Back to GetFilings.com

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

For the fiscal year ended: December 31, 2001

Commission File Number: 1-10694

VISX, Incorporated

3400 Central Expressway

(408) 733-2020

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      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 þ     No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      The aggregate market value of the voting Common Stock held by non-affiliates of the registrant as of March 18, 2002 was approximately $947,867,226.90 based on the per share closing price of the Common Stock on the New York Stock Exchange composite transactions tape of $17.49 on March 18, 2002. The number of shares of Common Stock outstanding as of March 18, 2002 was 54,194,810.

DOCUMENTS INCORPORATED BY REFERENCE

      Certain portions of the registrant’s Proxy Statement for its Annual Meeting of Stockholders to be held on May 3, 2002 are incorporated by reference into Part III.

Table of Contents

PART I

The Company

      VISX, a Delaware corporation organized in 1988, is a global leader in the development of proprietary technologies and systems for laser vision correction (sometimes abbreviated as “LVC”). Laser vision correction relies on a computerized laser to treat nearsightedness, farsightedness, and astigmatism with the goal of eliminating or reducing reliance on eyeglasses and contact lenses. The VISX® Excimer Laser System (the “VISX System”) ablates, or removes, submicron layers of tissue from the surface of the cornea to reshape the eye, thereby improving vision. The laser vision correction market is comprised of 50 to 60 million eligible candidates in the United States alone who experience some form of nearsightedness, farsightedness, or astigmatism. To date the industry has penetrated less than 4% of the eligible U.S. population. Typically, the individual receiving vision correction pays directly for the treatment, and so the industry is not reliant on reimbursement from governmental or private health care payors. A secondary market for the VISX System is the treatment of corneal pathologies.

      We have developed and continue to refine a substantial proprietary position in system and application technology relating to the use of lasers for vision correction. Our strategy is to commercialize this intellectual property position by broadening the installed base of VISX Systems around the world, and by collecting procedure license fees and equipment royalties for each laser vision correction procedure performed from licensed users and manufacturers.

      This report contains forward-looking statements that involve risks and uncertainties and our actual results may differ significantly from the results contemplated by the forward-looking statements. The factors set forth under “Legal Proceedings” and “Risk Factors” may cause 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.

Refractive Vision Disorders and Laser Vision Correction

      The human eye functions much like a camera. It incorporates a lens system that focuses light (the cornea and the lens), a variable aperture system that regulates the amount of light passing through the eye (the iris) and film that records the image (the retina). Images enter the human eye through the cornea. In a properly functioning eye, the cornea bends, or refracts, the incoming images, causing the images to focus on the retina. The retina translates the image into an electrical signal, which it relays to the optic nerve and from there to the brain. When the cornea is improperly curved, it cannot properly focus (or refract) the light passing through it onto the retina, resulting in a refractive vision disorder. As a result, the viewer perceives a blurred image. The three most common refractive vision disorders are:

	•	nearsightedness (also known as myopia): images are focused in front of the retina;
	•	farsightedness (also known as hyperopia): images are focused behind the retina; and
	•	astigmatism: images are not focused at any one point on the retina.

      Currently, eyeglasses or contact lenses are most often used to correct these refractive vision disorders. The VISX System changes the shape of the cornea so that images are properly focused on the retina, which in turn reduces or eliminates the need for corrective eyewear.

      In the early 1980s, experts thought it was impossible to operate directly on the front of the cornea. In 1987, doctors using VISX equipment performed the first procedure for the treatment of nearsightedness in the United States. The United States Food and Drug Administration (“FDA”) has since approved laser vision correction using the VISX System as safe and effective for the treatment of nearsightedness, farsightedness, and astigmatism. We estimate that approximately 1.25 million LVC procedures were performed in the United States using FDA-approved excimer laser systems in 2001.

1

Table of Contents

      In March 1996, the FDA approved the use of the VISX® System to correct mild to moderate nearsightedness. That approval was supplemented in April 1997 with approval to correct astigmatism. In January 1998, VISX became the first company ever to receive FDA approval to use a laser to treat higher myopia with or without astigmatism. In November 1998, we received the first FDA approval for the correction of hyperopia or farsightedness with a laser. In November 1999, the FDA approved the use of the VISX System for Laser in Situ Keratomileusis (LASIK). In May 2000, we received 510(k) clearance from the FDA of the WaveScan WaveFront^TM System. In March 2001, the FDA approved the use of the VISX System for an enlarged treatment zone with a blended ablation edge. In November 2001, the FDA approved the VISX treatment of mixed astigmatism, and in December 2001, we received FDA approval under the Humanitarian Device Exemption program (HDE) for Custom-Contoured Ablation Patterns (Custom-CAP^TM Method) for the treatment of patients with symptomatic decentered ablations from previous laser surgery.

      To perform laser vision correction, an ophthalmologist first measures the correction required by performing the same examination used to prescribe eyeglasses or contact lenses. The ophthalmologist programs the “prescription” into the VISX System, and the computer calculates the ablation needed to make a precise corneal correction. The VISX System emits laser pulses to ablate submicron layers of tissue from the surface of the cornea in a pattern to reshape the cornea. A micron equals 0.001 of a millimeter, and the depth of tissue ablated during the procedure typically is less than the width of a strand of human hair. The average procedure lasts approximately 15 to 40 seconds, and consists of approximately 150 laser pulses, each of which lasts several billionths of a second. The cumulative exposure of the eye to laser light is less than one second. The entire patient visit, including preparation, application of a topical anesthetic and post-operative dressing, generally lasts no more than 30 minutes.

      Laser vision correction includes LASIK and PhotoRefractive Keratectomy (PRK). The vast majority of laser vision correction procedures performed in the United States are LASIK procedures. In performing LASIK, the ophthalmologist uses a device called a microkeratome to create a thin flap on the cornea. The ophthalmologist folds back the flap, uses the laser to ablate the exposed corneal surface under the flap, and then returns the flap back to its original position. LASIK has gained in popularity primarily because there can be less postoperative discomfort and a more immediate improvement in uncorrected vision than is sometimes experienced with PRK. Nevertheless, LASIK has a higher incidence of adverse events, often attributable to the microkeratome, and requires a high degree of surgical skill.

      Unlike LASIK, PRK does not use a microkeratome, and in most procedures the epithelial layer (or outer layer) of the cornea is removed before ablation. Patients may experience discomfort for approximately 24 hours and blurred vision for approximately 48 to 72 hours after the procedure. The ophthalmologist may prescribe drops to promote corneal healing and alleviate discomfort. Although most patients experience significant improvement in uncorrected vision (vision without the aid of eyeglasses or contact lenses) within a few days of the procedure, it generally takes several months for the final correction to stabilize and for the full benefit of the procedure to be realized.

Corneal Pathologies: PTK and Custom-CAP

      The VISX System also treats certain types of corneal pathologies in an outpatient procedure known as PhotoTherapeutic Keratectomy (PTK). We estimate that VISX Systems have been used worldwide to perform approximately 35,000 PTK procedures. Although PTK is an important medical procedure for people who suffer from corneal pathologies, the market opportunity represented by PTK is much smaller than that represented by laser vision correction.

      In December 2001, we were granted an HDE for Custom-CAP^TM treatment, a procedure for treating symptomatic decentered ablations. An HDE allows the use and marketing of a device that is intended to benefit patients in the treatment of conditions that affect fewer than 4,000 individuals per year.

2

Table of Contents

Products

      VISX® System. The VISX System is a fully integrated ophthalmic medical device incorporating an excimer laser and a computer-driven workstation. The laser ablations produced by the VISX System are the product of a variable diameter beam scanning system, in which seven beams are homogenized as they converge, scan and rotate to produce an extremely smooth ablation area on the eye. Only the VISX System is capable of performing treatments using a variable sized scanning beam (which includes small-spot scanning) commonly known as variable spot scanning, or VSS^TM.

      The VISX STAR S3 ActiveTrak^TM Excimer Laser also employs an active, three-dimensional eye tracker that is capable of following eye movements during the procedure, ensuring precisely centered ablations and adding another element of safety and comfort for both patient and doctor.

      Excimer lasers ablate tissue without generating the heat associated with many other types of lasers that use different wavelengths and that can cause unintended thermal damage to surrounding tissue. The excimer laser operates in the ultraviolet spectrum and acts on the surface of the cornea; the light does not penetrate the eye, so there is no measurable effect in the interior of the eye. In the VISX System, the presence of seven scanning, variable sized beams means that refractive corrections can be completed in a shorter time and with less tissue removal than with other excimer lasers.

      VISX Treatment Cards. Use of the VISX System is controlled by proprietary cards, which are sold separately. Each card provides the user with specific access to proprietary software and is required to operate the VISX System. Because each procedure performed requires the use of a treatment card, there is a strong correlation between the sales of cards and the number of procedures performed. Types of VISX treatment cards include: the VisionKey® Card, the Custom-CAP^TM Card and the PTK Card.

      WaveScan WaveFront^TM System. In order to enhance treatments with the VISX System, VISX, in conjunction with 20/10 Perfect Vision, GmbH, has developed the WaveScan WaveFront System, which uses wavefront technology to diagnose refractive errors of the eye. These refractive errors are displayed by the system in the form of an aberration map. The WaveScan® takes advantage of complex mathematical algorithms to derive complete refractive information about the patient’s entire optical system. The WaveScan accomplishes this by projecting a beam of light onto the retina and analyzing the reflected light waves. The wavefront data also contains additional higher order aberration information, previously unmeasureable by any other instrument.

      Information concerning the amount and percentage of revenues contributed by our different products and services is set forth later in this report under the heading, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Marketing, Sales and Distribution

      Our marketing objective is to maximize consumer acceptance of laser vision correction by (a) offering advanced laser technology to the eyecare medical community, (b) developing improvements to that technology, and (c) providing our customers with various services and programs designed to increase their operating efficiency, effectiveness and volume of laser vision correction procedures.

      VISX University® Programs. VISX University is a series of educational programs designed to teach laser center decision-makers how to effectively manage and market their excimer laser practices. Three national sessions were held in 2001, and two are planned for 2002. Seventeen regional practice development sessions, known as Fast Tracks, were also held in 2001, and twelve are planned for 2002. Attendees learn about procedure-building techniques in advertising, marketing, public relations, lead tracking, staff training, and consumer education and recruitment. The VISX University curriculum features a two-day program of small-group, interactive workshops in which participants learn about the experiences of successful VISX laser vision correction marketers and share their own experiences. VISX University programs provide all our customers

3

Table of Contents

      Business Development Managers. We employ a team of industry experts as Business Development Managers who have geographical account responsibility across the nation. Each Business Development Manager is responsible for providing the instruction, information and services necessary to help our customers maximize their VISX® laser investment. Accounts that participate in this program receive intensive “hands-on” consulting and training to help them increase the number of laser vision correction procedures performed. The plan developed during the consultation phase identifies specific areas that the customer can modify in order to respond more successfully to consumers interested in having laser vision correction on a VISX System.

      The Refractive Society Symposium. The Refractive Society Symposium is a continuing medical education (CME) accredited event, typically held in conjunction with major ophthalmic meetings, drawing speakers from around the world to share their experiences on the latest refractive techniques and technologies. Refractive surgeons are encouraged to attend these events to obtain important information about the latest VISX technology and updates on the development of new technologies.

      Marketing Communication Materials. Customers who buy or use a VISX System receive educational and marketing materials including brochures, videos, slides, and other tools to help them promote VISX laser vision correction.

      Procedure Financing Support. Consumers are accustomed to making monthly payments to purchase goods and services, and VISX laser vision correction is well suited to that approach. We have referred our customers to several financial vendors that specialize in patient financing to consumers through eye care professionals. We are not directly involved with these financing programs and do not benefit from the financing except to the extent it contributes to growth in the number of laser vision correction procedures performed.

      Customer Response Center. The VISX Customer Response Center handles customer calls 24 hours a day, seven days a week, and is staffed by over 80 trained VISX professionals to respond to calls and inquiries from our customers. Telephone requests range from orders for parts and VisionKey cards to requests for technical support, customer information, and field service. More than 60 members of the Customer Response Center are field-based service engineers, strategically located to enable them to respond rapidly to customer needs.

      Laser Installation/ Training Process. We require new customers to participate in a thorough and rigorous training process to ensure they know how to safely operate the VISX System and perform laser vision correction surgery. After a VISX field service engineer installs the VISX System, the operators are trained on-site in the use and maintenance of the VISX System. Physicians are trained and certified by an independent ophthalmologist selected by us to serve as a VISX Physician Trainer. The initial training of operators and physicians is included with the purchase of the VISX System, and we receive no profit from training courses given throughout the United States. Instead, it is our philosophy that ophthalmologists are uniquely qualified to train ophthalmologists, and we authorize certified VISX Physician Trainers to train other physicians in the proper use of the VISX System. Over 8,500 United States ophthalmologists have been trained to use the VISX System.

      VISXPRESS®. At least once a month we broadcast a fax bulletin, called VISXPRESS, communicating the latest news regarding VISX and laser vision correction. The frequency of the publication is determined by the timing of news. The bulletin is also used to communicate breaking news immediately to our customers.

      VISX on the Internet. We believe that Internet-based marketing is particularly well suited to the demographics of our potential consumers. The Internet’s interactive capabilities enhance the effectiveness of

4

Table of Contents

	•	Information for consumers regarding the benefits of VISX® laser vision correction, including multimedia testimonials from patients, and an interactive map providing consumers with the locations of VISX installations and VISX-certified physicians;
	•	Clinical information for the physician community, including downloadable presentations and white papers concerning the most recent VISX clinical results from leading ophthalmologists worldwide;
	•	On-line access to the Customer Response Center, including news about new products and services, physician certification course schedules, and registration for practice development programs such as VISX University; and
	•	VISX University® Online, which gives our customers access to some of the same valuable educational information about practice building and marketing offered in the live seminars, but from the convenience of their computers.

      Our international sales and marketing strategy is to establish and maintain a presence and quality image in selected markets either directly or indirectly through distributors. To support this strategy, we have established a subsidiary in Japan and have sales managers that cover key international sales regions. We also support international markets by sponsoring speaking engagements and by attending select exhibitions and trade shows. VISX Systems are installed in more than 46 countries, and we have contracts with more than 32 distributors worldwide that are responsible for servicing those systems.

Major Customers

      Laser Vision Centers, Inc. (“LVCI”) accounted for 14%, 10% and 13% of total revenues in 2001, 2000, and 1999, respectively. TLC Laser Eye Centers, Inc. (“TLC”) accounted for 5%, 9% and 12% of total revenues in 2001, 2000, and 1999, respectively.

Reliance on Patents and Proprietary Technology

      We own over 200 United States and foreign patents and have 145 patent applications pending. We believe our patents provide a substantial proprietary position in system and application technology relating to the use of lasers for vision correction. Two of our fundamental patents have survived reexamination proceedings by the United Stated Patent and Trademark Office. U.S. Patent No. B1 5,108,388 survived reexamination with amendment to the original claims and the addition of 60 new claims. U.S. Patent No. 4,903,695 C1 survived reexamination without amendment of the original claims and with the addition of 39 new claims. We are committed to protecting our proprietary technology. It is possible, however, that one or more of our patents may be found to be invalid or unenforceable, or that a party against whom we are asserting claims of patent infringement may be found not to be infringing our patents. Such an outcome could have a material adverse effect on our business, financial position and results of operation. Please see “Risk Factors — Patents and Intellectual Property” and “Risk Factors — Intellectual Property Disputes” below for additional discussion of the risks related to our intellectual property.

      License to LaserSight. In May 2001, VISX and LaserSight Incorporated signed an agreement by which they settled all pending disputes and litigation between the two companies. Under the agreement, we licensed our patents relating to refractive excimer lasers to LaserSight. As consideration, LaserSight will pay a royalty to us for each procedure performed in the United States using LaserSight’s refractive excimer laser.

5

Table of Contents

      Cross License between VISX and Bausch & Lomb. In January 2001, VISX and Bausch & Lomb signed an agreement by which they settled all pending disputes and litigation between the two companies. Under the agreement, we licensed our patents relating to refractive excimer lasers to Bausch & Lomb. As consideration, Bausch & Lomb licensed its patents relating to refractive excimer lasers to us and will pay us a royalty for each procedure performed in the United States using Bausch & Lomb’s refractive excimer laser.

      Cross License between VISX and Summit. In June 1998, VISX and Summit Technology, Inc. (“Summit”), now owned by Alcon, signed an agreement by which they dissolved Pillar Point Partners (“Pillar Point”) and settled all pending disputes and litigation between the two companies. Under the agreement, VISX and Summit each granted the other a fully-paid license to its patents relating to laser ablation of corneal tissue. The licenses cover, with certain exceptions, technology acquired by the recipient of the license.

      Other Licensing Agreements. We have licensed certain patents issued outside of the United States to the following companies: Chiron Vision Corporation, now owned by Bausch & Lomb, Aesculap-Meditec GmbH, now known as Asclepion (“Asclepion”), Herbert Schwind GmbH & Co. KG (“Schwind”), Autonomous Technologies Corporation (“Autonomous”), previously owned by Summit and now owned by Alcon, and LaserSight. Under these agreements, we receive royalties for international sales of Bausch & Lomb, Asclepion, Schwind, and LaserSight equipment that is covered by our international patents. In addition, Summit has taken a fully-paid license to our non-U.S. patents, which covers sales of the Summit and Autonomous laser systems.

      In 1992, International Business Machines Corporation (“IBM”) granted VISX nonexclusive rights under United States and foreign IBM patents that include certain claims covering ultraviolet laser technology for removal of human tissue. Under the terms of this license, we have agreed to pay a royalty on VISX Systems made, used, sold or otherwise transferred by or for VISX in the United States and certain other countries. In 1997, IBM advised us that it assigned the patents and the license to LaserSight. In February 1998, LaserSight advised us that Nidek had acquired the foreign IBM patents and the licenses to these foreign patents. As part of the agreement entered into by VISX and LaserSight in May 2001, we obtained a paid-up license to the United States IBM patent. We also have entered into a nonexclusive, worldwide license agreement with Patlex Corporation (“Patlex”), which holds certain patents on lasers. Under this agreement, we pay Patlex a royalty on certain laser components of the VISX System.

      Confidentiality Arrangements. 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 VISX, without additional consideration, inventions conceived or reduced to practice by them while employed or retained by VISX, subject to customary exceptions. We cannot give any assurance that employees, consultants and others will not breach these confidentiality agreements, that we would have adequate remedies for any breach, or that our competitors will not learn of or independently develop our trade secrets.

Government Regulation

      U.S. Food and Drug Administration. The VISX STAR^TM Excimer Laser System and VISX WaveScan WaveFront^TM System are medical devices, and as such are subject to regulation by the FDA under the Food Drug and Cosmetic Act and by similar agencies outside of the United States. Products manufactured or distributed by us are subject to pervasive and continuing regulation by the FDA, including, among other things, postmarket surveillance and adverse event reporting requirements. Labeling and promotional activities are subject to scrutiny by the FDA and, in certain instances, by the Federal Trade Commission.

      We manufacture our products in accordance with Good Manufacturing Practices (“GMP”) regulations, which impose procedural and documentation requirements with respect to manufacturing and quality assurance activities. Our manufacturing facilities, procedures and practices have undergone and continue to be subject to GMP compliance inspections conducted by the FDA.

6

Table of Contents

      The FDA’s Quality System Regulation (“QSR”) went into effect on June 1, 1997. The goal of QSR is to make the existing GMP regulations consistent, to the extent possible, with the requirements for quality systems contained in applicable international standards, primarily, the International Organization for Standardization (“ISO”) 9001:1994 “Quality Systems — Model for Quality Assurance in Design, Development, Production, Installation, and Servicing.” On February 3, 1998, we were certified to ISO 9001/ EN46001. To ensure continuing compliance with ISO standards, we undergo annual recertification audits, the most recent of which was completed on October 19, 2001. These recertification audits are carried out by registered certification agencies. We have successfully passed each annual recertification audit since its initial certification.

      Other Government Regulation. We are regulated under the Radiation Control for Health and Safety Act, which requires laser products to comply with performance standards, and manufacturers to certify in product labeling and in reports to the FDA that their products comply with all such standards. In addition, we are subject to California regulations governing the manufacture of medical devices, including an annual licensing requirement, and our facilities have been inspected by, and are subject to ongoing, periodic inspections by, California regulatory authorities. Sales, manufacturing and further development of the VISX® System also may be subject to additional federal regulations pertaining to export controls and environmental and worker protection, as well as to state and local health, safety and other regulations that vary by locality, which may require obtaining additional permits. The impact of such regulations cannot be predicted. Our products have been tested and certified to comply with all applicable safety requirements for medical devices in the United States and Canada, and bear the ETL-c Mark as evidence of compliance.

      International. Many countries outside the United States do not impose safety and efficacy testing or regulatory approval requirements for medical laser systems. International regulatory requirements vary by country, however, and failure to receive approval in, or meet the requirements of, any country would prevent us from selling our products in that country.

      In Europe, the member countries of the European Union have promulgated rules that require medical products to receive the certifications necessary to affix the CE Mark to the device. The CE Mark is an international symbol of adherence to quality assurance standards and compliance with applicable European medical device directives. Certification under the ISO standards for quality assurance and manufacturing processes is one of the CE Mark requirements. We are licensed to apply the CE Mark to the VISX System and VISX WaveScan^TM in accordance with the European Medical Device Directives.

      In Japan, we received regulatory approval for PTK from the Japanese Ministry of Health and Welfare in May 1998 and for myopia, or nearsightedness, with astigmatism in January 2000. The Japanese Ministry of Health, Labour and Welfare approved the STAR S3^TM Excimer Laser System on December 5, 2001. We are the only United States manufacturer to receive approval for its laser vision correction system in Japan.

Competition

      In the United States, there are five companies whose excimer laser systems have received FDA approval, namely, those of VISX, Alcon (which purchased Summit Autonomous, Inc.), Nidek, LaserSight and Bausch & Lomb. Alcon and Nidek received FDA approval to commercialize their laser systems at the end of 1998, LaserSight at the end of 1999 and Bausch & Lomb in February 2000. While Bausch & Lomb took a per procedure license from us in January 2001, and LaserSight took a per procedure license from us in May 2001, and VISX and Summit granted each other cross licenses to patents covering ultraviolet ablation of corneal tissue, Nidek is actively engaged in commercializing their laser system in the United States and does not have a license to our patents. Nidek is currently offering laser systems for sale in the United States without requiring purchasers to pay license fees upon use of the system. We are pursuing several actions against Nidek and certain of its users for patent infringement. See “Legal Proceedings — Patent and Antitrust Proceedings” below.

      Our principal international competitors are Alcon, Asclepion, Bausch & Lomb, LaserSight, Nidek, Schwind and WaveLight. We have licensed certain of our patents to Asclepion, Bausch & Lomb, LaserSight, and Schwind, each of which is obligated to pay us royalties when it sells a system covered by our patents

7

Table of Contents

Manufacturing, Components and Raw Materials

      The manufacture of VISX® Systems is a complex operation involving numerous procedures, and the completed system must pass a series of quality control and reliability tests before shipment. We buy from various independent suppliers many components that are either standard or built to our proprietary specifications, and then assemble these components at our California facility. We also contract with third parties for the manufacture or assembly of certain components. A single vendor currently provides several of these components. Please see “Risk Factors — Single Sources for Key Components” below for a description of the risks we face due to our reliance on sole-source vendors.

Research and Development and Regulatory

      Our research efforts have been the primary source of our products. We intend to maintain our strong commitment to research as an essential component of our product development effort. Toward this end, we incurred research and development expenses, including clinical trial expenses, of $19.4 million in 2001, $14.9 million in 2000, and $15.5 million in 1999. Licensed technology developed by outside parties is an additional source of potential products. In 2001, VISX continued funding the early stage research at Stanford University for future treatments for age-related macular degeneration (AMD). We anticipate that research, development and regulatory expenses could be approximately $18 million in 2002.

Employees

      As of December 31, 2001, we had 333 full time employees, 10 temporary employees and 50 consultants. Of the regular employees, 185 are employed in manufacturing and service, 63 in research and development and regulatory, and 85 in general administrative and marketing and sales positions. None of our employees are covered by a collective bargaining agreement. We believe that our relations with employees are good.

Financial Information about Segments and Geographic Areas

      Financial information relating to VISX’s segments and information on revenues generated in different geographic areas are set forth in Note 2, titled “Segment Reporting,” of Notes to Consolidated Financial Statements in Item 8 of this report. In addition, information regarding risks attendant to our foreign operations is set forth under the heading “Risk Factors” later in this report.

Item 2.     Properties

      Our operations are currently located in a 108,844 square foot leased facility in Santa Clara, California. The lease for the facility expires in May 2003 with an option to extend the term an additional five years. We also lease approximately 25,000 square feet of warehouse space in Sunnyvale, California under a lease that expires in March 2006.

      We also lease warehouse and office space in Tokyo and Osaka, Japan. The two warehouse leases each cover 355 square feet. The first lease expires on March 31, 2003, and the second lease expires on December 31, 2002. The two leases for office space are for 871 and 1,835 square feet and expire on January 31, 2003 and September 30, 2003, respectively.

      We believe our facilities are sufficient to meet our current and reasonably anticipated future requirements. See Note 8 of Notes to Consolidated Financial Statements.

Item 3.     Legal Proceedings

      We are involved in a variety of legal proceedings that affect our 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. In 2001,

8

Table of Contents

Patent and Antitrust Proceedings

      The patents owned by VISX are being challenged on several fronts. Generally, the litigation and other proceedings center on whether infringement of the patents has occurred, and on the validity or enforceability of the patents. In addition, our use of patents and our business practices are being contested as violations of antitrust and securities laws. The results of these complex legal proceedings are very difficult to predict with certainty. Because a number of the proceedings have issues in common, an adverse determination in one proceeding could lead to adverse determinations in one or more of the other pending proceedings. Adverse determinations in any of these proceedings could limit our ability to collect equipment and per procedure license fees in certain markets, could give rise to significant monetary damages, could prevent us from manufacturing and selling the VISX® System, and therefore could have a material adverse effect on our business, financial position and results of operations.

Patent Litigation: Nidek and Users of Nidek Lasers

      In December 1998, Nidek received approval to market its laser vision correction systems in the United States, and subsequently VISX filed a lawsuit in the United States District Court in Northern California alleging that Nidek’s laser systems infringe certain VISX patents (USDC ND Cal C98-04842). We are seeking injunctive relief and monetary damages in that case. Nidek filed a lawsuit against us on March 30, 1999 in the United States District Court in Northern California alleging, among other things, various violations of federal antitrust and state unfair competition laws, based in part upon VISX’s procurement and assertion of its patents. This case was consolidated with VISX’s action against Nidek for patent infringement.

      In February 2000, four lawsuits filed during 1999 by VISX against certain users of the Nidek laser system were transferred to Multi-District Litigation in the United States District Court in Northern California for the purpose of consolidating them with the actions between VISX and Nidek for pre-trial proceedings (MDL Docket No. 1319, the “California MDL”). In these cases (captioned VISX, Incorporated v. Farmington Eye Center PLLC and Donald C. Fiander, MD (USDC ED Mich 99-60139); VISX, Incorporated v. OR Providers, Inc., Refractive Support, Inc., and Robert G. Wiley, M.D. (USDC ND Ohio 1:99CV00508); VISX, Incorporated v. Southwest Eye Care Center, Inc. et al. (USDC SD Cal 99 CV 1029L); and VISX, Incorporated v. Antoine L. Garabet et al. (USDC CD Cal 99-05284)), we have alleged, among other things, that the defendants’ use of the Nidek laser system infringes one or more of our patents and are seeking monetary damages and an injunction against the defendants prohibiting the use of the Nidek laser systems. The defendants in these actions have filed counterclaims seeking, among other things, a declaration of non-infringement, invalidity and unenforceability of the patents asserted by VISX.

      In October 2000, we amended our suits against Nidek and certain users of the Nidek laser system to assert only VISX United States Patents Nos. B1 5,108,388 (the “ ‘388 patent”) and 5,735,843 (the “ ‘843 patent”). The court has entered a scheduling order in the California MDL setting a trial date of February 3, 2003 in the actions between VISX and Nidek. In September 2001, VISX received a claims construction ruling in the California MDL. In the ruling, the court determined the scope of certain patent claims asserted by VISX. Among other things, the court found that the asserted claims of the ‘843 patent cover laser vision correction systems using a mask with an aperture to provide a graded intensity to the cornea. The court also found that the asserted claims of the ‘388 patent require ablation of layers above the stroma in addition to stroma. Discovery is ongoing in the California MDL.

9

Table of Contents

      In January 2001, Nidek filed a lawsuit against VISX in the United States District Court in Northern California (USDC ND Cal C01-20015 JF) alleging infringement of Nidek United States Patents Nos. 5,445,633, 5,624,436 and 6,136,012 and seeking monetary damages and injunctive relief. VISX has filed an answer to this complaint denying infringement and asserting certain other defenses. The court held a claims construction hearing in this case in January 2002, but has not yet issued its claims construction ruling.

      These proceedings are still in the discovery stage, and at present we are unable to predict either the outcome or estimate the potential adverse financial and operational impact, if any, that might arise from these cases. However, adverse determinations in these lawsuits could limit VISX’s ability to collect per procedure license fees in the United States from Nidek as well as from other sellers and users of laser vision correction systems, could give rise to significant monetary damages and could result in an order enjoining the manufacture and sale of the VISX® System. Any such adverse determination could therefore have a material adverse effect on VISX’s business, financial position and future results of operations.

      VISX has brought patent litigation against Nidek in Canada and France. These proceedings, which allege patent infringement by Nidek and certain of its users, were filed by VISX in February 1994 (Canada) and May 1997 (France). The defendants have contested VISX’s infringement claims as well as the validity of VISX’s patents. Trial in the Canadian proceeding took place in September 1999, and in December 1999, the Canadian federal court ruled that VISX’s patents were valid, but that defendants had not infringed them. Both sides appealed this decision, and in June 2001, the Canadian court of appeal upheld the trial court’s determination of validity and non-infringement. Neither side appealed from this latter decision.

      The proceeding in France is currently in the pleading stage, and at present we are unable to predict either the outcome or estimate the potential adverse financial and operational impact, if any, that might arise from that case. However, any determination that our patents are invalid could limit our ability to collect equipment license fees in France and elsewhere in Europe from Nidek as well as from other sellers of laser vision correction systems. Any such adverse determination could therefore have a material adverse effect on VISX’s business, financial position and future results of operations.

      In August 2000, Nidek filed an action in Japan against VISX’s Japanese subsidiary and others alleging infringement of Nidek’s Japanese Patent No. 2,809,959 (the “ ’959 patent”) and seeking monetary damages and injunctive relief (Tokyo District Court, the 47th Civil Division, Case No. (WA) 16531/2000). VISX thereafter initiated proceedings in the Japanese Patent Office (“JPO”) challenging the validity of that Nidek patent. In November 2001, the Tokyo District Court held that the ’959 patent is invalid and, as a result, is unenforceable. In January 2002, the JPO also found that the ’959 patent is invalid. Nidek has appealed both of these decisions to the Tokyo High Court and stated that it may attempt to amend the claims of the ’959 patent.

      At present we are unable to predict either the outcome or estimate the potential adverse financial and operational impact, if any, that might arise from the Japanese proceeding. However, an adverse determination in this suit could give rise to significant monetary damages and result in an order enjoining the importation and sale of VISX products to Japan. Any such adverse determination could therefore have a material adverse effect on our business, financial position and future results of operations.

Patent Litigation: LaserSight

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

      In February 2000, LaserSight filed a lawsuit against VISX in the same District Court (USDC Del. 00-059) alleging that VISX infringes United States Patent No. 5,630,810 (the “ ’810 patent”), which is licensed to LaserSight. In May 2001, LaserSight dismissed its infringement claim with prejudice and granted

10

Table of Contents

Patent Litigation: Bausch & Lomb

      In September 2000, VISX filed an action against Bausch & Lomb in the United States District Court in Delaware alleging that Bausch & Lomb infringed the ’388 patent (USDC Del. CA No 00-849 JJF). In January 2001, the parties reached a settlement of this action, which provided, among other things, for the licensing of the ’388 patent and other VISX United States patents to Bausch & Lomb.

Federal Trade Commission Antitrust Proceedings

      On March 24, 1998, the Federal Trade Commission (“FTC”) filed an administrative complaint (Docket No. 9286) challenging the existence of Pillar Point Partners, a now-dissolved partnership between VISX Partner, Inc. (“VISX Partner”) and Summit Partner, Inc. (“Summit Partner”), and challenging the enforceability of certain patents owned by VISX. On July 8, 1998, we reached a settlement with the FTC and entered into a consent decree regarding the dissolution of Pillar Point. On March 4, 1999, the FTC entered an order finalizing that consent decree. The consent decree did not address the portion of the FTC’s complaint directed towards the enforceability of certain VISX patents. On June 4, 1999, the FTC released the initial decision of its administrative law judge dismissing the remaining portions of the FTC’s complaint against VISX and, on June 21, 1999, the FTC attorneys filed notice that they would appeal the judge’s decision to the full Commission. On December 1, 1999, the FTC attorneys filed a conditional motion to dismiss the FTC’s complaint. The Commission dismissed the remaining portions of the FTC’s complaint on February 7, 2001, and the FTC proceedings against VISX have been concluded.

Antitrust Class Actions And Litigation Involving Pillar Point Partners

      Since the commencement of the FTC administrative proceeding on March 24, 1998, a large number of purported class actions were filed against VISX, Summit and, in some cases, also against their affiliates, VISX Partner, Summit Partner, and Pillar Point. Other claims involving Pillar Point were filed against VISX, Summit and others at various times. These actions alleged, among other things, violations of various state and federal antitrust and unfair competition laws.

      In the summer of 2001, VISX and Summit Autonomous, Inc., a subsidiary of Alcon, settled the following actions: In re PRK/ LASIK Consumer Litigation (California Superior Court for Santa Clara County, No. CV772894); The Antitrust Class Actions (USDC AZ, MDL No. 1202); Burlingame v. Pillar Point Partners, et al. (USDC AZ, MDL No. 1202); Freedom Vision Laser Center, LP v. VISX, Incorporated et al. (USDC AZ, MDL No. 1202); and Antoine L. Garabet, M.D. and Abraham v. Shammas, M.D. v. Summit Technology, Inc. and VISX (California Superior Court for Santa Clara County, No. CV 787359) (the “settlements”). In connection with the settlements, VISX paid a total of $37.8 million in one-time payments and related costs and fees. As a result of the settlements, all of the lawsuits described below have been or will likely be dismissed with prejudice.

      Several actions filed in California state court on behalf of purported classes of patients were consolidated into one case in the Superior Court of the State of California for the County of Santa Clara, captioned In re PRK/ LASIK Consumer Litigation, No. CV772894 (“In re PRK”), filed on June 12, 1998, and naming VISX, VISX Partner, Summit, and Summit Partner as defendants. The plaintiffs in the consolidated action alleged violations of the California Business and Professions Code (under the Cartwright Act and the Unfair Business Practices Act) on behalf of a putative nationwide class of patients. In August 2001, the parties to this action reached a settlement agreement whereby VISX and Summit Autonomous, Inc. paid money into a settlement fund. The court certified a settlement class of patients from twenty states and the District of Columbia who underwent laser vision correction surgery using a VISX or Summit laser system between October 1, 1995 and

11

Table of Contents

      In addition to the In re PRK action, VISX was named in several duplicative actions in other states on behalf of purported classes of patients:

      In Marks v. Summit Technology Inc., et al., filed on April 27, 1998 in Florida state court, plaintiff brought suit on behalf of a purported class of patients in several states alleging violations of the Florida antitrust and unfair competition laws. No class has been certified in this action. On December 15, 1999, pursuant to the parties’ joint motion, the court stayed this proceeding pending resolution of the In re PRK action. In light of the settlement of the In re PRK action, VISX expects that the Marks action will be dismissed in 2002.

      Worcester v. Summit Technology, Inc. et al. was filed on June 11, 1998 in Wisconsin state court on behalf of a purported class of Wisconsin patients alleging violations of the Wisconsin antitrust and unfair competition laws. In December 1998, the Worcester action was removed to federal court and transferred to the Multi-District Litigation in Arizona described below. On February 15, 2002, pursuant to the parties’ stipulation, this action was dismissed with prejudice.

      In May 1999, Brisson v. Summit Technology, Inc., VISX, Inc., Summit Partner, Inc., VISX Partner, Inc. and Pillar Point Partners was filed by plaintiff on behalf of a purported class of Minnesota patients alleging violations of Minnesota antitrust laws, seeking unspecified damages and injunctive relief. No class has been certified in this action. In June 2000, the court stayed this proceeding pending resolution of the In re PRK action. In light of the settlement of the In re PRK action, VISX expects that the Brisson action will be dismissed in 2002.

      In addition to the state court actions discussed above, a number of purported class actions alleging violations of federal antitrust laws on behalf of a purported class of direct purchasers were filed in federal court against VISX, Summit, and, in some cases, Pillar Point. All of these actions were transferred to the Multi-District Litigation in Arizona described below. In October 1998, the United States District Court in Arizona entered an order for consolidation of these class actions into a case captioned The Antitrust Class Actions (USDC AZ Oct. 21, 1998). In July 2001, the parties entered into a settlement agreement whereby VISX and Summit Autonomous, Inc. paid money into a settlement fund. The court certified a settlement class of all persons and entities in the United States who were charged a per procedure fee by VISX or Summit between October 1, 1995 and February 22, 2000. Individual notices were sent out to the members of the class. No members of the class opted out of the settlement agreement. In November 2001, the court granted final approval of the settlement agreement. On December 28, 2001, the settlement agreement became effective, and the matter was dismissed with prejudice as to all parties. Pursuant to the settlement agreement and plan of allocation, the settlement administrator will disburse the settlement fund to members of the class who timely submitted proof of claim forms.

      On June 4, 1998, VISX and Summit agreed to dissolve Pillar Point and settle all pending disputes and litigation between them. However, Pillar Point continued to be a party in a number of cases, which were transferred for pre-trial purposes to Multi-District Litigation in the United States District Court in Arizona under the caption In re Pillar Point Partners Antitrust and Patent Litigation (MDL No. 1202, the “Arizona

12

Table of Contents

      Burlingame v. Pillar Point Partners, et al.; John R. Shepherd, M.D., Ltd. v. Pillar Point Partners, et al. In June 1996, Dr. Burlingame filed suit against Pillar Point, Summit, Summit Partner, VISX, and VISX Partner. In September 1996, a corporation controlled by Dr. Shepherd filed suit against the same parties. Both actions were filed in the United States District Court in Northern California. Generally, plaintiffs alleged that the per procedure license fee charged by Pillar Point was a violation of the Sherman Act or of corresponding state antitrust laws. In 2001, as a result of the settlements, these cases were dismissed with prejudice.

      Freedom Vision Laser Center, LP v. VISX, Incorporated et al. On May 28, 1999, Freedom Vision Laser Center and other plaintiffs filed an action containing allegations similar to those made in the antitrust class actions described above. On January 18, 2002, following the final approval of the settlement agreement in the direct purchaser class actions, this action was dismissed with prejudice.

      On January 24, 2000, a case captioned Antoine L. Garabet, M.D. and Abraham v. Shammas, M.D. v. Summit Technology, Inc. and VISX (CV 787359), was filed in the Superior Court of the State of California for the County of Santa Clara. Plaintiffs brought this action purportedly on behalf of the public under Section 17200 of the Business and Professions Code, California’s unfair competition law. The complaint contained allegations similar to those made in the antitrust class actions described above. On December 26, 2000, the court granted defendants’ motion to stay the action pending further court action or final resolution of the suits in the In re PRK action and the Arizona MDL. In 2001, as a result of the settlements, this case was dismissed with prejudice.

Securities Class Actions and Derivative Litigation

      VISX and certain of our officers were named as defendants in several substantially similar securities class action lawsuits filed in February and March 2000 in the United States District Court in Northern California. The plaintiffs in these actions purport to represent a class of all persons who purchased VISX’s common stock between March 1, 1999 and February 22, 2000. The complaints allege that the defendants made misleading statements in violation of the federal securities laws, including Section 10(b) of the Securities Exchange Act of 1934. In April 2000, the court consolidated the various actions under the caption In re VISX, Inc. Securities Litigation C-00-0649-CRB, and appointed a lead plaintiff. The lead plaintiff thereafter filed his consolidated amended complaint, and the parties stipulated to the certification of a plaintiff class. On September 20, 2000, defendants filed a motion to dismiss the consolidated amended complaint, and on February 27, 2001, the District Court granted defendants’ motion and dismissed the consolidated amended complaint with prejudice. Plaintiffs have appealed this decision to the United States Court of Appeals for the Ninth Circuit. The appeal has been fully briefed and was heard on March 13, 2002. VISX believes it has meritorious defenses to plaintiffs’ claims and expects to vigorously pursue these defenses. However, there can be no assurance that this action will be resolved favorably to VISX or will not have a material adverse effect on VISX’s business, financial position and future results of operation.

      On April 24, 2000, a purported stockholder derivative action was filed in the Superior Court of the State of California for the County of Santa Clara (captioned Michael S. Glassman v. Mark B. Logan, et al., CV789364). The complaint alleged that certain of VISX’s officers and directors breached fiduciary duties owed to VISX in connection with the circumstances alleged in the securities class action complaints described above. On May 30, 2000, the defendants filed demurrers to the derivative complaint. On October 3, 2000, the court sustained the demurrers but granted leave to file an amended derivative complaint. Plaintiffs filed their amended derivative complaint in August 2001 and shortly thereafter defendants renewed their demurrers. On December 13, 2001, the court sustained the renewed demurrers without leave to amend. On January 30, 2002, the court entered judgment in defendants’ favor. Plaintiffs agreed not to appeal from this judgment in return for defendants’ waiver of court costs. This action has thus been concluded.

13

Table of Contents

Other Litigation

      We are involved in various other legal proceedings that arise in the normal course of business. These matters include product liability actions, contract disputes and other matters. Based on currently available information, we believe that we have meritorious defenses to these actions and that the resolution of these cases is not likely to have a material adverse effect on our business, financial position or future results of operations.

      No matters were submitted to a vote of security holders during the fourth quarter of 2001.

      Each executive officer holds his or her office for a one-year term. Our principal executive officers are:

      Elizabeth H. Dávila. Ms. Dávila has served as our Chairman of the Board since May 2001, President and Chief Executive Officer since February 2001, President and Chief Operating Officer from February 1999 to February 2001, Executive Vice President and Chief Operating Officer from May 1995 through February 1999, and as a Director since December 1995. From 1977 to 1994, Ms. Dávila held senior management positions with Syntex Corporation in its medical device, medical diagnostics, and pharmaceutical divisions. Ms. Dávila also serves on the Board of Directors of VidaMed, Inc.

      Timothy R. Maier. Mr. Maier has been Executive Vice President, Chief Financial Officer and Treasurer since December 1999, prior to which he had been Vice President, Chief Financial Officer and Treasurer since June 1995. From 1991 to June 1995, he served as Vice President, Chief Financial Officer of GenPharm International, Inc., a privately held international biotechnology company. From 1976 to 1991, Mr. Maier held various positions with Spectra-Physics, Inc., an international manufacturer of scientific and commercial laser products. His positions included Vice President of Finance, Operations Manager, and International Finance and Administration Manager.

      Douglas H. Post. Mr. Post has been Executive Vice President, Operations since January 2001. Prior to that time he was Vice President, Operations and Customer Support from September 1996 to January 2001. He served as Senior Director, Customer Support from December 1992 to September 1996 and was Senior Vice President, Sales & Customer Support, with VISX Massachusetts Inc. (formerly Questek, Inc.) from February 1985 to December 1992.

14

Table of Contents

      Derek A. Bertocci. Mr. Bertocci has been Vice President, Controller since December 1998. He served as Controller from November 1995 until December 1998. Prior to joining VISX, Mr. Bertocci was Controller for Time Warner Interactive from 1993 to 1995 and Controller and Assistant Treasurer for Datron Systems, Inc. from 1987 to 1993.

      Donald L. Fagen. Mr. Fagen has been Vice President, Global Sales since February 2001. Prior to joining VISX, Mr. Fagen was Vice President, Sales and Marketing for The Hillside Group from 2000 to 2001. From 1999 to 2000, Mr. Fagen was Executive Vice President, Sales and Marketing with ClearVision, Inc. From 1995 to 1999, Mr. Fagen held the position of Director of Sales and Group Purchasing Organizations with Alcon Laboratories. Prior to that time, Mr. Fagen directed sales organizations at CooperVision Surgical from 1985 to 1993 and Sci Med from 1993 to 1995.

      Carol F. H. Harner, Ph.D. Dr. Harner has been Vice President, Research and Development since December 1997. Prior to joining VISX, she was Vice President, Scientific Affairs of Collagen Corporation, and President of CollOptics, Inc., a subsidiary of Collagen Corporation. Before joining Collagen Corporation, Dr. Harner held senior management and scientific positions at Chiron Ophthalmics Inc. from 1986 to 1993, and CooperVision Surgical, from 1984 to 1986. Prior to that time, she was in academia for 13 years.

      Catherine E. Murphy. Ms. Murphy has been Vice President, Human Resources, since September 2001. Prior to joining VISX she was Director, Compensation, Benefits and Human Resource Information Technology for Genentech from 1998 to 2001. Ms. Murphy served as human resource consultant for a variety of medical device and biopharmaceutical firms from 1996 to 1998, and she held a variety of management positions within Syntex Corporation from 1983 to 1996 in the areas of compensation, benefits, employee relations, staffing and related human resource functions.

      John F. Runkel, Jr. Mr. Runkel has been Vice President, General Counsel and Secretary since January 2001. Before joining VISX, Mr. Runkel was a partner in the law firm of Sheppard, Mullin, Richter & Hampton, where he practiced law for 17 years.

      Alan F. Russell, Ph.D. Dr. Russell joined VISX as Vice President, Regulatory and Clinical Affairs in June 2001. Before joining VISX he was CEO of AvMax, Inc., a privately held pharmaceutical company. From 1992 to 1998, Dr. Russell was Senior Vice President, Scientific Affairs at Cygnus, Inc. Before that, he was Vice President for Scientific Affairs at Chiron Corporation from 1987 to April 1992. He held the same position at Beecham Laboratories from 1983 to 1987, prior to which he held various management positions at Syntex Corporation from 1971 to 1983, including Director of Regulatory Affairs for Investigational Drugs. He holds a Ph.D. in Organic Chemistry from the University of New South Wales in Australia and M.B.A. and J.D. degrees from the University of Santa Clara.

      Joaquin V. Wolff. Mr. Wolff has been Vice President of Global Marketing since January 2001. Mr. Wolff held the position of Director of Marketing with responsibilities in both the Cataract and Vitreoretinal business units of the Surgical Division at Alcon Laboratories from 1990 to 2000. From 1983 to 1990, he held a variety of sales and marketing positions for CooperVision Surgical.

      Our Board of Directors has approved the adoption by our executive officers and directors of trading plans under Securities and Exchange Commission Rule 10b5-1. Consequently, some or all of our executive officers and directors may choose to adopt such a plan in the future.

15

Table of Contents

PART II

Item 5.     Market for VISX’s Common Equity and Related Stockholder Matters

      Our common stock is traded on the New York Stock Exchange under the symbol “EYE”. Prior to September 7, 2000, our stock was traded on the Nasdaq National Market tier of The Nasdaq Stock Market^SM under the symbol “VISX.” The following table sets forth the high and low closing prices of our common stock.

      On March 18, 2002, the last reported sale price of the Common Stock on the New York Stock Exchange was $17.49 per share. We had approximately 768 holders of record of our common stock on that date.

      We have never declared or paid any cash dividends on our common stock. We presently intend to retain all future earnings for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.

16

Table of Contents

Item 6.     Selected Financial Data

      We derived the following selected financial data from our audited consolidated financial statements. This historical financial data should be read in conjunction with our consolidated financial statements and notes thereto.

Selected Consolidated Financial Information