Full Press Release Details
Alcon s Third Quarter Earnings Rise
26.9 Percent on 16.5 Percent Sales Growth
H NENBERG, Switzerland, October 20, 2004 Alcon, Inc. (NYSE: ACL) reported global sales of $958.1 million for the third quarter of 2004, an increase of 16.5 percent over global sales in the third quarter of 2003, or 13.3 percent excluding the impact of foreign exchange fluctuations. Net earnings for the third quarter of 2004 increased 26.9 percent to $194.3 million, or $0.62 per share on a diluted basis, compared to $153.1 million, or $0.49 per share, for the third quarter of 2003.
Cary Rayment, Alcon s President and Chief Executive Officer commented, This quarter reinforced our market leadership and the value of the many sales drivers we have in our portfolio. We are early into a new product cycle for many of these important products and expect to see healthy growth from them for many years to come. As this quarter also demonstrated, with our established manufacturing, distribution and sales infrastructure in place around the world, we expect to consistently translate this growth to faster profit growth.
Highlights of sales for the third quarter of 2004 are provided below. Unless otherwise noted, all comparisons are versus the third quarter of 2003.
Highlights of earnings for the third quarter of 2004 are provided below. Unless otherwise noted, all comparisons are versus the third quarter of 2003.
Research and Development Update
Summarized below are updates on key research and development activities.
Financial guidance for the full year 2004 is provided below.
Alcon, Inc. (NYSE: ACL) is the world s leading eye care company. Alcon, which has been dedicated to the ophthalmic industry for more than 50 years, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon s majority shareholder is Nestl , S.A., the world s largest food company. All trademarks noted in this release are the property of Alcon, Inc., with the exception of Ciprodex , which is the property of Bayer, AG and licensed to Alcon.
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(USD in millions, except share and per share data)
| Three months ended September 30, | Nine months ended September 30, | ||||||||
| 2004 | 2003 | 2004 | 2003 | ||||||
| Sales | $ 958.1 | $ 822.7 | $ 2,960.9 | $ 2,555.2 | |||||
| Cost of goods sold | 248.6 | 228.3 | 812.6 | 748.7 | |||||
| Gross profit | 709.5 | 594.4 | 2,148.3 | 1,806.5 | |||||
| Selling, general and administrative | 310.1 | 265.4 | 913.2 | 820.7 | |||||
| Research and development | 101.8 | 87.4 | 282.0 | 254.9 | |||||
| Amortization of intangibles | 20.6 | 17.0 | 51.8 | 51.0 | |||||
| Operating income | 277.0 | 224.6 | 901.3 | 679.9 | |||||
| Other income (expense): | |||||||||
| Gain (loss) from foreign currency, net | 1.4 | 0.3 | (1.8 | ) | 1.9 | ||||
| Interest income | 5.7 | 4.7 | 15.9 | 13.8 | |||||
| Interest expense | (6.5 | ) | (9.6 | ) | (19.8 | ) | (32.6 | ) | |
| Other | (0.1 | ) | -- | (0.1 | ) | 0.1 | |||
| Earnings before income taxes | 277.5 | 220.0 | 895.5 | 663.1 | |||||
| Income taxes | 83.2 | 66.9 | 211.0 | 201.6 | |||||
| Net earnings | $ 194.3 | $ 153.1 | $ 684.5 | $ 461.5 | |||||
| Basic earnings per common share | $ 0.64 | $ 0.50 | $ 2.24 | $ 1.50 | |||||
| Diluted earnings per common share | $ 0.62 | $ 0.49 | $ 2.20 | $ 1.49 | |||||
| Basic weighted average common shares | 305,519,598 | 307,963,762 | 305,909,907 | 307,935,416 | |||||
| Diluted weighted average common shares | 311,019,235 | 311,491,817 | 310,941,464 | 310,415,208 |
ALCON, INC. AND SUBSIDIARIES
| Three months ended September 30, | |||||||||||
| 2004 | 2003 | %Change | Foreign Currency %Change | %Change in Constant Currency | |||||||
| GEOGRAPHIC SALES | |||||||||||
| United States: | |||||||||||
| Pharmaceutical | $ 226.5 | $ 188.6 | 20.1 | % | -- | % | 20.1 | % | |||
| Surgical | 200.7 | 181.8 | 10.4 | -- | 10.4 | ||||||
| Consumer eye care | 72.7 | 64.2 | 13.2 | -- | 13.2 | ||||||
| Total United States Sales | 499.9 | 434.6 | 15.0 | -- | 15.0 | ||||||
| International: | |||||||||||
| Pharmaceutical | 149.9 | 124.9 | 20.0 | 6.2 | 13.8 | ||||||
| Surgical | 237.8 | 198.8 | 19.6 | 7.3 | 12.3 | ||||||
| Consumer eye care | 70.5 | 64.4 | 9.5 | 5.2 | 4.3 | ||||||
| Total International Sales | 458.2 | 388.1 | 18.1 | 6.7 | 11.4 | ||||||
| Total Global Sales | $ 958.1 | $ 822.7 | 16.5 | % | 3.2 | % | 13.3 | % | |||
| PRODUCT SALES | |||||||||||
| Infection/inflammation products | $ 138.8 | $ 122.4 | 13.4 | % | |||||||
| Glaucoma products | 134.9 | 106.8 | 26.3 | ||||||||
| Allergy products | 70.9 | 54.1 | 31.1 | ||||||||
| Otic products | 54.1 | 35.7 | 51.5 | ||||||||
| Other pharmaceuticals/rebates | (22.3 | ) | (5.5 | ) | N/M | ||||||
| Total Pharmaceutical | 376.4 | 313.5 | 20.1 | 2.5 | % | 17.6 | % | ||||
| Intraocular lenses | 139.6 | 118.6 | 17.7 | ||||||||
| Cataract/vitreoretinal products | 282.4 | 245.3 | 15.1 | ||||||||
| Refractive products | 16.5 | 16.7 | (1.2 | ) | |||||||
| Total Surgical | 438.5 | 380.6 | 15.2 | 3.8 | 11.4 | ||||||
| Contact lens disinfectants | 79.5 | 72.1 | 10.3 | ||||||||
| Artificial tears | 36.5 | 29.1 | 25.4 | ||||||||
| Other | 27.2 | 27.4 | (0.7 | ) | |||||||
| Total Consumer Eye Care | 143.2 | 128.6 | 11.4 | 2.6 | 8.8 | ||||||
| Total Global Sales | $ 958.1 | $ 822.7 | 16.5 | % | 3.2 | % | 13.3 | % |
ALCON, INC. AND SUBSIDIARIES
| Nine months ended September 30, | |||||||||||
| 2004 | 2003 | %Change | Foreign Currency %Change | %Change in Constant Currency | |||||||
| GEOGRAPHIC SALES | |||||||||||
| United States: | |||||||||||
| Pharmaceutical | $ 746.1 | $ 645.1 | 15.7 | % | -- | % | 15.7 | % | |||
| Surgical | 578.1 | 527.2 | 9.7 | -- | 9.7 | ||||||
| Consumer eye care | 210.3 | 200.0 | 5.2 | -- | 5.2 | ||||||
| Total United States Sales | 1,534.5 | 1,372.3 | 11.8 | -- | 11.8 | ||||||
| International: | |||||||||||
| Pharmaceutical | 449.9 | 363.2 | 23.9 | 7.8 | 16.1 | ||||||
| Surgical | 763.4 | 632.2 | 20.8 | 9.2 | 11.6 | ||||||
| Consumer eye care | 213.1 | 187.5 | 13.7 | 7.2 | 6.5 | ||||||
| Total International Sales | 1,426.4 | 1,182.9 | 20.6 | 8.5 | 12.1 | ||||||
| Total Global Sales | $ 2,960.9 | $ 2,555.2 | 15.9 | % | 3.9 | % | 12.0 | % | |||
| PRODUCT SALES | |||||||||||
| Infection/inflammation products | $ 440.9 | $ 388.6 | 13.5 | % | |||||||
| Glaucoma products | 394.6 | 314.7 | 25.4 | ||||||||
| Allergy products | 268.9 | 230.1 | 16.9 | ||||||||
| Otic products | 138.8 | 98.0 | 41.6 | ||||||||
| Other pharmaceuticals/rebates | (47.2 | ) | (23.1 | ) | N/M | ||||||
| Total Pharmaceutical | 1,196.0 | 1,008.3 | 18.6 | 2.8 | % | 15.8 | % | ||||
| Intraocular lenses | 429.7 | 362.7 | 18.5 | ||||||||
| Cataract/vitreoretinal products | 863.6 | 742.4 | 16.3 | ||||||||
| Refractive products | 48.2 | 54.3 | (11.2 | ) | |||||||
| Total Surgical | 1,341.5 | 1,159.4 | 15.7 | 5.0 | 10.7 | ||||||
| Contact lens disinfectants | 229.9 | 214.6 | 7.1 | ||||||||
| Artificial tears | 104.9 | 87.3 | 20.2 | ||||||||
| Other | 88.6 | 85.6 | 3.5 | ||||||||
| Total Consumer Eye Care | 423.4 | 387.5 | 9.3 | 3.5 | 5.8 | ||||||
| Total Global Sales | $ 2,960.9 | $ 2,555.2 | 15.9 | % | 3.9 | % | 12.0 | % |
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| September 30, 2004 | December 31, 2003 | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ 880.2 | $ 1,086.0 | |||
| Investments | 138.4 | 100.5 | |||
| Trade receivables, net | 698.9 | 622.8 | |||
| Inventories | 420.8 | 446.5 | |||
| Deferred income tax assets | 157.4 | 157.4 | |||
| Other current assets | 70.3 | 57.0 | |||
| Total current assets | 2,366.0 | 2,470.2 | |||
| Property, plant and equipment, net | 799.7 | 788.8 | |||
| Intangible assets, net | 349.5 | 331.5 | |||
| Goodwill | 551.2 | 552.1 | |||
| Long term deferred income tax assets | 153.7 | 118.8 | |||
| Other assets | 43.4 | 39.2 | |||
| Total assets | $ 4,263.5 | $ 4,300.6 | |||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable | $ 117.0 | $ 146.1 | |||
| Short term borrowings | 818.3 | 1,326.8 | |||
| Current maturities of long term debt | 4.6 | 8.5 | |||
| Other current liabilities | 906.0 | 751.6 | |||
| Total current liabilities | 1,845.9 | 2,233.0 | |||
| Long term debt, net of current maturities | 68.6 | 75.0 | |||
| Long term deferred income tax liabilities | 100.6 | 108.4 | |||
| Other long term liabilities | 311.9 | 292.7 | |||
| Contingencies | |||||
| Shareholders' equity: | |||||
| Common shares | 42.6 | 42.5 | |||
| Additional paid-in capital | 536.1 | 512.0 | |||
| Accumulated other comprehensive income | 112.2 | 135.8 | |||
| Deferred compensation | (3.8 | ) | (7.5 | ) | |
| Retained earnings | 1,466.3 | 951.2 | |||
| Treasury shares, at cost | (216.9 | ) | (42.5 | ) | |
| Total shareholders' equity | 1,936.5 | 1,591.5 | |||
| Total liabilities and shareholders' equity | $ 4,263.5 | $ 4,300.6 |
ALCON, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Disclosures
| Three months ended September 30, | Nine months ended September 30, | ||||||||
| 2004 | 2003 | 2004 | 2003 | ||||||
| Diluted earnings per common share | $0.62 | $0.49 | $2.20 | $1.49 | |||||
| as reported | |||||||||
| Less: | |||||||||
| Tax benefits from resolution of | |||||||||
| significant tax audit issues and | |||||||||
| amended returns | -- | -- | 0.18 | -- | |||||
| Diluted earnings per common share, | |||||||||
| excluding tax benefits above | $0.62 | $0.49 | $2.02 | $1.49 |
| 2004 Financial Guidance | |||||
| Lower Estimate | Higher Estimate | ||||
| Expected diluted earnings per common | $2.70 | $2.73 | |||
| share on same basis as reported | |||||
| Less: | |||||
| Tax benefits from resolution of | |||||
| significant tax audit issues and | |||||
| amended returns | 0.18 | 0.18 | |||
| Expected diluted earnings per common | |||||
| share, excluding tax benefits above | $2.52 | $2.55 |
Diluted earning per common share excluding tax benefits and expected diluted earnings per common share excluding tax benefits are non-GAAP financial measures as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. Alcon presents these non-GAAP measures to improve the comparability and consistency of financial results of Alcon s core business activities and to enhance the overall understanding of Alcon s performance and future prospects.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements principally relate to statements regarding the expectations of our management with respect to the future performance of various aspects of our business. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by our forward-looking statements. Words such as may, will, should, could, would, expect, plan, anticipate, believe, hope, intend, estimate, project, predict, potential and similar expressions are intended to
identify forward-looking statements. These statements reflect the views of our management as of the date of this press release with respect to future events and are based on assumptions and subject to risks and uncertainties and are not intended to give any assurance as to future results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following: the development of commercially viable products may take longer and cost more than expected; changes in reimbursement procedures by third party payers may affect our sales and profits; competition may lead to worse than expected financial condition and results of operations; currency exchange rate fluctuations may negatively affect our financial condition and results of operations; pending or future litigation may negatively impact our financial condition and results of operations; litigation settlements may adversely
impact our financial condition; product recalls or withdrawals may negatively impact our financial condition or results of operations; government regulation or legislation may negatively impact our financial condition or results of operations; changes in tax laws or regulations in the jurisdictions in which we and our subsidiaries are subject to taxation may adversely impact our financial performance; supply and manufacturing disruptions could negatively impact our financial condition or results of operations. You should read this press release with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, we undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information
or future events or circumstances or otherwise.
For information, contact:
Doug MacHatton (Investor Relations)
News media and other inquiries: Mary Dulle (Public Relations)