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<CONFORMED-NAME>INTUITIVE SURGICAL INC
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<STREET1>950 KIFER ROAD
<CITY>SUNNYVALE
<STATE>CA
<ZIP>94086
<PHONE>4085232100
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<DESCRIPTION>DEFINITIVE ADDITIONAL MATERIAL
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<DIV align="center">
 <IMG src="f88817daf8881702.gif" alt="(INTUITIVE SURGICAL LOGO)">
</DIV>

<P align="left">
<FONT size="2">Dear Shareholders, Customers and Employees:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s mission is to <I>take
surgical precision and technique beyond the limits of the human
hand</I><SUP>TM</SUP>. The da&nbsp;Vinci&#174; Surgical System
enables surgeons to perform even the most complex of surgical
procedures through tiny incisions. It improves surgical
dexterity, vision and precision. It improves outcomes and helps
good surgeons become great surgeons. Patients suffer less pain
and disfigurement, experience fewer complications, spend less
time in the hospital, and return more quickly to their family,
friends, and daily activities. Hospitals attract additional
revenue from incremental patients seeking the benefits of
minimally invasive surgery, and enjoy lower operating costs when
their patients have fewer complications and spend less time in
the hospital. With the <B><I>da&nbsp;Vinci </I></B>Surgical
System, surgeons win, hospitals win and most importantly
patients win.
</FONT>

<P align="left">
<B><FONT size="2">Complex Surgical Procedures Performed Through
Tiny Incisions:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The <B><I>da&nbsp;Vinci </I></B>Surgical System
allows surgeons to perform complex surgical procedures, such as
radical prostectomy, coronary bypass, and cardiac mitral valve
repair, through very small incisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While the <B><I>da&nbsp;Vinci </I></B>Surgical
System had previously been cleared by the Food and Drug
Administration for general laparoscopic (abdominal),
thoracoscopic (chest ) and prostatectomy surgery, its first
cardiac clearance was received in 2002 for minimally invasive
mitral valve repair. This clearance for intra-cardiac surgery is
the first cardiac clearance by the FDA for any operative robotic
system. Dr.&nbsp;W.&nbsp;Randolph Chitwood, Jr., Professor and
Chairman of the Department of Surgery at Brody School of
Medicine at East Carolina University in North Carolina, and
Principal Investigator in our multi-center trial, commented:
&#147;For the first time, we will be able to offer to a wider
range of patients a minimally invasive intra-cardiac procedure
to repair the mitral valve.&#148; He said, &#147;This news from
the FDA will allow more patients to enjoy the benefits of high
precision minimally invasive robotic surgery. These benefits
include less pain and trauma, shorter hospital stays, quicker
recovery and a better cosmetic result.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2003, we added totally endoscopic
Atrial Septal Defect (ASD) closure to our intra-cardiac
clearance. Hospitals can now use the <B><I>da&nbsp;Vinci</I></B>
Surgical System to minimally invasively close a hole between the
chambers of a patient&#146;s heart. Dr.&nbsp;Michael Argenziano,
Assistant Professor of Surgery at the Columbia University, and
Director of Minimally Invasive and Robotic Cardiac Surgery at
New York-Presbyterian Hospital, presented his interim results at
the Scientific Session of the American Heart Association Meeting
in November. Dr.&nbsp;Argenziano reported that the
<B><I>da&nbsp;Vinci </I></B>Surgical System can be utilized to
perform open heart procedures safely and effectively via a
closed chest approach. Furthermore, his outcomes suggest that
patients undergoing ASD closure with the <B><I>da Vinci</I></B>
System have a superior postoperative quality of life than those
undergoing other surgical approaches. Thus, this technique
represents an option for patients seeking a reliable ASD closure
without a sternotomy or thoracotomy and the uncertainty of
transcatheter techniques. These clearances bring the clinical
benefits of the <B><I>da&nbsp;Vinci </I></B>Surgical System to
cardiac surgery in the United States. These are the type of
procedures that maximize the value the <B><I>da&nbsp;Vinci
</I></B>Surgical System delivers to patients, surgeons, and
hospitals.
</FONT>

<P align="left">
<B><FONT size="2">Good Surgeons to Great Surgeons:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Surgical performance is measured by the outcome
for the patient. Dr.&nbsp;Mani Menon, Chief of Urology at the
Henry Ford Hospital and the Vattikuti Institute, recently
presented data that compares the results of his last 100 open
prostatectomies using conventional instruments with his first
200 prostatectomies performed through tiny incisions using the
<B><I>da&nbsp;Vinci </I></B>Surgical System.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These are his results:
</FONT>
<P>

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    <FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cancer Removal
    </B>measured by Negative Margins improved from an average of 76%
    with open surgery to 94% with the <B><I>da&nbsp;Vinci
    </I></B>Surgical System.
    </FONT></TD>
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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Continence
    </B>at 6&nbsp;months post operation measured by the lack of need
    for any kind of absorbent pads improved from an average of 60%
    with open surgery to 96% with the <B><I>da&nbsp;Vinci
    </I></B>Surgical System.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Potency </B>at
    6&nbsp;months post operation measured by the ability to have
    sexual intercourse doubled from an average of 33% with open
    surgery to 66% with the <B><I>da&nbsp;Vinci </I></B>Surgical
    System.
    </FONT></TD>
</TR>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Safety
    </B>measured by those patients with &#147;no complications&#148;
    improved from 85% with open surgery to 98% with the
    <B><I>da&nbsp;Vinci </I></B>Surgical System.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Pain
    </B>measured on a scale of 1-10 improved from &#147;7&#148; with
    open surgery to &#147;3&#148; with the <B><I>da&nbsp;Vinci
    </I></B>Surgical System.
    </FONT></TD>
</TR>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Blood Loss
    </B>measured by the need for a blood transfusion improved from
    11% with open surgery to zero with the <B><I>da&nbsp;Vinci
    </I></B>Surgical System.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dr. Menon also compared his first 200
prostatectomies using the <B><I>da&nbsp;Vinci</I></B> Surgical
System with the &#147;best in class&#148; from published data in
each category. In other words, he compared his minimally
invasive results using the <B><I>da&nbsp;Vinci </I></B>Surgical
System with the open results of a &#147;Dream Team&#148; of the
best urologists in the world. His results with the
<B><I>da&nbsp;Vinci </I></B>Surgical System were as good or
better than the best published clinical result in every category.
</FONT>

<P align="left">
<B><FONT size="2">Benefit to the Hospital:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The bottom line with the <B><I>da&nbsp;Vinci
</I></B>Surgical System, for Dr.&nbsp;Menon and the Henry Ford
Hospital System is: (1)&nbsp;better outcomes for their patients;
(2)&nbsp;dramatic growth in the number of prostatectomy
patients; and (3)&nbsp;significant reduction in the number of
surgical complications and length of hospital stay (93% of
patients are discharged in less than 24&nbsp;hours).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Patients at medical centers performing cardiac
surgery with the <B><I>da&nbsp;Vinci</I></B> Surgical System are
enjoying similar benefits. Dr.&nbsp;Pat&nbsp;S. Pappas&#146;
mitral valve patients at Christ Advocate Hospital in Chicago
typically return home within 30&nbsp;hours post operation to the
comfort of their home, family and friends. Coronary artery
bypass patients at Odessa Regional Medical Center in Texas,
where Dr.&nbsp;Sudhir Srivastava is performing the first totally
endoscopic beating heart coronary artery bypass procedures in
the United States under a physician sponsored FDA
Investigational Device Exemption, are typically released from
the hospital just 24 hours post operation with excellent results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In complex surgical procedures such as these,
where the <B><I>da&nbsp;Vinci </I></B>Surgical System enables
the surgeon to perform them through very small incisions, the
system delivers incremental revenue to hospitals and surgeons
through incremental patients. At the same time, it reduces costs
by reducing patient complication rates and length of hospital
stay. And very importantly, the shorter length of hospital stay
accelerates patient throughput and thereby adds valuable
capacity to the hospital without the increased capital and
staffing costs associated with additional hospital beds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This combination of increased revenue, reduced
operating costs, increased capacity, and incremental profit
contribution provide a very attractive value proposition to
smaller community hospitals as well as large academic medical
centers.
</FONT>

<P align="left">
<B><FONT size="2">Benefit to the Patient:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The value to the patient is obvious and far
reaching: fewer surgical complications, reduced risk of
infection, reduced blood loss and need of transfusion, less
post-operative pain, reduced scarring and better cosmesis,
shorter hospital stay, faster recovery and return to family,
friends and normal daily activities.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These patients are our mothers and fathers, our
brothers and sisters, our children and our friends. Marsha
Campbell writes to Dr.&nbsp;Douglas Murphy after her minimally
invasive atrial septal defect repair surgery performed using the
<B><I>da Vinci </I></B>Surgical System at St. Joseph&#146;s
Hospital in Atlanta, Georgia:
</FONT>
<P>

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    <TD align="left">
    <I><FONT size="2">&#147;Dear Dr.&nbsp;Murphy, <BR>
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Here
    it is a month after my surgery. Everyone I&#146;ve encountered
    has been amazed at my remarkable recovery. I&#146;m back at
    yoga&nbsp;&#38; dance. I feel great! I&#146;m honored to be one
    of the first to experience this miraculous treatment. With the
    robotic procedure, you gave me the gift of time, quicker
    healing, longer life. It&#146;s thrilling when technology,
    education and capable healing hands, like yours, come together
    to help so many people.&#148;</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Accomplishments:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are building the foundation of a large and
high growth business on the benefits our products bring to
patients, surgeons, and hospitals. We shipped 60
<B><I>da&nbsp;Vinci </I></B>Surgical Systems during the year and
ended 2002 with 149 systems installed in medical centers
throughout the world. We more than doubled surgical procedures
compared to 2001. We grew revenue to $72&nbsp;million, up
$20.3&nbsp;million, or 39% compared to 2001. Total 2002
recurring revenue reached $15.1&nbsp;million, up
$8.1&nbsp;million or 116%, from 2001. Gross margin improved to
52.0% from 45.4% in 2001 and we ended the year with
$50.8&nbsp;million in cash.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We logged a significant number of cases during
the fourth quarter in our ongoing stopped heart coronary artery
bypass trial. Results are positive and we continue to expect FDA
clearance for this procedure by late 2003 or early 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to advance the adoption of surgical
robotics through clinical and technical innovation. In 2003, we
expect to introduce many product enhancements, including a
fourth arm that significantly enhances the clinical capability
of the <B><I>da&nbsp;Vinci </I></B>Surgical System, a new suite
of 5mm&nbsp;surgical instruments employing a new wrist
architecture and a new&nbsp;3 channel&nbsp;3-D endoscope
developed by Olympus that allows the surgeon to move
instantaneously from a highly magnified field of view for very
precise surgery to a wide field of view for orientation within
the operating field. This new endoscope also allows the surgical
staff to move between a magnified and wide field of view
independent of the mode employed by the operating surgeon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The attached Form 10-K/A describes our intended
merger with Computer Motion to create a single company that
combines complementary technologies in networking, articulation,
control and visualization to better serve the robotic needs of
the surgical community. If completed, this merger will combine
our intellectual property and end a series of patent disputes
between our companies. It will allow us to focus the talent and
energy of our combined organization on developing and growing
the application of robotics in minimally invasive surgery and
the significant clinical benefits it brings to patients,
surgeons, and medical centers throughout the world.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are dedicated to fully achieving the operating
efficiencies that this combination can deliver to the bottom
line. We believe significant synergies, including an estimated
$18&nbsp;million in pre-tax annual cost savings, will be
realized as we combine our companies and eliminate redundancies.
We are committed to achieving sustainable profitability by the
end of 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also face significant challenges, including a
seamless and rapid integration of the two companies, the
continued application of robotics in minimally invasive surgery,
and aggressive management of our fixed costs and expenses as we
drive to profitability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As I stated in my letter last year, we are
committed to building a highly profitable company that delivers
creative solutions and exceptional value to our customers, uses
processes that emphasize speed and minimize non-value added
activities, focuses on the &#147;Vital Few&#148; core activities
that differentiate our products and our company from all others,
and creates great opportunities for our people and wealth for
our shareholders. We strive for progress daily and significant
progress weekly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We measure ourselves by our accomplishments.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="f88817daf8881703.gif" alt="-s- Lonnie Smith"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Lonnie Smith
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">President &#38; CEO</FONT></I></TD>
</TR>

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