From: R. Eric \ (email@example.com)
Date: Fri May 09 2003 - 00:36:20 EEST
This article was in the local Daily News, Santa Clarita edition...
3D's president demoted
Flaharty to step down in misreporting wake
By Nicholas Grudin
VALENCIA -- 3D Systems Corp. announced Tuesday that its president and
chief operating officer, Grant Flaharty, would step down after an
internal investigation into misreported earnings.
The $72 million Valencia-based company -- which in April fired its
financial officer, James Selzer -- sells systems that create solid
models out of computer images.
Flaharty will stay with the company as head of American sales, company
Others among the company's 400 employees received informal censure, and
one member of the sales staff was fired.
"We are coming to the end of a long and difficult process," said Brian
K. Service, chief executive officer for 3D Systems.
Shares of 3D Systems closed down 69 cents at $5.30 on Tuesday.
In the past year, 3D shares have plummeted from a 52-week high of $15,
but Service is optimistic that changes in management and accounting
practices will help to avoid future problems.
"We believe that the systems and controls being instituted as a result
of the audit committee investigation and the reconfiguration of our
management structure ... will enable us to keep much tighter control of
transaction reporting," Service said.
The company's accounting irregularities came under scrutiny in February,
when questions surfaced over whether $3 million in revenue counted for
2002, as it had been reported to investors, or for 2003.
An investigation conducted by a board of directors audit committee
determined that the earnings should not have been counted for 2002, thus
dropping the company's 2002 revenue below profitability and in default
of bank loans.
A final determination of the accounting issues has not yet been
disclosed by 3D Systems, which replaced auditor Deloitte & Touche in
favor of BDO Seidman in April.
Due to the audit, 3D is facing potential delisting by the Nasdaq stock
exchange, according to company spokeswoman Elizabeth Goode. An analyst,
however, said that isn't likely.
Also on Tuesday, 3D officials announced that the company would offer up
to $16 million in convertible preferred stock; $11.9 million of that
stock offering has already been acquired, Goode said Tuesday afternoon.
3D Systems has also paid off a $9.6 million term-loan portion of its $20
million debt facility with U.S. Bancorp.
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