“The company remains focused on executing its long-term plan, and we remain confident in the long-term growth opportunities in our core businesses,” Crump concluded.

The company will hold a conference call to discuss its second quarter financial results on Wednesday, July 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 800-299-7098, and the international dial-in is 617-801-9715. The access code is 55972822. 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.

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 2009, Stratasys supplied 43 percent of all additive fabrication systems installed worldwide in 2008, making it the unit market leader for the seventh 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 Dimension^® 3D Printers and our Fortus^TM 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 ABSplus 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 RedEyeOnDemand^TM and 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 are subject to 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 June 30,								Six Months Ended June 30,
			2009 (unaudited)				2008 (unaudited)				2009 (unaudited)				2008 (unaudited)
Net sales
Product			$	18,200,029			$	24,846,032			$	35,151,531			$	49,953,572
Services				6,448,248				6,428,890				12,641,547				12,029,039
				24,648,277				31,274,922				47,793,078				61,982,611
Cost of goods sold
Product				10,278,739				11,721,570				20,964,894				22,463,924
Services				2,796,317				2,244,982				5,682,610				4,846,440
				13,075,056				13,966,552				26,647,504				27,310,364
Gross profit				11,573,221				17,308,370				21,145,574				34,672,247
Operating expenses
Research and development				1,655,206				2,572,764				3,526,965				4,741,473
Selling, general and administrative				8,467,618				8,897,955				17,775,827				18,588,823
				10,122,824				11,470,719				21,302,792				23,330,296
Operating income (loss)				1,450,397				5,837,651				(157,218	)			11,341,951
Other income (expense)
Interest income, net				237,913				546,833				524,266				1,147,899
Foreign currency transaction losses, net				(399,819	)			(187,658	)			(163,218	)			(215,826	)
Other				12,078				22,747				25,803				(253,032	)
				(149,828	)			381,922				386,851				679,041
Income before income taxes				1,300,569				6,219,573				229,633				12,020,992
Income taxes				450,998				2,123,517				83,990				4,126,366
Net income			$	849,571			$	4,096,056			$	145,643			$	7,894,626
Earnings per common share
Basic			$	0.04			$	0.20			$	0.01			$	0.38
Diluted			$	0.04			$	0.19			$	0.01			$	0.37
Weighted average number of common shares outstanding
Basic				20,223,139				20,878,049				20,221,995				20,934,889
Diluted				20,242,197				21,491,704				20,236,245				21,470,288

STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
			June 30, 2009				December 31, 2008
			(unaudited)
ASSETS
Current assets
Cash and cash equivalents			$	34,753,226			$	27,945,799
Short-term investments - held to maturity				4,902,849				4,835,055
Accounts receivable, less allowance for doubtful accounts of $1,096,157 and $1,017,521 in 2009 and 2008, respectively				24,298,173				26,539,733
Inventories				18,387,423				19,889,351
Net investment in sales-type leases, less allowance for doubtful accounts of $311,358 and $324,642 in 2009 and 2008, respectively				3,923,803				3,870,472
Prepaid expenses and other current assets				1,684,717				2,608,080
Deferred income taxes				2,168,000				2,168,000
Total current assets				90,118,191				87,856,490
Property and equipment, net				28,073,243				29,749,921
Other assets
Intangible assets, net				8,034,671				8,347,200
Net investment in sales-type leases				3,577,686				4,545,977
Long-term investments - available for sale securities				1,109,250				1,109,250
Long-term investments - held to maturity				10,299,470				13,825,981
Other non-current assets				2,338,231				2,308,214
Total other assets				25,359,308				30,136,622
Total assets			$	143,550,742			$	147,743,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current liabilities			$	8,940,241			$	11,795,238
Unearned revenues				10,515,178				12,765,396
Total current liabilities				19,455,419				24,560,634
Non-current liabilities
Deferred tax liabilities				620,000				620,000
Total non-current liabilities				620,000				620,000
Total liabilities				20,075,419				25,180,634
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value, authorized 30,000,000 shares, issued 25,913,503 shares as of June 30, 2009 and 25,909,603 shares as of December 31, 2008				259,135				259,096
Capital in excess of par value				92,325,558				91,611,078
Retained earnings				70,045,311				69,899,669
Accumulated other comprehensive loss				(150,256	)			(203,019	)
Less cost of treasury stock, 5,687,631 shares in 2009 and 2008				(39,004,425	)			(39,004,425	)
Total stockholders' equity				123,475,323				122,562,399
Total liabilities and stockholders' equity			$	143,550,742			$	147,743,033

STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
			Non-GAAP Adjustments for the Three Months Ended June 30, 2009																Non-GAAP Adjustments for the Three Months Ended June 30, 2008
			Consolidated (unaudited) As Reported				Stock-Based Compensation (1)				Consolidated (unaudited) Non-GAAP								Consolidated (unaudited) As Reported				Stock-Based Compensation (1)				Consolidated (unaudited) Non-GAAP
Selling, general and administrative expenses			$	8,467,618			$	(182,374	)		$	8,285,244							$	8,897,955			$	(319,823	)		$	8,578,132
Total operating expenses				10,122,824				(182,374	)			9,940,450								11,470,719				(319,823	)			11,150,896
Operating income				1,450,397				182,374				1,632,771								5,837,651				319,823				6,157,474
Other income				12,078				-				12,078								22,747				-				22,747
Total other income (loss)				(149,828	)			-				(149,828	)							381,922				-				381,922
Income before income taxes				1,300,569				182,374				1,482,943								6,219,573				319,823				6,539,396
Income taxes				450,998				20,000				470,998								2,123,517				52,218				2,175,735
Net income			$	849,571			$	162,374			$	1,011,945							$	4,096,056			$	267,605			$	4,363,661
Earnings per common share
Basic			$	0.04			$	0.01			$	0.05							$	0.20			$	0.01			$	0.21
Diluted			$	0.04			$	0.01			$	0.05							$	0.19			$	0.01			$	0.20
Weighted average number of common shares outstanding
Basic				20,223,139								20,223,139								20,878,049								20,878,049
Diluted				20,242,197								20,242,197								21,491,704								21,491,704
			Non-GAAP Adjustments for the Six Months Ended June 30, 2009																Non-GAAP Adjustments for the Six Months Ended June 30, 2008
			Consolidated (unaudited) As Reported				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
Selling, general and administrative expenses			$	17,775,827			$	(432,927	)		$	(778,840	)		$	16,564,060			$	18,588,823			$	(635,218	)		$	-		$	17,953,605
Total operating expenses				21,302,792				(432,927	)			(778,840	)			20,091,025				23,330,296				(635,218	)			-			22,695,078
Operating income (loss)				(157,218	)			432,927				778,840				1,054,549				11,341,951				635,218				-			11,977,169
Other income (loss)				25,803				-				-				25,803				(253,032	)			-				390,000			136,968
Total other income				386,851				-				-				386,851				679,041				-				390,000			1,069,041
Income before income taxes				229,633				432,927				778,840				1,441,400				12,020,992				635,218				390,000			13,046,210
Income taxes				83,990				74,000				266,907				424,897				4,126,366				106,218				133,000			4,365,584
Net income			$	145,643			$	358,927			$	511,933			$	1,016,503			$	7,894,626			$	529,000			$	257,000		$	8,680,626
Earnings per common share
Basic			$	0.01			$	0.02			$	0.03			$	0.05			$	0.38			$	0.03			$	0.01		$	0.41
Diluted			$	0.01			$	0.02			$	0.03			$	0.05			$	0.37			$	0.02			$	0.01		$	0.40
Weighted average number of common shares outstanding
Basic				20,221,995												20,221,995				20,934,889											20,934,889
Diluted				20,236,245												20,236,245				21,470,288											21,470,288
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 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.

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