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Press release from GlobeNewswire (a Nasdaq OMX company)

Intuitive Surgical Announces Second Quarter Earnings

Thursday, July 18, 2013

Intuitive Surgical Announces Second Quarter Earnings

13:05 EDT Thursday, July 18, 2013

SUNNYVALE, Calif., July 18, 2013 (GLOBE NEWSWIRE) -- Intuitive Surgical, Inc. (Nasdaq:ISRG), the industry leader in robotic-assisted surgery, today reported second quarter of 2013 revenue, consistent with its July 8th release, of $579 million, up approximately 8% compared with $537 million for the second quarter of 2012.

Second quarter of 2013 instruments and accessories revenue increased 18% to $265 million from $224 million in the second quarter of 2012. The growth in instruments and accessories revenue is the result of growth in da Vinci® surgical procedures and increased utilization of new products. da Vinci surgical procedures grew approximately 18% in the second quarter of 2013 compared to the second quarter of 2012, driven primarily by growth in general surgery, U.S. gynecology and international urology procedures, partially offset by a decline in U.S. prostatectomy procedures.

Second quarter of 2013 systems revenue was $216 million, a decrease of 6%, compared with $229 million during the second quarter of 2012. During the second quarter of 2013, we sold 143 da Vinci Surgical Systems compared with sales of 150 systems during the same period last year. Second quarter of 2013 service revenue increased 18% to $98 million from $83 million during the second quarter of 2012, reflecting growth in the installed base of da Vinci Surgical Systems.

Second quarter of 2013 operating income decreased to $219 million from $225 million in the second quarter of 2012. Operating results for the second quarter of 2013 included $39 million of non-cash stock-based compensation expense compared with $33 million for the second quarter of 2012.

Intuitive Surgical's income tax rate for the second quarter of 2013 was 28.6% compared with 32.4% for the second quarter of 2012.

Second quarter of 2013 net income was $159 million, or $3.90 per diluted share, compared with $155 million, or $3.75 per diluted share, for the second quarter of 2012.

Intuitive Surgical ended the second quarter of 2013 with $3.0 billion in cash, cash equivalents and investments, reflecting a decrease of $89 million during the quarter. $270 million in cash was used to repurchase approximately 546,000 shares of Intuitive Surgical's common stock in the second quarter of 2013 at an average price of $494 per share.

Intuitive Surgical will also announce these results at a conference call today at 1:30 pm PDT. The dial-in numbers for the call are (800) 230-1092 for participants located in the United States and (612) 288-0337 for participants located outside the United States. The host is Dr. Gary Guthart. To access financial information that will be discussed on the call, please visit Intuitive Surgical's website at www.intuitivesurgical.com.

About Intuitive Surgical, Inc.

Intuitive Surgical, Inc. (Nasdaq:ISRG), headquartered in Sunnyvale, Calif., is the global leader in robotic-assisted, minimally invasive surgery. Intuitive Surgical develops, manufactures and markets the da Vinci Surgical System. Intuitive Surgical's mission is to extend the benefits of minimally invasive surgery to those patients who can and should benefit from it.

About the da Vinci Surgical System

The da Vinci Surgical System is a surgical platform designed to enable complex surgery using a minimally invasive approach. The da Vinci Surgical System consists of an ergonomic surgeon console or consoles, a patient-side cart with three or four interactive arms, a high-performance vision system and proprietary EndoWrist® instruments. Powered by state-of-the-art technology, the da Vinci Surgical System is designed to scale, filter and seamlessly translate the surgeon's hand movements into more precise movements of the EndoWrist instruments. The net result is an intuitive interface with improved surgical capabilities. By providing surgeons with superior visualization, enhanced dexterity, greater precision and ergonomic comfort, the da Vinci Surgical System makes it possible for skilled surgeons to perform more minimally invasive procedures involving complex dissection or reconstruction. For more information about clinical evidence related to da Vinci Surgery, please visit www.intuitivesurgical.com/company/clinical-evidence/

da Vinci® and EndoWrist® are trademarks of Intuitive Surgical, Inc.

This press release contains forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including the following: the impact of global and regional economic and credit market conditions on health care spending; health care reform legislation in the United States and its impact on hospital spending, reimbursement and fees which will be levied on certain medical device revenues; decreases in hospital admissions and actions by payers to limit or manage surgical procedures; timing and success of product development and market acceptance of developed products; procedure counts; regulatory approvals, clearances and restrictions; guidelines and recommendations in the health care and patient communities; intellectual property positions and litigation; competition in the medical device industry and in the specific markets of surgery in which we operate; unanticipated manufacturing disruptions or the inability to meet demand for products; the results of legal proceedings to which we are or may become a party; product liability and other litigation claims; adverse publicity regarding the Company and the safety of our products and adequacy of training; our ability to expand into foreign markets; and other risk factors under the heading "Risk Factors"' in our report on Form 10-K for the year ended December 31, 2012, as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Statements concerning forecasts, revenue growth, procedure growth, future financial results and statements using Words such as "estimates," "projects," "believes," "anticipates," "plans," "expects," "intends," "may," "will," "could," "should," "would," "targeted" and similar words and expressions are intended to identify forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update or release any revisions to these forward-looking statements, except as required by law.

INTUITIVE SURGICAL, INC.
UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
       
  Three months ended
  June 30,
2013
March 31,
2013
June 30,
2012
       
Revenue:      
Instruments and accessories  $ 264.5  $ 261.1  $ 223.7
Systems  215.9  255.9  229.4
Services  98.1  94.4  83.4
Total revenue  578.5 611.4 536.5
       
Cost of revenue:      
Product 140.9 146.3 122.9
Service 32.4 30.8 27.2
Total cost of revenue (1) 173.3 177.1 150.1
       
Gross profit 405.2 434.3 386.4
       
Operating expenses:      
Selling, general, and administrative 145.5 141.5 120.9
Research and development 41.2 41.6 40.2
Total operating expenses (1) 186.7 183.1 161.1
       
Income from operations (2)  218.5  251.2  225.3
       
Interest and other income (expense), net 4.3 4.3 4.0
       
Income before taxes  222.8  255.5  229.3
Income tax expense 63.7 66.6 74.4
       
Net income  $ 159.1  $ 188.9  $ 154.9
       
Net income per share:      
Basic  $ 3.99  $ 4.69  $ 3.88
       
Diluted   $ 3.90  $ 4.56  $ 3.75
       
Shares used in computing net income per share:      
Basic  39.9  40.3  39.9
       
Diluted  40.8  41.4  41.3
       
       
(1) Includes share-based compensation expense as follows:      
Total cost of revenue  $ 7.1  $ 6.8  $ 5.8
Total operating expenses  $ 31.6  $ 31.4  $ 27.5
       
(2) Includes amortization of purchased intangibles as follows:      
Income from operations  $ 5.7  $ 5.6  $ 6.1
 
 
INTUITIVE SURGICAL, INC.
UNAUDITED SIX MONTHS ENDED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
     
  Six months ended
June 30,
  2013 2012
     
Revenue:    
Instruments and accessories  $ 525.6  $ 431.5
Systems  471.8  436.0
Services  192.5  164.2
Total revenue 1,189.9 1,031.7
     
Cost of revenue:    
Product 287.2 234.6
Service 63.2 54.8
Total cost of revenue (1) 350.4 289.4
     
Gross profit 839.5 742.3
     
Operating expenses:    
Selling, general, and administrative 287.0 245.1
Research and development 82.8 78.6
Total operating expenses (1) 369.8 323.7
     
Income from operations (2)  469.7  418.6
     
Interest and other income (expense), net 8.6 7.8
     
Income before taxes  478.3  426.4
Income tax expense 130.3 128.0
     
Net income  $ 348.0  $ 298.4
     
Net income per share:    
Basic  $ 8.68  $ 7.52
     
Diluted   $ 8.47  $ 7.26
     
Shares used in computing net income per share:    
Basic  40.1  39.7
     
Diluted  41.1  41.1
     
     
(1) Includes share-based compensation expense as follows:    
Total cost of revenue  $ 13.9  $ 11.7
Total operating expenses  $ 63.0  $ 56.0
     
(2) Includes amortization of purchased intangibles as follows:  
Income from operations  $ 11.3  $ 12.0
 
 
INTUITIVE SURGICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
     
  June 30, 2013 December 31, 2012
Cash, cash equivalents and investments  $ 3,027.2  $ 2,920.5
Accounts receivable, net  358.6  370.3
Inventories  169.3  121.5
Property, plant and equipment, net  267.6  241.8
Goodwill  137.4  138.1
Deferred tax assets  115.7  96.3
Other assets  125.5  170.7
Total assets  $ 4,201.3  $ 4,059.2
     
Accounts payable and other accrued liabilities  $ 284.3  $ 292.7
Deferred revenue  198.2  186.4
Total liabilities  482.5  479.1
Stockholders' equity  3,718.8  3,580.1
Total liabilities and stockholders' equity  $ 4,201.3  $ 4,059.2
CONTACT: Investor Relations
(408) 523-2161

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