Stratasys Files Preliminary Proxy Statement in Connection With

Stratasys Files Preliminary Proxy Statement in Connection With Proposed Combination With Objet

®) process. The process creates functional prototypes and manufactured goods directly from any 3D CAD program, using high-performance industrial thermoplastics. The company holds more than 285 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

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


STRATASYS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Three Months Ended March 31, 2012

	As Reported			Pro Forma				Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	(unaudited)			Adjustments				(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	37,546		$	-			$	37,546		$	-			$	37,546
Services		7,418			-				7,418			-				7,418
		44,964			-				44,964			-				44,964

Cost of sales
Products		17,810			-				17,810			(436	)	(b)		17,374
Services		4,199			-				4,199			-				4,199
		22,009			-				22,009			(436	)			21,573

Gross profit		22,955			-				22,955			436				23,391

Operating expenses
Research and development		4,352			-				4,352			-				4,352
Selling, general and administrative		11,375			(981	)	(a)		10,394			(614	)	(c)		9,780
		15,727			(981	)			14,746			(614	)			14,132

Operating income		7,228			981				8,209			1,050				9,259

Other income (expense)
Interest income, net		250			-				250			-				250
Foreign currency transaction losses, net		(52	)		-				(52	)		-				(52	)
Other, net		98			-				98			-				98
		296			-				296			-				296

Income before income taxes		7,524			981				8,505			1,050				9,555

Income tax expense		3,002			-				3,002			417		(d)		3,419

Net income	$	4,522		$	981			$	5,503		$	633			$	6,136

Earnings per common share
Basic	$	0.21		$	0.05			$	0.26		$	0.03			$	0.29
Diluted	$	0.21		$	0.04			$	0.25		$	0.03			$	0.28

Weighted average number of common shares outstanding
Basic		21,266							21,266							21,266
Diluted		21,802							21,802							21,802

(a)		Represents expense associated with the Company's current efforts to combine with Objet Ltd.
(b)		Represents amortization expense related to acquired Solidscape, Inc. intangible assets.
(c)		Represents non-cash stock-based compensation expense of $0.48 million and amortization expense of $0.13 million related to acquired Solidscape, Inc. intangible assets
(d)		Represents the tax benefit related to non-GAAP adjustments.

STRATASYS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Twelve Months Ended December 31, 2011

				Pro Forma		Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	As Reported			Adjustments		(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	127,476		$	-	$	127,476		$	-			$	127,476
Services		28,418			-		28,418			-				28,418
		155,894			-		155,894			-				155,894

Cost of sales
Products		61,545			-		61,545			(1,724	)	(a)		59,821
Services		11,945			-		11,945			-				11,945
		73,490			-		73,490			(1,724	)			71,766

Gross profit		82,404			-		82,404			1,724				84,128

Operating expenses
Research and development		14,360			-		14,360			-				14,360
Selling, general and administrative		39,038			-		39,038			(2,558	)	(b)		36,480
		53,398			-		53,398			(2,558	)			50,840

Operating income		29,006			-		29,006			4,282				33,288

Other income (expense)
Interest income, net		923			-		923			-				923
Foreign currency transaction losses, net		(888	)		-		(888	)		-				(888	)
Other, net		2,311			-		2,311			(1,830	)	(c)		481
		2,346			-		2,346			(1,830	)			516

Income before income taxes		31,352			-		31,352			2,452				33,804

Income tax expense		10,726			-		10,726			601		(d)		11,327

Net income	$	20,626		$	-	$	20,626		$	1,851			$	22,477

Earnings per common share
Basic	$	0.98		$	-	$	0.98		$	0.09			$	1.06
Diluted	$	0.95		$	-	$	0.95		$	0.09			$	1.04

Weighted average number of common shares outstanding
Basic		21,133					21,133							21,133
Diluted		21,653					21,653							21,653

(a)		Represents amortization expense of $1.16 million related to acquired Solidscape, Inc. intangible assets and expense of $0.56 million for the revaluation of Solidscape, Inc. inventory at the time of acquisition.
(b)		Represents non-cash stock-based compensation expense of $1.59 million, amortization expense of $0.36 million related to acquired Solidscape, Inc. intangible assets and expense of $0.61 million for the acquisition of Solidscape, Inc.
(c)		Represents a gain of $1.20 million on the sale of an equity investment and a gain of $0.63 million on the sale of an auction rate security
(d)		Represents the tax benefit related to non-GAAP adjustments.

OBJET LTD.

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Three Months Ended March 31, 2012

	As Reported			Pro Forma				Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	(unaudited)			Adjustments				(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	33,697		$	-			$	33,697		$	-			$	33,697
Services		4,378			-				4,378			-				4,378
		38,075			-				38,075			-				38,075

Cost of sales
Products		9,911			7,489		(a)		17,400			(7,010	)	(e)		10,390
Services		4,004			150		(b)		4,154			(150	)	(b)		4,004
		13,915			7,639				21,554			(7,160	)			14,394

Gross profit		24,160			(7,639	)			16,521			7,160				23,681

Operating expenses
Research and development		3,849			429		(b)		4,278			(429	)	(b)		3,849
Selling, general and administrative		16,171			2,434		(c)		18,605			(5,971	)	(f)		12,634
		20,020			2,863				22,883			(6,400	)			16,483

Operating income		4,140			(10,502	)			(6,362	)		13,560				7,198

Other income (expense)
Other, net		(101	)		-				(101	)		-				(101	)
		(101	)		-				(101	)		-				(101	)

Income before income taxes		4,039			(10,502	)			(6,463	)		13,560				7,097

Income tax expense		645			(803	)	(d)		(158	)		803		(d)		645

Net income	$	3,394		$	(9,699	)		$	(6,305	)	$	12,757			$	6,452

(a)		Represents amortization expense of $6.87 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $0.14 million and a $0.48 million reclassification of shipping and handling costs from selling, general and administrative.
(b)		Represents non-cash stock-based compensation expense.
(c)		Represents amortization expense of $1.96 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $1.65 million, the elimination of $0.69 million of transaction costs related to the merger and a $0.48 million reclassification of shipping and handling costs to cost of sales.
(d)		Represents the tax benefit related to non-GAAP adjustments.
(e)		Represents amortization expense of $6.87 million related to acquired Objet intangible assets and non-cash stock-based compensation expense of $0.14 million.
(f)		Represents amortization expense of $1.96 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $1.65 million and expense of $2.37 million related to Objet's previously planned initial public offering.

OBJET LTD.

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Twelve Months Ended December 31, 2011

				Pro Forma				Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	As Reported			Adjustments				(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	105,759		$	-			$	105,759		$	-			$	105,759
Services		15,337			-				15,337			-				15,337
		121,096			-				121,096			-				121,096

Cost of sales
Products		34,008			30,042		(a)		64,050			(28,141	)	(e)		35,909
Services		12,946			651		(b)		13,597			(651	)	(b)		12,946
		46,954			30,693				77,647			(28,792	)			48,855

Gross profit		74,142			(30,693	)			43,449			28,792				72,241

Operating expenses
Research and development		14,569			1,854		(b)		16,423			(1,854	)	(b)		14,569
Selling, general and administrative		42,062			15,203		(c)		57,265			(17,104	)	(f)		40,161
		56,631			17,057				73,688			(18,958	)			54,730

Operating income		17,511			(47,750	)			(30,239	)		47,750				17,511

Other income (expense)
Other, net		(1,228	)		-				(1,228	)		-				(1,228	)
		(1,228	)		-				(1,228	)		-				(1,228	)

Income before income taxes		16,283			(47,750	)			(31,467	)		47,750				16,283

Income tax expense		1,589			(3,458	)	(d)		(1,869	)		3,458		(d)		1,589

Net income	$	14,694		$	(44,292	)		$	(29,598	)	$	44,292			$	14,694

(a)		Represents amortization expense of $27.47 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $0.67 million and a $1.90 million reclassification of shipping and handling costs from selling, general and administrative.
(b)		Represents non-cash stock-based compensation expense.
(c)		Represents amortization expense of $7.82 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $9.28 million and a $1.90 million reclassification of shipping and handling costs to cost of sales.
(d)		Represents the tax benefit related to non-GAAP adjustments.
(e)		Represents amortization expense of $27.47 million related to acquired Objet intangible assets and non-cash stock-based compensation expense of $0.67 million.
(f)		Represents amortization expense of $7.82 million related to acquired Objet intangible assets and non-cash stock-based compensation expense of $9.28 million.

UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Three Months Ended March 31, 2012

	As Reported			Pro Forma				Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	(unaudited)			Adjustments				(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	71,243		$	-			$	71,243		$	-			$	71,243
Services		11,796			-				11,796			-				11,796
		83,039			-				83,039			-				83,039

Cost of sales
Products		27,721			7,489		(a)		35,210			(7,446	)	(e)		27,764
Services		8,203			150		(b)		8,353			(150	)	(b)		8,203
		35,924			7,639				43,563			(7,596	)			35,967

Gross profit		47,115			(7,639	)			39,476			7,596				47,072

Operating expenses
Research and development		8,201			429		(b)		8,630			(429	)	(b)		8,201
Selling, general and administrative		27,546			1,453		(c)		28,999			(6,585	)	(f)		22,414
		35,747			1,882				37,629			(7,014	)			30,615

Operating income		11,368			(9,521	)			1,847			14,610				16,457

Other income (expense)
Interest income, net		250			-				250			-				250
Foreign currency transaction losses, net		(52	)		-				(52	)		-				(52	)
Other, net		(3	)		-				(3	)		-				(3	)
		195			-				195			-				195

Income before income taxes		11,563			(9,521	)			2,042			14,610				16,652

Income tax expense		3,647			(803	)	(d)		2,844			1,220		(d)		4,064

Net income	$	7,916		$	(8,718	)		$	(802	)	$	13,390			$	12,588

Earnings per common share
Basic	$	0.22		$	(0.24	)		$	(0.02	)	$	0.36			$	0.34
Diluted	$	0.20		$	(0.22	)		$	(0.02	)	$	0.34			$	0.32

Weighted average number of common shares outstanding
Basic		36,695							36,695							36,695
Diluted		39,854							36,695							39,854

(a)		Represents amortization expense of $6.87 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $0.14 million and a $0.48 million reclassification of shipping and handling costs from selling, general and administrative.
(b)		Represents non-cash stock-based compensation expense.
(c)		Represents amortization expense of $1.96 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $1.65 million, the elimination of $1.67 million of transaction costs related to the merger and a $0.48 million reclassification of shipping and handling costs to cost of sales.
(d)		Represents the tax benefit related to non-GAAP adjustments.
(e)		Represents amortization expense of $7.30 million related to acquired intangible assets and non-cash stock-based compensation expense of $0.14 million.
(f)		Represents amortization expense of $2.09 million related to acquired intangible assets, non-cash stock-based compensation expense of $2.13 million, and expense of $2.37 million related to Objet's previously planned initial public offering

UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

Twelve Months Ended December 31, 2011

	As Reported			Pro Forma				Pro Forma			Non-GAAP				Non-GAAP
(in thousands, except per share data)	(unaudited)			Adjustments				(unaudited)			Adjustments				(unaudited)

Net sales
Products	$	233,235		$	-			$	233,235		$	-			$	233,235
Services		43,755			-				43,755			-				43,755
		276,990			-				276,990			-				276,990

Cost of sales
Products		95,553			30,042		(a)		125,595			(29,865	)	(e)		95,730
Services		24,891			651		(b)		25,542			(651	)	(b)		24,891
		120,444			30,693				151,137			(30,516	)			120,621

Gross profit		156,546			(30,693	)			125,853			30,516				156,369

Operating expenses
Research and development		28,929			1,854		(b)		30,783			(1,854	)	(b)		28,929
Selling, general and administrative		81,100			15,203		(c)		96,303			(19,662	)	(f)		76,641
		110,029			17,057				127,086			(21,516	)			105,570

Operating income		46,517			(47,750	)			(1,233	)		52,032				50,799

Other income (expense)
Interest income, net		923			-				923			-				923
Foreign currency transaction losses, net		(888	)		-				(888	)		-				(888	)
Other, net		1,083			-				1,083			(1,830	)	(g)		(747	)
		1,118			-				1,118			(1,830	)			(712	)

Income before income taxes		47,635			(47,750	)			(115	)		50,202				50,087

Income tax expense		12,315			(3,458	)	(d)		8,857			4,059		(d)		12,916

Net income	$	35,320		$	(44,292	)		$	(8,972	)	$	46,143			$	37,171

Earnings per common share
Basic	$	0.97		$	(1.21	)		$	(0.25	)	$	1.26			$	1.02
Diluted	$	0.90		$	(1.21	)		$	(0.25	)	$	1.17			$	0.94

Weighted average number of common shares outstanding
Basic		36,562							36,562							36,562
Diluted		39,436							36,562							39,436

(a)		Represents amortization expense of $27.47 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $0.67 million and a $1.90 million reclassification of shipping and handling costs from selling, general and administrative.
(b)		Represents non-cash stock-based compensation expense.
(c)		Represents amortization expense of $7.82 million related to acquired Objet intangible assets, non-cash stock-based compensation expense of $9.28 million and a $1.90 million reclassification of shipping and handling costs to cost of sales.
(d)		Represents the tax benefit related to non-GAAP adjustments.
(e)		Represents amortization expense of $28.63 million related to acquired intangible assets, non-cash stock-based compensation expense of $0.67 million and expense of $0.56 million for the revaluation of Solidscape, Inc. inventory at the time of acquisition.
(f)		Represents amortization expense of $8.18 million related to acquired intangible assets, non-cash stock-based compensation expense of $10.87 million and expense of $0.61 million for the acquisition of Solidscape, Inc.
(g)		Represents a gain of $1.20 million on the sale of an equity investment and a gain of $0.63 million on the sale of an auction rate security

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