##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549



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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 June 30, 2001

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



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VISX, INCORPORATED(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 06-1161793                       
|                                                               |  |                                  
|(State or other Jurisdiction of
Incorporation or Organization) |  | (IRS Employer 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 July 31, 2001:
55,733,593





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TABLE OF CONTENTS



|                              |                                                                                               |                                                              |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Condensed Consolidated Interim Financial Statements                                  
|                              |                                                                                               | CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS     
|                              |                                                                                               | CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              |                                                                                               | Overview                                                    
|                              |                                                                                               | Results of Operations                                       
|                              |                                                                                               | Liquidity and Capital Resources                             
|                              |                                                                                               | Business Risks and Fluctuations in Results                  
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   



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##### Table of Contents



VISX, INCORPORATED
TABLE OF CONTENTS

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|PART I   FINANCIAL INFORMATION |         |                                                                                                                                                              
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|                               | Item 1. | Condensed Consolidated Interim Financial Statements                                                                                                           |  |     
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|                               |         | Condensed Consolidated Interim Balance Sheets as
of June 30, 2001 and December 31, 2000                                                                       |  | 3   
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|                               |         | Condensed Consolidated Interim Statements of Operations for
the Three Months Ended June 30, 2001 and 2000 and for the
Six Months Ended June 30, 2001 and 2000 |  | 4   
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|                               |         | Condensed Consolidated Interim Statements of Cash Flows for
the Six Months Ended June 30, 2001 and 2000                                                       |  | 5   
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|                               |         | Notes to Condensed Consolidated Interim Financial Statements                                                                                                  |  | 6   
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|                               | Item 2. | Managements Discussion and Analysis of Financial Condition
and Results of Operations                                                                         |  |     
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|                               |         | Overview                                                                                                                                                      |  | 9   
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|                               |         | Results of Operations                                                                                                                                         |  | 9   
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|                               |         | Liquidity and Capital Resources                                                                                                                               |  | 10  
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|                               |         | Business Risks and Fluctuations in Quarterly Results                                                                                                          |  | 11  
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|                               | Item 3. | Quantitative and Qualitative Disclosure about Market Risk                                                                                                     |  | 12  
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|PART II   OTHER INFORMATION    |         |                                                                                                                                                              
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|                               | Item 1. | Legal Proceedings                                                                                                                                             |  | 12  
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|                               | Item 6. | Exhibits and Reports on Form 8-K                                                                                                                              |  | 13  
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|SIGNATURES                     |         |                                                                                                                                                               |  | 14  

Page 2



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##### Table of Contents






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

|                                        |                                                                                                |                                                                         |                            |                           |     |             |         |         |              |         |         | 
|--------------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------- | ------------------------- | --- | ----------- | ------- | ------- | ------------ | ------- | ------- | 
|                                        |                                                                                                |                                                                         |                            |                           |     | June 30,    |         |         | December 31, |        
|                                        |                                                                                                |                                                                         |                            |                           |     | 2001        |         |         | 2000         |        
|                                        |                                                                                                |                                                                         |                            |                           |     |             |         |         |              |        
|                                        |                                                                                                |                                                                         |                            |                           |     | (unaudited) |         |         |              |         |        
|Current Assets:                         |                                                                                                |                                                                         |                            |                           |     |             |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                      |                                                                         | $                          | 22,832                    |     |             | $       | 19,686  |             
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term investments                                                                         |                                                                         |                            | 138,536                   |     |             |         | 209,767 |             
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts receivable, net of allowance for
doubtful accounts of $3,080 and $5,771,
respectively |                                                                         |                            | 42,702                    |     |             |         | 34,540  |             
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories                                                                                    |                                                                         |                            | 17,649                    |     |             |         | 14,762  |             
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred tax assets and prepaid expenses                                                       |                                                                         |                            | 20,325                    |     |             |         | 19,642  |             
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|                                        |                                                                                                |                                                                         |                            | Total current assets      |     |             | 242,044 |         |              |         | 298,397 | 
|                                       
|                                       
|                                       
|                                       
|Property and Equipment, net             |                                                                                                |                                                                         | 3,895                      |                           |     |             | 4,996   |        
|                                       
|                                       
|                                       
|                                       
|Long-Term Deferred Tax and Other Assets |                                                                                                |                                                                         | 18,221                     |                           |     |             | 18,114  |        
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                                | $                                                                       | 264,160                    |                           |     | $           | 321,507 |        
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|Current Liabilities:                    |                                                                                                |                                                                         |                            |                           |     |             |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                               |                                                                         | $                          | 4,063                     |     |             | $       | 7,353   |             
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities                                                                            |                                                                         |                            | 73,361                    |     |             |         | 45,382  |             
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                                |                                                                         |                            | Total current liabilities |     |             | 77,424  |         |              |         | 52,735  | 
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|Stockholders Equity:                   |                                                                                                |                                                                         |                            |                           |     |             |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock:                                                                                  |                                                                         |                            |                           |     |             |         |         |             
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                                | $.01 par value, 180,000,000 shares authorized;
64,990,089 shares issued |                            |                           | 650 |             |         |         | 650          |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                     |                                                                         |                            | 209,846                   |     |             |         | 214,668 |             
|                                       
|                                       
|                                       
|                                       
|                                        | Treasury stock, at cost 8,901,896 and 4,233,989
shares, respectively                           |                                                                         |                            | (160,119                  | )   |             |         | (79,946 | )           
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated comprehensive income                                                               |                                                                         |                            | 2,025                     |     |             |         | 984     |             
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                                                                              |                                                                         |                            | 134,334                   |     |             |         | 132,416 |             
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|                                        |                                                                                                |                                                                         | Total stockholders equity |                           |     | 186,736     |         |         |              | 268,772 |        
|                                        |                                                                                                |                                                                         |                            |                           |     |            
|                                        |                                                                                                | $                                                                       | 264,160                    |                           |     | $           | 321,507 |        
|                                        |                                                                                                |                                                                         |                            |                           |     |            

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Page 3



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |   |        |         |         | 
|---------------------------------------- | ------------------------------------- | ------------------------ | ------- | ------------------ | ------ | - | ---------------- | ----------- | ------ | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                         |                                       |                          |         | Three months ended |        |   | Six months ended |            
|                                         |                                       |                          |         | June 30,           |        |   | June 30,         |            
|                                         |                                       |                          |         |                    |        |   |                  |            
|                                         |                                       |                          |         | 2001               |        |   | 2000             |             |        | 2001 |        |         | 2000    |  
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |  
|                                         |                                       |                          |         |                    |        |   |                  | (unaudited) |        |      |        |         |        
|Revenues:                                |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | System sales                          |                          | $       | 17,239             |        |   | $                | 15,322      |        |      | $      | 34,335  |         |   | $      | 35,199  |        
|                                        
|                                        
|                                        
|                                        
|                                         | License, service and other revenues   |                          |         | 32,143             |        |   |                  | 32,683      |        |      |        | 66,623  |         |   |        | 76,803  |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|                                         |                                       | Total revenues           |         |                    | 49,382 |   |                  |             | 48,005 |      |        |         | 100,958 |   |        |         | 112,002 | 
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|Costs and Expenses:                      |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Cost of revenues                      |                          |         | 15,809             |        |   |                  | 16,929      |        |      |        | 33,637  |         |   |        | 33,898  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Marketing, general and administrative |                          |         | 11,609             |        |   |                  | 12,596      |        |      |        | 23,389  |         |   |        | 27,184  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Research, development and regulatory  |                          |         | 4,592              |        |   |                  | 3,341       |        |      |        | 9,142   |         |   |        | 6,851   |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|                                         |                                       | Total costs and expenses |         |                    | 32,010 |   |                  |             | 32,866 |      |        |         | 66,168  |   |        |         | 67,933  | 
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|Income From Operations                   |                                       |                          | 17,372  |                    |        |   | 15,139           |             |        |      | 34,790 |         |         |   | 44,069 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Interest and other income             |                          |         | 2,759              |        |   |                  | 3,311       |        |      |        | 6,201   |         |   |        | 6,978   |        
|                                         | Litigation settlement                 |                          |         | (37,821            | )      |   |                  | (11,856     | )      |      |        | (37,821 | )       |   |        | (11,856 | )      
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|Income Before Provision For Income Taxes |                                       |                          | (17,690 | )                  |        |   | 6,594            |             |        |      | 3,170  |         |         |   | 39,191 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Provision for income taxes            |                          |         | (6,988             | )      |   |                  | 2,441       |        |      |        | 1,252   |         |   |        | 15,480  |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|Net Income                               |                                       | $                        | (10,702 | )                  |        | $ | 4,153            |             |        | $    | 1,918  |         |         | $ | 23,711 |        
|                                        
|                                        
|                                        
|                                        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|                                        
|                                        
|                                        
|                                        
|Earnings Per Share                       |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                 |                          | $       | (0.19              | )      |   | $                | 0.07        |        |      | $      | 0.03    |         |   | $      | 0.38    |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|                                         | Diluted                               |                          | $       | (0.19              | )      |   | $                | 0.07        |        |      | $      | 0.03    |         |   | $      | 0.37    |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|Shares Used For Earnings Per Share       |                                       |                          |         |                    |        |   |                  |             |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                 |                          |         | 56,536             |        |   |                  | 60,725      |        |      |        | 58,021  |         |   |        | 62,171  |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        
|                                         | Diluted                               |                          |         | 56,536             |        |   |                  | 62,910      |        |      |        | 59,735  |         |   |        | 64,587  |        
|                                         |                                       |                          |         |                    |        |   |                  |             |        |      |        |        

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Page 4



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands)

|                                                     |                                                                                   |                                                                                     |                                          |         |                  |        |        |         |         |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------- | ------- | ---------------- | ------ | ------ | ------- | ------- | ------- | -
|                                                     |                                                                                   |                                                                                     |                                          |         | Six months ended |       
|                                                     |                                                                                   |                                                                                     |                                          |         | June 30,         |       
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|                                                     |                                                                                   |                                                                                     |                                          |         | 2001             |        |        | 2000    |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |        |        |         |        
|                                                     |                                                                                   |                                                                                     |                                          |         | (unaudited)      |       
|Cash flows from operating activities:                |                                                                                   |                                                                                     |                                          |         |                  |        |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                                                        |                                                                                     | $                                        | 1,918   |                  |        | $      | 23,711  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                     |                                          |         |                  |        |        |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Depreciation and amortization                                                       |                                          |         | 1,996            |        |        |         | 1,574   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Reserve for doubtful accounts receivable                                            |                                          |         | (2,691           | )      |        |         | 645     |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Increase (decrease) in cash flows from
changes in operating assets and liabilities: |                                          |         |                  |        |        |         |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Accounts receivable                      |         |                  | (5,471 | )      |         |         | 5,080   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Inventories                              |         |                  | (2,887 | )      |         |         | 857     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Deferred tax assets and prepaid expenses |         |                  | (683   | )      |         |         | 11,942  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Long-term deferred tax and other assets  |         |                  | (107   | )      |         |         | (16,804 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Accounts payable                         |         |                  | (3,290 | )      |         |         | 396     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                                                     | Accrued liabilities                      |         |                  | 27,979 |        |         |         | 50      |  
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Net cash provided by operating activities                                           |                                          |         | 16,764           |        |        |         | 27,451  |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|Cash flows from investing activities:                |                                                                                   |                                                                                     |                                          |         |                  |        |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Capital expenditures                                                              |                                                                                     |                                          | (895    | )                |        |        | (1,264  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchase of short-term investments                                                |                                                                                     |                                          | (23,368 | )                |        |        |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from maturities of short-term investments                                |                                                                                     |                                          | 95,471  |                  |        |        | 48,721  |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Net cash provided by investing activities                                           |                                          |         | 71,208           |        |        |         | 47,457  |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|Cash flows from financing activities:                |                                                                                   |                                                                                     |                                          |         |                  |        |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Exercise of stock options                                                         |                                                                                     |                                          | 4,582   |                  |        |        | 3,126   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repurchase of common stock                                                        |                                                                                     |                                          | (89,408 | )                |        |        | (86,622 | )      
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|                                                     |                                                                                   | Net cash used in financing activities                                               |                                          |         | (84,826          | )      |        |         | (83,496 | )      
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                                                     | 3,146                                    |         |                  |        | (8,588 | )      
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |                                                                                   |                                                                                     | 19,686                                   |         |                  |        | 25,842 |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, end of period             |                                                                                   | $                                                                                   | 22,832                                   |         |                  | $      | 17,254 |        
|                                                     |                                                                                   |                                                                                     |                                          |         |                  |       

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Page 5Table of Contents
VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2001
(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 2000 Annual
Report on 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.
        
        Revenue Recognition:We record revenue and the cost of installation, training, and warranty
services when we ship and, where applicable, install products. Software that
is used in our systems is included at the time of shipment. We recognize
service revenue when we provide service. We recognize license revenue when we
ship VisionKey® cards in the United States and when we receive payments from
manufacturing licensees.3.
        
        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, and are unaudited.

|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |        |  |   |        |        | 
|-------------------------- | ------------------------------------------------------------------- | - | ------------------ | ------- | - | ---------------- | ----- | ------ | ---- | - | ----- | ------ |  | - | ------ | ------ | 
|                           |                                                                     |   | Three Months Ended |         |   | Six Months Ended |      
|                           |                                                                     |   | June 30,           |         |   | June 30,         |      
|                           |                                                                     |   |                    |         |   |                  |      
|                           |                                                                     |   | 2001               |         |   | 2000             |       |        | 2001 |   |       | 2000   | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |        | 
|NET INCOME                 |                                                                     | $ | (10,702            | )       |   | $                | 4,153 |        |      | $ | 1,918 |        |  | $ | 23,711 |       
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|BASIC EARNINGS PER SHARE   |                                                                     |   |                    |         |   |                  |       |        |      |   |       |        |  |   |        |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | (10,702 | ) |                  | $     | 4,153  |      |   | $     | 1,918  |  |   | $      | 23,711 | 
|                          
|                          
|                          
|                          
|                           | Weighted average common shares outstanding                          |   |                    | 56,536  |   |                  |       | 60,725 |      |   |       | 58,021 |  |   |        | 62,171 | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|                           | Basic Earnings Per Share                                            |   | $                  | (0.19   | ) |                  | $     | 0.07   |      |   | $     | 0.03   |  |   | $      | 0.38   | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|DILUTED EARNINGS PER SHARE |                                                                     |   |                    |         |   |                  |       |        |      |   |       |        |  |   |        |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | (10,702 | ) |                  | $     | 4,153  |      |   | $     | 1,918  |  |   | $      | 23,711 | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|                           | Weighted average common shares outstanding                          |   |                    | 56,536  |   |                  |       | 60,725 |      |   |       | 58,021 |  |   |        | 62,171 | 
|                          
|                          
|                          
|                          
|                           | Dilutive potential common shares from stock options                 |   |                    |        |   |                  |       | 2,185  |      |   |       | 1,714  |  |   |        | 2,416  | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|                           | Weighted average common shares and dilutive potential common shares |   |                    | 56,536  |   |                  |       | 62,910 |      |   |       | 59,735 |  |   |        | 64,587 | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       
|                           | Diluted Earnings Per Share                                          |   | $                  | (0.19   | ) |                  | $     | 0.07   |      |   | $     | 0.03   |  |   | $      | 0.37   | 
|                           |                                                                     |   |                    |         |   |                  |       |        |      |   |       |       

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Options to purchase 4,033,000 shares and 2,860,000 shares during the six
month periods ended June 30, 2001 and 2000, 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.



|4. |  | Inventories(in thousands):
|-- |  | --------------------------

|                                |       |   |             |        |  |              |       |        | 
|------------------------------- | ----- | - | ----------- | ------ |  | ------------ | ----- | ------ | 
|                                |       |   | June 30,    |        |  | December 31, |      
|                                |       |   | 2001        |        |  | 2000         |      
|                                |       |   |             |        |  |              |      
|                                |       |   | (unaudited) |        |  |              |       |       
|Raw materials and subassemblies |       | $ | 13,189      |        |  | $            | 9,278 |       
|                               
|                               
|                               
|                               
|Work in process                 |       |   | 2,966       |        |  |              | 4,099 |       
|                               
|                               
|                               
|                               
|Finished goods                  |       |   | 1,494       |        |  |              | 1,385 |       
|                                |       |   |             |        |  |             
|                                | Total |   | $           | 17,649 |  |              | $     | 14,762 | 
|                                |       |   |             |        |  |             



|5. |  | Comprehensive Income(unaudited, in thousands):
|-- |  | ----------------------------------------------

|                           |                                                                              |   |                    |      |   |                  |       |     |      |   |       |      |  |   |        |     |  
|-------------------------- | ---------------------------------------------------------------------------- | - | ------------------ | ---- | - | ---------------- | ----- | --- | ---- | - | ----- | ---- |  | - | ------ | --- | -
|                           |                                                                              |   | Three Months Ended |      |   | Six Months Ended |      
|                           |                                                                              |   | June 30,           |      |   | June 30,         |      
|                           |                                                                              |   |                    |      |   |                  |      
|                           |                                                                              |   | 2001               |      |   | 2000             |       |     | 2001 |   |       | 2000 | 
|                           |                                                                              |   |                    |      |   |                  |       |     |      |   |       |      | 
|NET INCOME                 |                                                                              | $ | (10,702            | )    |   | $                | 4,153 |     |      | $ | 1,918 |      |  | $ | 23,711 |    
|                          
|                          
|                          
|                          
|OTHER COMPREHENSIVE INCOME |                                                                              |   |                    |      |   |                  |       |     |      |   |       |      |  |   |        |    
|                          
|                          
|                          
|                          
|                           | Change in unrealized holding gains (losses) on
available-for-sale securities |   |                    | (287 | ) |                  |       | 188 |      |   |       | 872  |  |   |        | (82 | )
|                          
|                          
|                          
|                          
|                           | Change in accumulated foreign currency translation adjustment                |   |                    | 43   |   |                  |       | 19  |      |   |       | 169  |  |   |        | (2  | )
|                           |                                                                              |   |                    |      |   |                  |       |     |      |   |       |     
|COMPREHENSIVE INCOME       |                                                                              | $ | (10,946            | )    |   | $                | 4,360 |     |      | $ | 2,959 |      |  | $ | 23,627 |    
|                           |                                                                              |   |                    |      |   |                  |       |     |      |   |       |     



|6. |  | New Accounting Pronouncements
|-- |  | -----------------------------

On June 29, 2001, the Financial Accounting Standard Board (FASB)
approved for issuance Statement of Financial Accounting Standards No. 141,
Business Combinations (SFAS 141), and Statement of Financial Accounting
Standards No. 142, Goodwill and Intangible Assets (SFAS 142). Major
provisions of these statements are as follows:



| | (i)   |  | All business combinations initiated after June 30, 2001 must
use the purchase method of accounting;                                                                                                                                                                                                                                 
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | The pooling of interest method of accounting is prohibited
except for transactions initiated before July 1, 2001;                                                                                                                                                                                                                   
|
| | (iii) |  | Intangible assets acquired in a business combination must be
recorded separately from goodwill if they arise from contractual or
other legal rights or are separable from the acquired entity and can
be sold, transferred, licensed, rented or exchanged, either
individually or as part of a related contract, asset or liability;

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| | (iv)   |  | Goodwill and intangible assets with indefinite lives are not
amortized but are tested for impairment annually using a fair value
approach, except in certain circumstances, and whenever there is an
impairment indicator;
| | ------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (v)    |  | Other intangible assets will continue to be valued and
amortized over their estimated lives;                                                                                                                              
|
| | (vi)   |  | In-process research and development will continue to be
written off immediately;                                                                                                                                          
|
| | (vii)  |  | All acquired goodwill must be assigned to reporting units
for purposes of impairment testing and segment reporting;                                                                                                       
|
| | (viii) |  | Effective January 1, 2002, existing goodwill will no longer be
subject to amortization.                                                                                                                                   

Goodwill arising between June 29, 2001 and December 31, 2001 will not be
subject to amortization. Upon adoption of SFAS 142, on January 1, 2002, we
will no longer be required amortize goodwill. However, since we have no
goodwill assets or amortization, adoption of these statements will have no
impact on our financial statements or results of operations.

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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 2000 Annual Report and Form 10-K and under Business Risks and
Fluctuations In Results 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 Excimer 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. The FDA has also approved our WaveScan
Wavefront System (WaveScan System) which provides a complete refractive
analysis of the eyes entire optical system. In the future, we anticipate that
doctors will be able to use this analysis to enhance treatments with the VISX
System. We sell VisionKey® 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. If adverse determinations
were rendered in current or future patent and antitrust litigation, damages
might 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® cards to fluctuate or even
decline. Accordingly, our past results may not be useful in predicting our
future results.




Results of Operations

|                                  |                           |      |                             |      |      |                           |        |        |   |  |      |    |  |      |         |      |        |   |         |      |   |  |     |    | 
|--------------------------------- | ------------------------- | ---- | --------------------------- | ---- | ---- | ------------------------- | ------ | ------ | - |  | ---- | -- |  | ---- | ------- | ---- | ------ | - | ------- | ---- | - |  | --- | -- | 
|                                  |                           |      | Three Months Ended June 30, |      |      | Six Months Ended June 30, |       
|                                  |                           |      |                             |      |      |                           |       
|REVENUES (000's)                  |                           | 2001 |                             |      | 2000 |                           |        | Change |   |  | 2001 |    |  | 2000 |         |      | Change |  
|                                  |                           |      |                             |      |      |                           |        |        |   |  |      |    |  |      |         |      |        |   |        
|System sales                      |                           | $    | 17,239                      |      |      | $                         | 15,322 |        |   |  | 13   | %  |  | $    | 34,335  |      |        | $ | 35,199  |      |   |  | (2  | )%
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                             | 34.9 | %    |                           |        | 31.9   | % |  |      |    |  |      |         | 34.0 | %      |   |         | 31.4 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|License, service & other revenues |                           |      | 32,143                      |      |      |                           | 32,683 |        |   |  | (2   | )% |  |      | 66,623  |      |        |   | 76,803  |      |   |  | (13 | )%
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                             | 65.1 | %    |                           |        | 68.1   | % |  |      |    |  |      |         | 66.0 | %      |   |         | 68.6 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|Total                             |                           | $    | 49,382                      |      |      | $                         | 48,005 |        |   |  | 3    | %  |  | $    | 100,958 |      |        | $ | 112,002 |      |   |  | (10 | )%

We sold fewer laser
systems in the second quarter and first half of 2001
than in the comparable periods of 2000. Sales of laser upgrades have grown
each quarter since they commenced in the fourth quarter of 2000, offsetting
lower sales of new lasers. We anticipate that sales of upgrades will slow in
coming quarters since a significant number of our customers have already
upgraded their laser systems. Our average selling price for laser systems was
slightly higher than in the prior year due to the introduction of our new STAR
S3 model late in 2000. We believe the decline in laser system sales was due to
a number of factors including the economic slowdown in the United States and
increased competition.

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Our License, Service & Other Revenue was lower in 2001 than in 2000 due
mainly to two factors. Customers in the U.S. purchased VisionKey® cards for
fewer procedures in the second quarter and first half of 2001 than in the
comparable periods of 2000. In addition, effective February 22, 2000, we
reduced our license fee from $250 to $100 per procedure in the U.S. Laser
vision correction is not generally covered by medical insurance. The decision
to have laser vision correction surgery is influenced by many factors including
consumers confidence in and perception of the health of the economy. We
believe that we maintained our share of the U.S. laser vision correction
market, however the slowdown in the U.S. economy and decline in consumer
confidence lead to a slowdown in the industry as a whole during 2001. We
believe this was the main cause for the decline in our U.S. procedure volume.
At present, it is hard to predict when the U.S. economy and consumer confidence
will rebound and provide renewed support for the U.S. laser vision correction
market.

|                           |                           |      |                             |      |      |                           |        |        |   |  |      |    |  |      |        |      |        |   |        |      |   |  |     |    | 
|-------------------------- | ------------------------- | ---- | --------------------------- | ---- | ---- | ------------------------- | ------ | ------ | - |  | ---- | -- |  | ---- | ------ | ---- | ------ | - | ------ | ---- | - |  | --- | -- | 
|                           |                           |      | Three Months Ended June 30, |      |      | Six Months Ended June 30, |       
|                           |                           |      |                             |      |      |                           |       
|COSTS & EXPENSES (000's)   |                           | 2001 |                             |      | 2000 |                           |        | Change |   |  | 2001 |    |  | 2000 |        |      | Change |  
|                           |                           |      |                             |      |      |                           |        |        |   |  |      |    |  |      |        |      |        |   |       
|Cost of revenues           |                           | $    | 15,809                      |      |      | $                         | 16,929 |        |   |  | (7   | )% |  | $    | 33,637 |      |        | $ | 33,898 |      |   |  | (1  | )%
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                             | 32.0 | %    |                           |        | 35.3   | % |  |      |    |  |      |        | 33.3 | %      |   |        | 30.3 | % |  |     |    | 
|                          
|                          
|                          
|                          
|Marketing, genl and admin |                           |      | 11,609                      |      |      |                           | 12,596 |        |   |  | (8   | )% |  |      | 23,389 |      |        |   | 27,184 |      |   |  | (14 | )%
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                             | 23.5 | %    |                           |        | 26.2   | % |  |      |    |  |      |        | 23.2 | %      |   |        | 24.3 | % |  |     |    | 
|                          
|                          
|                          
|                          
|R&D and regulatory         |                           |      | 4,592                       |      |      |                           | 3,341  |        |   |  | 37   | %  |  |      | 9,142  |      |        |   | 6,851  |      |   |  | 33  | % 
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                             | 9.3  | %    |                           |        | 7.0    | % |  |      |    |  |      |        | 9.1  | %      |   |        | 6.1  | % |  |     |    | 

Cost of revenues for upgrades, first shipped in the fourth quarter of
2000, more than offset the decline in cost of revenues for laser system in 2001
from 2000. Our gross profit margin was higher in the second quarter of 2001
than in the comparable period of 2000 as a result of the higher average selling
price of our new STAR S3 model (introduced late in 2000). However, our gross
profit margin was lower in the first half of 2001 predominately due to the
reduction in our license fee per procedure. Marketing, general and
administrative expenses were lower in 2001 than in the prior year mainly due to
a reduction in marketing expenses associated with promotional programs. Legal
expenses were also lower in 2001 than in 2000. In research and development we
increased spending in our three main areas of focus: new capabilities for the
VISX STAR Excimer Laser platform, development of new products such as our
WaveScan System and wavefront-driven ablations, and research into new
technologies. We anticipate that our R&D and regulatory expenses will total
approximately $19 million in 2001.

Our average balance of cash invested in interest bearing securities
declined in 2001 from 2000 because we repurchased a significant amount of our
stock. Accordingly, interest income declined in 2001 from 2000. We accrued
income taxes based on our expected effective income tax rate for all of 2001,
net of credits anticipated.




Liquidity and Capital Resources

Cash, cash equivalents and short-term investments (cash) and working
capital were as follows:

|                                                  |  |               |         |  |                   |   |         | 
|------------------------------------------------- |  | ------------- | ------- |  | ----------------- | - | ------- | 
|                                                  |  | (000's)       |        
|                                                  |  | June 30, 2001 |         |  | December 31, 2000 |  
|                                                  |  |               |         |  |                   |  
|Cash, cash equivalents
and short-term
investments |  | $             | 161,368 |  |                   | $ | 229,453 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Working capital                                   |  |               | 164,620 |  |                   |   | 245,662 | 

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Cash decreased by $68 million in the first six months of 2001 principally
because we spent $89 million to repurchase 5.2 million shares of VISX stock on
the open market. This was partially offset by $17 million generated from
operations.

On April 4, 2001 our Board of Directors authorized a new Stock Repurchase
Program under which up to 10 million shares of VISX common stock may be
repurchased. Before repurchasing shares we consider a number of factors
including market conditions, the market price of the stock, and the number of
shares needed for employee benefit plans. As a result, we cannot predict the
number of shares that we may repurchase in the future.

Purchases of short-term investments represent reinvestment into short-term
investments of the proceeds from short-term investments that matured and
investment of cash and cash equivalents. As of June 30, 2001 we did not have
any borrowings outstanding nor any credit agreements.

Our normal payment terms are net 30 days. However, based on our evaluation
of customers, market conditions and industry practices, we provide extended
payment terms beyond one year on some of our system sales in certain markets.
We believe 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;                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | 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, prevent us
from manufacturing or selling our products, 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.

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

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##### Table of Contents



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.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the three months ended June 30, 2001
to our exposure to market risk for changes in interest rates and foreign
currency exchange rates.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

Overview

VISX is engaged in numerous legal proceedings. Generally, the litigation
and other proceedings
center on the validity or enforceability of the 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 and securities 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 VISXs 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, 2000, and report on Form 10-Q for the quarter ended
March 31, 2001. During
the quarter ended June 30, 2001, there were no material developments with
respect to such previously
existing proceedings and no new material proceedings not previously disclosed,
except as follows:

Patent Litigation: LaserSight

In November 1999, VISX filed an action alleging that LaserSight had
infringed VISX United States Patent No. 4,718,418 (the
418 Patent) in
United States District Court in Delaware (USDC Del. 99-789). In May 2001, the
parties reached a settlement of this action which provided, among other things,
for the licensing of the 418 Patent and other VISX United States patents to
LaserSight.

International Patent Litigation: Nidek

In February 1994, VISX filed an action in Canada alleging patent
infringement by Nidek and certain of its distributors and customers. Nidek
opposed the action and contested the validity of VISXs patents. In December
1999, the Canadian federal court ruled that VISXs patents were valid, but that
defendants had not infringed the VISX patents. Both parties appealed this
decision, and on June 22, 2001 the Canadian court of appeal upheld the trial
courts determination of validity and non-infringement.

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##### Table of Contents



Antitrust Class Actions

During the most
recent quarter, VISX and Summit Autonomous, Inc., a subsidiary of
Alcon, settled
antitrust class actions and other claims involving Pillar Point Partners. The
settled claims were brought on behalf of VISX and Summit customers nationwide
and patients in certain states and the District of Columbia who had refractive
surgery performed on the companies laser systems. The settlements are subject
to court approval and include: The consolidated antitrust class actions brought
on behalf of VISX and Summit customers nationwide and pending in Multi-District
Litigation in the United States District Court in Arizona (captioned In re
Pillar Point Partners Antitrust and Patent Litigation, MDL No. 1202, the
Arizona MDL); the consolidated antitrust class actions brought on behalf of
patients in certain states and the District of Columbia and pending in
California Superior Court for Santa Clara County (captioned In re PRK/LASIK
Consumer Litigation, No. VC772894); Robert G. Burlingame, M.D. v. Pillar Point
Partners, et al., also pending in the Arizona MDL; Freedom Vision Laser Center,
LP v. VISX, Incorporated, et al., also pending in the Arizona MDL; and Antoine
L. Garabet, M.D. et al. v. Summit Technology, Inc., et al., pending in
California Superior Court for Santa Clara County (No. VC787359).

In connection with these settlements, VISX will pay a total of approximately
$37.8 million in one-time payments and related costs and fees.




Item 6. Exhibits and Reports on Form 8-K



|a) |  | Exhibits.                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------
|  
|   |  | None                                                                                             
|  
|b) |  | Reports on Form 8-K.                                                                             
|  
|   |  | VISX filed two reports on Form 8-K during or after the period covered by
this report, as follows:



| | (1) |  | Report on Form 8-K filed on April 6, 2001 under Item 5 (Other
Events) covering amendments and restatements of VISX Bylaws, as revised
through April 3, 2001. Attached as exhibits to the Form 8-K were VISXs
amended and restated Bylaws, as revised through April 3, 2001.                                                                                                                                                              
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Report on Form 8-K filed on May 1, 2001 under Item 5 (Other Events)
covering VISX Board of Directors authorization of an amendment to the
Rights Agreement, dated as of August 3, 2000 (the Rights Agreement),
between VISX and Fleet National Bank, as rights agent. Attached as
exhibits to the Form 8-K were the Rights Agreement, dated as of August
3, 2000, and the Amendment to the Rights Agreement, dated as of April
25, 2001.

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##### Table of Contents






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)      
| |                   
| |                   

|                |                               
|--------------- | ------------------------------
|                | /s/ Elizabeth H. Dávila       
|                |                               
|August 10, 2001 | Elizabeth H. Davila           
|               
|               
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|(Date)          | Chairman of the Board and     
|               
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|                | Chief Executive Officer       
|               
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|                | /s/ Timothy R. Maier          
|                |                               
|                | Timothy R. Maier              
|               
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|August 10, 2001 | Executive Vice President and  
|               
|               
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|(Date)          | Chief Financial Officer       
|               
|               
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|                | (principal financial officer) 
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|                | /s/ Derek A. Bertocci         
|                |                               
|August 10, 2001 | Derek A. Bertocci             
|               
|               
|               
|               
|(Date)          | Vice President, Controller    
|               
|               
|               
|               
|                | (principal accounting officer)

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