##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


FORM 10-Q



| | (X) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
| | --- |  | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2002

or



| | (  ) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
| | ---- |  | ----------------------------------------------------------------------------------------

For the transition period from                      to

Commission File Number 1-10694

VISX, INCORPORATED

(Exact name of registrant as specified in its charter)


|                                                                                         |  |                                            
|---------------------------------------------------------------------------------------- |  | -------------------------------------------
|Delaware(State or other Jurisdiction of
Incorporation or Organization)                   |  | 06-1161793(IRS Employer
Identification No.)
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|3400 Central Expressway, Santa Clara, California(Address of principal executive offices) |  | 95051-0703(Zip Code)                       

(Registrants telephone number, including area code):   (408) 733-2020

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  [X]   No  [  ]

Total number of shares of common stock outstanding as of October 31, 2002:
51,569,607





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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                             
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                              | Item 4. Disclosure Controls and Procedures                                                   
|Part II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|EXHIBIT INDEX                
|EXHIBIT 99.1                 



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##### Table of Contents



VISX, INCORPORATED
TABLE OF CONTENTS

|           |                               |                                                                                               |                                                                                                                                                                          |  |      |    | 
|---------- | ----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|           |                               |                                                                                               |                                                                                                                                                                          |  | Page
|           |                               |                                                                                               |                                                                                                                                                                          |  |     
|           | PART I. FINANCIAL INFORMATION |                                                                                               |                                                                                                                                                                          |  |     
|          
|          
|          
|          
|           |                               | Item 1. Condensed Consolidated Interim Financial Statements                                   |                                                                                                                                                                          |  |      |   
|          
|          
|          
|          
|           |                               |                                                                                               | Condensed Consolidated Interim Balance Sheets as
of September 30, 2002 and December 31, 2001                                                                             |  |      | 3  | 
|          
|          
|          
|          
|           |                               |                                                                                               | Condensed Consolidated Interim Statements of Operations for
the Three Months Ended September 30, 2002 and 2001 and for
the Nine Months Ended September 30, 2002 and 2001 |  |      | 4  | 
|          
|          
|          
|          
|           |                               |                                                                                               | Condensed Consolidated Interim Statements of Cash Flows for
the Nine Months Ended September 30, 2002 and 2001                                                            |  |      | 5  | 
|          
|          
|          
|          
|           |                               |                                                                                               | Notes to Condensed Consolidated Interim Financial Statements                                                                                                             |  |      | 6  | 
|          
|          
|          
|          
|           |                               | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                                                                          |  |      |   
|          
|          
|          
|          
|           |                               |                                                                                               | Overview                                                                                                                                                                 |  |      | 11 | 
|          
|          
|          
|          
|           |                               |                                                                                               | Results of Operations                                                                                                                                                    |  |      | 11 | 
|          
|          
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|          
|           |                               |                                                                                               | Liquidity and Capital Resources                                                                                                                                          |  |      | 13 | 
|          
|          
|          
|          
|           |                               |                                                                                               | Critical Accounting Policies                                                                                                                                             |  |      | 16 | 
|          
|          
|          
|          
|           |                               | Item 3.Quantitative and Qualitative Disclosure about Market Risk                              |                                                                                                                                                                          |  | 18   |   
|          
|          
|          
|          
|           |                               | Item 4.Disclosure Controls and Procedures                                                     |                                                                                                                                                                          |  | 18   |   
|          
|          
|          
|          
|           | PART II OTHER INFORMATION     |                                                                                               |                                                                                                                                                                          |  |     
|          
|          
|          
|          
|           |                               | Item 1.Legal Proceedings                                                                      |                                                                                                                                                                          |  | 18   |   
|          
|          
|          
|          
|           |                               | Item 5.Other Information                                                                      |                                                                                                                                                                          |  | 19   |   
|          
|          
|          
|          
|           |                               | Item 6.Exhibits and Reports on Form 8-K                                                       |                                                                                                                                                                          |  | 20   |   
|          
|          
|          
|          
|SIGNATURES |                               |                                                                                               | 20                                                                                                                                                                       | 

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                                 
|                                        |                                                                                                | September 30,              |                           | December 31,
|                                        |                                                                                                |                            |                           |              | 2002        |         | 2001   
|                                        |                                                                                                |                            |                           |              |             |         |        
|                                        |                                                                                                |                            |                           |              | (unaudited) |         |         |          |        
|Current Assets:                         |                                                                                                |                            |                           |              |             |         |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                      |                            | $                         | 24,640       |             |         | $       | 15,349   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term investments                                                                         |                            |                           | 93,619       |             |         |         | 108,458  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts receivable, net of allowance for
doubtful accounts of $2,565 and $4,567,
respectively |                            |                           | 24,591       |             |         |         | 32,490   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories                                                                                    |                            |                           | 14,309       |             |         |         | 14,071   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred tax assets and prepaid expenses                                                       |                            |                           | 23,842       |             |         |         | 33,214   |        
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|                                        |                                                                                                |                            | Total current assets      |              |             | 181,001 |         |          |         | 203,582 | 
|                                       
|                                       
|                                       
|                                       
|Property and Equipment, net             |                                                                                                |                            | 5,986                     |              |             |         | 4,152   |         
|                                       
|                                       
|                                       
|                                       
|Long-Term Deferred Tax and Other Assets |                                                                                                |                            | 12,883                    |              |             |         | 12,191  |         
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|                                        |                                                                                                | $                          | 199,870                   |              |             | $       | 219,925 |         
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|Current Liabilities:                    |                                                                                                |                            |                           |              |             |         |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                               |                            | $                         | 5,498        |             |         | $       | 3,270    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities                                                                            |                            |                           | 36,588       |             |         |         | 40,377   |        
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|                                        |                                                                                                |                            | Total current liabilities |              |             | 42,086  |         |          |         | 43,647  | 
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|Stockholders Equity:                   |                                                                                                |                            |                           |              |             |         |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock: $.01 par value, 180,000,000
shares authorized; 64,990,089 shares issued          |                            |                           | 650          |             |         |         | 650      |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                     |                            |                           | 201,237      |             |         |         | 208,130  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Treasury stock, at cost 13,317,882 and
10,436,238 shares, respectively                         |                            |                           | (206,215     | )           |         |         | (178,347 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated comprehensive income                                                               |                            |                           | 1,899        |             |         |         | 2,520    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                                                                              |                            |                           | 160,213      |             |         |         | 143,325  |        
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|                                        |                                                                                                | Total stockholders equity |                           |              | 157,784     |         |         |          | 176,278 |        
|                                        |                                                                                                |                            |                           |              |             |         |         |         
|                                        |                                                                                                | $                          | 199,870                   |              |             | $       | 219,925 |         
|                                        |                                                                                                |                            |                           |              |             |         |         |         

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 |        | Nine months ended
|                                         |                                             |                          |       | September 30,      |        | September 30,    
|                                         |                                             |                          |       |                    |        |                  
|                                         |                                             |                          |       | 2002               |        | 2001              |       | 2002   |        | 2001
|                                         |                                             |                          |       |                    |        |                   |       |        |        |     
|                                         |                                             |                          |       | (unaudited)       
|Revenues:                                |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | System revenues                             |                          | $     | 10,216             |        |                   | $     | 13,485 |        |      | $      | 32,935  |         |   | $      | 47,820  |        
|                                        
|                                        
|                                        
|                                        
|                                         | License, service and other revenues         |                          |       | 20,344             |        |                   |       | 23,547 |        |      |        | 70,849  |         |   |        | 87,938  |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                         |                                             | Total revenues           |       |                    | 30,560 |                   |       |        | 37,032 |      |        |         | 103,784 |   |        |         | 135,758 | 
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Costs and Expenses:                      |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Cost of system revenues                     |                          |       | 6,802              |        |                   |       | 10,235 |        |      |        | 21,913  |         |   |        | 34,538  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Cost of license, service and other revenues |                          |       | 5,016              |        |                   |       | 4,228  |        |      |        | 14,494  |         |   |        | 13,562  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Selling, general, and administrative        |                          |       | 8,552              |        |                   |       | 11,683 |        |      |        | 30,731  |         |   |        | 32,840  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Research, development and regulatory        |                          |       | 4,601              |        |                   |       | 5,344  |        |      |        | 13,625  |         |   |        | 14,486  |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                         |                                             | Total costs and expenses |       |                    | 24,971 |                   |       |        | 31,490 |      |        |         | 80,763  |   |        |         | 95,426  | 
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Income From Operations                   |                                             |                          | 5,589 |                    |        |                   | 5,542 |        |        |      | 23,021 |         |         |   | 40,332 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Interest and other income                   |                          |       | 1,505              |        |                   |       | 2,331  |        |      |        | 4,597   |         |   |        | 8,532   |        
|                                        
|                                        
|                                        
|                                        
|                                         | Litigation settlement                       |                          |       |                   |        |                   |       |       |        |      |        |        |         |   |        | (37,821 | )      
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Income Before Provision For Income Taxes |                                             |                          | 7,094 |                    |        |                   | 7,873 |        |        |      | 27,618 |         |         |   | 11,043 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Provision for income taxes                  |                          |       | (2,625             | )      |                   |       | (3,113 | )      |      |        | (10,730 | )       |   |        | (4,365  | )      
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Net Income                               |                                             | $                        | 4,469 |                    |        | $                 | 4,760 |        |        | $    | 16,888 |         |         | $ | 6,678  |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Earnings Per Share                       |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                       |                          | $     | 0.09               |        |                   | $     | 0.09   |        |      | $      | 0.32    |         |   | $      | 0.12    |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                         | Diluted                                     |                          | $     | 0.08               |        |                   | $     | 0.08   |        |      | $      | 0.31    |         |   | $      | 0.11    |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|Shares Used For Earnings Per Share       |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                       |                          |       | 52,483             |        |                   |       | 55,755 |        |      |        | 53,145  |         |   |        | 57,257  |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        
|                                         | Diluted                                     |                          |       | 52,904             |        |                   |       | 57,141 |        |      |        | 53,954  |         |   |        | 58,867  |        
|                                         |                                             |                          |       |                    |        |                   |       |        |        |      |        |         |         |   |        |        

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)

|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |          |         |        |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------- | ------- | ----------------- | ------ | ------- | -------- | ------- | ------ | -
|                                                     |                                                                                   |                                              |                                          |         | Nine months ended
|                                                     |                                                                                   |                                              |                                          |         | September 30,    
|                                                     |                                                                                   |                                              |                                          |         |                  
|                                                     |                                                                                   |                                              |                                          |         | 2002              |        | 2001   
|                                                     |                                                                                   |                                              |                                          |         |                   |        |        
|                                                     |                                                                                   |                                              |                                          |         | (unaudited)      
|Cash flows from operating activities:                |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                                                        |                                              | $                                        | 16,888  |                   |        | $       | 6,678    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income to net cash
provided by operating activities: |                                              |                                          |         |                   |        |         |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Depreciation and amortization                |                                          |         | 2,851             |        |         |          | 2,849   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Provision for doubtful accounts receivable   |                                          |         | 1,142             |        |         |          | 2,395   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Changes in operating assets and liabilities: |                                          |         |                   |        |         |          |         |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Accounts receivable                      |         |                   | 6,757  |         |          |         | (3,338 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Inventories                              |         |                   | (2,806 | )       |          |         | (815   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Deferred tax assets and prepaid expenses |         |                   | 9,372  |         |          |         | (1,007 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Long-term deferred tax and other assets  |         |                   | (710   | )       |          |         | (295   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Accounts payable                         |         |                   | 2,228  |         |          |         | (1,906 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                              | Accrued liabilities                      |         |                   | (3,789 | )       |          |         | (1,812 | )
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                     |                                                                                   | Net cash provided by operating activities    |                                          |         | 31,933            |        |         |          | 2,749   |       
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Cash flows from investing activities:                |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Capital expenditures, net                                                         |                                              |                                          | (2,099  | )                 |        |         | (1,712   | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Equity investments                                                                |                                              |                                          |        |                   |        |         | (1,800   | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchase of short-term investments                                                |                                              |                                          | (64,580 | )                 |        |         | (33,290  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from maturities of short-term investments                                |                                              |                                          | 78,799  |                   |        |         | 119,876  |        
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                     |                                                                                   | Net cash provided by investing activities    |                                          |         | 12,120            |        |         |          | 83,074  |       
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Cash flows from financing activities:                |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Exercise of stock options                                                         |                                              |                                          | 4,352   |                   |        |         | 5,227    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repurchase of common stock                                                        |                                              |                                          | (39,113 | )                 |        |         | (103,970 | )      
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                     |                                                                                   | Net cash used in financing activities        |                                          |         | (34,761           | )      |         |          | (98,743 | )     
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Effect of exchange rate changes                      |                                                                                   |                                              | (1                                       | )       |                   |        | 184     |         
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                              | 9,291                                    |         |                   |        | (12,736 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |                                                                                   |                                              | 15,349                                   |         |                   |        | 19,686  |         
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Cash and cash equivalents, end of period             |                                                                                   | $                                            | 24,640                                   |         |                   | $      | 6,950   |         
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         
|Non-Cash Investing Activities:                       |                                                                                   |                                              |                                          |         |                   |        |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Inventory transferred to property and equipment under
operating leases            |                                              | $                                        | 2,568   |                   |        | $       |         |        
|                                                     |                                                                                   |                                              |                                          |         |                   |        |         |         

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

Page 5



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2002
(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 2001 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. |  | Earnings Per Share:
|-- |  | -------------------

Basic earnings per share (EPS) equals net income (loss) divided by the
weighted average number of common shares outstanding. Diluted EPS equals net
income (loss) divided by the weighted average number of common shares
outstanding plus dilutive potential common shares calculated in accordance with
the treasury stock method. The calculation of diluted net loss per share
excludes potential common shares if the effect is antidilutive. All amounts in
the following table are in thousands, except per share data.

|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |        | 
|-------------------------- | ------------------------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ----- | ------ | ---- | - | ------ | ------ |  | - | ----- | ------ | 
|                           |                                                                     |   | Three Months Ended |        | Nine Months Ended
|                           |                                                                     |   | September 30,      |        | September 30,    
|                           |                                                                     |   |                    |        |                  
|                           |                                                                     |   | 2002               |        | 2001              |   | 2002  |        | 2001
|                           |                                                                     |   |                    |        |                   |   |       |        |     
|NET INCOME                 |                                                                     | $ | 4,469              |        |                   | $ | 4,760 |        |      | $ | 16,888 |        |  | $ | 6,678 |       
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|BASIC EARNINGS PER SHARE   |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | 4,469  |                   |   | $     | 4,760  |      |   | $      | 16,888 |  |   | $     | 6,678  | 
|                          
|                          
|                          
|                          
|                           | Weighted average common shares outstanding                          |   |                    | 52,483 |                   |   |       | 55,755 |      |   |        | 53,145 |  |   |       | 57,257 | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                           | Basic Earnings Per Share                                            |   | $                  | 0.09   |                   |   | $     | 0.09   |      |   | $      | 0.32   |  |   | $     | 0.12   | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|DILUTED EARNINGS PER SHARE |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | 4,469  |                   |   | $     | 4,760  |      |   | $      | 16,888 |  |   | $     | 6,678  | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                           | Weighted average common shares outstanding                          |   |                    | 52,483 |                   |   |       | 55,755 |      |   |        | 53,145 |  |   |       | 57,257 | 
|                          
|                          
|                          
|                          
|                           | Dilutive potential common shares from stock options                 |   |                    | 421    |                   |   |       | 1,386  |      |   |        | 809    |  |   |       | 1,610  | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                           | Weighted average common shares and dilutive potential common shares |   |                    | 52,904 |                   |   |       | 57,141 |      |   |        | 53,954 |  |   |       | 58,867 | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       
|                           | Diluted Earnings Per Share                                          |   | $                  | 0.08   |                   |   | $     | 0.08   |      |   | $      | 0.31   |  |   | $     | 0.11   | 
|                           |                                                                     |   |                    |        |                   |   |       |        |      |   |        |        |  |   |       |       

At September 30, 2002 and 2001, options for the purchase of 6,356,000 and
4,024,000 shares respectively, were exercisable at weighted average purchase
price per share of $12.77 and $17.14, and were excluded from the computation of
diluted EPS because exercise prices for these options were greater than the
average market price of VISXs common stock during these periods and their
effect is antidilutive.

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|3. |  | Inventories(in thousands):
|-- |  | --------------------------

|                                |       |   |               |        |              |   |       |        | 
|------------------------------- | ----- | - | ------------- | ------ | ------------ | - | ----- | ------ | 
|                                |       |   | September 30, |        | December 31,
|                                |       |   | 2002          |        | 2001        
|                                |       |   |               |        |             
|Raw materials and subassemblies |       | $ | 8,953         |        |              | $ | 8,901 |       
|                               
|                               
|                               
|                               
|Work in process                 |       |   | 1,166         |        |              |   | 1,491 |       
|                               
|                               
|                               
|                               
|Finished goods                  |       |   | 4,190         |        |              |   | 3,679 |       
|                                |       |   |               |        |              |   |       |       
|                                | Total |   | $             | 14,309 |              |   | $     | 14,071 | 
|                                |       |   |               |        |              |   |       |       



|4. |  | Comprehensive Income(in thousands):
|-- |  | -----------------------------------

|                           |                                                                     |   |                    |     |                   |   |       |       |      |   |        |      |   |   |       |       | 
|-------------------------- | ------------------------------------------------------------------- | - | ------------------ | --- | ----------------- | - | ----- | ----- | ---- | - | ------ | ---- | - | - | ----- | ----- | 
|                           |                                                                     |   | Three Months Ended |     | Nine Months Ended
|                           |                                                                     |   | September 30,      |     | September 30,    
|                           |                                                                     |   |                    |     |                  
|                           |                                                                     |   | 2002               |     | 2001              |   | 2002  |       | 2001
|                           |                                                                     |   |                    |     |                   |   |       |       |     
|NET INCOME                 |                                                                     | $ | 4,469              |     |                   | $ | 4,760 |       |      | $ | 16,888 |      |   | $ | 6,678 |      
|                          
|                          
|                          
|                          
|OTHER COMPREHENSIVE INCOME |                                                                     |   |                    |     |                   |   |       |       |      |   |        |      |   |   |       |      
|                          
|                          
|                          
|                          
|                           | Change in unrealized holding gains on available-for-sale
securities |   |                    | 354 |                   |   |       | 1,242 |      |   |        | (620 | ) |   |       | 2,114 | 
|                          
|                          
|                          
|                          
|                           | Change in accumulated foreign currency translation adjustment       |   |                    | (21 | )                 |   |       | 15    |      |   |        | (1   | ) |   |       | 184   | 
|                           |                                                                     |   |                    |     |                   |   |       |       |      |   |        |      |   |   |       |      
|COMPREHENSIVE INCOME       |                                                                     | $ | 4,802              |     |                   | $ | 6,017 |       |      | $ | 16,267 |      |   | $ | 8,976 |      
|                           |                                                                     |   |                    |     |                   |   |       |       |      |   |        |      |   |   |       |      



|5. |  | Share Repurchase Program
|-- |  | ------------------------

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. In accordance with the April 4, 2001 authorization and applicable
securities laws, through purchases on the open market we repurchased 3,541,700
shares during the first nine months of 2002 and have repurchased 6,644,100
shares cumulatively through September 30, 2002 at a total cost of $39.1 million
and $86.8 million, respectively. Accordingly, 3.4 million shares remain
available as of September 30, 2002 for repurchase under the Board of Directors
April 2001 authorization.



|6. |  | Significant Customer and Commitments
|-- |  | ------------------------------------

In May 2002, Laser Vision Centers, Inc. and TLC Laser Eye Centers, Inc.,
both customers of ours, announced their business combination was consummated
and became effective. The entitys new name is TLC Vision Corporation (TLC).
The combined company, TLC, accounted for 12% and 19% of total revenues in the
third quarter of 2002 and 2001, respectively, and 15% and 17% of total revenues
in the first nine months of 2002 and 2001, respectively.

In May 2002, VISX announced that it signed a Letter of Intent with Tracey
Technologies, LLC (Tracey) for exclusive worldwide rights to Traceys ray
tracing technology for use in customized laser vision correction treatments.
Additionally, VISX announced that it entered into an exclusive worldwide
license agreement for a portfolio of patents held by Luis Ruiz, MD, relating to
the treatment of presbyopia with multifocal ablations. During the second
quarter of fiscal 2002, VISX made payments of $650,000 related to these
agreements, of which $150,000 was expensed in connection with research and

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development activities and the balance was capitalized as a prepaid asset.
No additional payments were made during the third quarter of 2002. If a final
agreement is concluded with Tracey and clinical and regulatory milestones
specified in both agreements are achieved, VISX would be committed to make
additional payments in the range of $3 to $7 million in connection with these
two agreements. VISX could be obligated for additional payments for royalties
in the future based on any future sales of the associated product.



|7. |  | Related Party Transactions
|-- |  | --------------------------

In August 2001, we signed a one-year research and development agreement
with Medjet Inc. (Medjet) under which we provided funding to Medjet to pursue
new ophthalmic technologies and products. In addition, we signed a merger agreement
with Medjet that provided us with a one-year option, for which we paid $0.5
million, to acquire all outstanding Medjet common stock in a merger transaction
for $2.00 per share in cash. During the third quarter of fiscal 2002, our
agreements with Medjet was amended to provide us with up to an additional
eleven months to acquire all outstanding Medjet common stock in a merger
transaction for $2.00 per share in cash. The closing of the potential merger
was subject to Medjets stockholder approval and is subject to other customary
conditions to closing. In August 2001, we also paid $1.3 million to purchase
from a third party all outstanding shares of Medjets Series B Convertible
Preferred Stock, which are entitled to votes equivalent to 1,040,000 shares of
Medjet common stock and vote together with Medjets common stock. These shares
owned by VISX represent 21% of Medjets voting stock. In connection with these
agreements, we also entered into a voting agreement with Dr. Eugene Gordon,
founder of Medjet, under which Dr. Gordon agreed to vote all of his shares
of common stock in favor of the merger, and agreed to sell all of his stock
to VISX in the event that VISX offers to complete the merger. Dr. Gordon
currently holds shares representing approximately 32% of Medjets voting stock.
Additionally, VISX acquired warrants from Medjet to purchase 1,320,000 shares
of Medjet common stock excercisable at $0.75 per share. VISX also acquired
warrants from a third party to purchase 1,365,000 shares of Medjet common stock
exercisable at $3.50 per share. The warrants expire during the second half of
2004. Under Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities, the warrants are treated as
derivatives and measured at fair value. At each balance sheet date, the
warrants are remeasured at fair value and all gains and losses are recorded in
the statements of operations. We account for this investment under the equity
method prescribed by Accounting Principles Board No. 18, The Equity Method of
Accounting for Investments in Common Stock.

Under our R&D agreement with Medjet, we paid approximately $2.0 million to
Medjet to fund research and development work they performed during the first
nine months of 2002. We expense payments made to Medjet as research,
development and regulatory expense in our financial statements. To exercise our
option to acquire Medjet, we would have to pay approximately $9 million based
on the $2.00 per share purchase price and the number of shares of Medjet common
stock, options and warrants outstanding at September 30, 2002.

In November 2002, VISX terminated its merger and research and development
agreements with Medjet. In accordance with these agreements, VISX will pay
termination fees of $250,000 in the fourth quarter. As of
September 30, 2002, the remaining net book value of the investment in Medjet was
approximately $1.5 million. At this time we do not believe we have an impairment loss, however, we are required under generally accepted
accounting principles to review our investment for losses that are other than temporary. We will continue to monitor our investments in Medjet which may result in a charge to earnings in the future for some or
all of the $1.5 million.

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|8. |  | 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 interests 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;
|
| | (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 no
longer are required to amortize goodwill. Adoption of these statements did not
have any impact on our financial statements or results of operations as we do not have any goodwill recorded as of the adoption date.

In July 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on EITF No. 00-25, Vendor Income Statement Characterization of
Consideration Paid to a Reseller of the Vendors Products (EITF 00-25). EITF
00-25 generally requires that consideration, including equity instruments,
given to a customer be classified in a vendors financial statements not as an
expense, but as a reduction to revenue up to the amount of cumulative revenue
recognized or to be recognized. In November 2001, the EITF reached consensus on
EITF No. 01-09, Accounting for Consideration Given by a Vendor to a Customer
or Reseller of the Vendors Products (EITF 01-09). EITF 01-09 clarifies and
modifies certain items discussed in EITF 00-25. We adopted these new standards
on January 1, 2002. In accordance with the transition guidance in EITF 00-25,
adoption required the reclassification of financial statements for prior
periods presented for comparative purposes.

In accordance with EITF 00-25 and EITF 01-09, we have reclassified
consideration provided to customers in our statements of operations. This
consideration was previously reported as selling, general, and administrative
expense. This consideration is now reported as a reduction to license, service
and other revenue. The amounts reclassified for the first, second, third and
fourth quarters of 2001 are

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$1,111,000, $1,121,000, $1,508,000 and $810,000, respectively. These
reclassifications do not change the amount of net income reported for each
period, however revenue and expense are reduced in equal and offsetting amounts
in each period. Accordingly, the reclassification of the consideration
previously reported as selling, general, and administrative expense reduces our
gross profit ratio. Based upon this reclassification, our gross profit ratio
decreased to 61% from the previously reported 62% for the three months ended September 30, 2001 and
decreased to 65% from the previously reported 66% for the nine months ended September 30, 2001.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets (SFAS 144). An impairment loss must be recognized if the net book
value of long-lived assets exceeds:



| | (i)   |  | The future cash flows to be generated by these assets, whether
through continued operation or sale,
| | ----- |  | ---------------------------------------------------------------------------------------------------
|
| | (ii)  |  | The fair value of assets to be distributed to owners in a spin-off,
or                             
|
| | (iii) |  | The fair value of productive assets for which they are exchanged.                                  

This statement applies to long-term leases, certain oil and gas
properties, and long-term prepaid assets. It does not apply to goodwill,
intangible assets not being amortized, investments in equity securities
accounted for under the cost or equity method, and certain other types of
long-term assets. The provisions of SFAS 144 became effective for VISX on
January 1, 2002. We adopted SFAS 144 effective January 1, 2002, and adoption
of this statement did not have any impact on VISXs financial statements or
results of operations.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146) and nullifies EITF
Issue No. 94-3 Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring. SFAS 146 requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is incurred,
whereas EITF No. 94-3 had recognized the liability at the commitment date to an
exit plan. VISX is required to adopt the provisions of SFAS 146 effective for
exit or disposal activities initiated after December 31, 2002. VISX is
currently evaluating the impact of adoption of this statement but does not
expect a material impact on its financial position or results of operations.

Reclassifications.Certain reclassifications were made to prior year financial
data to conform with current year presentation.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

This Report contains forward-looking statements about expected system
sales and rentals, laser upgrade revenue and costs, license revenue, and R&D
expenditures for the remainder of 2002. These statements are subject to risks
and uncertainties that may cause actual results to differ significantly. The
risks and uncertainties include the potential reduction in demand for VISX
equipment and upgrades, and the potential decline in demand for procedures
caused by the continued weakness in the economy, consumer confidence and stock
markets in the United States. These forward-looking statements are estimates
reflecting the best judgment of the senior management of VISX, and they involve
a number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements. This Report,
including forward-looking statements contained herein, should therefore be considered in light
of various important factors, including those set forth in our 2001 annual
report on Form 10-K under the caption Risk Factors beginning on page 26,
Legal Proceedings beginning on page 8, and elsewhere in that report.
Moreover, we caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date they were made. We do not undertake
any obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this report or
to reflect the occurrence of unanticipated events.

The laser vision correction industry is evolving rapidly. Economic,
market, and technology changes frequently affect VISX and could harm our
business in the future. If any of the risks referred to above were to
materialize, orders and revenues for the VISX STAR Excimer Laser System (VISX
System) and VisionKey® cards could fluctuate or decline. Accordingly, our past
results may not be useful in predicting our future results.




Overview

We develop products and procedures to improve peoples eyesight using
lasers. Our principal product, the VISX System, is designed to correct the
shape of a persons eyes to reduce or eliminate the 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
approved, under a humanitarian device exemption, the use of VISXs
Custom-Contoured Ablation Pattern (C-CAP ) method to customize laser vision
correction treatments to correct decentered ablations resulting from a previous
treatment on any brand of laser. 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.




Results of Operations

|                                  |                           |      |                                  |      |                                 |        |        |      |   |      |     |        |  |   |         |      |   |   |         |      |   |  |     |    | 
|--------------------------------- | ------------------------- | ---- | -------------------------------- | ---- | ------------------------------- | ------ | ------ | ---- | - | ---- | --- | ------ |  | - | ------- | ---- | - | - | ------- | ---- | - |  | --- | -- | 
|                                  |                           |      | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                                  |                           |      |                                  |      |                                
|REVENUES (000's)                  |                           | 2002 |                                  | 2001 |                                 | Change |        | 2002 |   | 2001 |     | Change
|                                  |                           |      |                                  |      |                                 |        |        |      |   |      |     |       
|System revenues                   |                           | $    | 10,216                           |      |                                 | $      | 13,485 |      |   |      | (24 | %)     |  | $ | 32,935  |      |   | $ | 47,820  |      |   |  | (31 | %)
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                                  | 33.4 | %                               |        |        | 36.4 | % |      |     |        |  |   |         | 31.7 | % |   |         | 35.2 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|License, service & other revenues |                           |      | 20,344                           |      |                                 |        | 23,547 |      |   |      | (14 | %)     |  |   | 70,849  |      |   |   | 87,938  |      |   |  | (19 | %)
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                                  | 66.6 | %                               |        |        | 63.6 | % |      |     |        |  |   |         | 68.3 | % |   |         | 64.8 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|Total                             |                           | $    | 30,560                           |      |                                 | $      | 37,032 |      |   |      | (17 | %)     |  | $ | 103,784 |      |   | $ | 135,758 |      |   |  | (24 | %)

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System revenues

System revenues decreased $3.3 million, to $10.2 million for the three
months ended September 30, 2002 from $13.5 million for the three months ended
September 30, 2001. System revenues decreased $14.9 million, to $32.9 million
for the nine months ended September 30, 2002 from $47.8 for the nine months
ended September 30, 2001. System revenues include sales of laser systems,
upgrades to existing laser systems and WaveScan Systems. We sold fewer laser
systems in the third quarter and first nine months of 2002 than in the
comparable periods of 2001. We believe the decline, mainly in the U.S., was
due primarily to the economic slowdown in the United States. Aggressive pricing
tactics by competitors also adversely affected our sales. Our average selling
price for laser systems was lower than in the prior year due to the factors
discussed above. Upgrade revenue declined $4.0 million and $7.6 million in the
third quarter and first nine months of 2002, respectively, from the comparable
periods of the prior year. The decline in upgrade revenue was due to the fact
that approximately 80% of our lasers in active use in the U.S. have already
been upgraded. Accordingly, we anticipate that revenue from laser upgrades
will decline significantly in coming quarters and that upgrade revenue will be
lower for the full year 2002 than in 2001. WaveScan System sales increased
$1.9 million and $3.0 million in the third quarter and first nine months of
2002, respectively, over the comparable periods of the prior year as we
continued to extend our rollout of this new product.

License, service & other revenues

License, service and other revenue decreased $3.2 million to $20.3 million
for the three months ended September 30, 2002 from $23.5 million for the three
months ended September 30, 2001. License, service and other revenue decreased
$17.1 million to $70.8 million for the nine months ended September 30, 2002
from $87.9 million for the nine months ended September 30, 2001. The decreases
were attributable primarily to customers in the U.S. purchasing VisionKey®
cards for fewer procedures in the third quarter and first nine months of 2002
than in the comparable periods of 2001. The decision to have laser vision
correction surgery is influenced by many factors including consumers
perception of and confidence in the health of the economy. We believe the weak
economy, declines in consumer confidence, and the extended stock market
declines in the United States were the principal reasons why our U.S. procedure
volume, and the U.S. laser vision correction market as a whole, were lower in
the third quarter and first nine months of 2002 than in the same periods of
2001. At present, it is hard to predict when the economy, consumer confidence
and stock markets in the U.S. will rebound and provide renewed support for the
U.S. laser vision correction market.

|                                             |                           |      |                                  |      |                                 |        |        |      |   |      |     |        |  |   |        |      |   |   |        |      |   |  |     |    | 
|-------------------------------------------- | ------------------------- | ---- | -------------------------------- | ---- | ------------------------------- | ------ | ------ | ---- | - | ---- | --- | ------ |  | - | ------ | ---- | - | - | ------ | ---- | - |  | --- | -- | 
|                                             |                           |      | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                                             |                           |      |                                  |      |                                
|COSTS & EXPENSES (000's)                     |                           | 2002 |                                  | 2001 |                                 | Change |        | 2002 |   | 2001 |     | Change
|                                             |                           |      |                                  |      |                                 |        |        |      |   |      |     |       
|Cost of system revenues                      |                           | $    | 6,802                            |      |                                 | $      | 10,235 |      |   |      | (34 | %)     |  | $ | 21,913 |      |   | $ | 34,538 |      |   |  | (37 | %)
|                                            
|                                            
|                                            
|                                            
|                                             | Percent of total revenues |      |                                  | 22.3 | %                               |        |        | 27.6 | % |      |     |        |  |   |        | 21.1 | % |   |        | 25.4 | % |  |     |    | 
|                                            
|                                            
|                                            
|                                            
|Cost
of license, service, and other revenues |                           |      | 5,016                            |      |                                 |        | 4,228  |      |   |      | 19  | %      |  |   | 14,494 |      |   |   | 13,562 |      |   |  | 7   | % 
|                                            
|                                            
|                                            
|                                            
|                                             | Percent of total revenues |      |                                  | 16.4 | %                               |        |        | 11.4 | % |      |     |        |  |   |        | 14.0 | % |   |        | 10.0 | % |  |     |    | 
|                                            
|                                            
|                                            
|                                            
|Selling, genl and admin                     |                           |      | 8,552                            |      |                                 |        | 11,683 |      |   |      | (27 | %)     |  |   | 30,731 |      |   |   | 32,840 |      |   |  | (6  | %)
|                                            
|                                            
|                                            
|                                            
|                                             | Percent of total revenues |      |                                  | 28.0 | %                               |        |        | 31.6 | % |      |     |        |  |   |        | 29.6 | % |   |        | 24.2 | % |  |     |    | 
|                                            
|                                            
|                                            
|                                            
|R&D and regulatory                           |                           |      | 4,601                            |      |                                 |        | 5,344  |      |   |      | (14 | %)     |  |   | 13,625 |      |   |   | 14,486 |      |   |  | (6  | %)
|                                            
|                                            
|                                            
|                                            
|                                             | Percent of total revenues |      |                                  | 15.1 | %                               |        |        | 14.4 | % |      |     |        |  |   |        | 13.1 | % |   |        | 10.7 | % |  |     |    | 

Cost of system revenues

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##### Table of Contents



Cost of system revenues decreased $3.4 million to $6.8 million for the
three months ended September 30, 2002 from $10.2 million for the three months
ended September 30, 2001. Cost of system revenues decreased $12.6 million to
$21.9 million for the nine months ended September 30, 2002 from $34.5 million
for the nine months ended September 30, 2001. These declines were due
primarily to VISX selling fewer laser systems in the third quarter and first
nine months of 2002 than in the comparable periods of 2001. Additionally, cost
of upgrade revenues were lower due to reduced laser upgrade revenues in the
third quarter and first nine months of 2002 than in the comparable periods of
2001. The gross profit margin on upgrade revenue was higher in 2002 than in
2001 due to new product technologies being introduced.

Cost of license, service and other revenues

Cost of license, service and other revenues increased $0.8 million to $5.0
million for the three months ended September 30, 2002 from $4.2 million for the
three months ended September 30, 2001. Cost of license, service and other
revenues increased $0.9 million to $14.5 million for the nine months ended
September 30, 2002 from $13.6 million for the nine months ended September 30,
2001. The increase was due to higher costs for service due to an increased installed base.

Selling, general, and administrative expenses

Selling, general, and administrative expenses decreased $3.1 million to
$8.6 million for the three months ended September 30, 2002 from $11.7 million
for the three months ended September 30, 2001. Selling, general, and
administrative expenses decreased $2.1 million to $30.7 million for the nine
months ended September 30, 2002 from $32.8 million for the nine months ended
September 30, 2001. These decreases were due to decreased legal expenses in
the third quarter and first nine months of 2002 as the result of $3.5 million
and $5.0 million of insurance reimbursements received during the third quarter
and nine months ended September 30, 2002, respectively. Excluding these
reimbursements, legal expenses increased in 2002 over 2001.

Research, development and regulatory expenses

Research, development and regulatory expenses decreased $0.7 million, to
$4.6 million for the three months ended September 30, 2002 from $5.3 million
for the three months ended September 30, 2001. Research, development and
regulatory expenses decreased $0.9 million to $13.6 million for the nine months
ended September 30, 2002 from $14.5 million for the three months ended
September 30, 2001. We continued investing research and development dollars in
our three main areas of focus: new capabilities for the VISX STAR Excimer Laser
platform, development of products such as our WaveScan System and
wavefront-driven ablations, and research into new technologies. We anticipate
that our research, development and regulatory expenses will total approximately
$19 million for 2002.

Interest and other income

Our average balance of cash invested in interest bearing securities was
lower in 2002 than in 2001 due to cash used to repurchase our stock.
Additionally, our average yields on our portfolio of cash and investments were
lower in 2002 compared to 2001. Accordingly, interest income declined in 2002
from 2001.

Litigation settlement  2001

Lawsuits were filed against us in 1998 and thereafter in connection with
the activities of Pillar Point Partners (Pillar Point), a former partnership
between subsidiaries of VISX and Summit Technologies, Inc. (Summit). The
purported class action lawsuits alleged, among other things,

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##### Table of Contents



violations of various state and federal antitrust and unfair competition laws.
Other claims involving Pillar Point were filed against VISX, Summit and others
at various times. The Pillar Point partnership was dissolved in 1998, and in
2001 we and Summit, now a subsidiary of Alcon, Inc., settled certain of these
actions. In connection with the settlements, VISX paid a total of $37.8 million
in one-time payments and related costs and fees. As a result of the
settlements, all of the lawsuits have been dismissed with prejudice.




Liquidity and Capital Resources

Cash, cash equivalents and short-term investments and working capital were
as follows:

|                                                  |  |                    |         |                   |  |   |         | 
|------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | 
|                                                  |  | (000's)           
|                                                  |  | September 30, 2002 |         | December 31, 2001
|                                                  |  |                    |         |                  
|Cash, cash equivalents and short-term
investments |  | $                  | 118,259 |                   |  | $ | 123,807 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Working capital                                   |  |                    | 138,915 |                   |  |   | 159,935 | 

Cash, cash equivalents and short-term investments (cash) decreased by
$5.5 million in the first nine months of 2002 due mainly to $31.9 million cash
provided by operations offset by $39.1 million paid to repurchase 3.5 million
shares of VISX stock on the open market.

Operating activities provided $31.9 million of cash in the first nine
months of 2002, up from $2.7 million provided by operating activities in the
same period of 2001. The following factors that impact cash flow from
operations changed between the first nine months of 2002 and 2001.



| |  |  | Net income increased $10.2 million due mainly to the
non-recurring 2001 litigation settlement of $37.8 million, pre-tax,
offset by lower sales in 2002.   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Deferred tax assets and prepaid expenses decreased by $9.4
million in 2002 primarily as a result of a decrease in prepaid taxes
carried forward from 2001.
|
| |  |  | Accounts receivable (net of reserves) declined by $7.9
million in 2002 due to lower revenues whereas it increased by $0.9
million in 2001.                

On April 4, 2001, our Board of Directors authorized a 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. In accordance with the
April 4, 2001 authorization and applicable securities laws, through purchases
on the open market, we repurchased 3,541,700 shares during the first nine
months of 2002 and have repurchased 6,644,100 shares cumulatively through
September 30, 2002 at a total cost of $39.1 million and $86.8 million,
respectively. Accordingly, 3.4 million shares remain available as of September
30, 2002 for repurchase under the Board of Directors April 2001 authorization.

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 September 30, 2002, we did not have any borrowings outstanding nor
any credit agreements.

Our normal credit terms granted to customers are net 30 to 60 days. In an
effort to promote the growth of the laser vision correction industry and the
use of VISX Systems, in certain markets we

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provide long-term financing to customers for their purchase of VISX
Systems. We consider a number of factors including industry practice,
competition and our evaluation of customers credit worthiness in determining
when to offer such financing.

We believe that our operations will provide sufficient cash flow to meet
our working capital and capital equipment needs during the next twelve months.
In addition, we have $118.3 million of cash, cash equivalents and short-term
investments as of September 30, 2002 to provide for unforeseen contingencies
and to support strategic objectives including the development or acquisition of
new technologies and our Stock Repurchase Program.

In August 2001, we signed a one-year research and development agreement
with Medjet Inc. (Medjet) under which we provided funding to Medjet to pursue
new ophthalmic technologies and products. In addition, we signed a
merger agreement
with Medjet that provided us with a one-year option, for which we paid $0.5
million, to acquire all outstanding Medjet common stock in a merger transaction
for $2.00 per share in cash. During the third quarter of fiscal 2002, our
agreements with Medjet was amended to provide us with up to an additional
eleven months to acquire all outstanding Medjet common stock in a merger
transaction for $2.00 per share in cash. The closing of the potential merger
was subject to Medjets stockholder approval and is subject to other customary
conditions to closing. In August 2001, we also paid $1.3 million to purchase
from a third party all outstanding shares of Medjets Series B Convertible
Preferred Stock, which are entitled to votes equivalent to 1,040,000 shares of
Medjet common stock and vote together with Medjets common stock. These shares
owned by VISX represent 21% of Medjets voting stock. In connection with these
agreements, we also entered into a voting agreement with Dr. Eugene Gordon,
founder of Medjet, under which Dr. Gordon agreed to vote all of his shares
of common stock in favor of the merger, and agreed to sell all of his stock
to VISX in the event that VISX offers to complete the merger. Dr. Gordon
currently holds shares representing approximately 32% of Medjets voting stock.
Additionally, VISX acquired warrants from Medjet to purchase 1,320,000 shares
of Medjet common stock excercisable at $0.75 per share. VISX also acquired
warrants from a third party to purchase 1,365,000 shares of Medjet common stock
exercisable at $3.50 per share. The warrants expire during the second half of
2004. Under Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities, the warrants are treated as
derivatives and measured at fair value. At each balance sheet date, the
warrants are remeasured at fair value and all gains and losses are recorded in
the statements of operations. We account for this investment under the equity
method prescribed by Accounting Principles Board No. 18, The Equity Method of
Accounting for Investments in Common Stock.

Under our R&D agreement with Medjet, we paid approximately $2.0 million to
Medjet to fund research and development work they performed during the first
nine months of 2002. We expense payments made to Medjet as research,
development and regulatory expense in our financial statements. To exercise our
option to acquire Medjet, we would have to pay approximately $9 million based
on the $2.00 per share purchase price and the number of shares of Medjet common
stock, options and warrants outstanding at September 30, 2002.

In November 2002, VISX terminated its merger and research and development
agreements with Medjet. In accordance with these agreements, VISX
will pay termination fees of $250,000 in the fourth quarter. As of
September 30, 2002, the remaining net book value of the investment in Medjet was
approximately $1.5 million. At this time we do not believe we
have an impairment loss, however, we are required under generally accepted
accounting principles to review our investment for losses that are
other than temporary. We will continue to monitor our investments in
Medjet which may result in a change to earnings in the future for some or
all of the $1.5 million.

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In May 2002, VISX announced that it signed a Letter of Intent with Tracey
Technologies, LLC for exclusive worldwide rights to Traceys ray tracing
technology for use in customized laser vision correction treatments.
Additionally, VISX announced that it entered into an exclusive worldwide
license agreement for a portfolio of patents held by Luis Ruiz, MD, relating to
the treatment of presbyopia with multifocal ablations. During the second
quarter VISX made payments of $650,000 related to these agreements of which
$150,000 was expensed in connection with research and development activities
and the balance was capitalized as a prepaid asset. No additional payments
were made during the third quarter of 2002. If a final agreement is concluded
with Tracey and clinical and regulatory milestones specified in both agreements
are achieved, VISX would be committed to make additional payments in the range
of $3 to $7 million in connection with provisions contained in these two
agreements. VISX could be obligated for additional payments for royalty in the
future based on future sales of the associated product.

Critical Accounting Policies

We follow generally accepted accounting principles (GAAP) for the United
States in preparing our financial statements. As part of this work, we must
make many estimates and judgments about future events. These affect the value
of the assets and liabilities, contingent assets and liabilities, and revenues
and expenses that we report in our financial statements. We believe these
estimates and judgments are reasonable and we make them in accordance with our
accounting policies based on information available at the time. However, actual
results could differ from our estimates and this could require us to record
adjustments to expenses or revenues that could be material to our financial
position and results of operations in future periods. Our critical accounting
policies used in making these estimates and judgments are as follows.

Revenue Recognition

Our revenue is comprised of the following: sale and rental of system
equipment and upgrades, service revenue, and license fees and related procedure
revenue (procedure revenue). We recognize revenue in accordance with SEC
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
(SAB 101). Under this standard, revenue is generally recognized when the
following four criteria are met:



| | (1) |  | Persuasive evidence of an arrangement exists;        
| | --- |  | -----------------------------------------------------
|
| | (2) |  | Delivery has occurred or services have been rendered;
|
| | (3) |  | Our selling price is fixed or determinable; and      
|
| | (4) |  | Collectibility is reasonably assured.                

All of our sales are documented by contract or purchase orders specifying
sales prices and terms.

Within the U.S. we directly handle the sale and installation of our
systems and recognize revenue on these products after we have completed
installation of systems at a customers site. At this point we accrue an
estimate of the cost of warranty service to be provided in the future. Outside
the U.S. our standard terms are FOB VISX and we sell exclusively through
independent, third party distributors who are generally responsible for all
marketing, sales, installation, training and warranty labor coverage for our
products. Accordingly, we recognize sales revenue when we ship systems for
customers outside the U.S. and accrue an estimate of the cost of parts that we
are obligated to provide under warranty. Sales revenue includes revenue
recognized under sales type lease agreements. Under rental or operating lease

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agreements for systems, rental revenue is recognized in accordance with,
and over the term of the agreement. For customers who purchase service
contracts, we recognize service revenue over the term of the contract. For
customers without service contracts, we recognize service revenue when we
provide service. We record spare parts revenue upon shipment of the parts. We
recognize license revenue when we ship VisionKey® cards and when we receive
payments from third party licensees.

We assess the credit worthiness of all customers in connection with their
purchases. We recognize revenue only when collectibility is reasonably assured.
If this is not the case, then we record revenue only as payments are received.

Accounts Receivable

Customers
are evaluated for credit worthiness, and we recognize revenue
when collectibility is reasonably assured. At the end of each accounting
period, we estimate the reserves necessary for receivables that will ultimately
not be collectible from customers. To develop this estimate we review all
receivables and identify those accounts with problems. For these problem
accounts, we estimate individual, specific reserves based on our analysis of
the payment history, operations and finances of each account. For all other
accounts, we review historical bad debt trends, general and industry specific
economic trends, customer concentrations, and current payment patterns to
estimate the reserve necessary to provide for payment defaults that cannot be
specifically identified but can be expected with reasonable probability to
occur in the future. We face two particular challenges in estimating these
reserves: concentration of credit with certain large customers and the
potential for significant change in the overall health of the national
economies in the markets we serve. Unexpected deterioration in the health of
either a large customer or a national economy could lead to a material adverse
impact on the collectibility of our accounts receivable and our future
operating results.

Inventories

Inventories consist of purchased parts, subassemblies and finished systems
and are stated at the lower of cost or market, using the first-in, first-out
method. We regularly review our inventory on hand plus on order and compare
this to our estimate of demand over the following 12 months. Based on this
analysis, we reduce our inventory valuation for excess and obsolete items.
Changes in competition, the economy, and technology can lead to variation in
demand for our products. If the change in demand is significant, we may need to
further reduce the inventory valuation. All inventory write-downs result in a
new cost basis and are charged to cost of revenues, accordingly any inventory
write-down would impact our reported cost of revenues.

Legal Contingencies

We are involved in a variety of legal proceedings including those
concerning intellectual property rights, claims that we violated antitrust laws,
and class actions filed under federal securities laws. In cases brought against
us, we must assess the probability of an adverse decision. If we believe it
probable that we will lose in our defense and we can reasonably estimate the
loss, we must accrue an estimate of the potential loss. Currently we do not
believe it is probable that we will lose cases currently pending and,
accordingly, have not accrued any reserves for legal settlements. However, the
results of these complex legal proceedings are very difficult to predict with
certainty. In addition, 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, or could prevent us from manufacturing and selling our

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##### Table of Contents



laser system, and therefore could have a material adverse effect on our
business, financial position and results of operations.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the nine months ended September 30,
2002 to our exposure to market risk for changes in interest rates and foreign
currency exchange rates.




Item 4. Disclosure Controls and Procedures

VISX management, including the Chief Executive Officer and Chief Financial
Officer, have conducted an evaluation of the effectiveness of disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective in ensuring that all
material information required to be filed in this quarterly report has been
made known to them in a timely fashion. There have been no significant changes
in internal controls, or in factors that could significantly affect internal
controls, subsequent to the date the Chief Executive Officer and Chief
Financial Officer completed their evaluation.




Part II. OTHER INFORMATION




Item 1. Legal Proceedings

Overview

VISX is involved in a variety of legal proceedings that affect its
business. These include proceedings relating to patents and intellectual
property rights, proceedings relating to claims that VISXs activities have
violated antitrust laws and other litigation proceedings. For a complete description of legal proceedings,
see VISXs annual report on Form 10-K for the year ended December 31, 2001 and
our quarterly reports on Form 10-Q for the quarters ended March 31, 2002 and
June 30, 2002. During the quarter ended September 30, 2002, 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: WaveLight

In March 2002, VISX filed a lawsuit in Duesselfdorf, Germany against
WaveLight Laser Technologie AG and its senior manager, Max Reindl, alleging
infringement of VISXs German Patent No. P3481164.8. In September 2002, VISX
and WaveLight entered into Settlement and License Agreements. Under the
Agreements, VISX licensed its patents relating to refractive excimer lasers in
the United States and international markets to WaveLight. As consideration,
WaveLight will pay a royalty to VISX for each procedure performed in the United
States using a WaveLight refractive laser and, in addition, WaveLight will pay
a royalty to VISX for international equipment sales.

In September 2002, pursuant to the terms of the Agreements, the parties
filed a stipulated order dismissing the patent infringement action filed by
VISX against WaveLight and Mr. Reindl in Germany.

Patent Litigation: Nidek

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In August 2000, Nidek filed an action in the Tokyo District Court in Japan
against VISXs Japanese subsidiary and others alleging infringement of Nideks
Japanese Patent No. 2,809,959 (the 959 patent). VISX thereafter initiated
two proceedings in the Japanese Patent Office (JPO) challenging the validity
of the `959 patent. In November 2001 and January 2002, the Tokyo District Court
and JPO, respectively, held that the `959 patent is invalid. Nidek appealed
both of these decisions to the Tokyo High Court and stated that it may attempt
to amend the claims of the `959 patent. On June 19, 2002, the JPO in the second
proceeding issued a Notice of Reasons for Invalidation of the `959 patent based
on additional grounds.

In October 2002, Nidek filed with the JPO an Argument to rebut these
additional grounds for invalidity and a Request for Correction of the 959
patent claims found invalid by the JPO. A final decision by the JPO in the
second proceeding is expected after the Tokyo High Court rules on Nideks
appeal of the JPO decision of invalidation in the first proceeding.

Antitrust Class Actions And Litigation Involving Pillar Point Partners

In June 1998, VISX, VISX Partner, Inc., Summit Technology, Inc. (now
Summit Autonomous Inc.) and Summit Partner, Inc. (the parties), entered into
a Settlement and Dissolution Agreement which dissolved Pillar Point Partners.
The Dissolution Agreement provided that Pillar Point would remain in existence
thereafter for the sole purpose of winding up its affairs and defending or
settling litigation in which it was a party. In August 2002, the parties and
Pillar Point Partners entered into a Confirmation Agreement providing that
Pillar Point had wound up its affairs, that all litigation to which it was a
party had been terminated and that Pillar Point no longer existed for any
purpose.

Securities Class Action

In August 2002, the United States Court of Appeals for the Ninth Circuit
affirmed the district court s dismissal of the securities fraud class action
against VISX and the individual defendants in the case captioned in re VISX
Inc. Securities Litigation(No. C-00-0649-CRB). The plaintiffs in these
actions purported to represent a class of all persons who purchased VISXs
common stock between March 1, 1999 and February 22, 2000. The complaint alleged
that the defendants made misleading statements in violation of the federal
securities laws, including Section 10(b) of the Securities Exchange Act of
1934.




Item 5. Other Information

In accord with Section 10A(i)(2) of the Securities Exchange Act of 1934,
and as added by Section 202 of the Sarbanes-Oxley Act of 2002, VISX is
responsible for listing the non-audit services approved by VISX s Audit
Committee (the Committee) to be performed by KPMG LLP, VISX s independent
auditor. Non-audit services are defined in the law as services other than those
provided in connection with an audit or a review of the financial statements of
VISX. The non-audit services approved by the Audit Committee in the second and
third quarters are each considered by VISX to be audit-related services that
closely relate to the financial audit process. Each of the services has been
approved in accord with a pre-approval from the Committees Chairman pursuant
to delegated authority by the Committee.

During the quarterly period covered by this filing, the Committee approved
additional engagements of KPMG LLP for the following non-audit service: tax
return preparation, non-audit accounting services, and tax matter consultations
concerning federal and state taxes.




Item 6. Exhibits and Reports on Form 8-K

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##### Table of Contents





|a) |  | Exhibits.
|-- |  | ---------



| | 99.1 |  | Certification of Chief Executive Officer and Chief Financial
Officer
| | ---- |  | --------------------------------------------------------------------




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                  |  |                                                                                                    
|----------------- |  | ---------------------------------------------------------------------------------------------------
|                  |  | VISX, Incorporated(Registrant)                                                                     
|                 
|                 
|                 
|                 
|                  |  |                                                                                                    
|                 
|                 
|                 
|                 
|November 14, 2002 |  | /s/Elizabeth H. Dávila                                                                             
|(Date)            |  |                                                                                                    
|                  |  | Elizabeth H. Davila
Chairman of the Board and
Chief Executive Officer                              
|                 
|                 
|                 
|                 
|                  |  |                                                                                                    
|                 
|                 
|                 
|                 
|November 14, 2002 |  | /s/Timothy R. Maier                                                                                
|(Date)            |  |                                                                                                    
|                  |  | Timothy R. Maier
Executive Vice President and
Chief Financial Officer (principal
financial officer)
|                 
|                 
|                 
|                 
|                  |  |                                                                                                    
|                 
|                 
|                 
|                 
|November 14, 2002 |  | /s/Derek A. Bertocci                                                                               
|(Date)            |  |                                                                                                    
|                  |  | Derek A. Bertocci
Vice President, Controller (principal
accounting officer)                        

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##### Table of Contents



CERTIFICATIONS

I, Elizabeth H. Davila, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of VISX, Incorporated;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | /s/   Elizabeth H. Davila

Elizabeth H. Davila
Chief Executive Officer
November 14, 2002
| | ----------------------------------------------------------------------------------------





---



##### Table of Contents



I, Timothy R. Maier, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of VISX, Incorporated;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial
data and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | d) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | /s/   Timothy R. Maier

Timothy R. Maier
Chief Financial Officer
November 14, 2002
| | ----------------------------------------------------------------------------------





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##### Table of Contents






EXHIBIT INDEX



| | 99.1 |  | Certification of Chief Executive Officer and Chief Financial
Officer
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