Stratasys Reports Record Quarter and Fiscal Year Financial Results.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- Company Reaffirms 2006 Financial Guidance Stratasys Stratasys, Inc. is a company headquartered in Eden Prairie, MN that manufactures and sells both rapid prototyping machines and materials. Stratasys FDM systems use fused deposition modeling technology to produce parts out of industrial-grade thermoplastic materials such as ABS, , Inc. (Nasdaq:SSYS) today announced record quarter and fiscal year financial results. Revenues rose 21% to $23.5 million for the fourth quarter ended December December: see month. 31, 2005 over the $19.4 million recorded in the same quarter of the previous year. Net income increased by 37% to $3.1 million, or $0.30 per share, for the fourth quarter compared with net income of $2.3 million, or $0.21 per share, for the same quarter of the previous year. Total system shipments increased 32% to 363 units during the fourth quarter of 2005 compared with 275 units for the same period in 2004. The fourth quarter produced record quarterly revenue for high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. systems, consumables, paid parts, and maintenance contracts. In addition, the company's 3D printer business expanded significantly during the period, which contributed to a record number of total system shipments for the quarter. Revenues rose 18% to $82.8 million for the twelve months ended December 31, 2005 over the $70.3 million recorded for the same period of the previous year. Net income grew 16% to $10.6 million, or $0.99 per share, for the twelve-month period, compared with net income of $9.1 million, or $0.85 per share, for the same period in 2004. Total system shipments were 1,297 units for the twelve-month period, compared with 1,094 units for the same period in 2004. Stratasys released the following information regarding its financial guidance for the fiscal year ending Dec. 31, 2006: --Reaffirm revenue guidance of $98 million to $102 million or growth of 18% to 23% over fiscal 2005. --Reaffirm earnings guidance of $1.15 to $1.25 per share on a non-GAAP basis, which excludes the impact of stock-based compensation required under FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 123. --Estimated impact of stock-based compensation expense required under FASB 123 is $1.65 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern ; or $0.10 per share in net income for the year. --GAAP earnings guidance of $1.05 to $1.15 per share, which assumes the recognition of the estimated expense associated with FASB 123 stock-based compensation. "We are pleased with the fourth quarter results which generated record revenue performances across multiple business groups. We recognized improvements within our high-end system business, as the market environment improved over third-quarter levels. In addition, our strategy to expand the sales of 3D printers into a universe of 5 million three-dimensional three-di·men·sion·al adj. 1. Of, relating to, having, or existing in three dimensions. 2. Having or appearing to have extension in depth. 3. CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. workstations continues to succeed. We believe this success is evidenced in the 33% system unit growth we generated during the quarter," said Scott Crump crump v. crumped, crump·ing, crumps v.tr. 1. To crush or crunch with the teeth. 2. To strike heavily with a crunching sound. v.intr. , chairman and chief executive officer of Stratasys. "Highlighting some of our current initiatives, we recently introduced a new configuration of the company's T-Class line of rapid prototyping Building a part one layer at a time using a method of additive fabrication such as 3D printing. Such parts are used for concept modeling to determine if the product design meets the customer's expectations. systems. The new Vantage X offers our customers more material options than were previously available with the comparably priced Vantage i. The Vantage X has integrated a new ABSi material, previously only available on our FDM (1) (Fused Deposition Modeling) See 3D printing. (2) (Frequency Division Multiplexing) Transmitting multiple data signals simultaneously over a single wire by using multiple carriers, each having a unique center frequency. Maxum system. ABSi brings yet another unique material offering in the ABS (Automatic Backup System) See backup program. product line, allowing customers more opportunity to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. their needs to their desired performance requirements with true industrial thermoplastics thermoplastics, materials that soften or melt when heated and harden when cooled. Thermoplastic polymers consist of long polymer molecules that are not linked to each other. i.e., have no cross-links. . "We believe the price reductions we recently implemented for our Dimension 3D printers are strengthening our leadership position within the 3D printer category. Moreover, we were encouraged with the recent analysis conducted by T.A. Grimm & Associates, a leading independent consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a covering the rapid prototyping market, which ranked the Dimension SST SST: see airplane. 3D printer number one in dimensional accuracy when compared to other leading 3D printers. We continue to observe an under-penetrated market for 3D printers among users of three-dimensional CAD software. We believe this opportunity presents an addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market of 500,000 3D printers worldwide. Our goal is to take advantage of that opportunity with a range of systems that focus on functionality, in addition to affordability. "We have expanded the Eden product line in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. to include the distribution of two new systems, the 500 and 350. The new products broaden our PolyJet offerings with a wider range of prices and system capabilities. We believe the Eden's PolyJet technology is successfully complementing our high-end systems, the T-Class and Maxum lines, which produce parts with production-grade thermoplastics. The Eden PolyJet systems produce parts with unique photo-polymers that are ideal for certain niche applications. This best of both worlds strategy allow us to address a wide range of customer applications. "Following the Times Square launch of RedEyeRPM.com in October October: see month. , which allows for the instant quoting and ordering of parts over the Web, revenue within our paid parts business nearly doubled in the fourth quarter. In an effort to maintain our positive momentum within the paid parts business, we continue to invest in infrastructure automation, as well as sales support resources. In addition, we recently made available parts constructed with the Eden PolyJet technology. The PolyJet systems target applications currently addressed with our competitor's stereolithography The first 3D printing technology, which was pioneered by Chuck Hull of 3D Systems. See 3D printing. platforms. "We recently announced a distribution agreement with Arcam ARCAM Army Reserve Components Achievement Medal in Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. , for Stratasys to be the exclusive North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. distributor of Arcam's metal-based rapid manufacturing Building parts out of plastic or metal one layer at a time using a method of additive fabrication such as 3D printing. Multiple pieces, either similar or dissimilar, can be built simultaneously. and prototyping systems. Following extensive evaluation of the Arcam technology, we concluded that its proprietary electron-beam melting (EBM EBM Evidence-Based Medicine EBM Electronic Body Music EBM ecosystem-based management EBM Evidence Based Medical (statistics) EBM Environmentally Benign Manufacturing EBM Expressed Breast Milk EBM Executive Board Meeting ) process could produce parts that were superior to competitive processes, with properties that emulate em·u·late tr.v. em·u·lat·ed, em·u·lat·ing, em·u·lates 1. To strive to equal or excel, especially through imitation: an older pupil whose accomplishments and style I emulated. 2. conventionally manufactured metal parts. This agreement strategically expands Stratasys into metal offerings for rapid prototyping and rapid manufacturing, and allows the company to target a new user base that is focused primarily on the rapid manufacturing of end-use parts. "In addition to the Arcam agreement, we are developing new opportunities in rapid manufacturing applications, including our $3.6 million, 3-year initiative with a Fortune 100 global manufacturing company. The initiative's goal is to expand our core Fused-Deposition-Modeling (FDM) technology to allow for the manufacture of end-use parts. We are pleased to report that we are making progress with that initiative, and certain R&D objectives have been recently achieved. We are excited about this initiative, given our general belief that in the future, rapid manufacturing applications will exceed the current demand for rapid prototyping. "Although fiscal 2005 provided challenges, our near-term near-term adj. Of, for, or involving a short period of time in the near future. performance has improved and we are excited about our prospects heading into fiscal 2006 and beyond. We are accelerating the introduction of new products and services, and striving to provide our customers with innovative solutions for the development and manufacture of new products. We believe these new offerings, combined with our price leadership in 3D printing, will contribute to strong growth over the next several years," Crump concluded. The company will hold a conference call to discuss these results on February February: see month. 15, 2006 at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To access the call, dial 800-967-7134 (or 719-457-2625 internationally). The conference I.D. is "Stratasys." A recording of the call will be available for two weeks after the call. To access the recording, dial 888-203-1112 (or 719-457-0820 internationally). A live webcast will be available through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Stratasys Web site (www.stratasys.com). A replay of the webcast will be made available on the Stratasys Web site for 90 days. About Stratasys Inc. Stratasys Inc., Minneapolis, manufactures office-based rapid prototyping and manufacturing systems and 3D printers; and offers rapid prototyping and manufacturing parts services. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Wohlers Report 2005, Stratasys supplied 36 percent of all systems installed worldwide in 2004, making it the unit market leader. Stratasys patented the rapid prototyping process known as fused deposition modeling See 3D printing. (FDM). The process creates functional models directly from any 3D CAD program using ABS plastic, polycarbonate A category of plastic materials used to make a myriad of products, including CDs and CD-ROMs. , and PPSF PPSF Procurement/Production Status File . The company holds 175 granted or pending rapid prototyping patents globally. Stratasys products are used in the aerospace, defense, automotive, medical, education, electronic, and consumer product industries. The company's systems are also used for rapid manufacturing and rapid tooling applications. For more information on the company, go to www.Stratasys.com; www.RedEyeRPM.com; or www.DimensionPrinting.com. Non-GAAP Discussion The information discussed within this release includes financial results and forward-looking financial guidance that are in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). In addition, non-GAAP financial guidance has been included that excludes certain expenses. The non-GAAP financial measures are provided in an effort to give information that investors may deem relevant to the company's operations and comparative performance; primarily the identification and exclusion of expenses associated with stock-based compensation required under FASB 123. Forward Looking Statement All statements herein that are not historical facts or that include such words as "expects", "anticipates", "projects", "estimates" or "believes" or similar words are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that we deem to be covered by and to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. protection covered by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Our belief that we have the largest part-building service claim is based on the number of dedicated machines. Except for the historical information herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties; these include the continued market acceptance and growth of our Dimension BST (convention) BST - British Summer Time. The name for daylight-saving time in the UK GMT time zone. (TM), Dimension SST(TM), Prodigy An online information service that provides access to the Internet, e-mail and a variety of databases. Launched in 1988, Prodigy was the first consumer-oriented online service in the U.S. Plus, FDM Maxum(TM), FDM Vantage(TM), and Titan(TM) product lines; the size of the 3D printing market; our ability to penetrate the 3D printing market; our ability to maintain the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. experienced in this and preceding quarters; our ability to introduce and market new materials such as PC-ABS and the market acceptance of this and other materials; the impact of competitive products and pricing; the timely development and acceptance of new products and materials; our ability to effectively and profitably market and distribute the Eden polyjet line and the Arcam product line; the success of our recent R&D initiative to expand the rapid manufacturing capabilities of our core FDM technology; the success of our RedEye RPM (1) (Revolutions Per Minute) With electric and electronics devices, RPM measures the rotational speed of the motor's spindle. Floppy disks rotate at 300 RPM, while hard disks rotate from 3,000 to 15,000 RPM. and other parts services; and the other risks detailed from time to time in our SEC Reports, including the annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 and the quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed throughout 2005. This release is also available on the Stratasys Web site at www.Stratasys.com.
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended
December 31,
-------------------------
2005 2004
(unaudited) (unaudited)
----------------------------------------------------------------------
Net Sales
Product $18,926,700 $15,985,376
Services 4,588,361 3,460,124
------------ ------------
23,515,061 19,445,500
------------ ------------
Cost of sales
Product 8,874,761 6,630,355
Services 1,511,075 1,115,283
------------ ------------
10,385,836 7,745,638
------------ ------------
Gross profit 13,129,225 11,699,862
------------ ------------
Costs and expenses
Research and development 1,763,896 1,650,814
Selling, general and administrative 7,222,634 6,949,616
------------ ------------
8,986,530 8,600,430
------------ ------------
Operating income 4,142,695 3,099,432
------------ ------------
Other income (expense)
Interest income 384,930 273,028
Foreign currency translation (81,712) 185,351
Other (4,531) 16,615
------------ ------------
298,687 474,994
------------ ------------
Income before income taxes 4,441,382 3,574,426
Income taxes 1,291,781 1,276,538
------------ ------------
Net income $3,149,601 $2,297,888
============ ============
Earnings per common share
Basic $0.31 $0.22
============ ============
Diluted $0.30 $0.21
============ ============
Weighted average number of common
shares outstanding
Basic 10,283,200 10,420,322
============ ============
Diluted 10,475,919 10,823,822
============ ============
----------------------------------------------------------------------
Twelve Months Ended
December 31,
--------------------------
2005 2004
----------------------------------------------------------------------
Net Sales
Product $66,178,670 $56,832,959
Services 16,665,634 13,495,546
------------ ------------
82,844,304 70,328,505
------------ ------------
Cost of sales
Product 30,125,996 24,110,537
Services 5,193,253 3,888,239
------------ ------------
35,319,249 27,998,776
------------ ------------
Gross profit 47,525,055 42,329,729
------------ ------------
Costs and expenses
Research and development 6,353,877 5,640,216
Selling, general and administrative 27,013,718 23,692,008
------------ ------------
33,367,595 29,332,224
------------ ------------
Operating income 14,157,460 12,997,505
------------ ------------
Other income (expense)
Interest income 1,616,851 726,558
Foreign currency translation (484,352) (26,102)
Other (7,062) 149,034
------------ ------------
1,125,437 849,490
------------ ------------
Income before income taxes 15,282,897 13,846,995
Income taxes 4,680,000 4,717,849
------------ ------------
Net income $10,602,897 $9,129,146
============ ============
Earnings per common share
Basic $1.01 $0.88
============ ============
Diluted $0.99 $0.85
============ ============
Weighted average number of common
shares outstanding
Basic 10,527,807 10,350,043
============ ============
Diluted 10,744,583 10,725,901
============ ============
STRATASYS, INC.
CONSOLIDATED BALANCE SHEETS
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December 31, December 31,
2005 2004
--------------------------
ASSETS
Current assets
Cash and cash equivalents $10,105,199 $17,729,845
Short-term investments 20,000,000 38,120,000
Accounts receivable, less allowance for
returns and doubtful accounts
of $1,584,149 in 2005 and
$1,731,830 in 2004 20,019,177 14,951,350
Inventories 10,887,198 7,520,422
Net Investment in sales-type leases 2,036,386 1,324,499
Prepaid expenses 2,289,173 1,756,494
Deferred income taxes 597,000 455,000
--------------------------
Total current assets 65,934,133 81,857,610
--------------------------
Property and equipment, net 17,294,575 10,043,657
--------------------------
Other assets
Intangible assets, net 4,380,193 2,551,581
Net investment in sales-type leases 3,143,157 2,693,830
Deferred income taxes 392,000 354,000
Long-term investments 11,297,550 720,000
Other 2,237,985 978,339
--------------------------
21,450,885 7,297,750
--------------------------
Total assets $104,679,593 $99,199,017
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current
liabilities 9,545,265 6,643,620
Unearned maintenance revenue 8,865,253 7,668,362
--------------------------
Total current liabilities 18,410,518 14,311,982
--------------------------
Stockholders' equity
Common stock, $.01 par value, authorized
15,000,000 shares; issued 12,287,196
shares in 2005 and 12,211,835
shares in 2004 122,872 122,118
Capital in excess of par value 72,465,952 71,762,100
Retained earnings 30,795,945 20,193,048
Accumulated other comprehensive loss (324,599) 5,910
Less cost of treasury stock, 2,171,529
and 1,770,026 shares in 2005 and
2004, respectively (16,791,095) (7,196,141)
--------------------------
Total stockholders' equity 86,269,075 84,887,035
--------------------------
Total liabilities and stockholders' equity $104,679,593 $99,199,017
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