Full Press Release Details
Alcon's Second Quarter Sales Rise 17.9 Percent; Net Earnings
Increase 26.3 Percent
HUENENBERG, Switzerland - July 23, 2008 -
Alcon, Inc. (NYSE:ACL) reported global sales of $1,735.2 million for the
second quarter of 2008, an increase of 17.9 percent compared to the second quarter of 2007,
or 11.2 percent excluding the impact of foreign exchange fluctuations. Net earnings for the
second quarter of 2008 increased 26.3 percent to $566.4 million, or $1.88 per share on a
diluted basis, compared to $448.4 million, or $1.48 per share for the second quarter of
"The results for the second quarter demonstrate the benefits of our
global operations that experienced strong growth in our core product lines and solid sales
performance around the world," said Cary Rayment, Alcon's chairman, president
and chief executive officer. "Revenues in both developed and emerging markets outside
the U.S. were particularly robust, while our advanced technology intraocular lenses and
glaucoma franchise continued to deliver excellent sales growth."
Quarter Sales Highlights
Highlights of sales for the second quarter of 2008 are provided below.
Unless otherwise noted, all comparisons are versus the second quarter of 2007.
Quarter Earnings Details
Highlights of earnings for the second quarter of 2008 are provided below.
Unless otherwise noted, all comparisons are versus the second quarter of 2007.
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 2008 and factors impacting this
guidance are provided below.
Alcon, Inc. is the world's leading eye care company, with sales of
approximately $5.6 billion in 2007. Alcon, which has been dedicated to the ophthalmic
industry for more than 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. Moxifloxacin,
the active ingredient in
Vigamox , is licensed to Alcon,
Inc. by Bayer HealthCare AG.
INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
in millions, except share and per share data)
| Three months ended | Six months ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Sales | $ | 1,735.2 | $ | 1,471.5 | $ | 3,271.6 | $ | 2,794.2 | ||||
| Cost of goods sold | 414.5 | 353.3 | 812.8 | 702.3 | ||||||||
| Gross profit | 1,320.7 | 1,118.2 | 2,458.8 | 2,091.9 | ||||||||
| Selling, general and administrative | 526.9 | 431.5 | 1,011.1 | 848.6 | ||||||||
| Research and development | 142.2 | 139.9 | 287.1 | 273.4 | ||||||||
| Amortization of intangibles | 6.0 | 10.3 | 14.9 | 30.3 | ||||||||
| Operating income | 645.6 | 536.5 | 1,145.7 | 939.6 | ||||||||
| Other income (expense): | ||||||||||||
| Gain (loss) from foreign currency, net | (3.2 | ) | 2.0 | 2.7 | 5.0 | |||||||
| Interest income | 20.5 | 14.9 | 46.2 | 34.8 | ||||||||
| Interest expense | (14.4 | ) | (11.4 | ) | (31.8 | ) | (21.2 | ) | ||||
| Other, net | 0.7 | 10.4 | (10.1 | ) | 18.3 | |||||||
| Earnings before income taxes | 649.2 | 552.4 | 1,152.7 | 976.5 | ||||||||
| Income taxes | 82.8 | 104.0 | 156.9 | 181.9 | ||||||||
| Net earnings | $ | 566.4 | $ | 448.4 | $ | 995.8 | $ | 794.6 | ||||
| Basic earnings per common share | $ | 1.90 | $ | 1.50 | $ | 3.34 | $ | 2.66 | ||||
| Diluted earnings per common share | $ | 1.88 | $ | 1.48 | $ | 3.30 | $ | 2.62 | ||||
| Basic weighted average common shares | 298,477,807 | 298,285,773 | 298,100,370 | 298,993,430 | ||||||||
| Diluted weighted average common shares | 301,986,076 | 302,148,378 | 301,558,546 | 302,936,422 |
INC. AND SUBSIDIARIES
| Three months ended | Foreign | %Change in | |||||||||||
| June 30, | Currency | Constant | |||||||||||
| 2008 | 2007 | %Change | %Change | Currency | |||||||||
| GEOGRAPHIC SALES | |||||||||||||
| United States: | |||||||||||||
| Pharmaceutical | $ | 407.5 | $ | 376.5 | 8.2 | % | -- | % | 8.2 | % | |||
| Surgical | 276.4 | 257.2 | 7.5 | -- | 7.5 | ||||||||
| Consumer Eye Care | 104.0 | 102.7 | 1.3 | -- | 1.3 | ||||||||
| Total United States Sales | 787.9 | 736.4 | 7.0 | -- | 7.0 | ||||||||
| International: | |||||||||||||
| Pharmaceutical | 337.6 | 257.3 | 31.2 | 13.4 | 17.8 | ||||||||
| Surgical | 492.3 | 375.2 | 31.2 | 14.2 | 17.0 | ||||||||
| Consumer Eye Care | 117.4 | 102.6 | 14.4 | 11.2 | 3.2 | ||||||||
| Total International Sales | 947.3 | 735.1 | 28.9 | 13.5 | 15.4 | ||||||||
| Total Global Sales | $ | 1,735.2 | $ | 1,471.5 | 17.9 | 6.7 | 11.2 | ||||||
| PRODUCT SALES | |||||||||||||
| Infection/inflammation | $ | 233.1 | $ | 208.0 | 12.1 | % | |||||||
| Glaucoma | 252.4 | 198.9 | 26.9 | ||||||||||
| Allergy | 168.2 | 159.8 | 5.3 | ||||||||||
| Otic | 100.8 | 86.4 | 16.7 | ||||||||||
| Other pharmaceuticals/rebates | (9.4 | ) | (19.3 | ) | N/M | ||||||||
| Total Pharmaceutical | 745.1 | 633.8 | 17.6 | 5.5 | % | 12.1 | % | ||||||
| Intraocular lenses | 288.6 | 233.7 | 23.5 | ||||||||||
| Cataract/vitreoretinal | 449.5 | 389.0 | 15.6 | ||||||||||
| Refractive | 30.6 | 9.7 | 215.5 | ||||||||||
| Total Surgical | 768.7 | 632.4 | 21.6 | 8.5 | 13.1 | ||||||||
| Contact lens disinfectants | 122.3 | 116.9 | 4.6 | ||||||||||
| Artificial tears | 69.7 | 59.1 | 17.9 | ||||||||||
| Other | 29.4 | 29.3 | 0.3 | ||||||||||
| Total Consumer Eye Care | 221.4 | 205.3 | 7.8 | 5.6 | 2.2 | ||||||||
| Total Global Sales | $ | 1,735.2 | $ | 1,471.5 | 17.9 | 6.7 | 11.2 |
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. This measure is considered a non-GAAP financial measure as defined by Regulation G
promulgated by the U.S. Securities and Exchange Commission. Certain reclassifications have
been made to prior year amounts to conform with current year presentation.
INC. AND SUBSIDIARIES
| Six months ended | Foreign | %Change in | ||||||||||
| June 30, | Currency | Constant | ||||||||||
| 2008 | 2007 | %Change | %Change | Currency | ||||||||
| GEOGRAPHIC SALES | ||||||||||||
| United States: | ||||||||||||
| Pharmaceutical | $ | 725.8 | $ | 683.1 | 6.3 | % | - | % | 6.3 | % | ||
| Surgical | 530.4 | 491.3 | 8.0 | - | 8.0 | |||||||
| Consumer Eye Care | 203.7 | 196.4 | 3.7 | - | 3.7 | |||||||
| Total United States Sales | 1,459.9 | 1,370.8 | 6.5 | - | 6.5 | |||||||
| International: | ||||||||||||
| Pharmaceutical | 647.7 | 505.2 | 28.2 | 12.9 | 15.3 | |||||||
| Surgical | 936.2 | 721.8 | 29.7 | 14.0 | 15.7 | |||||||
| Consumer Eye Care | 227.8 | 196.4 | 16.0 | 11.4 | 4.6 | |||||||
| Total International Sales | 1,811.7 | 1,423.4 | 27.3 | 13.3 | 14.0 | |||||||
| Total Global Sales | $ | 3,271.6 | $ | 2,794.2 | 17.1 | 6.8 | 10.3 | |||||
| PRODUCT SALES | ||||||||||||
| Infection/inflammation | $ | 463.1 | $ | 411.1 | 12.6 | % | ||||||
| Glaucoma | 463.1 | 384.6 | 20.4 | |||||||||
| Allergy | 299.2 | 272.4 | 9.8 | |||||||||
| Otic | 165.6 | 141.5 | 17.0 | |||||||||
| Other pharmaceuticals/rebates | (17.5 | ) | (21.3 | ) | N/M | |||||||
| Total Pharmaceutical | 1,373.5 | 1,188.3 | 15.6 | 5.5 | % | 10.1 | % | |||||
| Intraocular lenses | 549.5 | 444.7 | 23.6 | |||||||||
| Cataract/vitreoretinal | 855.2 | 746.7 | 14.5 | |||||||||
| Refractive | 61.9 | 21.7 | 185.3 | |||||||||
| Total Surgical | 1,466.6 | 1,213.1 | 20.9 | 8.3 | 12.6 | |||||||
| Contact lens disinfectants | 236.7 | 218.9 | 8.1 | |||||||||
| Artificial tears | 135.5 | 114.9 | 17.9 | |||||||||
| Other | 59.3 | 59.0 | 0.5 | |||||||||
| Total Consumer Eye Care | 431.5 | 392.8 | 9.9 | 5.8 | 4.1 | |||||||
| Total Global Sales | $ | 3,271.6 | $ | 2,794.2 | 17.1 | 6.8 | 10.3 |
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. This measure is considered a non-GAAP financial measure as defined by Regulation G
promulgated by the U.S. Securities and Exchange Commission. Certain reclassifications have
been made to prior year amounts to conform with current year presentation.
INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| June 30, | Dec. 31, | ||||||
| 2008 | 2007 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 2,236.8 | $ | 2,134.3 | |||
| Short term investments | 654.4 | 669.8 | |||||
| Trade receivables, net | 1,291.4 | 1,089.2 | |||||
| Inventories | 606.7 | 548.5 | |||||
| Deferred income tax assets | 94.2 | 89.3 | |||||
| Other current assets | 279.0 | 293.7 | |||||
| Total current assets | 5,162.5 | 4,824.8 | |||||
| Long term investments | 36.7 | 41.8 | |||||
| Property, plant and equipment, net | 1,100.9 | 1,030.0 | |||||
| Intangible assets, net | 103.7 | 89.6 | |||||
| Goodwill | 635.8 | 626.0 | |||||
| Long term deferred income tax assets | 338.7 | 322.1 | |||||
| Other assets | 84.0 | 81.3 | |||||
| Total assets | $ | 7,462.3 | $ | 7,015.6 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 249.6 | $ | 208.7 | |||
| Short term borrowings | 1,598.9 | 1,751.1 | |||||
| Current maturities of long term debt | 1.9 | 1.3 | |||||
| Other current liabilities | 951.3 | 901.1 | |||||
| Total current liabilities | 2,801.7 | 2,862.2 | |||||
| Long term debt, net of current maturities | 53.5 | 52.2 | |||||
| Long term deferred income tax liabilities | 23.4 | 23.9 | |||||
| Other long term liabilities | 721.9 | 702.6 | |||||
| Contingencies | |||||||
| Shareholders' equity: | |||||||
| Common shares | 43.2 | 43.1 | |||||
| Additional paid-in capital | 1,415.7 | 1,299.8 | |||||
| Accumulated other comprehensive income | 274.5 | 203.0 | |||||
| Retained earnings | 3,631.2 | 3,392.2 | |||||
| Treasury shares, at cost | (1,502.8 | ) | (1,563.4 | ) | |||
| Total shareholders' equity | 3,861.8 | 3,374.7 | |||||
| Total liabilities and shareholders' equity | $ | 7,462.3 | $ | 7,015.6 |
INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
| Six months ended June 30, | |||||||
| 2008 | 2007 | ||||||
| Cash provided by (used in) operating activities: | |||||||
| Net earnings | $ | 995.8 | $ | 794.6 | |||
| Adjustments to reconcile net earnings to cash provided from operating activities: | |||||||
| Depreciation | 85.1 | 82.4 | |||||
| Amortization of intangibles | 14.9 | 30.3 | |||||
| Share-based payments | 53.5 | 56.2 | |||||
| Tax benefit from share-based compensation | 6.1 | 10.8 | |||||
| Deferred income taxes | (23.4 | ) | (29.8 | ) | |||
| Loss (gain) on sale of assets | 0.4 | (14.3 | ) | ||||
| Unrealized depreciation (appreciation) on trading securities | 9.9 | (2.7 | ) | ||||
| Other | -- | 0.1 | |||||
| Changes in operating assets and liabilities: | |||||||
| Trading securities | -- | (520.8 | ) | ||||
| Trade receivables | (162.3 | ) | (122.9 | ) | |||
| Inventories | (21.5 | ) | (11.8 | ) | |||
| Other assets | 18.3 | (6.4 | ) | ||||
| Accounts payable and other current liabilities | 77.6 | 37.2 | |||||
| Other long term liabilities | 17.6 | 43.8 | |||||
| Net cash from operating activities | 1,072.0 | 346.7 | |||||
| Cash provided by (used in) investing activities: | |||||||
| Purchases of property, plant and equipment | (127.2 | ) | (88.7 | ) | |||
| Proceeds from sale of assets | (28.2 | ) | (0.1 | ) | |||
| Purchase of investments | (37.2 | ) | (23.4 | ) | |||
| Proceeds from sales and maturities of investments | 41.1 | 135.7 | |||||
| Other | 2.0 | 1.5 | |||||
| Net cash from investing activities | (149.5 | ) | 25.0 | ||||
| Cash provided by (used in) financing activities: | |||||||
| Net proceeds from (repayment of) short term debt | (185.7 | ) | (112.5 | ) | |||
| Proceeds from issuance of long term debt | -- | 0.8 | |||||
| Repayment of long term debt | (0.7 | ) | (5.4 | ) | |||
| Dividends on common shares | (749.7 | ) | (612.8 | ) | |||
| Acquisition of treasury shares | (21.4 | ) | (744.3 | ) | |||
| Proceeds from exercise of stock options | 93.4 | 127.8 | |||||
| Tax benefits from share-based payment arrangements | 38.2 | 59.3 | |||||
| Net cash from financing activities | (825.9 | ) | (1,287.1 | ) | |||
| Effect of exchange rates on cash and cash equivalents | 5.9 | 2.5 | |||||
| Net increase (decrease) in cash and cash equivalents | 102.5 | (912.9 | ) | ||||
| Cash and cash equivalents, beginning of period | 2,134.3 | 1,489.2 | |||||
| Cash and cash equivalents, end of period | $ | 2,236.8 | $ | 576.3 |
Caution Concerning Forward-Looking Statements
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: