Intuitive Surgical, Inc. (NASDAQ:ISRG) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Benjamin Andrew – William Blair: Wanted to follow-up on a couple of points I guess to start and Gary, you talked about the fact that system growth would likely be lumpy over the course of the coming quarters. Can you give us some sense of what your inputs have been lately from the field and from customers relative to how lumpy and what the mix between new customers and existing customers is likely to look like going forward?
Gary S. Guthart, Ph.D. – President and CEO: I think the commentary is pretty much as we’ve outlined it for you. We see really an issue in the U.S. of them – existing customers looking to get capacity. We don’t see existing customers walking away from the technology or the opportunity but more a question of timing for them. So, we feel it’s more delay than otherwise. As we’ve said in the past I think that capital is really driven – capital sales are really driven by three underlying drivers. One of them Is additional capacity and existing customers. One of them is technologies or new features that they would like to get. And the third are customers that are not yet da Vinci owners who are interested in engaging. We’ve had good success with the new technologies that we’ve been bringing out, and so we see that as proceeding. I think the growth rate on benign gynecologic procedures has come in in the second quarter, grew, but grew at a slower rate than we were expecting and there is just a multiple higher effect there on capacity and so the capacity constraints and existing accounts will take some quarters to workout.
Benjamin Andrew – William Blair: Gary, can you maybe give us some commentary, perhaps Alex on this about any correlation between the volume of benign GYN cases and physician visits because we’ve heard some noise back and forth about flattish or even sometimes declining patient volumes overall. Does that appear to be part of it? Is maybe hysterectomy being utilized less frequently? Any other things like that around the procedure growth is, obviously, a big change in hysterectomy growth. this kind of happened during the last couple of quarters?
Gary S. Guthart, Ph.D. – President and CEO: I think in terms of total inpatient admissions as a whole and then people coming in and seeking, women coming in and seeking hysterectomy. As you know, in-patient admission data broadly lags for a while. So, we get out that by more or less the same way you do by talking to our customers by looking at survey data and trying to look at other analysis. It’s clear that in the first quarter, total inpatient admissions were lower than people had expected them and in some cases in some institutions negative as the total in Q2, we are hearing mixed feedback on total, and for hysterectomy as a whole, our customers are seeing a pressure both in Q1 and in Q2. Quantifying that in Q2 is tough, just because the data lags and so qualitatively we’ve seen some pressure there. Then there’s some things that are just hard for us to handicap in terms of intuitive specific events and their impact on benign hyst, things like the MCS notification are just harder for us to quantify what that impact was.
Benjamin Andrew – William Blair: Then Calvin, I guess very briefly on the procedure guidance the 15 to 18? Does that assume that benign hysterectomy grows sequentially in the back half versus the first half? I know you’ve got some big year-over-year comparisons there as well. So, maybe well a different answer versus year-on-year.
Calvin Darling – Senior Director of Finance: Yeah, I think when you look at the overall guidance and the revised range we’re talking about general surgery performing well and in line with our earlier guidance and similarly on the urology side and international. So, I think the change overall really is very much attributable to the benign gynecologic procedures in the U.S. And so I think, we’re still talking about growth. It’s a moderating growth pattern and the trajectory to the quarters ought to follow a similar patter to what we’ve seen historically.
Tao Levy – Wedbush Securities: So, let’s see on the warning letter that you received, it seems rather fast forward for the FDA to come in, in June and then a few weeks later give you guys a warning letter. Can you maybe go into a little more details as to what they’re looking for?
Gary S. Guthart, Ph.D. – President and CEO: The content of the letter is really a reflection of the content that was in the 483 Form that was issued in June, of there, there were four observations, there were two mentions in the warning letter will become public. Two mentions of things they’d like additional insight into. One of them had to do with the procedure by which, recalls are classified and their participation in that classification. That was kind of the first bullet, and the other bullet, they want additional information on, has to do with user input and design elements, having to do with a particular product. I think those are addressable we’re working on addressing them I think we can address them quickly and we’ll move on.
Tao Levy – Wedbush Securities: Did the letter mention anything about having to come back and revisit the facility or?
Gary S. Guthart, Ph.D. – President and CEO: There is a mention that they will come back and audit specifically around recall classifications.
Tao Levy – Wedbush Securities: And you also mentioned about Japan now not expecting any additional reimbursed procedures in the next cycle? What did the MHLW kind of mention to you guys about that?
Gary S. Guthart, Ph.D. – President and CEO: MHLW is working on guidance documentation for reimbursement more broadly than us for new technologies, that’s outlining data requirements for what they would like to see in Japan, Japan-specific data. For prostatectomy we’re able to use global data and had a good interaction with MHLW. Given current guidance again I think it’s a class of products more broad than us. They are looking for additional data collection in Japan specifically. That’s going to vary by procedure their data requirements appear to vary by procedure, happen to do with the maturity of clinical data and so it’s not all locked down yet. We’re continuing to work with surgical societies who in turn work with MHLW, but given the visibility we have on it now it looks like there will be a partial reimbursement followed by national reimbursement on a timeline that has to be decided based on their data requirements. And as we get additional insight and understand it deeper we’ll share that with you.
Tao Levy – Wedbush Securities: Lastly then the sort of cadence on system sales for the rest of the year, is the pressure that we should model that primarily just U.S.-based is that the right way to think about it, or do you see anything else in sort of Europe, rest of the world, Japan as well.
Gary S. Guthart, Ph.D. – President and CEO: I’ll start with the broad answer and let Marshall color it as well. In the U.S., I think the dynamics that we saw in the second quarter may persist for the back half of the year. In terms of O-U.S., we’re pleased with the progress we’re making in Europe, but as you know, Europe can be really lumpy, and likewise in Japan, I think that Japan has had symbolysis of pent-up demand and what that looks likes in future quarters is likely to not be stable. I don’t think I would use the past couple of quarters to predict the future next quarters, Marshall?
Marshall L. Mohr – SVP and CFO: Yeah, specifically in Japan we introduced Si at the beginning of the year and I think that helped drive increased system sales and we don’t see that level continuing as Gary said. Europe will be lumpy particularly Q3 is a vacation period for them, and so historically, we’ve seen lower sales in Europe in Q3.