-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EonywMqh75qUUC8rlFxi+/x5IJ3z/LoHhkSm79DCMCmC6dMiW3jrnoB29vrTw9vA sCUBfgs8iH57GvN6Yr5X3A== 0000950172-99-000615.txt : 19990524 0000950172-99-000615.hdr.sgml : 19990524 ACCESSION NUMBER: 0000950172-99-000615 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990521 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ESC MEDICAL SYSTEMS LTD CENTRAL INDEX KEY: 0001004945 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-54169 FILM NUMBER: 99632159 BUSINESS ADDRESS: STREET 1: YOKNEAM INDUSTRIAL PK CITY: YOKNEAM ISRAEL 20692 STATE: L5 ZIP: 00000 BUSINESS PHONE: 9729599000 MAIL ADDRESS: STREET 1: 100 CRESENT ROAD CITY: NEEDHAM STATE: MA ZIP: 02194 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOTTSTEIN BARNARD J CENTRAL INDEX KEY: 0001071874 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O CARR GOTTSTEIN PROPERTIES STREET 2: 550 WEST 7TH AVE SUITE 1540 CITY: ANCHORAGE STATE: AL ZIP: 99501 BUSINESS PHONE: 9072782277 MAIL ADDRESS: STREET 1: C/O CARR GOTTSTEIN PROPERTIES STREET 2: 550 WEST 7TH AVENUE SUITE 1540 CITY: ANCHORAGE STATE: AK ZIP: 99501 SC 13D/A 1 SCHEDULE 13D - AMENDMENT NO. 9 CUSIP No. M40868107 13D - ---------------------------------------------------------------------------- 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 EX-99 2 EXHIBIT 19 - LETTER 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 EX-99 3 EXHIBIT 20 - OPEN LETTER TO SHAREHOLDERS 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 -----END PRIVACY-ENHANCED MESSAGE-----