Intuitive Surgical Announces $10.9 Million Third Quarter Revenue, Up 38% Over Prior Year; Year to Date Revenue Up 124%

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Oct. 24, 2001--Intuitive Surgical, Inc. (Nasdaq:ISRG), the leader in precision surgical robotics, today reported sales of $10.9 million in the third quarter of 2001, up 38% from $7.9 million in sales reported in the third quarter of 2000. The sale and installation of 10 da Vinci(TM) Surgical Systems drove third quarter 2001 revenue growth, compared with 8 da Vinci(TM) Surgical Systems in the third quarter of 2000. Third quarter 2001 sales decreased $1.8 million, or 15% compared to second quarter 2001. The expected decline was due primarily to lower seasonal demand during the summer months. Intuitive reported total year-to-date sales of $35.7 million, up 124% from $15.9 million for the nine months ended September 30, 2000. The total worldwide installed base of da Vinci(TM) Surgical Systems is now 74.

Total third quarter systems sales were $9.2 million, instruments and accessories $1.1 million, and service revenue $0.6 million. The following table summarizes third quarter 2001 revenue compared to the prior year and prior quarter:

                         Q301     Q300   Change        Q201    Change
Revenue ($ Millions)       
Systems                  $9.2     $7.0     $2.2       $10.9     ($1.7)
Instruments/Accys        $1.1     $0.7     $0.4        $1.4     ($0.3)
Service                  $0.6     $0.2     $0.4        $0.4      $0.2
                       ------     ----     ----        ----      ----
                        $10.9     $7.9     $3.0       $12.7     ($1.8)

System Population
Installations              10        8        2          12        (2)
Total Installed Base       74       29       45          64        10

Intuitive's gross margin for the third quarter of 2001 was 47%, compared with 40% for the third quarter of 2000. Third quarter 2001 gross margin of 47% declined 1% compared to 48% in the second quarter of 2001.

Net loss for the third quarter of 2001 was $4.8 million, compared to a net loss of $4.0 million for the third quarter of 2000. Third quarter 2001 basic and diluted net loss per share was $0.13, compared to a net loss per share of $0.12 for the third quarter of 2000. Net loss for the nine months ended September 30, 2001 was $12.5 million, compared to $13.5 million in the previous year.

Commenting on the announcement, Lonnie Smith, President and CEO of Intuitive Surgical said: "We are satisfied with our third quarter financial results. We ended Q3 gaining substantial momentum for the next quarter and beyond. We expect Q4 revenue to surpass previous quarters' results."

The company will also discuss these results at a conference call today at 1:30 PM PT. The dial-in numbers for this call are 877-915-2768 for U.S. calls and 712-257-2760 for international calls. The passcode is ISRG and the meeting leader is Mr. Lonnie Smith.

About the da Vinci(TM) Surgical System:

The da Vinci(TM) Surgical System consists of a surgeon's viewing and control console having an integrated, high-performance InSite(TM) 3-D vision system, a patient-side cart consisting of three robotic arms that position and precisely maneuver endoscopic instruments and an endoscope, and a variety of articulating EndoWrist(TM) Instruments. By integrating computer-enhanced technology with surgeons' technical skills, Intuitive believes that its System enables surgeons to perform better surgery in a manner never before experienced. The da Vinci(TM) Surgical System seamlessly and directly translates the surgeon's natural hand, wrist and finger movements on instrument controls at the surgeon's console outside the patient's body into corresponding micro-movements of the instrument tips positioned inside the patient through small puncture incisions, or ports.

The statements contained in this release may be deemed to contain "forward-looking statements." Such statements are indicated by words or phrases such as "anticipate," "estimate," "projects," "believes," "intends," "expects" and similar words and phrases. Actual results may differ materially from those expressed or implied in any forward-looking statement as a result of certain risks and uncertainties, including, without limitation, competition and market acceptance of the Company's products, ability to obtain regulatory approvals and third-party reimbursement, ability to raise additional capital and other risks and uncertainties detailed in the Company's Securities and Exchange Commission filings. Prospective investors are cautioned not to place undue reliance on such forward-looking statements.

Intuitive(R), da Vinci(TM), InSite(TM), and EndoWrist(TM) are trademarks of Intuitive Surgical, Inc.

                   INTUITIVE SURGICAL, INCORPORATED
           CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                 Three months ended
                                               Sept. 30,   Sept. 30,
                                                 2001        2000

Sales                                           10,861       7,859
Cost of sales                                    5,750       4,708
     Gross profit                                5,111       3,151

Operating costs and expenses:
     Research and development                    3,493       3,172
     Selling, general and administrative         7,452       5,395
         Total operating costs and expenses     10,945       8,567

Loss from operations                            (5,834)     (5,416)
Interest income/(expense)                        1,036       1,396

Net loss                                      $ (4,798)   $ (4,020)

Weighted average shares outstanding
     used to compute net loss per share         36,056      34,665

Loss per share - basic and diluted            $  (0.13)   $  (0.12)


                   INTUITIVE SURGICAL, INCORPORATED
           CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                Nine months ended
                                              Sept. 30,   Sept. 30,
                                                 2001        2000

Sales                                           35,660      15,918
Cost of sales                                   18,972      10,743
     Gross profit                               16,688       5,175

Operating costs and expenses:
     Research and development                   10,060       8,624
     Selling, general and administrative        21,952      12,510
         Total operating costs and expenses     32,012      21,134

Loss from operations                           (15,324)    (15,959)
Interest income/(expense)                        2,876       2,417

Net loss                                      $(12,448)   $(13,542)

Weighted average shares outstanding
     used to compute net loss per share         35,704      20,016

Loss per share - basic and diluted            $  (0.35)   $  (0.68)



                   INTUITIVE SURGICAL, INCORPORATED
                CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                            (IN THOUSANDS)

                                     September 30,  June 30,
                                          2001        2001

Assets
Current assets:
    Cash, cash equivalents and
     short-term investments              64,274      74,471
    Accounts receivable, net             15,557       9,686
    Inventories, net                      7,595       6,791
    Prepaid expenses                      2,723       1,784
      Total current assets               90,149      92,732

Property and equipment, net               6,761       6,574
Other assets                              3,502       3,697

Total assets                            100,412     103,003

Liabilities and stockholders' equity
Current Liabilities:
    Accounts payable                      6,182       6,935
    Accrued compensation and
     employee benefits                    2,379       1,980
    Warranty provision                    1,555       1,593
    Accrued liabilities                   1,590       1,729
    Deferred revenue                      3,434       2,198
    Current portion of notes payable      1,903       2,110
      Total current liabilities          17,043      16,545

Notes payable                               963         772

Stockholders' equity
    Common stock                             36         36
    Additional paid-in capital          188,877     188,202
    Deferred compensation                (1,145)     (1,457)
    Accumulated deficit                (106,118)   (101,320)
    Accumulated other comprehensive
     income                                 756         225
      Total stockholders' equity         82,406      85,686

Total liabilities and stockholders'
  equity                                100,412     103,003