Company: ISRG
Filing Date: 2025-01-31
Form Type: 10-K
Source: 0001035267-25-000017
Chunk: 118

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-01-31
Form: 10-K
Item: Item 8
Chunk 118
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  The fair value of shares to be issued under the Company’s Employee Stock Purchase Plan (the “ESPP”) is computed using the Black-Scholes-Merton option-pricing model at the commencement of an offering period in February and August of each year utilizing the following inputs: (1) closing quoted price of the Company’s common stock on the initial date of the offering period; (2) expected term; (3) expected volatility; and (4) risk-free interest rate. Share-based compensation for the ESPP is recognized as expense on a straight-line basis over the two-year offering period.See “Note 10. Share-Based Compensation” for a detailed discussion of the Company’s stock plans and share-based compensation expense.

100

Computation of Net Income per ShareBasic 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 RSUs, stock options, PSUs, and shares to be purchased by employees under the Company’s ESPP.Employee equity share options, non-vested shares, and similar equity instruments granted by the Company are 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 ExpensesResearch 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 InstrumentsFor 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 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 monetary account balances, the re-measurement of such