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Computer Motion Announces First Quarter Results.

Business Editors

SANTA BARBARA, Calif.--(BUSINESS WIRE)--May 5, 2000

Computer Motion, Inc. (Nasdaq: RBOT), the leader in medical robotics, announced today its financial results for the quarter ended March 31, 2000. These numbers are in-line with its pre-release that was issued on April 26, 2000. Revenue for the quarter totaled $1,368,000, compared to revenue of $3,952,000 in last year's first quarter. Product transitions and a shift in sale and marketing focus were principally responsible for the revenue shortfall in Q1 but are having the intended positive impact early on in Q2.

ZEUS(TM) orders were impacted by the timing of our new version release which includes instrument tip articulation and 3-D visualization. The new ZEUS version is expected to ship in Q3 and we are selling an upgrade path in Q2. AESOP(R) orders were impacted in the quarter by a shift in sales and marketing focus. The retrained and re-orientated sales force is on the path to increased productivity in Q2. There was an absence of HERMES(TM) revenue in Q1, but we have received a 70-unit OEM order for delivery in Q2.

Gross profit of $679,000 for the first quarter compares with $2,238,000 recorded in the first quarter 1999. Cost of revenue for the first quarter 2000 was higher than anticipated due to under absorbed labor and fixed overhead.

Net loss for the first quarter 2000 was $5,019,000 ($0.57 per share) compared to a net loss of $2,736,000 ($0.33 per share) for the comparable prior year period. The loss primarily reflects the shortfall in revenues and gross profit. Operating expenses for the first quarter of $5,769,000 were in-line with the comparable prior year period ($5,207,000). Common shares outstanding increased from 8,389,000 at March 31, 1999 to 8,824,000 shares at March 31, 2000.

"Our first quarter financial results are far from satisfactory, but we are off to a very strong start in the second quarter," said Gordon Rogers, Chief Financial Officer of Computer Motion. "We already have in excess of $4.0 million in booked and contractual revenue this quarter. These events give us confidence that the second quarter of this year will establish a new all-time record in quarterly revenue. As a three-product company driving an integrated recurring revenue model, we are confident that 2000 will be a year of continued growth and progress towards profitability," Mr. Rogers added.

"Our Q1 financial results are not indicative of the progress and success we have achieved year-to-date," stated Robert W. Duggan, Chairman and CEO of Computer Motion. "Positive developments include the successful launch of our Evolve(TM) Cardiac Continuum campaign; product refinements for increased utility and ease of use; and significant progress in total procedure solution for effective and repeatable beating heart, endoscopic heart bypass surgeries."

According to Mr. Duggan, "In February, we announced that a clinical series of minimally invasive mitral valve surgeries had been performed with robotic assistance. This is just one of many applications where the positive impact of our technology platforms cannot be ignored. Randolph Chitwood, MD of East Carolina University School of Medicine in Greenville, NC, performed a study of 100 minimally invasive mitral valve surgeries, half of which were performed with AESOP. When comparing the cases utilizing the AESOP system with those not using robotic visualization, he found a 33% decrease in operative time, as well as a 30% decrease in perfusion time and cardiac arrest. With such significant impact, the medical community is bound to embrace the notion that our technology is a necessity to support advanced laparoscopic and endoscopic cardiac procedures."

In early March, Computer Motion was pleased to announce yet another world's first for the company: the world's first robotic pediatric heart surgery. Dr. Francois Laborde of L'Institut Mutualiste Montsouris in Paris performed a fully endoscopic closure of the patent ductus arteriosis (PDA) using the ZEUS Robotic Surgical System. The procedure was performed through three tiny incisions, each only 0.2 inches long, eliminating the need for a 4 to 5 inch incision that would normally be used for such a repair. This robotically enabled approach minimizes the significant pain and trauma of the thoracotomy and the resultant need for medication. It also decreases the potential for wound healing complications. Dr. Laborde has now completed 12 procedures with the ZEUS System on patients ranging from 7- to 24-months old. Dr. Laborde says he plans to use ZEUS on all his patients with similar conditions.

Mr. Duggan continued, "On April 28, Drs. Stephen Colvin and Gene Grossi, of the New York University Medical Center, performed the first minimally invasive robotic heart valve surgery in the United States. The procedure was part of a new FDA-approved Investigational Device Exemption clinical study. This is an important milestone in our regulatory pathway, as we continue the forward momentum in demonstrating the safety and effectiveness of the ZEUS System for a wide range of surgical applications.

"Another significant achievement for the company was the very positive results of the 6-month follow-up for the world's first robotic closed-chest, beating heart bypass patient. The patient was angina free and received an `A-rating' for the patency of the left anterior descending artery. It is clear that the patients are the real benefactors in this pioneering accomplishment."

Since last September, Dr. Douglas Boyd, Professor of Surgery at the University of Western Ontario, has used the ZEUS System to perform a series of eight closed chest, endoscopic, off-pump heart bypass surgeries through pencil-sized incisions. This approach provides a truly minimally invasive left anterior descending artery revascularization. This is the primary coronary artery that supplies blood to the left ventricle, the most important chamber of the heart.

Dr. Boyd stated, "My last patient was a 36-year-old male with a 5-month-old baby and a mortgage payment. The only way he was able to keep his house was to have a beating heart E-CABG(TM) procedure with the ZEUS System. As a homeowner, he did not qualify for any government assistance and had exceeded his medical benefits, so he needed a treatment option with an extremely rapid recovery rate. The patient actually requested to be discharged from the hospital 40-hours after his surgery, as he reported no direct pain from the procedure."

"To expand market penetration, we remain dedicated to educating both medical professionals and patients about new treatment solutions offered from the successful integration of computers and robotics," said Mr. Duggan. "We are routinely featured in some of the world's most notable media. Already this year, we have been featured in the New York Times, Discover Magazine, San Jose Mercury News and have aired on CNN, abc.com, "Ripley's Believe it or Not," Reuters, and the popular TV medical drama "Chicago Hope." Our technology was also recently showcased at a number of major medical conferences, where leading surgeons from around the world presented on the successful clinical results realized with the Computer Motion technology."

Mr. Duggan continued, "In Toronto last week at the American Association of Thoracic Surgery, the company launched the Evolve(TM) Cardiac Continuum program. This new program leverages Computer Motion's integrated product platforms to facilitate the transformation underway in cardiac surgery from open-chest to endoscopic, beating heart cardiac surgery. As surgeons continue evolving towards advanced minimally invasive procedures with computer and robotic technology, the Evolve Cardiac Continuum facilitates a gradient approach to learning new surgical techniques and procedures. We believe this new marketing program will powerfully increase global sales, product utilization and market expansion."

Computer Motion, the world leader in medical robotics, is creating the cornerstone technologies and products for the 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 voice-controlled AESOP(R) endoscope positioning system; the HERMES(TM) Control Center, a centralized system which enables the surgeon to voice control a network of "smart" medical devices; and the ZEUS(TM) Robotic Surgical System for new minimally invasive microsurgery procedures, such as endoscopic coronary artery bypass grafting (E-CABG(TM)). ZEUS is CE-Marked for commercial sale in the European Community, and the company has completed an FDA-approved Phase 1 Investigational Device Exemption (IDE) study with ZEUS. Computer Motion and Medtronic (NYSE:MDT) are co-marketing the ZEUS System. The company's Web site is www.ComputerMotion.com.

This press release contains forward-looking statements concerning the company's business and products. 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.
 CONDENSED STATEMENTS OF OPERATIONS

 Three Months Ended
 March 31
 2000 1999
 (in thousands except per share data)

Revenue $ 1,368 $ 3,952
Cost of revenue 689 1,714
Gross profit 679 2,238

Research & development expense 2,216 2,234
Selling, general & administrative
 expense 3,553 2,973
Loss from operations (5,090) (2,969)

Other expense/(income) (76) (239)
Loss before income taxes (5,014) (2,730)
Income tax provision 5 6
Net loss $ (5,019) $ (2,736)

Weighted average shares outstanding
 used to compute net loss per share 8,824 8,389

Loss per share - basic and diluted $ (0.57) $ (0.33)


 COMPUTER MOTION, INC.
 CONDENSED BALANCE SHEETS

 March 31, December 31,
 2000 1999
 (in thousands)

Cash and securities $ 5,349 $ 7,521
Accounts receivable 3,085 6,203
Inventories 5,968 5,009
Other current assets 532 332
Property and equipment, net 3,593 2,933
Other Assets 1,539 1,363
 Total Assets $ 20,066 $ 23,361

Current liabilities $ 4,672 $ 6,469
Debt and other liabilities 4,171 1,073
Shareholders' Equity 11,223 15,819
 Total Liabilities & Equity $ 20,066 $ 23,361
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