x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 77-0416458 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Title of Each Class: | Name of Each Exchange on which Registered | |
Common Stock, par value $0.001 per share | The Nasdaq Global Select Market |
Large accelerated filer | x | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Page No. | ||
ITEM 1. | BUSINESS |
• | a device that has grandfather marketing status because it was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976 were enacted; or |
• | a device that has previously been cleared through the 510(k) process. |
• | the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; |
• | federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal third-party payors that are false or fraudulent. Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals may share in amounts paid by the entity to the government in fines or settlement; |
• | the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; |
• | federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; |
• | the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; |
• | the federal Physician Payment Sunshine Act, which requires (i) manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare professionals, and teaching hospitals, and (ii) applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians described above and their immediate family members, and payments or other “transfers of value” to such physician owners. Manufacturers are required to submit reports to CMS by the 90th day of each calendar year; and |
• | analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other “transfers of value” to physicians and other healthcare providers or marketing expenditures and pricing information; and laws governing the privacy and security of health information in certain circumstances, including the E.U. General Data Protection Regulation (“GDPR”), many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. |
ITEM 1A. | RISK FACTORS |
• | changes in customer, geographic, or product mix, including mix of da Vinci Surgical System models sold or leased; |
• | changes in the portion of sales involving a trade-in of another system and the amount of trade-in credits given; |
• | introduction of new products, which may have lower margins than our existing products; |
• | our ability to maintain or reduce production costs; |
• | changes to our pricing strategy; |
• | changes in competition; |
• | changes in production volume driven by demand for our products; |
• | changes in material, labor, or other manufacturing-related costs, including the impact of foreign exchange rate fluctuations for foreign-currency denominated costs; |
• | changes to U.S. and foreign trade policies, such as the enactment of tariffs on goods imported into the U.S. including, but not limited to, goods imported from Mexico where we manufacture a majority of our instruments that we sell; |
• | inventory obsolescence and product recall charges; and |
• | market conditions. |
• | failure to obtain or maintain the same degree of protection against infringement of our intellectual property rights as we have in the U.S.; |
• | multiple OUS regulatory requirements that are subject to change and that could impact our ability to manufacture and sell our products; |
• | changes in tariffs, trade barriers, and regulatory requirements; |
• | protectionist laws and business practices that favor local competitors, which could slow our growth in OUS markets; |
• | local or national regulations that make it difficult or impractical to market or use our products; |
• | U.S. relations with the governments of the foreign countries in which we operate; |
• | inability or regulatory limitations on our ability to move goods across borders; |
• | the risks associated with foreign currency exchange rate fluctuations; |
• | difficulty in establishing, staffing, and managing OUS operations; |
• | the expense of establishing facilities and operations in new foreign markets; |
• | building and maintaining an organization capable of supporting geographically dispersed operations; |
• | anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental officials; |
• | antitrust and anti-competition laws; |
• | economic weakness, including inflation, or political instability in particular foreign economies and markets; and |
• | business interruptions due to natural disasters, outbreak of disease, and other events beyond our control. |
• | delays in product shipments; |
• | loss of revenue; |
• | delay in market acceptance; |
• | diversion of our resources; |
• | damage to our reputation; |
• | product recalls; |
• | regulatory actions; |
• | increased service or warranty costs; or |
• | product liability claims. |
• | problems involving production yields; |
• | quality control and assurance; |
• | component supply shortages; |
• | import or export restrictions on components, materials or technology; |
• | shortages of qualified personnel; and |
• | compliance with state, federal, and foreign regulations. |
• | the jurisdictions in which profits are determined to be earned and taxed; |
• | the resolution of issues arising from tax audits with various tax authorities; |
• | changes in valuation of our deferred tax assets and liabilities; |
• | increases in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection with acquisitions; |
• | changes in availability of tax credits, tax holidays, and tax deductions; |
• | changes in share-based compensation; and |
• | changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles. |
• | continued compliance to the QSR, which requires manufacturers to follow design, testing, control, documentation, and other quality assurance procedures during the development and manufacturing process; |
• | labeling regulations; |
• | the FDA’s general prohibition against false or misleading statements in the labeling or promotion of products for unapproved or “off-label” uses; |
• | stringent complaint reporting and Medical Device Reporting (“MDR”) regulations, which requires that manufacturers keep detailed records of investigations or complaints against their devices and to report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; |
• | adequate use of the Corrective and Preventive Actions process to identify and correct or prevent significant systemic failures of products or processes or in trends which suggest same; and |
• | the reporting of Corrections and Removals, which requires that manufacturers report to the FDA recalls and field corrective actions taken to reduce a risk to health or to remedy a violation of the FFDCA that may pose a risk to health. |
• | the extent to which our products achieve and maintain market acceptance; |
• | actions relating to regulatory matters; |
• | our timing and ability to develop our manufacturing and sales and marketing capabilities; |
• | demand for our products; |
• | the size and timing of particular sales and any collection delays related to those sales; |
• | product quality and supply problems; |
• | the progress of surgical training in the use of our products; |
• | our ability to develop, introduce, and market new or enhanced versions of our products on a timely basis; |
• | third-party payor reimbursement policies; |
• | our ability to protect our proprietary rights and defend against third-party challenges; |
• | our ability to license additional intellectual property rights; and |
• | the progress and results of clinical trials. |
• | announcements about us or our competitors; |
• | variations in operating results and financial guidance; |
• | introduction or abandonment of new technologies or products; |
• | regulatory approvals and enforcement actions; |
• | changes in product pricing policies; |
• | changes in earnings estimates or recommendations by analysts; |
• | changes in accounting policies; |
• | economic changes and overall market volatility; |
• | litigation; |
• | media coverage, whether accurate or inaccurate, fair or misleading; |
• | political uncertainties; |
• | short sales on shares of our common stock, or other activities by short sellers; and |
• | our stock repurchase program. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||
Equity compensation plans approved by security holders | 5,398,420 | $ | 203.84 | 5,670,804 | |||||
Equity compensation plans not approved by security holders | 765,282 | $ | 179.28 | 102,228 | |||||
Total | 6,163,702 | $ | 200.79 | 5,773,032 |
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG INTUITIVE, NASDAQ COMPOSITE, S&P HEALTH CARE INDEX, AND S&P 500 INDEX |
December 31, | |||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||
Intuitive Surgical, Inc. | $ | 100.00 | $ | 137.72 | $ | 142.20 | $ | 165.11 | $ | 285.05 | $ | 374.08 | |||||||||||
Nasdaq Composite | $ | 100.00 | $ | 114.75 | $ | 122.74 | $ | 133.62 | $ | 173.22 | $ | 168.30 | |||||||||||
S&P 500 Healthcare Index | $ | 100.00 | $ | 125.34 | $ | 133.97 | $ | 145.37 | $ | 177.47 | $ | 188.94 | |||||||||||
S&P 500 Index | $ | 100.00 | $ | 113.69 | $ | 115.26 | $ | 129.05 | $ | 157.22 | $ | 150.33 |
ITEM 6. | SELECTED FINANCIAL DATA |
Fiscal Year (1) | |||||||||||||||||||
2018 | 2017 (2) | 2016 | 2015 | 2014 | |||||||||||||||
(In millions, except per share amounts and headcount) | |||||||||||||||||||
Revenue | $ | 3,724.2 | $ | 3,138.2 | $ | 2,706.5 | $ | 2,384.4 | $ | 2,131.7 | |||||||||
Gross profit | $ | 2,604.1 | $ | 2,202.0 | $ | 1,892.9 | $ | 1,577.9 | $ | 1,413.8 | |||||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 1,127.9 | $ | 670.9 | $ | 738.3 | $ | 588.8 | $ | 418.8 | |||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||||||||||
Basic | $ | 9.92 | $ | 6.01 | $ | 6.43 | $ | 5.29 | $ | 3.78 | |||||||||
Diluted | $ | 9.49 | $ | 5.77 | $ | 6.26 | $ | 5.18 | $ | 3.70 | |||||||||
Shares used in computing basic and diluted net income per share: | |||||||||||||||||||
Basic | 113.7 | 111.7 | 114.9 | 111.3 | 110.7 | ||||||||||||||
Diluted | 118.8 | 116.3 | 117.9 | 113.7 | 113.1 | ||||||||||||||
Cash, cash equivalents, and investments | $ | 4,834.4 | $ | 3,846.5 | $ | 4,837.9 | $ | 3,347.8 | $ | 2,497.0 | |||||||||
Total assets | $ | 7,846.7 | $ | 5,776.8 | $ | 6,521.4 | $ | 4,907.3 | $ | 3,959.4 | |||||||||
Other long-term liabilities | $ | 338.6 | $ | 333.6 | $ | 112.1 | $ | 95.9 | $ | 78.8 | |||||||||
Stockholders’ equity | $ | 6,687.5 | $ | 4,780.4 | $ | 5,820.1 | $ | 4,319.5 | $ | 3,379.4 | |||||||||
Total headcount | 5,527 | 4,444 | 3,755 | 3,211 | 2,978 |
(1) | Fiscal years 2015 and 2014 do not reflect the impact of the adoption of the new revenue accounting standard in fiscal year 2018. |
(2) | Reflects amounts recorded for the enactment of the 2017 Tax Act. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Total revenue increased by 19% to $3.7 billion for the year ended December 31, 2018, compared with $3.1 billion for the year ended December 31, 2017. |
• | Approximately 1,037,000 da Vinci procedures were performed during the year ended December 31, 2018, an increase of approximately 18% compared with approximately 877,000 for the year ended December 31, 2017. |
• | Instrument and accessory revenue increased by 20% to $2.0 billion for the year ended December 31, 2018, compared with $1.6 billion for the year ended December 31, 2017. |
• | Systems revenue increased by 21% to $1,127.1 million for the year ended December 31, 2018, compared with $928.4 million for the year ended December 31, 2017. A total of 926 da Vinci Surgical Systems were shipped for the year ended December 31, 2018, compared with 684 for the year ended December 31, 2017. |
• | As of December 31, 2018, we had a da Vinci Surgical System installed base of approximately 4,986 systems, an increase of approximately 13% compared with the installed base as of December 31, 2017. |
• | Gross profit as a percentage of revenue decreased to 69.9% for the year ended December 31, 2018, compared with 70.2% for the year ended December 31, 2017. Lower gross profit in 2018 is primarily attributable to lower service margins. |
• | Operating income increased by 13% to $1,199.4 million for the year ended December 31, 2018, compared with $1,062.9 million for the year ended December 31, 2017. Operating income included $262.6 million and $209.9 million of share-based compensation expense related to employee stock plans for the years ended December 31, 2018, and 2017, respectively. Operating income for the years ended December 31, 2018, and 2017, also included pre-tax net litigation charges of $45.2 million and $25.3 million, respectively. Operating income for the year ended December 31, 2018, included $25.2 million of expense related to a contribution made to the Intuitive Foundation. |
• | As of December 31, 2018, we had $4.8 billion in cash, cash equivalents, and investments. Cash, cash equivalents, and investments increased by $987.9 million compared with December 31, 2017, primarily as a result of cash generated from operating activities. |
• | In August 2018, we filed for U.S. FDA clearance of the Ion endoluminal system, our new flexible robotic-assisted catheter-based platform, designed to navigate through very small lung airways to reach peripheral nodules for biopsies. |
Years Ended December 31, | ||||||||||||||||||||
2018 | % of total revenue | 2017 | % of total revenue | 2016 | % of total revenue | |||||||||||||||
Revenue: | ||||||||||||||||||||
Product | $ | 3,089.1 | 83 | % | $ | 2,565.3 | 82 | % | $ | 2,195.8 | 81 | % | ||||||||
Service | 635.1 | 17 | % | 572.9 | 18 | % | 510.7 | 19 | % | |||||||||||
Total revenue | 3,724.2 | 100 | % | 3,138.2 | 100 | % | 2,706.5 | 100 | % | |||||||||||
Cost of revenue: | ||||||||||||||||||||
Product | 906.2 | 24 | % | 756.3 | 24 | % | 662.6 | 24 | % | |||||||||||
Service | 213.9 | 6 | % | 179.9 | 6 | % | 151.0 | 6 | % | |||||||||||
Total cost of revenue | 1,120.1 | 30 | % | 936.2 | 30 | % | 813.6 | 30 | % | |||||||||||
Product gross profit | 2,182.9 | 59 | % | 1,809.0 | 58 | % | 1,533.2 | 57 | % | |||||||||||
Service gross profit | 421.2 | 11 | % | 393.0 | 12 | % | 359.7 | 13 | % | |||||||||||
Gross profit | 2,604.1 | 70 | % | 2,202.0 | 70 | % | 1,892.9 | 70 | % | |||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general and administrative | 986.6 | 27 | % | 810.5 | 26 | % | 703.6 | 26 | % | |||||||||||
Research and development | 418.1 | 11 | % | 328.6 | 10 | % | 239.6 | 9 | % | |||||||||||
Total operating expenses | 1,404.7 | 38 | % | 1,139.1 | 36 | % | 943.2 | 35 | % | |||||||||||
Income from operations | 1,199.4 | 32 | % | 1,062.9 | 34 | % | 949.7 | 35 | % | |||||||||||
Interest and other income, net | 80.1 | 2 | % | 41.9 | 1 | % | 35.6 | 1 | % | |||||||||||
Income before taxes | 1,279.5 | 34 | % | 1,104.8 | 35 | % | 985.3 | 36 | % | |||||||||||
Income tax expense | 154.5 | 4 | % | 433.9 | 14 | % | 247.0 | 9 | % | |||||||||||
Net income | 1,125.0 | 30 | % | 670.9 | 21 | % | 738.3 | 27 | % | |||||||||||
Less: net loss attributable to noncontrolling interest in joint venture | (2.9 | ) | — | % | — | — | % | — | — | % | ||||||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 1,127.9 | 30 | % | $ | 670.9 | 21 | % | $ | 738.3 | 27 | % |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenue | |||||||||||
Instruments and accessories | $ | 1,962.0 | $ | 1,636.9 | $ | 1,395.8 | |||||
Systems | 1,127.1 | 928.4 | 800.0 | ||||||||
Total product revenue | 3,089.1 | 2,565.3 | 2,195.8 | ||||||||
Services | 635.1 | 572.9 | 510.7 | ||||||||
Total revenue | $ | 3,724.2 | $ | 3,138.2 | $ | 2,706.5 | |||||
United States | $ | 2,633.5 | $ | 2,285.8 | $ | 1,956.4 | |||||
OUS | 1,090.7 | 852.4 | 750.1 | ||||||||
Total revenue | $ | 3,724.2 | $ | 3,138.2 | $ | 2,706.5 | |||||
% of Revenue - U.S. | 71 | % | 73 | % | 72 | % | |||||
% of Revenue - OUS | 29 | % | 27 | % | 28 | % | |||||
Instruments and accessories | $ | 1,962.0 | $ | 1,636.9 | $ | 1,395.8 | |||||
Services | 635.1 | 572.9 | 510.7 | ||||||||
Operating lease | 51.4 | 25.9 | 16.6 | ||||||||
Total recurring revenue | $ | 2,648.5 | $ | 2,235.7 | $ | 1,923.1 | |||||
% of Total revenue | 71 | % | 71 | % | 71 | % | |||||
Unit Shipments by Region: | |||||||||||
U.S. unit shipments | 581 | 417 | 338 | ||||||||
OUS unit shipments | 345 | 267 | 199 | ||||||||
Total unit shipments* | 926 | 684 | 537 | ||||||||
*Systems shipped under operating leases (included in total unit shipments) | 229 | 108 | 62 | ||||||||
Unit Shipments involving System Trade-ins: | |||||||||||
Unit shipments involving trade-ins | 277 | 163 | 156 | ||||||||
Unit shipments not involving trade-ins | 649 | 521 | 381 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(in millions) | |||||||||||
Net cash provided by (used in) | |||||||||||
Operating activities | $ | 1,169.6 | $ | 1,143.9 | $ | 1,087.0 | |||||
Investing activities | (1,049.6 | ) | 378.7 | (1,279.4 | ) | ||||||
Financing activities | 126.3 | (1,913.1 | ) | 514.4 | |||||||
Effect of exchange rates on cash, cash equivalents, and restricted cash | (0.1 | ) | 2.1 | — | |||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 246.2 | $ | (388.4 | ) | $ | 322.0 |
1. | Our net income included non-cash charges: share-based compensation of $261.2 million; depreciation and loss on disposal of property, plant, and equipment of $108.6 million; deferred income taxes of $31.9 million; amortization of intangible assets of $14.2 million; amortization of contract acquisition asset of $10.6 million; and investment related non-cash charges of $1.8 million. |
2. | Changes in operating assets and liabilities resulted in $383.7 million of cash used in operating activities during the year ended December 31, 2018. Operating assets and liabilities are primarily comprised of accounts receivable, inventory, prepaid expenses and other assets, accrued compensation and employee benefits, deferred revenue, and other accrued liabilities. Inventory, including the transfer of equipment from inventory to property, plant, and equipment, increased by $279.0 million primarily due to more systems under operating lease arrangements and an increase in inventory to meet higher sales volumes and add safety stock to mitigate possible trade and supplier matters. Accounts receivable increased by $161.3 million primarily due to higher customer billings and timing of billings and collections. Prepaid expenses and other assets increased by $77.7 million. The unfavorable impact of these items on cash used by operating activities was partly offset by a $54.3 million increase in deferred revenue, a $37.1 million increase in other accrued liabilities, and a $26.2 million increase in accrued compensation and employee benefits. |
1. | Our net income included non-cash charges, including share-based compensation of $209.1 million, depreciation and loss of disposal of property, plant, and equipment of $86.2 million, deferred income taxes of $60.2 million, investment related non-cash charges of $21.2 million, and amortization of intangible assets of $12.9 million. |
2. | Changes in operating assets and liabilities resulted in $73.5 million of cash provided by operating activities during the year ended December 31, 2017. Operating assets and liabilities are primarily comprised of accounts receivable, inventory, prepaid expenses and other assets, deferred revenue, and other accrued liabilities. Other accrued liabilities increased by $219.4 million, primarily due to an increase in income tax payable as a result of the 2017 Tax Act. Deferred revenue, which includes deferred service revenue that is being recognized as revenue over the service contract period, increased by $43.7 million primarily due to the higher number of installed systems for which service contracts existed. Accrued compensation and employee benefits increased by $31.2 million. Accounts payable increased by $14.0 million. The favorable impact of these items on cash provided by operating activities was partly offset by an increase of $115.5 million in inventory, including the transfer of equipment from inventory to property, plant, and equipment; an increase of $81.4 million in accounts receivable; and an increase of $38.9 million in prepaids and other assets. The increase in accounts receivable was primarily driven by higher revenue and timing of collections. The increase in prepaids and other assets was primarily driven by higher lease receivable balances resulting from sales-type lease arrangement transactions entered into during the year ended December 31, 2017. |
1. | Our net income included non-cash charges including in the form of share-based compensation of $177.6 million; depreciation and loss of disposal of property, plant, and equipment of $73.9 million; investment related non-cash charges of $35.9 million; deferred income tax of $20.9 million; and amortization of intangible assets of $18.2 million. |
2. | The non-cash charges outlined above were partly offset by changes in operating assets and liabilities that resulted in $17.7 million of cash used by operating activities during the year ended December 31, 2016. Operating assets and liabilities are primarily comprised of accounts receivable, inventory, prepaid expenses, deferred revenue, and other accrued liabilities. Inventory, including the transfer of equipment from inventory to property, plant and equipment, increased by $46.7 million. Accounts receivable increased $34.2 million primarily driven by higher revenue and timing of collections. Prepaids and other assets increased $39.2 million primarily driven by higher lease receivable balances resulting from sales-type lease arrangement transactions entered into during year ended December 31, 2016. The unfavorable impact of these items on cash provided by operating activities was partly offset by a $53.7 million increase in other liabilities, primarily due to higher income tax payable, a $14.1 million increase in deferred revenue, an $18.7 million increase in accrued compensation and employee benefits, and a $15.9 million increase in accounts payable. Deferred revenue, which includes deferred service revenue that is being recognized as revenue over the service contract period, increased primarily due to the increase in the number of installed systems for which service contracts existed. |
Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | |||||||||||||||
Operating leases | $ | 95.4 | $ | 15.1 | $ | 27.2 | $ | 22.2 | $ | 30.9 | |||||||||
Purchase commitments and obligations | 711.2 | 704.7 | 4.6 | 1.0 | 0.9 | ||||||||||||||
Other | 246.7 | 21.4 | 42.9 | 61.7 | 120.7 | ||||||||||||||
Total | $ | 1,053.3 | $ | 741.2 | $ | 74.7 | $ | 84.9 | $ | 152.5 |
• | the valuation and recognition of investments, which impacts our investment portfolio balance when we assess fair value, and interest and other income, net, when we record impairments; |
• | the standalone selling prices used to allocate the contract consideration to the individual performance obligations, which impacts revenue recognition; |
• | the allowance for sales returns and doubtful accounts, which impacts revenue; |
• | the estimation of transactions to hedge, which impacts revenue and expense; |
• | the valuation of inventory, which impacts gross profit margins; |
• | the valuation of and assessment of recoverability of intangible assets and their estimated useful lives, which primarily impacts gross profit margin or operating expenses when we record asset impairments or accelerate their amortization; |
• | the valuation and recognition of share-based compensation, which impacts gross profit margin and operating expenses; |
• | the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes; and |
• | the estimate of probable loss associated with legal contingencies, which impacts accrued liabilities and operating expenses. |
• | the sufficiency of the trading volume of freely traded options; |
• | the ability to reasonably match the terms, such as the date of the grant and the exercise price of the freely traded options to options granted; and |
• | the length of the term of the freely traded options used to derive implied volatility. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page No. | |
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 857.9 | $ | 648.2 | |||
Short-term investments | 2,205.2 | 1,312.4 | |||||
Accounts receivable, net of allowances of $8.2 and $4.6 as of December 31, 2018, and 2017, respectively | 682.3 | 507.9 | |||||
Inventory | 409.0 | 241.2 | |||||
Prepaids and other current assets | 178.8 | 99.2 | |||||
Total current assets | 4,333.2 | 2,808.9 | |||||
Property, plant, and equipment, net | 812.0 | 613.1 | |||||
Long-term investments | 1,771.3 | 1,885.9 | |||||
Deferred tax assets | 428.6 | 72.0 | |||||
Intangible and other assets, net | 261.0 | 195.8 | |||||
Goodwill | 240.6 | 201.1 | |||||
Total assets | $ | 7,846.7 | $ | 5,776.8 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 100.7 | $ | 82.5 | |||
Accrued compensation and employee benefits | 193.8 | 167.6 | |||||
Deferred revenue | 294.3 | 243.8 | |||||
Other accrued liabilities | 231.8 | 168.9 | |||||
Total current liabilities | 820.6 | 662.8 | |||||
Other long-term liabilities | 338.6 | 333.6 | |||||
Total liabilities | 1,159.2 | 996.4 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of December 31, 2018, and 2017 | — | — | |||||
Common stock, 300.0 shares authorized, $0.001 par value, 114.5 shares and 112.3 shares issued and outstanding as of December 31, 2018, and 2017, respectively | 0.1 | 0.1 | |||||
Additional paid-in capital | 5,170.3 | 4,679.2 | |||||
Retained earnings | 1,521.7 | 115.0 | |||||
Accumulated other comprehensive loss | (13.3 | ) | (15.5 | ) | |||
Total Intuitive Surgical, Inc. stockholders’ equity | 6,678.8 | 4,778.8 | |||||
Noncontrolling interest in joint venture | 8.7 | 1.6 | |||||
Total stockholders’ equity | 6,687.5 | 4,780.4 | |||||
Total liabilities and stockholders’ equity | $ | 7,846.7 | $ | 5,776.8 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenue: | |||||||||||
Product | $ | 3,089.1 | $ | 2,565.3 | $ | 2,195.8 | |||||
Service | 635.1 | 572.9 | 510.7 | ||||||||
Total revenue | 3,724.2 | 3,138.2 | 2,706.5 | ||||||||
Cost of revenue: | |||||||||||
Product | 906.2 | 756.3 | 662.6 | ||||||||
Service | 213.9 | 179.9 | 151.0 | ||||||||
Total cost of revenue | 1,120.1 | 936.2 | 813.6 | ||||||||
Gross profit | 2,604.1 | 2,202.0 | 1,892.9 | ||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 986.6 | 810.5 | 703.6 | ||||||||
Research and development | 418.1 | 328.6 | 239.6 | ||||||||
Total operating expenses | 1,404.7 | 1,139.1 | 943.2 | ||||||||
Income from operations | 1,199.4 | 1,062.9 | 949.7 | ||||||||
Interest and other income, net | 80.1 | 41.9 | 35.6 | ||||||||
Income before taxes | 1,279.5 | 1,104.8 | 985.3 | ||||||||
Income tax expense | 154.5 | 433.9 | 247.0 | ||||||||
Net income | 1,125.0 | $ | 670.9 | $ | 738.3 | ||||||
Less: net loss attributable to noncontrolling interest in joint venture | (2.9 | ) | — | — | |||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 1,127.9 | $ | 670.9 | $ | 738.3 | |||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic | $ | 9.92 | $ | 6.01 | $ | 6.43 | |||||
Diluted | $ | 9.49 | $ | 5.77 | $ | 6.26 | |||||
Shares used in computing net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic | 113.7 | 111.7 | 114.9 | ||||||||
Diluted | 118.8 | 116.3 | 117.9 | ||||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ | 1,130.1 | $ | 664.3 | $ | 738.9 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 1,127.9 | $ | 670.9 | $ | 738.3 | |||||
Other comprehensive income (loss): | |||||||||||
Change in foreign currency translation gains (losses) | (2.6 | ) | 3.6 | 2.0 | |||||||
Available-for-sale investments (net of tax): | |||||||||||
Change in unrealized gains (losses) | 0.3 | (2.7 | ) | (4.6 | ) | ||||||
Less: Reclassification adjustment for net losses on investments | 1.2 | — | 0.2 | ||||||||
Net change | 1.5 | (2.7 | ) | (4.4 | ) | ||||||
Derivative instruments (net of tax): | |||||||||||
Change in unrealized gains (losses) | 3.6 | (8.6 | ) | 4.1 | |||||||
Less: Reclassification adjustment for (gains) losses on derivative instruments | (1.0 | ) | 1.2 | (0.6 | ) | ||||||
Net change | 2.6 | (7.4 | ) | 3.5 | |||||||
Employee benefit plans (net of tax): | |||||||||||
Change in unrealized gains (losses) | 0.4 | (0.3 | ) | (0.7 | ) | ||||||
Less: Reclassification adjustment for losses on employee benefit plans | 0.3 | 0.2 | 0.2 | ||||||||
Net change | 0.7 | (0.1 | ) | (0.5 | ) | ||||||
Other comprehensive gains (losses) | 2.2 | (6.6 | ) | 0.6 | |||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ | 1,130.1 | $ | 664.3 | $ | 738.9 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Intuitive Surgical, Inc. Stockholders’ Equity | Noncontrolling Interest in Joint Venture | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balances at December 31, 2015 | 37.4 | $ | — | $ | 3,429.8 | $ | 899.2 | $ | (9.5 | ) | $ | 4,319.5 | $ | — | $ | 4,319.5 | ||||||||||||||
Adoption of new accounting standard (1) | 40.3 | 40.3 | 40.3 | |||||||||||||||||||||||||||
Issuance of common stock through employee stock plans | 1.5 | 580.9 | 580.9 | 580.9 | ||||||||||||||||||||||||||
Income tax benefit from employee stock plans | 29.8 | 29.8 | 29.8 | |||||||||||||||||||||||||||
Shares withheld related to net share settlement of equity awards | (2.2 | ) | (21.8 | ) | (24.0 | ) | (24.0 | ) | ||||||||||||||||||||||
Share-based compensation expense related to employee stock plans | 177.6 | 177.6 | 177.6 | |||||||||||||||||||||||||||
Repurchase and retirement of common stock | (0.1 | ) | (4.1 | ) | (38.4 | ) | (42.5 | ) | (42.5 | ) | ||||||||||||||||||||
Net income | 738.3 | 738.3 | 738.3 | |||||||||||||||||||||||||||
Other comprehensive income | 0.6 | 0.6 | 0.6 | |||||||||||||||||||||||||||
Balances at December 31, 2016 | 38.8 | $ | — | $ | 4,211.8 | $ | 1,617.6 | $ | (8.9 | ) | $ | 5,820.5 | $ | — | $ | 5,820.5 | ||||||||||||||
Three-for-one stock split | 77.6 | 0.1 | (0.1 | ) | — | — | ||||||||||||||||||||||||
Issuance of common stock through employee stock plans | 3.4 | 415.5 | 415.5 | 415.5 | ||||||||||||||||||||||||||
Shares withheld related to net share settlement of equity awards | (0.2 | ) | (5.1 | ) | (51.5 | ) | (56.6 | ) | (56.6 | ) | ||||||||||||||||||||
Share-based compensation expense related to employee stock plans | 209.1 | 209.1 | 209.1 | |||||||||||||||||||||||||||
Repurchase and retirement of common stock | (7.3 | ) | (152.0 | ) | (2,122.0 | ) | (2,274.0 | ) | (2,274.0 | ) | ||||||||||||||||||||
Net income | 670.9 | 670.9 | 670.9 | |||||||||||||||||||||||||||
Other comprehensive loss | (6.6 | ) | (6.6 | ) | (6.6 | ) | ||||||||||||||||||||||||
Capital contribution from noncontrolling interest | — | 2.0 | 2.0 | |||||||||||||||||||||||||||
Loss in noncontrolling interest | — | (0.4 | ) | (0.4 | ) | |||||||||||||||||||||||||
Balances at December 31, 2017 | 112.3 | $ | 0.1 | $ | 4,679.2 | $ | 115.0 | $ | (15.5 | ) | $ | 4,778.8 | $ | 1.6 | $ | 4,780.4 | ||||||||||||||
Adoption of new accounting standards (1) | 392.1 | (1.3 | ) | 390.8 | 390.8 | |||||||||||||||||||||||||
Issuance of common stock through employee stock plans | 2.5 | 236.6 | 236.6 | 236.6 | ||||||||||||||||||||||||||
Shares withheld related to net share settlement of equity awards | (0.3 | ) | (6.7 | ) | (113.3 | ) | (120.0 | ) | (120.0 | ) | ||||||||||||||||||||
Share-based compensation expense related to employee stock plans | 261.2 | 261.2 | 261.2 | |||||||||||||||||||||||||||
Net income | 1,127.9 | 1,127.9 | 1,127.9 | |||||||||||||||||||||||||||
Other comprehensive income | 3.5 | 3.5 | 3.5 | |||||||||||||||||||||||||||
Capital contribution from noncontrolling interest | — | 10.0 | 10.0 | |||||||||||||||||||||||||||
Loss in noncontrolling interest | — | (2.9 | ) | (2.9 | ) | |||||||||||||||||||||||||
Balances at December 31, 2018 | 114.5 | $ | 0.1 | $ | 5,170.3 | $ | 1,521.7 | $ | (13.3 | ) | $ | 6,678.8 | $ | 8.7 | $ | 6,687.5 | ||||||||||||||
(1) Represents the adjustments related to the adoption of new accounting standards. See Note 2 for details. |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 1,125.0 | $ | 670.9 | $ | 738.3 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and loss on disposal of property, plant, and equipment, net | 108.6 | 86.2 | 73.9 | ||||||||
Amortization of intangible assets | 14.2 | 12.9 | 18.2 | ||||||||
Loss on investment, accretion of discounts, and amortization of premiums on investments, net | 1.8 | 21.2 | 35.9 | ||||||||
Deferred income taxes | 31.9 | 60.2 | 20.9 | ||||||||
Income tax benefits from employee stock plans | — | — | 29.8 | ||||||||
Share-based compensation expense | 261.2 | 209.1 | 177.6 | ||||||||
Amortization of contract acquisition asset | 10.6 | 10.9 | 10.1 | ||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||
Accounts receivable | (161.3 | ) | (81.4 | ) | (34.2 | ) | |||||
Inventory | (279.0 | ) | (115.5 | ) | (46.7 | ) | |||||
Prepaids and other assets | (77.7 | ) | (38.9 | ) | (39.2 | ) | |||||
Accounts payable | 16.7 | 14.0 | 15.9 | ||||||||
Accrued compensation and employee benefits | 26.2 | 31.2 | 18.7 | ||||||||
Deferred revenue | 54.3 | 43.7 | 14.1 | ||||||||
Other liabilities | 37.1 | 219.4 | 53.7 | ||||||||
Net cash provided by operating activities | 1,169.6 | 1,143.9 | 1,087.0 | ||||||||
Investing activities: | |||||||||||
Purchase of investments | (2,581.9 | ) | (1,995.0 | ) | (2,585.5 | ) | |||||
Proceeds from sales of investments | 274.0 | 1,861.3 | 389.9 | ||||||||
Proceeds from maturities of investments | 1,533.6 | 703.1 | 970.1 | ||||||||
Purchase of property, plant and equipment, and intellectual property | (187.4 | ) | (190.7 | ) | (53.9 | ) | |||||
Acquisition of businesses, net of cash | (87.9 | ) | — | — | |||||||
Net cash provided by (used in) investing activities | (1,049.6 | ) | 378.7 | (1,279.4 | ) | ||||||
Financing activities: | |||||||||||
Proceeds from issuance of common stock relating to employee stock plans | 236.6 | 415.5 | 580.9 | ||||||||
Taxes paid related to net share settlement of equity awards | (120.0 | ) | (56.6 | ) | (24.0 | ) | |||||
Repurchase common stock | — | (2,274.0 | ) | (42.5 | ) | ||||||
Other financing activities | 9.7 | 2.0 | — | ||||||||
Net cash provided by (used in) financing activities | 126.3 | (1,913.1 | ) | 514.4 | |||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (0.1 | ) | 2.1 | — | |||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 246.2 | (388.4 | ) | 322.0 | |||||||
Cash, cash equivalents, and restricted cash, beginning of year | 663.2 | 1,051.6 | 729.6 | ||||||||
Cash, cash equivalents, and restricted cash, end of year | $ | 909.4 | $ | 663.2 | $ | 1,051.6 |
Useful Lives | |
Building | Up to 30 years |
Building improvements | Up to 15 years |
Leasehold improvements | Lesser of useful life or term of lease |
Equipment and furniture | 5 years |
Operating lease assets | Greater of lease term or 1 to 5 years |
Computer and office equipment | 3 years |
Enterprise-wide software | 5 years |
Purchased software | Lesser of 3 years or life of license |
Years Ended December 31, | |||||||||||
U.S. | 2018 | 2017 | 2016 | ||||||||
Instruments and accessories | $ | 1,485.2 | $ | 1,263.1 | $ | 1,077.3 | |||||
Systems | 692.2 | 603.5 | 501.3 | ||||||||
Services | 456.1 | 419.2 | 377.8 | ||||||||
Total U.S. revenue | $ | 2,633.5 | $ | 2,285.8 | $ | 1,956.4 | |||||
Outside of U.S. (“OUS”) | |||||||||||
Instruments and accessories | $ | 476.8 | $ | 373.8 | $ | 318.5 | |||||
Systems | 434.9 | 324.9 | 298.7 | ||||||||
Services | 179.0 | 153.7 | 132.9 | ||||||||
Total OUS revenue | $ | 1,090.7 | $ | 852.4 | $ | 750.1 | |||||
Total | |||||||||||
Instruments and accessories | $ | 1,962.0 | $ | 1,636.9 | $ | 1,395.8 | |||||
Systems | 1,127.1 | 928.4 | 800.0 | ||||||||
Services | 635.1 | 572.9 | 510.7 | ||||||||
Total revenue | $ | 3,724.2 | $ | 3,138.2 | $ | 2,706.5 |
As of | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Contract assets | $ | 12.4 | $ | 8.3 | |||
Deferred revenue | $ | 327.3 | $ | 268.6 |
Fiscal 2017 | Fiscal 2016 | ||||||||||||||||||||||
As Previously Reported | Adjustments | As Restated | As Previously Reported | Adjustments | As Restated | ||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Product | $ | 2,547.1 | $ | 18.2 | $ | 2,565.3 | $ | 2,187.4 | $ | 8.4 | $ | 2,195.8 | |||||||||||
Service | 581.8 | (8.9 | ) | 572.9 | 517.0 | (6.3 | ) | 510.7 | |||||||||||||||
Total revenue | 3,128.9 | 9.3 | 3,138.2 | 2,704.4 | 2.1 | 2,706.5 | |||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Product | 754.9 | 1.4 | 756.3 | 663.3 | (0.7 | ) | 662.6 | ||||||||||||||||
Service | 179.9 | — | 179.9 | 151.0 | — | 151.0 | |||||||||||||||||
Total cost of revenue | 934.8 | 1.4 | 936.2 | 814.3 | (0.7 | ) | 813.6 | ||||||||||||||||
Gross profit | 2,194.1 | 7.9 | 2,202.0 | 1,890.1 | 2.8 | 1,892.9 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative | 810.9 | (0.4 | ) | 810.5 | 705.3 | (1.7 | ) | 703.6 | |||||||||||||||
Research and development | 328.6 | — | 328.6 | 239.6 | — | 239.6 | |||||||||||||||||
Total operating expenses | 1,139.5 | (0.4 | ) | 1,139.1 | 944.9 | (1.7 | ) | 943.2 | |||||||||||||||
Income from operations | 1,054.6 | 8.3 | 1,062.9 | 945.2 | 4.5 | 949.7 | |||||||||||||||||
Interest and other income, net | 41.9 | — | 41.9 | 35.6 | — | 35.6 | |||||||||||||||||
Income before taxes | 1,096.5 | 8.3 | 1,104.8 | 980.8 | 4.5 | 985.3 | |||||||||||||||||
Income tax expense | 436.5 | (2.6 | ) | 433.9 | 244.9 | 2.1 | 247.0 | ||||||||||||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 660.0 | $ | 10.9 | $ | 670.9 | $ | 735.9 | $ | 2.4 | $ | 738.3 | |||||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||||||||||||||
Basic | $ | 5.91 | $ | 0.10 | $ | 6.01 | $ | 6.40 | $ | 0.03 | $ | 6.43 | |||||||||||
Diluted | $ | 5.67 | $ | 0.10 | $ | 5.77 | $ | 6.24 | $ | 0.02 | $ | 6.26 | |||||||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ | 653.4 | $ | 10.9 | $ | 664.3 | $ | 736.5 | $ | 2.4 | $ | 738.9 |
December 31, 2017 | |||||||||||
As Previously Reported | Adjustments | As Restated | |||||||||
ASSETS | |||||||||||
Accounts receivable, net | $ | 511.9 | $ | (4.0 | ) | $ | 507.9 | ||||
Prepaids and other current assets | $ | 97.2 | $ | 2.0 | $ | 99.2 | |||||
Deferred tax assets | $ | 87.3 | $ | (15.3 | ) | $ | 72.0 | ||||
Intangible and other assets, net | $ | 159.7 | $ | 36.1 | $ | 195.8 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | $ | 284.5 | $ | (40.7 | ) | $ | 243.8 | ||||
Other accrued liabilities | $ | 169.5 | $ | (0.6 | ) | $ | 168.9 | ||||
Other long-term liabilities | $ | 327.1 | $ | 6.5 | $ | 333.6 | |||||
Retained earnings | $ | 61.4 | $ | 53.6 | $ | 115.0 |
Reported as: | |||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-term Investments | Long-term Investments | |||||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||||
Cash | $ | 269.4 | $ | — | $ | — | $ | 269.4 | $ | 269.4 | $ | — | $ | — | |||||||||||||
Level 1: | |||||||||||||||||||||||||||
Money market funds | 569.1 | — | — | 569.1 | 569.1 | — | — | ||||||||||||||||||||
U.S. treasuries | 1,477.8 | 1.7 | (5.3 | ) | 1,474.2 | 10.0 | 897.8 | 566.4 | |||||||||||||||||||
Subtotal | 2,046.9 | 1.7 | (5.3 | ) | 2,043.3 | 579.1 | 897.8 | 566.4 | |||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||
Commercial paper | 110.7 | — | — | 110.7 | 1.4 | 109.3 | — | ||||||||||||||||||||
Corporate securities | 1,607.8 | 1.3 | (4.8 | ) | 1,604.3 | 8.0 | 724.5 | 871.8 | |||||||||||||||||||
U.S. government agencies | 791.8 | 0.3 | (3.8 | ) | 788.3 | — | 468.9 | 319.4 | |||||||||||||||||||
Municipal securities | 18.4 | — | — | 18.4 | — | 4.7 | 13.7 | ||||||||||||||||||||
Subtotal | 2,528.7 | 1.6 | (8.6 | ) | 2,521.7 | 9.4 | 1,307.4 | 1,204.9 | |||||||||||||||||||
Total assets measured at fair value | $ | 4,845.0 | $ | 3.3 | $ | (13.9 | ) | $ | 4,834.4 | $ | 857.9 | $ | 2,205.2 | $ | 1,771.3 |
Reported as: | |||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-term Investments | Long-term Investments | |||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||
Cash | $ | 197.7 | $ | — | $ | — | $ | 197.7 | $ | 197.7 | $ | — | $ | — | |||||||||||||
Level 1: | |||||||||||||||||||||||||||
Money market funds | 445.0 | — | — | 445.0 | 445.0 | — | — | ||||||||||||||||||||
U.S. treasuries | 1,029.1 | — | (4.7 | ) | 1,024.4 | 5.5 | 396.2 | 622.7 | |||||||||||||||||||
Subtotal | 1,474.1 | — | (4.7 | ) | 1,469.4 | 450.5 | 396.2 | 622.7 | |||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||
Commercial paper | 38.4 | — | — | 38.4 | — | 38.4 | — | ||||||||||||||||||||
Corporate securities | 946.6 | 0.2 | (4.4 | ) | 942.4 | — | 403.9 | 538.5 | |||||||||||||||||||
U.S. government agencies | 901.3 | — | (4.4 | ) | 896.9 | — | 311.7 | 585.2 | |||||||||||||||||||
Non-U.S. government securities | 2.5 | — | — | 2.5 | — | 2.5 | — | ||||||||||||||||||||
Municipal securities | 301.1 | — | (1.9 | ) | 299.2 | — | 159.7 | 139.5 | |||||||||||||||||||
Subtotal | 2,189.9 | 0.2 | (10.7 | ) | 2,179.4 | — | 916.2 | 1,263.2 | |||||||||||||||||||
Total assets measured at fair value | $ | 3,861.7 | $ | 0.2 | $ | (15.4 | ) | $ | 3,846.5 | $ | 648.2 | $ | 1,312.4 | $ | 1,885.9 |
Amortized Cost | Fair Value | ||||||
Mature in less than one year | $ | 2,230.2 | $ | 2,224.6 | |||
Mature in one to five years | 1,776.3 | 1,771.3 | |||||
Total | $ | 4,006.5 | $ | 3,995.9 |
Unrealized losses less than 12 months | Unrealized losses 12 months or greater | Total | |||||||||||||||||||||
December 31, 2018 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Corporate securities | $ | 727.4 | $ | (1.7 | ) | $ | 409.6 | $ | (3.1 | ) | $ | 1,137.0 | $ | (4.8 | ) | ||||||||
U.S. treasuries | 478.7 | (0.9 | ) | 592.8 | (4.4 | ) | 1,071.5 | (5.3 | ) | ||||||||||||||
U.S. government agencies | 228.0 | (0.2 | ) | 425.2 | (3.6 | ) | 653.2 | (3.8 | ) | ||||||||||||||
$ | 1,434.1 | $ | (2.8 | ) | $ | 1,427.6 | $ | (11.1 | ) | $ | 2,861.7 | $ | (13.9 | ) | |||||||||
December 31, 2017 | |||||||||||||||||||||||
Corporate securities | $ | 567.6 | $ | (2.1 | ) | $ | 277.0 | $ | (2.3 | ) | $ | 844.6 | $ | (4.4 | ) | ||||||||
U.S. treasuries | 763.5 | (2.5 | ) | 206.2 | (2.2 | ) | 969.7 | (4.7 | ) | ||||||||||||||
U.S. government agencies | 428.9 | (1.3 | ) | 345.5 | (3.1 | ) | 774.4 | (4.4 | ) | ||||||||||||||
Municipal securities | 236.3 | (1.3 | ) | 51.7 | (0.6 | ) | 288.0 | (1.9 | ) | ||||||||||||||
$ | 1,996.3 | $ | (7.2 | ) | $ | 880.4 | $ | (8.2 | ) | $ | 2,876.7 | $ | (15.4 | ) |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Recognized gains (losses) in interest and other income, net | $ | 8.7 | $ | (9.2 | ) | $ | 6.4 | ||||
Foreign exchange gains (losses) related to balance sheet re-measurement | $ | (2.6 | ) | $ | 9.7 | $ | (5.6 | ) |
Derivatives Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments | ||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||
Notional amounts: | |||||||||||||||
Forward contracts | $ | 183.0 | $ | 128.5 | $ | 182.7 | $ | 168.4 | |||||||
Gross fair value recorded in: | |||||||||||||||
Prepaid and other current assets | $ | 3.1 | $ | 0.9 | $ | 4.1 | $ | 1.2 | |||||||
Other accrued liabilities | $ | 0.9 | $ | 2.9 | $ | 1.1 | $ | 4.6 |
December 31, | |||||||
2018 | 2017 | ||||||
Inventory: | |||||||
Raw materials | $ | 164.1 | $ | 80.9 | |||
Work-in-process | 40.0 | 19.7 | |||||
Finished goods | 204.9 | 140.6 | |||||
Total inventory | $ | 409.0 | $ | 241.2 |
December 31, | |||||||
2018 | 2017 | ||||||
Property, plant, and equipment, net: | |||||||
Land | $ | 184.6 | $ | 174.8 | |||
Building and building/leasehold improvements | 266.2 | 230.5 | |||||
Machinery and equipment | 280.1 | 224.8 | |||||
Operating lease assets | 150.2 | 66.1 | |||||
Computer and office equipment | 52.6 | 44.8 | |||||
Capitalized software | 157.8 | 135.6 | |||||
Construction-in-process | 156.7 | 83.5 | |||||
Gross property, plant, and equipment | 1,248.2 | 960.1 | |||||
Less: Accumulated depreciation* | (436.2 | ) | (347.0 | ) | |||
Total property, plant, and equipment, net | $ | 812.0 | $ | 613.1 | |||
*Accumulated depreciation associated with operating lease assets | $ | (32.1 | ) | $ | (13.8 | ) |
December 31, | |||||||
2018 | 2017 | ||||||
Other accrued liabilities—short-term: | |||||||
Taxes payable | $ | 39.1 | $ | 63.1 | |||
Litigation related accruals | 55.0 | 13.8 | |||||
Other accrued liabilities | 137.7 | 92.0 | |||||
Total other accrued liabilities—short-term | $ | 231.8 | $ | 168.9 |
December 31, | |||||||
2018 | 2017 | ||||||
Other long-term liabilities: | |||||||
Income taxes—long-term | $ | 270.2 | $ | 286.8 | |||
Deferred revenue—long-term | 33.0 | 24.8 | |||||
Other long-term liabilities | 35.4 | 22.0 | |||||
Total other long-term liabilities | $ | 338.6 | $ | 333.6 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Income taxes paid | $ | 179.2 | $ | 147.5 | $ | 138.4 | |||||
Supplemental non-cash investing activities: | |||||||||||
Equipment transfers from inventory to property, plant, and equipment | $ | 125.7 | $ | 65.8 | $ | 39.3 | |||||
Deferred payments related to business combinations | $ | 16.7 | $ | — | $ | — |
December 31, | |||||||
2018 | 2017 | ||||||
Gross lease receivables | $ | 150.4 | $ | 128.0 | |||
Unearned income | (6.3 | ) | (5.0 | ) | |||
Allowance for credit loss | (1.0 | ) | (0.9 | ) | |||
Net investment in sales-type leases | $ | 143.1 | $ | 122.1 | |||
Reported as: | |||||||
Prepaids and other current assets | $ | 51.2 | $ | 41.9 | |||
Intangible and other assets, net | 91.9 | 80.2 | |||||
Total, net | $ | 143.1 | $ | 122.1 |
Fiscal Year | Amount | ||
2019 | $ | 50.8 | |
2020 | 46.5 | ||
2021 | 29.7 | ||
2022 | 14.9 | ||
2023 | 7.5 | ||
2024 and thereafter | 1.0 | ||
Total | $ | 150.4 |
Fiscal Year | Amount | ||
2019 | $ | 88.0 | |
2020 | 85.8 | ||
2021 | 68.8 | ||
2022 | 51.3 | ||
2023 | 25.4 | ||
2024 and thereafter | 1.9 | ||
Total | $ | 321.2 |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Patents and developed technology | $ | 158.7 | $ | (144.7 | ) | $ | 14.0 | $ | 156.0 | $ | (140.2 | ) | $ | 15.8 | ||||||||||
Distribution rights and others | 40.2 | (12.9 | ) | 27.3 | 9.2 | (9.2 | ) | — | ||||||||||||||||
Customer relationships | 48.5 | (23.1 | ) | 25.4 | 28.6 | (18.4 | ) | 10.2 | ||||||||||||||||
Total intangible assets | $ | 247.4 | $ | (180.7 | ) | $ | 66.7 | $ | 193.8 | $ | (167.8 | ) | $ | 26.0 |
Fiscal Year | Amount | ||
2019 | $ | 15.9 | |
2020 | 15.8 | ||
2021 | 12.5 | ||
2022 | 10.1 | ||
2023 | 6.2 | ||
2024 and thereafter | 6.2 | ||
Total | $ | 66.7 |
Fiscal Year | Amount | ||
2019 | $ | 15.1 | |
2020 | 14.5 | ||
2021 | 12.7 | ||
2022 | 11.2 | ||
2023 | 11.0 | ||
2024 and thereafter | 30.9 | ||
Total | $ | 95.4 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Shares repurchased | — | 7.3 | 0.2 | ||||||||
Average price per share | $ | — | $ | 310.32 | $ | 201.70 | |||||
Value of shares repurchased | $ | — | $ | 2,274.0 | $ | 42.5 |
Year Ended December 31, 2018 | |||||||||||||||||||
Gains (Losses) on Hedge Instruments | Unrealized Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation Gains (Losses) | Employee Benefit Plans | Total | |||||||||||||||
Beginning balance | $ | (2.4 | ) | $ | (11.3 | ) | $ | 2.3 | $ | (4.1 | ) | $ | (15.5 | ) | |||||
Other comprehensive income (loss) before reclassifications | 3.6 | 0.3 | (2.6 | ) | 0.4 | 1.7 | |||||||||||||
Reclassified from accumulated other comprehensive income (loss) | (1.0 | ) | 1.2 | — | 0.3 | 0.5 | |||||||||||||
Net current-period other comprehensive income (loss) | 2.6 | 1.5 | (2.6 | ) | 0.7 | 2.2 | |||||||||||||
Ending balance | $ | 0.2 | $ | (9.8 | ) | $ | (0.3 | ) | $ | (3.4 | ) | $ | (13.3 | ) | |||||
Year Ended December 31, 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 (loss) before reclassifications | (8.6 | ) | (2.7 | ) | 3.6 | (0.3 | ) | (8.0 | ) | ||||||||||
Reclassified from accumulated other comprehensive income | 1.2 | — | — | 0.2 | 1.4 | ||||||||||||||
Net current-period other comprehensive income (loss) | (7.4 | ) | (2.7 | ) | 3.6 | (0.1 | ) | (6.6 | ) | ||||||||||
Ending balance | $ | (2.4 | ) | $ | (11.3 | ) | $ | 2.3 | $ | (4.1 | ) | $ | (15.5 | ) |
Stock Options Outstanding | ||||||
Number Outstanding | Weighted Average Exercise Price Per Share | |||||
Balance at December 31, 2017 | 7.2 | $ | 164.16 | |||
Options granted | 0.6 | $ | 475.38 | |||
Options exercised | (1.5 | ) | $ | 126.52 | ||
Options forfeited/expired | (0.1 | ) | $ | 237.05 | ||
Balance at December 31, 2018 | 6.2 | $ | 200.79 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Range of Exercise Prices | Number of Shares | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value (1) | Number of Shares | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value (1) | ||||||||||||||||||
$31.96 - $127.91 | 1.4 | 2.7 | $ | 115.05 | 1.4 | $ | 115.05 | |||||||||||||||||||
$128.30 - $168.41 | 1.3 | 4.6 | $ | 156.67 | 1.3 | $ | 156.62 | |||||||||||||||||||
$169.42 - $178.39 | 1.4 | 5.6 | $ | 174.50 | 1.2 | $ | 174.17 | |||||||||||||||||||
$178.75 - $283.51 | 1.2 | 6.2 | $ | 214.60 | 0.9 | $ | 207.77 | |||||||||||||||||||
$310.67 - $548.71 | 0.9 | 9.1 | $ | 423.33 | 0.2 | $ | 388.12 | |||||||||||||||||||
Total | 6.2 | 5.4 | $ | 200.79 | $ | 1,727.7 | 5.0 | 4.7 | $ | 168.62 | $ | 1,554.5 |
(1) | The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $478.92 at December 31, 2018, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date. |
Shares | Weighted Average Grant Date Fair Value | |||||
Unvested balance at December 31, 2017 | 2.1 | $ | 209.55 | |||
Granted | 0.8 | $ | 431.11 | |||
Vested | (0.8 | ) | $ | 195.67 | ||
Forfeited | (0.1 | ) | $ | 277.10 | ||
Unvested balance at December 31, 2018 | 2.0 | $ | 295.70 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cost of sales—products | $ | 36.4 | $ | 28.1 | $ | 25.2 | |||||
Cost of sales—services | 16.8 | 14.0 | 12.4 | ||||||||
Total cost of sales | 53.2 | 42.1 | 37.6 | ||||||||
Selling, general and administrative | 133.2 | 111.8 | 97.4 | ||||||||
Research and development | 76.2 | 56.0 | 43.0 | ||||||||
Share-based compensation expense before income taxes | 262.6 | 209.9 | 178.0 | ||||||||
Income tax effect | 54.3 | 49.2 | 56.1 | ||||||||
Share-based compensation expense after income taxes | $ | 208.3 | $ | 160.7 | $ | 121.9 |
Years Ended December 31, | |||||||||||
STOCK OPTION PLANS | 2018 | 2017 | 2016 | ||||||||
Risk-free interest rate | 2.7 | % | 1.8 | % | 1.1 | % | |||||
Expected term (years) | 4.3 | 4.1 | 4.2 | ||||||||
Volatility | 33 | % | 25 | % | 26 | % | |||||
Fair value at grant date | $ | 146.30 | $ | 67.03 | $ | 47.06 | |||||
EMPLOYEE STOCK PURCHASE PLAN | |||||||||||
Risk-free interest rate | 2.1 | % | 1.2 | % | 0.6 | % | |||||
Expected term (years) | 1.3 | 1.2 | 1.2 | ||||||||
Volatility | 32 | % | 28 | % | 30 | % | |||||
Fair value at grant date | $ | 135.84 | $ | 79.77 | $ | 57.57 | |||||
RESTRICTED STOCK UNITS | |||||||||||
Fair value at grant date | $ | 431.11 | $ | 249.34 | $ | 184.59 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
U.S. | $ | 852.7 | $ | 774.7 | $ | 657.0 | |||||
Foreign | 426.8 | 330.1 | 328.3 | ||||||||
Total income before provision for income taxes | $ | 1,279.5 | $ | 1,104.8 | $ | 985.3 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Current | |||||||||||
Federal | $ | 89.5 | $ | 352.1 | $ | 207.0 | |||||
State | 21.1 | 13.0 | 13.4 | ||||||||
Foreign | 9.9 | 8.7 | 5.4 | ||||||||
$ | 120.5 | $ | 373.8 | $ | 225.8 | ||||||
Deferred | |||||||||||
Federal | $ | (4.1 | ) | $ | 62.8 | $ | 20.5 | ||||
State | (0.3 | ) | (0.3 | ) | 0.6 | ||||||
Foreign | 38.4 | (2.4 | ) | 0.1 | |||||||
$ | 34.0 | $ | 60.1 | $ | 21.2 | ||||||
Total income tax expense | $ | 154.5 | $ | 433.9 | $ | 247.0 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Federal tax at statutory rate | $ | 268.7 | $ | 386.7 | $ | 344.9 | |||||
Increase (reduction) in tax resulting from: | |||||||||||
State taxes, net of federal benefits | 20.8 | 16.0 | 14.0 | ||||||||
Foreign rate differential | (44.7 | ) | (115.7 | ) | (91.2 | ) | |||||
U.S. tax on foreign earnings | 43.7 | 8.4 | 5.0 | ||||||||
Research and development credit | (25.2 | ) | (15.3 | ) | (7.8 | ) | |||||
Share-based compensation not benefited | 9.9 | 10.8 | 3.6 | ||||||||
Domestic production activities deduction | — | (7.9 | ) | (8.0 | ) | ||||||
Reversal of unrecognized tax benefits | (5.2 | ) | (62.4 | ) | (15.8 | ) | |||||
Tax Cuts and Jobs Act impact | 0.5 | 317.8 | — | ||||||||
Excess tax benefits related to share-based compensation arrangements | (116.2 | ) | (102.8 | ) | — | ||||||
Other | 2.2 | (1.7 | ) | 2.3 | |||||||
Total income tax expense | $ | 154.5 | $ | 433.9 | $ | 247.0 |
December 31, | |||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Share-based compensation expense | $ | 87.2 | $ | 79.1 | |||
Expenses deducted in later years for tax purposes | 29.1 | 29.7 | |||||
Intangible assets | 351.9 | — | |||||
Research and other credits | 40.1 | 27.5 | |||||
Other | 9.0 | 10.5 | |||||
Gross deferred tax assets | $ | 517.3 | $ | 146.8 | |||
Valuation allowance | (42.3 | ) | (29.4 | ) | |||
Deferred tax assets | $ | 475.0 | $ | 117.4 | |||
Deferred tax liabilities: | |||||||
Fixed assets | $ | (42.2 | ) | $ | (26.3 | ) | |
Intangible assets | (7.5 | ) | (3.6 | ) | |||
Other | (0.1 | ) | (15.5 | ) | |||
Deferred tax liabilities | $ | (49.8 | ) | $ | (45.4 | ) | |
Net deferred tax assets | $ | 425.2 | $ | 72.0 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Beginning balance | $ | 65.4 | $ | 106.0 | $ | 92.4 | |||||
Increases related to tax positions taken during the current year | 22.5 | 21.1 | 29.9 | ||||||||
Decreases related to tax positions taken during a prior year | (0.9 | ) | (46.5 | ) | (0.5 | ) | |||||
Decreases related to settlements with tax authorities | — | (0.5 | ) | — | |||||||
Decreases related to expiration of statute of limitations | (8.2 | ) | (14.7 | ) | (15.8 | ) | |||||
Ending balance | $ | 78.8 | $ | 65.4 | $ | 106.0 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Numerator: | |||||||||||
Net income attributable to Intuitive Surgical, Inc. | $ | 1,127.9 | $ | 670.9 | $ | 738.3 | |||||
Denominator: | |||||||||||
Weighted average shares outstanding used in basic calculation | 113.7 | 111.7 | 114.9 | ||||||||
Add: dilutive effect of potential common shares | 5.1 | 4.6 | 3.0 | ||||||||
Weighted average shares outstanding used in diluted calculation | 118.8 | 116.3 | 117.9 | ||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic | $ | 9.92 | $ | 6.01 | $ | 6.43 | |||||
Diluted | $ | 9.49 | $ | 5.77 | $ | 6.26 |
Three Months Ended | |||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||
Revenue | $ | 1,046.5 | $ | 920.9 | $ | 909.3 | $ | 847.5 | |||||||
Gross profit | $ | 735.7 | $ | 642.3 | $ | 632.3 | $ | 593.8 | |||||||
Net income attributable to Intuitive Surgical, Inc. (1)(2)(3) | $ | 292.5 | $ | 292.5 | $ | 255.3 | $ | 287.6 | |||||||
Net income attributable to Intuitive Surgical, Inc. per share: | |||||||||||||||
Basic | $ | 2.56 | $ | 2.57 | $ | 2.25 | $ | 2.55 | |||||||
Diluted | $ | 2.45 | $ | 2.45 | $ | 2.15 | $ | 2.44 | |||||||
(1) Includes discrete tax benefits as follows: | |||||||||||||||
Excess tax benefits related to share-based compensation arrangements | $ | 15.8 | $ | 24.1 | $ | 21.6 | $ | 54.7 | |||||||
Certain one-time tax benefits | $ | 2.5 | $ | 4.6 | $ | — | $ | — | |||||||
(2) Includes pre-tax litigation benefits (charges) | $ | — | $ | 1.8 | $ | (42.5 | ) | $ | (4.5 | ) | |||||
(3) Includes charitable foundation contribution expense | $ | (25.2 | ) | $ | — | $ | — | $ | — | ||||||
Three Months Ended | |||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | ||||||||||||
Revenue | $ | 892.0 | $ | 807.8 | $ | 758.8 | $ | 679.6 | |||||||
Gross profit | $ | 634.0 | $ | 568.1 | $ | 530.1 | $ | 469.8 | |||||||
Net income (loss) attributable to Intuitive Surgical, Inc. (1)(2) | $ | (31.5 | ) | $ | 298.6 | $ | 223.0 | $ | 180.8 | ||||||
Net income (loss) attributable to Intuitive Surgical, Inc. per share: | |||||||||||||||
Basic | $ | (0.28 | ) | $ | 2.67 | $ | 2.01 | $ | 1.62 | ||||||
Diluted | $ | (0.28 | ) | $ | 2.56 | $ | 1.94 | $ | 1.57 | ||||||
(1) Includes discrete tax benefits (expense) as follows: | |||||||||||||||
Income expense related to the 2017 Tax Act | $ | (317.8 | ) | $ | — | $ | — | $ | — | ||||||
Excess tax benefits related to share-based compensation arrangements | $ | 19.9 | $ | 19.7 | $ | 30.6 | $ | 32.6 | |||||||
Certain one-time tax benefits | $ | — | $ | 68.4 | $ | — | $ | — | |||||||
(2) Includes pre-tax litigation benefits (charges) | $ | 1.2 | $ | (9.7 | ) | $ | 4.5 | $ | (21.3 | ) |
Balance at Beginning of Year | Additions | Deductions (1) | Balance at End of Year | ||||||||||||
Allowance for doubtful accounts, loan credit losses, and sales returns | |||||||||||||||
Year ended December 31, 2018 | $ | 14.6 | $ | 46.0 | $ | (40.2 | ) | $ | 20.4 | ||||||
Year ended December 31, 2017 | $ | 10.8 | $ | 36.1 | $ | (32.3 | ) | $ | 14.6 | ||||||
Year ended December 31, 2016 | $ | 9.4 | $ | 24.6 | $ | (23.2 | ) | $ | 10.8 |
(1) | Primarily represents products returned. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
ITEM 9A. | CONTROLS AND PROCEDURES |
(i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
(ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
(iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULE |
(a) | The following documents are filed as part of this Annual Report on Form 10-K |
1) | Financial Statements—See Index to Consolidated Financial Statements at Item 8 of this report on Form 10-K. |
2) | The following financial statement schedule of Intuitive Surgical, Inc. is filed as part of this report and should be read in conjunction with the financial statements of Intuitive Surgical, Inc.: |
3) | Exhibits |
3.1(1) | ||
3.2(2) | ||
4.1(3) | ||
10.1(4) | ||
10.2(4) | ||
10.3(5) | ||
10.4(6) | ||
10.5(7) | ||
10.6(8) | ||
10.7(9) | ||
10.8(10) | ||
10.9(11) | ||
10.10(12) | ||
10.11(13) | ||
10.12(14) | ||
10.13(15) | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101 | The following materials from Intuitive Surgical, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged at Level I through IV. |
(1) | Incorporated by reference to Exhibit 3.1 filed with the Company’s Quarterly Report on Form 10-Q filed on October 20, 2017 (File No. 000-30713). |
(2) | Incorporated by reference to Exhibit 3.1 filed with the Company’s Current Report on Form 8-K filed on December 13, 2016 (File No. 000-30713). |
(3) | Incorporated by reference to Exhibit 4.2 filed with the Company’s Registration Statement Amendment on Form S-1/A filed on May 2, 2000 (File No. 333-33016). |
(4) | Incorporated by reference to exhibits filed with the Company’s Registration Statement on Form S-1 filed on March 22, 2000 (File No. 333-33016). |
(5) | Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on August 3, 2015 (File No. 000-30713). |
(6) | Incorporated by reference to Exhibit 4.2 filed with the Company’s Registration Statement on Form S-8 filed on May 1, 2015 (File No. 333-203793). |
(7) | Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on April 26, 2017 (File No. 000-30713). |
(8) | Incorporated by reference to Exhibit 10.2 filed with the Company’s Current Report on Form 8-K filed on April 26, 2017 (File No. 000-30713). |
(9) | Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on December 2, 2008 (File No. 000-30713). |
(10) | Incorporated by reference to Exhibit 10.2 filed with the Company’s Quarterly Report on Form 10-Q filed on July 23, 2009 (File No. 000-30713). |
(11) | Incorporated by reference to Exhibit 10.9 filed with the Company’s 2015 Annual Report on Form 10-K filed on February 2, 2016 (File No. 000-30713). |
(12) | Incorporated by reference to Exhibit 10.10 filed with the Company’s 2015 Annual Report on Form 10-K filed on February 2, 2016 (File No. 000-30713). |
(13) | Incorporated by reference to Exhibit 10.11 filed with the Company’s 2015 Annual Report on Form 10-K filed on February 2, 2016 (File No. 000-30713). |
(14) | Incorporated by reference to Exhibit 10.12 filed with the Company’s 2015 Annual Report on Form 10-K filed on February 2, 2016 (File No. 000-30713). |
(15) | Incorporated by reference to Exhibit 10.13 filed with the Company’s 2016 Annual Report on Form 10-K filed on February 6, 2017 (File No. 000-30713). |
ITEM 16. | FORM 10-K SUMMARY |
INTUITIVE SURGICAL, INC. | ||
By: | /S/ GARY S. GUTHART | |
Gary S. Guthart, Ph.D. President and Chief Executive Officer |
Signature | Title | Date | ||
/S/ GARY S. GUTHART | President, Chief Executive Officer, and Director (Principal Executive Officer) | February 4, 2019 | ||
Gary S. Guthart, Ph.D. | ||||
/S/ MARSHALL L. MOHR | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 4, 2019 | ||
Marshall L. Mohr | ||||
/S/ JAMIE E. SAMATH | Vice President, Corporate Controller (Principal Accounting Officer) | February 4, 2019 | ||
Jamie E. Samath | ||||
/S/ LONNIE M. SMITH | Chairman of the Board of Directors | February 4, 2019 | ||
Lonnie M. Smith | ||||
/S/ CRAIG H. BARRATT | Director | February 4, 2019 | ||
Craig H. Barratt, Ph.D. | ||||
/S/ MICHAEL A. FRIEDMAN | Director | February 4, 2019 | ||
Michael A. Friedman, M.D. | ||||
/S/ AMAL M. JOHNSON | Director | February 4, 2019 | ||
Amal M. Johnson | ||||
/S/ DON R. KANIA | Director | February 4, 2019 | ||
Don R. Kania, Ph.D. | ||||
/S/ KEITH R. LEONARD JR. | Director | February 4, 2019 | ||
Keith R. Leonard Jr. | ||||
/S/ ALAN J. LEVY | Director | February 4, 2019 | ||
Alan J. Levy, Ph.D. | ||||
/S/ JAMI DOVER NACHTSHEIM | Director | February 4, 2019 | ||
Jami Dover Nachtsheim | ||||
/S/ MARK J. RUBASH | Director | February 4, 2019 | ||
Mark J. Rubash |
Subsidiaries of the Registrant | State or Other Jurisdiction of Incorporation |
I.S. Holdings C.V. | Netherlands |
I.S. Netherlands C.V. | Netherlands |
Intuitive Surgical AB | Sweden |
Intuitive Surgical ApS | Denmark |
Intuitive Surgical Australia Proprietary Limited | Australia |
Intuitive Surgical Brasil Importacao E Comercio De Equipamentos Cirurgicos Ltda. | Brazil |
Intuitive Surgical BV | Netherlands |
Intuitive Surgical Deutschland GmbH | Germany |
Intuitive Surgical GK | Japan |
Intuitive Surgical HK Limited | Hong Kong |
Intuitive Surgical Holdings, LLC | Delaware, U.S. |
Intuitive Surgical India Private Limited | India |
Intuitive Surgical International Ltd. | Cayman |
Intuitive Surgical Ireland Limited | Ireland |
Intuitive Surgical Korea Limited | South Korea |
Intuitive Surgical Limited | United Kingdom |
Intuitive Surgical Medical Device and Technology (Shanghai) Co., Ltd. | China |
Intuitive Surgical Medical Device Taiwan Ltd. | Taiwan |
Intuitive Surgical Operations, Inc. | Delaware, U.S. |
Intuitive Surgical Pte. Ltd. | Singapore |
Intuitive Surgical S. de R. L. de C.V. | Mexico |
Intuitive Surgical S.A.S. | France |
Intuitive Surgical s.r.o. | Czech Republic |
Intuitive Surgical Sarl | Switzerland |
Intuitive Surgical Spain SL | Spain |
Intuitive Surgical SPRL | Belgium |
Intuitive Surgical Turkey Medikal Cihaz Ticaret Limited Serketi | Turkey |
Intuitive Surgical-Fosun (HongKong) Co., Ltd. | Hong Kong |
Intuitive Surgical-Fosun Medical Technology (Shanghai) Co., Ltd. | China |
Unison Surgicals Company | Taiwan |
1. | I have reviewed this annual report on Form 10-K of Intuitive Surgical, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /S/ GARY S. GUTHART |
Gary S. Guthart, Ph.D. President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Intuitive Surgical, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /S/ MARSHALL L. MOHR |
Marshall L. Mohr Executive Vice President and Chief Financial Officer |
(i) | the accompanying Annual Report on Form 10-K of the Company for the period ended December 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ GARY S. GUTHART |
Gary S. Guthart, Ph.D. President and Chief Executive Officer |
(i) | the accompanying Annual Report on Form 10-K of the Company for the period ended December 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ MARSHALL L. MOHR |
Marshall L. Mohr Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Jan. 18, 2019 |
Jun. 30, 2018 |
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Document Document And Entity Information [Abstract] | |||
Entity Registrant Name | INTUITIVE SURGICAL INC | ||
Entity Central Index Key | 0001035267 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ISRG | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 114,488,602 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 53.9 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance | $ 8.2 | $ 4.6 |
Preferred stock, shares authorized | 2,500,000.0 | 2,500,000.0 |
Preferred stock, par value (usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 300,000,000.0 | 300,000,000.0 |
Common stock, par value (usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued | 114,500,000 | 112,300,000 |
Common stock, shares outstanding | 114,500,000 | 112,300,000 |
Consolidated Statements Of Cash Flows - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Statement of Cash Flows [Abstract] | |||
Net income | $ 1,125.0 | $ 670.9 | $ 738.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and loss on disposal of property, plant, and equipment, net | 108.6 | 86.2 | 73.9 |
Amortization of intangible assets | 14.2 | 12.9 | 18.2 |
Loss on investment, accretion of discounts, and amortization of premiums on investments, net | 1.8 | 21.2 | 35.9 |
Deferred income taxes | 31.9 | 60.2 | 20.9 |
Income tax benefits from employee stock plans | 0.0 | 0.0 | 29.8 |
Share-based compensation expense | 261.2 | 209.1 | 177.6 |
Amortization of contract acquisition asset | 10.6 | 10.9 | 10.1 |
Changes in operating assets and liabilities, net of effects of acquisitions: | |||
Accounts receivable | (161.3) | (81.4) | (34.2) |
Inventory | (279.0) | (115.5) | (46.7) |
Prepaids and other assets | (77.7) | (38.9) | (39.2) |
Accounts payable | 16.7 | 14.0 | 15.9 |
Accrued compensation and employee benefits | 26.2 | 31.2 | 18.7 |
Deferred revenue | 54.3 | 43.7 | 14.1 |
Other liabilities | 37.1 | 219.4 | 53.7 |
Net cash provided by operating activities | 1,169.6 | 1,143.9 | 1,087.0 |
Investing activities: | |||
Purchase of investments | (2,581.9) | (1,995.0) | (2,585.5) |
Proceeds from sales of investments | 274.0 | 1,861.3 | 389.9 |
Proceeds from maturities of investments | 1,533.6 | 703.1 | 970.1 |
Purchase of property, plant and equipment, and intellectual property | (187.4) | (190.7) | (53.9) |
Acquisition of businesses, net of cash | 87.9 | 0.0 | 0.0 |
Net cash provided by (used in) investing activities | (1,049.6) | 378.7 | (1,279.4) |
Financing activities: | |||
Proceeds from issuance of common stock relating to employee stock plans | 236.6 | 415.5 | 580.9 |
Taxes paid related to net share settlement of equity awards | (120.0) | (56.6) | (24.0) |
Repurchase common stock | 0.0 | (2,274.0) | (42.5) |
Other financing activities | 9.7 | 2.0 | 0.0 |
Net cash provided by (used in) financing activities | 126.3 | (1,913.1) | 514.4 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (0.1) | 2.1 | 0.0 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 246.2 | (388.4) | 322.0 |
Cash, cash equivalents, and restricted cash, beginning of year | 663.2 | 1,051.6 | 729.6 |
Cash, cash equivalents, and restricted cash, end of year | $ 909.4 | $ 663.2 | $ 1,051.6 |
Description of the Business |
12 Months Ended |
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Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of the Business | DESCRIPTION OF THE BUSINESS Intuitive Surgical, Inc. (“Intuitive” or the “Company”) develops, manufactures, and markets the da Vinci® Surgical System. The Company’s products and related services enable physicians and healthcare providers to improve the quality of and access to minimally invasive care. The da Vinci Surgical System consists of a surgeon console or consoles, a patient-side cart, a high-performance vision system, and proprietary instruments and accessories. |
Summary Of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Consolidated Financial Statements include the results and the balances of the Company’s majority-owned joint venture (“Joint Venture”) with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”). Chindex Medical Limited (“Chindex”), a subsidiary of Fosun Pharma, has been its distribution partner for da Vinci Surgical Systems in China. The Company holds a controlling financial interest in the Joint Venture and the noncontrolling interest is reflected as a separate component of the consolidated stockholders’ equity. The noncontrolling interest’s share of the earnings in the Joint Venture is presented separately in the Consolidated Statements of Income for the year ended December 31, 2018, while the amount was inconsequential for the year ended December 31, 2017, and was included as a component of interest and other income, net in the Consolidated Statements of Income. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements. The accounting estimates that require management’s most significant, difficult, and subjective judgments include the valuation and recognition of investments, the valuation of revenue and allowance for sales returns and doubtful accounts, the estimation of hedging transactions, the valuation of inventory, the valuation of and assessment of recoverability of intangible assets and their estimated useful lives, revenue recognition, the valuation and recognition of share-based compensation, the recognition and measurement of current and deferred income tax assets, along with the assessment of recoverability, and liabilities, and legal contingencies estimates. Actual results could differ materially from these estimates. Concentrations of Credit Risk and Other Risks and Uncertainties The carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities. Marketable securities and derivative instruments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s investment securities and derivative instruments consist of various major corporations, financial institutions, municipalities, and government agencies of high credit standing. The Company’s accounts receivable are derived from net revenue to customers and distributors located throughout the world. The Company performs credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The Company provides reserves for potential credit losses but has not experienced significant losses to date. As of December 31, 2018, and 2017, 71% and 69%, respectively, of accounts receivable were from domestic customers. No single customer represented more than 10% of total revenue for the years ended December 31, 2018, 2017, and 2016. During the years ended December 31, 2018, 2017, and 2016, domestic revenue accounted for 71%, 73%, and 72% of total revenue, respectively, while outside of the U.S. revenue accounted for 29%, 27%, and 28%, respectively, of total revenue for each of the years then ended. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from date of purchase of 90 days or less to be cash equivalents. Investments Available-for-sale investments. The Company’s investments may consist of U.S. treasury and U.S. government agency securities, taxable and tax exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities, and money market funds. The Company has designated all investments as available-for-sale and, therefore, such investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). For securities sold prior to maturity, the cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in interest and other income, net in the Consolidated Statements of Income. Investments with remaining maturities at date of purchase greater than approximately three months and remaining maturities as of the reporting period less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Other-than-temporary impairment. All of the Company’s investments are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary included the extent and length of time the investment’s fair value has been lower than its cost basis, the financial condition and near-term prospects of the investee, extent of the loss related to credit of the issuer, the expected cash flows from the security, the Company’s intent to sell the security, and whether or not the Company will be required to sell the security prior to the expected recovery of the investment’s amortized cost basis. No significant charges were recorded during the years ended December 31, 2018, 2017, and 2016. Fair Value Measurements The Company measures the fair value of money market funds and certain U.S. treasury securities based on quoted prices in active markets for identical assets as Level 1 securities. Marketable securities measured at fair value using Level 2 inputs are primarily comprised of commercial paper, corporate notes and bonds, U.S. and non-U.S. government agencies, and municipal notes. The Company reviews trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. This approach results in the Level 2 classification of these securities within the fair value hierarchy. Inventory Inventory is stated at the lower of standard cost, which approximates actual costs, or net realizable value, on a first-in, first-out basis. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Property, Plant, and Equipment Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets generally as follows:
Depreciation expense for the years ended December 31, 2018, 2017, and 2016, was $105.9 million, $82.1 million, and $70.7 million, respectively. Capitalized Software Costs for Internal Use Internally developed software primarily includes enterprise-level business software that the Company customizes to meet its specific operational needs. The Company capitalized costs for internal use software of $17.4 million, $22.4 million, and $11.8 million during the years ended December 31, 2018, 2017, and 2016, respectively. Upon being placed in service, these costs are depreciated over an estimated useful life of up to 5 years. Business Combinations The Company includes the results of operations of the businesses that are acquired as of the acquisition date. The Company allocates the purchase price of acquisitions to the assets acquired and liabilities assumed based on the estimated fair values. The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill. Acquisition related costs are recognized separately from the business combination and are expensed as incurred. Goodwill and Intangible Assets Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually during the fourth fiscal quarter, or if circumstances indicate their value may no longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. The Company continues to operate in one segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of December 31, 2018, there has been no impairment of goodwill. Intangible assets are carried at cost, net of accumulated amortization. The Company does not have intangible assets with indefinite useful lives other than goodwill. Amortization is recorded on a straight-line basis over the intangible assets’ useful lives, which range from approximately 1 to 9 years. Impairment of Long-lived Assets The Company evaluates long-lived assets, which include amortizable intangible and tangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. Recoverability is measured by comparing the net book value to the future undiscounted cash flows attributable to such assets. The Company recognizes an impairment charge equal to the amount by which the net book value exceeds its fair value. No material impairment losses were incurred in the periods presented. Revenue Recognition The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018. The Company’s revenue consists of product revenue resulting from the sale of systems, system components, instruments and accessories, and service revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities. The Company’s system sale arrangements generally contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are a distinct product or service that is separately identifiable from other items in bundled packages; and if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer. The Company’s system sale arrangements include a combination of the following performance obligations: system(s); system components; system accessories; instruments; accessories; and system service. The Company’s system sale arrangements generally include a five-year period of service. The first year of service is generally free and included in the system sale arrangement and the remaining four years are generally included at a stated service price. The Company considers the service terms in the arrangements that are legally enforceable to be performance obligations. Other than service, the Company generally satisfies all of the performance obligations up-front. System components, system accessories, instruments, accessories, and service are also sold on a stand-alone basis. The Company recognizes revenue as the performance obligations are satisfied by transferring control of the product or service to a customer. The Company generally recognizes revenue for the performance obligations at the following points in time: System sales. For systems (including system components and system accessories) sold directly to end customers, revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. For systems sold through distributors, revenue is recognized generally at the time of shipment. The Company’s system arrangements generally do not provide a right of return. The systems are generally covered by a one-year warranty. Warranty costs were not material for the periods presented. Instruments and accessories. Revenue from sales of instruments and accessories is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but also occurs at the time of delivery depending on the customer arrangement. The Company allows its customers in the normal course of business to return unused products for a limited period of time subsequent to initial purchase and records an allowance against revenue for estimated returns. Service. Service revenue is recognized over the term of the service period as the customer benefits from the services throughout the service period. Revenue related to services performed on a time-and-materials basis is recognized when performed. The Company offers its customers the opportunity to trade in their older systems for a credit towards the purchase of a newer generation system. The Company generally does not provide specified price trade-in rights or upgrade rights at the time of system purchase. Such trade-in or upgrade transactions are separately negotiated based on the circumstances at the time of the trade-in or upgrade, based on the then fair value of the system, and are generally not based on any pre-existing rights granted by the Company. Accordingly, such trade-ins and upgrades are not considered as separate performance obligations in the arrangement for a system sale. As part of a trade-in transaction, the customer receives a new generation system in exchange for its pre-owned system. The trade-in credit is negotiated at the time of the trade-in and is applied towards the purchase price of the new unit. Traded-in systems generally can be reconditioned and resold. The Company accounts for the fair value of the traded-in system in the total consideration in the arrangement by including the net realizable value of the traded-in system less a normal profit margin. The value of the traded-in system is determined as the amount, after reconditioning costs are added, that will allow a normal profit margin on the sale of the reconditioned unit to be generated. When there is no market for the traded-in units, no value is assigned. Traded-in units are reported as a component of inventory until resold, or otherwise disposed. In addition, customers may also have the opportunity to upgrade their systems at a price determined at the time of the upgrade, for example, by adding a second surgeon console for use with the da Vinci Surgical System. Such upgrades are performed by completing component level upgrades at the customer’s site. Upgrade revenue is recognized when the component level upgrades are complete and all revenue recognition criteria are met. For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services, geographies, and type of customer. The Company regularly reviews standalone selling prices and updates these estimates as necessary. The following table presents revenue disaggregated by types and geography (in millions):
The transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which revenue has not yet been recognized. A significant portion of this amount relates to performance obligations in the Company’s service contracts that will be satisfied and recognized as revenue in future periods. Transaction price allocated to remaining performance obligations was approximately $1,448.7 million as of December 31, 2018. The following information summarizes the Company’s contract assets and liabilities (in millions):
The Company invoices its customers based on the billing schedules in its sales arrangements. Payments are generally due 30 days from date of invoice. Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied and the contractual billing terms in the arrangements. Deferred revenue for the periods presented primarily relates to service contracts where the service fees are billed up-front, generally quarterly or annually, prior to those services having been performed. The associated deferred revenue is generally recognized over the term of the service period. The Company did not have any significant impairment losses on its contract assets for the periods presented. During the year ended December 31, 2018, the Company recognized $268.9 million of revenue that was included in the deferred revenue balance as of December 31, 2017. During the year ended December 31, 2017, the Company recognized $225.5 million of revenue that was included in the deferred revenue balance as of December 31, 2016. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company has determined that certain sales incentives provided to the Company’s sales team are required to be capitalized when the Company expects to generate future economic benefits from the related revenue-generating contracts subsequent to the initial capital sales transaction. When determining the economic life of the contract acquisition assets recognized, the Company considers historical service renewal rates, expectations of future customer renewals of service contracts, and other factors that could impact the economic benefits that the Company expects to generate from the relationship with its customers. The costs capitalized as contract acquisition costs included in intangible and other assets, net in the Consolidated Balance Sheets were $34.2 million and $31.4 million as of December 31, 2018, and 2017, respectively. The Company did not incur any impairment losses during the periods presented. Leases The Company enters into sales-type lease and operating lease arrangements with certain qualified customers. Sales-type leases have terms that generally range from 24 to 84 months and are usually collateralized by a security interest in the underlying assets. Revenue related to multiple-element arrangements are allocated to lease and non-lease elements based on their relative standalone selling prices as prescribed by the Company’s revenue recognition policy. Lease elements generally include a da Vinci Surgical System or system component, while non-lease elements generally include service, instruments and accessories. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following terms: (1) whether title of the system transfers automatically or for a nominal fee at the end of the term of the lease, (2) whether the present value of the minimum lease payments are equal to or greater than 90% of the fair market value of the leased asset at the inception of the lease, (3) whether the lease term exceeds 75% of the economic life of the leased asset, and (4) whether there is an option to purchase the leased asset at a “bargain price” at the end of the lease term. The Company generally recognizes revenue from sales-type lease arrangements at the time the system is accepted by the customer, assuming all other revenue recognition criteria have been met. Revenue from sales-type leases is presented as product revenue. Revenue from operating lease arrangements is recognized as earned over the lease term, which is generally on a straight-line basis and is presented as product revenue. Operating lease revenue for the years ended December 31, 2018, 2017, and 2016, was $51.4 million, $25.9 million, and $16.6 million, respectively. Allowance for Sales Returns and Doubtful Accounts The allowance for sales returns is based on the Company’s estimates of potential future returns of certain products 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. Share-Based Compensation The Company accounts for share-based employee compensation plans using the fair value recognition and measurement provisions under U.S. GAAP. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period. The Company estimates expected forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimated. Expected Term: The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The Company determines expected term based on historical exercise patterns and its expectation of the time it will take for employees to exercise options still outstanding. Expected Volatility: The Company uses market-based implied volatility for purposes of valuing stock options granted. Market-based implied volatility is derived based on at least one-year traded options on the Company’s common stock. The extent to which the Company relies on market-based volatility when valuing options, depend among other things, on the availability of traded options on the Company’s stock and the term of such options. Due to sufficient volume of the traded options, the Company used 100% market-based implied volatility to value options granted, which the Company believes is more representative of future stock price trends than historical volatility. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option. The fair value of restricted stock units is determined based on the closing quoted price of the Company’s common stock on the day of the grant. See “Note 9. Share-Based Compensation,” for a detailed discussion of the Company’s stock plans and share-based compensation expense. Computation of Net Income per Share Basic net income per share attributable to Intuitive Surgical, Inc. is computed using the weighted average number of shares outstanding during the period. Diluted net income per share attributable to Intuitive Surgical, Inc. is computed using the weighted average number of the Company’s shares and dilutive potential shares outstanding during the period. Dilutive potential shares primarily consist of employee stock options, restricted stock units, and shares to be purchased by employees under the Company’s employee stock purchase plan. U.S. GAAP requires that employee equity share options, non-vested shares, and similar equity instruments granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of equity awards, which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares. Research and Development Expenses Research and development costs are expensed as incurred and include amortization of intangible assets, costs associated with co-development research and development licensing arrangements, costs of prototypes, salaries, benefits and other headcount related costs, contract and other outside service fees, and facilities and overhead costs. Foreign Currency and Other Hedging Instruments 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 period. Gains and losses from foreign currency translation are included in accumulated other comprehensive income (loss) within stockholders’ equity in the Consolidated Balance Sheets. For all non-functional currency account balances, the re-measurement of such balances to the functional currency results in either a foreign exchange gain or loss, which is recorded to interest and other income, net in the Consolidated Statements of Income in the same accounting period that the re-measurement occurred. The Company uses derivatives to partially offset its business exposure to foreign currency exchange risk. The terms of the Company’s derivative contracts are generally twelve months or shorter. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and expenses. The Company may also enter into foreign currency forward contracts to offset the foreign currency exchange gains and losses generated by re-measurement of certain assets and liabilities denominated in non-functional currencies. The hedging program is not designated for trading or speculative purposes. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments. The Company records all derivatives on the Consolidated Balance Sheets at fair value. The effective portions of cash flow hedges are recorded in other comprehensive income (loss) (“OCI”) until the hedged item is recognized in earnings. Derivative instruments designated as cash flow hedges are de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two month time period. Gains and losses in OCI associated with such derivative instruments are reclassified immediately into earnings through interest and other income, net. Any subsequent changes in fair value of such derivative instruments also are reflected in current earnings. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings in interest and other income, net. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are expected more likely than not to be realized in the future. The Company has elected to account for Global Intangible Low-Taxed Income (“GILTI”) under the Tax Cuts and Jobs Act (“2017 Tax Act”) as period costs when incurred. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. As of December 31, 2018, and 2017, 88% and 88% of long-lived assets were in the United States, respectively. Revenue is attributed to a geographic region based on the location of the end customer. Legal Contingencies The Company is involved in a number of legal proceedings involving product liability, intellectual property, shareholder derivative actions, securities class actions, and other matters. A liability and related charge are recorded to earnings in the Company’s consolidated financial statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including discussion with outside legal counsel. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if no amount within the range is a better estimate than any other. If a material loss is reasonably possible, but not probable and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. The Company expenses legal fees as incurred. When determining the estimated probable loss or range of losses, significant judgment is required to be exercised in order to estimate the amount and timing of the loss to be recorded. Estimates of probable losses resulting from litigation are inherently difficult to make, particularly when the matters are in early procedural stages with incomplete facts and information. The final outcome of legal proceedings is dependent on many variables difficult to predict and, therefore, the ultimate cost to entirely resolve such matters may be materially different than the amount of current estimates. Consequently, new information or changes in judgments and estimates could have a material adverse effect on the Company’s business, financial condition, and results of operations or cash flows. Adopted Accounting Pronouncements Revenue from Contracts with Customers The Company adopted FASB Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers in the first quarter of the Company’s fiscal year that began on January 1, 2018, using the full retrospective method, which required the Company to restate each prior reporting period presented. This new standard replaced the previous revenue recognition guidance in U.S. GAAP. Please see the Company’s “Revenue Recognition” policy in the “Significant Accounting Policies” section above. The areas impacted include future contractual billings related to services included in the Company’s multi-year contracts, which are considered performance obligations that should be part of the contract consideration allocated to all performance obligations rather than being excluded due to its contingent nature as required under the previous revenue standard. Accordingly, the amount of contract consideration allocated to the performance obligations identified in the Company’s system arrangements is different from the amounts allocated under the previous revenue standard. In general, revenue is recognized earlier as a greater amount of the contract consideration is allocated to the product-related performance obligations that generally are delivered upfront, and therefore, less consideration is allocated to the service performance obligation that is generally recognized over the service period. In addition, the Company recognized an asset associated with the incremental costs of obtaining revenue generating customer contracts that it expects to benefit from over a period longer than one year. The Company capitalized sales commissions paid in connection with system sale arrangements that include multi-year service obligations and is amortizing such asset over the economic life of those contracts. Previously, sales commissions were expensed as incurred. The impact of this change on operating expenses in any given period will depend, in part, on the amount of such commissions incurred and capitalized in relation to the amount of ongoing amortization expense. Adoption of the standard using the full retrospective method also require the Company to restate certain previously reported results, including the impact to provision for income taxes. The adjustments to the Consolidated Statements of Comprehensive Income are as follows (in millions, except per share amounts):
The adjustments to the Consolidated Statement of Financial Position are as follows (in millions):
In addition, the cumulative effect of ASC 606 to the Company’s retained earnings at January 1, 2016, was $40.3 million. Adoption of the standard had no impact to total net cash from or used in operating, investing, or financing activities within the consolidated statements of cash flows. As part of the Company’s adoption of ASC 606, the Company elected to use the following practical expedients: (i) to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of ASC 606; (ii) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company’s transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (iii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iv) not to recast revenue for contracts that begin and end in the same fiscal year; and (v) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. Intra-Entity Transfer of Assets Other than Inventory Beginning fiscal 2018, the Company adopted 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. The Company adopted this standard using the modified retrospective approach, and as a result, recorded a deferred tax asset with a corresponding cumulative adjustment to retained earnings of $390.8 million as of January 1, 2018, associated with an intra-entity transfer of certain intellectual property rights related to the Company’s non-U.S. business to its Swiss entity. Business Combinations: Clarifying the Definition of a Business Beginning fiscal 2018, the Company adopted 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, and applied the new guidance prospectively. Refer to “Note 6. Goodwill and Intangible Assets” for further information on acquisitions accounted for as business combinations during fiscal 2018. Statement of Cash Flows: Restricted Cash Beginning fiscal 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires the statement of cash flows to explain the change during the period relating to total cash, cash equivalents, and restricted cash. The Company adopted this standard using the retrospective transition method by restating its Consolidated Statements of Cash Flows to include restricted cash of $15.0 million in the beginning and ending cash, cash equivalents, and restricted cash balances for 2017 and 2016. Net cash flows for 2017 and 2016 did not change as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts presented on the statements of cash flows. As of December 31, 2018, the cash, cash equivalents, and restricted cash balance includes restricted cash of $51.5 million. Restricted cash was included in prepaids and other current assets and intangible and other assets, net on the Consolidated Balance Sheets. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In 2018, the Company elected to early adopt ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the 2017 Tax Act. The Company elected to reclassify such tax effects in the period of adoption and resulted in the reclassification of $1.3 million from accumulated other comprehensive loss to retained earnings. Disclosure Framework for Fair Value Measurement In 2018, the Company elected to early adopt ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modified the disclosure requirements for fair value measurements by removing, modifying, and adding certain disclosures. The adoption did not have a material impact on the Consolidated Financial Statements. Improvements to Employee Share-based Payment Accounting In 2017, the Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting (“ASU 2016-09”), which changes among other things, how the tax effects of share-based awards are recognized. ASU 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 years ended December 31, 2018, and 2017, included excess tax benefits associated with employee equity plans of $116.2 million and $102.8 million, respectively, which reduced the Company’s effective tax rate by 9.1 and 9.3 percentage points, respectively, for the years ended December 31, 2018, and 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. In 2017, the Company adopted this provision retrospectively by reclassifying $44.1 million of excess tax benefits from financing activities to operating activities for the year ended December 31, 2016. Recent Accounting Pronouncements Not Yet Adopted Leases (Topic 842) In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 842”), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases), whereas under current accounting standards, the Company’s lease portfolio consists of operating leases and is not recognized on its consolidated balance sheets. The new standard also requires expanded disclosures regarding leasing arrangements. The new standard is effective for the Company beginning January 1, 2019. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an alternative modified transition method. Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is recognized on the date of adoption with prior periods not restated. The new standard provides a number of optional practical expedients in transition. The Company expects to elect: (1) the ‘package of practical expedients’, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs; (2) the use-of-hindsight; and (3) the practical expedient pertaining to land easements. In addition, the new standard provides practical expedients for an entity’s ongoing accounting that the Company anticipates making, such as the (1) the election for certain classes of underlying asset to not separate non-lease components from lease components and (2) the election for short-term lease recognition exemption for all leases that qualify. The Company will adopt ASU 842 as of January 1, 2019, using the alternative modified transition method. In preparation of adopting ASC 842, the Company is implementing additional internal controls to enable future preparation of financial information in accordance with ASC 842. The Company has also substantially completed its evaluation of the impact on the Company’s lease portfolio. The Company believes the largest impact will be on the consolidated balance sheets for the accounting of facilities-related leases, which represents a majority of its operating leases it has entered into as a lessee. These leases will be recognized under the new standard as ROU assets and operating lease liabilities. The Company will also be required to provide expanded disclosures for its leasing arrangements. As of December 31, 2018, the Company had $95.4 million of undiscounted future minimum operating lease commitments that are not recognized on its consolidated balance sheets as determined under the current standard. For a lessee, the results of operations are not expected to significantly change after adoption of the new standard. In addition, the Company’s customers finance purchases of da Vinci systems and ancillary products, including directly with the Company as the lessor. For a lessor, the new standard applied is largely unchanged from the previous standard and the Company does not anticipate a material impact on its Consolidated Financial Statements. While substantially complete, the Company is still in the process of finalizing its evaluation of the effect of ASU 842 on the Company’s financial statements and disclosures. The Company will finalize its accounting assessment and quantitative impact of the adoption during the first quarter of fiscal year 2019. 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 leases. 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. Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This new standard becomes effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. This new standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact and timing of adopting this new standard on its Consolidated Financial Statements. |
Financial Instruments |
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Fair Value Disclosures [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 or short-term or long-term investments as of December 31, 2018, and 2017 (in millions):
As of December 31, 2018, the Company also recorded $36.5 million of restricted cash equivalents (comprised of money market funds and U.S. treasuries which would be considered highly liquid investments with original maturity dates that are 90 days or less) in prepaids and other current assets in the accompanying Consolidated Balance Sheets.
During the year ended December 31, 2018, there were no changes in the valuation techniques used. The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale investments (excluding cash and money market funds), at December 31, 2018 (in millions):
Realized gains and losses, net of tax, were not material for any of the periods presented. As of December 31, 2018, and 2017, net unrealized losses on investments of $9.8 million and $11.3 million, net of tax, respectively, were included in accumulated other comprehensive loss in the accompanying Consolidated Balance Sheets. The following tables present the breakdown of the available-for-sale investments with unrealized losses at December 31, 2018, and 2017 (in millions):
The unrealized losses on the available-for-sale investments are related to corporate securities and government securities. The Company determined these unrealized losses to be temporary. Factors considered in determining whether a loss is temporary included the length of time and extent to which the investment’s fair value has been less than the cost basis; the financial condition and near-term prospects of the investee; extent of the loss related to credit of the issuer; the expected cash flows from the security; the Company’s intent to sell the security; and whether or not the Company will be required to sell the security before the recovery of its amortized cost. Foreign currency derivatives The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency denominated sales, expenses, and intercompany balances and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). 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 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 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 loss in stockholders’ equity and reclassifies into earnings in the same period in which the hedge 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, CHF, and Indian Rupee (“INR”). These derivative instruments are used to hedge against balance sheet foreign currency exposures. The related gains and losses were as follows (in millions):
The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for derivatives and aggregate gross fair value outstanding at the end of each period were as follows (in millions):
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Consolidated Financial Statement Details |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Financial Statement Details | CONSOLIDATED FINANCIAL STATEMENT DETAILS The following tables provide details of selected consolidated financial statement items (in millions):
Supplemental Cash flow Information The following table provides supplemental cash flow information (in millions):
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES Lease Receivables. Lease receivables relating to sales-type lease arrangements are presented on the Consolidated Balance Sheets as follows (in millions):
Contractual maturities of gross lease receivables as of December 31, 2018, are as follows (in millions):
Operating Leases. The Company’s operating lease terms are generally less than five years. Future minimum lease payments related to non-cancellable portion of operating leases as of December 31, 2018, are as follows (in millions):
Contingent rental revenue relating to operating lease arrangements were not material for the periods presented. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The increases in goodwill and intangible assets from December 31, 2017, to December 31, 2018, primarily relate to three transactions accounted for as business combinations. During the second quarter of fiscal 2018, the Company terminated its India distribution relationship with Vattikuti Technologies Pvt. Ltd. and acquired certain assets related to that distribution business on May 25, 2018, which collectively met the definition of a business. The transaction enhances the Company’s ability to serve patients, surgeons, and hospitals in India. The purchase consideration consisted of $38.1 million in cash. The Company preliminarily recorded $4.1 million of net tangible assets, $24.2 million of intangible assets, and $9.8 million of residual goodwill. Intangible assets included reacquired distribution rights, customer relationships, and a non-compete agreement, which are being amortized over a weighted average period of 4.3 years. During the third quarter of fiscal 2018, the Company acquired intellectual property, exclusive field of use rights, and certain key employees from InTouch Technologies, Inc. on August 17, 2018, which collectively met the definition of a business. The transaction enhances the Company’s network capabilities in using real-time data to support surgeons. The total purchase consideration of $38.7 million, as of the acquisition date, consisted of an initial cash payment of $22.0 million and subsequent cash payments totaling approximately $16.7 million. The Company recorded $13.3 million of intangible assets and $25.4 million of residual goodwill. Intangible assets included developed technology and a non-compete agreement, which are being amortized over a weighted average period of 5.7 years. The goodwill will be amortized for income tax purposes. During the fourth quarter of fiscal 2018, the Company acquired its Taiwan distributor, Unison Surgicals Company, on December 11, 2018, which met the definition of a business. The transaction enhances the Company’s ability to serve patients, surgeons, and hospitals in Taiwan. The purchase consideration consisted of $35.4 million in cash. The Company preliminarily recorded $13.1 million of net tangible assets, which included $7.6 million of cash, $17.3 million of intangible assets, and $5.0 million of residual goodwill. Intangible assets included customer relationships and non-compete agreements, which are being amortized over a weighted average period of 6.6 years. The Company has included the results of the businesses, since their acquisition dates, in its Consolidated Financial Statements, which have not been material to date. Pro forma results of operations related to the acquisitions have not been presented since the operating results of the acquired businesses are not material to the Consolidated Financial Statements. The following table summarizes the components of gross intangible asset, accumulated amortization, and net intangible asset balances as of December 31, 2018, and 2017 (in millions):
Amortization expense related to intangible assets was $14.2 million, $12.9 million, and $18.2 million for the years ended December 31, 2018, 2017, and 2016, respectively. The estimated future amortization expense related to intangible assets as of December 31, 2018, is as follows (in millions):
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Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES OPERATING LEASES The Company leases space for operations in United States, Mexico, Japan, South Korea, China, and certain other foreign countries. The Company also leases automobiles for certain sales and field service employees. These leases have varying terms up to fifteen years. Future minimum lease commitments under the Company’s operating leases as of December 31, 2018, are as follows (in millions):
OTHER COMMITMENTS Other commitments include an estimated amount of approximately $711.2 million relating to the Company’s open purchase orders and contractual obligations that occur in the ordinary course of business, including commitments with suppliers, for which the Company has not received the goods or services. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust its requirements based on its business needs prior to the delivery of goods or performance of services. In addition to the above, the Company has committed to make certain future milestone payments to third parties as part of licensing, collaboration, and development arrangements. Payments under these arrangements generally become due and payable only upon the achievement of certain specified developmental, regulatory, and/or commercial milestones. Because the achievement of these milestones is neither probable nor reasonably estimable, such contingencies are not included in the estimated amount. 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 re-evaluated 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. During the years ended December 31, 2018, 2017, and 2016, the Company recorded pre-tax charges of $45.2 million, $16.3 million, and $8.3 million, respectively, related to the securities class action lawsuits and the tolled product liability claims described below. A total of $53.0 million and $12.8 million associated with these matters were included in other accrued liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2018, and 2017, respectively. 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 U.S. District Court for the Northern District of California. The case has since been retitled In re Intuitive Surgical Securities Litigation, No. 5:13-cv-1920. The plaintiffs sought 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 alleged 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 June 11, 2018, the Company reached an agreement in principle to enter into a settlement agreement which stipulates a payment of $42.5 million by the Company. The court granted preliminary approval on October 4, 2018, and on December 20, 2018, the court granted final approval. During the year ended December 31, 2018, the Company recorded a pre-tax charge of $42.5 million for this matter. In connection with the settlement, the Company deposited $42.5 million into an escrow account established for disbursements, which was recorded in prepaids and other current assets in the accompanying Consolidated Balance Sheets as of December 31, 2018. The appeals period expired on January 21, 2019 and the matter has been concluded. Product Liability Litigation The Company is currently named as a defendant in a number of individual product liability lawsuits filed in various state and federal courts. The plaintiffs generally 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. 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. In addition to the filed cases, the Company previously received a substantial number of claims relating 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. As of December 31, 2018, all such “tolling agreements” have expired and the majority of the “tolled claims” have either been resolved or the matters have been filed. During the years ended December 31, 2018, 2017, and 2016, the Company recorded $2.7 million, $16.3 million, and $8.3 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. As of December 31, 2018, and 2017, a total of $10.5 million and $12.8 million, respectively, were included in other accrued liabilities in the accompanying Consolidated Balance Sheets related to the tolled product liability claims. The Company’s estimate of the anticipated cost of resolving the pending lawsuits and claims is based on negotiations with attorneys for the plaintiffs/claimants. The final outcome of the pending lawsuits and claims, and others that might arise, is dependent on many variables that are difficult to predict and the ultimate cost associated with these product liability lawsuits and 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. 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 U.S. 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. Ethicon asserts infringement of the U.S. Patent Nos. 9,585,658, 8,479,969, 9,113,874, 8,998,058, 8,991,677, 9,084,601, and 8,616,431. The parties are currently engaged in fact discovery regarding Ethicon’s allegations. A claim construction hearing occurred on October 1, 2018, and the court issued an order on December 28, 2018. Trial is currently scheduled for October 15, 2019. 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. On August 27, 2018, Ethicon LLC, Ethicon Endo-Surgery, Inc., and Ethicon US LLC (collectively, “Ethicon”) filed a second complaint for patent infringement against the Company in the U.S. District Court for the District of Delaware. The complaint alleges that the Company’s SureForm 60 Staplers infringe five of Ethicon’s patents. Ethicon asserts infringement of the U.S. Patent Nos. 9,884,369, 7,490,749, 8,602,288, 8,602,287, and 9,326,770. The Company filed an answer denying all claims. Ethicon has indicated it may seek preliminary injunctive relief, but it has yet to confirm, or to file such a motion. The case is set for a claim construction hearing on September 23, 2019, and trial is set for October 13, 2020. 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 |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | STOCKHOLDERS’ EQUITY STOCK REPURCHASE PROGRAM Through December 31, 2018, the Company’s Board of Directors (the “Board”) had authorized an aggregate of $6.2 billion of funding for the Company’s common stock repurchase program (the “Repurchase Program”) since originally established in March 2009, of which the previous authorization occurred in December 2016 when the Board increased the authorized amount available under the Repurchase Program to $3.0 billion. During the first quarter of 2017, the Company entered into an accelerated share repurchase program (the “ASR Program”) with Goldman Sachs & Co. LLC (“Goldman”) and Goldman delivered to the Company approximately 7.3 million shares of the Company’s common stock, for which the Company made a payment of $2.0 billion to Goldman. During the fourth quarter of 2017, the Company completed the ASR Program by making a final settlement payment of $274.0 million to Goldman. As of December 31, 2018, the remaining amount of share repurchases authorized by the Board under the Repurchase Program was approximately $717.5 million. The following table provides the stock repurchase activities during the years ended December 31, 2018, 2017, and 2016 (in millions, except per share amounts):
The Company uses the par value method of accounting for its stock repurchases. As a result of share repurchase activities during the years ended December 31, 2018, 2017, and 2016, the Company reduced common stock and additional paid-in capital by an aggregate of zero, $152.0 million, and $4.1 million, respectively, and charged zero, $2,122.0 million, $38.4 million, respectively, to retained earnings. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss) net of tax, for the years ended December 31, 2018, and 2017, are as follows (in millions):
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Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | SHARE-BASED COMPENSATION Stock Plans 2010 Incentive Award Plan. In April 2010, the Company’s stockholders approved the 2010 Incentive Award Plan (“2010 Plan”). Under this plan, the Company issues nonqualified stock options (“NSOs”) and restricted stock units (“RSUs”) to employees and certain consultants. The 2010 Plan generally permits NSOs to be granted at no less than the fair market value of the common stock on the date of grant, with terms of 10 years from the date of grant. The 2010 Plan expires in 2020. In April 2017, the Company’s stockholders approved an amended and restated 2010 Plan to provide for an increase in the number of shares of common stock reserved for issuance from 21,150,000 to 24,450,000. As of December 31, 2018, approximately 4.1 million shares were reserved for future issuance under the 2010 Plan. A maximum of 1.8 million of these shares can be awarded as RSUs. 2009 Employment Commencement Incentive Plan. In October 2009, the Board adopted the 2009 Employment Commencement Incentive Plan (“New Hire Plan”). The New Hire Plan provides for the shares to be used exclusively for the grant of RSUs and NSOs to new employees (“New Hire Options”), who were not previously employees or non-employee directors of the Company. The Compensation Committee approves all equity awards under the New Hire Plan, which are granted to newly-hired employees once a month on the fifth business day of each month after their hire. Options are granted at an exercise price not less than the fair market value of the stock on the date of grant and have a term not to exceed 10 years. In April 2015, the Board of Directors amended and restated the New Hire Plan to provide for an increase in the number of shares of common stock authorized for issuance pursuant to awards granted under the New Hire Plan from 3,465,000 to 4,365,000. As of December 31, 2018, approximately 102,000 shares were reserved for future issuance under the New Hire Plan. However, the Company intends to no longer issue grants from the New Hire Plan in the future and plans to instead utilize the 2010 Plan to make grants to new employees. 2000 Equity Incentive Plan. In March 2000, the Board adopted the 2000 Equity Incentive Plan (“2000 Plan”), which took effect upon the closing of the Company’s initial public offering. Under this plan, certain employees, consultants, and non-employee directors could be granted Incentive Stock Options (“ISOs”) and Nonstatutory Stock Options (“NSOs”) to purchase shares of the Company’s common stock. The 2000 Plan permitted ISOs to be granted at an exercise price not less than the fair value on the date of the grant and NSOs at an exercise price not less than 85% of the fair value on the date of grant. Options granted under the 2000 Plan generally expire 10 years from the date of grant and become exercisable upon grant subject to repurchase rights in favor of the Company until vested. The 2000 Plan expired in March 2010. However, options granted prior to the plan’s expiration continue to remain outstanding until their original expiration date. Employee Option Vesting. The Company makes annual option grants on February 15 (or the next business day if the date is not a business day) and on August 15 (or the next business day if the date is not a business day). The February 15 grants vest 6/48 upon completion of 6 months service and 1/48 per month thereafter. The August 15 stock option grants vest 7/48 at the end of one month and 1/48 per month thereafter through a 3.5-year vesting period. New Hire Options generally vest 12/48 upon completion of one year service and 1/48 per month thereafter. Option vesting terms are determined by the Board and, in the future, may vary from past practices. 2000 Non-Employee Directors’ Stock Option Plan. In March 2000, the Board of Directors adopted the 2000 Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”). In October 2009, the automatic evergreen increase provisions were eliminated so that no further automatic increases will be made to the number of shares reserved for issuance under the Directors’ Plan. In addition, the common stock authorized for issuance under the Directors’ Plan was reduced to 450,000. Options are granted at an exercise price not less than the fair market value of the stock on the date of grant and have a term not to exceed 10 years. Prior to 2016, initial stock option grants to new non-employee directors vest over a three-year period with 12/36 of the shares vesting after one year from the date of grant and 1/36 of the shares vesting monthly thereafter. Annual stock option grants vest one year from the date of the grant. Since 2016, new non-employee directors receive pro-rated stock option grants that vest on the same term as the annual stock option grants. As of December 31, 2018, approximately 0.1 million shares were reserved for future issuance under the Directors’ Plan. 2000 Employee Stock Purchase Plan. In March 2000, the Board adopted the 2000 Employee Stock Purchase Plan (the “ESPP”). Employees are generally eligible to participate in the ESPP if they are customarily employed by the Company for more than 20 hours per week and more than 5 months in a calendar year and are not 5% stockholders of the Company. Under the ESPP, eligible employees may select a rate of payroll deduction up to 15% of their eligible compensation subject to certain maximum purchase limitations. The duration for each offering period is 24 months and is divided into four purchase periods of approximately six months in length. Offerings are concurrent. The purchase price of the shares under the offering is the lesser of 85% of the fair market value of the shares on the offering date or 85% of the fair market value of the shares on the purchase date. A two-year look-back feature in the ESPP causes the offering period to reset if the fair value of the Company’s common stock on the first or last day of the purchase period is less than that on the original offering date. ESPP purchases by employees are settled with newly-issued common stock from the ESPP’s previously authorized and available pool of shares. In April 2017, the Company’s stockholders approved an amended and restated ESPP to provide for an increase in the number of shares of common stock reserved for issuance from 6,090,315 to 7,590,315. The Company issued 0.2 million, 0.2 million, and 0.2 million shares under the ESPP, representing approximately $46.8 million, $38.3 million, and $32.5 million in employee contributions for the years ended December 31, 2018, 2017, and 2016, respectively. As of December 31, 2018, there were approximately 1.4 million shares reserved for future issuance under the ESPP. Restricted Stock Units. Equity awards granted to employees and non-employee directors include a mix of stock options and RSUs. The RSUs to employees vest in one-fourth increments annually over a four-year period. Prior to 2016, initial RSUs granted to new non-employee directors are vested in one-third increments over a three-year period. Annual RSU grants to non-employee directors vest one year from the date of grant. Since 2016, new non-employee directors receive pro-rated RSU grants that vest on the same term as the annual RSU grants. The number of shares issued on the date the RSUs vest is net of the minimum statutory tax withholdings, which are paid in cash to the appropriate taxing authorities on behalf of the Company’s employees. Stock Option Information Option activity during fiscal 2018 under all the stock plans was as follows (in millions, except per share amounts):
The aggregate intrinsic value of stock options exercised under the Company’s stock plans determined as of the date of option exercise was $526.6 million, $379.9 million, and $273.3 million during the years ended December 31, 2018, 2017, and 2016, respectively. Cash received from option exercises and employee stock purchase plans for the years ended December 31, 2018, 2017, and 2016, was $236.6 million, $415.5 million, and $580.9 million, respectively. The income tax benefit from stock options exercised was $87.0 million for the year ended December 31, 2018. The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2018 (number of shares and aggregate intrinsic value in millions):
As of December 31, 2018, a total of 6.1 million shares of stock options vested and expected to vest had a weighted average remaining contractual life of 5.3 years, an aggregate intrinsic value of $1,715.2 million, and a weighted average exercise price of $197.45. Restricted Stock Units Information RSU activity for the year ended December 31, 2018, was as follows (in millions, except per share amounts):
As of December 31, 2018, 1.8 million shares of RSUs were expected to vest with an aggregate intrinsic value of $879.4 million. The aggregate vesting date fair value of RSUs vested was $334.3 million, $144.2 million, and $65.3 million during the years ended December 31, 2018, 2017, and 2016, respectively. Share-Based Compensation Expense The following table summarizes share-based compensation expense (in millions):
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 employee stock purchase plan. The weighted average estimated fair values of stock options, the rights to acquire stock granted, and RSUs, as well as the weighted average assumptions used in calculating the fair values of stock options and rights to acquire stock under the ESPP that were granted during the years ended December 31, 2018, 2017, and 2016, were as follows:
As share-based compensation expense recognized in the Consolidated Statements of Income during the years ended December 31, 2018, 2017, and 2016, is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. As of December 31, 2018, there were a total of $91.6 million, $373.5 million, and $11.6 million of total unrecognized compensation expense related to unvested stock options, restricted stock units, and employee stock purchases, respectively. The unrecognized compensation expense is expected to be recognized over a weighted average period of 2.3 years for unvested stock options, 2.2 years for unvested restricted stock units, and 0.9 years for rights granted to acquire common stock under the ESPP. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Income before provision for income taxes for the years ended December 31, 2018, 2017, and 2016, consisted of the following (in millions):
The provision for income taxes for the years ended December 31, 2018, 2017, and 2016, consisted of the following (in millions):
Income tax expense differs from amounts computed by applying the statutory federal income rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017, and 2016, as a result of the following (in millions):
Deferred income taxes reflect tax carry forwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in millions):
In December 2017, the 2017 Tax Act was enacted, which includes a number of changes in existing tax law impacting businesses, including a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018.The Securities Exchange Commission (“SEC”) issued guidance for a measurement period of one year from the enactment date to finalize the accounting for effects of the 2017 Tax Act. The Company recorded an income tax expense of $317.8 million in its 2017 income tax provision related to the 2017 Tax Act which included a provisional estimate of $270.2 million related to the one-time deemed repatriation toll charge (“Toll Tax”), and a provisional estimate of $47.6 million income tax expense in 2017 due to the re-measurement of its net deferred tax assets at a reduced U.S. federal statutory rate of 21%. The Company repatriated $1.6 billion of its cumulative undistributed foreign earnings back to the U.S. in June 2018 without any significant U.S. income tax consequences. The Company intends to repatriate earnings from its Swiss subsidiary as needed since the U.S. and foreign tax implications of such repatriations are not expected to be significant. The Company will continue to indefinitely reinvest earnings from the rest of our foreign subsidiaries, which are not significant. In December 2018, the Company completed its accounting for the effect of the 2017 Tax Act within the measurement period under the SEC guidance, and reflected a net $0.5 million increase in the 2018 income tax expense. The Company has adopted the approach of recording the consequences of the GILTI provision of the 2017 Tax Act as period costs when incurred. The Company’s tax holiday obtained in 2007 for business operations in Switzerland ended on December 31, 2017. The Company received a new tax ruling in Switzerland for new business operations. The new ruling is effective for years 2018 through 2022, which will be extended for the next five years thereafter, to the extent certain terms and conditions continue to be met. The new ruling allows for a reduced cantonal tax rate based on various thresholds of investment, including the ownership, development, and use of the non-U.S. intellectual property rights and employment in such jurisdiction. The tax benefits from Swiss tax holidays for the year ended December 31, 2018 were insignificant, while for the years ended December 31, 2017 and 2016 were approximately $10.9 million, or $0.09 per diluted share, and $10.0 million, or $0.08 per diluted share, respectively. As of December 31, 2018, and 2017, the Company had valuation allowances of $42.3 million and $29.4 million, respectively, primarily related to California deferred tax assets generated by California R&D credit forwards which have no expiration period. The Company recorded a valuation allowance against its California deferred tax assets as it is more likely than not these deferred tax assets will not be realized as a result of the computation of California taxes under the single sales factor. The Company recorded a net increase of its gross unrecognized tax benefits of approximately $13.4 million during the year ended December 31, 2018. The net increase was primarily due to increases related to 2018 uncertain tax positions, partially offset by the reversal of gross unrecognized tax benefits in connection with the expiration of certain statutes of limitation in various jurisdictions. The Company had gross unrecognized tax benefits of approximately $78.8 million, $65.4 million, and $106.0 million as of December 31, 2018, 2017, and 2016, respectively, which if recognized, would result in a reduction of the Company’s effective tax rate. The Company included interest expense accrued on unrecognized tax benefits as a component of its income tax expense. As of December 31, 2018, 2017, and 2016, gross interest related to unrecognized tax benefits accrued was approximately $2.6 million, $1.8 million, and $3.7 million, respectively. A majority of the Company’s net unrecognized tax benefits and related interest is presented in other accrued liabilities on the Consolidated Balance Sheets. A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for the years ended December 31, 2018, 2017, and 2016, are as follows (in millions):
The Company files federal, state and foreign income tax returns in many U.S. and OUS jurisdictions. Years before 2015 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. Due to the uncertainty related to the timing and potential outcome of audits, the Company cannot estimate the range of reasonably possible change in unrecognized tax benefits that may occur in the next 12 months. 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 |
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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 attributable to Intuitive Surgical, Inc. (in millions, except per share amounts):
Share-based compensation awards of approximately 0.4 million, 0.2 million, and 0.6 million shares for the years ended December 31, 2018, 2017, and 2016, respectively, were outstanding, but were not included in the computation of diluted net income per share attributable to Intuitive Surgical, Inc. common stockholders because the effect of including such shares would have been anti-dilutive in the periods presented. |
Employee Benefit Plans |
12 Months Ended |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The Company sponsors various retirement plans for its eligible U.S. and non-U.S. employees. For employees in the U.S., the Company maintains the Intuitive Surgical, Inc. 401(k) Plan (the “Plan”). As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax-deferred salary contributions for eligible U.S. employees. The Plan allows employees to contribute up to 100% of their annual compensation to the Plan on a pre-tax and after-tax basis. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The Company matches 200% of employee contributions up to $1,500 per calendar year per person. All matching employer contributions vest immediately. |
Subsequent Event |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENTS Acquisition of Certain Assets from Chindex In January 2019, the Joint Venture acquired certain assets from Chindex and its affiliates, a subsidiary of Fosun Pharma, including distribution rights, customer relationships, and certain personnel for estimated cash payments of approximately $80 to $90 million that are contingent on achieving certain commercial milestones in 2019 and 2020. Chindex was the Company’s distributor of da Vinci products and services in China. Subsequent to the acquisition of the above mentioned assets, the Company’s Joint Venture began direct operations for da Vinci products and services in China. The Company is currently completing its accounting assessment of this transaction. Increase Authorization of Common Stock Repurchase Program On January 31, 2019, the Board increased the authorized amount available under the Repurchase Program to an aggregate of $2.0 billion, including amounts remaining under previous authorization. The Repurchase Program does not have an expiration date. |
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Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Valuation And Qualifying Accounts |
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Summary Of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements. The accounting estimates that require management’s most significant, difficult, and subjective judgments include the valuation and recognition of investments, the valuation of revenue and allowance for sales returns and doubtful accounts, the estimation of hedging transactions, the valuation of inventory, the valuation of and assessment of recoverability of intangible assets and their estimated useful lives, revenue recognition, the valuation and recognition of share-based compensation, the recognition and measurement of current and deferred income tax assets, along with the assessment of recoverability, and liabilities, and legal contingencies estimates. Actual results could differ materially from these estimates. |
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Concentrations of Credit Risk and Other Risks and Uncertainties | Concentrations of Credit Risk and Other Risks and Uncertainties The carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities. Marketable securities and derivative instruments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s investment securities and derivative instruments consist of various major corporations, financial institutions, municipalities, and government agencies of high credit standing. The Company’s accounts receivable are derived from net revenue to customers and distributors located throughout the world. The Company performs credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The Company provides reserves for potential credit losses but has not experienced significant losses to date. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from date of purchase of 90 days or less to be cash equivalents. |
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Investments | Investments Available-for-sale investments. The Company’s investments may consist of U.S. treasury and U.S. government agency securities, taxable and tax exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities, and money market funds. The Company has designated all investments as available-for-sale and, therefore, such investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). For securities sold prior to maturity, the cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in interest and other income, net in the Consolidated Statements of Income. Investments with remaining maturities at date of purchase greater than approximately three months and remaining maturities as of the reporting period less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Other-than-temporary impairment. All of the Company’s investments are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary included the extent and length of time the investment’s fair value has been lower than its cost basis, the financial condition and near-term prospects of the investee, extent of the loss related to credit of the issuer, the expected cash flows from the security, the Company’s intent to sell the security, and whether or not the Company will be required to sell the security prior to the expected recovery of the investment’s amortized cost basis. No significant charges were recorded during the years ended December 31, 2018, 2017, and 2016. |
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Fair Value Measurements | Fair Value Measurements The Company measures the fair value of money market funds and certain U.S. treasury securities based on quoted prices in active markets for identical assets as Level 1 securities. Marketable securities measured at fair value using Level 2 inputs are primarily comprised of commercial paper, corporate notes and bonds, U.S. and non-U.S. government agencies, and municipal notes. The Company reviews trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. This approach results in the Level 2 classification of these securities within the fair value hierarchy. |
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Inventory | Inventory Inventory is stated at the lower of standard cost, which approximates actual costs, or net realizable value, on a first-in, first-out basis. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. |
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Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets generally as follows:
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Capitalized Software Costs for Internal Use | Capitalized Software Costs for Internal Use Internally developed software primarily includes enterprise-level business software that the Company customizes to meet its specific operational needs. The Company capitalized costs for internal use software of $17.4 million, $22.4 million, and $11.8 million during the years ended December 31, 2018, 2017, and 2016, respectively. Upon being placed in service, these costs are depreciated over an estimated useful life of up to 5 years. |
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Business Combinations | Business Combinations The Company includes the results of operations of the businesses that are acquired as of the acquisition date. The Company allocates the purchase price of acquisitions to the assets acquired and liabilities assumed based on the estimated fair values. The excess of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill. Acquisition related costs are recognized separately from the business combination and are expensed as incurred. |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually during the fourth fiscal quarter, or if circumstances indicate their value may no longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. The Company continues to operate in one segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of December 31, 2018, there has been no impairment of goodwill. Intangible assets are carried at cost, net of accumulated amortization. The Company does not have intangible assets with indefinite useful lives other than goodwill. Amortization is recorded on a straight-line basis over the intangible assets’ useful lives, which range from approximately 1 to 9 years. |
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Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company evaluates long-lived assets, which include amortizable intangible and tangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. Recoverability is measured by comparing the net book value to the future undiscounted cash flows attributable to such assets. The Company recognizes an impairment charge equal to the amount by which the net book value exceeds its fair value. No material impairment losses were incurred in the periods presented. |
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Revenue Recognition | Revenue Recognition The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018. The Company’s revenue consists of product revenue resulting from the sale of systems, system components, instruments and accessories, and service revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities. The Company’s system sale arrangements generally contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are a distinct product or service that is separately identifiable from other items in bundled packages; and if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer. The Company’s system sale arrangements include a combination of the following performance obligations: system(s); system components; system accessories; instruments; accessories; and system service. The Company’s system sale arrangements generally include a five-year period of service. The first year of service is generally free and included in the system sale arrangement and the remaining four years are generally included at a stated service price. The Company considers the service terms in the arrangements that are legally enforceable to be performance obligations. Other than service, the Company generally satisfies all of the performance obligations up-front. System components, system accessories, instruments, accessories, and service are also sold on a stand-alone basis. The Company recognizes revenue as the performance obligations are satisfied by transferring control of the product or service to a customer. The Company generally recognizes revenue for the performance obligations at the following points in time: System sales. For systems (including system components and system accessories) sold directly to end customers, revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. For systems sold through distributors, revenue is recognized generally at the time of shipment. The Company’s system arrangements generally do not provide a right of return. The systems are generally covered by a one-year warranty. Warranty costs were not material for the periods presented. Instruments and accessories. Revenue from sales of instruments and accessories is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but also occurs at the time of delivery depending on the customer arrangement. The Company allows its customers in the normal course of business to return unused products for a limited period of time subsequent to initial purchase and records an allowance against revenue for estimated returns. Service. Service revenue is recognized over the term of the service period as the customer benefits from the services throughout the service period. Revenue related to services performed on a time-and-materials basis is recognized when performed. The Company offers its customers the opportunity to trade in their older systems for a credit towards the purchase of a newer generation system. The Company generally does not provide specified price trade-in rights or upgrade rights at the time of system purchase. Such trade-in or upgrade transactions are separately negotiated based on the circumstances at the time of the trade-in or upgrade, based on the then fair value of the system, and are generally not based on any pre-existing rights granted by the Company. Accordingly, such trade-ins and upgrades are not considered as separate performance obligations in the arrangement for a system sale. As part of a trade-in transaction, the customer receives a new generation system in exchange for its pre-owned system. The trade-in credit is negotiated at the time of the trade-in and is applied towards the purchase price of the new unit. Traded-in systems generally can be reconditioned and resold. The Company accounts for the fair value of the traded-in system in the total consideration in the arrangement by including the net realizable value of the traded-in system less a normal profit margin. The value of the traded-in system is determined as the amount, after reconditioning costs are added, that will allow a normal profit margin on the sale of the reconditioned unit to be generated. When there is no market for the traded-in units, no value is assigned. Traded-in units are reported as a component of inventory until resold, or otherwise disposed. In addition, customers may also have the opportunity to upgrade their systems at a price determined at the time of the upgrade, for example, by adding a second surgeon console for use with the da Vinci Surgical System. Such upgrades are performed by completing component level upgrades at the customer’s site. Upgrade revenue is recognized when the component level upgrades are complete and all revenue recognition criteria are met. For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services, geographies, and type of customer. The Company regularly reviews standalone selling prices and updates these estimates as necessary. The following table presents revenue disaggregated by types and geography (in millions):
The transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which revenue has not yet been recognized. A significant portion of this amount relates to performance obligations in the Company’s service contracts that will be satisfied and recognized as revenue in future periods. Transaction price allocated to remaining performance obligations was approximately $1,448.7 million as of December 31, 2018. The following information summarizes the Company’s contract assets and liabilities (in millions):
The Company invoices its customers based on the billing schedules in its sales arrangements. Payments are generally due 30 days from date of invoice. Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied and the contractual billing terms in the arrangements. Deferred revenue for the periods presented primarily relates to service contracts where the service fees are billed up-front, generally quarterly or annually, prior to those services having been performed. The associated deferred revenue is generally recognized over the term of the service period. The Company did not have any significant impairment losses on its contract assets for the periods presented. During the year ended December 31, 2018, the Company recognized $268.9 million of revenue that was included in the deferred revenue balance as of December 31, 2017. During the year ended December 31, 2017, the Company recognized $225.5 million of revenue that was included in the deferred revenue balance as of December 31, 2016. |
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Assets Recognized from the Costs to Obtain a Contract with a Customer | Assets Recognized from the Costs to Obtain a Contract with a Customer The Company has determined that certain sales incentives provided to the Company’s sales team are required to be capitalized when the Company expects to generate future economic benefits from the related revenue-generating contracts subsequent to the initial capital sales transaction. When determining the economic life of the contract acquisition assets recognized, the Company considers historical service renewal rates, expectations of future customer renewals of service contracts, and other factors that could impact the economic benefits that the Company expects to generate from the relationship with its customers. The costs capitalized as contract acquisition costs included in intangible and other assets, net in the Consolidated Balance Sheets were $34.2 million and $31.4 million as of December 31, 2018, and 2017, respectively. The Company did not incur any impairment losses during the periods presented. |
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Leases | Leases The Company enters into sales-type lease and operating lease arrangements with certain qualified customers. Sales-type leases have terms that generally range from 24 to 84 months and are usually collateralized by a security interest in the underlying assets. Revenue related to multiple-element arrangements are allocated to lease and non-lease elements based on their relative standalone selling prices as prescribed by the Company’s revenue recognition policy. Lease elements generally include a da Vinci Surgical System or system component, while non-lease elements generally include service, instruments and accessories. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following terms: (1) whether title of the system transfers automatically or for a nominal fee at the end of the term of the lease, (2) whether the present value of the minimum lease payments are equal to or greater than 90% of the fair market value of the leased asset at the inception of the lease, (3) whether the lease term exceeds 75% of the economic life of the leased asset, and (4) whether there is an option to purchase the leased asset at a “bargain price” at the end of the lease term. The Company generally recognizes revenue from sales-type lease arrangements at the time the system is accepted by the customer, assuming all other revenue recognition criteria have been met. Revenue from sales-type leases is presented as product revenue. Revenue from operating lease arrangements is recognized as earned over the lease term, which is generally on a straight-line basis and is presented as product revenue. |
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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 estimates of potential future returns of certain products 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. |
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Share-Based Compensation | Share-Based Compensation The Company accounts for share-based employee compensation plans using the fair value recognition and measurement provisions under U.S. GAAP. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period. The Company estimates expected forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimated. Expected Term: The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The Company determines expected term based on historical exercise patterns and its expectation of the time it will take for employees to exercise options still outstanding. Expected Volatility: The Company uses market-based implied volatility for purposes of valuing stock options granted. Market-based implied volatility is derived based on at least one-year traded options on the Company’s common stock. The extent to which the Company relies on market-based volatility when valuing options, depend among other things, on the availability of traded options on the Company’s stock and the term of such options. Due to sufficient volume of the traded options, the Company used 100% market-based implied volatility to value options granted, which the Company believes is more representative of future stock price trends than historical volatility. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option. The fair value of restricted stock units is determined based on the closing quoted price of the Company’s common stock on the day of the grant. See “Note 9. Share-Based Compensation,” for a detailed discussion of the Company’s stock plans and share-based compensation expense. |
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Computation of Net Income per Share | Computation of Net Income per Share Basic net income per share attributable to Intuitive Surgical, Inc. is computed using the weighted average number of shares outstanding during the period. Diluted net income per share attributable to Intuitive Surgical, Inc. is computed using the weighted average number of the Company’s shares and dilutive potential shares outstanding during the period. Dilutive potential shares primarily consist of employee stock options, restricted stock units, and shares to be purchased by employees under the Company’s employee stock purchase plan. U.S. GAAP requires that employee equity share options, non-vested shares, and similar equity instruments granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of equity awards, which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares. |
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Research and Development Expenses | Research and Development Expenses Research and development costs are expensed as incurred and include amortization of intangible assets, costs associated with co-development research and development licensing arrangements, costs of prototypes, salaries, benefits and other headcount related costs, contract and other outside service fees, and facilities and overhead costs. |
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Foreign Currency and Other Hedging Instruments | Foreign Currency and Other Hedging Instruments 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 period. Gains and losses from foreign currency translation are included in accumulated other comprehensive income (loss) within stockholders’ equity in the Consolidated Balance Sheets. For all non-functional currency account balances, the re-measurement of such balances to the functional currency results in either a foreign exchange gain or loss, which is recorded to interest and other income, net in the Consolidated Statements of Income in the same accounting period that the re-measurement occurred. The Company uses derivatives to partially offset its business exposure to foreign currency exchange risk. The terms of the Company’s derivative contracts are generally twelve months or shorter. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and expenses. The Company may also enter into foreign currency forward contracts to offset the foreign currency exchange gains and losses generated by re-measurement of certain assets and liabilities denominated in non-functional currencies. The hedging program is not designated for trading or speculative purposes. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments. The Company records all derivatives on the Consolidated Balance Sheets at fair value. The effective portions of cash flow hedges are recorded in other comprehensive income (loss) (“OCI”) until the hedged item is recognized in earnings. Derivative instruments designated as cash flow hedges are de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two month time period. Gains and losses in OCI associated with such derivative instruments are reclassified immediately into earnings through interest and other income, net. Any subsequent changes in fair value of such derivative instruments also are reflected in current earnings. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings in interest and other income, net. |
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Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are expected more likely than not to be realized in the future. The Company has elected to account for Global Intangible Low-Taxed Income (“GILTI”) under the Tax Cuts and Jobs Act (“2017 Tax Act”) as period costs when incurred. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. |
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Segments | Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. As of December 31, 2018, and 2017, 88% and 88% of long-lived assets were in the United States, respectively. Revenue is attributed to a geographic region based on the location of the end customer. |
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Legal Contingencies | Legal Contingencies The Company is involved in a number of legal proceedings involving product liability, intellectual property, shareholder derivative actions, securities class actions, and other matters. A liability and related charge are recorded to earnings in the Company’s consolidated financial statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including discussion with outside legal counsel. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if no amount within the range is a better estimate than any other. If a material loss is reasonably possible, but not probable and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. The Company expenses legal fees as incurred. When determining the estimated probable loss or range of losses, significant judgment is required to be exercised in order to estimate the amount and timing of the loss to be recorded. Estimates of probable losses resulting from litigation are inherently difficult to make, particularly when the matters are in early procedural stages with incomplete facts and information. The final outcome of legal proceedings is dependent on many variables difficult to predict and, therefore, the ultimate cost to entirely resolve such matters may be materially different than the amount of current estimates. Consequently, new information or changes in judgments and estimates could have a material adverse effect on the Company’s business, financial condition, and results of operations or cash flows. |
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Recent Accounting Pronouncements | Adopted Accounting Pronouncements Revenue from Contracts with Customers The Company adopted FASB Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers in the first quarter of the Company’s fiscal year that began on January 1, 2018, using the full retrospective method, which required the Company to restate each prior reporting period presented. This new standard replaced the previous revenue recognition guidance in U.S. GAAP. Please see the Company’s “Revenue Recognition” policy in the “Significant Accounting Policies” section above. The areas impacted include future contractual billings related to services included in the Company’s multi-year contracts, which are considered performance obligations that should be part of the contract consideration allocated to all performance obligations rather than being excluded due to its contingent nature as required under the previous revenue standard. Accordingly, the amount of contract consideration allocated to the performance obligations identified in the Company’s system arrangements is different from the amounts allocated under the previous revenue standard. In general, revenue is recognized earlier as a greater amount of the contract consideration is allocated to the product-related performance obligations that generally are delivered upfront, and therefore, less consideration is allocated to the service performance obligation that is generally recognized over the service period. In addition, the Company recognized an asset associated with the incremental costs of obtaining revenue generating customer contracts that it expects to benefit from over a period longer than one year. The Company capitalized sales commissions paid in connection with system sale arrangements that include multi-year service obligations and is amortizing such asset over the economic life of those contracts. Previously, sales commissions were expensed as incurred. The impact of this change on operating expenses in any given period will depend, in part, on the amount of such commissions incurred and capitalized in relation to the amount of ongoing amortization expense. Adoption of the standard using the full retrospective method also require the Company to restate certain previously reported results, including the impact to provision for income taxes. The adjustments to the Consolidated Statements of Comprehensive Income are as follows (in millions, except per share amounts):
The adjustments to the Consolidated Statement of Financial Position are as follows (in millions):
In addition, the cumulative effect of ASC 606 to the Company’s retained earnings at January 1, 2016, was $40.3 million. Adoption of the standard had no impact to total net cash from or used in operating, investing, or financing activities within the consolidated statements of cash flows. As part of the Company’s adoption of ASC 606, the Company elected to use the following practical expedients: (i) to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of ASC 606; (ii) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company’s transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (iii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iv) not to recast revenue for contracts that begin and end in the same fiscal year; and (v) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. Intra-Entity Transfer of Assets Other than Inventory Beginning fiscal 2018, the Company adopted 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. The Company adopted this standard using the modified retrospective approach, and as a result, recorded a deferred tax asset with a corresponding cumulative adjustment to retained earnings of $390.8 million as of January 1, 2018, associated with an intra-entity transfer of certain intellectual property rights related to the Company’s non-U.S. business to its Swiss entity. Business Combinations: Clarifying the Definition of a Business Beginning fiscal 2018, the Company adopted 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, and applied the new guidance prospectively. Refer to “Note 6. Goodwill and Intangible Assets” for further information on acquisitions accounted for as business combinations during fiscal 2018. Statement of Cash Flows: Restricted Cash Beginning fiscal 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires the statement of cash flows to explain the change during the period relating to total cash, cash equivalents, and restricted cash. The Company adopted this standard using the retrospective transition method by restating its Consolidated Statements of Cash Flows to include restricted cash of $15.0 million in the beginning and ending cash, cash equivalents, and restricted cash balances for 2017 and 2016. Net cash flows for 2017 and 2016 did not change as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts presented on the statements of cash flows. As of December 31, 2018, the cash, cash equivalents, and restricted cash balance includes restricted cash of $51.5 million. Restricted cash was included in prepaids and other current assets and intangible and other assets, net on the Consolidated Balance Sheets. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In 2018, the Company elected to early adopt ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the 2017 Tax Act. The Company elected to reclassify such tax effects in the period of adoption and resulted in the reclassification of $1.3 million from accumulated other comprehensive loss to retained earnings. Disclosure Framework for Fair Value Measurement In 2018, the Company elected to early adopt ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modified the disclosure requirements for fair value measurements by removing, modifying, and adding certain disclosures. The adoption did not have a material impact on the Consolidated Financial Statements. Improvements to Employee Share-based Payment Accounting In 2017, the Company adopted ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting (“ASU 2016-09”), which changes among other things, how the tax effects of share-based awards are recognized. ASU 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 years ended December 31, 2018, and 2017, included excess tax benefits associated with employee equity plans of $116.2 million and $102.8 million, respectively, which reduced the Company’s effective tax rate by 9.1 and 9.3 percentage points, respectively, for the years ended December 31, 2018, and 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. In 2017, the Company adopted this provision retrospectively by reclassifying $44.1 million of excess tax benefits from financing activities to operating activities for the year ended December 31, 2016. Recent Accounting Pronouncements Not Yet Adopted Leases (Topic 842) In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 842”), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases), whereas under current accounting standards, the Company’s lease portfolio consists of operating leases and is not recognized on its consolidated balance sheets. The new standard also requires expanded disclosures regarding leasing arrangements. The new standard is effective for the Company beginning January 1, 2019. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an alternative modified transition method. Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is recognized on the date of adoption with prior periods not restated. The new standard provides a number of optional practical expedients in transition. The Company expects to elect: (1) the ‘package of practical expedients’, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs; (2) the use-of-hindsight; and (3) the practical expedient pertaining to land easements. In addition, the new standard provides practical expedients for an entity’s ongoing accounting that the Company anticipates making, such as the (1) the election for certain classes of underlying asset to not separate non-lease components from lease components and (2) the election for short-term lease recognition exemption for all leases that qualify. The Company will adopt ASU 842 as of January 1, 2019, using the alternative modified transition method. In preparation of adopting ASC 842, the Company is implementing additional internal controls to enable future preparation of financial information in accordance with ASC 842. The Company has also substantially completed its evaluation of the impact on the Company’s lease portfolio. The Company believes the largest impact will be on the consolidated balance sheets for the accounting of facilities-related leases, which represents a majority of its operating leases it has entered into as a lessee. These leases will be recognized under the new standard as ROU assets and operating lease liabilities. The Company will also be required to provide expanded disclosures for its leasing arrangements. As of December 31, 2018, the Company had $95.4 million of undiscounted future minimum operating lease commitments that are not recognized on its consolidated balance sheets as determined under the current standard. For a lessee, the results of operations are not expected to significantly change after adoption of the new standard. In addition, the Company’s customers finance purchases of da Vinci systems and ancillary products, including directly with the Company as the lessor. For a lessor, the new standard applied is largely unchanged from the previous standard and the Company does not anticipate a material impact on its Consolidated Financial Statements. While substantially complete, the Company is still in the process of finalizing its evaluation of the effect of ASU 842 on the Company’s financial statements and disclosures. The Company will finalize its accounting assessment and quantitative impact of the adoption during the first quarter of fiscal year 2019. 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 leases. 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. Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This new standard becomes effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. This new standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact and timing of adopting this new standard on its Consolidated Financial Statements. |
Summary Of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Useful Lives Of The Assets | Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets generally as follows:
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Revenue Disaggregated by Types and Geography | The following table presents revenue disaggregated by types and geography (in millions):
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Summary of Contract Assets and Liabilities | The following information summarizes the Company’s contract assets and liabilities (in millions):
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Schedule of Impact of Adopting New Standard | Adoption of the standard using the full retrospective method also require the Company to restate certain previously reported results, including the impact to provision for income taxes. The adjustments to the Consolidated Statements of Comprehensive Income are as follows (in millions, except per share amounts):
The adjustments to the Consolidated Statement of Financial Position are as follows (in millions):
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Financial Instruments (Tables) |
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Fair Value Disclosures [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 or short-term or long-term investments as of December 31, 2018, and 2017 (in millions):
As of December 31, 2018, the Company also recorded $36.5 million of restricted cash equivalents (comprised of money market funds and U.S. treasuries which would be considered highly liquid investments with original maturity dates that are 90 days or less) in prepaids and other current assets in the accompanying Consolidated Balance Sheets.
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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), at December 31, 2018 (in millions):
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Schedule Of Available-For-Sale Investments With Unrealized Losses | The following tables present the breakdown of the available-for-sale investments with unrealized losses at December 31, 2018, and 2017 (in millions):
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Derivative Instruments Used to Hedge against Balance Sheet Foreign Currency Exposures | These derivative instruments are used to hedge against balance sheet foreign currency exposures. The related gains and losses were as follows (in millions):
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Gross Notional Amounts for Outstanding Derivatives | Total gross notional amounts (in USD) for derivatives and aggregate gross fair value outstanding at the end of each period were as follows (in millions):
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Consolidated Financial Statement Details (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of the Inventory Balance Sheet Item |
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Details of the Property, Plant and Equipment, Net Balance Sheet Item | Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets generally as follows:
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Details of the Other Accrued Liabilities—Short Term Balance Sheet Item |
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Details of the Other Long-Term Liabilities Balance Sheet Item |
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Supplemental Cash Flow Information | The following table provides supplemental cash flow information (in millions):
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Receivables Relating to Sales-type Lease Arrangements | Lease receivables relating to sales-type lease arrangements are presented on the Consolidated Balance Sheets as follows (in millions):
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Contractual Maturities of Gross Lease Receivables | Contractual maturities of gross lease receivables as of December 31, 2018, are as follows (in millions):
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Schedule Of Future Minimum Lease Receivables Under Operating Leases | The Company’s operating lease terms are generally less than five years. Future minimum lease payments related to non-cancellable portion of operating leases as of December 31, 2018, are as follows (in millions):
Future minimum lease commitments under the Company’s operating leases as of December 31, 2018, are as follows (in millions):
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Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | The following table summarizes the components of gross intangible asset, accumulated amortization, and net intangible asset balances as of December 31, 2018, and 2017 (in millions):
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Schedule Of Estimated Future Amortization Expense Of Intangible Assets | The estimated future amortization expense related to intangible assets as of December 31, 2018, is as follows (in millions):
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Commitments And Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Future Minimum Lease Commitments Under Operating Leases | The Company’s operating lease terms are generally less than five years. Future minimum lease payments related to non-cancellable portion of operating leases as of December 31, 2018, are as follows (in millions):
Future minimum lease commitments under the Company’s operating leases as of December 31, 2018, are as follows (in millions):
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Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Stock Repurchase Activities | The following table provides the stock repurchase activities during the years ended December 31, 2018, 2017, and 2016 (in millions, except per share amounts):
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Components of Accumulated Other Comprehensive Income (Loss), Net of Tax | The components of accumulated other comprehensive income (loss) net of tax, for the years ended December 31, 2018, and 2017, are as follows (in millions):
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Share-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Stock Option Activity Under All Stock Plans | Option activity during fiscal 2018 under all the stock plans was as follows (in millions, except per share amounts):
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Summary Of Significant Ranges Of Outstanding And Exercisable Options | The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2018 (number of shares and aggregate intrinsic value in millions):
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Summary of RSU Activity | RSU activity for the year ended December 31, 2018, was as follows (in millions, except per share amounts):
|
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Summary Of Share-Based Compensation Expense | The following table summarizes share-based compensation expense (in millions):
|
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Schedule Of Estimated Fair Values Of The Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions and Fair Value of RSUs | The weighted average estimated fair values of stock options, the rights to acquire stock granted, and RSUs, as well as the weighted average assumptions used in calculating the fair values of stock options and rights to acquire stock under the ESPP that were granted during the years ended December 31, 2018, 2017, and 2016, were as follows:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Income Before Provision For Income Taxes | Income before provision for income taxes for the years ended December 31, 2018, 2017, and 2016, consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Provision For Income Taxes | The provision for income taxes for the years ended December 31, 2018, 2017, and 2016, consisted of the following (in millions):
|
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Schedule Of Income Tax Difference From The Statutory Rate | Income tax expense differs from amounts computed by applying the statutory federal income rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017, and 2016, as a result of the following (in millions):
|
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Schedule Of Deferred Tax Assets | Deferred income taxes reflect tax carry forwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in millions):
|
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Schedule Of Gross Unrecognized Income Tax Benefits | A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for the years ended December 31, 2018, 2017, and 2016, are as follows (in millions):
|
Net Income Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 attributable to Intuitive Surgical, Inc. (in millions, except per share amounts):
|
Selected Quarterly Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Selected Quarterly Data |
|
Summary Of Significant Accounting Policies - Additional Information (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
customer
segment
|
Dec. 31, 2017
USD ($)
customer
|
Dec. 31, 2016
USD ($)
customer
|
Jan. 01, 2018
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Summary Of Significant Accounting Policies [Line Items] | |||||
Effective Income Tax Rate Reconciliation, Share-based Compensation, Excess Tax Benefit, Percent | 9.10% | 9.30% | |||
Other-than-temporary impairment losses | $ 0 | $ 0 | $ 0 | ||
Performance obligation period | The Company’s system sale arrangements generally include a five-year period of service. The first year of service is generally free and included in the system sale arrangement and the remaining four years are generally included at a stated service price. | ||||
Restricted cash | $ 51,500,000 | 15,000,000 | 15,000,000 | ||
Depreciation expense | $ 105,900,000 | 82,100,000 | 70,700,000 | ||
Number of operating segments | segment | 1 | ||||
Impairment of goodwill | $ 0 | ||||
System sales arrangement, warranty period | 1 year | ||||
Transaction price allocated to remaining performance obligations | $ 1,448,700,000 | ||||
Revenue recognized | 268,900,000 | 225,500,000 | |||
Operating lease revenue | $ 51,400,000 | 25,900,000 | 16,600,000 | ||
Market-based implied volatility (period) | 1 year | ||||
Market-based implied volatility (percent) | 100.00% | ||||
Cash flow hedges de-designated (period) | 2 months | ||||
Likelihood of tax benefits being realized upon ultimate settlement | 50.00% | ||||
Operating expenses | $ 1,404,700,000 | 1,139,100,000 | 943,200,000 | ||
Retained earnings | 1,521,700,000 | 115,000,000 | |||
Net cash provided by operating activities | 1,169,600,000 | 1,143,900,000 | 1,087,000,000 | ||
Capitalized contract costs | 34,200,000 | 31,400,000 | |||
Net Cash Provided by (Used in) Financing Activities | 126,300,000 | (1,913,100,000) | 514,400,000 | ||
Undiscounted future minimum operating lease commitments | $ 95,400,000 | ||||
ASU No. 2014-09 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Operating expenses | 1,139,100,000 | 943,200,000 | |||
Retained earnings | 115,000,000 | ||||
ASU No. 2014-09 | Difference between evenue guidance in effect before and after Topic 606 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Retained earnings | $ 40,300,000 | ||||
ASU 2016-16 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Catch-up adjustment to retained earnings | $ 390,800,000 | ||||
ASU 2016-16 | Retained Earnings | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Catch-up adjustment to retained earnings | $ 390,800,000 | ||||
ASU No. 2016-09 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Net cash provided by operating activities | 44,100,000 | ||||
Net Cash Provided by (Used in) Financing Activities | 44,100,000 | ||||
Enterprise-wide software | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Property, plant and equipment, estimated useful lives | 5 years | ||||
Internal use software | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Capitalized computer software, gross | $ 17,400,000 | $ 22,400,000 | $ 11,800,000 | ||
Minimum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life, intangible asset | 1 year | ||||
Sales-type leases term | 24 months | ||||
Maximum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life, intangible asset | 9 years | ||||
Sales-type leases term | 84 months | ||||
Derivative, term of contract | 12 months | ||||
Maximum | Internal use software | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Property, plant and equipment, estimated useful lives | 5 years | ||||
United States | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Long-lived assets, percent | 88.00% | 88.00% | |||
Accounts Receivable | United States | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 71.00% | 69.00% | |||
Total Revenue | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customers representing more than 10% of total revenue | customer | 0 | 0 | 0 | ||
Total Revenue | United States | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 71.00% | 73.00% | 72.00% | ||
Total Revenue | International | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 29.00% | 27.00% | 28.00% | ||
Early adoption | ASU 2018-02 | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Reclassification from AOCI to retained earnings | $ 1,300,000 |
Summary Of Significant Accounting Policies - Estimated Useful Lives Of Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | Up to 30 years |
Property, plant and equipment, estimated useful lives | 30 years |
Building improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | Up to 15 years |
Property, plant and equipment, estimated useful lives | 15 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | Lesser of useful life or term of lease |
Equipment and furniture | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 5 years |
Operating lease assets | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | Greater of lease term or 1 to 5 years |
Operating lease assets | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 5 years |
Operating lease assets | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 1 year |
Computer and office equipment | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 3 years |
Enterprise-wide software | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 5 years |
Purchased software | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | Lesser of 3 years or life of license |
Property, plant and equipment, estimated useful lives | 3 years |
Summary Of Significant Accounting Policies - Revenue Disaggregated by Types and Geography (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | $ 1,046.5 | $ 920.9 | $ 909.3 | $ 847.5 | $ 892.0 | $ 807.8 | $ 758.8 | $ 679.6 | $ 3,724.2 | $ 3,138.2 | $ 2,706.5 |
Instruments and accessories | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 1,962.0 | 1,636.9 | 1,395.8 | ||||||||
Systems | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 1,127.1 | 928.4 | 800.0 | ||||||||
Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 635.1 | 572.9 | 510.7 | ||||||||
U.S. | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 2,633.5 | 2,285.8 | 1,956.4 | ||||||||
U.S. | Instruments and accessories | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 1,485.2 | 1,263.1 | 1,077.3 | ||||||||
U.S. | Systems | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 692.2 | 603.5 | 501.3 | ||||||||
U.S. | Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 456.1 | 419.2 | 377.8 | ||||||||
Outside of U.S. (“OUS”) | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 1,090.7 | 852.4 | 750.1 | ||||||||
Outside of U.S. (“OUS”) | Instruments and accessories | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 476.8 | 373.8 | 318.5 | ||||||||
Outside of U.S. (“OUS”) | Systems | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 434.9 | 324.9 | 298.7 | ||||||||
Outside of U.S. (“OUS”) | Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | $ 179.0 | $ 153.7 | $ 132.9 |
Summary Of Significant Accounting Policies - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounting Policies [Abstract] | ||
Contract assets | $ 12.4 | $ 8.3 |
Deferred revenue | $ 327.3 | $ 268.6 |
Summary Of Significant Accounting Policies - Schedule of Impact of Adopting New Standard (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenue: | |||||||||||
Total revenue | $ 1,046.5 | $ 920.9 | $ 909.3 | $ 847.5 | $ 892.0 | $ 807.8 | $ 758.8 | $ 679.6 | $ 3,724.2 | $ 3,138.2 | $ 2,706.5 |
Cost of revenue: | |||||||||||
Total cost of revenue | 1,120.1 | 936.2 | 813.6 | ||||||||
Gross profit | 735.7 | 642.3 | 632.3 | 593.8 | 634.0 | 568.1 | 530.1 | 469.8 | 2,604.1 | 2,202.0 | 1,892.9 |
Operating expenses: | |||||||||||
Selling, general and administrative | 986.6 | 810.5 | 703.6 | ||||||||
Research and development | 418.1 | 328.6 | 239.6 | ||||||||
Total operating expenses | 1,404.7 | 1,139.1 | 943.2 | ||||||||
Income from operations | 1,199.4 | 1,062.9 | 949.7 | ||||||||
Interest and other income, net | 80.1 | 41.9 | 35.6 | ||||||||
Income before taxes | 1,279.5 | 1,104.8 | 985.3 | ||||||||
Income tax expense | 154.5 | 433.9 | 247.0 | ||||||||
Net income attributable to Intuitive Surgical, Inc. | $ 292.5 | $ 292.5 | $ 255.3 | $ 287.6 | $ (31.5) | $ 298.6 | $ 223.0 | $ 180.8 | $ 1,127.9 | $ 670.9 | $ 738.3 |
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic (usd per share) | $ 2.56 | $ 2.57 | $ 2.25 | $ 2.55 | $ (0.28) | $ 2.67 | $ 2.01 | $ 1.62 | $ 9.92 | $ 6.01 | $ 6.43 |
Diluted (usd per share) | $ 2.45 | $ 2.45 | $ 2.15 | $ 2.44 | $ (0.28) | $ 2.56 | $ 1.94 | $ 1.57 | $ 9.49 | $ 5.77 | $ 6.26 |
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ 1,130.1 | $ 664.3 | $ 738.9 | ||||||||
ASSETS | |||||||||||
Accounts receivable, net | $ 682.3 | $ 507.9 | 682.3 | 507.9 | |||||||
Prepaids and other current assets | 178.8 | 99.2 | 178.8 | 99.2 | |||||||
Deferred tax assets | 428.6 | 72.0 | 428.6 | 72.0 | |||||||
Intangible and other assets, net | 261.0 | 195.8 | 261.0 | 195.8 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | 294.3 | 243.8 | 294.3 | 243.8 | |||||||
Other accrued liabilities | 231.8 | 168.9 | 231.8 | 168.9 | |||||||
Retained earnings | $ 1,521.7 | 115.0 | 1,521.7 | 115.0 | |||||||
Product | |||||||||||
Revenue: | |||||||||||
Total revenue | 3,089.1 | 2,565.3 | 2,195.8 | ||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 906.2 | 756.3 | 662.6 | ||||||||
Service | |||||||||||
Revenue: | |||||||||||
Total revenue | 635.1 | 572.9 | 510.7 | ||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | $ 213.9 | 179.9 | 151.0 | ||||||||
ASC 606 | |||||||||||
Revenue: | |||||||||||
Total revenue | 3,138.2 | 2,706.5 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 936.2 | 813.6 | |||||||||
Gross profit | 2,202.0 | 1,892.9 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 810.5 | 703.6 | |||||||||
Research and development | 328.6 | 239.6 | |||||||||
Total operating expenses | 1,139.1 | 943.2 | |||||||||
Income from operations | 1,062.9 | 949.7 | |||||||||
Interest and other income, net | 41.9 | 35.6 | |||||||||
Income before taxes | 1,104.8 | 985.3 | |||||||||
Income tax expense | 433.9 | 247.0 | |||||||||
Net income attributable to Intuitive Surgical, Inc. | $ 670.9 | $ 738.3 | |||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic (usd per share) | $ 6.01 | $ 6.43 | |||||||||
Diluted (usd per share) | $ 5.77 | $ 6.26 | |||||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ 664.3 | $ 738.9 | |||||||||
ASSETS | |||||||||||
Accounts receivable, net | 507.9 | 507.9 | |||||||||
Prepaids and other current assets | 99.2 | 99.2 | |||||||||
Deferred tax assets | 72.0 | 72.0 | |||||||||
Intangible and other assets, net | 195.8 | 195.8 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | 243.8 | 243.8 | |||||||||
Other accrued liabilities | 168.9 | 168.9 | |||||||||
Other Liabilities, Noncurrent | 333.6 | 333.6 | |||||||||
Retained earnings | 115.0 | 115.0 | |||||||||
ASC 606 | Product | |||||||||||
Revenue: | |||||||||||
Total revenue | 2,565.3 | 2,195.8 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 756.3 | 662.6 | |||||||||
ASC 606 | Service | |||||||||||
Revenue: | |||||||||||
Total revenue | 572.9 | 510.7 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 179.9 | 151.0 | |||||||||
As Previously Reported | ASC 606 | |||||||||||
Revenue: | |||||||||||
Total revenue | 3,128.9 | 2,704.4 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 934.8 | 814.3 | |||||||||
Gross profit | 2,194.1 | 1,890.1 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 810.9 | 705.3 | |||||||||
Research and development | 328.6 | 239.6 | |||||||||
Total operating expenses | 1,139.5 | 944.9 | |||||||||
Income from operations | 1,054.6 | 945.2 | |||||||||
Interest and other income, net | 41.9 | 35.6 | |||||||||
Income before taxes | 1,096.5 | 980.8 | |||||||||
Income tax expense | 436.5 | 244.9 | |||||||||
Net income attributable to Intuitive Surgical, Inc. | $ 660.0 | $ 735.9 | |||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic (usd per share) | $ 5.91 | $ 6.40 | |||||||||
Diluted (usd per share) | $ 5.67 | $ 6.24 | |||||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ 653.4 | $ 736.5 | |||||||||
ASSETS | |||||||||||
Accounts receivable, net | 511.9 | 511.9 | |||||||||
Prepaids and other current assets | 97.2 | 97.2 | |||||||||
Deferred tax assets | 87.3 | 87.3 | |||||||||
Intangible and other assets, net | 159.7 | 159.7 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | 284.5 | 284.5 | |||||||||
Other accrued liabilities | 169.5 | 169.5 | |||||||||
Other Liabilities, Noncurrent | 327.1 | 327.1 | |||||||||
Retained earnings | 61.4 | 61.4 | |||||||||
As Previously Reported | ASC 606 | Product | |||||||||||
Revenue: | |||||||||||
Total revenue | 2,547.1 | 2,187.4 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 754.9 | 663.3 | |||||||||
As Previously Reported | ASC 606 | Service | |||||||||||
Revenue: | |||||||||||
Total revenue | 581.8 | 517.0 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 179.9 | 151.0 | |||||||||
Adjustments | ASC 606 | |||||||||||
Revenue: | |||||||||||
Total revenue | 9.3 | 2.1 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 1.4 | (0.7) | |||||||||
Gross profit | 7.9 | 2.8 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | (0.4) | (1.7) | |||||||||
Research and development | 0.0 | 0.0 | |||||||||
Total operating expenses | (0.4) | (1.7) | |||||||||
Income from operations | 8.3 | 4.5 | |||||||||
Interest and other income, net | 0.0 | 0.0 | |||||||||
Income before taxes | 8.3 | 4.5 | |||||||||
Income tax expense | (2.6) | 2.1 | |||||||||
Net income attributable to Intuitive Surgical, Inc. | $ 10.9 | $ 2.4 | |||||||||
Net income per share attributable to Intuitive Surgical, Inc.: | |||||||||||
Basic (usd per share) | $ 0.10 | $ 0.03 | |||||||||
Diluted (usd per share) | $ 0.10 | $ 0.02 | |||||||||
Total comprehensive income attributable to Intuitive Surgical, Inc. | $ 10.9 | $ 2.4 | |||||||||
ASSETS | |||||||||||
Accounts receivable, net | (4.0) | (4.0) | |||||||||
Prepaids and other current assets | 2.0 | 2.0 | |||||||||
Deferred tax assets | (15.3) | (15.3) | |||||||||
Intangible and other assets, net | 36.1 | 36.1 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | (40.7) | (40.7) | |||||||||
Other accrued liabilities | (0.6) | (0.6) | |||||||||
Other Liabilities, Noncurrent | 6.5 | 6.5 | |||||||||
Retained earnings | $ 53.6 | 53.6 | |||||||||
Adjustments | ASC 606 | Product | |||||||||||
Revenue: | |||||||||||
Total revenue | 18.2 | 8.4 | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | 1.4 | (0.7) | |||||||||
Adjustments | ASC 606 | Service | |||||||||||
Revenue: | |||||||||||
Total revenue | (8.9) | (6.3) | |||||||||
Cost of revenue: | |||||||||||
Total cost of revenue | $ 0.0 | $ 0.0 |
Financial Instruments - Summary Of Cash And Available-For-Sale Securities (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | $ 857.9 | $ 648.2 |
Total | 4,006.5 | |
Total assets measured at fair value, Amortized Cost | 4,845.0 | 3,861.7 |
Gross Unrealized Gains | 3.3 | 0.2 |
Gross Unrealized Losses | 13.9 | 15.4 |
Fair Value | 3,995.9 | |
Total assets measured at fair value, Fair Value | 4,834.4 | 3,846.5 |
Short-term Investments | 2,205.2 | 1,312.4 |
Long-term Investments | 1,771.3 | 1,885.9 |
Cash | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 269.4 | 197.7 |
Fair Value | 269.4 | 197.7 |
Level 1 | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 579.1 | 450.5 |
Total | 2,046.9 | 1,474.1 |
Gross Unrealized Gains | 1.7 | 0.0 |
Gross Unrealized Losses | 5.3 | 4.7 |
Fair Value | 2,043.3 | 1,469.4 |
Short-term Investments | 897.8 | 396.2 |
Long-term Investments | 566.4 | 622.7 |
Level 1 | Money market funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 569.1 | 445.0 |
Fair Value | 569.1 | 445.0 |
Short-term Investments | 0.0 | 0.0 |
Long-term Investments | 0.0 | 0.0 |
Level 1 | U.S. treasuries | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 10.0 | 5.5 |
Total | 1,477.8 | 1,029.1 |
Gross Unrealized Gains | 1.7 | 0.0 |
Gross Unrealized Losses | 5.3 | 4.7 |
Fair Value | 1,474.2 | 1,024.4 |
Short-term Investments | 897.8 | 396.2 |
Long-term Investments | 566.4 | 622.7 |
Level 2 | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 9.4 | 0.0 |
Total | 2,528.7 | 2,189.9 |
Gross Unrealized Gains | 1.6 | 0.2 |
Gross Unrealized Losses | 8.6 | 10.7 |
Fair Value | 2,521.7 | 2,179.4 |
Short-term Investments | 1,307.4 | 916.2 |
Long-term Investments | 1,204.9 | 1,263.2 |
Level 2 | Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 1.4 | 0.0 |
Total | 110.7 | 38.4 |
Gross Unrealized Gains | 0.0 | 0.0 |
Gross Unrealized Losses | 0.0 | 0.0 |
Fair Value | 110.7 | 38.4 |
Short-term Investments | 109.3 | 38.4 |
Long-term Investments | 0.0 | 0.0 |
Level 2 | Corporate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 8.0 | 0.0 |
Total | 1,607.8 | 946.6 |
Gross Unrealized Gains | 1.3 | 0.2 |
Gross Unrealized Losses | 4.8 | 4.4 |
Fair Value | 1,604.3 | 942.4 |
Short-term Investments | 724.5 | 403.9 |
Long-term Investments | 871.8 | 538.5 |
Level 2 | U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 0.0 | 0.0 |
Total | 791.8 | 901.3 |
Gross Unrealized Gains | 0.3 | 0.0 |
Gross Unrealized Losses | 3.8 | 4.4 |
Fair Value | 788.3 | 896.9 |
Short-term Investments | 468.9 | 311.7 |
Long-term Investments | 319.4 | 585.2 |
Level 2 | Non-U.S. government securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 0.0 | |
Total | 2.5 | |
Gross Unrealized Gains | 0.0 | |
Gross Unrealized Losses | 0.0 | |
Fair Value | 2.5 | |
Short-term Investments | 2.5 | |
Long-term Investments | 0.0 | |
Level 2 | Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and Cash Equivalents | 0.0 | 0.0 |
Total | 18.4 | 301.1 |
Gross Unrealized Gains | 0.0 | 0.0 |
Gross Unrealized Losses | 0.0 | 1.9 |
Fair Value | 18.4 | 299.2 |
Short-term Investments | 4.7 | 159.7 |
Long-term Investments | $ 13.7 | $ 139.5 |
Financial Instruments - Summary Of Contractual Maturities Of Cash Equivalents And Available-For-Sale Investments (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Amortized Cost | |
Mature in less than one year | $ 2,230.2 |
Mature in one to five years | 1,776.3 |
Total | 4,006.5 |
Fair Value | |
Mature in less than one year | 2,224.6 |
Mature in one to five years | 1,771.3 |
Total | $ 3,995.9 |
Financial Instruments - Additional Information (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Net unrealized losses on investments | $ (9.8) | $ (11.3) |
Prepaid and other current assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted Cash and Cash Equivalents | $ 36.5 |
Financial Instruments - Schedule Of Available-For-Sale Investments With Unrealized Losses (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized losses less than 12 months Fair Value | $ 1,434.1 | $ 1,996.3 |
Unrealized losses less than 12 months | (2.8) | (7.2) |
Unrealized losses 12 months or greater Fair Value | 1,427.6 | 880.4 |
Unrealized losses 12 months or greater | (11.1) | (8.2) |
Total Fair Value | 2,861.7 | 2,876.7 |
Total Unrealized Losses | (13.9) | (15.4) |
Corporate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized losses less than 12 months Fair Value | 727.4 | 567.6 |
Unrealized losses less than 12 months | (1.7) | (2.1) |
Unrealized losses 12 months or greater Fair Value | 409.6 | 277.0 |
Unrealized losses 12 months or greater | (3.1) | (2.3) |
Total Fair Value | 1,137.0 | 844.6 |
Total Unrealized Losses | (4.8) | (4.4) |
U.S. treasuries | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized losses less than 12 months Fair Value | 478.7 | 763.5 |
Unrealized losses less than 12 months | (0.9) | (2.5) |
Unrealized losses 12 months or greater Fair Value | 592.8 | 206.2 |
Unrealized losses 12 months or greater | (4.4) | (2.2) |
Total Fair Value | 1,071.5 | 969.7 |
Total Unrealized Losses | (5.3) | (4.7) |
U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized losses less than 12 months Fair Value | 228.0 | 428.9 |
Unrealized losses less than 12 months | (0.2) | (1.3) |
Unrealized losses 12 months or greater Fair Value | 425.2 | 345.5 |
Unrealized losses 12 months or greater | (3.6) | (3.1) |
Total Fair Value | 653.2 | 774.4 |
Total Unrealized Losses | $ (3.8) | (4.4) |
Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized losses less than 12 months Fair Value | 236.3 | |
Unrealized losses less than 12 months | (1.3) | |
Unrealized losses 12 months or greater Fair Value | 51.7 | |
Unrealized losses 12 months or greater | (0.6) | |
Total Fair Value | 288.0 | |
Total Unrealized Losses | $ (1.9) |
Financial Instruments - Derivative Instruments Used to Hedge against Balance Sheet Foreign Currency Exposures (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Foreign exchange gains (losses) related to balance sheet re-measurement | $ (2.6) | $ 9.7 | $ (5.6) |
Foreign Exchange Forward | Other income | Derivatives Not Designated as Hedging Instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Recognized gains (losses) in interest and other income, net | $ 8.7 | $ (9.2) | $ 6.4 |
Financial Instruments - Gross Notional Amounts for Outstanding Derivatives (Details) - Forward contracts - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives Designated as Hedging Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | $ 183.0 | $ 128.5 |
Derivatives Designated as Hedging Instruments | Prepaid and other current assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | 3.1 | 0.9 |
Derivatives Designated as Hedging Instruments | Other accrued liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | 0.9 | 2.9 |
Derivatives Not Designated as Hedging Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | 182.7 | 168.4 |
Derivatives Not Designated as Hedging Instruments | Prepaid and other current assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | 4.1 | 1.2 |
Derivatives Not Designated as Hedging Instruments | Other accrued liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notional amounts of outstanding currency forward contracts | $ 1.1 | $ 4.6 |
Consolidated Financial Statement Details - Inventory (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory: | ||
Raw materials | $ 164.1 | $ 80.9 |
Work-in-process | 40.0 | 19.7 |
Finished goods | 204.9 | 140.6 |
Total inventory | $ 409.0 | $ 241.2 |
Consolidated Financial Statement Details - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, plant, and equipment, net: | ||
Land | $ 184.6 | $ 174.8 |
Building and building/leasehold improvements | 266.2 | 230.5 |
Machinery and equipment | 280.1 | 224.8 |
Operating lease assets | 150.2 | 66.1 |
Computer and office equipment | 52.6 | 44.8 |
Capitalized software | 157.8 | 135.6 |
Construction-in-process | 156.7 | 83.5 |
Gross property, plant, and equipment | 1,248.2 | 960.1 |
Less: Accumulated depreciation | (436.2) | (347.0) |
Total property, plant, and equipment, net | 812.0 | 613.1 |
Accumulated depreciation associated with operating lease assets | $ (32.1) | $ (13.8) |
Consolidated Financial Statement Details - Other Accrued Liabilities—Short Term (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Taxes payable | $ 39.1 | $ 63.1 |
Litigation related accruals | 55.0 | 13.8 |
Other accrued liabilities | 137.7 | 92.0 |
Other Liabilities, Current | $ 231.8 | $ 168.9 |
Consolidated Financial Statement Details - Other Long-Term Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Income taxes—long-term | $ 270.2 | $ 286.8 |
Deferred revenue—long-term | 33.0 | 24.8 |
Other long-term liabilities | 35.4 | 22.0 |
Liabilities, Other than Long-term Debt, Noncurrent | $ 338.6 | $ 333.6 |
Consolidated Financial Statement Details - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Income taxes paid | $ 179.2 | $ 147.5 | $ 138.4 |
Supplemental non-cash investing activities: | |||
Equipment transfers from inventory to property, plant, and equipment | 125.7 | 65.8 | 39.3 |
Deferred payments related to business combinations | $ 16.7 | $ 0.0 | $ 0.0 |
Leases - Lease Receivables (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Leases [Abstract] | ||
Gross lease receivables | $ 150.4 | $ 128.0 |
Unearned income | (6.3) | (5.0) |
Allowance for credit loss | (1.0) | (0.9) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Net investment in sales-type leases | 143.1 | 122.1 |
Capital Leases, Future Minimum Payments Receivable, Fiscal Year Maturity [Abstract] | ||
2019 | 50.8 | |
2020 | 46.5 | |
2021 | 29.7 | |
2022 | 14.9 | |
2023 | 7.5 | |
2024 and thereafter | 1.0 | |
Total | 150.4 | |
Prepaid and other current assets | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Net investment in sales-type leases | 51.2 | 41.9 |
Intangible and other assets, net | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Net investment in sales-type leases | $ 91.9 | $ 80.2 |
Leases - Operating Leases (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 88.0 |
2020 | 85.8 |
2021 | 68.8 |
2022 | 51.3 |
2023 | 25.4 |
2024 and thereafter | 1.9 |
Total | $ 321.2 |
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 11, 2018 |
Aug. 17, 2018 |
May 25, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||||||
Goodwill | $ 240.6 | $ 201.1 | ||||
Deferred payments related to business combinations | 16.7 | 0.0 | $ 0.0 | |||
Amortization expense related to intangible assets | $ 14.2 | $ 12.9 | $ 18.2 | |||
Vattikuti Technologies Pvt. Ltd. | ||||||
Business Acquisition [Line Items] | ||||||
Cash payments | $ 38.1 | |||||
Net tangible assets acquired | 4.1 | |||||
Intangible assets acquired | 24.2 | |||||
Goodwill | $ 9.8 | |||||
Weighted average useful life | 4 years 3 months 18 days | |||||
InTouch | ||||||
Business Acquisition [Line Items] | ||||||
Cash payments | $ 22.0 | |||||
Intangible assets acquired | 13.3 | |||||
Goodwill | $ 25.4 | |||||
Weighted average useful life | 5 years 8 months 12 days | |||||
Total purchase consideration | $ 38.7 | |||||
Deferred payments related to business combinations | $ 16.7 | |||||
Unison Surgicals Company | ||||||
Business Acquisition [Line Items] | ||||||
Cash payments | $ 35.4 | |||||
Net tangible assets acquired | 13.1 | |||||
Intangible assets acquired | 17.3 | |||||
Goodwill | $ 5.0 | |||||
Weighted average useful life | 6 years 7 months 6 days | |||||
Cash acquired | $ 7.6 |
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 247.4 | $ 193.8 |
Accumulated Amortization | (180.7) | (167.8) |
Net Carrying Amount | 66.7 | 26.0 |
Patents and developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 158.7 | 156.0 |
Accumulated Amortization | (144.7) | (140.2) |
Net Carrying Amount | 14.0 | 15.8 |
Distribution rights and others | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 40.2 | 9.2 |
Accumulated Amortization | (12.9) | (9.2) |
Net Carrying Amount | 27.3 | 0.0 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 48.5 | 28.6 |
Accumulated Amortization | (23.1) | (18.4) |
Net Carrying Amount | $ 25.4 | $ 10.2 |
Goodwill and Intangible Assets - Schedule Of Estimated Future Amortization Expense Of Intangible Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 15.9 | |
2020 | 15.8 | |
2021 | 12.5 | |
2022 | 10.1 | |
2023 | 6.2 | |
2024 and thereafter | 6.2 | |
Net Carrying Amount | $ 66.7 | $ 26.0 |
Commitments And Contingencies - Schedule Of Future Minimum Lease Commitments Under Operating Leases (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 15.1 |
2020 | 14.5 |
2021 | 12.7 |
2022 | 11.2 |
2023 | 11.0 |
2024 | 30.9 |
Total | $ 95.4 |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Jun. 11, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Operating lease maximum term (in years) | 15 years | ||||
Other commitments | $ 711.2 | $ 711.2 | |||
Commitments And Contingencies [Line Items] | |||||
Pre-tax settlement charges | 45.2 | ||||
Accrued liabilities, product liability claims | 53.0 | 53.0 | $ 12.8 | ||
Settlement agreement payment | $ 42.5 | ||||
Pre-tax loss | 42.5 | ||||
Prepaid and other current assets | |||||
Commitments And Contingencies [Line Items] | |||||
Settlement agreement payment | 42.5 | ||||
da Vinci Surgical System Product Liability Matters | |||||
Commitments And Contingencies [Line Items] | |||||
Pre-tax settlement charges | 2.7 | 16.3 | $ 8.3 | ||
Accrued liabilities, product liability claims | $ 10.5 | $ 10.5 | $ 12.8 |
Stockholders' Equity - Additional Information (Details) - USD ($) shares in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Shares repurchased (shares) | 0.0 | 7.3 | 0.2 | ||
Repurchase of common stock | $ 0 | $ 2,274,000,000 | $ 42,500,000 | ||
Stock repurchase program, remaining authorized amount | 717,500,000 | ||||
Aggregate reduction in common stock and additional paid-in capital during stock repurchases | 0 | 152,000,000 | 4,100,000 | ||
Amount charged to retained earnings during stock repurchases | 0 | $ 2,122,000,000 | 38,400,000 | ||
Goldman | ASR Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares repurchased (shares) | 7.3 | ||||
Repurchase of common stock | $ 274,000,000 | $ 2,000,000,000 | |||
Common stock | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 6,200,000,000.0 | ||||
Stock Repurchase Program, increased to authorized amount | $ 3,000,000,000 |
Stockholders' Equity - Schedule Of Stock Repurchase Activities (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity [Abstract] | |||
Shares repurchased (shares) | 0.0 | 7.3 | 0.2 |
Average price per share (usd per share) | $ 0.00 | $ 310.32 | $ 201.70 |
Value of shares repurchased | $ 0.0 | $ 2,274.0 | $ 42.5 |
Stockholders' Equity - Components of Accumulated Other Comprehensive Income, Net of Tax (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 4,778.8 | ||
Other comprehensive income (loss) before reclassifications | 1.7 | $ (8.0) | |
Reclassified from accumulated other comprehensive income (loss) | 0.5 | 1.4 | |
Other comprehensive gains (losses) | 2.2 | (6.6) | $ 0.6 |
Ending balance | 6,678.8 | 4,778.8 | |
Gains (Losses) on Hedge Instruments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (2.4) | 5.0 | |
Other comprehensive income (loss) before reclassifications | 3.6 | (8.6) | |
Reclassified from accumulated other comprehensive income (loss) | (1.0) | 1.2 | |
Other comprehensive gains (losses) | 2.6 | (7.4) | |
Ending balance | 0.2 | (2.4) | 5.0 |
Unrealized Gains (Losses) on Available-for-Sale Securities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (11.3) | (8.6) | |
Other comprehensive income (loss) before reclassifications | 0.3 | (2.7) | |
Reclassified from accumulated other comprehensive income (loss) | 1.2 | 0.0 | |
Other comprehensive gains (losses) | 1.5 | (2.7) | |
Ending balance | (9.8) | (11.3) | (8.6) |
Foreign Currency Translation Gains (Losses) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 2.3 | (1.3) | |
Other comprehensive income (loss) before reclassifications | (2.6) | 3.6 | |
Reclassified from accumulated other comprehensive income (loss) | 0.0 | 0.0 | |
Other comprehensive gains (losses) | (2.6) | 3.6 | |
Ending balance | (0.3) | 2.3 | (1.3) |
Employee Benefit Plans | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (4.1) | (4.0) | |
Other comprehensive income (loss) before reclassifications | 0.4 | (0.3) | |
Reclassified from accumulated other comprehensive income (loss) | 0.3 | 0.2 | |
Other comprehensive gains (losses) | 0.7 | (0.1) | |
Ending balance | (3.4) | (4.1) | (4.0) |
Total | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (15.5) | (8.9) | |
Other comprehensive gains (losses) | (6.6) | 0.6 | |
Ending balance | $ (13.3) | $ (15.5) | $ (8.9) |
Share-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
period
$ / shares
shares
|
Dec. 31, 2017
USD ($)
shares
|
Dec. 31, 2016
USD ($)
shares
|
Apr. 30, 2017
shares
|
Mar. 31, 2017
shares
|
Apr. 30, 2015
shares
|
Mar. 31, 2015
shares
|
Oct. 31, 2009
shares
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Aggregate intrinsic value of options exercised under stock option plans | $ | $ 526.6 | $ 379.9 | $ 273.3 | |||||
Cash received from option exercises and employee stock purchase plans | $ | $ 236.6 | 415.5 | 580.9 | |||||
Number of options vested and expected to vest | 6,100,000 | |||||||
Weighted average remaining contractual life of shares vested and expected to vest, years | 5 years 4 months | |||||||
Aggregate intrinsic value of shares vested and expected to vest | $ | $ 1,715.2 | |||||||
Options vested and expected to vest, weighted-average exercise price per share | $ / shares | $ 197.45 | |||||||
Share-based compensation charges, income tax effect | $ | $ 54.3 | 49.2 | 56.1 | |||||
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | $ | 87.0 | |||||||
Restricted Stock Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total unrecognized compensation expense | $ | $ 373.5 | |||||||
Weighted average period unrecognized compensation expenses are expected to be recognized, years | 2 years 2 months | |||||||
Expected to vest (in shares) | 1,800,000 | |||||||
Aggregate intrinsic value | $ | $ 879.4 | |||||||
Canceled (shares) | 100,000 | |||||||
Vested in period, aggregate fair value | $ | $ 334.3 | $ 144.2 | $ 65.3 | |||||
Restricted Stock Units (RSUs) | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25.00% | |||||||
Share based vesting period | 4 years | |||||||
Restricted Stock Units (RSUs) | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share based vesting period | 1 year | |||||||
Annual Grant Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage vesting upon six months of service | 12.50% | |||||||
Percentage vesting per month after six months of service | 2.0833% | |||||||
Annual Grant Options | February Grant | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage vesting upon six months of service | 12.50% | |||||||
Percentage vesting per month after six months of service | 2.0833% | |||||||
Annual Grant Options | August Grant | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage vesting at the end of one month | 14.5833% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 2.0833% | |||||||
New Hire Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage vesting upon one year of service | 25.00% | |||||||
Percentage vesting per month after one year | 2.0833% | |||||||
Employee Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares were reserved for future issuance (shares) | 1,400,000 | |||||||
Minimum hours employed per week | 20 hours | |||||||
Minimum months employed per year | 5 months | |||||||
Maximum percentage of employees on stockholders to participate in ESPP | 5.00% | |||||||
Percentage of employee payroll deduction under the stock plan, maximum | 15.00% | |||||||
Duration for each offering period | 24 months | |||||||
Number of shorter purchase periods that each offering period is divided into | period | 4 | |||||||
Duration of each shorter offering period | 6 months | |||||||
Discount on fair market value on the offering date | 85.00% | |||||||
Discount on fair market value on the purchase date | 85.00% | |||||||
Period of look-back that could cause offering period to reset | 2 years | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 7,590,315 | 6,090,315 | ||||||
Employee stock purchase plan, shares issued | 200,000 | 200,000 | 200,000 | |||||
Employee stock purchase plan, value of shares issued | $ | $ 46.8 | $ 38.3 | $ 32.5 | |||||
Total unrecognized compensation expense | $ | $ 11.6 | |||||||
Weighted average period unrecognized compensation expenses are expected to be recognized, years | 11 months | |||||||
Nonvested Stock Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total unrecognized compensation expense | $ | $ 91.6 | |||||||
Weighted average period unrecognized compensation expenses are expected to be recognized, years | 2 years 3 months 18 days | |||||||
Initial RSU grants | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.3333% | |||||||
Share based vesting period | 3 years | |||||||
2010 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation, options, expiration term (in years) | 10 years | |||||||
Number of shares of common stock reserved for issuance (shares) | 24,450,000 | 21,150,000 | ||||||
Shares were reserved for future issuance (shares) | 4,100,000 | |||||||
2010 Plan | Restricted Stock Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares were reserved for future issuance (shares) | 1,800,000 | |||||||
2010 Plan | Annual Grant Options | February Grant | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share based vesting period | 4 years | |||||||
2010 Plan | Annual Grant Options | August Grant | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share based vesting period | 3 years 6 months | |||||||
2009 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation, options, expiration term (in years) | 10 years | |||||||
Number of shares of common stock reserved for issuance (shares) | 4,365,000 | 3,465,000 | ||||||
Shares were reserved for future issuance (shares) | 102,000 | |||||||
2000 Equity Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation, options, expiration term (in years) | 10 years | |||||||
Minimum exercise price of NSOs, percentage of fair value | 85.00% | |||||||
2000 Non-Employee Directors' Stock Option Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation, options, expiration term (in years) | 10 years | |||||||
Number of shares of common stock reserved for issuance (shares) | 450,000 | |||||||
Shares were reserved for future issuance (shares) | 100,000 | |||||||
2000 Non-Employee Directors' Stock Option Plan | Annual Grant Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share based vesting period | 1 year | |||||||
2000 Non-Employee Directors' Stock Option Plan | Initial Grant Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage vesting upon one year of service | 33.3333% | |||||||
Percentage vesting per month after one year | 2.7778% | |||||||
Stock options granted initial vesting period, years | 3 years |
Share-Based Compensation - Summary Of Stock Option Activity Under All Stock Plans (Details) shares in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Number Outstanding | |
Beginning balance (shares) | shares | 7.2 |
Options granted (shares) | shares | 0.6 |
Options exercised (shares) | shares | (1.5) |
Options forfeited/expired (shares) | shares | (0.1) |
Ending balance (shares) | shares | 6.2 |
Weighted Average Exercise Price Per Share | |
Beginning balance (usd per share) | $ / shares | $ 164.16 |
Options granted (usd per share) | $ / shares | 475.38 |
Options exercised (usd per share) | $ / shares | 126.52 |
Options forfeited/expired (usd per share) | $ / shares | 237.05 |
Ending balance (usd per share) | $ / shares | $ 200.79 |
Share-Based Compensation - Outstanding and Exercisable Options Ranges (Details) $ / shares in Units, shares in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
$ / shares
shares
| |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding, Number of Shares | shares | 6.2 |
Options Outstanding, Weighted Average Remaining Contractual Life | 5 years 5 months |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 200.79 |
Options Outstanding, Aggregate Intrinsic Value | $ | $ 1,727,700,000 |
Options Exercisable, Number of Shares | shares | 5.0 |
Options Exercisable, Weighted Average Remaining Contractual Life | 4 years 8 months |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 168.62 |
Options Exercisable, Aggregate Intrinsic Value | $ | $ 1,554,500,000 |
Closing stock price (usd per share) | $ | $ 478.92 |
Exercise Price Range 1 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, minimum (usd per share) | $ 31.96 |
Range of Exercise Prices, maximum (usd per share) | $ 127.91 |
Options Outstanding, Number of Shares | shares | 1.4 |
Options Outstanding, Weighted Average Remaining Contractual Life | 2 years 8 months |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 115.05 |
Options Exercisable, Number of Shares | shares | 1.4 |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 115.05 |
Exercise Price Range 2 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, minimum (usd per share) | 128.30 |
Range of Exercise Prices, maximum (usd per share) | $ 168.41 |
Options Outstanding, Number of Shares | shares | 1.3 |
Options Outstanding, Weighted Average Remaining Contractual Life | 4 years 7 months |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 156.67 |
Options Exercisable, Number of Shares | shares | 1.3 |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 156.62 |
Exercise Price Range 3 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, minimum (usd per share) | 169.42 |
Range of Exercise Prices, maximum (usd per share) | $ 178.39 |
Options Outstanding, Number of Shares | shares | 1.4 |
Options Outstanding, Weighted Average Remaining Contractual Life | 5 years 7 months |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 174.50 |
Options Exercisable, Number of Shares | shares | 1.2 |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 174.17 |
Exercise Price Range 4 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, minimum (usd per share) | 178.75 |
Range of Exercise Prices, maximum (usd per share) | $ 283.51 |
Options Outstanding, Number of Shares | shares | 1.2 |
Options Outstanding, Weighted Average Remaining Contractual Life | 6 years 2 months |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 214.60 |
Options Exercisable, Number of Shares | shares | 0.9 |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 207.77 |
Exercise Price Range 5 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, minimum (usd per share) | 310.67 |
Range of Exercise Prices, maximum (usd per share) | $ 548.71 |
Options Outstanding, Number of Shares | shares | 0.9 |
Options Outstanding, Weighted Average Remaining Contractual Life | 9 years 1 month |
Options Outstanding, Weighted Average Exercise Price Per Share (usd per share) | $ 423.33 |
Options Exercisable, Number of Shares | shares | 0.2 |
Options Exercisable, Weighted Average Exercise Price Per Share (usd per share) | $ 388.12 |
Share-Based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Shares | |||
Unvested beginning balance (shares) | 2.1 | ||
Granted (shares) | 0.8 | ||
Vested (shares) | (0.8) | ||
Canceled (shares) | (0.1) | ||
Unvested ending balance (shares) | 2.0 | 2.1 | |
Weighted Average Grant Date Fair Value | |||
Unvested beginning balance (usd per share) | $ 209.55 | ||
Fair value at grant date (usd per share) | 431.11 | $ 249.34 | $ 184.59 |
Vested (usd per share) | 195.67 | ||
Canceled (usd per share) | 277.10 | ||
Unvested ending balance (usd per share) | $ 295.70 | $ 209.55 |
Share-Based Compensation - Share-Based Compensation Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense before income taxes | $ 262.6 | $ 209.9 | $ 178.0 |
Income tax effect | 54.3 | 49.2 | 56.1 |
Share-based compensation expense after income taxes | 208.3 | 160.7 | 121.9 |
Total cost of sales | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense before income taxes | 53.2 | 42.1 | 37.6 |
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 | 36.4 | 28.1 | 25.2 |
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 | 16.8 | 14.0 | 12.4 |
Selling, general and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense before income taxes | 133.2 | 111.8 | 97.4 |
Research and development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense before income taxes | $ 76.2 | $ 56.0 | $ 43.0 |
Share-Based Compensation - Schedule Of Estimated Fair Value Of Option Using Black-Scholes Option Pricing Model, Weighted Average Assumptions (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
STOCK OPTION PLANS | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.70% | 1.80% | 1.10% |
Expected term (years) | 4 years 3 months 6 days | 4 years 1 month 6 days | 4 years 2 months |
Volatility (percent) | 33.00% | 25.00% | 26.00% |
Weighted average fair value at grant date (usd per share) | $ 146.30 | $ 67.03 | $ 47.06 |
EMPLOYEE STOCK PURCHASE PLAN | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.10% | 1.20% | 0.60% |
Expected term (years) | 1 year 3 months 18 days | 1 year 2 months 12 days | 1 year 2 months 12 days |
Volatility (percent) | 32.00% | 28.00% | 30.00% |
Weighted average fair value at grant date (usd per share) | $ 135.84 | $ 79.77 | $ 57.57 |
RESTRICTED STOCK UNITS | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value at grant date (usd per share) | $ 431.11 | $ 249.34 | $ 184.59 |
Income Taxes - Schedule Of Income Before Provision For Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Income before provision for income taxes, U.S. | $ 852.7 | $ 774.7 | $ 657.0 |
Income before provision for income taxes, Foreign | 426.8 | 330.1 | 328.3 |
Income before taxes | $ 1,279.5 | $ 1,104.8 | $ 985.3 |
Income Taxes - Schedule Of Provision For Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Current income taxes, Federal | $ 89.5 | $ 352.1 | $ 207.0 |
Current income taxes, State | 21.1 | 13.0 | 13.4 |
Current income taxes, Foreign | 9.9 | 8.7 | 5.4 |
Current income taxes | 120.5 | 373.8 | 225.8 |
Deferred income taxes, Federal | (4.1) | 62.8 | 20.5 |
Deferred income taxes, State | (0.3) | (0.3) | 0.6 |
Deferred income taxes, Foreign | 38.4 | (2.4) | 0.1 |
Deferred income taxes | 34.0 | 60.1 | 21.2 |
Total income tax expense | $ 154.5 | $ 433.9 | $ 247.0 |
Income Taxes - Schedule Of Income Tax Difference From Statutory Rate (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||||||||||
Federal tax at statutory rate | $ 268.7 | $ 386.7 | $ 344.9 | ||||||||
State taxes, net of federal benefits | 20.8 | 16.0 | 14.0 | ||||||||
Foreign rate differential | (44.7) | (115.7) | (91.2) | ||||||||
U.S. tax on foreign earnings | 43.7 | 8.4 | 5.0 | ||||||||
Research and development credit | (25.2) | (15.3) | (7.8) | ||||||||
Share-based compensation not benefited | 9.9 | 10.8 | 3.6 | ||||||||
Domestic production activities deduction | 0.0 | (7.9) | (8.0) | ||||||||
Reversal of unrecognized tax benefits | (5.2) | (62.4) | (15.8) | ||||||||
Tax Cuts and Jobs Act impact | 0.5 | 317.8 | 0.0 | ||||||||
Excess tax benefits related to share-based compensation arrangements | $ (15.8) | $ (24.1) | $ (21.6) | $ (54.7) | $ (19.9) | $ (19.7) | $ (30.6) | $ (32.6) | (116.2) | (102.8) | 0.0 |
Other | 2.2 | (1.7) | 2.3 | ||||||||
Total income tax expense | $ 154.5 | $ 433.9 | $ 247.0 |
Income Taxes - Schedule Of Deferred Tax Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Share-based compensation expense | $ 87.2 | $ 79.1 |
Expenses deducted in later years for tax purposes | 29.1 | 29.7 |
Intangible assets | 351.9 | 0.0 |
Research and other credits | 40.1 | 27.5 |
Other | 9.0 | 10.5 |
Gross deferred tax assets | 517.3 | 146.8 |
Valuation allowance | (42.3) | (29.4) |
Deferred tax assets | 475.0 | 117.4 |
Deferred tax liabilities: | ||
Fixed assets | (42.2) | (26.3) |
Intangible assets | (7.5) | (3.6) |
Other | (0.1) | (15.5) |
Deferred tax liabilities | (49.8) | (45.4) |
Net deferred tax assets | $ 425.2 | $ 72.0 |
Income Taxes - Schedule Of Gross Unrecognized Income Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Beginning balance | $ 65.4 | $ 106.0 | $ 92.4 |
Increases related to tax positions taken during the current year | 22.5 | 21.1 | 29.9 |
Decreases related to tax positions taken during a prior year | (0.9) | (46.5) | (0.5) |
Decreases related to settlements with tax authorities | 0.0 | (0.5) | 0.0 |
Decreases related to expiration of statute of limitations | (8.2) | (14.7) | (15.8) |
Ending balance | $ 78.8 | $ 65.4 | $ 106.0 |
Income Taxes - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Holiday [Line Items] | ||||||||||||
Provisional income tax expense | $ 0.5 | $ 317.8 | $ 0.0 | |||||||||
Estimated cumulative undistributed foreign earnings | 1,600.0 | |||||||||||
U.S. tax on foreign earnings | 43.7 | 8.4 | 5.0 | |||||||||
Excess tax benefits associated with employee equity plans | $ 15.8 | $ 24.1 | $ 21.6 | $ 54.7 | $ 19.9 | $ 19.7 | $ 30.6 | $ 32.6 | 116.2 | 102.8 | 0.0 | |
Tax Cuts and Jobs Act of 2017, Change in Tax Rate, Income Tax Expense (Benefit) | 47.6 | |||||||||||
Valuation allowance | 42.3 | 29.4 | 42.3 | 29.4 | ||||||||
Unrecognized tax benefits, period increase (decrease) | 13.4 | |||||||||||
Total gross unrecognized tax benefits | 78.8 | 65.4 | 78.8 | 65.4 | 106.0 | $ 92.4 | ||||||
Interest and penalties related to unrecognized tax benefits accrued | $ 2.6 | $ 1.8 | $ 2.6 | 1.8 | 3.7 | |||||||
Swiss Federal Tax Administration (FTA) | ||||||||||||
Income Tax Holiday [Line Items] | ||||||||||||
Tax benefit from tax holiday | $ 10.9 | $ 10.0 | ||||||||||
Tax benefit from tax holiday (in dollars per share) | $ 0.09 | $ 0.08 | ||||||||||
Pro forma | ||||||||||||
Income Tax Holiday [Line Items] | ||||||||||||
U.S. tax on foreign earnings | $ 270.2 |
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 | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to Intuitive Surgical, Inc. | $ 292.5 | $ 292.5 | $ 255.3 | $ 287.6 | $ (31.5) | $ 298.6 | $ 223.0 | $ 180.8 | $ 1,127.9 | $ 670.9 | $ 738.3 |
Weighted-average shares outstanding basic (shares) | 113.7 | 111.7 | 114.9 | ||||||||
Add: Dilutive potential shares | 5.1 | 4.6 | 3.0 | ||||||||
Weighted-average shares used in computing diluted net income per share (shares) | 118.8 | 116.3 | 117.9 | ||||||||
Basic net income per share (usd per share) | $ 2.56 | $ 2.57 | $ 2.25 | $ 2.55 | $ (0.28) | $ 2.67 | $ 2.01 | $ 1.62 | $ 9.92 | $ 6.01 | $ 6.43 |
Diluted net income per share (usd per share) | $ 2.45 | $ 2.45 | $ 2.15 | $ 2.44 | $ (0.28) | $ 2.56 | $ 1.94 | $ 1.57 | $ 9.49 | $ 5.77 | $ 6.26 |
Net Income Per Share - Additional Information (Details) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | |||
Employee stock options excluded from computation of diluted net income per share | 0.4 | 0.2 | 0.6 |
Employee Benefit Plans - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Retirement Benefits [Abstract] | |
Maximum rate of employees' contribution to 401(k) plan | 100.00% |
Employer match percentage | 200.00% |
Employer matching contributions | $ 1,500 |
Subsequent Event (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Dec. 31, 2016 |
|
Subsequent event | Minimum | ||
Subsequent Event [Line Items] | ||
Estimated cash payments | $ 80 | |
Subsequent event | Maximum | ||
Subsequent Event [Line Items] | ||
Estimated cash payments | 90 | |
Common stock | ||
Subsequent Event [Line Items] | ||
Stock Repurchase Program, increased to authorized amount | $ 3,000 | |
Common stock | Subsequent event | ||
Subsequent Event [Line Items] | ||
Stock Repurchase Program, increased to authorized amount | $ 2,000 |
Selected Quarterly Data - Schedule Of Selected Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information [Abstract] | |||||||||||
Total revenue | $ 1,046.5 | $ 920.9 | $ 909.3 | $ 847.5 | $ 892.0 | $ 807.8 | $ 758.8 | $ 679.6 | $ 3,724.2 | $ 3,138.2 | $ 2,706.5 |
Gross profit | 735.7 | 642.3 | 632.3 | 593.8 | 634.0 | 568.1 | 530.1 | 469.8 | 2,604.1 | 2,202.0 | 1,892.9 |
Net income | $ 292.5 | $ 292.5 | $ 255.3 | $ 287.6 | $ (31.5) | $ 298.6 | $ 223.0 | $ 180.8 | $ 1,127.9 | $ 670.9 | $ 738.3 |
Basic net income per share (usd per share) | $ 2.56 | $ 2.57 | $ 2.25 | $ 2.55 | $ (0.28) | $ 2.67 | $ 2.01 | $ 1.62 | $ 9.92 | $ 6.01 | $ 6.43 |
Diluted net income per share (usd per share) | $ 2.45 | $ 2.45 | $ 2.15 | $ 2.44 | $ (0.28) | $ 2.56 | $ 1.94 | $ 1.57 | $ 9.49 | $ 5.77 | $ 6.26 |
Income tax (expense) related to the 2017 Tax Act | $ (317.8) | $ 0.0 | $ 0.0 | $ 0.0 | |||||||
Excess tax benefits related to share-based compensation arrangements | $ 15.8 | $ 24.1 | $ 21.6 | $ 54.7 | 19.9 | 19.7 | 30.6 | 32.6 | $ 116.2 | $ 102.8 | $ 0.0 |
Certain one-time tax benefits | 2.5 | 4.6 | 0.0 | 0.0 | 0.0 | 68.4 | 0.0 | 0.0 | |||
Includes pre-tax litigation (charges) | 0.0 | 1.8 | (42.5) | (4.5) | $ 1.2 | $ (9.7) | $ 4.5 | $ (21.3) | |||
Includes charitable foundation contribution expense | $ (25.2) | $ 0.0 | $ 0.0 | $ 0.0 |
Valuation And Qualifying Accounts (Details) - Allowance for doubtful accounts, loan credit losses, and sales returns - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 14.6 | $ 10.8 | $ 9.4 |
Additions | 46.0 | 36.1 | 24.6 |
Deductions | (40.2) | (32.3) | (23.2) |
Balance at End of Year | $ 20.4 | $ 14.6 | $ 10.8 |