Intuitive Surgical Announces $189.4 Million Fourth Quarter Revenue, Up 68 Percent

January 31, 2008 at 4:07 PM EST

SUNNYVALE, Calif., Jan. 31, 2008 (PRIME NEWSWIRE) -- Intuitive Surgical, Inc. (Nasdaq:ISRG), the industry leader in surgical robotics, today reported fourth quarter 2007 revenue of $189.4 million, increasing 68% from $112.6 million for the fourth quarter of 2006. Fourth quarter 2007 revenue growth was driven by continued robotic procedure adoption and higher da Vinci(r) Surgical System sales.

Fourth quarter 2007 instruments and accessories revenue increased 68% to $56.1 million from $33.3 million during the fourth quarter of 2006. Fourth quarter 2007 da Vinci(r) Surgical Systems revenue increased 73% to $108.6 million from $63.0 million during the fourth quarter of 2006. Fourth quarter 2007 service and training revenue increased 52% to $24.7 million from $16.3 million during the fourth quarter of 2006.

Revenue for the year ended December 31, 2007 totaled $600.8 million, increasing 61% from $372.7 million for the year ended December 31, 2006.



                        Three Months Ended      Twelve Months Ended
                            December 31,           December 31,
                       ----------------------- -----------------------
 Revenue ($ Millions)   2007    2006  Increase  2007    2006  Increase
 --------------------  ------  ------ -------- ------  ------ --------
 Instruments/
  Accessories          $ 56.1  $ 33.3   $ 22.8 $191.7  $111.7   $ 80.0
 Systems                108.6    63.0     45.6  324.4   205.9    118.5
 Service/Training        24.7    16.3      8.4   84.7    55.1     29.6
                       ----------------------- -----------------------
                       $189.4  $112.6   $ 76.8 $600.8  $372.7   $228.1
                       ======================= =======================

Fourth quarter 2007 operating income increased 107% to $73.4 million, compared with $35.4 million for the fourth quarter of 2006. Operating results for the fourth quarter of 2007 included $10.1 million of stock-based compensation expense in accordance with the Financial Accounting Standards Board SFAS 123R, compared with $6.8 million for the fourth quarter of 2006.

Fourth quarter 2007 net income increased 108% to $49.2 million, compared with $23.6 million for the fourth quarter of 2006. Diluted earnings per share increased to $1.24 for the fourth quarter of 2007 from $0.62 for the fourth quarter of 2006.

Net income for the year ended December 31, 2007 was $144.5 million, or $3.70 per diluted share, compared to net income of $72.0 million, or $1.89 per diluted share for the year ended December 31, 2006.

Intuitive ended the fourth quarter of 2007 with cash, cash equivalents and investments of $635 million, up $102 million from September 30, 2007 and $305 million from December 31, 2006.

Commenting on the announcement, Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, "We are pleased with our fourth quarter revenue, income, and cash flow growth. Robotic surgery momentum is strong as we continue to partner with our customers to deliver increasing patient value by improving surgical outcomes and reduced surgical trauma."

The Company will also announce these results at a conference call today at 1:30 pm PDT. The dial-in numbers for the call are 888-323-7915 for participants located in the U.S. and 210-839-8500 for participants located outside the U.S. The passcode is ISRG and the meeting leader is Ms. Sarah Norton. To access financial information that will be discussed on the call, please visit Intuitive Surgical's website at www.intuitivesurgical.com.

About Intuitive's Products:

The da Vinci(r) Surgical System consists of a surgeon's viewing and control console having an integrated, high-performance InSite(r) 3-D, high definition vision system, a patient-side cart consisting of three or four robotic arms that position and precisely maneuver endoscopic instruments and an endoscope, and a variety of articulating EndoWrist(r) 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(r) 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.

Intuitive(r), da Vinci(r), da Vinci(r) S, InSite(r), and EndoWrist(r) are trademarks or registered trademarks of Intuitive Surgical, Inc.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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: timing and success of product development and market acceptance of developed products; 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 Intuitive Surgical operates; and unanticipated manufacturing disruptions; delays in regulatory approvals of new manufacturing facilities or the inability to meet demand for products. Words such as "estimate," "project," "plan," "intend," "expect," "anticipate," "believe" and similar 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 to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.



                         INTUITIVE SURGICAL, INC.
                UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                  (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                            Three months ended
                                    ----------------------------------
                                      Dec. 31,   Sept. 30     Dec. 31,
                                    ----------------------------------
                                       2007        2007        2006
                                    ----------------------------------
 Revenue:
     Products                       $  164,702  $  135,053  $   96,287
     Services                           24,744      21,851      16,280
                                    ----------  ----------  ----------
        Total revenue                  189,446     156,904     112,567

 Cost of revenue:
     Products                           42,587      38,305      29,161
     Services                           11,659      10,129       8,461
                                    ----------  ----------  ----------
        Total cost of revenue*          54,246      48,434      37,622

     Gross profit                      135,200     108,470      74,945

 Operating expenses:
     Selling, general and
      administrative                    45,694      40,163      31,050
     Research and development           16,124      14,319       8,448
                                    ----------  ----------  ----------
         Total operating expenses*      61,818      54,482      39,498

 Income from operations                 73,382      53,988      35,447

 Interest and other income, net          8,432      12,220       4,181
                                    ----------  ----------  ----------
 Income before income taxes             81,814      66,208      39,628
 Provision for income taxes             32,660      25,289      15,987
                                    ----------  ----------  ----------
 Net lncome                         $   49,154  $   40,919  $   23,641
                                    ==========  ==========  ==========
 Earnings per share:
         Basic                      $     1.28  $     1.08  $     0.64
                                    ==========  ==========  ==========
         Diluted                    $     1.24  $     1.04  $     0.62
                                    ==========  ==========  ==========
 Shares used in computing earnings
  per share:
         Basic                          38,364      38,033      37,009
                                    ==========  ==========  ==========
         Diluted                        39,756      39,271      38,241
                                    ==========  ==========  ==========


 *  Includes stock-based compensation expense of $1.6 million, $1.4
    million and $1.0 million in total cost of revenue and $8.5
    million, $7.3 million and $5.8 million in total operating expenses
    for the three months ended December 31, 2007, September 30, 2007
    and December 31, 2006, respectively.





                         INTUITIVE SURGICAL, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                     Year ended
                                                     December 31,
                                                ----------------------
                                                    2007       2006
                                                ----------------------

 Revenue:
     Products                                   $  516,089  $  317,599
     Services                                       84,739      55,083
                                                ----------  ----------
        Total revenue                              600,828     372,682

 Cost of revenue:
     Products                                      145,654      97,615
     Services                                       40,888      27,231
                                                ----------  ----------
        Total cost of revenue*                     186,542     124,846
     Gross profit                                  414,286     247,836

 Operating expenses:
     Selling, general and administrative           158,685     110,703
     Research and development                       48,859      29,778
                                                ----------  ----------
         Total operating expenses*                 207,544     140,481

 Income from operations                            206,742     107,355

 Interest and other income, net                     30,492      12,783
                                                ----------  ----------
 Income before income taxes                        237,234     120,138
 Provision for income taxes                         92,697      48,094
                                                ----------  ----------

 Net lncome                                     $  144,537  $   72,044
                                                ==========  ==========
 Earnings per share:
         Basic                                  $     3.82  $     1.96
                                                ==========  ==========
         Diluted                                $     3.70  $     1.89
                                                ==========  ==========
 Shares used in computing earnings per share:
         Basic                                      37,831     36,737
                                                ==========  ==========
         Diluted                                    39,021     38,093
                                                ==========  ==========


 * Includes stock compensation expense of  $5.8 million and $3.9
   million in total cost of revenue and $30.5 million and $21.4
   million in total operating expenses for the year ended December 31,
   2007 and 2006, respectively.




                          INTUITIVE SURGICAL, INC.
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                              (IN THOUSANDS)

                                    12/31/2007   9/30/2007  12/31/2006
                                    ----------  ----------  ----------
 Cash, cash equivalents, and
  investments                       $  635,381  $  533,489  $  330,296
 Accounts receivable, net              130,370     120,456      94,680
 Inventory                              32,416      26,773      24,295
 Property and equipment, net            68,093      64,153      59,939
 Goodwill                              110,740     112,170     118,240
 Deferred tax assets                    24,577      36,211      31,677
 Other assets                           38,421      18,995      12,663
                                    ----------  ----------  ----------
      Total assets                  $1,039,998  $  912,247  $  671,790
                                    ==========  ==========  ==========

 Accounts payable and other
  accrued liabilities               $   96,632  $   63,525  $   44,700
 Deferred revenue                       54,692      48,571      37,385
                                    ----------  ----------  ----------
      Total liabilities                151,324     112,096      82,085
 Stockholders' equity                  888,674     800,151     589,705
                                    ----------  ----------  ----------
      Total liabilities and
       stockholders' equity         $1,039,998  $  912,247  $  671,790
                                    ==========  ==========  ==========

CONTACT: Intuitive Surgical
Ben Gong
408-523-2175
Sarah Norton
408-523-2446