<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ______
Commission File Number 1-10694
---------------------------------
VISX, INCORPORATED
(Exact name of registrant as specified in its charter)
---------------------------------
DELAWARE 06-1161793
-------- ----------
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3400 CENTRAL EXPRESSWAY, SANTA CLARA, CALIFORNIA 95051-0703
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (408) 733-2020
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Total number of shares of common stock outstanding as of April 30, 2000:
60,736,894
<PAGE> 2
VISX, INCORPORATED
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Interim Balance Sheets as 3
of March 31, 2000 and December 31, 1999
Condensed Consolidated Interim Statements of Operations for the Three Months 4
Ended March 31, 2000 and 1999
Condensed Consolidated Interim Statements of Cash Flows for the Three Months 5
Ended March 31, 2000 and 1999
Notes to Condensed Consolidated Interim Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview 8
Results of Operations 8
Liquidity and Capital Resources 9
Business Risks and Fluctuations in Quarterly Results 10
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings 11
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
Page 2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ---------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 24,979 $ 25,842
Short-term investments ................................................. 193,949 232,517
Accounts receivable, net of allowance for doubtful accounts
of $2,344 and $1,773, respectively ................................... 41,594 51,254
Inventories ............................................................ 10,648 10,669
Deferred tax assets and prepaid expenses ............................... 16,767 29,192
--------- ---------
Total current assets ................................................ 287,937 349,474
PROPERTY AND EQUIPMENT, NET ................................................ 5,224 5,681
LONG TERM DEFERRED TAX ASSETS & OTHER ASSETS ............................... 24,395 7,566
--------- ---------
$ 317,556 $ 362,721
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ....................................................... $ 14,057 $ 5,156
Accrued liabilities .................................................... 41,373 40,772
--------- ---------
Total current liabilities ........................................... 55,430 45,928
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock:
$.01 par value, 180,000,000 shares authorized;
64,990,089 and 64,890,946 shares issued, respectively ................ 650 649
Additional paid-in capital ............................................. 221,238 220,049
Treasury stock, at cost: 3,872,674 and 2,939 shares, respectively ..... (75,276) (153)
Accumulated comprehensive income (loss) ................................ (1,239) (947)
Retained earnings ...................................................... 116,753 97,195
--------- ---------
Total stockholders' equity ......................................... 262,126 316,793
--------- ---------
$ 317,556 $ 362,721
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 3
<PAGE> 4
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
2000 1999
------- -------
(unaudited)
<S> <C> <C>
REVENUES:
System sales ............................. $19,877 $11,914
License, service and other revenues ...... 44,120 42,035
------- -------
Total revenues ......................... 63,997 53,949
------- -------
COSTS AND EXPENSES:
Cost of revenues ......................... 16,969 10,597
Marketing, general and administrative .... 14,588 9,093
Research, development and regulatory ..... 3,510 3,635
------- -------
Total costs and expenses ............... 35,067 23,325
------- -------
INCOME FROM OPERATIONS ....................... 28,930 30,624
Interest and other income ................ 3,667 1,882
------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES ..... 32,597 32,506
Provision for income taxes ............... 13,039 12,775
------- -------
NET INCOME ................................... $19,558 $19,731
======= =======
EARNINGS PER SHARE
Basic .................................... $ 0.31 $ 0.32
======= =======
Diluted .................................. $ 0.30 $ 0.29
======= =======
SHARES USED FOR EARNINGS PER SHARE
Basic .................................... 63,617 62,135
======= =======
Diluted .................................. 66,147 68,329
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 4
<PAGE> 5
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
2000 1999
-------- --------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................... $ 19,558 $ 19,731
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ............................................. 928 708
Increase (decrease) in cash flows from changes in operating assets and
liabilities:
Accounts receivable ................................................... 9,660 (3,050)
Inventories ........................................................... 21 (1,399)
Current deferred tax assets and prepaid expenses ...................... 12,425 549
Long term deferred tax assets & other assets .......................... (16,964) (260)
Accounts payable ...................................................... 8,901 3,883
Accrued liabilities ................................................... 600 (327)
-------- --------
Net cash provided by operating activities ................................. 35,129 19,835
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ......................................................... (336) (1,283)
Purchase of short-term investments ........................................... -- (44,743)
Proceeds from maturities and sales of short-term investments ................. 38,297 22,520
-------- --------
Net cash provided by (used in) investing activities ....................... 37,961 (23,506)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options, including income tax benefit ...................... 2,199 18,220
Repurchase of common stock ................................................... (76,152) (957)
-------- --------
Net cash provided by (used in) financing activities ....................... (73,953) 17,263
-------- --------
Net increase (decrease) in cash and cash equivalents ............................. (863) 13,592
Cash and cash equivalents, beginning of period ................................... 25,842 29,870
-------- --------
Cash and cash equivalents, end of period ......................................... $ 24,979 $ 43,462
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Page 5
<PAGE> 6
VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION:
We prepared our Condensed Consolidated Interim Financial Statements in
conformity with Securities and Exchange Commission rules and regulations.
Accordingly, we condensed or omitted certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles. Please read our 1999 Annual
Report and Form 10-K to gain a more complete understanding of these interim
financial statements.
We included in these interim financial statements all adjustments
(consisting primarily only of normal recurring adjustments) necessary to present
fairly our results for the interim period. Our interim financial statements have
not been audited.
2. EARNINGS PER SHARE:
Basic earnings per share ("EPS") equals net income divided by the
weighted average number of common shares outstanding. Diluted EPS equals net
income divided by the weighted average number of common shares outstanding plus
dilutive potential common shares calculated in accordance with the treasury
stock method. All amounts in the following table are in thousands, except per
share data.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
------- -------
<S> <C> <C>
NET INCOME ............................................................... $19,558 $19,731
======= =======
BASIC EARNINGS PER SHARE
Income available to common shareholders ................................ $19,558 $19,731
Weighted average common shares outstanding ............................. 63,617 62,135
------- -------
Basic Earnings Per Share ............................................... $ 0.31 $ 0.32
======= =======
DILUTED EARNINGS PER SHARE
Income available to common shareholders ................................ $19,558 $19,731
------- -------
Weighted average common shares outstanding ............................. 63,617 62,135
Dilutive potential common shares from stock options .................... 2,530 6,194
------- -------
Weighted average common shares and dilutive potential common shares .... 66,147 68,329
------- -------
Diluted Earnings Per Share ............................................. $ 0.30 $ 0.29
======= =======
</TABLE>
Options to purchase 1,850,000 shares and 2,000 shares during the three
month periods ended March 31, 2000 and 1999, respectively, were excluded from
the computation of diluted EPS because the options' exercise prices were greater
than the average market price of the Company's common stock during these
periods.
Page 6
<PAGE> 7
3. INVENTORIES (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------- -------
(unaudited)
<S> <C> <C>
Raw materials and subassemblies ............ $ 5,584 $ 5,310
Work in process ............................ 4,654 4,756
Finished goods ............................. 410 603
------- -------
Total .................................... $10,648 $10,669
======= =======
</TABLE>
4. COMPREHENSIVE INCOME (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
2000 1999
-------- --------
<S> <C> <C>
NET INCOME ............................................................. $ 19,558 $ 19,731
OTHER COMPREHENSIVE INCOME
Change in unrealized holding gains (losses) on available-for-sale .... (272) (129)
securities
Change in accumulated foreign currency translation adjustment ........ (20) 3
-------- --------
COMPREHENSIVE INCOME ................................................... $ 19,266 $ 19,605
======== ========
</TABLE>
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133") which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments imbedded in other contracts, and for hedging activities. It requires
that we recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. We
are required to adopt SFAS No. 133 in the first quarter of 2001. We do not
expect the impact of adopting SFAS No. 133 to have a material effect on our
financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No. 101"), Revenue Recognition in Financial
Statements. It provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. Among other
things, SAB No. 101 would result in a change from the established practice in
many industries of recognizing revenue at the time of shipment of a system, and
instead would delay recognition until the time of installation. A change in
revenue recognition reporting practices could have a material affect on revenue
in any particular reporting period. We will adopt SAB No. 101 as required in the
second quarter of 2000 and are evaluating the effect that SAB No. 101 may have
on our financial statements.
6. SUBSEQUENT EVENTS
On May 4, 2000 we reported the settlement of a number of litigation
matters: (1) antitrust and patent claims between VISX and Jon Dishler, et al.,
(2) the action filed by John Taboada against Stephen Trokel, VISX, et al., and
(3) an action filed by a group of former clinical investigators of the system
Page 7
<PAGE> 8
made by Taunton Technologies Corporation. In connection with these settlements,
VISX paid a total of approximately $12 million or $0.12 per share in one-time
payments and related costs and fees. Please see Part II, Item 1 - Legal
Proceedings in for a more detailed discussion of these matters.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In our Management's Discussion and Analysis of Financial Condition and
Results of Operations we review our past performance and, where appropriate,
state our expectations about future activity in forward-looking statements. Our
future results may differ from our expectations. We have described our business
and the challenges and risks we may face in the future in Items 1 and 3 of our
1999 Annual Report and Form 10-K and under "Business Risks and Quarterly
Fluctuations" below. Please read these items carefully.
OVERVIEW
We develop products and procedures to improve people's eyesight using
lasers. Our principal product, the VISX STAR S2(TM) Laser System ("VISX
System"), is designed to correct the shape of a person's eyes to reduce or
eliminate their need for eyeglasses or contact lenses. The Food and Drug
Administration ("FDA") has approved the VISX System for use in the treatment of
most types of refractive vision disorders including nearsightedness,
farsightedness, and astigmatism. We sell VisionKey(R) cards to control the use
of the VISX System and to collect license fees for the use of our patents.
The laser vision correction industry is evolving rapidly. New
developments and changes in market conditions frequently affect VISX and could
harm our business in the future. We may face increased competition from
manufacturers and users of other laser vision correction systems or new
competition from non-laser methods for correcting a person's vision. Patients'
and doctors' desire for laser vision correction using VISX Systems may not grow
or may decline in the future. Prices for our products and services may change as
the result of new developments in our market. Due to adverse determinations in
current and future patent and antitrust litigation, damages may be assessed
against us and we may not be able to enforce our current patent rights or
collect license fees. All of these factors could cause orders and revenues for
VISX Systems and VisionKey(R) cards to fluctuate or even decline. Accordingly,
our past results may not be useful in predicting our future results.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------
REVENUES (000's) 2000 1999 Change
- -------------------------------------- ------- ------- -------
<S> <C> <C> <C>
System sales ......................... $19,877 $11,914 67%
Percent of total revenues ....... 31.1% 22.1%
License, service & other revenues .... 44,120 42,035 5%
Percent of total revenues ....... 68.9% 77.9%
Total ................................ $63,997 $53,949 19%
</TABLE>
In the first quarter of 2000 we sold 86 laser systems as compared to 51
in the comparable period of the prior year. Average selling prices were largely
unchanged. In the U.S. we sold 47 laser systems in the first quarter of 2000 as
compared to 40 in the comparable period of the prior year. In international
markets we sold 39 laser systems in 2000 as compared to 11 in the prior year.
This growth in international markets was due to long term development efforts
such as hiring new distributors in recent years and expanding market support
programs.
Page 8
<PAGE> 9
In the United States our customers purchased approximately 40% more
VisionKey(R) cards for laser vision correction surgery in the first quarter of
2000 than in the comparable period of 1999. The license fees associated with
these cards generated most of the increase in license, service and other
revenues in 2000 over 1999. We believe that card purchases increased because
laser vision correction has grown more popular with consumers. However, based on
our analysis of sales data and developments in the U.S. laser vision correction
market, we concluded that consumers' concerns about pricing of laser vision
correction was dampening the industry's potential for growth. In an effort to
address these concerns and to help broaden the appeal for laser vision
correction, on February 22, 2000 we reduced our U.S. license fee by 60% to $100
per procedure from the $250 fee we had previously charged since we first entered
the U.S. market in 1996. This change caused license, service and other revenue
to grow only marginally from the prior year, despite the 40% increase in the
quantity of VisionKey(R) cards sold in the U.S. While we expect that our license
fee reduction will result in a significant decline in license revenue, as well
as total revenue, for the remainder of 2000 as compared to the corresponding
periods of 1999, we believe the reduced fee will help promote faster growth of
laser vision correction procedures performed using VISX Systems in the U.S. We
cannot, however, predict with certainty when or whether growth in procedures
will offset the decline in procedure fee, nor even that procedures will
increase.
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------------
COSTS & EXPENSES (000's) 2000 1999 Change
- ----------------------------------- --------- --------- ------
<S> <C> <C> <C>
Cost of revenues .................. $ 16,969 $ 10,597 60%
Percent of total revenues .... 26.5% 19.6%
Marketing, gen'l and admin ........ 14,588 9,093 60%
Percent of total revenues .... 22.8% 16.9%
R&D and regulatory ................ 3,510 3,635 (3)%
Percent of total revenues .... 5.5% 6.7%
</TABLE>
Cost of revenues increased in the first quarter of 2000 over the
comparable period of the prior year because we sold more systems and serviced a
larger installed base of systems. Marketing, general and administrative expenses
grew in the first quarter of 2000 over the comparable period of the prior year
due to a variety of factors. We increased spending on marketing programs
targeted towards consumers. Further, our legal expenses were higher due to
patent litigation with Nidek Co., Ltd., including proceedings before the
International Trade Commission, and other patent matters. We focused our
research and development on three areas: new capabilities for the VISX STAR
Excimer Laser platform, development of new products such as our WaveScan(TM)
Wavefront System, and research into new technologies. We continued to conduct
clinical studies and prepare submissions designed to obtain additional approvals
from the FDA and regulatory authorities in other countries.
Interest income increased because we have generated cash from operations
over the past 12 months and have invested this in additional interest bearing
securities. We have accrued income taxes based on our expected effective income
tax rate for all of 2000, net of credits anticipated.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments ("cash") and working
capital were as follows.
<TABLE>
<CAPTION>
(000's)
------------------------------------
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Cash, cash equivalents and short-term investments .... $218,928 $258,359
Working capital ...................................... 232,507 303,546
</TABLE>
Page 9
<PAGE> 10
Cash decreased by $39 million in the first quarter months of 2000
because the $35 million we generated from operations was more than offset by the
$76 million we spent to repurchase 3.9 million shares of VISX stock on the open
market.
Purchases of short-term investments represent reinvestment of the
proceeds from maturities of short-term investments and investment of cash and
cash equivalents into short-term investments.
We anticipate that our current cash, cash equivalents and short-term
investments, as well as anticipated cash flows from operations, will be
sufficient to meet our working capital and capital equipment needs at least
through the next twelve months.
BUSINESS RISKS AND FLUCTUATIONS IN RESULTS
Our results of operations have varied widely in the past, and they could
continue to vary significantly due to a number of factors, including:
- Patients' and doctors' acceptance of laser vision correction as a
preferred means of vision correction;
- Competition from manufacturers and users of other laser vision
correction systems;
- Introduction of new methods for vision correction which render our
products less competitive or obsolete;
- Changes in prices for our products and services as the result of
new developments in our markets;
- Developments in antitrust litigation to which we are currently a
party, including legal actions brought against us by private
parties and the legal action pending before the FTC;
- Developments in patent litigation that we have initiated,
particularly to the extent that adverse developments in these
proceedings could limit our ability to collect license fees from
sellers and users of laser vision correction equipment; and
- Developments in patent litigation in which we are a defendant,
particularly to the extent that adverse developments in these
proceedings result in damages being assessed against VISX or render
certain of our patents invalid or unenforceable, which would reduce
the scope of proprietary protection available to us and could limit
our ability to collect license fees from sellers and users of laser
vision correction equipment.
We anticipate that our revenue will be significantly lower in 2000 than
in 1999 as a result of the new $100 license fee we began charging in February,
2000. In the future, our revenue may fluctuate significantly. Any shortfall in
revenues below expectations would likely have an immediate impact on our
earnings per share, which could adversely affect the market price of our common
stock. Our operating expenses, which include sales and marketing, research and
development and general and administrative expenses, are based on our
expectations of future revenues and are relatively fixed in the short term.
Accordingly, if revenues fall below expectations, we will not be able to reduce
our spending rapidly in response to such a shortfall. This will adversely affect
our operating results. We devote significant resources to research and
development. We anticipate that the resulting new products and capabilities will
be well received by customers and generate future revenue, however the actual
results may vary from expectations. Due to the foregoing factors, we believe
that our results of operations in any given period may not be a good indicator
of our future performance.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes during the three months ended March 31,
2000 to our exposure to market risk for changes in interest rates and foreign
currency exchange rates.
Page 10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
VISX is engaged in numerous legal proceedings. Generally, the litigation
and other proceedings center on the validity or enforceability of VISX's
patents, and on whether infringement of the patents has occurred. In addition,
VISX's use of patents and its business practices are being contested in several
proceedings as violations of antitrust laws. The results of these complex legal
proceedings are very difficult to predict with certainty. Because a number of
the proceedings have issues in common, an adverse determination in one
proceeding could lead to adverse determinations in one or more of the other
pending proceedings. Adverse determinations in any of these proceedings could
limit our ability to collect equipment and use fees in certain markets, could
give rise to significant monetary damages, could prevent VISX from manufacturing
and selling the VISX System, and therefore could have a material, adverse effect
on our business, financial position and results of operations.
For a complete description of legal proceedings, see VISX's annual
report on Form 10 -K for the year ended December 31, 1999. During the quarter
ended March 31, 2000, there were no material developments with respect to such
previously existing proceedings and no new material proceedings not previously
disclosed, except as follows:
RECENT SETTLEMENTS
As previously reported in our report on Form 8-K filed on May 4, 2000,
VISX recently settled a number of litigation matters. Among the claims settled
were the antitrust and other claims against VISX filed by Jon Dishler, DTC Eye
Surgery Center, Inc., DTC Eye Associates, PC, Laser Institute of the Rockies,
LLC, and TELCO The Excimer Laser Company Pty, Ltd. in the U.S. District court
for the District of Colorado. The settlement also included a resolution of the
claims filed in 1996 by Pillar Point Partners, Summit Partner, Inc. and VISX
Partner, Inc. against those same parties.
Also settled was the action filed by John Taboada against Stephen
Trokel, VISX, and VISX Partner, Inc. in the U.S. District Court for the Western
District of Texas (USDC West. Dist. Tex. SA-97-CA-794-FB) seeking, among other
things, a declaration that Taboada is the inventor of VISX's U.S. Patent No.
5,108,388 (the "'388 Patent") and a payment of royalties received by VISX for
the `388 Patent. In connection with the settlement, the parties have signed and
will file with the court a stipulated judgment stating that Dr. Trokel is the
sole inventor of the `388 Patent. A stipulated dismissal was also filed in the
proceeding initiated by Taboada in U.S. District Court for the District Court of
Columbia in which Taboada had sought a stay of the reexemination of the `388
patent currently pending in the U.S. Patent and Trademark Office.
VISX also settled an action filed against it by a group of former
clinical investigators of the system made by Taunton Technologies Corporation in
which the plaintiffs alleged federal antitrust law violations, breach of
contract, and unjust enrichment.
In connection with these settlements, VISX paid a total of approximately
$12 million in one-time payments and related costs and fees.
PATENT LITIGATION: NIDEK
Neither VISX nor Nidek Co. Ltd. ("Nidek") filed an appeal of the
decision of the International Trade Commission and the deadline for filing any
such appeal has passed. VISX elected not to appeal the
Page 11
<PAGE> 12
Commission's March 6, 2000 decision. VISX is pursuing its patent infringement
case against Nidek and its U.S. subsidiaries in the action pending in the U.S.
District Court for the Northern District of California described in Part I, Item
3 of our Annual Report and Form 10-K for the year ended December 31, 1999.
PATENT LITIGATION: LASERSIGHT
The action VISX initiated against LaserSight, Incorporated, LaserSight
Technologies, Inc. and LaserSight Centers Incorporated in November 1999 alleging
that LaserSight infringes VISX's U.S. Patent No. 4,718,418 (the "'418 patent")
has been consolidated with the action filed by LaserSight against VISX in
February 2000 in which LaserSight is seeking a declaration of non-infringement
and invalidity of the `418 patent and has alleged that VISX infringes
LaserSight's U.S. Patent No. 5,630,810. The consolidated case is captioned VISX,
Incorporated v. LaserSight Inc., et al. (USDC Del. 99-789-JJF) Discovery in the
consolidated action has commenced and trial is scheduled to begin in June 2001.
SHAREHOLDER ACTIONS
VISX and certain of its officers have been named as defendants in
several substantially similar securities class action lawsuits filed in
February, March and April 2000 in the U.S. District Court for the Northern
District of California. The plaintiffs in these actions purport to represent a
class of all persons who purchased VISX's common stock between March 1, 1999 and
February 22, 2000. The complaints allege that the defendants made misleading
statements in violation of the federal securities laws, including Section 10(b)
of the Securities Exchange Act of 1934. VISX expects the Court to appoint a lead
plantiff and consolidate the complaints in the near future.
On April 24, 2000, a purported shareholder derivative action was filed
in the Superior Court of the State of California, Santa Clara County. The
complaint alleges that certain of VISX's officers and directors breached
fiduciary duties owed to VISX in connection with the circumstances alleged in
the securities class action complaints described above. VISX is a nominal
defendant in the action and no damages are sought from it.
VISX believes that the claims asserted in the shareholder actions
described above are without merit, and we intend to defend against the claims
vigorously. Nevertheless, litigation is subject to inherent uncertainties and
thus there can be no assurance that this suit will be resolved favorably to VISX
or will not have a material adverse effect on VISX's financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits.
Ex. 27 Financial Data Schedule
b) Reports on Form 8-K.
VISX filed one report on Form 8-K during or after the period covered by this
report, as follows:
(1) Report on Form 8-K filed on May 4, 2000 under Item 5 (Other Events) to
which we attached a copy of a VISX Press Release dated May 4, 2000 entitled
VISX Announces Litigation Settlements.
Page 12
<PAGE> 13
SIGNATURES
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 thereunto duly authorized.
VISX, Incorporated
------------------
(Registrant)
May 9, 2000 /s/ Mark B. Logan
(Date) ------------------------------------
Mark B. Logan
Chairman of the Board and
Chief Executive Officer
May 9, 2000 /s/ Timothy R. Maier
(Date) ------------------------------------
Timothy R. Maier
Executive Vice President and
Chief Financial Officer (principal
financial officer)
May 9, 2000 /s/ Derek A. Bertocci
(Date) ------------------------------------
Derek A. Bertocci
Vice President, Controller (principal
accounting officer)
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 24,979
<SECURITIES> 193,949
<RECEIVABLES> 43,938
<ALLOWANCES> (2,344)
<INVENTORY> 10,648
<CURRENT-ASSETS> 287,937
<PP&E> 14,604
<DEPRECIATION> (9,380)
<TOTAL-ASSETS> 317,556
<CURRENT-LIABILITIES> 55,430
<BONDS> 0
0
0
<COMMON> 650
<OTHER-SE> 261,476
<TOTAL-LIABILITY-AND-EQUITY> 317,556
<SALES> 19,877
<TOTAL-REVENUES> 63,997
<CGS> 16,969
<TOTAL-COSTS> 16,969
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 572
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 32,597
<INCOME-TAX> 13,039
<INCOME-CONTINUING> 19,558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,558
<EPS-BASIC> 0.31
<EPS-DILUTED> 0.30
</TABLE>
