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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 2234
(Amendment No. 3)
Advanced Medical Optics, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value per share
------------------------------------------------
(Title of Class of Securities)
00763M108
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(CUSIP Number)
Allison Bennington, Esq.
ValueAct Capital
435 Pacific Avenue, Fourth Floor
San Francisco, CA 94133
(415) 362-3700
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(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
Christopher G. Karras, Esq.
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19104-2808
(215) 994-4000
July 10, 2007
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(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 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 240.13d-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.
This 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 2234 ("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).
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SCHEDULE 13D
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CUSIP NO. 00763M108 Page 2 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)*
WC*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 7,908,832**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
7,908,832**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,908,832**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.2%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 3 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund III, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)*
WC*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 902,803**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
902,803**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
902,803**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 4 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
VA Partners, L.L.C.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 7,908,832**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
7,908,832**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,908,832**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.2%
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14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 5 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
VA Partners III, L.L.C.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 902,803**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
902,803**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
902,803**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 6 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 8,811,635**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,811,635**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,811,635**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 7 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 8,811,635**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,811,635**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,811,635**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
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14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 8 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Jeffrey W. Ubben
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
---------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 8,811,635**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,811,635**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,811,635**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
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14. TYPE OF REPORTING PERSON
IN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 9 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
George F. Hamel, Jr.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 8,811,635**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,811,635**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,811,635**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 00763M108 Page 10 of 22
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Peter H. Kamin
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
---------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 8,811,635**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,811,635**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,811,635**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
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CUSIP NO. 00763M108 Page 11 of 22
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THE PURPOSE OF THIS AMENDMENT NO. 3 TO SCHEDULE 13D IS TO AMEND THE
OWNERSHIP REPORTS OF THE REPORTING PERSONS AND TO AMEND THE PURPOSE
OF TRANSACTION SECTION. THE INFORMATION BELOW SUPPLEMENTS THE INFORMATION
PREVIOUSLY PROVIDED.
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par value $0.01 per
share (the "Common Stock"), of Advanced Medical Optics, Inc., a Delaware
corporation (the "Issuer"). The address of the principal executive offices
of the Issuer is 1700 E. St. Andrew Place, Santa Ana, California 92705.
Item 2. Identity and Background
This statement is filed jointly by (a) ValueAct Capital Master Fund,
L.P. ("ValueAct Master Fund"), (b) ValueAct Capital Master Fund III, L.P.
("ValueAct Master Fund III"), (c) VA Partners, LLC ("VA Partners"), (d) VA
Partners III, LLC ("VA Partners III"), (e) ValueAct Capital Management, L.P.
("ValueAct Management L.P."), (f) ValueAct Capital Management, LLC ("ValueAct
Management LLC"), (g) Jeffrey W. Ubben, (h) George F. Hamel, Jr. and (i)
Peter H. Kamin (collectively, the "Reporting Persons").
ValueAct Master Fund and ValueAct Master Fund III are limited
partnerships organized under the laws of the British Virgin Islands. Each
has a principal business address of 435 Pacific Avenue, Fourth Floor, San
Francisco, CA 94133.
VA Partners is a Delaware limited liability company, the principal
business of which is to serve as the General Partner to ValueAct Master Fund.
VA Partners III is a Delaware limited liability company, the principal
business of which is to serve as the General Partner to ValueAct Master Fund
III. Each has a principal business address of 435 Pacific Avenue, Fourth
Floor, San Francisco, CA 94133.
ValueAct Management L.P. is a Delaware limited partnership which
renders management services to ValueAct Master Fund and ValueAct Master Fund
III. ValueAct Management LLC is a Delaware limited liability company, the
principal business of which is to serve as the General Partner to ValueAct
Management L.P. Each has a principal business address of 435 Pacific Avenue,
Fourth Floor, San Francisco, CA 94133.
(a), (b) and (c). Messrs. Ubben, Hamel and Kamin are each managing
members, principal owners and controlling persons of VA Partners, VA Partners
III and ValueAct Management LLC, and such activities constitute their
principal occupations. Such individuals are sometimes collectively referred
to herein as the "Managing Members" or individually as a "Managing Member".
Each Managing Member is a United States citizen and has a principal business
address of 435 Pacific Avenue, Fourth Floor, San Francisco, CA 94133.
(d) and (e). None of the entities or persons identified in this Item 2
has during the past five years been convicted of any criminal proceeding
(excluding traffic violations or similar misdemeanors), nor been a party to a
civil proceeding of a judicial or administrative body of competent judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
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CUSIP NO. 00763M108 Page 12 of 22
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Item 3. Source and Amount of Funds or Other Consideration
The source of funds used for the purchase of the Issuer's
securities was the working capital of ValueAct Master Fund and ValueAct
Master Fund III. The aggregate funds used by these Reporting Persons to make
the purchases reported in Item 5(c) below were $39,772,800 and
$4,419,200.
Item 4. Purpose of Transaction
On July 10, 2007, the Reporting Persons sent a letter (the "Letter") to
Mr. James V. Mazzo, the Chairman of the Board of Directors, President and
Chief Executive Officer of the Issuer, expressing the Reporting Persons'
objections to the Issuer's proposed acquisition of Bausch & Lomb
Incorporated. The Letter states that the proposed acquisition would reduce
shareholder returns, presents substantial execution risk and is fundamentally
ill advised. The Letter also states that the Reporting Persons intend to vote
their shares against the proposed acquisition. A copy of the Letter is
attached as Exhibit 2 to this report and is incorporated herein by reference.
The Reporting Persons have acquired the Issuer's Common Stock for
investment purposes, and such purchases have been made in the Reporting
Persons' ordinary course of business.
In pursuing such investment purposes, the Reporting Persons may further
purchase, hold, vote, trade, dispose or otherwise deal in the Common Stock at
times, and in such manner, as they deem advisable to benefit from changes in
market prices of such Common Stock, changes in the Issuer's operations,
business strategy or prospects, or from sale or merger of the Issuer. To
evaluate such alternatives, the Reporting Persons will routinely monitor the
Issuer's operations, prospects, business development, management, competitive
and strategic matters, capital structure, and prevailing market conditions,
as well as alternative investment opportunities, liquidity requirements of
the Reporting Persons and other investment considerations. Consistent with
its investment research methods and evaluation criteria, the Reporting
Persons may discuss such matters with management or directors of the Issuer,
other shareholders, industry analysts, existing or potential strategic
partners or competitors, investment and financing professionals, sources of
credit and other investors. Such factors and discussions may materially
affect, and result in, the Reporting Persons' modifying their ownership of
Common Stock, exchanging information with the Issuer pursuant to appropriate
confidentiality or similar agreements, proposing changes in the Issuer's
operations, governance or capitalization, or in proposing one or more of the
other actions described in subsections (a) through (j) of Item 4 of Schedule
13D.
The Reporting Persons reserve the right to formulate other plans and/or
make other proposals, and take such actions with respect to their investment
in the Issuer, including any or all of the actions set forth in paragraphs
(a) through (j) of Item 4 of Schedule 13D, or acquire additional Common Stock
or dispose of all the Common Stock beneficially owned by them, in the public
market or privately negotiated transactions. The Reporting Persons may at
any time reconsider and change their plans or proposals relating to the
foregoing.
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 13 of 22
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Item 5. Interest in Securities of the Issuer
(a) and (b). Set forth below is the beneficial ownership of
shares of Common Stock of the Issuer for each person named in Item 2. Shares
reported as beneficially owned by ValueAct Master Fund and ValueAct Master
Fund III are also reported as beneficially owned by (i) ValueAct Management
L.P. as the manager of each such investment partnership, (ii) ValueAct
Management LLC, as General Partner of ValueAct Management L.P. and (iii) the
Managing Members as controlling persons of VA Partners, VA Partners III and
ValueAct Management LLC. Shares reported as beneficially owned by ValueAct
Master Fund are also reported as beneficially owned by VA Partners, as
General Partner of ValueAct Master Fund. Shares reported as beneficially
owned by ValueAct Master Fund III are also reported as beneficially owned by
VA Partners III, as General Partner of ValueAct Master Fund III. VA
Partners, VA Partners III, ValueAct Management LLC and the Managing Members
also, directly or indirectly, may own interests in one or more than one of
the partnerships from time to time. Unless otherwise indicated below, by
reason of such relationships each of the ValueAct Master Fund and ValueAct
Master Fund III is reported as having shared power to vote or to direct the
vote, and shared power to dispose or direct the disposition of, such shares
of Common Stock, with VA Partners (only with respect to ValueAct Master
Fund), VA Partners III (only with respect to ValueAct Master Fund III),
ValueAct Management L.P., ValueAct Management LLC and the Managing Members.
As of the date hereof, ValueAct Master Fund is the beneficial owner
of 7,908,832 shares of Common Stock, representing approximately 13.2% of the
Issuer's outstanding Common Stock (which shares may also be deemed to be
beneficially owned by VA Partners). As of the date hereof, ValueAct Master
Fund III is the beneficial owner of 902,803 shares of Common Stock,
representing 1.5% of the Issuer's outstanding Common Stock (which shares may
also be deemed to be beneficially owned by VA Partners III).
ValueAct Management L.P., ValueAct Management LLC and the Managing
Members may each be deemed the beneficial owner of an aggregate of 8,811,635
shares of Common Stock, representing approximately 14.7% of the Issuer's
outstanding Common Stock.
All percentages set forth in this Schedule 13D are based upon the
Issuer's reported 59,940,915 outstanding shares of Common Stock as reported
in the Issuer's Form 10-Q for the quarterly period ended March 30, 2007.
(c) Since the last filing the Reporting Persons purchased the
following shares of Common Stock in the open market:
Reporting Person Trade Date Shares Price/Share
---------------- ---------- --------- -----------
ValueAct Master Fund 07/10/2007 180,000 34.77
07/10/2007 967,500 34.64
ValueAct Master Fund III 07/10/2007 20,000 34.77
07/10/2007 107,500 34.64
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 14 of 22
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(d) and (e) Not applicable.
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 15 of 22
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Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Other than as described elsewhere in this Report and as previously
reported, the Reporting Persons have no understandings, arrangements,
relationships or contracts relating to the Issuer's Common Stock which are
required to be described hereunder.
Item 7. Material to Be Filed as Exhibits
(1) Joint Filing Agreement.
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 16 of 22
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below on this Schedule 13D hereby constitutes and appoints Jeffrey W. Ubben,
George F. Hamel, Jr. and Peter H. Kamin, and each of them, with full power to
act without the other, his or its true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or it and in his
or its name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to this Schedule 13D, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary fully to all intents and
purposes as he or it might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
ValueAct Capital Master Fund III L.P., by
VA Partners III, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
VA Partners III, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 17 of 22
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ValueAct Capital Management, L.P., by
ValueAct Capital Management, LLC its
General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: July 10, 2007 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: July 10, 2007 Peter H. Kamin, Managing Member
-------------------------- -------------------------
CUSIP NO. 00763M108 Page 18 of 22
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Exhibit 1
JOINT FILING UNDERTAKING
The undersigned parties hereby agree that the Schedule 13D filed herewith
(and any amendments thereto) relating to the Common Stock of Advanced Medical
Optics, Inc. is being filed jointly on behalf of each of them with the
Securities and Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 2234, as amended.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
ValueAct Capital Master Fund III L.P., by
VA Partners III, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
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Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
VA Partners III, L.L.C.
By: /s/ George F. Hamel, Jr.
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Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, L.P.,
by, ValueAct Capital Management, LLC
its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
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CUSIP NO. 00763M108 Page 19 of 22
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By: /s/ Jeffrey W. Ubben
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Dated: July 10, 2007 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
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Dated: July 10, 2007 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
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Dated: July 10, 2007 Peter H. Kamin, Managing Member
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CUSIP NO. 00763M108 Page 20 of 22
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Exhibit 2
July 10, 2007
VIA EMAIL AND OVERNIGHT MAIL
James V. Mazzo
Chairman, President & CEO
Advanced Medical Optics
1700 E. St. Andrew Place
Santa Ana, CA 92705
Dear Jim:
ValueAct Capital ("ValueAct") now owns 8.8 million shares representing 14.7%
of Advanced Medical Optics' ("AMO") common shares outstanding. I am writing
to express ValueAct's opposition to AMO's proposed acquisition of Bausch &
Lomb ("B&L"). I have copied B&L's board of directors on this letter so that
they might consider our objection in evaluating AMO's offer. We understand
that the proposed acquisition would require AMO shareholder approval. We
intend to vote against the deal.
We believe an AMO acquisition of B&L would impair our expected risk-adjusted
return as AMO shareholders. The proposed acquisition increases business risk
by further concentrating AMO cash flows in a consumer contact lens and lens
care business that is clearly prone to product recalls and that has a long-
term demand profile that is much more questionable than that of AMO's
surgical business. The required debt financing reduces the margin for error
operationally and, together with the proposed issuance of collarless equity,
subjects current shareholders to significant capital markets risk. Finally,
the proposed transaction raises substantial regulatory risk which you have
told us is the reason that you do not yet have a commitment from any private
equity partners.
But most concerning to us is the execution risk of a B&L acquisition.
Against the backdrop of the Complete MoisturePlus recall and the integration
of IntraLase, you are asking investors to believe that Randy and you can
deliver on the synergies of integrating B&L, a company that is over twice the
size of AMO (based on 2006 revenue), in what would be your most complicated
acquisition to date. By your own admission this would be a stretch and would
challenge already constrained management resources. In your July 5th press
release, you stated that you intend to rely not on a strong management bench
but on "a team of outside advisors?to complete a rapid and successful
integration".
We might feel differently had you demonstrated an ability to deliver in the
past, but a B&L acquisition in your hands is simply too big a leap of faith
in light of your public track record. You have yet to stick to or deliver a
single number to which you have initially guided investors for the years 2005
to 2008. The following table lays out the history:
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CUSIP NO. 00763M108 Page 21 of 22
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Pro Forma EPS
2005 2006 2007 2008
Previous guidance $1.65 - $1.75 $2.20 - $2.30 $2.65+ $2.25 - $2.40
Date issued October 21, 2004 February 8, 2005 July 20, 2005 Janary 8, 2007
Actual / most recent guidance $1.48 $1.30 ($1.15) - ($0.95) $1.55 - $1.75
% change based on mid-point (12.9%) (42.2%) - (29.0%)
=============================================================================================================
In October 2004, you guided investors to $1.65 to $1.75 of next year pro
forma EPS. Today, almost three years later, your next year guidance is
$1.55 to $1.75 ? more or less the same target. Is it a surprise that AMO's
stock price is in the same spot? On a prospective basis you have held out
the carrot of $2.25+ of pro forma EPS, a target which has perpetually been
around the corner ? first in 2006, then pushed out to 2007, then pushed out
to 2008, and now in 2009 at the earliest. Just as $2.25 of pro forma EPS
have yet to materialize, real earnings have yet to materialize. From 2002 to
2006, cumulative one-time costs1 of $595 million have more than entirely
offset cumulative operating profit2 of $445 million. How long will one-time
acquisition and repositioning costs obfuscate the earnings power of the
business? At some point you must execute on what you have and deliver on the
promise. When you have yet to deliver actual earnings, it is unrealistic to
ask us to believe you can execute an acquisition of the magnitude of B&L.
Our initial investment decision was based on the strength of the AMO's
existing assets, specifically the surgical assets. Favorable demographics
support solid secular growth rates, which we believe will be augmented by
less emphasis on reimbursement-based demand and more emphasis on consumer-
driven demand. The industry structure is conducive to sustainable,
attractive margins and is one where innovation will expand the market and
move market share.
We have always believed in AMO's business. It's the lack of discipline on
the part of management and the board that has been our greatest concern.
Randy has made the argument that AMO would not be where it is today, that is,
bidding on B&L, if not for the acquisition program to date. As we describe
above, there has been no per share earnings or stock price progress over the
last three years. Randy's comments further our point that management and the
board appear misguided in thinking absolute growth, at any cost, will also
grow shareholder value. We have seen all too often acquisition-oriented
management teams go "a bridge too far". AMO's attempt to acquire B&L raises
operational, financial and regulatory risk that will distract management from
what should be top priorities in the near term including fixing the existing
lens solution challenges, driving market adoption of multifocal IOLs and
realizing the promised synergies of the IntraLase acquisition.
With all AMO has on its plate, the timing of this proposed deal could not be
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worse. The process is rushed, and the contemplated financing, with all its
uncertainty to current equity holders, poses unacceptable risk. We feel the
impulse to do the B&L deal right now is indicative of a management and board
fixated on doing a deal at any cost. The B&L proxy statement filed today
indicates that in October 2006 you initially expressed an interest in
possibly acquiring B&L for "in excess of $60 per share". Faced with
potentially losing the deal to Warburg Pincus ("Warburg"), you eventually
increased this to $75. In addition, your June 20th proposal to acquire B&L
included the concept of a 5% equity collar. The B&L board had issues with
the "lack of price protection with respect to the stock component" so you
ceded collar protection in your June 29th proposal, thus trading significant
risk of dilution to current shareholders in order to stay in the hunt.
To the extent that an AMO and B&L combination makes sense, this property is
not going into Warburg's hands forever. To the contrary, Warburg is a seller
at some point; that is how they get paid. Management should take the lower
risk path of fixing the solutions business and integrating prior acquisitions
while letting Warburg handle the heavy lifting of the B&L turnaround. We
want you to prove to your shareholders that you deserve to do a deal this
big, by first executing on the current challenges and opportunities. By
doing so, you will reduce AMO's cost of equity. While the B&L asset will be
more expensive next time around, the risk-reward will be more attractive.
Sincerely,
Jeffrey W. Ubben G. Mason Morfit
Managing Partner Partner
ValueAct Capital ValueAct Capital
cc:
Advanced Medical Optics' Board of Directors
Christopher G. Chavez
William J. Link, PH.D.
Michael A. Mussallem
Robert J. Palmisano
James O. Rollans
Deborah J. Neff
Elizabeth H. Davila
Bausch & Lomb's Board of Directors
Alan M. Bennett
Catherine M. Burzik
Domenico De Sole
Paul A. Friedman, M.D.
Jonathan S. Linen
Ruth R. McMullin
Linda Johnson Rice
William H. Waltrip
Barry W. Wilson
Kenneth L. Wolfe
Ronald L. Zarrella
1 Includes in-process R&D and business repositioning costs; figures from 2006
form 10-K.
2 Defined as gross profit less SG&A less R&D; figures from 2006 form 10-K.
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