These additional remediation actions include:a.Hiring additional staff with appropriate accounting, finance, operational and technology knowledge and experience in the design and execution of controls,b.Re-designing ineffective controls or processes,c.Implementing software to enhance our financial close and reporting process, andd.Establishing a formal controls governance committee to manage and enhance the oversight and execution of internal controls.Remediation Plan for Material Weaknesses as of December 31, 2021In addition to the remediation plan for the two material weaknesses discussed above, to address the tax material weakness present at December 31, 2021, we plan to implement a number of remediation actions including:a. Implementing software enhancements, including a tax reporting solution for our tax provision processb. Redesigning controls related to the accounting for the income tax processc. Engaging a third party to review our quarterly and annual tax calculationsd. Hiring additional experienced resources with backgrounds in income tax accountingWe are committed to the remediation of all material weaknesses and expect to successfully implement enhanced control processes and have a sufficient period of operational effectiveness to evidence material weakness remediation in 2022.However, as we continue to evaluate, and work to improve our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.Therefore, we cannot assure you when we will remediate such weaknesses, nor can we be certain that additional actions will not be required or the costs of any such additional actions.Moreover, we cannot assure you that additional material weaknesses will not arise in the future.Changes in Internal Control Over Financial Reporting39Other than the remediation efforts described above with respect to the two material weaknesses identified at December 31, 2020, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2017 were identified2021, that have materially affected, or are reasonably likely to materially effect,affect, our internal control over financial reporting. The tax material weakness described above was identified after December 31, 2021.Accordingly, we are in the process of implementing certain changes in our internal controls to remediate this tax material weakness as described above. The implementation of the material aspects of these additional remediation efforts began in the first quarter of fiscal year 2022.None.Item 9c. Disclosure Regarding Foreign Jurisdictions that Prevent InspectionsNone.The information required in response to this Item will be set forth in our Proxy Statement for our 20182022 Annual Meeting of Stockholders (“Proxy Statement”) under the captions “Election“Proposal One: Election of Directors,” “Corporate Governance Matters,” “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance,Reports,” “Corporate Governance Matters—Code of Conduct and Code of Ethics,” “Corporate Governance Matters—Corporate Governance and Nominating Committee,” and “Corporate Governance Matters—Audit Committee.”The information in response to this Item will be set forth in our Proxy Statement under the captions “Director Compensation,” “Executive Compensation,” “Corporate Governance Matters—Compensation Committee,” and “Executive Compensation—Compensation Committee Report.”Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersExcept as set forth below, the information required in response to this Item will be set forth in our Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”The following table summarizes information about the equity securities authorized for issuance under our compensation plans as of December 31, 2017.2021. For a description of these plans, please see Note 1418 to the Consolidated Financial Statements.1,820 14.08 1,077 2,897 6,545 (a)The weighted-average exercise price is only applicable to stock options.(b)The number of securities remaining available for future issuance for stock options, restricted stock units, and stock awards for non-employee directors is approved in total and not individually with respect to these items.(in thousands, except exercise price) Number of securities to be issued upon exercise of outstanding stock options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights aNumber of securities remaining available for future issuance under equity compensation plans bEquity compensation plans approved by stockholders: Stock options 420 $ 13.26 Restricted stock units 1,914 Total 2,334 4,258 a.The weighted-average exercise price is only applicable to stock options.b.The number of securities remaining available for future issuance for stock options, restricted stock units, and stock awards for non-employee directors is approved in total and not individually with respect to these items.40The information required in response to this Item will be set forth in our Proxy Statement under the captions “Corporate Governance Matters—Director Independence” and “Corporate Governance Matters – Matters—Related Party Transaction Policies and Procedures.”48The information in response to this Item will be set forth in our Proxy Statement under the caption “Fees“Proposal Three: Ratification of Selection of Independent Registered Accounting Firm—Fees of Independent Registered Public Accounting Firm.”413.1Share Purchase Agreement, dated November 2, 2020, by and among 3D Systems, Inc., 3D Systems Corporation and ST Acquisition Co. (Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed November 4, 2020.) First Amendment to Share Purchase Agreement, dated December 31, 2020, by and among ST Acquisition Co., 3D Systems, Inc. and 3D Systems Corporation (Incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K, filed January 4, 2021.) Asset Purchase Agreement, dated June 1, 2021, by and among 3D Systems, Inc., Quickparts.com, Inc., 3D Systems Italia Srl, 3D Systems France Sarl, 3D Systems Europe Limited, 3D Systems GmbH, QP 3D Acquisition, Inc., and 3D Systems Corporation. (Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K files on June 2, 2021.) First Amendment to the Asset Purchase Agreement, dated June 1, 2021, by and among 3D Systems, Inc., Quickparts.com Inc., 3D Systems Italia Srl, Sd Systems France Sarl, 3D Systems Europe Limited, 3D Systems GmbH, QP 3D Acquisition, Inc., and 3D Systems. (Incorporated by reference Exhibit 2.5 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed November 8, 2021.) Second Amendment to the Asset Purchase Agreement, dated June 1, 2021, by and among 3D Systems, Inc., Quickparts.com Inc., 3D Systems Italia Srl, Sd Systems France Sarl, 3D Systems Europe Limited, 3D Systems GmbH, QP 3D Acquisition, Inc., and 3D Systems Corporation. Stock Purchase Agreement, dated July 28, 2021, by and between 3D Systems, Inc. and Surgical Science Sweden AB. (Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K files on July 30, 2021.) Agreement and Plan of Merger, dated September 8, 2021, by and among 3D Systems Corporation, Oqton, Inc., 3DS Merger Sub 1, Inc., 3DS Merger Sub 2 Inc., and Shareholder Representative Services LLC, solely in its capacity as the representative, agent and attorney-in-fact of the Sellers. (Incorporated by reference to the Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on September 9, 2021.) First Amendment to the Agreement and Plan of Merger, dated October 29, 2021, by and among 3D Systems Corporation, Oqton, Inc., 3DS Merger Sub 1, Inc., 3DS Merger Sub 2 Inc., and Shareholder Representative Services LLC, solely in its capacity as the representative, agent and attorney-in-fact of the Sellers. Agreement and Plan of Merger, dated October 27, 2021, by and among 3D Systems Corporation, Volumetric Biotechnologies, Inc., Texans Merger Sub I, Inc., Texans Merger Sub II, Inc., and Fortis Advisors LLC, solely in its capacity as the Stockholders' Representative. (Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on October 28, 2021.) 3.1 Certificate of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8‑B8-B filed on August 16, 1993, and the amendment thereto, filed on Form 8‑B/8-B/A on February 4, 1994.)S‑2/S-2/A, filed on May 25, 1995.)424.1*4.2*4.3*4.4*4.5*4.6*4.7*494.8*4.94.104.11*4.12*4.13*4.14*4.15*4.16*4.17*4.18*10.1Indenture, dated as of November 16, 2021, between 3D Systems Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee. (Incorporated by reference to the Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on November 17, 2021.) Form of 0% Convertible Notes due 2026 (included in Exhibit 4.10). (Incorporated by reference to the Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed on November 17, 2021.) Lease Agreement dated February 8, 2006 between the Registrant and KDC-Carolina Investments 3, LP. (Incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8‑K,8-K, filed on February 10, 2006.)5010.64310.7*Amended and Restated Lease Agreement dated February 25, 2021 between 3D Systems Corporation and 3D Fields, LLC. (Incorporated by reference to Exhibit 10.7 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on May 5, 2021.) Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC Bank USA, National Association, as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, the guarantors party thereto, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019). Security Agreement, dated February 27, 2019, among 3D Systems Corporation, 3D Holdings, LLC, 3D Systems, Inc., and HSBC Bank USA, National Association, as Administrative Agent. (Incorporated by reference to Exhibit 10.11 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019). First Amendment, dated September 30, 2019, to the Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC Bank USA, National Association, as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, the guarantors party thereto, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.2 of the Registrant's Annual Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 30, 2019). Second Amendment, dated October 9, 2020, to the Credit Agreement, dated February 27, 2019, among 3D Systems Corporation, HSBC Bank USA, National Association, as Administrative Agent, Swing Loan Lender and Issuing Lender, the guarantors party thereto, and the other lenders party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed October 14, 2020.) Charles W. Hull consulting arrangementConsulting Arrangement (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed on July 29, 2010.)10.8*10.910.10*10.11*10.12*10.13*10.14*10.15*10.16*10.17*10.18*10.19*10.20*10.21*5110.22*10.23*10.24*10.25*10.26*10.27*10.28*10.29*10.30*3D Systems Corporation Change of Control Severance Policy (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed February 23, 2018.) Employment Agreement, dated May 11, 2020, between 3D Systems Corporation and Dr. Jeffrey A. Graves (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 14, 2020.) Employment Agreement, dated August 4, 2016,21, 2020, between 3D Systems Corporation and Jagtar Narula (Incorporated by reference to Exhibit 10.1 to the Restricted Stock PurchaseRegistrant’s Current Report on Form 8-K filed August 26, 2020.)Employment Agreement, dated November 17, 2014,21, 2016, between 3D Systems Corporation and Menno Ellis (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.)Employment Agreement, dated October 1, 2020, between 3D Systems Corporation and Reji Puthenveetil (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.) Amendment No. 1 to the Employment Agreement, dated February 22, 2021, between 3D Systems Corporation and Reji Puthenveetil. (Incorporated by reference to Exhibit 10.30 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on May 5, 2021.) Consulting Agreement, dated October 1, 2020, between 3D Systems Corporation and Reji Puthenveetil (Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020.) Amended and Restated Employment Agreement, dated January 1, 2021, between 3D Systems Corporation and Jeff Blank. (Incorporated by reference to Exhibit 10.32 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on May 5, 2021.) Employment Agreement, dated June 28, 2021, between 3D Systems Corporation and David K. Leigh. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed August 9, 2021.) 44Employment Agreement, dated August 30, 2021, by and between 3D Systems Corporation and Charles W. Hull.Phyllis Nordstrom. (Incorporated by reference to Exhibit 10.310.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed November 8, 2021.)Equity Distribution Agreement, dated August 5, 2020, by and among 3D Systems Corporation and Truist Securities, Inc. and HSBC Securities (USA) Inc. (Incorporated by reference to Exhibit 1.1 of Registrant’s Current Report on Form 8-K filed on August 8, 2016.5, 2020.)10.31*21.123.131.1†1, 2022. 31.2†1, 2022. 32.1†1, 2022. 32.2†1, 2022. 101.INS101.SCH52101.CAL101.CAL† 101.DEF101.LAB101.PRE104 Cover Page Interactive Data File - this data file does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document. *Management contract or compensatory plan or arrangement† Exhibits filed herein. All exhibits not so designated are incorporated by reference to a prior filing, as indicated.Item 16. Form 10-K SummaryNone.5345Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized.By: /s/ DR. JEFFREY A. GRAVES By:/s/ VYOMESH I. JOSHIVyomesh I. JoshiPresident and Director14, 2018Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of registrant and in the capacities and on the dates indicated. VYOMESH I. JOSHIVyomesh I. JoshiMarch 1, 2022 Dr. Jeffrey A. Graves (principal executive officer) March 14, 2018JOHN N. MCMULLEN14, 2018John N. McMullenand accounting officer)14, 2018Senior Vice President, Chief Accounting Officer March 1, 2022 Michael Crimmins (principal accounting officer) /s/ CHARLES G. WALTER LOEWENBAUM, IIMCCLURE, JR14, 2018Walter Loewenbaum, IIDirector March 1, 2022 Malissia R. Clinton /s/ WILLIAM E. CURRAN Director March 1, 2022 William E. Curran /s/ CLAUDIA N. DRAYTON Director March 1, 2022 Claudia N. Drayton /s/ THOMAS W. ERICKSON Director March 1, 2022 Thomas W. Erickson /s/ WILLIAM D. HUMES Director March 1, 2022 William D. Humes /s/ JIM D. KEVER 14, 201814, 2018CHARLES G. MCCLURE, JR14, 2018Charles G. McClure, Jr./s/ WILLIAM E. CURRANDirectorMarch 14, 2018William E. Curran14, 2018/s/ WILLIAM D. HUMESDirectorMarch 14, 2018William D. Humes14, 2018/s/ THOMAS W. ERICKSONDirectorMarch 14, 2018Thomas W. Erickson54463D Systems CorporationIndex to Consolidated Financial Statementsand Consolidated Financial Statement ScheduleReport of Independent Registered Public Accounting Firm(BDO USA, LLP; Charlotte, NC; PCAOB ID#243)F-2F-4F-5F-6F-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015F-8F-9F-1F-1REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the StockholdersReport of Independent Registered Public Accounting FirmReport of Independent Registered Public Accounting FirmShareholders and Board of Directors3D Systems CorporationRock Hill, South CarolinaOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of 3D Systems Corporation (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2022 expressed an adverse opinion thereon.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.Revenue from Collaboration and Licensing AgreementsAs described in Note 5 to the consolidated financial statements, the Company recognizes revenue when control of the promised products or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company recognized approximately $6.8 million related to collaboration arrangements with customers for the year ended December 31, 2021. The nature of the activities performed, and consideration exchanged through the Company’s collaborative agreements, varies such that certain agreements meet the definition of customer relationships for which revenue is recorded, while others do not meet this definition. The Company’s collaborativeF-2revenue contracts may contain multiple performance obligations and may contain fees for licensing, research and development services, contingent milestone payments upon achievement of developmental contractual criteria, and/or royalty fees based on the licensees' product revenue.We identified revenue recognition from collaborative agreements with customers as a critical audit matter. Management makes significant judgments in identifying customer relationships and in determining revenue recognition for its collaborative agreements with customers, including the evaluation of distinct performance obligations, the identification and evaluation of material rights, the estimation of variable consideration, and the determination of the pattern of transfer of control for each distinct performance obligation. Auditing management’s judgments and estimates required significant audit effort and auditor subjectivity and in addition, as described in the “Opinion on Internal Control over Financial Reporting” section above, a material weakness was identified that encompasses this matter.The primary procedures we performed to address this critical audit matter included:•Assessing the completeness of collaboration arrangements that require assessment for proper accounting treatment by inspecting Company press releases, Committee meeting minutes, and credits within Research & Development expense general ledger accounts.•Evaluating the reasonableness of management’s judgments to determine whether customer relationships exist in its collaborative arrangements.•Examining a sample of revenue contracts and other source documents to test management's identification of significant terms for completeness and assessing the appropriateness of the treatment for such terms, including the identification of distinct performance obligations, material rights, and variable consideration.•Evaluating the reasonableness of management’s judgments and estimates to calculate variable consideration, and the timing of recognizing the related revenue subject to any constraints.•Evaluating the appropriateness of management’s determination of whether identified performance obligations meet the criteria for over-time revenue recognition.•Evaluating the appropriateness of the method used to recognize revenue and testing the relevant inputs and assumptions to the revenue recognition calculations.We have served as the Company's auditor since 2003./s/ BDO USA, LLPCharlotte, North CarolinaMarch 1, 2022F-3Report of Independent Registered Public Accounting FirmReport of Independent Registered Public Accounting FirmShareholders and Board of Directors3D Systems CorporationRock Hill, South CarolinaOpinion on Internal Control over Financial ReportingWe have audited 3D Systems Corporation and its subsidiaries’System Corporation’s (the “Company’s”) internal control over financial reporting as of December 31, 2017,2021, based on criteria established in Internal Control – Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria���criteria”). In our opinion, the Company maintained,did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2017,2021, based on the COSO criteria.We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 20172021 and 2016,2020, the related consolidated statements of operations, and comprehensive loss,income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017,2021, and the related notes (collectively referred to as “the financial statements”) and our report dated March 14, 20181, 2022 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.As indicatedA material weakness is a deficiency, or a combination of deficiencies, in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting, did not include the internal controls of Vertex-Global Holding B.V, which was acquired on January 31, 2017, and whichsuch that there is included in the consolidated balance sheetsa reasonable possibility that a material misstatement of the Companycompany’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses regarding management’s failure to design and subsidiaries asmaintain controls over the identification and review of December 31, 2017, andcontracts with financial accounting implications, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2017. Vertex-Global Holding B.V. constituted 5% of consolidated total assets, as of December 31, 2017, and less than 1% of consolidated net loss, for the year then ended December 31, 2017. Management did not assess the effectiveness of internal control over financial reporting and close process, and accounting for income taxes, including non-routine transactions have been identified and described in management’s assessment. These material weaknesses were considered in determining the nature, timing, and extent of Vertex-Global Holding B.V. becauseaudit tests applied in our audit of the timing of the acquisition which was completed2021 financial statements, and this report does not affect our report dated March 1, 2022 on January 31, 2017. Our audit of internal control over those financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Vertex-Global Holding B.V.F-4Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.F-2/s/ BDO USA, LLPCharlotte, North CarolinaMarch 14, 20181, 2022F-3F-5REPORT3D SYSTEMS CORPORATIONCONSOLIDATED BALANCE SHEETS(In thousands, except par value) December 31, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 789,657 $ 75,010 Accounts receivable, net of reserves — $2,445 and $4,392 106,540 114,254 Inventories 92,887 116,667 Prepaid expenses and other current assets 42,653 33,145 Current assets held for sale — 18,439 Total current assets 1,031,737 357,515 Property and equipment, net 57,257 75,356 Intangible assets, net 45,835 28,083 Goodwill 345,588 161,765 Right of use assets 46,356 48,620 Deferred income tax asset 5,054 6,247 Assets held for sale — 31,684 Other assets 17,272 23,785 Total assets $ 1,549,099 $ 733,055 LIABILITIES AND EQUITY Current liabilities: Current portion of long term debt $ — $ 2,051 Current right of use liabilities 8,344 9,534 Accounts payable 57,366 45,174 Accrued and other liabilities 76,994 69,812 Customer deposits 7,281 7,750 Deferred revenue 28,027 30,302 Current liabilities held for sale — 11,107 Total current liabilities 178,012 175,730 Long-term debt, net — 19,218 Convertible notes payable, net 446,859 — Long-term right of use liabilities 47,420 48,469 Deferred income tax liability 2,173 4,716 Liabilities held for sale — 2,952 Other liabilities 32,254 51,247 Total liabilities 706,718 302,332 Commitments and contingencies (Note 23) 0 0 Stockholders’ equity: Common stock, $0.001 par value, authorized 220,000 shares; issued 128,375 and 127,626 128 128 Additional paid-in capital 1,501,210 1,404,964 Treasury stock, at cost — 0 shares and 3,494 shares — (22,590) Accumulated deficit (621,251) (943,303) Accumulated other comprehensive loss (37,706) (8,476) Total stockholders’ equity 842,381 430,723 Total liabilities and stockholders’ equity $ 1,549,099 $ 733,055 See accompanying notes to consolidated financial statements.F-63D SYSTEMS CORPORATIONCONSOLIDATED STATEMENTSOFOPERATIONSYear Ended December 31, (in thousands, except per share amounts) 2021 2020 2019 Revenue: Products $ 428,742 $ 332,799 $ 389,337 Services 186,897 224,441 247,017 Total revenue 615,639 557,240 636,354 Cost of sales: Products 245,169 220,415 234,581 Services 106,692 113,450 121,232 Total cost of sales 351,861 333,865 355,813 Gross profit 263,778 223,375 280,541 Operating expenses: Selling, general and administrative 227,697 219,895 254,355 Research and development 69,150 74,143 83,290 Impairment of goodwill — 48,300 — Total operating expenses 296,847 342,338 337,645 Loss from operations (33,069) (118,963) (57,104) Interest and other income (expense), net 352,609 (24,447) (7,996) Income (loss) before income taxes 319,540 (143,410) (65,100) Benefit (provision) for income taxes 2,512 (6,184) (4,532) Net income (loss) 322,052 (149,594) (69,632) Less: net income attributable to noncontrolling interests — — 248 Net income (loss) attributable to 3D Systems Corporation $ 322,052 $ (149,594) $ (69,880) Net income (loss) per share available to 3D Systems Corporation common stockholders Basic $ 2.62 $ (1.27) $ (0.61) Diluted $ 2.55 $ 1.27 $ (0.61) See accompanying notes to consolidated financial statements.F-73D SYSTEMS CORPORATIONCONSOLIDATED STATEMENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the StockholdersCOMPREHENSIVE INCOME (LOSS)Year Ended December 31, (in thousands, except per share amounts) 2021 2020 2019 Net income (loss) $ 322,052 $ (149,594) $ (69,632) Other comprehensive income (loss), net of taxes: Pension adjustments 682 783 (1,060) Derivative financial instruments 721 (403) (318) Foreign currency translation (39,546) 28,752 2,996 Foreign currency translation reclassification - sales of Cimatron and Simbionix 8,912 — — Total other comprehensive (loss) income, net of taxes: (29,231) 29,132 1,618 Total comprehensive income (loss), net of taxes 292,821 (120,462) (68,014) Comprehensive income attributable to noncontrolling interests — — 191 Comprehensive income (loss) attributable to 3D Systems Corporation $ 292,821 $ (120,462) $ (68,205) See accompanying notes to consolidated financial statements.F-83D SYSTEMS CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
customerYear Ended December 31, (in thousands) 2021 2020 2019 Cash flows from operating activities: Net income (loss) $ 322,052 $ (149,594) $ (69,632) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 34,623 44,595 50,396 Stock-based compensation 55,153 17,725 23,587 Provision for inventory obsolescence and revaluation (2,909) 12,373 — Loss on hedge accounting de-designation and termination 721 1,235 — Provision for bad debts 232 457 1,308 (Gain) Loss on the disposition of businesses, property, equipment and other assets (350,846) 5,274 2,282 Provision for deferred income taxes and reserve adjustments (11,679) (1,206) (3,354) Impairment of goodwill and assets 1,676 55,484 1,728 Changes in operating accounts: Accounts receivable (11,912) (6,052) 15,071 Inventories 7,866 (9,901) 18,447 Prepaid expenses and other current assets (8,106) (16,218) 9,150 Accounts payable 27,159 (6,653) (16,846) Deferred revenue and customer deposits (3,325) 3,231 677 Accrued and other liabilities (12,389) 28,286 (1,346) All other operating activities (169) 843 113 Net cash provided by (used in) operating activities 48,147 (20,121) 31,581 Cash flows from investing activities: Purchases of property and equipment (18,791) (13,643) (23,985) Proceeds from sale of assets and businesses, net of cash 421,485 1,554 1,620 Business acquisitions, net of cash acquired (139,685) — — Other investing activities (2,454) 356 (2,007) Net cash provided by (used in) investing activities 260,555 (11,733) (24,372) Cash flows from financing activities: Proceeds from revolving credit facilities — 20,000 — Payments on revolving credit facilities — (20,000) — Proceeds from borrowings 460,000 — 100,000 Debt issuance costs (13,466) — — Repayment of borrowings/long-term debt (21,392) (26,840) (76,768) Proceeds from issuance of common stock — 24,702 — Purchase of noncontrolling interests (6,300) (12,500) (2,500) Payments related to net-share settlement of stock-based compensation (12,619) (5,138) (3,194) Other financing activities (423) 296 (1,338) Net cash provided by (used in) financing activities 405,800 (19,480) 16,200 Effect of exchange rate changes on cash, cash equivalents and restricted cash (9,243) 1,428 289 Net increase (decrease) in cash, cash equivalents and restricted cash 705,259 (49,906) 23,698 Cash, cash equivalents and restricted cash at the beginning of the year a84,711 134,617 110,919 Cash, cash equivalents and restricted cash at the end of the year a$ 789,970 $ 84,711 $ 134,617 Supplemental cash flow information Lease assets obtained in exchange for new lease liabilities (excludes adoption) $ 4,502 $ 23,309 $ 8,662 Cash interest payments 1,138 2,109 3,715 Cash income tax payments (receipts), net 4,709 3,706 10,722 Transfer of equipment from inventory to property and equipment, net b1,738 1,055 3,187 Transfer of equipment to inventory from property and equipment, net c— — 32 Stock issued for acquisition 99,044 — — Noncash financing activity Purchase of noncontrolling interest d$ — $ — (11,000) F-9(a)The amounts for cash and Boardcash equivalents shown above include restricted cash of Directors of3D Systems CorporationRock Hill, South CarolinaOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of 3D Systems Corporation$313, $540 and its subsidiaries (the “Company”)$921 as of December 31, 20172021, 2020 and 2016, the related consolidated statements of operations2019, respectively, which were included in Other assets, net, and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting$9,161 as of December 31, 2017, based on criteria established2020, which was included in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 14, 2018 expressed an unqualified opinion thereon.BasisCurrent assets held for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuressale in the consolidated financial statements. Our audits also included evaluating the accounting principlesbalance sheets.(b)Inventory is transferred from inventory to property and equipment at cost when we require additional machines for training or demonstration or for placement into on demand manufacturing services locations.(c)In general, an asset is transferred from Property and equipment, net, into inventory at its net book value when we have identified a potential sale for a used machine.(d)Purchase of noncontrolling interest to be paid in installments over a four-year period recorded to Accrued and significant estimates made by management, as well as evaluating the overall presentation ofother liabilities and Other liabilities on the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ BDO USA, LLPWe have served as the Company's auditor since 2003.Charlotte, North CarolinaMarch 14, 2018F-43D Systems CorporationConsolidated Balance Sheetsas of December 31, 2017 and 2016136,344 184,947 129,879 127,114 103,903 103,331 50,000 18,296 17,558 438,422 432,950 97,521 79,978 98,783 121,501 230,882 181,230 4,020 8,123 27,136 25,371 896,764 849,153 644 572 55,607 40,514 65,899 55,187 50,000 5,765 5,857 29,214 28,275 207,129 130,405 7,078 7,587 8,983 17,601 48,754 57,988 271,944 213,581 8,872 8,872 115 115 1,326,250 1,307,428 (8,203) (2,658) (677,772) (621,787) (21,536) (53,225) 618,854 629,873 (2,906) (3,173) 615,948 626,700 896,764 849,153 Consolidated Financial Statements.F-5F-103D Systems CorporationConsolidated Statements of Operations and Comprehensive Loss 2017, 20162021, 2020 and 20152019379,126 380,383 408,119 266,943 252,582 258,044 646,069 632,965 666,163 203,527 195,428 243,639 137,703 127,786 130,715 341,230 323,214 374,354 304,839 309,751 291,809 264,185 259,776 303,784 94,627 88,395 92,770 537,179 358,812 348,171 933,733 (53,973) (38,420) (641,924) (3,548) (1,392) (13,029) (57,521) (39,812) (654,953) 7,802 (547) 8,972 (65,323) (39,265) (663,925) 868 (846) (8,433) (66,191) (38,419) (655,492) (0.59) (0.35) (5.85) 220 (902) 338 288 31,728 (12,958) (16,300) 31,948 (13,572) (15,962) 259 105 (820) 31,689 (13,677) (15,142) (33,375) (52,837) (679,887) 1,127 (741) (9,253) (34,502) (52,096) (670,634) Common Stock (in thousands, except par value) Shares Par Value $0.001 Additional Paid In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total 3D Systems Corporation Stockholders' Equity Equity Attributable to Noncontrolling Interests Total Stockholders' Equity December 31, 2018 118,650 $ 117 $ 1,355,503 $ (15,572) $ (722,701) $ (38,978) $ 578,369 $ (2,382) $ 575,987 Issuance (repurchase) of stock 2,616 3 — (3,197) — — (3,194) — (3,194) Acquisition of non-controlling interest — — (7,526) — — 256 (7,270) (6,072) (13,342) Adjustment of RNCI carrying value — — — — (1,128) — (1,128) — (1,128) Stock-based compensation expense — — 23,587 — — — 23,587 — 23,587 Net (loss) — — — — (69,880) — (69,880) 248 (69,632) Pension adjustment — — — — — (1,060) (1,060) — (1,060) Derivative financial instrument adjustment — — — — (318) (318) — (318) Foreign currency translation adjustment — — — — — 3,053 3,053 (57) 2,996 December 31, 2019 121,266 120 1,371,564 (18,769) (793,709) (37,047) 522,159 (8,263) 513,896 Issuance (repurchase) of stock 6,360 8 23,377 (3,821) — — 19,564 — 19,564 Acquisition of non-controlling interest — — (7,702) — — (561) (8,263) 8,263 — Stock-based compensation expense — — 17,725 — — — 17,725 — 17,725 Net (loss) — — — — (149,594) — (149,594) — (149,594) Pension adjustment — — — — — 783 783 — 783 Derivative financial instrument adjustment — — — — — (1,638) (1,638) — (1,638) De-designation of derivative instrument — — — — — 1,235 1,235 — 1,235 Foreign currency translation adjustment — — — — — 28,752 28,752 — 28,752 December 31, 2020 127,626 128 1,404,964 (22,590) (943,303) (8,476) 430,723 — 430,723 Issuance (repurchase) of stock 813 — (12,620) — — — (12,620) — (12,620) Shares issued to acquire assets and businesses 3,430 3 99,041 — — — 99,044 — 99,044 Stock-based compensation expense — — 32,412 — — — 32,412 — 32,412 Net income — — — — 322,052 — 322,052 — 322,052 Pension adjustment — — — — — 181 181 — 181 Gain on pension plan - unrealized — — — — — 501 501 — 501 De-designation of derivative instrument — — — — — 721 721 — 721 Retirement of treasury shares (3,494) (3) (22,587) 22,590 — — — — — Foreign currency translation adjustment — — — — — (30,633) (30,633) — (30,633) December 31, 2021 128,375 $ 128 $ 1,501,210 $ — $ (621,251) $ (37,706) $ 842,381 $ — $ 842,381 See accompanying notes to Consolidated Financial Statements.consolidated financial statements.F-6F-113D Systems CorporationConsolidated Statements of Stockholders’ EquityYears Ended December 31, 2017, 2016 and 2015112,233 112 1,245,462 709 (374) 72,124 (24,406) 1,292,918 1,207 1,294,125 (1,243) (1,243) (1,243) 882 1 786 183 (652) 135 135 34,733 34,733 34,733 (655,492) (655,492) (8,433) (663,925) 6,783 6,783 338 338 338 (15,480) (15,480) (820) (16,300) 113,115 113 1,279,738 892 (1,026) (583,368) (39,548) 655,909 (1,263) 654,646 1,998 2 (1,241) 606 (1,632) (2,871) (2,871) (2,364) (2,364) (1,169) (3,533) 31,295 31,295 31,295 (38,419) (38,419) (846) (39,265) (902) (902) (902) 288 288 288 (13,063) (13,063) 105 (12,958) 115,113 115 1,307,428 1,498 (2,658) (621,787) (53,225) 629,873 (3,173) 626,700 1,720 721 (5,545) (5,545) (5,545) 192 3,208 3,208 3,208 (1,440) 50 (1,390) (860) (2,250) (10,206) 10,206 27,260 27,260 27,260 (66,191) (66,191) 868 (65,323) 220 220 220 31,419 31,419 259 31,678 117,025 115 1,326,250 2,219 (8,203) (677,772) (21,536) 618,854 (2,906) 615,948 See accompanying notes to Consolidated Financial StatementsF-73D Systems CorporationConsolidated Statements of Cash FlowsYears Ended December 31, 2017, 2016 and 2015(65,323) (39,265) (663,925)
operating activities:62,041 60,535 83,069 27,260 31,295 34,733 12,883 11,053 21,550 2,427 8,618 544,611 1,051 1,552 3,766 11,282 (5,567) (6,566) (2,875) 1,465 (43) 3,987 26,255 20,534 (17,716) (20,656) (37,216) (49,834) (3,895) 16,900 12,448 (4,975) (20,049) 50,209 (7,670) (10,320) (7,925) (265) (4,848) 25,941 57,481 (2,831) (34,291) (91,799) (30,881) (16,567) (22,399) (1,159) (1,132) (907) 273 350 (2,250) (3,533) (2,351) (1,000) (5,750) (70,659) (21,882) (120,855) (5,545) (2,871) (1,108) (3,206) (437) (1,055) (1,049) (9,188) (3,926) (2,157) 5,303 (2,369) (3,376) (48,603) 29,304 (129,219) 184,947 155,643 284,862 136,344 184,947 155,643 503 839 707 6,339 11,045 12,512 9,881 12,493 9,902 378 1,102 2,764 3,208 (a)Inventory is transferred from inventory to property and equipment at cost when the Company requires additional machines for training or demonstration or for placement into on demand manufacturing services locations.(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.See accompanying notes to Consolidated Financial Statements.F-8Note 1(1) Basis of PresentationThe Consolidated Financial Statementsconsolidated financial statements include the accounts of 3D Systems Corporation and all majority-ownedmajority and wholly-owned subsidiaries and entities in which a controlling interest is maintained (the(“3D Systems” or the “Company” or “we” or “us”). A non-controlling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent. The Company includesWe include noncontrolling interests as a component of total equity in the Consolidated Balance Sheetsconsolidated balance sheets and the net income (loss) attributable to noncontrolling interests areis presented as an adjustment from net lossincome (loss) used to arrive at net lossincome (loss) attributable to 3D Systems Corporation in the consolidated statements of operations and comprehensive loss. The Company’sincome (loss). Our annual reporting period is the calendar year.The Consolidated Financial Statementsconsolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation.Our top priority is the health and safety of our employees and their families and communities, as we continue to manage our business through the COVID-19 pandemic. Throughout this past year, our leadership regularly reviewed and adapted our COVID-19 protocols based on evolving research and guidance. We have reopened our offices and begun business travel, with safety measures in place and in accordance with local guidance. Additionally, we implemented a hybrid-work program globally, providing more flexibility for employees to work remotely. We continue to monitor local transmission rates and regulatory guidance, and remain committed to protecting our employees, delivering for our customers, and supporting our communities. We are subject to vaccination and workplace safety protocols of the United States Federal Government Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors, and the COVID-19 Workplace Safety Guidance for Federal Contractors and Subcontractors issued by the Safer Federal Workforce Task Force. In support of a safe work environment, we have a vaccine policy for our U.S. employees, and a visitor policy to ensure those visiting our sites are taking the necessary health and safety precautions.Our operations in North America and South America (collectively referred to as "Americas"), Europe and the Middle East (collectively referred to as "EMEA") and the Asia Pacific and Oceania regions (collectively referred to as "APAC") expose us to risks associated with public health crises and epidemics/pandemics, such as the COVID-19 pandemic. While the COVID-19 pandemic continued to impact our reported results for the years ended December 31, 2021 and 2020, we are unable to predict the longer-term impact that the pandemic may have on our business, results of operations, financial position or cash flows. The extent to which our operations may be impacted by the dynamic nature of the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including the severity or resurgence of the outbreak and actions by government authorities to contain the outbreak or treat its impact. Furthermore, the impacts of uncertain global economic conditions, further supply chain disruptions, including the shortages of critical components, and the continued disruptions to, and volatility in, the financial markets remain unknown.As of January 1, 2021, we determined the Company has 2 reportable segments, Healthcare and Industrial. The Company previously only reported its consolidated results in 1 segment. This change in segment reporting as of January 1, 2021 was the result of changes to how the chief operating decision maker (“CODM”) assesses the financial performance of the Company and in the decision-making process driving future operating performance. As a result of this re-segmentation, the Company performed a quantitative analysis for potential impairment of our goodwill immediately following the re-segmentation, noting that we determined the fair value of the Healthcare and Industrial reporting segments exceeded their carrying values. See Note 6.Fair value was determined using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value, and a market approach. The valuation methodology and underlying financial information included in the Company's determination of fair value required significant judgments by management. The principal assumptions used in the Company's discounted cash flow analysis consisted of (a) the long-term projections of future financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the risk attributable to the Company and the industry in which it operates. Under the market approach, the principal assumption included an estimate of multiples of various financial metrics of comparable companies.All dollar and share amounts presented in the accompanying footnotes are presented in thousands, except for per share information.Note 2F-12During the first quarter ended March 31, 2021 we became aware that certain amounts previously presented within our statements of operations as products cost of sales related to services cost of sales. We note that the total cost of sales line item was not affected. We further note that this error did not affect our gross profit, loss from operations, net income (loss), consolidated balance sheets or statements of cash flows. We evaluated the materiality of this presentation-only error and concluded it was not material to any previously reported quarter or year-end financial statement. The following schedule depicts the effect on our previously reported statements of operations.Year Ended December 31, 2020 (in thousands) As reported Change Revised Cost of sales: Products $ 227,681 $ (7,266) $ 220,415 Services 106,184 7,266 113,450 Total cost of sales $ 333,865 $ — $ 333,865 Revision of Previously Issued Financial StatementsDuring the fourth quarter ended December 31, 2021, we became aware that certain amounts previously presented as investing cash outflows should be reported as financing cash outflows within the statements of cash flows. The error affected the previously issued statements of cash flows for the three, six and nine month periods within the December 31, 2021 and 2020 annual periods as well as the annual periods ended December 31, 2020 and 2019. We note that this change did not impact the as reported net increase (decrease) in cash, cash equivalents and restricted cash within the annual 2020 and 2019 statements of cash flows or the interim statements of cash flows for the years ended December 31, 2021 and 2020. We further note that this reclassification did not affect our balance sheet, statements of operations, statements of comprehensive income (loss) and statements of stockholders' equity. We evaluated the materiality, including both quantitative and qualitative considerations, of this presentation-only error and concluded it was not material to any previously reported quarter or year-end financial statement. The following schedule depicts the effect on our previously reported interim and annual statements of cash flows.Year Ended December 31, 2020 Year Ended December 31, 2019 As Reported Changed Revised As Reported Changed Revised Net cash provided by (used in) operating activities $ (20,121) $ — $ (20,121) $ 31,581 $ — $ 31,581 Net cash provided by (used in) investing activities (24,233) 12,500 (11,733) (26,872) 2,500 (24,372) Net cash provided by (used in) financing activities (6,980) (12,500) (19,480) 18,700 (2,500) 16,200 Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,428 — 1,428 289 — 289 Net increase (decrease) in cash, cash equivalents and restricted cash $ (49,906) $ — $ (49,906) $ 23,698 $ — $ 23,698 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 As Reported Changed Revised As Reported Changed Revised Net cash provided by (used in) operating activities $ 62,652 $ — $ 62,652 $ (32,649) $ — $ (32,649) Net cash (used in) investing activities 395,641 4,000 399,641 (22,459) 12,500 (9,959) Net cash provided by (used in) financing activities (32,202) (4,000) (36,202) (3,773) (12,500) (16,273) Effect of exchange rate changes on cash, cash equivalents and restricted cash (7,737) — (7,737) 526 — 526 Net increase (decrease) in cash, cash equivalents and restricted cash $ 418,354 $ — $ 418,354 $ (58,355) $ — $ (58,355) F-13Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 As Reported Changed Revised As Reported Changed Revised Net cash provided by (used in) operating activities $ 41,976 $ — $ 41,976 $ (21,018) $ — $ (21,018) Net cash (used in) investing activities 31,325 4,000 35,325 (19,584) 12,500 (7,084) Net cash provided by (used in) financing activities (28,444) (4,000) (32,444) (27,270) (12,500) (39,770) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,902 — 2,902 (1,856) — (1,856) Net increase (decrease) in cash, cash equivalents and restricted cash $ 47,759 $ — $ 47,759 $ (69,728) $ — $ (69,728) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 As Reported Changed Revised As Reported Changed Revised Net cash provided by (used in) operating activities $ 28,453 $ — $ 28,453 $ (2,285) $ — $ (2,285) Net cash (used in) investing activities 46,563 4,000 50,563 (16,598) 12,500 (4,098) Net cash provided by (used in) financing activities (24,337) (4,000) (28,337) 1,229 (12,500) (11,271) Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,434) — (2,434) (3,241) — (3,241) Net increase (decrease) in cash, cash equivalents and restricted cash $ 48,245 $ — $ 48,245 $ (20,895) $ — $ (20,895) (2) Significant Accounting PoliciesUse of EstimatesThe preparation of financial statements in conformity with GAAP requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases itsWe base our estimates on historical experience, currently available information and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from these estimates.Revenue RecognitionNetWe account for revenue is derived primarilyin accordance with Accounting Standard Codification ("ASC") Topic 606, “Revenue from the sale of products and services. The followingContracts with Customers.” Collaborative revenue recognition policies define the mannercontracts in which the Company accounts for sales transactions.The Company recognizes revenue when persuasive evidencecollaboration partner meets the definition of a sale arrangement exists, delivery has occurred or servicescustomer are rendered, the sales price or fee is fixed or determinable and collectability is reasonably assured. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. The Company sells its products through its direct sales force and through authorized reseller partners. The Company recognizes revenue on sales to reseller partners at the time of sale, when the partner has economic substance apart from Company and the Company has completed its obligations related to the sale.The Company enters into sales arrangements that may provide for multiple deliverables to a customer. Sales of printers may include ancillary equipment, materials, a warranty on the equipment, training and installation. The Company identifies all goods and/or services that are to be delivered separately under a sales arrangement and allocates revenue to each deliverable based on either vendor-specific objective evidence (“VSOE”); or if VSOE is not determinable, then the Company uses best estimated selling price (“BESP”) of each deliverable. The Company established VSOE of selling price using the price charged for a deliverable when sold separately. The objective of BESP is to determine the price at which the Company would transact a sale if the deliverable was sold regularly on a stand-alone basis. The Company considers multiple factors including, but not limited to, market conditions, geographies, competitive landscapes, and entity-specific factors such as internal costs, gross margin objectives and pricing practices when estimating BESP. Consideration in a multiple element arrangement is then allocated to the elements on a relative sales value basis using either VSOE or BESP for all the elements. The Company also evaluates the impact of undelivered items on the functionality of delivered items for each sales transaction and, where appropriate, defers revenue on delivered items when that functionality has been affected. Functionality is determined to be met if the delivered products or services represent a separate earnings process.HardwareUnder the Company’s standard terms and conditions of sale, title and risk of loss transfer to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. In instances in which significant obligations remain, the Company defers the estimated revenue associated with post-sale obligations that are not essential to the functionality of the delivered items, and recognizes revenue in the future as the conditions for revenue recognition are met.F-9SoftwareThe Company also markets and sells software tools that enable our customers to capture and customize content using our printers, as well as reverse engineering and inspection software. The software does not require significant modification or customization. The Company applies the guidance in ASC 985-605, Software-Revenue Recognition in recognizing revenue when software is more than incidental to the product or service as a whole based on fair value using vendor-specific objective evidence. Revenue from perpetual software licenses is recognized either upon delivery of the product or delivery of a key code which allows the customer to access the software. In instances where software access is provided for a trial period, revenue is not recognized until the expiration of the trial period and the customer has purchased the software. The Company uses the residual method to allocate revenue to software licenses at the inception of the license term when VSOE of fair value for all undelivered elements, such as maintenance, exists and all other revenue recognition criteria have been satisfied. In instances in which customers purchase post sale support, it is considered a separate element from the software and is deferred at the time of sale and subsequently amortized in future periods.The Company also sells equipment with embedded software to its customers. The embedded software is not sold separately, it is not a significant focus of the marketing effort and the Company does not provide post-contract customer support specific to the software or incur significant costs that are within the scope of ASC 985. Additionally, the functionality that the software provides is marketed as part of the overall product. The software embedded in the equipment is incidental to the equipment as a whole such that ASC 985 is not applicable. Sales of these products are recognizedrecorded in accordance with ASC 605-25, “Multiple-Element Arrangements.”ServicesPrinters and certain other products include a warranty under whichTopic 606, otherwise the Company provides maintenance for periods up to one year. The Company also offers training, installation and non-contract maintenance services for its products. Additionally, the Company offers extended warranties and maintenance contracts customers can purchase at their option. For initial product warranties, revenue is recognized and estimated costs are accrued at the time of the sale of the product. These cost estimates are established using historical information on the nature, frequency and average cost of claims for each type of printer or other product as well as assumptions about future activity and events. Revisions to expense accruals are made as necessary based on changes in these historical and future factors. For optional warranty or maintenance contracts, revenue is deferred at the time of sale based on the relative fair value of these services and costs are expensed as incurred. Deferred revenue is recognized ratably over the term of the warranty or maintenance period on a straight-line basis. Revenue from training, installation and non-contract maintenance services is recognized at the time of performance of the service.On demand manufacturing and healthcare service sales are included within services revenue and revenue is recognized upon shipment or delivery of the parts or performance of the service, based on the terms of the sales arrangement.Terms of saleShipping and handling costs billed to customers for equipment sales and sales of materials are included in product revenue in the Consolidated Statements of Operations and Other Comprehensive Loss. Costs incurred by the Company associated with shipping and handling are included in product cost of sales in the Consolidated Statements of Operations and Other Comprehensive Loss.Credit is extended, and creditworthiness is determined, based on an evaluation of each customer’s financial condition. New customers are generally required to complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness. Customers with a favorable profile may receive credit terms that differ from the Company’s general credit terms. Creditworthiness is considered, among other things, in evaluating the Company’s relationship with customers with past due balances.F-10The Company’s terms of sale generally require payment within 30 to 60 days after shipment of a product, although the Company also recognizes that longer payment periods are customary in some countries where it transacts business. To reduce credit risk in connection with printer sales, the Company may, depending upon the circumstances, require significant deposits prior to shipment and may retain a security interest in a system sold until fully paid. In some circumstances, the Company may require payment in full for its products prior to shipment and may require international customers to furnish letters of credit. For maintenance services, the Company either bills customers on a time-and-materials basis or sells customers service agreements thatcollaborative arrangements are recorded as deferred revenue and providein accordance with ASC 808 - "Collaborative Arrangements". See Note 5 for payment in advance on either an annual or other periodic basis.Cash and Cash EquivalentsCash and cash equivalents consist of cash and temporaryhighly liquid investments with maturities of three months or less when acquired.InvestmentsInvestments in non-consolidated affiliates (20-50 percent owned companies and joint ventures) are accounted for using the equity method. Investments through which we are not able to exercise significant influence over the investee and which we do not have readily determinable fair values are generally accounted for under the cost method.The Company assessesF-14We assess declines in the fair value of investments to determine whether such declines are other-than-temporary. Other-than-temporary impairments of investments are recorded to interest and other expense, net, in the period in which they become impaired.For the years ended December 31, 20172021 and 2016, the Company2020, we recorded impairment charges of $1,743$0 and $1,210,$2,361, respectively, related to certain cost-method investments. The aggregate carrying amount of all investments accounted for under the cost method totaled $8,263$5,632 and $9,116$5,016 at December 31, 20172021 and 2016,2020, respectively, and is included in other assets, net, on the Company’s Consolidated Balance Sheets.Accounts Receivable and AllowancesAllowance for Doubtful AccountsTrade accounts receivable are recorded at the invoiced amount and do not bear interest. In evaluating the collectability of accounts receivable, the Company assesseswe assess a number of factors, including specific customers’ ability to meet their financial obligations to us, the length of time receivables are past due and historical collection experience. Based on these assessments, the Companywe may record a reserve for specific customers, as well as a general reserve and allowance for returns and discounts. If circumstances related to specific customers change, or economic conditions deteriorate such that the Company’sour past collection experience is no longer relevant, itsour estimate of the recoverability of accounts receivable could be further reduced from the levels provided for in the Consolidated Financial Statements.The following presents the changes in the balance of our allowance for doubtful accounts:12,920 1,051 (3,713) 10,258 14,139 1,552 (2,771) 12,920 10,300 3,766 73 14,139 Year Ended Item Balance at beginning of year Additions charged to expense Other (a)Balance at end of year 2021 Allowance for doubtful accounts $ 4,392 $ 232 $ (2,179) $ 2,445 2020 Allowance for doubtful accounts 8,762 457 (4,827) 4,392 2019 Allowance for doubtful accounts 8,423 1,308 (969) 8,762 (a)Other includes the impact of subsequent collections or write-offs to the allowance for doubtful accounts.InventoriesInventories are stated at the lower of cost or net realizable value, with cost being determined usingstandard cost, which approximates the first-in, first-out method.Long-Lived Assets andGoodwillThe Company reviewsWe review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Recoverability is assessed asfor the carrying value of assets held for use based on a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived asset over its estimated fair value as determined by discounted projected cash flows. No impairment charges for intangible assets with finite lives were recorded for the years ended December 31, 20172021 and 2016. For the year ended December 31, 2015, the Company recorded non-cash impairment charges of $93,520 arising from the Company’s other intangible assets impairment testing.2020.F-11in the fourth quarteron November 30 of each year, and is tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level, with all goodwill assigned to a reporting unit.The test for goodwill impairment is a two-step process to first identify potential goodwill impairment for each reporting unit and then, if necessary, measure the amount of the impairment loss. Our reporting units are consistent with our geographies in Note 20.Healthcare and Industrial. We completed the required annual goodwill impairment test during the fourth quarteras of 2017.November 30, 2021. The first step of the goodwill impairment test comparescompared the fair value of each of our reporting unitsunit to itstheir carrying value. We estimateestimated the fair value of our reporting units based primarily on the discounted projected cash flows of the underlying operations.operations and a market approach. The estimated fair value for each of our reporting units was in excess of itstheir respective carrying values as of December 31, 2017.For the year ended December 31, 2015, the results of the first step of annual impairment testing indicated the carrying amount of goodwill assigned to the Americas and EMEA reporting units exceeded fair value. Based on these results, management completed the second step of annual impairment testing for the Americas and EMEA reporting units. Management determined that the fair value of goodwill assigned to the Americas was zero, resulting in a non-cash, non-tax deductible impairment charge of $382,271. Management determined that the carrying amount of the goodwill assigned to EMEA exceeded fair value by approximately 29%, resulting in a non-cash, non-tax deductible goodwill impairment charge of $61,388. November 30, 2021.For a summary of our goodwill by reporting unit and discussion of goodwill impairment, see Note 7.Redeemable Noncontrolling InterestsThe minority interest shareholders11.F-15Assets and Liabilities Held for SaleOnce management has committed to disposal of a certain subsidiary have the right in certain circumstances to require the Company to acquire either a portion of or all of the remaining ownership interests held by them. The owners’ ability to exercise any such “put option” right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise. In addition, these rights cannot be exercised prior to a specified exercise date. The exercise of these rights at their earliest contractual date would result in obligationscomponent of the Company and it is probable of being completed within one year, the assets and liabilities are reclassified as held for sale and net income continues to fund the related amounts in 2019.be reported as from continuing operations, unless it meets requirements to be reclassified as a discontinued operation. See Note 21.The Company has recorded the put option as mezzanine equity at their current estimated redemption amount. The Company accrues changes in the redemption amounts over the period from the date of issuance to the earliest redemption date of the put option. For the years ended December 31, 2017 and 2016, the balance of redeemable noncontrolling interests was $8,872. Changes in the estimated redemption amounts of the put options are adjusted at each reporting period with a corresponding adjustment to equity.ContingenciesThe Company followsWe follow the provisions of ASC 450, “Contingencies,” which requires that an estimated loss from a loss contingency be accrued by a charge to income if it is both probable that an asset has been impaired or that a liability has been incurred and that the amount of the loss can be reasonably estimated.Foreign Currency TranslationLocal currenciesThe local currency in which a subsidiary operates is generally are considered theits functional currenciescurrency for those subsidiaries domiciled outside the United States. Assets and liabilities for operations in local-currency environmentsnon-U.S. subsidiaries are translated to the USD at month-end exchange rates of the period reported. Income and expense items are translated atmonthly using the monthly average exchange rates of each applicable month.rate. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.For the Year Ended December 31, 2021, 2020, 2019 the aggregate foreign currency gain or (loss) was 1,681, (4,762), (2,287), respectively, and has been recorded as a component of interest and other income (expense) in the accompanying consolidated statements of operations.Derivative Financial InstrumentsThe Company isWe are exposed to market risk from changes in interest rates, and foreign currency exchange rates and commodity prices, which may adversely affect itsour results of operations and financial condition. The Company seeksWe seek to minimize these risks through regular operating and financing activities and, when the Company considerswe consider it to be appropriate, through the use of derivative financial instruments.The Company does We do not purchase, hold or sell derivative financial instruments for trading or speculative purposes. The Company has elected notWe may use derivative financial instruments to manage our exposure to changes in interest rates on outstanding debt instruments. For those instruments that qualify and where we elect to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, allrelated gains and losses (realized or unrealized) related to derivative instruments are recognized in accumulated other comprehensive income (loss) and are reclassified into earnings when the underlying transaction is recognized in net earnings and, depending on the fair value at the end of the reporting period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.We and our subsidiaries conduct business in various countries using both their functional currencies and other currencies to effect cross border transactions. As a result, we and our subsidiaries are subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement dates will result in a foreign exchange gain or loss. When practicable, we endeavor to match assets and liabilities in the same currency on our U.S. balance sheet and those of our subsidiaries in order to reduce these risks. If appropriate, we enter into foreign currency contracts to hedge the exposure arising from those transactions. See Note 15. For our hedges of foreign exchange rates and commodity prices, we have elected to not prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, changes in fair value are recognized in interest and other expense, net in the consolidated statements of operations and comprehensive loss and, depending on the fair value at the end of the reporting period, derivatives are recorded either in prepaid and other current assets or in accrued liabilities in the consolidated balance sheets.The Company and its subsidiaries conduct business in various countries using both their functional currencies and other currencies to effect cross border transactions. As a result, theyWe are subject to the risk that fluctuations in foreign exchange rates between the dates thatF-12those 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 U.S. balance sheet and those of its subsidiaries in order to reduce these risks. The Company, when it considers it to be appropriate, enters into foreign currency contracts to hedge the exposures arising from those transactions. See Note 10.The Company is exposed to credit risk if the counterparties to such transactions are unable to perform their obligations. However, the Company seekswe seek to minimize such risk by entering into transactions with counterparties that are believed to be creditworthy financial institutions.Research and Development CostsResearch and development costs are expensed as incurred.F-16Earnings (Loss) per ShareBasic earnings (loss) per share are calculated onusing the weighted-average number of common shares outstanding during each period. Diluted earnings per share are calculated using dilutive shares which include shares issuable upon exercise of outstanding stock options, andupon vesting of employee stock-based awards, upon the accrual of incentive compensation to be paid in shares, and to settle the portion of the convertible notes that may be settled in shares, where the conversion of such instruments would be dilutive. See Note 16.Advertising CostsAdvertising costs are expensed as incurred.incurred and recorded in Selling General & Administrative expenses. Advertising costs, including trade shows, were $13,683, $12,469$5,486, $7,561 and $15,245$13,732 for the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively.Pension costsThe Company sponsorsWe sponsor a retirement benefit for one of itsour non-U.S. subsidiaries in the form of a defined benefit pension plan. Accounting standards require the cost of providing this pension benefit be measured on an actuarial basis. Actuarial gains and losses resulting from both normal year-to-year changes in valuation assumptions and differences from actual experience are deferred and amortized. The application of these accounting standards requires managementrequire us to make assumptions and judgements that can significantly affect these measurements. CriticalOur critical assumptions made by management in performing these actuarial valuations include the selection of the discount rate to determine the present value of the pension obligations that affects the amount of pension expense recorded in any given period. Changes in the discount rate could have a material effect on the Company’sour reported pension obligations and related pension expense. See Note 15.Equity Compensation PlansThe Company recognizesWe recognize compensation expense for itsour stock-based compensation programs, which include stock options, restricted stock, restricted stock units (RSUs)(“RSU”), performance shares and performance shares. Formarket based awards. The fair value for service-based awards, stock-based compensation is estimated at the grant date based on the fair value of the awards expected to vest and recognized as expense ratably over the requisite service period of the award. For stock optionsThe fair value of performance-based awards are recognized on the grant date and expensed ratably over any implicit or explicit service period when the performance condition is deemed probable of achievement. Stock compensation recorded for performance shares is reversed if the performance condition is no longer deemed probable of achievement. The fair value for awards with market conditions compensation cost is determined atusing a Monte Carlo valuation model and is expensed ratably over any implicit or explicit service period regardless if the individual tranche level. The Company recognizesmarket condition is probable of achievement or not. Stock compensation expense is not reversed if the market condition is not met. We recognize forfeitures when they occur.Some RSUs are granted with a performance measure derived from non-GAAP-based management targets or non-financial targets. Depending on our performance with respect to these metrics, the number of RSUs earned may be less than, equal to or greater than the original number of RSUs awarded, subject to a payout range.Income TaxesThe CompanyWe and the majority of itsour domestic subsidiaries file a consolidated U.S. federal income tax return, while it has four of our domestic entities that file separate U.S. federal income tax returns. The Company’sOur non-U.S. subsidiaries file income tax returns in their respective jurisdictions. The Company provides for income taxes on those portions of its foreign subsidiaries’ accumulated earnings (deficit) that the Company believes are not reinvested permanently in their business.Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax benefit carryforwards. Deferred income tax liabilities and assets at the end of each period are determined using enacted tax rates.F-13The Company establishesWe establish a valuation allowance for those jurisdictions in which the expiration date of tax benefit carryforwards or projected taxable earnings leads the Companyus to conclude that it is “more likely than not” that a deferred tax asset will not be realized. The evaluation process includes the consideration of all available evidence regarding historical results and future projections including the estimated timing of reversals of existing taxable temporary differences and potential tax planning strategies. Once a valuation allowance is established, it is maintained until a change in factual circumstances gives rise to sufficient income of the appropriate character and timing that will allow a partial or full utilization of the deferred tax asset.F-17In accordance with ASC 740, “Income Taxes,” the impact of an uncertain tax position on the Company’sour income tax returns is recognized at the largest amount that is more likely than not to be required to be recognized upon audit by the relevant taxing authority.The Company includesWe include interest and penalties accrued in the Consolidated Financial Statementsconsolidated financial statements as a component of income tax expense.See Note 1922 for further discussion.Operating and Finance LeasesWe determine if an arrangement contains a lease at inception. Some leases include the options to purchase, terminate or extend for one or more years; these options are included in the Consolidated Financial Statements.Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of the future lease payments.Certain of our leases include variable costs. Variable costs include non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the ROU asset recorded on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated in the ROU asset balances recorded on the balance sheet result in variable expenses being recorded when these expenses are incurred during the lease term. See Note 7.Recent Accounting PronouncementsRecently Adopted Accounting StandardsIn October 2020, the FASB issued ASU 2021-08, "Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers", amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to “require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.” While primarily related to contract assets and contract liabilities that were accounted for by the acquiree in accordance with ASC 606, “the amendments also apply to contract assets and contract liabilities from other contracts to which the provisions of Topic 606 apply, such as contract liabilities from the sale of nonfinancial assets within the scope of Subtopic 610-20.” For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted. The Company expects to early adopt this standard in the first quarter of 2017, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-09, “Compensation – Stock Compensation (Topic 718), Improvements2022, and does not expect it to Employee Share-Based Payment Accounting”. The following summarizes the effectsbe material to results of the adoption:Forfeitures - Prior to adoption, share-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company no longer applies a forfeiture rate and instead accounts for forfeitures as they occur. The change was applied on a modified retrospective basis resulting in a cumulative effect adjustment to retained earnings of $10,206 as of January 1, 2017. Prior periods were not adjusted.Statement of Cash Flows - The Company historically accounted for excess tax benefits related to share-based compensation on the Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income taxoperations, cash flows as an operating activity. The Company has elected to adopt this portion of the standard on a prospective basis beginning in 2017. Prior periods were not adjusted.Income taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies related to share-based compensation are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Prior periods were not adjusted. The impact of adoption was not material to the Consolidated Statements of Earnings and Comprehensive Loss or Consolidated Statements of Cash Flows of the Company.Recently Issued Accounting StandardsIn August 2017,2020, the FASB issued ASU No. 2017-12, “2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20)," and "Derivatives and Hedging (Topic 815): Targeted Improvements- Contracts in Entity’s Own Equity (Subtopic 815-40)," which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible instruments. This guidance also eliminates the treasury stock method to Accountingcalculate diluted earnings per share for Hedging Activities” (“ASU 2017-12”), in order to create more transparency around how economic results are presented within bothconvertible instruments and requires the financial statements and inuse of the footnotes and to better align the results of cash flow and fair value hedge accounting with risk management activities. ASU 2017-12if-converted method. For public companies, this guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently in the process of evaluating when it will adopt ASU 2017-12 and its impact on its consolidated financial statements.In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”), in an effort to reduce diversity and clarify what constitutes a modification, as it relates to the change in terms or conditions of a share-based payment award. According to ASU 2017-09, the Company should account for the effects of a modification unless all of the following are met: (1) the fair value of the modified award is the same as the fair value the original award immediately before the original award is modified, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in ASU 2017-09 are effective for annual periods,2021 and interim periods within those annual periods, beginning after December 15, 2017, with earlyfiscal years. Early adoption is permitted. The Company will adopt ASU 2017-09 beginningearly adopted the standard as of January 1, 20182021 and does not expect the implementation ofapplied this guidance to the convertible senior notes issued in November 2021. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification 740, Income Taxes. It also clarifies certain aspects of the existing guidance to promote more consistent application. This standard is effective for calendar-year public business entities in 2021 and interim periods within that year, and early adoption is permitted. The Company adopted this guidance during the first quarter of 2021. The implementation did not have a material effect on its consolidatedour financial statements.position, results of operations or cash flows.F-14March 2017,June 2016, the FASB issued ASU No. 2017-07,2016-13, “Compensation – Retirement Benefits (Topic 715): Improving the PresentationMeasurement of Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostCredit Losses on Financial Instruments” (“ASU 2017-07”2016-13”), as revised in July 2018, which standardizesprovides guidance regarding the presentationmeasurement of credit losses for financial assets and certain otherF-18instruments that are not accounted for at fair value through net benefit costincome, including trade and other receivables, debt securities, net investment in sales type and direct financing leases, and off-balance sheet credit exposures. The new guidance requires companies to replace the income statementcurrent incurred loss impairment methodology with a methodology that measures all expected credit losses for financial assets based on historical experience, current conditions, and on the components eligible for capitalization in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods. The amendments in ASU 2017-07 should be applied retrospectively for the presentation of the service cost componentreasonable and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets.supportable forecasts. The Company will adopt ASU 2017-07 inadopted this guidance during the first quarter of 2018 and does2020. The implementation did not expect the implementation of this guidance to have a material effect on its consolidatedour financial statements.In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350):, Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductibletax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. The standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual impairment tests performed on testing dates after January 1, 2017. The Company is currently in the process of evaluating when it will adopt ASU 2017-04 and its impact on its consolidated financial statements.In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 permits the recognition of income tax consequences related to an intra-entity transfer of an asset other than inventory when the transfer occurs. It is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company adopted this standard forguidance during the year ended December 31, 2017 and itfirst quarter of 2020. The implementation did not have a material impacteffect on its consolidatedour financial statements.In August 2016,November 2018, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts2018-18, "Collaborative Arrangements (ASC 808), Clarifying the Interaction between ASC 808 and Cash Payments”ASC 606" (“ASU 2016-15”2018-18”). With the objective of reducing the existing diversity in practice,This ASU 2016-15 addresses the manner in which certain cash receipts and cash paymentsclarified when transactions between collaborative participants are presented and classified in the scope of ASC 606. The ASU also provides some guidance on presentation of transactions not in the scope of ASC 606. After adoption during the fourth quarter of 2020 the Company determined it was appropriate to recast the presentation of our previously reported statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017. The amendments should be applied retrospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company adopted this standardoperations for the yearyears ended December 31, 2017 and it2019. The Company acknowledges this standard should have been adopted January 1, 2020. The adoption of this standard did not have a material impact on its consolidated financial statements.In February 2016,change the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize assetsCompany's previously reported net loss or loss from operations for the years ended December 31, 2019 or any individual quarter therein and liabilities arising from operating leasesthe effect on the balance sheet. It is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Though still evaluating the impact of ASU 2016-02, the Company expects changes to its balance sheet due to the recognition of right-of-use assets and lease liabilities related to its real estate leases, but it does not anticipate material impacts to its results of operations or liquidity.In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customersindividual quarters in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded disclosures regarding revenue recognition. The FASB has also issued several updates to ASU that are intended to promote a more consistent interpretation and application of the principles outlined in the standard. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the present standards.The Company will adopt the new standard effective January 1, 2018, by recognizing the cumulative effect of initially applying the new standard, driven predominantly by the acceleration of timing of recognition related to certain promotional discounts, as an adjustment to the opening balance of retained earnings with an offsetting impact within current liabilities. Based on its comprehensive assessment of the new guidance, the Company does not currently expect the adjustment to have a material impact to retained earnings nor on net income on an ongoing basis. However, actual results may differ from the current estimates. In addition, the Company expects to make certain immaterial balance sheet reclassifications to align with the presentation requirements of the new standard. Results for reporting periods beginning after January 1, 2018 will be presented according to ASU 2014-09 while prior period amounts will not be adjusted and will continue to be reported in accordance with the Company’s historic accounting policies. Beginning in the first quarter of 2018, the Company plans to provide expanded revenue recognition disclosures based on the new qualitative and quantitative disclosure requirements of the standard.No other new accounting pronouncements, issued or effective during 2017,2021, have had or are expected to have a significant impact on the Company’sour consolidated financial statements.statements.F-15Note 3(3) Acquisitions2017 AcquisitionsOn January 31, 2017, the CompanyNovember 1, 2021, we acquired 100 percent of the shares of Vertex-Global Holding B.V.Oqton, Inc. (“Vertex”Oqton”), a provider of dental materials worldwide under the Vertex and NextDent brands. The fair value of the considerationfor $188,168, excluding customary closing adjustments. $107,471 paid for this acquisition, net of cash acquired, was $37,562, and consisted of cash and shares. The cash portion of the purchase price is included in cash paid for acquisitions, net of cash assumed, in the Consolidated Statement of Cash Flows. The share portion of the purchase price is included in issuance of stock for acquisitions in the Consolidated Statement of Equity. The operating results of Vertex have been included in the Company’s reported results since the closing date. The purchase price of the acquisition has been allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.2016 AcquisitionsNo acquisitions were made by the Company for the year ended December 31, 2016.2015 Acquisitions On February 9, 2015, the Company acquired 100 percent of the outstanding shares and voting rights of Cimatron Ltd. (“Cimatron”), a provider of integrated 3D CAD/CAM software and solutions for manufacturing. The fair value of the consideration paid for this acquisition, net of cash acquired, was $77,984, all of which was paid in cash. The operations of Cimatron have been integrated into the Company’s products and service revenues. 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 2015 acquisitions.On April 2, 2015, the Company acquired 65 percent of the equity interests in Wuxi Easyway Model Design and Manufacture Co. Ltd. (“Easyway”), a manufacturing service bureau and distributor of 3D printing and scanning products in China. The fair value of the consideration paid for this acquisition, net of cash acquired, was $11,265, all of which was paid in cash. Under the terms of the agreement, the Company has an option to acquire the remainder of the equity interests in Easyway between the third and fifth anniversaries of the closing. The operations of Easyway have been integrated into the Company’s products and service revenues. 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 2015 acquisitions.On June 16, 2015, the Company acquired certain assets of STEAMtrax, LLC, a curricula provider. The fair value of the consideration paid for this acquisition, net of cash acquired, was $2,550, all of which was paid in cash. 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 2015 acquisitions. The Company exited this investment in 2016.On June 17, 2015, the Company acquired certain assets of NOQUO INC., a software provider. The fair value of the consideration paid for this acquisition, net of cash acquired, was $651, which was paid with cash and the cancellationissuance of a note. 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 2015 acquisitions. The Company exited this investment in 2016.For all acquisitions made in 2015, factors considered by the Company in determination of goodwill include synergies, vertical integration and strategic fit for the Company. The acquisitions completed during the 2015 are not material relative to the Company’s assets or operating results; therefore, no proforma financial information is provided.F-16The amounts related to the acquisitions of these businesses were allocated to the assets acquired and the liabilities assumed and included in the Company’s consolidated balance sheet at December 31, 2015 as follows:(in thousands)2015Fixed assets$1,505 Other intangible assets, net57,066 Goodwill44,772 Other assets, net of cash acquired22,449 Liabilities(33,342)Net assets acquired$92,450 Note 4 InventoriesComponents of inventories, net, at December 31, 2017 and 2016 are as follows:37,660 38,383 3,906 3,109 62,337 61,839 103,903 103,331 During 2017, the Company recorded inventory adjustments totaling $12.9 million resulting from its lower of cost or net realizable value analysis. The charge was effected because of ongoing efforts to focus and prioritize the Company’s portfolio based on year-to-date demand, market trends and a better understanding of where the Company’s offerings meet and will continue to meet customers’ needs and demand. The inventory adjustments related primarily to legacy plastics printers, refurbished and used metals printers and parts which have shown little to no use over extended periods.During 2016, the Company recorded inventory adjustments totaling $10.7 million in connection with the discontinuation of certain products as a result2,553 shares of the Company’s updated strategy.Note 5 Property and EquipmentProperty and equipment at December 31, 2017 and 2016 are summarized as follows:903 903 11,276 11,122 134,666 108,826 8,834 8,651 4,677 3,130 29,503 24,423 13,527 7,760 203,386 164,815 (105,865) (84,837) 97,521 79,978 (a)Leasehold improvements are amortized oncommon stock having a straight-line basis over the shorter of (i) their estimated useful lives and (ii) the estimated or contractual life of the related lease.F-17The Company includes all depreciation from assets attributable to the generation of revenue in the Cost of Sales line item in the statement of operations. Depreciation related to assets that are not attributable to the generation of revenue are included in the Research and Development and Selling and General Administrative line items in the statement of operations. Depreciation expense on property and equipment for the years ended 2017, 2016 and 2015 was $25,561, $24,331 and $20,979, respectively.For the years ended December 31, 2017, 2016 and 2015, the Company recognized impairment charges of $636, $7,408, and $614, respectively, on property and equipment, net. The charges taken in 2016 were in connection with our updated strategy and project reprioritization.Note 6 Intangible AssetsIntangible assets other than goodwill at December 31, 2017 and December 31, 2016 are summarized as follows:105,505 (57,796) 47,709 99,067 (46,252) 52,815 54,716 (39,644) 15,072 52,881 (27,543) 25,338 25,813 (15,552) 10,261 28,110 (16,015) 12,095 17,909 (7,338) 10,571 16,263 (5,873) 10,390 19,431 (11,530) 7,901 19,134 (9,383) 9,751 16,661 (11,969) 4,692 16,965 (10,674) 6,291 20,012 (17,435) 2,577 23,431 (18,610) 4,821 260,047 (161,264) 98,783 255,851 (134,350) 121,501 The Company includes all amortization from assets attributable to the generation of revenue in the Cost of Sales line item in the statement of operations. Amortization related to assets that are not attributable to the generation of revenue are included in the Research and Development and Selling and General Administrative line items in the statement of operations. Amortization expense related to intangible assets was $35,559, $35,124 and $61,066 for the years ended December 31, 2017, 2016 and 2015, respectively. Amortization of these intangible assets is calculated on a straight-line basis.Annual amortization expense for intangible assets is expected to be $29,448 in 2018, $20,411 in 2019, $17,308 in 2020, $12,859 in 2021 and $7,493 in 2022.For discussion on intangible asset impairment testing, see Note 2.Note 7 GoodwillThe following are the changes in the carrying amount of goodwill by geographic reporting unit:150,521 37,354 187,875 (137) 189 52 (5,413) (1,284) (6,697) 144,971 36,259 181,230 31,438 41 31,479 15,539 2,634 18,173 191,948 38,934 230,882 F-18The effect of foreign currency exchange in this table reflects the impact on goodwill of amounts recorded in currencies other than the U.S. dollar on the financial statements of subsidiaries in these geographic areas resulting from the yearly effect of foreign currency translation between the applicable functional currency and the U.S. dollar.For discussion on acquisitions, see Note 3. For discussion on goodwill impairment testing, see Note 2.Note 8 Employee BenefitsThe Company sponsors a Section 401(k) plan (the “Plan”) covering substantially all its eligible U.S. employees. The Plan entitles eligible employees to make contributions to the Plan after meeting certain eligibility requirements. Contributions are limited to the maximum contribution allowances permitted under the Internal Revenue Code. The Company matches 50.0% of contributions on the first 6.0% of the participant’s eligible compensation. The Company will give a minimum match of $1,500 to participants who average a minimum 6.0% deferral contribution rate per plan year. In addition, the Company has several other U.S. and non-U.S. defined contribution plans covering eligible U.S. and non-U.S. employees, respectively.For the years ended December 31, 2017, 2016 and 2015, the Company expensed $2,360, $1,175 and $956, respectively, for matching contributions to defined contribution plans.Note 9 Accrued and Other LiabilitiesAccrued liabilities at December 31, 2017 and 2016 are summarized below: 20,432 22,771 13,861 9,831 11,282 7,044 8,231 5,564 5,219 2,772 3,238 2,485 2,956 1,679 2,092 742 810 38 39 65,899 55,187 Other liabilities at December 31, 2017 and 2016 are summarized below:13,887 11,152 8,290 7,613 7,596 7,183 7,298 7,464 9,340 5,726 2,343 7,568 11,282 48,754 57,988 F-19Changes in product warranty obligations, including deferred revenue on extended warranty contracts, for the years ended December 31, 2017, 2016 and 2015 are summarized below:9,051 13,623 (12,472) 10,202 10,663 12,859 (14,471) 9,051 11,914 15,349 (16,600) 10,663 Note 10 Hedging Activities and Financial InstrumentsThe 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, net” in the condensed consolidated statements of operations and comprehensive loss. Depending on their fair value at the enddate of the reporting period, derivatives are recorded either in prepaid expenses and other current assets or in accrued liabilitiesissuance of $80,697. The acquisition’s near term impact on the condensed consolidated balance sheet.The Company had $39,600 in notional foreign exchange contracts outstanding as of December 31, 2017, for which the fair value was not material. No foreign exchange contracts were outstanding as of December 31, 2016 and 2015.The Company translates foreign currency balance sheets from each international businesses' functional currency (generally the respective local currency) to U.S. dollars at end-of-period exchange rates, and statements of earnings at average exchange rates for each period. The resulting foreign currency translation adjustments are a component of other comprehensive income (loss).The Company does not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations' results into U.S. dollars. The impact of translating the Company’s non-U.S. operations’ revenue and earnings into U.S. dollars was not material to the Company’s results of operations for the years ended December 31, 2017, 2016 and 2015.Note 11 BorrowingsCredit FacilityOn October 10, 2014, the Company and certain of its subsidiaries entered into a $150,000 five-year revolving, unsecured credit facility (the “Credit Agreement”) with PNC Bank, National Association, as Administrative Agent, PNC Capital Markets LLC, as Sole Lead Arranger and Sole Bookrunner, HSBC Bank USA, N.A., as Syndication Agent, and the other lenders party thereto (collectively, the “Lenders”). The Credit Agreement comprises a revolving loan facility that provides for advances in the initial aggregate principal amount of up to $150,000 (the “Credit Facility”). Subject to certain terms and conditions contained in the Credit Agreement, the Company may, at its option, request an increase in the aggregate principal amount available under the Credit Facility by an additional $75,000. The Credit Agreement includes provisions for the issuance of letters of credit and swingline loans.The Credit Agreement is guaranteed by certain of the Company’s material domestic subsidiaries (the “Guarantors”). From time to time, the Company may be required to cause additional material domestic subsidiaries to become Guarantors under the Credit Agreement. The Credit Facility contains customary covenants, some of which require the Company to maintain certain financial ratios that determine the amounts available and terms of borrowings and events of default. The Company was in compliance with all covenants at both December 31, 2017 and December 31, 2016.F-20The payment of dividends on the Company’s common stock is restricted under provisions of the Credit Facility, which limits the amount of cash dividends that the Company may pay in any one fiscal year to $30,000. The Company currently does not pay, and has not paid, any dividends on its common stock, and currently intends to retain any future earnings for use in its business.There was no outstanding balance on the Credit Facility as of December 31, 2017 or 2016.Interest Income and ExpenseInterest income totaled $784, $807 and $521 for the years ended December 31, 2017, 2016 and 2015, respectively.Interest expense totaled $919, $1,282 and $2,011 for the years ended December 31, 2017, 2016 and 2015, respectively. Note 12 Lease ObligationsThe Company leases certain of its facilities and equipment under capitalized leases and other facilities and equipment under non-cancelable operating leases. The leases are generally on a net-rent basis, under which the Company pays taxes, maintenance and insurance. Leases that expire at various dates through 2027flows are expected to be renewed or replaced by leases on other properties.Rent expensedilutive. Oqton's operating results will be reported in the Industrial segment. We incurred approximately $1,458 of acquisition related expenses.Oqton is a software company that creates an intelligent, cloud-based Manufacturing Operating System (MOS) platform tailored for flexible production environments that increasingly utilize a range of advanced manufacturing and automation technologies, including additive manufacturing (AM) solutions, in their production workflows. The cloud-based solution leverages the Industrial Internet of Things, artificial intelligence, and machine learning technologies to deliver a solution for customers to automate their digital manufacturing workflows, scale their operations and enhance their competitive position. The Oqton acquisition will allow the Company to expand its existing additive manufacturing software suite to the entire additive industry.We accounted for the years ended December 31, 2017, 2016 and 2015 was $14,899, $13,232 and $13,960, respectively.The Company’s future minimum lease paymentsAcquisition using the acquisition method as of December 31, 2017 under capitalized leases and non-cancelable operating leases, with initial or remaining lease terms in excess of one year, were as follows:1,373 15,930 1,143 12,273 1,050 7,495 738 5,875 752 5,097 6,739 9,738 11,795 56,408 (4,073) 7,722 (644) 7,078 Rock Hill FacilityThe Company leases its headquarters and research and development facility pursuant to a lease agreement with 3D Fields, LLC. After its initial term ending August 31, 2021, the lease provides the Company with the option to renew the lease for two additional five-year terms. The lease also grants the Company the right to cause 3D Fields, LLC, subject to certain terms and conditions, to expand the leased premises during the term of the lease, in which case the term of the lease would be extended. The lease is a triple net lease and provides for the payment of base rent of $709 in 2018 through 2020 and $723 in 2021. Under the terms of the lease, the Company is obligated to pay all taxes, insurance, utilities and other operating costs with respect to the leased premises. This lease is recorded as a capitalized lease obligation under ASC 840, “Leases.” The implicit interest rate was 6.93% as of December 31, 2017 and 2016.Other Capital Lease ObligationsThe Company leases other equipment with lease terms through August 2018.prescribed by Accounting Standards Codification (ASC) 805 Business Combinations. In accordance with valuation methodologies described in ASC 840,820 Fair Value Measurement, the Company hasacquired assets and assumed liabilities were recorded these leasesat their estimated fair values at as capitalized leases. The implicit interest rate ranged from 1.75%of the date of acquisition.Shown below is the preliminary purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of acquisition:F-19Current assets, including cash acquired of $3,454 $ 4,462 Intangible assets: Product technology $ 11,200 Trade name 6,800 Total intangible assets 18,000 Goodwill 167,576 Other assets 855 Liabilities: Accounts payable and accrued liabilities $ 2,235 Deferred revenue 490 Total liabilities 2,725 Net assets acquired $ 188,168 On December 1, 2021, we acquired Volumetric Biotechnologies, Inc. (“Volumetric”), for $40,172 of which $24,814 was paid in cash and the remainder was paid via the issuance of 720 shares of the Company's common stock having a fair value on the date of issuance of $15,358. Additional payments of up to 8.06% at$355,000 are possible which are linked to the attainment of 7 non-financial milestones through December 31, 20172030 and 2016.Note 13 Preferred StockThe Company had 5,000 shares2035 and continued employment of preferred stock that were authorized but unissued at December 31, 2017certain key individuals from Volumetric. Any additional payments made will be paid approximately half in cash and 2016. F-21Note 14 Stock-Based CompensationEffective May 19, 2004, the Company adopted its 2004 Incentive Stock Plan, as further amended and restated on February 3, 2015 (the “2004 Stock Plan”), and its 2004 Restricted Stock Plan for Non-Employee Directors, as further amended and restated on April 1, 2013 (the “Director Plan”). On May 19, 2015, the Company’s stockholders approved the 2015 Incentive Plan of 3D Systems Corporation, as further amended and restated on May 16, 2017 (the “2015 Plan” and, together with the 2004 Stock Plan, the “Incentive Plans”).The 2004 Stock Plan authorizes shares of restricted stock, restricted stock units (“RSU”), stock appreciation rights and the grant of options to purchasehalf in shares of the Company’s common stock. The 2004 Stock Plan also designates measures that mayadditional payments are considered compensation expense which will be used for performance awards. The Director Plan authorizes sharesrecorded ratably from the time a milestone is deemed probable of restricted stock for non-employee directorsachievement to the estimated time of achievement. Any compensation expense recorded will be reversed if the milestone is no longer probable of achievement. As of December 31, 2021, 1 of the Company. The 2015 Plan authorizes shares7 milestones are considered probable of restricted stock, RSUs, stock appreciation rights, cash incentive awards and the grantachievement for which $1,326 of options to purchase sharesexpense was recorded in 2021. Volumetric will be part of the Company’s common stock.Healthcare reporting unit and segment. The 2015 Plan also designates measures that may be used for performance awards.Generally, awards granted prior to November 13, 2015 become fully-vestedacquisition’s near-term impact on the three-year anniversary of the grant date and awards granted on or after November 13, 2015 vest one third each year over three years.Stock-based compensation expense is included in selling, general and administrative expenses in the consolidated statementsCompany's results of operations and comprehensive income (loss).cash flows are expected to be dilutive. The following table detailsimpact of potential share issuance related to the componentsachievement of stock-based compensation expense recognizedmilestones is not included in net earningsdilutive shares until the milestone is met. We incurred approximately $1,200 of acquisition related expenses.Volumetric’s mission is to develop the ability to manufacture human organs using bioprinting methods and the underlying technologies required to create these highly complex biological structures. With this acquisition, 3D Systems will expand our capabilities and capacity in each3D printing related to bio-printing and regenerative medicine. Combining 3D Systems regenerative medicine group with Volumetric’s highly complementary skill sets of biological expertise and cellular engineering is expected to accelerate our core regenerative medicine strategies which include the bio-printing of human organs, additional non-organ applications and bio-printing technologies for research labs.We accounted for the Acquisition using the acquisition method as prescribed by Accounting Standards Codification (ASC) 805 Business Combinations. In accordance with valuation methodologies described in ASC 820 Fair Value Measurement, the acquired assets and assumed liabilities were recorded at their estimated fair values at as of the past three years:date of acquisition.22,920 28,612 34,733 4,340 2,683 27,260 31,295 34,733 Restricted StockThe Company determinesShown below is the preliminary purchase price allocation, which summarizes the fair value of restricted stockthe assets and RSUs based on the closing price of its stock onliabilities assumed, at the date of grant. acquisition:Current assets, including cash acquired of $389 $ 3,143 Intangible assets: Patents $ 639 Total intangible assets 639 Goodwill 38,620 Other assets 1,194 Liabilities: Accounts payable and accrued liabilities 3,424 Total liabilities 3,424 Net assets acquired $ 40,172 F-20The Company generally recognizes compensation expense related to restricted stockhas performed preliminary valuation analyses of the fair market value of acquired assets and RSUs on a straight-line basis over the period during which the restriction lapses. Forfeitures are recognized in the period in which they occur. A summaryliabilities of restricted stockboth Oqton and RSU activity during 2017 follows:3,904 20.54 2,156 10.62 (420) 15.90 (1,379) 29.36 4,261 13.12 Included in the activity above are 393 shares of restricted stock that vest under specified market conditions, which were awarded to certain employees in 2017 and 2016. Each of these employees was generally awarded two equal tranches of market condition restricted stock that immediately vestsVolumetric. The final purchase price allocations will be determined when the Company’s common stock trades at either $30 or $40 per shareCompany has completed and fully reviewed the detailed valuations and determined the final purchase consideration for ninety consecutive calendar days. At December 31, 2017, there was $2,931items such as but not limited to working capital adjustments. The final allocations could differ materially from the preliminary allocations. The final allocations may include changes in allocations to acquired intangible assets, changes to assets and liabilities including but not limited to deferred tax assets and liabilities and tax liabilities, as well as goodwill. The estimated useful lives of unrecognized pre-tax stock-based compensation expense relatedacquired intangible assets are also preliminary.On May 6, 2021, we purchased Allevi, Inc. to non-vested restricted stock awards with market conditions, whichexpand regenerative medicine initiatives into medical and pharmaceutical research and development laboratories. Additionally, on June 15, 2021, we closed the Company expects to recognize overacquisition of a weighted-average periodGerman software firm, Additive Works GmbH (“Additive”). Additive expands the simulation capabilities for rapid optimization of 1.8 years.At December 31, 2017, there was $33,202 of unrecognized pre-tax stock-based compensation expense related to all other non-vested restricted stock award sharesindustrial-scale 3D printing processes. The purchase price for both acquisitions, individually and units, which the Company expects to recognize over a weighted-average period of 1.8 years.F-22Stock OptionsDuring the year ended December 31, 2016, the Company awarded certain employees market condition stock options under the 2015 Plan, included in the activity above, that vest under specified market conditions. Each employee was generally awarded two equal tranches of market condition stock options that immediately vest when the Company’s common stock trades at either $30 or $40 per share for ninety consecutive calendar days.The Company recognizes compensation expense related to stock options on a straight-line basis over the derived term of the awards. Forfeitures are recognized in the period in which they occur. The fair value of stock options with market conditions is estimated using a binomial lattice Monte Carlo simulation model. The weighted-average fair valuecombined, and the assumptions used to measure fair value were as follows:7.80 60.0% 0% 3-4 Stock option activity for the year ended December 31, 2017 was as follows:2,260 13.92 (440) 13.26 1,820 14.08 8.50 In the table above, intrinsic value is calculated as the excess, if any, between the market price of the Company’s stock on the last trading day of the year and the exercise price of the options. Because the market price was lower than the exercise price, the intrinsic value is zero.At December 31, 2017, there was $7,424 of unrecognized pre-tax stock-based compensation expense related to stock options, which the Company expects to recognize over a weighted-average period of 1.7 years.Note 15 International Retirement PlanThe Company sponsors a non-contributory defined benefit pension plan for certain employees of a non-U.S. subsidiary initiated by a predecessor of the subsidiary. The Company maintains insurance contracts that provide an annuity that is used to fund the current obligations under this plan. The net present value of the annuity was $3,207 and $2,760 as of December 31, 2017 and 2016, respectively. The net present value of that annuity is included in “Other assets, net”expected impacts on the Company’s consolidated balance sheets at December 31, 2017financial position, results of operations and 2016. The following table provides a reconciliationcash flows are not material.Acquisitions of the changes in the projected benefit obligation for the years ended December 31, 2017 and 2016:F-237,727 6,328 184 154 131 159 (555) 1,437 (136) (120) 1,083 (231) 8,434 7,727 (8,434) (7,727) For the year ended December 31, 2017, the Company recorded a $555 gain, net of $244 of actuarial amortization and a $247 tax provision, as a $552 adjustment to “Accumulated other comprehensive income (loss)” in accordance with ASC 715, “Compensation – Retirement Benefits.” For the year ended December 31, 2016, the Company recorded a $1,437 loss, net of $128 of actuarial amortization and a $407 tax benefit, as a $902 adjustment to “Accumulated other comprehensive income (loss)”.The Company has recognized the following amounts in the consolidated balance sheets at December 31, 2017 and 2016:144 114 8,290 7,613 8,434 7,727 (2,555) (2,775) 5,879 4,952 The following projected benefit obligation and accumulated benefit obligation were estimated as of December 31, 2017 and 2016:8,434 7,727 7,570 6,905 The following table shows the components of net periodic benefit costs and other amounts recognized in other comprehensive income (loss):184 154 131 159 244 128 559 441 (555) 1,437 4 1,878 The following assumptions are used to determine benefit obligations as of December 31:F-24The following benefit payments, including expected future service cost, are expected to be paid:145 147 163 181 184 1,020 Note 16 Computation of Net Loss per ShareThe Company computes basic loss per share using net loss attributable to 3D Systems Corporation and the weighted average number of common shares outstanding during the applicable period. Diluted loss per share incorporates the additional shares issuable upon assumed exercise of stock options and the release of restricted stock and RSUs, except in such case when their inclusion would be anti-dilutive.(66,191) (38,419) (655,492) 111,554 111,189 111,969 (0.59) (0.35) (5.85) For the years ended December 31, 2017, 2016 and 2015, the effect of dilutive securities, including non-vested stock options, restricted stock awards and RSUs, was excluded from the denominator for the calculation of diluted net loss per share because the Company recognized a net loss for the period and their inclusion would be anti-dilutive. Dilutive securities excluded were 5,341, 5,284 and 1,117 for the years ended December 31, 2017, 2016 and 2015, respectively.Note 17 Noncontrolling InterestsAs of December 31, 2017, the Company owned approximately 70%We own 100% of the capital and voting rights of Robtec, a service bureau and distributor of 3D printing and scanning products in Brazil. Robtec was acquired on November 25, 2014.As of December 31, 2017, the Company owned approximatelyApproximately 70% of the capital and voting rights of Robtec were acquired on November 25, 2014. On January 7, 2020, we made a payment equal to the redemption price of $10,000 and acquired the remaining 30% of the capital and voting rights.We own 100% of Easyway, a service bureau and distributor of 3D printing and scanning products in China. Approximately 65% of the capital and voting rights of Easyway were acquired on April 2, 2015, and an additional 5% of the capital and voting rights of Easyway were acquired on July 19, 2017 for $2.3 million.(4) DispositionsOn January 1, 2021, we completed the sale of 100% of the issued and outstanding equity interests of Cimatron Ltd. ("Cimatron"), the subsidiary that operated the Company’s Cimatron integrated CAD/CAM software for tooling business and its GibbsCAM CNC programming software business, for approximately $64,173, after certain adjustments and excluding $9,476 of cash amounts transferred to the purchaser. We recorded a gain on the sale of $32,047 included within Interest and other income (expense), net on the accompanying consolidated statements of operations for the year ended December 31, 2021. Additionally, at the time of the sale, we recognized a gain of $6,481 for accumulated foreign currency translation gain previously included in Accumulated other comprehensive loss (“AOCL”), which is included within Interest and other income (expense), net. This disposed of business would have been included within the Industrial segment.The components of Cimatron's assets and liabilities recorded as held for sale on the consolidated balance sheet at December 31, 2020 were as follows:F-21(in thousands) December 31, 2020 Assets Cash and cash equivalents $ 9,161 Accounts receivable, net of reserves of $1,154 5,361 Inventories 155 Prepaid expenses and other current assets 3,762 Total current assets held for sale 18,439 Property and equipment, net 202 Intangible assets, net 6,642 Goodwill 21,385 Right of use assets 898 Deferred income tax asset 560 Other assets 1,997 Total assets held for sale $ 50,123 Liabilities Current right of use liabilities $ 445 Accounts payable 654 Accrued and other liabilities 5,631 Customer deposits 25 Deferred revenue 4,352 Total current liabilities held for sale 11,107 Long-term right of use liabilities 518 Other liabilities 2,434 Total liabilities held for sale $ 14,059 In September 2021, we completed the sale of the Company’s On Demand Manufacturing business ("ODM") for $82,000, excluding certain adjustments. We recorded a gain on the sale of $38,490 included within Interest and other income (expense), net on the accompanying consolidated statements of operations for the year ended December 31, 2021. ODM was primarily included within the Industrial segment. At closing, the Company and the purchaser entered into a supply agreement and a transition services agreement pursuant to which the Company will provide certain information technology, corporate finance, tax, treasury, accounting, human resources and payroll, sales and marketing, operations, facilities and other customary services to support the purchaser in the ongoing operation of ODM for a period of time post-closing.On August 24, 2021, we completed the sale of 100% of the issued and outstanding equity interests of Simbionix USA Corporation, which owned our global medical simulation business (“Simbionix”), for $305,000, excluding certain closing adjustments and excluding $6,794 of cash transferred to the purchaser. We recorded a gain on the sale of $271,404 included within Interest and other income (expense), net on the accompanying consolidated statements of operations for the year ended December 31, 2021. Additionally, we recognized a gain of $2,431 for accumulated foreign currency translation gain previously included in AOCL, which is included within Interest and other income (expense), net. Simbionix was included within the Healthcare segment.In November 2020, we sold our Australia ODM business in an asset sale for $685. The carrying value of the assets, including net working capital and allocable goodwill, was $1,482. In December 2020, we sold our Wuxi Easyway business in an asset sale for $79. The carrying value of the assets, including net working capital and allocable goodwill, was $3,806. Recognized losses of $4,524 were included in 2020 interest and other expense, net on the consolidated statement of operations.(5) RevenueWe account for revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers,”.F-22Performance ObligationsA performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.At December 31, 2021, we had $143,169 of outstanding performance obligations, comprised of deferred revenue, customer order backlog and customer deposits. We expect to recognize approximately 77.0% of deferred revenue as revenue within the next twelve months, an additional 13.0% by the end of 2023 and the remaining balance thereafter.Revenue RecognitionRevenue is recognized when control of the promised products or services is transferred to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Many of our contracts with customers include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative stand-alone selling price (“SSP”). Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. The amount of consideration received and revenue recognized may vary based on changes in marketing incentive programs offered to our customers. Our marketing incentive programs take many forms, including volume discounts, trade-in allowances, rebates and other discounts.A majority of our revenue is recognized at the point in time when products are shipped or services are delivered to customers. Please see below for further discussion.Hardware and MaterialsRevenue from hardware and material sales is recognized when control has transferred to the customer, which typically occurs when the goods have been shipped to the customer, risk of loss has transferred to the customer and we have a present right to payment for the hardware. In limited circumstances, when printer or other hardware sales include substantive customer acceptance provisions, revenue is recognized either when customer acceptance has been obtained, customer acceptance provisions have lapsed, or we have objective evidence that the criteria specified in the customer acceptance provisions have been satisfied.Printers and certain other products include a warranty under which we provide maintenance for periods up to one year. For these initial product warranties, estimated costs are accrued at the time of the sale of the product. These cost estimates are established using historical information on the nature, frequency and average cost of claims for each type of printer or other product as well as assumptions about future activity and events. Revisions to expense accruals are made as necessary based on changes in these historical and future factors.SoftwareWe also market and sell software tools that enable our customers to capture and customize content using our printers, design optimization and simulation software, and reverse engineering and inspection software. Software does not require significant modification or customization and the license provides the customer with a right to use the software as it exists when made available. Revenue from these software licenses is recognized either upon delivery of the product or of a key code which allows the customer to download the software. Customers may purchase post-sale support. Generally, the first year is included but subsequent years are optional. This optional support is considered a separate obligation from the software and is deferred at the time of sale and subsequently recognized ratably over future periods.Collaboration and Licensing AgreementsF-23We enter into collaboration and licensing agreements with third parties. The nature of the activities to be performed and the consideration exchanged under the agreements varies on a contract by contract basis. We evaluate these agreements to determine whether they meet the definition of a customer relationship for which revenue is recorded. These contracts may contain multiple performance obligations and may contain fees for licensing, research and development services, contingent milestone payments upon the achievement of developmental contractual criteria and/or royalty fees based on the licensees’ product revenue. We determine the revenue to be recognized for these agreements based on an evaluation of the distinct performance obligations, the identification and evaluation of material rights, the estimation of variable consideration and the determination of the pattern on transfer of control for each distinct performance obligation. The Company recognized $6,804, $6,953 and $7,260 in revenue related to collaboration arrangements with customers for the years ended December 31, 2021, 2020 and 2019, respectively.ServicesWe offer training, installation and non-contract maintenance services for our products. Additionally, we offer maintenance contracts that customers can purchase at their option. For maintenance contracts, revenue is deferred at the time of sale based on the stand-alone selling prices of these services and costs are expensed as incurred. Deferred revenue is recognized ratably over the term of the maintenance period on a straight-line basis. Revenue from training, installation and non-contract maintenance services is recognized at the time of performance of the service.On demand manufacturing and healthcare service sales are included within services revenue and revenue is recognized upon shipment or delivery of the parts or performance of the service, based on the terms of the arrangement. We disposed of the majority of our service revenue businesses, including; Cimatron, Simbionix, and ODM, which were minimally offset by the purchase of Oqton. See Note 183 and Note 4.Terms of saleShipping and handling activities are treated as fulfillment costs rather than as an additional promised service. We accrue the costs of shipping and handling when the related revenue is recognized. Our incurred costs associated with shipping and handling are included in product cost of sales.Credit is extended, and creditworthiness is determined, based on an evaluation of each customer’s financial condition. New customers are generally required to complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness. Customers with a favorable profile may receive credit terms that differ from our general credit terms. Creditworthiness is considered, among other things, in evaluating our relationship with customers with past due balances.Our terms of sale generally provide payment terms that are customary in the countries where we transact business. To reduce credit risk in connection with certain sales, we may, depending upon the circumstances, require significant deposits or payment in full prior to shipment. For maintenance services, we either bill customers on a time-and-materials basis or sell maintenance contracts that provide for payment in advance on either an annual or other periodic basis.Significant JudgmentsOur contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, we allocate revenues to each performance obligation based on its relative SSP.Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, we estimate SSP using historical transaction data. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, we determine the SSP using information that may include market conditions and other observable inputs.In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers, geographic region or other factors. In these instances, it may use information such as the size of the customer and geographic region in determining the SSP.The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.F-24The nature of our marketing incentives may lead to consideration that is variable. Judgment is exercised at contract inception to determine the most likely outcome of the contract and resulting transaction price. Ongoing assessments are performed to determine if updates are needed to the original estimates.Contract BalancesThe timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer deposits and deferred revenues (contract liabilities) on the consolidated balance sheets. Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized at the time of invoicing, or unbilled receivables when revenue is recognized prior to invoicing. For most of our contracts, customers are invoiced when products are shipped or when services are performed resulting in billed accounts receivables for the remainder of the owed contract price. Unbilled receivables generally result from items being shipped where the customer has not been charged, but for which revenue had been recognized or when certain performance milestones are deemed probable of achievement. In our on demand manufacturing business, which was sold in September of 2021, customers may be required to pay in full before work begins on their orders, resulting in customer deposits. We typically bill in advance for installation, training and maintenance contracts as well as extended warranties, resulting in deferred revenue. Changes in contract asset and liability balances were not materially impacted by any other factors for the period ended December 31, 2021. Contract assets with a remaining performance obligation are netted with contract liabilities.Through December 31, 2021, we recognized revenue of30,302 related to our contract liabilities at December 31, 2020. Through December 31, 2020, we recognized revenue of $30,635 related to our contract liabilities at December 31, 2019. Through December 31, 2019, we recognized revenue of $26,486 related to our contract liabilities at December 31, 2018.Practical Expedients and ExemptionsWe generally expense sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling, general and administrative expenses.Revenue ConcentrationsFor the years ended December 31, 2021, 2020, and 2019, one customer accounted for approximately 22%, 13% and 11% of our consolidated revenue, respectively. We expect to maintain our relationship with this customer.Revenue by geographic region for the years ended December 31, 2021, 2020, and 2019 were as follows:Year Ended December 31, (in thousands) 2021 2020 2019 Americas $ 344,619 $ 280,028 $ 323,085 EMEA 201,684 213,575 240,403 APAC 69,336 63,637 72,866 Total $ 615,639 $ 557,240 $ 636,354 United States (Included in Americas above) $ 341,123 $ 275,145 $ 313,910 (6) Segment InformationEffective January 1, 2021, we changed our segment reporting under ASC 280 Segment Reporting. For periods prior to January 1, 2021, we operated under 1 operating segment, consistent with the information that was presented to our CODM. Effective January 1, 2021, we have identified 2 operating segments, Healthcare and Industrial.F-25This change in reportable segments was necessitated as a result of changes to our enterprise wide financial reporting to reflect the re-organization of the business into the Healthcare and Industrial verticals that were launched January 1, 2021 at the request of our CODM. These changes resulted in revisions to the financial information provided to the CODM on a recurring basis in his evaluation of financial performance of the Company and in the decision-making process driving future operating performance. The CODM does not review disaggregated assets on a segment basis; therefore, such information is not presented. In addition, the changes made to our enterprise wide financial reporting system were prospective and prevent historical financial information for the Healthcare and Industrial segments to be available other than for revenue which has been disclosed below. We have evaluated potential alternatives to generate comparative prior period financial information for the Healthcare and Industrial segments, and believe that the practicality exception as proscribed in ASC 280 Segment Reporting is applicable due to the high degree of difficulty involved and the significant expense associated with overhauling the structure of legacy financial systems.The following table set forth our net sales and operating results by segment:Year Ended December 31, 2021 2020 2021 (in thousands) Net Sales (a) Operating Profit Operations by segment: Healthcare $ 306,184 $ 246,437 $ 69,358 Industrial 309,455 310,803 48,555 Total $ 615,639 $ 557,240 117,913 General corporate expense, net (b)(150,982) Operating loss, as reported (33,069) Interest and other income, net 352,609 Income before income taxes $ 319,540 a.Approximately 44.6% and 50.6% of sales for the year ended December 31, 2021 and 2020, respectively, were located outside of the U.S.b.General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs.(7) LeasesWe have various lease agreements for our facilities, equipment and vehicles with remaining lease terms ranging from one to sixteen years. We determine if an arrangement contains a lease at inception. Some leases include the options to purchase, terminate or extend for one or more years; these options are included in the right-of-use (“ROU”) asset and liability lease term when it is reasonably certain an option will be exercised. Our leases do not contain any material residual value guarantees or material restrictive covenants.Most of our leases do not provide an implicit rate; therefore, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of the future lease payments.Certain leases include variable costs. Variable costs include non-lease components incurred based upon actual terms rather than contractually fixed amounts. In addition, incremental lease payments that are indexed to a change in rate or index are considered variable costs. Because the ROU asset and lease liability recorded on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated, result in variable expenses being incurred when actual payments differ from estimated payments.F-26On February 25, 2021, the Company entered into an agreement to amend its lease for its corporate office and extended the term. As part of this agreement, the Company sold land owned adjacent to our corporate office for $389 and entered into a lease with the buyer of the land for a new building, containing approximately 80,000 to 100,000 rentable square feet, to be constructed and funded by the lessor up to a certain amount. The lease terms, as amended, for both the existing building and the expansion site extend through August 2037. The lease for the new building will not commence until construction is substantially complete and the total estimated lease payments are $16,875 which are not included in the lease information below as the lease has not commenced. Additionally, we entered into a lease for a new building in Littleton, CO containing approximately 50,000 rentable square feet to be constructed and funded by the lessor up to a certain amount. The lease term is for ten years upon commencement which is when construction is substantially complete. The total estimated lease payments are $14,233 which are not included in the lease information below as the lease has not commenced.Components of lease cost (income) were as follows:(in thousands) Year Ended December 31, 2021 Year Ended December 31, 2020 Operating lease cost $ 10,226 $ 13,937 Finance lease cost - amortization expense 714 937 Finance lease cost - interest expense 238 664 Short-term lease cost 76 159 Variable lease cost 3,163 1,363 Sublease income (569) (615) Total $ 13,848 $ 16,445 Balance sheet classifications at December 31, 2021 and 2020 are summarized below:December 31, 2021 December 31, 2020 (in thousands) Right of use assets Current right of use liabilities Long-term right of use liabilities Right of use assets Current right of use liabilities Long-term right of use liabilities Operating Leases $ 42,502 $ 7,711 $ 43,359 $ 40,586 $ 8,562 $ 38,296 Finance Leases 3,854 633 4,061 8,034 972 10,173 Total $ 46,356 $ 8,344 $ 47,420 $ 48,620 $ 9,534 $ 48,469 On September 1, 2020, we closed 2 facilities in connection with our restructuring plan. These facilities occupied leased office space that terminates in 2024. In conjunction with these closings, we recorded impairment charges totaling $1,627 related to our ROU assets and impairment charges totaling $1,953 related to leasehold improvements.During the 2020 fourth quarter, we recorded ROU assets and liabilities related to lease extensions and renewals that were entered into during the 2019 fourth quarter, 2020 second quarter and 2020 third quarter of approximately $1,469, $2,021, and $3,467, respectively. There was not a material income statement impact from recording these lease extensions and renewals during the 2020 fourth quarter.F-27Our future minimum lease payments as of December 31, 2021 under operating lease and finance leases, with initial or remaining lease terms in excess of one year, were as follows:December 31, 2021 (in thousands) Finance Leases Operating Leases Years ending December 31: 2022 $ 828 $ 10,199 2023 801 9,110 2024 753 7,518 2025 690 5,830 2026 649 5,153 Thereafter 1,799 26,519 Total lease payments (undiscounted) 5,520 64,329 Less: imputed interest (826) (13,259) Present value of lease liabilities $ 4,694 $ 51,070 Supplemental cash flow information related to our operating leases for the years ending December 31, 2021, and 2020 was as follows:(in thousands) December 31, 2021 December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 11,108 $ 13,151 Operating cash outflow from finance leases 238 661 Financing cash outflow from finance leases $ 721 $ 496 Weighted-average remaining lease terms and discount rate for our operating leases for the year ending December 31, 2021, were as follows:December 31, 2021 Finance Operating Weighted-average remaining lease term (in years) 7.4 8.7 Weighted-average discount rate 4.63% 5.45% (8) InventoriesComponents of inventories at December 31, 2021 and 2020 are summarized as follows:(in thousands) 2021 2020 Raw materials $ 23,530 $ 23,762 Work in process 5,173 5,912 Finished goods and parts 64,184 86,993 Inventories $ 92,887 $ 116,667 We record a reserve to the carrying value of our inventory to reflect the rapid technological change in our industry that impacts the market for our products. The inventory reserve was $16,509 and $20,125 as of December 31, 2021 and 2020, respectively.In June 2020, as part of our assessment of prospective sales and evaluation of inventory, we determined the end-of-life for certain product lines. The end-of-life determination for these products reflects management's plans to focus our resources that are better aligned with our new strategic focus, as further discussed in Note 25. As a result, for the year ended December 31, 2020, we recorded a charge of $10,894 to products costs of sales, primarily attributable to inventory, accessories and inventory commitments for these products. We have ceased production for these items. There was no material product line life ended for year ended December 31, 2021.F-28(9) Property and EquipmentProperty and equipment at December 31, 2021 and 2020 are summarized as follows:(in thousands) 2021 2020 Useful Life (in years) Land $ — $ 541 N/A Building 84 5,422 25-30 Machinery and equipment 117,446 163,688 2-5 Capitalized software 24,149 24,814 3-5 Office furniture and equipment 5,188 5,106 1-5 Leasehold improvements 32,200 32,349 Life of lease aConstruction in progress 12,051 4,910 N/A Total property and equipment 191,118 236,830 Less: Accumulated depreciation and amortization (133,861) (161,474) Total property and equipment, net $ 57,257 $ 75,356 a.Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful life, or (ii) the estimated or contractual life of the related lease.We include all depreciation from assets attributable to the generation of revenue in the cost of sales line item in the Statement of Operations. Depreciation related to assets that are not attributable to the generation of revenue are included in the research and development and selling and general administrative line items in the Statement of Operations. Depreciation on property and equipment is calculated on a straight-line basis. Depreciation expense on property and equipment for the years ended December 31, 2021, 2020 and 2019 was $24,242, $28,397 and $29,982, respectively.For the years ended December 31, 2021, 2020 and 2019, we recognized impairment charges of $788, $3,406 and $181, respectively, on property and equipment, net included in the selling and general administrative line item in the Statement of Operations.(10) Intangible AssetsIntangible assets, net, other than goodwill, at December 31, 2021 and 2020 are summarized as follows:2021 2020 (in thousands) Gross aAccumulated Amortization Net Gross aAccumulated Amortization Net Weighted Average Useful Life Remaining (in years) Intangible assets with finite lives: Customer relationships $ 53,062 $ (45,613) $ 7,449 $ 71,123 $ (56,682) $ 14,441 2.8 Acquired technology 17,518 (5,430) 12,088 42,472 (41,201) 1,271 5.2 Trade names 20,448 (10,438) 10,010 17,477 (16,506) 971 18.9 Patent costs 21,852 (11,812) 10,040 19,828 (10,999) 8,829 10.5 Trade secrets 19,924 (18,971) 953 20,188 (18,216) 1,972 1.1 Acquired patents 16,257 (15,945) 312 16,317 (15,723) 594 6.1 Other 12,982 (7,999) 4,983 19,793 (19,788) 5 9.4 Total intangible assets $ 162,043 $ (116,208) $ 45,835 $ 207,198 $ (179,115) $ 28,083 8.5 a.Change in gross carrying amounts primarily due to divestitures of Cimatron, Simbionix and ODM partially offset by the acquisition of Oqton and foreign currency translation.Amortization expense related to intangible assets was $10,469, $15,810 and $20,312 for the years ended December 31, 2021 2020 and 2019, respectively.F-29Annual amortization expense for intangible assets is expected to be $10,767 in 2022, $6,190 in 2023, $5,395 in 2024, $5,365 in 2025 and $4,415 in 2026.(11) GoodwillThe following are the changes in the carrying amount of goodwill by reporting unit:Year Ended December 31, 2021 Healthcare Industrial Consolidated (in thousands) Gross Goodwill Dispositions, Acquisitions and Impairments Net Goodwill Gross Goodwill Dispositions, Acquisitions and Impairments Net Goodwill Gross Goodwill Dispositions, Acquisitions and Impairments Net Goodwill Balance at beginning of year $101,767 $(32,055) $69,712 $134,382 $(42,329) $92,053 $236,149 $(74,384) $161,765 Acquisition (a)— 39,182 39,182 — 170,033 170,033 — 209,215 209,215 Dispositions (b)— (15,598) (15,598) — (3,873) (3,873) — (19,471) (19,471) Adjustments (c)(900) — (900) 900 — 900 — — — Foreign currency translation adjustments (2,481) — (2,481) (3,440) — (3,440) (5,921) — (5,921) Total goodwill $98,386 $(8,471) $89,915 $131,842 $123,831 $255,673 $230,228 $115,360 $345,588 a.The 2021 acquisition, for the Healthcare and Industrial segments in the table above relate to Allevi, Additive Works, Oqton and Volumetric. Approximately $560 of goodwill related to Allevi will be deductible for tax purposes.b.The 2021 dispositions for the Healthcare and Industrial segments in the table above relate to of ODM and Simbionixc.The 2021Adjustment, for the Healthcare and Industrial segments in the table above relate to reclassification within the segments.The following are the changes in the carrying amount of goodwill by reporting unit for 2020. This presentation reflects the prior year reporting unit structure, which has been changed for 2021. Due to unnecessarily burdensome procedures to recast this information into our new segment structure, we have taken the practicability exception allowed and presented as in prior year:(in thousands) Americas EMEA APAC Total Balance at December 31, 2019 $ — $ 186,695 $ 36,481 $ 223,176 Dispositions and impairments a— (69,685) (4,699) (74,384) Effect of foreign currency exchange rates — 10,582 2,391 12,973 Balance at December 31, 2020 $ — $ 127,592 $ 34,173 $ 161,765 a.Includes $21,385 of goodwill held for sale related to Cimatron in EMEA and $4,699 of goodwill related to the sale of our Australia ODM and Wuxi Easyway businesses in APAC. See Note 4.The effect of foreign currency exchange in the above tables reflect the impact on goodwill of amounts recorded in currencies other than the U.S. dollar on the financial statements of subsidiaries in these geographic areas resulting from the yearly effect of foreign currency translation between the applicable functional currency and the U.S. dollar.F-30Our reporting units are Healthcare and Industrial. We completed the required annual goodwill impairment test as of November 30, 2021. The goodwill impairment test compared the fair value of each reporting unit to their carrying value. We estimated the fair value of our reporting units based primarily on projections of future revenues, expenses, and cash flows discounted to its present value, and a market approach. The valuation methodology and underlying financial information included in the Company's determination of fair value required significant judgment by management. The principal assumptions used in the Company's discounted cash flow analysis consisted of (a) the long-term projections of future financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the risk attributable to the Company and the industry in which it operates. Under the market approach, the principal assumption included an estimate of multiples for various financial metrics of comparable companies. The estimated fair value for each of our reporting units was in excess of their respective carrying values as of November 30, 2021.As of September 30, 2020, we experienced a goodwill valuation triggering event due to a drop in our stock price, which was negatively impacted by the business environment as a result of the COVID-19 pandemic. Accordingly, we performed a quantitative analysis for potential impairment of our goodwill and long-lived asset balances. Based on available information and analysis as of September 30, 2020, we determined the carrying value of the EMEA reporting unit exceeded its fair value and recorded a non-cash goodwill impairment charge of $48,300. We determined the fair value of the Americas and APAC reporting units exceeded their carrying values and the carrying value of our long-lived assets is recoverable for all reporting units.(12) Employee BenefitsWe sponsor a Section 401(k) plan (the “Plan”) covering substantially all our eligible U.S. employees. The Plan entitles eligible employees to make contributions to the Plan after meeting certain eligibility requirements. Contributions are limited to the maximum contribution allowances permitted under the Internal Revenue Code. We match 50.0% of contributions on the first 6.0% of the participant’s eligible compensation.For the years ended December 31, 2021, 2020 and 2019, we expensed $2,039, $2,456 and $2,688, respectively, for matching contributions to the defined contribution plan.International Retirement PlanWe sponsor a non-contributory defined benefit pension plan for certain employees of a non-U.S. subsidiary initiated by a predecessor of the subsidiary. We maintain insurance contracts that provide an annuity that is used to fund the current obligations under this plan. The following table provides a reconciliation of the changes in the projected benefit obligation for the years ended December 31, 2021 and 2020:(in thousands) 2021 2020 Reconciliation of benefit obligations: Obligations as of January 1 $ 10,391 $ 10,497 Service cost 187 204 Interest cost 130 84 Actuarial loss (gain) (234) (1,222) Benefit payments (627) (151) Effect of foreign currency exchange rate changes (773) 979 Benefit obligations as of December 31 9,074 10,391 Fair value of assets as of December 31 a3,577 3,844 Funded status as of December 31, net of tax benefit $ (5,497) $ (6,547) a.No change in underlying asset value for the periods.We recognized the following amounts in the consolidated balance sheets at December 31, 2021 and 2020:F-31(in thousands) 2021 2020 Other assets $ 3,577 $ 3,844 Accrued liabilities (163) (163) Other liabilities (8,911) (10,228) Net liability $ (5,497) $ (6,547) The following projected benefit obligation and accumulated benefit obligation were estimated as of December 31, 2021 and 2020:(in thousands) 2021 2020 Projected benefit obligation $ 9,074 $ 10,391 Accumulated benefit obligation $ 8,635 $ 9,343 The following table shows the components of net periodic benefit costs and the amounts recognized in “Accumulated other comprehensive income (loss)” as of December 31, 2021, 2020 and 2019:(in thousands) 2021 2020 2019 Net periodic benefit cost: Service cost $ 187 $ 204 $ 166 Interest cost 130 84 151 Amortization of actuarial loss 259 351 200 Total net periodic pension cost 576 639 517 Other changes in plan assets and benefit obligations recognized in other comprehensive income: Net (gain) loss (234) (1,223) 1,815 Amortization of prior years' unrecognized loss (259) (351) (200) Total recognized as accumulated other comprehensive income (loss), excluding tax (493) (1,574) 1,615 Total expense recognized in net periodic benefit cost and other comprehensive income $ 83 $ (935) $ 2,132 The following assumptions are used to determine benefit obligations as of December 31, 2021 and 2020:2021 2020 Discount rate 1.2% 1.3% Rate of compensation 3.0% 3.0% The following benefit payments, including expected future service cost, are expected to be paid:(in thousands) Estimated future benefit payments: 2022 $ 175 2023 181 2024 185 2025 187 2026 189 2027 through 2031 $ 1,439 F-32(13) Accrued and Other LiabilitiesAccrued liabilities at December 31, 2021 and 2020 are summarized as follows:(in thousands) 2021 2020 Compensation and benefits $ 39,846 $ 24,629 Accrued taxes 19,836 14,952 Vendor accruals 9,045 18,762 Product warranty liability 3,585 2,348 Accrued professional fees 2,263 1,773 Accrued other 1,593 6,138 Royalties payable 826 1,210 Total $ 76,994 $ 69,812 Other liabilities at December 31, 2021 and 2020 are summarized as follows:(in thousands) 2021 2020 Long term employee indemnity $ 5,237 $ 12,228 Long term tax liability 6,099 15,532 Defined benefit pension obligation 8,911 10,228 Long term deferred revenue 10,244 6,163 Other long term liabilities 1,763 7,096 Total $ 32,254 $ 51,247 Changes in product warranty obligations, including deferred revenue on extended warranty contracts, for the years ended December 31, 2021, 2020 and 2019, are summarized below:(in thousands) Beginning Balance Additional Accrual/ Revenue Deferred Costs Incurred/ Deferred Revenue Amortization Ending Balance Year Ended December 31, 2021 $ 6,380 $ 8,670 $ (8,784) $ 6,266 2020 6,192 6,454 (6,266) 6,380 2019 $ 7,660 $ 8,124 $ (9,592) $ 6,192 F-33(14) BorrowingsConvertible NotesOn November 16, 2021 the Company issued $460,000 in aggregate principal amount of its 0% Convertible Senior Notes due November 15, 2026 (the “Notes”) pursuant to an Indenture, dated November 16, 2021 (the “Indenture”), between the Company and The Bank of New York Mellon, N.A., as trustee. The net proceeds from the offering of the Notes were $446,534 after deducting the initial purchasers’ discounts and commissions and offering expenses payable by the Company in the amount of $13,466 for which $13,141 is unamortized at December 31, 2021. The annual effective interest rate of the Notes is 0.594% when including purchasers' discounts and commissions and offering expenses incurred by the Company. The Notes are senior, unsecured obligations of the Company, will not bear regular interest and the principal amount of the Notes will not accrete. The Notes will mature on November 15, 2026, unless earlier redeemed, repurchased or converted in accordance with the terms of the Notes. The Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 15, 2026, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2022 (and only during such quarter), if the last reported sale price of the Company’s common stock, par value $0.001 per share (the “Common Stock”), is greater than or equal to 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter on each applicable trading day; (2) during the 5 business day period after any 5 consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Common Stock and the conversion rate on each such trading day; (3) if the Company calls such Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; and (4) upon the occurrence of specified corporate events, including a Fundamental Change (as defined in the Indenture), or distributions of the Common Stock. On or after August 15, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of the Common Stock, or a combination of cash and shares of the Common Stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Notes being converted. The Notes have an initial conversion rate of 27.8364 shares of Common Stock per $1 principal amount of Notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $35.92 per share. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture. Holders of the Notes have the right to require the Company to repurchase for cash all or a portion of their Notes at 100% of their principal amount, plus any accrued and unpaid special interest, upon the occurrence of a Fundamental Change. The Company is also required to increase the conversion rate for holders who convert their Notes in connection with a Fundamental Change or convert their Notes that are called for redemption, as the case may be, prior to the maturity date. The Company may not redeem the Notes prior to November 20, 2024. The Notes are redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, on or after November 20, 2024 and before the 41st scheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Common Stock has been at least 130% of the conversion price then in effect for a specified period of time. The Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment to any of the Company’s future unsecured indebtedness that is not so subordinated; be effectively subordinated in right of payment to any of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company. The Indenture also contains covenants, events of default and other provisions which are customary for offerings of convertible notes. We are in compliance with all covenants. At the December 31, 2021 the fair value of the Notes is $436,600. This based on the quoted market price where the volume of activity is not active and thus this is deemed a level 2 fair value measurement.The Company incurred $324 of debt issuance cost amortization in 2021. Debt issuance cost accretion of $2,663, $2,679 $2,695, $2,711, and $2,394 are expected to be incurred in 2022, 2023, 2024, 2025 and 2026, respectively.F-34Credit FacilityWe had a 5-year $100,000 senior secured revolving credit facility (the “Senior Credit Facility”) to support working capital and general corporate purposes. The Senior Credit Facility also included a 5-year $100,000 senior secured term loan facility (the “Term Facility”) that was fully repaid and terminated in the first quarter of 2021, as discussed below. Effective August 24, 2021, we terminated the 5-year $100,000 Senior Credit Facility. The Senior Credit Facility contained customary covenants, some of which required us to maintain certain financial ratios that determine the amounts available and terms of borrowings and events of default. We were in compliance with all covenants through the date of termination.Borrowings under the Senior Credit Facility were subject to interest at varying spreads above quoted market rates and a commitment fee was paid on the total unused commitment. The interest rate at December 31, 2020 was 1.9%. We had a balance of $21,392 outstanding on the Term Facility at December 31, 2020. On January 1, 2021, the Company completed the sale of Cimatron. A portion of the proceeds from the sale were used to repay the outstanding balance on the Term Facility. The Term Facility was fully repaid and terminated in the first quarter of 2021. Concurrent with the repayment of the Term Facility, we terminated the related interest rate swap, resulting in a marked-to-market payment of $721. See Note 15 for additional information.InterestIncome andExpenseInterest income totaled $438, $400 and $1,209 for the years ended December 31, 2021, 2020 and 2019, respectively.Interest expense totaled $2,340, $4,391 and $4,442 for the years ended December 31, 2021, 2020 and 2019, respectively. (15) Hedging Activities and Financial InstrumentsDerivatives Designated as Hedging InstrumentsOn July 8, 2019, we entered into a $50,000 interest rate swap contract, designated as a cash flow hedge, to minimize the risk associated with the variability of cash flows in interest payments from variable-rate debt due to fluctuations in the one-month USD-LIBOR, subject to a 0% floor, through February 26, 2024. Changes in the interest rate swap are expected to offset the changes in cash flows attributable to fluctuations of the one-month USD-LIBOR for the interest payments associated with our Term Facility.On June 30, 2020, we executed an amendment to the swap which reduced the notional amount to $15,000 and resulted in de-designation as a cash flow hedge. The reduction required a mark-to-market settlement of $1,253 paid in July 2020. Amounts previously recognized in Accumulated Other Comprehensive Loss ("AOCL") of $1,235 were released and reclassified into Interest and other expense, net on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2020. Subsequent to June 2020, changes in the swap’s fair value are recognized currently in earnings and included in the Interest and other expense, net. The remaining $721 in AOCL as of December 31, 2020 was expensed to Interest and other expense, net in 2021 when the Company terminated this agreement in connection with repayment of the Term Facility. See Note 14 for additional information.We had no exposure to LIBOR rates as of December 31, 2021. The notional amount and fair value of the historical derivative on our balance sheet at December 31, 2021 and 2020 are disclosed below:(in thousands) Balance Sheet location Notional amount Fair value December 31, 2021 Interest rate swap contract Other liabilities $ — $ — December 31, 2020 Interest rate swap contract Other liabilities $ 15,000 $ (700) F-35Derivatives Not Designated as Hedging InstrumentsWe conduct business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a result, we are subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement dates will result in a foreign exchange gain or loss. When practicable, we endeavor to match assets and liabilities in the same currency on our balance sheet and those of our subsidiaries in order to reduce these risks. When appropriate, we enter into foreign currency contracts to hedge exposures arising from those transactions. We have elected not to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, all gains and losses (realized or unrealized) are recognized in Interest and other expense, net in the consolidated statements of operations and comprehensive loss. Depending on their fair value at the end of the reporting period, derivatives are recorded either in prepaid expenses and other current assets or in accrued liabilities on the consolidated balance sheet.We had $43,000 and $101,781 in notional foreign exchange contracts outstanding as of December 31, 2021 and 2020, respectively. The fair values of these contracts were not material.We translate foreign currency balance sheets for each non-U.S. subsidiary's functional currency (generally the respective local currency) to U.S. dollars at end-of-period exchange rates and statements of earnings at average exchange rates for each period. The resulting foreign currency translation adjustments are a component of other comprehensive income (loss). We do not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations' results into U.S. dollars.(16) Inventory Financing AgreementsOn December 1, 2018 and January 17, 2020, we entered into a Manufacturing Services Agreement and Amendment One to Manufacturing Services Agreement (together, the "Agreement"), with an assembling manufacturer to produce products on behalf of 3D Systems Corporation. During the quarter ended March 31, 2020, as part of the Agreement, we sold $12,100 of inventory to the assembling manufacturer that we have an obligation to repurchase. At December 31, 2021, our obligation to repurchase inventory, included in Accrued and other liabilities on our consolidated balance sheets, was $2,826, relating to the initial sale of inventory to the assembly manufacturer and adjusted for transactions. The inventory sold consisted of raw materials, packaging materials and consumables representing stock on hand related to certain product families for which the manufacturing has been outsourced to the assembling manufacturer. Although the assembling manufacturer holds legal title, we account for the inventory similar to a product financing arrangement; therefore, the inventories sold to the assembling manufacturer will continue to be included in Inventories on our consolidated balance sheets until processed into finished goods and sold back to us. At December 31, 2021, inventory held at assemblers was $26.Additionally, as part of the Agreement, we have a commitment to purchase certain materials and supplies that the assembling manufacturer purchased from third parties. At December 31, 2021, we had a commitment of $5,187 with the assembling manufacturer.(17) Preferred StockWe had 5,000 shares of preferred stock that were authorized but unissued at December 31, 2021 and 2020.(18) Stock-Based CompensationThe Company maintains the 2004 Restricted Stock Plan, as amended, for Non-Employee Directors and the 2015 Incentive Plan of 3D Systems Corporation. The 2015 Incentive Plan was amended and restated in May 2020 to, among other things, increase the number of shares reserved for issuance by 4,860 shares (as amended and restated, the “2015 Plan”).The 2015 Plan authorizes the granting of shares of restricted stock, RSUs, stock appreciation rights, cash incentive awards and the grant of options to purchase shares of our common stock. The 2015 Plan also designates measures that may be used for performance awards and market-based awards. The Director Plan authorizes shares of restricted stock for our non-employee directors.The vesting period for awards under the Stock Plans is generally determined by the Board at the date of the grant and generally the awards vest one third each year over 3 years.F-36Stock-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). The following table details the components of stock-based compensation expense recognized in net earnings in each of the past three years:Year Ended December 31, (in thousands) 2021 2020 2019 Total stock-based compensation expense $ 55,153 $ 17,725 $ 23,587 Included in the above expense for 2021 is $22,057 pertaining to the annual incentive compensation awards that will be paid in company shares of which a $1,914 liability was reduced and recorded as part of the divestiture gains. Additionally, the above expense includes $683 related to the Volumetric contingent milestone payments as discussed in Note 3.Restricted Stock We determine the fair value of restricted stock and RSUs based on the closing price of our stock on the date of grant. We generally recognize compensation expense related to restricted stock and RSUs on a straight-line basis over the vesting period. Forfeitures are recognized in the period in which they occur. A summary of restricted stock and RSU activity for the year ended December 31, 2021 follows:(in thousands, except per share amounts) Number of Shares/Units Weighted Average Grant Date Fair Value Outstanding at beginning of year — unvested 3,540 $ 8.81 Granted 2,547 29.30 Canceled (462) 18.17 Vested (1,645) 11.68 Outstanding at end of year — unvested 3,980 $ 19.72 Included in the outstanding balance above are 606 shares of restricted stock that vest under specified market conditions and 747 shares of restricted stock that vest under specified Company performance measures. Awards with specified market conditions were awarded to certain employees in 2016, 2020 and 2021. The fair value for awards with market conditions is determined using a binomial lattice Monte Carlo simulation model and is expensed ratably over any implicit or explicit service period regardless if the market condition is probable of achievement or not. Stock compensation expense is not reversed if the market condition is not met. We recognize forfeitures when they occur. The fair value of performance-based awards are recognized on the grant date and expensed ratably over any implicit or explicit service period when the performance condition is deemed probable of achievement. Stock compensation recorded for performance shares is reversed when the performance condition is no longer deemed probable of achievement.Some RSUs are granted with a performance measure derived from non-GAAP-based management targets or based on non-financial metrics. Depending on our performance with respect to these metrics, the number of RSUs earned may be less than, equal to or greater than the original number of RSUs awarded, subject to a payout range.On December 1, 2021, we issued Performance Share Units (PSUs) to employees of Volumetric as part of the acquisition agreement. Vesting of these shares is based on 4 non-financial milestones that involve various medical achievements. These awards were divided into 4 tranches, 1 tranche per milestone, and compensation expense is recognized only when a milestone is probable of achievement. As of December 31, 2021 1 of the 4 milestones was deemed probable of achievement and the company recorded $81 of expense in 2021 related to these awards.At December 31, 2021, there was $60,612 of unrecognized stock-based compensation expense related to all non-vested restricted stock award shares and units, which we expect to recognize over a weighted-average period of 2.8 years.F-37Stock Options During the year ended December 31, 2016, we awarded certain employees market condition stock options under the 2015 Plan, included in the activity above, that vest under specified market conditions. Each employee was generally awarded 2 equal tranches of market condition stock options that immediately vest when our common stock trades at either $30 or $40 per share for ninety consecutive calendar days.We recognize compensation expense related to stock options on a straight-line basis over the derived term of the awards. Forfeitures are recognized in the period in which they occur. The fair value of stock options with market conditions is estimated using a binomial lattice Monte Carlo simulation model. Expense for awards with a market condition are not reversed if the market condition is not met.Stock option activity for the year ended December 31, 2021 was as follows:Year Ended December 31, 2021 (in thousands, except per share amounts) Number of Shares Weighted Average Exercise Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Stock option activity: Outstanding at beginning of year 420 $ 13.26 5.7 $ — Granted — — — — Exercised — — — — Forfeited and expired — — — — Outstanding at end of year 420 $ 13.26 4.7 $ 3,479 In the table above, intrinsic value is calculated as the excess, if any, between the market price of our stock on the last trading day of the year and the exercise price of the options.At December 31, 2021, there was no unrecognized pre-tax stock-based compensation expense related to stock options.F-38(19) Net Income (Loss) Per ShareWe compute basic earnings (loss) per share using net income (loss) attributable to 3D Systems Corporation and the weighted average number of common shares outstanding during the applicable period. Diluted earnings (loss) per share incorporates the additional shares issuable upon assumed exercise of stock options and the assumed vesting of restricted stock and RSUs, except in such case when their inclusion would be anti-dilutive.Year Ended December 31, (in thousands, except per share amounts) 2021 2020 2019 Numerator for basic and diluted net earnings (loss) per share: Net income (loss) attributable to 3D Systems Corporation $ 322,052 $ (149,594) $ (69,880) Denominator for net earnings (loss) per share: Weighted average shares - basic 122,867 117,579 113,811 Dilutive effect of shares issuable under stock based compensation and other plans(1)3,467 — — Weighted average shares - diluted 126,334 117,579 113,811 Anti-dilutive shares of restricted share awards which are excluded from the dilutive shares above(2)1,779 3,960 5,822 Net income (loss) per share - basic $ 2.62 $ (1.27) $ (0.61) Net income (loss) per share - diluted $ 2.55 $ 1.27 $ (0.61) (1) The dilutive impact of share awards is 2,755 shares for which the calculation requires certain assumptions regarding assumed proceeds that will hypothetically repurchase unvested restricted shares and outstanding stock options and an estimate of 712 shares for the payment of accrued incentive compensation that will be settled in shares. The share estimate is based on the accrued incentive compensation balance at the end of the year divided by the average 2021 share price.(2) Excludes the impact of shares contingently issuable upon the achievement of certain milestones in the Volumetric acquisition as discussed in Note 3. The 2020 and 2019 amounts represent outstanding equity awards that are anti-dilutive because we had a net loss in both years.On November 16, 2021 the Company issued $460.0 million in aggregate principal amount of its 0% Convertible Senior Notes due November 15, 2026 as discussed in Note 14.The Notes’ impact to diluted shares will be calculated using the if-converted method as prescribed in ASU 2020-06.The Notes will increase the diluted share count when the average share price over a quarterly or annual reporting period is greater than $35.92, the conversion price of the Notes.For the year ended December 31, 2021 the Notes were anti-dilutive.On August 5, 2020, we entered into an Equity Distribution Agreement for an At-The-Market equity offering program (“ATM Program”) where we may issue and sell, from time to time, shares of our common stock. Our ATM Program allowed for an aggregate gross sales price of up to a total of $150,000, depending upon market conditions and our liquidity requirements, through Truist Securities, Inc. and HSBC Securities (USA) Inc. For the year ended December 31, 2020, we sold 4,616 shares of our common stock under our ATM Program for net proceeds of $24,664, net of $849 in fees, commissions and other costs. As of December 31, 2020, we had $124,487 in availability remaining under the ATM Program. On January 6, 2021, we terminated the ATM Program.(20) Noncontrolling InterestsAs of December 31, 2020, we owned 100% of the capital and voting rights of Robtec, a service bureau and distributor of 3D printing and scanning products in Brazil. Approximately 70% of the capital and voting rights of Robtec was acquired on November 25, 2014. On January 7, 2020, we made a payment equal to the redemption price of $10,000 and acquired the remaining 30% of the capital and voting rights.F-39(21) Fair Value MeasurementsASC 820, “Fair Value Measurements and Disclosures,” defines fair value asis the exchange price that would be received forto sell 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 onat the measurement date. ASC 820 also establishes a fairFair value hierarchy that requires an entitymeasurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation techniques maximize the use of observable inputs 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 thatand minimize use of unobservable inputs.Cash equivalents, Israeli severance funds and derivatives 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; orLevel 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.F-25For the Company, the above standard applies to cash equivalents and earnout consideration. The Company utilizesvalued utilizing 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 December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Description 20,244 20,244 5,115 5,115 Cash equivalents aCash equivalents a$ 485,521 $ — $ — $ 485,521 Israeli severance funds bIsraeli severance funds b— 2,070 — 2,070 Fair Value Measurements as of December 31, 2020 (in thousands) Level 1 Level 2 Level 3 Total Description 25,206 25,206 10,806 10,806 Cash equivalents aCash equivalents a$ 199 $ — $ — $ 199 Israeli severance funds bIsraeli severance funds b— 6,422 — 6,422 Derivative financial instruments cDerivative financial instruments c$ — $ (700) $ — $ (700) (a)Cash equivalents include funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in the consolidated balance sheet.
a.Cash equivalents include funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in the consolidated balance sheet.(b)The fair value of the earnout consideration, which is based on the present value of the expected future payments to be made to the sellers of the acquired businesses, was derived by analyzing the future performance of the acquired businesses using the earnout formula and performance targets specified in each purchase agreement and adjusting those amounts to reflect the ability of the acquired entities to achieve the stated targets. Given the significance of the unobservable inputs, the valuations are classified in Level 3 of the fair value hierarchy. The change in earnout consideration from December 31, 2016 to December 31, 2017 reflects a payment of $3,206, accretion of $921 and adjustments of $3,406.The Companyb.We partially fund a liability for our Israeli severance requirement through monthly deposits into fund accounts, the value of these contributions are recorded to non-current assets on the consolidated balance sheet.c.Derivative instruments are reported based on published market prices for similar assets or are estimated based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices and spot and future exchange rates. See Note 15 for additional information on our derivative financial instruments.We did not have any transfers of assets and liabilities between levelsLevel 1, Level 2 and Level 3 of the fair value measurement hierarchy during the year ended December 31, 2017.In addition to the assets and liabilities included in the above table, certain of our assets and liabilities are to be initially measured at fair value on a non-recurring basis. This includes goodwill and other intangible assets which are measured at fair value for impairment assessment.at acquisition and adjusted to fair value only if their fair value falls below the initial fair value. For further discussion on the valuation techniques and inputs used in the fair value measurement of goodwill and other intangible assets, see Notes 2, 63, 10 and 7.11.F-26Note 19(22) Income TaxesThe U.S. Tax Cuts and Jobs Act (“Tax Act”) was enacted in December 2017. The Tax Act significantly changed U.S. tax law by, among other things, lowering the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, implementing a territorial tax system and imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, the Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $37,889 tax expense that was offset by an adjustment to the Company’s valuation allowance of a provisional $37,889 tax benefit.The Tax Act also provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”). The Company recognized a provisional $9,474 of income tax expense related to the transition tax, which was offset by its current year net operating loss. As such, the Company does not expect any cash tax payment to be made in connection with the transition tax.While the Tax Act provides for a modified territorial tax system, beginning in 2018, global intangible low-taxed income (“GILTI”) provisions will result in an incremental tax on low taxed foreign income. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. Under U.S. GAAP, the Company is required to make an accounting policy election to either (1) treat taxes due related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factor such amounts into the measurement of the Company’s deferred taxes (the “deferred method”). The Company is continuing to evaluate the GILTI tax rules and have not yet adopted a policy to account for the related impacts.The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company has recognized a net tax expense of $47,362 for the provisional tax impacts related to the one-time transition tax and the revaluation of deferred tax balances which was offset by $47,362 of provisional tax benefit associated to the change in the valuation allowance and included these estimates in the consolidated financial statements for the year ended December 31, 2017. The Company is in the process of analyzing the impact of the various provisions of the Tax Act. The ultimate impact may materially differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. The Company expects to complete the analysis within the measurement period in accordance with SAB 118.The components of the Company’sour income before income taxes are as follows:(75,965) (53,868) (580,720) 18,444 14,056 (74,233) (57,521) (39,812) (654,953) 2021 2020 2019 Income (Loss) before income taxes: Domestic $ 308,514 $ (45,973) $ (79,821) Foreign 11,026 (97,437) 14,721 Total $ 319,540 $ (143,410) $ (65,100) F-272017, 20162021, 2020 and 20152019 are as follows:(83) (2,110) 10,753 741 30 169 12,711 8,099 925 13,369 6,019 11,847 (1,245) (5,252) 1,097 (225) (6,664) (5,321) 2,602 (5,567) (6,566) (2,875) 7,802 (547) 8,972 F-402021 2020 2019 Current: U.S. federal $ (8,675) $ 1,294 $ (135) State 2,097 451 801 Foreign 6,861 5,645 7,220 Total 283 7,390 7,886 Deferred: U.S. federal — 67 (1,008) State — — — Foreign (2,795) (1,273) (2,346) Total (2,795) (1,206) (3,354) Total income tax (benefit) provision $ (2,512) $ 6,184 $ 4,532 The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2017, 20162021, 2020 and 20152019 as follows:% of Pretax Loss 2021 2020 2019 35.0 35.0 35.0 Tax provision based on the federal statutory rate 21.0 % 21.0 % 21.0 % 48.8 (58.5) (16.4) Increase in valuation allowances (10.4) (8.5) (21.3) Dividends not taxable Dividends not taxable — 9.5 — Net operating loss carryback claim Net operating loss carryback claim — 6.2 — Change in carryforward attributes Change in carryforward attributes (0.7) (3.2) — Global intangible low-taxed income inclusion Global intangible low-taxed income inclusion 1.2 (0.3) (7.0) Nondeductible expenses Nondeductible expenses 1.4 (13.5) (1.8) Taxes related to distributions Taxes related to distributions — — (0.8) Foreign income tax rate differential Foreign income tax rate differential — (3.3) 1.0 Deemed income related to foreign operations Deemed income related to foreign operations — (1.6) (0.5) Tax rate change Tax rate change (0.7) (0.3) (1.1) Employee share-based payments Employee share-based payments (1.3) (1.4) — 2.9 1.7 (0.4) Other — (0.4) (0.9) 2.2 Deferred and payable adjustments Deferred and payable adjustments 1.4 (2.6) 3.3 ASU 842 adoption ASU 842 adoption — — (0.1) State taxes, net of federal benefit, before valuation allowance State taxes, net of federal benefit, before valuation allowance 1.0 0.5 2.8 2.0 18.8 (0.7) Return to provision adjustments (0.1) 0.9 (2.5) 1.0 3.9 0.9 (1.1) 13.0 (1.4) (25.1) (0.5) (3.3) (1.1) (0.1) (4.1) (8.4) (0.6) (13.2) (16.5) (65.9) 9.4 3.1 3.1 (2.0) (16.8) 6.5 0.2 Other tax credits Other tax credits (0.5) 0.2 (1.9) Uncertain tax positions and audit settlements Uncertain tax positions and audit settlements (3.0) (7.5) 2.8 Divestitures Divestitures (10.1) — — (13.6) 1.4 (1.4) Effective tax rate (0.8) % (4.3) % (7.0) % The difference between the Company’sour effective tax rate for 20172021 and the federal statutory rate was 48.621.8 percentage points. The difference in the effective rate is primarily due primarilyto differences in book and stock bases related to the impactdivestitures of the Tax Act, change inCimatron and Simbionix, valuation allowances that were recorded during the year, as well as the Company’s foreign income inclusionsallowance changes, and employee share-based payments that were previously recognized through other comprehensive income. The difference between the Company’sour effective tax rate for 20162020 and the federal statutory rate was 33.625.3 percentage points. The Company recorded nondeductible expenses, including non-deductible goodwill impairment charges and a valuation allowance in the U.S. and certain foreign jurisdictions, which contributed to a difference in the effective rate is primarily due to valuation allowance changes, nondeductible impairment charges, dividends not taxable, net operating loss carryback claim, and adjustments to uncertain tax rate.F-41The difference between the Company’sour effective tax rate for 20152019 and the federal statutory rate was 36.428.0 percentage points. The Company incurred nondeductible expenses and recognized income for tax purposes, net of tax credits, not includeddifference in financial statement income, increasing the effective rate is primarily due to valuation allowance changes, provisions for Global Intangible Low Taxed Income ("GILTI"), prior period adjustments and adjustments to uncertain tax rate. The Company is benefiting from the U.S. domestic production activities deductionpositions.In 2021, 2020 and from research credits, reducing the effective tax rate.During the third quarter2019, there were no significant changes to our valuation allowance assertions. We continue to review results of 2017, the Company determined thatoperations and forecast estimates to determine if it is more likely than not that the deferred tax assets related to Phenix Systems would notwill be realized based on the Company’s review of results from operations and other evidence. During the fourth quarter,F-28it was determined that it was more likely than not that Layerwise, located in Belgium, would realize benefits based on results from operations and utilization of existing net operating losses. There were no other changes to the Company’s valuation allowance assertions.In 2016, there were no changes to the Company’s valuation allowance assertions. During the fourth quarter of 2015, based upon the Company’s review of results of operations and forecast estimates in connection with the assessment of deferred tax benefits, the Company determined that it is more likely than not that the deferred tax assets in the US and certain foreign jurisdictions will not be realized. the Company’sour net deferred income tax assets and net deferred income tax liabilities(liabilities) at December 31, 20172021 and 20162020 are as follows:24,232 40,014 5,988 14,384 11,308 20,022 35,004 29,398 10,908 13,571 3,011 5,330 4,629 3,502 (80,796) (109,913) 14,284 16,308 11,301 16,968 7,304 8,818 642 19,247 25,786 (4,963) (9,478) (in thousands) 2021 2020 Deferred income tax assets: Intangibles $ 10,950 $ 17,395 Stock options and restricted stock awards 8,005 2,544 Reserves and allowances 8,692 10,450 Net operating loss carryforwards 38,394 67,025 Tax credit carryforwards 19,967 18,813 Accrued liabilities 2,893 6,077 Deferred revenue 8,141 4,637 Lease Tax Asset 10,362 8,343 163(j) Limitation Carryforward — 2,854 Valuation allowance (91,165) (123,113) Total deferred income tax assets 16,239 15,025 Deferred income tax liabilities: Intangibles 2,356 2,548 Property, plant, and equipment 2,110 2,662 Lease Tax Liability 8,458 6,379 Other 434 1,345 Total deferred income tax liabilities 13,358 12,934 Deferred income tax asset held for sale $ — $ 560 Net deferred income tax assets $ 2,881 $ 1,531 At December 31, 2017, $35,0042021, $38,394 of the Company’sour deferred income tax assets was attributable to $237,186$279,684 of gross net operating loss carryforwards, which consisted of $115,846$84,869 of loss carryforwards for U.S. federal income tax purposes, $101,563$144,455 of loss carryforwards for U.S. state income tax purposes and $19,777$50,360 of loss carryforwards for foreign income tax purposes.At December 31, 2016, $29,398 $23,797 of the Company’s deferred income tax assets was attributable to $148,199 of gross operating loss carryforwards, which consisted of $50,587 loss carryforwards for U.S. federal income tax purposes, $78,274 of loss carryforwards for U.S. state income tax purposes and $19,338 of loss carryforwards for foreign income tax purposes.The net operating loss carryforwards for U.S. federal income tax purposes beginare acquisition related and are subject to potential measurement period adjustments under ASC 805.$1,304 of gross net operating loss carryforwards for U.S. federal income tax purposes will expire in 2022.2037. All other loss carryforwards for U.S. federal income tax purposes do not expire. The net operating loss carryforwards for U.S. state income tax purposes begin to expire in 2018.2022. In addition, certain loss carryforwards for foreign income tax purposes begin to expire in 20182024 and certain other loss carryforwards for foreign purposes do not expire.At December 31, 2017,2021, tax credit carryforwards included in the Company’sour deferred income tax assets consisted of $2,845$8,411 of research and experimentation credit carryforwards for U.S. federal income tax purposes, $3,745$4,201 of research and experimentation tax credit carryforwards for U.S. state income tax purposes, $3,549$6,629 of foreign tax credits for U.S. federal income tax purposes, $474 of other U.S. federal tax credits, $170 of research and experimentation tax credit carryforwards for foreign income tax purposes and $600$729 of other state tax credits. Certain state research and experimentation and other state credits beginbegan to expire in 2024. The Company has2021. We have recorded a valuation allowance related to the U.S. federal and state tax credits.At December 31, 2016, tax credit carryforwards included in the Company’s deferred income tax assets consisted of $2,544 of research and experimentation credit carryforwards for U.S. federal income tax purposes, $2,649 of research and experimentation tax credit carryforwards for U.S. state income tax purposes, $7,155 of foreign tax credits for U.S. federal income tax purposes, $474 of other U.S. federal tax credits, $149 of research and experimentation tax credit carryforwards for foreign income tax purposes and $600 of other state tax credits. Certain state research and experimentation credits begin to expire in 2017; other state credits begin to expire in 2024. The Company has recorded a valuation allowance relatedF-42Due to the U.S. federal and stateone time transition tax, credits.F-29The Company has provided for $9,474 in tax for the Transition Tax discussed above which has been offset by its 2017 net operating loss. As the Company’sour previously unremitted earnings have now been subjected to U.S. federal income tax, although, other additional taxes such as, withholding tax, could be applicable. We intend to permanently reinvest its earnings outside the U.S. and as such, have not provided for any repatriationadditional taxes on approximately $121,509 of unremitted earnings. We believe the unrecognized deferred tax liability related to these earnings to the U.S. would not be expected to incur significant additional taxes related to such amounts. However, the Company’s estimates are provisional and subject to further analysis.Including interest and penalties, the Company increased itswe decreased our unrecognized benefits by $218$10,300 for the year ended December 31, 20172021 and increased itsour unrecognized tax benefits by $10,077$1,659 for the year ended December 31, 2016.2021. The Company doesdecrease was primarily related to the release of unrecognized tax benefits due to the receipt of two favorable U.S. private letter rulings and the settlement of an audit in a foreign jurisdiction. We do not anticipate any additional unrecognized tax benefits during the next 12 months that would result in a material change to itsour consolidated financial position. The Company includestotal amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $5,596. We include interest and penalties in the Consolidated Financial Statementsconsolidated financial statements as a component of income tax expense.Unrecognized Tax Benefits* (in thousands) 2021 2020 2019 (18,251) (8,296) (1,845) Balance at January 1 $ (25,902) $ (15,467) $ (13,031) (4,104) (2,658) Increases related to prior year tax positions (467) (10,426) (2,684) 4,045 1,475 Decreases related to prior year tax positions 8,886 788 857 Decreases related to prior year tax positions as a result of lapse of statute Decreases related to prior year tax positions as a result of lapse of statute 371 — — Decreases related to settlement Decreases related to settlement 1,043 — — (7,297) (7,926) Increases related to current year tax positions (553) (797) (609) Increases related to acquired tax positions Increases related to acquired tax positions (639) — — (18,310) (18,251) (8,296) Balance at December 31 $ (17,261) $ (25,902) $ (15,467) * The unrecognized tax benefit balance includes an insignificant amount of interest and penalties.Tax years 20032013 through 20172020 remain subject to examination by the U.S. Internal Revenue Service with most of the years open to examination due to the generation and utilization of various tax credits.(“IRS”). State income tax returns are generally subject to examination for a period of three to four years after filing the respective tax returns. The impact on such tax returns of any federal changes remains subjectyears 2016 through 2020 remain open to examination by the various states for a period of upforeign taxing jurisdictions to one year after formal notification towhich the states. The Company files income tax returns (which are open to examination beginning in the year shown in parentheses) in Australia (2013), Belgium (2014), Brazil (2012), China (2014), France (2014), Germany (2013), India (2013), Israel (2013), Italy (2012), Japan (2012), Korea (2012), Mexico (2012), Netherlands (2012), Switzerland (2012), the United Kingdom (2016) and Uruguay (2012).The following presents the changes in the balance of the Company’sour deferred income tax asset valuation allowance:109,913 (28,071) (1,046) 80,796 107,312 20,450 (17,849) 109,913 107,312 107,312 Year Ended Item Balance at beginning of year Additions (reductions) charged to expense Other Balance at end of year 2021 Deferred income tax asset valuation allowance $ 123,113 $ (31,948) $ — $ 91,165 2020 Deferred income tax asset valuation allowance 109,643 13,470 — 123,113 2019 Deferred income tax asset valuation allowance $ 95,398 $ 14,245 $ — $ 109,643 Note 20 Segment InformationThe Company operates as one segment and conducts its business through various offices and facilities located throughout the Americas region (United States, Canada, Brazil, Mexico and Uruguay), EMEA region (Belgium, France, Germany, Israel, Italy, the Netherlands, Switzerland and the United Kingdom), and Asia Pacific region (Australia, China, India, Japan and Korea). 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.” Financial information concerning the Company’s geographical locations is based on the location of the selling entity. Such summarized financial information concerning the Company’s geographical operations is shown in the following tables:322,399 329,553 345,032 11,377 11,332 12,944 220,357 193,141 200,104 91,936 98,939 108,083 646,069 632,965 666,163 F-30210,280 223,544 257,379 168,846 156,839 150,740 266,943 252,582 258,044 646,069 632,965 666,163 2,169 36,914 14,775 20,388 74,246 70,709 6,005 13,093 4,945 94,752 2,790 174 3,936 6,900 75,668 42,919 28,042 29,269 175,898 3,013 28,881 10,958 21,639 64,491 65,209 3,365 8,921 6,091 83,586 3,046 369 3,959 7,374 71,268 32,246 20,248 31,689 155,451 3,073 36,552 17,133 17,602 74,360 58,489 4,232 9,643 6,172 78,536 3,027 4 79 3,585 6,695 64,589 40,788 26,855 27,359 159,591 (71,951) (53,725) (596,283) (292) (1,613) (71,201) 20,173 19,591 27,432 (52,070) (35,747) (640,052) (1,903) (2,673) (1,872) (53,973) (38,420) (641,924) 25,484 25,892 43,613 31,135 29,946 34,596 5,422 4,697 4,860 62,041 60,535 83,069 F-3123,925 8,172 14,062 5,227 5,947 7,469 1,729 2,448 868 30,881 16,567 22,399 329,550 345,412 382,738 454,319 382,163 406,084 112,895 121,578 103,137 896,764 849,153 891,959 51,475 105,750 98,913 52,642 44,877 34,388 32,227 34,320 22,342 136,344 184,947 155,643 94,319 96,016 113,364 306,988 262,543 285,980 57,035 57,644 60,148 458,342 416,203 459,492 Note 21(23) Commitments and ContingenciesThe Company leasesWe lease certain of itsour facilities and equipment under non-cancelable operating and finance leases. See Note 12.We have an inventory purchase commitment with an assembling manufacturer. See Note 16.Supply commitments totaled $83,305$31,094 and $62,935$55,317 as of December 31, 20172021 and 2016,2020, respectively. Commitments for printer assemblies and inventory items at December 31, 20172021 and 20162020 were $57,592$29,916 and $51,156,$27,030, respectively. Commitments for operating costs and capital expenditures and operating costs at December 31, 20172021 and 20162020 were $25,713$1,179 and $11,779,$28,287, respectively.Certain of the Company’s acquisitions contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. The total liability recorded for these earnouts as of December 31, 2017 and 2016 was $5,115 and $10,806, respectively.Put OptionsOwners of interests in a certain subsidiary have the right in certain circumstances to require the Company to acquire either a portion of or all of the remaining ownership interests held by them. The owners’ ability to exercise any such “put option” right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise. In addition, these rights cannot be exercised prior to a specified exercise date. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts in 2019.F-32IndemnificationF-43Management estimates, assuming that the subsidiary owned by the Company at December 31, 2017, performs over the relevant future periods at its forecasted earnings levels, that these rights, if exercised, could require the Company, in future periods, to pay approximately $8,872 to the owners of such rights to acquire such ownership interests in the relevant subsidiary. This amount has been recorded as redeemable noncontrolling interests on the Consolidated Balance Sheet at December 31, 2017 and 2016. The ultimate amount payable relating to this transaction will vary because it is dependent on the future results of operations of the subject business. IndemnificationIn the normal course of business, the Companywe periodically entersenter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of the Company’sour products. Historically, costs related to these indemnification provisions have not been significant, and the Company iswe are unable to estimate the maximum potential impact of these indemnification provisions on its future results of operations.To the extent permitted under Delaware law, the Company indemnifies itswe indemnify our directors and officers for certain events or occurrences while the director or officer is, or was, serving at the Company’sour request in such capacity, subject to limited exceptions. The maximum potential amount of future payments the Companywe could be required to make under these indemnification obligations is unlimited; however, the Company haswe have directors and officers insurance coverage that may enable the Companyus 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.LitigationSecuritiesExport Controls and Derivative LitigationThe Company and certain of its former executive officers have been named as defendants in a consolidated putative stockholder class action lawsuit pending in the United States District Court for the District of South Carolina. The consolidated action is styled KBC Asset Management NV v. 3D Systems Corporation, et al., Case No. 0:15-cv-02393-MGL. The Amended Consolidated Complaint (the “Complaint”), which was filed on December 9, 2015, alleges that defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions and that the former officers are control persons under Section 20(a) of the Exchange Act. The Complaint was filed on behalf of stockholders who purchased shares of the Company’s common stock between October 29, 2013, and May 5, 2015 and seeks monetary damages on behalf of the purported class. Defendants filed a motion to dismiss the Complaint in its entirety on January 14, 2016, which was denied by Memorandum Opinion and Order dated July 25, 2016 (the “Order”). Defendants filed a motion for reconsideration of the Order on August 4, 2016, which was denied by Order dated February 24, 2017. On September 28, 2017, the Court granted Lead Plaintiff’s Motion for Class Certification. On February 15, 2018, following mediation, the parties entered into a Stipulation of Settlement that provides for, among other things, payment of $50 million by the Company’s insurance carriers and a mutual exchange of releases. The Stipulation of Settlement calls for a dismissal of all claims against the Company and the individual defendants with prejudice following Court approval, a denial by defendants of any wrongdoing, and no admission of liability. On February 15, 2018, Lead Plaintiff filed an Unopposed Motion for Preliminary Approval of Class Action Settlement. On February 21, 2018, the Court entered an Order Preliminarily Approving Settlement and Providing for Notice. The final approval hearing has been scheduled for June 25, 2018. A current liability of $50,000 was recorded for the agreed upon settlement amount and an offsetting receivable of $50,000 was recorded for related insurance proceeds.Nine related derivative complaints have been filed by purported Company stockholders against certain of the Company’s former executive officers and members of its Board of Directors. The Company is named as a nominal defendant in all nine actions. The derivatives complaints are styled as follows: (1) Steyn v. Reichental, et al., Case No. 2015-CP-46-2225, filed on July 27, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Steyn”); (2) Piguing v. Reichental, et al., Case No. 2015-CP-46-2396, filed on August 7, 2015 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina (“Piguing”); (3) Booth v. Reichental, et al., Case No. 15-692-RGA, filed on August 6, 2015 in the United States District Court for the District of Delaware; (4) Nally v. Reichental, et al., Case No. 15-cv-03756-MGL, filed on September 18, 2015 in the United States District Court for the District of South Carolina (“Nally”); (5) Gee v. Hull, et al., Case No. BC-610319, filed on February 17, 2016 in the Superior Court for the State of California, County of Los Angeles (“Gee”); (6) Foster v. Reichental, et al., Case No. 0:16-cv-01016-MGL, filed on April 1, 2016 in the United States District Court for the District of South Carolina (“Foster”); (7) Lu v. Hull, et al., Case No. BC629730, filed on August 5, 2016 in the Superior Court for the State of California, County of Los Angeles (“Lu”); (8) Howes v. Reichental, et al., Case No. 0:16-cv-2810-MGL, filed on August 11, 2016 in the United States District Court for the District of South Carolina (“Howes”); and (9) Ameduri v. Reichental, et al., Case No. 0:16-cv-02995-MGL, filed on September 1, 2016 in the United States District Court for the District of South Carolina (“Ameduri”). Steyn and Piguing were consolidated into one action styled as In re 3D Systems Corp. Shareholder Derivative Litig., Lead Case No. 2015-CP-46-2225 in the Court of Common Pleas for the 16th Judicial Circuit, County of York, South Carolina. Gee and Lu were consolidated into one action styled as Gee v. Hull, et al., Case No. BC610319 in the Superior Court for the State of California, County of Los Angeles. Nally, Foster, Howes, and Ameduri wereF-33consolidated into one action in the United States District Court for the District of South Carolina with Nally as the lead consolidated case.The derivative complaints allege claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment and seek, among other things, monetary damages and certain corporate governance actions.All of the derivative complaints listed above have been stayed until the earlier of the close of discovery or the deadline for appealing a dismissal in the KBC Asset Management NV securities class action.The Company believes the claims alleged in the derivative lawsuits are without merit and intends to defend the Company and its officers and directors vigorously. Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, et. al.On August 23, 2013, Ronald Barranco, a former Company employee, filed two lawsuits against the Company and certain officers in the United States District Court for the District of Hawaii. The first lawsuit (“Barranco I”) is captioned Ronald Barranco and Print3D Corporation v. 3D Systems Corporation, 3D Systems, Inc., and Damon Gregoire, Case No. CV 13-411 LEK RLP, and alleges seven causes of action relating to the Company’s acquisition of Print3D Corporation (of which Mr. Barranco was a 50% shareholder) and the subsequent employment of Mr. Barranco by the Company. The second lawsuit (“Barranco II”) is captioned Ronald Barranco v. 3D Systems Corporation, 3D Systems, Inc., Abraham Reichental, and Damon Gregoire, Case No. CV 13-412 LEK RLP, and alleges the same seven causes of action relating to the Company’s acquisition of certain website domains from Mr. Barranco and the subsequent employment of Mr. Barranco by the Company. Both Barranco I and Barranco II allege the Company breached certain purchase agreements in order to avoid paying Mr. Barranco additional monies pursuant to royalty and earn out provisions in the agreements. The Company and its officers timely filed responsive pleadings on October 22, 2013 seeking, inter alia, to dismiss Barranco I due to a mandatory arbitration agreement and for lack of personal jurisdiction and to dismiss Barranco II for lack of personal jurisdiction.With regard to Barranco I, the Hawaii district court, on February 28, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina for the convenience of the parties. However, the Hawaii court recognized that the plaintiff’s claims are all subject to mandatory and binding arbitration in Charlotte, North Carolina. Because the Hawaii court was without authority to compel arbitration outside of Hawaii, the court ordered that the case be transferred to the district court encompassing Charlotte (the United States District Court for the Western District of North Carolina) so that court could compel arbitration in Charlotte. On April 17, 2014, Barranco I was transferred to the United States District Court for the Western District of North Carolina. Plaintiff filed a demand for arbitration on October 29, 2014. On December 9, 2014, the Company filed its answer to plaintiff’s demand for arbitration. On February 2, 2015, plaintiff filed an amended demand that removed Mr. Gregoire as a defendant from the matter, and on February 4, 2015 the Company filed its amended answer. The parties selected an arbitrator and arbitration took place in September 2015 in Charlotte, North Carolina.On September 28, 2015, the arbitrator issued a final award in favor of Mr. Barranco with respect to two alleged breaches of contract and implied covenants arising out of the contract. The arbitrator found that the Company did not commit fraud or make any negligent misrepresentations to Mr. Barranco. Pursuant to the award, the Company is to pay approximately $11,282, which includes alleged actual damages of $7,254, fees and expenses of $2,318 and prejudgment interest of $1,710. The Company disagrees with the single arbitrator’s findings and conclusions and believes the arbitrator’s decision exceeds his authority and disregards the applicable law. As an initial response, the Company filed a motion for modification on September 30, 2015, based on mathematical errors in the computation of damages and fees. On October 16, 2015, the arbitrator issued an order denying the Company’s motion and sua sponte issuing a modified final award in favor of Mr. Barranco in the same above-referenced amounts, but making certain substantive changes to the award, which changes the Company believes were improper and outside the scope of his authority and the American Arbitration Association rules. On November 20, 2015, the Company filed a motion to vacate the arbitration award in the federal court in the United States District Court for the Western District of North Carolina. Claimants also filed a motion to confirm the arbitration award. A hearing was held on the motions on September 29, 2016 in federal court in the Western District of North Carolina. The court requested supplemental briefing by the parties, which briefs were filed on July 11, 2016.On August 31, 2016, the court issued an order granting in part and denying in part Plaintiff’s motion to confirm the arbitration award and for judgment, entering judgment in the principal amount of the arbitration award and denying Plaintiff’s motion for fees and costs. The court denied the Company’s motion to vacate. On September 7, 2016, Plaintiff filed a motion to amend the judgment to include prejudgment interest. The Company opposed that motion and the parties submitted briefing. On September 28, 2016 the Company filed a motion to alter or amend the judgment. Plaintiff opposed the motion and the parties submitted briefing. On May 18, 2017, the court issued an opinion and order denying the Company’s motion to alter or amend and denying Plaintiff’s motion for prejudgment interest. On September 16, 2017, the Company filed a notice of appeal with the United States Court of Appeals for the Fourth Circuit. The appeal is pending. The Company filed its Opening Brief and the Joint Appendix on August 28, 2017. Plaintiff filed its Opening Brief on September 11, 2017. The Company filed its Reply Brief on September 25, 2017.F-34Notwithstanding the Company’s right to appeal, given the arbitrator’s decision, the Company recorded an $11,282 expense provision for this matter in the quarter ended September 30, 2015. The provision is subject to adjustment based on the ultimate outcome of the Company’s appeal. If it is ultimately determined that money is owed following the full appellate process in federal court, the Company intends to fund any amounts to be paid from cash on hand. This amount has been classified as a current liability given the timeline of the appeals process. With regard to Barranco II, the Hawaii district court, on March 17, 2014, denied the Company’s motion to dismiss and its motion to transfer venue to South Carolina. However, the Hawaii court dismissed Count II in plaintiff’s complaint alleging breach of the employment agreement. The Company filed an answer to the complaint in the Hawaii district court on March 31, 2014. On November 19, 2014, the Company filed a motion for summary judgment on all claims which was heard on January 20, 2015. On January 30, 2015, the court entered an order granting in part and denying in part the Company’s motion for summary judgment. The Order narrowed the plaintiff’s claim for breach of contract and dismissed the plaintiff’s claims for fraud and negligent misrepresentation. As a result, Messrs. Reichental and Gregoire were dismissed from the lawsuit. The case was tried to a jury in May 2016, and on May 27, 2016 the jury found that the Company was not liable for either breach of contract or breach of the implied covenant of good faith and fair dealing. Additionally, the jury found in favor of the Company on its counterclaim against Mr. Barranco and determined that Mr. Barranco violated his non-competition covenant with the Company. On July 5, 2017, the court ordered a bench trial regarding causation and damages with respect to the equitable accounting on the Company’s prevailing counterclaim against Mr. Barranco. The bench trial took place on November 20, 2017. The Court ordered the submission of proposed findings of fact and conclusions of law. The Company submitted its proposed Findings of Fact and Conclusions of Law on January 12, 2018. Barranco submitted his on February 2, 2018. The Company submitted its Reply on February 16, 2018. The Court is expected to rule on the accounting thereafter.ExportGovernment Contracts Compliance MatterIn October 2017, the Companywe received an administrative subpoena from the Bureau of Industry and Security of the Department of Commerce (“BIS”) requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to itsour Quickparts.com, Inc. subsidiary. In addition, while collecting information responsive to the above-referenced subpoena, the Companyour internal investigation identified potential violations of the International Traffic in Arms Regulations (“ITAR”)”) administered by the Directorate of Defense Trade Controls of the Department of State (“DDTC”) and potential violations of the Export Administration Regulations administered by the BureauBIS. On June 8, 2018 and thereafter, we submitted voluntary disclosures to BIS and DDTC identifying numerous potentially unauthorized exports of Industrytechnical data.As part of our ongoing review of trade compliance risks and Securityour cooperation with the government, on November 20, 2019, we submitted to the U.S. Treasury Department’s Office of the Department of Commerce. On February 12, 2018, the Company submittedForeign Assets Control (“OFAC”) an initial notice of voluntary disclosure regarding potential violations of economic sanctions related to Iran. We continued to investigate this issue and filed final disclosures with OFAC on May 20, 2020 and December 21, 2021. We have and will continue to implement compliance enhancements to our export controls, trade sanctions, and government contracting compliance program to address the issues identified through our ongoing internal investigation and will cooperate with DDTC and BIS, as well as the U.S. Departments of Justice, Defense, Homeland Security and Treasury in whichtheir ongoing reviews of these matters. In connection with these ongoing reviews, in August 2020, the Company identified certain potentially unauthorized exportsreceived 2 federal grand jury subpoenas issued by the U.S. District Court for the Northern District of technical data.Texas. The Company is continuingresponded to conductthese 2 subpoenas and internal review and cooperatingwill continue to fully cooperate with the investigation, butU.S. Department of Justice in the related investigation.In addition, on July 19, 2019, we received a notice of immediate suspension of federal contracting from the United States Air Force, pending the outcome of an ongoing investigation. The suspension applied to 3D Systems, its subsidiaries and affiliates, and was related to the potential export controls violations involving our ODM business described above. Under the suspension, we were generally prohibited from receiving new federal government contracts or subcontracts from any executive branch agency as described in the provisions of 48 C.F.R Subpart 9.4 of the Federal Acquisition Regulation. The suspension allowed us to continue to perform current federal contracts, and also to receive awards of new subcontracts for items under $35 and for items considered commercially available off-the-shelf items. The Air Force lifted the suspension on September 6, 2019 following the execution of a two-year Administrative Agreement with us. We are now eligible to obtain and perform U.S. government contracts and subcontracts without restrictions. Under the Administrative Agreement, we were monitored and evaluated by independent monitors who reported to the Air Force on our compliance with the terms of the Company’s Ethics & Compliance Program, including its overall culture, government contracting compliance program, and export controls compliance program. The Air Force terminated the Administrative Agreement and associated monitorship early, on August 12, 2021, after the monitors found that we had satisfied the requirements of the Administrative Agreement.Although we cannot predict the ultimate resolution of this matter. The Company expectsthese matters, we have incurred and expect to continue to incur significant legal costs and other expenses in connection with responding to these inquiries.If the U.S. government findsagencies.Shareholder SuitsF-44The Company and certain of its current and former executive officers have been named as defendants in a consolidated putative stockholder class action lawsuit pending in the United States District Court for the Eastern District of New York. The action is styled In re 3D Systems Securities Litigation, No. 1:21-cv-01920-NGG-TAM (E.D.N.Y.) (the “Securities Class Action”). On July 14, 2021, the Court appointed a Lead Plaintiff for the putative class and approved his choice of Lead Counsel. Lead Plaintiff filed his Consolidated Amended Complaint (the “Amended Complaint”) on September 13, 2021, alleging that defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and SEC Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions, and that the current and former executive officers named as defendants are control persons under Section 20(a) of the Exchange Act. The Amended Complaint was filed on behalf of stockholders who purchased shares of the Company’s common stock between May 6, 2020 and March 5, 2021, and seeks monetary damages on behalf of the purported class. Defendants moved to dismiss the Amended Complaint on February 15, 2022, and the motion will be fully briefed in May 2022.The Company has violated onebeen named as a nominal defendant and certain of its current and former executive officers have been named as defendants in derivative lawsuits pending in the United States District Court for the Eastern District of New York and the South Carolina Court of Common Pleas for the 16th Circuit, York County. The actions are styled Nguyen v. Joshi, et al., No. 21-cv-03389-DG-CLP (E.D.N.Y.) (the “New York Derivative Action”), Lesar v. Graves, et al., No. 2021CP4602308 (S.C., Ct. of Common Pleas for the 16th Judicial Cir., Cty. of York) (the “Lesar Action”), and Scanlon v. Graves, et al., No. 2021CP4602312 (S.C., Ct. of Common Pleas for the 16th Judicial Cir., Cty. of York) (the “Scanlon Action”). The Complaint in the New York Derivative Action, which was filed on June 15, 2021, asserts breach of fiduciary duty claims against all defendants and claims for contribution under the federal securities laws against certain of the defendants. The Complaints in the Lesar Action and the Scanlon Action, which were filed on July 26, 2021, assert breach of fiduciary duty and unjust enrichment claims against defendants. On August 27, 2021, the New York Derivative Action was stayed until 30 days after the earlier of: (i) the close of discovery in the Securities Class Action, or more export control laws or trade sanctions,(ii) the deadline for appealing a dismissal of the Securities Class Action with prejudice. On October 26, 2021, the Lesar Action and the Scanlon Action were consolidated into a single stockholder derivative action, styled as In Re 3D Systems Corp. Shareholder Derivative Litigation, No. 2021CP4602308 (S.C., Ct. of Common Pleas for the 16th Judicial Cir., Cty. Of York) (the “South Carolina Derivative Action”).The Company believes the claims alleged in the putative securities class action and derivative lawsuits are without merit and the Company could be subjectintends to various penalties. By statute, these penalties can include butdefend itself and its current and former officers vigorously.OtherWe are not limited to fines, which by statute may be significant, denial of export privileges, and debarment from participation in U.S. government contracts; and any assessment of penalties could also harm the Company’s reputation, create negative investor sentiment, and affect the Company’s share value. In connection with any resolution, the Company may also be required to undertake additional remedial compliance measures and program monitoring. The Company cannot at this time predict when BIS and/or DDTC will conclude their investigations or determine an estimated cost, if any, or range of costs, for any penalties or fines that may be incurred upon resolution of this matter.The Company is involved in various other legal matters incidental to itsour business. Although the Companywe cannot predict the results of the litigation with certainty, the Company believeswe believe that the disposition of all currentthese various other legal matters will not have a material adverse effect, individually or in the aggregate, on itsour consolidated results of operations, consolidated statement of cash flows or consolidated financial position.F-35Note 22(24) Accumulated Other Comprehensive Income (Loss)The changes in the balances of accumulated other comprehensive loss by component are as follows:(37,675) (1,873) (39,548) (13,063) (902) 288 (13,677) (50,738) (2,775) 288 (53,225) 31,419 220 50 31,689 (19,319) (2,555) 338 (21,536) (in thousands) Foreign currency translation adjustment Defined benefit pension plan Derivative financial instruments Liquidation of non-US entity and purchase of non-controlling interests Total Balance at December 31, 2019 $ (33,616) $ (3,707) $ (318) $ 594 $ (37,047) Other comprehensive income (loss) 28,752 783 (1,638) (561) 27,336 Amounts reclassified from accumulated other comprehensive income (loss) a— — 1,235 — 1,235 Balance at December 31, 2020 (4,864) (2,924) (721) 33 (8,476) Other comprehensive income (loss) (30,633) 682 — — (29,951) Amounts reclassified from accumulated other comprehensive income (loss) a— — 721 — 721 Balance at December 31, 2021 $ (35,497) $ (2,242) $ — $ 33 $ (37,706) a.Amount reclassified into Interest and other expense, net on the statement of operations. See Note 15.F-45The amounts presented in the table above are in other comprehensive loss and are net of taxes. For additional information about foreign currency translation and derivative financial instruments, see Note 10.15. For additional information about the pension plan, see Note 15.Note 23 Selected Quarterly Financial Data (unaudited)(25) Restructuring and Exit Activity CostsOn August 5, 2020, we announced, in connection with the new strategic focus, a restructuring plan intended to align our operating costs with current revenue levels and better position the Company for future sustainable and profitable growth. The following tables set forth unaudited selected quarterly financial data:177,264 152,907 159,467 156,431 85,458 58,522 80,673 80,186 91,161 90,857 87,537 89,257 (5,703) (32,335) (6,864) (9,071) 971 3,723 2,067 1,041 (10,134) (37,670) (8,416) (9,971) (0.08) (0.34) (0.08) (0.09) 165,937 156,362 158,111 152,555 82,890 68,937 80,411 77,513 78,817 90,954 84,128 94,272 4,073 (22,017) (3,717) (16,759) (1,212) (2,214) 1,700 1,179 5,230 (21,213) (4,648) (17,788) 0.05 (0.19) (0.04) (0.16) F-36183,363 151,574 170,504 160,722 60,160 71,038 81,627 78,984 626,081 105,675 105,469 96,508 (565,921) (34,637) (23,842) (17,524) 29,535 (3,524) (10,096) (6,943) (596,366) (32,249) (13,696) (13,181) (5.32) (0.29) (0.12) (0.12) (a)For the quarter ended December 31, 2015, loss from operations includes $443,659 of impairment charges related to goodwill and $93,520 of impairment charges related to other intangible assets. In addition, the Company recognized cash and non-cash charges related to the end of life of the Cube printer and shift from consumer products and services, which totaled $8,771 and $18,619, respectively. See Notes 2, 4, 6 and 7 to the Consolidated Financial Statements.The sumrestructuring plan included a reduction of per share amounts for eachnearly 20% of our workforce, with the majority of the quarterly periods presented doesworkforce reduction completed by December 31, 2020. We completed the restructuring efforts in the second quarter of 2021. Cost reduction efforts included reducing the number of facilities and examining every aspect of our manufacturing and operating costs.We incurred cash charges for severance, facility closing and other costs, primarily in the second half of 2020, and continued to incur additional charges through the second quarter of 2021, when we finalized all the actions to be taken. Non-cash charges related to these actions were $6,400 and are included in facility closing costs. We also divested parts of the business that did not necessarily equalalign with this strategic focus. See Note 4.In connection with the total presentedrestructuring plan, we recorded pre-tax costs during the years ended December 31, 2021 and 2020, included within selling, general and administrative in the consolidated statement of operations as follows:(in thousands) Costs Incurred during 2020 Costs Incurred during 2021 Total Costs Incurred Severance, termination benefits and other employee costs $ 12,914 $ 660 $ 13,574 Facility closing costs 6,470 640 7,110 Other costs 668 (179) 489 Total $ 20,052 $ 1,121 $ 21,173 The liabilities at December 31, 2020 related to these costs were principally recorded in accrued expenses in the consolidated balance sheets and consisted of severance, termination benefits and other employee costs of $7,173. There were no liabilities at December 31, 2021.(26) Subsequent EventsWe have agreed to acquire Kumovis GmbH and Titan Additive LLC for a combined purchase price of $80 million, before customary closing adjustments. Titan is a pellet-based extrusion platform that addresses customer applications requiring large build volumes, superior performance, and improved productivity at significantly lower cost, opens up new markets in the Industrial segment. Kumovis, servicing the Healthcare segment, utilizes polyether ether keton or PEEK materials, which has properties that lend it to many medical applications, including many implant applications, that fit perfectly into our personalized healthcare operations. These are expected to close in the second quarter of 2022 and the combined impact of both acquisitions are not expected to have a near-term material impact to the Company's financial position, statement of operations or cash flows, other than the use of cash for the year because each quarterly amount is independently calculated at the end of each period based on the net income (loss) available to common stockholders for such periodpurchase price and the weighted average shares of outstanding common stock for such period.Note 24 Subsequent EventsThere are no subsequent events except as disclosed within the Litigation section of Note 21.F-37F-46
