The company reported net income of $1.6 million for the third quarter, or $0.08 per share, compared to net income of $3.7 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 $1.8 million, or $0.09 per share, for the third quarter of 2009 compared to $4.0 million, or $0.19 per share, for the same period last year.

Stock-based compensation expense was approximately $210,000 net of tax, or $0.01 per share, for the third quarter of 2009, and approximately $238,000 net of tax, or $0.01 per share, for the same period last year.

Cash flow from operations totaled $8.7 million for the third quarter. The company had approximately $60 million in cash and investments as of the end of September 2009.

Revenue was $72.1 million for the nine-month period ended September 30, 2009 versus $92.6 million reported for the same period in 2008. System shipments totaled 1,487 units for the nine-month period of 2009, versus 1,614 for the same period last year.

The company reported net income of $1.7 million for the nine-month period of 2009, or $0.09 per share, compared to net income of $11.6 million, or $0.54 per share, for the same period last year.

Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $2.8 million, or $0.14 per share, for the nine-month period of 2009 compared to $12.7 million, or $0.59 per share, for the same period last year.

The nine-month period of 2009 included a discrete item related to a restructuring expense of approximately $512,000 net of tax, or $0.03 per share. This expense was associated with cost-reduction measures the company implemented during the first quarter of 2009.

The nine-month period of 2008 included a discrete item related to an impairment charge of approximately $288,000 net of tax, or $0.01 per share. This non-operating charge was an adjustment to the fair value of an auction rate security taken in 2008.

Stock-based compensation expense was approximately $569,000 net of tax, or $0.03 per share, for the nine-month period of 2009, and approximately $767,000 net of tax, or $0.04 per share, for the same period last year.

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.

"We are pleased with our third quarter performance when considering the unprecedented economic environment and given the seasonal weakness we generally observe during the summer period," said Scott Crump, chairman and chief executive officer of Stratasys. "We are especially pleased with the strong cash flow from operations of $8.7 million for the third quarter, which stemmed from significant improvements in managing our working capital.

"Fortus system sales were consistent with levels in the second quarter, and we observed relatively strong sales of our higher-priced 3D printers. Although our lower-priced 3D printer, the uPrint, remained our best selling printer in the third quarter, our channel partners were often successful in up-selling to 3D printers with more features and system functionality. This trend contributed to a significant sequential improvement in our margins.

"Our resellers continue to observe a recovery in channel activity as economic conditions improve. We are gaining traction for new direct digital manufacturing applications within Fortus, and we remain on track to broaden our distribution strategy within 3D printing. While we are pleased with the sales mix that favored our higher-priced 3D printers, our top priority remains expanding the distribution of our more affordable 3D printing products. We are making progress in implementing a strategy to meet this goal.

"We believe our results over the past nine months suggest a building of positive momentum. This momentum is a combination of our successful go-to-market strategy combined with the incremental improvements in economic conditions, and prudent cost-reduction measures we implemented over the past year. Once again, we have strengthened our financial position substantially following our third quarter and now maintain almost $60 million in cash and investments.

"We believe our competitive position has improved during the economic downturn, as our financial strength has allowed us to remain committed to our long-term goals and objectives. While the near-term economic outlook remains challenging, we are encouraged by the positive signs within our channel, and are cautiously optimistic as we move into the fourth quarter. Most importantly, we are excited about new programs we hope to initiate over the coming quarters, and we remain confident in our long-term growth opportunities," Crump concluded.

The company will hold a conference call to discuss its third quarter financial results on Thursday, October 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 866-783-2143, and the international dial-in is 857-350-1602. The access code is 36423313. 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 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.(R) 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(R) 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 achieve 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 September 30,              Nine Months Ended September 30,
                                                       2009                   2008                   2009                 2008
                                                       (unaudited)            (unaudited)            (unaudited)          (unaudited)
Net sales
Product                                                $    18,046,184        $    23,965,510        $   53,197,716       $   73,919,081
Services                                                    6,283,212              6,603,918             18,924,759           18,632,957
                                                            24,329,396             30,569,428            72,122,475           92,552,038
Cost of goods sold
Product                                                     9,918,263              12,048,155            30,883,158           34,512,079
Services                                                    2,542,879              2,706,835             8,225,489            7,553,275
                                                            12,461,142             14,754,990            39,108,647           42,065,354
Gross profit                                                11,868,254             15,814,438            33,013,828           50,486,684
Operating expenses
Research and development                                    1,983,420              2,100,349             5,510,385            6,841,822
Selling, general and administrative                         7,481,311              8,415,988             25,257,138           27,004,811
                                                            9,464,731              10,516,337            30,767,523           33,846,633
Operating income                                            2,403,523              5,298,101             2,246,305            16,640,051
Other income (expense)
Interest income, net                                        230,429                498,831               754,695              1,646,730
Foreign currency transaction losses, net                    (5,930     )           (83,794    )          (169,148   )         (299,620   )
Other                                                       (9,021     )           (33,560    )          16,780               (286,592   )
                                                            215,478                381,477               602,327              1,060,518
Income before income taxes                                  2,619,001              5,679,578             2,848,632            17,700,569
Income taxes                                                1,040,201              1,970,011             1,124,191            6,096,378
Net income                                             $    1,578,800         $    3,709,567         $   1,724,441        $   11,604,191
Earnings per common share
Basic                                                  $    0.08              $    0.18              $   0.09             $   0.56
Diluted                                                $    0.08              $    0.18              $   0.09             $   0.54
Weighted average number of common shares outstanding
Basic                                                       20,229,357             20,616,338            20,224,889           20,829,338
Diluted                                                     20,231,033             21,021,417            20,233,234           21,354,073

STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                                     September 30,           December 31,
                                                                     2009                    2008
                                                                     (unaudited)
ASSETS
Current assets
Cash and cash equivalents                                            $    34,993,140         $    27,945,799
Short-term investments - held to maturity                                 12,207,926              4,835,055
Accounts receivable, less allowance for doubtful accounts of              20,887,758              26,539,733
$1,099,442 and $1,017,521 in 2009 and 2008, respectively
Inventories                                                               15,388,102              19,889,351
Net investment in sales-type leases, less allowance for doubtful          4,064,467               3,870,472
accounts of $199,709 and $324,642 in 2009 and 2008, respectively
Prepaid expenses and other current assets                                 2,702,167               2,608,080
Deferred income taxes                                                     2,168,000               2,168,000
Total current assets                                                      92,411,560              87,856,490
Property and equipment, net                                               26,871,099              29,749,921
Other assets
Intangible assets, net                                                    7,886,767               8,347,200
Net investment in sales-type leases                                       3,560,840               4,545,977
Long-term investments - available for sale securities                     1,109,250               1,109,250
Long-term investments - held to maturity                                  11,363,730              13,825,981
Other non-current assets                                                  1,613,154               2,308,214
Total other assets                                                        25,533,741              30,136,622
Total assets                                                         $    144,816,400        $    147,743,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current liabilities                       $    8,379,196          $    11,795,238
Unearned revenues                                                         10,242,116              12,765,396
Total current liabilities                                                 18,621,312              24,560,634
Non-current liabilities
Deferred tax liabilities                                                  620,000                 620,000
Total non-current liabilities                                             620,000                 620,000
Total liabilities                                                         19,241,312              25,180,634
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value, authorized 30,000,000 shares, issued        259,255                 259,096
25,925,503 shares as of September 30, 2009 and 25,909,603 shares
as of December 31, 2008
Capital in excess of par value                                            92,719,350              91,611,078
Retained earnings                                                         71,624,111              69,899,669
Accumulated other comprehensive loss                                      (23,203     )           (203,019    )
Less cost of treasury stock, 5,687,631 shares in 2009 and 2008            (39,004,425 )           (39,004,425 )
Total stockholders' equity                                                125,575,088             122,562,399
Total liabilities and stockholders' equity                           $    144,816,400        $    147,743,033

STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
                                                       Non-GAAP Adjustments for the Three Months Ended September                    Non-GAAP Adjustments for the Three Months Ended September 30, 2008
                                                       30, 2009
                                                       Consolidated        Stock-Based       Consolidated                           Consolidated        Stock-Based       Auction Rate    Consolidated
                                                       (unaudited)         Compensation (1)  (unaudited)                            (unaudited)         Compensation (1)  Security (3)    (unaudited)
                                                       As Reported                           Non-GAAP                               As Reported                                           Non-GAAP
Selling, general and administrative expenses           $      7,481,311    $      (238,032 ) $      7,243,279                       $      8,415,988    $      (321,285 ) $      -        $      8,094,703
Total operating expenses                                      9,464,731           (238,032 )        9,226,699                              10,516,337          (321,285 )        -               10,195,052
Operating income                                              2,403,523           238,032           2,641,555                              5,298,101           321,285           -               5,619,386
Other income (loss)                                           (9,021     )        -                 (9,021     )                           (33,560    )        -                 50,000          16,440
Total other income                                            215,478             -                 215,478                                381,477             -                 50,000          431,477
Income before income taxes                                    2,619,001           238,032           2,857,033                              5,679,578           321,285           50,000          6,050,863
Income taxes                                                  1,040,201           28,000            1,068,201                              1,970,011           83,000            19,000          2,072,011
Net income                                             $      1,578,800    $      210,032    $      1,788,832                       $      3,709,567    $      238,285    $      31,000   $      3,978,852
Earnings per common share
Basic                                                  $      0.08         $      0.01       $      0.09                            $      0.18         $      0.01       $      0.00     $      0.19
Diluted                                                $      0.08         $      0.01       $      0.09                            $      0.18         $      0.01       $      0.00     $      0.19
Weighted average number of common shares outstanding
Basic                                                         20,229,357                            20,229,357                             20,616,338                                            20,616,338
Diluted                                                       20,231,033                            20,231,033                             21,021,417                                            21,021,417
                                                       Non-GAAP Adjustments for the Nine Months Ended September 30, 2009            Non-GAAP Adjustments for the Nine Months Ended September 30, 2008
                                                       Consolidated        Stock-Based       Restructuring (2)   Consolidated       Consolidated        Stock-Based       Auction Rate    Consolidated
                                                       (unaudited)         Compensation (1)                      (unaudited)        (unaudited)         Compensation (1)  Security (3)    (unaudited)
                                                       As Reported                                               Non-GAAP           As Reported                                           Non-GAAP
Selling, general and administrative expenses           $      25,257,138   $      (670,959 ) $      (778,840   ) $      23,807,339  $      27,004,811   $      (956,503 ) $      -        $      26,048,308
Total operating expenses                                      30,767,523          (670,959 )        (778,840   )        29,317,724         33,846,633          (956,503 )        -               32,890,130
Operating income                                              2,246,305           670,959           778,840             3,696,104          16,640,051          956,503           -               17,596,554
Other income (loss)                                           16,780              -                 -                   16,780             (286,592   )        -                 440,000         153,408
Total other income                                            602,327             -                 -                   602,327            1,060,518           -                 440,000         1,500,518
Income before income taxes                                    2,848,632           670,959           778,840             4,298,431          17,700,569          956,503           440,000         19,097,072
Income taxes                                                  1,124,191           102,000           266,907             1,493,098          6,096,378           189,218           152,000         6,437,596
Net income                                             $      1,724,441    $      568,959    $      511,933      $      2,805,333   $      11,604,191   $      767,285    $      288,000  $      12,659,476
Earnings per common share
Basic                                                  $      0.09         $      0.03       $      0.03         $      0.14        $      0.56         $      0.04       $      0.01     $      0.61
Diluted                                                $      0.09         $      0.03       $      0.03         $      0.14        $      0.54         $      0.04       $      0.01     $      0.59
Weighted average number of common shares outstanding
Basic                                                         20,224,889                                                20,224,889         20,829,338                                            20,829,338
Diluted    20,233,234         20,233,234   21,354,073         21,354,073
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.
(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.

SOURCE: Stratasys, Inc.

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

SmarTrend is bullish on shares of SSYS and our subscribers received an Uptrend alert on July 28, 2009 at $12.29, which has returned 38.4% to date.

Write to Chip Brian at cbrian@tradethetrend.com

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

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.(R) 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.

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

SOURCE: Stratasys, Inc.

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

The investor conference call will be available via live webcast on the Stratasys web site at: stratasys.com under the "Investors" tab. To participate by telephone, the domestic dial-in number is 866-783-2143 and the international dial-in is 857-350-1602. The access code is 36423313. 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 Web site.

((Comments on this story may be sent to newsdesk@closeupmedia.com))