##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549





FORM 10-Q

|        |  |                                                                                         
|------- |  | ----------------------------------------------------------------------------------------
|(X BOX) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
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|        |  | For the quarterly period ended March 31, 2002                                           
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|        |  | or                                                                                      
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|(BOX)   |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 1-10694



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



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

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

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

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

Total number of shares of common stock outstanding as of April 30, 2002:
53,970,037.





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TABLE OF CONTENTS



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



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##### Table of Contents



VISX, INCORPORATED
TABLE OF CONTENTS

|           |  |                                                                                                            |  |     
|---------- |  | ---------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                            |  | Page
|PART I     |  | FINANCIAL INFORMATION                                                                                      |  |     
|          
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|           |  |                                                                                                            |  |     
|          
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|          
|Item 1.    |  | Condensed Consolidated Interim Financial Statements                                                        |  |     
|          
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|           |  |                                                                                                            |  |     
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|           |  | Condensed Consolidated Interim Balance Sheets as of March
31, 2002 and December 31, 2001                   |  | 3   
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|           |  |                                                                                                            |  |     
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|           |  | Condensed Consolidated Interim Statements of Operations for
the Three Months Ended March 31, 2002 and 2001 |  | 4   
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|           |  |                                                                                                            |  |     
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|           |  | Condensed Consolidated Interim Statements of Cash Flows for
the Three Months Ended March 31, 2002 and 2001 |  | 5   
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|           |  |                                                                                                            |  |     
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|           |  | Notes to Condensed Consolidated Interim Financial Statements                                               |  | 6   
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|Item 2.    |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations                      |  |     
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|           |  |                                                                                                            |  |     
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|           |  | Overview                                                                                                   |  | 9   
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|           |  | Results of Operations                                                                                      |  | 9   
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|           |  | Liquidity and Capital Resources                                                                            |  | 10  
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|           |  |                                                                                                            |  |     
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|Item 3.    |  | Quantitative and Qualitative Disclosure about Market Risk                                                  |  | 12  
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|           |  |                                                                                                            |  |     
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|PART II    |  | OTHER INFORMATION                                                                                          |  |     
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|           |  |                                                                                                            |  |     
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|Item 1.    |  | Legal Proceedings                                                                                          |  | 12  
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|           |  |                                                                                                            |  |     
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|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                           |  | 13  
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|           |  |                                                                                                            |  |     
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|SIGNATURES |  |                                                                                                            |  | 14  

Page 2



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Condensed Consolidated Interim Financial Statements




VISX, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(In thousands, except share and per share amounts)

|                                        |                                                                                                |                            |         |          |             |   |              |          |         |  | 
|--------------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ----------- | - | ------------ | -------- | ------- |  | 
|                                        |                                                                                                |                            |         |          | March 31,   |   | December 31,
|                                        |                                                                                                |                            |         |          | 2002        |   | 2001        
|                                        |                                                                                                |                            |         |          |             |   |             
|                                        |                                                                                                |                            |         |          | (unaudited) |   |             
|ASSETS                                  |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|Current Assets:                         |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                      |                            | $       | 32,046   |             |   | $            | 15,349   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term investments                                                                         |                            |         | 96,805   |             |   |              | 108,458  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts receivable, net of allowance for
doubtful accounts of $4,385 and $4,567,
respectively |                            |         | 29,489   |             |   |              | 32,490   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories                                                                                    |                            |         | 12,080   |             |   |              | 14,071   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred tax assets and prepaid expenses                                                       |                            |         | 28,794   |             |   |              | 33,214   |        
|                                        |                                                                                                |                            |         |          |             |   |              |         
|                                        |                                                                                                | Total current assets       |         |          | 199,214     |   |              |          | 203,582 | 
|                                       
|                                       
|                                       
|                                       
|Property and Equipment, net             |                                                                                                |                            | 5,073   |          |             |   | 4,152        |         
|                                       
|                                       
|                                       
|                                       
|Long-Term Deferred Tax and Other Assets |                                                                                                |                            | 10,958  |          |             |   | 12,191       |         
|                                        |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                                | $                          | 215,245 |          |             | $ | 219,925      |         
|                                        |                                                                                                |                            |         |          |             |   |              |         
|LIABILITIES AND STOCKHOLDERS EQUITY    |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|Current Liabilities:                    |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                               |                            | $       | 5,248    |             |   | $            | 3,270    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities and other current liabilities                                              |                            |         | 42,108   |             |   |              | 40,377   |        
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                                |                            |         |          |             |   |              |         
|                                        |                                                                                                | Total current liabilities  |         |          | 47,356      |   |              |          | 43,647  | 
|                                        |                                                                                                |                            |         |          |             |   |              |         
|Stockholders Equity:                   |                                                                                                |                            |         |          |             |   |              |         
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock: $.01 par value, 180,000,000
shares authorized; 64,990,089 shares issued          |                            |         | 650      |             |   |              | 650      |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                     |                            |         | 203,858  |             |   |              | 208,130  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Treasury stock, at cost 11,038,079 and
10,436,238 shares, respectively                         |                            |         | (187,741 | )           |   |              | (178,347 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                                         |                            |         | 1,294    |             |   |              | 2,520    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                                                                              |                            |         | 149,828  |             |   |              | 143,325  |        
|                                        |                                                                                                |                            |         |          |             |   |              |         
|                                        |                                                                                                | Total stockholders equity |         |          | 167,889     |   |              |          | 176,278 | 
|                                        |                                                                                                |                            |         |          |             |   |              |         
|                                        |                                                                                                | $                          | 215,245 |          |             | $ | 219,925      |         
|                                        |                                                                                                |                            |         |          |             |   |              |         

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

Page 3



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES

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

|                                         |                                       |                |        |                    |        |      |        |        |        | 
|---------------------------------------- | ------------------------------------- | -------------- | ------ | ------------------ | ------ | ---- | ------ | ------ | ------ | 
|                                         |                                       |                |        | Three months ended
|                                         |                                       |                |        | March 31,         
|                                         |                                       |                |        |                   
|                                         |                                       |                |        | 2002               |        | 2001
|                                         |                                       |                |        |                    |        |     
|                                         |                                       |                |        | (unaudited)       
|Revenues:                                |                                       |                |        |                    |        |      |        |       
|                                        
|                                        
|                                        
|                                        
|                                         | System sales                          |                | $      | 9,915              |        |      | $      | 17,096 |       
|                                        
|                                        
|                                        
|                                        
|                                         | License, service and other revenues   |                |        | 26,670             |        |      |        | 33,369 |       
|                                         |                                       |                |        |                    |        |      |        |       
|                                         |                                       | Total revenues |        |                    | 36,585 |      |        |        | 50,465 | 
|                                         |                                       |                |        |                    |        |      |        |       
|Costs and Expenses:                      |                                       |                |        |                    |        |      |        |       
|                                        
|                                        
|                                        
|                                        
|                                         | Cost of revenues                      |                |        | 12,604             |        |      |        | 17,828 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Marketing, general and administrative |                |        | 10,518             |        |      |        | 10,669 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Research, development and regulatory  |                |        | 4,245              |        |      |        | 4,550  |       
|                                         |                                       |                |        |                    |        |      |        |       
|                                         | Total costs and expenses              |                |        | 27,367             |        |      |        | 33,047 |       
|                                        
|                                        
|                                        
|                                        
|                                         |                                       |                |        |                    |        |      |        |       
|Income From Operations                   |                                       |                | 9,218  |                    |        |      | 17,418 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Interest and other income             |                |        | 1,531              |        |      |        | 3,442  |       
|                                         |                                       |                |        |                    |        |      |        |       
|Income Before Provision For Income Taxes |                                       |                | 10,749 |                    |        |      | 20,860 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Provision for income taxes            |                |        | 4,246              |        |      |        | 8,240  |       
|                                         |                                       |                |        |                    |        |      |        |       
|Net Income                               |                                       | $              | 6,503  |                    |        | $    | 12,620 |       
|                                         |                                       |                |        |                    |        |      |        |       
|Earnings Per Share                       |                                       |                |        |                    |        |      |        |       
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                 |                | $      | 0.12               |        |      | $      | 0.21   |       
|                                         |                                       |                |        |                    |        |      |        |       
|                                         | Diluted                               |                | $      | 0.12               |        |      | $      | 0.21   |       
|                                         |                                       |                |        |                    |        |      |        |       
|Shares Used For Earnings Per Share       |                                       |                |        |                    |        |      |        |       
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                                 |                |        | 54,509             |        |      |        | 59,522 |       
|                                         |                                       |                |        |                    |        |      |        |       
|                                         | Diluted                               |                |        | 55,581             |        |      |        | 61,018 |       
|                                         |                                       |                |        |                    |        |      |        |       

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

Page 4



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands)

|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |         |         |        |  
|---------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------- | ------- | ------------------ | ----- | ------ | ------- | ------- | ------ | -
|                                               |                                                                                   |                                                                                     |                                          |         | Three months ended
|                                               |                                                                                   |                                                                                     |                                          |         | March 31,         
|                                               |                                                                                   |                                                                                     |                                          |         |                   
|                                               |                                                                                   |                                                                                     |                                          |         | 2002               |       | 2001  
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |       
|                                               |                                                                                   |                                                                                     |                                          |         | (unaudited)       
|Cash flows from operating activities:          |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net income                                                                        |                                                                                     | $                                        | 6,503   |                    |       | $      | 12,620  |        
|                                              
|                                              
|                                              
|                                              
|                                               | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                     |                                          |         |                    |       |        |         |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Depreciation and amortization                                                       |                                          |         | 905                |       |        |         | 1,002   |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Provision for doubtful accounts receivable                                          |                                          |         | 200                |       |        |         | 252     |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   | Increase (decrease) in cash flows from
changes in operating assets and liabilities: |                                          |         |                    |       |        |         |         |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Accounts receivable                      |         |                    | 2,801 |        |         |         | (6,200 | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Inventories                              |         |                    | 1,991 |        |         |         | (75    | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Deferred tax assets and prepaid expenses |         |                    | 4,420 |        |         |         | 201    |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Long-term deferred tax and other assets  |         |                    | 1,233 |        |         |         | (439   | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Accounts payable                         |         |                    | 1,978 |        |         |         | 3,987  |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                   |                                                                                     | Accrued liabilities                      |         |                    | 1,731 |        |         |         | 7,118  |  
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                               |                                                                                   | Net cash provided by operating activities                                           |                                          |         | 21,762             |       |        |         | 18,466  |       
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|Cash flows from investing activities:          |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Capital expenditures, net                                                         |                                                                                     |                                          | (1,826  | )                  |       |        | (274    | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of short-term investments                                                |                                                                                     |                                          | (13,105 | )                  |       |        |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from maturities of short-term investments                                |                                                                                     |                                          | 23,523  |                    |       |        | 64,309  |        
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                               |                                                                                   | Net cash provided by investing activities                                           |                                          |         | 8,592              |       |        |         | 64,035  |       
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|Cash flows from financing activities:          |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Exercise of stock options                                                         |                                                                                     |                                          | 2,572   |                    |       |        | 341     |        
|                                              
|                                              
|                                              
|                                              
|                                               | Repurchase of common stock                                                        |                                                                                     |                                          | (16,238 | )                  |       |        | (69,198 | )      
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|                                               |                                                                                   | Net cash used in financing activities                                               |                                          |         | (13,666            | )     |        |         | (68,857 | )     
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|Effect of exchange rate changes on cash        |                                                                                   |                                                                                     | 9                                        |         |                    |       | 126    |        
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|Net increase in cash and cash equivalents      |                                                                                   |                                                                                     | 16,697                                   |         |                    |       | 13,770 |        
|                                              
|                                              
|                                              
|                                              
|Cash and cash equivalents, beginning of period |                                                                                   |                                                                                     | 15,349                                   |         |                    |       | 19,686 |        
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        
|Cash and cash equivalents, end of period       |                                                                                   | $                                                                                   | 32,046                                   |         |                    | $     | 33,456 |        
|                                               |                                                                                   |                                                                                     |                                          |         |                    |       |        |        

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

Page 5



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##### Table of Contents






VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

1.     Basis of Presentation:

We prepared our Condensed Consolidated Interim Financial Statements in
conformity with Securities and Exchange Commission rules and regulations.
Accordingly, we condensed or omitted certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States. Please
read our 2001 Annual Report on Form 10-K to gain a more complete understanding
of these interim financial statements.

We included in these interim financial statements all adjustments
(consisting primarily only of normal recurring adjustments) necessary to
present fairly our results for the interim period. Our interim financial
statements have not been audited.

2.     Earnings Per Share:

Basic earnings per share (EPS) equals net income 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,         
|                           |                                                                     |   |                   
|                           |                                                                     |   | 2002               |        | 2001
|                           |                                                                     |   |                    |        |     
|NET INCOME                 |                                                                     | $ | 6,503              |        |      | $ | 12,620 |       
|                           |                                                                     |   |                    |        |      |   |        |       
|BASIC EARNINGS PER SHARE   |                                                                     |   |                    |        |      |   |        |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | 6,503  |      |   | $      | 12,620 | 
|                          
|                          
|                          
|                          
|                           | Weighted average common shares outstanding                          |   |                    | 54,509 |      |   |        | 59,522 | 
|                           |                                                                     |   |                    |        |      |   |        |       
|                           | Basic Earnings Per Share                                            |   | $                  | 0.12   |      |   | $      | 0.21   | 
|                           |                                                                     |   |                    |        |      |   |        |       
|DILUTED EARNINGS PER SHARE |                                                                     |   |                    |        |      |   |        |       
|                          
|                          
|                          
|                          
|                           | Income available to common shareholders                             |   | $                  | 6,503  |      |   | $      | 12,620 | 
|                           |                                                                     |   |                    |        |      |   |        |       
|                           | Weighted average common shares outstanding                          |   |                    | 54,509 |      |   |        | 59,522 | 
|                          
|                          
|                          
|                          
|                           | Dilutive potential common shares from stock options                 |   |                    | 1,072  |      |   |        | 1,496  | 
|                           |                                                                     |   |                    |        |      |   |        |       
|                           | Weighted average common shares and dilutive potential common shares |   |                    | 55,581 |      |   |        | 61,018 | 
|                           |                                                                     |   |                    |        |      |   |        |       
|                           | Diluted Earnings Per Share                                          |   | $                  | 0.12   |      |   | $      | 0.21   | 
|                           |                                                                     |   |                    |        |      |   |        |       

Options to purchase 5,303,000 shares and 5,124,000 shares during the three
month periods ended March 31, 2002 and 2001, respectively, were excluded from
the computation of diluted EPS because the options exercise prices were
greater than the average market price of the Companys common stock during
these periods.

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3.     Inventories(in thousands):

|                                |  |             |        |              |  |   |        | 
|------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                |  | March 31,   |        | December 31,
|                                |  | 2002        |        | 2001        
|                                |  |             |        |             
|                                |  | (unaudited) |        |             
|Raw materials and subassemblies |  | $           | 8,425  |              |  | $ | 8,901  | 
|                               
|                               
|                               
|                               
|Work in process                 |  |             | 1,371  |              |  |   | 1,491  | 
|                               
|                               
|                               
|                               
|Finished goods                  |  |             | 2,284  |              |  |   | 3,679  | 
|                                |  |             |        |              |  |   |        | 
|                                |  | $           | 12,080 |              |  | $ | 14,071 | 
|                                |  |             |        |              |  |   |        | 

4.     Comprehensive Income(unaudited, in thousands):

|                           |                                                                              |   |                    |        |      |   |        |       | 
|-------------------------- | ---------------------------------------------------------------------------- | - | ------------------ | ------ | ---- | - | ------ | ----- | 
|                           |                                                                              |   | Three Months Ended
|                           |                                                                              |   | March 31,         
|                           |                                                                              |   |                   
|                           |                                                                              |   | 2002               |        | 2001
|                           |                                                                              |   |                    |        |     
|NET INCOME                 |                                                                              | $ | 6,503              |        |      | $ | 12,620 |      
|                          
|                          
|                          
|                          
|OTHER COMPREHENSIVE INCOME |                                                                              |   |                    |        |      |   |        |      
|                          
|                          
|                          
|                          
|                           | Change in unrealized holding gains (losses) on
available-for-sale securities |   |                    | (1,235 | )    |   |        | 1,159 | 
|                          
|                          
|                          
|                          
|                           | Change in accumulated foreign currency translation adjustment                |   |                    | 9      |      |   |        | 126   | 
|                           |                                                                              |   |                    |        |      |   |        |      
|COMPREHENSIVE INCOME       |                                                                              | $ | 5,277              |        |      | $ | 13,905 |      
|                           |                                                                              |   |                    |        |      |   |        |      

5.     New Accounting Pronouncements

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



| | (i)   |  | All business combinations initiated after June 30, 2001 must use
the purchase method of accounting,                                                                                                                                                                                                                                 
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | The pooling of interests method of accounting is prohibited except
for transactions initiated before June 30, 2001,                                                                                                                                                                                                                 
|
| | (iii) |  | Intangible assets acquired in a business combination must be
recorded separately from goodwill if they arise from contractual or
other legal rights or are separable from the acquired entity and can be
sold, transferred, licensed, rented or exchanged, either individually
or as part of a related contract, asset or liability,
|
| | (iv)  |  | Goodwill and intangible assets with indefinite lives are not
amortized but are tested for impairment annually using a fair value
approach, except in certain circumstances, and whenever there is an
impairment indicator,                                                                                                          
|
| | (v)   |  | Other intangible assets will continue to be valued and amortized
over their estimated lives,                                                                                                                                                                                                                                        
|
| | (vi)  |  | In-process research and development will continue to be written off
immediately,                                                                                                                                                                                                                                                    

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| | (vii)  |  | All acquired goodwill must be assigned to reporting units for
purposes of impairment testing and segment reporting, and
| | ------ |  | -----------------------------------------------------------------------------------------------------------------------
|
| | (viii) |  | Effective January 1, 2002, goodwill existing as of June 30, 2001 will
no longer be subject to amortization.            

Goodwill arising between June 29, 2001 and December 31, 2001 will not be
subject to amortization. Since we have no goodwill assets, adoption of these
statements on January 1, 2002 had no impact on our financial statements or
results of operations.

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



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

This statement applies to long-term leases, certain oil and gas
properties, and long-term prepaid assets. It does not apply to goodwill,
intangible assets not being amortized, investments in equity securities
accounted for under the cost or equity method, and certain other types of
long-term assets. The provisions of SFAS 144 are effective for financial
statements issued for fiscal years beginning after December 15, 2001. Adoption
of this statement did not have any impact on VISXs financial statements or
results of operations.

In July 2001, the FASB Emerging Issues Task Force (EITF) reached final
consensus on EITF No. 00-25, Vendor Income Statement Characterization of
Consideration Paid to a Reseller of the Vendors Products (EITF 00-25). EITF
00-25 generally requires that consideration, including equity instruments,
given to a customer be classified in a vendors financial statements not as an
expense, but as a reduction to revenue up to the amount of cumulative revenue
recognized or to be recognized. In November 2001, the EITF reached consensus on
EITF No. 01-09, Accounting for Consideration Given by a Vendor to a Customer
or Reseller of the Vendors Products (EITF 01-09). EITF 01-09 clarifies and
modifies certain items discussed in EITF 00-25. We adopted these new standards
in the quarter ended March 31, 2002.

In accordance with EITF 00-25 and EITF 01-09, we have reclassified
consideration provided to customers in our statements of operations. This
consideration was previously reported as marketing, general and administrative
expense. Beginning with the quarter ended March 31, 2002, this consideration
will be reported as a reduction to license, service and other revenue. The
prior year comparative amounts will be reclassified to be consistent with the
current year presentation. The amounts reclassified for the first, second,
third and fourth quarters of 2001 are $1.1 million, $1.1 million, $1.5 million
and $0.8 million, respectively. These reclassifications do not change the
amount of net income reported for each period; however, revenues and expenses
are reduced in equal and offsetting amounts in each period.

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

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

This Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. When we use the words,
anticipate, estimate, project, intend, expect, plan, believe,
should, likely and similar expressions, we are making forward-looking
statements. In addition, forward-looking statements in this report include, but
are not limited to, statements about our beliefs, estimates or plans regarding
the following topics: our research efforts; the outcome of various lawsuits to
which we are a party; the use of our WaveScan® System; system upgrade revenues
in 2002; renewed support in the U.S. laser vision correction market in 2002;
the amount of our R&D and regulatory expenses in 2002. These forward-looking
statements are estimates reflecting the best judgment of the senior management
of VISX, and they involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking
statements. Forward-looking statements should therefore be considered in light
of various important factors, including those set forth in our 2001 annual
report on Form 10-K under the caption Risk Factors beginning on page 26,
Legal Proceedings beginning on page 8, and elsewhere in that report.
Moreover, we caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date they were made. We do not undertake
any obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this report or
to reflect the occurrence of unanticipated events.




Overview

We develop products and procedures to improve peoples eyesight using
lasers. Our principal product, the VISX STAR Excimer Laser System (VISX
System), is designed to correct the shape of a persons eyes to reduce or
eliminate the need for eyeglasses or contact lenses. The Food and Drug
Administration (FDA) has approved the VISX® System for use in the treatment
of most types of refractive vision disorders including nearsightedness,
farsightedness, and astigmatism. The FDA has also approved our WaveScan
Wavefront System (WaveScan System), which provides a complete refractive
analysis of the eyes entire optical system. In the future, we anticipate that
doctors will be able to use this analysis to enhance treatments with the VISX
System. We sell VisionKey® cards to control the use of the VISX System and to
collect license fees for the use of our patents.

The laser vision correction industry is evolving rapidly. Economic,
market, and technology changes frequently affect VISX and could harm our
business in the future. Please see the section of our 2001 annual report on
Form 10-K entitled Risk Factors, beginning on page 26 of that report, for a
more thorough description of the risks that our business faces. If any of the
risks in that Risk Factors section materialize, orders and revenues for VISX
Systems and VisionKey cards could fluctuate or decline. Accordingly, our past
results may not be useful in predicting our future results.




Results of Operations

|                                  |                           |      |                              |      |   |        |        |      |   |  |     |    | 
|--------------------------------- | ------------------------- | ---- | ---------------------------- | ---- | - | ------ | ------ | ---- | - |  | --- | -- | 
|                                  |                           |      | Three Months Ended March 31,
|                                  |                           |      |                             
|REVENUES (000's)                  |                           | 2002 |                              | 2001 |   | Change
|                                  |                           |      |                              |      |   |       
|System sales                      |                           | $    | 9,915                        |      |   | $      | 17,096 |      |   |  | (42 | )%
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                              | 27.1 | % |        |        | 33.9 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|License, service & other revenues |                           |      | 26,670                       |      |   |        | 33,369 |      |   |  | (20 | )%
|                                 
|                                 
|                                 
|                                 
|                                  | Percent of total revenues |      |                              | 72.9 | % |        |        | 66.1 | % |  |     |    | 
|                                 
|                                 
|                                 
|                                 
|Total                             |                           | $    | 36,585                       |      |   | $      | 50,465 |      |   |  | (28 | )%

System sales revenue in the first quarter of 2002 was $7 million lower
than in the comparable period of 2001 due to declines in sales of laser systems
and upgrades of laser systems. Laser system sales revenue declined $5 million
due, we believe, to the recession (both U.S. and worldwide). Laser upgrade

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revenue decreased $3 million due to the recession and the fact that
approximately 60% of our U.S. customers had already upgraded their STAR S2
laser systems to the STAR S3 model by the end of 2001. Accordingly, we
anticipate that upgrade revenue throughout 2002 will be lower than in 2001.
Sales of our WaveScan system generated approximately $1 million of additional
sales revenue in the first quarter of 2002 as compared to the same period in
2001.

License, service and other revenue in the first quarter of 2002 was $7
million lower than in the comparable period of 2001 due to a decline in license
and other procedure fees (procedure fees) from U.S. customers. Procedure fees
declined due to a lower volume of procedures for which VISX earned procedure
fees. We believe the economic recession and the decline in consumer confidence
that occurred in 2001 were the principal reasons why our procedure volume, and
the U.S. laser vision correction market as a whole, were lower in the first
quarter of 2002 than in the same period of 2001. We believe that the rebound of
the U.S. economy and consumer confidence that began in the first quarter of
2002 will provide renewed support for the U.S. laser vision correction market,
though the timing and extent of the rebound through the remainder of 2002 is
difficult to predict.

|                           |                           |      |                              |      |   |        |        |      |   |  |     |    | 
|-------------------------- | ------------------------- | ---- | ---------------------------- | ---- | - | ------ | ------ | ---- | - |  | --- | -- | 
|                           |                           |      | Three Months Ended March 31,
|                           |                           |      |                             
|COSTS & EXPENSES (000's)   |                           | 2002 |                              | 2001 |   | Change
|                           |                           |      |                              |      |   |       
|Cost of revenues           |                           | $    | 12,604                       |      |   | $      | 17,828 |      |   |  | (29 | )%
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                              | 34.5 | % |        |        | 35.3 | % |  |     |    | 
|                          
|                          
|                          
|                          
|Marketing, genl and admin |                           |      | 10,518                       |      |   |        | 10,669 |      |   |  | (1  | )%
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                              | 28.7 | % |        |        | 21.1 | % |  |     |    | 
|                          
|                          
|                          
|                          
|R&D and regulatory         |                           |      | 4,245                        |      |   |        | 4,550  |      |   |  | (7  | )%
|                          
|                          
|                          
|                          
|                           | Percent of total revenues |      |                              | 11.6 | % |        |        | 9.0  | % |  |     |    | 

Cost of revenues declined $5 million due to lower unit sales of laser
systems and laser upgrades, with each accounting for approximately one half of
the decline. Our gross profit margin has remained relatively constant at
approximately 65%. Marketing, general and administrative expenses declined
slightly from the same period in the prior year due to a decrease in marketing
spending. Our research and development expenses were lower in the first quarter
of 2002 than in the same period of the prior year due to the timing of
development of our projects. As these projects progress, we anticipate that our
R&D and regulatory expenses will increase in future quarters and will total
approximately $18 to $19 million for 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,
|                |  | 2002      |         | 2001        
|                |  |           |         |             
|Cash            |  | $         | 128,851 |              |  | $ | 123,807 | 
|               
|               
|               
|               
|Working capital |  |           | 151,858 |              |  |   | 159,935 | 

Cash increased by $5 million in the first quarter of 2002 due mainly to
$22 million of cash provided by operations offset by $16 million paid to
repurchase 1 million shares of VISX stock on the open market.

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Operating activities provided $22 million of cash in the first quarter of
2002, up from $18 million provided in the same period of 2001. The following
factors that impact cash flow from operations changed between 2002 and 2001.



| |  |  | Net income declined $6.1 million due mainly to lower sales.                                                                                                                                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Accounts payable and accrued liabilities each increased in the
first quarter of 2002 and 2001, but the increases were lower in 2002
than in the prior year by a total of $7.4 million. The timing of
payments of U.S. income taxes accounted for approximately $6 million of
this difference.
|
| |  |  | Deferred tax assets decreased by $4.4 million in 2002 as we
benefited from prepaid taxes carried forward from 2001.                                                                                                                                                                          
|
| |  |  | Accounts receivable (net of reserves) declined by $2.8 million in
2002 whereas it increased by $6.2 million in 2001. This contributed
$9.0 million to the improvement in cash flow.                                                                                                          
|
| |  |  | Long-term deferred tax and other assets declined by $1.2 million
due to a reduction in the long-term portion of equipment financing
outstanding with customers.                                                                                                                              
|
| |  |  | Inventory continued to decline in the first quarter of 2002 as we
made progress balancing inventory and production needs. This
contributed $2.0 million to the increase in cash flow.                                                                                                        

Interest income was lower in 2002 than in 2001 due mainly to the decrease
in cash available for investment in interest bearing securities.

On April 4, 2001, our Board of Directors authorized a new Stock Repurchase
Program under which up to 10 million shares of VISX common stock may be
repurchased. Before repurchasing shares we consider a number of factors
including market conditions, the market price of the stock, and the number of
shares needed for employee benefit plans. As a result, we cannot predict the
number of shares that we may repurchase in the future. In accordance with the
April 4, 2001 authorization and applicable securities laws, through purchases
on the open market we repurchased 1,002,800 shares during the first quarter of
2002 and have repurchased 4,105,200 shares cumulatively through March 31, 2002
at a total cost of $16.2 million and $63.9 million, respectively. Accordingly,
5.9 million shares remain available as of March 31, 2002 for repurchase under
the Board of Directors April 2001 authorization.

Purchases of short-term investments represent reinvestment of the proceeds
from short-term investments that matured and investment of cash and cash
equivalents. As of March 31, 2002, we did not have any borrowings outstanding
or any credit agreements.

Our normal credit terms granted to customers are net 30 to 60 days. In an
effort to promote the growth of the laser vision correction industry and the
use of VISX® Systems, in certain markets we provide long-term financing to
customers for their purchase of VISX® Systems. We consider a number of factors
including industry practice, competition and our evaluation of customers
credit worthiness in determining when to offer such financing. We believe that
our operations will provide sufficient cash flow to meet our working capital
and capital equipment needs during the coming twelve months. In addition, we
have $129 million of cash as of March 31, 2002 to provide for unforeseen
contingencies and to support strategic objectives including the development or
acquisition of new technologies and our Stock Repurchase Program.

In August 2001 we signed a one-year research and development agreement
with Medjet Inc. (Medjet) under which we provide funding to Medjet to pursue
new ophthalmic technologies and products. In addition, we signed an agreement
with Medjet that provides us with a one-year option, for which we paid $0.5
million, to acquire all outstanding Medjet common stock in a merger transaction
for $2.00 per share in cash. The closing of the potential merger is subject to
Medjets shareholder approval and is subject to other customary conditions to
closing. At the same time, we paid $1.3 million to

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purchase from a third party all outstanding shares of Medjets Series B
Convertible Preferred Stock, which are entitled to votes equivalent to
1,040,000 shares of Medjet common stock and vote together with Medjets common
stock. These shares owned by VISX represent 21% of Medjets voting stock. In
connection with these agreements, we also entered into a voting agreement with
Dr. Eugene Gordon, founder of Medjet, under which Dr. Gordon has agreed to vote
all of his shares of common stock in favor of the merger, and has agreed to
sell all of his stock to VISX in the event that VISX offers to complete the
merger. Dr. Gordon currently holds 1,596,787 shares, representing 32% of
Medjets voting stock. Lastly, we now have one of seven seats on Medjets Board
of Directors. We account for this investment under the equity method prescribed
by APB 18.

Under our R&D agreement with Medjet, we paid approximately $0.8 million to
Medjet to fund research and development work they performed during the first
quarter of 2002 and anticipate continuing this funding level through August
2002. We expense payments made to Medjet as research, development and
regulatory expense in our financial statements. To exercise our option to
acquire Medjet, we would have to pay approximately $9 million based on the
$2.00 per share purchase price and the number of shares of Medjet common stock,
options and warrants outstanding at March 31, 2002.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the three months ended March 31,
2002 in our exposure to market risk for changes in interest rates and foreign
currency exchange rates.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

Overview

VISX is involved in a variety of legal proceedings that affect its
business. These include proceedings relating to patents and intellectual
property rights, proceedings relating to claims that VISXs activities have
violated antirust laws, class actions filed under federal securities laws and
other litigation proceedings. For a complete description of legal proceedings,
see VISXs annual report on Form 10-K for the year ended December 31, 2001.
During the quarter ended March 31, 2002, there were no material developments
with respect to such previously existing proceedings and no new material
proceedings not previously disclosed, except as follows.

Patent Litigation: WaveLight

In March 2002, VISX filed a lawsuit in Duesseldorf, Germany against
WaveLight Laser Technologie AG and its senior manager, Max Reindl, alleging
infringement of VISXs German Patent No. P3481164.8 and seeking monetary
damages and injunctive relief. WaveLight is a German manufacturer and seller of
excimer laser systems for use in laser vision correction. The first court
hearing in the German proceeding is scheduled for June 6, 2002 at which time
the Court will set a timetable for the proceeding.

Antitrust Class Actions And Litigation Involving Pillar Point Partners

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In May 1999, Brisson v. Summit Technology, Inc., VISX, Inc., Summit
Partner, Inc., VISX Partner, Inc. and Pillar Point Partnerswas filed by
plaintiff in the State of Minnesota, County of Hennepin, on behalf of a
purported class of Minnesota patients alleging violations of Minnesota
antitrust laws and seeking unspecified damages and injunctive relief. On April
10, 2002, pursuant to the parties stipulation, this action was dismissed with
prejudice.




Item 6. Exhibits and Reports on Form 8-K



|a) |  | Exhibits.           
|-- |  | --------------------
|  
|   |  | None                
|  
|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 10, 2002
(Date) |  | /s/Elizabeth H. Dávila

Elizabeth H. Davila
Chairman of the Board and
Chief Executive Officer                           
|                   
|                   
|                   
|                   
|                    |  |                                                                                                                         
|                   
|                   
|                   
|                   
|May 10, 2002
(Date) |  | /s/Timothy R. Maier

Timothy R. Maier
Executive Vice President and
Chief Financial Officer (principal
financial officer)
|                   
|                   
|                   
|                   
|                    |  |                                                                                                                         
|                   
|                   
|                   
|                   
|May 10, 2002
(Date) |  | /s/Derek A. Bertocci

Derek A. Bertocci
Vice President, Controller (principal
accounting officer)                       

Page 14