UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
or
|_| TRANSITION REPORT PURSUANT TO 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 of incorporation or (I.R.S. Employer
organization) Identification No.)
14950 Martin Drive, Eden Prairie, Minnesota 55344
(Address of principal executive offices) (Zip Code)
(952) 937-3000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has 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 the past 90 days.
|X| Yes |_| No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
|_| Yes |X| No
As of August 12, 2003, the Registrant had 5,801,243 shares of common stock, $.01
par value, outstanding.
STRATASYS, INC.
Table of Contents
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2003 and
December 31, 2002.................................................... 1
Consolidated Statements of Operations and Comprehensive Income
(Loss) for the three and six months ended June 30, 2003 and 2002..... 2
Consolidated Statements of Cash Flows for the six months ended
June 30, 2003 and 2002............................................... 3
Notes to Financial Statements........................................ 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk........... 15
Item 4. Controls and Procedures.............................................. 16
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.................. 17
Item 6. Exhibits and Reports on Form 8-K..................................... 17
Signatures.................................................................... 18
ITEM 1. FINANCIAL STATEMENTS
STRATASYS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2003 2002
(UNAUDITED)
---------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 20,977,557 $ 14,193,590
Accounts receivable, less allowance for returns and
doubtful accounts of $650,415 in 2003 and $537,374 in 2002 10,732,728 10,640,451
Inventories 6,480,049 6,537,446
Prepaid expenses 875,787 921,404
Deferred income taxes 126,000 126,000
---------------------------------
Total current assets 39,192,121 32,418,891
---------------------------------
PROPERTY AND EQUIPMENT, net 5,946,209 5,937,200
---------------------------------
OTHER ASSETS
Intangible assets, net 2,708,050 2,953,401
Deferred income taxes 2,174,000 2,174,000
Other 377,251 116,995
---------------------------------
5,259,301 5,244,396
---------------------------------
$ 50,397,631 $ 43,600,487
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Mortgage payable, current portion $ 64,804 $ 61,572
Accounts payable and other current liabilities 5,035,667 4,141,635
Unearned maintenance revenue 4,949,063 4,474,281
---------------------------------
Total current liabilities 10,049,534 8,677,488
---------------------------------
MORTGAGE PAYABLE, less current portion 2,125,520 2,156,790
---------------------------------
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value, authorized 15,000,000
shares, issued 6,965,080 shares in 2003 and
6,518,200 shares in 2002 69,651 65,182
Capital in excess of par value 37,839,943 35,025,413
Retained earning 7,568,491 4,908,388
Accumulated other comprehensive loss (84,713) (61,979)
Less cost of treasury stock, 1,179,237 shares in 2003
and 2002 (7,170,795) (7,170,795)
---------------------------------
Total stockholders' equity 38,222,577 32,766,209
---------------------------------
$ 50,397,631 $ 43,600,487
=================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- -----------------------------
2003 2002 2003 2002
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------------------- -----------------------------
SALES $ 12,073,761 $ 10,111,608 $ 22,751,402 $ 16,507,997
COST OF GOODS SOLD 4,158,237 4,292,328 7,978,307 6,742,463
----------------------------- -----------------------------
GROSS PROFIT 7,915,524 5,819,280 14,773,095 9,765,534
----------------------------- -----------------------------
COSTS AND EXPENSES
Research and development 1,337,441 1,195,991 2,495,598 2,338,259
Selling, general and administrative 4,600,445 4,185,309 8,830,697 7,862,517
----------------------------- -----------------------------
5,937,886 5,381,300 11,326,295 10,200,776
----------------------------- -----------------------------
OPERATING INCOME (LOSS) 1,977,638 437,980 3,446,800 (435,242)
----------------------------- -----------------------------
OTHER INCOME (EXPENSE)
Interest income 39,723 37,984 76,252 80,903
Interest expense (40,976) (44,968) (82,288) (91,262)
Other 45,654 293,272 106,040 155,988
----------------------------- -----------------------------
44,401 286,288 100,004 145,629
----------------------------- -----------------------------
INCOME (LOSS) BEFORE INCOME TAXES 2,022,039 724,268 3,546,804 (289,613)
INCOME TAXES 505,509 206,417 886,701 (82,538)
----------------------------- -----------------------------
NET INCOME (LOSS) $ 1,516,530 $ 517,851 $ 2,660,103 $ (207,075)
============================= =============================
EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.27 $ 0.10 $ 0.48 $ (0.04)
============================= =============================
Diluted $ 0.25 $ 0.09 $ 0.44 $ (0.04)
============================= =============================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 5,662,272 5,350,582 5,529,118 5,367,894
============================= =============================
Diluted 6,171,857 5,655,454 6,093,785 5,367,894
============================= =============================
COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS) $ 1,516,530 $ 517,851 $ 2,660,103 $ (207,075)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment (1,208) 20,634 (22,734) 13,507
----------------------------- -----------------------------
COMPREHENSIVE INCOME (LOSS) $ 1,515,322 $ 538,485 $ 2,637,369 $ (193,568)
============================= =============================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
-------------------------
2003 2002
(UNAUDITED) (UNAUDITED)
---------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,660,103 $ (207,075)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Deferred income taxes (96,592)
Depreciation 806,791 702,688
Amortization 492,110 431,002
Loss on disposal of assets 114,010 119
Increase (decrease) in cash attributable to
changes in operating assets and liabilities:
Accounts receivable (92,277) 2,230,900
Inventories 57,397 (485,750)
Prepaid expenses 45,617 198,093
Other assets (260,256) 139,180
Accounts payable and other current liabilities 894,032 (482,988)
Unearned maintenance revenue 474,782 (181,767)
---------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,192,309 2,247,810
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of machinery and equipment (929,810) (491,639)
Payments for intangible assets (246,759) (316,330)
---------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,176,569) (807,969)
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of obligations under capitalized leases (65,861)
Purchase of treasury stock (3,462,557)
Payments of mortgage payable (28,038) (26,049)
Net proceeds from the sale of common stock 2,818,999 1,812,260
---------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,790,961 (1,742,207)
---------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (22,734) 13,507
---------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,783,967 (288,859)
CASH AND CASH EQUIVALENTS, beginning of period 14,193,590 10,211,398
---------------------------------
CASH AND CASH EQUIVALENTS, end of period $ 20,977,557 $ 9,922,539
=================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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 and six months ended
June 30, 2003, 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 accounting
principles generally accepted in the United States of America have been
condensed or omitted. The reader is referred to the audited financial statements
and notes thereto for the year ended December 31, 2002, filed as part of the
Company's Annual Report on Form 10-K for such year.
Note 2 - Inventories
Inventories consisted of the following at June 30 and December 31,
respectively:
2003 2002
---------- ----------
Finished Goods $2,660,907 $2,869,223
Raw materials 3,819,142 3,668,223
---------- ----------
Totals $6,480,049 $6,537,446
========== ==========
Note 3 - Material Commitments
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 $3,400,000, some
of which contain non-cancellation clauses.
Note 4 - Income per common share
The difference between the number of shares used to compute basic income
per share and diluted income 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. For the three months ended June 30, 2003 and 2002, the additional
shares amounted to 509,585 and 304,872, respectively. For the six months ended
June 30, 2003 and 2002, the additional shares amounted 564,667 and nil,
respectively.
Note 5 - Stock-Based Compensation
The Company has various stock option plans that have been approved by the
shareholders. The Company accounts for those plans under the recognition and
measurement principles of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations. No stock-based employee compensation is reflected in the net
income for the three and six month periods ended June 30, 2003 and 2002, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The Company follows
SFAS No. 123, "Accounting for Stock-Based Compensation." The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 "Accounting for
Stock-Based Compensation", to stock-based employee compensation:
4
Three Months Ended June 30,
-----------------------------------
2003 2002
------------- -------------
Net income, as reported $ 1,516,530 $ 517,851
Effect of stock based compensation
accounted for under the fair value
recognition provisions, net of tax (37,750) (142,750)
------------- -------------
Pro forma net income 1,478,780 375,101
============= =============
Earnings per share:
Basic, as reported $ .27 $ .10
Basic, pro forma .26 .07
Diluted, as reported .25 .09
Diluted, pro forma .24 .07
Six Months Ended June 30,
-----------------------------------
2003 2002
------------- -------------
Net income (loss), as reported $ 2,660,103 $ (207,075)
Effect of stock based compensation
accounted for under the fair value
recognition provisions, net of tax (75,000) (285,500)
------------- -------------
Pro forma net income (loss) 2,585,103 (492,575)
============= =============
Earnings (loss) per share:
Basic, as reported $ .48 $ (.04)
Basic, pro forma .47 (.09)
Diluted, as reported .44 (.04)
Diluted, pro forma .42 (.09)
5
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 ("RP")
and 3D printing systems 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. 3D printing offers a fast,
low-cost, alternative for building concept and working models. These systems are
very simple to operate. Conversely, RP systems are more expensive and allow
users to make prototype models out of a variety of materials that are better
suited to test for form, fit, and functionality. Historically, our sales growth
has been derived from a number of industries, including consumer products,
electronics, general manufacturing, medical, automotive, and aerospace.
Educational institutions, government agencies, and service bureaus have also
been significant markets for us.
Our strategy for the remainder of 2003 will be to continue to expand our
position in the 3D printing market and our core RP businesses. We anticipate
that our expenses will increase in 2003 over the amounts reported in 2002, but
that our revenue growth will exceed that of our expenses. This should allow for
increased profitability from operations in 2003 as compared with 2002. For the
first half of 2003, revenues were $22,751,402, compared with $16,507,997 in the
first half of 2002. Operating income in the first half of 2003 period improved
to $3,446,800 from an operating loss of $435,242 in the comparable 2002 period.
We believe that the 3D printing market represents a significant growth
area and that our Dimension(TM) 3D Printer will continue to have a significant
positive impact on our results in 2003 and beyond. However, we remain fully
committed to the growth of our core FDM(TM) business, which is currently served
by our FDM Titan(TM), Prodigy Plus(TM), FDM 3000, and FDM Maxum(TM) systems. We
also believe that our service, consumable, and maintenance revenues derived from
our installed base of systems will improve as well over the results attained in
2002. In the first half of 2003, sales of our Dimension, Prodigy Plus, and Titan
systems were particularly strong. Total units increased to 280 systems compared
with 158 systems in the first half of 2002. Similarly, revenues derived from our
combined service, consumable, and maintenance sources were significantly above
prior period results. We believe that we shipped more systems in the first half
of 2003 than any other RP or 3D printing company in the world, a repeat of our
full-year performance in 2002.
Our current and future growth is largely dependent upon our ability to
penetrate new markets, and develop and market new rapid prototyping and 3D
printing systems, materials, applications, and services that meet the needs of
our current and prospective customers. In May 2003, we introduced the commercial
availability of polyphenylsulfone ("PPSF") for use on our Titan systems. PPSF, a
specialty thermoplastic, allows a user to build prototypes that combine the
properties of high strength, heat resistance, and chemical resistance. Potential
markets for PPSF include the aerospace industry, due to the material's
flammability properties, and the automotive industry, due to its petroleum
resistance and its ability to function at over 400(degree) F. In June 2003, we
introduced FDM Vantage(TM). Vantage is built on our T-Class high-performance
platform, and allows users to build models in thermoplastics such as ABS and
polycarbonate at a significantly lower price than our Titan system.
Our ability to implement our strategy for 2003 and beyond is subject to
numerous uncertainties, many of which are described in this Management's
Discussion and Analysis of Financial Condition and Results of Operations and in
the section below captioned "Forward Looking Statements and Factors That May
Affect Future Results of Operations." We cannot ensure that our efforts will be
successful.
Our operating results could be adversely impacted if the downturn in
general economic conditions experienced by many capital equipment manufacturers
in 2002 were to continue in 2003, or if the SARS contagion impacts sales in our
Asia Pacific region, historically one of our strongest. To date, we have not
seen an impact of SARS on our sales, but due to the difficulty of making sales
calls in regions impacted by SARS, future revenues could be impacted. Our
expense levels are based in part on our expectations of future revenues. While
we have adjusted, and will continue to adjust, our expense levels based on both
actual and anticipated revenues, fluctuations in revenues in a particular period
could adversely impact our operating results. Whereas our backlog as of June 30,
2003 was approximately 28% higher than the backlog as of the end of 2002, it
would not be sufficient to meet our budgeted revenue targets should new system
orders in 2003 decline. These and other factors may lead to operating
6
losses in certain quarters, or reduced operating and gross profits as compared
with the results reported in 2002 and the first half of 2003.
We believe that sales of a number of RP and 3D printing manufacturers in
the rapid prototyping industry grew between 5-30% in 2002. However, declining
sales by the largest company in the industry likely caused the total RP industry
sales to decline by approximately 10% in 2002. We believe that 3D printers
accounted for more than 44% of the all RP systems shipped in 2002. Furthermore,
we believe the 3D printing segment of the RP market is the fastest growing
component of the market, with a growth rate of approximately 34%, and that our
Dimension system, based upon price and performance, is positioned to capture an
increased share of this market. Penetration of the 3D Printing market has been
small to date. We believe, based on a growing installed base of more than three
million CAD seats, the potential market for low-priced 3D Printers could be in
the hundreds of thousands of units. Yet, since inception of the RP industry,
approximately 10,000 RP systems of all kinds have been sold.
We also believe that there is a long-term trend toward lower-priced RP
systems capable of producing functional prototypes. This pricing trend should
lead to growth in the more traditional functional prototyping marketplace as
companies continue to address in-house RP needs. Certain market segments in the
industry have not demonstrated significant pricing sensitivity. These segments
are more interested in modeling envelope size, modeling material, throughput,
part quality, part durability, rapid manufacturing, and rapid tooling, which
should allow growth to continue for higher-priced RP systems such as our Maxum,
Titan, and Prodigy Plus systems that address these needs.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2003 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2002
The following table sets forth certain 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 operations.
For the three months ended June 30,
2003 2002
---- ----
Net sales 100.0% 100.0%
Cost of goods sold 34.4% 42.4%
Gross profit 65.6% 57.6%
Selling, general, and administrative expenses 38.1% 41.4%
Research & development expenses 11.1% 11.8%
Operating income 16.4% 4.3%
Other income 0.4% 2.8%
Income before income taxes 16.7% 7.2%
Income taxes 4.2% 2.0%
Net income 12.6% 5.1%
NET SALES
Net sales for the three months ended June 30, 2003, were $12,073,761,
compared with net sales of $10,111,608 for the three months ended June 30, 2002.
This represents an increase of $1,962,153, or 19.4%. Dimension, Prodigy Plus and
Titan sales were very strong in the quarter and exceeded our internal
expectations. Total units shipped in the three months ended June 30, 2003,
amounted to 146, compared to 106 systems in the 2002 period, an increase of
almost 38%. Revenues from consumables, other services, and maintenance also
increased significantly in the three months ended June 30, 2003 as compared with
the same 2002 period, and constitute one of the fastest growing components of
our mix. This increase was largely due to the larger installed base of systems
and a continued emphasis on the sale of maintenance contracts. Additionally, we
started a new fee-based program to produce prototypes that favorably impacted
the results in the second quarter of 2003.
Domestic sales accounted for approximately 58% of total revenue in the
three months ended June 30, 2003, as compared with approximately 52% in the
three months ended June 30, 2002. The total revenue growth rate for
7
our domestic regions amounted to almost 35%, as compared with a growth rate of
only 3% for our international regions. In the United States, we consolidated our
domestic sales regions in 2003, reducing the number of regions to two regions
from three. Our coastal region, made up of the east coast and the southern half
of the United States, recorded the highest revenues in the second quarter
of 2003, while the central region, which also includes the northern half of the
United States and which is dominated by the automotive industry, continued to
lag. Internationally, our Asia Pacific region, which comprises Japan, China, the
Far East and India, recorded revenues that amounted to approximately 22% of
total sales. This was down from the approximately 25% recorded in this region
for the second quarter of 2002, although bookings from this region exceeded
their second quarter's quota. Europe accounted for approximately 20% of total
revenue for the quarter ended June 30, 2003, and approximately 19% of sales in
the comparable quarter of 2002. However, European bookings were below quota,
and, whereas revenue was higher in the current quarter than that in the
comparative 2002 quarter, our European territory remains an area of concern. We
believe that the commercial introduction of PPSF, available for only part of the
second quarter of 2003, should have a positive impact on sales of our Titan
system in many of our regions in future quarters. We believe that sales into our
Asia Pacific and domestic regions will remain strong throughout 2003. However,
declining economic conditions in any of these regions could adversely impact our
future sales and profitability.
GROSS PROFIT
Gross profit improved to $7,915,524, or 65.6% of sales, in the three
months ended June 30, 2003, compared with $5,819,280, or 57.6% of sales, in the
comparable period of 2002. This represents an increase of $2,096,244, or 36%.
Gross profit increased due to higher revenues, a favorable mix of products sold
that carry high margins, and material and labor cost control. Gross margin in
the period exceeded our internal expectations, as the quarter was favorably
impacted by higher than anticipated sales of our high performance systems such
as Titan. Prodigy Plus and Dimension sales were also very strong, with the
margins on this platform being favorably impacted as compared with 2002 by
material and labor cost reductions that were implemented in late 2002 and
throughout 2003. In addition, consumable and service revenues, driven by our
larger installed base and which also have high margins, recorded higher than
expected growth. Over the next several quarters, there could be a modest
expansion to our gross margins over the percentages we have reported over the
last several quarters. As such, gross margins should range between 63% and 67%
of sales, but will be highly dependent upon our volumes and the mix of products
that we ship.
OPERATING EXPENSES
SG&A expenses increased to $4,600,445 for the three months ended June 30,
2003, from $4,185,309 for the comparable period of 2002. This represents an
increase of $415,136, or almost 10%. However, as a percentage of sales, SG&A
expenses declined to 38.1% in the quarter ended June 30, 2003, from 41.4% in the
comparable 2002 quarter. Variable selling expenses were higher in the 2003
period as a result of increased revenues. Marketing, promotional, and sales
expenses associated with current and new products, including the introduction of
Vanguard and PPSF, also accounted for the increase in SG&A expenses for the
three months ended June 30, 2003 as compared with the three months ended June
30, 2002.
R&D expenses increased to $1,337,441 for the three months ended June 30,
2003 from $1,195,991 for the three months ended June 30, 2002. This amounted to
an increase of $141,450, or 11.8%. On higher revenues, R&D expenses decreased as
a percentage of sales to 11.1% in the three months ended June 30, 2003, from
11.8% in the 2002 period. Higher compensation and benefit expense accounted for
much of the expense increase in the current three-month period, although
headcount in this department increased by only 6.7% as compared with the second
quarter of 2002.
We will continue to focus on our operating expenses in 2003, with the
intent to keep the growth of our operating expenses at a rate less than the
growth of our revenues. We expect that R&D expenses should be relatively flat in
2003, but that future R&D expenses should track somewhat higher than the
reported first half results. SG&A expenses will continue to be impacted by
higher Dimension-related selling and marketing expenses, higher investor
relations expenses, and higher regulatory-related expenses (e.g. legal and
accounting expenses), as compared with 2002. We will also continue to pursue
other strategic business opportunities as we become aware of them. The expenses
associated with the evaluation of these opportunities could also impact the
total amount of SG&A
8
expenses that we report. However, we expect that SG&A expenses will decline as a
percentage of sales as compared with 2002 as we increase revenues in 2003. We
cannot, however, ensure that we will be successful.
OPERATING INCOME
For the reasons cited above, our operating income for the three months
ended June 30, 2003 amounted to $1,977,638, or 16.4% of sales, compared with
operating income of $437,980, or 4.3% of sales, for the three months ended June
30, 2002. This represents an increase of $1,539,658.
OTHER INCOME
Other income netted to $44,401 in the three months ended June 30, 2003
compared with other income of $286,288 in the comparable 2002 period. Interest
income increased to $39,723 in the current three-month period, compared with
$37,984 in the three-month period of 2002. The increase in interest income was
primarily due to higher average cash balances in 2003, but offset by lower
interest rates. Interest expense declined to $40,976 in the three months ended
June 30, 2003 from $44,968 in the same period of 2002. In the three months ended
June 30, 2003, we recognized other income of $45,654, principally due to income
of approximately $47,100 from foreign currency transactions related to the euro,
which compared with other income of $293,272 in the comparable 2002 period. This
was principally due to income on foreign currency transactions related to the
euro of approximately $293,000.
INCOME TAXES
Income tax expense amounted to $505,509, or 4.2% of sales, in the three
months ended June 30, 2003, compared with income tax expense of $206,417, or
2.0% of sales, for the three months ended June 30, 2002. The effective tax rate
for 2003, which should benefit from R&D tax credits and permanent differences,
including those resulting from the exercise of employee stock options, amounted
to 25% compared with an effective tax rate of 28.5% in 2002. We believe that our
effective tax rate should fall between a range of 25% to 28% in 2003.
NET INCOME
For the reasons cited above, our net income for the three months ended
June 30, 2003, amounted to $1,516,530, or 12.6% of sales, compared with net
income of $517,851, or 5.1% of sales, in the comparable 2002 period. This
resulted in earnings per diluted common share of $.25 in the three months ended
June 30, 2003, compared with earnings per common share of $.09 for the
comparable 2002 period.
SIX MONTHS ENDED JUNE 30, 2003 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2002
The following table sets forth certain 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 operations.
For the three months ended June 30,
2003 2002
---- ----
Net sales 100.0% 100.0%
Cost of goods sold 35.1% 40.8%
Gross profit 64.9% 59.2%
Selling, general, and administrative expenses 38.8% 47.6%
Research & development expenses 11.0% 14.2%
Operating income (loss) 15.1% (2.6%)
Other income 0.4% 0.9%
Income (loss) before income taxes 15.6% (1.8%)
Income taxes (benefit) 3.9% (0.5%)
Net income 11.7% (1.3%)
9
NET SALES
Net sales for the six months ended June 30, 2003 were $22,751,402,
compared with sales of $16,507,997 for the six months ended June 30, 2002. This
represents an increase of $6,243,405, or 37.8%. We shipped a total of 280
systems in the six months ended June 30, 2003, a 77% increase over the total
unit shipments in the comparable 2002 period. Sales of our Dimension and Prodigy
Plus systems improved significantly from the results reported in the comparable
period in 2002, although the Prodigy Plus was not commercially available until
May of 2002. Titan system sales were also higher in the six months ended 2003 as
compared with 2002, as were revenues derived from sales of consumables,
maintenance, and other services. The increase was due to our increased installed
base of systems, the continued emphasis on the sale of maintenance contracts,
and growth in our other fee-based services.
Domestic sales accounted for approximately 56% of total revenue in six
months ended June 30, 2003, compared with 53% recorded in the comparable
six-month period of 2002. However, domestic sales increased by approximately 45%
versus approximately 29% reported for international sales. Our coastal region
(described above) was our strongest region, followed by our central region. Our
European region, following a strong first quarter, reported disappointing
results in the second quarter and for the six-month period is lagging behind the
other regions in terms of reported growth. We remain concerned about economic
conditions in this region, particularly Germany and Italy, and the impact it
could have on our sales growth. Our combined Asia Pacific region, accounted for
approximately 22% of total revenue in six months ended June 30, 2003, and this
region is on plan, with little direct evidence that the SARS virus has had any
impact on revenues.
GROSS PROFIT
Gross profit increased to $14,773,095, or 64.9% of sales, in the six
months ended June 30, 2003, compared with $9,765,534, or 59.2% of sales, in the
comparable period of 2002. This represents an increase of $5,007,561, or 51.3%.
Gross profit improved due to higher revenues, favorable product mix, reduced
labor and material costs on the Prodigy platform, and continued cost control
over the growth rates of our total labor and overhead expenses.
OPERATING EXPENSES
SG&A expenses increased to $8,830,697 for the six months ended June 30,
2003, from $7,862,517 for the comparable period of 2002. This represents an
increase of $968,180, or 12.3%. Variable selling expenses related to the higher
revenue in the period, coupled with increased marketing, promotional, and sales
expenses associated with Dimension and other new products, accounted for much of
the increase in SG&A expenses for the six months ended June 30, 2003 as compared
with the six months ended June 30, 2002. However, higher investor relations and
regulatory-related expenses also impacted the growth of our SG&A expenses. SG&A
expenses as a percentage of sales declined to 38.8% in the six months ended June
30, 2003, as compared with 47.6% in the six months ended June 30, 2002.
R&D expenses increased to $2,495,598 for the six months ended June 30,
2003 from $2,338,259 for the six months ended June 30, 2002. The increase
amounted to $157,339, or 6.7%. On higher revenues, R&D expenses decreased as a
percentage of sales to 11.0% in the six months ended June 30, 2003, from 14.2%
in the 2002 period. Increased wages and benefit expenses, coupled with a small
increase in headcount, accounted for the majority of the R&D expense increase in
the 2003 as compared with the 2002 period.
OPERATING INCOME
For the reasons cited above, operating income for the six months ended
June 30, 2003 amounted to $3,446,800, or 15.1% of sales, compared with an
operating loss of $435,242, or 2.6% of sales, for the six months ended June 30,
2002. This represents an increase of $3,882,042.
OTHER INCOME
Other income netted to $100,004 in the six months ended June 30, 2003
compared with other income of $145,629 in the comparable 2002 period. Interest
income declined to $76,252 in the current six month period,
10
compared with $80,903 in prior year's six month period. The reduction in
interest income was primarily due to lower interest rates, in spite of the
increase in our average cash balance in 2003. Interest expense declined to
$82,288 in the six months ended June 30, 2003 from $91,262 in the same period of
2002, primarily due to interest expense on the mortgage of our manufacturing
facility. In the six months ended June 30, 2003, we recognized other income of
approximately $106,000, principally due to income of approximately $124,000 on
foreign currency transactions related to the euro. In the six months ended June
30, 2002, other income amounted to approximately $156,000 in the 2002 period,
principally due to income on foreign currency transactions related to the euro.
NET INCOME (LOSS)
For the reasons cited above, the net income for the six months ended June
30, 2003, amounted to $2,660,103, or 11.7% of sales, compared with a net loss of
$207,075, or 1.3% of sales, in the 2002 period. This resulted in earnings per
diluted common share of $.44 for the six months ended June 30, 2003, compared
with a loss per common share of $.04 for the same period ended June 30, 2002.
LIQUIDITY AND CAPITAL RESOURCES
We have increased our cash and cash equivalents balances to $20,977,557 at
June 30, 2003, from $14,193,590 at December 31, 2002. In 2003, net cash provided
by our operating activities amounted to $5,192,309, compared with $2,247,810 in
2002. The principal source of cash from our operating activities in 2003 has
been our net income of $2,660,103, as adjusted to exclude the effects of
non-cash charges, and changes in working capital, primarily inventories,
accounts receivable, and accounts payable. Whereas our net accounts receivable
balances increased to $10,732,728 in 2003 from $9,901,838 as of June 30, 2002,
the increase should be evaluated against the 37.8% increase in sales. While we
have been successful in controlling the growth of our receivables relative to
our sales growth, in large part by instituting tighter controls in our credit
and collections areas, some of our international distributors continue to carry
high balances, some of which have exceeded our normal terms. These delays in
payment adversely impact our days sales outstanding ("DSO"). Nevertheless, DSO's
have declined over the past two years, to approximately 80 days as of June 30,
2003, from approximately 111 days as of June 30, 2002.
For the six months ended June 30, 2003 and 2002, our inventory balances
were $6,480,049 and $7,363,332, respectively. We have instituted better
inventory management and controls, but recognize that we have opportunities to
make considerably more improvements to reduce overall inventory and increase
turns. Over the two-year period, inventory turns have improved to 1.5 times in
the six months ended June 30, 2003, from 1.1 times in the comparable 2002
period. A significant portion of our inventory is dedicated to fulfill our
service contracts and warranty obligations. As we have introduced several new
products over the last six quarters, there are many more platforms and models to
service than in the past, which increases the requirements to maintain inventory
spares.
Our investing activities used cash of $1,176,567 and $807,969 in the six
months ended June 30, 2003 and 2002, respectively. Property and equipment
acquisitions totaled $929,810 in 2003 and $491,639 in 2002. Over the two-year
period, the majority of the equipment we purchased was for manufacturing or
engineering development, tooling, leasehold improvements, and the acquisition of
computer systems and software applications. Payments for intangible assets,
including patents and capitalized software, amounted to $246,757 and $316,330
for the six months ended June 30, 2003 and 2002, respectively.
Our financing activities provided cash of $2,790,961 and used cash of
$1,742,207 in the six months ended June 30, 2003 and 2002, respectively. The
exercise of stock options and warrants provided cash of $2,818,999 and
$1,812,260 in the six months of the 2003 and 2002, respectively. We used cash of
$3,462,557 to purchase outstanding stock through our stock buyback program in
the six months ended June 30, 2002. While our stock buyback program is still in
effect, we did not purchase any outstanding stock in 2003. Payments for
obligations under capital leases used cash of $65,861 in the 2002 period; in
2003 we no longer have any outstanding capital leases. Payments on our mortgage
payable used cash of $28,038 in the 2003 six-month period and $26,049 in the
comparable 2002 period.
For 2003, we expect to use our cash for working capital purposes; for
improvements to our manufacturing facility; for leasehold improvements; for new
product and materials development; for sustaining engineering; for the
acquisition of equipment, including production equipment, tooling, and
computers; for the purchase of intangible
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assets, including patents and capitalized software; for increased selling and
marketing activities, especially as they relate to the continued Dimension
market development; for acquisitions; for strategic business development and/or
opportunities; and for our common stock buyback program. In October 2002, our
board of directors authorized a continuation of our stock buyback program by
authorizing an additional $1,000,000 to the prior authorization of $2,000,000,
net of the proceeds from the exercise of stock options. We have approximately
$1,300,000 available under this authorization. While we believe that the primary
source of liquidity during 2003 will be derived from current cash balances and
cash flows from operations, we have maintained a line of credit for the lesser
of $4,000,000 or a defined borrowing base. To date, we have not borrowed against
this credit facility.
As of June 30, 2003, we had gross accounts receivable of $11,383,143, less
an allowance of $650,415 for returns and doubtful accounts. Historically, our
bad debt expense has been minimal. Certain customers, especially those that
purchased our Maxum or Titan systems, continue to carry high balances.
Additionally, at June 30, 2003, large balances were concentrated with certain
international distributors, and some of these balances exceed our payment terms.
Default by one or more of these distributors or customers would result in a
significant charge against our current reported earnings. We have reviewed our
policies that govern credit and collections, and will continue to monitor them
in light of current payment status and economic conditions. While we can give no
assurances, we believe that most, if not all, of the accounts receivable
balances will ultimately be collected.
Our total current assets amounted to $39,192,121 at June 30, 2003, the
majority of which consisted of cash and cash equivalents, inventories and
accounts receivable. Total current liabilities amounted to $10,049,534. Our debt
is minimal, consisting of a mortgage payable of $2,190,324. We estimate that we
will spend approximately $1,500,000 in 2003 for facility improvements,
production and R&D equipment, computers and integrated software, and tooling. We
estimate that as of June 30, 2003, material commitments for inventory purchases
from selected vendors for the ensuing twelve-month period ending June 30, 2004,
will amount to approximately $3,400,000. We intend to finance these purchases
from existing cash or from cash flows from operations.
INFLATION
We believe that inflation has not had a material effect on our operations
or on our financial condition during the three most recent fiscal years.
FOREIGN CURRENCY TRANSACTIONS
Prior to 2000, substantially all of our recognized revenues from foreign
sales were invoiced in United States dollars. Therefore, our exposure to foreign
currency exchange rates was immaterial. Commencing in late 2000, we began to
invoice sales to certain European distributors in euros. Our reported results
have been subject to fluctuations based upon changes in the exchange rates of
that currency in relation to the United States dollar. In the six months ended
June 30, 2003, income from foreign currency translations amounted to
approximately $124,000, whereas in the comparable 2002 period we reported income
from foreign currency translations of approximately $156,000. In the six months
ended June 30, 2003, we hedged approximately (Euro) 1,000,000 of our accounts
receivable that were denominated in euros. The hedge resulted in a currency
translation loss of approximately $107,000 for the six months ended June 30,
2003. We intend to continue to hedge some of our accounts receivable balances
that are denominated in euros throughout 2003, and will continue to monitor our
exposure to currency fluctuations. Instruments to hedge our risks may include
foreign currency forward, swap, and option contracts. These instruments will be
used to selectively manage risks, but there can be no assurances that we will be
fully protected against material foreign currency fluctuations. We expect to
continue to derive most of our revenue from regions where the transactions are
negotiated, invoiced, and paid in US dollars. Fluctuations in the currency
exchange rates in these 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", "estimate" or "believe" or other
similar words are forward-looking statements that we deem to be covered by and
to qualify for the safe harbor protection covered by the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Investors and prospective
investors in our Company should understand that several factors govern
12
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 RP and 3D printing systems, services and consumables, and our ability
to maintain our gross margins on these sales. The forward-looking statements
include our assumptions about the size of the RP and 3D printing market, and our
ability to penetrate, compete, and successfully sell our products in these
markets. They include our plans and objectives to introduce new products, to
control expenses, to improve the quality and reliability of our systems, to
respond to new or existing competitive products, and to 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:
- will be able to continue to introduce new RP and 3D printing
systems and materials acceptable to the market, and to
continue to improve our existing technology and software in
our current product offerings;
- will be able to successfully develop and expand the 3D
printing market and that this market will accept our products;
- will be able to maintain our revenues and gross margins on our
present products;
- will be able to control our operating expenses;
- will be able to expand our manufacturing and service
capabilities to meet the expected demand generated by
Dimension;
- will be able to successfully commercialize PPSF, and that the
market will accept this new material, and
- will be able to retain and recruit employees with the
necessary skills to produce, develop, market, and sell our
products.
Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, geo-political, competitive, market and
technological 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,
manufacturing or other budgets, which may in turn affect our results of
operations or the success of our new product development and introduction. We
may not be able to alter our plans or budgets in a timely manner, resulting in
reduced profitability or losses.
Due to the factors noted above and elsewhere in this 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
a significant number of 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.
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CRITICAL ACCOUNTING POLICIES
We have prepared our financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America. This has required us to make estimates, judgments, and assumptions that
affected the amounts we reported.
We have identified several critical accounting policies that have required
us to make assumptions about matters that were uncertain at the time of our
estimates. Had we used different estimates and assumptions, the amounts we
recorded could have been significantly different. Additionally, actual results
that would have a material effect on our financial condition or results of
operations could result had we used different assumptions or conditions. The
critical accounting policies that were affected by the estimates, assumptions,
and judgments used in the preparation of our financial statements are listed
below.
REVENUE RECOGNITION
We recognize revenue when (1) persuasive evidence of a final agreement
exists, (2) delivery has occurred or services have been rendered, (3) the
selling price is fixed or determinable, and (4) collectability is reasonably
assured. Revenue from system and consumable sales is primarily recognized at
time of shipment if the shipment conforms to the terms and conditions of the
purchase agreement. Revenue from maintenance contracts is recognized ratably
over the term of the contract, usually one year. On certain sales that require a
one-year warranty rather than our standard 90-day warranty, a percentage of the
selling price that represents the extended warranty is deferred and recognized
ratably over the period of the extended warranty as an implied maintenance
contract. This has had the effect of deferring, for the six months ended June
30, 2003, approximately $955,000 of revenue that will be recognized in future
periods.
We assess collectability as part of the revenue recognition process. We
evaluate a number of factors to assess collectability, including an evaluation
of the creditworthiness of the customer, past payment history, and current
economic conditions. If it is determined that collectability cannot be
reasonably assured, we would decline shipment, request a down payment, or defer
recognition of revenue until ultimate collectability is more determinable.
We also record a provision for estimated product returns and allowances in
the period in which the related revenue is recorded. This provision against
current gross revenue is based principally on historical rates of returns, but
also factors in changes in the customer base, geographic economic conditions,
and changes in the financial conditions of our customers. If past trends were to
change, we would potentially have to increase or decrease the amount of the
provision for these returns. As of June 30, 2003, our allowance for returns was
$198,481.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
While we evaluate the collectability of a sale as part of our revenue
recognition process, we must also make judgments regarding the ultimate
realization of our accounts receivable and notes receivable balances. A
considerable amount of judgment is required in assessing the realization of
these receivables, including the aging of the receivables and the
creditworthiness of each customer. We may not be able to accurately and timely
predict changes to a customer's financial condition. If a customer's financial
condition should suddenly deteriorate, calling into question our ability to
collect the receivable, our estimates of the realization of our receivables
could be adversely affected. We might then have to record additional allowances
for doubtful accounts, which could have an adverse effect on our results of
operations in the period affected.
Our allowance for doubtful accounts is adjusted on a quarterly basis using
two methods. First, our overall reserves are based on a percentage applied to
certain aged receivable categories that are predominately based on historical
bad debt write-off experience. Then, we make an additional evaluation of overdue
customer accounts, for which we specifically reserve. In our evaluation we use a
variety of factors such as past payment history, the current financial condition
of the customer, and current economic conditions. We also evaluate our overall
concentration risk, which assesses the total amount owed by each customer,
regardless of its current status. Certain of our international distributors have
carried large balances that have become overdue. While these distributors have
paid
14
down their balances and are still considered performing, we have either
converted certain of these accounts receivable to notes receivable (some of
which are collateralized), or placed distributors on payment plans that strictly
limit the amount of new business that we will honor unless they adhere to the
payment plans. A default by one or more of these distributors could have a
material effect, ranging from $200,000 to $800,000, on our reported operating
results in the period affected. As of June 30, 2003, our allowance for doubtful
accounts amounted to $451,934.
INVENTORIES
Our inventories are recorded at the lower of cost or market, with cost
determined on a first-in, first-out basis. We periodically assess this inventory
for obsolescence and potential excess by reducing the difference between our
cost and the estimated market value of the inventory based on assumptions about
future demand and historical sales patterns. Our inventories consist of
materials and products that are subject to technological obsolescence and
competitive market conditions. If market conditions or future demand are less
favorable than our current expectations, additional inventory write downs or
reserves may be required, which could have an adverse effect on our reported
results in the period the adjustment are made. Additionally, engineering or
field change orders ("ECO" and "FCO", respectively) introduced by our
engineering group could suddenly create extensive obsolete and/or excess
inventory. Although our engineering group considers the estimated effect that an
ECO or FCO would have on our inventories, a mandated ECO or FCO could have an
immediate adverse affect on our reported financial condition if it required the
use of different materials in either new production or our service inventory.
Some of our inventory is returned to us by our customers and refurbished.
This refurbished inventory, once fully repaired and tested, is functionally
equivalent to new production and is utilized to satisfy many of our requirements
under our warranty and service contracts. Upon receipt of the returned material,
this inventory is recorded at a discount from original cost, and further reduced
by estimated future refurbishment expense. While we evaluate this service
material in the same way as our stock inventory (i.e., we periodically test for
obsolescence and excess), this inventory is subject to changing demand that may
not be immediately apparent. Adjustments to this service inventory, following an
obsolescence or excess review, could have an adverse effect on our reported
financial condition in the period when the adjustments are made.
INCOME TAXES
We comply with SFAS No. 109, "Accounting for Income Taxes," which requires
that deferred tax assets and liabilities be recognized using enacted tax rates
for the effect of temporary differences between the book and tax bases of
recorded assets and liabilities. SFAS 109 also requires a valuation allowance if
it is more likely than not that a portion of the deferred tax asset will not be
realized. We have determined that it is more likely than not that our future
taxable income will be sufficient to realize our deferred tax assets.
Our provision for income taxes is based on our effective income tax rate.
The effective rate is highly dependent upon a number of factors, including our
total earnings, the geographic location of sales, the availability of tax
credits, the exercise of employee stock options, and the effectiveness of our
tax planning strategies. We monitor the effects of these variables throughout
the year and adjust our income tax rate accordingly. However, if our actual
results differ from our estimates, we could be required to adjust our effective
tax rate or record a valuation adjustment on our deferred tax assets. This could
have an adverse effect on our financial condition and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
INTEREST RATE RISK
Our cash and cash equivalent investments are exclusively in short-term
money market and sweep instruments with maturities of less than 90 days. These
are subject to limited interest rate risk. A 10% change in interest rates would
not have a material effect on our financial condition or results of operations.
Our mortgage bears interest at a fixed rate of 7.38% through 2006. Therefore, an
immediate 10% change in interest rates would have no material effect on our
financial condition or results of operations.
15
FOREIGN CURRENCY EXCHANGE RATE RISK
We have not historically hedged sales from or expenses incurred by our
European operations that are conducted in euros. Therefore, a hypothetical 10%
change in the exchange rates between the U.S. dollar and the euro could increase
or decrease our earnings before taxes by less than $100,000 for the continued
maintenance of our European facility. In the first six months of 2003 we hedged
(Euro) 1,000,000 of our accounts receivable balances that are denominated in
euros. A hypothetical 10% change in the exchange rates between the US dollar and
the euro could increase or decrease earnings before taxes by less than $100,000.
ITEM 4. CONTROLS AND PROCEDURES
Based on their evaluation required by Rule 13a-15(b) or 15a-15(b) under
the Securities Exchange Act of 1934 (the "Exchange Act"), management, including
our Chief Executive Officer and Chief Financial Officer, concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) were effective as of the end of the period covered by
this report.
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PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
We held our Annual Meeting of Stockholders on May 6, 2003. The following
directors, constituting all of our directors, were elected at the meeting to
serve until their respective successors are duly elected and qualified. The
directors elected at the Annual Meeting received the number of votes set forth
opposite their respective names:
Withheld
For Authority/
Election Abstained
--------- ----------
S. Scott Crump 4,765,932 13,151
Ralph E. Crump 4,766,032 13,051
Edward J. Fierko 4,775,882 3,201
Clifford H. Schwieter 4,776,082 3,001
Arnold J. Wasserman 4,774,182 4,901
Gregory L. Wilson 4,777,082 2,001
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
31.1 Certification of the Chief Executive Officer required by Rule
13a-14(a) or Rule 15d-14(a).
31.2 Certification of the Chief Financial Officer required by Rule
13a-14(a) or Rule 15d-14(a).
32.1 Certification of the Chief Executive Officer required by Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2 Certification of the Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
(b) Reports on Form 8-K.
Current Report on Form 8-K, dated April 23, 2003, reporting under
Item 9 that the Registrant issued a press release announcing its
first quarter 2003 earnings.
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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: August 14, 2003 Stratasys, Inc.
By: /s/ Thomas W. Stenoien
_________________________________
Thomas W. Stenoien
Executive Vice President, Secretary and
Chief Financial Officer
(Principal Financial Officer)
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