Cutera(r) Reports Fourth Quarter and Full-Year 2008 Results


BRISBANE, Calif., Feb. 9, 2009 (GLOBE NEWSWIRE) -- Cutera, Inc. (Nasdaq:CUTR), a leading provider of laser and other light-based aesthetic systems for practitioners worldwide, today reported financial results for the fourth quarter and year ended December 31, 2008.

Fourth quarter 2008 revenue was $17.9 million, compared to $26.5 million in the same period last year. Full-year 2008 revenue was $83.4 million, compared to 2007 revenue of $101.7 million. Net loss for the fourth quarter of 2008 was $235,000, or $0.02 per diluted share. These fourth quarter results include a non-cash impairment charge, net of tax, of $1.2 million, or $0.09 per diluted share, associated with the company's investment in auction rate securities. Net loss for full-year 2008 was $2.9 million, or $0.22 per diluted share. These full-year results include a similar impairment charge, net of tax, of $3.6 million, or $0.28 per diluted share. As of December 31, 2008, the company had $106.8 million in cash, marketable securities and long term investments -- with no debt.

Kevin Connors, President and CEO of Cutera, stated, "2008 was a challenging year for our industry, as the global recession continued to affect customer purchasing decisions. Even though our revenue volume was impacted by this economic downturn, our decisive actions in managing expenses enabled us to generate a fourth quarter and full-year profit after adjusting for non-cash impairment charges, net of tax, associated with our investments in auction rate securities. In January, we reduced the size of our workforce by approximately 10% in an effort to improve profitability and cash generation. We will continue to manage our expenses during these uncertain economic times to keep them in line with revenue levels."

He continued, "International revenue for the fourth quarter of 2008 was down 5% when compared to the year-ago quarter, but when measuring full-year 2008 to 2007, our international revenue grew 11%. We believe that our investments in our international infrastructure have positioned us well for international growth in 2009 and beyond.

"U.S. revenue for the fourth quarter of 2008 was down 52%, compared to the fourth quarter of 2007, and down 35% in 2008, compared to 2007. We feel that the continuing recession is causing our prospective customers to delay their purchase decisions. We also believe that those prospects who do not have established medical practices are finding it more difficult to obtain credit financing. In response to the current market conditions, we have been increasing our focus on the core market of dermatologists and plastic surgeons and other established medical offices through marketing efforts and product introductions."

Mr. Connors concluded, "While the near-term prospects for our industry are difficult to predict due to economic uncertainty, we believe that our worldwide distribution network, solid cash position, strong portfolio of products, and various research and development projects underway offer continuing, long-term opportunities for our company."

Conference Call:

The conference call to discuss these results is scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET) on February 9, 2009. The call will be broadcast live over the Internet hosted at the Investor Relations section of Cutera's website at www.cutera.com, and will be archived online within one hour of its completion and continue through 8:59 p.m. PT (11:59 p.m. ET) on February 23, 2009. In addition, you may call 1-800-762-8779 to listen to the live broadcast. Participating in the call will be Kevin Connors, President and Chief Executive Officer, and Ron Santilli, Chief Financial Officer.

About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of laser and other light-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has been developing innovative, easy-to-use products that enable physicians and other qualified practitioners to offer safe and effective aesthetic treatments to their patients. For more information, call 1-888-4CUTERA or visit www.cutera.com.

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Cutera's ability to grow its business, increase revenue, manage expenses, generate additional cash, maintain profitability, develop and commercialize existing and new products and applications, and improve the performance of its worldwide sales and distribution network and statements regarding long-term prospects are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Cutera's actual results to differ materially from the statements contained herein. Potential risks and uncertainties that could affect Cutera's business and cause its financial results to differ materially from those contained in the forward-looking statements include the global economic crisis, which may reduce consumer demand for its products, cause potential customers to delay their purchase decisions and make it more difficult for some potential customers to obtain credit financing; its ability to increase revenue, manage expenses and improve sales productivity and performance worldwide; its ability to successfully develop and acquire new products and applications and market them to both its installed based and new customers; the length of the sales cycle process; unforeseen events and circumstances relating to its operations; government regulatory actions; and those other factors described in the section entitled, "Risk Factors," in its most recent Form 10-Q as filed with the Securities and Exchange Commission on November 3, 2008. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. Cutera's fourth quarter and year ended December 31, 2008 financial performance, as discussed in this release, is preliminary and unaudited, and subject to adjustment.



                          CUTERA, INC.
             CONDENSED CONSOLIDATED BALANCE SHEETS
                         (in thousands)
                          (unaudited)

                                                     Dec 31,   Dec 31,
                                                      2008      2007
                                                    --------  --------
 Assets
 Current assets:
  Cash and cash equivalents                         $ 36,540  $ 11,054
  Marketable investments                              60,653    88,510
  Accounts receivable, net                             5,792    10,692
  Inventories                                          9,927     7,533
  Deferred tax asset                                   4,257     8,058
  Other current assets                                 1,832     1,955
                                                    --------  --------
   Total current assets                              119,001   127,802

 Property and equipment, net                           1,357     1,361
 Long term investments                                 9,627     7,429
 Intangibles, net                                      1,025     1,227
 Deferred tax asset, net of current portion            6,527       834
                                                    --------  --------
   Total assets                                     $137,537  $138,653
                                                    ========  ========

 Liabilities and Stockholders' Equity
 Current liabilities:
  Accounts payable                                  $  1,690  $  2,350
  Accrued liabilities                                  8,563    13,587
  Deferred revenue                                     6,758     4,971
                                                    --------  --------
   Total current liabilities                          17,011    20,908

 Deferred rent                                         1,713     1,639
 Deferred revenue, net of current portion              4,907     5,593
 Income tax liability                                  1,452     1,160
                                                    --------  --------
   Total liabilities                                  25,083    29,300
                                                    --------  --------

 Stockholders' equity:
  Common stock                                            13        13
  Additional paid-in capital                          80,664    74,871
  Retained earnings                                   31,410    34,279
  Accumulated other comprehensive income (loss)          367       190
                                                    --------  --------
   Total stockholders' equity                        112,454   109,353
                                                    --------  --------
    Total liabilities and stockholders' equity      $137,537  $138,653
                                                    ========  ========


                          CUTERA, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (in thousands, except per share data)
                           (unaudited)

                                Three Months Ended  Twelve Months Ended
                                   December 31,        December 31,
                                ------------------  ------------------
                                  2008      2007      2008      2007
                                --------  --------  --------  --------
 Net revenue                    $ 17,897  $ 26,453  $ 83,379  $101,726
 Cost of revenue                   7,045     9,704    32,358    35,002
                                --------  --------  --------  --------
   Gross profit                   10,852    16,749    51,021    66,724
                                --------  --------  --------  --------

 Operating expenses:
  Sales and marketing              6,568     9,438    35,354    38,277
  Research and development         1,933     1,735     7,550     7,169
  General and administrative       2,723     2,725    11,270    11,721
                                --------  --------  --------  --------
   Total operating expenses       11,224    13,898    54,174    57,167
                                --------  --------  --------  --------
 Income (loss) from operations      (372)    2,851    (3,153)    9,557
 Interest and other income, net      555     1,001     3,046     4,207
 Other-than-temporary
  impairments on long term
  investments                     (1,182)       --    (3,554)       --
                                --------  --------  --------  --------
 Income (loss) before
  income taxes                      (999)    3,852    (3,661)   13,764
 Provision (benefit)
  for income taxes                  (764)      229      (792)    3,260
                                --------  --------  --------  --------
 Net income (loss)              $   (235) $  3,623  $ (2,869) $ 10,504
                                ========  ========  ========  ========

 Net income (loss) per share:
  Basic                         $  (0.02) $   0.28  $  (0.22) $   0.80
                                ========  ========  ========  ========
  Diluted                       $  (0.02) $   0.27  $  (0.22) $   0.74
                                ========  ========  ========  ========

 Weighted-average number of
  shares used in per share
  calculations:
  Basic                           12,797    12,714    12,770    13,153
                                ========  ========  ========  ========
  Diluted                         12,797    13,561    12,770    14,228
                                ========  ========  ========  ========



                           CUTERA, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (in thousands)
                            (unaudited)

                                Three Months Ended  Twelve Months Ended
                                   December 31,        December 31,
                                ------------------  ------------------
                                  2008      2007      2008      2007
                                --------  --------  --------  --------
 Cash flows from operating
  activities:
 Net income (loss)              $   (235) $  3,623  $ (2,869) $ 10,504
 Adjustments to reconcile
  net income (loss) to net cash
  provided by operating
  activities:
  Stock-based compensation         1,237     1,322     5,220     5,627
  Tax benefit relating to
   employee stock options             66     1,787       115     4,195
  Excess tax benefit related to
   stock-based compensation
   expense                          (390)   (1,789)     (390)   (3,652)
  Depreciation and amortization      233       232       904       913
  Other-than-temporary
   impairments on long term
   investments                     1,182        --     3,554        --
  Change in deferred tax
   asset/liability                (2,032)   (2,929)   (1,892)   (2,662)
  Other                              378        53       467       248
 Changes in assets
  and liabilities:
  Accounts receivable                791       819     4,848    (1,066)
  Inventories                     (1,644)   (1,060)   (2,803)   (2,592)
  Other current assets             1,067     1,108     1,287       747
  Accounts payable                  (430)      611      (660)      138
  Accrued liabilities             (1,467)     (526)   (5,024)      367
  Deferred rent                       18        53        74       215
  Deferred revenue                  (505)    1,274     1,101     3,792
  Income tax liability              (145)      456        62       116
                                --------  --------  --------  --------
   Net cash provided by
    (used in) operating
    activities                    (1,876)    5,034     3,994    16,890
                                --------  --------  --------  --------

 Cash flows from investing
  activities:
 Acquisition of property
  and equipment                     (165)     (119)     (703)   (1,000)
 Proceeds from sales of
  marketable investments           5,135    20,460    55,104    69,103
 Proceeds from maturities of
  marketable investments          11,915     4,950    30,065    31,508
 Purchase of marketable and
  long term investments           (5,737)  (33,057)  (63,822) (100,017)
 Other                                --        (6)       --       (20)
                                --------  --------  --------  --------
   Net cash provided by
    (used in) investing
    activities                    11,148    (7,772)   20,644      (426)
                                --------  --------  --------  --------

 Cash flows from financing
  activities:
 Proceeds from exercise of stock
  options and employee stock
  purchase plan                      195       627       458     4,138
 Repurchase of common stock           --        --        --   (25,000)
 Excess tax benefit related to
  stock-based compensation
  expense                            390     1,789       390     3,652
                                --------  --------  --------  --------
   Net cash provided by
    (used in) financing
    activities                       585     2,416       848   (17,210)
                                --------  --------  --------  --------

 Net increase (decrease) in
  cash and cash equivalents        9,857      (322)   25,486      (746)
 Cash and cash equivalents at
  beginning of period             26,683    11,376    11,054    11,800
                                --------  --------  --------  --------
 Cash and cash equivalents at
  end of period                 $ 36,540  $ 11,054  $ 36,540  $ 11,054
                                ========  ========  ========  ========



                            CUTERA, INC.
                  CONSOLIDATED REVENUE HIGHLIGHTS
               (in thousands, except percentage data)
                            (unaudited)

                     Three Months Ended         Twelve Months Ended
                         December 31,               December 31,
                  -------------------------  -------------------------
                    2008      2007   Change    2008      2007   Change
                  --------  --------  -----  --------  --------  -----
 Revenue By
  Geography:
 United States    $  7,417  $ 15,368    -52% $ 41,683  $ 64,084    -35%
 International      10,480    11,085     -5%   41,696    37,642    +11%
                  --------  --------         --------  --------
                  $ 17,897  $ 26,453    -32% $ 83,379  $101,726    -18%
                  ========  ========         ========  ========

 Revenue By Product
  Category:
 Products         $ 11,388  $ 18,858    -40% $ 57,998  $ 74,502    -22%
 Product upgrades    2,028     3,503    -42%    8,361    13,342    -37%
 Service             3,047     2,820     +8%   11,358     9,128    +24%
 Titan refills       1,434     1,272    +13%    5,662     4,754    +19%
                  --------  --------         --------  --------
                  $ 17,897  $ 26,453    -32% $ 83,379  $101,726    -18%
                  ========  ========         ========  ========


            

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