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Cutera Reports Third Quarter 2018 Financial Results

truSculpt® iD Sets Company Record for New System Launch
Company Achieves Sequential Gross Margin Improvement

BRISBANE, Calif., Nov. 06, 2018 (GLOBE NEWSWIRE) -- Cutera, Inc. (NASDAQ: CUTR) (“Cutera” or the “Company”), a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide, today reported financial results for the third quarter ended September 30, 2018.

Key financial and operational highlights for the third quarter of 2018 include:

  • Revenue increased 6% to $40.6 million for the third quarter and 13% to $117.3 million for the nine months ended September 30, 2018.  The United States and International operations reported 5% and 9% growth in the third quarter over the prior year period, and 15% and 10% growth year-to-date, respectively;
    • Third quarter revenue performance continues to reflect strong demand for the Secret® RF system and a record performance for the newly launched next generation body sculpting system, truSculpt® iD.
    • In its launch quarter, truSculpt iD revenue exceeded any previous product launch and was 55% greater than truSculpt 3D’s second quarter of 2017 launch performance.   
    • Third quarter International results reflect strong performances in EMEA and Asia and positions the Company well for the upcoming launch of truSculpt iD in these respective regions.  
  • Gross Margin of 54%, compared to 53% in the second quarter 2018 and 58% in the prior year period.  Sequential improvement seen in the third quarter reflects a combination of product and channel mix and benefits from operational improvement initiatives.
  • Operating expenses were 56% of revenue compared to 42% in the prior year period.  The third quarter of 2017 included a one-time $4 million facility lease termination benefit.  Non-GAAP* operating expenses were 51% of revenue compared to 50% in the prior year period, primarily reflecting $1.6 million in non-cash stock compensation in the current period vs. $1.0 million in the prior year period, and the one-time $4 million lease termination benefit.
  • GAAP Net Loss was $0.9 million, or $0.06 per fully-diluted share, while non-GAAP* net income was $1.6 million, or $0.11 per fully-diluted share.

“We remain committed to expanding Cutera’s leadership in the energy based aesthetic space while delivering long-term shareholder value,” stated Cutera President and CEO, James Reinstein. “The Company has a clearly defined growth strategy built around product innovation and strong distribution channels. Our growth initiatives include launching at least two products a year through a reinforced and expanded capital sales team. In 2018, we launched four products, three of which generate high margin revenue from Cutera products used in each procedure. We are very excited about our most recent launch, truSculpt iD, which addresses the billion-dollar body sculpting market, and set a company record for revenue contribution in its launch quarter.”

“We are also committed to improving the scalability of our business and continue to execute on our operational improvement activities,” continued Reinstein. “These initiatives will enhance the Company’s efficiency and enable Cutera to achieve its overall long-term corporate objectives.” 

2018 Financial Outlook

  • We reiterate our 2018 revenue guidance range of $165 to $170 million, a 9% - 12% increase over 2017;
  • Full year gross margin expected in a range 53% to 54% of total revenue;
  • With the revised annual revenue range issued on October 4, GAAP operating expenses are now expected to be in the range of 57% to 58% of 2018 revenue; and
  • Our non-GAAP* earnings per share is now expected to be in the range of $0.40 to $0.50.

Conference Call

The Company will host a live audio webcast for interested parties commencing today at 1:30 p.m. PST (4:30 p.m. EST).  Participating in the call will be James Reinstein, President and Chief Executive Officer and Sandra Gardiner, Executive Vice President and Chief Financial Officer.  The call will be broadcast live over the Internet, hosted at the Investor Relations section of Cutera's website at http://www.cutera.com/, and will be archived online within 24 hours of its completion through November 30, 2018. In addition, you may call 1-877-705-6003 to listen to the live broadcast.

CONTACTS:

Cutera, Inc.
Matthew Scalo
Vice President, Investor Relations & Corporate Development
415-657-5500
mscalo@cutera.com 

Investor Relations
John Mills
Partner, ICR, Inc.
646-277-1254
john.mills@icrinc.com 


About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has developed 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.

*Use of Non-GAAP Financial Measures

In this press release, in order to supplement our condensed consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, management has disclosed certain non-GAAP financial measures for the statement of operations and net income(loss) per diluted share, which exclude non-cash expenses for stock-based compensation, depreciation and amortization, as well as the net tax impact of excluding these items.  From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful information to investors and management.  We have provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure.  We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability, limited visibility, unpredictability, or unique non-recurring nature of the excluded items.

Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter, and year to year, on a regular basis and for benchmarking against other medical technology companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measure as prescribed by GAAP.  Non-GAAP financial measures for the statement of operations and net income per diluted share exclude the following:

Non-cash expenses for stock-based compensation. We have excluded the effect of stock-based compensation expenses in calculating our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We record non-cash compensation expense related to grants of options, performance and restricted stock. Depending upon the size, timing and the terms of the grants, the non-cash compensation expense may vary significantly but will recur in future periods.  We believe that excluding this item allows users of our financial statements to better review and assess both current and historical results of operations.  We also believe that excluding non-cash expenses for stock-based compensation better allows for comparisons to our peer companies;

Non-recurring lease termination income. We incurred a one-time benefit with respect to a certain lease termination transaction.  We exclude this benefit in calculating our non-GAAP operating expenses and net income measures as it relates to a unique, one-time event and has no direct impact or correlation to the operation of our on-going business. Additionally, we believe that its inclusion is potentially misleading to users of our financial statements given the lease termination income’s unique, non-recurring nature; and

Depreciation and amortization. We have excluded depreciation and amortization expense in calculating our non-GAAP operating expenses and net income measures.  Depreciation and amortization are non-cash charges to current operations.  We continue to evaluate our business performance excluding non-cash charges and believe that excluding these items allows users of our financial statements to better review and assess both current and historical results of operations.

Safe Harbor Statement

Certain statements in this press release, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These statements include, but are not limited to, Cutera’s plans, objectives, strategies, financial performance and outlook, product launches and performance, trends, prospects or future events and involve known and unknown risks that are difficult to predict.  As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” “foresee” or variations of these terms and similar expressions, or the negative of these terms or similar expressions.  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.  These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements.  There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this press release, including those described in the “Risk Factors” section of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, the Registration Statement on Form S-8 and other documents filed from time to time with the United States Securities and Exchange Commission by Cutera.

All information in this press release is as of the date of its release.  Accordingly, undue reliance should not be placed on forward-looking statements. 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. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.  Cutera's financial performance for the third quarter ended September 30, 2018, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

  
 CUTERA, INC. 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands) 
 (unaudited) 
             
     September 30,
 June 30,
 December 31,
     2018  2018  2017(1)
 Assets         
 Current assets:         
  Cash and cash equivalents $21,866  $18,432  $14,184 
  Marketable investments  5,018   10,573   21,728 
  Accounts receivable, net  25,444   22,122   20,777 
  Inventories  31,322   30,138   28,782 
  Other current assets and prepaid expenses  3,716   3,469   2,903 
   Total current assets  87,366   84,734   88,374 
             
 Property and equipment, net  2,784   2,632   2,096 
 Deferred tax asset  21,402   21,219   19,055 
 Goodwill  1,339   1,339   1,339 
 Other long-term assets  6,048   5,807   374 
   Total assets $118,939  $115,731  $111,238 
             
    Liabilities and Stockholders' Equity         
 Current liabilities:         
  Accounts payable $13,321  $10,743  $7,002 
  Accrued liabilities  22,904   22,756   26,848 
  Deferred revenue  8,939   9,288   9,461 
   Total current liabilities  45,164   42,787   43,311 
             
 Deferred revenue, net of current portion  2,380   2,519   2,195 
 Income tax liability  352   386   379 
 Other long-term liabilities  640   665   460 
   Total liabilities  48,536   46,357   46,345 
             
 Stockholders’ equity:         
  Common stock  14   14   13 
  Additional paid-in capital  68,180   66,291   62,025 
  Accumulated income  2,283   3,156   2,947 
  Accumulated other comprehensive loss  (74)  (87)  (92)
   Total stockholders' equity  70,403   69,374   64,893 
   Total liabilities and stockholders' equity $118,939  $115,731  $111,238 
             
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
  

 

 CUTERA, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 (unaudited) 
               
    Three Months Ended Nine Months Ended
    September 30, September 30, September 30, September 30,
    2018 2017(1) 2018 2017(1)
               
 Products$35,675  $33,486  $102,589  $89,688 
 Service 4,898   4,687   14,662   14,173 
 Total net revenue 40,573   38,173   117,251   103,861 
               
 Products 15,909   13,859   46,876   38,843 
 Service 2,779   2,104   8,779   6,241 
 Total cost of revenue 18,688   15,963   55,655   45,084 
   Gross profit 21,885   22,210   61,596   58,777 
   Gross margin % 54%  58%  53%  57%
               
 Operating expenses:           
  Sales and marketing 14,479   13,148   43,102   36,708 
  Research and development 3,244   3,467   10,895   9,393 
  General and administrative 5,160   3,379   15,501   10,143 
  Lease termination income -   (4,000)  -   (4,000)
   Total operating expenses 22,883   15,994   69,498   52,244 
 Income (loss) from operations (998)  6,216   (7,902)  6,533 
 Interest and other income (expense), net (49)  197   (80)  746 
 Income (loss) before income taxes (1,047)  6,413   (7,982)  7,279 
 Provision (benefit) for income taxes (174)  225   (3,505)  166 
 Net income (loss)$(873) $6,188  $(4,477) $7,113 
               
 Net income (loss) per share:           
  Basic$(0.06) $0.44  $(0.33) $0.51 
  Diluted$(0.06) $0.42  $(0.33) $0.48 
               
 Weighted-average number of shares used in per share calculations:      
  Basic 13,851   13,973   13,717   13,917 
  Diluted 13,851   14,767   13,717   14,733 
               
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
  

 

 CUTERA, INC. 
 CONSOLIDATED FINANCIAL HIGHLIGHTS
 (in thousands, except percentage data)
 (unaudited) 
            
     Three Months Ended  % Change Nine Months Ended  % Change
     Q3 Q3 Q3 '18 Vs Q3 Q3 Q3 '18 Vs
     2018
 2017(1) Q3 '17 2018
 2017(1) Q3 '17
 Revenue By Geography:                
   United States $24,329  $23,275  +5% $73,597  $64,058  +15%
   International  16,244   14,898  +9%  43,654   39,803  +10%
   Total Net Revenue $40,573  $38,173  +6% $117,251  $103,861  +13%
   International as a percentage of total revenue  40%  39%    37%  38%  
                    
 Revenue By Product Category:                
  Systems                
   - North America $22,628  $21,869  +3% $67,458  $58,955  +14%
   - Rest of World  10,569   9,993  +6%  28,269   26,014  +9%
   Total Systems  33,197   31,862  +4%  95,727   84,969  +13%
  Consumables  1,055   595  +77%  2,881   1,743  +65%
  Skincare  1,423   1,029  +38%  3,981   2,976  +34%
   Total Products  35,675   33,486  +7%  102,589   89,688  +14%
                    
  Service  4,898   4,687  +5%  14,662   14,173  +3%
   Total Net Revenue $40,573  $38,173  +6% $117,251  $103,861  +13%
                    
                    
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
                    
                    
     Three Months Ended    Nine Months Ended   
     Q3 Q3   Q3 Q3  
     2018
 2017
   2018
 2017
  
 Pre-tax Stock-Based Compensation Expense:                
   Cost of revenue $196  $101    $576  $377   
   Sales and marketing  541   394     1,744   1215   
   Research and development  163   157     617   633   
   General and administrative  731   345     2,587   1398   
     $1,631  $997    $5,524  $3,623   
                    

 

 CUTERA, INC.  
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (in thousands)  
 (unaudited)  
   
     Three Months Ended  Nine Months Ended 
     September 30, September 30,  September 30, September 30, 
     2018 2017(1)  2018 2017(1) 
 Cash flows from operating activities:              
 Net income (loss) $  (873) $  6,188   $  (4,477) $  7,113  
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
  Stock-based compensation    1,631     997      5,524     3,623  
  Depreciation of tangible assets    305     258      849     750  
  Amortization of contract acquisition costs    482     -      1,304     -  
  Change in deferred tax asset    (183)    -      (3,507)    -  
  Provision for doubtful accounts receivable    390     (6)     877     (9) 
  Other    240     (16)     215     (58) 
 Changes in assets and liabilities:              
  Accounts receivable    (3,712)    (1,407)     (5,544)    (3,048) 
  Inventories    (1,184)    (6,815)     (2,540)    (8,751) 
  Other current assets and prepaid expenses    (228)    (88)     (797)    (633) 
  Other long-term assets    (723)    -      (2,301)    (1) 
  Accounts payable    2,578     1,512      6,319     3,207  
  Accrued liabilities    148     3,223      (4,177)    4,757  
  Other long-term liabilities    35     -      105     -  
  Deferred revenue    (488)    (132)     58     652  
  Income tax liability    (34)    1      (27)    3  
   Net cash provided by (used in) operating activities    (1,616)    3,715      (8,119)    7,605  
                  
 Cash flows from investing activities:              
 Acquisition of property, equipment and software    (633)    (233)     (1,214)    (443) 
 Disposal of property and equipment    3     13      41     53  
 Proceeds from sales of marketable investments    -     2,400      13,044     9,154  
 Proceeds from maturities of marketable investments    5,550     14,800      8,050     39,612  
 Purchase of marketable investments    -     (18,293)     (4,390)    (44,156) 
   Net cash provided by (used in) investing activities    4,920     (1,313)     15,531     4,220  
                  
 Cash flows from financing activities:              
 Repurchases of common stock    -     (6,735)     -     (13,776) 
 Proceeds from exercise of stock options and employee stock purchase plan    565     695      3,603     4,566  
 Taxes paid related to net share settlement of equity awards    (307)    (165)     (2,971)    (1,332) 
 Payments on capital lease obligations    (128)    (92)     (362)    (274) 
   Net cash provided by (used in) financing activities    130     (6,297)     270     (10,816) 
                  
 Net increase (decrease) in cash and cash equivalents    3,434     (3,895)     7,682     1,009  
 Cash and cash equivalents at beginning of period    18,432     18,679      14,184     13,775  
 Cash and cash equivalents at end of period $  21,866   $   14,784   $  21,866   $   14,784  
                  
                  
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented. 
                  

 

 CUTERA, INC. 
 RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 TO  NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 (unaudited) 
        
     Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
     GAAP Adjustments* Non-GAAP GAAP(1) Adjustments*  Non-GAAP
                  
 Net revenue $40,573  $-   $40,573  $38,173  $-   $38,173 
 Cost of revenue  18,688   (261)(a)  18,427   15,963   (188)(a)  15,775 
   Gross profit  21,885   261    22,146   22,210   188    22,398 
   Gross margin %  54%     55%  58%     59%
                  
 Operating expenses:              
  Sales and marketing  14,479   (1,183)(b)  13,296   13,148   (560)(b)  12,588 
  Research and development  3,244   (182)(c)  3,062   3,467   (162)(c)  3,305 
  General and administrative  5,160   (792)(d)  4,368   3,379   (345)(d)  3,034 
  Lease termination income  -   -    -   (4,000)  4,000 (e)  - 
   Total operating expenses  22,883   (2,157)   20,726   15,994   2,933    18,927 
 Income (loss) from operations   (998)  2,418    1,420   6,216   (2,745)   3,471 
 Interest and other income (expense), net  (49)  -    (49)  197   -    197 
 Income (loss) before income taxes  (1,047)  2,418    1,371   6,413   (2,745)   3,668 
 Provision (benefit) for income taxes  (174)  (39)(f)  (213)  225   (92)(f)  133 
 Net income (loss) $(873) $2,457   $1,584  $6,188  $(2,653)  $3,535 
                  
 Net income (loss) per share:              
  Basic $(0.06)    $0.11  $0.44     $0.25 
  Diluted $(0.06)    $0.11  $0.42     $0.24 
                  
 Weighted-average number of shares used in per share calculations:              
  Basic  13,851      13,851   13,973      13,973 
  Diluted  13,851      14,258   14,767      14,767 
                  
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
                  
                  
 Operating expenses as a % of net revenue GAAP    Non-GAAP GAAP(1)    Non-GAAP
  Sales and marketing  35.7%     32.8%  34.4%     33.0%
  Research and development  8.0%     7.5%  9.1%     8.7%
  General and administrative  12.7%     10.8%  8.9%     7.9%
  Lease termination income  0.0%     0.0%  -10.5%     0.0%
      56.4%     51.1%  41.9%     49.6%
                  
                  
 * Fiscal third quarter of 2018 and 2017 Non-GAAP results exclude the effect of the below mentioned adjustments ($000s): 
 a) Adjustment of $261 and $188 for 2018 and 2017, respectively, included non-cash expenses of $65 and $87 related to depreciation, and $196 and $101 of stock-based compensation.
 b) Adjustment of $1,183 and $560 for 2018 and 2017, respectively, included non-cash expenses of $642 and $166 related to depreciation and amortization, and $541 and $394 of stock-based compensation.
 c) Adjustment of $182 and $162 for 2018 and 2017, respectively, included non-cash expenses of $19 and $5 related to depreciation, and $163 and $157 of stock-based compensation.
 d) Adjustment of $792 and $345 for 2018 and 2017, respectively, included non-cash expenses of $61 and $0 related to depreciation and $731 and $345 for stock-based compensation.
 e) Adjustment of $4,000 represents non-recurring lease termination income.
 f) Adjustment of $39 and $92 for 2018 and 2017, respectively, relates to the net impact of excluding the Non-GAAP adjustments from our tax provision.  The 2018 adjustment excludes a discrete tax benefit of $0.25M related to excess stock deduction activity in the quarter.

 

 CUTERA, INC. 
 RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 TO  NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 (unaudited) 
        
     Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
     GAAP Adjustments* Non-GAAP GAAP(1) Adjustments*  Non-GAAP
                  
 Net revenue $117,251  $-   $117,251  $103,861  $-   $103,861 
 Cost of revenue  55,655   (802)(a)  54,853   45,084   (612)(a)  44,472 
   Gross profit  61,596   802    62,398   58,777   612    59,389 
   Gross margin %  53%     53%  57%     57%
                  
 Operating expenses:              
  Sales and marketing  43,102   (3,509)(b)  39,593   36,708   (1,714)(b)  34,994 
  Research and development  10,895   (668)(c)  10,227   9,393   (648)(c)  8,745 
  General and administrative  15,501   (2,698)(d)  12,803   10,143   (1,399)(d)  8,744 
  Lease termination income  -   -    -   (4,000)  4,000 (e)  - 
   Total operating expenses  69,498   (6,875)   62,623   52,244   239    52,483 
 Income (loss) from operations   (7,902)  7,677    (225)  6,533   373    6,906 
 Interest and other income (expense), net  (80)  -    (80)  746   -    746 
 Income (loss) before income taxes  (7,982)  7,677    (305)  7,279   373    7,652 
 Provision (benefit) for income taxes  (3,505)  130 (f)  (3,375)  166   (80)(f)  86 
 Net income (loss) $(4,477) $7,547   $3,070  $7,113  $453   $7,566 
                  
 Net income (loss) per share:              
  Basic $(0.33)    $0.22  $0.51     $0.54 
  Diluted $(0.33)    $0.21  $0.48     $0.51 
                  
 Weighted-average number of shares used in per share calculations:              
  Basic  13,717      13,717   13,917      13,917 
  Diluted  13,717      14,285   14,733      14,733 
                  
 (1) As of January 1, 2018, the Company adopted the requirements of ASC 606 using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.
                  
                  
 Operating expenses as a % of net revenue
 GAAP    Non-GAAP GAAP(1)    Non-GAAP
  Sales and marketing
  36.8%     33.8%  35.3%     33.7%
  Research and development
  9.3%     8.7%  9.0%     8.4%
  General and administrative
  13.2%     10.9%  9.8%     8.4%
  Lease termination income
  0.0%     0.0%  -3.9%     0.0%
      59.3%     53.4%  50.3%     50.5%
                  
                  
 * Year-to-date September 30, 2018 and 2017 Non-GAAP results exclude the effect of the below mentioned adjustments ($000s):
 a) Adjustment of $802 and $612 for 2018 and 2017, respectively, included non-cash expenses of $226 and $235 related to depreciation, and $576 and $377 of stock-based compensation.
 b) Adjustment of $3,509 and $1,714 for 2018 and 2017, respectively, included non-cash expenses of $1,765 and $499 related to depreciation and amortization, and $1,744 and $1,215 of stock-based compensation.
 c) Adjustment of $668 and $648 for 2018 and 2017, respectively, included non-cash expenses of $51 and $15 related to depreciation, and $617 and $633 of stock-based compensation.
 d) Adjustment of $2,698 and $1,399 for 2018 and 2017, respectively, included non-cash expenses of $111 and $1 related to depreciation and $2,587 and $1,398 for stock-based compensation.
 e) Adjustment of $4,000 represents non-recurring lease termination income.
 f) Adjustment of ($130) and $80 for 2018 and 2017, respectively, relates to the net impact of excluding the Non-GAAP adjustments from our tax provision.  The 2018 adjustment excludes a discrete tax benefit of $2.85M related to excess stock deduction activity.
                  
Tuesday, November 6, 2018 - 16:05