SEC Filings

10-K
INTUITIVE SURGICAL INC filed this Form 10-K on 02/02/2018
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As of December 31, 2017, 1.9 million shares of RSUs were expected to vest with an aggregate intrinsic value of $700.1 million. The aggregate vesting date fair value of RSUs vested was $144.2 million, $65.3 million, and $29.5 million during the years ended December 31, 2017, 2016, and 2015, respectively.
Share-Based Compensation Expense
The following table summarizes share-based compensation expense (in millions):
 
Years Ended December 31,
 
2017
 
2016
 
2015
Cost of sales—products
$
28.1

 
$
25.2

 
$
22.8

Cost of sales—services
14.0

 
12.4

 
12.9

Total cost of sales
42.1

 
37.6

 
35.7

Selling, general and administrative
111.8

 
97.4

 
94.7

Research and development
56.0

 
43.0

 
37.7

Share-based compensation expense before income taxes
209.9

 
178.0

 
168.1

Income tax effect
49.2

 
56.1

 
51.8

Share-based compensation expense after income taxes
$
160.7

 
$
121.9

 
$
116.3

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans and rights to acquire stock granted under the Company’s employee stock purchase plan. The weighted average estimated fair values of stock options, the rights to acquire stock granted, and RSUs, as well as the weighted average assumptions used in calculating the fair values of stock options and rights to acquire stock under the ESPP that were granted during the years ended December 31, 2017, 2016, and 2015, were as follows:
 
Years Ended December 31,
STOCK OPTION PLANS
2017
 
2016
 
2015
Risk-free interest rate
1.8
%
 
1.1
%
 
1.6
%
Expected term (years)
4.1

 
4.2

 
4.3

Volatility
25
%
 
26
%
 
28
%
Fair value at grant date
$
67.03

 
$
47.06

 
$
43.82

EMPLOYEE STOCK PURCHASE PLAN
 
 
 
 
 
Risk-free interest rate
1.2
%
 
0.6
%
 
0.4
%
Expected term (years)
1.2

 
1.2

 
1.2

Volatility
28
%
 
30
%
 
31
%
Fair value at grant date
$
79.77

 
$
57.57

 
$
48.91

RESTRICTED STOCK UNITS
 
 
 
 
 
Fair value at grant date
$
249.34

 
$
184.59

 
$
170.64

As share-based compensation expense recognized in the Consolidated Statements of Income during the years ended December 31, 2017, 2016, and 2015, is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. For share-based compensation accounting, the Company elected to continue estimating expected forfeitures at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimated.
As of December 31, 2017, there were a total of $69.9 million, $278.9 million, and $18.4 million of total unrecognized compensation expense related to unvested stock options, restricted stock units, and employee stock purchases, respectively. The unrecognized compensation expense is expected to be recognized over a weighted average period of 2.3 years for unvested stock options, 2.4 years for unvested restricted stock units, and 1.5 years for rights granted to acquire common stock under the ESPP.

87

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