PRESSTEK INC /DE/

The 2003 Stock Option and Incentive Plan (the “2003 Plan”) provides for the award of stock options, stock issuances and other equity interests in the Company to employees, officers, directors (including those directors who are not an employee or officer of the Company, such directors being referred to as Non-Employee Directors), consultants and advisors of the Company and its subsidiaries.  A total of 2,000,000 shares of common stock, subject to anti-dilution adjustments, have been reserved under this plan.  Any future options granted under the 2003 Plan will become exercisable at such times and subject to such terms and conditions as the Board of Directors or Committee may specify at the time of each grant.  At June 30, 2012, there were 1,410,567 options outstanding under the 2003 Plan, and 504,033 shares available for future grants under this plan.  The options will expire at various dates prescribed by the individual option grants.

provide advanced digital print solutions through the development, manufacture, and sourcing of digital laser imaging equipment and advanced technology chemistry-free and chemistry-based printing plates, which we call consumables, for commercial and in-plant print providers targeting the growing market for high quality, fast turnaround short-run color printing; and

are a leading sales and services company delivering Presstek digital solutions and solutions from other manufacturing partners through our direct sales and service force and through distribution partners worldwide.

Consolidated cost of revenue was $21.1 million in the second quarter of fiscal year 2012 and $40.9 million in the first six months of 2012, compared to $21.4 million and $43.4 million, respectively, in 2011.  The year-to-date decrease is primarily due to lower revenues and cost reduction actions taken in the second half of 2011.

The margin decrease for both the three months and six month periods ended June 20, 2012 is primarily due to an unfavorable mix of consumable products. Additionally, our per unit production costs have also risen as a result of lower overall production.

Sales, marketing and customer support expenses decreased to $4.3 million in the second quarter of fiscal 2012 from $5.6 million in the second quarter of fiscal year 2011.  Year-to-date selling, marketing and customer support expenses declined from $10.9 million in the first six months of 2011 to $8.3 million in the comparable current year period.  The reductions in expense in both periods resulted primarily from our cost reduction initiatives implemented in the second half of 2011.