1. Intuitive Surgical $ by Darrin Scilley

6. Sector Components Managed Care Facilities Biotechnology Pharmaceuticals Healthcare Products and Supplies

7. Sector Analysis Facilities  eliminated – Decreasing revenues + Increasing costs Pharmaceuticals  eliminated – Slowing growth Biotech  possible – High growth, but FDA/legal hurdles Managed Care  possible –Rising GDP = rising costs –Possible Medicare/Medicaid penetration Medical Products and Supplies  likely –High growth, recession resistant

8. Selection Process Debt Maturity Leverage Multiples Historical Growth P/E 2008 Growth Intuitive Surgical21.3845.83% Bard21.0112.36% St. Jude Medical33.6815.45% Medtronic16.589.89% Stryker Corp15.1711.97% Baxter International18.589.59% Varian Medical Systems17.1917.89% Becton, Dickinson and Co.15.9212.52%

9. Multiples  Forward Mutliples P/EBITDAEV/EBITDA1 yr CAGR2 yr CAGR5 yr CAGR 2009 EV/EBITDA 2010 EV/EBITDA 2013 EV/EBITDA Intuitive Surgical (ISRG)12.049.3515.00%25.00%21.00%8.136.51 3.61 Johnson and Johnson (JNJ)7.457.40-1.10%8.70%8.25%7.486.89 4.98 St. Jude Medical (STJ)14.4414.559.10%13.50%13.10%13.3411.75 7.86 Medtronic (MDT)7.167.6812.70%9.60%11.35%6.826.22 4.49 Stryker (SYK)6.815.719.50%12.80%14.20%5.214.62 2.94 Baxter (BAX)9.9410.4610.70%13.40%12.48%11.588.33 5.81 Pfizer (PFE)6.315.10-16.00%12.00%0.75%4.285.42 4.91

10. Expected Return Earnings Price Per Share Dividend/ ShareRepurchase Forward SharesP/E End P/E Yearly Decay Forward P/E 2009 CAGRExpected Return Intuitive Surgical (ISRG)204,315$103.030.00300,00036,33819.7915.08-0.9418.8515.00% 18.30% Johnson and Johnson (JNJ)12,949,000$50.641.802,000,0002,730,50610.8315.080.8511.68-1.10% 11.74% St. Jude Medical (STJ)353,020$36.670.000346,15035.9615.08-4.1831.789.10% -3.57% Medtronic (MDT)2,169,000$28.580.5301,102,00014.7615.080.0614.8212.70% 16.90% Stryker (SYK)1,147,000$33.810.50600,000378,78411.6915.080.6812.379.50% 22.76% Baxter (BAX)2,014,000$51.161.251,200,000590,39415.5915.08-0.1015.4910.70% 16.78% Pfizer (PFE)8,026,000$14.541.285,000,0006,406,12112.2315.080.5712.80-16.00% 1.44%

11. Who is ISRG?

12. 205,000 procedures in 2009 – Up 51% from 2008 Revenue $1,050M, up 20% from 2008 Operating Profit $377M, up 21% from 2008 71% Gross Margin, 36% Operating Margin $1,171M Cash – 25% Mkt Cap  9% Mkt Cap

16. ISRG’s Fit in Healthcare Healthcare Keys to Success – New/existing product innovation – International expansion – Form strategic alliances – Lower managed care costs – Improve patients’ lives How ISRG fits – Pioneers of RAS/MIS – See international map – Numerous acquisitions/partnerships – ROI 20%-30%+ – 3-4 year payback period – Inpatient  Outpatient conversion – Decreased length of stay – Decreased nursing/staffing – Decreased blood loss/complications – Improved patient satisfaction

17. Risk Factors Competition Economic/political environment Continued market acceptance Malfunctions Single Source Suppliers

18. Valuation Key 1: Revenue

19. Procedures

20. Adoption Curve

21. International Adoption

22. Revenue Split

23. Key Driver 2: Market Share

24. Scenario Analysis