Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 17, 2017 | |
Document Document And Entity Information [Abstract] | ||
Entity Registrant Name | INTUITIVE SURGICAL INC | |
Trading Symbol | ISRG | |
Entity Central Index Key | 1,035,267 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 112,047,836 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 875 | $ 1,036.6 |
Short-term investments | 1,271.8 | 1,518 |
Accounts receivable, net | 468 | 430.2 |
Inventory | 225.2 | 182.3 |
Prepaids and other current assets | 88.9 | 83.3 |
Total current assets | 2,928.9 | 3,250.4 |
Property, plant and equipment, net | 584.8 | 458.4 |
Long-term investments | 1,655.2 | 2,283.3 |
Deferred tax assets | 119.8 | 150.9 |
Intangible and other assets, net | 154.8 | 142.8 |
Goodwill | 201.1 | 201.1 |
Total assets | 5,644.6 | 6,486.9 |
Current liabilities: | ||
Accounts payable | 80.4 | 68.5 |
Accrued compensation and employee benefits | 124.7 | 136.4 |
Deferred revenue | 282.5 | 240.6 |
Other accrued liabilities | 128.1 | 151 |
Total current liabilities | 615.7 | 596.5 |
Other long-term liabilities | 69 | 112.6 |
Total liabilities | 684.7 | 709.1 |
Contingencies (Note 6) | ||
Stockholders’ equity: | ||
Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of September 30, 2017, and December 31, 2016 | 0 | 0 |
Common stock, 300.0 shares authorized, $0.001 par value, 112.0 shares and 116.4 shares issued and outstanding as of September 30, 2017, and December 31, 2016, respectively | 0.1 | 0 |
Additional paid-in capital | 4,190.4 | 4,211.8 |
Retained earnings | 776.6 | 1,574.9 |
Accumulated other comprehensive loss | (9.2) | (8.9) |
Total Intuitive Surgical, Inc. stockholders’ equity | 4,957.9 | 5,777.8 |
Noncontrolling interest in joint venture | 2 | 0 |
Total stockholders’ equity | 4,959.9 | 5,777.8 |
Total liabilities and stockholders’ equity | $ 5,644.6 | $ 6,486.9 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
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) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 112,000,000 | 116,400,000 |
Common stock, shares outstanding (in shares) | 112,000,000 | 116,400,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Product | $ 659.3 | $ 553.2 | $ 1,807.5 | $ 1,565.2 |
Service | 146.8 | 129.7 | 429 | 382.3 |
Total revenue | 806.1 | 682.9 | 2,236.5 | 1,947.5 |
Cost of revenue: | ||||
Product | 195 | 158.4 | 543.1 | 475.8 |
Service | 44.3 | 37.5 | 132.6 | 108.8 |
Total cost of revenue | 239.3 | 195.9 | 675.7 | 584.6 |
Gross profit | 566.8 | 487 | 1,560.8 | 1,362.9 |
Operating expenses: | ||||
Selling, general and administrative | 204.8 | 168 | 591.7 | 511.6 |
Research and development | 83.4 | 62.6 | 241.5 | 170.5 |
Total operating expenses | 288.2 | 230.6 | 833.2 | 682.1 |
Income from operations | 278.6 | 256.4 | 727.6 | 680.8 |
Interest and other income, net | 10.8 | 10.4 | 29.6 | 23.9 |
Income before taxes | 289.4 | 266.8 | 757.2 | 704.7 |
Income tax (benefit) expense | (8.1) | 55.8 | 58.4 | 172.8 |
Net income | $ 297.5 | $ 211 | $ 698.8 | $ 531.9 |
Net income per share: | ||||
Basic (in dollars per share) | $ 2.66 | $ 1.82 | $ 6.26 | $ 4.64 |
Diluted (in dollars per share) | $ 2.55 | $ 1.77 | $ 6.03 | $ 4.52 |
Shares used in computing net income per share: | ||||
Weighted-average shares outstanding used in basic calculation | 111.8 | 116.1 | 111.6 | 114.6 |
Diluted (in shares) | 116.8 | 119.1 | 115.9 | 117.6 |
Total comprehensive income | $ 298.1 | $ 205.7 | $ 698.5 | $ 545.4 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Operating activities: | |||
Net income | $ 698.8 | $ 531.9 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and loss on disposal of property, plant, and equipment | 61.4 | 54 | |
Amortization of intangible assets | 10.1 | 14 | |
Loss on investments, accretion of discounts, and amortization of premiums on investments, net | 16.8 | 26.3 | |
Deferred income taxes | 28.8 | 31.7 | |
Income tax benefits from employee stock plans | 0 | 25.6 | |
Share-based compensation expense | 153.5 | 132.1 | |
Changes in operating assets and liabilities | |||
Accounts receivable | (37.8) | (37.7) | |
Inventory | (82.7) | (40.8) | |
Prepaids and other assets | (13.6) | (19) | |
Accounts payable | 11.9 | 6.4 | |
Accrued compensation and employee benefits | (11.3) | (12.9) | |
Deferred revenue | 45.1 | 5.9 | |
Other liabilities | (69.1) | 39.8 | |
Net cash provided by operating activities | [1] | 811.9 | 757.3 |
Investing activities: | |||
Purchase of investments | (1,122.1) | (1,896.6) | |
Proceeds from sales of investments | 1,525.6 | 278.4 | |
Proceeds from maturities of investments | 450.7 | 683.9 | |
Purchase of property, plant and equipment, and intellectual property | (159.7) | (36.1) | |
Net cash provided by (used in) investing activities | 694.5 | (970.4) | |
Financing activities: | |||
Proceeds from issuance of common stock relating to employee stock plans | 381.6 | 550.4 | |
Taxes paid related to net share settlement of equity awards | (53.6) | (23.2) | |
Repurchase of common stock | (2,000) | (8.1) | |
Other financing activities | 2 | 0 | |
Net cash provided by (used in) financing activities | [1] | (1,670) | 519.1 |
Effect of exchange rate changes on cash and cash equivalents | 2 | 1 | |
Net increase (decrease) in cash and cash equivalents | (161.6) | 307 | |
Cash and cash equivalents, beginning of period | 1,036.6 | 714.6 | |
Cash and cash equivalents, end of period | $ 875 | $ 1,021.6 | |
[1] | The Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, during the first quarter of 2017. This ASU eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The Company adopted this provision retrospectively by reclassifying $39.5 million of excess tax benefits from financing activities to operating activities for the nine months ended September 30, 2016. |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - Footnote - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Net cash provided by financing activities | [1] | $ (1,670) | $ 519.1 |
Net cash provided by operating activities | [1] | $ 811.9 | 757.3 |
Accounting Standards Update 2016-09 | |||
Net cash provided by financing activities | (39.5) | ||
Net cash provided by operating activities | $ 39.5 | ||
[1] | The Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, during the first quarter of 2017. This ASU eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The Company adopted this provision retrospectively by reclassifying $39.5 million of excess tax benefits from financing activities to operating activities for the nine months ended September 30, 2016. |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci ® Surgical Systems and related instruments and accessories, which taken together, are advanced surgical systems that the Company believes enable a new generation of surgery. This advanced 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 System translates 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 System is 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 ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
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- and majority-owned subsidiaries have been prepared on a consistent basis with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2016 , 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, 2016 , which was filed with the SEC on February 6, 2017. The results of operations for the first nine months of fiscal year 2017 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods. The Financial Statements include the results and the balances of the Company's majority owned joint venture with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. The Company holds a controlling financial interest in the joint venture and the noncontrolling interest is reflected as a separate component of consolidated stockholders’ equity. Noncontrolling interest in net income was inconsequential to the consolidated results for all periods presented and, therefore, has not been separately presented in the condensed consolidated statements of comprehensive income. Common Stock Split Shares issued pursuant to the three -for-one stock split (the “Stock Split”) of the Company’s issued and outstanding common stock, par value $0.001 per share, were distributed on October 5, 2017, to stockholders of record as of September 29, 2017. All share and per share information presented in the Financial Statements have been retroactively adjusted to reflect the Stock Split. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . This new standard will replace most of the existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The new standard, as amended, becomes effective for the Company in the first quarter of fiscal year 2018. The Company currently plans to adopt this accounting standard in the first quarter of fiscal year 2018 using the full retrospective method to restate each prior reporting period presented in its Financial Statements. While the Company is continuing to assess the effect of this new standard, the Company currently believes that contractual future billings related to services included in its multi-year contracts will be considered performance obligations that should be part of the contract consideration allocated to all deliverables. Under the current standard, future service billings are considered to be contingent revenue. Accordingly, the amount of contract consideration allocated to the performance obligations identified in the Company’s system arrangements would be different under the new standard than the amount allocated under the current standard, which will result in an acceleration of revenue recognition. The Company currently expects that under the new standard a greater amount of the contract consideration would be allocated to the product-related performance obligations, which are generally delivered upfront. In addition, the Company also expects that incremental contract acquisition costs of obtaining revenue generating contracts, such as sales commissions paid in connection with system sales with multi-year service commitments, would be capitalized and amortized over the economic life of the contract. Under the current guidance, the Company expenses such costs when incurred. The new revenue standard is principle based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice, and guidance may evolve as companies and the accounting profession work to implement this new standard. The Company is still in the process of evaluating the effect of the new standard on the Company’s historical financial statements and disclosures. While the Company has not completed its evaluation, the Company currently believes that the impact to revenue and expense recognized will not be material to any of the years presented. As the Company completes its evaluation of this new standard, new information may arise that could change the Company’s current understanding of the impact to revenue and expense recognized. Additionally, the Company will continue to monitor industry activities and any additional guidance provided by regulators, standards setters, or the accounting profession and adjust the Company’s assessment and implementation plans accordingly. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). The new standard also requires expanded disclosures regarding leasing arrangements. The new standard becomes effective for the Company in the first quarter of fiscal year 2019 and early adoption is permitted. The new standard is required to be adopted using the modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company generally does not finance purchases of equipment or other capital, but does lease some of its facilities. The Company’s customers finance purchases of da Vinci systems and ancillary products, including directly with the Company. It is currently unknown whether the new standard will change customer buying patterns or behaviors. The Company is evaluating the effect that this new standard will have on its Financial Statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory , which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This ASU will be effective for the Company in the first quarter of 2018. This ASU is required to be adopted using the modified retrospective approach, with a cumulative catch-up adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of adopting this ASU on its Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. Adopted Accounting Pronouncement Beginning fiscal 2017, the Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting , which changes among other things, how the tax effects of share-based awards are recognized. ASU No. 2016-09 requires excess tax benefits and tax deficiencies to be recognized in the provision for income taxes as discrete items in the period when the awards vest or are settled, whereas previously such income tax effects were generally recorded as part of additional paid-in capital. The provision for income taxes for the three and nine months ended September 30, 2017, included excess tax benefits of $19.7 million and $82.9 million , respectively, that reduced the Company’s effective tax rate by 6.8 and 10.9 percentage points, respectively. The recognized excess tax benefits resulted from share-based compensation awards primarily associated with employee equity plans that were vested or settled in the three and nine months ended September 30, 2017. This ASU also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The Company adopted this provision retrospectively by reclassifying $39.5 million of excess tax benefits from financing activities to operating activities for the nine months ended September 30, 2016. The Company also excluded the related tax benefits when applying the treasury stock method for computing diluted shares outstanding on a prospective basis as required by this ASU. In addition, the Company elected to continue its current practice of estimating expected forfeitures. The amount of excess tax benefits and deficiencies recognized in the provision for income taxes will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to share-based instruments under U.S. GAAP. Significant Accounting Policies There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , that are of significance, or potential significance to the Company. The information provided below related to the Company’s allowance for sales returns and doubtful accounts policies provide additional clarification on the Company’s policy of accounting for arrangements with rights of return that occurred during the first quarter of 2017. Allowance for Sales Returns and Doubtful Accounts The allowance for sales returns is based on the Company’s estimate 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. The Company offered certain customers who purchased surgical systems in the first quarter of fiscal 2017 the opportunity to return such systems and receive a credit toward the purchase of the da Vinci X surgical system launched in the second quarter of 2017. In accordance with the guidance relating to the accounting for arrangements in which return rights exist, revenue and associated costs equal to the Company’s estimate of the amount of product that will be returned in a future period was deferred. A total of $23.4 million and $8.1 million of revenue and product costs, respectively, related to shipments made in the first quarter of 2017, were deferred from recognition in the Company’s first quarter Financial Statements. Subject to meeting all other criteria of the Company’s revenue recognition policy, the revenue and product cost deferred will be recognized at the date the trade-out rights are exercised by the customers or at the expiration of unexercised rights, which the Company anticipates to be substantially completed prior to the end of 2017. During the three months ended September 30, 2017, the Company recognized $21.3 million and $7.3 million of previously deferred revenue and product costs, respectively, as a result of those offers having expired unexercised. As of September 30, 2017, a total of $2.1 million and $0.8 million of revenue and product costs, respectively, remained deferred related to this program. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Investments, All Other Investments [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Cash, Cash Equivalents, and Investments The following tables summarize the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents, short-term, or long-term investments as of September 30, 2017 , and December 31, 2016 (in millions): Reported as: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short- term Investments Long- term Investments September 30, 2017 Cash $ 252.4 $ — $ — $ 252.4 $ 252.4 $ — $ — Level 1: Money market funds 590.5 — — 590.5 590.5 — — U.S. treasuries 448.7 — (1.9 ) 446.8 8.7 182.8 255.3 Subtotal 1,039.2 — (1.9 ) 1,037.3 599.2 182.8 255.3 Level 2: Commercial paper 80.5 — — 80.5 6.0 74.5 — Corporate debt securities 1,262.9 0.6 (2.2 ) 1,261.3 2.4 533.0 725.9 U.S. government agencies 774.2 0.1 (2.5 ) 771.8 8.0 270.7 493.1 Non-U.S. government securities 8.5 — — 8.5 6.0 2.5 — Municipal securities 390.4 0.2 (0.4 ) 390.2 1.0 208.3 180.9 Subtotal 2,516.5 0.9 (5.1 ) 2,512.3 23.4 1,089.0 1,399.9 Total assets measured at fair value $ 3,808.1 $ 0.9 $ (7.0 ) $ 3,802.0 $ 875.0 $ 1,271.8 $ 1,655.2 Reported as: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short- term Investments Long- term Investments December 31, 2016 Cash $ 227.7 $ — $ — $ 227.7 $ 227.7 $ — $ — Level 1: Money market funds 612.4 — — 612.4 612.4 — — U.S. treasuries 625.9 0.1 (2.0 ) 624.0 157.9 168.4 297.7 Subtotal 1,238.3 0.1 (2.0 ) 1,236.4 770.3 168.4 297.7 Level 2: Commercial paper 139.6 — — 139.6 31.1 108.5 — Corporate debt securities 1,471.8 0.7 (5.0 ) 1,467.5 2.9 555.4 909.2 U.S. government agencies 938.7 0.5 (2.9 ) 936.3 — 342.7 593.6 Non-U.S. government securities 18.5 — — 18.5 — 16.0 2.5 Municipal securities 815.4 — (3.5 ) 811.9 4.6 327.0 480.3 Subtotal 3,384.0 1.2 (11.4 ) 3,373.8 38.6 1,349.6 1,985.6 Total assets measured at fair value $ 4,850.0 $ 1.3 $ (13.4 ) $ 4,837.9 $ 1,036.6 $ 1,518.0 $ 2,283.3 The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale investments (excluding cash and money market funds), as of September 30, 2017 (in millions): Amortized Cost Fair Value Mature in less than one year $ 1,304.9 $ 1,303.9 Mature in one to five years 1,660.3 1,655.2 Total $ 2,965.2 $ 2,959.1 Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations. Realized gains and losses, recognized on the sale of investments, were not material for any of the periods presented. There were no transfers between Level 1 and Level 2 measurements during the nine months ended September 30, 2017 , and there were no changes in the valuation techniques used by the Company. Foreign Currency Derivatives The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on cash flow from foreign currency denominated sales, expenses, intercompany balances, and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). The terms of the Company’s derivative contracts are generally twelve months or shorter. 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 USD, primarily the European Euro (“EUR”), the British Pound (“GBP”), the Japanese Yen (“JPY”), and the Korean Won (“KRW”). The Company also enters into currency forward contracts as cash flow hedges to hedge certain forecasted expense transactions denominated in EUR and the Swiss Franc (“CHF”). For these derivatives, the Company reports the after-tax gain or loss from the hedge as a component of accumulated other comprehensive gain (loss) in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The amounts reclassified to revenue and expenses related to the hedged transactions and the ineffective portions of cash flow hedges were not material for the periods presented. 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 USD, primarily the EUR, GBP, JPY, KRW, and CHF. The net gains (losses) recognized in interest and other income, net in the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2017 , and 2016 , were not material. The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for outstanding derivatives and aggregate gross fair value at the end of each period were as follows (in millions): Derivatives Designated as Hedging Instruments Derivatives Not Designated as Hedging Instruments September 30, December 31, September 30, December 31, Notional amounts: Forward contracts $ 130.0 $ 109.7 $ 122.5 $ 143.7 Gross fair value recorded in: Prepaids and other current assets $ 1.6 $ 6.2 $ 1.7 $ 5.6 Other accrued liabilities $ 4.1 $ 1.0 $ 2.5 $ 0.6 |
BALANCE SHEET DETAILS AND OTHER
BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION | BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION Inventory The following table provides further details of inventory (in millions): As of September 30, December 31, Raw materials $ 67.7 $ 54.8 Work-in-process 18.5 13.4 Finished goods 139.0 114.1 Total inventory $ 225.2 $ 182.3 Supplemental Cash Flow Information The following table provides supplemental non-cash investing activities (in millions): Nine Months Ended September 30, 2017 2016 Equipment transfers, including operating lease assets, from inventory to property, plant and equipment $ 45.1 $ 31.1 |
LEASE RECEIVABLES
LEASE RECEIVABLES | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
LEASE RECEIVABLES | LEASE RECEIVABLES Lease receivables relating to sales-type lease arrangements are presented on the Condensed Consolidated Balance Sheets as follows (in millions): As of September 30, December 31, Gross lease receivable $ 113.0 $ 104.3 Unearned income (4.7 ) (4.8 ) Allowance for credit loss (0.8 ) (0.6 ) Net investment in sales-type leases 107.5 98.9 Reported as: Prepaids and other current assets 35.0 29.8 Intangible and other assets, net 72.5 69.1 Total, net $ 107.5 $ 98.9 Contractual maturities of gross lease receivables at September 30, 2017 , are as follows (in millions): Amount 2017 $ 9.3 2018 38.0 2019 29.8 2020 19.5 2021 11.2 2022 and thereafter 5.2 Total $ 113.0 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
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, intellectual property, insurance, contract disputes, employment, and other matters. Certain of these lawsuits and claims are described in further detail below. It is not possible to predict what the outcome of these matters will be and the Company cannot guarantee that any resolution will be reached on commercially reasonable terms, if at all. A liability and related charge to earnings are recorded in the Company’s Financial Statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is reevaluated each accounting period and is based on all available information, including impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to each case. Nevertheless, it is possible that additional 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 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 a number 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 retitled In re Intuitive Surgical Securities Litigation, No. 5:13-cv-1920. 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 allegedly making false and misleading statements and omitting certain material facts in certain public statements and in the Company’s filings with the SEC. On November 18, 2013, the court appointed the 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, which was granted in part and denied in part on August 21, 2014. The plaintiffs elected not to further amend their complaint at that time. On October 22, 2014, the court granted the Company’s motion for leave to file a motion for reconsideration of the court’s August 21, 2014, order. The Company filed its motion for reconsideration on November 5, 2014. Following opposition and reply briefing, the court denied the motion on December 15, 2014, allowing the case to move forward on the claims that remained. The plaintiffs moved for class certification on September 1, 2015, and following opposition and reply briefing, the court held a hearing on the motion on January 21, 2016. While that motion remained pending, on October 11, 2016, the Company sent plaintiffs’ lead counsel, Labaton Sucharow LLP, a letter enclosing a draft motion for sanctions pursuant to Federal Rule of Civil Procedure 11, primarily based on statements to the court that lacked a proper factual basis. In response, on November 1, 2016, plaintiffs’ local counsel withdrew from the case entirely and withdrew their signatures from the disputed pleadings. On November 2, 2016, Labaton Sucharow LLP filed a motion for leave to file an amended complaint that did not include the disputed statements. On November 16, 2016, the Company filed an opposition to plaintiffs’ motion, along with an independent motion to strike the amended complaint and the pleadings from which plaintiffs’ local counsel withdrew their signatures. Following additional briefing, the motion for leave to amend and motion to strike were fully submitted to the court on November 23, 2016, and December 7, 2016, respectively. On December 22, 2016, the court entered an order granting plaintiffs’ motion for class certification. On January 5, 2017, the Company filed a Petition for Permission to Appeal from the order granting class certification in the U.S. Court of Appeals for the Ninth Circuit. The court of appeals has not yet ruled on the Company’s petition. On January 12, 2017, plaintiffs sought leave to file a motion for partial reconsideration of the court’s class certification order, which the court granted on March 17, 2017. Plaintiffs filed the motion for reconsideration itself on April 3, 2017, and the Company filed its opposition on April 17, 2017. The court denied the motion on September 29, 2017. On January 25, 2017, the court entered an order granting plaintiffs’ motion for leave to amend the complaint and denying the Company’s motion to strike. On February 9, 2017, the Company moved to dismiss the amended complaint. Following opposition and reply briefing, the matter was fully submitted to the court on March 2, 2017. The court denied the motion on September 29, 2017. On July 13, 2017, the parties filed a stipulation vacating the case schedule, which the court entered on July 14, 2017. On October 11, 2017, the court scheduled a trial setting conference for November 16, 2017. 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 on February 3, 2014, February 21, 2014, March 21, 2014, June 3, 2014, and March 5, 2015 On February 3, 2014, an alleged stockholder, Robert Berg, 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. The lawsuit names the Company as a nominal defendant and names a number of the Company’s current and former officers and directors as defendants. The plaintiff seeks to recover, on the Company’s behalf, unspecified damages purportedly sustained by the Company in connection with allegedly misleading statements and/or omissions made in connection with the Company’s financial reporting for the period between 2012 and early 2014. The plaintiff also seeks a series of changes to the Company’s corporate governance policies and an award of attorneys’ fees. On April 3, 2014, the case was related to In re Intuitive Surgical Securities Litigation. On July 30, 2014, the court granted Berg’s motion to be appointed lead plaintiff, denied the City of Birmingham’s motion seeking such appointment (see below for additional description), and retitled the matter In re Intuitive Surgical, Inc. Shareholder Derivative Litigation , No. 4:14-CV-00515. On August 13, 2014, the plaintiffs filed a consolidated complaint, making allegations substantially similar to the allegations in the original complaint. On September 12, 2014, the Company filed a motion to dismiss the consolidated complaint. The plaintiffs filed an opposition on October 9, 2014, and the Company filed its reply on October 30, 2014. The court denied the Company’s motion to dismiss on November 16, 2015. On January 26, 2016, the Company moved to stay this lawsuit in favor of Public School Teachers’ Pension and Retirement Fund of Chicago v. Guthart et al. (see below for additional description). Plaintiff opposed the motion to stay on February 16, 2016, the Company filed its reply on March 1, 2016, and a hearing was set for June 16, 2016. While the motion was pending, however, the Company and the plaintiff agreed in principle that the plaintiff would file a motion to intervene in the Public School Teachers’ Pension and Retirement Fund of Chicago action and withdraw his opposition to the motion to stay. On March 17, 2016, the parties jointly requested that the court not rule on the motion to stay while the agreement was being implemented. Following additional negotiations, the plaintiff filed an unopposed motion to intervene on April 29, 2016. After additional briefing, on May 23, 2016, the court in the Public School Teachers’ Pension and Retirement Fund of Chicago action granted the motion. Accordingly, on May 31, 2016, the parties filed a stipulation requesting that the court stay In re Intuitive Surgical, Inc. Shareholder Derivative Litigation . The court granted the stay on June 2, 2016. Additional discussions between the parties ensued, and on September 15, 2016, they executed a confidential Memorandum of Understanding that contained the essential terms of a settlement to which the parties agreed in principle. That settlement, as later finalized, provides for a dismissal with prejudice and release of all claims brought in both the In re Intuitive Surgical, Inc. Shareholder Derivative Litigation action and the Public School Teachers’ Pension and Retirement Fund of Chicago action, as well as City of Plantation Police Officers’ Employees’ Retirement System v. Guthart et al. (see below for additional description). The settlement, which also includes terms that require the Company to reimburse the plaintiffs’ lawyers’ legal fees, is subject to court approval as described below. In the interim, the In re Intuitive Surgical, Inc. Shareholder Derivative Litigation action remains stayed. 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. On February 21, 2014, a second alleged stockholder caused a substantially similar purported stockholder’s derivative lawsuit entitled Public School Teachers’ Pension and Retirement Fund of Chicago v. Guthart et al. , No. CIV 526930, to be filed 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 case was removed to the United States District Court for the Northern District of California, where it was related to In re Intuitive Surgical Securities Litigation and Berg v. Guthart on April 30, 2014. The district court remanded the case back to San Mateo County Superior Court on June 30, 2014. On August 28, 2014, the Company filed a motion seeking to stay the case in favor of the federal action and asking that the plaintiff be required to post a bond on the grounds that the action was duplicative and was not in the Company’s best interests. On November 13, 2014, the superior court entered an order denying in part the Company’s motion to stay and denying the Company’s request for plaintiff’s bond. On November 18, 2014, the Company petitioned the First Appellate District of the California, Court of Appeal for a writ of mandate directing the superior court to stay the case in its entirety. At the same time, the Company requested an immediate stay of proceedings pending resolution of the petition. On November 19, 2014, the court of appeal granted the Company’s request for an immediate stay of the proceedings and set a briefing schedule for the petition. The plaintiff filed its opposition to the petition on December 8, 2014, and the Company filed its reply on December 22, 2014. The petition was denied on January 8, 2015. On January 20, 2015, the Company filed a demurrer (moved to dismiss the complaint). The plaintiff filed its opposition to the demurrer on February 10, 2015, and the Company filed its reply on February 20, 2015. A hearing was held on February 27, 2015, and the court overruled the demurrer on March 27, 2015. The court’s order was entered on April 2, 2015. On June 19, 2015, the Company moved for summary judgment, and a hearing on the Company’s motion was set for September 4, 2015. On July 6, 2015, the court amended the case schedule, and the Company withdrew its motion for summary judgment. The court later further amended the case schedule, and trial was eventually reset for September 16, 2016. On May 23, 2016, the court granted an unopposed motion to intervene filed by the plaintiffs in In re Intuitive Surgical, Inc. Shareholder Derivative Litigation and City of Birmingham Relief and Retirement System v. Guthart et al. (see above and below for additional description). The Company filed a new motion for summary judgment on June 1, 2016, and the plaintiff filed a motion for summary adjudication regarding certain affirmative defenses on June 2, 2016. Following opposition and reply briefing, the court heard argument on the motions for summary judgment and summary adjudication on August 24, 2016. While the motions were pending, on September 15, 2016, the parties executed the confidential Memorandum of Understanding described above, which contained the essential terms of a settlement to which the parties agreed in principle. The parties notified the court of the Memorandum of Understanding on September 15, 2016, and on September 16, 2016, the court entered an order vacating the trial date and ruling that the motions for summary judgment and summary adjudication (along with other pre-trial motions) were moot. The parties finalized the settlement over the ensuing months, appearing before the court periodically to keep it apprised of their progress. The final settlement provides for a dismissal with prejudice and release of all claims brought in the Public School Teachers’ Pension and Retirement Fund of Chicago action, as well as the In re Intuitive Surgical, Inc. Shareholder Derivative Litigation action and the City of Plantation Police Officers’ Employees’ Retirement System action and the other similar derivative cases (see above and below, respectively, for additional description). The settlement also includes terms that require the Company to reimburse the plaintiffs’ lawyers’ legal fees. On July 7, 2017, the plaintiff filed a motion for preliminary approval of the settlement, and on July 18, 2017, the Company filed a statement of non-opposition. On August 9, 2017, the court entered an order preliminarily approving settlement, providing for notice to the Company’s shareholders, and setting a final settlement hearing. On October 20, 2017, the final settlement was approved by the court. During the three and nine months ended September 30, 2017, the Company recorded $8.7 million and $11.7 million , respectively, of pre-tax charges to reflect the estimated cost of settling this matter. As of September 30, 2017, a total of $16.7 million was included in other accrued liabilities in the accompanying Consolidated Balance Sheets related to this settlement. On March 21, 2014, a third alleged stockholder caused a substantially similar purported stockholder’s derivative lawsuit entitled City of Birmingham Relief and Retirement System v. Guthart et al. , No. 5-14-CV-01307, to be filed in the United States District Court for the Northern District of California against the same parties and seeking the same relief. On April 8, 2014, the lawsuit was related to In re Intuitive Surgical Securities Litigation and Berg v. Guthart. On July 30, 2014, the court consolidated the case with Berg v. Guthart and, as noted above, granted Berg’s motion to be appointed lead plaintiff and denied the City of Birmingham’s motion seeking such appointment. Accordingly, the City of Birmingham Relief and Retirement System action will be resolved by the pending settlement of the In re Intuitive Surgical, Inc. Shareholder Derivative Litigation action (see above for additional description). 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. On June 3, 2014, a fourth alleged stockholder caused a substantially similar purported stockholder’s derivative lawsuit entitled City of Plantation Police Officers’ Employees’ Retirement System v. Guthart et al. , C.A. No. 9726-CB, to be filed in the Court of Chancery of the State of Delaware. The Company filed a motion to stay proceedings in favor of the earlier-filed stockholder derivative lawsuits pending in federal and state courts in California. In light of the Company’s motion, the plaintiff agreed to a stay of all proceedings in the case in favor of the earlier-filed actions. While the case was stayed, the parties agreed that the plaintiff would file a motion to intervene in the Public School Teachers’ Pension and Retirement Fund of Chicago action (see above for additional description). The plaintiff filed an unopposed motion to intervene on April 29, 2016. After additional briefing, on May 23, 2016, the court in the Public School Teachers’ Pension and Retirement Fund of Chicago action granted the plaintiff’s motion. However, on June 21, 2016, in response to discovery requests, the plaintiff admitted that it did not continuously hold the Company’s stock during all relevant times. Accordingly, on July 21, 2016, the plaintiff filed a request for dismissal as an additional plaintiff in the Public School Teachers’ Pension and Retirement Fund of Chicago action, which the court in that action granted with prejudice on July 22, 2016. On September 15, 2016, the parties executed the confidential Memorandum of Understanding described above, which contained the essential terms of a settlement to which the parties agreed in principle. That settlement, as later finalized, provides for a dismissal with prejudice and release of all claims brought in the City of Plantation Police Officers’ Employees’ Retirement System action, as well as both the In re Intuitive Surgical, Inc. Shareholder Derivative Litigation action and the Public School Teachers’ Pension and Retirement Fund of Chicago action (see above for additional description). The settlement, which also includes terms that require the Company to reimburse the plaintiffs’ lawyers’ legal fees, is subject to court approval as described above. In the interim, the City of Plantation Police Officers’ Employees’ Retirement System action remains stayed. 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. On March 5, 2015, a fifth alleged stockholder caused a substantially similar purported stockholder’s derivative lawsuit entitled Back v. Guthart et al. , No. 3:15-CV-01037, to be filed in the United States District Court for the Northern District of California. On April 7, 2015, the lawsuit was related to In re Intuitive Surgical Securities Litigation and Berg v. Guthart . The Company filed a motion to dismiss the complaint on July 10, 2015. On August 13, 2015, the parties stipulated to a complete stay of the matter and the court entered an order reflecting the stay on August 17, 2015. On September 11, 2017, the plaintiff filed a motion to lift the stay and reopen the case and for leave to file amended complaint. On September 25, 2017, the individual defendants filed an opposition to plaintiffs’ motion, which the Company joined on September 26, 2017. Plaintiff filed his reply October 2, 2017, and the Court has set a hearing for January 25, 2018. The Company believes the settlement of the cases described above will make this motion and the action itself moot and will move for dismissal on that basis. 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 45 individual product liability lawsuits filed in various state and federal courts by plaintiffs who allege that they or a family member 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, many of which are subject to certain tolling agreements further discussed below. The Company has also been named as a defendant in a multi-plaintiff lawsuit filed in Missouri state court. In total, plaintiffs in that case seek damages on behalf of 55 patients from 22 different states who had surgeries in which their surgeons used the da Vinci Surgical System. Several of the filed cases have trial dates in the next 12 months. 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. Plaintiffs’ attorneys have also engaged in well-funded national advertising efforts seeking patients dissatisfied with surgery utilizing the da Vinci Surgical System. The Company has received a significant number of such claims from plaintiffs’ attorneys that it believes are a result of these advertising efforts. A substantial number of claims relate to alleged complications from surgeries performed with certain versions of Monopolar Curved Scissor (“MCS”) instruments which 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. 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 many of these claims and engaged in confidential mediation efforts. After an extended confidential mediation process with legal counsel for many of the claimants covered by the tolling agreements, the Company determined during 2014 that, while it denies any and all liability, in light of the costs and risks of litigation, settlement of certain claims was appropriate. During the three months ended September 30, 2017, and 2016, no significant charges were recorded related to these claims. During the nine months ended September 30, 2017 , and 2016, the Company recorded $15.6 million and $6.3 million , respectively, of pre-tax charges to reflect the estimated cost of settling a number of the product liability claims covered by the tolling agreements. The Company has reached confidential settlements in many of the cases that were in the confidential mediation process and earlier filed cases. The Company’s estimate of the anticipated cost of resolving these claims is based on negotiations with attorneys for claimants who have participated in the mediation process. Nonetheless, it is possible that more claims will be made by additional individuals and that the claimants whose claims were not resolved through the mediation program, as well as those claimants who have not participated in mediations, will choose to pursue greater amounts 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 position, and future results of operations. 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. As of September 30, 2017 , and December 31, 2016 , a total of $18.4 million and $20.5 million , respectively, were included in other accrued liabilities in the accompanying Consolidated Balance Sheets related to the tolled product liability claims. 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 a decedent’s surgery on such decedent’s behalf ( 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 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. Subsequent to the verdict, the plaintiff filed a notice of appeal. That appeal was denied on July 7, 2015. On July 27, 2015, plaintiff filed a motion for reconsideration with the court of appeal; the court of appeal denied the motion for reconsideration on August 10, 2015. On September 9, 2015, plaintiff filed a Petition for Review with the Washington State Supreme Court (“Washington Supreme Court”). On February 10, 2016, the Washington Supreme Court issued an order granting the plaintiff’s Petition for Review. Oral argument on the appeal before the Washington Supreme Court was heard on June 7, 2016. On February 9, 2017, the Washington Supreme Court vacated the defense verdict and remanded the case for retrial, which is currently scheduled to begin on February 12, 2018. 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. Patent Litigation On June 30, 2017, Ethicon LLC., Ethicon Endo-Surgery, Inc., and Ethicon US LLC (collectively, “Ethicon”) filed a complaint for patent infringement against the Company in the United States District Court for the District of Delaware. The complaint, which was served on the Company on July 12, 2017, alleges that the Company’s EndoWrist Stapler instruments infringe several of Ethicon’s patents. Based on currently available information, the Company is unable to make a reasonable estimate of loss or range of losses, if any, arising from this matter. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Stock Repurchase Program The Company’s Board of Directors (the “Board”) has authorized an aggregate of $6.2 billion of funding for the Company’s common stock repurchase program (the “Repurchase Program”) since its establishment in March 2009. The most recent authorization occurred in December 2016 when the Board increased the authorized amount available under Repurchase Program to $3.0 billion . As of September 30, 2017 , the remaining amount of share repurchases authorized by the Board was approximately $991.6 million . On January 24, 2017, the Company entered into an accelerated share repurchase program (the “ASR Program”) with Goldman, Sachs & Co. (“Goldman”) to repurchase $2.0 billion of the Company’s common stock. On January 27, 2017, the Company made a payment of $2.0 billion to Goldman and Goldman delivered to the Company an initial delivery of approximately 7.3 million shares of the Company’s common stock with an aggregate market value of approximately $1.6 billion on the date of the transaction, which was accounted as a reduction to common stock and additional paid-in capital by an aggregate of $152.0 million and $1,448.0 million to retained earnings. The remaining $400.0 million was recorded as a forward contract as a reduction to additional paid-in capital. The Company reflects the ASR Program as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as a forward contract indexed to its own common stock. The total number of shares that the Company will repurchase under the ASR Program will be based generally on the daily volume-weighted average price per share of the Company’s common stock during the repurchase period, less a discount. Depending on the circumstances at settlement, Goldman may be required to deliver additional shares of common stock to the Company or the Company may be required either to deliver shares of common stock or make a cash payment to Goldman. Final settlement of the ASR Program is scheduled to be completed by the fourth quarter of 2017, although the completion date may be accelerated at Goldman’s option. The Company repurchased approximately 47,000 shares of the Company’s common stock in the open market during the nine months ended September 30, 2016. There were no shares repurchased during the three month periods ended September 30, 2017, and 2016. The following table provides the share repurchase activities during the nine months ended September 30, 2017 , and 2016 (in millions, except per share amounts): Nine Months Ended September 30, 2017 2016 Shares repurchased 7.3 — Average price per share (a) $ 172.18 Value of shares repurchased (a) $ 8.1 (a) The number of shares repurchased represents shares delivered during the nine months ended September 30, 2017, and does not represent the final number of shares to be delivered under the ASR Program. Therefore, the average price paid per share will be determined at the end of the applicable purchase period. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2017 , and 2016 , are as follows (in millions): Three Months Ended September 30, 2017 Gains (Losses) on Hedge Instruments Unrealized Gains Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ (1.9 ) $ (5.3 ) $ 1.0 $ (3.6 ) $ (9.8 ) Other comprehensive income before reclassifications (2.0 ) 0.7 0.8 — (0.5 ) Amounts reclassified from accumulated other comprehensive income 1.1 — — — 1.1 Net current-period other comprehensive income (loss) (0.9 ) 0.7 0.8 — 0.6 Ending balance $ (2.8 ) $ (4.6 ) $ 1.8 $ (3.6 ) $ (9.2 ) Three Months Ended September 30, 2016 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ (1.0 ) $ 10.5 $ 3.1 $ (3.3 ) $ 9.3 Other comprehensive income before reclassifications (1.9 ) (5.6 ) 0.7 — (6.8 ) Amounts reclassified from accumulated other comprehensive income 1.3 — — 0.2 1.5 Net current-period other comprehensive income (loss) (0.6 ) (5.6 ) 0.7 0.2 (5.3 ) Ending balance $ (1.6 ) $ 4.9 $ 3.8 $ (3.1 ) $ 4.0 Nine Months Ended September 30, 2017 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ 5.0 $ (8.6 ) $ (1.3 ) $ (4.0 ) $ (8.9 ) Other comprehensive income before reclassifications (7.1 ) 4.0 3.1 0.1 0.1 Amounts reclassified from accumulated other comprehensive income (0.7 ) — — 0.3 (0.4 ) Net current-period other comprehensive income (loss) (7.8 ) 4.0 3.1 0.4 (0.3 ) Ending balance $ (2.8 ) $ (4.6 ) $ 1.8 $ (3.6 ) $ (9.2 ) Nine Months Ended September 30, 2016 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ 1.5 $ (4.2 ) $ (3.3 ) $ (3.5 ) $ (9.5 ) Other comprehensive income before reclassifications (4.4 ) 8.8 7.1 — 11.5 Amounts reclassified from accumulated other comprehensive income 1.3 0.3 — 0.4 2.0 Net current-period other comprehensive income (loss) (3.1 ) 9.1 7.1 0.4 13.5 Ending balance $ (1.6 ) $ 4.9 $ 3.8 $ (3.1 ) $ 4.0 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION In April 2017, the Company’s shareholders approved an amended and restated 2000 Employee Stock Purchase Plan (the “ESPP”) to provide for an increase in the number of shares of common stock reserved for issuance from 2,030,105 to 2,530,105 (or, after giving effect to the Stock Split, 6,090,315 to 7,590,315 ). The Company’s shareholders also approved an amended and restated 2010 Incentive Award Plan (“2010 Plan”) to provide for an increase in the number of shares of common stock reserved for issuance from 7,050,000 to 8,150,000 (or, after giving effect to the Stock Split, 21,150,000 to 24,450,000 ). As of September 30, 2017 , approximately 6.3 million shares of common stock were reserved for future issuance under the Company’s stock plans. A maximum of approximately 2.7 million of these shares can be awarded as restricted stock units (“RSUs”). Stock Option Information A summary of stock option activity under all stock plans for the nine months ended September 30, 2017 , is presented as follows (in millions, except per share amounts): Stock Options Outstanding Number Outstanding Weighted Average Exercise Price Per Share Balance at December 31, 2016 9.3 $ 148.36 Options granted 0.7 $ 282.99 Options exercised (2.5 ) $ 140.31 Options forfeited/expired (0.1 ) $ 193.50 Balance at September 30, 2017 7.4 $ 162.90 As of September 30, 2017 , options to purchase an aggregate of 5.6 million shares of common stock were exercisable at a weighted-average price of $145.37 per share. Restricted Stock Units Information A summary of RSU activity for the nine months ended September 30, 2017 , is presented as follows (in millions, except per share amounts): Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2016 1.8 $ 174.72 Granted 1.0 $ 245.40 Vested (0.5 ) $ 170.58 Forfeited (0.1 ) $ 200.82 Unvested balance at September 30, 2017 2.2 $ 207.09 Employee Stock Purchase Plan Under the ESPP, employees purchased approximately 0.2 million shares for $38.3 million and 0.2 million shares for $32.5 million during the nine months ended September 30, 2017 , and 2016 , respectively. Share-based Compensation Expense The following table summarizes share-based compensation expense for the three and nine months ended September 30, 2017 , and 2016 (in millions): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of sales - products $ 7.0 $ 6.9 $ 20.5 $ 18.6 Cost of sales - services 3.7 3.3 10.4 9.4 Total cost of sales 10.7 10.2 30.9 28.0 Selling, general and administrative 30.0 25.3 82.3 72.9 Research and development 15.2 11.4 40.9 31.5 Share-based compensation expense before income taxes 55.9 46.9 154.1 132.4 Income tax benefit 18.4 14.8 50.3 41.5 Share-based compensation expense after income taxes $ 37.5 $ 32.1 $ 103.8 $ 90.9 The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans and rights to acquire stock granted under the Company’s ESPP. The weighted average estimated fair values of stock options, the rights to acquire stock granted, and the weighted average assumptions used in calculating those fair values were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock Option Plans Risk free interest rate 1.7 % 1.0 % 1.8 % 1.1 % Expected term (in years) 3.9 3.9 4.1 4.2 Expected volatility 26 % 24 % 25 % 27 % Weighted average fair value at grant date $ 74.37 $ 47.32 $ 65.12 $ 46.90 Employee Stock Purchase Plan Risk free interest rate 1.2 % 0.5 % 1.2 % 0.6 % Expected term (in years) 1.2 1.2 1.2 1.2 Expected volatility 29 % 27 % 28 % 30 % Weighted average fair value at grant date $ 85.23 $ 61.14 $ 79.77 $ 57.57 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax (benefit) expense for the three months ended September 30, 2017 , was $(8.1) million , or (2.8)% of income before taxes, compared with $55.8 million , or 20.9% of income before taxes for the three months ended September 30, 2016 . Income tax expense for the nine months ended September 30, 2017 , was $58.4 million , or 7.7% of income before taxes, compared with $172.8 million , or 24.5% of income before taxes for the nine months ended September 30, 2016 . The Company’s income tax provision for the three and nine months ended September 30, 2017 , compared with the same periods of 2016, primarily benefited from the expiration of statutes of limitations and excess tax benefits recognized under ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting . Also, the Company’s effective tax rates for these periods differ from the U.S. federal statutory rate of 35% due 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. 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 effective tax rates for the three and nine months ended September 30, 2017, reflected a $14.9 million tax benefit mainly related to the release of unrecognized tax benefits due to the expiration of statutes of limitations in various jurisdictions. The effective tax rates for the three and nine months ended September 30, 2017, also reflected tax benefit of $53.5 million and $45.7 million , respectively, from reevaluation of certain unrecognized tax benefits as a result of the expiration of such statutes of limitations. The Company adopted ASU No. 2016-09 in the first quarter of 2017, which resulted in excess tax benefits associated with employee equity plans of $19.7 million and $82.9 million being recognized in the income tax provision during the three and nine months ended September 30, 2017 , respectively. Excess tax benefits associated with employee equity plans was previously recorded in additional paid-in capital and the adoption of this ASU resulted in reducing the Company’s effective tax rate by 6.8 percentage points and 10.9 percentage points for the three and nine months ended September 30, 2017 , respectively. The amount of excess tax benefits or deficiencies will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to employee equity awards under U.S. GAAP. As of September 30, 2017 , the Company had total gross unrecognized tax benefits of $62.3 million compared with $106.0 million as of December 31, 2016 , representing a net decrease of approximately $43.7 million for the nine months ended September 30, 2017 . The net decrease is primarily related to the above mentioned reversal of previously unrecognized tax benefits as a result of the expiration of certain statutes of limitations, partially offset by increases during the first nine months of 2017 related to other uncertain tax positions. If recognized, these gross unrecognized tax benefits would reduce the effective tax rate in the period of recognition. The Company files federal, state, and foreign income tax returns in many U.S. and outside of the U.S. (“OUS”) jurisdictions. Years before 2014 are closed for the significant jurisdictions. Certain of the Company’s unrecognized tax benefits could change due to activities of various tax authorities, including potential assessment of additional tax, possible settlement of audits, or through normal expiration of various statutes of limitations, which could affect the Company’s effective tax rate in the period in which they change. The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. The outcome of these audits cannot be predicted with certainty. The Company’s 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 Company’s 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 | 9 Months Ended |
Sep. 30, 2017 | |
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 and nine months ended September 30, 2017 , and 2016 (in millions, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income $ 297.5 $ 211.0 $ 698.8 $ 531.9 Denominator: Weighted-average shares outstanding used in basic calculation 111.8 116.1 111.6 114.6 Add: dilutive effect of potential common shares 5.0 3.0 4.3 3.0 Weighted-average shares used in computing diluted net income per share 116.8 119.1 115.9 117.6 Net income per share: Basic $ 2.66 $ 1.82 $ 6.26 $ 4.64 Diluted $ 2.55 $ 1.77 $ 6.03 $ 4.52 As the forward contract associated with the ASR Program is presumed to be settled in shares, any dilutive effect of the contingently issuable shares is included in the computation of diluted net income per share. See Note 7 to the Condensed Consolidated Financial Statements (Unaudited) for further details on the ASR Program. Share-based compensation awards of approximately 0.2 million and 0.3 million weighted-average shares for the three months ended September 30, 2017 , and 2016 , respectively, and approximately 0.4 million and 0.5 million weighted-average shares for the nine months ended September 30, 2017 , and 2016 , 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 ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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- and majority-owned subsidiaries have been prepared on a consistent basis with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2016 , 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, 2016 , which was filed with the SEC on February 6, 2017. The results of operations for the first nine months of fiscal year 2017 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . This new standard will replace most of the existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The new standard, as amended, becomes effective for the Company in the first quarter of fiscal year 2018. The Company currently plans to adopt this accounting standard in the first quarter of fiscal year 2018 using the full retrospective method to restate each prior reporting period presented in its Financial Statements. While the Company is continuing to assess the effect of this new standard, the Company currently believes that contractual future billings related to services included in its multi-year contracts will be considered performance obligations that should be part of the contract consideration allocated to all deliverables. Under the current standard, future service billings are considered to be contingent revenue. Accordingly, the amount of contract consideration allocated to the performance obligations identified in the Company’s system arrangements would be different under the new standard than the amount allocated under the current standard, which will result in an acceleration of revenue recognition. The Company currently expects that under the new standard a greater amount of the contract consideration would be allocated to the product-related performance obligations, which are generally delivered upfront. In addition, the Company also expects that incremental contract acquisition costs of obtaining revenue generating contracts, such as sales commissions paid in connection with system sales with multi-year service commitments, would be capitalized and amortized over the economic life of the contract. Under the current guidance, the Company expenses such costs when incurred. The new revenue standard is principle based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice, and guidance may evolve as companies and the accounting profession work to implement this new standard. The Company is still in the process of evaluating the effect of the new standard on the Company’s historical financial statements and disclosures. While the Company has not completed its evaluation, the Company currently believes that the impact to revenue and expense recognized will not be material to any of the years presented. As the Company completes its evaluation of this new standard, new information may arise that could change the Company’s current understanding of the impact to revenue and expense recognized. Additionally, the Company will continue to monitor industry activities and any additional guidance provided by regulators, standards setters, or the accounting profession and adjust the Company’s assessment and implementation plans accordingly. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). The new standard also requires expanded disclosures regarding leasing arrangements. The new standard becomes effective for the Company in the first quarter of fiscal year 2019 and early adoption is permitted. The new standard is required to be adopted using the modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company generally does not finance purchases of equipment or other capital, but does lease some of its facilities. The Company’s customers finance purchases of da Vinci systems and ancillary products, including directly with the Company. It is currently unknown whether the new standard will change customer buying patterns or behaviors. The Company is evaluating the effect that this new standard will have on its Financial Statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory , which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This ASU will be effective for the Company in the first quarter of 2018. This ASU is required to be adopted using the modified retrospective approach, with a cumulative catch-up adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of adopting this ASU on its Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. Adopted Accounting Pronouncement Beginning fiscal 2017, the Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting , which changes among other things, how the tax effects of share-based awards are recognized. ASU No. 2016-09 requires excess tax benefits and tax deficiencies to be recognized in the provision for income taxes as discrete items in the period when the awards vest or are settled, whereas previously such income tax effects were generally recorded as part of additional paid-in capital. The provision for income taxes for the three and nine months ended September 30, 2017, included excess tax benefits of $19.7 million and $82.9 million , respectively, that reduced the Company’s effective tax rate by 6.8 and 10.9 percentage points, respectively. The recognized excess tax benefits resulted from share-based compensation awards primarily associated with employee equity plans that were vested or settled in the three and nine months ended September 30, 2017. This ASU also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The Company adopted this provision retrospectively by reclassifying $39.5 million of excess tax benefits from financing activities to operating activities for the nine months ended September 30, 2016. The Company also excluded the related tax benefits when applying the treasury stock method for computing diluted shares outstanding on a prospective basis as required by this ASU. In addition, the Company elected to continue its current practice of estimating expected forfeitures. The amount of excess tax benefits and deficiencies recognized in the provision for income taxes will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to share-based instruments under U.S. GAAP. |
Allowance for Sales Returns and Doubtful Accounts | Allowance for Sales Returns and Doubtful Accounts The allowance for sales returns is based on the Company’s estimate 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. |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, All Other Investments [Abstract] | |
Summary of Cash and Available-For-Sale Securities | The following tables summarize the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents, short-term, or long-term investments as of September 30, 2017 , and December 31, 2016 (in millions): Reported as: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short- term Investments Long- term Investments September 30, 2017 Cash $ 252.4 $ — $ — $ 252.4 $ 252.4 $ — $ — Level 1: Money market funds 590.5 — — 590.5 590.5 — — U.S. treasuries 448.7 — (1.9 ) 446.8 8.7 182.8 255.3 Subtotal 1,039.2 — (1.9 ) 1,037.3 599.2 182.8 255.3 Level 2: Commercial paper 80.5 — — 80.5 6.0 74.5 — Corporate debt securities 1,262.9 0.6 (2.2 ) 1,261.3 2.4 533.0 725.9 U.S. government agencies 774.2 0.1 (2.5 ) 771.8 8.0 270.7 493.1 Non-U.S. government securities 8.5 — — 8.5 6.0 2.5 — Municipal securities 390.4 0.2 (0.4 ) 390.2 1.0 208.3 180.9 Subtotal 2,516.5 0.9 (5.1 ) 2,512.3 23.4 1,089.0 1,399.9 Total assets measured at fair value $ 3,808.1 $ 0.9 $ (7.0 ) $ 3,802.0 $ 875.0 $ 1,271.8 $ 1,655.2 Reported as: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short- term Investments Long- term Investments December 31, 2016 Cash $ 227.7 $ — $ — $ 227.7 $ 227.7 $ — $ — Level 1: Money market funds 612.4 — — 612.4 612.4 — — U.S. treasuries 625.9 0.1 (2.0 ) 624.0 157.9 168.4 297.7 Subtotal 1,238.3 0.1 (2.0 ) 1,236.4 770.3 168.4 297.7 Level 2: Commercial paper 139.6 — — 139.6 31.1 108.5 — Corporate debt securities 1,471.8 0.7 (5.0 ) 1,467.5 2.9 555.4 909.2 U.S. government agencies 938.7 0.5 (2.9 ) 936.3 — 342.7 593.6 Non-U.S. government securities 18.5 — — 18.5 — 16.0 2.5 Municipal securities 815.4 — (3.5 ) 811.9 4.6 327.0 480.3 Subtotal 3,384.0 1.2 (11.4 ) 3,373.8 38.6 1,349.6 1,985.6 Total assets measured at fair value $ 4,850.0 $ 1.3 $ (13.4 ) $ 4,837.9 $ 1,036.6 $ 1,518.0 $ 2,283.3 |
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 investments (excluding cash and money market funds), as of September 30, 2017 (in millions): Amortized Cost Fair Value Mature in less than one year $ 1,304.9 $ 1,303.9 Mature in one to five years 1,660.3 1,655.2 Total $ 2,965.2 $ 2,959.1 |
Gross Notional Amounts for Derivatives and Aggregate Gross Fair Value Outstanding | The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for outstanding derivatives and aggregate gross fair value at the end of each period were as follows (in millions): Derivatives Designated as Hedging Instruments Derivatives Not Designated as Hedging Instruments September 30, December 31, September 30, December 31, Notional amounts: Forward contracts $ 130.0 $ 109.7 $ 122.5 $ 143.7 Gross fair value recorded in: Prepaids and other current assets $ 1.6 $ 6.2 $ 1.7 $ 5.6 Other accrued liabilities $ 4.1 $ 1.0 $ 2.5 $ 0.6 |
BALANCE SHEET DETAILS AND OTH19
BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventory Details | The following table provides further details of inventory (in millions): As of September 30, December 31, Raw materials $ 67.7 $ 54.8 Work-in-process 18.5 13.4 Finished goods 139.0 114.1 Total inventory $ 225.2 $ 182.3 |
Supplemental Cash Flow Information | The following table provides supplemental non-cash investing activities (in millions): Nine Months Ended September 30, 2017 2016 Equipment transfers, including operating lease assets, from inventory to property, plant and equipment $ 45.1 $ 31.1 |
LEASE RECEIVABLES (Tables)
LEASE RECEIVABLES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Schedule of Lease Receivables | Lease receivables relating to sales-type lease arrangements are presented on the Condensed Consolidated Balance Sheets as follows (in millions): As of September 30, December 31, Gross lease receivable $ 113.0 $ 104.3 Unearned income (4.7 ) (4.8 ) Allowance for credit loss (0.8 ) (0.6 ) Net investment in sales-type leases 107.5 98.9 Reported as: Prepaids and other current assets 35.0 29.8 Intangible and other assets, net 72.5 69.1 Total, net $ 107.5 $ 98.9 |
Schedule of Contractual Maturities of Gross Lease Receivables | Contractual maturities of gross lease receivables at September 30, 2017 , are as follows (in millions): Amount 2017 $ 9.3 2018 38.0 2019 29.8 2020 19.5 2021 11.2 2022 and thereafter 5.2 Total $ 113.0 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Share Repurchase Activities | The following table provides the share repurchase activities during the nine months ended September 30, 2017 , and 2016 (in millions, except per share amounts): Nine Months Ended September 30, 2017 2016 Shares repurchased 7.3 — Average price per share (a) $ 172.18 Value of shares repurchased (a) $ 8.1 (a) The number of shares repurchased represents shares delivered during the nine months ended September 30, 2017, and does not represent the final number of shares to be delivered under the ASR Program. Therefore, the average price paid per share will be determined at the end of the applicable purchase period. |
Components of Accumulated Other Comprehensive Income, Net of Tax | The components of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2017 , and 2016 , are as follows (in millions): Three Months Ended September 30, 2017 Gains (Losses) on Hedge Instruments Unrealized Gains Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ (1.9 ) $ (5.3 ) $ 1.0 $ (3.6 ) $ (9.8 ) Other comprehensive income before reclassifications (2.0 ) 0.7 0.8 — (0.5 ) Amounts reclassified from accumulated other comprehensive income 1.1 — — — 1.1 Net current-period other comprehensive income (loss) (0.9 ) 0.7 0.8 — 0.6 Ending balance $ (2.8 ) $ (4.6 ) $ 1.8 $ (3.6 ) $ (9.2 ) Three Months Ended September 30, 2016 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ (1.0 ) $ 10.5 $ 3.1 $ (3.3 ) $ 9.3 Other comprehensive income before reclassifications (1.9 ) (5.6 ) 0.7 — (6.8 ) Amounts reclassified from accumulated other comprehensive income 1.3 — — 0.2 1.5 Net current-period other comprehensive income (loss) (0.6 ) (5.6 ) 0.7 0.2 (5.3 ) Ending balance $ (1.6 ) $ 4.9 $ 3.8 $ (3.1 ) $ 4.0 Nine Months Ended September 30, 2017 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ 5.0 $ (8.6 ) $ (1.3 ) $ (4.0 ) $ (8.9 ) Other comprehensive income before reclassifications (7.1 ) 4.0 3.1 0.1 0.1 Amounts reclassified from accumulated other comprehensive income (0.7 ) — — 0.3 (0.4 ) Net current-period other comprehensive income (loss) (7.8 ) 4.0 3.1 0.4 (0.3 ) Ending balance $ (2.8 ) $ (4.6 ) $ 1.8 $ (3.6 ) $ (9.2 ) Nine Months Ended September 30, 2016 Gains (Losses) on Hedge Instruments Unrealized Gains (Losses) on Available-for-Sale Securities Foreign Currency Translation Gains (Losses) Employee Benefit Plans Total Beginning balance $ 1.5 $ (4.2 ) $ (3.3 ) $ (3.5 ) $ (9.5 ) Other comprehensive income before reclassifications (4.4 ) 8.8 7.1 — 11.5 Amounts reclassified from accumulated other comprehensive income 1.3 0.3 — 0.4 2.0 Net current-period other comprehensive income (loss) (3.1 ) 9.1 7.1 0.4 13.5 Ending balance $ (1.6 ) $ 4.9 $ 3.8 $ (3.1 ) $ 4.0 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 , is presented as follows (in millions, except per share amounts): Stock Options Outstanding Number Outstanding Weighted Average Exercise Price Per Share Balance at December 31, 2016 9.3 $ 148.36 Options granted 0.7 $ 282.99 Options exercised (2.5 ) $ 140.31 Options forfeited/expired (0.1 ) $ 193.50 Balance at September 30, 2017 7.4 $ 162.90 |
Summary of RSU Activity | A summary of RSU activity for the nine months ended September 30, 2017 , is presented as follows (in millions, except per share amounts): Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2016 1.8 $ 174.72 Granted 1.0 $ 245.40 Vested (0.5 ) $ 170.58 Forfeited (0.1 ) $ 200.82 Unvested balance at September 30, 2017 2.2 $ 207.09 |
Summary of Share-Based Compensation Expense | The following table summarizes share-based compensation expense for the three and nine months ended September 30, 2017 , and 2016 (in millions): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of sales - products $ 7.0 $ 6.9 $ 20.5 $ 18.6 Cost of sales - services 3.7 3.3 10.4 9.4 Total cost of sales 10.7 10.2 30.9 28.0 Selling, general and administrative 30.0 25.3 82.3 72.9 Research and development 15.2 11.4 40.9 31.5 Share-based compensation expense before income taxes 55.9 46.9 154.1 132.4 Income tax benefit 18.4 14.8 50.3 41.5 Share-based compensation expense after income taxes $ 37.5 $ 32.1 $ 103.8 $ 90.9 |
Schedule of Estimated Fair Value of the Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions | The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans and rights to acquire stock granted under the Company’s ESPP. The weighted average estimated fair values of stock options, the rights to acquire stock granted, and the weighted average assumptions used in calculating those fair values were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock Option Plans Risk free interest rate 1.7 % 1.0 % 1.8 % 1.1 % Expected term (in years) 3.9 3.9 4.1 4.2 Expected volatility 26 % 24 % 25 % 27 % Weighted average fair value at grant date $ 74.37 $ 47.32 $ 65.12 $ 46.90 Employee Stock Purchase Plan Risk free interest rate 1.2 % 0.5 % 1.2 % 0.6 % Expected term (in years) 1.2 1.2 1.2 1.2 Expected volatility 29 % 27 % 28 % 30 % Weighted average fair value at grant date $ 85.23 $ 61.14 $ 79.77 $ 57.57 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 and nine months ended September 30, 2017 , and 2016 (in millions, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income $ 297.5 $ 211.0 $ 698.8 $ 531.9 Denominator: Weighted-average shares outstanding used in basic calculation 111.8 116.1 111.6 114.6 Add: dilutive effect of potential common shares 5.0 3.0 4.3 3.0 Weighted-average shares used in computing diluted net income per share 116.8 119.1 115.9 117.6 Net income per share: Basic $ 2.66 $ 1.82 $ 6.26 $ 4.64 Diluted $ 2.55 $ 1.77 $ 6.03 $ 4.52 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Millions | Sep. 29, 2017 | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Dec. 31, 2016$ / shares | |
Accounting Policies [Abstract] | ||||||
Stock split ratio | 3 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Excess tax benefit reduction | $ 19.7 | $ 82.9 | ||||
Effective tax rate | 6.80% | 10.90% | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net cash provided by financing activities | [1] | $ (1,670) | $ 519.1 | |||
Net cash provided by operating activities | [1] | $ 811.9 | 757.3 | |||
Accounting Standards Update 2016-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net cash provided by financing activities | (39.5) | |||||
Net cash provided by operating activities | $ 39.5 | |||||
[1] | The Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, during the first quarter of 2017. This ASU eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The Company adopted this provision retrospectively by reclassifying $39.5 million of excess tax benefits from financing activities to operating activities for the nine months ended September 30, 2016. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Allowance for Sales Returns and Doubtful Accounts (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Mar. 31, 2017 | |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Revenue remained deferred | $ 2.1 | $ 23.4 |
Deferred costs | 0.8 | $ 8.1 |
Revenue recognized | 21.3 | |
Costs recognized | $ 7.3 |
FINANCIAL INSTRUMENTS - Summary
FINANCIAL INSTRUMENTS - Summary of Cash and Available-For-Sale Securities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | $ 3,808.1 | $ 4,850 | ||
Gross Unrealized Gains | 0.9 | 1.3 | ||
Gross Unrealized Losses | (7) | (13.4) | ||
Fair Value | 3,802 | 4,837.9 | ||
Cash and Cash Equivalents | 875 | 1,036.6 | $ 1,021.6 | $ 714.6 |
Short- term Investments | 1,271.8 | 1,518 | ||
Long- term Investments | 1,655.2 | 2,283.3 | ||
Cash | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 252.4 | 227.7 | ||
Fair Value | 252.4 | 227.7 | ||
Cash and Cash Equivalents | 252.4 | 227.7 | ||
Level 1 | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 1,039.2 | 1,238.3 | ||
Gross Unrealized Gains | 0 | 0.1 | ||
Gross Unrealized Losses | (1.9) | (2) | ||
Fair Value | 1,037.3 | 1,236.4 | ||
Cash and Cash Equivalents | 599.2 | 770.3 | ||
Short- term Investments | 182.8 | 168.4 | ||
Long- term Investments | 255.3 | 297.7 | ||
Level 1 | Money market funds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 590.5 | 612.4 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 590.5 | 612.4 | ||
Cash and Cash Equivalents | 590.5 | 612.4 | ||
Short- term Investments | 0 | 0 | ||
Long- term Investments | 0 | 0 | ||
Level 1 | U.S. treasuries | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 448.7 | 625.9 | ||
Gross Unrealized Gains | 0 | 0.1 | ||
Gross Unrealized Losses | (1.9) | (2) | ||
Fair Value | 446.8 | 624 | ||
Cash and Cash Equivalents | 8.7 | 157.9 | ||
Short- term Investments | 182.8 | 168.4 | ||
Long- term Investments | 255.3 | 297.7 | ||
Level 2 | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 2,516.5 | 3,384 | ||
Gross Unrealized Gains | 0.9 | 1.2 | ||
Gross Unrealized Losses | (5.1) | (11.4) | ||
Fair Value | 2,512.3 | 3,373.8 | ||
Cash and Cash Equivalents | 23.4 | 38.6 | ||
Short- term Investments | 1,089 | 1,349.6 | ||
Long- term Investments | 1,399.9 | 1,985.6 | ||
Level 2 | Commercial paper | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 80.5 | 139.6 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 80.5 | 139.6 | ||
Cash and Cash Equivalents | 6 | 31.1 | ||
Short- term Investments | 74.5 | 108.5 | ||
Long- term Investments | 0 | 0 | ||
Level 2 | Corporate debt securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 1,262.9 | 1,471.8 | ||
Gross Unrealized Gains | 0.6 | 0.7 | ||
Gross Unrealized Losses | (2.2) | (5) | ||
Fair Value | 1,261.3 | 1,467.5 | ||
Cash and Cash Equivalents | 2.4 | 2.9 | ||
Short- term Investments | 533 | 555.4 | ||
Long- term Investments | 725.9 | 909.2 | ||
Level 2 | U.S. government agencies | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 774.2 | 938.7 | ||
Gross Unrealized Gains | 0.1 | 0.5 | ||
Gross Unrealized Losses | (2.5) | (2.9) | ||
Fair Value | 771.8 | 936.3 | ||
Cash and Cash Equivalents | 8 | 0 | ||
Short- term Investments | 270.7 | 342.7 | ||
Long- term Investments | 493.1 | 593.6 | ||
Level 2 | Non-U.S. government securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 8.5 | 18.5 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 8.5 | 18.5 | ||
Cash and Cash Equivalents | 6 | 0 | ||
Short- term Investments | 2.5 | 16 | ||
Long- term Investments | 0 | 2.5 | ||
Level 2 | Municipal securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 390.4 | 815.4 | ||
Gross Unrealized Gains | 0.2 | 0 | ||
Gross Unrealized Losses | (0.4) | (3.5) | ||
Fair Value | 390.2 | 811.9 | ||
Cash and Cash Equivalents | 1 | 4.6 | ||
Short- term Investments | 208.3 | 327 | ||
Long- term Investments | $ 180.9 | $ 480.3 |
FINANCIAL INSTRUMENTS - Summa27
FINANCIAL INSTRUMENTS - Summary of Contractual Maturities of Cash Equivalents and Available-For-Sale Investments (Details) $ in Millions | Sep. 30, 2017USD ($) |
Amortized Cost | |
Mature in less than one year | $ 1,304.9 |
Mature in one to five years | 1,660.3 |
Total | 2,965.2 |
Fair Value | |
Mature in less than one year | 1,303.9 |
Mature in one to five years | 1,655.2 |
Total | $ 2,959.1 |
FINANCIAL INSTRUMENTS - Gross N
FINANCIAL INSTRUMENTS - Gross Notional Amounts for Outstanding Derivatives (Details) - Forward contracts - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Derivatives Designated as Hedging Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amount, forward contracts | $ 130 | $ 109.7 |
Gross fair value of derivative assets | 1.6 | 6.2 |
Gross fair value of derivative liabilities | 4.1 | 1 |
Derivatives Not Designated as Hedging Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amount, forward contracts | 122.5 | 143.7 |
Gross fair value of derivative assets | 1.7 | 5.6 |
Gross fair value of derivative liabilities | $ 2.5 | $ 0.6 |
BALANCE SHEET DETAILS AND OTH29
BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION - Inventory (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 67.7 | $ 54.8 |
Work-in-process | 18.5 | 13.4 |
Finished goods | 139 | 114.1 |
Total inventory | $ 225.2 | $ 182.3 |
BALANCE SHEET DETAILS AND OTH30
BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental non-cash investing activities: | ||
Equipment transfers, including operating lease assets, from inventory to property, plant and equipment | $ 45.1 | $ 31.1 |
LEASE RECEIVABLES - Lease Recei
LEASE RECEIVABLES - Lease Receivables (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Capital Leased Assets [Line Items] | ||
Gross lease receivable | $ 113 | $ 104.3 |
Unearned income | (4.7) | (4.8) |
Allowance for credit loss | (0.8) | (0.6) |
Net investment in sales-type leases | 107.5 | 98.9 |
Reported as: | ||
Net investment in sales-type leases | 107.5 | 98.9 |
Prepaids and other current assets | ||
Reported as: | ||
Prepaids and other current assets | 35 | 29.8 |
Intangible and other assets, net | ||
Reported as: | ||
Intangible and other assets, net | $ 72.5 | $ 69.1 |
LEASE RECEIVABLES - Gross Contr
LEASE RECEIVABLES - Gross Contractual Maturities of Lease Receivables (Details) $ in Millions | Sep. 30, 2017USD ($) |
Leases [Abstract] | |
2,017 | $ 9.3 |
2,018 | 38 |
2,019 | 29.8 |
2,020 | 19.5 |
2,021 | 11.2 |
2022 and thereafter | 5.2 |
Total | $ 113 |
CONTINGENCIES - Additional Info
CONTINGENCIES - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)statelawsuit | Sep. 30, 2017USD ($)statepatientlawsuit | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Derivative Actions | ||||
Commitments and Contingencies [Line Items] | ||||
Additional loss contingency accrual | $ 8.7 | $ 11.7 | ||
Loss contingency liability | 16.7 | 16.7 | ||
da Vinci Surgical System Product Liability Matters | Product liability claims | ||||
Commitments and Contingencies [Line Items] | ||||
Additional loss contingency accrual | 15.6 | $ 6.3 | ||
Loss contingency liability | $ 18.4 | $ 18.4 | $ 20.5 | |
Number of lawsuits | lawsuit | 45 | 45 | ||
Number of patients for which damages sought | patient | 55 | |||
Number of states in which surgeries were performed and damages are sought on behalf of patients | state | 22 | 22 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Program (Details) - USD ($) | Jan. 27, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jan. 24, 2017 | Dec. 31, 2016 |
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | $ 2,000,000,000 | $ 8,100,000 | |||||
Shares repurchased | 0 | 0 | 7,300,000 | 47,000 | |||
Repurchase Program | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Remaining amount of share repurchases authorized | $ 991,600,000 | $ 991,600,000 | |||||
ASR Program | Goldman | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | $ 2,000,000,000 | ||||||
Shares repurchased | 7,300,000 | ||||||
Aggregate market value of common stock repurchased | $ 1,600,000,000 | ||||||
Common Stock | Repurchase Program | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Amount of share repurchases authorized | $ 6,200,000,000 | $ 6,200,000,000 | |||||
Stock repurchase program, increased to authorized amount | $ 3,000,000,000 | ||||||
Common Stock | ASR Program | Goldman | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Amount of share repurchases authorized | $ 2,000,000,000 | ||||||
Additional paid-in capital | ASR Program | Goldman | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Aggregate market value of common stock repurchased | 152,000,000 | ||||||
Reduction to additional paid-in capital from forward contract | 400,000,000 | ||||||
Retained earnings | ASR Program | Goldman | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Aggregate market value of common stock repurchased | $ 1,448,000,000 |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Activities (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Equity [Abstract] | ||||
Shares repurchased | 0 | 0 | 7,300,000 | 47,000 |
Average price per share (in dollars per share) | $ 172.18 | |||
Value of shares repurchased | $ 8.1 |
STOCKHOLDERS' EQUITY - Componen
STOCKHOLDERS' EQUITY - Components of Accumulated Other Comprehensive Income, Net of Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Gains (Losses) on Hedge Instruments | ||||
Beginning balance | $ (1.9) | $ (1) | $ 5 | $ 1.5 |
Other comprehensive income before reclassifications | (2) | (1.9) | (7.1) | (4.4) |
Amounts reclassified from accumulated other comprehensive income | 1.1 | 1.3 | (0.7) | 1.3 |
Net current-period other comprehensive income (loss) | (0.9) | (0.6) | (7.8) | (3.1) |
Ending balance | (2.8) | (1.6) | (2.8) | (1.6) |
Unrealized Gains (Losses) on Available-for-Sale Securities | ||||
Beginning balance | (5.3) | 10.5 | (8.6) | (4.2) |
Other comprehensive income before reclassifications | 0.7 | (5.6) | 4 | 8.8 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 | 0.3 |
Net current-period other comprehensive income (loss) | 0.7 | (5.6) | 4 | 9.1 |
Ending balance | (4.6) | 4.9 | (4.6) | 4.9 |
Foreign Currency Translation Gains (Losses) | ||||
Beginning balance | 1 | 3.1 | (1.3) | (3.3) |
Other comprehensive income before reclassifications | 0.8 | 0.7 | 3.1 | 7.1 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income (loss) | 0.8 | 0.7 | 3.1 | 7.1 |
Ending balance | 1.8 | 3.8 | 1.8 | 3.8 |
Employee Benefit Plans | ||||
Beginning balance | (3.6) | (3.3) | (4) | (3.5) |
Other comprehensive income before reclassifications | 0 | 0 | 0.1 | 0 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0.2 | 0.3 | 0.4 |
Net current-period other comprehensive income (loss) | 0 | 0.2 | 0.4 | 0.4 |
Ending balance | (3.6) | (3.1) | (3.6) | (3.1) |
Total | ||||
Beginning balance | (9.8) | 9.3 | (8.9) | (9.5) |
Other comprehensive income before reclassifications | (0.5) | (6.8) | 0.1 | 11.5 |
Amounts reclassified from accumulated other comprehensive income | 1.1 | 1.5 | (0.4) | 2 |
Net current-period other comprehensive income (loss) | 0.6 | (5.3) | (0.3) | 13.5 |
Ending balance | $ (9.2) | $ 4 | $ (9.2) | $ 4 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Apr. 20, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 6,300,000 | |||
Options exercisable, number of shares | 5,600,000 | |||
Options exercisable, weighted-average exercise price (usd per share) | $ 145.37 | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 2,700,000 | |||
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 | 200,000 | 200,000 | ||
Employee Stock Purchase Plan, value of shares purchased by employees | $ 38.3 | $ 32.5 | ||
ESPP, pre-stock split | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 2,530,105 | 2,030,105 | ||
ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 7,590,315 | 6,090,315 | ||
2010 Plan, pre-stock split | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 8,150,000 | 7,050,000 | ||
2010 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved for future issuance | 24,450,000 | 21,150,000 |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary Of Stock Option Activity Under All Stock Plans (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number Outstanding | |
Beginning balance, Number Outstanding | shares | 9.3 |
Options granted, Number Outstanding | shares | 0.7 |
Options exercised, Number Outstanding | shares | (2.5) |
Options forfeited/expired, Number Outstanding | shares | (0.1) |
Ending balance, Number Outstanding | shares | 7.4 |
Weighted Average Exercise Price Per Share | |
Beginning balance, Weighted Average Exercise Price Per Share | $ / shares | $ 148.36 |
Options granted, Weighted Average Exercise Price Per Share | $ / shares | 282.99 |
Options exercised, Weighted Average Exercise Price Per Share | $ / shares | 140.31 |
Options forfeited/expired, Weighted Average Exercise Price Per Share | $ / shares | 193.50 |
Ending balance, Weighted Average Exercise Price Per Share | $ / shares | $ 162.90 |
SHARE-BASED COMPENSATION - Su39
SHARE-BASED COMPENSATION - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) shares in Millions | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Shares | |
Unvested beginning balance (in shares) | shares | 1.8 |
Granted (in shares) | shares | 1 |
Vested (in shares) | shares | (0.5) |
Forfeited (in shares) | shares | (0.1) |
Unvested ending balance (in shares) | shares | 2.2 |
Weighted Average Grant Date Fair Value | |
Unvested beginning balance (usd per share) | $ / shares | $ 174.72 |
Granted (usd per share) | $ / shares | 245.40 |
Vested (usd per share) | $ / shares | 170.58 |
Forfeited (usd per share) | $ / shares | 200.82 |
Unvested ending balance (usd per share) | $ / shares | $ 207.09 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | $ 55.9 | $ 46.9 | $ 154.1 | $ 132.4 |
Income tax benefit | 18.4 | 14.8 | 50.3 | 41.5 |
Share-based compensation expense after income taxes | 37.5 | 32.1 | 103.8 | 90.9 |
Total cost of sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | 10.7 | 10.2 | 30.9 | 28 |
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 | 7 | 6.9 | 20.5 | 18.6 |
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 | 3.7 | 3.3 | 10.4 | 9.4 |
Selling, general and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | 30 | 25.3 | 82.3 | 72.9 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | $ 15.2 | $ 11.4 | $ 40.9 | $ 31.5 |
SHARE-BASED COMPENSATION - Sche
SHARE-BASED COMPENSATION - Schedule Of Estimated Fair Value Of Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock Option Plans | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk free interest rate | 1.70% | 1.00% | 1.80% | 1.10% |
Expected term (in years) | 3 years 10 months 17 days | 3 years 10 months 17 days | 4 years 1 month 6 days | 4 years 2 months 24 days |
Expected volatility (percent) | 26.00% | 24.00% | 25.00% | 27.00% |
Weighted average fair value at grant date (usd per share) | $ 74.37 | $ 47.32 | $ 65.12 | $ 46.90 |
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk free interest rate | 1.20% | 0.50% | 1.20% | 0.60% |
Expected term (in years) | 1 year 2 months 12 days | 1 year 2 months 12 days | 1 year 2 months 12 days | 1 year 2 months 12 days |
Expected volatility (percent) | 29.00% | 27.00% | 28.00% | 30.00% |
Weighted average fair value at grant date (usd per share) | $ 85.23 | $ 61.14 | $ 79.77 | $ 57.57 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (8.1) | $ 55.8 | $ 58.4 | $ 172.8 | |
Income tax expense, percentage of pre-tax income | (2.80%) | 20.90% | 7.70% | 24.50% | |
Federal statutory tax rate | 35.00% | 35.00% | 35.00% | 35.00% | |
Release of unrecognized tax benefits due to expiration of statutes of limitations | $ 14.9 | $ 14.9 | |||
Tax benefits from reevaluation of certain unrecognized tax benefits | 53.5 | 45.7 | |||
Excess tax benefit reduction | $ 19.7 | $ 82.9 | |||
Effective tax rate | 6.80% | 10.90% | |||
Total gross unrecognized tax benefits | $ 62.3 | $ 62.3 | $ 106 | ||
Net decrease of unrecognized tax benefits | $ (43.7) |
NET INCOME PER SHARE - Computat
NET INCOME PER SHARE - Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net income | $ 297.5 | $ 211 | $ 698.8 | $ 531.9 |
Denominator: | ||||
Weighted-average shares outstanding used in basic calculation | 111.8 | 116.1 | 111.6 | 114.6 |
Add: dilutive effect of potential common shares | 5 | 3 | 4.3 | 3 |
Weighted-average shares used in computing diluted net income per share | 116.8 | 119.1 | 115.9 | 117.6 |
Net income per share: | ||||
Basic (in dollars per share) | $ 2.66 | $ 1.82 | $ 6.26 | $ 4.64 |
Diluted (in dollars per share) | $ 2.55 | $ 1.77 | $ 6.03 | $ 4.52 |
NET INCOME PER SHARE - Addition
NET INCOME PER SHARE - Additional Information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Employee stock options excluded from computation of diluted net income per share | 0.2 | 0.3 | 0.4 | 0.5 |