SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 20, 2001
3D SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22250 95-4431352
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
26081 Avenue Hall
Valencia, California 91355
(Address of Principal Executive Offices)
(661) 295-5600
(Registrant's Telephone Number)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF DTM CORPORATION
On April 2, 2001, we and our indirect wholly owned subsidiary, Tiger Deals,
Inc., a Delaware corporation, and DTM Corporation, a Texas corporation, entered
into an Agreement and Plan of Merger pursuant to which Tiger would acquire DTM
through:
o a cash tender offer of all the outstanding shares of DTM common stock,
par value $.0002 per share; and
o a subsequent merger to acquire all remaining outstanding shares not
tendered in the tender offer.
On April 30, 2001, Tiger commenced a cash tender offer for the shares of
DTM common stock at $5.80 per share in cash, without interest, less any required
withholding taxes. The tender offer expired at midnight, New York City time, on
August 17, 2001. On August 20, 2001, Tiger accepted for payment and paid for all
shares of DTM common stock tendered during the offering period and commenced a
subsequent offering period that expired at midnight, New York City time, on
August 23, 2001. During the subsequent offering period, Tiger accepted for
payment and paid for all shares of DTM common stock tendered in the subsequent
offering period. The total number of shares tendered in the initial and
subsequent offering periods was 6,953,830 shares, representing approximately
97.5% of the outstanding shares of DTM common stock.
On August 24, 2001, we effected a merger whereby Tiger merged with and into
DTM, with DTM as the surviving corporation. Pursuant to the merger agreement,
upon consummation of the merger:
o DTM became our wholly-owned subsidiary;
o the shares of DTM common stock not tendered in the tender offer,
except shares held in treasury by DTM or held by us or Tiger, were
converted, subject to dissenters' rights, into the right to receive a
cash payment of $5.80 per share; and
o all DTM stock options, vested or unvested, were converted into a right
to receive the excess of $5.80 per share over the exercise price per
share of the option multiplied by the number of shares underlying the
option.
The aggregate acquisition cost for DTM was approximately $44.7 million and
our related transaction expenses totaled approximately $4.8 million.
The terms of the Agreement and Plan of Merger were negotiated at arms
length between our officers and directors and those of DTM (none of whom were
affiliated with us, our affiliates, our officers or directors or any associates
of our officers or directors).
DTM develops, manufactures and markets advanced systems, including the
Vanguard. Manufacturers and service bureaus worldwide use these systems to
rapidly create three-dimensional objects, including models, parts, molds,
tooling and casting
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patterns. We currently intend to devote DTM's assets to the continuation of the
business operations of DTM, substantially as they were conducted prior to the
completion of the merger.
FINANCING THE ACQUISITION
On May 21, 2001, we and DTM received a $26,500,000 revolving line of credit
and a $15,000,000 commercial term loan from U.S. Bank N.A. Tiger funded the
acquisition of DTM through proceeds from this new line of credit and loan and
through available cash on hand.
ANTITRUST LITIGATION RELATED TO THE ACQUISITION
On August 16, 2001, we and DTM reached a settlement with the Department of
Justice, which we refer to as the "DOJ," which allowed us to consummate the
purchase of DTM. The settlement agreement was filed in the U.S. District Court
for the District of Columbia. Under the terms of the settlement agreement, we
and DTM must comply with the following terms:
o grant a license to all of our North American (which we limit to the
U.S., Canada, and Mexico) stereolithography and laser sintering
patents owned or licensed as of August 16, 2001, as well as any
applied-for patents as of August 16, 2001, that cover technology
marketed prior to August 16, 2001, to a purchaser that currently
manufactures either stereolithography or laser sintering machines, and
that is approved by the DOJ. We refer to stereolithography and laser
sintering as "SL" and "LS," respectively. The license will, among
other things:
o have a field of use restriction limiting the licensee to
whichever of the two technologies it currently uses, but not both
technologies;
o be fully paid-up (that is, no running royalties, with the
exception of patents licensed by us, which may be sublicensed to
the purchaser on terms no less favorable than those applicable to
us or DTM); and
o be perpetual, assignable, transferable and non-exclusive (without
the right to sublicense, except for establishing distribution and
contracting out for manufacturing).
o divest our or DTM's North American customer lists, depending on
whether the purchaser already uses SL or LS technology.
o provide the option to the purchaser of acquiring DTM's assembly
facility located in Austin, Texas.
o grant the purchaser all software copyright licenses necessary to
purchase and resell our and DTM's used SL and LS rapid prototyping
machines, on terms no less favorable than that offered to other
purchasers and resellers of used SL and LS machines.
The settlement agreement also contains the following provisions concerning
our and DTM's employees:
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o If the purchaser currently uses SL technology, then following
consummation of the sale, we must provide to the purchaser information
relating to all of our personnel that, before our acquisition of DTM,
were involved in sales, marketing, and manufacturing, to enable the
purchaser to make offers of employment. If the purchaser currently
uses LS technology, then the same information must be provided
concerning former DTM employees that, before our acquisition of DTM,
were involved in sales, marketing, and manufacturing. We are not
prohibited from seeking to retain such personnel as employees.
o We may not interfere with any negotiations by the purchaser to employ
any of our or DTM's present or former employees until August 16, 2003.
o We must waive any non-compete provisions in any employment agreement
with any of our or DTM's present or former employees.
o We may not include a non-compete clause in any future employment
agreement with any of our or DTM's present or former employees until
August 16, 2003. We and DTM typically do not include non-compete
clauses in either of our employment agreements.
We also are prohibited from asserting against the purchaser the following
types of claims:
o Any claim for patent or copyright infringement in North America for
products made, sold or used pursuant to the licenses granted under the
settlement agreement.
o Any claim for patent infringement in North America for patents which
are licensed to us or DTM, but that do not contain a right to
sublicense and are not sublicensed to the purchaser.
o Any claim that any equipment, systems, supplies, software, processes,
or other technology sold by the purchaser outside North America prior
to August 16, 2001 infringes, in North America, any patent or
copyright issued or licensed to us or DTM prior to August 16, 2001.
These prohibitions will remain in effect until the expiration of the Final
Judgment, as described below, which is ten years after the date it is entered by
the court.
We must complete the divestiture, which is subject to approval by the DOJ,
within 120 days from August 16, 2001, unless the DOJ agrees, in its sole
discretion, to grant 60-day extensions. If we cannot complete the divestiture
within this time period, the court will appoint a trustee, selected by the DOJ,
who will be empowered to complete the divestiture to a purchaser acceptable to
the DOJ, on terms then obtainable by it using its reasonable efforts.
Our settlement agreement was filed with the court as a proposed Final
Judgement. As required by Section 16 of the Tunney Act, the proposed Final
Judgement will be published in the Federal Register. Following a 60-day public
comment period, the court may enter the Final Judgment upon a finding that it
serves the public interest. We have agreed to abide by the terms of the proposed
Final Judgment pending its entry. We expect the proposed Final Judgment to be
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entered by the court following completion of the Tunney Act procedures. However,
if following all available appeals, the court does not enter the Final Judgment,
the DOJ would be able to recommence its challenge to our purchase of DTM, even
after our consummation of the purchase.
CERTAIN RISKS ASSOCIATED WITH OUR ACQUISITION OF DTM
DTM CURRENTLY IS INVOLVED IN INTELLECTUAL PROPERTY LITIGATION, THE OUTCOME OF
WHICH COULD MATERIALLY AND ADVERSELY AFFECT THE COMBINED COMPANY.
DTM faces direct competition for selective laser sintering equipment and
materials outside the United States from EOS GmbH of Planegg, Germany. DTM has
been involved for a number of years in significant litigation with EOS in
France, Germany, Italy and Japan with regard to its proprietary rights to
selective laser sintering technology and is pursuing injunctive relief against
EOS where applicable.
DTM VS. EOS, ET AL
The plastic sintering patent infringement actions against EOS began in
France, Germany, and Italy in 1996. Legal actions in France, Germany, and Italy
are proceeding. EOS had challenged the validity of certain plastic patents in
the European Patent Office, which we refer to as the EPO. These patents survived
the opposition appeals, after the original claims were modified, and the
infringement hearings have been re-started.
In 1997, DTM initiated action against Hitachi Zosen Joho Systems, the EOS
distributor in Japan. In May 1998, EOS initiated two invalidation trials in the
Japanese Patent Office attempting to have DTM's patent invalidated on two
separate bases. The Japanese Patent Office ruled in DTM's favor in both trials
in July 1998, effectively ruling that DTM's patent was valid. In September 1999,
the Tokyo District Court then ruled in DTM's favor and granted a preliminary
injunction prohibiting further importation and selling of the infringing plastic
sintering EOS machine. In connection with this preliminary injunction, DTM was
required to place 20 million yen, which is approximately $200,000, on deposit
with the court towards potential damages that EOS might claim should the
injunction be reversed. Based on the Tokyo District Court's ruling, EOS then
filed an appeal in the Tokyo High Court to have the rulings of the Japanese
Patent Office revoked. On March 6, 2001, the Tokyo High Court ruled in EOS's
favor that the rulings of the Japanese Patent Office were in error. This ruling
is being appealed by DTM to the Tokyo Supreme Court.
EOS AND 3D SYSTEMS VS. DTM
In December 2000, EOS filed a patent infringement suit against DTM in
federal court in California. EOS alleges that DTM has infringed and continues to
infringe certain U.S. patents that we license to EOS. In a February 2001 press
release related to EOS's filing of the suit, EOS claimed damages of $20 million.
In April 2001, consistent with an order issued by the federal court in this
matter, we were added as a plaintiff to the lawsuit. In August 2001, EOS filed a
motion requesting that the court issue an injunction to stop the sale, within
the United States, of Sinterstation(R) systems pending final resolution of this
lawsuit. EOS has also threatened us with
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a breach of contract claim if, following our acquisition of DTM, we compete with
EOS in the laser sintering field.
We cannot assure you that we will successfully defend against the claims of
past infringement of the patents that are the subject of the dispute with EOS,
the motion to enjoin sales of the Sinterstation(R) systems or a breach of
contract claim, if asserted. Our inability to resolve the claims of patent
infringement or to prevail in any related litigation could result in a finding
of infringement of our licensed patents that are the subject of the litigation.
Additionally, one EOS patent is asserted which, if found valid and infringed,
could preclude the continued development and sale of certain of DTM's products
that incorporate the intellectual property which is the subject of the patent.
In addition, we may become obligated to pay substantial monetary damages for
past infringement. Regardless of the outcome of these actions, DTM has incurred,
and following the merger, we may continue to incur, significant related expenses
and costs that could have a material adverse effect on our business and
operations. Furthermore, these actions could involve a substantial diversion of
the time of some members of management. Our failure to successfully defend
against EOS' allegations, the costs associated with these actions and any
potential breach of contract claim could have a material adverse effect on our
results of operations, liquidity and financial condition and could cause
significant fluctuations in results from quarter to quarter.
INTEGRATING DTM'S OPERATIONS WITH OURS MAY BE DIFFICULT AND MAY CAUSE
DISRUPTIONS TO OUR BUSINESS; WE MAY NOT ACHIEVE THE SYNERGIES WE EXPECT FROM THE
ACQUISITION OR MAINTAIN DTM'S CUSTOMERS.
To attain the benefits of the merger, we will have to effectively integrate
our operations, technologies and products. In particular, we must integrate
management and other personnel, sales and marketing teams, information systems,
and financial, accounting and other operational procedures. In addition, we must
effectively coordinate our combined research and development activities. Our
success in this process will be significantly influenced by our ability to
retain key management and marketing and development personnel. The difficulties
of this integration may be increased by the necessity to coordinate
geographically separated organizations with distinct cultures. The integration
of operations will require the dedication of management resources, which
temporarily may distract the attention of management and other personnel from
our day-to-day business activities. In addition, employees of DTM may be less
productive as a result of uncertainty during the integration process, which also
may disrupt our business. These disruptions or any other difficulties with
integration could seriously harm us. In addition, even if the operations of each
company are integrated successfully, we anticipate accomplishing the integration
over time and, in the interim, the combination may have an adverse effect on our
business, results of operations and financial condition.
We expect the combination to result in synergies and operating
efficiencies, including reduced overhead costs as a percentage of combined
revenue, expanded operations, and enhanced purchasing leverage. We may not
achieve these benefits and whether we ultimately realize these benefits will
depend on a number of factors, many of which are beyond our control. In
addition, we cannot assure you that our current and potential customers and
those of DTM will continue to do business with us. If we are not able to obtain
these synergies or maintain DTM's customer base, our financial condition and
results of operations will be materially adversely affected.
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CERTAIN PARTIES HAVE FILED A LAWSUIT RELATING TO THE OFFER AND THE MERGER.
On April 6, 2001, a purported class action lawsuit under the caption
SPINNER V. GOLDSTEIN was filed in the 200th Judicial District Court of Travis
County, Austin, Texas, naming as defendants DTM Corporation, certain of DTM's
directors and 3D Systems Corporation. The complaint was amended on May 2, 2001.
The complaint as amended asserts that the $5.80 cash consideration paid in the
merger is inadequate and does not represent the value of the assets and the
future prospects of DTM. The amended complaint also alleges that the individual
defendants breached their fiduciary obligations to the public shareholders of
DTM in approving the merger agreement and that the tender offer documents
distributed to the shareholders of DTM in connection with the tender fail to
disclose material information.
We have entered into a memorandum of understanding with the representative
of the purported class in this lawsuit, providing for the settlement of the
action. The terms of the settlement are not expected to have a material adverse
effect on us.
Our business is subject to other risks that are described in our reports
and other filings with the Securities and Exchange Commission to which we refer
you, including our annual report on Form 10-K for the year ended December 31,
2000, our quarterly reports for the quarters ended March 30 and June 30, 2001
and in our current reports on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The financial statements of DTM Corporation, a Texas corporation,
required by Item 7 of Form 8-K will be filed pursuant to an
amendment to this Form 8-K no later than November 5, 2001.
(b) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information required by Item 7 of Form
8-K will be filed pursuant to an amendment to this Form 8-K no
later than November 5, 2001.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of April 2, 2001, by
and among the DTM Corporation (the "Company"), 3D Systems
Corporation ("Parent") and Tiger Deals, Inc. ("Offeror").(1)
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
May 15, 2001, by and among the Company, Parent and
Offeror.(2)
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10.1 Loan and Security Agreement, dated as of May 21, 2001, by
and among U.S. Bank National Association, Parent and other
signatories.(3)
10.2 Form of Tender and Voting Agreement, dated as of April 2,
2001, by and among Parent, Offeror and certain shareholders
of the Company.(1)
99.1 Final Judgment, U.S. V. 3D SYSTEMS CORPORATION AND DTM
CORPORATION, filed on August 16, 2001 in the U.S. District
Court for the District of Columbia (pending final entry
following Tunney Act process).
99.2 Text of Press Release issued by Parent on August 20,
2001.(4)
99.3 Text of Press Release issued by Parent on August 24,
2001.(5)
(1) Incorporated by reference from Parent's Schedule TO-C filed with the SEC on
April 3, 2001.
(2) Incorporated by reference from Parent's Amendment No. 1 to Schedule TO
filed with the SEC on May 16, 2001.
(3) Incorporated by reference from Parent's Amendment No. 2 to Schedule TO
filed with the SEC on May 22, 2001.
(4) Incorporated by reference from Parent's Amendment No. 10 to Schedule TO
filed with the SEC on August 20, 2001.
(5) Incorporated by reference from Parent's Amendment No. 11 to Schedule TO
filed with the SEC on August 24, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
August 31, 2001 3D SYSTEMS CORPORATION
By: /S/ E. JAMES SELZER
-----------------------------
Name: E. James Selzer
Its: Chief Financial Officer and
Vice President of Finance
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EXHIBIT INDEX
EXHIBITS
2.1 Agreement and Plan of Merger, dated as of April 2, 2001, by and among the
Company, Parent and Offeror.(1)
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of May 15,
2001, by and among the Company, Parent and Offeror.(2)
10.1 Loan and Security Agreement, dated as of May 21, 2001, by and among U.S.
Bank National Association, Parent and other signatories.(3)
10.2 Form of Tender and Voting Agreement, dated as of April 2, 2001, by and
among Parent, Offeror and certain shareholders of the Company.(1)
99.1 Final Judgment, U.S. V. 3D SYSTEMS CORPORATION AND DTM CORPORATION, filed
on August 16, 2001 in the U.S. District Court for the District of
Columbia (pending final entry following Tunney Act process).
99.2 Text of Press Release issued by Parent on August 20, 2001.(4)
99.3 Text of Press Release issued by Parent on August 24, 2001.(5)
(1) Incorporated by reference from Parent's Schedule TO-C filed with the SEC on
April 3, 2001.
(2) Incorporated by reference from Parent's Amendment No. 1 to Schedule TO
filed with the SEC on May 16, 2001.
(3) Incorporated by reference from Parent's Amendment No. 2 to Schedule TO
filed with the SEC on May 22, 2001.
(4) Incorporated by reference from Parent's Amendment No. 10 to Schedule TO
filed with the SEC on August 20, 2001.
(5) Incorporated by reference from Parent's Amendment No. 11 to Schedule TO
filed with the SEC on August 24, 2001.