Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | NOTE 1—SUMMARY Description of Operations and Principles of Consolidation Cutera, Inc. (“Cutera” or the “Company”) is a global provider of laser and energy-based aesthetic systems for practitioners worldwide. The Company designs, develops, manufactures, distributes and markets light and energy-based product platforms for use by physicians and other qualified practitioners, enabling them to offer safe and effective aesthetic treatments to their customers. The Company currently markets the following system platforms: excel, enlighten, Juliet, Secret RF, truSculpt xeo Titan, truSculpt 3D truSculpt iD Juliet Secret RF third Titan , truSculpt 3D truSculpt iD Headquartered in Brisbane, California, the Company has wholly-owned subsidiaries that are currently operational in Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, Spain, Switzerland and the United Kingdom. The Company’s wholly owned subsidiary in Italy is currently dormant. These active subsidiaries market, sell and service the Company’s products outside of the United States. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated. Use of Estimates The preparation of Consolidated Financial Statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the amounts reported of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial Statements and the accompanying notes, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ materially from those estimates. On an ongoing basis, management evaluates its estimates, including those related to warranty obligations, sales commission, accounts receivable and sales allowances, valuation of inventories, fair values of goodwill, useful lives of property and equipment, assumptions regarding variables used in calculating the fair value of the Company's equity awards, expected achievement of performance based vesting criteria, fair value of investments, the standalone selling price of the Company's products and services, the customer life and period of benefit used to capitalize and amortize contracts acquisition costs, variable consideration, contingent liabilities, recoverability of deferred tax assets, and effective income tax rates, among others. Management bases estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. R isks and Uncertainties The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not Comparability The Company adopted the new revenue standard effective January 1, 2018, not December 31, 2018 December 31, 2018 December 31, 2017. December 31, 2018 December 31, 2017 not December 31, 2018 December 31, 2017. Recent Accounting Pronouncements Not In February 2016, 2016 02, 842 July 2018, 2018 11, 2016 02 2018 2018 11 not July 2018, 2018 10, 842, 2016 02. 2016 02 January 1, 2019 The Company will adopt ASC Topic 842 January 1, 2019, not not The Company expects that this standard will have a material effect on our financial statements. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new right-of-use (“ROU”) assets and lease liabilities on our balance sheet for our auto, office, and embedded leases; and the requirement to provide significant new disclosures about our leasing activities. Upon the adoption of ASC Topic 842, $10.0 $11.0 The new standard also provides practical expedients for an entity’s ongoing accounting. The Company will elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not not not not Recently Adopted Accounting Pronouncements In May 2014, 2014 09, 606, December 15, 2017, December 15, 2016. first 2018 not See “Revenue Recognition,” for additional accounting policy and transition disclosures. On January 26, 2017, No. 2017 04, 350 one not 2 two 350 20 35 3A The amendment is effective for the Company for its fiscal years beginning after December 15, 2019. January 1, 2017 ( 350 20 65 3 2017 04—Intangibles—Goodwill 350 October 1, 2018. no See ” Goodwill and Other Intangible Assets” in Note 3 In June 2018, No. 2018 07, 718 1 2 3 606. December 15, 2018, no 606. January 1, 2019 not Revenue The Company adopted ASC Topic 606, January 1, 2018, not January 1, 2018. January 1, 2018 606, not 606. Upon adoption of ASC Topic 606, $3.8 14 January 1, 2018 first 2018: ● $237,000 ● $151,000 one ● $210,000 ● $4.7 2.5 ● $1.2 606 The following table summarizes the effects of adopting ASC Topic 606 December 31, 2018: As reported under ASC Topic 606 Adjustments Balances under Prior GAAP (In thousands) Other long-term assets $ 5,971 $ (5,217) $ 754 Deferred revenue 12,566 (106) 12,460 Retained earnings (deficit) (24,010) 4,610 (19,400) The following table summarizes the effects of adopting ASC Topic 606 December 31, 2018: As reported under Topic 606 Adjustments Balances under Prior GAAP (In thousands) Products revenue $ 142,535 $ 274 $ 142,261 Service revenue 20,185 280 19,905 Sales and marketing 58,420 540 58,960 Interest and other income, net* (123) 297 174 * Included in interest and other income, net, is the estimated interest expense for advance payment related to service contracts under the new revenue standard. Adoption of the standard had no As part of the Company's adoption of ASC Topic 606, not one one not not Revenue recognition Revenue recognition- Period before January 1, 2018 - 606 The Company recognized revenue under ASC Topic 605 606 January 1 2018. 605, ● Persuasive evidence of an arrangement exists; ● The price is fixed or determinable; ● Delivery has occurred or services have been rendered; and ● Collectability is reasonably assured. Transfer of title and risk of ownership occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. Revenue is recorded net of customer and distributor discounts. When collectability is not not Multiple-element Arrangements A multiple-element arrangement includes the sale of one one For multiple-element arrangements, judgments are required as to the allocation of the proceeds received from an arrangement to the multiple elements of the arrangement. For multiple element arrangements the Company allocates revenue to all deliverables based on their relative selling prices in accordance with the FASB Accounting Standards Codification (“ASC”) 605 25. third not With respect to the sale of its earlier generation of the truSculpt truSculpt not truSculpt truSculpt Customer Marketing Arrangements The Company has a customer marketing and incentive program called “Cutera Bucks” for its North America customers through which it offers various sales incentives and discounts and pays or reimburses customers for qualifying expenses associated with practice set-up, advertising procedures related to the system purchased, and other expenses. The Company records such incentives as a reduction of revenue at the time when the sale of the system is recorded. Service Revenue The Company also offers customers extended service contracts. Revenue under service contracts is recognized on a straight-line basis over the period of the applicable service contract. Revenue from services performed in the absence of a service contract, including installation and training revenue, is recognized when the related services are performed and collectability is reasonably assured. Service revenue billed on a time and material basis, from customers whose systems are not December 31, 2017 2016 $18.8 $19.0 Bill and Hold Arrangement Under ASC 605 2017 one third no $938,000 2017. no 2016. Revenue recognition- Period after January 1, 2018 - 606 Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time. Revenue from performance obligations that are transferred to customers over time accounted for approximately 12% twelve December 31, 2018. The Company has certain system sale arrangements that contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are distinct. The Company’s products and services are distinct if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer, and if the Company’s promise to transfer the products or service to the customer is separately identifiable from other promises in the contract. The Company’s system sale arrangements include a combination of the following performance obligations: the system and software license (considered as one For the Company’s system sale arrangements that include an extended service contract, the period of service commences at the expiration of the Company’s standard warranty offered at the time of the system sale. The Company considers the extended service contracts terms in the arrangements that are legally enforceable to be performance obligations. Other than extended service contracts and marketing services (which are satisfied over time), the Company generally satisfies all of the performance obligations at a point in time. Systems, system accessories (hand pieces), training, time and materials services are also sold on a stand-alone basis, and related performance obligations are satisfied at a point in time. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. Nature of Products and Services Systems System revenue represents the sale of a system or an upgrade of an existing system. A system consists of a console that incorporates a universal graphic user interface, a laser or other energy based module, control system software and high voltage electronics, as well as one Pearl Pearl Fractional The Company offers customers the ability to select the system that best fits their practice at the time of purchase and then to cost-effectively add applications to their system as their practice grows. This provides customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue. The Company concludes that the system or upgrade and the right to use the embedded software represent a single performance obligation as the software license is integral to the functionality of the system or upgrade. The Company does not enlighten enlighten enlighten For systems sold directly to end-customers that are credit approved, revenue is recognized when the Company transfers control to the end-customer, which occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. The Company recognizes revenue on a cash basis for system sales to international direct end-customer sales that have not The Company typically receives payment for its system consoles and other accessories within 30 Skincare products The Company sells third third third Consumables (Other accessories) The Company treats its customers' purchases of replacement Titan truSculpt 3D truSculpt iD Juliet Secret RF truSculpt Extended contract services The Company offers post-warranty services to its customers through extended service contracts that cover parts and labor for a term of one, two, or three Training Sales of system to customers include training on the system to be provided within 180 not Customer Marketing Support In North America, the Company offers marketing and consulting phone support to its customers who purchase truSculpt 3D truSculpt iD six six Significant Judgments The Company combines two The Company is required to estimate the total consideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received is variable based on the specific terms of the contract The Company has not The Company determines standalone selling price ("SSP") for each performance obligation as follows: Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers. When SSP is not Training: SSP is based on observable price when sold on a standalone basis. Extended warranty/Service contracts: SSP is based on observable price when sold on a standalone basis (by customer type). Customer Marketing Support: SSP is estimated based on cost plus a margin. Set-up /Installation: Set-up or installation for all other systems (excluding the enlighten system) is immaterial in the context of the contract as the set-up or installation for systems other than enlighten. The related costs to complete set-up or installation are immaterial. The calibration and installation service of the enlighten system are treated as separate performance obligations because the Company regularly sells enlighten systems without the calibration and installation service. Loyalty Program The Company launched a customer loyalty program during the third 2018 fifth 5 th The fair value of the reward earned by loyalty program members is included in accrued liabilities and recorded as a reduction of net sales at the time the reward is earned. Cash Equivalents, and Marketable Investments The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies, commercial paper and corporate debt securities. All highly liquid investments with stated maturities of three three The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable securities have been classified and accounted for as available-for-sale securities. Investments with remaining maturities of more than one Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The Company’s financial instruments include cash equivalents, accounts receivable, accounts payable and accrued liabilities. Carrying amounts of the Company's financial instruments, approximate their fair values as of the balance sheet dates given their generally short maturities. The fair value hierarchy distinguishes between ( 1 2 three 1 3 three 820: ● Level 1: ● Level 2: not 2 not ● Level 3: no In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value. Impairment of Marketable Investments After determining the fair value of available-for-sales debt instruments, gains or losses on these securities are recorded to other comprehensive income, until either the security is sold or the Company determines that the decline in value is other-than-temporary. The primary differentiating factors that the Company considers in classifying impairments as either temporary or other-than-temporary impairments are the Company’s intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value or the maturity of the investment, the length of the time and the extent to which the market value of the investment has been less than cost and the financial condition and near-term prospects of the issuer. There were no December 31, 2018, 2017, 2016. Allowance for Sales Returns and Doubtful Accounts The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products. In cases where the Company is aware of circumstances that may Concentration of Credit Risk and Other Risks and Uncertainties The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities and other factors could negatively impact our operating results. The Company is also subject to risks related to changes in the value of our significant balance of financial instruments. Financial instruments that potentially subject the Company to concentrations of risk consist principally of cash, cash equivalents, marketable investments and accounts receivable. The Company’s cash and cash equivalents are primarily invested in deposits and money market accounts with three may not The Company invests in debt instruments, including bonds of the U.S. Government, its agencies and municipalities. The Company has also invested in other high grade investments such as commercial paper and corporate debt securities. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. By policy, the Company restricts its exposure to any single issuer by imposing concentration limits. To minimize the exposure due to adverse shifts in interest rates, the Company maintains investments at an average maturity of generally less than twelve Accounts receivable are recorded net of an allowance for doubtful accounts, and are typically unsecured and are derived from revenue earned from worldwide customers. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs credit evaluations of its customers and maintains reserves for potential credit losses. As of December 31, 2018 2017, one 4.9% December 31, 2018, 2017, 2016, 62%, 62%, 55%, 37%, 38%, 45%, No 10% December 31, 2018, 2017, 2016. Supplier concentration The Company relies on third third may Inventories Inventories are stated at the lower of cost and net realizable value, cost being determined on a standard cost basis which approximates actual cost on a first first The Company includes demonstration units within inventories. Demonstration units are carried at cost and amortized over an estimated economic life of two As of December 31, 2018 2017, $2.9 $1.9 Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation expense recognized is on a straight-line basis over the estimated useful lives of the assets, generally as follows: Useful Lives Leasehold improvements Lesser of useful life or term of lease Office equipment and furniture (in years) 3 Machinery and equipment (in years) 3 Upon sale or retirement of property and equipment, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. Maintenance and repairs are charged to operations as incurred. Depreciation expense related to property and equipment for 2018, 2017 2016, $1.2 $1.0 $0.8 Goodwill and Intangible Assets Goodwill and intangible assets with indefinite useful lives are not fourth may no The Company continues to operate in one December 31, 2018, no December 31, 2018. Warranty Obligations The Company offers post-warranty services to its customers through extended service contracts that cover replacement parts and labor for a term of one, two, or three 14 16 The Company also offers services on a time-and-materials basis for detachable hand piece replacements, parts and labor. These post-warranty services serve as additional sources of recurring revenue from the Company’s installed product base. Deferred Sales Commissions Incremental costs of obtaining a contract, including sales commissions, are capitalized and amortized on a straight-line basis over the expected customer relationship period. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts and such expense is recognized over a period associated with the revenue of the related portfolio, which is generally two three Total capitalized costs for the year ended December 31, 2018 $5.2 $1.8 December 31, 2018 Cost of Revenue Cost of revenue consists primarily of material, finished and semi-finished products purchased from third The Company's system sales include a control console, universal graphic user interface, control system software, high voltage electronics and a combination of applications (referred to as hand pieces). Hand pieces are programmed to have a limited number of uses to ensure the safety of the device to patients. The Company sells refurbished hand pieces, or "refills," of its Titan truSculpt 3D Research and Development Expenditures Research and development costs are expensed as incurred and include costs related to research, design, development, testing of products, salaries, benefits and other headcount related costs, facilities, material, third Advertising Costs Advertising costs are included as part of sales and marketing expense and are expensed as incurred. Advertising expenses for 2018, 2017 2016 $2.8 $1.8 $1.3 Stock-based Compensation The Company accounts for share-based employee compensation plans using the fair value recognition and measurement provisions under U.S. GAAP. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period. The Company estimates expected forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimated. Expected Term Expected Volatility: 50 50 Risk-Free Interest Rate: ● The fair value of stock options ("options") on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option's expected term and the price volatility of the underlying stock, to determine the fair value of award. The Company recognizes the expense associated with options using a single award approach over the requisite service period. The Company accounts for all stock options awarded to non-employees at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model. ● The fair value of restricted stock units is determined based on the closing quoted 50 ● The fair value of Performance Stock Units (“PSUs”) that have operational measurement goals, are measured at the 50 may not See Note 9 Income Taxes The Company is subject to taxes on earnings in both the U.S. and various foreign jurisdictions. As a global taxpayer, significant judgments and estimates are required in evaluating our uncertain tax positions and determining our provision for income taxes on earnings. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not 50% The Company’s effective tax rates have differed from the statutory rate primarily due to changes in the valuation allowance, foreign operations, research and development tax credits, state taxes, and certain benefits realized related to stock option activity. The Company’s current effective tax rate does not Undistributed earnings of the Company’s foreign subsidiaries at December 31, 2018 no 2017 not not In December 2017, No. 118, 118” not one 2017 fourth 2017, December 31, 2017. 2017 fourth 2018. 2017 December 31, 2018. $0.4 $7.3 $0.4 118. In January 2018, 2017 Computation of Net Income ( Loss) per Share Basic net income per share is computed using the weighted average number of shares outstanding during the period. Diluted net income per share is computed using the weighted average number of the Company’s shares and dilutive potential shares outstanding during the period. Dilutive potential shares primarily consist of employee stock options, restricted stock units, and shares to be purchased by employees under the Company’s employee stock purchase plan. GAAP requires that employee equity share options, non-vested shares, and similar equity instruments granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of equity awards, which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. For the periods presented, the accumulated other comprehensive income (loss) consisted solely of the unrealized gains or losses on the Company's available for- sale investments, net of tax. Foreign Currency The U.S. Dollar is the functional currency of the Company’s subsidiaries. Monetary assets and liabilities are re-measured into U.S. Dollars at the applicable period end exchange rate. Sales and operating expenses are re-measured at average exchange rates in effect during each period. Gains or losses resulting from foreign currency transactions are included in net income (loss) and are insignificant for each of the three December 31, 2017. three December 31, 2018. Segments The Company operates in one one not December 31, 2018, 2017, 89% 98% 13 |