Stratasys Reports Record Quarterly Revenue and Non-GAAP Net Income

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.

(a) Represents amortization expense of $436,012 related to acquired Solidscape, Inc. intangible assets and expense of $71,000 associated with the Company's current efforts to combine with Objet Ltd.

(b) Represents non-cash stock-based compensation expense of $784,181, amortization expense of $133,333 related to acquired Solidscape, Inc. intangible assets and expense of $2,493,479 associated with the Company's current efforts to combine with Objet Ltd.

(d) Represents amortization expense related to acquired Solidscape, Inc. intangible assets.

(e) Represents non-cash stock-based compensation expense of $440,829 and amortization expense of $133,333 related to acquired Solidscape, Inc. intangible assets.

(f) Represents gain on sale of an auction rate security during the third quarter of 2011.

The Company considers these non-GAAP measures to be indicative of 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 these measures should not be viewed as a substitute for the Company’s GAAP results.


STRATASYS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS


	Nine Months Ended September 30, 2012										Nine Months Ended September 30, 2011
	As Reported							Non-GAAP			As Reported							Non-GAAP
	(unaudited)			Adjustments				(unaudited)			(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	120,301,057		$	-			$	120,301,057		$	91,273,133		$	-			$	91,273,133
Services		23,791,947			-				23,791,947			21,048,816			-				21,048,816
		144,093,004			-				144,093,004			112,321,949			-				112,321,949

Cost of sales
Products		54,692,340			(1,379,036	)	(a)		53,313,304			43,752,872			(1,287,781	)	(d)		42,465,092
Services		12,328,692			-				12,328,692			9,029,273			-				9,029,273
		67,021,032			(1,379,036	)			65,641,996			52,782,145			(1,287,781	)			51,494,365

Gross profit		77,071,972			1,379,036				78,451,008			59,539,804			1,287,781				60,827,585

Operating expenses
Research and development		12,576,094			-				12,576,094			10,687,578			-				10,687,578
Selling, general and administrative		42,365,253			(9,274,541	)	(b)		33,090,712			28,738,325			(1,925,579	)	(e)		26,812,746
		54,941,347			(9,274,541	)			45,666,806			39,425,903			(1,925,579	)			37,500,324

Operating income		22,130,625			10,653,577				32,784,202			20,113,901			3,213,360				23,327,261

Other income (expense)
Interest income, net		672,052			-				672,052			698,469			-				698,469
Foreign currency transaction losses, net		(265,141	)		-				(265,141	)		(429,840	)		-				(429,840	)
Other, net		109,922			-				109,922			2,264,307			(1,830,596	)	(f)		433,711
		516,833			-				516,833			2,532,936			(1,830,596	)			702,340

Income before income taxes		22,647,458			10,653,577				33,301,035			22,646,837			1,382,764				24,029,601

Income tax expense		9,924,615			1,513,033		(c)		11,437,648			7,806,524			358,211		(c)		8,164,735

Net income	$	12,722,843		$	9,140,544			$	21,863,387		$	14,840,313		$	1,024,552			$	15,864,865

Earnings per common share
Basic	$	0.60		$	0.43			$	1.02		$	0.70		$	0.05			$	0.75
Diluted	$	0.58		$	0.42			$	1.00		$	0.68		$	0.05			$	0.73

Weighted average number of common shares outstanding
Basic		21,348,967							21,348,967			21,107,474							21,107,474
Diluted		21,856,719							21,856,719			21,669,848							21,669,848

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