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Item 7.01.
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Regulation FD Disclosure.
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On April 27, 2020, the Company issued a press release announcing the election of Mr. Beery at the Annual Meeting, which press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On April 28, 2020, the Company issued a press release outlining its efforts to support customers, employees, and communities during the COVID-19 pandemic, including announcing a Customer Relief Program (the “Program”), which press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The Program provides, among other things, service credits and warranty extensions to customers who have deferred da Vinci procedures in order to provide care to COVID-19 patients as well as extended payment terms to certain customers. The amounts of service credits and warranty extensions will be based on the decline in a customer's da Vinci procedure volume during the second and third quarters of 2020 and will vary by region and hospital. While the maximum value of service credits and warranty extensions that the Company will issue under the Program is $205 million, the Company estimates that the value of the service credits and warranty extensions that will be issued will be in the range of $90 million to $130 million. The value of the service credits and warranty extensions will reduce service revenue and pre-tax income equally in the periods that they are derived. The Company anticipates that the majority of the $90 million to $130 million will be issued in the second quarter of 2020, which the Company expects will result in an after-tax net loss for the Company in the second quarter of 2020. In addition, to the extent that the Company provides extended payment terms to customers under the Program, the Company's accounts receivable could increase and its cash flows could decrease materially.
This Current Report on Form 8-K contains forward-looking statements. For example, statements using words such as “estimates,” “projects,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “may,” “will,” “could,” “should,” or similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by such statements. They should, therefore, be considered in light of various important factors, including, but not limited to, the following: our ability to obtain accurate procedure volume in the midst of the COVID-19 pandemic, the risk that the COVID-19 pandemic could lead to material delays and cancellations of procedures and our actual costs of the Customer Relief Program may be higher than estimated, curtailed or delayed capital spending by hospitals and disruption to our supply chain, closures of our facilities, delays in surgeon training, delays in gathering clinical evidence, diversion of management and other resources to respond to the COVID-19 outbreak; the evaluation of the risks of robotic-assisted surgery in the presence of infectious diseases, the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 virus disrupts local economies and causes economies to enter prolonged recessions and other risk factors under the heading “Risk Factors” in our report on Form 10-K for the year ended December 31, 2019, as updated by our other filings with the Securities and Exchange Commission.
The information in this Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit Number
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Description
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3.1
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3.2
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10.1
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99.1
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99.2
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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