SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report: July 26, 2006
(Date
of
earliest event reported)
INTUITIVE
SURGICAL, INC.
(exact
name of registrant as specified in its charter)
|
Delaware
|
|
000-30713
|
|
77-0416458
|
|
(State
or other jurisdiction of
incorporation or organization)
|
|
Commission
File Number
|
|
(I.R.S.
Employer Identification No.)
|
950
Kifer Road
Sunnyvale,
California 94086
(Address
of Principal executive offices, including zip code)
(408)
523-2100
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
|
Item
2.02.
|
Results
of Operations and Financial Condition.
|
On
July
26, 2006, Intuitive Surgical issued a press release announcing its financial
results for the quarter ended June 30, 2006. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated by reference into this
Item
2.02.
Intuitive
is making reference to non-GAAP financial information in the press release.
A
reconciliation of these non-GAAP financial measures to the comparable GAAP
financial measures is contained in the attached press release.
|
Item
9.01.
|
Financial
Statements and Exhibits.
|
Press
release issued by Intuitive Surgical, July 26, 2006.
(2)
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
INTUITIVE
SURGICAL, INC.
|
|||
|
Date: July
26, 2006
|
By
|
/s/ Marshall
L. Mohr
|
|
|
Name:
|
Marshall
L. Mohr
|
||
|
Title:
|
Senior
Vice President
and Chief Financial Officer
|
||
(3)
EXHIBIT
INDEX
|
Exhibit No.
|
|
Description
|
|
|
Press
Release issued by Intuitive Surgical, July 26,
2006
|
(4)
Exhibit
99.1
|
FOR
IMMEDIATE RELEASE
|
Contacts:
|
Ben
Gong
|
408-523-2175
|
|
Sarah
Norton
|
408-523-2161
|
INTUITIVE
SURGICAL ANNOUNCES $87 MILLION SECOND QUARTER REVENUE, UP
65%
SUNNYVALE,
CALIF. July 26, 2006 - Intuitive Surgical, Inc. (NASDAQ: ISRG), the industry
leader in surgical robotics, today reported second quarter 2006 sales of $87.0
million, increasing 65%
from
$52.8 million for the second quarter of 2005. Higher sales were driven by
increased
da
Vinci®
Surgical
System sales and
continued
growth
in
recurring revenue.
Intuitive
sold 39 da
Vinci®
Surgical
Systems during the second quarter of 2006, compared to 26 in the second quarter
of 2005. Second quarter 2006 system revenue increased to $48.1 million from
$28.5 million during the second quarter of 2005.
Second
quarter
2006
instrument and accessory revenue increased 61% to $26.1 million from $16.2
million during the second quarter of 2005. Instrument and accessory revenue
growth resulted from a larger installed base of da
Vinci®
Surgical
Systems
and
increased system usage.
Net
sales
for the six months ended June 30, 2006 totaled $164.3 million, increasing 74%
from 94.4 million for the first half of 2005.
|
Three
Months Ended,
|
Six
Months Ended,
|
||||||||||||||||||
|
6/30/06
|
6/30/05
|
Increase
|
6/30/06
|
6/30/05
|
Increase
|
||||||||||||||
|
Revenue
($Millions)
|
|||||||||||||||||||
|
Systems
|
$
|
48.1
|
$
|
28.5
|
$
|
19.6
|
$
|
90.5
|
$
|
49.8
|
$
|
40.7
|
|||||||
|
Instruments/Accessories
|
26.1
|
16.2
|
9.9
|
49.4
|
29.1
|
20.3
|
|||||||||||||
|
Service/Training
|
12.8
|
8.1
|
4.7
|
24.4
|
15.5
|
8.9
|
|||||||||||||
|
$
|
87.0
|
$
|
52.8
|
$
|
34.2
|
$
|
164.3
|
$
|
94.4
|
$
|
69.9
|
||||||||
|
da
Vinci® Surgical System Unit Sales
|
39
|
26
|
13
|
74
|
45
|
29
|
|||||||||||||
Second
quarter 2006 operating income was $24.5 million compared with $15.3 million
for
the second quarter of 2005. Operating results for the second quarter of 2006
included $6.5 million of stock compensation expense in accordance with Financial
Accounting Standards Board “SFAS” 123R. Excluding the $6.5 million of non-cash
stock compensation expense, second quarter 2006 operating income was $31.0
million, up 102% compared with the second quarter of 2005.
Exhibit
99.1
Second
quarter 2006 net income, including non-cash stock compensation expense, was
$16.7 million, or $0.44 per diluted share, compared with $14.8 million, or
$0.40
per diluted share for the second quarter of 2005. Excluding the impact of stock
compensation expenses, second quarter 2006 net income was $21.1 million, or
$0.55 per share, up 42% compared with the second quarter of 2005. A complete
reconciliation between GAAP and results excluding stock compensation is provided
in the attached tables.
Intuitive
ended the second quarter of 2006 with cash, cash equivalents and investments
of
$243.8 million, up $22.3 million from the previous quarter end. Cash provided
by
operations for the second quarter of 2006 was $19.7 million, net of $5.7 million
utilized during the quarter to fund working capital requirements.
Net
income for the first half of 2006, including non-cash stock compensation
expense, was $31.1 million, or $0.82 per diluted share, compared with $23.9
million, or $0.64 per diluted share for the first half of 2005. Excluding the
impact of stock compensation expenses, first half 2006 net income was $38.6
million, or $1.02 per share.
Commenting
on the announcement, Lonnie Smith, Chairman and CEO of Intuitive Surgical said,
“We are pleased with our second quarter revenue and bottom line growth, which
were driven by higher procedure volume across all of our targeted surgical
specialties. Adoption of da Vinci Surgery continues as we remain dedicated
to
providing the most effective, least invasive surgical treatment option
available.”
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 877-909-3508 for participants located
in the U.S. and 517-645-6051 for participants located outside the U.S. The
passcode is ISRG and the meeting leader is Mr. Lonnie Smith. 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®
Surgical System consists of a surgeon’s viewing and control console having an
integrated, high-performance InSite® 3-D 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® 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®
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.
Exhibit
99.1
The
Aesop®
Endoscope Positioner is a voice-activated robotic arm that automates the
critical task of endoscope positioning, providing the surgeon with direct
control over a smooth, precise and stable view of the internal surgical
field.
The
Hermes®
Control
Center is a centralized system designed to voice control a series of networked
"smart" medical devices.
#
#
#
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®,
da
Vinci®,
da
Vinci® S™,
InSite®,
EndoWrist®,
Hermes®, and Aesop®
are
trademarks or registered trademarks of Intuitive Surgical, Inc.
Exhibit
99.1
INTUITIVE
SURGICAL, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenue:
|
|||||||||||||
|
Products
|
$
|
74,211
|
$
|
44,651
|
$
|
139,880
|
$
|
78,834
|
|||||
|
Services
|
12,814
|
8,105
|
24,403
|
15,536
|
|||||||||
|
Total
revenue
|
87,025
|
52,756
|
164,283
|
94,370
|
|||||||||
|
Cost
of revenue:
|
|||||||||||||
|
Products
|
21,869
|
13,649
|
41,791
|
24,804
|
|||||||||
|
Services
|
6,179
|
3,480
|
11,835
|
6,676
|
|||||||||
|
Total
cost of revenue
|
28,048
|
17,129
|
53,626
|
31,480
|
|||||||||
|
Gross
profit
|
58,977
|
35,627
|
110,657
|
62,890
|
|||||||||
|
Operating
costs and expenses:
|
|||||||||||||
|
Selling,
general, and administrative
|
27,265
|
15,934
|
51,075
|
30,138
|
|||||||||
|
Research
and development
|
7,205
|
4,355
|
13,351
|
8,500
|
|||||||||
|
Total
operating costs and expenses
|
34,470
|
20,289
|
64,426
|
38,638
|
|||||||||
|
Income
from operations
|
24,507
|
15,338
|
46,231
|
24,252
|
|||||||||
|
Interest
and other income, net
|
3,255
|
954
|
5,458
|
1,677
|
|||||||||
|
Income
before taxes
|
27,762
|
16,292
|
51,689
|
25,929
|
|||||||||
|
Income
tax expense
|
11,080
|
1,508
|
20,549
|
2,041
|
|||||||||
|
Net
income
|
$
|
16,682
|
$
|
14,784
|
$
|
31,140
|
$
|
23,888
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$
|
0.45
|
$
|
0.42
|
$
|
0.85
|
$
|
0.69
|
|||||
|
Diluted
|
$
|
0.44
|
$
|
0.40
|
$
|
0.82
|
$
|
0.64
|
|||||
|
Shares
used in computing net income per share:
|
|||||||||||||
|
Basic
|
36,684
|
34,790
|
36,532
|
34,655
|
|||||||||
|
Diluted
|
38,124
|
37,244
|
37,974
|
37,133
|
|||||||||
Exhibit
99.1
INTUITIVE
SURGICAL, INC.
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
Three
months ended June 30, 2006
|
Three
months ended June 30, 2005
|
||||||||||||
|
GAAP
|
123R
Impact
|
Pro
Forma
|
As
Reported
|
||||||||||
|
Sales:
|
|||||||||||||
|
Products
|
$
|
74,211
|
$
|
-
|
$
|
74,211
|
$
|
44,651
|
|||||
|
Services
|
12,814
|
-
|
12,814
|
8,105
|
|||||||||
|
Total
sales
|
87,025
|
-
|
87,025
|
52,756
|
|||||||||
|
Cost
of sales:
|
|||||||||||||
|
Products
|
21,869
|
(650
|
)
|
21,219
|
13,649
|
||||||||
|
Services
|
6,179
|
(360
|
)
|
5,819
|
3,480
|
||||||||
|
Total
cost of sales
|
28,048
|
(1,010
|
)
|
27,038
|
17,129
|
||||||||
|
Gross
profit
|
58,977
|
1,010
|
59,987
|
35,627
|
|||||||||
|
%
Sales
|
67.8
|
%
|
1.1
|
%
|
68.9
|
%
|
67.5
|
%
|
|||||
|
Operating
costs and expenses:
|
|||||||||||||
|
Selling,
general, and administrative
|
27,265
|
(4,092
|
)
|
23,173
|
15,934
|
||||||||
|
Research
and development
|
7,205
|
(1,359
|
)
|
5,846
|
4,355
|
||||||||
|
Total
operating costs and expenses
|
34,470
|
(5,451
|
)
|
29,019
|
20,289
|
||||||||
|
Income
from operations
|
24,507
|
6,461
|
30,968
|
15,338
|
|||||||||
|
%
Sales
|
28.2
|
%
|
7.4
|
%
|
35.6
|
%
|
29.1
|
%
|
|||||
|
Other
income, net
|
3,255
|
-
|
3,255
|
954
|
|||||||||
|
Income
before income tax provision
|
27,762
|
6,461
|
34,223
|
16,292
|
|||||||||
|
Income
tax provision
|
11,080
|
2,087
|
13,167
|
1,508
|
|||||||||
|
Net
income
|
$
|
16,682
|
$
|
4,374
|
$
|
21,056
|
$
|
14,784
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$
|
0.45
|
$
|
0.12
|
$
|
0.57
|
$
|
0.42
|
|||||
|
Diluted
|
$
|
0.44
|
$
|
0.11
|
$
|
0.55
|
$
|
0.40
|
|||||
|
Shares
used in computing net income per share:
|
|||||||||||||
|
Basic
|
36,684
|
36,684
|
34,790
|
||||||||||
|
Diluted
|
38,124
|
38,124
|
37,244
|
||||||||||
Note
- To
supplement our consolidated financial statements presented in accordance with
generally accepted accounting principles (GAAP), we have presented “Non-GAAP
(pro forma)” information, which reflects our results based on GAAP excluding
stock compensation expense under SFAS 123R. This “Non-GAAP” information is
provided to enhance the user's overall understanding of our current financial
performance and our prospects for the future. Specifically, we believe the
“Non-GAAP” results provide useful information to both management and investors
by excluding SFAS 123R compensation charges that we believe are not indicative
of our core operating results. Further, these “Non-GAAP” results are one of the
primary indicators management uses for assessing our performance, allocating
resources and planning and forecasting future periods. These measures should
be
considered in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results.
Exhibit
99.1
INTUITIVE
SURGICAL, INC.
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
Six
months ended June 30, 2006
|
Six
months ended June 30, 2005
|
||||||||||||
|
GAAP
|
123R
Impact
|
Pro
Forma
|
As
Reported
|
||||||||||
|
Sales:
|
|||||||||||||
|
Products
|
$
|
139,880
|
$
|
-
|
$
|
139,880
|
$
|
78,834
|
|||||
|
Services
|
24,403
|
-
|
24,403
|
15,536
|
|||||||||
|
Total
sales
|
164,283
|
-
|
164,283
|
94,370
|
|||||||||
|
Cost
of sales:
|
|||||||||||||
|
Products
|
41,791
|
(1,121
|
)
|
40,670
|
24,804
|
||||||||
|
Services
|
11,835
|
(657
|
)
|
11,178
|
6,676
|
||||||||
|
Total
cost of sales
|
53,626
|
(1,778
|
)
|
51,848
|
31,480
|
||||||||
|
Gross
profit
|
110,657
|
1,778
|
112,435
|
62,890
|
|||||||||
|
%
Sales
|
67.4
|
%
|
1.0
|
%
|
68.4
|
%
|
66.6
|
%
|
|||||
|
Operating
costs and expenses:
|
|||||||||||||
|
Selling,
general, and administrative
|
51,075
|
(7,291
|
)
|
43,784
|
30,138
|
||||||||
|
Research
and development
|
13,351
|
(2,456
|
)
|
10,895
|
8,500
|
||||||||
|
Total
operating costs and expenses
|
64,426
|
(9,747
|
)
|
54,679
|
38,638
|
||||||||
|
Income
from operations
|
46,231
|
11,525
|
57,756
|
24,252
|
|||||||||
|
%
Sales
|
28.1
|
%
|
7.1
|
%
|
35.2
|
%
|
25.7
|
%
|
|||||
|
Other
income, net
|
5,458
|
-
|
5,458
|
1,677
|
|||||||||
|
Income
before income tax provision
|
51,689
|
11,525
|
63,214
|
25,929
|
|||||||||
|
Income
tax provision
|
20,549
|
4,091
|
24,640
|
2,041
|
|||||||||
|
Net
income
|
$
|
31,140
|
$
|
7,434
|
$
|
38,574
|
$
|
23,888
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$
|
0.85
|
$
|
0.21
|
$
|
1.06
|
$
|
0.69
|
|||||
|
Diluted
|
$
|
0.82
|
$
|
0.20
|
$
|
1.02
|
$
|
0.64
|
|||||
|
Shares
used in computing net income per share:
|
|||||||||||||
|
Basic
|
36,532
|
36,532
|
34,655
|
||||||||||
|
Diluted
|
37,974
|
37,974
|
37,133
|
||||||||||
Note
- To
supplement our consolidated financial statements presented in accordance with
generally accepted accounting principles (GAAP), we have presented “Non-GAAP
(pro forma)” information, which reflects our results based on GAAP excluding
stock compensation expense under SFAS 123R. This “Non-GAAP” information is
provided to enhance the user's overall understanding of our current financial
performance and our prospects for the future. Specifically, we believe the
“Non-GAAP” results provide useful information to both management and investors
by excluding SFAS 123R compensation charges that we believe are not indicative
of our core operating results. Further, these “Non-GAAP” results are one of the
primary indicators management uses for assessing our performance, allocating
resources and planning and forecasting future periods. These measures should
be
considered in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results.
Exhibit
99.1
INTUITIVE
SURGICAL, INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN
THOUSANDS)
|
6/30/06
|
12/31/05
|
||||||
|
Cash,
cash equivalents, and investments
|
$
|
243,775
|
$
|
202,739
|
|||
|
Accounts
receivable, net
|
70,530
|
52,849
|
|||||
|
Inventory,
net
|
24,638
|
15,170
|
|||||
|
Property
and equipment, net
|
58,841
|
52,225
|
|||||
|
Goodwill
|
124,035
|
124,638
|
|||||
|
Deferred
tax assets
|
27,864
|
40,758
|
|||||
|
Other
assets
|
16,155
|
13,208
|
|||||
|
Total
Assets
|
$
|
565,838
|
$
|
501,587
|
|||
|
Accounts
payable and other accrued liabilities
|
$
|
31,993
|
$
|
33,485
|
|||
|
Deferred
revenue
|
30,775
|
25,511
|
|||||
|
Total
liabilities
|
62,768
|
58,996
|
|||||
|
Stockholders'
equity
|
503,070
|
442,591
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
565,838
|
$
|
501,587
|
|||
INTUITIVE
SURGICAL, INC.
UNAUDITED
SELECTED CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
(IN
THOUSANDS)
|
Three
months ended
|
Six
months ended
|
||||||||||||
|
6/30/06
|
6/30/05
|
6/30/06
|
6/30/05
|
||||||||||
|
Net
Income
|
$
|
16,682
|
$
|
14,784
|
$
|
31,140
|
$
|
23,888
|
|||||
|
Depreciation
and amortization
|
2,189
|
1,630
|
4,363
|
3,297
|
|||||||||
|
Deferred
income tax
|
4,895
|
-
|
12,894
|
-
|
|||||||||
|
Stock
option expense
|
6,461
|
-
|
11,525
|
-
|
|||||||||
|
Tax
benefits from acquisition and employee stock option plans
|
603
|
1,454
|
603
|
1,454
|
|||||||||
|
Excess
tax benefits from stock-based compensation
|
(5,533
|
)
|
-
|
(5,533
|
)
|
-
|
|||||||
|
Changes
in operating assets and liabilities
|
(5,670
|
)
|
(7,431
|
)
|
(19,160
|
)
|
(5,796
|
)
|
|||||
|
Other,
net
|
98
|
(20
|
)
|
9
|
(78
|
)
|
|||||||
|
Net
cash provided by operating activities
|
$
|
19,725
|
$
|
10,417
|
$
|
35,841
|
$
|
22,765
|
|||||
|
Acquisition
of property and equipment
|
$
|
6,772
|
$
|
3,603
|
$
|
9,975
|
$
|
4,604
|
|||||
|
Proceeds
from issuance of common stock
|
$
|
5,152
|
$
|
2,237
|
$
|
11,653
|
$
|
9,195
|
|||||