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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 28, 1995
VISX, INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 1-10694 06-1161793
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(State of incorporation) (Commission File No.) (IRS Employer I.D. No.)
3400 Central Expressway, Santa Clara, California 95051
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(Address of principal executive offices)
(408) 773-2020
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
VISX, Incorporated ("VISX" or the "Company"), Alcon Laboratories, Inc.
("Alcon") and CAP Advisers Limited, CAP Trust and Osterfak Limited
(collectively, the "CAP Group") reached an agreement in principle to settle
VISX's pending stockholder derivative litigation which was filed against Alcon
and certain former officers and current and former directors of the Company by
the CAP Group in September 1994. In the litigation, the CAP Group is seeking on
behalf of the Company monetary damages in excess of $2.25 billion from Alcon and
the named individual defendants. The settlement is subject to execution of a
definitive settlement agreement as well as court approval. The agreement in
principle also relates to the settlement of the counterclaims filed by Alcon in
the proceeding.
As part of the settlement, the domestic and international marketing
agreements between VISX and Alcon will be terminated after a transition period
during which court approval of the settlement will be sought. The Company
expects that court approval will be obtained in early 1996, although no
assurance can be given as to when or whether such approval will be received.
Alcon has agreed to cooperate with the Company in various respects to facilitate
the transition resulting from termination of the marketing agreements with
Alcon.
Alcon is currently the exclusive international distributor for the
Company's products and also has exclusive domestic sales and marketing rights.
As a result of the termination of the Alcon agreements, Alcon will cease, after
the transition period, all marketing and sales efforts on behalf of VISX.
However, Alcon will continue to service VISX excimer laser systems sold
internationally by Alcon. In addition, as part of the settlement, Alcon will
obtain a fully-paid license under VISX's Canadian patents for the use of the 23
VISX excimer laser systems sold by Alcon in Canada. Under the terms of the
settlement, the Company will be released from its obligation to reimburse Alcon
for approximately $1.5 million of developmental expenses for the VISX excimer
laser system previously advanced by Alcon. Alcon's right to receive 25% of
VISX's future excess cash flow will also be terminated. In addition, Alcon will
be able to market competitors' laser vision correction systems.
During the past month, the Company has received deposits for the direct
sale of more than 50 VISX excimer laser systems, as well as a significant
increase in orders for which deposits have not yet been received, as a result of
(i) United States Food and Drug Administration ("FDA") approval of VISX's
premarket approval ("PMA") application for phototherapeutic keratectomy ("PTK"),
(ii) FDA approval of a PMA application for laser vision correction with a VISX
competitor's system and (iii) a recommendation by the FDA's Ophthalmic Devices
Advisory Panel for approval of VISX's PMA application for laser vision
correction using the VISX excimer laser system. Nevertheless, the termination of
the agreements with Alcon may have a material adverse effect on the Company's
future revenues and results of operations.
As a result of the termination of Alcon's exclusive marketing and
distribution rights, the Company will need to establish and implement new
marketing and sales strategies for the United
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States and for international markets. In that connection, the Company expects to
establish its own direct sales and marketing organization and also expects to
establish third-party marketing or distribution arrangements. In addition, the
Company plans to establish an alternative service capability for systems sold
internationally other than through Alcon. The Company's future success will
depend in large part on its ability to establish and implement new marketing and
sales strategies, and there can be no assurance that the Company will be able to
do so in a timely manner or at all.
Under the settlement agreement, VISX will also be obligated to
reimburse the CAP Group for legal fees and expenses and certain other related
expenses incurred by them. In addition, VISX has certain obligations to
indemnify its directors and officers in the event of litigation and is therefore
obligated to reimburse the individual defendants for their legal fees and
expenses. As a result, VISX anticipates incurring additional legal expenses in
connection with the settlement of this litigation.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISX, INCORPORATED
By: /s/ Elizabeth H. Davila
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Elizabeth H. Davila,
Executive Vice President and
Chief Operating Officer
Date: November 2, 1995
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