-----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, EzYSdP/8B6lNQ0cBXjdm3OQBKi0Gup2664PF4t/7eh26jJor9DI2rZ5/4SA/7RsI fh50raFzSQZyK0n+pjlSaw== 0000912057-96-025317.txt : 19970310 0000912057-96-025317.hdr.sgml : 19970310 ACCESSION NUMBER: 0000912057-96-025317 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISX INC CENTRAL INDEX KEY: 0000837991 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 061161793 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17247 FILM NUMBER: 96657646 BUSINESS ADDRESS: STREET 1: 3400 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051 BUSINESS PHONE: 4087332020 MAIL ADDRESS: STREET 1: VISX INC STREET 2: 3400 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051-0703 FORMER COMPANY: FORMER CONFORMED NAME: TAUNTON TECHNOLOGIES INC DATE OF NAME CHANGE: 19901212 10-Q 1 10-Q 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 SEPTEMBER 30, 1996 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 --------------------------------------------------------- (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 October 31, 1996: 15,410,066. ----------- VISX, INCORPORATED TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Condensed Consolidated Interim Balance Sheets as 3 of September 30, 1996 and December 31, 1995 Condensed Consolidated Interim Statements of Operations for 4 the Three Months Ended September 30, 1996 and 1995 and for the Nine Months Ended September 30, 1996 and 1995 Condensed Consolidated Interim Statements of Cash Flows for 5 the Nine Months Ended September 30, 1996 and 1995 Notes to Condensed Consolidated Interim Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview 7 Results of Operations 7 Liquidity and Capital Resources 8 PART II OTHER INFORMATION ITEM 1. Legal Proceedings 9 ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 Page 2 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 September 30, December 31, 1996 1995 -------------- -------------- (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 24,677 $ 32,332 Short-term investments 59,291 42,887 Accounts receivable, net of allowance for doubtful accounts of $600 and $0, respectively 15,388 6,667 Inventories 6,618 6,742 Prepaid expenses 626 234 -------- ------- Total current assets 106,600 88,862 PROPERTY AND EQUIPMENT, NET 3,081 1,565 OTHER ASSETS 2,805 651 -------- ------- $112,486 $91,078 -------- ------- -------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,314 $ 2,506 Accrued liabilities 16,249 8,691 -------- ------- Total current liabilities 19,563 11,197 -------- ------- STOCKHOLDERS' EQUITY: Common stock - $.01 par value, 90,000,000 shares authorized; 15,415,259 and 15,173,855 shares issued, respectively 154 152 Additional paid-in capital 134,114 131,185 Treasury stock,at cost - 58,247 and 0 shares, respectively (1,229) -- Accumulated deficit (40,125) (51,568) Unrealized holding gain on available-for-sale securities 9 112 -------- ------- Total stockholders' equity 92,923 79,881 -------- ------- $112,486 $91,078 -------- ------- -------- -------
The accompanying notes are an integral part of these condensed consolidated interim financial statements. Page 3 VISX, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Nine months ended September 30, September 30, --------------------- ------------------- 1996 1995 1996 1995 ------ ------- ------ ------ (unaudited) (unaudited) REVENUES: Product sales $ 14,484 $ 2,800 $ 39,385 $ 5,600 Product sales to Alcon, a related party -- -- -- 1,680 Service and other revenues 5,183 1,151 11,391 3,146 --------- -------- -------- -------- Total revenues 19,667 3,951 50,776 10,426 --------- -------- -------- -------- COSTS AND EXPENSES: Cost of revenues 7,662 2,702 21,904 7,140 Marketing, general and administrative 4,227 1,737 12,869 5,653 Research, development and regulatory 2,845 2,069 6,804 6,677 --------- -------- -------- -------- Total costs and expenses 14,734 6,508 41,577 19,470 --------- -------- -------- -------- Income (loss) from operations 4,933 (2,557) 9,199 (9,044) Interest and other income 1,146 179 3,106 637 Litigation settlement -- -- -- (2,250) --------- -------- -------- -------- Income (loss) before income taxes 6,079 (2,378) 12,305 (10,657) Provision for income taxes 466 -- 862 -- --------- -------- -------- -------- Net income (loss) $ 5,613 $ (2,378) $ 11,443 $(10,657) --------- -------- -------- -------- --------- -------- -------- -------- Earnings (loss) per share $ 0.35 $ (0.20) $ 0.72 $ (0.90) --------- -------- -------- -------- --------- -------- -------- -------- Weighted average number of shares and equivalents outstanding 15,840 12,156 15,988 11,823 --------- -------- -------- -------- --------- -------- -------- --------
The accompanying notes are an integral part of these condensed consolidated interim financial statements. Page 4 VISX, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Nine months ended September 30, --------------------- 1996 1995 ------- ------- (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 11,443 $(10,657) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 618 462 CHANGES IN ASSETS AND LIABILITIES: Increase in accounts receivable (8,721) (3,943) Decrease in accounts receivable from Alcon, a related party -- 2,659 Decrease (increase) in inventories 124 (2,572) Increase in prepaid expenses (392) (160) (Increase) decrease in other assets (2,170) 253 Increase in accounts payable 808 685 Increase (decrease) in accrued liabilities 7,558 (431) -------- -------- Net cash provided by (used in) operating activities 9,268 (13,704) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,118) (481) Purchase of short-term investments (37,698) (8,712) Proceeds from maturities of short-term investments 21,191 2,653 -------- -------- Net cash used in investing activities (18,625) (6,540) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 2,931 15,305 Purchases of treasury stock, net of shares used for option exercises (1,229) -- -------- -------- Net cash provided by financing activities 1,702 15,305 -------- -------- Net decrease in cash and cash equivalents (7,655) (4,939) Cash and cash equivalents, beginning of period 32,332 11,161 -------- -------- Cash and cash equivalents, end of period $ 24,677 $ 6,222 -------- -------- -------- --------
The accompanying notes are an integral part of these condensed consolidated interim financial statements. Page 5 VISX, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS September 30, 1996 (Unaudited) The accompanying interim financial statements and related notes should be read in conjunction with the financial statements and related notes included in the Company's 1995 Annual Report and Form 10-K. 1. BASIS OF PRESENTATION: The Condensed Consolidated Interim Financial Statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The Condensed Consolidated Interim Financial Statements included herein reflect, in the opinion of management, all adjustments (consisting primarily only of normal recurring adjustments) necessary to present fairly the results for the interim period. The results of operations for the three and nine month periods ended September 30, 1996 are not necessarily indicative of results to be expected for the full year ending December 31, 1996. 2. PILLAR POINT PARTNERS ROYALTIES: The Company records a royalty payable to Pillar Point Partners when VISX systems and VisionKey-Registered Trademark- cards are sold in the United States. The Company records royalty revenue as service and other revenues when Pillar Point Partners reports the amount of royalty distribution, net of expenses, due the Company. The Company received its first report of royalty distribution from Pillar Point Partners in the first quarter of 1996. 3. EARNINGS (LOSS) PER SHARE: Earnings per share was computed based on the weighted average number of common and common equivalent shares outstanding during 1996. Common share equivalents were calculated using the treasury stock method, and represent dilutive shares issuable upon the exercise of stock options. Net loss per share was computed based on the weighted average number of common shares outstanding during 1995. Common equivalent shares were excluded from the computation since their effect would be to reduce the net loss per share amount. 4. INVENTORIES (in thousands): September 30, December 31, 1996 1995 ------------ ------------ Raw materials and subassemblies $ 2,610 $ 2,878 Work in process 3,284 1,348 Finished goods 724 2,516 ---------- --------- Total $ 6,618 $ 6,742 ---------- --------- ---------- --------- Page 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. The Company's actual results of operations could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those factors identified below. The Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's 1995 Annual Report and Form 10-K. OVERVIEW Since its inception, VISX has been engaged in the design and development of proprietary technologies and systems for laser vision correction ("LVC") and has been manufacturing such systems since 1987. In March 1995, the Company introduced a new model of the VISX System. The FDA approved pre-market approval ("PMA") applications for use of the VISX System for phototherapeutic keratectomy ("PTK") on September 29, 1995 and for photorefractive keratectomy ("PRK") treatment of low to moderate myopia on March 27, 1996. Notwithstanding approval by the FDA and subsequent increases in sales, the Company's future growth and profitability cannot be predicted with certainty and will be influenced by a variety of factors. These factors include the extent to which LVC is broadly accepted in the United States and key international markets targeted by the Company, the degree to which Pillar Point Partners is successful in generating royalty income from patent rights and defending against legal challenges relating to its structure and operation, developments in patent litigation both in support of the Company's patents and in defense of claims of infringement such as pending patent litigation against the Company brought by Summit Technology, developments with respect to other litigation to which the Company is a party or in which it may become involved, and competition from other vision correction products and procedures which are currently in use or may be developed and introduced in the future. Results of operations in the current or any prior fiscal period should not be considered as indicative of results to be expected for any future fiscal period. RESULTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- -------------------------------- REVENUE 1996 1995 Change 1996 1995 Change - ------- ------ ------ ------ ------ ------ ------ Product sales 14,484 2,800 417% 39,385 7,280 441% PERCENT OF REVENUE 73.6% 70.9% 77.6% 69.8% Service & other revenues 5,183 1,151 350% 11,391 3,146 262% PERCENT OF REVENUE 26.4% 29.1% 22.4% 30.2% Total 19,667 3,951 398% 50,776 10,426 387%
Product sales increased due to the FDA's approval of the Company's PMA application for use of the VISX System (for PTK on September 29, 1995 and for PRK treatment of low to moderate myopia on March 27, 1996). This allowed the Company to sell VISX Systems in the United States, which generated an increase in unit sales over the comparable periods of the prior year. In addition, average selling prices were higher in 1996 because the Company was selling through its own direct sales force in the United States, as contrasted to 1995 when the Company was only selling outside the United States at lower prices through its distributor, Alcon Pharmaceuticals, Ltd. Page 7 Until May 26, 1995, Alcon was a related party to the Company by virtue of its representation on the Company's board of directors. Alcon's representatives did not stand for reelection at the Company's 1995 stockholders' meeting. Accordingly, Alcon was no longer considered a related party after that time. Certain portions of the derivative litigation brought by stockholders of the Company relate to Alcon's marketing of the VISX System. On January 9, 1996 the California Superior Court approved a settlement reached by Alcon, VISX and the other participants in VISX's stockholder derivative litigation pursuant to which, among other things, the domestic and international marketing agreement between VISX and Alcon was terminated. This settlement became effective on March 12, 1996. Service and other revenues increased principally due to continued growth in Pillar Point Partners royalty revenue. Royalty license revenue and service and parts revenue also contributed to the increase.
Three Months Ended September 30, Nine Months Ended September 30, ------------------------------- ------------------------------- COSTS & EXPENSES 1996 1995 Change 1996 1995 Change - ---------------- ------ ------ -------- ------ ------ -------- Cost of revenues 7,662 2,702 184% 21,904 7,140 207% PERCENT OF REVENUE 39.0% 68.4% 43.1% 68.5% Marketing, gen'l and admin 4,227 1,737 143% 12,869 5,653 128% PERCENT OF REVENUE 21.5% 44.0% 25.3% 54.2% R&D and regulatory 2,845 2,069 38% 6,804 6,677 2% PERCENT OF REVENUE 14.5% 52.4% 13.4% 64.0%
Gross profit margins improved mainly as the result of higher average selling prices for systems and lower overhead cost per unit due to increased production. Royalty revenue, principally from Pillar Point Partners, also contributed significantly to higher gross profit margins in 1996. Marketing, general and administrative expenses increased as the Company created its own direct sales force to replace Alcon, developed marketing programs and began direct advertising about the VISX System for LVC. In addition, legal expenses were higher than in the prior year due to litigation and other matters primarily related to the Company's patents. Research & development costs increased 108% in the third quarter and 51% in the first nine months of 1996 over the comparable periods of 1995. These increases were the result of higher spending to develop new products and technologies and a third quarter charge related to incremental compensation expense. Research & development costs declined as a percentage of net sales in both the third quarter and the first nine months of 1996 from the comparable periods in 1995 due primarily to increased net sales during the 1996 periods. Regulatory costs were lower in both the third quarter and the first nine months of 1996 than in the comparable periods of 1995 when the Company incurred incremental costs for staff, consultants and other regulatory expenses necessary to pursue PMA applications filed with the FDA. Interest and other income increased in the third quarter and first nine months of 1996 over the comparable periods in 1995 due to higher interest income generated by funds raised in the November 1995 common stock offering. LIQUIDITY AND CAPITAL RESOURCES Higher sales in the third quarter of 1996 over the fourth quarter of 1995 contributed to the increase in accounts receivable. Increases in accrued liabilities, principally cash received as deposits accompanying orders for VISX Systems and warranty accruals, largely offset the increase in accounts receivable. Purchases of short-term investments reflect reinvestment of the proceeds from maturities of short-term investments and investment of cash and cash equivalents in short-term investments. Page 8 The Company anticipates that its current cash, cash equivalents and short-term investments, as well as anticipated cash flows from operations, will be sufficient to cover working capital and capital equipment needs through the end of 1997. The Company may, however, seek to raise additional capital during this time frame and any such additional capital may not be available on satisfactory terms. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The following discussion of legal proceedings contains forward-looking statements that involve risks and uncertainties. The Company's actual results of operations could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those factors identified below. The Company is a party to various pending legal proceedings. For a complete description of such proceedings, see the Company's report on Form 10-K for the year ended December 31, 1995 and report on Form 10-Q for the quarter ended June 30, 1996. During the quarter ended September 30, 1996 there were no material developments with respect to such previously existing proceedings, except as follows: PRODUCT LIABILITY VISX requires all investigators participating in clinical trials sponsored by VISX to advise persons treated in United States clinical trials that the procedure is investigational and has not been determined to be safe or effective by the FDA and requires that signed consents be obtained prior to treatment. Notwithstanding these requirements, certain individuals who were treated in United States clinical trials of the VISX System have sued their ophthalmologists and VISX following their surgery. Two lawsuits, one in Michigan and one in New Jersey, were voluntarily dismissed by the plaintiffs during the respective quarter ended September 30, 1996. In a third lawsuit, brought in Pennsylvania, discovery is ongoing, and the plaintiff has recently amended its complaint to add a claim for punitive damages. In addition to punitive damages, plaintiff is seeking money damages of $2,000,000 from the Company. VISX believes that it has meritorious defenses to the Pennsylvania action, and that its resolution will not have a material adverse effect on the Company's financial position or results of operations. Nevertheless, the action is still in discovery, and there can be no assurance as to its outcome. In particular, the prospect of punitive damages could, depending on the results at trial, have an adverse impact on the Company. In addition to the foregoing, the Company has been named as a "respondent in discovery" in a lawsuit brought in Illinois. Under Illinois law, a respondent in discovery must respond to discovery by a plaintiff as if it were a defendant, and the respondent in discovery may be added as a defendant under certain circumstances. There is no indication at this stage that VISX will be added as a defendant in that case, and it is too early to determine what, if any, impact the resolution of this case could have on the Company's financial position or results of operations. The following new proceedings have arisen since June 30, 1996. VISX PARTNER, INC. V. SUMMIT TECHNOLOGY, INC. On August 28, 1996, the Company's wholly-owned subsidiary, VISX Partner, Inc., brought suit against Summit Technology, Inc. ("Summit"). The suit, filed in the United States District Court for the District of Massachusetts, alleges breach of contract by Summit under its license agreement with Pillar Point Partners. VISX Partner brought the suit on behalf Page 9 of the Partnership in accordance with provisions of the partnership agreement governing resolution of disputes. VISX Partner seeks damages in an amount not less than $4,500,000. The action is in the early phase of discovery, and there can be no prediction as to the outcome of the action or the effect, if any, that the case will have on the Company's financial position or results of operations. PATENT LITIGATION PILLAR POINT PARTNERS V. APPLER. On September 9, 1996, Pillar Point Partners brought suit in the United States District Court for the District of Columbia against William D. Appler, an individual. The suit alleges that Mr. Appler has induced others to infringe the partnership's patents and interference with prospective business relationships, and seeks money damages and injunctive relief. PILLAR POINT PARTNERS V. BARNET DULANEY EYE CENTER. On September 9, 1996, Pillar Point Partners brought suit in the United States District Court for the District of Arizona against David Dulaney and Anna Marie Dulaney (husband and wife), Ronald Barnet and Teri Lynn Barnet (husband and wife) and Barnet Dulaney Eye Center P.L.L.C. The suit alleges infringement of certain of the partnership's patents, and seeks money damages and injunctive relief. PILLAR POINT PARTNERS V. JON DISHLER, ET AL. On October 9, 1996, Pillar Point Partners brought suit in the United States District Court for the District of Colorado against Jon G. Dishler, DTC Eye Surgery Center, Inc., D.T.C. Eye Associates, P.C., and Laser Institute of the Rockies, LLC. The suit alleges infringement of certain of the partnership's patents, and seeks money damages and injunctive relief. SHEPHERD V. PILLAR POINT PARTNERS, ET AL. On September 5, 1996, an action was filed by a Nevada ophthalmologist against Pillar Point Partners, Summit Technology, Inc., Summit Partner, Inc., VISX, and VISX Partner, Inc. The action was filed in the United States District Court for the Northern District of California. Generally, the plaintiff alleges that the per procedure royalty charged by Pillar Point Partners to its licensees is a violation of the Sherman Act, or alternatively a violation of corresponding Nevada and California antitrust laws. The plaintiff is not a licensee of Pillar Point Partners, and does not own a VISX System. The plaintiff seeks money damages of $56,250 (plus $12,500 per month through the judgment date). VISX believes that it has meritorious defenses to this action, and that its resolution will not have a material adverse effect on the Company's financial position or results of operations. However, the suit is in the early stages of discovery and there can be no assurance as to its outcome. AUTONOMOUS TECHNOLOGIES CORPORATION V. PILLAR POINT PARTNERS, ET AL. On October 24, 1996, Autonomous Technologies Corporation ("Autonomous") brought an action in the United States District Court for the District of Delaware, against Pillar Point Partners, Summit, Summit Partner, Inc., VISX, and VISX Partner, Inc. The action seeks declaratory relief that one of the Partnership's patents is not infringed, is invalid and unenforceable, and that the defendants are otherwise promissorily estopped from claiming that the Autonomous system infringes the same patent. VISX believes that it has meritorious defenses to this action, and that its resolution will not have a material adverse effect on the Company's financial position or results of operations. However, the suit is in the early stages of discovery and there can be no assurance as to its outcome. The patent litigation described above involves patent infringement issues relating to whether or not patents licensed to Pillar Point Partners are valid and/or are infringed by the activities of the other parties to such actions. In addition, the structure and operation of Pillar Point Partners has been alleged by certain of such other parties to be in violation of federal and, in certain cases, state antitrust laws. Adverse determinations in such proceedings with respect to the patents licensed to Pillar Point Partners or with respect to whether or not the structure and operation of Pillar Point Partners is in violation of Page 10 antitrust laws could have a material adverse effect on the business, financial condition and results of operations of the Company. AUTONOMOUS TECHNOLOGIES CORPORATION V. VISX. On October 24, 1996, Autonomous brought an action in the Federal Court of Canada (Trial Division), against VISX. The action seeks declaratory relief that one of VISX's patents is not infringed, is invalid and unenforceable, and that VISX is otherwise promissorily estopped from claiming that the Autonomous system infringes the same patent. VISX believes that it has meritorious defenses to this action, and that its resolution will not have a material adverse effect on the Company's financial position or results of operations. However, the suit is in the early stages of discovery and there can be no assurance as to its outcome. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a) EXHIBITS. Ex. 3 Amended and Restated Certificate of Incorporation Ex. 27 Financial Data Schedule b) REPORTS ON FORM 8-K. None Page 11 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) November 08, 1996 /s/Mark B. Logan (Date) --------------------------------- Mark B. Logan Chairman of the Board and Chief Executive Officer November 08, 1996 /s/Timothy R. Maier (Date) ----------------------------------- Timothy R. Maier Vice President and Chief Financial Officer (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) Page 12 EX-3 2 EXHIBIT 3 EXHIBIT 3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF VISX, INCORPORATED ------------------------ VISX, INCORPORATED (the "Company"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "General Corporation Law"), having filed its original Certificate of Incorporation on June 7, 1988, under the name of TTI Acquisition Corp., DOES HEREBY CERTIFY: That the amendment and restatement of the Company's Certificate of Incorporation was duly approved by the Company's Board of Directors, and by a majority of the Company's Stockholders, in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. Pursuant to Sections 242 and 245 of the General Corporation Law, this Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Certificate of Incorporation of the Company. The text of the Company's Certificate of Incorporation as heretofore amended or supplemented is hereby amended and restated in its entirety to read as follows: I: The name of the Company is VISX, Incorporated. II: The address of its registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of the registered agent at such address is The Corporation Trust Company. III: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. IV: The total number of shares of all classes of stock that the Company is authorized to issue is ninety million (90,000,000) shares of Common Stock with a par value of $0.01 per share. V: The Company reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights and powers conferred herein upon stockholders and directors are granted subject to this reservation. VI: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, alter or repeal the Bylaws of the Company. VII: Meetings of stockholders shall be held at such place, within or without the State of Delaware, as may be designated by or in the manner provided in the Bylaws, or, if not so designated, at the registered office of the Company in the State of Delaware. Elections of directors need not be by written ballot unless and to the extent that the Bylaws so provide. VIII: To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of this Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Without limiting the foregoing in any respect, a director of this Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director's duty of loyalty to the Company or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the Delaware General Corporation Law, or (4) for any transaction from which the director derived an improper personal benefit. IX: (A) RIGHT TO INDEMNIFICATION. (1) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Company, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer , employee or agent, shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. (2) The Company shall indemnify and hold harmless in such manner any person who was or is made a party or is threatened to be made a party to a proceeding by reason of the fact that he, she or a person of whom he or she is the legal representative, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise; (3) Notwithstanding the foregoing, except as provided in paragraph IX(B) below, the Company shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Company. In the event a director or officer of the Company shall serve as a director, officer, employee or agent of any corporation, partnership, joint venture, trust or other enterprise in which the Company maintains an investment it shall be conclusively presumed for purposes of the indemnification provided for in subsection (A)(2) above that such service has been undertaken at the request of the Company. The foregoing presumption shall apply regardless of whether such director or officer is serving such entity at the request of a third party or that his or her service with such entity was commenced prior to the effectiveness of this Article of the Certificate of Incorporation or prior to his or her becoming an officer or director of the Company. The right to indemnification conferred in subsection (A)(1) above shall be a contract right based upon an offer from the Company which shall be deemed to be accepted by such person's service or continued service with the Company for any period after the adoption of this Article of the Certificate of Incorporation and shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition; PROVIDED, HOWEVER, that (if the Delaware General Corporation Law requires) the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the Company of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Company may, by action of its Board of Directors, provide indemnification to employees or agents of the Company with the same scope and effect as the foregoing indemnification of directors and officers. (B) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under subsection IX(A)(1) of this Article is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim, and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Company) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Company to indemnify the claimant for the amount claimed. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (C) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors, or otherwise. (D) INSURANCE. The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Delaware Corporation Law. X: Whenever a compromise or arrangement is proposed between the Company and its creditors or any class of them and/or between the Company and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Company or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Company under the provisions of Section 291 Title 8 of the Delaware Code or on the application of trustees in dissolution or any receiver or receivers appointed for the Company under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Company, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Company, as the case may be, agree to any compromise or arrangement and to any reorganization of this Company as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors and/or on all the stockholders or class of stockholders of the Company, as the case may be, and also on the Company. RESOLVED FURTHER, that the foregoing Amended and Restated Certificate of Incorporation is hereby approved and adopted. IN WITNESS WHEREOF, VISX, INCORPORATED has caused this Restated Certificate to be signed by Mark B. Logan, its President and Chief Executive Officer, this 20th day of September , 1996. VISX, INCORPORATED By: /s/ Mark B. Logan ----------------------------------- Mark B. Logan PRESIDENT AND CHIEF EXECUTIVE OFFICER EX-27 3 EX 27
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 24,677 59,291 15,988 (600) 6,618 106,600 6,343 (3,262) 112,486 19,563 0 0 0 154 92,769 112,486 39,385 50,776 21,904 21,904 0 600 0 12,305 862 11,443 0 0 0 11,443 0.72 0.72
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