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Intuitive Surgical Announces Fourth Quarter Earnings

SUNNYVALE, Calif., Jan 21, 2010 (GlobeNewswire via COMTEX) -- Intuitive Surgical, Inc. (Nasdaq:ISRG), the industry leader in surgical robotics, today reported fourth quarter of 2009 revenue of $323.0 million, up 40% compared with $231.5 million for the fourth quarter of 2008. Fourth quarter of 2009 revenue growth was driven by continued robotic procedure adoption and higher da Vinci Surgical System sales.

Fourth quarter of 2009 instruments and accessories revenue increased 39% to $113.3 million from $81.6 million in the fourth quarter of 2008. The growth in instruments and accessories revenue was primarily driven by growth in da Vinci surgical procedures of approximately 44%. Fourth quarter of 2009 systems revenue was $162.0 million, an increase of 42%, compared to $113.8 million during the fourth quarter of 2008. Fourth quarter of 2009 service revenue increased 32% to $47.8 million from $36.2 million during the fourth quarter of 2008, reflecting growth in the installed base of da Vinci Surgical Systems.

Fourth quarter of 2009 operating income increased to $128.4 million from $82.7 million during the fourth quarter of 2008. Operating results for the fourth quarter of 2009 included $25.0 million of non-cash stock-based compensation expense compared with $21.4 million for the fourth quarter of 2008.

Fourth quarter of 2009 net income was $77.6 million, or $1.95 per diluted share, compared with $50.8 million, or $1.27 per diluted share for the fourth quarter of 2008.

Revenue for the year ended December 31, 2009 totaled $1,052.2 million, increasing 20% from $874.9 million for the year ended December 31, 2008. Net income for the year ended December 31, 2009 was $232.6 million, or $5.93 per diluted share, compared to net income of $204.3 million, or $5.12 per diluted share for the year ended December 31, 2008.

Intuitive Surgical ended the fourth quarter of 2009 with cash, cash equivalents and investments of $1,172 million, up $148 million from the previous quarter.

Commenting on the announcement, Gary Guthart, President and CEO of Intuitive Surgical, said, "We are pleased with the performance of our team in the fourth quarter, our procedure growth, and as a consequence, our financial results. Led by outstanding patient outcomes, robotic surgery adoption with patients and the medical community at large continues to grow."

The Company will also announce these results at a conference call today at 1:30 pm PST. The dial-in numbers for the call are 877-909-3508 for participants located in the United States and 517-645-6051 for participants located outside the United States. The passcode is ISRG and the meeting leader is Mr. 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's Products

Intuitive Surgical, Inc. (Nasdaq:ISRG), headquartered in Sunnyvale, California, is the global technology leader in robotic-assisted, minimally invasive surgery. Intuitive Surgical develops, manufactures, and markets robotic technologies designed to improve clinical outcomes and help patients return more quickly to active and productive lives. The Company's mission is to extend the benefits of minimally invasive surgery to the broadest possible base of patients. Intuitive Surgical -- Taking surgery beyond the limits of the human hand(TM).

About the da Vinci(R) Surgical System

The da Vinci(R) System is a breakthrough surgical platform designed to enable complex surgery using a minimally invasive approach. The da Vinci(R) System consists of an ergonomic surgeon console or consoles, a patient-side cart with four interactive robotic arms, a high-performance vision system and proprietary EndoWrist(R) instruments. Powered by state-of-the-art robotic and computer technology, the da Vinci(R) System is designed to scale, filter and seamlessly translate the surgeon's hand movements into more precise movements of the EndoWrist(R) instruments. The net result is an intuitive interface with breakthrough surgical capabilities. By providing surgeons with superior visualization, enhanced dexterity, greater precision and ergonomic comfort, the da Vinci Surgical System makes it possible for more surgeons to perform minimally invasive procedures involving complex dissection or reconstruction. This ultimately has the potential to raise the standard of care for complex surgeries, translating into numerous potential patient benefits, including less pain, a shorter recovery and quicker return to normal daily activities.

Intuitive(R), da Vinci(R), da Vinci S(R), da Vinci(R) Si(TM), 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: the impact of the global economic recession and tight credit market and related impact on health care spending; possible health care reform in the United States and its implications on hospital spending, reimbursement, and fees which may be levied on certain medical device companies; 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; unanticipated manufacturing disruptions; delays in regulatory approvals of new manufacturing facilities or the inability to meet demand for products, the results of the year end audit, and the other factors under the heading "Risk Factors" in our report on Form 10-K for the year ended December 31, 2008, 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 forecasts, revenue growth, procedure growth, future financial results, and statements using 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 QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
             (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                      Three months ended
                                 -----------------------------
                                 December  September  December
                                    31,       30,        31,

                                   2009       2009      2008
                                 --------  ---------  --------

  Revenue:
   Instruments & Accessories     $113,268   $100,822   $81,575
   Systems                        161,956    135,459   113,752
   Services                        47,814     43,853    36,218
                                 --------  ---------  --------
    Total revenue (1)             323,038    280,134   231,545

  Cost of revenue:
   Products                        71,418     65,336    51,669
   Services                        18,461     15,794    14,536
                                 --------  ---------  --------
    Total cost of revenue (2)      89,879     81,130    66,205

   Gross profit                   233,159    199,004   165,340

  Operating expenses:
   Selling, general and
    administrative                 79,006     69,863    61,739
   Research and development (3)    25,771     24,650    20,864
    Total operating expenses     --------  ---------  --------
     (2)                          104,777     94,513    82,603

  Income from operations          128,382    104,491    82,737

  Interest and other income,
   net                              4,123      4,362     5,525
                                 --------  ---------  --------

  Income before income taxes      132,505    108,853    88,262

  Provision for income taxes       54,953     44,329    37,504
                                 --------  ---------  --------


  Net lncome                      $77,552    $64,524   $50,758
                                 ========  =========  ========

  Earnings per share:

    Basic                           $2.02      $1.69     $1.30
                                 ========  =========  ========


    Diluted (1)                     $1.95      $1.64     $1.27
                                 ========  =========  ========

  Shares used in computing earnings per
   share:

    Basic                          38,329     38,083    39,138
                                 ========  =========  ========


    Diluted                        39,683     39,245    39,837
                                 ========  =========  ========


  (1) The Company offered certain customers the opportunity to
   upgrade the da Vinci S Surgical Systems purchased during
   the first quarter of 2009 to the recently introduced da
   Vinci Si Surgical Systems, at a discount from the list
   price of the upgrade. These customers were also given the
   opportunity to return certain da Vinci S accessories in
   exchange for da Vinci Si accessories. The customers were
   given until June 30, 2009 to accept the offer. As of March
   31, 2009, the Company had deferred $20.1 million associated
   with these offers.

In the second quarter of 2009, the
   Company recognized $13.8 million of revenue originally
   deferred in the first quarter and associated with offers
   declined, upgrades completed or accessories delivered. In
   the third quarter of 2009, the Company recognized the
   remaining $6.3 million of revenue originally deferred in
   the first quarter and associated with upgrades completed or
   accessories delivered. Excluding the $6.3 million of
   revenue recognized, the total revenue and diluted earnings
   per share during the three months ended September 30, 2009
   was $273.9 million and $1.55, respectively.

  (2) Includes stock compensation expense of $3.7 million,
   $3.7 million, and $3.1 million in total cost of revenue and
   $21.3 million, $20.9 million, and $18.3 million in total
   operating expenses for the three months ended December 31,
   2009, September 30, 2009, and December 31, 2008,
   respectively.

  (3) Includes amortization of purchased intellectual property
   of $3.6 million, $3.6 million and $3.2 million in research
   and development expenses for the three months ended
   December 31, 2009, September 30, 2009, and December 31,
   2008, respectively.

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

                                       Year Ended

                                     December 31,
                                  -------------------

                                     2009      2008
                                  ---------  --------

  Revenue:
   Instruments & Accessories       $389,445  $292,989
   Systems                          490,456   455,336
   Services                         172,267   126,594
                                  ---------  --------
    Total revenue                 1,052,168   874,919

  Cost of revenue:
   Products                         237,562   200,074
   Services                          63,554    54,068
                                  ---------  --------
    Total cost of revenue (1)       301,116   254,142

    Gross profit                    751,052   620,777

  Operating expenses:
   Selling, general and
    administrative                  278,511   230,570
   Research and development
    (2)                              95,102    79,372
    Total operating expenses      ---------  --------
     (1)                            373,613   309,942

  Income from operations            377,439   310,835

  Interest and other income,
   net                               18,672    24,368
                                  ---------  --------

  Income before income taxes        396,111   335,203

  Provision for income taxes        163,505   130,888
                                  ---------  --------


  Net lncome                       $232,606  $204,315
                                  =========  ========

  Earnings per share:

    Basic                             $6.07     $5.26
                                  =========  ========


    Diluted                           $5.93     $5.12
                                  =========  ========

  Shares used in computing
   earnings per share:

    Basic                            38,298    38,877
                                  =========  ========


    Diluted                          39,205    39,943
                                  =========  ========

  (1)  Includes stock compensation expense of $14.3
   million and $11.4 million in total cost of revenue
   and $82.7 million and $65.3 million in total
   operating expenses for the years ended December
   31, 2009 and 2008, respectively.

  (2)  Includes amortization of purchased
   intellectual property of $14.4 million and $9.1
   million in research and development expenses for
   the years ended December 31, 2009 and 2008,
   respectively.

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


                                      12/31/2009      9/30/2009     12/31/2008
                                      ----------     ----------     ----------
  Cash, cash equivalents, and
   investments                        $1,171,980     $1,023,984       $901,873
  Accounts receivable, net               205,384        186,530        170,107
  Inventory                               57,600         56,646         63,460
  Property and equipment, net            125,741        122,865        117,021
  Goodwill                               110,740        110,740        110,740
  Deferred tax assets                     60,680         60,257         45,357

  Other assets                            77,591         76,789         66,066
                                      ----------     ----------     ----------

     Total assets                     $1,809,716     $1,637,811     $1,474,624
                                      ==========     ==========     ==========

  Accounts payable and other accrued
   liabilities                          $171,916       $155,924       $128,606
  Deferred revenue                       100,517         91,625         79,252
                                      ----------     ----------     ----------
    Total liabilities                    272,433        247,549        207,858

  Stockholders' equity                 1,537,283      1,390,262      1,266,766
                                      ----------     ----------     ----------
    Total liabilities and
     stockholders' equity             $1,809,716     $1,637,811     $1,474,624
                                      ==========     ==========     ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Intuitive Surgical, Inc.

CONTACT:
Intuitive Surgical, Inc.
Ben Gong
408-523-2175
Laura Lee Luna
408-523-2161