CUSIP No. M40868107 13D
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 9)
ESC Medical Systems Ltd.
(Name of Issuer)
Ordinary Shares, NIS 0.10 par value per share
(Title of Class of Securities)
M40868107
(CUSIP Number)
Barnard J. Gottstein
Carr-Gottstein Properties
550 West 77th Avenue, Suite 1540
Anchorage, Alaska 99501
(907) 278-2277
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Joseph J. Giunta, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
(213) 687-5000
May 20, 1999
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box:
/ /
This Amendment No. 9 (the "Amendment") amends and supplements the
Statement on Schedule 13D, dated September 29, 1998, as amended by
Amendment No. 1, dated January 15, 1999, Amendment No. 2, dated March 9,
1999, Amendment No. 3, dated March 22, 1999, Amendment No. 4, dated March
24, 1999, Amendment No. 5, dated April 14, 1999, Amendment No. 6, dated
April 19, 1999, Amendment No. 7, dated May 10, 1999, and Amendment No. 8,
dated May 11, 1999 (the "Original Schedule 13D"), relating to the Ordinary
Shares, par value NIS 0.10 per share (the "Shares"), of ESC Medical Systems
Ltd., an Israeli corporation (the "Company"). Each of the Barnard J.
Gottstein Revocable Trust, Barnard J. Gottstein, as trustee of the Barnard
J. Gottstein Revocable Trust, and Barnard J. Gottstein, as an individual
(collectively, the "Reporting Persons"), are filing this Amendment to
update the information with respect to the Reporting Persons' purposes and
intentions with respect to the Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Original Schedule 13D is hereby amended and supplemented
as follows:
Messrs. Genger and Gottstein were informed through a press
release issued on May 18, 1999 that Asher Edelman, whose group owns
approximately 7.1% of the issued and outstanding shares of the Company,
informed the Company that he plans to vote all of his group's shares in
favor of Messrs. Genger's and Gottstein's proposal to restructure the
current Board of the Company.
In an effort to reach a compromise with respect to the pending
proxy contest for removal of certain directors of the Company, Mr. Genger
met with Shimon Eckhouse, Chairman of the Board, President and Chief
Executive Officer of the Company on May 20, 1999. In order to expedite a
solution, Mr. Genger offered that, in lieu of replacing the entire Board
(with the exception of Dr. Eckhouse and Thomas Hardy), as is now proposed,
Messrs. Genger and Gottstein would agree to the replacement of two existing
management directors and one existing non-management director (other than
Thomas Hardy) with four nominated independent directors. Alternatively,
Mr. Genger suggested that Messrs. Genger and Gottstein would be willing to
agree to the removal of two current directors (other than Thomas Hardy) to
be identified by the current Board, and the addition of five new directors
from among the proposed nominees, thereby creating an eleven-member Board.
As part of the compromise, Messrs. Genger and Gottstein also proposed that
Dr. Eckhouse step down as president and chief executive officer of the
Company and that the new Board would be responsible for creating a special
search committee in order to recruit a new chief executive officer.
Although Dr. Eckhouse indicated he would discuss the matters with his Board
of Directors, Dr. Eckhouse also stated that he would inform the Board that
he was opposed to all of the proposals.
On May 21, 1999, Mr. Genger sent a letter to Dr. Eckhouse,
expressing his disappointment with the result of his meeting with Dr.
Eckhouse held on May 20, 1999. A copy of the letter is attached hereto as
Exhibit 19.
On May 21, 1999, Messrs. Genger and Gottstein sent an open letter
to the shareholders of the Company, commenting on the information contained
in the Company's press release that was issued on May 17, 1999. A copy of
the letter is attached hereto as Exhibit 20.
Other than as described above and as previously described in the
Original Schedule 13D, the Reporting Persons do not have any present plans
or proposals which relate to or would result in (although they reserve the
right to develop such plans or proposals) any transaction, change or event
specified in clauses (a) through (j) of Item 4 of the form of Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Original Schedule 13D is hereby amended to add the
following exhibits:
Exhibit 19: Letter, dated May 21, 1999, from Mr. Genger to Shimon
Eckhouse
Exhibit 20: Open Letter to the Shareholders of the Company, dated
May 21, 1999, from Messrs. Genger and Gottstein
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 21, 1999
/s/ Barnard J. Gottstein
--------------------------------------
Barnard J. Gottstein
Individually and as Trustee of
the Barnard J. Gottstein Revocable Trust
BARNARD J. GOTTSTEIN REVOCABLE TRUST
/s/ Barnard J. Gottstein
---------------------------------------
Barnard J. Gottstein
Trustee
EXHIBIT INDEX
Exhibit
Number Title Page
------- ----- ----
19 Letter, dated May 21, 1999, from Mr. Genger to
Shimon Eckhouse 6
20 Open Letter to the Shareholders of the Company,
dated May 21, 1999, from Messrs. Genger and Gottstein 7
Exhibit 19
Dear Dr. Eckhouse:
I was surprised and disappointed at the result of our meeting.
Since you requested the meeting, I was hopeful you would have something of
substance to discuss. On the contrary, not only did you offer no
compromise, but you have refused any suggestions for compromise offered.
In addition, you proceeded within two hours to issue a totally misleading
press release regarding our meeting. Your deceit continues.
I sincerely hope that the shareholders of ESC will soon have the
opportunity to vote at this critical time to determine the future direction
of the Company and to reverse the disastrous course being followed by the
Company.
Sincerely,
/s/ Arie Genger
Exhibit 20
Open Letter to Shareholders of
ESC Medical Systems Ltd. (the "Company")
May 21, 1999
ESC'S DISMAL 1999 FIRST QUARTER RESULTS
SPEAK FOR THEMSELVES
Dear Fellow ESC Shareholder:
On May 17, 1999, ESC's management finally released the Company's
first quarter results for 1999. Having followed ESC's management closely
during the past year, we were not surprised, but are very concerned, about
the Company's terrible performance during the first quarter. It was our
concern about management's ability to successfully manage the operations of
ESC that led us to request the necessary changes we are proposing for ESC.
We believe the 1999 first quarter results speak for themselves.
LET'S REVIEW THE NUMBERS:
* ESC reported inventory write-offs of $16.6 million, representing 27.1%
of the $61.2 million in inventory reported at December 31, 1998. It
seems impossible for ESC to have had a deterioration in Inventory of
that magnitude in just three months, which represents about 27% of the
$61.2 million in Inventory reported as of December 31, 1998.
Accordingly, we believe it is likely that Inventory was overstated as
of December 31, 1998 and possibly also in prior quarters.
* On February 11, 1999, ESC management announced that they expected to
record a charge for the first quarter ended March 31, 1999 of about
$13 million to $17 million. Recently, ESC reported actual charges
for the first quarter ended March 31, 1999 of $30.8 million.
* Sales decreased from $59.5 million to $31.3 million for the first
quarter ended March 31, 1999 when compared with the first quarter
ended March 31, 1998 -- a 47.4% decrease. After excluding "inventory
write-offs" and "restructuring expenses" of $30.8 million, ESC still
reported a loss of $9.8 million for the first quarter ended March 31,
1999, which amounts to an annual on-going loss rate of almost $40
million.
* WHILE SALES DECREASED BY A WHOPPING 47.4%, SELLING & MARKETING,
GENERAL AND ADMINISTRATIVE EXPENSES FOR THE FIRST QUARTER ENDED MARCH
31, 1999 INCREASED TO 75.5% OF SALES COMPARED WITH 35% FOR THE FIRST
QUARTER ENDED MARCH 31, 1998!
* We were astounded to discover in ESC's May 17, 1999 press release that
management has chosen to partly blame ESC's disastrous first quarter
results on our efforts to restructure the Board, even though we did
not unilaterally begin to act to restructure the Board until the last
week of March 1999. Obviously, our actions could not have had any
effect on ESC's results for the period ended March 31, 1999.
For your information, ESC, inconsistent with prior practice, did
not host any type of analyst meeting in connection with ESC's release of
its first quarter results for 1999, at which meeting analysts and
shareholders could have been given the opportunity to raise questions and
seek explanations for ESC's poor performance during the quarter.
THE CURRENT ESC BOARD MEMBERS CONTINUE THEIR
REORGANIZATION RUSE
Once again, the current Board is trying to mislead shareholders
by announcing a plan to restructure management. On May 17, 1999, ESC
announced that Shimon Eckhouse plans to step down as chief executive
officer and has agreed to "assume the responsibility of an active Chairman
of the Board." Here again, they have neglected to tell you that the
proposed Israeli companies law, which is expected to become effective in
the year 2000, will not permit him to continue to serve as both chairman
and CEO. Furthermore, ESC said that they would actively try to recruit a
new CEO who would be part of the new "Office of the Chairman," and who
would report to Eckhouse. WE ASK YOU, WHAT PROSPECTIVE CHIEF EXECUTIVE
OFFICER WORTH HIS SALT WOULD TAKE THE JOB THAT WILL REQUIRE REPORTING TO
ECKHOUSE? UNDER THIS PROPOSED RESTRUCTURING, IS ECKHOUSE REALLY
RELINQUISHING HIS ROLE AS CEO?
In accordance with our right under Israeli corporate law, we have
called for an extraordinary general meeting of shareholders to be convened
on June 2, 1999. Shareholders of record on May 10, 1999 will be entitled
to vote and be represented at the meeting. We encourage you to support our
proposed slate of independent directors so that the necessary steps can be
taken in order to reverse the harm that we believe is being inflicted on
ESC by the current Board and management.
We urge you to vote the enclosed YELLOW proxy today! If you have
any questions or need assistance, please call MacKenzie Partners, Inc. at
(212) 929-5500 (call collect) or call toll-free at (800) 322-2885.
Sincerely,
/s/ Barnard J. Gottstein /s/ Arie Genger
Any questions or requests for assistance or additional copies of this
Open Letter to Shareholders, the Revocable Proxy and Instrument of
Appointment, the Proxy Information Statement and any other related
materials may be directed to the Information Agent at the address and
telephone number set forth below. Shareholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for
assistance concerning Mr. Genger's and Mr. Gottstein's proposal (the
"Proposal").
THE INFORMATION AGENT FOR THE PROPOSAL IS:
MACKENZIE
PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE: (800) 322-2885
