Intuitive Surgical Announces Fourth Quarter Earnings

Intuitive Surgical Announces Fourth Quarter Earnings

SUNNYVALE, Calif., Jan. 23, 2014 (GLOBE NEWSWIRE) -- Intuitive Surgical, Inc.
(Nasdaq:ISRG), the industry leader in robotic-assisted surgery, reported
revenue consistent with their January 14^th press release of $576 million for
the fourth quarter of 2013, down approximately 5% compared with $609 million
for the fourth quarter of 2012.

Fourth quarter of 2013 instruments and accessories revenue increased 6% to
$268 million from $254 million in the fourth quarter of 2012. The growth in
instruments and accessories revenue is the result of growth in da Vinci^®
surgical procedures. da Vinci surgical procedures grew approximately 12% in
the fourth quarter of 2013 compared to the fourth quarter of 2012, driven
primarily by the growth in U.S. general surgery procedures, U.S. gynecologic
procedures, and urology procedures outside of the U.S.

Fourth quarter of 2013 systems revenue was $205 million, a decrease of 23%
compared with $265 million during the fourth quarter of 2012. During the
fourth quarter of 2013, Intuitive Surgical sold 138 da Vinci Surgical Systems
compared with sales of 175 systems during the same period last year. System
sales were down in the fourth quarter of 2013 primarily as a result of lower
U.S. sales reflecting moderating growth in benign gynecology, combined with
changing hospital capital spending priorities associated with the
implementation of the Affordable Care Act.

Fourth quarter of 2013 service revenue increased 14% to $103 million, compared
with $91 million during the fourth quarter of 2012, reflecting growth in the
installed base of da Vinci Surgical Systems.

Fourth quarter of 2013 operating income decreased to $209 million, compared
with $248 million in the fourth quarter of 2012. Operating results for the
fourth quarter of 2013 included $42 million of non-cash share-based
compensation expense, compared with $38 million for the fourth quarter of
2012.

Intuitive Surgical's income tax rate for the fourth quarter of 2013 was 23%,
compared with 31% for the fourth quarter of 2012.

Fourth quarter of 2013 net income was $166 million, or $4.28 per diluted
share, compared with $175 million, or $4.25 per diluted share, for the fourth
quarter of 2012.

Revenue for the year ended December31, 2013 totaled $2,265 million, an
increase of 4% compared with $2,179 million for the year ended December31,
2012.Net income was $671 million for the year ended December31, 2013, or
$16.73 per diluted share, compared with net income of $657 million, or $15.98
per diluted share, for the year ended December31, 2012. Net income for the
years ended December31, 2013 and 2012, included one-time tax benefits of $34
million and $47 million, respectively, associated with various items,
including the expiration of the statutes of limitations in multiple
jurisdictions.Excluding these one-time benefits, net income and earnings per
share for the years ended December31, 2013 and 2012, would have been $637
million, or $15.88 per share and $610 million, or $14.84 per share,
respectively.

Intuitive Surgical ended the fourth quarter of 2013 with $2.8 billion in cash,
cash equivalents and investments, reflecting an increase of $222 million
during the quarter.

Commenting on the announcement, Dr. Gary Guthart, President and CEO of
Intuitive Surgical, said, "While 2013 has been a challenging year, our teams
are well positioned heading into 2014 and deeply committed to our mission of
improving surgery for those who need it. For 2014, we are focused on expanding
use ofda Vinciin general surgery, particularly colorectal surgery and
single-incision surgery, supporting worldwide gynecology and urology growth,
broadening our stapling andSingle-Sitelaunches, and continuing to strengthen
our capabilities in international markets, particularly Europe and Japan."

Additional supplemental financial and procedure information has been posted to
the Investor Relations section of the Intuitive website at:
http://phx.corporate-ir.net/phoenix.zhtml?c=122359&p=irol-IRHome.

Intuitive Surgical will discuss these results at a conference call today at
1:30 pm PST. 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.

Forward-Looking Statements

This press release contains forward-looking statements, including statements
regarding supporting future growth, broadening launches of our instruments,
and strengthening our capabilities in our international markets.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
December31, 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 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
                                 December31, 2013 September30, December31,
                                                    2013          2012
Revenue:                                                        
Instruments and accessories       $268.2          $239.1      $253.8
Systems                           204.6             158.5         264.9
Services                          103.4             101.4         90.6
Total revenue                     576.2             499.0         609.3
Cost of revenue:                                                
Product                           144.2             112.0         141.4
Service                           34.0              30.3          30.0
Total cost of revenue (1)         178.2             142.3         171.4
Gross profit                      398.0             356.7         437.9
Operating expenses:                                             
Selling, general, and             147.7             139.3         148.1
administrative
Research and development          41.7              43.2          41.7
Total operating expenses (1)      189.4             182.5         189.8
Income from operations (2)        208.6             174.2         248.1
Interest and other income, net    5.9               3.9           3.7
Income before taxes               214.5             178.1         251.8
Income tax expense (3)            48.3              21.3          76.9
Net income                        $166.2          $156.8      $174.9
Net income per share:                                           
Basic                             $4.36           $4.06       $4.37
Diluted                           $4.28           $3.99       $4.25
Shares used in computing net                                    
income per share:
Basic                             38.1              38.6          40.0
Diluted                           38.8              39.3          41.2
(1) Includes share-based                                        
compensation expense as follows:
Total cost of revenue             $7.6            $8.8        $6.9
Total operating expenses          $34.0           $41.6       $31.4
(2) Includes amortization of                                    
purchased intangibles as follows:
Income from operations            $4.7            $5.3        $5.9
(3) Includes one-time benefits
associated with the expiration of $ —               $ 26.2        $ —
the statutes of limitations in
multiple jurisdictions


INTUITIVE SURGICAL, INC.
UNAUDITED TWELVE MONTHS ENDED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
                                                                    
                                                          Twelve Months Ended
                                                          2013       2012
Revenue:                                                             
Instruments and accessories                                $1,032.9 $903.3
Systems                                                    834.9      932.9
Services                                                   397.3      342.6
Total revenue                                              2,265.1    2,178.8
Cost of revenue:                                                     
Product                                                    543.4      495.3
Service                                                    127.5      113.2
Total cost of revenue (1)                                  670.9      608.5
Gross profit                                               1,594.2    1,570.3
Operating expenses:                                                  
Selling, general, and administrative                       574.0      522.2
Research and development                                   167.7      170.0
Total operating expenses (1)                               741.7      692.2
Income from operations (2)                                 852.5      878.1
Interest and other income, net                             18.4       15.8
Income before taxes                                        870.9      893.9
Income tax expense (3)                                     199.9      237.3
Net income                                                 $ 671.0    $ 656.6
Net income per share:                                                
Basic                                                      $17.12   $16.50
Diluted                                                    $16.73   $15.98
Shares used in computing net income per share:                       
Basic                                                      39.2       39.8
Diluted                                                    40.1       41.1
(1) Includes share-based compensation expense as follows:            
Total cost of revenue                                      $30.3    $27.0
Total operating expenses                                   $138.6   $126.3
(2) Includes amortization of purchased intangibles as                
follows:
Income from operations                                     $21.3    $23.1
(3) Includes one-time discrete tax benefits as follows:              
Expiration of the statutes of limitations in multiple      $26.2    $38.0
jurisdictions
Benefit from new IRS guidance relating to the Section 199  $—       $8.5
Domestic Production Deduction
Reinstatement of the 2012 federal R&D tax credit           $8.2     $—


INTUITIVE SURGICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
                                                          
                                              December 31, December31,
                                               2013         2012
Cash, cash equivalents and investments         $2,753.9   $2,920.5
Accounts receivable, net                       301.4        370.3
Inventories                                    179.6        121.5
Property, plant and equipment, net             309.9        241.8
Goodwill                                       137.4        138.1
Deferred tax assets                            135.7        96.3
Other assets                                   132.4        170.7
Total assets                                   $3,950.3   $4,059.2
Accounts payable and other accrued liabilities             
Deferred revenue                               $247.2     $292.7
Total liabilities                              201.7        186.4
Stockholders' equity                           448.9        479.1
Total liabilities and stockholders' equity     3,501.4      3,580.1
                                              $3,950.3   $4,059.2

CONTACT: Investor Relations
         (408) 523-2161
 
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