Stratasys Reports First Quarter Financial Results

MINNEAPOLIS--(Business Wire)--
Stratasys, Inc. (Nasdaq:SSYS) today announced first quarter financial results.

Revenue was $23.1 million for the first quarter ended March 31, 2009 versus
$30.7 million reported for the same period in 2008. System shipments totaled 591
units for the first quarter of 2009, versus 577 for the same period last year.

The company reported a net loss of approximately $704,000 for the first quarter,
or $0.03 per share, compared to net income of $3.8 million, or $0.18 per share,
for the same period last year.

Non-GAAP net income, which excludes certain discrete items and stock-based
compensation expense, was approximately $5,000 for the first quarter of 2009
compared to $4.3 million for the same period last year.

The first quarter of 2009 included a discrete item related to a pre-tax
restructuring expense that totaled approximately $779,000. The restructuring
expense is associated with cost-saving measures the company implemented during
the first quarter. The total restructuring expense, net of tax, was
approximately $512,000, or $0.03 per share.

The first quarter of 2008 included a discrete item related to an impairment
charge of approximately $257,000 net of tax, or $0.01 per share. This
non-operating charge in 2008 was an adjustment to the fair value of an auction
rate security.

Stock-based compensation expense required under Statement of Financial
Accounting Standard (SFAS) 123R was approximately $197,000 net of tax, or $0.01
per share for the first quarter of 2009, and approximately $261,000 net of tax,
or $0.01 per share, for the same period last year.

Cash flow from operations totaled $3.0 million for the first quarter. The
company had approximately $49 million in total cash and investments as of the
end of the first quarter.

Appropriate reconciliations between GAAP and non-GAAP financial measures are
provided in a table at the end of this press release. The table provides
itemized detail of the impairment charge and restructuring expense, as well as
the stock-based compensation expense used to determine non-GAAP financial
measures.

"The first quarter represented a challenging economic environment for our
company as market conditions deteriorated significantly from levels observed in
the fourth quarter of last year," said Scott Crump, chairman and chief executive
officer of Stratasys. "The global slowdown impacted all of our businesses, as
customers reduced capital budgets and operating expenditures. Despite these
conditions, our new initiatives have been well-executed, and we are
well-positioned for a rebound in the global economy.

"Our new distribution model for Fortus 3D production systems in North America
has been successfully implemented, with all Stratasys systems now distributed
through an indirect channel worldwide. In addition, we remain excited about the
opportunity within direct digital manufacturing, as well as our new branding and
product strategies that target these applications. Although Fortus 3D production
system sales fell compared to last year, we are building a pipeline of
opportunities that should contribute to accelerated growth when economic
conditions improve.

"We have been pleased with the market`s response to our new personal 3D printer,
the uPrint, following its successful introduction in January. While total sales
of our 3D printers have been disappointing, uPrint sales have been strong. In
addition, we believe the system represents a whole-product solution that has
widened our lead over competitors. Despite the current economic environment, we
remain passionate in our long-term vision to accelerate the adoption of 3D
printers among designers and engineers worldwide, and we are confident that our
strategy will meet that goal.

"Our RedEye paid parts and consumable businesses were also impacted by the weak
global economy during the first quarter. Although our paid parts business grew
slightly over last year, it was negatively impacted by an aggressive competitive
environment, as many competitors are fighting for their survival. Our consumable
business felt the impact of a decline in system usage, as our users have cut
back on design and engineering resources. We believe these trends are temporary,
and will reverse with an eventual rebound in the markets we serve.

"The near-term outlook continues to suggest a difficult market environment, and
we have taken steps in the first quarter to adjust our operating expenses.
However, our value proposition has not changed, nor has our long-term outlook
and strategy for growth. We remain committed to our long-term goals and
objectives and remain confident in our ability to provide value to our
customers, channel partners and shareholders," Crump concluded.

Due to the difficulty of forecasting in the current economic environment,
Stratasys is currently not providing financial guidance for the fiscal year
ending December 31, 2009.

The company recently provided access to several promotional videos on its Web
site, including a demonstration of a Dimension 3D printer application at Jay
Leno`s Garage, and a presentation by the Chief Technology Officer at AutoDesk of
a full-scale custom motorcycle prototype made by the RedEye paid parts service.
These videos can be accessed at
http://www.stratasys.com/Stratasys_Video_Library.aspx.

The company will hold a conference call to discuss its first quarter financial
results on Wednesday, April 29, 2009 at 8:30 a.m. (ET). The investor conference
call will be available via live webcast on the Stratasys Web site at
www.stratasys.com under the "Investors" tab. To participate by telephone, the
domestic dial-in number is 866-362-4829, and the international dial-in is
617-597-5346. The access code is 73379324. Investors are advised to dial into
the call at least ten minutes prior to the call to register.

The webcast will be available for 90 days on the "Investors" page of the
Stratasys website.

(Financial tables follow)

Stratasys, Inc., Minneapolis, manufactures additive fabrication machines for
prototyping and manufacturing plastic parts. The company also operates a service
for part prototyping and production. According to Wohlers Report 2008, Stratasys
supplied 44 percent of all additive fabrication systems installed worldwide in
2007, making it the unit market leader for the sixth consecutive year. Stratasys
patented and owns the process known as FDM. The process creates functional
prototypes and end-use parts directly from any 3D CAD program, using
high-performance industrial thermoplastics. The company holds more than 250
granted or pending additive fabrication patents globally. Stratasys products are
used in the aerospace, defense, automotive, medical, business and industrial
equipment, education, architecture, and consumer-product industries. Online at:
www.Stratasys.com.

Forward Looking Statements

All statements herein that are not historical facts or that include such words
as "expects", "anticipates", "projects", "estimates", "vision", "planning" or
"believes" or similar words constitute forward-looking statements covered by the
safe harbor protection of the Private Securities Litigation Reform Act of
1995.Except for the historical information herein, the matters discussed in this
news release are forward-looking statements that involve risks and
uncertainties.These include statements regarding projected revenue and income in
future quarters; the size of the 3D printing market; our objectives for the
marketing and sale of our DimensionTM 3D printers and our FortusTM 3D production
systems, particularly for use in direct digital manufacturing (DDM); the demand
for our proprietary consumables; the expansion of our paid parts service; and
our beliefs with respect to the growth in the demand for our products.Other
risks and uncertainties that may affect our business include our ability to
penetrate the 3D printing market; our ability to maintain the growth rates
experienced in preceding quarters; our ability to introduce, produce and market
new materials, such as ABS-Plus and ABS-M30, and the market acceptance of these
and other materials; the impact of competitive products and pricing; our timely
development of new products and materials and market acceptance of those
products and materials; the success of our recent R&D initiative to expand the
DDM capabilities of our core FDM technology; and the success of our
RedEyeOnDemandTMand other paid parts services.Actual results may differ from
those expressed or implied in our forward-looking statements. These statements
represent beliefs and expectations only as of the date they were made. We may
elect to update forward-looking statements, but we expressly disclaim any
obligation to do so, even if our beliefs and expectations change. In addition to
the statements described above, such forward-looking statements include the
risks and uncertainties described more fully in our reports filed or to be filed
with the Securities and Exchange Commission, including our annual reports on
Form 10-K and quarterly reports on Form 10-Q.

Financial Tables & Non-GAAP Discussion

The information discussed within this release includes financial results that
are in accordance with accounting principles generally accepted in the United
States (GAAP).Certain prior year balance sheet amounts shown in the financial
tables have been reclassified to conform to the current year`s presentation.In
addition, certain non-GAAP financial measures have been provided that exclude
certain charges and expenses.The non-GAAP measures should be read in conjunction
with the corresponding GAAP measures and should be considered in addition to,
and not as an alternative or substitute for, the measures prepared in accordance
with GAAP.The non-GAAP financial measures are provided in an effort to provide
information that investors may deem relevant to evaluate results from the
company`s core business operations and to compare the company`s performance with
prior periods.The non-GAAP financial measures primarily identify and exclude
certain discrete items, such as an impairment charge for certain auction rate
securities, restructuring expenses, and expenses associated with stock-based
compensation required under SFAS 123R.The company uses these non-GAAP financial
measures for evaluating comparable financial performance against prior periods.

This release is also available on the Stratasys Web site at www.Stratasys.com.

STRATASYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,
2009 2008
(unaudited) (unaudited)

Net sales
Product $ 16,951,502 $ 25,107,540
Services 6,193,299 5,600,149
23,144,801 30,707,689

Cost of goods sold
Product 10,686,156 10,742,354
Services 2,886,293 2,601,458
13,572,449 13,343,812

Gross profit 9,572,352 17,363,877

Operating expenses
Research and development 1,871,760 2,168,709
Selling, general and administrative 9,308,209 9,690,868
11,179,969 11,859,577

Operating income (loss) (1,607,617 ) 5,504,300

Other income (expense)
Interest income, net 286,353 601,066
Foreign currency transaction gains (losses), net 236,601 (28,168 )
Other 13,726 (275,780 )
536,680 297,118

Income (loss) before income taxes (1,070,937 ) 5,801,418

Income taxes (367,008 ) 2,002,849

Net income (loss) $ (703,929 ) $ 3,798,569

Earnings per common share
Basic $ (0.03 ) $ 0.18
Diluted $ (0.03 ) $ 0.18

Weighted average number of common
shares outstanding
Basic 20,222,127 20,979,068
Diluted 20,222,127 21,507,626

STRATASYS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, December 31,
2009 2008
(unaudited)

ASSETS

Current assets
Cash and cash equivalents $ 30,664,771 $ 27,945,799
Short-term investments - held to maturity 3,820,657 4,835,055
Accounts receivable, less allowance for doubtful
accounts of $1,063,943 and $1,017,521
in 2009 and 2008, respectively 23,686,635 26,539,733
Inventories 20,229,662 19,889,351
Net investment in sales-type leases, less allowance for 3,463,969 3,870,472
doubtful accounts of $314,819 and $342,642
in 2009 and 2008, respectively
Prepaid expenses and other current assets 1,420,520 2,608,080
Deferred income taxes 2,168,000 2,168,000
Total current assets 85,454,214 87,856,490

Property and equipment, net 28,941,966 29,749,921

Other assets
Intangible assets, net 8,107,048 8,347,200
Net investment in sales-type leases 3,731,588 4,545,977
Long-term investments - available for sale securities 1,109,250 1,109,250
Long-term investments - held to maturity 13,769,498 13,825,981
Other non-current assets 2,320,683 2,308,214
Total other assets 29,038,067 30,136,622

Total assets $ 143,434,247 $ 147,743,033

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and other current liabilities $ 9,122,403 $ 11,795,238
Unearned revenues 11,509,689 12,765,396
Total current liabilities 20,632,092 24,560,634

Non-current liabilities
Deferred tax liabilities 620,000 620,000
Total non-current liabilities 620,000 620,000

Total liabilities 21,252,092 25,180,634

Commitments and contingencies

Stockholders' equity
Common stock, $.01 par value, authorized 30,000,000
shares, issued 25,910,203 shares as of March 31, 2009 and
25,909,603 shares as of December 31, 2008 259,102 259,096
Capital in excess of par value 92,100,450 91,611,078
Retained earnings 69,195,740 69,899,669
Accumulated other comprehensive loss (368,712 ) (203,019 )
Less cost of treasury stock, 5,687,631 shares in 2009 and 2008 (39,004,425 ) (39,004,425 )
Total stockholders' equity 122,182,155 122,562,399

Total liabilities and stockholders' equity $ 143,434,247 $ 147,743,033

STRATASYS, INC.

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Non-GAAP Adjustments Three Months Ended March 31, 2009 Non-GAAP Adjustments Three Months Ended March 31, 2008
Consolidated (unaudited) As Stock-Based Compensation (1) Restructuring (2) Consolidated (unaudited) Non-GAAP Consolidated (unaudited) As Reported Stock-Based Compensation (1) Auction Rate Security (3) Consolidated (unaudited) Non-GAAP
Reported

Selling, $ 9,308,209 $ (250,553 ) $ (778,840 ) $ 8,278,816 $ 9,690,868 $ (315,395 ) $ (390,000 ) $ 8,985,473
general and
administrativ
e expenses

Total 11,179,969 (250,553 ) (778,840 ) 10,150,576 11,859,577 (315,395 ) (390,000 ) 11,154,182
operating
expenses

Operating (1,607,617 ) 250,553 778,840 (578,224 ) 5,504,300 315,395 390,000 6,209,695
income (loss)

Other income 13,726 - - 13,726 (275,780 ) - - (275,780 )
Total other 536,680 - - 536,680 297,118 - - 297,118
income

Income (loss) (1,070,937 ) 250,553 778,840 (41,544 ) 5,801,418 315,395 390,000 6,506,813
before income
taxes
Income taxes (367,008 ) 54,000 266,907 (46,101 ) 2,002,849 54,000 133,000 2,189,849

Net income $ (703,929 ) $ 196,553 $ 511,933 $ 4,557 $ 3,798,569 $ 261,395 $ 257,000 $ 4,316,964
(loss)

Earnings per
common share
Basic $ (0.03 ) $ 0.01 $ 0.03 $ 0.00 $ 0.18 $ 0.01 $ 0.01 $ 0.20
Diluted $ (0.03 ) $ 0.01 $ 0.03 $ 0.00 $ 0.18 $ 0.01 $ 0.01 $ 0.20

Weighted
average
number of
common shares
outstanding
Basic 20,222,127 20,222,127 20,979,068 20,979,068
Diluted 20,222,127 20,231,569 21,507,626 21,507,626

These adjustments reconcile the Company`s GAAP results of operations to its
non-GAAP results of operations. The Company believes that presentation of
results adjusted for the non-GAAP items described below provides meaningful
supplemental information to both management and investors.

(1) - Represents non
-cash stock
-based
compensation
expense
recognized in
accordance with
FAS 123R.
(2) - Represents
severance and
other related
costs associated
with the
Company's
restructuring in
the first
quarter of 2009.
(3) - Represents a
reduction in the
assessed fair
value of an
auction rate
security
investment that
the Company
considered to be
other than
temporary.

The Company considers these non-GAAP measures to be indicative of the its core
operating results and facilitates a comparison of operating results across
reporting periods. The Company uses these non-GAAP measures when evaluating its
financial results as well as for internal planning and forecasting purposes
however they should not be viewed as a substitute for the Company`s GAAP
results.

Stratasys, Inc.
Shane Glenn, 952-294-3416
Director of Investor Relations
shane.glenn@stratasys.com

Copyright Business Wire 2009