<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended March 31, 2000
--------------------------
OR
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the transition period from ______________ to_________________
Commission file number 1-13400
------------------
STRATASYS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3658792
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
14950 Martin Drive, Eden Prairie, Minnesota 55344
---------------------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
(612) 937-3000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
---------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
past 90 days. Yes X No
--- ---
As of May 8, 2000, the Registrant had 6,116,009 shares of Common Stock,
$.01 par value, outstanding.
<PAGE> 2
STRATASYS, INC.
Index
Page
----
Part I. Financial Information
Item 1. Financial Statements...............................................1
Balance Sheets as at March 31, 2000 and December 31, 1999..........1
Statements of Operations for the three months ended March 31,
2000 and 1999......................................................2
Statements of Cash Flows for the three months ended
March 31, 2000 and 1999............................................3
Notes to Financial Statements......................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................5
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K...................................10
Signatures....................................................................11
(i)
<PAGE> 3
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
STRATASYS, INC.
CONSOLIDATED BALANCE SHEETS
======================================================================================================================
MARCH 31, DECEMBER 31,
2000 1999
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,169,614 $ 2,532,359
Marketable Securities 6,536,255 6,000,620
Accounts receivable, less allowance for returns and
doubtful accounts of $520,868 in 2000 and $420,833 in 1999 10,258,975 11,756,257
Inventories 7,300,005 6,647,265
Prepaid expenses 522,992 429,211
Deferred income taxes 214,000 214,000
--------------------------------------------
Total current assets 28,001,841 27,579,712
--------------------------------------------
PROPERTY AND EQUIPMENT, net 3,042,185 3,235,362
--------------------------------------------
OTHER ASSETS
Intangible assets, net 3,505,639 3,409,708
Deferred income taxes 2,350,803 2,507,000
Other 426,402 381,534
--------------------------------------------
6,282,844 6,298,242
--------------------------------------------
$ 37,326,870 $ 37,113,316
============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Obligations under capitalized leases, current portion $ 219,081 $ 230,229
Accounts payable and other current liabilities 3,471,760 3,855,447
Unearned maintenance revenue 4,161,851 3,926,583
--------------------------------------------
Total current liabilities 7,852,692 8,012,259
--------------------------------------------
OBLIGATIONS UNDER CAPITALIZED LEASES, less current portion 264,738 318,012
============================================
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value, authorized 15,000,000
shares, issued 6,109,061 shares
in 2000 and 6,101,961 shares in 1999 61,091 61,020
Capital in excess of par value 32,750,726 32,712,755
Accumulated deficit (1,328,122) (1,703,880)
Accumulated other comprehensive income (loss) (27,013) (39,608)
Less cost of treasury stock, 542,600 shares in 2000
and 1999 (2,247,242) (2,247,242)
--------------------------------------------
Total Stockholders' Equity 29,209,440 28,783,045
--------------------------------------------
$ 37,326,870 $ 37,113,316
============================================
</TABLE>
See notes to financial statements.
1
<PAGE> 4
<TABLE>
<CAPTION>
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
==========================================================================================================================
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SALES $ 9,298,007 $ 7,603,144
COST OF GOODS SOLD 3,392,292 2,410,094
----------------------------------------------------------
GROSS PROFIT 5,905,715 5,193,050
COSTS AND EXPENSES
Research and development 1,541,209 1,676,931
Selling, general and administrative 3,928,041 3,915,400
----------------------------------------------------------
5,469,250 5,592,331
----------------------------------------------------------
OPERATING INCOME (LOSS) 436,465 (399,281)
----------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 117,265 122,984
Interest expense (16,925) (14,993)
----------------------------------------------------------
100,340 107,991
----------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 536,805 (291,290)
INCOME TAXES (BENEFIT) 161,041 (98,277)
----------------------------------------------------------
NET INCOME (LOSS) $ 375,764 $ (193,013)
----------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.07 $ (0.03)
==========================================================
Diluted $ 0.06 $ (0.03)
==========================================================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 5,564,504 5,959,432
==========================================================
Diluted 5,931,973 5,959,432
==========================================================
COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS) $ 375,764 $ (193,013)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment (27,013) 72,220
----------------------------------------------------------
COMPREHENSIVE INCOME (LOSS) $ 348,751 $ (120,793)
==========================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 5
<TABLE>
<CAPTION>
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
===============================================================================================================
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 375,764 $ (193,013)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Deferred taxes 156,197 (98,277)
Depreciation 305,153 325,978
Amortization 90,143 217,944
Purchased in-process research and development - (6,464,709)
Increase (decrease) in cash attributable to
changes in assets and liabilities
Accounts receivable 1,497,282 2,349,975
Inventories (652,740) (16,938)
Prepaid expenses (93,781) (14,364)
Other assets (44,868) -
Accounts payable and other current liabilities (383,687) (334,071)
Unearned maintenance revenue 235,268 487,741
-----------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,484,731 (3,739,734)
-----------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of (payments for purchases of)
marketable securities, net (535,635) 3,999,034
Acquisition of machinery and equipment (111,976) (363,899)
Payments for intangible assets (186,074) (95,584)
Proceeds from other assets, net - 1,501
-----------------------------------------------
NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES (833,685) 3,541,052
-----------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of obligations under capitalized leases (64,422) (49,622)
Net proceeds from the sale of common stock 38,042 2,286
Repurchase of treasury stock - (122,271)
-----------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (26,380) (169,607)
-----------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 12,589 (2,163)
-----------------------------------------------
NET INCREASE (DECREASE) IN CASH 637,255 (370,452)
CASH AND CASH EQUIVALENTS, beginning of period 2,532,359 11,243,839
-----------------------------------------------
CASH AND CASH EQUIVALENTS, end of period $ 3,169,614 $ 10,873,387
===============================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
cash paid during the period for interest $ 16,925 $ 14,992
===============================================
</TABLE>
See notes to financial statements.
3
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The financial information herein is unaudited; however, such information
reflects all adjustments (consisting of normal, recurring adjustments) which
are, in the opinion of management, necessary for a fair statement of results for
the interim period. The results of operations for the three months ended March
31, 2000, are not necessarily indicative of the results to be expected for the
full year. Certain financial information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The reader is referred to
the audited financial statements and notes thereto for the year ended December
31, 1999, filed as part of the Company's Annual Report on Form 10-K for such
year.
Note 2--Inventory
Inventories consist of the following at March 31 and December 31,
respectively:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Finished Goods $ 3,120,500 $ 3,715,292
Work in process 109,519 50,103
Raw materials 4,069,986 2,881,870
------------ ------------
Totals $ 7,300,005 $ 6,647,265
</TABLE>
Note 3--Material Commitment
The Company has signed material commitments with several vendors for
fixed delivery of selected inventory expected to be supplied in the ensuing
twelve month period. These commitments amount to approximately $3,8000,000, some
of which contain non-cancellation clauses.
Note 4--Income (loss) per common share
The difference between the number of shares used to compute basic income
(loss) per share and diluted income (loss) per share relates to additional
shares to be issued upon the assumed exercise of stock options and warrants, net
of shares hypothetically repurchased at the average market price with the
proceeds of exercise. These amounted to 367,469 in 2000 and nil in 1999, due to
their antidilutive effect.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
We develop, manufacture, and market a family of rapid prototyping devices
that enable engineers and designers to create physical models, tooling and
prototypes out of plastic and other materials directly from a computer aided
design ("CAD") workstation. Historically, our growth has come from sales to a
number of industries, including automotive, consumer products, electronics,
medical, and aerospace. Universities, other educational institutions, and
service bureaus have also been significant markets for us. Our current and
future growth is largely dependent upon our ability to penetrate new markets,
and develop and market new rapid prototyping devices and applications that meet
the needs of our current and prospective customers. Our new product development
will focus on various rapid prototyping devices, modeling materials, and
software enhancements. Our primary business strategy will focus on expanding
international and domestic sales of our existing family of rapid prototyping
devices, while maintaining on-going development of new rapid prototyping
equipment, modeling materials, and software. In addition, we expect to incur
expenses in 2000 for the development of the technology we purchased in December
1998, and we expect to commercialize this technology in 2000. However, we can
give no assurances that we will be successful in commercializing this
technology, or that the market will accept it. We have successfully introduced
new products in the past. Most recently, we introduced GensisyXs in April 1999,
followed by the August 1999 introduction of the FDM 3000 and Waterworks.
Revenues derived from these new products contributed significantly to our
revenue and profit growth in 1999 and the first quarter of 2000.
Net revenue derived from sales of our rapid prototyping devices, modeling
materials, and maintenance has increased each year since 1990. We expect, but
cannot assure, that this trend will continue. We believe that we shipped more
rapid prototyping systems than any of our competitors in the three-year period
ended December 31, 1999, and that we recorded the second highest revenues
within the industry in 1999. Our revenue in the three months ended March 31,
2000, increased significantly over the revenue recorded in the same 1999 period.
We can give no assurances, however, that these trends will continue.
We have continued to increase our expenditures on research and
development ("R&D") for both new products and sustaining engineering. R&D
expenses amounted to $1,541,209 in the first quarter of 2000 compared with
$1,676,931 recorded in the comparable 1999 period. R&D expenses are expected to
expand moderately from the levels attained in the first quarter of 2000,
although we can give no assurances that R&D expenses will not increase more
significantly due to project cost over-runs or delays. Selling, General and
Administrative ("SG&A") expenses increased modestly to $3,928,041 in the first
quarter of 2000 as compared with $3,915,400 in the comparable 1999 period,
although we expect that SG&A expenses will trend higher on increasing revenue
throughout 2000. Our headcount has increased to approximately 218 employees and
contractors at the end of the first quarter of 2000 from approximately 200
employees and contractors at the end of the comparable 1999 period. Future
profitability will be dependent upon our ability to control our operating
expenses, including our headcount additions, while increasing revenues. We do
not believe that meaningful improvements to our gross margins are achievable,
and gross margins could possibly decline in the event that significant price
competition emerges within the industry or if the our product mix were to change
dramatically. While we believe that profitability will improve in 2000 as
compared with 1999 as a result of higher sales coupled with operating expense
control, we can give no assurance that these results will be achieved.
We believe that the rapid prototyping industry is growing at
approximately 15-20% per year. We believe that there is a long-term trend toward
lower priced rapid prototyping systems capable of producing functional
prototypes, and that a sizable market exists for concept or visualization 3D
printers. This pricing trend should lead to growth in the more traditional
functional prototyping marketplace as companies continue to address in-house
rapid prototyping and concept-modeling needs. Certain market segments in the
industry have not demonstrated pricing sensitivity. These segments are more
interested in modeling envelope size, modeling material variety, throughput, and
part quality, which should allow growth to continue for higher priced rapid
prototyping systems addressing these needs.
5
<PAGE> 8
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 2000 COMPARED WITH QUARTER ENDED MARCH 31, 1999
The following table contains selected statement of operations data as a
percentage of net sales for the periods indicated. All items are included in or
derived from our statement of income.
<TABLE>
<CAPTION>
For the quarters ended March 31,
2000 1999
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 36.5% 31.7%
Gross margin 63.5% 68.3%
Selling, general, and administrative expenses 42.2% 51.5%
Research and development expense 16.6% 22.1%
Operating income (loss) 4.7% (5.3%)
Other income 1.1% 1.4%
Income before taxes (benefit) 5.8% (3.8%)
Income taxes (benefit) 1.7% (1.3%)
Net income (loss) 4.0% (2.5%)
</TABLE>
NET SALES
Net sales for the quarter ended March 31, 2000 were $9,298,007, compared
with net sales of $7,603,144 for the quarter ended March 31, 1999. This
represents an increase of $1,694,863, or 22.3%. Sales of the GenisysXs and the
recently-introduced FDM 3000 and WaterWorks were particularly strong. Consumable
and maintenance revenue also increased in the quarter ended March 31, 2000 as
compared with the same 1999 period. Maintenance and materials revenues were
enhanced by the larger installed base of systems, customer satisfaction with
ABS, WaterWorks and other material selections, and continued emphasis on the
sale of maintenance contracts.
Unit shipments increased by approximately 55% in the first quarter of
2000 as compared with 1999. System sales included sales of all systems,
including trade-in and upgrade systems. The average selling price of our
systems declined in the current quarter as compared with the same 1999 period
due to increased shipments of the Genisys Xs and lower-priced Benchtop systems.
Product mix can dramatically affect the average selling price in any quarter,
and we expect, but cannot assure, that the average selling price will increase
in the next several quarters as the product mix shifts to higher priced
systems.
Domestic sales accounted for approximately 60% of total revenue in the
quarter ended March 31, 2000, which was significantly above the 49% recorded in
the comparable period in 1999. In the United States, all of our regions recorded
revenues beyond expectations. Europe accounted for approximately 14% of total
revenue in the first quarter of 2000, up from approximately 11% of revenue in
the comparable 1999 quarter but still below our expectations for this region.
Our combined Asia-Pacific region, which comprises the Far East, Southeast Asia,
and India, accounted for approximately 25% of total revenue, down from
approximately 38% attained in 1999 but equaled our expectations. Historically,
we have derived a larger percentage of our revenues from our European region. We
believe that 2000 sales into Southeast Asian countries such as Singapore,
Thailand, Indonesia, and Malaysia will be weak, but sales into the remainder of
the Asia Pacific region as well as our domestic territories are expected to
remain strong in 2000. No assurances, however, can be given that future sales
and profitability will not be adversely impacted by the economic conditions of
our international regions, or that sales into our domestic territories will
continue to improve.
6
<PAGE> 9
GROSS PROFIT
Gross profit increased to $5,905,715, or 63.5% of sales, in the quarter
ended March 31, 2000, compared with $5,193,050, or 68.3% of sales, in the
quarter ended March 31, 1999. This represents an increase of $712,665, or 13.7%.
Gross profit was positively impacted in the 2000 period by significantly higher
system and recurring revenues and slightly lower labor and overhead expenses. It
was negatively impacted by product mix shifts to lower margin products such as
GensisysXs and our Benchtop systems. Historically, gross profit has fluctuated
between 63% and 67% of revenues due primarily to product mix shifts. These
product mix shifts are difficult to forecast and can be expected to impact our
reported gross profit in future quarters.
OPERATING EXPENSES
SG&A expenses increased to $3,928,041 for the quarter ended March 31,
2000, from $3,915,400 for the quarter ended March 31, 1999. This represents an
increase of $12,641, or .3%, significantly below the 22.3% growth in revenue. We
have increased our customer support department to service the expanded customer
base under service contracts, and also strengthened our international sales
operation. Warranty expense, on the other hand, declined significantly as
compared with the quarter ended March 31, 1999. SG&A expenses can be expected to
increase in future quarters due to the variable component of selling expense as
well as anticipated increases to the customer support area, but we expect, but
cannot assure, that our SG&A growth will be less than the growth rate of our
revenues.
R&D expenses declined to $1,541,209 for the quarter ended March 31, 2000
from $1,676,931 for the quarter ended March 31, 1999. The decrease in 2000 over
1999 amounted to $135,722, or (8.1%). Expenses for materials were significantly
lower in the quarter ended March 31, 2000 compared with the same 1999 period,
whereas payroll related expenses increased. The timing of certain material and
project deliveries can impact expenses. We believe that R&D expenses will
increase from the levels recorded in the first quarter of 2000 as we proceed
with our new product development efforts, including efforts designed to
commercialize the technology that we purchased in December 1998. We believe, but
cannot assure, that these increases will be less than our revenue growth rate.
Our operating income for the quarter ended March 31, 2000 amounted to
$436,465, or 4.7% of sales, compared with an operating loss of $399,281, or
(5.3%) of sales, for the quarter ended March 31, 1999.
OTHER INCOME
Other income and expense netted to $100,340 in the quarter ended March
31, 2000 compared with $107,991 in the same 1999 period. Interest income
amounted to $117,265 compared with interest income of $122,984 recorded in 1999,
which was due to the lower average cash and cash equivalent balances in the 2000
period as compared with 1999
NET INCOME
For the reasons cited above, net income for the quarter ended March 31,
2000 amounted to $375,764 compared with a net loss of $193,013 in the same 1999
period. This resulted in earnings per diluted common and common equivalent share
of $.06, compared with a loss per common share of $.03 in the period ended March
31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities during the three months ended March 31, 2000
provided cash of $1,484,731, primarily reflecting the reduction of accounts
receivable of $1,497,282 and an increase in unearned maintenance revenue of
$235,268. Conversely, increases to inventory and decreases in our accounts
payable and other current assets used cash of $652,740 and $383,687,
respectively. In the three months ended March 31, 1999, our operating activities
used cash
7
<PAGE> 10
of $3,739,734, primarily reflecting the purchase of in-process R&D of $6,464,709
combined with a reduction in our accounts payable balance of $334,071.
Reductions to our accounts receivable balances, coupled with increases to
unearned maintenance revenue, provided cash of $2,349,975 and $487,741,
respectively, in the same 1999 period.
Cash used by investing activities amounted to $833,685 in the period
ended March 31, 2000. The net payments for the purchase of marketable securities
resulted in a net use of cash of $535,635. We also used cash for the acquisition
of machinery and equipment and for the purchase of intangible assets in the
amounts of $111,976 and $186,074, respectively. Our investing activities
provided cash of $3,541,052 in the three months ended March 31, 1999. The net
proceeds from the sale of marketable securities provided net cash of $3,999,034
in the 1999 period, while we used cash for the acquisition of machinery and
equipment and for payments for intangible assets in the amounts of $363,899 and
$95,584, respectively.
In the three months ended March 31, 2000, our financing activities used
cash of $26,380, which included $64,422 for repayments of obligations under
capitalized leases. This was partially offset by net proceeds from the sale of
common stock in the amount of $38,042. In 1999, financing activities used net
cash of $169,607, including $122,271 for the repurchase of treasury stock, and
$49,622 used for payments under capitalized leases.
For the reasons cited above, net cash increased by $637,255 for the three
months ended March 31, 2000, as compared with a net decrease of cash of $370,452
in the same 1999 period. The Company's ending cash and cash equivalents balances
as of March 31, 2000 and 1999 were $3,169,614 and $2,532,359, respectively.
At March 31, 2000, our cash, cash equivalents, and marketable securities
balances totaled $9,705,869. We expect to use this cash for working capital
purposes, for improvement to facilities, for acquisitions, for new product
development and tooling, for acquisition of production equipment and computers,
for increased selling and marketing activities, and for engineering expenses
required to develop and commercialize the in-process research and development
acquisition. Additionally, in July 1999 our Board of Directors authorized us to
increase our stock repurchase plan to purchase up to 1,000,000 shares of our
common stock. Under this authorization, we may occasionally repurchase our
common stock, although no stock was repurchased in the three months ended March
31, 2000. We believe that our revenue from operations, our current cash and
cash equivalents balances, and the proceeds from the sale of short-term
marketable securities should provide sufficient cash resources to finance our
operations for at least 24 months.
Except for 1998 and 1999, we have historically been unable to finance our
growth from cash generated from operations. Furthermore, our working capital
requirements may significantly increase if revenue growth slows, if R&D expenses
related to new product development accelerate, or if significant operating
losses occur. We can give no assurances as to the adequacy of our working
capital to support our operations following a period of losses. If the existing
cash balances are insufficient or if working capital requirements are greater
than estimated, we could be required to raise additional capital. There can be
no assurance that we will be able to raise additional capital or that the terms
upon which such capital will be available to us will be acceptable.
As of March 31, 2000, our gross accounts receivable balance was
$10,779,843, less an allowance of $520,868 for returns and doubtful accounts.
Historically, our bad debt expense has been minimal. However, at March 31, 2000,
large balances, some of which exceeded our normal payment terms, were
concentrated with certain international distributors. While we can give no
assurances, we believe that most, if not all, the accounts receivable balances
ultimately will be collected.
Our total current assets amounted to $28,001,841 at March 31, 2000, the
majority of which consisted of cash, cash equivalents, marketable securities,
inventories and accounts receivable. Total current liabilities amounted to
$7,852,692. Our debt is minimal, consisting primarily of principal payments due
under capital leases of $483,773. We estimate that we will spend approximately
$1,450,000 in 2000 for facility improvements, production and R&D equipment,
computers and integrated software, and tooling, which we anticipate financing
through internally generated cash flows. As of March 31, 2000, material
commitments for inventory purchases from selected vendors for the ensuing
8
<PAGE> 11
nine-month period ending December 31, 2000 should amount to approximately
$3,800,000.
INFLATION
We believe that inflation has not had a material effect on our operations
or on its financial condition.
FOREIGN CURRENCY TRANSACTIONS
Substantially all of our transactions are negotiated, invoiced, and paid
in US dollars. Fluctuations in the currency exchange rates in other countries
may therefore reduce the demand for our products by increasing the price of our
products in the currency of countries in which the local currency has declined
in value.
FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS OF
OPERATIONS
All statements herein that are not historical facts or that include such
words as expect, anticipate, project, estimates or believes or other similar
words are forward-looking statements deemed by us to be covered by and to
qualify for the safe harbor protection covered by the safe harbor protection
provided by the Private Securities Litigation Reform Act of 1995 (the "1995
Act"). Investors and prospective investors in the Company should understand that
several factors govern whether any forward-looking statement herein will be or
can be achieved. Any one of these factors could cause actual results to differ
materially from those projected herein. These forward-looking statements include
the expected increases in net sales of rapid prototyping systems and services,
and our ability to maintain our gross margins on these sales. The
forward-looking statements also cover the plans and objectives of management to
introduce new products, control expenses, and improve profitability. The
forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions, among others, that we (1) will be able to
continue to introduce new rapid prototyping systems acceptable to the market and
improve existing technology and software in our current product offering,
(2)will be able to maintain our gross margins on our present products, (3) will
be able to control our operating expenses, (4) will be able to retain and
recruit employees with the necessary skills to produce, develop, market, and
sell our products, and (5) will be able to further develop and commercialize the
purchased in-process research and development that we acquired in December 1998.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive, market and technology conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond our control. Although we believe that
the assumptions underlying the forward-looking statements contained herein are
reasonable, any of those assumptions could prove inaccurate, and therefore there
is and can be no assurance that the results contemplated in any such
forward-looking statement will be realized. The impact of actual experience and
business developments may cause us to alter our marketing plans, our capital
expenditure budgets, or our engineering, selling or other budgets, which may in
turn affect our results of operations or the success of our engineering efforts.
Due to the factors noted above and elsewhere in the Management's Discussion and
Analysis of Financial Condition and Results of Operations, our future earnings
and stock price may be subject to significant volatility, particularly on a
quarterly basis. Additionally, we may not learn of revenue or earnings
shortfalls until late in a fiscal quarter, since we frequently receive the
majority of our orders very late in a quarter. This could result in an immediate
and adverse effect on the trading price of our common stock. Past financial
performance should not be considered a reliable indicator of future performance,
and investors should not use historical trends to anticipate results or trends
in future periods.
9
<PAGE> 12
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Selected Financial Data.
(b) Reports on Form 8-K.
None
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 12, 2000 STRATASYS, INC.
By: /s/Thomas W. Stenoien
------------------------------
Thomas W. Stenoien
Chief Financial Officer
(Principal Financial Officer)
11
<PAGE> 14
Exhibit Index
Exhibit Description
- ------- -----------
27.1 Selected Financial Data
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,169,614
<SECURITIES> 6,536,255
<RECEIVABLES> 10,779,843
<ALLOWANCES> (520,866)
<INVENTORY> 7,300,005
<CURRENT-ASSETS> 28,001,841
<PP&E> 7,494,532
<DEPRECIATION> (4,452,347)
<TOTAL-ASSETS> 37,326,870
<CURRENT-LIABILITIES> 7,852,692
<BONDS> 0
0
0
<COMMON> 61,091
<OTHER-SE> 29,148,349
<TOTAL-LIABILITY-AND-EQUITY> 37,326,870
<SALES> 9,298,007
<TOTAL-REVENUES> 9,298,007
<CGS> 3,382,292
<TOTAL-COSTS> 5,469,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,925
<INCOME-PRETAX> 536,805
<INCOME-TAX> 161,041
<INCOME-CONTINUING> 375,764
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375,764
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.06
</TABLE>
