Stratasys Reports Record Quarterly Revenue And Non-GAAP Net Income

This release is available on the Stratasys web site at www.stratasys.com

Additional information on the Emma Lavelle story can be accessed at http://www.stratasys.com/Resources/Case-Studies/Medical-FDM-Technology-Case-Studies/Nemours.aspx

Important Information for Investors and Shareholders

In connection with the proposed combination of Objet and Stratasys pursuant to an Agreement and Plan of Merger (the “Merger”), Objet has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4, which includes a proxy statement of Stratasys and a prospectus of Objet, as well as other relevant materials in connection with the proposed transaction. Stratasys concurrently filed the same proxy statement/prospectus with the SEC and has mailed it to Stratasys shareholders for purposes of soliciting proxies for voting in favor of the Merger at a special meeting of Stratasys stockholders called for the purpose of approving the Merger Agreement and the Merger. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT MATERIALS, BECAUSE THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT STRATASYS, OBJET AND THE PROPOSED TRANSACTION. The proxy statement/prospectus and other relevant materials and any other related documents filed with the SEC may be obtained free of charge on the SEC’s website at www.sec.gov or via the Stratasys website at www.stratasys.com. Stockholders may also obtain a copy of the SEC filings free of charge upon written request to Stratasys, Attention: Shane Glenn, Director of Investor Relations, 7665 Commerce Way, Eden Prairie, Minnesota 55344.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Stratasys

Stratasys Inc., Minneapolis, is a maker of additive manufacturing machines for prototyping and producing plastic parts. The company markets under the brands Mojo, uPrint and Dimension 3D Printers and Fortus Production 3D Printers. The company also operates RedEye On Demand, a digital-manufacturing service for prototypes and production parts. In 2011 Stratasys acquired 3D printer maker Solidscape Inc. According to Wohlers Report 2012, Stratasys had a 41.5 percent market share in 2011, and has been the unit market leader for the tenth consecutive year. Stratasys patented and owns the Fused Deposition Modeling (FDM ^®) process. The process creates functional prototypes and manufactured goods directly from any 3D CAD program, using high-performance industrial thermoplastics. The company holds 380 granted or pending additive manufacturing 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

Stratasys, Fortus, Dimension, and uPrint are registered trademarks, and Mojo is a trademark, of Stratasys Inc.

STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
				Three Months Ended September 30,										Nine Months Ended September 30,
				2012					2011					2012					2011
				(unaudited)					(unaudited)					(unaudited)					(unaudited)
Net sales
Products				$	41,317,863				$	32,512,544				$	120,301,057				$	91,273,133
Services					8,405,612					7,440,470					23,791,947					21,048,816
					49,723,475					39,953,014					144,093,004					112,321,949
Cost of sales
Products					17,563,569					15,284,820					54,692,340					43,752,872
Services					4,203,443					3,114,248					12,328,692					9,029,273
					21,767,012					18,399,068					67,021,032					52,782,145
Gross profit					27,956,463					21,553,946					77,071,972					59,539,804
Operating expenses
Research and development					4,066,846					3,613,668					12,576,094					10,687,578
Selling, general and administrative					14,780,526					10,083,451					42,365,253					28,738,325
					18,847,372					13,697,119					54,941,347					39,425,903
Operating income					9,109,091					7,856,827					22,130,625					20,113,901
Other income (expense)
Interest income, net					229,003					276,089					672,052					698,469
Foreign currency transaction losses, net					(72,586	)				(217,857	)				(265,141	)				(429,840	)
Other, net					7,021					755,030					109,922					2,264,307
					163,438					813,262					516,833					2,532,936
Income before income taxes					9,272,529					8,670,089					22,647,458					22,646,837
Income tax expense					4,089,393					2,812,920					9,924,615					7,806,524
Net income				$	5,183,136				$	5,857,169				$	12,722,843				$	14,840,313
Earnings per common share
Basic				$	0.24				$	0.28				$	0.60				$	0.70
Diluted				$	0.24				$	0.27				$	0.58				$	0.68
Weighted average number of common shares outstanding
Basic					21,467,606					21,165,401					21,348,967					21,107,474
Diluted					22,008,471					21,542,674					21,856,719					21,669,848
Note: Certain reclassifications have been made to prior period balances to conform to current period presentation.

STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
				September 30,					December 31,
				2012					2011
				(unaudited)
ASSETS
Current assets
Cash and cash equivalents				$	27,899,789				$	20,092,200
Short-term investments - held to maturity					23,900,469					14,602,408
Accounts receivable, less allowance for doubtful accounts of $773,000 at September 30, 2012 and $1,089,000 at December 31, 2011					35,865,540					26,230,289
Inventories					32,079,430					22,771,460
Net investment in sales-type leases, less allowance for doubtful accounts of $302,000 at September 30, 2012 and $230,000 at December 31, 2011					4,249,410					3,295,039
Prepaid expenses and other current assets					2,193,015					3,259,012
Deferred income taxes					2,973,000					2,973,000
Total current assets					129,160,653					93,223,408
Property and equipment, net					44,887,880					39,669,433
Other assets
Goodwill					25,388,731					25,393,967
Other Intangible assets, net					24,150,718					25,295,032
Net investment in sales-type leases					7,249,832					5,494,753
Long-term investments - held to maturity					13,915,821					32,581,472
Other non-current assets					145,652					112,300
Total other assets					70,850,754					88,877,524
Total assets				$	244,899,287				$	221,770,365
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current liabilities				$	21,628,011				$	19,368,197
Unearned revenues					9,968,263					9,768,610
Total current liabilities					31,596,274					29,136,807
Non-current liabilities
Deferred tax liabilities					6,760,000					6,760,000
Unearned revenues - long-term					2,662,953					2,562,195
Total liabilities					41,019,227					38,459,002
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value, authorized 30,000,000 shares; 27,501,216 and 26,933,301 issued at September 30, 2012 and December 31, 2011, respectively					275,012					269,333
Additional paid-in capital					125,951,072					118,134,006
Retained earnings					116,734,701					104,011,848
Accumulated other comprehensive loss					(76,300	)				(99,399	)
Treasury stock at cost, 5,687,631 shares at September 30, 2012 and December 31, 2011					(39,004,425	)				(39,004,425	)
Total stockholders' equity					203,880,060					183,311,363
Total liabilities and stockholders' equity				$	244,899,287				$	221,770,365
Note: Certain reclassifications have been made to prior period balances to conform to current period presentation.

STRATASYS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
			Three Months Ended September 30, 2012														Three Months Ended September 30, 2011
			As Reported										Non-GAAP				As Reported										Non-GAAP
			(unaudited)				Adjustments						(unaudited)				(unaudited)				Adjustments						(unaudited)
Net sales
Products			$	41,317,863			$	-					$	41,317,863			$	32,512,544			$	-					$	32,512,544
Services				8,405,612				-						8,405,612				7,440,470				-						7,440,470
				49,723,475				-						49,723,475				39,953,014				-						39,953,014
Cost of sales
Products				17,563,569				(507,012	)		(a)			17,056,557				15,284,820				(436,012	)		(d)			14,848,808
Services				4,203,443				-						4,203,443				3,114,248				-						3,114,248
				21,767,012				(507,012	)					21,260,000				18,399,068				(436,012	)					17,963,056
Gross profit				27,956,463				507,012						28,463,475				21,553,946				436,012						21,989,958
Operating expenses
Research and development				4,066,846				-						4,066,846				3,613,668				-						3,613,668
Selling, general and administrative				14,780,526				(3,410,994	)		(b)			11,369,532				10,083,451				(574,162	)		(e)			9,509,289
				18,847,372				(3,410,994	)					15,436,378				13,697,119				(574,162	)					13,122,957
Operating income				9,109,091				3,918,006						13,027,097				7,856,827				1,010,174						8,867,001
Other income (expense)
Interest income, net				229,003				-						229,003				276,089				-						276,089
Foreign currency transaction losses, net				(72,586	)			-						(72,586	)			(217,857	)			-						(217,857	)
Other, net				7,021				-						7,021				755,030				(626,188	)		(f)			128,842
				163,438				-						163,438				813,262				(626,188	)					187,074
Income before income taxes				9,272,529				3,918,006						13,190,535				8,670,089				383,986						9,054,075
Income tax expense				4,089,393				376,723			(c)			4,466,116				2,812,920				89,362			(c)			2,902,282
Net income			$	5,183,136			$	3,541,283					$	8,724,419			$	5,857,169			$	294,624					$	6,151,793
Earnings per common share
Basic			$	0.24			$	0.16					$	0.41			$	0.28			$	0.01					$	0.29
Diluted			$	0.24			$	0.16					$	0.40			$	0.27			$	0.01					$	0.29
Weighted average number of common shares outstanding
Basic				21,467,606										21,467,606				21,165,401										21,165,401
Diluted				22,008,471										22,008,471				21,542,674										21,542,674

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.

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