Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $173,421 | $194,623 |
Short-term investments | 207,241 | 256,746 |
Accounts receivable, net | 175,216 | 170,107 |
Inventory | 59,247 | 63,460 |
Prepaids and other assets | 13,634 | 9,496 |
Deferred tax assets | 9,299 | 9,458 |
Total current assets | 638,058 | 703,890 |
Property, plant and equipment, net | 122,584 | 117,021 |
Long-term investments | 521,399 | 450,504 |
Long-term deferred tax assets | 44,124 | 35,899 |
Intangible assets, net | 63,992 | 56,224 |
Goodwill | 110,740 | 110,740 |
Other assets | 385 | 346 |
Total assets | 1,501,282 | 1,474,624 |
Current liabilities: | ||
Accounts payable | 26,555 | 20,501 |
Accrued compensation and employee benefits | 29,315 | 36,930 |
Deferred revenue | 88,215 | 77,981 |
Other accrued liabilities | 34,915 | 29,104 |
Total current liabilities | 179,000 | 164,516 |
Long-term liabilities | 51,098 | 43,342 |
Total liabilities | 230,098 | 207,858 |
Commitments and contingencies | 0 | 0 |
Stockholders' equity: | ||
Preferred stock, 2,500 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of June 30, 2009 and December 31, 2008 | 0 | 0 |
Common stock, 100,000 shares authorized, $0.001 par value, 37,931 and 39,183 shares issued and outstanding as of June 30, 2009 and December 31, 2008, respectively | 38 | 39 |
Additional paid-in capital | 900,712 | 871,846 |
Retained earnings | 369,640 | 397,824 |
Accumulated other comprehensive income (loss) | 794 | (2,943) |
Total stockholders' equity | 1,271,184 | 1,266,766 |
Total liabilities and stockholders' equity | $1,501,282 | $1,474,624 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Share data in Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, par value | 0.001 | 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, par value | 0.001 | 0.001 |
Common stock, shares issued | 37,931 | 39,183 |
Common stock, shares outstanding | 37,931 | 39,183 |
Statement Of Income
Statement Of Income (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenue: | ||||
Products | $219,346 | $189,780 | $368,396 | $350,731 |
Services | 41,278 | 29,409 | 80,600 | 56,652 |
Total revenue | 260,624 | 219,189 | 448,996 | 407,383 |
Cost of revenue: | ||||
Products | 55,542 | 50,036 | 100,808 | 94,888 |
Services | 14,897 | 13,097 | 29,299 | 26,632 |
Total cost of revenue | 70,439 | 63,133 | 130,107 | 121,520 |
Gross profit | 190,185 | 156,056 | 318,889 | 285,863 |
Operating expenses: | ||||
Selling, general, and administrative | 67,276 | 57,504 | 129,642 | 106,138 |
Research and development | 23,369 | 20,357 | 44,681 | 36,658 |
Total operating expenses | 90,645 | 77,861 | 174,323 | 142,796 |
Income from operations | 99,540 | 78,195 | 144,566 | 143,067 |
Interest and other income, net | 5,171 | 5,707 | 10,187 | 14,248 |
Income before taxes | 104,711 | 83,902 | 154,753 | 157,315 |
Income tax expense | 42,323 | 32,720 | 64,223 | 61,352 |
Net income | $62,388 | $51,182 | $90,530 | $95,963 |
Earnings per share: | ||||
Basic | 1.65 | 1.32 | 2.36 | 2.48 |
Diluted | 1.62 | 1.28 | 2.32 | 2.4 |
Shares used in computing earnings per share: | ||||
Basic | 37,897 | 38,773 | 38,390 | 38,677 |
Diluted | 38,557 | 39,980 | 38,946 | 39,914 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Operating Activities: | ||
Net income | $90,530 | $95,963 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 9,089 | 6,719 |
Amortization of intangible assets | 7,857 | 4,075 |
Deferred income taxes | (8,417) | (7,600) |
Income tax benefits from employee stock option plans and acquisition | 715 | 38,018 |
Excess tax benefit from stock-based compensation | (970) | (35,580) |
Share-based compensation expense | 47,382 | 34,282 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,108) | (31,713) |
Inventory | 4,212 | (10,198) |
Prepaids and other assets | (3,956) | 4,416 |
Accounts payable | 6,026 | (9,828) |
Accrued compensation and employee benefits | (7,622) | (3,301) |
Deferred revenue | 10,290 | 11,361 |
Accrued liabilities | 23,085 | 7,571 |
Net cash provided by operating activities | 173,113 | 104,185 |
Investing Activities: | ||
Purchase of investments | (303,224) | (417,496) |
Proceeds from sales and maturities of investments | 286,124 | 405,931 |
Purchase of property and equipment and acquisition of intellectual property | (40,334) | (52,035) |
Net cash provided by (used in) investing activities | (57,434) | (63,600) |
Financing Activities: | ||
Proceeds from issuance of common stock, net | 12,054 | 23,318 |
Excess tax benefit from stock-based compensation | 970 | 35,580 |
Repurchase and retirement of common stock | (150,000) | 0 |
Net cash provided by (used in) financing activities | (136,976) | 58,898 |
Effect of exchange rate changes on cash and cash equivalents | 95 | 715 |
Net increase (decrease) in cash and cash equivalents | (21,202) | 100,198 |
Cash and cash equivalents, beginning of period | 194,623 | 122,825 |
Cash and cash equivalents, end of period | $173,421 | $223,023 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 1. DESCRIPTION OF BUSINESS | NOTE 1. DESCRIPTION OF BUSINESS Intuitive Surgical, Inc. designs, manufactures, and markets the da Vinci Surgical System, which is an advanced surgical system that the Company believes represents a new generation of surgery. The da Vinci Surgical System consists of a surgeons console, a patient-side cart, a high performance vision system and proprietary wristed instruments. The da Vinci Surgical System seamlessly translates the surgeons natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. The Company markets its products through sales representatives in the United States, and through a combination of sales representatives and distributors in its international markets. |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements (financial statements) of Intuitive Surgical, Inc., and its wholly-owned subsidiaries (collectively, the Company) have been prepared on a consistent basis with the December31, 2008 audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. These 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 statements in accordance with accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December31, 2008, which was filed on February6, 2009. The results of operations for the first six months of fiscal 2009 are not indicative of the results to be expected for the entire fiscal year or any future periods. Subsequent Events Evaluation Management has reviewed and evaluated material subsequent events from the balance sheet date of June30, 2009 through the financial statements issue date of July23, 2009. All appropriate subsequent event disclosures, if any, have been made in notes to our unaudited Condensed Consolidated Financial Statements. Foreign Currency and Other Hedging Instruments The accounts of the Companys foreign subsidiaries are translated in accordance with SFAS No.52, Foreign Currency Translation (SFAS 52). The Company has determined that the functional currency of its subsidiaries should be their local currency, with the exception of its subsidiaries in the Cayman Islands and Switzerland, whose functional currency is the U.S. dollar. For subsidiaries whose local currency is their functional currency, their assets and liabilities are translated into U.S. dollars at exchange rates at the balance sheet date and revenues and expenses are translated using average exchange rates in effect during the quarter. Gains and losses from foreign currency translation are included in accumulated other comprehensive income (loss) within stockholders equity in the accompanying unaudited condensed consolidated balance sheets. For all non functional currency account balances, the re-measurement of such balances to the functional currency will result in either a foreign exchange gain or loss which is recorded to interest and other income, net in the same accounting period that the re-measurement occurred. In January 2009, the Company began a hedging program to address the risk associated with non-functional currency (primarily Euro) financial statement exposures. The Company accounts for these instruments in accordance with FASB Statement No.133, Accounting for Derivative Instruments and Hedging Activities, as amended, (SFAS 133) which requires that every derivative in |
NOTE 3. INVESTMENTS | NOTE 3. INVESTMENTS The following table summarizes the Companys investments (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value June 30, 2009 Cash and cash equivalents $ 173,421 $ $ $ 173,421 Short-term investments: Commercial paper 13,042 13,042 Municipal notes 13,605 102 13,707 U.S. corporate debt 115,615 838 (156 ) 116,297 U.S. treasuries 20,723 257 20,980 U.S government agencies 42,911 304 43,215 Total short-term investments $ 205,896 $ 1,501 $ (156 ) $ 207,241 Long-term investments: Municipal notes $ 194,390 $ 954 $ (11,500 ) $ 183,844 U.S. corporate debt 169,289 2,114 (694 ) 170,709 U.S. Treasuries 32,075 194 (60 ) 32,209 U.S government agencies 125,869 1,147 (70 ) 126,946 Put option 7,691 7,691 Total long-term investments $ 521,623 $ 12,100 $ (12,324 ) $ 521,399 Total cash, cash equivalents and investments $ 900,940 $ 13,601 $ (12,480 ) $ 902,061 December 31, 2008 Cash and cash equivalents $ 194,621 2 $ 194,623 Short-term investments: Commercial paper $ 34,186 $ 81 $ $ 34,267 U.S. corporate debt 109,048 590 (582 ) 109,056 U.S. treasuries 12,408 145 - 12,553 U.S. government agencies 100,032 858 (20 ) 100,870 Total short-term investments $ 255,674 $ 1,674 $ (602 ) $ 256,746 Long-term investments: Municipal notes $ 143,088 $ 170 $ (15,597 ) $ 127,661 U.S. corporate debt 166,215 1,152 (3,970 ) 163,397 U.S. treasuries 21,987 648 22,635 U.S. government agencies 123,458 1,748 125,206 Put option 11,605 11,605 Total long-term investments $ 454,748 $ 15,323 $ (19,567 ) $ 450,504 Total cash, cash equivalents and investments $ 905,043 $ 16,999 $ (20,169 ) $ 901,873 The following is a summary of the amortized cost and estimated fair value of the Companys cash, cash equivalents and investments at June30, 2009 by maturity date (in thousands): Amortized Cost Fair Value Mature in less than one year $ 379,317 $ 380,662 Mature in one to five years 434,863 438,396 Mature in more than five years 86,760 83,003 Total $ 900,940 $ 902,061 During the three and six months ended June30, 2009 and 2008, realized gains or losses recognized on the sale of investments wer |
NOTE 4. FAIR VALUE MEASUREMENTS | NOTE 4. FAIR VALUE MEASUREMENTS The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, available-for-sale securities, trading securities and foreign currency derivatives. The fair value of these financial assets and liabilities was determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table represents the Companys fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June30, 2009 (in thousands): Fair Value Measurements at June 30, 2009 Using Assets Level 1 Level 2 Level 3 Total Money Market funds $ 141,411 $ $ $ 141,411 U.S. Treasuries 53,189 53,189 Commercial paper 21,542 21,542 Corporate debt 287,006 287,006 U.S. government agencies 170,161 170,161 Municipal notes 114,548 83,003 197,551 Put option 7,691 7,691 Total assets measured at fair value $ 194,600 $ 593,257 $ 90,694 $ 878,551 Liabilities Foreign Currency Derivatives $ $ 914 $ $ 914 Total liabilities measured at fair value $ $ 914 $ $ 914 Amounts included in: Cash and cash equivalents $ 141,411 $ 8,500 $ $ 149,911 Short-term investments 20,980 186,261 207,241 Long-term investments 32,209 398,496 90,694 521,399 Total assets measured at fair value $ 194,600 $ 593,257 $ 90,694 $ 878,551 Other accrued liabilities $ $ 914 $ $ 914 Total liabilities measured at fair value $ $ 914 $ $ 914 The fair value of these financial assets was determined using the following level of inputs as of December31, 2008 and are presented on the Companys unaudited Condensed Consolidated Balance Sheets as follows (in thousands): FairValueMeasurementsatDecember31,2008Using Assets Level 1 Level 2 Level 3 Total Money Market funds $ 156,729 $ $ $ 156,729 U.S. Treasuries 45,188 45,188 Commercia |
NOTE 5. INVENTORY | NOTE 5. INVENTORY The following table provides details of selected balance sheet items (in thousands): June 30, 2009 December31, 2008 Inventory Raw materials $ 16,285 $ 19,901 Work-in-process 2,956 4,097 Finished goods 40,006 39,462 Total $ 59,247 $ 63,460 |
NOTE 6. STOCKHOLDERS' EQUITY | NOTE 6. STOCKHOLDERS EQUITY Comprehensive Income The components of comprehensive income are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Net income, as reported $ 62,388 $ 51,182 $ 90,530 $ 95,963 Foreign currency translation adjustments 251 132 66 511 Unrealized gains (losses) on derivative instruments, net of tax: Unrealized gains (losses) on derivative (1,049 ) (696 ) Reclassification adjustment for (gain) loss on derivative instruments recognized during the period 606 436 Unrealized gains (losses) on available-for-sale securities, net of tax: Unrealized gains (losses) arising during period 1,963 (5,117 ) 3,931 (6,780 ) Total other comprehensive income $ 64,159 $ 46,197 $ 94,267 $ 89,694 The components of accumulated other comprehensive income (loss) are as follows (in thousands): June30, 2009 December31, 2008 Foreign currency translation adjustments $ 293 $ 227 Accumulated net unrealized gains (losses) on derivatives, net of tax (260 ) Accumulated net unrealized gains (losses) on available-for-sale securities, net of tax 761 (3,170 ) Total accumulated other comprehensive income (loss) $ 794 $ (2,943 ) Stock Option Plans A summary of stock option activity under the Plans for the six months ended June30, 2009 is presented as follows (in thousands, except per share amounts): Stock Options Outstanding Shares Available forGrant Number Outstanding WeightedAverage Exercise Price Per Share Balance at December 31, 2008 (with 1,791 options exerciseable at a weighted-average exercise price of $100.71 per share and with 3,551 options vested and expected to vest at a weighted-average exercise price of $160.68 per share) 8,449 3,749 $ 163.25 Options authorized 2,046 Options granted (1,481 ) 1,481 108.76 Options exercised (99 ) 74.15 Options forfeited/expired 93 (93 ) 194.49 Balance at June 30, 2009 (with 2,148 options exerciseable at a weighted-average exercise price of $121.43 per share and with 4,764 options vested and expected to vest at a weighted-average exercise price of $146.96 per share) 9,107 5,038 $ 148.40 Employee Stock Purchase Plan (ESPP) Under the Employee Stock Purchase Plan, employees purchased approximately 55,185 shares for $4.7 million and 46,700 shares for $4.5 million during the six months ended June30, 2009 and 2008, respectively. Stock-based Compensation The following table summarizes stock-based compensation charges (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Cost of sales - pro |
NOTE 7. SHARE REPURCHASE PROGRAM | NOTE 7. SHARE REPURCHASE PROGRAM In March 2009, the Companys Board of Directors authorized the repurchase of up to $300 million of the Companys common stock through open market and private block transactions pursuant to Rule 10b5-1 plans or privately negotiated purchases or other means, including accelerated stock repurchase transactions or similar arrangements. In connection with this stock repurchase authorization, the Company entered into a collared accelerated share repurchase program (the ASR Program) with Goldman, Sachs Co. (Goldman) to repurchase $150 million of the Companys common stock. The number of shares repurchased by Intuitive under the ASR Program was based generally on the average daily volume-weighted average price of Intuitives common stock during a specific period less a predetermined discount per share. As of March31, 2009, the Company has received and retired 1,406,049 shares of the Companys common stock. All ASR Program purchases were completed on June5, 2009 and during the three months ended June30, 2009 the Company did not receive any additional shares. As of June30, 2009, the Company had $150 million remaining under the board authorized amount of stock repurchases. In accordance with EITF Issue No.99-7,Accounting for an Accelerated Share Repurchase Program, the Company accounted for the accelerated share repurchase as two separate transactions: (a)as shares of common stock acquired in a treasury stock transaction recorded on the transaction date and (b)as a forward contract indexed to the Companys common stock. As such, the Company accounted for the 1,406,049 shares that it received as a repurchase of its common stock and retired those shares immediately for net income per share purposes. The Company has determined that the forward contract indexed to the Companys common stock met all of the applicable criteria for equity classification in accordance with EITF 00-19, and therefore, the contract was not accounted for as a derivative under SFAS 133. The Company uses the par value method of accounting for its stock repurchases. Under the par value method, common stock is first charged with the par value of the shares involved. The excess of the cost of shares acquired over the par value is allocated to additional-paid-in capital (APIC) based on an estimated average amount per issued share with the excess amounts charged to retained earnings. As a result of the stock repurchases during March 2009, the Company reduced common stock and APIC by an aggregate of $31.3 million and charged $118.7 million to retained earnings. |
NOTE 8. INCOME TAXES | NOTE 8. INCOME TAXES As part of the process of preparing the unaudited Condensed Consolidated Financial Statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the current tax liability under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the accompanying unaudited condensed consolidated balance sheets. Income tax expense for the three months ended June30, 2009 was $42.3 million, or 40.4% of pre-tax income, compared with $32.7 million, or 39.0% of pre-tax income for the three months ended June30, 2008. Income tax expense for the six months ended June30, 2009 was $64.2 million, or 41.5% of pre-tax income, compared with $61.3 million, or 39.0% of pre-tax income for the six months ended June30, 2008. The effective tax rate for the three and six months ended June30, 2009 differs from the U.S. federal statutory rate of 35% primarily due to state income taxes and non-deductible stock option expenses, partially offset by 2009 research and development (RD) credits and domestic production deductions. The effective tax rate for the three and six months ended June30, 2008 differs from the federal statutory rate primarily due to state income taxes and non-deductible stock option expenses, partially offset by domestic production deductions. A California tax law change enacted in February 2009 allows an elective single sales factor for state apportionment for taxable years beginning on or after January1, 2011. The Company expects to benefit from the California single sale factor election for apportioning income for years 2011 and beyond. As a result of its anticipated election of the single sales factor, in accordance with SFAS No.109, Accounting for Income Taxes (SFAS 109), the Company has re-measured its deferred tax assets taking into account the reversal pattern and the expected California tax rate under the elective single sales factor. The impact of this change resulted in a decrease to California beginning deferred tax assets of $1.6 million and this charge was recorded in the Companys income tax provision during the three months ended March31, 2009. As of June30, 2009, the Company has total gross unrecognized tax benefits of approximately $51.0 million compared with approximately $42.0 million as of December31, 2008, representing an increase of approximately $9.0 million for the six months ended June30, 2009. Of the total gross unrecognized tax benefits, $49.9 million, if recognized, would reduce the Companys effective tax rate in the period of recognition. The Company files federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. For U.S. federal and California income tax purposes, the statute of limitations currently remain open for all years since inception due to utilization of net operating losses and RD credits generated in prior years. |
NOTE 9. NET INCOME PER SHARE | NOTE 9. NET INCOME PER SHARE The following table presents the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Net income $ 62,388 $ 51,182 $ 90,530 $ 95,963 Basic: Weighted-average shares outstanding 37,897 38,773 38,390 38,677 Basic net income per share $ 1.65 $ 1.32 $ 2.36 $ 2.48 Diluted: Weighted-average shares outstanding used in basic calculation 37,897 38,773 38,390 38,677 Add common stock equivalents 660 1,207 556 1,237 Weighted-average shares used in computing diluted net income per shares 38,557 39,980 38,946 39,914 Diluted earnings per share $ 1.62 $ 1.28 $ 2.32 $ 2.40 Employee stock options to purchase approximately 2,914,505 and 1,251,460 weighted shares for the three months ended June30, 2009 and 2008, respectively, and 2,957,813 and 962,294 weighted shares for the six months ended June30, 2009 and 2008, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Jul. 17, 2009
| Jun. 30, 2008
| |
Entity [Text Block] | |||
Trading Symbol | ISRG | ||
Entity Registrant Name | INTUITIVE SURGICAL INC | ||
Entity Central Index Key | 0001035267 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 37,934,659 | ||
Entity Public Float | $10,344,393,000 |