Computer Motion Announces First Quarter Results; Eighth Consecutive Quarter of Record Quarterly Revenue.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--April 22, 1999--

Computer Motion Inc. (Nasdaq:RBOT), the world leader in medical robotics, Thursday announced record revenue for its first quarter ended March 31, 1999.

Revenue for the quarter totaled $3,952,000, a 90% increase from revenue of $2,077,000 in last year's first quarter. Gross profit of $2,238,000 also established a quarterly record and was up 89% from the $1,184,000 recorded in last year's first quarter.

Compared with the fourth quarter 1998, first quarter 1999 revenue was up $524,000 (15%) and gross profit was up $240,000 (12%). The company has now posted eight consecutive quarters of increasing revenue.

The company's HERMES(tm) and ZEUS(tm) product lines were principally responsible for the revenue increase. HERMES revenue of $1,154,000 for the quarter was up 382% from prior year levels and resulted mainly from commercial shipments of the HERMES Control Center and related ancillary products under the company's arrangement with its initial HERMES alliance partner, Stryker Corp.

ZEUS revenue of $1,209,000 for the quarter was up 307% from prior year levels and related to the sale of one ZEUS system in Europe and on-going contractual payments from hospitals where ZEUS Robotic Surgical Systems have been installed under research and clinical development arrangements.

AESOP(R) first quarter revenue of $1,589,000 increased 3% over the previous year's first quarter level mainly as a result of higher average selling prices.

Robert W. Duggan, Chairman of the Board and CEO of Computer Motion, said: "We continued to make excellent progress in the first quarter. The company enjoyed record revenue led by record sales levels for both HERMES and ZEUS. While AESOP sales were below our target, it should be noted that each ZEUS system includes an AESOP as one of its three robotic arms, and we entered into five ZEUS agreements during the quarter.

"For the first time, all three product lines were above the million dollar revenue threshold. We have completed the operative portion of the ten patient U.S. Food and Drug Administration (FDA) Phase I Investigational Device Exemption (IDE) for human cardiac procedures performed with the ZEUS system.

"Stopped and beating-heart coronary artery bypass graft (CABG) ZEUS-based procedures continue to be performed in Europe. Four of the ten patients in our Phase I IDE for tubal reanastomsis procedures performed with ZEUS have conceived.

"An agreement was signed with W.L. Gore and Associates Inc. for the exclusive sale of custom configurations of GORE-TEX sutures designed to facilitate fully endoscopic cardiac procedures performed with the ZEUS system. HERMES control interfaces for both Berchtold Corporation's operating room (OR) lights and cameras and STERIS Corporation's OR tables are near completion."

Mr. Duggan added: "Our broad-based technology platform, which is focused on robotics, speech recognition and networkable products, has the potential to change the way surgical healthcare will be delivered.

"We believe the OR of the Future will be comprised of intelligent devices which will be voice controlled and integrated within the OR and that computer controlled robotics puts us on the edge of a new era for minimally invasive surgery. Our increasing revenue indicates that the market continues to embrace our computer and voice-controlled robotic technology."

Net loss for the first quarter 1999 was $2,736,000 ($.33 per share) compared with a net loss of $2,730,000 ($.35 per share) for the comparable prior year period. The loss reflects additional personnel hired in the sales and marketing and research and development areas in the past twelve months, as well as increased expenses associated with ZEUS-based pre-clinical and clinical trials. Common shares outstanding increased from 7,916,000 at March 31, 1998 to 8,405,000 shares at March 31, 1999.

Mr. Duggan further stated: "Yesterday we filed an IDE with the FDA to begin a multi-center pivotal clinical study of the ZEUS system for cardiac procedures. We expect to commence this clinical trial in the U.S. in the second quarter.

"We enjoyed a highly successful American Association of Thoracic Surgeons (AATS) meeting this week in New Orleans where ZEUS was demonstrated on the show floor and in a technology suite. Based on the level of surgeon excitement regarding ZEUS, we expect to continue to expand our ZEUS sites, which now number eighteen.

"In the first quarter, we sold our first ZEUS for human use in Europe and entered into ZEUS-based clinical development programs at the Biomedical Research Foundation and three renowned U.S. hospitals - New York University Medical Center, Massachusetts General Hospital and Buffalo General Hospital.

"Subsequent to the quarter we entered into a ZEUS-based clinical development program with the prestigious Duke University Medical Center. We fully expect that ZEUS-based cardiac procedures will be performed in multiple sites around the world beginning in the second quarter."

Computer Motion is creating the cornerstone technologies and products for today's Intelligent Operating Room(tm). The company develops, manufactures and markets proprietary computer-enhanced and robotic surgical systems which enhance surgeons' capabilities, improve outcomes and reduce costs.

Computer Motion's products include: the AESOP 3000, a voice-controlled endoscope positioning system, the HERMES Control Center, a centralized system which enables the surgeon to voice control a network of "smart" medical devices, and the ZEUS Robotic Surgical System for new minimally invasive microsurgery procedures, such as endoscopic coronary artery bypass grafting (E-CABG(tm)).

The company's Internet Web site is www.ComputerMotion.com.

This news release contains forward-looking statements concerning the company's business, products, research and development and regulatory activities. Actual results may differ materially depending on a number of risk factors, including the risks of competition and competing technologies, duration or suspension of clinical studies, regulatory clearances and approvals, and physician, hospital and payor acceptance of the company's products. These factors and other risks inherent in the company's business are described from time to time in the company's Securities and Exchange Commission filings, including its Annual Report on Form 10-K. The company undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.

                         COMPUTER MOTION INC.
            (UNAUDITED) CONDENSED STATEMENTS OF OPERATIONS

                                      Quarter Ended
                                        March 31,
                                   1999           1998

Revenue                     $3,952,000        $2,077,000
Cost of revenue              1,714,000           893,000
Gross profit                 2,238,000         1,184,000
Selling, general and
 administrative expense      2,973,000         2,575,000
Research and development
 expense                     2,234,000         1,745,000
Loss from operations        (2,969,000)       (3,136,000)
Other income                  (239,000)         (413,000)
Loss before taxes           (2,730,000)       (2,723,000)
Income tax provision             6,000             7,000
Net loss                   ($2,736,000)      ($2,730,000)
Weighted average shares
 outstanding                 8,389,000         7,792,000
Net loss per share --
 basic and diluted              ($0.33)           ($0.35)



                         Computer Motion Inc.
                       Condensed Balance Sheets

                                       March 31, 1999    Dec. 31, 1998
                                         (unaudited)       (audited)

Cash and securities                     $ 18,094,000     $ 21,313,000
Accounts receivable                        3,842,000        2,856,000
Inventories                                3,136,000        3,281,000
Plant and equipment                        2,519,000        2,375,000
Other assets                                 728,000          619,000
 Total assets                           $ 28,319,000     $ 30,444,000
Current liabilities                     $  3,927,000     $  3,574,000
Shareholders' equity                      24,392,000       26,870,000
 Total liabilities and equity           $ 28,319,000     $ 30,444,000