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8-k Exhibit 99.1:

STRATASYS REPORTS FOURTH QUARTER AND FULL YEAR FINANCIAL
RESULTS

High-End System Sales Expand by 41% in Q4
- - - - -

MINNEAPOLIS, February 17, 2009 – Stratasys, Inc. (Nasdaq: SSYS) today announced fourth quarter and full year financial results.

Revenue rose to $31.9 million for the fourth quarter ended December 31, 2008 over the $30.2 million reported for the same period in 2007. Revenue from proprietary products and services for the fourth quarter increased by 11% over the same period last year. System shipments totaled 570 units for the fourth quarter of 2008, versus 536 for the same period last year.

Operating profit, including discrete items, declined to $4.0 million for the fourth quarter, compared to operating profit of $4.9 million for the same period in 2007.

Net income, including discrete items, declined to $2.0 million for the fourth quarter, or $0.10 per share, compared to net income of $4.3 million, or $0.20 per share, for the same period last year.

Non-GAAP net income, which excludes discrete items and stock-based compensation expense, declined by 15% to $3.2 million for the fourth quarter, or $0.16 per share, compared to Non-GAAP net income of $3.8 million, or $0.17 per share, for the same period last year.

Discrete items in the fourth quarter of 2008 included an asset impairment charge and restructuring expense that totaled $1.4 million. The impairment charge was for an adjustment to fair value of an auction rate security. The restructuring expense is associated with the recent restructuring of the company’s North American sales and marketing organization. The total impairment charge and restructuring expense, net of tax, was approximately $869,000, or $0.04 per share.

Income tax expense for the fourth quarter of 2007 includes approximately $710,000, or $0.03 per share, in previously unrecognized state tax credits for prior years’ research and development expenditures.

Stock-based compensation expense required under Financial Accounting Standard (SFAS) 123R was approximately $341,000 net of tax, or $0.02 per share for the fourth quarter of 2008, and approximately $202,000 net of tax, or $0.01 per share, for the same period last year.

A table provided with this release provides itemized detail of these charges and expenses.

Revenues rose to a record $124.5 million for the twelve months ended December 31, 2008 over the $112.2 million reported for 2007. Revenue from proprietary products and services increased by 15% in the twelve-month period over last year. Total system shipments increased to a record 2,184 for the twelve-month period of 2008 compared with 2,169 for 2007.

Operating profit, including discrete items, increased 11% to a record $20.6 million for the twelve-month period, compared to operating profit of $18.5 million for 2007.

Net income, including discrete items, declined by 5% to $13.6 million for the twelve-month period, or $0.65 per share, compared to net income of $14.3 million, or $0.66 per share, for the same period last year.

Non-GAAP net income, which excludes discrete items and stock-based compensation expense, increased by 12% to $16.0 million for the twelve-month period, or $0.76 per share, compared to Non-GAAP net income of $14.3 million, or $0.66 per share, for the same period last year.

Discrete items in fiscal 2008 included an asset impairment charge and restructuring expense that totaled $2.0 million. The total impairment charge and restructuring expense, net of tax, was approximately $1.3 million, or $0.06 per share.

Stock-based compensation expense required under SFAS 123R was approximately $1.1 million net of tax, or $0.05 per share for the twelve-month period of 2008, and approximately $748,000 net of tax, or $0.03 per share, for 2007.

“Despite a challenging economic environment during the fourth quarter, we generated 11% growth in our proprietary products and services over last year,” said Scott Crump, chairman and chief executive officer of Stratasys. “Sales of our proprietary high-end systems, which we recently repositioned as 3D Production Systems under the brand name Fortus grew by 41% in the fourth quarter, continuing a positive trend that has followed the introduction of several new products and our successful expansion into direct digital manufacturing, or DDM, applications.

“Starting in January, we began selling our Fortus 3D production systems through a select group of our existing Dimension resellers in North America. In addition to selling our Dimension 3D printer line, these resellers have committed additional resources for the Fortus line. This structure mirrors our successful international model and leverages the company’s success with what we believe is the strongest sales channel in the industry. We believe the new structure will make the most of our expanding Fortus line and new DDM initiatives.

“Our 3D printer sales continued to be negatively impacted by the weak global economy, as our users deferred capital investments and cut back on discretionary expenditures. In addition, 3D printer revenue was likely negatively impacted by the anticipated rollout of our new personal 3D printer, the uPrint, which we introduced in January of this year. We began limited distribution of uPrint in December of last year to better position for the product’s immediate availability in January. We believe the market’s anticipation of uPrint may have cost us orders for our other Dimension 3D printers during the fourth quarter.

“The RedEye paid parts business grew by 36% during the fourth quarter driven by increased demand for DDM applications. The RedEye team was excited to announce in December a major collaboration with Autodesk, a two-billion dollar world leader in digital design technologies, which allows AutoCAD software users to order digitally manufactured parts quickly and easily through a new on-demand 3D printing feature. We are pleased that companies like Autodesk are increasingly recognizing the value of incorporating additive fabrication technologies into the design process.

“Consumable revenue was flat during the fourth quarter, a function of the inconsistent buying patterns of our resellers, combined with a likely negative impact from the slowing economy. We are projecting a more positive growth trajectory for consumable revenue during 2009, given our expectation of a significant expansion in our installed base of systems. We should note that maintenance revenue, another recurring revenue component of our business, increased by 20% during the quarter.

“Fiscal 2008 represented another record revenue and operating profit year for Stratasys despite the challenging economic environment. We introduced 5 new products throughout the year, and reached a major milestone upon installing our 10,000 th system since our company’s inception. We grew our proprietary products and services by 15% and completed development projects that will provide for future growth.

“We have positive momentum within our Fortus 3D production systems and RedEye paid parts businesses, driven by new products and emerging DDM applications. We are excited about our 3D printer initiatives, most notably the Dimension uPrint, the world’s first personal 3D printer that we successfully introduced in January of this year. uPrint represents a major step within our longer-term strategy of moving down the price elasticity curve and accelerating the adoption of 3D printers among designers and engineers. We believe uPrint will generate significant growth in our unit volume during 2009, which bodes well for future consumable revenue.

“We remain committed to our long-term goal of providing products and services that help our customers reduce costs and accelerate their new products to market. Although we are feeling the impact of an unprecedented slowdown in manufacturing worldwide, our financial position is strong, we are solidly profitable, and we maintain a flexible business model built around significant recurring revenue components that generate strong contribution margins,” Crump concluded.

Due to the difficulty of forecasting in the current economic environment, Stratasys is currently not providing financial guidance for the fiscal year ending December 31, 2009.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of this press release.

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