##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549




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FORM 10-Q

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

For the quarterly period ended March 31, 2003

or

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

For the transition period from        to

Commission File Number 1-10694



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VISX, INCORPORATED

(Exact name of registrant as specified in its charter)





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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 06-1161793                       
|                                                               |  |                                  
|(State or other Jurisdiction of
Incorporation or Organization) |  | (IRS Employer
Identification No.)

|                                                                        
|------------------------------------------------------------------------
|3400 Central Expressway, Santa Clara, California 95051-0703             
|                                                                        
|(Address of principal executive offices)                      (Zip Code)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes (X)  No (  )

Total number of shares of common stock outstanding as of April 30, 2003: 51,355,375.

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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                             
|             |                                                                                               | Critical Accounting Policies                                
|             | 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 99.1



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VISX, INCORPORATEDTABLE OF CONTENTS

|           |  |                                                                                                            |    |     
|---------- |  | ---------------------------------------------------------------------------------------------------------- | -- | ----
|           |  |                                                                                                            |    | Page
|PART I.    |  | FINANCIAL INFORMATION                                                                                      |    |     
|Item 1.    |  | Condensed Consolidated Interim Financial Statements                                                        |    |     
|           |  | Condensed Consolidated Interim Balance Sheets as of March
31, 2003 and December 31, 2002                   |    | 3   
|           |  | Condensed Consolidated Interim Statements of Operations for
the Three Months Ended March 31, 2003 and 2002 |    | 4   
|           |  | Condensed Consolidated Interim Statements of Cash Flows for
the Three Months Ended March 31, 2003 and 2002 |    | 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                                                                                      |    | 12  
|           |  | Liquidity and Capital Resources                                                                            |    | 14  
|           |  | Critical Accounting Policies                                                                               |    | 15  
|           |  | Risk Factors                                                                                               |    | 17  
|Item 3.    |  | Quantitative and Qualitative Disclosure about Market Risk                                                  |    | 17  
|Item 4.    |  | Disclosure Controls and Procedures                                                                         |    | 17  
|PART II.   |  | OTHER INFORMATION                                                                                          |    |     
|Item 1.    |  | Legal Proceedings                                                                                          |    | 18  
|Item 5.    |  | Other Information                                                                                          |    | 19  
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                           |    | 19  
|SIGNATURES |  |                                                                                                            | 20

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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)

|                                        |                                                                                                |                            |                                      |          |         |             |         |              |         |  |  | 
|--------------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | -------- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                        |                                                                                                |                            |                                      |          |         | March 31,   |         | December 31,
|                                        |                                                                                                |                            |                                      |          |         | 2003        |         | 2002        
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                |                            |                                      |          |         | (unaudited) |         |              |         | 
|                                        |                                                                                                |                            |                                      | ASSETS   |         |             |         |              |         |  |  | 
|Current Assets:                         |                                                                                                |                            |                                      |          |         |             |         |             
|                                        | Cash and cash equivalents                                                                      |                            | $                                    | 36,828   |         |             | $       | 37,687       |        
|                                        | Short-term investments                                                                         |                            |                                      | 93,057   |         |             |         | 85,268       |        
|                                        | Accounts receivable, net of allowance for
doubtful accounts of $2,763 and $2,563,
respectively |                            |                                      | 25,927   |         |             |         | 24,559       |        
|                                        | Inventories                                                                                    |                            |                                      | 14,244   |         |             |         | 12,751       |        
|                                        | Deferred tax assets and prepaid expenses                                                       |                            |                                      | 20,128   |         |             |         | 23,488       |        
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                | Total current assets       |                                      |          | 190,184 |             |         |              | 183,753 | 
|Property and Equipment, net             |                                                                                                |                            | 7,230                                |          |         |             | 6,498   |             
|Long-Term Deferred Tax and Other Assets |                                                                                                |                            | 9,440                                |          |         |             | 10,341  |             
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                | $                          | 206,854                              |          |         | $           | 200,592 |             
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                |                            | LIABILITIES AND STOCKHOLDERS EQUITY |          |         |             |         |              |         |  | 
|Current Liabilities:                    |                                                                                                |                            |                                      |          |         |             |         |             
|                                        | Accounts payable                                                                               |                            | $                                    | 5,617    |         |             | $       | 4,341        |        
|                                        | Accrued liabilities and other current liabilities                                              |                            |                                      | 40,621   |         |             |         | 41,061       |        
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                | Total current liabilities  |                                      |          | 46,238  |             |         |              | 45,402  | 
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|Stockholders Equity:                   |                                                                                                |                            |                                      |          |         |             |         |             
|                                        | Common stock: $.01 par value, 180,000,000
shares authorized; 64,990,089 shares issued          |                            |                                      | 650      |         |             |         | 650          |        
|                                        | Additional paid-in capital                                                                     |                            |                                      | 202,573  |         |             |         | 202,700      |        
|                                        | Treasury stock, at cost 13,639,256 and
13,652,256 shares, respectively                         |                            |                                      | (208,549 | )       |             |         | (208,748     | )      
|                                        | Accumulated other comprehensive income                                                         |                            |                                      | 1,799    |         |             |         | 1,921        |        
|                                        | Retained earnings                                                                              |                            |                                      | 164,143  |         |             |         | 158,667      |        
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                | Total stockholders equity |                                      |          | 160,616 |             |         |              | 155,190 | 
|                                        |                                                                                                |                            |                                      |          |         |             |         |             
|                                        |                                                                                                | $                          | 206,854                              |          |         | $           | 200,592 |             
|                                        |                                                                                                |                            |                                      |          |         |             |         |             

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

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VISX, INCORPORATED AND SUBSIDIARIES




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

|                                         |                                      |                |       |                    |        |      |        |        |        | 
|---------------------------------------- | ------------------------------------ | -------------- | ----- | ------------------ | ------ | ---- | ------ | ------ | ------ | 
|                                         |                                      |                |       | Three months ended
|                                         |                                      |                |       | March 31,         
|                                         |                                      |                |       |                   
|                                         |                                      |                |       | 2003               |        | 2002
|                                         |                                      |                |       |                    |        |     
|                                         |                                      |                |       | (unaudited)       
|Revenues:                                |                                      |                |       |                    |        |      |        |       
|                                         | System revenues                      |                | $     | 9,926              |        |      | $      | 9,915  |       
|                                         | Service and parts revenues           |                |       | 4,830              |        |      |        | 5,090  |       
|                                         | License and other revenues           |                |       | 19,677             |        |      |        | 21,580 |       
|                                         |                                      |                |       |                    |        |      |        |       
|                                         |                                      | Total revenues |       |                    | 34,433 |      |        |        | 36,585 | 
|                                         |                                      |                |       |                    |        |      |        |       
|Costs and Expenses:                      |                                      |                |       |                    |        |      |        |       
|                                         | Cost of system revenues              |                |       | 8,295              |        |      |        | 8,181  |       
|                                         | Cost of service and parts revenues   |                |       | 3,697              |        |      |        | 3,216  |       
|                                         | Cost of license and other revenues   |                |       | 1,193              |        |      |        | 1,207  |       
|                                         | Selling, general and administrative  |                |       | 9,093              |        |      |        | 10,518 |       
|                                         | Research, development and regulatory |                |       | 4,046              |        |      |        | 4,245  |       
|                                         |                                      |                |       |                    |        |      |        |       
|                                         | Total costs and expenses             |                |       | 26,324             |        |      |        | 27,367 |       
|                                         |                                      |                |       |                    |        |      |        |       
|Income From Operations                   |                                      |                | 8,109 |                    |        |      | 9,218  |       
|                                         | Interest and other income            |                |       | 943                |        |      |        | 1,531  |       
|                                         |                                      |                |       |                    |        |      |        |        |       
|Income Before Provision For Income Taxes |                                      |                | 9,052 |                    |        |      | 10,749 |       
|                                         | Provision for income taxes           |                |       | 3,576              |        |      |        | 4,246  |       
|                                         |                                      |                |       |                    |        |      |        |       
|Net Income                               |                                      | $              | 5,476 |                    |        | $    | 6,503  |       
|                                         |                                      |                |       |                    |        |      |        |       
|Earnings Per Share                       |                                      |                |       |                    |        |      |        |       
|                                         | Basic                                |                | $     | 0.11               |        |      | $      | 0.12   |       
|                                         |                                      |                |       |                    |        |      |        |       
|                                         | Diluted                              |                | $     | 0.11               |        |      | $      | 0.12   |       
|                                         |                                      |                |       |                    |        |      |        |       
|Shares Used For Earnings Per Share       |                                      |                |       |                    |        |      |        |       
|                                         | Basic                                |                |       | 51,342             |        |      |        | 54,509 |       
|                                         |                                      |                |       |                    |        |      |        |       
|                                         | Diluted                              |                |       | 51,805             |        |      |        | 55,581 |       
|                                         |                                      |                |       |                    |        |      |        |       



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

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VISX, INCORPORATED AND SUBSIDIARIES




| |  |                                                         |  | 
| |  | ------------------------------------------------------- |  | 
| |  | CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
| |  | (In thousands)                                         

|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |      |         |         |       | 
|---------------------------------------------------- |  | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------- | ------- | ---------------------------- | ------ | ---- | ------- | ------- | ----- | 
|                                                     |  |                                                                                   |                                                                        |                                          |         | Three months ended March 31,
|                                                     |  |                                                                                   |                                                                        |                                          |         |                             
|                                                     |  |                                                                                   |                                                                        |                                          |         | 2003                         |        | 2002
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  |                                                                                   |                                                                        |                                          |         | (unaudited)                 
|Cash flows from operating activities:                |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  | Net income                                                                        |                                                                        | $                                        | 5,476   |                              |        | $    | 6,503   |        
|                                                     |  | Adjustments to reconcile net income to net cash provided by
operating activities: |                                                                        |                                          |         |                              |        |      |         |        
|                                                     |  |                                                                                   | Depreciation and amortization                                          |                                          |         | 1,275                        |        |      |         | 905     |      
|                                                     |  |                                                                                   | Provision for doubtful accounts receivable                             |                                          |         | 209                          |        |      |         | 200     |      
|                                                     |  |                                                                                   | Increase (decrease) in operating assets and liabilities:               |                                          |         |                              |        |      |         |         |      
|                                                     |  |                                                                                   |                                                                        | Accounts receivable                      |         |                              | (1,577 | )    |         |         | 2,801 | 
|                                                     |  |                                                                                   |                                                                        | Inventories                              |         |                              | (3,191 | )    |         |         | 707   | 
|                                                     |  |                                                                                   |                                                                        | Deferred tax assets and prepaid expenses |         |                              | 3,360  |      |         |         | 4,420 | 
|                                                     |  |                                                                                   |                                                                        | Long-term deferred tax and other assets  |         |                              | 872    |      |         |         | 1,233 | 
|                                                     |  |                                                                                   |                                                                        | Accounts payable                         |         |                              | 1,276  |      |         |         | 1,978 | 
|                                                     |  |                                                                                   |                                                                        | Accrued liabilities                      |         |                              | (440   | )    |         |         | 1,731 | 
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  |                                                                                   | Net cash provided by operating activities                              |                                          |         | 7,260                        |        |      |         | 20,478  |      
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Cash flows from investing activities:                |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  | Capital expenditures                                                              |                                                                        |                                          | (280    | )                            |        |      | (542    | )      
|                                                     |  | Purchase of short-term investments                                                |                                                                        |                                          | (14,882 | )                            |        |      | (13,105 | )      
|                                                     |  | Proceeds from maturities of short-term investments                                |                                                                        |                                          | 6,971   |                              |        |      | 23,523  |        
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  |                                                                                   | Net cash provided by (used in) investing activities                    |                                          |         | (8,191                       | )      |      |         | 9,876   |      
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Cash flows from financing activities:                |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  | Exercise of stock options                                                         |                                                                        |                                          | 72      |                              |        |      | 2,572   |        
|                                                     |  | Repurchase of common stock                                                        |                                                                        |                                          |        |                              |        |      | (16,238 | )      
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  |                                                                                   | Net cash provided by (used in) financing activities                    |                                          |         | 72                           |        |      |         | (13,666 | )    
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Effect of exchange rate changes                      |  |                                                                                   |                                                                       |                                          |         |                              | 9      |     
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Net increase (decrease) in cash and cash equivalents |  |                                                                                   | (859                                                                   | )                                        |         |                              | 16,697 |     
|Cash and cash equivalents, beginning of period       |  |                                                                                   | 37,687                                                                 |                                          |         |                              | 15,349 |     
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Cash and cash equivalents, end of period             |  | $                                                                                 | 36,828                                                                 |                                          |         | $                            | 32,046 |     
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|Supplemental Cash Flow Information:                  |  |                                                                                   |                                                                        |                                          |         |                              |        |     
|                                                     |  | Income
taxes paid                                                                 |                                                                        | $                                        | (10)    |                              |        | $    | 91      |        
|                                                     |  | Non-cash
investing activities:                                                    |                                                                        |                                          |         |                              |        |      |         |        
|                                                     |  |                                                                                   | Inventory transferred to property and equipment under
operating leases |                                          |         | 1,698                        |        |      |         | 1,284   |      
|                                                     |  |                                                                                   |                                                                        |                                          |         |                              |        |     

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

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VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
March 31, 2003
(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 accounting principles generally accepted in the United States. Please
read our 2002 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.

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

2. Earnings Per Share:

Basic earnings per share (EPS) equals net income divided by the weighted
average number of common shares outstanding. Diluted EPS equals net income
divided by the weighted average number of common shares outstanding plus
dilutive potential common shares calculated in accordance with the treasury
stock method. All amounts in the following table are in thousands, except per
share data, and are unaudited.

|                           |                                                                     |   |                    |        |      |   |       |        | 
|-------------------------- | ------------------------------------------------------------------- | - | ------------------ | ------ | ---- | - | ----- | ------ | 
|                           |                                                                     |   | Three Months Ended
|                           |                                                                     |   | March 31,         
|                           |                                                                     |   |                   
|                           |                                                                     |   | 2003               |        | 2002
|                           |                                                                     |   |                    |        |     
|NET INCOME                 |                                                                     | $ | 5,476              |        |      | $ | 6,503 |       
|                           |                                                                     |   |                    |        |      |   |       |       
|BASIC EARNINGS PER SHARE   |                                                                     |   |                    |        |      |   |       |       
|                           | Income available to common shareholders                             |   | $                  | 5,476  |      |   | $     | 6,503  | 
|                           | Weighted average common shares outstanding                          |   |                    | 51,342 |      |   |       | 54,509 | 
|                           |                                                                     |   |                    |        |      |   |       |       
|                           | Basic Earnings Per Share                                            |   | $                  | 0.11   |      |   | $     | 0.12   | 
|                           |                                                                     |   |                    |        |      |   |       |       
|DILUTED EARNINGS PER SHARE |                                                                     |   |                    |        |      |   |       |       
|                           | Income available to common shareholders                             |   | $                  | 5,476  |      |   | $     | 6,503  | 
|                           |                                                                     |   |                    |        |      |   |       |       
|                           | Weighted average common shares outstanding                          |   |                    | 51,342 |      |   |       | 54,509 | 
|                           | Dilutive potential common shares from stock options                 |   |                    | 463    |      |   |       | 1,072  | 
|                           |                                                                     |   |                    |        |      |   |       |       
|                           | Weighted average common shares and dilutive potential common shares |   |                    | 51,805 |      |   |       | 55,581 | 
|                           |                                                                     |   |                    |        |      |   |       |       
|                           | Diluted Earnings Per Share                                          |   | $                  | 0.11   |      |   | $     | 0.12   | 
|                           |                                                                     |   |                    |        |      |   |       |       

Options to purchase 6,597,000 and
5,303,000 shares during the three-month periods ended March 31, 2003 and 2002, respectively, were excluded from the
computation of diluted EPS because the weighted average exercise
prices for these options of $21.51 and $25.17, respectively, were
greater than the average market price of our common stock during these periods.

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3. Stock-Based Employee Compensation

We account for stock-based employee compensation arrangements using the
intrinsic value method in accordance with the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB 25) and Financial Accounting Standards Board (FASB) Interpretation No.
44 (FIN 44), Accounting for Certain Transactions Involving Stock
Compensation  an Interpretation of APB No. 25 and comply with the disclosure
provisions of Statement of Financial Accounting Standards No. 148, Accounting
For Stock-Based Compensation  Transition and Disclosure (SFAS 148). In
accordance with APB 25 and FIN 44, we record no stock-based employee
compensation cost in our net income because (1) all options granted under our
stock option plans have an exercise price equal to the market value of the
underlying common stock on the date of grant and (2) stock purchased through
our Employee Stock Purchase Plan is priced at 85% of the fair market value of
the stock on the first day or the end of each six month segment of a two year
offering period. The following table illustrates the effect on net income and
earnings per share if we had applied the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123), to stock-based employee compensation
(unaudited, in thousands, except per share data).

|                                                                                                                                            |  |             |  |                    |         |      |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ------------------ | ------- | ---- |  | - | ------- | 
|                                                                                                                                            |  |             |  | Three Months Ended
|                                                                                                                                            |  |             |  | March 31,         
|                                                                                                                                            |  |             |  |                   
|                                                                                                                                            |  |             |  | 2003               |         | 2002
|                                                                                                                                            |  |             |  |                    |         |     
|Net Income                                                                                                                                  |  | As Reported |  | $                  | 5,476   |      |  | $ | 6,503   | 
|Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects |  |             |  |                    | (1,817) |      |  |   | (2,252) | 
|                                                                                                                                            |  |             |  |                    |         |      |  |   |         | 
|Net Income                                                                                                                                  |  | Pro Forma   |  | $                  | 3,659   |      |  | $ | 4,251   | 
|                                                                                                                                            |  |             |  |                    |         |      |  |   |         | 
|Basic Earnings Per Share                                                                                                                    |  | As Reported |  | $                  | 0.11    |      |  | $ | 0.12    | 
|                                                                                                                                            |  | Pro Forma   |  |                    | 0.07    |      |  |   | 0.08    | 
|Diluted Earnings Per Share                                                                                                                  |  | As Reported |  | $                  | 0.11    |      |  | $ | 0.12    | 
|                                                                                                                                            |  | Pro Forma   |  |                    | 0.07    |      |  |   | 0.08    | 

Under SFAS 123 the fair value of each option is estimated on the date of grant
using the Black-Scholes option pricing model. The following weighted average
assumptions were used for grants issued in 2003 and 2002, respectively:
risk-free interest rates of 2.4% and 4.1%, expected volatility of 73% and 76%,
no expected dividends, and an expected life of 1.5 and 1.5 years beyond the
vest date for each years vesting increment of an option.

These pro forma amounts may not be representative of the effects for future
years as options vest over several years and additional awards are generally
made each year.

4. Inventories(in thousands):

|                                |  |             |        |              |  |   |        | 
|------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                |  | March 31,   |        | December 31,
|                                |  | 2003        |        | 2002        
|                                |  |             |        |             
|                                |  | (Unaudited) |        |              |  |  
|Raw materials and subassemblies |  | $           | 8,314  |              |  | $ | 8,108  | 
|Work in process                 |  |             | 1,709  |              |  |   | 1,563  | 
|Finished goods                  |  |             | 4,221  |              |  |   | 3,080  | 
|                                |  |             |        |              |  |   |        | 
|                                |  | $           | 14,244 |              |  | $ | 12,751 | 
|                                |  |             |        |              |  |   |        | 

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5. Comprehensive Income(unaudited, in thousands):

|                           |                                                                                   |   |                    |      |      |   |       |        |  
|-------------------------- | --------------------------------------------------------------------------------- | - | ------------------ | ---- | ---- | - | ----- | ------ | -
|                           |                                                                                   |   | Three Months Ended
|                           |                                                                                   |   | March 31,         
|                           |                                                                                   |   |                   
|                           |                                                                                   |   | 2003               |      | 2002
|                           |                                                                                   |   |                    |      |     
|NET INCOME                 |                                                                                   | $ | 5,476              |      |      | $ | 6,503 |       
|OTHER COMPREHENSIVE INCOME |                                                                                   |   |                    |      |      |   |       |       
|                           | Decrease in accumulated unrealized holding gains on
available-for-sale securities |   |                    | (122 | )    |   |       | (1,235 | )
|                           | Change in accumulated foreign currency translation adjustment                     |   |                    |     |      |   |       | 9      |  
|                           |                                                                                   |   |                    |      |      |   |       |       
|COMPREHENSIVE INCOME       |                                                                                   | $ | 5,354              |      |      | $ | 5,277 |       
|                           |                                                                                   |   |                    |      |      |   |       |       

6. Warranty Obligations

Changes in product warranty obligations for the periods ended March 31, 2003
and 2002 are as follows (unaudited, in thousands):

|                                          |  |                    |       |      |  |   |        |  
|----------------------------------------- |  | ------------------ | ----- | ---- |  | - | ------ | -
|                                          |  | Three Months Ended
|                                          |  | March 31,         
|                                          |  |                   
|                                          |  | 2003               |       | 2002
|                                          |  |                    |       |     
|Balance as of the beginning of the period |  | $                  | 1,963 |      |  | $ | 1,768  |  
|Expense accrued for new warranties        |  |                    | 768   |      |  |   | 926    |  
|Cost of services provided                 |  |                    | (751  | )    |  |   | (1,049 | )
|                                          |  |                    |       |      |  |   |        |  
|Balance as of the end of the period       |  | $                  | 1,980 |      |  | $ | 1,645  |  
|                                          |  |                    |       |      |  |   |        |  

7. Stock 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 have repurchased 7.0
million shares cumulatively through March 31, 2003 at a total cost of $90.4
million, respectively. Accordingly, 3.0 million shares remain available as of
March 31, 2003 for repurchase under the Board of Directors April 2001
authorization.

8. Significant Customer

A significant portion of our revenues is derived from sales to TLC Vision
Corporation (TLC), formed in May 2002 through the merger of TLC Laser Eye
Centers, Inc. and Laser Vision Centers, Inc., both long-term customers of ours.
Sales to the combined company, TLC, accounted for 13% and 16% of total
revenues in the first quarter of 2003 and 2002, respectively.

9. New Accounting Pronouncements

In June 2001, the FASB issued Statement No. 143, Accounting for Asset
Retirement Obligations (SFAS 143). SFAS 143 requires that the fair value of
a liability for a retirement obligation be recognized in the period in which it
is incurred, if a reasonable estimate of the fair value can be made, and
expense charged over the life of the asset. The statement is effective for
financial statements issued

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for fiscal years beginning after June 15, 2002. The adoption of SFAS 143 did
not have a material impact on our financial position 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 nullified 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. We are required to adopt the provisions of SFAS 146 effective for
exit or disposal activities initiated after December 31, 2002. The adoption of
SFAS 146 did not have a material impact on our financial position or results of
operations.

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires that a
liability be recorded in the guarantors balance sheet upon issuance of a
guarantee. In addition, FIN 45 requires disclosures about the guarantees that
an entity has issued, including a rollforward of the entitys product warranty
liabilities. The disclosure requirements are effective for financial
statements issued after December 15, 2002 and the recognition/measurement
requirements are effective on a prospective basis for guarantees issued or
modified after December 31, 2002. The application of the requirements of FIN
45 did not have a material impact on our financial position or results of
operations.

In November 2002, the EITF reached a consensus on Issue No. 00-21, Revenue
Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides
guidance on how to account for arrangements that involve the delivery or
performance of multiple products, services and/or rights to use assets. The
provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. We are currently
evaluating the effect that the adoption of EITF Issue No. 00-21 will have on
our results of operations and financial position.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation, Transition and Disclosure. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also requires
that disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the
pro forma effect in interim financial statements. The transition and annual
disclosure requirements of SFAS No. 148 are effective for fiscal years ending
after December 15, 2002. The interim disclosure provisions are effective for
financial reports containing financial statements for interim periods beginning
after December 15, 2002. As we did not make a voluntary change to the fair
value based method of accounting for stock-based employee compensation in 2002,
the adoption of SFAS No. 148 did not have a material impact on our financial
position or results of operations. The disclosure requirements have been
adopted and incorporated in the footnotes to these financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied

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for the first interim or annual period beginning after June 15, 2003. The
adoption of FIN 46 did not have a material impact on our financial position or
results of operations.

10. Subsequent Event

In April 2003, we acquired technology, including patents and other assets
associated with our WaveScan WaveFront® System (WaveScan System) from 20/10
Perfect Vision Optische Gerate GmbH. We paid $5.9 million for this technology,
which was previously licensed to us under an exclusive licensing agreement that
is superseded by the acquisition.

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

This Report contains forward-looking statements, including but not limited to:
the anticipated approval by the Food and Drug Administration
(FDA) of our CustomVueTM procedure which
provides for the
treatment of patients using data from our WaveScan WaveFront® System (WaveScan
System); declining laser upgrade revenue; our belief that a rebound in the
U.S. economy and increases in consumer confidence will provide renewed support
for the U.S. laser vision correction market in the future; our belief that
ongoing technical advances (including our CustomVue procedure) have the
potential to improve a persons vision beyond that which can be obtained with
contact lenses or glasses and will reduce concerns perceived by some consumers;
research and development and regulatory expenditures; the sufficiency of
our cash flow from operations combined with our existing cash, cash equivalents
and short-term investments to meet our needs during the coming twelve
months; and our belief that legal actions will not materially affect
our business.
These forward-looking statements are estimates reflecting the best judgment of our
senior management, 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. The risks and uncertainties include the
potential reduction in demand for our 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.
In addition, please see the disclosure under the caption Risk Factors at
the end of Item 2. 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 STAR System) and
VisionKey® Cards could fluctuate or decline. Accordingly, our past results may
not be useful in predicting our future results.




Overview

VISX, Incorporated (VISX), a Delaware corporation organized in 1988, is a
worldwide leader in the design and development of proprietary technologies and
systems for laser vision correction. We sell products worldwide and generate
the majority of our revenue through the sale of VisionKey Cards that are
required to perform laser vision correction procedures on the VISX STAR System.
We have also licensed our technology to other excimer laser system companies
and generally receive royalties from the sale of their systems outside the U.S.
and from procedures that are performed in the U.S. using their systems.

The FDA and comparable international regulatory agencies have approved the VISX
STAR System for use in the treatment of most types of refractive vision
disorders including nearsightedness, farsightedness, and astigmatism. The FDA
has also approved our WaveScan System, a diagnostic device that measures
refractive errors in a persons vision more precisely than did previously available
technology. In international markets, the WaveScan System is used in
conjunction with our VISX STAR System to perform CustomVue laser vision
correction, which enhances laser vision correction and potentially improves
vision beyond that of contacts and glasses. In the U.S., we are awaiting FDA
approval of our CustomVueTM procedure.

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Results of Operations

|                           |                           |      |                              |      |   |        |        |      |   |  |    |    | 
|-------------------------- | ------------------------- | ---- | ---------------------------- | ---- | - | ------ | ------ | ---- | - |  | -- | -- | 
|                           |                           |      | Three Months Ended March 31,
|                           |                           |      |                             
|REVENUES (000s)           |                           | 2003 |                              | 2002 |   | Change
|                           |                           |      |                              |      |   |       
|System revenues            |                           | $    | 9,926                        |      |   | $      | 9,915  |      |   |  | 0  | % 
|                           | Percent of total revenues |      |                              | 28.8 | % |        |        | 27.1 | % |  |    |    | 
|Service and parts revenues |                           |      | 4,830                        |      |   |        | 5,090  |      |   |  | (5 | )%
|                           | Percent of total revenues |      |                              | 14.0 | % |        |        | 13.9 | % |  |    |    | 
|License and other revenues |                           |      | 19,677                       |      |   |        | 21,580 |      |   |  | (9 | )%
|                           | Percent of total revenues |      |                              | 57.2 | % |        |        | 59.0 | % |  |    |    | 
|Total                      |                           | $    | 34,433                       |      |   | $      | 36,585 |      |   |  | (6 | )%

System revenues

System revenues in the first quarter of 2003 were approximately the same as in
the comparable period of the prior year. VISX STAR Laser System revenue
declined $1.9 million due principally, we believe, to the economic slowdown in
the U.S. and many of our markets abroad. Since approximately 80% of our U.S.
customers had upgraded their STAR S2 laser systems to the STAR S3 model by
the end of 2002, laser upgrade revenue continued to decline, down approximately
$0.9 million from the prior year. We anticipate that upgrade revenue throughout
2003 will be significantly lower than in 2002. Sales of our WaveScan System
generated approximately $2.8 million of additional sales revenue in the first
quarter of 2003 as compared to the same period in 2002 as we continued to
extend the rollout of this product.

Service and parts revenues

Service and parts revenues in 2003 were $0.3 million lower than in 2002 due
mainly to a new service plan that reduced the price charged for service
contracts on laser systems with lower than average procedure volume.

License and other revenues

License and other revenue in the first quarter of 2003 was $1.9 million lower
than in the comparable period of 2002 due to a decline in the volume of U.S.
procedures for which VISX earned procedure fees.

The U.S. economy has deteriorated over the last two years. One consequence has
been a decline in consumers discretionary spending. Since laser vision
correction surgery is elective and generally not covered by medical insurance,
it has been adversely impacted. The volume of laser vision correction surgeries
in the U.S. over the past two years has shown a correlation with changes in the
stock market and consumer confidence index, both of which have declined
significantly during this period. We believe these are the main factors causing
the decline in U.S. procedure volume and related revenue. In addition,
consumers also consider perceptions about the safety and effectiveness of the
procedure. The lack of long-term follow-up studies of the procedure combined
with media coverage of selected unfavorable outcomes may have contributed to
uncertainty and delay by some potential consumers.

We believe that a rebound in the U.S. economy and increases in consumer
confidence will provide renewed support for the U.S. laser vision correction
market in the future. We also expect that ongoing technical advances (including
our CustomVue procedure), which have the potential to improve a persons
vision beyond that which can be obtained with contact lenses or glasses, will
reduce concerns

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perceived by some consumers regarding
the safety of laser vision correction. Notwithstanding, we cannot accurately predict
when, or to what extent, these anticipated changes in the economy and
technology would impact our license and other revenues.

|                                    |                             |      |                              |      |   |        |        |      |   |  |     |    | 
|----------------------------------- | --------------------------- | ---- | ---------------------------- | ---- | - | ------ | ------ | ---- | - |  | --- | -- | 
|                                    |                             |      | Three Months Ended March 31,
|                                    |                             |      |                             
|COSTS & EXPENSES (000s)            |                             | 2003 |                              | 2002 |   | Change
|                                    |                             |      |                              |      |   |       
|Cost of system revenues             |                             | $    | 8,295                        |      |   | $      | 8,181  |      |   |  | 1   | % 
|                                    | Percent of related revenues |      |                              | 83.6 | % |        |        | 82.5 | % |  |     |    | 
|Cost of service and parts revenues  |                             |      | 3,697                        |      |   |        | 3,216  |      |   |  | 15  | % 
|                                    | Percent of related revenues |      |                              | 76.5 | % |        |        | 63.2 | % |  |     |    | 
|Cost of license and other revenues  |                             |      | 1,193                        |      |   |        | 1,207  |      |   |  | (1  | )%
|                                    | Percent of related revenues |      |                              | 6.1  | % |        |        | 5.6  | % |  |     |    | 
|                                   
|                                   
|Selling, general and administrative |                             |      | 9,093                        |      |   |        | 10,518 |      |   |  | (14 | )%
|                                    | Percent of total revenues   |      |                              | 26.4 | % |        |        | 28.7 | % |  |     |    | 
|Research, develop. and regulatory   |                             |      | 4,046                        |      |   |        | 4,245  |      |   |  | (5  | )%
|                                    | Percent of total revenues   |      |                              | 11.8 | % |        |        | 11.6 | % |  |     |    | 

Cost of system revenues

Cost of system revenues was largely unchanged in the first quarter of 2003 from
the corresponding period of the prior year. Sales of lasers and upgrades
decreased while shipments of WaveScan Systems increased, but the overall gross
profit margin remained fairly level.

Cost of service and parts revenues

Cost of service and parts revenues increased $0.5 million due to higher costs
to service a larger installed base of products in the United States.

Cost of license and other revenues

Cost of license and other revenues decreased slightly in the first quarter of
2003 from the corresponding period of the prior year due to the decline in
license and other revenue.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $1.4 million to $9.1
million for the three months ended March 31, 2003 from $10.5 million for the
three months ended March 31, 2002. This decrease was primarily due to a
reduction in legal expenses of $2.8 million (including $1.5 million due to
insurance reimbursements received during the first quarter of 2003 for legal
expenses related to litigation between VISX and Nidek) offset partially by an
increase in marketing costs of $0.9 million incurred in connection with our new
CustomVue procedure.

Research, development and regulatory expenses

Research, development and regulatory expenses decreased $0.2 million, to $ 4.0
million for the three months ended March 31, 2003 from $4.2 million for the
three months ended March 31, 2002. We continued to focus on next generation
technologies and developments for laser vision correction. These included laser
platforms such as our STAR S4 Excimer Laser System, eye diagnostic units such
as our WaveScan System, and new methods for correcting vision disorders
including our CustomVue procedure and early research and clinical trials on
treatments for presbyopia. We also continued funding early stage research at
Stanford University for future treatments for age-related macular degeneration
(AMD) and other advanced technologies. We

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anticipate that our research, development and regulatory expenses in 2003 will
be consistent with our expenditures in 2002.

Interest and other income

The average yields on our portfolio of cash and investments were lower in 2003
compared to 2002. Accordingly, interest income declined in 2003 from 2002.




Liquidity and Capital Resources

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

|                                                  |  |             |         |              |  |   |         | 
|------------------------------------------------- |  | ----------- | ------- | ------------ |  | - | ------- | 
|                                                  |  | (000s)    
|                                                  |  | March 31,   |         | December 31,
|                                                  |  | 2003        |         | 2002        
|                                                  |  |             |         |             
|                                                  |  | (Unaudited) |         |              |  |  
|Cash, cash equivalents and short-term investments |  | $           | 129,885 |              |  | $ | 122,955 | 
|Working capital                                   |  |             | 143,946 |              |  |   | 138,351 | 
|Stockholders equity                              |  |             | 160,616 |              |  |   | 155,190 | 

Our cash, cash equivalents, and short-term investments consist principally of
money market funds, and government and corporate bonds. All of our short-term
investments are classified as available-for-sale under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. The securities are carried at fair
market value with the unrealized gains and losses, net of tax, included in
accumulated other comprehensive income, which is reflected as a separate
component of stockholders equity. Realized gains and losses are recognized
when realized on the consolidated statements of operations.

Cash, cash equivalents, and short-term investments increased by $6.9 million in
the first quarter of 2003 principally because operating activities provided
$7.3 million for the three months ended March 31, 2003.

Net operating activities provided $7.3 million of cash in the first quarter of
2003, down from $20.5 million provided in the first quarter of 2002. The
principal factors that contributed to this difference are as follows. Net
income decreased by $1.0 million due mainly to lower license revenues. Accounts
receivable and inventories increased during 2003, whereas they decreased in
2002, resulting in an $8.3 million change in cash generation. Days sales
outstanding in accounts receivable was 68 days at the end of the first quarter
of 2003 as compared to 73 days at the comparable point in 2002. Inventory
increased in 2003 due to an increase in finished goods. Deferred income tax
assets and prepaid expenses decreased in both years due primarily to the
utilization of net operating loss carryforwards and a reduction of deferred
temporary tax timing differences. The reduction, however, was $1.1 million
lower in 2003. Combined, accounts payable and accrued liabilities increased
$2.9 million less in 2003 than in 2002 due to timing of payments and higher
legal expenses in 2002.

Net cash used in investing activities was $8.2 million in the first quarter of
2003, compared to net cash provided by investing activities of $9.9 million in
the first quarter of 2002. Net cash used in investing activities in the first
quarter of 2003 consisted primarily of the net investment of cash generated
from operations into short-term investments.

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Net cash provided by financing activities was $0.1 million in the first quarter
of 2003, compared to net cash used in financing activities of $13.7 million in
the first quarter of 2002. This difference was due mainly to the fact that
$16.2 million was used during the first quarter of 2002 to repurchase 1 million
shares of VISX stock in open market transactions, whereas no stock was
repurchased during the first quarter of 2003. Partially offsetting these cash
expenditures in 2002 was $2.6 million received upon the exercise of stock
options. In comparison, virtually no options were exercised in the first
quarter of 2003.

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. In
accordance with this authorization and applicable securities laws, we have
purchased 7.0 million shares on the open market cumulatively through March 31,
2003. Accordingly, 3.0 million shares remain available for purchase in the
future under current Board of Director authorization. Before repurchasing
shares we consider a number of factors including market conditions, the market
price of the stock, and the number of shares needed for employee benefit plans.
As a result, we cannot predict the number of shares that we may repurchase in
the future.

Purchases of short-term investments represent reinvestment into short-term
investments of the proceeds from short-term investments that matured and
investment of cash and cash equivalents. As of March 31, 2003, 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 STAR Systems, in certain markets we provide long-term financing to
customers for their purchase of our equipment. 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 coming twelve months. In
addition, we have $130 million of cash, cash equivalents, and short-term
investments as of March 31, 2003 to provide for unforeseen contingencies and to
support strategic objectives including the development or acquisition of new
technologies and our Stock Repurchase Program.

In May 2002, 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. VISX also signed an
agreement with Tracey Technologies, LLC for rights to Traceys ray tracing
technology for use in customized laser vision correction treatments. If
clinical and regulatory milestones specified in both agreements were achieved,
VISX would be committed to make additional payments of approximately $2 million
in connection with these two agreements. VISX could be obligated for royalties
in the future based on any future sales of the associated products.




Critical Accounting Policies

We follow accounting principles generally accepted in the United States
(GAAP) 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

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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 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.

We sell directly to end customers in the U.S. Within the U.S. and Japan we
directly handle installation of our equipment and upgrades and recognize
revenue on these products after we have completed installation 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. and Japan 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 system
revenue when we ship equipment for customers outside the U.S. and Japan and
accrue an estimate of the cost of parts that we are obligated to provide under
warranty. Under sales type lease agreements, system revenues are recognized
upon shipment or installation, as appropriate. Under rental or operating lease
agreements for systems, rental revenue is recognized over the term of the
agreement. For customers who purchase service contracts, we recognize service
revenue over the term of the contract. Payments received in advance of services
performed are recorded as deferred revenue. 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 fees and
related procedure revenue from direct customers when we ship VisionKey® Cards.
We recognize license fees from third party licensees when we receive payment.
We classify shipping costs, net of any billings, in cost of revenues.

We assess the credit worthiness of all customers in connection with their
purchases. We only recognize revenue 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 reserve necessary for accounts 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

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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 six months. Based on this
analysis, we reduce the carrying value of our inventory 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 carrying value of our inventory. 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

At the end of each accounting period we review all outstanding legal matters.
If we believe it is probable that we will incur a loss as a result of the
resolution of a legal matter and we can reasonably estimate the amount of the
loss, we accrue our best estimate of the potential loss. It is very difficult
to predict the future results of complex legal matters. New developments in
legal matters can cause changes in previous estimates and result in significant
changes in loss accruals. Currently we are not aware of any legal actions
against us or threatened that we believe could materially adversely affect our
business, financial condition or results of operations. However, we could in
the future be subject to litigation claims that could cause us to incur
significant expenses and put our business, financial position, and results of
operations at material risk.

Risk Factors

This report contains forward-looking statements that involve risk and
uncertainty. The factors set forth below, which are not the only risks we face,
may cause our actual results to vary from those contemplated by certain
forward-looking statements set forth in this report and should be considered
carefully in addition to the other information presented in this report. If any
of the following risks actually occur, our business, results of operations or
cash flows could be adversely affected. Our results of operations have varied
widely in the past, and they could continue to vary significantly. In addition,
our actual results may differ significantly from the results contemplated by
the forward-looking statements. Accordingly, we believe that our results of
operations in any given period may not be a good indicator of our future
performance.

Market Acceptance.Our business depends upon broad market acceptance of laser
vision correction by both doctors and patients in the United States and key
international markets. Laser vision correction has penetrated less than 5% of
the eligible U.S. population, and our profitability and continued growth will
be largely dependent on increasing levels of market acceptance and procedure
growth both in the United States and internationally. Although laser vision
correction offers a more predictable outcome and more precise results than
other surgical methods used to correct refractive disorders, it is not without
risk. Potential complications and side effects include: post-operative
discomfort, corneal haze (an increase in the light scattering properties of the
cornea) during healing, glare/halos (undesirable visual sensations produced by
bright lights), decreases in contrast sensitivity, temporary increases in
intraocular pressure in reaction to procedure medication, modest fluctuations
in refractive capabilities during healing, modest decrease in best corrected
vision (i.e., with corrective eyewear), unintended over- or under-corrections,
regression of effect, disorders of corneal healing, corneal scars, corneal
ulcers, and induced astigmatism (which may result in blurred or double vision
and/or shadow images). Some consumers may not choose to undergo laser vision
correction because of these complications or more general concerns relating to
its safety and efficacy and a general resistance to surgery. Alternatively,
some consumers may elect to delay undergoing laser vision correction surgery
because they believe improved technology and/or methods of treatment will be
available in the near future. Should either the ophthalmic community or the
general population turn away from laser vision correction as an alternative to
existing methods of treating refractive vision disorders, or if future
technologies replaced laser vision correction, these developments could have a
material adverse effect on our business, financial position and results of
operations.

Patents and Intellectual Property.Our business is dependent on the
enforceability and the validity of our United States and foreign patents. We
own over 200 United States and foreign patents and have approximately 180
patent applications pending. Although we are committed to protecting our
proprietary technology, it is possible that one or more of our patents will be
found to be invalid or unenforceable, or that a party against whom we are
asserting claims of patent infringement will be found not to be infringing our
patents. Such an outcome could result in, among other things, our inability to
sell, license, use or incorporate products that use the challenged technology;
increased competition by new or
existing competitors or the payment of substantial monetary damages, any of
which could have a material adverse effect on our business, financial position
and results of operations.

Competition.Intense competition in the laser vision correction industry could
result in the loss of customers, an inability to attract new customers, or a
decrease in prices for our products. The medical device and ophthalmic laser
industries are subject to intense competition and technological change. Not
only does laser vision correction compete with more traditional vision
correction options such as eyeglasses and contact lenses, it also competes with
other technologies and surgical techniques such as corneal implants,
intraocular lenses, and surgery using different types of lasers. In addition,
the market for laser vision correction systems has become increasingly
competitive in recent years as a result of FDA approval of several new laser
systems. The VISX System competes with products marketed or under development
by other laser and medical equipment manufacturers, many of which have greater
financial and other resources. Competitors may offer laser systems at a lower
price, may price their laser systems as part of a bundle of products or
services, may develop procedures that involve a lower per procedure cost, or
may offer products perceived as preferable to the VISX System. In addition,
medical companies, academic and research institutions and others could develop
new therapies, including new medical devices or surgical procedures, for the
conditions targeted by VISX, which therapies could be more medically effective
and less expensive than laser vision correction, and could potentially render
laser vision correction obsolete. Any such developments could have a material
adverse effect on our business, financial position and results of operations.

Unfavorable Side Effects.The possibility of long-term side effects and
adverse publicity regarding laser correction surgery could seriously harm our
business. Laser vision correction is a relatively new procedure. Consequently,
there is no long-term follow-up data beyond ten years, and longer-term
follow-up data might reveal additional complications or unknown side effects.
Any future reported side effects, other adverse events or unfavorable publicity
involving patient outcomes resulting from the use of laser vision correction
systems manufactured by VISX or any participant in the laser vision correction
market, may have a material adverse effect on our business, financial position,
and results of operations.

Economic Conditions.Laser vision correction is not subject to reimbursement
from third-party payors such as insurance companies or government programs, and
adverse economic conditions have, and may continue to cause, our revenues to
decline. The costs of laser vision correction are typically borne by
individuals directly. Accordingly, individuals may be less willing to incur the
procedure cost associated with laser vision correction in weak or uncertain
economic conditions, as was evidenced by our decline in revenues from 2002
compared to 2001 and from 2001 compared to 2000. Any resulting decline in the
number of VISX STAR Systems sold or laser vision correction procedures
performed may have a material adverse effect on our business, financial
position, and results of operations.

Loss Of Significant Customers.If we lose one or more of our significant
customers, or if purchases by one or more of our key customers decrease, our
net sales may decline and our business could be harmed. A significant portion
of our revenues is derived from sales to TLC Vision Corporation (TLC) formed
in May 2002 through the merger of Laser Vision Centers, Inc. and TLC Laser Eye
Centers, Inc., both long-term customers of ours. The combined company, TLC,
accounted for 14%, 17% and 18% of our total revenues in 2002, 2001 and 2000,
respectively. Should we lose a major customer or if anticipated sales to a
major customer do not materialize, our business, financial position and results
of operations may suffer.

Fixed Short-Term Expenses.Because our expenses are relatively fixed in the
short term, our earnings will decline if we do not meet our projected sales.
Any shortfall in revenues below expectations would likely have an immediate
impact on our earnings per share, which could adversely affect the market price
of our common stock. Our operating expenses, which include sales and marketing,
research and development, and general and administrative expenses, are based on
our expectations of future revenues and are relatively fixed in the short term.
Accordingly, if revenues fall below expectations, we will not be able to reduce
our spending rapidly in response to such a shortfall.

Governmental Regulation.We are subject to extensive governmental regulation,
which increases our costs and could prevent us from selling our products.
Government regulation includes inspection of and controls over research and
development, testing, manufacturing, safety and environmental controls,
efficacy, labeling, advertising, promotion, pricing, record keeping, the sale
and distribution of pharmaceutical products and samples and electronic records
and electronic signatures. In the United States, we must obtain FDA approval or
clearance for each medical device that we market. The FDA approval process is
typically lengthy and expensive, and approval is never certain. Products
distributed outside of the United States are also subject to government
regulation, which may be equally or more demanding. Our new products could take
a significantly longer time than we expect to gain regulatory approval and may
never gain approval. If a regulatory authority delays approval of a potentially
significant product, our market value and operating results may decline. Even
if the FDA or another regulatory agency approves a product, the approval may
limit the indicated uses for a product, may otherwise limit our ability to
promote, sell and distribute a product or may require post-marketing studies.
If we are unable to obtain regulatory approval of our products, we will not be
able to market these products, which would result in a decrease in our sales.
Currently, we are actively pursuing approval for a number of our products from
regulatory authorities in a number of countries, including, among others, the
United States, countries in the European Union and Japan. In particular, we are
awaiting approval from the FDA to perform our CustomVue procedure in the
United States. Continued growth in our sales and profits will depend, in part,
on the timely and successful introduction and marketing of some or all of these
products.

The clinical trials required to obtain regulatory approvals are complex and
expensive and their outcomes are uncertain. We incur substantial expense for,
and devote significant time to, clinical trials, yet cannot be certain that the
trials will ever result in the
commercial sale of a product. We may suffer significant setbacks in clinical
trials, even after earlier clinical trials show promising results. Any of our
products may produce undesirable side effects that could cause us or regulatory
authorities to interrupt, delay or halt clinical trials of a product candidate.
We, the FDA, or another regulatory authority may suspend or terminate clinical
trials at any time if they or we believe the trial participants face
unacceptable health risks.

Noncompliance with applicable United States regulatory requirements can result
in fines, injunctions, penalties, mandatory recalls or seizures, suspensions of
production, denial or withdrawal of pre-marketing approvals, recommendations by
the FDA against governmental contracts and criminal prosecution. The FDA also
has authority to request repair, replacement, or refund of the cost of any
device we manufacture or distribute. Regulatory authorities outside of the
United States may impose similar sanctions for noncompliance with applicable
regulatory requirements.

Taxes.We operate throughout
the United States and, consequently, are subject to various federal,
state and local taxes, including sales, income, payroll,
unemployment, property, franchise, capital and use tax on our
operations, payroll, assets and services. Although we believe we have
adequate provisions and accruals in our financial statements for tax
liabilities, we cannot predict the outcome of all past and future tax
assessments. If any taxing authority determines that we owe amounts
for taxes greater than we expect, our earnings may be negatively
affected.

New Products May Not Be Commercially Viable.Our research and development may
not lead to new products that achieve commercial success. We devote significant
resources to research and development. The research and development process is
expensive, prolonged, and entails considerable uncertainty. Development of a
new product, from discovery through testing and registration to initial product
launch, typically takes between three and seven years for a medical device.
Each of these periods varies considerably from product to product and country
to country. Because of the complexities and uncertainties associated with
ophthalmic research and development, products we are currently developing may
not complete the development process or obtain the regulatory approvals
required to market such products successfully. The products currently in our
development pipeline may not be approved by regulatory entities and may not be
commercially successful, and our current and planned products could be
surpassed by more effective or advanced products.

International Operations.We face risks due to our reliance on sales in
international markets. Our future success will depend in part on the continued
expansion of our international sales and operations. In particular, during
2002, 2001, and 2000, we derived approximately 23%, 16% and 18%, respectively,
of our revenues from sales to customers outside the United States. Our growing
international presence exposes us to risks including:



| |  |  | the need for export licenses;                                
| | - |  | -------------------------------------------------------------
|
| |  |  | unexpected regulatory requirements;                          
|
| |  |  | tariffs and other potential trade barriers and restrictions; 
|
| |  |  | political, legal and economic instability in foreign markets;
|
| |  |  | longer accounts receivable cycles;                           



| |  |  | difficulties in managing operations across disparate geographic areas;                  
| | - |  | ----------------------------------------------------------------------------------------
|
| |  |  | foreign currency fluctuations;                                                          
|
| |  |  | reduced or limited protection of our intellectual property rights in
some countries; and
|
| |  |  | dependence on local distributors.                                                       

If one or more of these risks materialize, our sales to international customers
may decrease and our costs may increase, which could negatively impact our
revenues and operating results.

Intellectual Property Disputes.The laser vision correction industry has been
the subject of substantial litigation, both in the United States and
internationally, specifically focusing on patents and proprietary rights. In
the past, our patents have been challenged on several fronts and we have
asserted our patents against competitors. Generally, these proceedings
centered on whether infringement of the patents had occurred, and on the
validity or enforceability of the patents. While all of these proceedings have
now been resolved, other companies own United States and foreign patents
covering methods and apparatus for performing corneal surgery with ultraviolet
lasers. If we were accused of infringing such competitors patents, and found
to have infringed such patents, we could be subject to significant monetary
liability and we could be enjoined from distributing our products. In
addition, we may assert our patents against competitors as well. If our
patents were found to be invalid or unenforceable (or in the event that parties
against whom VISX asserted patent infringement were found not to be infringing
our patents), our ability to collect license fees from the parties to the
litigation or from other sellers or users of laser vision correction equipment
in the United States may suffer and our revenues may decline. Any one of these
results could harm our business. See Item 1 Legal Proceedings of Part II of
this report for additional information regarding legal proceedings involving
VISX.

Product Liability Claims.We have and may become subject to product liability
claims. We could be liable for injuries or damage resulting from use of the
VISX STAR System or WaveScan System. In addition, a claim that an injury
resulted from a defect in any VISX product, even if successfully defended,
could damage our reputation. Although we possess insurance customarily obtained
by businesses of our type (including insurance against product liability risks
associated with the testing, manufacturing, and marketing of our products),
product liability claims in excess of our insurance coverage could have a
material adverse effect on our business, financial position, and results of
operations.

Single Sources For Key Components.The manufacture of VISX STAR Systems and
WaveScan Systems is a complex operation involving numerous procedures. We
depend on single and limited sources for several key components. If any of
these suppliers were to cease providing components, we would be required to
locate and contract with a substitute supplier. We could have difficulty
identifying a substitute supplier in a timely
manner or on commercially reasonable terms. If the production of our products,
parts and services were interrupted or could not continue in a cost-effective
or timely manner, our business, financial position, and results of operations,
could be materially adversely affected.

Volatility of our Stock Price.The market price of our common stock has
experienced fluctuations and is likely to fluctuate significantly in the
future. Our stock price can fluctuate for a number of reasons, including:



| |  |  | announcements about us or our competitors;                                      
| | - |  | --------------------------------------------------------------------------------
|
| |  |  | results or settlements of any litigation;                                       
|
| |  |  | quarterly variations in operating results;                                      
|
| |  |  | the introduction or abandonment of new technologies or products;                
|
| |  |  | changes in product pricing policies by us or our competitors;                   
|
| |  |  | changes in earnings estimates by analysts or changes in accounting policies; and
|
| |  |  | economic changes and political uncertainties.                                   

In addition, stock markets have experienced significant price and volume
volatility in recent years. This volatility has had a substantial effect on the
market prices of securities of many public companies for reasons frequently
unrelated or disproportionate to the operating performance of the specific
companies. In addition, the securities of many medical device companies,
including VISX, have historically been subject to extensive price and volume
fluctuations that may affect the market price of their common stock. If these
broad market fluctuations continue, they may adversely affect the market price
of our common stock.

Confidentiality Agreements.We rely on confidentiality agreements to protect
our proprietary technology. We protect our proprietary technology, in part,
through confidentiality and nondisclosure agreements with employees,
consultants and other parties. Our confidentiality agreements with employees
and consultants generally contain standard provisions requiring those
individuals to assign to us, without additional consideration, inventions
conceived or reduced to practice by them while employed or retained by us,
subject to customary exceptions. If any of our employees, consultants or others
breach these confidentiality agreements, we may not have adequate remedies for
any breach, and our competitors may learn of our trade secrets.

New Technologies.If we fail to keep pace with advances in our industry or
fail to develop new methods of vision correction, customers may not buy our
products and our revenue may decline. We must be able to manufacture and
effectively market those products and persuade a sufficient number of eye care
professionals to use the new
products we introduce. Sales of our existing products may decline rapidly if a
new product is introduced by one of our competitors or if we announce a new
product that, in either case, represents a substantial improvement over our
existing products. A decrease in procedure volume may also occur if consumers
elect to delay undergoing laser vision correction surgery because they believe
improved technology and/or methods of treatment will be available in the near
future.

Antitakeover Provisions in Our Charter Documents.In 2000, we adopted a
stockholder rights plan. The presence of this plan could make it more difficult for a third party to engage in a
takeover attempt, even a takeover attempt in which the potential purchaser
offers to pay a per share price greater than the current market price for our
common stock. In addition, the presence of the plan could delay or impede the
removal of incumbent directors. These provisions may also impact the amount of
interest investors have in our business.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the three months ended March 31, 2003 in
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, conducted an evaluation of the effectiveness of disclosure
controls and procedures (as defined in Exchange Act Rule 13a-14(c)
and 15d-14(c)) within 90 days as of the filing date of this
quarterly report (the Evaluation Date). 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 Evaluation Date.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

Overview

From time to time, we have been involved in a variety of legal proceedings. For
a complete description of legal proceedings, see our annual report on Form 10-K
for the year ended December 31, 2002. During the quarter ended March 31, 2003,
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: Nidek and Users of Nidek Lasers

On March 31, 2003, VISX and Nidek signed a term sheet outlining a global
litigation settlement and patent cross-license. On April 4, 2003, VISX and
Nidek concluded the settlement by signing final settlement and cross-license
agreements. As a result of the signing of the March 31, 2003 term sheet, we
concluded that a final settlement was probable and accrued a $9 million charge
for litigation settlement expense in our financial statements for 2002.

Pursuant to the settlement, the following lawsuits have been or will be
dismissed:

United States

In re Nidek Excimer Laser Surgery Systems Patent & Antitrust Litigation(USDC
ND Cal, MDL No. 1319), which consisted of the following actions consolidated
for pre-trial proceedings:



| |  | VISX, Incorporated v. Nidek Co., Ltd., et al.(USDC ND Cal,
C98-4842-CRB). As a result of the settlement, this action was dismissed
without prejudice.                                                                                                                                                    
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Nidek Co., Ltd., et al. v. VISX, Incorporated(USDC ND Cal C99-1528-CRB).
As a result of the settlement, this action was dismissed with prejudice.                                                                                                                                                        
|
| |  | VISX, Incorporated v. Farmington Eye Center PLLC, et al.(USDC ED Mich
99-60139; and USDC ND Cal C00-0870-CRB). As a result of the settlement,
this action was dismissed without prejudice.                                                                                                               
|
| |  | VISX, Incorporated v. Antoine L. Garabet, M.D., Inc., et al.(USDC CD
Cal 99-05284; and USDC ND Cal C00-0868-CRB). As a result of the
settlement, this action was dismissed without prejudice.                                                                                                            
|
| |  | VISX, Incorporated v. Refractive Support, Inc., et al.(USDC ND Ohio
1:99CV00508; and USDC ND Cal C00-0871-CRB). As a result of the
settlement, our claims and defendants declaratory relief claims were
dismissed without prejudice, and defendants damages claims were
dismissed with prejudice.      
|
| |  | VISX, Incorporated v. Southwest Eye Care Center, Inc., et al.(USDC SD
Cal 99 CV 1029L; and USDC ND Cal C00-0869-CRB). As a result of the
settlement, our claims and defendants declaratory relief claims were
dismissed without prejudice, and defendants damages claims were
dismissed with prejudice.

Page 18 of 23



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##### Table of Contents



| |  | Nidek Co., Ltd. v. VISX, Incorporated(USDC ND Cal C01-20015 JF). As a result
of the settlement, this action was dismissed without prejudice.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------

Canada, France and Japan

As a result of the settlement, the parties resolved certain court costs issues
that were still pending in their Canadian litigation. As a further result of
the settlement, our patent infringement action against Nidek in France will be
dismissed with prejudice, and our patent invalidity proceedings and Nideks
patent infringement action in Japan were withdrawn, rendering Nideks Japanese
appeals moot.

While we are involved in litigation arising periodically in the ordinary course
of business, we are not aware of any actions against us that we believe would
materially adversely affect our business, financial condition or results of
operations. However, in the future we could be subject to litigation claims
that could cause us to incur significant expenses.




Item 5. Other Information

In accordance with
Section 10A(i)(2) of the Securities Exchange Act of 1934, as added by Section 202 of the Sarbanes-Oxley Act of 2002, VISX is
responsible for disclosing the non-audit services approved by VISX s Audit
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 first
quarter are considered by VISX to be audit-related services that closely
relate to the financial audit process. Each of the services has been approved
in accordance with a pre-approval from the Audit Committees Chairman pursuant to
delegated authority by the Audit 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



|a) |  | Exhibits.                                                                     
|-- |  | ------------------------------------------------------------------------------
|  
|   |  | 99.1      Certification of Chief Executive Officer and Chief Financial Officer



|b) |  | Reports on Form 8-K.
|-- |  | --------------------
|  
|   |  | None                

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SIGNATURES

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

|             |  |                                      
|------------ |  | -------------------------------------
|             |  | VISX, Incorporated                   
|             |  |                                      
|             |  | (Registrant)                         
|             |  |                                      
|May 12, 2003 |  | /s/ Elizabeth H. Dávila              
|(Date)       |  |                                      
|             |  | Elizabeth H. Dávila                  
|             |  | Chairman of the Board and            
|             |  | Chief Executive Officer              
|             |  |                                      
|May 12, 2003 |  | /s/ Timothy R. Maier                 
|(Date)       |  |                                      
|             |  | Timothy R. Maier                     
|             |  | Executive Vice President and         
|             |  | Chief Financial Officer (principal   
|             |  | financial officer)                   
|             |  |                                      
|May 12, 2003 |  | /s/ Derek A. Bertocci                
|(Date)       |  |                                      
|             |  | Derek A. Bertocci                    
|             |  | Vice President, Controller (principal
|             |  | accounting officer)                  

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CERTIFICATION

I, Elizabeth H. Dávila, 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. Dávila
| |                        
| | Elizabeth H. Dávila    
| | Chief Executive Officer
| | May 12, 2003           

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##### Table of Contents



CERTIFICATION

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):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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/ Timothy R. Maier   
| |                        
| | Timothy R. Maier       
| | Chief Financial Officer
| | May 12, 2003           

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##### Table of Contents



EXHIBIT INDEX



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

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