Cutera(R) Reports Second Quarter 2008 Results

Second quarter 2008 revenue increased 4% to $24.8 million, from $23.9 million in the same period last year. International revenue for the second quarter of 2008 increased 41% compared to the second quarter of 2007, and U.S. revenue declined 18% when compared to the same period last year. Cutera generated $0.05 of earnings per diluted share, and cash from operations was $3.5 million. As of June 30, 2008, the company had $107.8 million in cash, marketable securities and long-term investments - with no debt.

"We are pleased to have returned to revenue growth and profitability during this challenging economic period, and are particularly pleased with our continued growth internationally as well as our overall increase in Service and Titan refill revenue," said Kevin Connors, President and CEO.

"U.S. revenue for the second quarter of 2008 was sequentially flat compared to the first quarter of 2008, but declined compared to the year ago quarter. We believe this decline was primarily driven by an economic slowdown which caused physicians to delay their decision to make capital equipment purchases. To manage our business through this uncertain environment, we recently implemented expense reduction measures with a focus of bringing expenses in line with current revenue levels. These initiatives are expected to improve our operating margins and help us achieve higher profitability."

He added, "Our Pearl Fractional development efforts are continuing to produce positive clinical results, and patient responses are exceeding our expectations. This new device, designed to improve pronounced wrinkles by targeting the deep dermal layer, would enable us to compete in the expanding fractional ablative market. FDA approval is pending, and we plan to start commercial shipments within the next ninety days."

Mr. Connors concluded, "Our business model has enabled us to maintain healthy gross margins and a strong balance sheet, even during this challenging environment. We will keep our focus on managing our expenses while growing our revenue, and remain confident in the long-term prospects of this industry. Cutera is looking forward to its planned launch of Pearl Fractional, as well as more new products in the coming quarters."

Conference Call:

The conference call to discuss these results is scheduled to begin at 2:00 p.m. PDT (5:00 p.m. EDT) on August 4, 2008. 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. PDT (11:59 p.m. EDT) on August 18, 2008. 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 and manage expenses, expectations regarding new products and applications, plans to improve the performance of its worldwide sales and distribution network and outlook 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 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; general economic conditions; 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 August 4, 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 second quarter June 30, 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) June 30, December 31, 2008 2007 --------- ------------ Assets Current assets: Cash and cash equivalents $ 20,464 $ 11,054 Marketable investments 75,872 88,510 Accounts receivable, net 9,157 10,692 Inventories 8,609 7,533 Deferred tax asset 7,899 8,058 Other current assets 2,137 1,955 --------- ------------ Total current assets 124,138 127,802 Property and equipment, net 1,232 1,361 Long term investments 11,478 7,429 Intangibles, net 1,126 1,227 Deferred tax asset, net of current portion 1,021 834 --------- ------------ Total assets $138,995 $ 138,653 ========= ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,914 $ 2,350 Accrued liabilities 11,664 13,587 Deferred revenue 5,943 4,971 --------- ------------ Total current liabilities 19,521 20,908 Deferred rent 1,676 1,639 Deferred revenue, net of current portion 5,891 5,593 Income tax liability 1,558 1,160 --------- ------------ Total liabilities 28,646 29,300 --------- ------------ Stockholders' equity: Common stock 13 13 Additional paid-in capital 77,737 74,871 Retained earnings 34,398 34,279 Accumulated other comprehensive income (loss) (1,799) 190 --------- ------------ Total stockholders' equity 110,349 109,353 --------- ------------ Total liabilities and stockholders' equity $138,995 $ 138,653 ========= ============

CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2008 2007 2008 2007 ---------- ------- -------- ------- Net revenue $ 24,754 $23,873 $46,372 $47,130 Cost of revenue 9,271 7,910 17,490 15,691 ---------- ------- -------- ------- Gross profit 15,483 15,963 28,882 31,439 ---------- ------- -------- ------- Operating expenses: Sales and marketing 10,361 9,190 20,710 18,253 Research and development 2,004 1,923 3,789 3,671 General and administrative 3,023 2,900 5,964 5,918 ---------- ------- -------- ------- Total operating expenses 15,388 14,013 30,463 27,842 ---------- ------- -------- ------- Income (loss) from operations 95 1,950 (1,581) 3,597 Interest and other income, net 857 1,108 1,758 2,110 ---------- ------- -------- ------- Income before income taxes 952 3,058 177 5,707 Provision for income taxes 291 1,024 58 1,918 ---------- ------- -------- ------- Net income $ 661 $ 2,034 $ 119 $ 3,789 ========== ======= ======== ======= Net income per share: Basic $ 0.05 $ 0.15 $ 0.01 $ 0.28 ========== ======= ======== ======= Diluted $ 0.05 $ 0.14 $ 0.01 $ 0.26 ========== ======= ======== ======= Weighted-average number of shares used in per share calculations: Basic 12,764 13,610 12,753 13,413 ========== ======= ======== ======= Diluted 13,465 14,666 13,457 14,655 ========== ======= ======== =======

CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Cash flows from operating activities: Net income $ 661 $ 2,034 $ 119 $ 3,789 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 1,327 1,446 2,657 2,788 Tax benefit (shortfall) related to employee stock options (51) 787 (51) 1,497 Excess tax benefit related to stock-based compensation expense - (545) - (833) Depreciation and amortization 228 228 451 454 Change in deferred tax asset/liability (13) 124 (28) 184 Other 30 73 106 153 Changes in assets and liabilities: Accounts receivable (897) (596) 1,446 378 Inventories 758 (367) (1,093) (1,681) Other current assets 288 673 48 (113) Accounts payable (504) 34 (436) (285) Accrued liabilities 1,160 798 (1,923) (807) Deferred rent 3 53 37 107 Deferred revenue 482 984 1,270 1,184 Income tax liability 39 (30) 398 (56) --------- --------- --------- --------- Net cash provided by operating activities 3,511 5,696 3,001 6,759 --------- --------- --------- --------- Cash flows from investing activities: Acquisition of property and equipment (35) (417) (221) (758) Acquisition of intangibles - - - (20) Proceeds from sales of marketable investments 3,835 3,520 41,195 18,669 Proceeds from maturities of marketable investments 7,108 9,623 9,670 17,253 Purchase of marketable investments (32,290) (23,838) (44,495) (44,682) --------- --------- --------- --------- Net cash provided by (used in) investing activities (21,382) (11,112) 6,149 (9,538) --------- --------- --------- --------- Cash flows from financing activities: Proceeds from exercise of stock options and employee stock purchase plan 225 922 260 3,073 Repurchase of common stock - (2,516) - (2,516) Excess tax benefit related to stock-based compensation expense - 545 - 833 --------- --------- --------- --------- Net cash provided by (used in) financing activities 225 (1,049) 260 1,390 --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents (17,646) (6,465) 9,410 (1,389) Cash and cash equivalents at beginning of period 38,110 16,876 11,054 11,800 --------- --------- --------- --------- Cash and cash equivalents at end of period $ 20,464 $ 10,411 $ 20,464 $ 10,411 ========= ========= ========= =========

CUTERA, INC. CONSOLIDATED REVENUE HIGHLIGHTS (in thousands, except percentage data) (unaudited) Three Months Ended Six Months Ended June June 30, 30, ---------------------- ---------------------- 2008 2007 Change 2008 2007 Change ------- ------- ------ ------- ------- ------ Revenue By Geography: United States $12,383 $15,124 -18% $24,768 $30,970 -20% International 12,371 8,749 +41% 21,604 16,160 +34% ------- ------- ------- ------- $24,754 $23,873 +4% $46,372 $47,130 -2% ======= ======= ======= ======= Revenue By Product Category: Products $18,364 $17,694 +4% $33,690 $36,011 -6% Product upgrades 2,154 2,897 -26% 4,385 4,819 -9% Service 2,686 2,060 +30% 5,391 3,976 +36% Titan refills 1,550 1,222 +27% 2,906 2,324 +25% ------- ------- ------- ------- $24,754 $23,873 +4% $46,372 $47,130 -2% ======= ======= ======= =======

SOURCE: Cutera, Inc.

Cutera, Inc. Ron Santilli, Chief Financial Officer, 415-657-5500 or Investor Relations Integrated Corporate Relations, Inc. John Mills, 310-954-1100 john.mills@icrinc.com