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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number 000-30713 
Intuitive Surgical, Inc.
(Exact name of Registrant as specified in its Charter)

Delaware 77-0416458
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
1020 Kifer Road
Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
(408) 523-2100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareISRGThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer¨
Non-accelerated filer¨Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
The Registrant had 117,025,880 shares of Common Stock, $0.001 par value per share, outstanding as of July 20, 2020.



INTUITIVE SURGICAL, INC.
TABLE OF CONTENTS


  Page No.
PART I. FINANCIAL INFORMATION
PART II. OTHER INFORMATION

2

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTUITIVE SURGICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

in millions (except par values)June 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$2,035.6  $1,167.6  
Short-term investments2,452.7  2,054.1  
Accounts receivable, net508.8  645.2  
Inventory645.5  595.5  
Prepaids and other current assets256.4  200.2  
Total current assets5,899.0  4,662.6  
Property, plant, and equipment, net1,450.3  1,272.9  
Long-term investments1,586.5  2,623.5  
Deferred tax assets365.5  425.6  
Intangible and other assets, net465.5  441.4  
Goodwill336.8  307.2  
Total assets$10,103.6  $9,733.2  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$108.9  $123.5  
Accrued compensation and employee benefits168.7  251.6  
Deferred revenue343.1  337.8  
Other accrued liabilities304.1  317.3  
Total current liabilities924.8  1,030.2  
Other long-term liabilities412.4  418.3  
Total liabilities1,337.2  1,448.5  
Contingencies (Note 8)
Stockholders’ equity:
Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of June 30, 2020, and December 31, 2019
    
Common stock, 300.0 shares authorized, $0.001 par value, 117.0 shares and 116.0 shares issued and outstanding as of June 30, 2020, and December 31, 2019, respectively
0.1  0.1  
Additional paid-in capital6,085.1  5,756.8  
Retained earnings2,633.0  2,494.5  
Accumulated other comprehensive income22.3  12.4  
Total Intuitive Surgical, Inc. stockholders’ equity8,740.5  8,263.8  
Noncontrolling interest in joint venture25.9  20.9  
Total stockholders’ equity8,766.4  8,284.7  
Total liabilities and stockholders’ equity$10,103.6  $9,733.2  
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
3

INTUITIVE SURGICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

Three Months Ended June 30,Six Months Ended June 30,
in millions (except per share amounts)2020201920202019
Revenue:
Product$721.8  $922.3  $1,622.6  $1,722.1  
Service130.3  176.6  329.0  350.5  
Total revenue852.1  1,098.9  1,951.6  2,072.6  
Cost of revenue:
Product283.8  283.4  580.5  529.8  
Service65.4  56.5  130.0  114.2  
Total cost of revenue349.2  339.9  710.5  644.0  
Gross profit502.9  759.0  1,241.1  1,428.6  
Operating expenses:
Selling, general and administrative279.1  279.2  587.2  552.6  
Research and development143.2  120.8  290.3  264.8  
Total operating expenses422.3  400.0  877.5  817.4  
Income from operations80.6  359.0  363.6  611.2  
Interest and other income, net26.6  32.8  51.7  60.3  
Income before taxes107.2  391.8  415.3  671.5  
Income tax expense37.0  75.4  28.9  51.1  
Net income70.2  316.4  386.4  620.4  
Less: net income (loss) attributable to noncontrolling interest in joint venture2.2  (1.9) 4.9  (4.4) 
Net income attributable to Intuitive Surgical, Inc.$68.0  $318.3  $381.5  $624.8  
Net income per share attributable to Intuitive Surgical, Inc.:
Basic$0.58  $2.76  $3.27  $5.42  
Diluted$0.57  $2.67  $3.19  $5.23  
Shares used in computing net income per share attributable to Intuitive Surgical, Inc.:
Basic116.8  115.4  116.6  115.2  
Diluted119.7  119.3  119.7  119.4  
Total comprehensive income attributable to Intuitive Surgical, Inc.$81.4  $335.1  $391.4  $654.2  
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
4

INTUITIVE SURGICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Six Months Ended June 30,
in millions 20202019
Operating activities:
Net income$386.4  $620.4  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and loss on disposal of property, plant, and equipment102.5  67.8  
Amortization of intangible assets24.7  20.5  
Gain on investments, accretion, and amortization, net(2.4) (1.6) 
Deferred income taxes52.5  52.7  
Share-based compensation expense186.5  157.7  
Amortization of contract acquisition assets8.2  5.9  
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable136.9  48.9  
Inventory(120.1) (178.0) 
Prepaids and other assets(95.5) (89.2) 
Accounts payable(3.6) 21.7  
Accrued compensation and employee benefits(83.0) (33.3) 
Deferred revenue4.1  8.7  
Other liabilities(14.5) (53.0) 
Net cash provided by operating activities582.7  649.2  
Investing activities:
Purchase of investments(1,426.8) (1,815.9) 
Proceeds from sales of investments800.7  61.1  
Proceeds from maturities of investments1,298.6  1,418.9  
Purchase of property, plant, and equipment and intellectual property(215.2) (196.9) 
Acquisition of businesses, net of cash(37.7) 1.2  
Net cash provided by (used in) investing activities419.6  (531.6) 
Financing activities:
Proceeds from issuance of common stock relating to employee stock plans154.0  119.6  
Taxes paid related to net share settlement of equity awards(155.1) (145.0) 
Repurchase of common stock(100.0) (200.0) 
Capital contribution from noncontrolling interest  10.0  
Payment of deferred purchase consideration(30.0) (5.0) 
Net cash used in financing activities(131.1) (220.4) 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(1.6) (1.3) 
Net increase (decrease) in cash, cash equivalents, and restricted cash869.6  (104.1) 
Cash, cash equivalents, and restricted cash, beginning of period1,182.6  909.4  
Cash, cash equivalents, and restricted cash, end of period$2,052.2  $805.3  
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

5

INTUITIVE SURGICAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In this report, “Intuitive Surgical,” “Intuitive,” the “Company,” “we,” “us,” and “our” refer to Intuitive Surgical, Inc. and its wholly and majority-owned subsidiaries.
NOTE 1. DESCRIPTION OF THE BUSINESS
Intuitive Surgical, Inc. (“Intuitive” or the “Company”) develops, manufactures, and markets the da Vinci® Surgical System and the IonTM endoluminal system. The Company’s products and related services enable physicians and healthcare providers to improve the quality of and access to minimally invasive care. The da Vinci Surgical System consists of a surgeon console or consoles, a patient-side cart, a high-performance vision system, and proprietary instruments and accessories. The Ion endoluminal system is a flexible, robotic-assisted, catheter-based platform that utilizes instruments and accessories for lung biopsies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of Intuitive Surgical, Inc. and its wholly and majority-owned subsidiaries have been prepared on a consistent basis with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2019, and include all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state the information set forth herein. The Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, omit certain information and footnote disclosure necessary to present the Financial Statements in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”). These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 7, 2020. The results of operations for the first six months of fiscal year 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods.
The Financial Statements include the results and the balances of the Company’s majority-owned joint venture (referred to herein as the “Joint Venture”) with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”). The Company holds a controlling financial interest in the Joint Venture, and the noncontrolling interest is reflected as a separate component of consolidated stockholders’ equity. The noncontrolling interest’s share of the earnings in the Joint Venture is presented separately in the condensed consolidated statements of income.
Risks and Uncertainties
The Company is subject to additional risks and uncertainties due to the COVID-19 pandemic. The extent of the impact on the Company's business is highly uncertain and difficult to predict, as the response to the pandemic is in its early stages with no vaccine or new effective treatments available as of the date of this filing. The Company's customers are diverting resources to treat COVID-19 patients and deferring elective surgical procedures, both of which are likely to impact the Company's customers' ability to meet their obligations, including to the Company. Furthermore, capital markets and economies worldwide have been negatively impacted by the COVID-19 pandemic, and it is possible that the impact could cause an extended local and/or global economic recession. Such economic disruption could have a material adverse effect on our business as hospitals curtail and reduce capital and overall spending. Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. However, the magnitude and overall effectiveness of these actions remains uncertain.
The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivables, supply chain disruptions, uncertain or reduced demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers. As of the date of issuance of these Financial Statements, the extent to which the COVID-19 pandemic may materially adversely affect the Company's financial condition, liquidity, or results of operations is uncertain.
6

Customer Relief Program
During the second quarter of 2020, the Company introduced a series of programs to provide financial relief to customers (the “Customer Relief Program”). As part of the Customer Relief Program, the Company is providing its customers service fee credits, extending payment terms, and deferring payments related to Intuitive System Leasing arrangements.
Service fee credits. As part of the Customer Relief Program, the Company is providing service fee credits to customers that vary based on the reduction in the utilization of their systems relative to a pre-COVID-19 level baseline. The service fee credit will not exceed an amount equal to three months' worth of service fees per da Vinci/Ion system and have been and will be provided to customers in the second and third quarters of 2020. The Company reflects the service fee credits as a reduction of service revenue and accounts receivable in the quarter they are earned by its customers. The service fee credit program resulted in a $59 million decrease in service revenue in the second quarter of 2020.
Short-term payment relief. In response to the COVID-19 pandemic, the Company has introduced a payment deferral program to provide financial relief to qualified customers. This relief extended payment terms up to 180 days for qualified and creditworthy customers.
The Company also introduced a lease payment deferral program in which creditworthy customers with active Intuitive System Leasing arrangements may elect to defer lease payments up to five months that are payable at the end of the lease by extending the lease term by five months. This program does not result in substantial increases in the rights of the lessor or the obligations of the lessee, and the Company elected to apply the relief provided by the Financial Accounting Standards Board (“FASB”) FAQ on accounting for COVID-19 and market volatility by not applying the lease modification guidance in ASC 842 to the lease arrangements affected by the deferrals and lease extensions.
For operating lease arrangements where the lease term is extended by adding the deferred period to the end of the contract, the Company recalculated the straight-line revenue based on the revised terms, consistent with the treatment accepted by the FASB FAQ on accounting for COVID-19. For its sales-type lease arrangements impacted, the Company accounted for the deferral in the timing of lease payments as if there were no changes in the lease contract, consistent with the treatment accepted by the FASB FAQ on accounting for COVID-19. While the short-term payment relief offered did not have a material impact on the results of operations, the Company deferred $10 million of lease billings and extended payment terms associated with $65 million of trade receivables since the start of the program, of which $37 million would otherwise have been due in the second quarter of 2020.
Recently Adopted Accounting Pronouncements
Credit Losses
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) (“Topic 326”), which replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. The Company adopted Topic 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, was not material. Please see the description of the Company’s “Credit Losses” accounting policy in the “Significant Accounting Policies” section below.
Significant Accounting Policies
With the exception of the aspects within the Customer Relief Program noted above and the change for the accounting of credit losses as a result of the adoption of Topic 326, there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that are of significance, or potential significance, to the Company.
7

Credit Losses
Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. For the three and six months ended June 30, 2020, the Company recognized bad debt expense of $2.3 million and $5.5 million, respectively. For both the three and six months ended June 30, 2019, bad debt expense was not significant.
Net investment in sales-type leases. The Company enters into sales-type leases with certain qualified customers to purchase its systems. Sales-type leases have terms that generally range from 24 to 84 months and are usually collateralized by a security interest in the underlying assets. The allowance for loan loss is based on the Company's assessment of current expected lifetime loss on lease receivables. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the lease receivable balances, and current economic conditions that may affect a customer's ability to pay. Lease receivables are considered past due 90 days after invoice.
The Company manages the credit risk in net investment in sales-type leases using a number of factors, including, but not limited to the following: size of operations; profitability, liquidity, and debt ratios; payment history; and past due amounts. The Company also uses credit scores obtained from external providers as a key credit quality indicator for the purposes of determining credit quality. The following table presents credit quality by class of net investment in sales-type lease as of June 30, 2020. The following table summarizes the amortized cost basis by year of origination and credit quality indicator as of June 30, 2020 (in millions):
20202019201820172016PriorNet Investment
Credit Rating:
High$41.3  $51.6  $18.7  $10.0  $3.1  $2.6  $127.3  
Moderate30.4  34.4  22.1  7.5  2.5  0.1  97.0  
Low3.6    1.8  0.9  2.3    8.6  
Total$75.3  $86.0  $42.6  $18.4  $7.9  $2.7  $232.9  
For the three and six months ended June 30, 2020, the Company recognized no credit loss and a credit loss of $0.9 million, respectively, related to net investment in sales-type leases. For both the three and six months ended June 30, 2019, the credit loss related to net investment in sales-type leases was not significant.
Available-for-sale debt securities. The Company's investment portfolio at any point in time contains investments in U.S. treasury and U.S. government agency securities, taxable and tax-exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities, cash deposits, and money market funds. The Company segments its portfolio based on the underlying risk profiles of the securities and have a zero loss expectation for U.S. treasury and U.S. government agency securities. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. During the three months ended June 30, 2020, the Company recognized no credit losses related to available-for-sale debt securities. For the six months ended June 30, 2020, the Company recognized a credit loss of $1.2 million related to available-for-sales debt securities. For both the three and six June 30, 2019, there were no credit losses recognized related to available-for-sales debt securities.
The Company's exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of lease and trade receivables as hospital's cash flows are impacted by their response to the COVID-19 pandemic and deferral of elective surgical procedures.
8

NOTE 3. FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, and Investments
The following tables summarize the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents, short-term investments, or long-term investments as of June 30, 2020, and December 31, 2019 (in millions):
Reported as:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Allowance for Credit LossFair
Value
Cash and
Cash
Equivalents
Short-
term
Investments
Long-
term
Investments
June 30, 2020
Cash$562.6  $—  $—  $—  $562.6  $562.6  $—  $—  
Level 1:
Money market funds1,266.8  —  —  —  1,266.8  1,266.8      
U.S. treasuries1,997.4  35.0      2,032.4  122.5  1,023.1  886.8  
Subtotal3,264.2  35.0      3,299.2  1,389.3  1,023.1  886.8  
Level 2:
Commercial paper269.7        269.7  26.6  243.1    
Corporate debt securities1,436.2  18.0  (0.3) (1.3) 1,452.6  7.1  972.3  473.2  
U.S. government agencies410.7  3.6      414.3  50.0  202.4  161.9  
Non-U.S. government securities4.5        4.5    4.5    
Municipal securities69.8  2.1      71.9    7.3  64.6  
Subtotal2,190.9  23.7  (0.3) (1.3) 2,213.0  83.7  1,429.6  699.7  
Total assets measured at fair value$6,017.7  $58.7  $(0.3) $(1.3) $6,074.8  $2,035.6  $2,452.7  $1,586.5  
 
9

Reported as:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Cash and
Cash
Equivalents
Short-
term
Investments
Long-
term
Investments
December 31, 2019
Cash$413.1  $—  $—  $413.1  $413.1  $—  $—  
Level 1:
Money market funds726.8  —  —  726.8  726.8      
U.S. treasuries1,935.8  9.7  (0.4) 1,945.1    890.8  1,054.3  
Subtotal2,662.6  9.7  (0.4) 2,671.9  726.8  890.8  1,054.3  
Level 2:
Commercial paper165.1      165.1  25.5  139.6    
Corporate debt securities2,096.1  16.8  (0.2) 2,112.7    798.5  1,314.2  
U.S. government agencies418.3  1.1  (0.2) 419.2    209.6  209.6  
Non-U.S. government securities4.5      4.5    4.5    
Municipal securities58.4  0.3    58.7  2.2  11.1  45.4  
Subtotal2,742.4  18.2  (0.4) 2,760.2  27.7  1,163.3  1,569.2  
Total assets measured at fair value$5,818.1  $27.9  $(0.8) $5,845.2  $1,167.6  $2,054.1  $2,623.5  
The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale investments (excluding cash and money market funds), as of June 30, 2020 (in millions):
Amortized
Cost
Fair
Value
Mature in less than one year$2,645.5  $2,658.9  
Mature in one to five years1,542.8  1,586.5  
Total$4,188.3  $4,245.4  
Actual maturities may differ from contractual maturities, because certain borrowers have the right to call or prepay certain obligations. Gross realized gains recognized on the sale of investments were $6.9 million and $8.3 million for the three and six months ended June 30, 2020, respectively, and not material for the prior year comparative periods. Gross realized losses recognized on the sale of investments were not material for the periods presented.
Foreign Currency Derivatives
The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency-denominated sales, expenses, intercompany balances, and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). The terms of the Company’s derivative contracts are generally twelve months or shorter. The derivative assets and liabilities are measured using Level 2 fair value inputs.
Cash Flow Hedges
The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the USD, primarily the Euro (“EUR”), the British Pound (“GBP”), the Japanese Yen (“JPY”), and the Korean Won (“KRW”). The Company also enters into currency forward contracts as cash flow hedges to hedge certain forecasted expense transactions denominated in EUR and the Swiss Franc (“CHF”).
For these derivatives, the Company reports the unrealized after-tax gain or loss from the hedge as a component of accumulated other comprehensive income/(loss) in stockholders’ equity and reclassifies the amount into earnings in the same period in which the hedged transaction affects earnings. The amounts reclassified to revenue and expenses related to the hedged transactions and the ineffective portions of cash flow hedges were not material for the periods presented.
10

Other Derivatives Not Designated as Hedging Instruments
Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the USD, primarily the EUR, GBP, JPY, KRW, CHF, Indian Rupee ("INR"), Mexican Peso ("MXN"), Chinese Yuan ("CNY"), and New Taiwan Dollar ("TWD").
These derivative instruments are used to hedge against balance sheet foreign currency exposures. The related gains and losses were as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Recognized gains/(losses) in interest and other income, net$(1.7) $(0.2) $1.9  $1.5  
Foreign exchange gains/(losses) related to balance sheet re-measurement$1.7  $2.1  $(6.9) $0.3  
The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for outstanding derivatives and the aggregate gross fair value at the end of each period were as follows (in millions):
Derivatives Designated as Hedging InstrumentsDerivatives Not Designated as Hedging Instruments
June 30,
2020
December 31, 2019June 30,
2020
December 31, 2019
Notional amounts:
   Forward contracts$96.8  $154.5  $257.5  $227.2  
Gross fair value recorded in:
   Prepaids and other current assets$0.8  $1.3  $1.6  $2.2  
   Other accrued liabilities$0.3  $0.5  $0.4  $0.7  

NOTE 4. BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION
Balance Sheet Details
The following tables provide details of selected balance sheet line items (in millions):
As of
InventoryJune 30,
2020
December 31,
2019
Raw materials$212.8  $211.0  
Work-in-process67.2  75.9  
Finished goods365.5  308.6  
Total inventory$645.5  $595.5  

As of
Other accrued liabilities–short-termJune 30,
2020
December 31,
2019
Taxes payable$37.7  $37.9  
Litigation-related accruals2.8  5.8  
Current portion of deferred purchase consideration payments41.8  35.7  
Current portion of contingent consideration33.6  44.5  
Other accrued liabilities188.2  193.4  
Total other accrued liabilities–short-term$304.1  $317.3  

11

As of
Other long-term liabilitiesJune 30,
2020
December 31,
2019
Income taxes–long-term$280.5  $258.6  
Deferred revenue–long-term28.4  27.4  
Other long-term liabilities103.5  132.3  
Total other long-term liabilities$412.4  $418.3  
Supplemental Cash Flow Information
The following table provides supplemental non-cash investing and financing activities (in millions):
Six Months Ended June 30,
20202019
Equipment transfers, including operating lease assets, from inventory to property, plant, and equipment $79.0  $89.0  
Deferred payments and contingent consideration related to business combinations$