Good morning, and welcome to the 3D Systems Conference Call, an audio webcast to discuss the results of the Second Quarter and First Six Months of 2012. My name is Tahisha, and I will facilitate the audio portion of today’s interactive broadcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. At this time, I would like to turn the call over Stacey Witten with 3D Systems. Please proceed.

Good morning and welcome to 3D Systems Conference Call. I’m Stacey Witten, and with me on the call are Avi N. Reichental, CEO; Damon Gregoire, our CFO and Andrew Johnson, our General Counsel. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those following on the phone who wish to access the slide portion of this presentation may do so via the web at www.3dsystems.com/investor. Participants who would like to ask questions at the end of the session related to matters discussed in this conference call should call in using the phone numbers provided here on Slide 3. The phone numbers are also provided in the press release that we issued this today. For those who have access to the streaming portion of the webcast, please be aware that there is a five second delay and that you will not be able to post questions via the web. Before we begin the discussion, I would like to mention a statement regarding forward-looking information that appears on Slide 4. This presentation contains forward-looking statements as defined by Federal and State Securities Laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying assumptions and other statements which are other than statements of historical fact. All such forward-looking statements, whether written or oral and whether made by us or on our behalf, are expressly qualified by the cautionary statements described on the slide. Forward-looking statements are only predictions that relate to future events or future performance and are subject to known and unknown risks, uncertainties, assumptions, and other factors, many of which are beyond our control. As a result, we cannot guarantee future results or performance and past performance is not necessarily indicative of future results. These forward-looking statements are based on current expectations, estimates, forecasts and projections, as well as beliefs and assumptions of management. We undertake no obligation and may not intend to update these forward-looking statements. Further, we encourage you to review the risks that we face and other information about us in our filings with the SEC, including our Annual Report on Form 10-K, which was filed February 25, 2013. At this time, I would like to introduce Avi N. Reichental, 3D Systems’ President and CEO.

Good morning everyone, and thanks for taking the time to listen to our call this morning. We are pleased to reports record quarterly revenue and gross profit. This morning Damon and I will recap our quarterly highlights. We will go over our financial results in more depth, updates you on our progress and provide an outlook for the remainder of this year. Our revenue grew 44.5% from the prior year to $120.8 million on 108% increase in printers and other products revenue and 30.1% overall organic growth. Gross profit increased 46% and gross profit margin expanded 40 basis points to 51.8%, even with the impact of adverse mix and drive from the recent acquisition of our RPDG. Heavier than expected demand also resulted in a 60% sequential increase to our backlog and significant near-term advanced manufacturing and consumer opportunities compelled us to accelerate our in quarter R&D and marketing expenditures. New products extended channels and to a lessor extent acquisitions contributed favorably to our record revenue. Since the beginning of this year we launched significant new product including a complete refresh of our best selling ProJet 3500 and ProJet x60 series printers and high-performance 3D Print materials. We also launched Geomagic solution 2014 a suite of powerful new design software tool to train advanced engineer’s desktop empowering designers to create and print without limitations. During the second quarter, we completed the acquisition of RPDG continuing to extend and enhance our Quickparts services and acquired 81% of Phoenix Systems, a couple of weeks ago adding strategic Direct Metal 3D Printers capability to our growing print engine portfolio. We believe this our accelerated growth rate reflects the strength of our diversified portfolio, the productivity of our channels and the effectiveness of our strategic initiatives. For the second quarter of this year, all…

Thanks, Avi. Good morning, everyone. The second quarter revenue grew 45% from the prior year to a $120.8 million. Gross profit increased 46% to $62.6 million and gross profit margin expanded 40 basis points to 51.8%. Our total operating expenses increased to $45.8 million and increased of 38% of revenue on higher sales costs from higher revenue, accelerated R&D and marketing expenses in support of our expanded portfolio and incremental cost from recent acquisitions that for the quarter contributed incremental cost ahead of our expected revenue contributions for a full quarter. As a result of our strong revenue growth and expanded gross profit, we generated net income of $9.3 million to the 12% improvement over the 2012 quarter and earned $0.10 per share. On a non-GAAP basis, we earned $0.20 per share for the quarter and I’ll discuss our non-GAAP results in more detail later. For the first six months, revenue grew 38% from the prior year to $222.9 million; gross profit increased 42% to a $116.1 million and gross profit margin expanding 140 basis points to 52.1%. Our total operating expenses increased to $81.7 million on higher sales costs from much higher revenue. Incremental costs from acquisitions and higher R&D expenses in support of our extended portfolio. As a result of our strong revenue growth and expanded gross profit, we generated net income of $15.2 million, 5% improvement over the 2012 period, and earned $0.16 per share inclusive of approximately a 20 million share increase in share count for the period. On a non-GAAP basis, we earned $0.40 per share for the six months 2013. We report non-GAAP adjusted results that exclude the tax affected impact of amortization of intangibles, non-cash interest expense, non-recurring acquisition, integration, severance expenses, including gain or loss on acquisition, impact of litigation settlements, stock-based…

Thanks Damon. We continue to extend our portfolio, extend our reach and diversify our business model and towards that and during the second quarter a strong demand for our new full-color ProJet x60 series of professional printer add to our sales momentum and the commercialization of two new materials with Injection Molding-Like properties extended our use cases. Heavier than expected demand for our award winning Cube and Cube X consumer 3D Printer, contributed to our backlog and resulted in a second expansion of our manufacturing lines in successive quarters. We also extended our reseller network with the addition of Seiko-I Infotech in Asia-Pacific, Hawk Ridge Systems and SYNNEX Corporation in the United States and Canada and expect this new network to begin to contribute meaningfully to our growth during the second half of this year. As part of our consumer initiatives, during the second quarter we announced that Staples, the world largest office product company and second largest e-commerce company has become the first major U.S. retailer to sell our Cube 3D Printer online and in select stores. This morning, we’re happy to share with you that in-store sale commenced late in June to enthusiastic customer reception. Both companies are placed with their results to date and plan to expand in-store availability at Staples from a couple of dozen stores today, there were couple of Android stores over the next few months. Yesterday, we also announced that Yamada Denki, Japan’s largest consumer and electronic retailers, started selling our Cube in select stores. We expect additional top-tier retailers in North America, Europe and Asia-Pacific to follow us through during the second half of this year. Early in the quarter, we acquired RPDG, a provider of on-demand additive and traditional manufacturing services an immediately integrated its state-of-the-art capabilities into our growing Quickparts…

We will now open the call for questions. We kindly request that you ask one question at a time and then return to the queue as allowing other to participate in the Q&A session. As a reminder, please direct all question to the teleconference portion of this call. The telephone numbers are provided again on the slide. If you are calling inside the U.S. the number is 1-877-474-9505 and if you are calling outside the U.S. the number is 1-857-244-7558. The conference ID is 62870047.

(Operator Instructions). Your first question comes from the line of Jim Ricchiuti from Needam & Company. Please proceed.

Hi, thank you good morning.

Good morning.

Avi or Damon, question just with respect to the second half of the year just in light of the mix shift to lower price printers. What gives you the confidence that you are going to see this acceleration in the growth in the materials revenue, just given that I guess the usage materials revenue usage on these machines at least initially is a bit lower?

Jim, I think this is an excellent question. I mean clearly we acknowledge that there is some lag in material revenue growth rate relative to the surge in printer sales, but were not concerned about it specifically, because it’s a function of a lag and so given the surge that we enjoyed in the last few quarter, we expect to see the impact of our multi-quarter printer unit surge translate to accelerated materials revenue growth during the second half of this year. And as our overall materials category grows, we expect continued consolidated gross profit margin expansion. And if you recall Jim, we had a similar question on our healthcare sales last quarter and we expressed our confidence that the growth trajectory will remain intact over a meaningful period notwithstanding the periodic fluctuation and that was an expectation that you can strictly really materialized this quarter with redemption of growth at the rate of 55%.

And just on that acceleration in printer revenue that you saw, I'm wondering if there is any additional color you can give on the linearity, the sales linearity in the quarter of the products business and what drove that?

Well, Damon mentioned that there was heavier concentration in the third month of the quarter and that was driven by few factors, one is the in quarter in introduction of the ProJet x60 series that kind of took hold more towards the end of the quarter as Staples began to realize all the amazing features and benefits and that obviously contributed to sales momentum and also to backlog. Channel extension that we just began to see some early indication of what it could and we expect the full impact to come in the second half on some of the bigger addition that we’ve made, and the extension of our retail channels and consumer activities that for the second quarter in a row contributed not just to backlog, but compelled us to into successive quarters expand our manufacturing capacity. What is also interesting to note to Jim is that not just the revenue that was recognized, but sequential backlog also increased some 60% quarter-over-quarter which I think is just underscores the strength of this increased demand.

Yeah thanks. Thanks very much Avi.

Your next question comes from the line of John Baliotti from Janney Capital Markets. Please proceed.

Hi good morning. Avi and then Damon you had mentioned last quarter that you expect R&D spending to pick up and obviously it did and I think certainly given increase in the backlog it makes sense to we want to capture that business. I was just curious is there a way to look at that going forward to the balance of the year or maybe as it goes into next year, how do you see that shifting with respect to recognizing that business that you’re investing toward?

Look we clearly believe that you know we are in a very unique and exciting period in our business here and you know when we factor the significant increase of inbound interest in the quarter, we made this affirmative decision to boost search and discretionary expenses to accelerate adoption and we did it because we have come to believe that right now is the time to do it, the interest in our product and services is unprecedented and its unprecedented across both the consumer and advanced manufacturing sectors, and so for this reason we basically kind of took the offensive decision to offensively and materially accelerate both R&D and marketing spending to fully address these opportunities. Our belief that this will benefit us in coming periods in a way, that also gave us confidence to reiterate and affirm our guidance for the fully year. So I think that I mean remember that these decisions are discretionary in this and certainly R&D and marketing spending our discretionary and at this time OE sales that this was the right decision make given the abundance of opportunities that are in front of U.S., in the here and now.

Sure, I'm I think its totally understandable, you surely don’t want to give up the momentum that you have and I was curious how – given that Phoenix just recently close was any of that pick up, part of your effort to start to scale up the opportunities of Phoenix or should we expect that more in the upcoming quarters.

That’s in the upcoming quarters, because we had to close and none of that activity was involved in the first half of the year.

Okay great, thank you very much.

Your next question comes from the line of Troy Jensen from Piper Jaffray. Please proceed.

Congrats on the top line gentlemen.

Thanks.

Hey so Avi, you know I mean games united the accelerated investments to the opportunities there, but I'm just having problems just trying to get to just the margin targets. So if I'm doing my math correctly here, do you get to in the mid point of your guidance for revenues and earnings, I think that implies like 40% operating margins in the second half, and I just think that that’s pretty steep margin expansion. So can you just help me, how you get there or should we be thinking more kind of in the lower end of that range given that the margins is pretty aggressive?

Well, I mean it doesn’t imply, it does have that our margins would increase, and we do believe that as revenue volume increases our margins increase. And where we fall in the range, I mean we reiterated the range, but not necessarily exactly where it would be in the range and you might have, you possibly could be in the higher end of the revenue range to achieve the points of the EPS range to get there. So feel comfortable and confident with the rangers that we put out.

I think Troy it’s important also to note that if you look at the second quarter revenue mix, it was really fairly as mix in terms of gross profit margin. But notwithstanding all of that year-over-year, we extended our gross profit margin. And if we can do it in such for mix we are fairly confident that as material revenue kicks into a higher gear in the second half and the mix normalizes a little bit where we have the higher component of recurring revenues in the mix. That will certainly boost our gross profit margin to a level that gives us confidence to reiterate our guidance.

All right, that’s fair. Hey, last question for me, cash flow was a little soft this quarter and obviously it was due to receivables right and obviously the linearity in a quarter. So could you just help us out with you are in this channel expansion mode like we are now, when you are adding SYNNEX, Staples or Hawk Ridge. What does that do to channel inventory and if you just help us out with maybe the difference between sales in versus sales out, you said Avi that – I understanding you guys are investing in markets taking off so the channel needs to grow, could you just help us with kind of what is at their contribution you think that had in the quarter?

Well in terms of channel contribution in the quarter from the addition of channel as we said in our prepared remarks, most of that will probably come in the second half, we have not yet had a significant impact to revenue or to receivables of your point for example, from the addition of SYNNEX and some of the others, so that we think will contribute the second half results. If you look at what happened in net accounts receivables, we’ve seen an increase by about $31.6 million from last December on substantial sales growth and what is going on there is that with a higher proportion of our revenue mix shifting to resellers and retailers as part of our planned business model here. A larger portion of our sales are transacted on standard terms, but what happened in the quarter is this shift was further exacerbated by the combined effect of the timing and concentration of all those during the third month of the quarter as the result of the increasing demand that was driven by the meaningful contributions on some of the new products that we mentioned. But also the impact of RPDG acquisition during the quarter that when you put it all together drove our DSOs higher to 84 days for the June quarter from 72 days at December of last year, but as Damon mentioned previously, our expectation over the next few periods is that our DSO will normalize that they are on 75 days towards the end of the year.

Okay. All right guts, well sorry for those questions, but again to let them sitting here.

Thanks.

Okay next question comes from the line (inaudible). Please proceed.

Hi, guys thanks for taking the questions. I guess Avi and Damon you I guess given the new revenue run rate the $120 million is that have you – as we I don’t know if it’s the second half this year but maybe going the 2014 rethink the longer term business model at all. I know that – I believe that you guys have made comments in the past that at a $500 million run rate, you are pretty close to as of this quarter, you start to think of gross margins in the 60% range, and that margin is in the 40% range. And I get to do some dynamics going on near-team with the increased R&D spend and its mixed up, but if this run rate continues and you sort of suggest it will, it gets to the mid point of your rough guidance this year. Do you begin that rethink the margin structure as we get into 2014? Thanks.

I think the margin structure based on components of margin remains the same, the mix does affect that and if you – the models that we had put out there before those run rates called for you know 75% and 80% recurring revenue and as you can see this quarter we are 55% and 58% for the year. So it obviously does affect your overall gross profit margin, but each individual component in those kind of rates that we were shooting for are still intact and making progress and growing every quarter.

Yeah, so just a quick clarification part on that. So it’s as much around the recurring rev component of it as it is around the overall revenue component of meeting $500, so we did to the recurring rev higher as well to get up to the 60% margins and the 40%?

Yeah, we will always say that it’s a component being firmly in the run rate and having the mix in the right range, which when we model that we looked at recurring revenues to be at least lower from 70% of total revenue. And one of the reasons why we’re optimistic and have optimistic expectations going forward is because we put in significant amount of new printers into the market; we’ve a significant portion of it into authorized professional and production installation. So we have a reasonable expectation that the second half will also see a significant uptick in our materials revenues and that begins to rebalance the recurring revenue mix towards the target that we modeled long-term and with that kicking in we think that our overall model for the next year is not only in intact but probably somewhat accelerating given the heavy demand.

Got it. Thank you very much.

Your next question comes from the line of Jay Harris from Goldsmith & Harris. Please proceed.

Good morning gentlemen.

Good morning.

R&D, how much of the increase is due to acquisition? How much from additional expenditures and can you comment on the future profile of R&D expenditures, beyond this year?

I mean Jay, the deliberate in quarter R&D increases that we made were above and beyond what came with what already acquired. So as Damon clearly said in his prepared remarks, a portion of the R&D expenditures certainly included things like Geomagic Solution. But most of the increases were deliberate in quarter increases were we decided to basically address opportunities that became definitively crystallized during the quarter both on the advanced manufacturing front and the consumer front. In our expectation given what we know today, our expectation is that this R&D run rate will continue and might even slightly increase further, because as we see an abundance of opportunities ahead of us and heavy demand to confirm those, to validate those opportunities.

What will we see – you have a very robust pipeline of objectives, will the R&D increase at a 5% annual rate, 10% annual rate, what’s the (inaudible).

As we said during our June, in New York City Investor Conference, our expectation is that that R&D will be somewhere in the range of 7% to 8% of revenue and for this period I believe it was at 7%.

Okay, thank you.

(Operator Instructions). Your next question comes from the line of Hendi Susanto from Gabelli. Please proceed.

Good morning Avi, Damon and Stacey. I would like to deep further on Phoenix Systems, like how many patents does Phoenix systems, what does their expiration time line looks like and what is your view on barriers of entry Direct Metal (inaudible). And if I can add one more, may I know how much sales of Phoenix Systems are embedded in your full year revenue guidance.

Yes, so in terms of patents there is about 50 patents in the portfolio, most of them are fairly recent and so they don’t have any meaningful near or mid term expiry dates and a lot of them have to do with unique attributes like compacting of how there was this spread ability to get to much lower granularity and the ability to create basically future details and surfaces that are of quality and accuracy that are unparalleled in the marketplace. I should also add that the Phoenix systems can already process about 15 different materials, which is also a key strength and that we have some specific systems that are geared towards dental and medical device as well as much larger systems that are completely geared for high speed production and that relative to other competitive Direct Metal systems the Phoenix System appears have much higher throughput and manufacturing speed to the tune of about 20% overall advantage.

And then about my questions like how much Phoenix Systems sales is embedded in your full year revenue guidance, would you be able to share that?

We did break that out of the guidance, but I mean if you look at what they historically have done it’s not a significant number compared to our total revenue.

For the second half of this year, our guidance that we reiterated this morning is not really dependent on Phoenix revenue, but it reflects the drag to that we anticipate from Phoenix operations. So the drag is backed in, we don’t have a lot of high expectations for revenue that are built into our guidance for the remainder of this year.

Okay. Very helpful, thank you very much Avi and Damon.

Your next question comes from the line of Paul Coster from JPMorgan. Please proceed.

Sure. Thanks very much. Damon you talked about the leverage for materials and Avi have expressed the confidence the lag was safe thing, but I don’t really understand what is going on here, I mean you have seem four quarters now, the year-on-year revenue growth for materials declined, you are seeing a shift towards lower price systems which presumably means that the material consumption goes down and it just looks to me like the utilization rates for the incremental machine sale is lower than you have seen in the past. So what gives you the confidence that that will recover and we will see the razor blade model really being expressed in the margin mix?

Yeah. What gives us the confidence is that the vast majority of the machines that are being sold and installed into high throughput accounts are the kind of machines that we expect will kick in the second half and begin to contribute. It’s very true Paul that we have seen a shift towards the lower cost systems, that’s a shift that we have been driving for the last few years, but bear in mind that a great deal of our success is coming from selling the mid range of our production and professional systems including the ProJet 6000, 5000, 3500 and now the new x60 series. And this is our high throughput machine and that’s not to be confused with what we do on the consumer side which you’re absolutely correct, those are not heavily utilized machines, but given the mix of what has been placed over the last few quarters and how long it takes customers to install it, the lag in installing and fully deploying those into manufacturing projects that’s what gives us the confidence.

All right. It just needs to be a key metric here but the second is, I have been scrambling to keep up with your revenue run rate, but also I have been ratcheting down the sort of in-state business model here in terms of the EBIT and EBITDA margins that you should achieve in long-term, are you prepared to kind of express what your long-term idea is now or should we just sort of kind – we are just following through different vectors here and trying to figure out where you are going to end up of sales?

No I think Paul, that we’ve expressed our targets very clearly and succinctly over several periods, and I would urge you to take another look and reflect at what is going on here, what’s going on here is we have heavier demand and increased inbound interest that compelled us to basically boosts R&D and marketing spending, because we believe that this is a most exciting moment in the development of the Company. That doesn’t change the business model or the trajectory, it just in a temporary basis as for our stepping up and boosting expenses in anticipation of accelerated growth. The fundamental remain intact.

Okay, got it. But what is the tier model here?

I don’t think ultimately that we are changing from the metrics that we had at those levels. I mean that the big difference with this at those $500 million run rates right now is the mix of the revenue sales and not having those recurring revenue targets. So we sort of achieved that, we’ve achieved the revenue run rates prior to the mix that we have expected. But we expect as we move towards those fixed rate that we get right to those levels.

And the other thing Paul to remember is that notwithstanding the fairly poor product mix for the quarter, we still manage to extend our gross profit margins. As the rest of it happens, our expectation is that it boosts gross profit even further and of course as the mix kicks in the business model and expectations in our view will remain intact, what is happening temporarily is we have increased demand and the mix will adjust in due course. But I think that there is – what’s happening right now is the fact that our margins actually extended on poor mix is a reason to celebrate.

Okay, thank you.

Your next question comes from the line of Brian Drab from William Blair. Please proceed.

Good morning.

Good morning.

First question, I just wanted to follow-up on Troy’s question on receivables, because I was left a little puzzled after the answer, I just want to make sure I'm understanding this. So receivables are up about $22 million or 25% sequentially after that $10 million increase in the first quarter, total sales are up only $19 million sequentially, so that’s where the first kind of question start, but you sighted RPDG and strong sales at the end of the quarter is primary reasons for that step up in receivables, but if I assume that RPDG does a little over $30 million in revenue or $7 million to $9 million per quarter, let’s assume just for a second that you collected only half of that in the second quarter, you still have $18 million or so to explain and again printer product revenue was up only – was up less than $15 million sequentially and as a side note Geomagic you had three months of Geomagic in the mix there too. So I'm trying to reconcile this $12 or $15 million sequential increase in printer and other product revenue depending on if you just for Geomagic, with the $18 million sequential increase plus or minus if you adjust for RPDG.

You get to these things where we did have this increase, just like as we said higher portion of our revenue mix shifting to resellers and retailers, which are on credit terms as part of our planned business model change, that was further affected by the RPDG and Geomagic as you had said, but also the sales coming closer to the end of in that third month of the quarter for the different reasons of the new product announcements that were happening including the ProJet x60s products that were really taking hold and the sales occurring in the later part of the quarter, and other increasing demand of printers in that later part of the quarter. So it’s a timing issue there.

Okay. But just it seems like, it’s hard to understand how you would have that much in sales, right at the end of the quarter when you’re talking about $15 million sequential increase and now you got a $20 million sequential increase in receivables and it all hit at the end of the quarter, or so much of it hit at the end of the quarter.

Yeah one part just to be clear, it’s not at the end of the quarter, it’s with in the last month of the quarter, so last third of the quarter. So it’s not like the very end either, I just want to make that clear.

And Brian, we accept that this might be hard to understand, but those are the facts.

Okay and then just clarify one point in RPDG I know that you incorporated that into the Quickparts operation very quickly. Can you tell us whether that once something like RPDG is incorporated into Quickparts is that revenue recorded as organic revenue because the Quickparts operation is organic?

We are easily able to segregate the revenue and the activity from RPDG versus the remaining of the business for the first year that we record for organic. So to be clear, the 30.1% organic growth rate includes no RPDG revenue.

Okay. Thanks for that clarification.

And your next question comes from the line of Holden Lewis from BB&T. Please proceed.

Thank you. Good morning. Can you just comment about sort of the progress that’s taking place on the training of the software sale, I'm sort of interested in obviously you have been making discrete sales of software, discrete sales of machines et cetera and I think one of the goals is to ultimately get cross selling and selling entirely maybe sort of work flow products and things like that. I mean can you tell us where you are in the process of training the sales force on the software side, how successful you have found them at selling machines and then things like that?

We have done the first round of training across the board and we’ve held actually regional training sessions in North America and Europe and in Asia-Pac and as a result of that, we for all intents and purposes got all of the qualified software resellers now into our personal printers as the first step, we’re not doing in Phase two the reverse we are getting most of our 3D Printing resellers exposed to the Geomagic Solution 2014 suite of products that we just introduced, we didn’t want to do that prior to the integration of the product and the launch of 2014 product. So that’s second phase and Holden it will probably in the same way that it took us about a year or two to get fully up to speed the combined 3D Systems and Z-Corp resellers, it probably going to take us that length of time to get this leg of the journey fully optimized. So we’re probably another six to eight months away from declaring complete victory here, which means plenty of upside in the second half.

All right. Thank you.

Your next question comes from the line of Cindy Shaw from Discern. Please proceed.

Thank you. I wanted to know – we’ve talked about the target mix for the long-term model, one thing I haven’t heard is and we’ve heard about what sort of recurring revenue mix there might be, but I haven’t heard what sort of revenue growth you might anticipate to get that sort of recurring revenue mix and I was hoping you could give us some color on that?

I think Cindy that our growth rate is already implied in the ranges of our guidance. What am I missing?

This would be for the long-term model with the operating gross margins that we’ve talked about, there hasn’t been any sort of growth rate attached to that sort of recurring revenue mix up north of 70% for the long-term model?

When we talked about the long-term model, we talked about revenue goal post. So we basically said in the range of $400 million to $500 million we expected certain gross profit margin at a certain recurring revenue mix and so forth. And so for us to get to those targets of what was it 56% and 60%? Yeah 56% and 60% it basically depends on being firmly in a revenue run rate and secondly on what percentage of total revenue will come from recurring revenues and that’s unchanged.

I understand that, what I’m asking is in that situation, what kind of revenue growth would you expect, would you expect it to be the levels of revenue growth that you’re seeing at this point, would it slow, would it accelerate, it seems that there was a previous call in the $200 million to $300 million range that what we’ve heard was, well we didn’t hit that because we grew too fast and what I'm wondering is what sort of revenue growth rate is compatible with the long-term model targets you have put out there?

I think Cindy that it does take another look in the implied growth rate that we have in this year’s guidance, which gives you also an expectation for earnings per share and that tells you, I think the answer as to what you’re looking for.

So are you saying the revenue growth in this year’s guidance would be compatible with the long-term model?

No, I’m saying that the revenue range for this year’s guidance will give you the ranges of what we’re guiding for this year.

Okay, I’ll move on. There was the recent shareholders meeting and authorization of 100 million additional shares to be issued, which is almost a double from current levels and it seems that with the recent secondary offering that that would imply some pretty aggressive plans for spending within a year or you might have waited until next year’s meeting. And I’m wondering what sort of plans might be behind that authorization to almost double the share count to over roughly a year?

The larger part of that is sort of true up with the authorized shares that we had out before and it takes into account, the splits that we had done is the biggest part of it. So on a split adjusted, it’s not bigger difference and it gets us to the same type of percentages of authorized shares versus outstanding shares that we’ve had in the past.

Okay. And is there the possibility of authorizing those in the next year, almost doubling the authorized shares?

Cindy, I think that you maybe miss reading, what was that. The only thing that we did is as a result of the split, we had to true-up to come back to a comparable ratio between authorized and non-authorized. It doesn’t imply anything more than that.

Okay. I understood that explanations at the time. It just suggests to me to there is plan to spend a lot of more. Maybe you’ll give us some color on…

I think that that maybe conversation that you are having with somebody else. I mean we’ve given you fairly straight forward answer.

Yes, and it still left me wondering what plans were. Consumable to so you commented…

Wonder on, you are free to wonder.

Thank you. Two Cube consumables, you commented earlier and then I’ve heard this in the past and certainly this would be consistent with the industry. The consumables on the less expenses printers as a percentage of the current price tend to be much less than the professional and production printers. And can you give us some more color what your expectations are there, and what your experience have been so far?

Well what our experience has been, first of all it’s very true what you said, that on consumer level printers the consumption is much lower than the professional and production systems. And what we’ve said so far, is that in our case, it’s been about three times greater than our expectation, where it will level off overtime and what the ratio is percentage wise between ASP of a printer and annual recurring revenues, we don’t know yet, because we’re only 18 or so months into the journey. But what I can tell you is two things, one is demand is very high both for the printers and the materials, both contributed to backlog and two successive of quarters, we had to increase our manufacturing capacity.

And that was specifically for the Cube?

That was specifically for the Cube and Cube X.

And on a related note, the production and professional printers, I thought I understood you to say you expect that to accelerate in the back half, and growth in that category and revenue basis, last year was only 2%. So can you give us color on – and I haven’t had a chance to go through this morning’s 10-Q, how did that fair professional and production during the second quarter and expectations as to why that’s going to accelerate?

I don’t recall saying anything about production printers specially. Can you tell me what you think you heard?

First too much in the last hour, its hard to be specific but I did think that I heard that was one reason to optimize them?

You have to be specific, because you’re asking me a specific answer to something that I don’t think I said, so I would…

We can follow-up off line with the transcript.

All right.

Perfect.

Could you just comment on professional and production was 2% of revenue growth last year, it is your expectations that will be higher?

Well I think that if we read the queue together here it says that revenue from professional printers including production printers increased 78.3% over 2012. So I'm not sure what is the 2%, you can look on the queue on what page it is? Stacey.

Avi I said that was the 10-K for last year.

Yeah, no, no, no this is...

What’s the current acceleration?

Cindy this is this morning’s queue that I’m referring to.

Right, right and so Avi what I’m saying is…

Let be, let’s stay clear I'm referring you to this morning’s 10-Q and the reality is that professional and production printers increased 78.3%. And I believe that Damon in his remark, prepared remarks may be that’s what you’re referring to. In Damon’s prepared remarks related to Slide 13 of this morning’s webcast, Damon said and I quote, revenue from our combined professional and production printers increased 78% and our personal printers’ revenue increased 333%, over the last year. Now what’s your question?

Beauty in that my question is that 10-K for 2012 says professional and production grew 2%, so what’s behind the acceleration?

Well in course of the event from advanced manufacturing and consumer interest, the very reasons that has given us this reason to invest more in R&D and marketing Cindy. We have increased demand we have lots of interesting advanced manufacturing applications that are boosting revenue, and on the consumer side, it’s been very interesting period and exciting period.

And can you give us more color on that?

And indecently, we’re trying to find what you are referring to and we can’t find it.

Okay, can you give us more color on what’s behind the professional and production acceleration?

More implementation into advanced manufacturing applications across the Board.

So widespread across the Board in advanced manufacturing?

Yeah.

Okay thank you.

Thanks, yeah you’re welcome.

And we have a follow-up question from the line (inaudible). Please proceed.

Hi Damon, hey just wanted to get your view on where you guys expect focus M&A going forward and maybe investment of capital dollars, now that you have Phoenix under the fold my hunch is that you feel pretty content with your materials positioning with Phoenix. So I just wanted to get a sense of where M&A maybe focused going forward and capital spend maybe going forward? Thanks.

We do have our five growth initiatives that we focus on and some different areas, one we had said that when we did the equity raise that we said the near-term focus is were a couple of different areas, one was definitely on the metal side which we’ve moved on and then continued advanced materials capabilities is another area. We’ve said that we will continue to expand our Quickparts, On Demand Parts services both for tuck-ins and geographically where we need to keep adding and then continue to invest on the consumer side and the healthcare side. So sort of still well distributed but well focused and what we have based on our five growth pillars.

Got it. Thanks and then I guess just a follow-up on that, just a sense of what M&A environment feels like today relative to where its been and I guess how the price tag of future M&A may look relative to what you’ve done in the last couple of years. Thanks.

Well M&A pipeline remains very robust and we’re not one of the companies that tend to pay significant premiums for what we acquired, you might say that we probably had the first mover advantage in the consolidation strategy and given the five growth pillars that we have, we have more of a target to reach funnel here. And look our aim is to deploy capital in investments in to areas that would be not only accretive to the business model and to our shareholders, but we always want to have some longer returns strategic components and with all of that our D&A in deal making has been that we don’t overpay for what we get. So when you look at what we have done to-date, I think over 30 acquisitions we have practiced that extremely well and there is no question that there some segments of additive manufacturing are overheated at the moment, but we have many more targets to work on notwithstanding the overheat in some sectors.

Got it. Thank very much.

Ladies and gentlemen that concludes the Q&A portion of the conference. I would now like to turn the conference back over to Stacey Witten for any closing remarks.

Thank you for joining us today and for your continued support of 3D Systems. A replay of this broadcast will be made available after the call on the Investor Relations section of our website www.3dsystems.com/investor.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.