Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 14, 2014 | |
Document Document And Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'INTUITIVE SURGICAL INC | ' |
Trading Symbol | 'ISRG | ' |
Entity Central Index Key | '0001035267 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 38,403,653 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $814 | $782.10 |
Short-term investments | 745.3 | 621.4 |
Accounts receivable, net | 239.1 | 301.4 |
Inventory | 185.5 | 179.6 |
Prepaids and other current assets | 58.8 | 38.3 |
Deferred tax assets | 34.9 | 9.6 |
Total current assets | 2,077.60 | 1,932.40 |
Property, plant and equipment, net | 320.8 | 309.9 |
Long-term investments | 1,404.30 | 1,350.40 |
Long-term deferred tax assets | 131.6 | 126.1 |
Intangible and other assets, net | 112.4 | 94.1 |
Goodwill | 147.5 | 137.4 |
Total assets | 4,194.20 | 3,950.30 |
Current liabilities: | ' | ' |
Accounts payable | 57 | 46.2 |
Accrued compensation and employee benefits | 55.4 | 70.7 |
Deferred revenue | 226.5 | 200.1 |
Other accrued liabilities | 120.6 | 63.9 |
Total current liabilities | 459.5 | 380.9 |
Other long-term liabilities | 78.1 | 68 |
Total liabilities | 537.6 | 448.9 |
Contingencies (Note 5) | ' | ' |
Stockholders’ equity: | ' | ' |
Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 0 | 0 |
Common stock, 100.0 shares authorized, $0.001 par value, 38.4 shares and 38.2 shares outstanding as of March 31, 2014 and December 31, 2013, respectively | 0 | 0 |
Additional paid-in capital | 2,629.10 | 2,519.90 |
Retained earnings | 1,023.70 | 979.4 |
Accumulated other comprehensive income | 3.8 | 2.1 |
Total stockholders’ equity | 3,656.60 | 3,501.40 |
Total liabilities and stockholders’ equity | $4,194.20 | $3,950.30 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares outstanding (in shares) | 38,400,000 | 38,200,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue: | ' | ' |
Product | $360.80 | $517 |
Service | 103.9 | 94.4 |
Total revenue | 464.7 | 611.4 |
Cost of revenue: | ' | ' |
Product | 113.8 | 146.3 |
Service | 35.5 | 30.8 |
Total cost of revenue | 149.3 | 177.1 |
Gross profit | 315.4 | 434.3 |
Operating expenses: | ' | ' |
Selling, general and administrative | 215.8 | 141.5 |
Research and development | 43 | 41.6 |
Total operating expenses | 258.8 | 183.1 |
Income from operations | 56.6 | 251.2 |
Interest and other income, net | 3.9 | 4.3 |
Income before taxes | 60.5 | 255.5 |
Income tax expense | 16.2 | 66.6 |
Net income | 44.3 | 188.9 |
Net income per share: | ' | ' |
Basic (in dollars per share) | $1.16 | $4.69 |
Diluted (in dollars per share) | $1.13 | $4.56 |
Shares used in computing net income per share: | ' | ' |
Basic (in shares) | 38.3 | 40.3 |
Diluted (in shares) | 39.1 | 41.4 |
Total comprehensive income | $46 | $190.40 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Operating activities: | ' | ' |
Net income | $44.30 | $188.90 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation | 12.3 | 10.4 |
Amortization of intangible assets | 4.7 | 5.6 |
Accretion of discounts and amortization of premiums on investments, net | 8.1 | 9.8 |
Deferred income taxes | -33.2 | -9.5 |
Income tax benefits from employee stock option plans | 2.1 | 19.9 |
Excess tax benefit from share-based compensation | -4.3 | -20.6 |
Share-based compensation expense | 40.8 | 38.2 |
Changes in operating assets and liabilities, net of effects of acquisition: | ' | ' |
Accounts receivable | 62.4 | 25.3 |
Inventories | -20.4 | -15.8 |
Prepaids and other assets | -25.1 | 18.5 |
Accounts payable | 10.3 | 10.3 |
Accrued compensation and employee benefits | -18 | -38 |
Other liabilities | 82.3 | 15 |
Net cash provided by operating activities | 166.3 | 258 |
Investing activities: | ' | ' |
Purchase of investments | -433.2 | -576 |
Proceeds from sales of investments | 53.3 | 50 |
Proceeds from maturities of investments | 195.2 | 194.7 |
Purchase of property, plant and equipment, intellectual property and business | -20.6 | -16.7 |
Net cash used in investing activities | -205.3 | -348 |
Financing activities: | ' | ' |
Proceeds from issuance of common stock, net | 66.3 | 89.3 |
Excess tax benefit from share-based compensation | 4.3 | 20.6 |
Repurchase and retirement of common stock | 0 | -145.7 |
Net cash provided by (used in) financing activities | 70.6 | -35.8 |
Effect of exchange rate changes on cash and cash equivalents | 0.3 | -0.4 |
Net increase (decrease) in cash and cash equivalents | 31.9 | -126.2 |
Cash and cash equivalents, beginning of period | 782.1 | 553.7 |
Cash and cash equivalents, end of period | $814 | $427.50 |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
DESCRIPTION OF BUSINESS | ' |
DESCRIPTION OF BUSINESS | |
Intuitive designs, manufactures and markets da Vinci® Surgical Systems and related instruments and accessories, which taken together, are advanced surgical systems that the Company considers a new generation of surgery. This new generation of surgery, which the Company calls da Vinci surgery, combines the benefits of minimally invasive surgery (“MIS”) for patients with the ease of use, precision and dexterity of open surgery. A da Vinci Surgical System consists of a surgeon’s console, a patient-side cart and a high performance vision system. The da Vinci Surgical Systems translate a surgeon’s natural hand movements, which are performed on instrument controls at a console, into corresponding micro-movements of instruments positioned inside the patient through small incisions, or ports. The da Vinci Surgical Systems are designed to provide its operating surgeons with intuitive control, range of motion, fine tissue manipulation capability and Three Dimensional (“3-D”), High-Definition (“HD”) vision while simultaneously allowing surgeons to work through the small ports enabled by MIS procedures. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements (“financial statements”) of Intuitive Surgical, Inc. and its wholly-owned subsidiaries have been prepared on a consistent basis with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2013, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosure necessary to present the financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which was filed on February 3, 2014. The results of operations for the first three months of fiscal 2014 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods. | |
Recent Accounting Pronouncements | |
In June 2013, the Financial Accounting Standards Board determined that an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss (“NOL”) carryforward or other tax credit carryforward when settlement in this manner is available under applicable tax law. This guidance is effective for the Company’s interim and annual periods beginning January 1, 2014. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. | |
Significant Accounting Policies | |
With the exception of the information provided below relating to the Company's allowance for sales returns and doubtful accounts, there has been no change in the Company's significant accounting policies described in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |
Allowance for Sales Returns and Doubtful Accounts | |
The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. | |
In April 2014, the Company offered certain customers who purchased a 4-arm da Vinci Si Surgical System in the first quarter of fiscal 2014 the opportunity to trade out their systems for a da Vinci XiTM Surgical System. Under this program, these customers will be able to return their da Vinci Si Surgical System and receive a credit, substantially equal to the price paid for the da Vinci Si Surgical System, towards the purchase of a da Vinci Xi Surgical System. These customers have until June 20, 2014, to accept the Company's offer. Subject to meeting all other criteria of the Company's revenue recognition policy, the revenue deferred will be recognized at the date the da Vinci Xi Surgical Systems and related instruments and accessories are shipped and accepted by the customers participating in the trade-in program, which is anticipated to be substantially completed by June 30, 2014. In accordance with guidance for accounting for arrangements in which return rights exist, system revenue and associated costs in an amount equal to the Company's estimate of the number of systems that will be returned have been deferred. | |
A total of $25.6 million of revenue related to shipments made in the three months ended March 31, 2014, was deferred based on the Company's estimate of the amount of systems, instruments, and accessories sold that is expected to be returned in a future period. |
FINANCIAL_INSTRUMENTS
FINANCIAL INSTRUMENTS | 3 Months Ended | |||||||||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ' | |||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS | ||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | ||||||||||||||||||||||||||||
The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of the Company’s cash and available-for-sale securities by investment category that are recorded as cash and cash equivalents, or short-term or long-term investments as of March 31, 2014, and December 31, 2013 (in millions): | ||||||||||||||||||||||||||||
Amortized | Gross | Gross | Fair | Cash and | Short- | Long- | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | Cash | term | term | ||||||||||||||||||||||
Gains | Losses | Equivalents | Investments | Investments | ||||||||||||||||||||||||
31-Mar-14 | ||||||||||||||||||||||||||||
Cash | $ | 210.5 | $ | — | $ | — | $ | 210.5 | $ | 210.5 | $ | — | $ | — | ||||||||||||||
Level 1: | ||||||||||||||||||||||||||||
Money market funds | 522.5 | — | — | 522.5 | 522.5 | — | — | |||||||||||||||||||||
U.S. Treasuries | 129.8 | — | (0.3 | ) | 129.5 | — | 77.6 | 51.9 | ||||||||||||||||||||
Subtotal | 652.3 | — | (0.3 | ) | 652 | 522.5 | 77.6 | 51.9 | ||||||||||||||||||||
Level 2: | ||||||||||||||||||||||||||||
Commercial paper | 171.8 | — | — | 171.8 | 75 | 96.8 | — | |||||||||||||||||||||
Corporate securities | 920.4 | 2.9 | (1.4 | ) | 921.9 | — | 234 | 687.9 | ||||||||||||||||||||
U.S. government agencies | 343.3 | 0.6 | (0.6 | ) | 343.3 | 6 | 80.7 | 256.6 | ||||||||||||||||||||
Non-U.S. government securities | 70.8 | 0.2 | — | 71 | — | 40.2 | 30.8 | |||||||||||||||||||||
Municipal securities | 583.8 | 1.4 | (0.1 | ) | 585.1 | — | 216 | 369.1 | ||||||||||||||||||||
Subtotal | 2,090.10 | 5.1 | (2.1 | ) | 2,093.10 | 81 | 667.7 | 1,344.40 | ||||||||||||||||||||
Level 3: | ||||||||||||||||||||||||||||
Auction rate securities | 8 | — | — | 8 | — | — | 8 | |||||||||||||||||||||
Subtotal | 8 | — | — | 8 | — | — | 8 | |||||||||||||||||||||
Total assets measured at fair value | $ | 2,960.90 | $ | 5.1 | $ | (2.4 | ) | $ | 2,963.60 | $ | 814 | $ | 745.3 | $ | 1,404.30 | |||||||||||||
Amortized | Gross | Gross | Fair | Cash and | Short- | Long- | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | Cash | term | term | ||||||||||||||||||||||
Gains | Losses | Equivalents | Investments | Investments | ||||||||||||||||||||||||
31-Dec-13 | ||||||||||||||||||||||||||||
Cash | $ | 247.8 | $ | — | $ | — | $ | 247.8 | $ | 247.8 | $ | — | $ | — | ||||||||||||||
Level 1: | ||||||||||||||||||||||||||||
Money market funds | 516.2 | — | — | 516.2 | 516.2 | — | — | |||||||||||||||||||||
U.S. Treasuries & corporate equity securities | 65.4 | — | (0.3 | ) | 65.1 | — | 25.5 | 39.6 | ||||||||||||||||||||
Subtotal | 581.6 | — | (0.3 | ) | 581.3 | 516.2 | 25.5 | 39.6 | ||||||||||||||||||||
Level 2: | ||||||||||||||||||||||||||||
Commercial paper | 100.2 | — | — | 100.2 | 18.1 | 82.1 | — | |||||||||||||||||||||
Corporate securities | 844.7 | 2.9 | (1.9 | ) | 845.7 | — | 227.7 | 618 | ||||||||||||||||||||
U.S. government agencies | 352.2 | 0.7 | (0.7 | ) | 352.2 | — | 84.7 | 267.5 | ||||||||||||||||||||
Non-U.S. government securities | 67.7 | 0.2 | (0.1 | ) | 67.8 | — | 41.2 | 26.6 | ||||||||||||||||||||
Municipal securities | 550.1 | 1.5 | (0.1 | ) | 551.5 | — | 160.2 | 391.3 | ||||||||||||||||||||
Subtotal | 1,914.90 | 5.3 | (2.8 | ) | 1,917.40 | 18.1 | 595.9 | 1,303.40 | ||||||||||||||||||||
Level 3: | ||||||||||||||||||||||||||||
Auction rate securities | 8 | — | (0.6 | ) | 7.4 | — | — | 7.4 | ||||||||||||||||||||
Subtotal | 8 | — | (0.6 | ) | 7.4 | — | — | 7.4 | ||||||||||||||||||||
Total assets measured at fair value | $ | 2,752.30 | $ | 5.3 | $ | (3.7 | ) | $ | 2,753.90 | $ | 782.1 | $ | 621.4 | $ | 1,350.40 | |||||||||||||
The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale securities (excluding cash and money market funds), at March 31, 2014 (in millions): | ||||||||||||||||||||||||||||
Amortized | Fair | |||||||||||||||||||||||||||
Cost | Value | |||||||||||||||||||||||||||
Mature in less than one year | $ | 825 | $ | 826.3 | ||||||||||||||||||||||||
Mature in one to five years | 1,394.90 | 1,396.30 | ||||||||||||||||||||||||||
Mature after five years | 8 | 8 | ||||||||||||||||||||||||||
Total | $ | 2,227.90 | $ | 2,230.60 | ||||||||||||||||||||||||
Realized gains, net of tax, recognized on the sale of investments during the three months ended March 31, 2014, was $0.1 million. Realized losses, net of tax, recognized on the sale of investments during the three months ended March 31, 2013, was $0.2 million. | ||||||||||||||||||||||||||||
As of March 31, 2014, and December 31, 2013, net unrealized gains of $2.7 million and $1.6 million, respectively, were included in accumulated other comprehensive income in the accompanying unaudited Condensed Consolidated Balance Sheets, along with the related tax impact of $1.1 million and $0.7 million, respectively. | ||||||||||||||||||||||||||||
There have been no transfers between Level 1 and Level 2 measurements during the three months ended March 31, 2014, and there were no changes in the Company’s valuation technique. Level 3 assets consisted of municipal bonds with auction rate securities (“ARS”). Since the auctions for these securities have historically failed, these investments did not have a readily determinable fair value. During the three months ended March 31, 2014, the Company recorded $0.6 million of unrealized gains as other comprehensive income relating to the recovery of the $0.6 million of unrealized losses on the ARS recorded in previous quarter. In April of 2014, the ARS were liquidated at par value for a total of $8.0 million. | ||||||||||||||||||||||||||||
Foreign currency derivatives | ||||||||||||||||||||||||||||
The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency denominated sales and intercompany balances and other monetary assets or liabilities denominated in currencies other than the U.S. dollar. The Company had $0.4 million of derivative assets recorded as prepaid and other current assets in the unaudited Condensed Consolidated Balance Sheets at March 31, 2014, compared to $3.8 million of derivative liabilities recorded as other accrued liabilities in the Condensed Consolidated Balance Sheets at December 31, 2013. The derivative assets and liabilities are measured using Level 2 fair value inputs. | ||||||||||||||||||||||||||||
Cash Flow Hedges | ||||||||||||||||||||||||||||
The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar, primarily the European Euro ("Euro"), the British Pound (“GBP”) and the Korean Won (“KRW”). | ||||||||||||||||||||||||||||
As of March 31, 2014, the Company had notional amounts of EUR 29.5 million and KRW 621.2 million of outstanding currency forward contracts entered into to hedge Euro and KRW denominated sales, compared to EUR 59.0 million and KRW 4.4 billion of outstanding currency forward contracts at December 31, 2013. The net gains (losses) reclassified to revenue related to the hedged revenue transactions for the three months ended March 31, 2014 and 2013, were not material. | ||||||||||||||||||||||||||||
Other Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||
Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the U.S. dollar, primarily the Euro, GBP, Swiss Franc (“CHF”), Japanese Yen (“JPY”) and KRW. | ||||||||||||||||||||||||||||
Derivative instruments used to hedge balance sheet foreign currency exposures at the end of each period were as follows (in millions): | ||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Recognized gains (losses) in interest and other income, net | $ | 0.9 | $ | 1 | ||||||||||||||||||||||||
Foreign exchange gains (losses) related to re-measurement | $ | (0.6 | ) | $ | (1.4 | ) | ||||||||||||||||||||||
The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in local currency) for derivatives (recorded at fair value) outstanding at the end of each period were as follows (in millions): | ||||||||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
European Euro | 33 | 64 | ||||||||||||||||||||||||||
Korean Won | 21,978.80 | 23,000.00 | ||||||||||||||||||||||||||
British Pound | 10.4 | 7.7 | ||||||||||||||||||||||||||
Swiss Franc | 1.5 | — | ||||||||||||||||||||||||||
Japanese Yen | 75 | 60 | ||||||||||||||||||||||||||
BALANCE_SHEET_DETAILS
BALANCE SHEET DETAILS | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
BALANCE SHEET DETAILS | ' | |||||||
BALANCE SHEET DETAILS | ||||||||
Inventory | ||||||||
The following table provides details of inventory (in millions): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 60 | $ | 67.2 | ||||
Work-in-process | 8.4 | 12.6 | ||||||
Finished goods | 117.1 | 99.8 | ||||||
Total inventories | $ | 185.5 | $ | 179.6 | ||||
Goodwill and Intangible Assets | ||||||||
The increases in goodwill of $10.1 million and intangible assets of $4.8 million from December 31, 2013, to March 31, 2014, primarily relate to the acquisition of certain intellectual property, know-how, fixed assets, and employees from Luna Innovations, Inc. on January 17, 2014, that met the definition of a business, partly offset by amortization expense of $4.7 million. The $9.5 million of intangible assets acquired are being amortized over nine years. The total value of the acquisition and the related operations of the acquired business are not material to the Company's consolidated financial statements. |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
CONTINGENCIES | ' |
CONTINGENCIES | |
The Company is involved in a variety of claims, lawsuits, investigations and proceedings relating to securities laws, product liability, false claims, insurance, contract disputes, and other matters relating to various claims that arise in the normal course of business. Certain of these lawsuits and claims are described in further detail below. The Company does not know what the outcome of these matters will be and cannot assure that any resolution will be reached on commercially reasonable terms, if at all. It is not possible to predict the outcome of the pending or threatened litigation matters currently disclosed. With the exception of the charge related to settlement of the product liability claims described below, the Company has determined that an estimate of possible loss or range of loss related to pending or threatened litigation matters cannot be determined as of March 31, 2014. Nevertheless, it is possible that future legal costs (including settlements, judgments, legal fees and other related defense costs) could have a material adverse effect on the Company's business, financial condition, and results of operations or cash flows. | |
The Company is also party to various other legal actions that arise in the ordinary course of business and does not believe that any of these other legal actions will have a material adverse impact on the Company's business, financial position, or results of operations. | |
In accordance with U.S. GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. In the quarter ended March 31, 2014, the Company recorded a pre-tax charge of $67.4 million related to the Company’s estimate of the probable loss associated with the potential resolution of certain product liability claims described below. | |
Purported Shareholder Class Action Lawsuit filed August 6, 2010 | |
On August 6, 2010, a purported class action lawsuit entitled Perlmutter v. Intuitive Surgical et al., No. CV10-3451, was filed against seven of the Company's current and former officers and directors in the United States District Court for the Northern District of California. The lawsuit seeks unspecified damages on behalf of a putative class of persons who purchased or otherwise acquired the Company's common stock between February 1, 2008, and January 7, 2009. The complaint alleges that the defendants violated federal securities laws by making allegedly false and misleading statements and omitting certain material facts in filings with the Securities and Exchange Commission. On February 15, 2011, the Police Retirement System of St. Louis was appointed lead plaintiff in the case pursuant to the Private Securities Litigation Reform Act of 1995. An amended complaint was filed on April 15, 2011, making allegations substantially similar to the allegations described above. On May 23, 2011, a motion was filed to dismiss the amended complaint. On August 10, 2011, that motion was granted and the action was dismissed; the plaintiffs were given 30 days to file an amended complaint. On September 12, 2011, plaintiffs filed their amended complaint. The allegations contained therein are substantially similar to the allegations in the prior complaint. The Company filed a motion to dismiss the amended complaint. A hearing occurred on February 16, 2012, and on May 22, 2012, and the Company's motion was granted. The complaint was dismissed with prejudice, and a final judgment was entered in the Company's favor on June 1, 2012. On June 20, 2012, plaintiffs filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit. The appeal is styled Police Retirement System of St. Louis v. Intuitive Surgical, Inc. et al., No. 12-16430. Plaintiffs filed their opening brief on September 28, 2012. The Company filed an answering brief on November 13, 2012, and plaintiffs filed a reply brief on December 17, 2012. Oral argument was held on March 14, 2014, and the matter was taken under submission. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the business, financial position or future results of operations of the Company. | |
Purported Derivative Actions filed August 19, 2010 | |
On August 19, 2010, an alleged stockholder caused a purported stockholder’s derivative lawsuit entitled Himmel v. Smith et al., No. 1-10-CV-180416, to be filed in the Superior Court of California for the County of Santa Clara naming the Company as a nominal defendant, and naming 14 of the Company's current and former officers and directors as defendants. The lawsuit seeks to recover, for the Company's benefit, unspecified damages purportedly sustained in connection with allegedly misleading statements and/or omissions made in connection with the Company's financial reporting for the period between February 1, 2008, and January 7, 2009. It also seeks a series of changes to the Company's corporate governance policies and an award of attorneys’ fees. On September 15, 2010, another purported stockholder filed a substantially identical lawsuit entitled Applebaum v. Guthart et al., No. 1-10-CV-182645, in the same court against 15 of the Company's current and former officers and directors. On October 5, 2010, the court ordered that the two cases be consolidated for all purposes. By agreement with plaintiffs, all activity in the case has been stayed pending the results of the appeal in the purported shareholder class action lawsuit discussed above. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the Company's business, financial position or future results of operations. | |
Purported Shareholder Class Action Lawsuits filed April 26, 2013, and May 24, 2013 | |
On April 26, 2013, a purported class action lawsuit entitled Abrams v. Intuitive Surgical, et al., No. 5-13-cv-1920, was filed against several of the Company's current and former officers and directors in the United States District Court for the Northern District of California. A substantially identical complaint, entitled Adel v. Intuitive Surgical, et al., No. 5:13-cv-02365, was filed in the same court against the same defendants on May 24, 2013. The Adel case was voluntarily dismissed without prejudice on August 20, 2013. | |
On October 15, 2013, plaintiffs in the Abrams matter filed an amended complaint. The case has since been re-titled In re Intuitive Surgical Securities Litigation. The plaintiffs seek unspecified damages on behalf of a putative class of persons who purchased or otherwise acquired the Company's common stock between February 6, 2012 and July 18, 2013. The amended complaint alleges that the defendants violated federal securities laws by making allegedly false and misleading statements and omitting certain material facts in the Company's filings with the Securities and Exchange Commission. On November 18, 2013 the Court appointed Employees’ Retirement System of the State of Hawaii as lead plaintiff and appointed lead counsel. The Company filed a motion to dismiss the amended complaint on December 16, 2013, and anticipates a hearing on the motion in May 2014. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the Company's business, financial position or future results of operations. | |
Purported Derivative Actions filed February 3, 2014, February 21, 2014, and March 21, 2014 | |
On February 3, 2014, an alleged stockholder caused a purported stockholder’s derivative lawsuit entitled Berg v. Guthart et al., No. 4-14-CV-00515, to be filed in the United States District Court for the Northern District of California, naming the Company as a nominal defendant, and naming 16 of the Company's current and former officers and directors as defendants. The lawsuit seeks to recover, for the benefit of the Company, unspecified damages purportedly sustained in connection with allegedly misleading statements and/or omissions made in connection with the Company's financial reporting for the period between 2012 and the present. It also seeks a series of changes to the Company's corporate governance policies and an award of attorneys’ fees. On February 21, 2014, another purported stockholder filed a substantially similar lawsuit entitled Public School Teachers’ Pension and Retirement Fund of Chicago v. Guthart et al., No. CIV 526930, in the Superior Court of the State of California, County of San Mateo, against the same parties and seeking the same relief. On March 26, 2014, the Company removed the case to the United States District Court for the Northern District of California and will seek to have it related to the similar lawsuit discussed above. On March 21, 2014, another purported stockholder filed a substantially similar lawsuit entitled City of Birmingham Relief and Retirement System v. Guthart et al., No. 5-14-CV-01307, in the United States District Court for the Northern District of California against the same parties and seeking the same relief. The Company has sought to have it related to the lawsuits discussed above. These proceedings are in their initial stages. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the Company's business, financial position or future results of operations. | |
Product Liability Litigation | |
The Company is currently named as a defendant in approximately 83 individual product liability lawsuits filed in various state and federal courts by plaintiffs who allege that they underwent surgical procedures that utilized the da Vinci Surgical System and sustained a variety of personal injuries and, in some cases, death as a result of such surgery. The Company has also received a large number of product liability claims from plaintiffs' attorneys that are part of certain tolling agreements further discussed below. In addition, the Company has been named as a defendant in a purported class action filed in Louisiana state court, and removed to federal court, seeking damages on behalf of all patients who were allegedly injured by the da Vinci Surgical System at a single hospital in Louisiana. The cases raise a variety of allegations including, to varying degrees, that plaintiffs’ injuries resulted from purported defects in the da Vinci Surgical System and/or failure on the Company's part to provide adequate training resources to the healthcare professionals who performed plaintiffs’ surgeries. The cases further allege that the Company failed to adequately disclose and/or misrepresented the potential risks and/or benefits of the da Vinci Surgical System. Plaintiffs also assert a variety of causes of action, including for example, strict liability based on purported design defects, negligence, fraud, breach of express and implied warranties, unjust enrichment, and loss of consortium. Plaintiffs seek recovery for alleged personal injuries and, in many cases, punitive damages. The Company has reached confidential settlements in a small number of filed cases. As to the remaining cases, with a few exceptions, including the Taylor case described below, these cases generally are in the early stages of pretrial activity. | |
Plaintiffs’ attorneys have engaged in well-funded national advertising efforts seeking patients dissatisfied with da Vinci surgery. The claims relate to alleged complications from surgeries performed with certain versions of Monopolar Curved Scissor (“MCS”) instruments that included an MCS tip cover accessory that was the subject of a market withdrawal in 2012 and MCS instruments that were the subject of a recall in 2013. The Company has received a significant number of claims from plaintiffs’ attorneys as a result of these advertising efforts. In an effort to avoid the expense and distraction of defending multiple lawsuits, the Company entered into tolling agreements to pause the applicable statutes of limitations for the claims, and engaged in confidential mediation efforts. The attorneys for the patients agreed to collect and supply medical records, operative notes and other necessary information from these patients to the Company. Each claim was individually investigated. The collection and evaluation of the patients’ medical information was laborious. For hundreds of the asserted claims, the Company has never received medical records. More than 2,000 sets of patient records were received and evaluated. To evaluate these claims, the Company and its legal counsel, assisted by independent medical consultants, reviewed and analyzed the large volumes of medical information that began to arrive in the fall of 2013. The completion of the legal and medical evaluation of a significant number of these claims occurred during the first quarter of 2014. | |
During the three months ended March 31, 2014, the Company recorded a pre-tax charge of $67.4 million to reflect the estimated costs of resolving a number of the product liability claims received. After an extended confidential mediation process with legal counsel for many of the claimants, the Company determined during the first quarter of 2014 that, while it denies any and all liability, in light of the costs and risks of litigation, settlement of certain claims may be appropriate. The Company’s estimate of the anticipated cost of resolving these claims is based on negotiations with attorneys for patients who have participated in the mediation process. To date, approximately 3,000 claims have been reviewed as part of the mediation process. Of those, however, a substantial number have already been removed from the tolling agreement and plaintiffs’ counsels have indicated to the Company that they no longer intend to pursue these claims. Nonetheless, the claimants that have been removed from the tolling agreement remain free to pursue lawsuits against the Company and it is also possible that more claims will be made by other individuals who have undergone da Vinci surgery and allege that they suffered injuries. It is further possible that the claimants who participate in the mediations, as well as those claimants who have not participated in negotiations, will pursue greater amounts in mediation or in a court of law. Consequently, the final outcome of these claims is dependent on many variables that are difficult to predict and the ultimate cost associated with these product liability claims may be materially different than the amount of the current estimate and accruals and could have a material adverse effect on the Company's business, financial condition, and results of operations or cash flows. Although there is a reasonable possibility that a loss in excess of the amount recognized exists, the Company is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time. | |
The Company submits reports to the FDA for these claims as part of its post-market surveillance process. The FDA publicly reports these claims on its MAUDE database. On February 27, 2014, the Company submitted an Alternative Summary Report (ASR) to consolidate 1,406 of the product liability claims for surgeries spanning the period 2004 through the third quarter of 2013. During this time period, approximately 1.7 million surgeries were performed with the da Vinci® Surgical System in the United States. | |
A reportable adverse event submitted in an MDR or ASR does not necessarily indicate that the da Vinci Surgical System caused injury or harm to a patient. MDR filing criteria are described in FDA Code of Federal Regulations Title 21, Part 803. The February ASR contains information from attorneys who submitted claims of injury involving da Vinci use in surgery. The vast majority of the alleged injuries in the ASR are common complications associated with surgery, including minimally invasive and open surgical procedures. In the rare instances in which Company records were able to confirm claims of a malfunction of the da Vinci Surgical System during a surgery, the Company filed a separate MDR. Where a claim indicated a patient death, the Company filed a separate MDR. The ASR excludes these individually reported death and malfunction events. | |
Taken in context with the Company’s normal Medical Device Reports (“MDRs”) reporting process, including all of the product liability claims, the adverse event rate for da Vinci Surgery has generally declined during the period 2004-2013. | |
In February 2011, the Company was named as a defendant in a product liability action that had originally been filed in Washington State Superior Court for Kitsap County against the healthcare providers and hospital involved in plaintiff’s decedent’s surgery (Josette Taylor, as Personal Representative of the Estate of Fred E. Taylor, deceased; and on behalf of the Estate of Fred E. Taylor v. Intuitive Surgical, Inc., No. 09-2-03136-5). In Taylor, plaintiff asserted wrongful death and product liability claims against the Company, generally alleging that the decedent died four years after surgery as a result of injuries purportedly suffered during the surgery, which was conducted with the use of the da Vinci Surgical System. The plaintiff in Taylor asserted that such injuries were caused, in whole or in part, by the Company's purported failure to properly train, warn, and instruct the surgeon. The lawsuit sought unspecified damages for past medical expenses, pain and suffering, loss of consortium as well as punitive damages. A trial commenced in the action on April 15, 2013. On May 23, 2013, the jury returned a defense verdict, finding that the Company was not negligent. Judgment was entered in the Company's favor on June 7, 2013. Plaintiff has filed a notice of appeal. | |
False Claims Act Litigation | |
In October 2013, the Company was served in a case entitled Rose v. Intuitive Surgical, Inc., No. 12-cv-1812, in the Middle District of Florida. Relator Bryan Rose, a former employee of Intuitive Surgical, brought the action on behalf of the United States of America, alleging violations of the False Claims Act, 31 U.S.C. § 3729 et seq., and the analogous false-claims statutes of twenty-one states and of the District of Columbia. Broadly, he alleges that he has first-hand knowledge of a fraudulent scheme, involving kickbacks paid in exchange for referrals and surgical procedures, and first-hand knowledge of off-label usage of the Company's products. The complaint was filed under seal on November 27, 2012, and was provided to the Department of Justice and the twenty-one states and the District of Columbia. The United States Government declined to intervene on October 8, 2013. The twenty-one states and the District of Columbia declined to intervene on November 21, 2013. The Company filed a motion to dismiss on January 21, 2014. Based on currently available information, the Company believes that it has meritorious defenses in this action and intends to assert them vigorously. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the Company's business, financial position or future results of operations. | |
Insurance Litigation | |
In October 2013, the Company was named as a defendant in an insurance action entitled Illinois Union Insurance Co. v. Intuitive Surgical, Inc., No. 3:13-cv-04863-JST, filed in the Northern District of California. Plaintiff Illinois Union Insurance Co. seeks to rescind the Life Sciences Products-Completed Operations Liability Policy issued by Plaintiff to the Company, which provides coverage for products liability claims first made against the Company during the policy period March 1, 2013 to March 1, 2014. In December 2013, the Company was named as a defendant in another insurance action entitled Navigators Specialty Insurance Co. v. Intuitive Surgical, Inc., No. 5:13-cv-05801-HRL, filed in the Northern District of California. Plaintiff Navigators Insurance Co. alleges that the Follow Form Excess Liability Insurance Policy issued by Plaintiff to the Company for product liability claims first made against the Company during the policy period March 1, 2013, to March 1, 2014, should be rescinded. Both Plaintiffs generally allege that the Company did not disclose the existence of tolling agreements and the number of claimants incorporated within those agreements, and that those agreements were material to Plaintiffs’ underwriting processes. The Company intends to vigorously defend these actions. Based on currently available information, the Company does not believe the resolution of this matter will have a material adverse effect on the Company's business, financial position or future results of operations. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||||||||
NOTE 6. STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Accumulated Other Comprehensive Income | ||||||||||||||||||||
The components of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2014, and 2013, are as follows (in millions): | ||||||||||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
Gains (Losses) | Unrealized Gains | Foreign | Employee Benefit Plans | Total | ||||||||||||||||
on Hedge | (Losses) on Securities | Currency | ||||||||||||||||||
Instruments | Translation | |||||||||||||||||||
Gains (Losses) | ||||||||||||||||||||
Beginning balance | $ | — | $ | 1.7 | $ | 0.4 | $ | — | $ | 2.1 | ||||||||||
Other comprehensive income before reclassifications | 0.5 | 3.9 | 0.3 | (2.6 | ) | 2.1 | ||||||||||||||
Reclassified from accumulated other comprehensive income | (0.3 | ) | (0.1 | ) | — | — | (0.4 | ) | ||||||||||||
Net current-period other comprehensive income | 0.2 | 3.8 | 0.3 | (2.6 | ) | 1.7 | ||||||||||||||
Ending balance | $ | 0.2 | $ | 5.5 | $ | 0.7 | $ | (2.6 | ) | $ | 3.8 | |||||||||
Three Months Ended March 31, 2013 | ||||||||||||||||||||
Gains (Losses) | Unrealized Gains | Foreign | Employee Benefit Plans | Total | ||||||||||||||||
on Hedge | (Losses) on Securities | Currency | ||||||||||||||||||
Instruments | Translation | |||||||||||||||||||
Gains (Losses) | ||||||||||||||||||||
Beginning balance | $ | — | $ | 6.2 | $ | 0.4 | $ | — | $ | 6.6 | ||||||||||
Other comprehensive income before reclassifications | 1.4 | 0.9 | (0.4 | ) | — | 1.9 | ||||||||||||||
Reclassified from accumulated other comprehensive income | (0.6 | ) | 0.2 | — | — | (0.4 | ) | |||||||||||||
Net current-period other comprehensive income | 0.8 | 1.1 | (0.4 | ) | — | 1.5 | ||||||||||||||
Ending balance | $ | 0.8 | $ | 7.3 | $ | — | $ | — | $ | 8.1 | ||||||||||
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||
SHARE-BASED COMPENSATION | ' | |||||||
SHARE-BASED COMPENSATION | ||||||||
As of March 31, 2014, approximately 1.2 million shares were reserved for future issuance under the Company’s stock plans. A maximum of 0.5 million of these shares can be awarded as non-vested restricted stock units (“RSUs”). | ||||||||
Stock Option Plans | ||||||||
A summary of stock option activity under all stock plans for the three months ended March 31, 2014, is presented as follows (in millions, except per share amounts): | ||||||||
Stock Options Outstanding | ||||||||
Number | Weighted Average | |||||||
Outstanding | Exercise Price Per | |||||||
Share | ||||||||
Balance at December 31, 2013 | 5.6 | $ | 380.71 | |||||
Options authorized | — | — | ||||||
Options granted | 0.3 | 440.4 | ||||||
Options exercised | (0.2 | ) | 281.34 | |||||
Options forfeited/expired | (0.1 | ) | 470.4 | |||||
Balance at March 31, 2014 | 5.6 | $ | 385.42 | |||||
As of March 31, 2014, options to purchase an aggregate of 3.3 million shares of common stock were exercisable at a weighted-average price of $334.50 per share. | ||||||||
Restricted Stock Units | ||||||||
Beginning in 2014, equity awards granted to employees include a mix of stock options and RSUs, which vest in one-quarter increments over a four-year period and are settled in stock. The number of shares issued on the date the RSUs vest is net of the minimum statutory tax withholdings, which is paid in cash to the appropriate taxing authorities on behalf of the Company's employees. | ||||||||
A summary of RSU activity for the three months ended March 31, 2014, is presented as follows (in millions, except per share amounts): | ||||||||
Shares | Weighted Average | |||||||
Grant Date Fair Value | ||||||||
Nonvested balance at December 31, 2013 | — | $ | — | |||||
Granted | 0.2 | 443.02 | ||||||
Vested | — | — | ||||||
Canceled | — | — | ||||||
Nonvested balance at March 31, 2014 | 0.2 | $ | 443.02 | |||||
The fair value of RSUs is determined based on the closing quoted price of the Company's common stock on the day of the grant. | ||||||||
Employee Stock Purchase Plan | ||||||||
Under the Employee Stock Purchase Plan (“ESPP”), employees purchased approximately 0.1 million shares for $17.5 million and 0.1 million shares for $16.4 million during the three months ended March 31, 2014 and 2013, respectively. | ||||||||
Share-based Compensation | ||||||||
The following table summarizes share-based compensation expense for the three months ended March 31, 2014 and 2013 (in millions): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Cost of sales - products | $ | 4.4 | $ | 3.9 | ||||
Cost of sales - services | 3.1 | 2.9 | ||||||
Total cost of sales | 7.5 | 6.8 | ||||||
Selling, general and administrative | 24.1 | 23 | ||||||
Research and development | 9.2 | 8.4 | ||||||
Share-based compensation expense before income taxes | 40.8 | 38.2 | ||||||
Income tax benefit | 13 | 12.2 | ||||||
Share-based compensation expense after income taxes | $ | 27.8 | $ | 26 | ||||
The fair value of each option grant and the fair value of the option component of the ESPP shares were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions, assuming no expected dividends: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Stock Option Plans | ||||||||
Average risk free interest rate | 1.5 | % | 0.9 | % | ||||
Average expected term (in years) | 4.5 | 4.6 | ||||||
Average expected volatility | 31 | % | 28 | % | ||||
Weighted average fair value at grant date | $ | 123.45 | $ | 143.09 | ||||
Employee Stock Purchase Plans | ||||||||
Average risk free interest rate | 0.2 | % | 0.2 | % | ||||
Average expected term (in years) | 1.3 | 1.3 | ||||||
Average expected volatility | 33 | % | 33 | % | ||||
Weighted average fair value at grant date | $ | 128.87 | $ | 170.51 | ||||
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES | |
Income tax expense for the three months ended March 31, 2014, was $16.2 million, or 26.8% of pre-tax income, compared with $66.6 million, or 26.1% of pre-tax income for the three months ended March 31, 2013. The Company’s effective tax rates for both periods differ from the U.S. federal statutory rate of 35% due primarily to the effect of income earned by certain of the Company’s overseas entities being taxed at rates lower than the federal statutory rate, partially offset by state income taxes and non-deductible stock option expenses. The Company intends to indefinitely reinvest outside the U.S. all of its undistributed foreign earnings that were not previously subject to U.S. tax. | |
The Company’s effective tax rate for the three months ended March 31, 2014, did not include the tax benefit from the U.S. federal Research and Development (“R&D”) credit because the credit expired at the end of year 2013. If the credit is reinstated retroactively, the tax benefit will be recorded discretely in the period of reinstatement. In addition to reflecting net 2013 U.S. federal R&D credit, the income tax provision for the three months ended March 31, 2013, also reflected a discrete net benefit related to 2012 federal R&D credit which was retroactively reinstated in January of 2013. | |
As of March 31, 2014, the Company had total gross unrecognized tax benefits of approximately $75.9 million compared with approximately $74.0 million as of December 31, 2013, representing a net increase of approximately $1.9 million for the three months ended March 31, 2014. If recognized, these gross unrecognized tax benefits would reduce the effective tax rate in the period of recognition. Gross interest and penalties related to unrecognized tax benefit accrued were approximately $3.7 million and $3.4 million as of March 31, 2014, and December 31, 2013, respectively. | |
The Company files federal, state and foreign income tax returns in many jurisdictions in the U.S. and abroad. Generally, years before 2010 are closed for most significant jurisdictions except for California, for which years before 2008 were considered closed. Certain of the Company’s unrecognized tax benefits could reverse based on the normal expiration of various statutes of limitations, which could affect the Company’s effective tax rate in the period in which they reverse. | |
The Company is subject to the examination of its income tax returns by the Internal Revenue Service (the "IRS") and other tax authorities. The outcome of these audits cannot be predicted with certainty. Management regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of the Company’s provision for income taxes. If any issues addressed in the tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. |
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
NET INCOME PER SHARE | ' | |||||||
NET INCOME PER SHARE | ||||||||
The following table presents the computation of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 (in millions, except per share amounts): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Numerator: | ||||||||
Net income | $ | 44.3 | $ | 188.9 | ||||
Denominator: | ||||||||
Weighted-average shares outstanding used in basic calculation | 38.3 | 40.3 | ||||||
Add: Dilutive effect of potential common shares | 0.8 | 1.1 | ||||||
Weighted-average shares used in computing diluted net income per share | 39.1 | 41.4 | ||||||
Net income per share: | ||||||||
Basic | $ | 1.16 | $ | 4.69 | ||||
Diluted | $ | 1.13 | $ | 4.56 | ||||
Employee stock options to purchase approximately 2.9 million and 1.7 million weighted-average shares for the three months ended March 31, 2014 and 2013, respectively, were outstanding, but were not included in the computation of diluted net income per share because the effect of including such shares would have been anti-dilutive. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements (“financial statements”) of Intuitive Surgical, Inc. and its wholly-owned subsidiaries have been prepared on a consistent basis with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2013, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosure necessary to present the financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which was filed on February 3, 2014. The results of operations for the first three months of fiscal 2014 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods. | |
New Accounting Standards Recently Adopted | ' |
Accounting Pronouncements | |
In June 2013, the Financial Accounting Standards Board determined that an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss (“NOL”) carryforward or other tax credit carryforward when settlement in this manner is available under applicable tax law. This guidance is effective for the Company’s interim and annual periods beginning January 1, 2014. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. | |
Significant Accounting Policies | |
With the exception of the information provided below relating to the Company's allowance for sales returns and doubtful accounts, there has been no change in the Company's significant accounting policies described in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |
Allowance for Sales Returns and Doubtful Accounts | |
The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. | |
In April 2014, the Company offered certain customers who purchased a 4-arm da Vinci Si Surgical System in the first quarter of fiscal 2014 the opportunity to trade out their systems for a da Vinci XiTM Surgical System. Under this program, these customers will be able to return their da Vinci Si Surgical System and receive a credit, substantially equal to the price paid for the da Vinci Si Surgical System, towards the purchase of a da Vinci Xi Surgical System. These customers have until June 20, 2014, to accept the Company's offer. Subject to meeting all other criteria of the Company's revenue recognition policy, the revenue deferred will be recognized at the date the da Vinci Xi Surgical Systems and related instruments and accessories are shipped and accepted by the customers participating in the trade-in program, which is anticipated to be substantially completed by June 30, 2014. In accordance with guidance for accounting for arrangements in which return rights exist, system revenue and associated costs in an amount equal to the Company's estimate of the number of systems that will be returned have been deferred. |
FINANCIAL_INSTRUMENTS_Tables
FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | |||||||||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ' | |||||||||||||||||||||||||||
Summary of Cash and Available-For-Sale Securities | ' | |||||||||||||||||||||||||||
The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of the Company’s cash and available-for-sale securities by investment category that are recorded as cash and cash equivalents, or short-term or long-term investments as of March 31, 2014, and December 31, 2013 (in millions): | ||||||||||||||||||||||||||||
Amortized | Gross | Gross | Fair | Cash and | Short- | Long- | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | Cash | term | term | ||||||||||||||||||||||
Gains | Losses | Equivalents | Investments | Investments | ||||||||||||||||||||||||
31-Mar-14 | ||||||||||||||||||||||||||||
Cash | $ | 210.5 | $ | — | $ | — | $ | 210.5 | $ | 210.5 | $ | — | $ | — | ||||||||||||||
Level 1: | ||||||||||||||||||||||||||||
Money market funds | 522.5 | — | — | 522.5 | 522.5 | — | — | |||||||||||||||||||||
U.S. Treasuries | 129.8 | — | (0.3 | ) | 129.5 | — | 77.6 | 51.9 | ||||||||||||||||||||
Subtotal | 652.3 | — | (0.3 | ) | 652 | 522.5 | 77.6 | 51.9 | ||||||||||||||||||||
Level 2: | ||||||||||||||||||||||||||||
Commercial paper | 171.8 | — | — | 171.8 | 75 | 96.8 | — | |||||||||||||||||||||
Corporate securities | 920.4 | 2.9 | (1.4 | ) | 921.9 | — | 234 | 687.9 | ||||||||||||||||||||
U.S. government agencies | 343.3 | 0.6 | (0.6 | ) | 343.3 | 6 | 80.7 | 256.6 | ||||||||||||||||||||
Non-U.S. government securities | 70.8 | 0.2 | — | 71 | — | 40.2 | 30.8 | |||||||||||||||||||||
Municipal securities | 583.8 | 1.4 | (0.1 | ) | 585.1 | — | 216 | 369.1 | ||||||||||||||||||||
Subtotal | 2,090.10 | 5.1 | (2.1 | ) | 2,093.10 | 81 | 667.7 | 1,344.40 | ||||||||||||||||||||
Level 3: | ||||||||||||||||||||||||||||
Auction rate securities | 8 | — | — | 8 | — | — | 8 | |||||||||||||||||||||
Subtotal | 8 | — | — | 8 | — | — | 8 | |||||||||||||||||||||
Total assets measured at fair value | $ | 2,960.90 | $ | 5.1 | $ | (2.4 | ) | $ | 2,963.60 | $ | 814 | $ | 745.3 | $ | 1,404.30 | |||||||||||||
Amortized | Gross | Gross | Fair | Cash and | Short- | Long- | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | Cash | term | term | ||||||||||||||||||||||
Gains | Losses | Equivalents | Investments | Investments | ||||||||||||||||||||||||
31-Dec-13 | ||||||||||||||||||||||||||||
Cash | $ | 247.8 | $ | — | $ | — | $ | 247.8 | $ | 247.8 | $ | — | $ | — | ||||||||||||||
Level 1: | ||||||||||||||||||||||||||||
Money market funds | 516.2 | — | — | 516.2 | 516.2 | — | — | |||||||||||||||||||||
U.S. Treasuries & corporate equity securities | 65.4 | — | (0.3 | ) | 65.1 | — | 25.5 | 39.6 | ||||||||||||||||||||
Subtotal | 581.6 | — | (0.3 | ) | 581.3 | 516.2 | 25.5 | 39.6 | ||||||||||||||||||||
Level 2: | ||||||||||||||||||||||||||||
Commercial paper | 100.2 | — | — | 100.2 | 18.1 | 82.1 | — | |||||||||||||||||||||
Corporate securities | 844.7 | 2.9 | (1.9 | ) | 845.7 | — | 227.7 | 618 | ||||||||||||||||||||
U.S. government agencies | 352.2 | 0.7 | (0.7 | ) | 352.2 | — | 84.7 | 267.5 | ||||||||||||||||||||
Non-U.S. government securities | 67.7 | 0.2 | (0.1 | ) | 67.8 | — | 41.2 | 26.6 | ||||||||||||||||||||
Municipal securities | 550.1 | 1.5 | (0.1 | ) | 551.5 | — | 160.2 | 391.3 | ||||||||||||||||||||
Subtotal | 1,914.90 | 5.3 | (2.8 | ) | 1,917.40 | 18.1 | 595.9 | 1,303.40 | ||||||||||||||||||||
Level 3: | ||||||||||||||||||||||||||||
Auction rate securities | 8 | — | (0.6 | ) | 7.4 | — | — | 7.4 | ||||||||||||||||||||
Subtotal | 8 | — | (0.6 | ) | 7.4 | — | — | 7.4 | ||||||||||||||||||||
Total assets measured at fair value | $ | 2,752.30 | $ | 5.3 | $ | (3.7 | ) | $ | 2,753.90 | $ | 782.1 | $ | 621.4 | $ | 1,350.40 | |||||||||||||
Summary of Contractual Maturities of Cash Equivalents and Available-For-Sale Investments | ' | |||||||||||||||||||||||||||
The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale securities (excluding cash and money market funds), at March 31, 2014 (in millions): | ||||||||||||||||||||||||||||
Amortized | Fair | |||||||||||||||||||||||||||
Cost | Value | |||||||||||||||||||||||||||
Mature in less than one year | $ | 825 | $ | 826.3 | ||||||||||||||||||||||||
Mature in one to five years | 1,394.90 | 1,396.30 | ||||||||||||||||||||||||||
Mature after five years | 8 | 8 | ||||||||||||||||||||||||||
Total | $ | 2,227.90 | $ | 2,230.60 | ||||||||||||||||||||||||
Derivative Instruments Used to Hedge against Balance Sheet Foreign Currency Exposures | ' | |||||||||||||||||||||||||||
Derivative instruments used to hedge balance sheet foreign currency exposures at the end of each period were as follows (in millions): | ||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Recognized gains (losses) in interest and other income, net | $ | 0.9 | $ | 1 | ||||||||||||||||||||||||
Foreign exchange gains (losses) related to re-measurement | $ | (0.6 | ) | $ | (1.4 | ) | ||||||||||||||||||||||
Gross Notional Amounts for Outstanding Derivatives | ' | |||||||||||||||||||||||||||
Total gross notional amounts (in local currency) for derivatives (recorded at fair value) outstanding at the end of each period were as follows (in millions): | ||||||||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
European Euro | 33 | 64 | ||||||||||||||||||||||||||
Korean Won | 21,978.80 | 23,000.00 | ||||||||||||||||||||||||||
British Pound | 10.4 | 7.7 | ||||||||||||||||||||||||||
Swiss Franc | 1.5 | — | ||||||||||||||||||||||||||
Japanese Yen | 75 | 60 | ||||||||||||||||||||||||||
BALANCE_SHEET_DETAILS_Tables
BALANCE SHEET DETAILS (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Inventory Details | ' | |||||||
The following table provides details of inventory (in millions): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 60 | $ | 67.2 | ||||
Work-in-process | 8.4 | 12.6 | ||||||
Finished goods | 117.1 | 99.8 | ||||||
Total inventories | $ | 185.5 | $ | 179.6 | ||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||
Components of Accumulated Other Comprehensive Income, Net of Tax | ' | |||||||||||||||||||
The components of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2014, and 2013, are as follows (in millions): | ||||||||||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
Gains (Losses) | Unrealized Gains | Foreign | Employee Benefit Plans | Total | ||||||||||||||||
on Hedge | (Losses) on Securities | Currency | ||||||||||||||||||
Instruments | Translation | |||||||||||||||||||
Gains (Losses) | ||||||||||||||||||||
Beginning balance | $ | — | $ | 1.7 | $ | 0.4 | $ | — | $ | 2.1 | ||||||||||
Other comprehensive income before reclassifications | 0.5 | 3.9 | 0.3 | (2.6 | ) | 2.1 | ||||||||||||||
Reclassified from accumulated other comprehensive income | (0.3 | ) | (0.1 | ) | — | — | (0.4 | ) | ||||||||||||
Net current-period other comprehensive income | 0.2 | 3.8 | 0.3 | (2.6 | ) | 1.7 | ||||||||||||||
Ending balance | $ | 0.2 | $ | 5.5 | $ | 0.7 | $ | (2.6 | ) | $ | 3.8 | |||||||||
Three Months Ended March 31, 2013 | ||||||||||||||||||||
Gains (Losses) | Unrealized Gains | Foreign | Employee Benefit Plans | Total | ||||||||||||||||
on Hedge | (Losses) on Securities | Currency | ||||||||||||||||||
Instruments | Translation | |||||||||||||||||||
Gains (Losses) | ||||||||||||||||||||
Beginning balance | $ | — | $ | 6.2 | $ | 0.4 | $ | — | $ | 6.6 | ||||||||||
Other comprehensive income before reclassifications | 1.4 | 0.9 | (0.4 | ) | — | 1.9 | ||||||||||||||
Reclassified from accumulated other comprehensive income | (0.6 | ) | 0.2 | — | — | (0.4 | ) | |||||||||||||
Net current-period other comprehensive income | 0.8 | 1.1 | (0.4 | ) | — | 1.5 | ||||||||||||||
Ending balance | $ | 0.8 | $ | 7.3 | $ | — | $ | — | $ | 8.1 | ||||||||||
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||
Summary of Stock Option Activity Under All Stock Plans | ' | |||||||
A summary of stock option activity under all stock plans for the three months ended March 31, 2014, is presented as follows (in millions, except per share amounts): | ||||||||
Stock Options Outstanding | ||||||||
Number | Weighted Average | |||||||
Outstanding | Exercise Price Per | |||||||
Share | ||||||||
Balance at December 31, 2013 | 5.6 | $ | 380.71 | |||||
Options authorized | — | — | ||||||
Options granted | 0.3 | 440.4 | ||||||
Options exercised | (0.2 | ) | 281.34 | |||||
Options forfeited/expired | (0.1 | ) | 470.4 | |||||
Balance at March 31, 2014 | 5.6 | $ | 385.42 | |||||
Summary of RSU Activity | ' | |||||||
A summary of RSU activity for the three months ended March 31, 2014, is presented as follows (in millions, except per share amounts): | ||||||||
Shares | Weighted Average | |||||||
Grant Date Fair Value | ||||||||
Nonvested balance at December 31, 2013 | — | $ | — | |||||
Granted | 0.2 | 443.02 | ||||||
Vested | — | — | ||||||
Canceled | — | — | ||||||
Nonvested balance at March 31, 2014 | 0.2 | $ | 443.02 | |||||
The fair value of RSUs is determined based on the closing quoted price of the Company's common stock on the day of the grant. | ||||||||
Summary of Share-Based Compensation Expense | ' | |||||||
The following table summarizes share-based compensation expense for the three months ended March 31, 2014 and 2013 (in millions): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Cost of sales - products | $ | 4.4 | $ | 3.9 | ||||
Cost of sales - services | 3.1 | 2.9 | ||||||
Total cost of sales | 7.5 | 6.8 | ||||||
Selling, general and administrative | 24.1 | 23 | ||||||
Research and development | 9.2 | 8.4 | ||||||
Share-based compensation expense before income taxes | 40.8 | 38.2 | ||||||
Income tax benefit | 13 | 12.2 | ||||||
Share-based compensation expense after income taxes | $ | 27.8 | $ | 26 | ||||
Schedule of Estimated Fair Value of the Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions | ' | |||||||
The fair value of each option grant and the fair value of the option component of the ESPP shares were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions, assuming no expected dividends: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Stock Option Plans | ||||||||
Average risk free interest rate | 1.5 | % | 0.9 | % | ||||
Average expected term (in years) | 4.5 | 4.6 | ||||||
Average expected volatility | 31 | % | 28 | % | ||||
Weighted average fair value at grant date | $ | 123.45 | $ | 143.09 | ||||
Employee Stock Purchase Plans | ||||||||
Average risk free interest rate | 0.2 | % | 0.2 | % | ||||
Average expected term (in years) | 1.3 | 1.3 | ||||||
Average expected volatility | 33 | % | 33 | % | ||||
Weighted average fair value at grant date | $ | 128.87 | $ | 170.51 | ||||
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Computation of Basic and Diluted Net Income Per Share | ' | |||||||
The following table presents the computation of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 (in millions, except per share amounts): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Numerator: | ||||||||
Net income | $ | 44.3 | $ | 188.9 | ||||
Denominator: | ||||||||
Weighted-average shares outstanding used in basic calculation | 38.3 | 40.3 | ||||||
Add: Dilutive effect of potential common shares | 0.8 | 1.1 | ||||||
Weighted-average shares used in computing diluted net income per share | 39.1 | 41.4 | ||||||
Net income per share: | ||||||||
Basic | $ | 1.16 | $ | 4.69 | ||||
Diluted | $ | 1.13 | $ | 4.56 | ||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (Shipments, USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Shipments | ' |
Deferred Revenue Arrangement [Line Items] | ' |
Revenue deferred during the period | $25.60 |
FINANCIAL_INSTRUMENTS_Summary_
FINANCIAL INSTRUMENTS - Summary of Cash and Available-For-Sale Securities (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||||
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | $2,960.90 | $2,752.30 | ' | ' |
Gross Unrealized Gains | 5.1 | 5.3 | ' | ' |
Gross Unrealized Losses | -2.4 | -3.7 | ' | ' |
Fair Value | 2,963.60 | 2,753.90 | ' | ' |
Cash and Cash Equivalents | 814 | 782.1 | 427.5 | 553.7 |
Short- term Investments | 745.3 | 621.4 | ' | ' |
Long- term Investments | 1,404.30 | 1,350.40 | ' | ' |
Cash | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 210.5 | 247.8 | ' | ' |
Fair Value | 210.5 | 247.8 | ' | ' |
Cash and Cash Equivalents | 210.5 | 247.8 | ' | ' |
Level 1 | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 652.3 | 581.6 | ' | ' |
Gross Unrealized Gains | 0 | 0 | ' | ' |
Gross Unrealized Losses | -0.3 | -0.3 | ' | ' |
Fair Value | 652 | 581.3 | ' | ' |
Cash and Cash Equivalents | 522.5 | 516.2 | ' | ' |
Short- term Investments | 77.6 | 25.5 | ' | ' |
Long- term Investments | 51.9 | 39.6 | ' | ' |
Level 1 | Money market funds | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 522.5 | 516.2 | ' | ' |
Gross Unrealized Gains | 0 | 0 | ' | ' |
Gross Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 522.5 | 516.2 | ' | ' |
Cash and Cash Equivalents | 522.5 | 516.2 | ' | ' |
Level 1 | U.S. Treasuries | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 129.8 | ' | ' | ' |
Gross Unrealized Gains | 0 | ' | ' | ' |
Gross Unrealized Losses | -0.3 | ' | ' | ' |
Fair Value | 129.5 | ' | ' | ' |
Cash and Cash Equivalents | 0 | ' | ' | ' |
Short- term Investments | 77.6 | ' | ' | ' |
Long- term Investments | 51.9 | ' | ' | ' |
Level 1 | U.S. Treasuries & corporate equity securities | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | ' | 65.4 | ' | ' |
Gross Unrealized Gains | ' | 0 | ' | ' |
Gross Unrealized Losses | ' | -0.3 | ' | ' |
Fair Value | ' | 65.1 | ' | ' |
Cash and Cash Equivalents | ' | 0 | ' | ' |
Short- term Investments | ' | 25.5 | ' | ' |
Long- term Investments | ' | 39.6 | ' | ' |
Level 2 | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 2,090.10 | 1,914.90 | ' | ' |
Gross Unrealized Gains | 5.1 | 5.3 | ' | ' |
Gross Unrealized Losses | -2.1 | -2.8 | ' | ' |
Fair Value | 2,093.10 | 1,917.40 | ' | ' |
Cash and Cash Equivalents | 81 | 18.1 | ' | ' |
Short- term Investments | 667.7 | 595.9 | ' | ' |
Long- term Investments | 1,344.40 | 1,303.40 | ' | ' |
Level 2 | Commercial paper | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 171.8 | 100.2 | ' | ' |
Gross Unrealized Gains | 0 | 0 | ' | ' |
Gross Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 171.8 | 100.2 | ' | ' |
Cash and Cash Equivalents | 75 | 18.1 | ' | ' |
Short- term Investments | 96.8 | 82.1 | ' | ' |
Long- term Investments | 0 | 0 | ' | ' |
Level 2 | Corporate securities | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 920.4 | 844.7 | ' | ' |
Gross Unrealized Gains | 2.9 | 2.9 | ' | ' |
Gross Unrealized Losses | -1.4 | -1.9 | ' | ' |
Fair Value | 921.9 | 845.7 | ' | ' |
Cash and Cash Equivalents | 0 | 0 | ' | ' |
Short- term Investments | 234 | 227.7 | ' | ' |
Long- term Investments | 687.9 | 618 | ' | ' |
Level 2 | U.S. government agencies | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 343.3 | 352.2 | ' | ' |
Gross Unrealized Gains | 0.6 | 0.7 | ' | ' |
Gross Unrealized Losses | -0.6 | -0.7 | ' | ' |
Fair Value | 343.3 | 352.2 | ' | ' |
Cash and Cash Equivalents | 6 | 0 | ' | ' |
Short- term Investments | 80.7 | 84.7 | ' | ' |
Long- term Investments | 256.6 | 267.5 | ' | ' |
Level 2 | Non-U.S. government securities | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 70.8 | 67.7 | ' | ' |
Gross Unrealized Gains | 0.2 | 0.2 | ' | ' |
Gross Unrealized Losses | 0 | -0.1 | ' | ' |
Fair Value | 71 | 67.8 | ' | ' |
Cash and Cash Equivalents | 0 | 0 | ' | ' |
Short- term Investments | 40.2 | 41.2 | ' | ' |
Long- term Investments | 30.8 | 26.6 | ' | ' |
Level 2 | Municipal securities | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 583.8 | 550.1 | ' | ' |
Gross Unrealized Gains | 1.4 | 1.5 | ' | ' |
Gross Unrealized Losses | -0.1 | -0.1 | ' | ' |
Fair Value | 585.1 | 551.5 | ' | ' |
Cash and Cash Equivalents | 0 | 0 | ' | ' |
Short- term Investments | 216 | 160.2 | ' | ' |
Long- term Investments | 369.1 | 391.3 | ' | ' |
Level 3 | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 8 | 8 | ' | ' |
Gross Unrealized Gains | 0 | 0 | ' | ' |
Gross Unrealized Losses | 0 | -0.6 | ' | ' |
Fair Value | 8 | 7.4 | ' | ' |
Cash and Cash Equivalents | 0 | 0 | ' | ' |
Short- term Investments | 0 | 0 | ' | ' |
Long- term Investments | 8 | 7.4 | ' | ' |
Level 3 | Municipal securities | ' | ' | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | ' | ' |
Amortized Cost | 8 | 8 | ' | ' |
Gross Unrealized Gains | 0 | 0 | ' | ' |
Gross Unrealized Losses | 0 | -0.6 | ' | ' |
Fair Value | 8 | 7.4 | ' | ' |
Cash and Cash Equivalents | 0 | 0 | ' | ' |
Short- term Investments | 0 | 0 | ' | ' |
Long- term Investments | $8 | $7.40 | ' | ' |
FINANCIAL_INSTRUMENTS_Summary_1
FINANCIAL INSTRUMENTS - Summary of Contractual Maturities of Cash Equivalents and Available-For-Sale Investments (Detail) (USD $) | Mar. 31, 2014 |
In Millions, unless otherwise specified | |
Amortized Cost | ' |
Mature in less than one year, Amortized Cost | $825 |
Mature in one to five years, Amortized Cost | 1,394.90 |
Mature in after five years, Amortized Cost | 8 |
Total, Amortized Cost | 2,227.90 |
Fair Value | ' |
Mature in less than one year, Fair Value | 826.3 |
Mature in one to five years, Fair Value | 1,396.30 |
Mature in after five years, Fair Value | 8 |
Total, Fair Value | $2,230.60 |
FINANCIAL_INSTRUMENTS_Derivati
FINANCIAL INSTRUMENTS - Derivative Instruments Used to Hedge against Balance Sheet Foreign Currency Exposures (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Foreign exchange gains (losses) related to re-measurement | ($0.60) | ($1.40) |
Foreign Exchange Forward | Interest and other income (expense), net | Not Designated As Hedging Instrument | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Recognized gains (losses) in interest and other income, net | $0.90 | $1 |
FINANCIAL_INSTRUMENTS_Gross_No
FINANCIAL INSTRUMENTS - Gross Notional Amounts for Outstanding Derivatives (Detail) | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | EUR (€) | KRW | EUR (€) | KRW | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward |
Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | |||||
CHF | EUR (€) | GBP (£) | JPY (¥) | KRW | CHF | EUR (€) | GBP (£) | JPY (¥) | KRW | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amounts of outstanding currency forward contracts | € 29.50 | 621.2 | € 59 | 4,400 | 1.5 | € 33 | £ 10.4 | ¥ 75 | 21,978.80 | 0 | € 64 | £ 7.7 | ¥ 60 | 23,000 |
FINANCIAL_INSTRUMENTS_Addition
FINANCIAL INSTRUMENTS - Additional Information (Detail) | 3 Months Ended | 1 Months Ended | ||||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2014 |
USD ($) | USD ($) | EUR (€) | KRW | USD ($) | EUR (€) | KRW | Prepaid expenses and other current assets | Other accrued liabilities | Subsequent Event | |
USD ($) | USD ($) | USD ($) | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Realized gains, net of tax, recognized on the sale of investments | ($0.10) | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Realized losses, net of tax, recognized on the sale of investments | ' | 0.2 | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated other comprehensive income, net unrealized gains on investments, before tax | 2.7 | ' | ' | ' | 1.6 | ' | ' | ' | ' | ' |
Accumulated other comprehensive income, net unrealized gains on investments, tax | 1.1 | ' | ' | ' | 0.7 | ' | ' | ' | ' | ' |
Unrealized gains related to the recovery of unrealized losses recorded in previous quarter | 0.6 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available-for-sale securities, liquidated, par value | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 |
Derivative assets | ' | ' | ' | ' | ' | ' | ' | 0.4 | ' | ' |
Derivative liabilities | ' | ' | ' | ' | ' | ' | ' | ' | 3.8 | ' |
Notional amounts of outstanding currency forward contracts | ' | ' | € 29.50 | 621.2 | ' | € 59 | 4,400 | ' | ' | ' |
BALANCE_SHEET_DETAILS_Details_
BALANCE SHEET DETAILS - Details of Selected Balance Sheet Items (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Inventories: | ' | ' |
Raw materials | $60 | $67.20 |
Work-in-process | 8.4 | 12.6 |
Finished goods | 117.1 | 99.8 |
Total inventories | 185.5 | 179.6 |
Goodwill and Intangible Assets | ' | ' |
Increase in goodwill | 10.1 | ' |
Increase in intangible assets | 4.8 | ' |
Amortization expense | 4.7 | ' |
Intangible assets | $9.50 | ' |
CONTINGENCIES_Additional_Infor
CONTINGENCIES - Additional Information (Detail) (USD $) | 0 Months Ended | 117 Months Ended | |
In Millions, unless otherwise specified | Feb. 27, 2014 | Sep. 30, 2013 | Mar. 31, 2014 |
lawsuit | surgery | Product liability claims | |
lawsuit | |||
Commitments and Contingencies [Line Items] | ' | ' | ' |
Estimate of probably loss recorded | ' | ' | $67.40 |
Number of lawsuits | ' | ' | 83 |
Number of claims reported and consolidated | 1,406 | ' | ' |
Number of surgeries performed with da Vinci Surgical System in the United States | ' | 1,700,000 | ' |
STOCKHOLDERS_EQUITY_Components
STOCKHOLDERS' EQUITY - Components of Accumulated Other Comprehensive Income, Net of Tax (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Gains (Losses) on Hedge Instruments | ' | ' |
Beginning balance | $0 | $0 |
Other comprehensive income before reclassifications | 0.5 | 1.4 |
Reclassified from accumulated other comprehensive income | -0.3 | -0.6 |
Net current-period other comprehensive income | 0.2 | 0.8 |
Ending balance | 0.2 | 0.8 |
Unrealized Gains (Losses) on Securities | ' | ' |
Beginning balance | 1.7 | 6.2 |
Other comprehensive income before reclassifications | 3.9 | 0.9 |
Reclassified from accumulated other comprehensive income | -0.1 | 0.2 |
Net current-period other comprehensive income | 3.8 | 1.1 |
Ending balance | 5.5 | 7.3 |
Foreign Currency Translation Gains (Losses) | ' | ' |
Beginning balance | 0.4 | 0.4 |
Other comprehensive income before reclassifications | 0.3 | -0.4 |
Reclassified from accumulated other comprehensive income | 0 | 0 |
Net current-period other comprehensive income | 0.3 | -0.4 |
Ending balance | 0.7 | 0 |
Employee Benefit Plans | ' | ' |
Beginning balance | 0 | 0 |
Other comprehensive income before reclassifications | -2.6 | 0 |
Reclassified from accumulated other comprehensive income | 0 | 0 |
Net current-period other comprehensive income | -2.6 | 0 |
Ending balance | -2.6 | 0 |
Total | ' | ' |
Beginning balance | 2.1 | 6.6 |
Other comprehensive income before reclassifications | 2.1 | 1.9 |
Reclassified from accumulated other comprehensive income | -0.4 | -0.4 |
Net current-period other comprehensive income | 1.7 | 1.5 |
Ending balance | $3.80 | $8.10 |
SHAREBASED_COMPENSATION_Summar
SHARE-BASED COMPENSATION - Summary Of Stock Option Activity Under All Stock Plans (Detail) (USD $) | 3 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 |
Number Outstanding | ' |
Beginning balance, Number Outstanding | 5.6 |
Options authorized, Number Outstanding | 0 |
Options granted, Number Outstanding | 0.3 |
Options exercised, Number Outstanding | -0.2 |
Options forfeited/expired, Number Outstanding | -0.1 |
Ending balance, Number Outstanding | 5.6 |
Weighted Average Exercise Price Per Share | ' |
Beginning balance, Weighted Average Exercise Price Per Share | $380.71 |
Options authorized, Weighted Average Exercise Price Per Share | $0 |
Options granted, Weighted Average Exercise Price Per Share | $440.40 |
Options exercised, Weighted Average Exercise Price Per Share | $281.34 |
Options forfeited/expired, Weighted Average Exercise Price Per Share | $470.40 |
Ending balance, Weighted Average Exercise Price Per Share | $385.42 |
SHAREBASED_COMPENSATION_Summar1
SHARE-BASED COMPENSATION - Summary of RSU Activity (Details) (Restricted Stock Units (RSUs), USD $) | 3 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 |
Restricted Stock Units (RSUs) | ' |
RSU Activity, Shares [Roll Forward] | ' |
Nonvested balance at December 31, 2013 | 0 |
Granted | 0.2 |
Vested | 0 |
Canceled | 0 |
Nonvested balance at March 31, 2014 | 0.2 |
RSU Activity, Weighted Average Grant Date Fair Value | ' |
Nonvested balance at December 31, 2013 | $0 |
Granted | $443.02 |
Vested | $0 |
Canceled | $0 |
Nonvested balance at March 31, 2014 | $443.02 |
SHAREBASED_COMPENSATION_StockB
SHARE-BASED COMPENSATION - Stock-Based Compensation Expense (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | $40.80 | $38.20 |
Income tax benefit | 13 | 12.2 |
Share-based compensation expense after income taxes | 27.8 | 26 |
Total cost of sales | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | 7.5 | 6.8 |
Total cost of sales | Cost of sales - products | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | 4.4 | 3.9 |
Total cost of sales | Cost of sales - services | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | 3.1 | 2.9 |
Selling, general and administrative | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | 24.1 | 23 |
Research and development | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Share-based compensation expense before income taxes | $9.20 | $8.40 |
SHAREBASED_COMPENSATION_Schedu
SHARE-BASED COMPENSATION - Schedule Of Estimated Fair Value Of Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stock Options | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected dividend rate | 0.00% | 0.00% |
Average risk free interest rate | 1.50% | 0.90% |
Average expected term (in years) | '4 years 6 months 11 days | '4 years 7 months 7 days |
Average expected volatility | 31.00% | 28.00% |
Weighted average fair value at grant date | $123.45 | $143.09 |
Employee Stock Purchase Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected dividend rate | 0.00% | 0.00% |
Average risk free interest rate | 0.20% | 0.20% |
Average expected term (in years) | '1 year 3 months | '1 year 3 months |
Average expected volatility | 33.00% | 33.00% |
Weighted average fair value at grant date | $128.87 | $170.51 |
SHAREBASED_COMPENSATION_Additi
SHARE-BASED COMPENSATION - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options exercisable, number of shares | 3.3 | ' |
Options exercisable, weighted-average exercise price per share | $334.50 | ' |
Employee Stock Purchase Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Employee Stock Purchase Plan, number of shares purchased by employees | 0.1 | 0.1 |
Employee Stock Purchase Plan, value of shares purchased by employees | $17.50 | $16.40 |
Amended and Restated 2009 Employment Commencement Incentive Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of shares of common stock authorized | 1.2 | ' |
Restricted Stock Units (RSUs) | Amended and Restated 2009 Employment Commencement Incentive Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of shares of common stock authorized | 0.5 | ' |
INCOME_TAXES_Additional_Inform
INCOME TAXES - Additional Information (Detail) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Income tax expense | $16.20 | $66.60 | ' |
Income tax expense, percentage of pre-tax income | 26.80% | 26.10% | ' |
Federal statutory tax rate | 35.00% | ' | ' |
Total gross unrecognized tax benefits | 75.9 | ' | 74 |
Unrecognized tax benefits, period increase | 1.9 | ' | ' |
Gross interest and penalties related to unrecognized tax benefit accrued | $3.70 | ' | $3.40 |
NET_INCOME_PER_SHARE_Computati
NET INCOME PER SHARE - Computation of Basic and Diluted Net Income Per Share (Detail) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share, Basic and Diluted [Abstract] | ' | ' |
Net income | $44.30 | $188.90 |
Weighted-average shares outstanding used in basic calculation | 38.3 | 40.3 |
Add: Dilutive effect of potential common shares | 0.8 | 1.1 |
Weighted-average shares used in computing diluted net income per share | 39.1 | 41.4 |
Net income per share: | ' | ' |
Basic (in dollars per share) | $1.16 | $4.69 |
Diluted (in dollars per share) | $1.13 | $4.56 |
NET_INCOME_PER_SHARE_Additiona
NET INCOME PER SHARE - Additional Information (Detail) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Employee stock options excluded from computation of diluted net income per share | 2.9 | 1.7 |