UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.5)*
VISX, Incorporated
(Name of Issuer)
Common Shares
(Title of Class of Securities)
92844S105
(CUSIP Number)
Marc Weitzen, Esq.
General Counsel,
Icahn Associates Corp. & affiliated companies
767 Fifth Avenue, 47th Floor
New York, New York 10153
(212) 702-4388
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 20, 2001
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d_7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
CUSIP No. 92844S105
1 NAME OF REPORTING PERSON
High River Limited Partnership
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
3,245,505
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
3,245,505
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,245,505
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
14 TYPE OF REPORTING PERSON*
PN
2
SCHEDULE 13D
CUSIP No. 92844S105
1 NAME OF REPORTING PERSON
Barberry Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
2,774,500
8 SHARED VOTING POWER
3,245,505
9 SOLE DISPOSITIVE POWER
2,774,500
10 SHARED DISPOSITIVE POWER
3,245,505
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,020,005
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.5%
14 TYPE OF REPORTING PERSON*
CO
3
SCHEDULE 13D
CUSIP No. 92844S105
1 NAME OF REPORTING PERSON
Carl C. Icahn
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
6,020,005
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
6,020,005
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,020,005
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.5%
14 TYPE OF REPORTING PERSON*
IN
4
SCHEDULE 13D
CUSIP No. 92844S105
1 NAME OF REPORTING PERSON
Gail Golden
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
1,990
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
1,990
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,990
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0000345%
14 TYPE OF REPORTING PERSON*
IN
5
SCHEDULE 13D
Item 1. Security and Issuer
The Schedule 13D filed with the U.S. Securities and Exchange Commission
on October 20, 2000, relating to the common shares, $.01 par value (the
"Shares"), of VISX, Incorporated, a Delaware corporation (the "Issuer" or
"VISX") and amended on November 6, 2000, December 5, 2000, December 15, 2000 and
April 18, 2001, by the Registrants, is amended to furnish additional information
set forth herein. All capitalized terms not otherwise defined shall have the
meaning ascribed to such terms in the previously filed statement on Schedule
13D.
Item 2. Identity and Background
Item 2(e) is hereby amended to add the statement set forth on Exhibit 1
hereto.
Item 4. Purpose of Transaction
Item 4 is hereby amended to add the following:
On April 20, 2001, Mr. Icahn delivered a letter to the Issuer addressed
to Ms. Davila, CEO of VISX (the "Letter") and issued a press release. A copy of
each of the Letter and the press release is filed as Exhibit 2 and Exhibit 3
hereto, respectively, and is incorporated herein by reference.
On April 20, 2001, Mr. Icahn prepared a letter for further distribution
to VISX's stockholders, which letter is filed as Exhibit 4 hereto and is
incorporated herein by reference.
Item 7. Material to be Filed as Exhibits
1. Statement pursuant to Item 2(e)
2. Letter from Mr. Icahn to Ms. Davila, CEO of VISX, Incorporated dated
April 20, 2001
3. Press release dated April 20, 2001
4. Letter from Mr. Icahn to Stockholders of VISX, Incorporated dated April
20, 2001
6
SIGNATURE
After reasonable inquiry and to the best of the undersigned knowledge
and belief, each of the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: April 20, 2001
BARBERRY CORP.
By: /s/ Carl C. Icahn
Name: Carl C. Icahn
Title: President
HIGH RIVER LIMITED PARTNERSHIP
By: BARBERRY CORP.,
General Partner
By: /s/ Carl C. Icahn
Name: Carl C. Icahn
Title: President
/s/ Gail Golden
GAIL GOLDEN
/s/ Carl C. Icahn
CARL C. ICAHN
[Signature Page of Amendment No. 5 of Schedule 13D with respect to VISX,
Incorporated]
7
EXHIBIT 1
On January 5, 2001, Reliance Group Holdings, Inc. ("Reliance")
commenced an action in the United States District Court for the Southern
District of New York against Carl C. Icahn, Icahn Associates Corp. and High
River as defendants alleging that High River's tender offer for Reliance 9%
senior notes violated Section 14(e) of the Exchange Act. Reliance sought a
temporary restraining order and preliminary and permanent injunctive relief to
prevent defendants from purchasing the notes. The Court initially imposed a
temporary restraining order. Defendants then supplemented the tender offer
disclosures. The Court conducted a hearing on the disclosures and other matters
raised by Reliance. The Court then denied Reliance's motion for a preliminary
injunction and ordered dissolution of the temporary restraining order following
dissemination of the supplement.
Reliance took an immediate appeal to the United States Court of
Appeals for the Second Circuit and sought a stay to restrain defendants from
purchasing notes during the pendency of the appeal. On January 30, 2001, the
Court of Appeals denied plaintiffs' stay application. On January 30, Reliance
also sought a further temporary restraining order from the District Court. The
Court considered the matter and reimposed its original restraint until noon the
next day, at which time the restraint against Mr. Icahn and his affiliates was
dissolved. On March 22, 2001, the Court of Appeals ruled in favor of Mr. Icahn
by affirming the judgment of the District Court.
8
Exhibit 2
CARL C. ICAHN
767 Fifth Avenue - 47th Floor
New York, NY 10153
April 20, 2001
BY TELECOPY
Ms. Elizabeth Davila, Chief Executive Officer
VISX Incorporated
3400 Central Expressway
Santa Clara, CA 95051
Dear Ms. Davila:
I was happy to read in your April 18th press release that you are "receptive" to
proposals for VISX. If you were not being disingenuous in your statement, then I
would like to make the following proposal: I would be willing to engage in a
cash merger with VISX, in which VISX shareholders would receive $32 per share,
subject to due diligence and financing.
Obviously due diligence with respect to a company like VISX, which involves
significant high technology assets, would require serious review and a
substantial commitment of money, time and effort. Also, obtaining necessary
financing for a transaction of this size would involve the payment of a
significant commitment fee. Therefore, I believe that if VISX management is
serious about receiving proposals, the Company should assure prospective buyers
which incur such upfront costs that if an offer is made it will be put to
shareholders for their approval.
If VISX agrees with me to submit to a vote of shareholders the best offer of $32
per share or higher from any qualified bidder, then I will be willing to commit
the significant funds needed to commence the necessary effort to conduct due
diligence and to attempt to raise the financing for the transaction. I have been
in contact with the Industrial Bank of Japan, a member of the Mizuho Financial
Group, and they are prepared to commence due diligence efforts immediately. If
the results of due diligence are acceptable, one of my affiliated companies
would provide a significant portion of the purchase price in order to effectuate
the offer, in addition to the funds to be derived from financing sources.
Naturally I cannot assure that my efforts will ultimately result in our
consummation of the transaction outlined above. However, it is my belief that in
any event my efforts, together with a clear commitment by VISX, may move the
auction process forward and bring out other potential bidders.
9
A price of $32 per share is more than 3 1/2times higher than last
year's intraday low of $8.75 per share. If management is unwilling to commit to
submitting a $32 per share or higher offer to a vote of shareholders, it is, in
my view, an insult to shareholders and another example of management's
self_interest to the detriment of shareholders. In this regard, I note that
senior executives of VISX cashed out nearly $100 million in stock options in
1999 at share prices substantially above the recent stock price, in addition to
receiving their substantial compensation packages.
I await your reply!
Sincerely,
Carl C. Icahn
10
Exhibit 3
FOR IMMEDIATE RELEASE
ICAHN SUBMITS PROPOSAL FOR CASH MERGER WITH VISX AT $32 PER SHARE
New York, New York April 20, 2001. In a letter sent today by Carl C.
Icahn to Ms. Elizabeth Davila, the CEO of VISX, Inc., Mr. Icahn stated "I was
happy to read in your April 18th press release that you are 'receptive' to
proposals for VISX.... [Therefore] I would like to make the following proposal:
I would be willing to engage in a cash merger with VISX, in which VISX
shareholders would receive $32 per share, subject to due diligence and
financing."
Mr. Icahn noted the significant commitment of money, time and effort necessary
in order to investigate such a transaction, but declared that "if VISX agrees
with me to submit to a vote of shareholders the best offer of $32 per share or
higher from any qualified bidder, then I will be willing to commit the
significant funds needed to commence the necessary effort to conduct due
diligence and to attempt to raise the financing for the transaction. I have been
in contact with the Industrial Bank of Japan, a member of the Mizuho Financial
Group, and they are prepared to commence due diligence efforts immediately. If
the results of due diligence are acceptable, one of my affiliated companies
would provide a significant portion of the purchase price in order to effectuate
the offer, in addition to the funds to be derived from financing sources."
Mr. Icahn stated that he could not assure that his efforts will ultimately
result in his consummation of the transaction, but that it was his "belief that
in any event [his] efforts, together with a clear commitment by VISX, may move
the auction process forward and bring out other potential bidders."
A price of $32 per share is more than 3 1/2 times higher than last year's
intraday low of $8.75 per share. Mr. Icahn observed that if management is
unwilling to commit to submitting a $32 per share or higher offer to a vote of
shareholders, it is an insult to shareholders and another example of
management's self-interest to the detriment of shareholders. In this regard, Mr.
Icahn noted that senior executives of VISX cashed out nearly $100 million in
stock options in 1999 at share prices substantially above the recent stock
price, in addition to receiving their substantial compensation packages.
A copy of Mr. Icahn's letter to Ms. Davila is attached.
Contact: Susan Gordon at (212) 702-4309.
11
CARL C. ICAHN
767 Fifth Avenue - 47th Floor
New York, NY 10153
April 20, 2001
BY TELECOPY
Ms. Elizabeth Davila, Chief Executive Officer
VISX Incorporated
3400 Central Expressway
Santa Clara, CA 95051
Dear Ms. Davila:
I was happy to read in your April 18th press release that you are "receptive" to
proposals for VISX. If you were not being disingenuous in your statement, then I
would like to make the following proposal: I would be willing to engage in a
cash merger with VISX, in which VISX shareholders would receive $32 per share,
subject to due diligence and financing.
Obviously due diligence with respect to a company like VISX, which involves
significant high technology assets, would require serious review and a
substantial commitment of money, time and effort. Also, obtaining necessary
financing for a transaction of this size would involve the payment of a
significant commitment fee. Therefore, I believe that if VISX management is
serious about receiving proposals, the Company should assure prospective buyers
which incur such upfront costs that if an offer is made it will be put to
shareholders for their approval.
If VISX agrees with me to submit to a vote of shareholders the best offer of $32
per share or higher from any qualified bidder, then I will be willing to commit
the significant funds needed to commence the necessary effort to conduct due
diligence and to attempt to raise the financing for the transaction. I have been
in contact with the Industrial Bank of Japan, a member of the Mizuho Financial
Group, and they are prepared to commence due diligence efforts immediately. If
the results of due diligence are acceptable, one of my affiliated companies
would provide a significant portion of the purchase price in order to effectuate
the offer, in addition to the funds to be derived from financing sources.
Naturally I cannot assure that my efforts will ultimately result in our
consummation of the transaction outlined above. However, it is my belief that in
any event my efforts, together with a clear commitment by VISX, may move the
auction process forward and bring out other potential bidders.
12
A price of $32 per share is more than 3 1/2 times higher than last year's
intraday low of $8.75 per share. If management is unwilling to commit to
submitting a $32 per share or higher offer to a vote of shareholders, it is, in
my view, an insult to shareholders and another example of management's
self_interest to the detriment of shareholders. In this regard, I note that
senior executives of VISX cashed out nearly $100 million in stock options in
1999 at share prices substantially above the recent stock price, in addition to
receiving their substantial compensation packages.
I await your reply!
Sincerely,
Carl C. Icahn
13
Exhibit 4
CARL C. ICAHN
767 Fifth Avenue - 47th Floor
New York, NY 10153
April 20, 2001
Dear Fellow VISX Shareholder:
As you are aware, I am conducting a proxy contest against the management of
VISX, Incorporated ("VISX" or the "Company") in which I am seeking to have my
five nominees elected as the directors of VISX. A proxy statement has previously
been sent to you. I hope you will support my efforts and vote for my nominees by
signing, dating and returning the enclosed WHITE proxy card which accompanies
this letter.
On April 20, 2001, I sent management a letter, a copy of which is attached for
your review, telling them that I would be willing to engage in a cash merger
with VISX, in which VISX shareholders would receive $32 per share for VISX,
subject to due diligence and financing, if VISX agrees with me to submit to a
vote of shareholders the best offer of $32 per share or higher from any
qualified bidder. Naturally I cannot assure that my efforts will ultimately
result in our consummation of the transaction outlined above. However, if VISX's
management commits to submit to a vote of shareholders the best offer of $32 per
share or higher, then I will be willing to commit the significant funds needed
to commence the necessary effort to conduct due diligence and to attempt to
raise the financing for the transaction. I have been in contact with the
Industrial Bank of Japan, a member of the Mizuho Financial Group, and they are
prepared to commence due diligence efforts immediately. If the results of due
diligence are acceptable, one of my affiliated companies would provide a
significant portion of the purchase price in order to effectuate the offer, in
addition to the funds to be derived from financing sources. I believe that my
efforts, together with a clear commitment by VISX, may move the auction process
forward and bring out other potential bidders.
A price of $32 is more than 3 1/2 times higher than last year's intraday low of
$8.75 per share. If management is unwilling to commit to submitting a $32 per
share or higher offer to a vote of shareholders, their action would, in my view,
be an insult to shareholders and another example of management's self-interest
to the detriment of shareholders. In this regard I note that senior executives
of VISX cashed out nearly $100 million in stock options in 1999 at share prices
substantially above the recent market closing price of $20.83 per share on April
19, 2001, in addition to receiving their substantial compensation packages.
14
DO NOT BE CONFUSED BY MANAGEMENT'S ACTIONS
VISX management may choose to ignore the interests of shareholders and reject my
proposal. They may, as they did in their April 18, 2001 press release, attempt
to justify their action by hiding behind their financial advisors, legal
representatives and the process that they have created for the review of
"strategic alternatives."
Management is well aware that putting together a real bid for a company such as
VISX, which involves significant high technology assets, requires a great deal
more than merely contacting advisors. It involves due diligence activity, fees
for financing sources and lawyers and a substantial commitment of money, time
and effort. I can't imagine that a possible acquirer would undertake such an
effort merely for the privilege of having a conversation with Goldman, Sachs &
Co., especially in light of the fact that in January of this year VISX
management said that "the Company is not for sale." My proposal simply asks
management to agree that if a potential acquirer is willing to undertake all of
this expense and effort, management will confirm that they will allow
shareholders, the ultimate owners of VISX, to consider a bona fide, fully
financed offer at $32 per share or higher.
ICAHN PLATFORM
My platform is very simple and is explained in greater detail in the proxy
statement which should be carefully read by you. If my nominees are elected, I
will propose that the new board, subject to their fiduciary duties, consider the
following immediate actions:
1. Conduct an open auction to sell the Company with a minimum acceptable
bid of $32 per share. (1) There can, of course, be no assurances that the
auction will achieve the desired result. Stockholders who do not wish to wait
until a successful completion of the auction may wish to sell their shares in a
tender offer as proposed in the next paragraph.
----------------
(1) As stated in my proxy material, in selecting a minimum acceptable bid of $32
per share, I do not intend to be providing a valuation of VISX. However, in
selecting that minimum acceptable bid, I studied and analyzed the recent
acquisition of VISX's competitor, Summit Autonomous Inc., by Alcon Holdings Inc.
I also studied and analyzed the market valuation of Allergan, a company in the
ophthalmic field, and considered that according to VISX's 10-K, VISX is "a
worldwide leader in the development of proprietary technologies and systems for
laser vision correction." However, I pointed out that Summit, Allergan and VISX
have differences in revenue sources, product mix and financial resources, among
others, that affect their comparability. While a vote for my nominees is not a
vote to sell the Company, I will strongly urge that my nominees for the Board of
Directors of VISX consider, subject to the exercise of their fiduciary duties,
my recommendation to vote in favor of the sale of the Company at a minimum price
of $32 per share. It is expected that stockholders will be required to
affirmatively approve any sale of the Company.
15
2. Double the company's recently announced new share buyback program
from 10 to 20 million shares to be effected through an immediate issuer tender
offer by VISX at $25 per share rather than wait to make open market purchases
over a potentially long time period. If the Company is unable to obtain outside
financing to purchase the additional 10 million shares, I would lend the company
sufficient funds to do so on commercially reasonable terms. Furthermore, neither
I nor any of my affiliates would sell shares in the tender offer.
In the event no sale, merger or other business combination occurs, I would
propose that the new board consider, subject to their fiduciary duties:
Forming an executive search committee to review existing management and consider
top-flight executive candidates. I believe that VISX's management has made a
number of bad decisions, which I consider to have turned out less than
beneficial to the Company. These include allowing VISX's relationship with TLC
Laser Eye Centers ("TLC"), the Company's second largest customer, to deteriorate
to the point where TLC announced that it has adopted technology provided by
Alcon and not VISX as its primary platform in its refractive centers. In
addition, I believe that management's decision to cut procedure fees in February
2000 from $250 to $100 per procedure is an important contributing factor toward
the decline in VISX earnings for the first quarter of 2001 as compared with the
first quarter of 2000. Finally, I disagree with management's decision to settle
a patent dispute by licensing VISX's proprietary technology to Bausch & Lomb, a
much larger company with substantial financial resources and, therefore, a
potential major competitor. Management has not disclosed the license terms.
MANAGEMENT SELF-INTEREST AT SHAREHOLDER EXPENSE
While management's decision making has not been satisfactory in my view, I do
have to credit them for their uncanny market timing and shrewd negotiation with
the existing board's compensation committee:
Senior executives cashed out nearly $100 million in stock options in 1999 at
share prices substantially above the recent stock price before announcing a
dramatic cut in procedure fees in February 2000.
After this "well-timed" massive insider selling not one member of senior
management or the board of directors owns more than 50,000 shares other than via
options which they have been granted.
16
The top five executive officers received total compensation, including cash and
options, valued in excess of $6 million (according to management's 2001 proxy
statement) in a year in which shareholders suffered a decline in the company's
share price from $52.10 per share in January 2000 to $10.44 per share as of year
end.
Is this management team, which has unloaded most of its equity interest in the
company and been handsomely compensated while the share price has performed
poorly, dedicated to do what is in the best interest of shareholders?
MY CHALLENGE TO VISX
On April 18, 2001, I sent management a letter, in which, among other things, I
challenged them to conduct an open auction for VISX and agree to submit for
shareholder approval the best offer at $32 per share or above. Later that day,
in a press release and a letter to shareholders ("Management's Statements"),
VISX management responded to my letter. They did not agree to conduct an open
auction for VISX. Is VISX management unwilling to accept my challenge because
they are acting in shareholders' interests, or because they are concerned for
their own interests? I invite you to draw your own conclusions. In my view
Management's Statements continue a pattern of disingenuous and incomplete
statements by management.
MY RESPONSE TO MANAGEMENT'S STATEMENTS
Management says:
"We have already engaged in a review of our strategic alternatives with our
outside financial and legal advisors. We and our advisors have contacted a
number of companies in the ophthalmic and non_ophthalmic industries about
possible sale, merger or business combinations. Based on our discussions, we do
not believe that there is a currently available transaction that would enhance
stockholder value."
My view:
VISX management stated in its January 17, 2001 conference call that "the Company
is not for sale". How then, are shareholders to believe that VISX management has
fully reviewed all currently available transactions? By talking about "strategic
alternatives" is management just paying lip service to the concept of
stockholder value? In my experience, an open auction provides a solid
opportunity for shareholders to receive an attractive value. By contrast, hiring
high-priced outside advisors to review "strategic alternatives" can result in an
open-ended process with no foreseeable benefits or exit date for VISX
shareholders.
17
Management says:
"VISX's earnings were $0.21 per share, exceeding expectations"
However, management fails to point out that:
First quarter earnings per share declined 30% year over year, from $0.30 in 2000
to $0.21 per share in 2001. While first quarter earnings of $0.21 per share
exceeded analysts' most recent estimates, those estimates had already fallen.
Management says:
"VISX's industry-leading market share increased"
Analyst views:
According to an April 16, 2001 J.P. Morgan H&Q report, VISX's procedure market
share in the first quarter of 2001 was 68%, up from the fourth quarter of 2000
but down from 73% in the first quarter of 2000. According to an April 16, 2001
Robertson Stephens report, VISX's procedure market share in the first quarter of
2001 was 63%, down from 64% in the fourth quarter of 2000 and down from 67% in
the first quarter of 2000.
Management says:
"VISX's licensing revenue grew by 23% over fourth quarter, 2000"
However, management fails to point out that:
First quarter licensing revenue declined by 32% from the first quarter of 2000.
Management says:
"VISX's systems sales grew by 29% over fourth quarter, 2000"
However, management fails to point out that:
First quarter system sales declined by 14% from the first quarter of 2000.
Management says:
"If implemented, this [Mr. Icahn's] proposal would force VISX to assume $300
million in debt to finance a 20 million share buy-back program, thereby:
immediately diluting VISX's earnings per share; severely weakening VISX's
balance sheet; and depriving VISX of the flexibility to invest in essential
research and development."
The Simple Math:
I believe my share buyback program would increase the attractiveness of VISX to
a potential acquiror willing to pay my proposed minimum price of $32 per share,
since 20 million shares
18
would already have been repurchased at a lower price. In addition, based upon
year 2000 results, VISX had net operating income of approximately $74 million
after deducting $15 million of research and development expenses(2). If VISX
borrowed the additional $300 million referred to in Management's Statements and
even assuming an interest rate of 11%, total annual interest cost would be $33
million. Therefore, after payment of interest VISX would still have $41 million
available for additional research and development and other corporate purposes,
AND SHAREHOLDERS WOULD HAVE RECEIVED AN AGGREGATE OF UP TO $500 MILLION FROM
VISX.
TIME FOR A CHANGE
I believe management should be held accountable for their poor performance and
questionable decision-making. IF MANAGEMENT IS UNWILLING TO COMMIT TO SUBMITTING
A $32 PER SHARE OR HIGHER OFFER TO A VOTE OF SHAREHOLDERS, THEIR ACTION WOULD,
IN MY VIEW, BE AN INSULT TO SHAREHOLDERS AND ANOTHER EXAMPLE OF MANAGEMENT'S
SELF-INTEREST TO THE DETRIMENT OF SHAREHOLDERS.
I urge you to sign, date and return the WHITE proxy card in the enclosed
envelope and allow a new board to consider an open auction for our company.
Very truly yours,
Carl C. Icahn
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(2)But without deducting an increase in reserves against accounts receivables
and other assets due from customers of approximately $18 million.
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IMPORTANT
Please sign, date and return the enclosed WHITE proxy card today in the
postage_paid envelope provided.
Do not sign any proxy card that you may receive or have received from VISX.
You may also revoke any proxy you previously signed and submitted by signing,
dating and returning the enclosed WHITE proxy card.
If you have any questions, or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of proxies:
Innisfree M&A Incorporated
TOLL-FREE: (877)-750-9501
Banks and Brokers call collect:(212) 750-5833
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CARL C. ICAHN
767 Fifth Avenue - 47th Floor
New York, NY 10153
April 20, 2001
BY TELECOPY
Ms. Elizabeth Davila, Chief Executive Officer
VISX Incorporated
3400 Central Expressway
Santa Clara, CA 95051
Dear Ms. Davila:
I was happy to read in your April 18th press release that you are "receptive" to
proposals for VISX. If you were not being disingenuous in your statement, then I
would like to make the following proposal: I would be willing to engage in a
cash merger with VISX, in which VISX shareholders would receive $32 per share,
subject to due diligence and financing.
Obviously due diligence with respect to a company like VISX, which involves
significant high technology assets, would require serious review and a
substantial commitment of money, time and effort. Also, obtaining necessary
financing for a transaction of this size would involve the payment of a
significant commitment fee. Therefore, I believe that if VISX management is
serious about receiving proposals, the Company should assure prospective buyers
which incur such upfront costs that if an offer is made it will be put to
shareholders for their approval.
If VISX agrees with me to submit to a vote of shareholders the best offer of $32
per share or higher from any qualified bidder, then I will be willing to commit
the significant funds needed to commence the necessary effort to conduct due
diligence and to attempt to raise the financing for the transaction. I have been
in contact with the Industrial Bank of Japan, a member of the Mizuho Financial
Group, and they are prepared to commence due diligence efforts immediately. If
the results of due diligence are acceptable, one of my affiliated companies
would provide a significant portion of the purchase price in order to effectuate
the offer, in addition to the funds to be derived from financing sources.
Naturally I cannot assure that my efforts will ultimately result in our
consummation of the transaction outlined above. However, it is my belief that in
any event my efforts, together with a clear commitment by VISX, may move the
auction process forward and bring out other potential bidders.
A price of $32 per share is more than 3 1/2 times higher than last year's
intraday low of $8.75 per share. If management is unwilling to commit to
submitting a $32 per share or higher offer to a vote of shareholders, it is, in
my view, an insult to shareholders and another example of management's
self_interest to the detriment of shareholders. In this regard, I note that
senior executives of VISX cashed out nearly $100 million in stock options in
1999 at share prices substantially above the recent stock price, in addition to
receiving their substantial compensation packages.
I await your reply!
Sincerely,
Carl C. Icahn
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