Full Press Release Details
Alcon s First Quarter Sales Rise 14.3 Percent
HUNENBERG, Switzerland April 25, 2007 Alcon, Inc. (NYSE:ACL) reported global sales of $1,322.7 million for the first quarter of 2007, an increase of 14.3 percent compared to the first quarter of 2006, or 12.0 percent excluding the impact of foreign exchange fluctuations. Net earnings for the first quarter of 2007 increased 17.1 percent to $346.2 million, or $1.14 per share on a diluted basis, compared to $295.7 million, or $0.95 per share for the first quarter of 2006. Earnings in the first quarter of 2007 included a charge related to the impairment of certain assets of the company s refractive laser product line. The impact of this charge was $20.8 million after income taxes or $0.07 per share on a diluted basis. Excluding this item, adjusted net earnings for the first quarter of 2007 would have increased 24.1 percent to $367.0 million, or $1.21 per share on a
diluted basis. A reconciliation of reported and adjusted net earnings and earnings per share for the first quarter is included in the financial tables below.
These results reflect solid contributions throughout our global organization and across our product lines, said Cary Rayment, Alcon s chairman, president and chief executive officer. Our performance continues to be balanced as we stress the importance of executing our strategy of core brand development and continued introduction of our innovative technologies into key markets.
First Quarter Sales Highlights
Highlights of sales for the first quarter of 2007 are provided below. Unless otherwise noted, all comparisons are versus the first quarter of 2006.
due in large part to continued physician interest in the OZilTM torsional handpiece technology. Sales of vitreoretinal products grew 9.8 percent due to solid growth of disposables and accessories. Refractive revenue declined 13.0 percent due mainly to a decrease in procedure fees in the United States.
First Quarter Earnings Details
Highlights of earnings for the first quarter of 2007 are provided below. Unless otherwise noted, all comparisons are versus first quarter of 2006.
New Product and R&D Pipeline Update
Summarized below are updates on new products and significant research and development activities.
Financial guidance for the full year 2007 and factors impacting this guidance are provided below.
Alcon, Inc. is the world s leading eye care company, with sales of approximately $4.9 billion in 2006. Alcon, which has been dedicated to the ophthalmic industry for 60 years, researches, 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 Cipro and Ciprodex , which are the property of Bayer AG and licensed to Alcon, Inc. by Bayer Healthcare AG. Moxifloxacin, the active ingredient in Vigamox , is licensed to Alcon, Inc. from Bayer AG.
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(USD in millions, except share and per share data)
| Three months ended | |||||||
| March 31, | |||||||
| 2007 | 2006 | ||||||
| Sales | $ | 1,322.7 | $ | 1,157.1 | |||
| Cost of goods sold | 349.0 | 288.2 | |||||
| Gross profit | 973.7 | 868.9 | |||||
| Selling, general and administrative | 417.1 | 386.7 | |||||
| Research and development | 133.5 | 119.3 | |||||
| Amortization of intangibles | 20.0 | 20.5 | |||||
| Operating income | 403.1 | 342.4 | |||||
| Other income (expense): | |||||||
| Gain (loss) from foreign currency, net | 3.0 | (1.9 | ) | ||||
| Interest income | 19.9 | 18.8 | |||||
| Interest expense | (9.8 | ) | (12.5 | ) | |||
| Other, net | 7.9 | 7.3 | |||||
| Earnings before income taxes | 424.1 | 354.1 | |||||
| Income taxes | 77.9 | 58.4 | |||||
| Net earnings | $ | 346.2 | $ | 295.7 | |||
| Basic earnings per common share | $ | 1.16 | $ | 0.96 | |||
| Diluted earnings per common share | $ | 1.14 | $ | 0.95 | |||
| Basic weighted average common shares | 299,708,952 | 306,487,627 | |||||
| Diluted weighted average common shares | 303,733,106 | 311,647,291 |
ALCON, INC. AND SUBSIDIARIES
| Three months ended | Foreign | %Change in | |||||||||||
| March 31, | Currency | Constant | |||||||||||
| 2007 | 2006 | %Change | %Change | Currency | |||||||||
| GEOGRAPHIC SALES | |||||||||||||
| United States: | |||||||||||||
| Pharmaceutical | $ | 306.6 | $ | 279.1 | 9.9 | % | -- | % | 9.9 | % | |||
| Surgical | 234.1 | 223.5 | 4.7 | -- | 4.7 | ||||||||
| Consumer eye care | 93.7 | 74.1 | 26.5 | -- | 26.5 | ||||||||
| Total United States Sales | 634.4 | 576.7 | 10.0 | -- | 10.0 | ||||||||
| International: | |||||||||||||
| Pharmaceutical | 247.9 | 196.0 | 26.5 | 4.8 | 21.7 | ||||||||
| Surgical | 346.6 | 301.7 | 14.9 | 4.7 | 10.2 | ||||||||
| Consumer eye care | 93.8 | 82.7 | 13.4 | 3.7 | 9.7 | ||||||||
| Total International Sales | 688.3 | 580.4 | 18.6 | 4.6 | 14.0 | ||||||||
| Total Global Sales | $ | 1,322.7 | $ | 1,157.1 | 14.3 | % | 2.3 | % | 12.0 | % | |||
| PRODUCT SALES | |||||||||||||
| Infection/inflammation | $ | 203.1 | $ | 175.8 | 15.5 | % | |||||||
| Glaucoma | 185.7 | 158.8 | 16.9 | ||||||||||
| Allergy | 112.6 | 107.0 | 5.2 | ||||||||||
| Otic | 53.7 | 46.4 | 15.7 | ||||||||||
| Other pharmaceuticals/rebates | (0.6 | ) | (12.9 | ) | N/M | ||||||||
| Total Pharmaceutical | 554.5 | 475.1 | 16.7 | 1.9 | % | 14.8 | % | ||||||
| Intraocular lenses | 211.0 | 188.5 | 11.9 | ||||||||||
| Cataract/vitreoretinal | 357.7 | 322.9 | 10.8 | ||||||||||
| Refractive | 12.0 | 13.8 | (13.0 | ) | |||||||||
| Total Surgical | 580.7 | 525.2 | 10.6 | 2.7 | 7.9 | ||||||||
| Contact lens disinfectants | 102.0 | 77.7 | 31.3 | ||||||||||
| Artificial tears | 55.8 | 50.1 | 11.4 | ||||||||||
| Other | 29.7 | 29.0 | 2.4 | ||||||||||
| Total Consumer Eye Care | 187.5 | 156.8 | 19.6 | 2.0 | 17.6 | ||||||||
| Total Global Sales | $ | 1,322.7 | $ | 1,157.1 | 14.3 | % | 2.3 | % | 12.0 | % |
N/M - Not Meaningful
Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth is an important measure of the company s operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices.
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| Mar. 31, | Dec. 31, | ||||||
| 2007 | 2006 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 1,496.2 | $ | 1,489.2 | |||
| Short term investments | 264.1 | 321.0 | |||||
| Trade receivables, net | 1,000.5 | 912.8 | |||||
| Inventories | 488.4 | 473.8 | |||||
| Deferred income tax assets | 130.3 | 122.5 | |||||
| Other current assets | 143.3 | 142.8 | |||||
| Total current assets | 3,522.8 | 3,462.1 | |||||
| Long term investments | 50.1 | 91.1 | |||||
| Property, plant and equipment, net | 912.0 | 920.7 | |||||
| Intangible assets, net | 75.3 | 95.2 | |||||
| Goodwill | 553.6 | 553.2 | |||||
| Long term deferred income tax assets | 256.0 | 235.7 | |||||
| Other assets | 70.0 | 69.3 | |||||
| Total assets | $ | 5,439.8 | $ | 5,427.3 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 193.6 | $ | 168.9 | |||
| Short term borrowings | 907.6 | 926.5 | |||||
| Current maturities of long term debt | 1.4 | 5.8 | |||||
| Other current liabilities | 721.8 | 899.9 | |||||
| Total current liabilities | 1,824.4 | 2,001.1 | |||||
| Long term debt, net of current maturities | 48.6 | 49.0 | |||||
| Long term deferred income tax liabilities | 10.2 | 10.1 | |||||
| Other long term liabilities | 584.0 | 453.5 | |||||
| Contingencies | |||||||
| Shareholders equity: | |||||||
| Common shares | 44.0 | 43.9 | |||||
| Additional paid-in capital | 1,169.7 | 1,064.5 | |||||
| Accumulated other comprehensive income | 138.5 | 127.3 | |||||
| Retained earnings | 3,578.2 | 3,201.9 | |||||
| Treasury shares, at cost | (1,957.8 | ) | (1,524.0 | ) | |||
| Total shareholders' equity | 2,972.6 | 2,913.6 | |||||
| Total liabilities and shareholders' equity | $ | 5,439.8 | $ | 5,427.3 |
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three Months ended March 31, | |||||||
| 2007 | 2006 | ||||||
| Cash provided by operating activities: | |||||||
| Net cash from operating activities | $ | 342.9 | $ | 267.6 | |||
| Cash provided by (used in) investing activities: | |||||||
| Purchases of property, plant and equipment | (33.4 | ) | (36.4 | ) | |||
| Purchases of intangible assets | (0.1 | ) | -- | ||||
| Purchases of available-for-sale investments | (7.5 | ) | (155.6 | ) | |||
| Proceeds from sales and maturities of available-for-sale investments | 112.0 | 130.2 | |||||
| Other | 0.6 | 0.1 | |||||
| Net cash from investing activities | 71.6 | (61.7 | ) | ||||
| Cash provided by (used in) financing activities: | |||||||
| Net proceeds from (repayment of) short term debt | (30.1 | ) | (110.8 | ) | |||
| Repayment of long term debt | (5.1 | ) | (4.8 | ) | |||
| Acquisition of treasury shares | (503.2 | ) | (64.0 | ) | |||
| Proceeds from exercise of stock options | 87.6 | 24.1 | |||||
| Tax benefits from share-based payment arrangements | 41.8 | 34.4 | |||||
| Net cash from financing activities | (409.0 | ) | (121.1 | ) | |||
| Effect of exchange rates on cash and cash equivalents | 1.5 | 5.9 | |||||
| Net increase in cash and cash equivalents | 7.0 | 90.7 | |||||
| Cash and cash equivalents, beginning of period | 1,489.2 | 1,457.2 | |||||
| Cash and cash equivalents, end of period | $ | 1,496.2 | $ | 1,547.9 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid during the period for the following: | |||||||
| Interest expense, net of amount capitalized | $ | 10.1 | $ | 11.2 | |||
| Income taxes | $ | 64.0 | $ | 52.3 |
ALCON, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Disclosures (Unaudited)
(USD in millions, except per share data)
| Three months ended March 31, 2007 (1) | ||||||||||
| Non-GAAP Adjustments | ||||||||||
| Reported | Refractive Impairment | Non-GAAP Adjusted | ||||||||
| Sales | $ | 1,322.7 | $ | -- | $ | 1,322.7 | ||||
| Cost of goods sold | 349.0 | (24.0 | ) | 325.0 | ||||||
| Gross profit | 973.7 | 24.0 | 997.7 | |||||||
| Selling, general and administrative | 417.1 | -- | 417.1 | |||||||
| Research and development | 133.5 | -- | 133.5 | |||||||
| Amortization of intangibles | 20.0 | (8.7 | ) | 11.3 | ||||||
| Operating income | 403.1 | 32.7 | 435.8 | |||||||
| Other income (expense): | ||||||||||
| Gain (loss) from foreign currency, net | 3.0 | -- | 3.0 | |||||||
| Interest income | 19.9 | -- | 19.9 | |||||||
| Interest expense | (9.8 | ) | -- | (9.8 | ) | |||||
| Other, net | 7.9 | -- | 7.9 | |||||||
| Earnings before income taxes | 424.1 | 32.7 | 456.8 | |||||||
| Income taxes | 77.9 | 11.9 | 89.8 | |||||||
| Net earnings | $ | 346.2 | $ | 20.8 | $ | 367.0 | ||||
| Diluted earnings per common share | $ | 1.14 | $ | 0.07 | $ | 1.21 | ||||
| Selected ratios as percent of sales | ||||||||||
| Gross profit | 73.6 | % | 75.4 | % | ||||||
| Operating income | 30.5 | 32.9 | ||||||||
| Other selected financial ratios | ||||||||||
| % Operating income growth | 17.7 | 27.3 | ||||||||
| % Net earnings growth | 17.1 | 24.1 |
ALCON, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Disclosures (Unaudited)
(USD in millions, except per share data)
| Year-ended December 31, 2007 (1) | ||||||||
| Non-GAAP Adjustments | ||||||||
| Projected | Refractive Impairment | Non-GAAP Adjusted | ||||||
| Financial Guidance | ||||||||
| Diluted earnings per common share - Low | $ | 5.08 | $ | 0.07 | $ | 5.15 | ||
| Diluted earnings per common share - High | $ | 5.18 | $ | 0.07 | $ | 5.25 |
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; the occurrence of excessive property and casualty, general liability
or business interruption losses, for which we are self-insured, 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 more information, contact:
Investor Relations and Strategic Corporate Communications