Report of Independent Accountants


To the Board of Directors and Stockholders
of Surgical Dynamics Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and retained earnings and
of cash flows present fairly, in all material respects, the financial
position of Surgical Dynamics Inc. and its subsidiaries at May 31, 1994
and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended May 31, 1994, in conformity
with generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for the opinion expressed above.

As discussed in Note 8 to the consolidated financial statements, the
accompanying financial statements included an estimated liability
related to the early termination of a lease agreement.  The Company is
in negotiations with its former landlord.  The final resolution of
actual settlement amounts, however, is dependent upon future events,
the outcome of which is not fully determinable at the present time.




Price Waterhouse LLP
San Francisco, California
July 12, 1994
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