Gary S. Guthart - Chief Executive Officer, President and Director Marshall L. Mohr - Chief Financial Officer, Principal Accounting Officer and Senior Vice President Aleks Cukic - Vice President of Strategy Calvin Darling -

Lennox Ketner - BofA Merrill Lynch, Research Division Spencer Nam - ThinkEquity LLC, Research Division Frederick A. Wise - Leerink Swann LLC, Research Division Tao Levy - Collins Stewart LLC, Research Division Ben Andrew - William Blair & Company L.L.C., Research Division Jonathan Demchick - Morgan Stanley, Research Division Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Intuitive Surgical Quarter 4 2011 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Senior Director of Finance for Intuitive Surgical, Mr. Calvin Darling. Please go ahead.

Thank you. Good afternoon, and welcome to Intuitive Surgical's fourth quarter conference call. With me today, we have Gary Guthart, our President and CEO; Marshall Mohr, our Chief Financial Officer; and Aleks Cukic, our Vice President of Strategic Planning. Before we begin, I would like to inform you that comments mentioned on today's call may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in the company's Securities and Exchange Commission filings. Prospective investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at intuitivesurgical.com on the Audio Archive section under our Investor Relations page. In addition, today's press release has been posted to our website. Today's format will consist of providing you with highlights of our fourth quarter results as described in our press release announced earlier today followed by a question-and-answer session. Gary will present the quarter's business and operational highlights. Marshall will provide a review of our fourth quarter financial results. Aleks will discuss marketing and clinical highlights. Then I will provide our financial forecast for 2012. And finally, we will host a question-and-answer session. With that, I'll turn it over to Gary. Gary S. Guthart: Thank you for joining us on the call today. 2011 has been a productive year at Intuitive. In the past year, our focus was in 4 areas: first, extending the benefits of minimally invasive surgery in gynecology and urology; second, expanding robotic surgery and deepening our organizational capability in Europe and Asia; third, crisp execution in our product development efforts; and finally, enabling emerging procedures in thoracic, transoral, colorectal and general surgery. We have made substantial progress in the areas above. Looking first at procedures. In gynecology, hysterectomy procedures grew by approximately 33% over 2010, led by growth in procedures for benign indications in the U.S. In urology, da Vinci Prostatectomy grew by approximately 15% worldwide with most of the growth coming from Europe. Emerging procedure growth was substantive during the year with thoracic surgery and general surgery leading the way followed by head and neck surgery. Clinical results and surgeon interest in these procedures reinforce our conviction in the value of da Vinci surgery in these disciplines. Aleks will take you through greater detail on our procedure performance later in the call. Internationally, our teams perform well. In the face of economic uncertainty, our European capital team continue to convert the demand for dVP into new system placements. In Asia, we continue to invest into key markets, particularly Korea and Japan. Earlier this month, we acquired our Korean distributor, Biorobotics, and will begin the transition from a distributor market to a direct sales market. Korea is a country that has embraced robotic surgery and whose surgeons have led in creating new techniques. This acquisition allows us to partner with Korean customers more closely in the development of procedures and products to advance the art. We welcome our Korean team to Intuitive. In Japan, customer interest in 2011 remained high despite the earthquake and ensuing tragedy that occurred in March. We have been working diligently on obtaining reimbursement for da Vinci in Japan and are actively engaged with our partners and MHLW. Our product development and regulatory teams also performed well in 2011. Response to our da Vinci Simulator and our Firefly Fluorescence Imaging system was positive in the year with more than half of our new customers purchasing simulators and with Firefly systems beginning use in several leading centers. Turning to instruments. We received clearance for our Single-Site instrument and accessory kit for use in cholecystectomy in Q4 2011 and are in the process of a phase rollout. Our first U.S. customers have been completing single-incision cholecystectomy cases and their early reports on outcomes and ease-of-use are encouraging. In December of 2011, we received our FDA clearance for our vessel sealer and we anticipate beginning its phase rollout in this first quarter of 2012. Lastly, we submitted our 510(k) for our da Vinci Stapler late in the fourth quarter. Looking back at the full year 2011, our operating highlights are as follows. Worldwide procedures grew by approximately 29%. We sold 534 da Vinci Surgical Systems in the year, up from 441. Total revenue grew to $1,757,000,000, up 24% over 2010. Recurring revenue grew to $980 million, up 30% and comprising 56% of total revenue. We generated $831 million in operating profit before noncash stock compensation expense, up 24% from last year. And GAAP net income grew to $495 million, up 30% year-over-year. Now turning to operating highlights for the fourth quarter. Procedures grew approximately 27% over the fourth quarter of last year. We sold 152 da Vinci Surgical Systems, up from 124 in the fourth quarter of 2010. Total revenue for the quarter was $497 million, up 28%. Instrument and accessory revenue increased to $196 million, up 30%. We generated an operating profit of $234 million in the quarter before noncash stock compensation expense, up 27% from the fourth quarter of last year. And GAAP net income grew to $151 million, up 25%. We ended the year with $2,172,000,000 in cash and investments, up $285 million from last quarter and up $563 million from last year. We received $261 million in cash during the year from the exercise of stock options and invested $83 million in fixed assets and intellectual property, $19 million in working capital and equipment and $332 million in stock repurchases for the year. Going forward, we will continue to look for stock repurchase opportunities. Gross cash from operations for the year were $737 million, which is 149% of our reported GAAP net income for the year. This is a reflection of the significant noncash stock option and statutory tax expenses reflected in our GAAP net income and is the reason that we believe that gross cash generated from operations remains the best measure of our financial performance. We added 79 people to our team predominantly in our clinical sales force, our design and operations functions in Q4, bringing our total team to 1,924 employees. Looking to 2012, our priorities are as follows: first, continuing our growth in gynecology and urology worldwide through outstanding execution in the field; second, disciplined execution of our Single-Site and vessel sealing launches focused on outstanding early customer experiences; third, building robust clinical programs with leading customers and emerging procedures in general surgery, thoracic surgery and transoral surgery; and finally, strengthening our capabilities in international markets, particularly Europe, Japan and Korea. I'll now pass the time over to Marshall Mohr, our Chief Financial Officer, to take us through our financial performance in greater detail. Marshall L. Mohr: Thank you, Gary. Our fourth quarter revenue was $497 million, up 28% compared with $389 million for the fourth quarter of 2010 and up 11% compared with $447 million reported for the third quarter of 2011. Fourth quarter revenues by product category were as follows. Fourth quarter instrument and accessory revenue was $196 million, up 30% compared with $151 million for the fourth quarter of 2010, and up 12% compared with $176 million in the third quarter of 2011. Year-over-year, instrument and accessory revenue growth was driven by procedure growth of 27% and initial purchases of recently launched products, including our Firefly and thoracic instrument set. Quarter-over-quarter growth was primarily driven by higher fourth quarter stocking orders associated with higher fourth quarter system unit sales. Instrument and accessory revenue realized per procedure, including initial stocking orders of approximately $1,975 per procedure, was higher than the $1,940 realized in the fourth quarter of 2010 and the $1,950 achieved in the third quarter of 2011. Over time, we expect instruments and accessories per procedure to decline slowly given that initial stocking orders have a lower impact on a larger installed base. This natural decline has been more than offset in recent quarters by the positive impact of our new instrument and accessory product. However, instrument and accessory revenue per procedure will fluctuate based on product and procedure mix as well as the rate of adoption of newer products. Fourth quarter 2011 systems revenue of $225 million increased 27% compared with $178 million of systems revenue for the fourth quarter of 2010 and increased 13% compared with $199 million of systems revenue for the third quarter of 2011. Our higher fourth quarter 2011 systems revenue was driven by higher system unit sales and increased average selling prices. We sold 152 systems in the fourth quarter of 2011 compared with 124 systems in the fourth quarter of 2010 and 133 systems in the third quarter of 2011. The fourth quarter of 2011 system count included 50 systems involving trade-in comprised of 23 standard systems and 27 da Vinci Ss. During the third quarter of 2011, 35 systems involved trade-ins comprised of 14 standard systems and 21 da Vinci Ss. In the fourth quarter of 2010, 33 systems involved trade-in comprised of 24 standard systems and 9 da Vinci Ss. Upgrade revenue for the fourth quarter of 2011 was approximately $2 million compared with $3 million for the fourth quarter of 2010 and $5 million for the third quarter of 2011. Our fourth quarter average sales price per system, including all da Vinci models but excluding upgrades, was $1.47 million, an increase from the $1.41 million realized in the fourth quarter of 2010 and a slight increase compared with the $1.46 million realized in the third quarter. The increase in average sales price relative to the fourth quarter of 2010 reflects a higher proportion of dual consoles in surgical simulators and Firefly-enabled systems, both of which were introduced in the current year, partially offset by an increase in the number of da Vinci S trade-in. The increase in ASPs relative to the third quarter reflect a higher proportion of simulators and Firefly-enabled systems, partially offset by a proportionally lower mix of dual consoles and increased da Vinci S trade-in. We sold 29 dual console systems in the fourth quarter 2011 compared to 16 in the fourth quarter of 2010 and 29 in the third quarter of 2011. ASPs will fluctuate quarter-to-quarter based on product, customer and trade-in mix as well as foreign exchange rates on sales made in European currency. Service revenue increased to $75 million, up 24% compared with $61 million last year and up 5% compared with $72 million last quarter. The growth in service revenue was primarily driven by a larger system installed base. Total fourth quarter recurring revenue comprised of instrument, accessory and service revenue, increased to $272 million, up 28% compared with the fourth quarter of 2010 and up 10% compared with the third quarter of 2011. Recurring revenue represented 55% of total fourth quarter revenue compared with 54% in the fourth quarter last year and 55% last quarter. International results were as follows. Fourth quarter 2011 procedures outside of the United States grew approximately 28% compared with fourth quarter of 2010 and 34% compared with the third quarter of 2011. dVP in Europe was the greatest driver of o U.S. procedure growth. We also experienced growth in dVH for malignant conditions in Europe. o U.S. procedures grew slower than previous quarters in part reflecting cost control efforts in certain European market and a decline in the Korean market. On January 11, we completed the purchase of our Korean distributor. The purchase price and the impact of the acquisition on 2012 income is not expected to be material. The acquisition will enable closer relationships with our Korean customers and increase focus on procedure adoption. Fourth quarter revenue outside of the United States was $107 million, up 12% compared with revenue of $95 million in the fourth quarter of 2010 and up 13% compared with revenue of $94 million in the third quarter of 2011. Instrument and accessory revenue outside of the United States grew 34% year-over-year and 11% sequentially. We sold 39 systems outside of the United States this quarter compared with 38 in the fourth quarter of 2010 and 34 last quarter. Aleks will provide additional details of overseas system sales. Moving on to the remainder of the P&L. Our gross margin in the fourth quarter was 73%, consistent with 73% for the fourth quarter of 2010 and 73% for the third quarter of 2011. Fourth quarter operating expenses of $163 million were up 27% compared with the fourth quarter of 2010 and up 11% compared with the third quarter of 2011. The quarter-over-quarter increase reflects higher variable costs associated with increased revenue, higher engineering project costs and costs associated with employees added during the quarter. We added 79 employees in the quarter, including 30 employees in product operations and 31 employees in commercial operations. Fourth quarter 2011 operating income was $200 million or 40% of sales compared with $154 million or 40% of sales for the fourth quarter of 2010 and $179 million or 40% of sales for the third quarter of 2011. Fourth quarter 2011 operating income reflects $35 million of noncash stock compensation expense compared with $30 million for the fourth quarter of 2010 and $35 million last quarter. Our effective tax rate for the fourth quarter of 26% brought our annual tax rate to just over 30% compared to an annual tax rate of 33% last year. The decrease in the annual rate reflects a higher mix of foreign earnings and lower state taxes. The change from the third quarter reflects lower state taxes and changes in our estimates of foreign versus U.S. income. Our net income was $151 million or $3.75 per share compared with $121 million or $3.02 per share for the fourth quarter of 2010 and $122 million or $3.05 per share for the third quarter of 2011. Let me quickly summarize our results for 2011. Procedures grew by 29%. Total revenue for 2011 was $1.76 billion, up 24% compared with $1.41 billion last year. The revenue increase included recurring revenue growth, 30%, and an increase in systems revenue of 18%. Operating income for 2011 was $695 million, up 25% compared with $555 million last year. Operating income included $136 million of stock-based compensation charges in 2011 compared with $118 million in 2010. Net income for 2011 was $495 million or $12.32 per share compared with $382 million or $9.47 per share last year. Gross cash flows from operations for 2011 totaled $737 million compared with $573 million last year. Now moving to the balance sheet. We ended 2011 with cash and investments of $2.17 billion, up $285 million compared with September 30, 2011. The increase was driven by $209 million of gross cash flows from operation plus $79 million from the exercise of stock options, partially offset by $15 million of capital and IP purchases. During the fourth quarter, we did not repurchase any of our common stock. However, we remain committed to exercising the remaining board authorized buybacks of $568 million. Our accounts receivable balance increased to $298 million at December 31 from $265 million at September 30, primarily reflecting the higher impact of fourth quarter revenues. Our net inventory increased to $112 million at December 31 from $109 million at September 30. Our higher inventory reflects our business growth and expanded product offering. And with that, I'd like to turn it over to Aleks who will go over our sales, marketing and clinical highlights.

Thank you, Marshall. During the fourth quarter, we sold 152 da Vinci systems; 113 in the United States, 23 into Europe and 16 into rest of world markets. As part of the 152 system sales, 23 standard da Vinci systems and 27 da Vinci S systems were traded in for credit against sales for new da Vinci Si systems. We had a net 101 system additions to the installed base during the quarter, which brings to 2,132 the cumulative number of da Vinci systems worldwide; 1,548 in the U.S., 372 in Europe and 212 in rest of world markets. 82 of the 152 systems installed during the quarter represented repeat system sales to existing customers. In total, 144 of the 152 systems sold represented da Vinci Si systems, which included 29 dual console systems. The 39 system sales internationally included 5 into Japan, 5 into France and 4 into the countries of Germany and Russia. As mentioned in the past, Q4 tends to provide seasonal strength for da Vinci system sales, most notably in the U.S. While international da Vinci sales were solid, the EU macroeconomic environment remained choppy. Clinically, we had a strong quarter, achieving an overall year-over-year procedure growth rate of approximately 27%. Gynecology and general surgery growth was particularly strong; while urology, most notably international dVP growth, was robust. Within GYN, strong growth took place across the board. The 9 dVH sacrocolpopexy, myomectomy and endometrial resections were up sharply. General surgery growth was also strong within several procedure subcategories, including G.I. surgery and cholecystectomy. During the quarter, nearly 300 abstracts and papers representing a variety of surgical specialties were published within various peer reviewed journals, while the clinical conferences were abundant with why da Vinci procedure transmissions, postgraduate robotic courses, podium presentations and clinical poster sessions. While our FDA clearance for Single-Site is brand-new, we've had the product selectively available in Europe for the past few quarters. The initial European response has been favorable with early clinical reports beginning to make their way into the clinical journals. In a recent edition of the journal, Surgical Endoscopy, Dr. Spinoglio and Lenti from Alessandria, Italy published a comparative analysis entitled, Single-Site Robotic Cholecystectomy Versus Single-Incision Lap Chole: A Comparison of Learning Curves. In the publication, they described how technical constraints, such as instrument collisions, lack of triangulation and cross-handing has hampered the SILS approach from fully emerging. They described how using a robotic platform may overcome these problems and enable more precise surgical actions by increasing freedom of movement and by restoring intuitive instrument control. In their study, performed under institutional controls, the surgeons compared the results of their first 25 Single-Site cases to their first 25 single-incision lap choles and followed up each patient 2 months postoperatively. The result showed consistency between the 2 patient groups when it came to wound complications where neither group experienced wound infections or incisional hernias. Length of hospitalization was reduced slightly within the Single-Site cohort. However, the most striking difference between the 2 groups was the operative time to perform the procedure. They published that the operative time was significantly reduced using Single-Site as compared to the manual single-incision approach. Average operative time was 83.2 minutes with the SILS approach compared to 62.7 minutes with Single-Site. Their conclusion was and I quote, "Our preliminary experience shows that Single-Site robotic chole is safe, can easily be learned and performed in a reproducible manner and is faster than single-incision lap chole." We continue to experience general surgery procedure strength across several subcategories, cholecystectomy among them. Going forward, we anticipate general surgery playing a more prominent role within our overall procedure mix. While not a primary target, the conversion from laparoscopic hysterectomy to dVH has been taking place within a number of practices. These conversions have not been isolated to any particular pathological segment, meaning that we have seen conversions take place within both benign and malignant treatment pathways. Surgeons have provided various reasons for converting lap cases to dVH, most of which relate to the expansion of MIS technique across a wider spectrum of patients. But a recent study published in the journal, Gynecologic Oncology, provides a new postoperative cost savings argument. The study authored by Drs. Martino and Shubella was entitled, A Cost Analysis of Postoperative Management in Endometrial Cancer Patients Treated by Robotics Versus Laparoscopic Approach. The study retrospectively collected cost data from 215 patients, 101 dVHs and 114 lap hyst patients where all surgeries were performed by gynecologic oncologists. Demographic data, patient recorded pain scores, pain management interventions and post operative pain medication costs were compared. They reported that robotic patients had a lower number of initial drug interventions as well as a lower number of total drug interventions than laparoscopic patients. Robotic patients also had a lower initial pain score. There was a 50% reduction in the pain medication cost on the day of surgery for robotic patients and a 56% cost reduction for the rest of their length of stay. The author's conclusion and I quote, "Endometrial cancer patients, who have robotic surgery experience, less initial postoperative pain and have fewer drug interventions, the cost associated for their pain management represents a savings of greater than 50%. These factors demonstrate the value of robotic surgery in regard to postoperative pain management by delivering higher-quality care at a lower cost." Drs. Magrina and Zanagnolo from the Mayo Clinic of Scottsdale published a study in the European Journal of Gynecologic Oncology entitled, Robotic Surgery for Endometrial Cancer: A Comparison of Perioperative Outcomes and Recurrences with Laparoscopy, Vaginal Laparoscopy and Laparotomy. The method of study was a prospective analysis of 67 patients undergoing robotic surgery for endometrial cancer as compared to 37 laparoscopic hysterectomies, 99 laparotomy approaches and 47 vaginal laparoscopic combination procedures. They reported that the mean operating times for patients undergoing these 4 techniques was pretty similar. But mean blood loss differed significantly; 141 milliliters for robotic patients, 300 milliliters for lap patients, 300 milliliters for vag lap patients and 472 milliliters for open laparotomy. The mean length of hospital stay was 1.9 days in the robotic cohort, 3.4 days for lap patients, 3.5 days for vaginal lap patients and 5.6 days for their laparotomy patients. There were no significant differences in intra or postoperative complications among the 4 groups. The conversion rate was 2.9% for robotics compared to 10.8% for the laparoscopy group. Their conclusion and I quote, "Robotics, laparoscopy and vaginal laparoscopy techniques are preferable to laparotomy for suitable patients with endometrial cancer. Robotics is preferable to laparoscopy due to a shorter hospital stay and lower conversion rate and preferable to vaginal laparoscopy due to reduced hospitalization." Late adopters of urologic robotic surgery have, from time to time, issued critiques based purely on a structural academic point of view, citing little prospective randomized data comparing dVP to open prostatectomy. And since powering a large study with enough men willing to be randomized into the open surgery cohort is both difficult and unlikely, we have relied on the large body of clinical evidence that has been drawn from quality institutions around the world. This month, 2 more very large studies were published in the journal, European Urology. Each study was comprised of 5-digit national samples, but for sake of time, I'll highlight only one. The study was entitled, Perioperative Outcomes of Robotic-Assisted Radical Prostatectomy Compared with Open Radical Prostatectomy: Results from an Inpatient Sample. It originated out of the Vattikuti Urology Institute at Henry Ford Hospital in Detroit and included authorship support from several other leading centers. The study, which included over 19,000 prostatectomy patients, compared the rates of blood transfusions, intraoperative and postoperative complications, prolonged length of stay and in-hospital mortality between 7,400 open prostatectomies and 11,900 dVP patients. In the comparison, the authors reported that the percentage of men requiring blood transfusions was approximately 3.5x greater for men undergoing an open prostatectomy as compared to dVP. The percentage of men experiencing intraoperative complications was over 2x greater for open prostatectomy. Postoperative complications were approximately 25% higher in the open prostatectomy group. Length of stay, prolonged length of stay and in-hospital mortality was found to be higher within the open prostatectomy group. The authors summarized their conclusion by stating and I quote, "Robotic-assisted radical prostatectomy has supplanted open prostatectomy as the most common surgical approach for radical prostatectomy. Moreover, we demonstrate superior adjusted perioperative outcomes after robotic-assisted radical prostatectomy in virtually all examined outcomes." This concludes my remarks, so I'll now turn the time over to Calvin.

Thank you, Aleks. I will be providing you with our financial forecast for 2012, including procedures, revenues and other elements of the income statement on a GAAP basis. I will also provide estimates of significant noncash expenses to provide you with visibility into our expected future cash flows. Starting with procedures. We continue to see strong growth in U.S. da Vinci gynecologic procedures and dVPs in Europe and general growth across a broadening range of procedures at early stages of adoption -- earlier stages of market adoption. We expect our 2012 total procedures to grow approximately 24% to 26% from the base of approximately 360,000 procedures performed in 2011. Based on an increasing percentage of benign hysterectomies and other short-term elective procedures in our procedure mix, we anticipate a more pronounced quarterly seasonality impact in 2012 as compared to 2011. Moving on to revenues. We expect to achieve annual revenue growth of between 17% and 19%. We expect typical capital sales seasonality in 2012 with the proportion of full year system units sold in each quarter to follow a pattern consistent with 2011. We would expect fewer systems to be sold in the upcoming seasonally slower first quarter than in the recently completed seasonally stronger fourth quarter. All 2012 revenues, particularly capital sales in Europe, are subject to the impacts of uncertain economic conditions. Now turning to operating income. Our 2011 operating income was 39.5% of revenue and it was 39.3% of revenue in 2010. For 2012, we would expect our operating income profile to remain fairly consistent with the past 2 years falling within a range of between 39% and 40% of revenue for the year. Consistent with prior years, we would expect our operating income as a percentage of revenue to be lower in the first quarter of 2012, reflecting system sales and procedure seasonality in combination with the more linear operating expense growth pattern. We expect our noncash stock compensation charges to increase from $136 million recorded in 2011 to approximately $144 million to $150 million in 2012. Amortization of purchased intellectual property, which is mostly recorded as R&D expense, is expected to increase from $18 million in 2011 to a range between $20 million and $24 million in 2012. Other income, which is mainly comprised of interest income was approximately $15 million in 2011. We expect other income to be approximately flat within a range of between $13 million and $15 million in 2012. With regard to income tax, in 2011, we recorded an income tax rate at approximately 30% of pretax income. Going forward, we would expect the 2012 income tax rate to remain around that rate, between a range of 29% and 31% of pretax income. We estimate that our share count for calculating EPS in Q1 2012 will be approximately 40.5 million shares. That concludes our prepared remarks. We will now open the call to your questions.

[Operator Instructions] Our first question today comes from the line of Ben Andrew representing William Blair. Ben Andrew - William Blair & Company L.L.C., Research Division: I'm curious. You had a lot of activity going with all the single-incision approval, purchase of the Korean distributor, closing on Japanese reimbursement approval and it looked like you stepped up hiring in the fourth quarter to support some of that. Talk a little bit about the strategy going direct in Korea and how material event that could be. What does your organization look like in Japan now and what it may look like? And presumably, a lot of that is already contemplated into your operating margin guidance. So is there a chance that maybe we see a bigger investment as the year goes on that could -- that would push you towards the lower end of the range that Calvin just gave us? Gary S. Guthart: A few questions embedded in there, but I'll start with Korea. Our view of Korea is that -- has a lot to do with being close to our Korean customer to help develop the next generation of procedures of general surgical procedures. We don't see it so much as being a big swing financially one way or the other but really an opportunity to be with some leading groups and be close to them, and it's something that we have contemplated for a little while and are excited to get started with. On the Japan side, most of our investment this past year have really been in regulatory and kind of back office support work getting ready to take on reimbursement and some of the other things we want to do with regard to building out that market. And we expect more of the same this year. I don't think I would forecast high or low end of the range based on that set of activities that we're going to do. I think Calvin's range that he described accurately represents where we're going to wind up. Ben Andrew - William Blair & Company L.L.C., Research Division: Okay. And then as you think about ramping single incision, obviously, that's a new approval for you guys. There's some iteration to do on the instruments and some experience to gain, perhaps. Over what time frame do you think that, that can become material to the business? Is that really a 2013 where you're talking maybe 5s or 10s of thousands of procedures? Or is that something achievable in '12 because obviously it's a large opportunity and the instrument set's early. And I know you're collecting experience in Europe. But just how do you think about that? And being a different call point, does that require a different sales force or just to get another duty for your already very busy sales organization?

Dan, it's Aleks. And I'll take a cut at it and Gary can fill in anything that I leave blank. I think as a general matter, when we think of procedure launches or product launches that are really tied to a specific procedure, we have a set of activities that is requisite, really irrespective of the specialty. And that is getting the procedure up and running with key opinion leaders, making sure that you understand the nuances of the procedure, understanding what the training pathway is going to look like, setting up your proctors, embedding it into basic sales training for your large downstream organization, making sure you've got instrument optimization and so on and so forth. Unlike a, let's say, a pharmaceutical clearance where doctors basically fill out prescription pads and you can be off and running pretty quick, it requires a lot of work. So when we think about it in terms of is it going to be a material number in 2011 or is it 2012, we're really not that focused on it. The market is going to be there if we approach it well. And so we're more interested in really doing it well in the front end and give us a couple of quarters to sort of sort through that, and we'll probably have a better answer for you in the near future. Ben Andrew - William Blair & Company L.L.C., Research Division: Okay. And just circling back, Gary, on one, that on the sales rep hiring, it does look like the headcount picked up more like the trajectory we saw several quarters ago. Was that an artifact or was that the distributor? Is that kind of more just again in support of this and we should expect to see that sustained over the course of '12?

So just in terms of the numbers, I'll fill those in and let Gary comment further. So we ended the quarter with roughly 565 clinical salespeople and 85 capital sales in the field. So what that results in was about 20 clinical adds and 5 capital for the year -- or for the quarter, sorry, which would bring our full year clinical adds to 90 and 15 on the capital side. So that's really more of a return to a pattern of hiring consistent with the system installations or the adds to the installed base that we've seen historically. You may recall in 2011 -- or 2010, we invested heavily in the field organization. In that year, we had 150 when we took it from 315 to 465. So here, we're back to a more status quo level. Gary S. Guthart: Just to add a little, there's a couple of things in here that are a little bit of timing where we tend to want to bring in sales reps on the early side for the year and get them into training, and you do see the addition of the Korean team into the groups.

And next we'll go to the line of Tycho Peterson with JPMorgan. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: I'm wondering if you could just provide a little bit more color on Europe. Your commentary there on Europe in the quarter was a little bit mixed. I'm just wondering, you brought up, I think, something like the cost control initiatives. So can you just talk a little bit more on the dynamics in the European market? Gary S. Guthart: Sure. So what we saw in the -- in the European market, what we saw was that hospitals are cautious about what they're spending. And we understand that they're given fixed budgets and that they may have run through those fixed budgets and, therefore, didn't serve all of the patients that maybe they otherwise would have. We'll see in Q1. We don't know. The market is not predictable at this point and we'll see how it pans out.

Yes. I think also, just to add, Tycho, is that when you look at the 23 systems that were sold in Europe and you're looking at the connection between procedures and system sales, really the strength of urology and namely dVP is really moving rapidly in certain markets. And you've heard us call out Germany quarter after quarter where they've had a pretty strong performance in Germany. And you're hearing a couple of new markets like Russia, and France has been pretty strong for the past few quarters. So we're pleased with the adoption of that, but it just becomes very difficult to predict which country is going to be able to close, which system and in which 90-day period. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: And then I guess maybe just shifting to new products. First of all, with the vessel sealer, can you talk about how you see the opportunity between general surgery and colorectal? And I think you've talked about lung and some other areas. And then also, are you willing to put a guess on when you'll get the Stapler out now that you filed?

As far as vessel sealer, the way we think about that, if you look at the standard toolkit for a surgeon, be it general surgery, GYN oncology, thoracic surgery and more specifically, colorectal within general, a vessel sealer capable of taking larger vessels is usually in the armamentarium. Now with da Vinci today, we have the ability -- our customers have the ability to tie off large vessels, they can clip them. We have monopolar and bipolar, which usually goes into smaller vessels. We have the Endo PK device. So we have a number of tools but what has been missing is an integrated vessel sealer. So when we again think about it and where it's going to go, we know it's used in conjunction with da Vinci procedures across the board. When I say across the board, including general surgery and GYN, oncology and other areas. So we think that the choreography of giving them the ability to fire it from the system without having to get up or having the system fire it is going to add value. Where and how and how many, again, give us a few quarters to sort that out. It is a disposal product. We plan to roll it out this quarter. We've got our clearances. We will be cautious and make sure we set up the right sites and the work through it diligently as we do it with any other large product launch. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: And then on the Stapler? Gary S. Guthart: Yes. On the stapler, we're feeling good about the product. On the other hand, trying to handicap exactly when we'll get through the clearance process we're not ready to do. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: And then just one last one, following up on that. As we think about overall R&D spend, how do you feel about R&D levels? As you come off 2011, could we start to see R&D leverage at some point going forward? Or how do we think about that? Gary S. Guthart: Yes, it's been lumpy and you saw some lumpiness in the fourth quarter. A little bit of what drove that lumpiness coming in, a little bit of acceleration in the fourth quarter were really 2 things. Some of it was just prototype timing. Those things aren't always smooth quarter-to-quarter. And a little bit of it was some of the things that we were asked to do for FDA clearances, and that brought it up a little bit. So I think it will be -- in profile it will hold about the same profile. It may be lumpy, though. It may not come in smoothly all the way through the year.

Our next question today comes from David Lewis with Morgan Stanley. Jonathan Demchick - Morgan Stanley, Research Division: This is Jon Demchick, in for David. We had a question on revenue per procedure trends. Over the last few quarters, we've seen a lot of progress with Intuitive's pipeline; adding Single-Site, the vessel sealer Firefly, suction irrigation, et cetera. These new tools have continued to help revenue per procedure stay in the mid-1,900s now moving up a little from there. As these instruments gain a little further traction, how do you expect revenue per procedure to trend? And also, do you expect to continue to introduce new products at the current rate that you have been over the past few quarters?

Yes. Jon, it's Calvin here. Yes, you correctly pointed it out. I think, as Marshall stated in our prepared comments, over a long period of time, we'd expect that the revenue per procedure would gradually trend down as the stocking order impact becomes lesser impactful on a larger installed base. But in recent quarters, as you correctly point out, some of our new product offerings, like Firefly and our 8.5-millimeter scope and our thoracic toolkit, the initial stocking of those new products has also served to kind of offset that national decline and we've kind of held it around the mid-1,900s. So now looking forward into 2012, which is your question, I guess there's forces moving it in either direction, including the timing of the stocking orders, international rate fluctuations, exchange rates, I mean, and new products, and particularly how successful we are with some of the new products that we have talked earlier, which we're just not really in a position to handicap that perfectly how much impact it will have. So really, it could go either way at this point. Jonathan Demchick - Morgan Stanley, Research Division: Okay. And then just a quick follow-up on the procedure guidance. So we were wondering if you could give any clarity to some of the assumptions behind that guidance at around 25% for year 2012 for both hysterectomies and for o U.S. prostatectomies. We were wondering if you were kind of assuming procedure growth in line above or below your total procedure guidance? Gary S. Guthart: So the major drivers of a procedure -- procedure growth next year, we still expect to be in the gynecologic area in U.S. and dVP in Europe. We haven't profiled how much we think each one of those is going to grow next year, but those assumptions of those 2 areas driving the growth are embedded in our total projection.

And also, strength in the emerging procedures that we've talked about in the general surgery or thoracic surgery and some of the other areas. So we're pretty careful about the makeup of the projected growth and we've thought through it pretty clearly.

And our next question comes from Tao Levy of Collins Stewart. Tao Levy - Collins Stewart LLC, Research Division: A question on the procedure growth rate in the fourth quarter of -- was that a -- mainly, the slowdown versus the growth rates that we saw throughout the first 3 quarters of 2011, that was mainly Europe, is that kind of correct? Gary S. Guthart: Yes, we felt pretty good about our procedure performance through the year in the U.S. We saw some pressure in Europe right at the very end of the fourth quarter and a little bit out of Asia. Different things going on there. In Europe, it looks to be more anecdotes come back, pointing more to economic pressure. In Asia, it's really getting some of the structural issues resolved in Japan and in Korea. Tao Levy - Collins Stewart LLC, Research Division: Got you. And general surgery, I think, Aleks, you made a comment that expect that to play a bigger role going forward. And can you talk a little bit more or expand a little bit more into what areas, what type of penetration you expect to get to in this segment? And at least in your prior investor presentations, general surgery was mainly made up of colorectal. I mean, you're talking a little bit more about gallbladders being -- having grown nicely in the quarter. And I was just wondering how that fits into the long-term picture.

Yes, so if you look at general surgery, there's obviously a number of ways to cut it. But I think for sake of the question, think of it in terms of G.I., gastrointestinal, made up mostly of the colon. So you've got right colon, transverse colon, you have descending, left colon, sigmoid, low anterior resections, et cetera. We have a nice emerging business there with good solid growth rates. It's off a small base, but we're hearing from customers that there is a lot of value to this procedure, a procedure that they have been doing in small numbers laparoscopically over the past 15 to 20 years. We think we can add some value there. A device, such as the vessel sealer, will be helpful to that cohort of physicians and customers. So we -- you can envision us spending more time there, more sales interactions, et cetera, whereas Single-Site is specific to lap chole. And so as we look at 2011 and compare it to, let's say, projected 2012 activity, you now have a number of exciting areas with higher value offerings to your customer. And so we're going to refrain from trying to give guidance in terms of what we think our penetration will be or by when because we're really focused on doing the right things at the front end to seed this market. The market isn't going anywhere. We will do it right. And so as we get a few more quarters into it, perhaps at that point, we can elaborate more deeply. Tao Levy - Collins Stewart LLC, Research Division: Okay. If I could just sneak one more in. Japan reimbursement, Gary, I think you mentioned that you may continue to make progress over there. So is it fair to say that you have not gotten reimbursement for prostate in Japan yet? Gary S. Guthart: So we're in conversation, but we have not had a definitive conversation at this time.

Our next question comes from Lennox Ketner with Bank of America. Lennox Ketner - BofA Merrill Lynch, Research Division: One, just if we could just return to Europe quickly. I was wondering if you can maybe characterize kind of what you saw throughout the quarter. The weakness that you're talking about, did that just manifest towards the very end of the quarter? Or was that kind of consistent throughout the quarter? Gary S. Guthart: Thought it increased through quarter is the right way to view it. I think though, it's not a deep, deep analysis. But anecdotally, you saw some increased pressure as the quarter wore on. Lennox Ketner - BofA Merrill Lynch, Research Division: Okay. And then on the Single-Site launch, is it possible -- I know Aleks was talking about kind of all of the work that's involved in the early stages of the launch and then will be fairly gradual. But is there any way to kind of just qualitatively compare it to the European launch? I know you're in kind of 10 to 15 sites in Europe in the first year. How should we think about the U.S. launch? Can you -- do you feel like you can be in twice as many sites? How -- if there's any way to kind of compare it to the European launch in terms of the scope, that would be helpful.

I think, structurally, when I say structurally, we'll go through the same process of picking the right centers. But I don't think you should think of it being materially larger or materially smaller than the initial launch that we had outside the United States. So it is something that will be carefully scripted in making sure we have the right centers. And obviously, our sales and marketing people have a list of people that they are working with now, and we'll keep it in that domain and eventually add more centers. And as we have more learning, roll it out fully at some point. Lennox Ketner - BofA Merrill Lynch, Research Division: Okay. And then I apologize if you answered this earlier, but are you guys planning to hire additional sales people for that product or to have the sales people specialize there? Or will it just be sold by your general sales force? Gary S. Guthart: We have a small team who will help focus on Single-Site as it comes out and as it goes in the early phases, they'll be focused on that effort. As it gets a little bit broader, then it will work down into the rest of the organization.

And we have a question from Rick Wise representing Leerink Swann. Frederick A. Wise - Leerink Swann LLC, Research Division: Let me come back to Korea. First, a broader question. Are there other international distributors to convert, one? And, two, I mean, I know that Korea has been a hotbed of a robotic activity, can you give us any flavor for how big it is relative to international sales or total sales? And where I'm going is -- and it would seem to me that as you convert from a distributor to direct that you'd realize higher ASPs, which all things equal should be helpful to a system pricing, all things equal, in 2012.

First of all, Rick, as far as the -- kind of scoping it for you, Korea, I believe, through the end of the year has 36 da Vinci placements. And if you look at the things that are being done within the busy Korean centers, you'll see things like a lot of thyroid work, colorectal work, certainly urologic work. And some pretty advanced efforts into things like gastric and other G.I. cancers. Now as far as the overall procedures, we haven't broken out any individual country by procedure numbers. But you could -- you can envision it, I think, fairly accurately by thinking of a 36-system market that has a lot of activity going on. As far as other distributors, to my knowledge, and perhaps Marshall or Calvin can correct me if I'm wrong, the only other one that I'm aware of that we took from distributor to direct in recent memory has been the U.K. And so we've done it before. And Gary gave the reasons why Korea is an interesting market for us. Gary S. Guthart: And that was a few years ago. Basically, we monitor the performance of all the distributors and make decisions as we go and so... Frederick A. Wise - Leerink Swann LLC, Research Division: So there could be others in the future. Turning to gross margins, did I miss it? Or did you not give a specific gross margin for cash for 2012? Any reason to assume anything other than the sort of stable performance we have seen?

Yes. So the guidance on this, we kind of truncated the gross margin and the operating expenses to come to an overall operating profit. That again, we guided to something relatively flat on a profile basis between 39% and 40% there. Splitting it out, roughly flat is probably reasonable. If it goes one way or another, we'd probably see maybe a little more downward pressure on the gross margins as we're introducing some of the new products and maybe a slight bit of leverage on the operating expenses. But again, focusing on the operating income, we're signaling pretty flat. Frederick A. Wise - Leerink Swann LLC, Research Division: Yes, and then 2 last ones. Just back to Japan reimbursement, I'm not sure what this means, but I've read something that says that the government has certified the da Vinci system is "highly advanced medical technology" for prostate cancer operations, allowing patients to use health insurance. Can you just -- any color around that, what's that about? Gary S. Guthart: I haven't seen the specific publication that you're talking about, so I really can't comment it on the call. Frederick A. Wise - Leerink Swann LLC, Research Division: Okay. And just a last quick one, if I could. And just sort of a fishing expedition, somebody asked me a question about patents. And last time we met, Marshall or maybe it was Gary, you said you have 1,000 patents or so now, 1,000 in the pipeline and just big numbers. Are there any key expirations that we should be sensitive to coming up in the next 12 to 24 months? Gary S. Guthart: On the patent side, it's a sliding window. So as things mature, some things will fall off and other things get added. It's not huge numbers that falloff at any one time. And so as you go through kind of a detailed analysis, some will start coming off in future years as you'd expect. And we feel like the kinds of things that we're innovating on, and are obtaining patent coverage for either through organic work or through end licensing, will be important for our products and important to our customers.

Our final question today then will come from the line of Spencer Nam with Think Equity. Spencer Nam - ThinkEquity LLC, Research Division: Just couple of quick questions. On the multisystem, the places, locations, if you will. Last quarter, you had provided some color on that. Could you give us a little more color on what the current multisystem location numbers would be?

Yes. Spencer, I believe it's -- and Calvin can correct me. I think it's 306 at the end of this quarter. And now we have a hospital. I think the Mayo Clinic in Rochester is now up to 7 systems. So that would be the highest in any one hospital. And again, then there's a smattering of few hospitals with 6 and 5 and 4 all the way down to those.

For our total installed base of 2,132, they're spread across 1,718 sites. Spencer Nam - ThinkEquity LLC, Research Division: That's helpful. And then the -- in terms of these trade-ins with standards and Ss, how many of those are left out there? Can you guys -- do you guys have an estimate on that?

Yes. So on the standard side, we've got roughly 225 still remaining out in the field, of which about 100 are in the U.S. then on... Spencer Nam - ThinkEquity LLC, Research Division: And then final question is, in terms of the customers who are picking up systems now, are they still focusing on prostatectomy and hysterectomy for the initial purchase, if you will? Or is it more broad nowadays that you guys have focused on a broad number of procedures out there?

I think the answer is both or all of what you described. You can imagine if you do not own a single da Vinci system today that there is going to be support from a urologic group that has by -- by any count had some loss of patient volume. And GYN is growing at a pretty rapid rate. You are now starting to see other specialties or I should say you've been seeing other specialties, perhaps thoracic or general surgery to colorectal. Now with Single-Site, it will be interesting to see how some of those physicians weigh into the decision. But it is -- should be and has been considered a multi-specialty initiative, and that's the way our salespeople approach it. Gary S. Guthart: That was our last question. As we've discussed with you over the years, while we spend our time on these calls reviewing our financial performance, our team remains sharply focused on the creation of patient value, improving the efficacy of surgery while reducing its invasiveness. I'd like to share with you a brief example of what this means in the lives of our patients. I'd like to share with you Cleave's story. "I'm 51 years old. I was hurting in my lower stomach for a few months. I started passing a little blood, so my family said it was time to go to the doctor. So I went to see my regular doctor. And he said, "You're 50, it's time to get a colonoscopy." So December 19, I had my colonoscopy. He told me there was a mass, and I wasn't sure you know that lingo, and he said it will be cancer. So the ball started rolling. Immediately, they referred me to an oncologist. We went in and we met with him, and he said he would be cutting me from the breastbone down and then over and then open me up. There would be 2 surgeons, 4 hands inside working. He said I would lose several pints of blood and that they may dislocate my pelvic bones. And when he started talking like this, I'm like, this doesn't sound right, this is too much. I've got too many years left, I don't like the odds. Meanwhile, my daughter was doing research. We were like, well, we see this da Vinci thing. We looked at the videos on the Internet, and we were like let's go talk to this guy. So we went to Dr. Hoss' [ph] office and he said, "Yes, we can do this." I said, "About how much blood are we talking about losing here?" He said, "Blood's not an issue." He said, "You're a young guy. I'm going to do everything I can." So I came out of it. He took 12 to 13 inches of bowel out and put everything back together. My healing, as far as the procedure itself, my incisions and stuff, they healed up well. I've seen some people who've been cut, they get infections. And this was a scary thing for me, too, because I have a lot of years left. I've got a lot of stuff to do. And I think I've made a good decision." Patients like these are the strongest advocates for da Vinci Surgery and form the very foundation of our operating performance. We have built our company to take surgery beyond the limits of the human hand, and I assure you that we remain committed to driving a vital few things that truly make a difference. This concludes today's call. We thank you for your participation and support on this extraordinary journey to improve surgery, and we look forward to talking with you again in 3 months.

Ladies and gentlemen, that does conclude our conference for today. We thank you for your participation and for using the AT&T Executive Teleconference. You may now disconnect.