20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F

(Mark One)         

         REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
         

OR

X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
          For the fiscal year ended                                  DECEMBER 31, 2003

OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _________________ to ________________

Commission file number 001-31269

Alcon, Inc.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Switzerland
(Jurisdiction of incorporation or organization)
Bösch 69 
 P.O.  Box 62
Hünenberg, Switzerland
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class                                                                                                   Name of each exchange on which registered
Common Shares, par value CHF 0.20 per share                                                  The New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 308,519,051 Common Shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No __
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 __ Item 18 X

TABLE OF CONTENTS

	SEQUENTIAL PAGE
INTRODUCTION AND USE OF CERTAIN TERMS	3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	4
PART I	5
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	5
ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE	5
ITEM 3. KEY INFORMATION	5
ITEM 4. INFORMATION ON THE COMPANY	15
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	37
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	59
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	72
ITEM 8. FINANCIAL INFORMATION	75
ITEM 9. THE OFFER AND LISTING	76
ITEM 10. ADDITIONAL INFORMATION	77
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	91
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	92
PART II	92
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	92
ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	92
ITEM 15. CONTROLS AND PROCEDURES	93
ITEM 16.	93
PART III	95
ITEM 17. FINANCIAL STATEMENTS	95
ITEM 18. FINANCIAL STATEMENTS	96
ITEM 19. EXHIBITS	97
SIGNATURES	98

INTRODUCTION AND USE OF CERTAIN TERMS

        In this report, the United States Food and Drug Administration is often referred to as the “FDA”.

        Trademarks used by Alcon, Inc. (“Alcon”) appear in italic type in this report and are the property of or are licensed by one of our subsidiaries. Timoptic-XE® is a trademark of Merck & Co., Inc. Claritin® is a trademark of Schering-Plough HealthCare Products, Inc.

        In this report, references to Alomide® are to Alomide® ophthalmic solution, references to Azopt® are to Azopt® ophthalmic suspension, references to Betoptic S® are to Betoptic S® ophthalmic suspension, references to BSS Plus® are to BSS Plus® irrigating solution, references to Ciloxan® are to Ciloxan® ophthalmic solution and ointment, references to Emadine® are to Emadine® ophthalmic solution, references to Maxitrol® are to Maxitrol® ophthalmic suspension and ointment, references to OPTI-FREE®, with or without EXPRESS® No-Rub™, are to OPTI-FREE® contact lens care solutions, references to Patanol® are to Patanol® ophthalmic solution, references to TobraDex® are to TobraDex® ophthalmic suspension and ointment, references to Tobrex® are to Tobrex® ophthalmic solution and ointment, references to Travatan® are to Travatan® ophthalmic solution, and references to Vigamox™ are to Vigamox™ ophthalmic solution.

        References to the ophthalmic industry in this report do not include eyeglasses or contact lenses. This report relies on and refers to statistics regarding the ophthalmic industry. Where specified, these statistics reflect Alcon’s internal estimates. Otherwise, we obtained these statistics from various third-party sources that we believe are reliable, but we have not independently verified these third-party statistics. Unless otherwise specified, all market share information is based on units sold.

        Statements in this report regarding Alcon’s market share position in the United States in various markets are based on the following sources:

• Cataract surgery: internal estimates prepared using industry data for the nine months ended September 30, 2003; and
• Ophthalmic pharmaceuticals (including generics): total prescriptions filled as provided by the Verispan Source Prescription Audit for the year ended December 31, 2003.

        Statements in this report regarding Alcon’s market share position worldwide in the ophthalmic surgical market are based on the following source:

• Ophthalmic surgical products by sales: internal estimates prepared using industry data for the nine months ended September 30, 2003.

        In this report, references to “$", “U.S. $", “U.S. dollars” and “United States dollars” are to the lawful currency of the United States of America, references to “CHF” and “Swiss francs” are to the lawful currency of the Swiss Confederation, references to “euro” are to the lawful currency of the member states of the European Monetary Union that have adopted or that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union, and references to Japanese yen are to the lawful currency of Japan. Unless otherwise stated, figures provided are under generally accepted accounting principles in the United States (“U.S. GAAP”). References to “IFRS” are to International Financial Reporting Standards.

        “IPO” in this document refers to the initial public offering of approximately 69,750,000 of Alcon, Inc.‘s common shares on March 20, 2002. Prior to the IPO, Alcon, Inc. was a wholly owned subsidiary of Nestlé S.A., a Swiss corporation (“Nestlé”).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to our business and the sectors in which Alcon and its subsidiaries and interests operate. These forward-looking statements are contained principally in the sections entitled “Key Information,” “Information on the Company,” “Operating and Financial Review and Prospects,” “Financial Information,” “Additional Information,” and “Quantitative and Qualitative Disclosures about Market Risk.” 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. Forward-looking statements include, but are not limited to, statements about: the progress of our research and development programs; the receipt of regulatory approvals; competition in our industry; the impact of pending or future litigation; the impact of any future product recalls; changes in, or the failure or inability to comply with, governmental regulation; the opportunities for growth, whether through internal development or acquisitions; exchange rate fluctuations; general economic conditions; and trends affecting the ophthalmic industry, our financial condition or results of operations.

        Words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “intend,” “estimate,” “project,” “predict,” “potential” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in this report in greater detail under the subheadings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These forward-looking statements represent our estimates and assumptions only as of the date of this report and are not intended to give any assurance as to future results. Factors that might cause future results to differ include, but are not limited to, the following:

• the production and launch of commercially viable products may take longer and cost more than expected; 
•  resources devoted to research and development may not yield new products that achieve commercial success; 
• competition may lead to worse than expected financial condition and results of operations; 
• changes in reimbursement procedures by third-party payors; 
• the global economic environment in which we operate, as well as the economic conditions in our markets. 
• currency exchange rate fluctuations may negatively affect our financial condition and results of operations;
• the impact of any future events with material unforeseen impacts, including, but not limited to, war, natural disasters, or acts of terrorism.
• supply and manufacturing disruptions could negatively impact our financial condition or results of operations;
• qualified personnel may not be available, which could negatively impact our ability to grow our business;
• difficulty in protecting our intellectual property rights;
• pending or future litigation may negatively impact our financial condition and results of operations;
• government regulation or legislation may negatively impact our financial condition or results of operations;
• product recalls or withdrawals may negatively impact our financial condition or results of operations; and
• the occurrence of environmental liabilities arising from our operations;

        You should read this report completely and with the understanding that Alcon’s 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 U. S. 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.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

               Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE

               Not Applicable.

ITEM 3. KEY INFORMATION

A.     SELECTED FINANCIAL DATA

        The following tables present our selected historical consolidated financial data in accordance with U.S. GAAP. This information should be read along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 5 of this report and the consolidated financial statements, including the accompanying notes thereto, included in Item 18 of this report.

        We have accounted for the acquisition of Summit Autonomous Inc. (“Summit”) as a purchase and have included Summit’s results of operations since July 7, 2000 in our financial statements.

	Year Ended December 31,
	2003		2002		2001		2000		1999
	(in millions, except per share data)
Statement of Earnings Data:
Sales	$ 3,407		$ 3,009		$ 2,748		$ 2,554		$ 2,401
Cost of goods sold	1,006		893		798		750		719
Gross profit	2,401		2,116		1,950		1,804		1,682
Selling, general and administrative	1,113		1,015		954		856		805
Research and development	350		323		290		246		213
In-process research and development	--		--		--		19		--
Gain on sale of plant	(8	)	--		--		--		--
Amortization of intangibles	67		74		117		86		47
Operating income	879		704		589		597		617
Interest income	19		22		47		44		14
Interest expense	(42	)	(53	)	(108	)	(86	)	(55	)
Other, net	2		5		(14	)	--		11
Earnings before income taxes	858		678		514		555		587
Income taxes	263		211		198		223		240
Net earnings	$    595		$    467		$    316		$    332		$    347
Basic weighted-average common shares outstanding	308		301		300		300		284
Diluted weighted-average common shares outstanding	311		303		300		300		284
Basic earnings per common share(*)	$   1.93		$   1.54		$   1.05		$   1.11		$   1.22
Diluted earnings per common share(*)	$   1.92		$   1.53		$   1.05		$   1.11		$   1.22
Dividends paid on common shares	$    107		(*)		(*)		(*)		(*)
Dividends paid per common share: U.S. $	$   0.35		(*)		(*)		(*)		(*)
Dividends paid per common share: Swiss CHF.........CHF	0.45		(*)		(*)		(*)		(*)
Cash Flow Data:
Cash provided by (used in):
Operating activities	$    915		$    701		$    544		$    431		$    448
Investing activities	(176	)	(127	)	(149	)	(910	)	(107	)
Financing activities	(669	)	(753	)	(156	)	883		21

	At December 31,
	2003	2002		2001	2000	1999
	(in millions)
Balance Sheet Data:
Current assets	$2,470	$ 2,200		$2,251	$2,045	$1,490
Working capital (deficit)	237	(373	)	641	250	33
Total assets	4,301	3,970		4,071	3,882	2,554
Long term debt, net of current maturities	75	81		697	700	85
Total shareholders' equity	1,592	974		1,390	1,101	794

(*) We believe that net earnings are a more appropriate measure of our profitability prior to the IPO than earnings per share, since we were a wholly owned subsidiary of Nestlé. We have not included dividends paid and dividends per share information prior to the IPO as they are not relevant to the investor, since prior to the IPO we were a wholly owned subsidiary of Nestlé. On March 20, 2002, we made a payment to Nestlé that was considered a dividend and repayment of capital under U.S. GAAP of CHF 2.1 billion (or approximately $1.24 billion). This payment was financed by existing cash and cash equivalents and additional borrowings. This entire payment was considered a dividend under Swiss law.

Exchange Rates

        Fluctuations in the exchange rate between the Swiss franc and the U.S. dollar will affect the conversions into U.S. dollars of any cash dividends paid in Swiss francs on our common shares. In addition, these and other fluctuations in the exchange rates of the currencies of our various local operations affect our results of operations and financial condition as presented in our financial statements.

        The following table sets forth, for the periods indicated, information concerning the exchange rate between Swiss francs and U.S. dollars based on the noon buying rate in the City of New York for cable transfers of Swiss francs as certified for customs purposes by the Federal Reserve Bank of New York:

Fiscal Year	Period End (1)	Average (1) (2)	High	Low
1999	1.5930	1.5045	1.5930	1.4168
2000	1.6202	1.6904	1.7978	1.6202
2001	1.6598	1.6891	1.8185	1.5858
2002	1.3833	1.5567	1.7190	1.3833
2003	1.2380	1.3450	1.4181	1.2380

(1)     The noon buying rate at each period end and the average rate for each period differed from the exchange rates used in the preparation of our financial statements.

(2)     Represents the average of the daily rates as published by the Federal Reserve Bank of New York during the period.

        The following table sets forth the high and low noon buying rate for the Swiss franc for each of the prior six months:

Month	Period End	Average	High	Low
September 2003	1.3208	1.3743	1.4133	1.3208
October 2003	1.3382	1.3222	1.3382	1.3067
November 2003	1.2917	1.3318	1.3737	1.2917
December 2003	1.2380	1.2643	1.3003	1.2380
January 2004	1.2593	1.2391	1.2659	1.2190
February 2004	1.2680	1.2448	1.2680	1.2269

        Although we have translated selected Swiss franc amounts in this report into U.S. dollars for convenience, this does not mean that the Swiss franc amounts referred to could have been, or could be, converted into U.S. dollars at these rates or any other rate. The Federal Reserve Bank of New York certifies this rate for customs purposes on each date the rate is given.

B.     CAPITALIZATION AND INDEBTEDNESS

         Not Applicable.

C.     REASONS FOR THE OFFER AND USE OF THE PROCEEDS

         Not Applicable.

D.     RISK FACTORS

        You should carefully consider the risks described below and the other information contained in this report before making a decision to invest in our common shares. The risks described below are not the only ones that may exist. Additional risks not currently known by us or that we deem immaterial may also impair our business operations. If any of these risks actually occurs, our business, financial condition and results of operations could suffer, in which case the trading price of our common shares could decline.

Risks Related to Our Business and Industry

If we fail to keep pace with advances in our industry or fail to persuade physicians to adopt new products we introduce, customers may not buy our products and our sales and profits may decline.

        The ophthalmic industry is characterized by rapid product development, constant innovation in products and techniques, frequent new product introductions and price competition. Companies that introduce products that are first to market gain a significant competitive advantage. Our future growth depends, in part, on our ability to develop products which are more effective in treating diseases and disorders of the eye or that incorporate the latest technologies. In addition, we must be able to manufacture and effectively market those products and persuade a sufficient number of eye care professionals to use the new products we introduce. For example, glaucoma requires ongoing treatment over a long period of time; thus, many doctors are reluctant to switch a patient to a new treatment if the patient’s current treatment for glaucoma remains effective. Sales of our existing products may decline rapidly if a new product is introduced by one of our competitors or if we announce a new product that, in either case, represents a substantial improvement over our existing products. Similarly, if we fail to make sufficient investments in research and development programs or if we focus on technologies that do not lead to more effective products, our current and planned products could be surpassed by more effective or advanced products.

We may not successfully develop and launch replacements for our products that lose patent protection.

        Most of our products are covered by patents that give us a degree of market exclusivity during the term of the patent. Upon patent expiration, our competitors may introduce products using the same technology. As a result of this possible increase in competition, we may need to charge a lower price in order to maintain sales of our products which could result in these products becoming less profitable. If we fail to develop and successfully launch new products prior to the expiration of patents for our existing products, our sales and profits with respect to those products could decline significantly. We may not be able to develop and successfully launch more advanced replacement products before these and other patents expire.

Resources devoted to research and development may not yield new products that achieve commercial success.

        We devote substantial resources to research and development. The research and development process is expensive, prolonged and entails considerable uncertainty. Development of a new product, from discovery through testing and registration to initial product launch, typically takes between eight and fifteen years or more for a pharmaceutical product and three and seven years or more for a medical device. Each of these periods varies considerably from product to product and country to country. Because of the complexities and uncertainties associated with ophthalmic research and development, products we are currently developing may not complete the development process or obtain the regulatory approvals required for us to market such products successfully. For example, we are investing substantial sums in the research and development of new treatments for age-related macular degeneration, a condition in which the retina degenerates, thereby reducing sight. These may take longer and cost more to develop and may be less successful than we currently anticipate, or than other therapies that are presently or soon may be on the market. None of the products currently in our development pipeline may be commercially successful.

Economic conditions and price competition may cause sales of our products used in elective surgical procedures to decline and reduce our profitability.

        Sales of products used in elective surgical procedures have been and may continue to be adversely impacted by economic conditions. Generally, the costs of elective surgical procedures are borne by individuals without reimbursement from their medical insurance providers or government programs. Accordingly, individuals may be less willing to incur the costs of these procedures in weak or uncertain economic conditions and there may be a decline in the number of these procedures. Sales of our laser refractive surgical equipment worldwide and our revenues from technology fees in the United States have come under pressure and may remain under pressure if uncertain economic conditions persist or if the pricing environment for technology fees does not improve. A softening in demand for laser refractive surgery could also impact us by reducing our profits as customers to whom we have leased, or have extended financing for the purchase of, laser refractive surgical equipment are unable to make required payments to us.

The FDA may authorize sales of some prescription pharmaceuticals on a non-prescription basis, which would reduce the profitability of our prescription products.

        Managed care organizations have petitioned the FDA to permit sales of some pharmaceuticals currently sold on a prescription basis, including anti-allergy medications, without a prescription. In late 2002, the FDA revised the status of Claritin® (Schering-Plough) from “prescription only” to “over-the-counter,” or OTC, following such a petition, although the sponsor ultimately sought the change in status. The FDA may also undertake “OTC switching” on its own initiative. Approval by the FDA of the sale of these products without a prescription would reduce demand for our competing prescription products and, accordingly, reduce our profits. In the future, additional managed care organizations or other third-party payors may petition the FDA to permit sales of some of our pharmaceutical products on a non-prescription basis, which could reduce our profits.

Failure of users of our products to obtain adequate reimbursement from third-party payors could limit market acceptance of our products, which could impact our sales and profits.

        The initiatives of managed care organizations and governments to contain health care costs in the United States and elsewhere are placing an increased emphasis on the delivery of more cost-effective medical therapies. This emphasis could adversely affect sales and prices of our products. Physicians, hospitals and other health care providers may be reluctant to purchase our products if they do not receive reimbursement for the cost of our pharmaceutical and surgical products and for procedures performed using our surgical medical device products from third-party payors such as Medicare, Medicaid and health insurance programs, both governmental and private. For example:

• major third-party payors for hospital services, including government insurance plans, Medicare, Medicaid and private health care insurers, have substantially revised their payment methodologies during the last few years, resulting in stricter standards for and lower levels of reimbursement of hospital and outpatient charges for some medical procedures, including cataract procedures and intraocular lenses;
• most European Union member states impose controls on the prices at which medicines and medical devices are reimbursed under state health care schemes; because of increased pressures to reduce government health care spending and increased transparency of prices following the adoption of the euro, member governments in some countries in the European Union are requesting price reductions to match prices charged in other countries in the European Union; furthermore, with increased price transparency, parallel importation of pharmaceuticals from lower price level countries to higher priced markets has grown; these parallel imports lower our effective average selling price;
• managed care organizations restrict the pharmaceutical products that doctors in those organizations can prescribe through the use of formularies, the lists of drugs which physicians are permitted to prescribe to patients in a managed care organization, and a failure of our pharmaceutical products to be included on formularies could have an adverse effect on our revenues and profits;
• our competitors may reduce the prices of their products which could result in our competitors being reimbursed for a larger number of procedures by third-party payors;
• competitors may introduce generic products that compete directly or indirectly with our products and such generic products may reduce our unit sales and prices;
• there are proposed and existing laws and regulations governing product prices and the profitability of companies in the health care industry; and
• there have been recent initiatives by third-party payors to challenge the prices charged for medical products which could affect our profitability. 
  

        Reductions in the prices for our products in response to these trends could reduce our profits. Moreover, our products may not be covered in the future by third-party payors. The failure of our products to be so covered could cause our profits to decline.

We may experience pressure to lower the prices of some or all of our prescription pharmaceutical products because of new and/or proposed federal legislation.

        New U.S. federal legislation, enacted in December 2003, has added an outpatient prescription drug benefit to Medicare, effective January 2006. In the interim, Congress has established a discount drug card program for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers. These negotiations may increase pressures to lower prices. While the new law specifically prohibits the United States government from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, some members of Congress are pursuing legislation that would permit the United States government to use its enormous purchasing power to negotiate discounts from pharmaceutical companies, thereby creating de facto price controls on prescription drugs. In addition, the new law contains triggers for Congressional consideration of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level. These cost containment measures could include certain limitations on prescription drug prices.

The global nature of our business may result in fluctuations and declines in our sales and profits.

        Our products are sold in more than 180 countries. We have more than 70 local operations worldwide and approximately 48% of our revenues in 2003 came from customers outside of the United States.

        The results of operations and the financial position of our local operations are generally reported in the relevant local currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, exposing us to translation risk. In 2003, our most significant currency exposures were to the U.S. dollar, euro, Japanese yen and Swiss franc.

        The exchange rates between these and other foreign currencies and the U.S. dollar may fluctuate substantially. In addition, we are exposed to transaction risk because some of our expenses are incurred in a different currency from the currency in which our revenues are received. Fluctuations in the value of the U.S. dollar against other currencies have had in the past, and may have in the future, a material adverse effect on our operating margins and profitability.

        Economic, social and political conditions, laws, practices and local customs vary widely among the countries in which we sell our products. Our operations outside of the United States are subject to a number of risks and potential costs, including lower product margins, less stringent protection of intellectual property and economic, political and social uncertainty in countries in which we operate, especially in emerging markets. Our continued success as a global company depends, in part, on our ability to develop and implement policies and strategies that are effective in anticipating and managing these and other risks in the countries where we do business. These and other risks may have a material adverse effect on our operations in any particular country and on our business as a whole. For example, many emerging markets have currencies that fluctuate substantially, in response to which we may reduce our prices, making our products less profitable. Inflation in emerging markets also makes our products less profitable and increases the credit risks to which we are exposed. We have experienced currency fluctuations, inflation and volatile economic conditions, which have impacted our profitability in the past in several markets, including Argentina, Brazil, Poland and Turkey, and we may experience such impacts in the future. We expect currency devaluation and weak economic conditions to persist in Latin America and Turkey and these conditions may have a negative impact on our performance in these markets.

        During the past three years, the economy of Japan, our second largest market, continued to experience slight deflation and very low growth. Because a majority of our sales in Japan are to parties who are reimbursed by the government, a prolonged downturn in the Japanese economy coupled with an aging population could lead to downward pricing pressures on government reimbursement rates for our products. For example, in April 2002, the Japanese Ministry of Health reduced procedure reimbursements for cataract surgery by 18%. This put pressure on the prices of Alcon’s cataract surgery products in Japan.

We single source many of the active ingredients and components used in our products and interruptions in the supply of these raw materials could disrupt our manufacturing of specific products and cause our sales and profitability to decline.

        We single source active ingredients contained in a majority of our pharmaceutical and contact lens care products, including Travatan® ophthalmic solution, OPTI-FREE® EXPRESS® No Rub™ multi-purpose disinfecting solution, Patanol® ophthalmic solution and Vigamox™ ophthalmic solution. In these cases, obtaining the required regulatory approvals, including from the FDA, to use alternative suppliers may be a lengthy process. In many cases, we use single-source suppliers for other components and raw materials used in our products. The loss of any of these or other significant suppliers or the inability of a supplier to meet performance and quality specifications, requested quantities or delivery schedules could cause our sales and profitability to decline and have a negative impact on our customer relations. In addition, a significant price increase from any of our single-source suppliers could cause our profitability to decline if we cannot increase our prices to our customers. In order to ensure sufficient supply, we may determine that we need to provide financing to some of our single-source suppliers, which could increase our financial exposure to those suppliers.

In many cases, we manufacture a product, at a single-source facility, and an inability to produce a sufficient quantity of, or any disruption in the manufacturing of, a product at the relevant facility could impair our ability to fill customer orders and could reduce our sales.

        In many cases, we manufacture a product, including some of our key products, at a single-source manufacturing facility. FDA product approval is generally limited to a specific approved manufacturing facility. If we fail to produce enough of a product at a facility, or if our manufacturing process at that facility is disrupted, we may be unable to deliver that product to our customers on a timely basis. A failure to deliver products on a timely basis could lead to customer dissatisfaction and damage our reputation. Significant delays in the delivery of our products or a delay in the delivery of a key product could also negatively impact our sales and profitability.

We depend on proprietary technologies. We may not be able to protect our intellectual property rights adequately and are currently subject to at least two claims of infringement of intellectual property.

        We currently hold more than 3,000 patents and have nearly 1,800 pending patent applications. We rely on a combination of contractual provisions, confidentiality procedures and patent, trademark, copyright and trade secrecy laws to protect the proprietary aspects of our technology. These legal measures afford limited protection and may not prevent our competitors from gaining access to our intellectual property and proprietary information. Any of our patents may be challenged, invalidated, circumvented or rendered unenforceable. From time to time, we have faced challenges of our intellectual property rights. Furthermore, we cannot assure you that any pending patent application held by us will result in an issued patent, or that if patents are issued to us, such patents will provide meaningful protection against competitors or competitive technologies. We have taken measures to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of our proprietary rights. Any litigation could result in substantial expense, may reduce our profits and may not adequately protect our intellectual property rights. In addition, we may be exposed to future litigation by third parties based on claims that our products infringe their intellectual property rights. This risk is exacerbated by the fact that the validity and breadth of patents in our industry frequently involve complex legal issues that are not easily resolved.

        Any litigation or claims against us, whether or not successful, could result in substantial costs and harm our reputation. In addition, intellectual property litigation or claims could force us to do one or more of the following: cease selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue; obtain a license from the holder of the intellectual property right alleged to have been infringed, which license may not be available on reasonable terms, if at all; and redesign or, in the case of trademark claims, rename our products to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time-consuming if it is possible to do so.

Importation of products from Canada and other countries into the U.S. may lower the prices we receive for our products.

        In the U.S., our products are subject to competition from lower priced versions of our products and competing products from Canada, Mexico, and other countries where there are government price controls or other market dynamics that make the products lower priced. The ability of patients and other customers to obtain these lower priced imports has grown significantly as a result of the Internet, an expansion of pharmacies in Canada and elsewhere targeted to American purchasers, the increase in U.S.-based businesses affiliated with Canadian pharmacies marketing to American purchasers, and other factors. Most of these foreign imports are illegal under current law. However, the volume of imports continues to rise due to the limited enforcement resources of the FDA and the U.S. Customs Service, and there is increased political pressure to permit the imports as a mechanism for expanding access to lower priced medicines.

        In addition, in December 2003 federal legislation was enacted to change United States import laws and expand the ability to import lower priced versions of our and competing products from Canada, where there are government price controls. These changes to the import laws will not take effect unless and until the Secretary of Health and Human Services certifies that the changes will lead to substantial savings for consumers and will not create a public health safety issue. The current Secretary of Health and Human Services has indicated that there is not a basis to make such a certification at this time. However, it is possible that this Secretary or a subsequent Secretary could make the certification in the future. In addition, legislative proposals have been made to implement the changes to the import laws without any certification, and to broaden permissible imports in other ways. Even if the changes to the import laws do not take effect, and other changes are not enacted, imports from Canada and elsewhere may continue to increase due to market and political forces, and the limited enforcement resources of the FDA, the Customs Service, and other government agencies. For example, state and local governments have suggested that they may import drugs from Canada for employees covered by state health plans or others, and some already have put such plans in place.

        The importation of foreign products adversely affects our profitability in the U.S. This impact could become more significant in the future, and the impact could be even greater if there is a further change in the law or if state or local governments take further steps to import products from abroad.

We are subject to extensive government regulation that increases our costs and could prevent us from selling our products.

        The research, development, testing, manufacturing and marketing of our products are subject to extensive governmental regulation. Government regulation includes inspection of and controls over testing, manufacturing, safety and environmental controls, efficacy, labeling, advertising, marketing, promotion, record keeping, reporting, the sale and distribution of pharmaceutical products, import, export and samples and electronic records and electronic signatures. We are also subject to government regulation with respect to the prices we charge and the rebates we offer to customers. Government regulation substantially increases the cost of developing, manufacturing and selling our products.

        In the United States, we must obtain approval from the FDA for each pharmaceutical product that we market and FDA approval or clearance for each medical device that we market. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products distributed outside of the United States are also subject to government regulation, which may be equally or more demanding. Our new products could take a significantly longer time than we expect to gain regulatory approval and may never gain approval. If a regulatory authority delays approval of a potentially significant product, our market value and operating results may decline. Even if the FDA or another regulatory agency approves a product, the approval may limit the indicated uses for a product, may otherwise limit our ability to promote, sell and distribute a product or may require post-marketing studies or impose other post-marketing obligations. If we are unable to obtain regulatory approval of our products, we will not be able to market these products, which would result in a decrease in our sales. Currently, we are actively pursuing approval for a number of our products from regulatory authorities in a number of countries, including, among others, the United States, countries in the European Union and Japan. Continued growth in our sales and profits will depend, in part, on the timely and successful introduction and marketing of some or all of these products.

        The clinical trials required to obtain regulatory approvals are complex and expensive and their outcomes are uncertain. We incur substantial expense for, and devote significant time to, clinical trials, yet we cannot be certain that the trials will result in the commercial sale of a product. Positive results from preclinical studies and early clinical trials do not ensure positive results in later clinical trials that form the basis of an application for regulatory approval. We may suffer significant setbacks in clinical trials, even after earlier clinical trials show promising results. Any of our products may produce undesirable side effects that could cause us or regulatory authorities or research sites to interrupt, delay or halt clinical trials of a pharmaceutical or medical device candidate. We, the FDA or another regulatory authority or an institutional review board charged with overseeing the research to protect study subjects may suspend or terminate clinical trials at any time if we or they believe the trial participants face unacceptable health risks.

        Noncompliance with applicable United States regulatory requirements can result in fines, injunctions, penalties, mandatory recalls or seizures, suspensions of production, denial or withdrawal of pre-marketing approvals, recommendations by the FDA against governmental contracts and criminal prosecution. The FDA also has authority to request repair, replacement or refund of the cost of any device we manufacture or distribute. Regulatory authorities outside of the United States may impose similar sanctions for noncompliance with applicable regulatory requirements.

We may implement a product recall or voluntary market withdrawal and could be exposed to significant product liability claims; we may have to pay significant amounts to those harmed and may suffer from adverse publicity as a result.

        The manufacturing and marketing of pharmaceuticals, medical devices and surgical equipment and instruments involve an inherent risk that our products may prove to be defective and cause a health risk. In that event, we may voluntarily implement a recall or market withdrawal or may be required to do so by a regulatory authority. We have recalled products in the past and, based on this experience, believe that the occurrence of a recall could result in significant costs to us, potential disruptions in the supply of our products to our customers and adverse publicity, all of which could harm our ability to market our products. A recall of one of our products or a product manufactured by another manufacturer could impair sales of other similar products we market as a result of confusion concerning the scope of the recall.

        Although we are not currently subject to any material product liability proceedings, we may incur material liabilities relating to product liability claims in the future, including product liability claims arising out of procedures performed using our surgical equipment. We currently rely on a combination of self-insurance and third-party insurance to cover potential product liability claims. The combination of our insurance coverage, cash flows and reserves may not be adequate to satisfy product liabilities we may incur in the future. Even meritless claims could subject us to adverse publicity, hinder us from securing insurance coverage in the future and require us to incur significant legal fees. Successful product liability claims brought against Alcon could have a material adverse effect on our financial condition.

Our activities involve hazardous materials and emissions and may subject us to environmental liability.

        Our manufacturing, research and development practices involve the controlled use of hazardous materials. We are subject to federal, state and local laws and regulations in the various jurisdictions in which we have operations governing the use, manufacturing, storage, handling and disposal of these materials and certain waste products. Although we believe that our safety and environmental procedures for handling and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of accidental contamination or injury from these materials. Remedial environmental actions could require us to incur substantial unexpected costs which would materially and adversely affect our results of operations. If we were involved in a major environmental accident or found to be in substantial non-compliance with applicable environmental laws, we could be held liable for damages or penalized with fines that could be material.

        We currently rely on a combination of self-insurance and third-party insurance to cover potential environmental liability claims. The combination of our insurance coverage, cash flows and reserves may not be adequate to satisfy environmental liabilities we may incur in the future. Any environmental claims could subject us to adverse publicity, hinder us from securing insurance coverage in the future and require us to incur significant legal fees.

We self-insure some of our business risks.

        The pharmaceutical and medical device business involves an inherent risk of product liability and any claims of this type could have an adverse impact on us. We have taken, and will continue to take, what we believe are appropriate measures, including a self-insured retention combined with product liability insurance coverage, to provide adequate coverage for possible product liability claims. Though our insurance coverage and cash flows have been adequate to provide for liability claims in the past, product liability claims could exceed our insurance coverage limits and cash flows, and insurance may not be available on commercially reasonable terms or at all in the future.

We may not successfully complete and integrate strategic acquisitions to expand or complement our business.

        As part of our growth strategy, we evaluate and pursue strategic business acquisitions to expand or complement our business. Such ventures may bring new products, increased market share or new customers to Alcon’s prominent position in the ophthalmic industry. We cannot assure you that suitable acquisition candidates will be identified. Acquisition activities can be thwarted by overtures from competitors for the targeted candidates, governmental regulation, (including market concentration limitations) and rapid replacement product developments in our industry. Further, after an acquisition, successful integration of the venture can be complicated by corporate cultural differences, difficulties in retention of key personnel and suppliers, and coordination with other products and processes. Also, acquisitions could divert management’s attention from our existing business and could result in liabilities being incurred that were not known at the time of acquisition or the creation of tax or accounting issues. If we fail to timely recognize or address these matters or to devote adequate resources to them, we may fail to achieve our growth strategy or otherwise not realize the intended benefits of any acquisition.

Risks Related to Our Relationship with Nestlé

We will be controlled by Nestlé as long as it owns a majority of our common shares, and our other shareholders will be unable to affect the outcome of a shareholder vote during that time.

        Nestlé owns approximately 75% of our outstanding common shares. Because Nestlé’s interests may differ from those of our other shareholders, actions Nestlé takes with respect to us may be unfavorable to our other shareholders. Minority holders of common shares will not be able to affect the outcome of any shareholder vote so long as Nestlé owns at least a majority of our outstanding common shares. So long as it owns at least two-thirds of our common shares, Nestlé will be able to control, among other things: increases in our share capital; the approval of a dissolution other than by liquidation, including by way of merger; the creation of restrictions on the transferability of our common shares; and the restriction or elimination of preemptive rights in connection with a share capital increase. So long as it owns at least a majority of our common shares, Nestlé will be able to control, among other things: the election and removal of all of our directors; amendments to our Articles of Association (other than those subject to the two-thirds majority requirement referred to above); payment of dividends; changes to our capital structure unless the change is subject to the requirement that it be approved by holders of two-thirds of our common shares represented at a shareholders’ meeting; and appointment and removal of our statutory and group auditors.

Because Nestlé controls us, conflicts of interest between Nestlé and us could be resolved in a manner unfavorable to us.

        Most of our agreements with Nestlé, including the separation agreement, were finalized while we were a wholly owned subsidiary of Nestlé and, as a result, the terms of each may not be as favorable to us as if they had been negotiated between unaffiliated parties. Various conflicts of interest between Alcon and Nestlé could arise. For example, ownership interests of directors or officers of Alcon in Nestlé shares or service as a director or officer of both Alcon and Nestlé could create, or appear to create, potential conflicts of interest when a director or officer is faced with decisions that could have different implications for the two companies, such as disagreement over the desirability of a potential acquisition opportunity, employee retention or recruiting or our dividend policy.

Risks Related to the Securities Markets and Ownership of Our Common Shares

The price of our common shares may fluctuate.

        The market price of our common shares may fluctuate significantly in response to factors, some of which are beyond our control, such as announcements of innovations and discoveries or new products by us or our competitors, developments concerning intellectual property rights and regulatory approvals, and changes in estimates of our financial performance or changes in recommendations by securities analysts.

        The stock market in general sometimes experiences extreme price and volume fluctuations. The market prices of securities of pharmaceutical and medical device companies have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. These market fluctuations could result in extreme volatility in the price of our common shares, which could cause a decline in the value of our common shares. You should also be aware that price volatility may be worse if the trading volume of our common shares is low.

Sales or distributions of our common shares by Nestlé could depress the market price for our common shares.

        Nestlé may sell all or part of our common shares that it owns or distribute those common shares to its shareholders. There can be no assurance that any of our shareholders will be included in any transaction in which Nestlé sells a controlling interest in us or realize a premium with respect to their common shares. In addition, sales or distributions by Nestlé of substantial amounts of our common shares in the public market or to its shareholders could adversely affect prevailing market prices for our common shares. Nestlé is not subject to any contractual obligation to maintain its ownership position in our shares.

Risks Related to Our Jurisdiction of Incorporation

We are incorporated in Switzerland and Swiss law governs our internal corporate affairs.

        We are a corporation incorporated under the laws of Switzerland. The rights of holders of our common shares are governed by Swiss corporate law and by our Articles of Association. In particular, Swiss corporate law limits the ability of a shareholder to challenge resolutions or actions of our board of directors in court. Shareholders generally are not permitted to file a suit to reverse a decision or action by directors but are permitted to seek damages for breaches of fiduciary duty. Shareholder claims against a director for breach of fiduciary duty would, as a matter of Swiss law, have to be brought at our place of incorporation in the Canton of Zug, Switzerland, or at the domicile of the involved director. In addition, under Swiss law, any claims by shareholders against us must be brought exclusively at our place of incorporation.

        Under Swiss corporate law, we are required to declare dividends in Swiss francs. As a result, any currency fluctuations between the U.S. dollar and the Swiss franc will affect the dollar value of the dividends we pay.

        In addition, in several instances we follow Swiss corporate governance practices instead of the corporate governance practices applicable to a U.S. company under New York Stock Exchange listing standards. A summary of the principal areas of difference is provided under “Directors, Senior Management and Employees – Board Practices – Compliance with NYSE Listing Standards on Corporate Governance.”

ITEM 4. INFORMATION ON THE COMPANY

A.     HISTORY AND DEVELOPMENT OF THE COMPANY

General Information

        The entity that is now Alcon, Inc. was originally incorporated in Switzerland in 1971 as Société Fromagère Nestlé S.A., and, after a change of our name to Alcon Universal S.A. in 1978, was registered in the Commercial Register of the Canton of Zug on March 13, 1992. Effective on December 21, 2001, we changed our name to Alcon, Inc. Our principal executive offices are located at Bösch 69, P.O. Box 62, 6331 Hünenberg, Switzerland, and our telephone number is +41-41-785-8888. Our principal United States offices are located at 6201 South Freeway, Fort Worth, Texas 76134-2099, and the telephone number at those offices is (817) 293-0450.

Capital Expenditures, Acquisitions and Divestitures for the Last Three Years (January 1, 2001 through December 31, 2003):

        The Company’s capital expenditures for property, plant and equipment, to expand and upgrade manufacturing facilities, research and development facilities, and other infrastructure, for the years ended December 31, 2003, 2002 and 2001 were $157.9 million, $120.9 million and $127.4 million, respectively.

        On November 6, 2003, Alcon Cusi S.A., a wholly owned subsidiary of the Company, sold its contact lens care solutions manufacturing facility located in Madrid, Spain, to AMO Manufacturing Spain, S. L., a wholly owned subsidiary of Advanced Medical Optics, Inc., for $21.6 million in cash.

Capital Expenditures, Acquisitions and Divestitures Currently Underway:

        In 2003, the Company commenced construction of a new $24 million administrative facility located on the Fort Worth, Texas campus that will provide occupancy for offsite employees as well as serve as a training and education center for physicians, medical students and Alcon’s sales force. In order to establish manufacturing capacity for intraocular lenses outside the United States, the Company began converting the Cork, Ireland manufacturing facility from its refractive equipment production to production of intraocular lenses. Additional expenditures were made to upgrade our manufacturing facilities in Puurs, Belgium, Kaysersberg, France, Huntington, West Virginia, and Fort Worth, Texas. We had capital expenditure commitments of $38.6 million at December 31, 2003. We expect to fund these capital projects through operating cash flow and, if necessary, short term borrowings.

        The Company has not announced any acquisitions or divestitures subsequent to December 31, 2003.

B.     BUSINESS OVERVIEW

        Alcon is a research and development driven, global medical specialty company focused on eye care. We develop, manufacture and market pharmaceuticals, surgical equipment and devices and consumer eye care products to treat diseases and disorders of the eye. Our broad range of products represents one of the strongest portfolios in the ophthalmic industry. We believe we have the largest commitment to ophthalmic research and development of any company worldwide. Currently, our products are sold in over 180 countries, and we are present in every significant market in the world where ophthalmology is practiced. In 2003, we had sales of $3.4 billion, operating income of $879 million and net earnings of $595 million.

Our Competitive Strengths

Depth, Breadth and Quality of Our Products

        Our broad range of products represents one of the strongest portfolios in the ophthalmic industry, with high-quality and technologically advanced products across all major product categories. Our leadership position across most of our product categories enhances our ability to extend our product offerings, through the launch of new and innovative products, and to expand our geographic reach into ophthalmic markets worldwide. With over 50 years of experience in the ophthalmic industry, we believe that the ALCON® brand is synonymous with quality, service and innovation among eye care professionals worldwide. The depth, breadth and market positions of our products combined with our sales infrastructure enhance our ability to sell our products effectively across product categories.

Our Significant Research and Development Commitment and Commercial Success

        Our commitment to ophthalmic research and development is substantial. In 2003, we spent $349.9 million on our research and development efforts. Currently, we have approximately 1,300 individuals dedicated to our research and development efforts, including more than 280 individuals who are either medical doctors, Ph.D.s or doctors of optometry. Our research and development team has built substantial research relationships with numerous leading academic institutions worldwide, and our scientists work closely with researchers at each of these institutions. These research and development efforts have yielded a strong intellectual property portfolio, including approximately 3,000 patents and 1,800 pending patent applications throughout the world as of December 31, 2003.

        We also have a strong track record of converting discoveries into commercially viable products and bringing those products to market. The integration of our regulatory affairs staff and research and development department together with our level of regulatory expertise has enabled us to reduce the time required to bring new products to market around the world. We believe that our research and development capabilities together with our experience in converting discoveries into marketable products and improving our existing products have resulted in, and will continue to provide us with, a very strong development pipeline.

Our Long-Standing Commitment to Eye Care

        For over 50 years, we have specialized in developing, manufacturing and marketing innovative and high-quality branded products for eye care professionals. Through our long-standing commitment to eye care, we have established close relationships with ophthalmologists, optometrists, opticians and other eye care professionals around the world. We have built and maintained these relationships through sales and marketing efforts, programs at our training facilities in 40 countries, funding ophthalmic research, product development collaborations and humanitarian efforts. For example, during the course of 2003, we hosted over 1,000 eye care professionals at our Fort Worth campus and manufacturing locations throughout the United States for multi-day training sessions covering ophthalmic procedures using our products. We believe that our broad and established relationships give us a competitive advantage in maintaining and growing our business.

Our Global Scale

        We are present in every significant market in the world where ophthalmology is practiced and currently our products are sold in over 180 countries. We have our own local operations in over 70 countries and sales representatives dedicated to the sale of our products in other countries. Our extensive network of local operations differentiates us from our competitors through the level of direct selling activities and technical service support we provide for our customers. We built this network over time through our local surgical training programs and facilities and through substantial investments in emerging markets when the practice of ophthalmology was in its developmental stage. We believe that our global infrastructure enables us to provide a level of customer service and technical support on a global basis unmatched in the ophthalmic industry.

Our Manufacturing Expertise

        We have state-of-the-art pharmaceutical and medical device manufacturing facilities that employ our proprietary technologies. In these facilities, we manufacture the vast majority of our products, with only limited reliance on third-party manufacturers. The broad experience, long tenure and low turnover rate among our workforce allow us to maintain and enhance our manufacturing know-how and expertise. Our manufacturing operations work closely with our research and development and regulatory staff throughout the process of product development to promote a rapid and successful launch once a product is approved. Our knowledge base in manufacturing, state-of-the-art facilities and capacity planning enable us to handle increased levels of product demand and product complexity, while controlling manufacturing costs.

Our Experienced Management Team and Workforce

        The long and diverse experience of our management team in the ophthalmic industry allows them to understand our business and add value to our operations. As a result, the long industry experience of our senior executives and managers and their strong relationships with eye care professionals, academic researchers and regulators are important to our business and differentiate us from other companies in the ophthalmic industry.

        We also benefit from an experienced multinational and multidisciplinary workforce of approximately 11,900 employees, many of whom have been with us for over two decades. The long tenure of our staff represents a competitive advantage because of their knowledge of our industry, familiarity with our customers and understanding of the development, manufacture and sale of our products. Since individuals at many levels of our organization interact with important customers, researchers and regulators, the experience of our personnel forms an integral part of the relationship-building that is important to the effective conduct of our business.

Our Strategy

Build on Our Leadership Positions in Attractive Markets

        We build on the proven quality of our products and their leadership positions across a broad range of product categories to increase sales in established markets and grow our market share, particularly in attractive segments of the ophthalmic market, such as the treatment of glaucoma and cataracts. This strategy is implemented by using market-leading products such as our Infiniti® and LEGACY® phacoemulsification machines and AcrySof® intraocular lenses to inform potential customers about related products, including viscoelastics and related pharmaceutical products. We also intend to continue to rely on our leading products and existing infrastructure in markets as a base to launch new products and drive sales of our existing products.

Continue to Make Significant Investments in Research and Development

        Research and development is fundamental to our long term growth and profitability. We will target areas we believe present new and attractive growth opportunities, including age-related macular degeneration and other retinal disorders. We will continue to focus our efforts on introducing the next generation of our products, with a particular emphasis on the replacement of products reaching the end of their product life cycle. We will also continue to license compounds from other pharmaceutical companies that have potential ophthalmic uses as part of our research and development efforts.

Grow Our Sales in Emerging Markets

        Our strategy is to accelerate the adoption of medically advanced technologies in emerging markets through our global scale and ophthalmic expertise. The adoption of these technologies not only benefits local populations but should also increase the size of the global market for our products. We seek to increase our sales in emerging markets by capitalizing on our long-standing tradition of setting up in-country infrastructure, including training programs and facilities, local sales and marketing organizations and technical service and support teams. We currently have permanent surgical training facilities in 40 countries around the world on six continents. These facilities introduce ophthalmologists to our surgical equipment and cataract products through hands-on training in surgical techniques while exposing them to leading ophthalmologists. In our experience, this infrastructure has led to increased sales of our complete product offering and helped establish relationships that have resulted in faster approval times for our products. Furthermore, our local sales forces build on the relationships begun in our training programs.

Capitalize on Sales Forces Across Product Categories

        Our strategy is to dedicate expert and focused sales forces to the specialized needs of our customers. Our selling efforts are organized around pharmaceutical, surgical and consumer eye care products, and we customize these efforts to the medical practice needs of each customer. We organize our sales teams to ensure appropriate reach and frequency of promotion to all customer channels for our product portfolio. We encourage our sales representatives to go beyond traditional selling efforts and to provide our customers with access to clinical education programs, clinical studies, technical service assistance and practice management feedback. We educate our specialized sales forces to recognize cross-selling opportunities for key products from other product categories and involve the appropriate sales representatives to market these products.

Launch Products Globally

        We intend to use our extensive regulatory capabilities, with personnel in 40 countries, to accelerate the approval and launch of new products in key countries around the world. We coordinate the introduction of new products under the ALCON® brand and, where possible, globally brand our products to promote better recognition and broad customer acceptance. Our strategy enables us to benefit more quickly from sales outside of the United States and realize a faster return on our research and development investments.

Our Products

        We manage our business through two business segments: Alcon United States and Alcon International. Our portfolio spans three key ophthalmic categories: pharmaceutical, surgical and consumer eye care products. See notes 9 and 10 to the consolidated financial statements for a three year history of our sales by category and segment.

Our Pharmaceutical Products

        We are a global leader in ophthalmic pharmaceuticals. We develop, manufacture and market a broad offering of prescription ophthalmic pharmaceutical products.

        The following table lists our principal pharmaceutical products:

Glaucoma	Ocular Anti-Infectives	Ocular Combination	Ocular Allergy	Generics	Otic Combination
Travatan®	Ciloxan®	TobraDex®	Patanol®	Timolol GFS	Cipro HC Otic (1)
Betoptic S®	Tobrex®	Maxitrol®	Opatanol®	Pred Acetate	Ciprodex (1)
Azopt®	Vigamox®		Emadine®	Brimonidine
			Alomide®

(1) Cipro and Ciprodex are registered trademarks of Bayer AG, licensed to Alcon by Bayer AG.

      Glaucoma Treatment

        We offer a complete line of products to treat glaucoma. In 2003, sales of our glaucoma products were $432.4 million, or 33% of our total pharmaceutical sales.

        In April 2001, we launched Travatan®, our entry into the prostaglandin analogue class of glaucoma treatments, in the United States. Prostaglandin analogues are the newest and most effective class of compounds currently available to reduce intraocular pressure (“IOP”), the primary characteristic of glaucoma. Travatan® contains the most potent prostaglandin analogue available today. We have launched Travatan® in more than 70 countries in addition to the United States. In 2003, we expanded our indication in the European Union to include the use of Travatan® as a first-line therapy.

        In addition to Travatan®, we offer a complete line of glaucoma products, including Azopt® ophthalmic suspension and Betoptic S®, both of which utilize other classes of compounds. Azopt®, a carbonic anhydrase inhibitor, has shown to be an excellent adjunct therapy when used with other glaucoma therapies, including prostaglandin analogues, to control IOP in difficult cases. In 2003 Azopt® global sales totaled $ 92.7 million. Azopt® was approved and launched in Japan in December 2002 and has increased in market share during 2003. Betoptic S®, a beta-blocker, also was approved for sale in Japan during 2002. These products are important to our glaucoma franchise and currently make up a majority of our glaucoma sales. We expect these glaucoma products to continue to contribute to our sales.

      Anti-infectives, Anti-inflammatories and Combination Therapies

        We currently manufacture and market a broad range of drugs to treat bacterial, viral and fungal infections of the eye and to control ocular inflammation. In 2003, combined sales of our ocular anti-infectives, ocular anti-inflammatories and combination therapies were $517.9 million, or 39.5% of our total pharmaceutical sales.

        Our combination ocular anti-infective/anti-inflammatory product, TobraDex®, is convenient and cost-effective because it combines a broad-spectrum antibiotic with a proven anti-inflammatory. TobraDex® is currently the only branded combination product of this type in the U.S. market without a generic equivalent. We currently sell TobraDex® in more than 80 countries.

        Our leading ocular anti-infective product is Ciloxan®, a topical ophthalmic solution utilizing ciprofloxacin that is effective against a broad spectrum of bacteria, including strains resistant to more than one antibiotic. Ciloxan® is offered in both ointment and solution form, providing options for treating ocular infection in a variety of patients. We currently sell Ciloxan® in more than 90 countries. The patents for Ciloxan® have expired in virtually all of the countries where it is marketed; the U.S. patent will expire in June 2004.

        In April 2003, Alcon launched Vigamox™ ophthalmic solution in the U.S. for the treatment of bacterial conjunctivitis. Vigamox™ has quickly become one of the leading topical antibiotics in the U.S. due to its broad spectrum, ability to eradicate resistant bacteria, its ability to penetrate the surface of the eye and its “three times a day” dosing. Over the next two years, we expect Vigamox™ to become our leading ocular antibiotic and we plan to introduce Vigamox™ in key international markets.

        We also market combination anti-infective/anti-inflammatory products for ear infections. In 1998, we licensed Cipro HC Otic drops to treat otitis externa, commonly known as swimmer’s ear. Sales of Cipro HC Otic were $92.5 million in 2003 and $85.8 million in 2002, and Cipro HC Otic currently is marketed in over 30 countries. Sales of this product are seasonal, with the majority of prescriptions written during the summer months.

        In 2003 Alcon strengthened its otic portfolio with the introduction of Ciprodex otic suspension for the treatment of otitis media in the presence of tympanostomy tubes (“AOMT”) and of otitis externa. The AOMT indication allows Alcon to compete in the market for patients who have middle ear infections and ear tubes. Clinical trials for Ciprodex otic showed higher cure rates versus market-leading products. Sales of Ciprodex otic were $18.5 million in 2003.

      Allergy

        We currently market and manufacture products for the treatment of ocular allergies. In 2003, sales of our ocular allergy pharmaceutical products were $276.6 million, or 21.1% of our total pharmaceutical sales. The allergy market is, by its very nature, seasonal, peaking in the spring and again, but to a lesser extent, in the fall.

        Patanol® ophthalmic solution was the first twice-daily ocular allergy product with a dual-action active ingredient, which acts as both an antihistamine and a mast-cell stabilizer. When we introduced Patanol® in 1997, we estimated the total topical ocular allergy market to be less than $100 million. Due in large part to the effectiveness of this drug, our related marketing efforts to physicians and direct-to-consumer advertising, the methods for treating ocular allergy have been expanded to include topical eye drops. This evolution in treatment methods has resulted in sales of topical ocular allergy products in the United States increasing to more than $300 million in 2003. We have launched, in 2003, a European version of Patanol®, under the name Opatanol® ophthalmic solution, and we also are seeking approval of Patanol® in Japan. We currently sell Patanol® in more than 50 countries.

      Generic Pharmaceuticals

        We established Falcon Pharmaceuticals in 1994 to manufacture and market generic ophthalmic pharmaceutical products in the United States. Falcon’s sales in 2003 were $93.2 million, or 7.1% of our total global pharmaceutical sales.

        Falcon’s main product is Timolol GFS, a patented gel forming solution used to treat glaucoma. Timolol GFS is currently the sole generic pharmaceutical approved by the FDA as a therapeutically equivalent substitute for Merck’s Timoptic-XE® at the pharmacy. In 2003, Timolol GFS accounted for over 87% of the U.S. prescriptions written for gel formulated timolol. We expect Timolol GFS’s status as the sole generic substitute for Timoptic-XE® to last until 2006, when Merck’s patent protection expires. Falcon currently manufactures and markets 27 brands of generic pharmaceutical products. Falcon’s other principal generic products include Pred Acetate 1% (which is a steroid used for the treatment of inflammation of the eye), Timolol Solution (for the treatment of glaucoma), Trifluridine (used to treat virus infections of the eye), Brimonidine 0.2% (introduced in 2003 for the treatment of glaucoma), and Neomycin and Polymyxin B Sulfates and Hydrocortisone otic and ophthalmic suspensions (sterile antibacterial and anti-inflammatory combination products for the treatment of bacterial infections in the ear and the eye, respectively).

      Product Development and Registrations

        We are developing new products to treat a variety of ophthalmic diseases. In glaucoma, we have filed a U.S. New Drug Application (“NDA”) in the fourth quarter of 2003 for Travatan®/timolol ophthalmic solution, a prostaglandin analogue-beta blocker combination therapy, and are continuing Phase III clinical trials in the U.S. and Europe to complete our global development. We are in Phase III clinical trials for brimonidine 0.15% preserved with POLYQUAD® (polyquaternium-1) for the treatment of glaucoma.

        Age-related Macular Degeneration (“AMD”) frequently causes rapid loss of vision and is the leading cause of blindness in the U.S., Europe and Japan in people over fifty years of age. The causes of AMD are currently unknown, and no cure has been discovered, although certain laser treatments and other procedures exist. The expected development of more effective AMD treatments during the next three years is anticipated to expand the market for AMD treatments into a multi-billion dollar global market. Today, the AMD market is largely undeveloped because of limited knowledge and available treatments.

        We have a new product in development for AMD treatment. RETAANE™ 15 mg anecortave acetate for depot suspension is in Phase III clinical trials for the treatment of the “wet” form of AMD. In 2004, Phase III studies on a second indication will be initiated, directed toward arresting the progression of the “dry” form of AMD in patients who are at risk to convert to “wet” AMD. RETAANE™ Depot development has also been initiated in Japan.

        During 2003, we reviewed our development plans for combination anti-infective/anti-inflammatory eye drops to treat eye infections and control inflammation. Based on this review, we have changed our focus from a product that combines ciprofloxacin and dexamethasone to a product that combines moxifloxacin and dexamethasone. Because we are at an earlier stage of development with the moxifloxacin and dexamethasone combination, we now are projecting a 2006 or later approval of a combination product in this area. Previously we had expected approval of the ciprofloxacin and dexamethasone combination product in late 2005.

        We are currently developing Nepafenac, a proprietary molecule, for control of post-surgical inflammation. Phase II/III studies have already demonstrated efficacy in the treatment of this indication. An NDA is projected to be filed in the latter part of 2004.

        In our allergy group, we have filed for U.S. approval on a Patanol® formulation that requires only once-a-day dosing. We also are developing Patanase®, a unique nasal formulation for the treatment of allergic rhinitis. An NDA for Patanase® is targeted for the second half of 2004.

        In another pharmaceutical category, we are conducting Phase III clinical trials on 15(S)-HETE, a new potential prescription treatment for the discomfort and irritation of dry eye syndrome. We expect to complete these studies in the first half of 2004.

        The following table includes additional detail about each of these products in development, including their expected approval date in the U.S.

Name	Condition	Expected Approval Date	Status
Travatan®/Timolol,	Glaucoma	2005	Filed
new combination therapy
Brimonidine 0.15% with	Glaucoma	2005	Phase III
POLYQUAD®
RETAANE™ 15 mg Depot,	Wet AMD	2005	Phase III
anecortave acetate
Moxifloxacin/Dexamethasone	Anti-infective/ Anti-	(1)	Pre-clinical
	inflammatory
Nepafenac	Anti-inflammatory	(1)	Phase III
Patanol® once-a-day	Allergy	2004	Filed
Patanase®, nasal antihistamine	Allergy	2005	Phase III
Prescription dry eye product	Dry eye	(1)	Phase III
(15(S) HETE)

(1) We currently expect an approval date in 2006 or later.

      The expected approval dates in the table above reflect those for the United States. We also expect to file for approval of these products in most of the countries where we currently market our products. For pharmaceutical products, these approvals generally are received after U.S. approvals. We maintain a significant regulatory presence in major countries to support the filing process outside the U.S.

Our Surgical Products

     We are the global leader in ophthalmic surgical products and manufacture and market the most comprehensive product offering available today.

The following table lists our principal surgical products:

Cataract	Refractive	Vitreoretinal	General Surgical
Infiniti™ vision system	LADARVision® 4000 laser	Accurus® surgical system	BSS Plus® surgical irrigating solution
Infiniti™ AquaLase® surgical instruments	LADARWave®	Accurus® cassettes and probes
Series 20000® LEGACY® surgical system	CustomCornea®	Grieshaber® microsurgical instruments	Custom Pak® surgical
LEGACY® consumables	Wavefront System	Perfluoron® liquid	procedure packs
AcrySof ® intraoccular lenses		Silikon® 1000 ophthalmic surgical oil	A-OK® surgical knives
Viscoelastic devices
- Viscoat®
- Provisc®
- Duovisc®

      Cataract Surgery

        We support our market leadership position through a comprehensive offering of single-use disposable products. Sales of our products for cataract surgery in 2003 were $1.32 billion, or 83.6% of our total surgical sales. We currently market our products for cataract surgery in substantially all of Alcon’s markets.

        The Infiniti™ vision system, our newest lens removal system, was introduced in May 2003. Based on initial customer interest, we expect the Infiniti™ to maintain our position as worldwide leader in lens removal systems. The Infiniti™ vision system is the world’s first and only tri-modal lens removal surgical instrument. With this single instrument, surgeons now have a choice of three different methods to remove a cataract:

• advanced ultrasound phacoemulsification alone,
• the combination of ultrasound and oscillation provided by the NeoSoniX® handpiece, or
• Alcon’s entirely new AquaLase® liquefaction device that generates pulses of surgical solution to safely break up and remove the natural lens material.

        Our comprehensive line of single-use products for cataract procedures includes the cassettes used in the LEGACY® and Infiniti™ vision systems, a full line of viscoelastics to protect delicate tissues of the eye during the procedure, surgical knives and surgical irrigating solutions.

        Our AcrySof® intraocular lenses are the most widely implanted foldable intraocular lenses in the world. AcrySof® intraocular lenses are made of the first material specially engineered for use in an intraocular lens. This acrylic material is more compatible with the human eye than silicone. In 2003, with the exception of Japan, we globally launched the AcrySof® Natural intraocular lens. The AcrySof® Natural is the first foldable ultraviolet (UV) and blue light-filtering intraocular lens on the market in the U.S. and is specially designed to approximate the light filtration properties of a healthy human lens. The AcrySof® Natural is currently sold in over 50 countries.

        We also had a limited and controlled launch in 2003 of the AcrySof® ReSTOR® intraocular lens in countries other than the U.S. and Japan. This newly developed lens has a unique optical system that incorporates an apodized diffractive, refractive pattern that provides distance, near and intermediate vision for the patient following lens removal surgery, thereby reducing the patient’s need for or dependence on eyeglasses.

      Vitreoretinal Surgery

        Our vitreoretinal surgical product offering is one of the most comprehensive in the industry for surgical procedures for the back of the eye. In 2003, market-leading sales of our products for vitreoretinal surgery were $161.8 million, or 10.2% of our total surgical sales. We currently market our vitreoretinal surgical products in substantially all of the countries in which we sell products.

        The Accurus® surgical system integrates all automated, non-laser surgical functions used in vitreoretinal surgery. Some Accurus® models can also perform phaco procedures for cataract removal. At the end of 2003, we introduced a series of instruments for use in new small gauge (25 gauge) posterior segment surgical procedures. These new offerings will enhance our Accurus® consumable products offerings, along with additional 25 gauge products that we plan to introduce in 2004. We support the leading position of the Accurus® through our full line of vitreoretinal products, including lasers, ultrasound diagnostics and hand-held microsurgical instruments.

      Custom Pak® Surgical Procedure Packs

        To provide convenience, efficiency and superior value for ophthalmic surgeons, we have developed the Custom Pak® surgical procedure pack. We market our Custom Pak® for cataract, refractive and vitreoretinal surgical procedures. Unlike conventional surgical procedure packs, the Custom Pak® allows ophthalmic surgeons and their staff to customize and sequence the products included in the surgical procedure pack. For a single price, our Custom Pak® includes our single-use products required for the procedure, combined with non-Alcon products. We believe that our Custom Pak® allows ophthalmic surgeons to improve their efficiency in the operating room, and this gives us the opportunity to provide access to our single-use products in a value-added package. We estimate that a Custom Pak® was used in a majority of the cataract surgeries performed in the United States in 2003. Our Custom Pak® has been successful in Europe, and we see growth potential in other markets, including Latin America and Japan.

      Refractive Surgery

        We are one of the leaders in the global market for laser refractive surgical products. We entered the laser refractive market with our acquisition of Summit Autonomous, Inc. during 2000. In 2003, sales of our laser refractive products and related technology fees were $70.3 million, or 4.4% of our total surgical sales. We currently market our laser refractive surgical equipment in over 50 countries.

        Our LADARVision® 4000 excimer laser combines the fastest active laser radar eye tracker and a true small-spot laser beam to deliver to surgeons advanced laser technology that they can use to treat their refractive patients.

        Alcon also manufactures and markets the LADARWave® aberrometer, a wave front device which measures refractive errors of the entire optical system. LADARWave® can create and display this information as a three-dimensional map of the cornea. When used in combination with the LADARVision® 4000, physicians can measure and treat visual aberrations that previously went undetected, and provide a customized treatment for each individual patient. The clinical trials we conducted to gain approval of the CustomCornea® system produced better quality of vision for patients than conventional treatment. We received the first FDA approval of customized procedures in late 2002 to correct patients with spherical myopia and have additional FDA filings planned to broaden the range of correction for LADARWave®.

      Product Development

        We currently have products in development in the three primary areas of our surgical markets: cataract, vitreoretinal and refractive surgery.

        We intend to build on our AcrySof® intraocular lenses franchise with several additions. The AcrySof® ReSTOR® lens, a pseudoaccommodative intraocular lens, is targeted for approval in the U.S. in early 2005. We also are developing the AcrySof® ReSTOR® for the Japanese market. We expect U.S. approval of AcrySof® Natural Toric intraocular lens in 2005. We plan to release to the market in 2004 the Acrysert® insertion device, an advancement in the packaging and insertion of intraocular lenses.

        We also are developing the next-generation viscoelastic, optimized for all phases of cataract and/or certain refractive procedures, based on new proprietary polymer ratios. We expect to launch this product in the U.S. in 2005.

        We plan to expand our offerings in the irrigating solutions market with Stableyz™ ophthalmic solution, a next-generation irrigating solution with improved surgical performance and ocular protection based on a proprietary polymer system. The product has already demonstrated improved efficacy (reduced turbulence) in clinical studies.

        In vitreoretinal surgery, we are developing the next-generation vitreoretinal system. We expect that this new system will replace the Accurus® system beyond 2006.

        As a complement to our existing refractive business, Alcon is conducting clinical studies with its Angle-Supported Phakic intraocular lens. Made from the same biocompatible AcrySof® material, this product will offer refractive patients an alternative to the current laser-based offerings. We anticipate that the Angle-Supported Phakic intraocular lens will receive approval in the EU in 2005, followed by FDA approval in the U.S. several years later. Also, Alcon will seek approval for CustomCornea® treatment of hyperopia patients in 2005 for the U.S. and EU markets.

        The following table includes additional details about surgical products in development including their expected approval date in the U.S.

Name	Condition	Expected Approval Date		Status
AcrySof® ReSTOR® lens	Cataract	2005		Advanced development
AcrySof ® Natural Toric lens	Cataract	2005		Advanced development
Acrysert® lens insertion device	Cataract	2004		Filed
New viscoelastic	Cataract	2005		Advanced development
Stableyz™ irrigating solution	Cataract/Vitreoretinal	(1	)	Active development
Next generation vitreoretinal system	Vitreoretinal	(1	)	Early development
AcrySof ® Angle-Supported Phakic lens	Refractive	(1	)	Early development
CustomCornea®, myopia with	Refractive	2004		Filed
astigmatism
(expanded approval)
CustomCornea®, hyperopia	Refractive	2005		Advanced development

(1) We currently expect an approval date in 2006 or later.

     The expected approval dates in the table above reflect those for the United States. We also expect to file for approval of these products in most of the countries where we currently market our products. For surgical products, these approvals are often obtained before U.S. approvals. We maintain a significant regulatory presence in major countries to support the filing process outside the U.S.

Our Consumer Eye Care Products

     We market contact lens care products, artificial tears and ocular vitamins. We currently market our contact lens care and artificial tears products in most of the countries where we sell products. The following table lists our principal products in these areas:

Contact Lens Care	Artificial Tears	Ocular Vitamins
OPTI-FREE® EXPRESS® No Rub™multi-purpose disinfecting solution	Systane® lubricant eye drops	ICAPS® dietary supplements
	Tears Naturale® Forte lubricant eye
OPTI-FREE® multi-purpose solution	drops
OPTI-FREE® SupraClens® liquid	Tears NaturaleFree® lubricant eye
enzyme	drops
CLERZ® Plus lens rewetting drops	Tears Naturale® II lubricant eye
Opti-One® No Rub™ multi-purpose solution	drops with POLYQUAD®
UNIQUE-pH® disinfecting solution	antimicrobial preservative Bion® Tears lubricant eye drops

      Contact Lens Care Products

        Our contact lens care products include disinfecting solutions to destroy harmful microorganisms in and on the surface of contact lenses, cleaners to remove undesirable film and deposits from contact lenses, weekly enzymatic cleaners to remove protein deposits from contact lenses and lens rewetting drops to improve wearing comfort for contact lenses. Sales of our contact lens care products in 2003 were $282.2 million, or 55.2% of our total consumer eye care sales.

        OPTI-FREE® EXPRESS® No Rub™ multi-purpose disinfecting solution, our leading contact lens care product was the first multi-purpose disinfecting solution to obtain FDA approval to make a “no rub” claim. OPTI-FREE® EXPRESS® No Rub™ utilizes a multi-purpose disinfecting solution with high-capacity disinfection and superior protein cleaning benefits, without requiring rubbing of the contact lenses. We introduced this product in 1999 and currently market it in most major markets throughout the world. In 2002, we completed and submitted studies to the FDA that demonstrated superior comfort for OPTI-FREE® EXPRESS® No Rub™, which allowed us to add the claim “Lasting Comfort Formula” to our package. This new claim has been added to our EXPRESS® packages around the world as appropriate approvals are obtained.

        Our line of contact lens care products also includes CLERZ® Plus lens rewetting drops, which moisten contact lenses during wear and are clinically proven to reduce protein build-up, OPTI-FREE® SupraClens® preservative-free active cleaning solution and UNIQUE- pH® multi-purpose solution for hard contact lenses.

      Other Vision Care Products

        We manufacture and market artificial tears to treat dry eye syndrome and vitamins formulated to promote good ocular health. We offer a complete line of products for the dry eye sufferer. In February 2003, we added Systane® lubricating eye drops to our product line in the U.S. and, in 2004, we plan to launch the product in over 20 additional countries. Systane® has a unique “in-the-eye” gelling formula that provides longer-lasting relief of dry-eye symptoms. The bulk of our sales of artificial tears still comes from our Tears Naturale® line of products. Our Bion® Tears contains zinc and bicarbonate and is specially formulated for severe dry eye sufferers.

        We market ICAPS®, Lutein and Zeaxanthin formula, a vitamin specially formulated to promote good ocular health. In its Age Related Eye Disease Study (“AREDS”), the National Eye Institute found that high levels of anti-oxidants and zinc reduce the risk of AMD in patients at risk for developing it. In 2002 we launched ICAPS® AREDS, a formula that includes the anti-oxidants and zinc ingredients referenced in the AREDS study.

      Product Development

        We currently are developing products in the areas of contact lens care and dry eye, including a new disinfectant for contact lenses that we believe will be more comfortable than existing solutions. In the area of dry eye, we are developing both a new preservative system and a single-use, preservative-free formulation for Systane®.

        The following table includes additional detail about each of these products in development.

Name	Condition	Expected Approval Date	Status
New contact lens disinfectant solution	Contact lens care	2005	Early development
Systane® next generation tears	Dry eye	2004	Advanced development
Systane® tears preservative free product	Dry eye	2004	Advanced development
(single use)

        The expected approval dates in the table above reflect those for the United States. We also expect to file for approval of these products in most of the countries where we currently market our products. For consumer eye care products, these approvals generally are received after U.S. approvals. We maintain a significant regulatory presence in major countries to support the filing process outside the U.S.

Sales and Marketing

        We conduct our sales activities through more than 50 local operating entities and 20 representative/branch offices around the world. We have a sales force of over 2,350 sales representatives consisting of approximately 750 sales representatives in the United States, our largest market, and approximately 1,600 sales representatives outside of the United States. We use the broad reach of our local operations to provide technical service to our optometry customers in the United States and optometric fitters outside of the United States. All of our surgical technical service in the United States and a high percentage of that service outside the United States are provided by our service technicians. In countries where we do not have local operations or a scientific office, we use distributors to sell and handle the physical distribution of our products. Outside of the United States, our largest markets by sales are Japan, France, Spain, Germany, Italy, Canada, the United Kingdom, Brazil, Australia and Mexico.

        We organize our selling efforts around pharmaceutical, surgical and consumer eye care products and customize these efforts to the medical practice needs of each customer. We encourage our sales representatives to go beyond traditional selling efforts and to provide our customers with access to clinical education programs, clinical studies, technical service assistance and practice management programs. We educate our specialized sales forces to recognize cross-selling opportunities for key products from other product categories.

        In each of our markets, we rely on our strong relationships with eye care professionals to maintain and expand our market share. We have established several long-standing programs that bring ophthalmic residents, optometrists and other eye care professionals to our Fort Worth campus and other locations for multi-day training sessions and educational seminars. We also sponsor ophthalmic conferences around the world, and we conduct training seminars where leading ophthalmologists discuss the therapeutic attributes of our products and demonstrate surgical techniques using our products. We support these programs by having our sales representatives work closely with our customers and their staffs to better understand their practices and solicit feedback, which is important to our development of new products. We currently have permanent surgical training facilities in 40 countries around the world on six continents. These facilities introduce ophthalmologists to our surgical equipment and cataract products through hands-on training in surgical techniques while exposing them to leading ophthalmologists. Our local sales forces build on the relationships begun in our training programs to advance the sale of our products.

        Most of our global marketing efforts are supported by advertising in trade publications and by sales representatives attending regional and national medical conferences. We reinforce our marketing efforts with targeted and timely promotional materials that our sales force presents to the eye care professional in the office, hospital or surgery center setting. We supplement these marketing efforts through direct mailings to eye care professionals and e-detailing. To coordinate our sales efforts, we have begun using customer relationship management software. Moreover, in the United States and Japan, we use direct-to-consumer advertising to promote selected products.

        While we market all of our products by calling on eye care professionals, our direct customers and distribution methods differ across business lines. Distributors, wholesalers, hospitals, government agencies, large retailers and physicians are the direct customers for our pharmaceutical products. We sell our surgical products directly to hospitals and ambulatory surgical centers. In the United States, over 80% of our contact lens care products are sold to large grocery, drug and general merchandise retailers. Outside of the United States, we sell most of our consumer eye care products directly to retailers and optical chains, while a smaller amount is sold to distributors for resale directly to smaller retailers and eye care professionals. No single customer accounted for 10% or more of our sales in 2003.

        As a result of changes in health-care economics, managed care organizations have become the largest payors for health care services in the United States. In an effort to control prescription drug costs, over 95% of managed care organizations use a formulary. We have a dedicated managed care sales team that actively seeks to get our products on these formularies and to improve the position of our products once they are on a formulary.

Research and Development

        We have the largest research and development commitment of any eye care company worldwide. Our research and development organization consists of approximately 1,300 employees, including more than 280 individuals who are either M.D.s, doctors of optometry or Ph.D.s. Our researchers have extensive experience in the field of ophthalmology and frequently have academic or practitioner backgrounds to complement their commercial experience. We organize our research teams around our pharmaceutical, surgical and consumer eye care products. Candidates for pharmaceutical and contact lens care product development originate from our internal research, from our extensive relationships with academic institutions and from our licensing of molecules from other companies. Our surgical design concepts are internally developed by staff engineers and scientists who, in addition to their own research, gather ideas from ophthalmic surgeons and clinicians in the involved fields. Our research and development organization has been designed to drive global registration of products through a focused central research facility in Fort Worth, Texas, combined with regionally based clinical and regulatory personnel in 40 countries outside of the United States.

        We have invested approximately $1.4 billion over the last five years (including $350 million in 2003, $323 million in 2002 and $290 million in 2001) to carry out our strategy of developing products primarily from our own research and development activities.

        We enter into license agreements in the ordinary course of our business with respect to compounds used in our pharmaceutical products. We have a number of agreements with pharmaceutical companies that allow us to screen compounds for potential uses in the eye. We also have a small number of contracts with companies that give us the right to develop ophthalmic products from their compounds.

        Our research and development department maintains an extensive network of relationships with scientists working in university laboratories and with leading ophthalmologists, inventors and investigators in the pharmaceutical and surgical products fields. The principal purpose of these collaborative scientific interactions is to take advantage of leading-edge research from academic investigators and recognized surgeons to complement our internal technical capabilities. We also support our direct academic relationships with grants from the Alcon Research Institute, which we fund. These grants recognize research undertaken in the general area of ophthalmology and are awarded by an independent board of ophthalmologists and academic researchers.

Manufacturing and Supplies

Manufacturing

        We generally organize our manufacturing facilities along product categories, with most plants being primarily dedicated to the manufacture of either surgical equipment and surgical medical devices or pharmaceutical and contact lens care products. Our functional division of plants reflects the unique differences in regulatory requirements governing the production of surgical medical devices and pharmaceuticals, as well as the different technical skills required of employees in these two manufacturing environments. All of our manufacturing plants in the United States and Europe are ISO 9001 certified.

        We employ cost reduction programs, known as continuous improvement programs, involving activities such as cycle-time reductions, efficiency improvements, automation, plant consolidations and material negotiation programs as a means to reduce manufacturing and component costs. To comply with good manufacturing practices and to improve the skills of our employees, we train our direct labor manufacturing staff throughout the year. Our professional employees are trained in various aspects of management, regulatory and technical issues through a combination of in-house seminars, local university classes and trade meetings.

        As of December 31, 2003, we employed approximately 2,000 people to manufacture our pharmaceutical and contact lens care products at seven facilities in the United States, Belgium, France, Spain, Brazil and Mexico. As of December 31, 2003, we employed approximately 2,100 people to manufacture surgical equipment and other surgical medical devices at nine facilities in the United States, Belgium, Switzerland, Ireland and China. Currently, we manufacture substantially all of our pharmaceutical, contact lens care and surgical products internally and rely on third-party manufacturers for only a small number of products.

        Due to the complexity of certain manufacturing technologies and the costs of constructing and maintaining duplicate facilities, a number of our key products are manufactured at only one of our facilities. Some of these key products include:

Products	Facility
U.S. pharmaceutical products	Fort Worth, Texas
Intraocular lenses (l)	Huntington, West Virginia
Provisc®, Viscoat®, Duovisc® viscoelastics	Puurs, Belgium
OPTI-FREE® EXPRESS® No Rub™	Fort Worth, Texas
Accurus®/LEGACY®/Infiniti™	Irvine, California
LADARVision® LADARWave® (1)	Orlando, Florida

(l) We are in the process of converting the Cork, Ireland, manufacturing facility from its refractive equipment production to production of intraocular lenses to provide additional capacity.

        In addition, Cipro HC Otic is produced for us by Bayer Aktiengesellschaft, at a single location, pursuant to contracts in the ordinary course of business. We have begun to move production of this product to Alcon’s Barcelona, Spain, manufacturing facility.

Supplies

        The active ingredients used in our pharmaceutical and consumer eye care products are sourced from facilities approved by the FDA or by other applicable health regulatory authorities. Because of the proprietary nature and complexity of the production of these active ingredients, a number of them are only available from a single FDA-approved source. When supplies are single-sourced, we try to maintain a sufficient inventory consistent with prudent practice and production lead-times. The majority of active chemicals and biological raw materials and selected inactive chemicals are acquired pursuant to long term supply contracts. The sourcing of components used in our surgical products differs widely due to the breadth and variety of products. Inventory levels for components used in the production of our surgical products are established based on delivery times and other supply chain factors to ensure sufficient inventory at all times. The prices of our supplies are generally not volatile.

        The following table identifies certain single-source suppliers of raw materials acquired pursuant to contracts entered into in the ordinary course of business and the Alcon products that contains these raw materials:

Supplier Name	Raw Material	Alcon Product
Dow Chemical Co.	travoprost	Travatan®
Bayer Aktiengesellschaft	ciprofloxacin	Ciloxan®, Cipro HC Otic
	moxifloxacin	Vigamox™
Kyowa Hakko Kogyo Co. Ltd.	olopatadine	Patanol®, Opatanol®
Solutia, Inc.	myristinamide	OPTI-FREE® EXPRESS®
Plantex USA, Inc.	timolol	Timolol GFS
Genzyme Corporation	hyaluronate (high molecular weight)	Provisc®
Lifecore Biomedical, Inc.	hyaluronate (low molecular weight)	Viscoat®
Biogal Pharmaceutical Works LT	Tobramycin	Tobrex® (all formats),
		Tobradex® (all formats)
Sanofi Winthrop	Betaxolol	Betoptic®, Betaxolol
		(Falcon)
Napp Technologies LLC	Fluorescein	Fluorescite® intravenous
		solution
Pfizer Centre Source	Neomycin Sulphate	Maxitrol® (all formats),
Alpharma Inc.	Polymixin B	Maxitrol® (ointment only)

Competition

        The ophthalmic industry is highly competitive and subject to rapid technological change and evolving industry requirements and standards. Companies within our industry compete on technological leadership and innovation, quality and efficacy of their products, relationships with eye care professionals and health care providers, breadth and depth of product offering and pricing. The presence of these factors varies across our product offerings. We provide a broad line of proprietary eye care products and compete in all product categories in the ophthalmic market. Even if our principal competitors do not have a comparable range of products, they can, and often do, form strategic alliances and enter into co-marketing agreements to achieve comparable coverage of the ophthalmic market.

Pharmaceutical

        Competition in the ophthalmic pharmaceutical market is characterized by category leadership of products with superior technology, including increases in clinical effectiveness (e.g., new drug delivery systems, formulations and combination products), the development of therapies for previously untreated conditions (e.g., AMD) and competition based on price from lower-priced generic pharmaceuticals.

Our main competitors in the pharmaceutical market are Allergan, Inc., Bausch & Lomb Incorporated, Novartis AG, Pfizer, Inc., Merck & Co., Inc., Daiichi Pharmaceutical Co., Ltd., and Santen Pharmaceutical Co., Ltd.

Surgical

        Competition in the ophthalmic surgical market is characterized by category leadership with products that provide superior technology and performance. Innovation, performance and long term relationships are also key factors in this competitive environment. Surgeons rely on the quality, convenience, value and efficiency of a product and the availability and quality of technical service. While we compete throughout the field of ophthalmic surgery, our principal competitors vary somewhat in each area. We compete with Bausch & Lomb across most of the ophthalmic surgical market. Advanced Medical Optics, Inc. (“AMO”), and Pfizer, Inc. each compete in limited segments of the surgical market. In addition to Bausch & Lomb, our principal competitors in laser refractive surgical equipment are VISX, Incorporated, Nidek Co., Ltd. and Lumenis Ltd.

Consumer Eye Care Products

        The consumer eye care business is characterized by competition for market share in a maturing market through the introduction of products that provide superior technology or effectiveness. Recommendations from eye care professionals and customer brand loyalty as well as our product quality and price are key factors in maintaining market share in these products. Our principal competitors in contact lens care products are Bausch & Lomb, AMO and Novartis. We compete with Allergan, Pfizer and Novartis in artificial tears products and Bausch & Lomb in ocular vitamins. All consumer eye care markets include significant competition from private label store brands, which generally are less costly to the consumer.

Intellectual Property

        We strive to protect our investment in the research, development, manufacturing and marketing of our products through the use of patents, trademarks, copyrights, trade secrets and other intellectual property. We own or have rights to a number of patents, trademarks, copyrights, trade secrets and other intellectual property directly related and important to our businesses. As of January 1, 2004, we owned 984 United States patents and pending United States patent applications and approximately 3,800 corresponding patents and patent applications outside of the United States.

        We believe that our patents are important to our business but that no single patent, or group of related patents, currently is of material importance in relation to our business as a whole. Patents for individual products extend for varying periods of time according to the date a patent application is filed or a patent is granted and the term of patent protection available in the jurisdiction granting the patent. The scope of protection provided by a patent can vary significantly from country to country. Our strategy is to develop patent portfolios for our research and development projects in order to obtain market exclusivity for our products in our major markets. Although the expiration of a patent for a product normally results in the loss of market exclusivity, we may continue to derive commercial benefits from these products. We routinely monitor the activities of our competitors and other third parties with respect to their use of intellectual property. If we believe our patents have been infringed, we generally file patent infringement suits with the appropriate courts. We aggressively assert the patents we hold relating to our lines of business. We vigorously contest claims of infringement brought by other patent holders against us.

        In addition to our patents and pending patent applications in the United States and selected non-U.S. markets, we use proprietary know-how and trade secrets in our businesses. In some instances, we also obtain from third parties licenses of the right to use intellectual property, principally patents, which are important to our businesses.

        Worldwide, all of our major products are sold under trademarks that we consider in the aggregate to be important to our businesses as a whole. We consider trademark protection to be particularly important in the protection of our investment in the sales and marketing of our pharmaceutical and contact lens care and general eye care products. The scope and duration of trademark protection varies widely throughout the world. In some countries, trademark protection continues only as long as the mark is used. Other countries require registration of trademarks and the payment of registration fees. Trademark registrations are generally for fixed but renewable terms.

        We rely on copyright protection in various jurisdictions to protect the exclusivity of the code for the software used in our surgical equipment. The scope of copyright protection for computer software varies throughout the world, although it is generally for a fixed term which begins on the date of copyright registration.

Philanthropic Efforts

        We have a long-standing commitment to bringing ophthalmic products to those who would not otherwise have access to them. Our Medical Missions Program supported more than 980 humanitarian efforts in 2003 involving over 2,900 volunteer eye care professionals in 87 countries. Using products that we provided without charge, these eye care professionals performed over 22,000 cataract procedures in 2003. We also conduct a glaucoma assistance program in the United States, which provided Alcon glaucoma products to more than 31,000 patients in 2003.

Government Regulation

Overview

        We are subject to comprehensive government controls governing the research, design, clinical and non-clinical development, manufacturing, labeling, advertising, promotion, safety and other reporting, storage, distribution, import, export and marketing of our products in essentially all countries of the world. National health regulatory agencies generally require pre-approval of pharmaceuticals and medical devices prior to their entry into that country’s marketplace. State and local laws also apply to our activities. This section summarizes the applicable regulations in the United States, European Union and Japan. Please also refer to “Risk Factors — Risks Related to Our Business and Industry — We are subject to extensive government regulation that increases our costs and could prevent us from selling our products.”

Pharmaceutical Development and Registration Process in the United States

        The pharmaceutical research, development and registration process in the United States is typically intensive, uncertain, lengthy and rigorous and can generally take several years, or more, depending on the product under consideration. During pre-clinical testing, studies are conducted to demonstrate the activity of the compound against the targeted disease in animal models and to evaluate the effects of the new drug candidate on other organ systems in order to assess its potential therapeutic effectiveness relative to its safety. This testing includes studies on the chemical and physical stability of candidate formulations, as well as biological testing of the compound. Pre-clinical testing is subject to good laboratory practice requirements. Failure to follow these requirements can invalidate the data, among other things.

        In order for human clinical studies of a new drug to commence in the United States, an Investigational New Drug Application, or IND, must be filed with the FDA; similar notifications are required in other countries. Informed consent must also be obtained from study participants. In general, studies may begin in the United States without specific approval by the FDA after a 30-day review period has passed. However, the FDA may prevent studies from moving forward, and may suspend or terminate studies once initiated. Studies are also subject to review by independent institutional review boards, or IRBs, responsible for overseeing studies at particular sites and protecting human research study subjects. An IRB may prevent a study from beginning or suspend or terminate a study once initiated.

        Clinical testing generally follows a prescribed format that involves initial exposure to normal, non-diseased subjects in Phase I clinical trials, followed by exposure of patients with disease to the new drug candidate in larger Phase II and Phase III clinical trials. United States law requires that studies conducted to support approval of a new drug be “adequate and well-controlled” as a way to control possible bias. This generally means that a control, either a placebo or a drug already approved in the market for the same disease, is used as a reference. Studies must also be conducted and monitored in accordance with good clinical practice and other requirements.

        Following the completion of clinical trials, we thoroughly analyze the data to determine if the clinical trials successfully demonstrate safety and efficacy. If they do, in the case of a drug product, a New Drug Application, or NDA, is filed with the FDA along with proposed labeling for the product and information about the manufacturing processes and facilities that will be used to ensure product quality. Each NDA submission requires a substantial user fee payment for which the FDA has committed generally to review and make a decision concerning approval within 10 months, and of a new “priority” drug within 6 months. However, final FDA action on the NDA can take substantially longer and also may involve review and recommendations by an independent FDA advisory committee. The FDA may conduct a pre-approval inspection of our manufacturing facility to assess conformance to the current good manufacturing practice requirements and may also inspect sites of clinical investigators involved in our clinical development program to ensure their conformance to good clinical practices. The FDA may not approve an NDA, or may require revisions to the product labeling, require that additional studies be conducted prior to or as a condition of approval, or impose other limitations or conditions on product distribution, including, for example, adoption of a special risk management plan.

        A different but similar application is used for biological products, and generally equivalent FDA review and approval procedures and requirements apply.

        Generic drugs are approved through a different abbreviated process. Generally an abbreviated new drug application, or ANDA, is filed with the FDA. The ANDA must seek approval of a drug product that has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use (labeling) as a so-called “reference listed drug” approved under an NDA with full supporting data to establish safety and effectiveness. Only limited exceptions exist to this ANDA sameness requirement, including certain limited variations approved by the FDA through a special petition process. The ANDA may also contain clinical data to demonstrate that the product covered by the ANDA is absorbed in the body at the same rate and to the same extent as the reference listed drug. This is known as bioequivalence. In addition, the ANDA must contain information regarding the manufacturing processes and facilities that will be used to ensure product quality, and must contain certifications to patents listed with the FDA for the reference listed drug.

        Special procedures apply when an ANDA contains certifications stating that a listed patent is invalid or not infringed, and if the owner of the patent or the NDA for the reference listed drug brings a patent infringement suit within a specified time, an automatic stay bars FDA approval of the ANDA for a specified period of time pending resolution of the suit or other action by the court. The first complete ANDA filed with the FDA that contains a certification challenging the patents listed with the FDA for a reference listed drug is also eligible to receive 180 days of exclusivity during which the FDA is prohibited from approving subsequent ANDAs. Certain aspects of these patent and related provisions have been the subject of recent changes by legislation and by FDA rulemaking. Among other things, these changes in the law affect what patents an NDA holder may submit to the FDA for listing, prevent the triggering of multiple automatic stays on FDA approval of an ANDA following initiation of patent infringement suits, require ANDA applicants with 180-day exclusivity to bring a product to market within certain prescribed deadlines or forfeit the exclusivity, and clarify or change other aspects of the operation of 180-day exclusivity. The impact of all of these new provisions is not entirely clear at this point, given the newness and complexity of the changes in law.

        As a general matter, the amount of testing and effort that is required to prepare and submit an ANDA is substantially less than that required for an NDA. Conducting the necessary formulation development work, performing the bioequivalence testing, and preparing the ANDA typically takes one to three years, although the time can be shorter or longer. FDA review and approval can take two years, although this time can also be shorter or longer.

        In addition to the NDA and ANDA procedures, there is an additional approval mechanism known as a 505(b)(2) application. A 505(b)(2) application is a form of an NDA where the applicant does not have a right to reference some of the data being relied upon for approval. Under current regulations, 505(b)(2) applications can be used where the applicant is relying in part on published literature or on findings of safety or effectiveness in another company’s NDA. This might be done, for example, where the applicant is seeking approval for a new use for a drug that has already been approved for a different use or for a different formulation of the same drug that is already approved for the same use. The use of 505(b)(2) applications is the subject of an ongoing legal challenge, and it is thus not clear what the permitted use of a 505(b)(2) application might be in the future.

Medical Device Development and Registration Process in the United States

        Medical devices, including intraocular lenses and surgical equipment used in cataract procedures and laser refractive surgery, are also subject to regulation in the United States by the FDA. Approval to market new device products is, in general, achieved by a process not unlike that for new pharmaceuticals, requiring submission of extensive pre-clinical and clinical evaluations in a new product application. The process of developing data sufficient to support a regulatory filing on a new device is costly and generally requires at least several years for completion.

        In the United States, medical devices are classified by the FDA as Class I, Class II or Class III based upon the level of risk presented by the device. Class I devices present the least risk and are generally exempt from the requirement of pre-market review. Certain Class II devices are also exempt from pre-market review. Most Class II devices and certain Class III devices are marketed after submission of a pre-market notification under a process which is known as a 510(k) notification procedure. The pre-market notification must demonstrate that the proposed device is “substantially equivalent” in intended use and in safety and effectiveness to a legally marketed “predicate device.” Class III devices and devices not substantially equivalent to a predicate device are subject to the most stringent regulatory review and cannot be marketed for commercial sale in the United States until the FDA grants a pre-market approval, a PMA, for the device.

        A PMA must contain proposed directions for use for the device, information about the manufacturing processes and facilities, clinical data demonstrating that the device is safe and effective for its intended use, and other information required by FDA. The PMA filing is subject to a substantial user fee payment. Clinical trials for a medical device must be conducted in accordance with FDA requirements, including informed consent from study participants, review by an IRB, and the submission of an investigational device exemption (IDE) application for significant risk devices.

        If the FDA’s evaluation of a PMA application is favorable, the FDA typically issues an “approvable letter” requiring the applicant’s agreement to comply with specific conditions, to supply specific additional data or information or to finalize the labeling, in order to secure final approval of the PMA application. Once the conditions contained in the approvable letter are satisfied, the FDA will issue a PMA order for the approved indications, which can be more limited than those originally sought by the manufacturer. The PMA order can include post-approval conditions that the FDA believes are necessary to ensure the safety and effectiveness of the device including, among other things, post-market studies or restrictions on labeling, promotion, sale and distribution. Products manufactured and distributed pursuant to a PMA are subject to extensive, ongoing regulation by the FDA. The FDA review of a PMA application generally takes one to two years from the date the application is accepted for filing but may take significantly longer.

        FDA User Fees, similar to those established for new drug products, were established for medical device products in 2003. Although User Fees are being collected by FDA at this time, FDA performance targets are proposed to begin in 2005.

Pharmaceutical and Medical Device Registration Outside the United States

      European Union

        In the European Union, our products are subject to extensive regulatory requirements. As in the United States, the marketing of medicinal products has for many years been subject to the granting of marketing authorizations by regulatory agencies. Particular emphasis is also being placed on more sophisticated and faster procedures for reporting of adverse events to the competent authorities.

        In common with the United States, the various phases of pre-clinical and clinical research are subject to significant regulatory controls. The regulatory controls on clinical research are currently undergoing a harmonization process following the adoption of the Clinical Trials Directive 2001/20/EC. Compliance with the national implementations of this Directive will be mandatory from May 1, 2004. Until that date, variations in the member state regimes will exist. However, all member states currently require institutional review board approval of interventional clinical trials. With the exception of United Kingdom Phase 1 studies in healthy volunteers, all clinical trials require either prior governmental notification or approval. This exemption for Phase 1 research will cease to exist from May 1, 2004, although the United Kingdom will operate a simplified pre-approval system for such studies. Most European regulators also require the submission of adverse event reports during a study and a copy of the final study report.

        In the European Union, approval of new medicinal products can be obtained only through one of two processes:

Mutual recognition procedure. An applicant submits an application in one European Union member state, known as the Reference Member State. Once the Reference Member State has granted the marketing authorization, the applicant may choose to submit applications in other concerned member states, requesting them to mutually recognize the marketing authorization already granted. Under this mutual recognition process, authorities in other concerned member states have 55 days to raise objections, which must then be resolved by discussions among the concerned member states, the Reference Member State and the applicant within 90 days of the commencement of the mutual recognition procedure. If any disagreement remains, all considerations by authorities in the concerned member states are suspended and the disagreement is resolved through an arbitration process. The mutual recognition process results in separate national marketing authorizations in the Reference Member State and each concerned member state.

Centralized procedure. This procedure is currently mandatory for products developed by means of a biotechnological process and optional for new active substances and other “innovative medicinal products with novel characteristics.” Under this procedure, an application is submitted to the European Agency for the Evaluation of Medical Products. Two European Union member states are appointed to conduct an initial evaluation of each application. These countries each prepare an assessment report, which are then used as the basis of a scientific opinion of the Committee on Proprietary Medical Products. If this opinion is favorable, it is sent to the European Commission which drafts a decision. After consulting with the member states, the European Commission adopts a decision and grants a marketing authorization, which is valid throughout the European Union and confers the same rights and obligations in each of the member states as a marketing authorization granted by that member state.

        The European Union is currently expanding its membership, with a number of eastern European countries expected to join over the coming years. Several other European countries outside of the European Union, particularly those intending to accede to the European Union, accept European Union review and approval as a basis for their own national approval.

        The European Union regulatory regime for most medical devices became mandatory in June 1998. Under this regime, a medical device may be placed on the market within the European Union if it conforms with certain “essential requirements.” The most fundamental essential requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others. In addition, the device must achieve the performances intended by the manufacturer and be designed, manufactured and packaged in a suitable manner. To assist manufacturers in satisfying the essential requirements, the European Commission has requested the preparation of standards applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical equipment, and product standards for certain types of medical devices. There are also harmonized quality standards relating to design and manufacture. While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter. Compliance with a standard developed to implement an essential requirement also creates a rebuttable presumption that the device satisfies that essential requirement.

        Manufacturers must demonstrate that their devices conform with the relevant essential requirements through a conformity assessment procedure. The nature of the assessment depends upon the classification of the device. The classification rules are mainly based on three criteria: the length of time the device is in contact with the body, the degree of invasiveness, and the extent to which the device affects the anatomy. Medical devices in all but the lowest risk classification are also subject to a conformity assessment, which includes a review of the manufacturer’s quality systems and certification by a notified body. Notified bodies are often private entities and are authorized or licensed to perform such assessments by government authorities.

      Japan

        In Japan, our largest market outside of the United States, the regulatory process is also quite complex. Pre-marketing approval and clinical studies are required, as is governmental reimbursement approval for medical devices and pharmaceuticals. The regulatory regime for pharmaceuticals in Japan has historically been so lengthy and costly that it has been cost-prohibitive for many pharmaceutical companies. Historically, Japan has required that all clinical data submitted in support of a new drug application be performed on Japanese patients. This has slowed the development of some new drugs in Japan. Recently, however, as a part of the global drug harmonization process, Japan has signaled a willingness to accept United States or European Union patient data when submitted along with a “bridging” study, which demonstrates that Japanese and non-Japanese subjects react comparably to the product. This approach, which is executed on a case-by-case basis, enables companies like Alcon to potentially reduce the time to approval and introduction of new drugs into the Japanese market, and we are currently employing these approaches to petition for approval of new ocular drugs in Japan.

        Japan is currently in the process of phasing in new drug regulatory legislation adopted in 2002. Under the new legislation, a “marketing authorization” comparable to the EU authorization and U.S. NDA will replace the current “approval”/“permit” requirements. This is expected to allow greater flexibility on the part of manufacturers to efficiently organize their production/marketing activities. The Japanese government has also announced its intention to introduce a new proprietary data “exclusivity” period of up to 10 years in order to protect the value of clinical data by 2006.

Other Regulation

      Ongoing Reporting

        Following approval, a pharmaceutical or device company generally must engage in various monitoring activities and continue to submit periodic and other reports to the applicable regulatory agencies, including any cases of adverse events and appropriate quality control records. Some medical devices also may be subject to tracking requirements.

      Advertising and Promotion

        Drug and medical device advertising and promotion are subject to federal and state regulations. In the United States, the FDA regulates company and product promotion, including direct-to-consumer advertising. Violative materials may lead to FDA enforcement action. The U.S. Federal Trade Commission (“FTC”) also has certain authority over medical device advertising. In the European Union, the promotion of prescription medicines is subject to intense regulation and control, including a prohibition on direct-to-consumer advertising. Some European Union member states also restrict the advertising of medical devices. The restrictions vary from state to state. Some subject only those medical devices that are reimbursed under state health care systems to specific advertising and promotion restrictions. Others restrict the advertising and promotion of devices for the treatment or diagnosis of certain listed conditions.

      Manufacturing

        In the United States, the European Union and Japan, the manufacturing of our products is subject to comprehensive and continuing regulation. These regulations require us to manufacture our products in specific approved facilities and in accordance with their quality system rules and/or current Good Manufacturing Practices, and to list or notify our products and register or authorize our manufacturing establishments with the government agencies, such as the FDA. These regulations also impose certain organizational, procedural and documentation requirements upon us with respect to manufacturing and quality assurance activities. Our manufacturing facilities are subject to comprehensive, periodic inspections by the FDA and other regulatory agencies.

      Lasers

        In the United States, our lasers are subject to the Electronic Product Radiation Control provisions of the Federal Food, Drug, and Cosmetic Act, previously codified as the Radiation Control for Health and Safety Act, which are administered by the Center for Devices and Radiological Health of the FDA. This law requires laser manufacturers to file new product and annual reports, comply with performance standards and maintain quality control, product testing and sales records. In addition, lasers sold to end users must comply with labeling and certification requirements. Various warning labels must be affixed to the laser depending on the class of the product under the performance standard.

        In the European Union, medical device rules regulate lasers intended for medical purposes. Depending on the class and purpose of each laser, member states may also impose additional restrictions and controls, such as limitations on those entitled to use the products and the facilities where their use is permitted.

      Other

        Our manufacturing, sales, promotion, and other activities following product approval are subject to regulation by numerous regulatory authorities, including, in the United States, the FDA, the FTC, the Department of Justice, the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, and state and local governments. Among other laws and requirements, our post-approval manufacturing and promotion activities must comply with the Federal Food, Drug, and Cosmetic Act and the implementing regulations of the FDA, and we must submit post-approval reports required by these laws. We must file marketing authorization variations or supplemental applications with FDA or other regulators and obtain their approval for labeling, manufacturing, and other product changes, depending on the nature of the changes. Our distribution of pharmaceutical samples to physicians must comply with applicable rules, including the Prescription Drug Marketing Act. Our sales, marketing and scientific/educational programs must comply with the medicines advertising and anti-bribery rules and related laws, such as anti-kickback provisions of the Social Security Act, the False Claims Act, and similar state laws. Our pricing and rebate programs must comply with pricing and reimbursement rules, including the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws. Finally, certain jurisdictions have other trade regulations from time to time to which our business is subject such as technology or environmental export controls and political trade embargoes. Most European Union member states impose controls and restrictions that are similar in nature or effect.

        Depending on the circumstances, failure to meet these applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into supply contracts, including government contracts. In addition, even if we comply with FDA and other requirements, new information regarding the safety or effectiveness of a product could lead FDA to modify or withdraw a product approval.

Environmental, Health and Safety

        We are subject to a wide range of laws and regulations relating to protection of the environment and employee health and safety, both in the United States and elsewhere. In addition, internal corporate policies and procedures provide a common format for managing these aspects of our business. Our manufacturing facilities, research and development and other support operations undergo regular internal audits relating to environmental, health and safety requirements. Our facilities in the United States are required to comply with applicable Environmental Protection Agency and Occupational Safety and Health Administration regulations. Our facilities outside the United States are required to comply with locally mandated regulations that vary by country. Alcon continues to obtain certifications under the internationally recognized environmental standard ISO 14001. Currently we have three ISO 14001 certified facilities in Europe. These include the Puurs, Belgium, facility’s Custom Pak® operations and the Barcelona, Spain, and Kaysersberg, France, pharmaceutical facilities. In addition, the R&D facilities in Barcelona, Spain, and Fort Worth, Texas, are certified under this standard. Alcon has also developed its own internal Alcon Environmental Management System based on the core elements of ISO 14001 and implemented this system at all of our other domestic and international manufacturing locations. Based upon our reviews and the outcome of local, state and federal inspections, we believe that our manufacturing facilities are in substantial compliance with all applicable environmental, health and safety requirements. We are not aware of any pending litigation or significant financial obligations arising from any alleged failure to comply with health and safety laws and regulations that are likely to have a material adverse impact on our financial position.

        We are subject to environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act, that require the cleanup of soil and groundwater contamination at sites currently or formerly owned or operated by us, or at sites where we may have sent waste for disposal. These laws often require parties to fund remedial action at sites regardless of fault. We have been named as a potentially responsible party with respect to the remediation costs at two sites which are in the process of being remediated or might be remediated in the future. As a result of our long history of manufacturing operations, there may be other sites for which we may be responsible for all or a portion of the clean-up costs. However, we believe that we have adequate reserves for our currently known remediation matters and that such matters will not have a material adverse effect on our results of operation, liquidity or consolidated financial position. In an effort to ensure ongoing compliance with applicable environmental laws and regulations, we have a program to continually monitor waste, air emissions, ozone depletion components and energy consumption.

        We are not aware of any pending litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse impact on our financial position. There can be no assurance, however, that environmental problems relating to properties owned or operated by us will not develop in the future, and we cannot predict whether any such problems, if they were to develop, could require significant expenditures on our part. In addition, we are unable to predict what legislation or regulations may be adopted or enacted in the future with respect to environmental protection and waste disposal.

Price Controls

        In many of the markets where we operate, the prices of pharmaceutical products are subject to direct price controls (by law) and to drug reimbursement programs with varying price control mechanisms.

        In the United States, debate over the reform of the health care system has resulted in an increased focus on pricing. Although there are currently no government price controls over private sector purchases in the United States, federal legislation requires pharmaceutical manufacturers to pay prescribed rebates on certain drugs to enable them to be eligible for reimbursement under certain public health care programs. Various states have adopted mechanisms under Medicaid and otherwise that seek to control drug prices, including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers. In the absence of new government regulation, managed care has become a potent force in the market place that increases downward pressure on the prices of pharmaceutical products. New federal legislation, enacted in December 2003, has added an outpatient prescription drug benefit to Medicare, effective January 2006. In the interim, Congress has established a discount drug card program for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers. While these negotiations may increase pricing pressures, it is also possible that the new Medicare prescription drug benefit may increase the volume of pharmaceutical drug purchases, offsetting, at least in part, potential price discounts. The new law specifically prohibits the United States government from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, but some members of Congress are still pursuing legislation that would permit the United States government to use its enormous purchasing power to demand discounts from pharmaceutical companies thereby creating de facto price controls on prescription drugs. In addition, the new law contains triggers for Congressional consideration of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level. These cost containment measures could include certain limitations on prescription drug prices.

        This focus on pricing has led to other adverse government action, and may lead to other action in the future. For example, in December 2003 federal legislation was enacted to change United States import laws and expand the ability to import lower priced versions of our and competing products from Canada, where there are government price controls. These changes to the import laws will not take effect unless and until the Secretary of Health and Human Services certifies that the changes will lead to substantial savings for consumers and will not create a public health safety issue. The current Secretary of Health and Human Services has indicated that there is not a basis to make such a certification at this time. However, it is possible that this Secretary or a subsequent Secretary could make the certification in the future. In addition, legislative proposals have been made to implement the changes to the import laws without any certification, and to broaden permissible imports in other ways. Even if the changes to the import laws do not take effect, and other changes are not enacted, imports from Canada and elsewhere may increase due to market and political forces, and the limited enforcement resources of the FDA, the Customs Service, and other government agencies. For example, numerous states and localities have proposed programs to facilitate Canadian imports, and at least one locality has already begun such a program, notwithstanding questions raised by FDA about the legality of such actions. We expect that pressures on pricing and operating results will continue.

        In the EU, governments influence the price of pharmaceutical products and medical devices through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified by the National Institute for Clinical Excellence in the UK which evaluates the data supporting new medicines and passes reimbursement recommendations to the government. In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert a commercial pressure on pricing within a country.

        In Japan, the National Health Ministry biannually reviews the pharmaceutical prices of individual products. In the past, these reviews have resulted in price reductions. In the 2002 biannual review, the Japanese government lowered procedure reimbursement by 18% for cataract surgery and 20% for vitreoretinal surgery. This action places downward pressure on sales of our products for cataract and vitreoretinal surgeries in Japan. We expect a similar price review in 2004, in line with the government’s previously announced plan for controlling health care costs. On the other hand, compensation for new medical devices often takes the form of doctors’ fee. Adding new technologies or products to the compensation schedule is possible only biannually.

C.     ORGANIZATIONAL STRUCTURE

        Alcon, Inc. is the parent holding company of the worldwide group of Alcon companies. It owns 100% of the common voting stock in Alcon Holdings Inc., the holding company for our U.S. operations. The U.S. operations include a diverse group of legal entities. Alcon Manufacturing, Ltd. and Alcon RefractiveHorizons, Inc. are our U.S. manufacturing arms. These two entities have operations in Texas, California, Florida, Pennsylvania, and West Virginia. Alcon Laboratories, Inc. and Alcon RefractiveHorizons, Inc. are our selling, marketing, and distribution arms with physical locations in Texas, California, Maryland, Hawaii, and Florida. Alcon Laboratories, Inc. also maintains sales and technical service staff in almost all 50 states and the District of Columbia. Alcon Research, Ltd. is our research arm with operations primarily in Texas, California, and Florida. With headquarters in Texas, Falcon Pharmaceuticals, Ltd. markets our generic brand products. Alcon Pharmaceuticals, Inc. is a distribution operation based in Nevada.

        Alcon, Inc. directly or indirectly owns numerous other operating entities located throughout the world with significant presence in Europe, Japan, South America, Canada, and Australia. Our International companies are primarily selling, marketing, and distribution entities, but several of these companies also have manufacturing operations and a few have small research facilities. Some of the major companies in our International operations are Alcon Pharmaceuticals Ltd. (Switzerland), S.A. Alcon-Couvreur N.V. (Belgium), Laboratoires Alcon S.A. (France), Alcon Pharma GmbH (Germany), Alcon Laboratories (U.K.) Limited (United Kingdom), Alcon Laboratorios Argentina S.A. (Argentina), Laboratorios Alcon de Colombia, S.A. (Colombia), Alcon Laboratorios, S.A. de C.V. (Mexico), Alcon Laboratorios do Brazil Ltda. (Brazil), Alcon Laboratories (Australia) Pty. Ltd. (Australia), Alcon Canada Inc. (Canada), and Alcon Japan Ltd. (Japan).

D.     PROPERTY, PLANT AND EQUIPMENT

        Our principal executive offices and registered office are located at Bösch 69, P.O. Box 62, 6331 Hünenberg, Canton of Zug, Switzerland. The principal offices for our United States operations are located at 6201 South Freeway, Fort Worth, Texas 76134.

        We believe that our current manufacturing and production facilities have adequate capacity for our medium-term needs. To ensure that we have sufficient manufacturing capacity to meet future production needs, we continually review the capacity and utilization of our manufacturing facilities. The FDA and other regulatory agencies regulate the approval for use of manufacturing facilities for pharmaceuticals and medical devices, and compliance with these regulations requires a substantial amount of validation time prior to start-up and approval. Accordingly, it is important to our business that we ensure we have sufficient manufacturing capacity to meet our future production needs. We presently anticipate expanding the capacity of six of our manufacturing facilities over the next two years. We plan to move into the expansion of our research and development facilities in Fort Worth in early 2004. Item 4.A provides additional discussion of capital expenditures underway.

        The following table sets forth, by location, size and principal use of our main manufacturing and other facilities at December 31, 2003:

Location	Size	Principal Use(s)	Owned/ Leased
	(sq. feet)
United States:
Fort Worth, Texas	1,084,000	Research and development, administrative Buildings	Owned
Fort Worth, Texas	127,890	Research and development, administrative Buildings	Leased
Fort Worth, Texas	334,000	Pharmaceutical, contact lens care and surgical solutions	Owned
Fort Worth, Texas	342,990	Pharmaceutical and small volume consumer products	Owned
Houston, Texas	352,000	Surgical (Custom Pak® and consumables)	Owned
Irvine, California	189,193	Surgical (electronic instruments and consumables), research and development	Leased
Huntington, West Virginia	116,000	Surgical (intraocular lenses)	Owned
Sinking Spring, Pennsylvania	165,000	Surgical (handheld instruments and consumables)	Owned
Orlando, Florida	89,997	Surgical (refractive equipment), research and development	Leased
Outside of the United States:
Barcelona, Spain	439,042	Pharmaceutical, contact lens care, research and development	Owned
Puurs, Belgium	469,673	Pharmaceutical, contact lens care, surgical (viscoelastics and Custom Pak®),administrative	Owned
Kaysersberg, France	133,481	Pharmaceutical, contact lens care	Owned
Sao Paulo, Brazil	88,748	Pharmaceutical, contact lens care	Owned
Sao Paulo, Brazil	58,448	Administrative	Leased
Cork, Ireland	60,299	Surgical (refractive equipment facility being converted to produce intraocular lenses)	Leased
Schaffhausen, Switzerland	17,696	Surgical (microsurgical instruments)	Owned
Schaffhausen, Switzerland	17,481	Surgical (microsurgical instruments)	Leased
Mexico City, Mexico	43,625	Pharmaceutical, contact lens care	Owned
Mexico City, Mexico	74,864	Administrative	Owned
Beijing, China	4,900	Surgical (intraocular lenses and sutures)	Leased

        In addition to these principal facilities, we have office facilities worldwide. These facilities are generally leased. In some countries, we lease or sublease facilities from Nestlé.

        We believe that all of our facilities and our equipment in those facilities are in good condition and are well maintained.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis in conjunction with our financial statements and notes thereto included elsewhere in this report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. Please see “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions relating to these statements.

Overview of Our Business

General

        Alcon, Inc. and its subsidiaries develop, manufacture and market pharmaceuticals, surgical equipment and devices and consumer eye care products that treat eye diseases and disorders and promote the general health and function of the human eye. Founded in 1945, we have local operations in over 70 countries and our products are sold in more than 180 countries around the world. In 1977, we were acquired by Nestlé S.A. Since then, we have operated largely as an independent company, separate from most of Nestlé’s other businesses and have grown our annual sales from $82 million to over $3.4 billion primarily as a result of internal development and selected acquisitions. In March 2002, Nestlé sold approximately 25% of its ownership of Alcon through an initial public offering (“IPO”).

        We conduct our global business through two business segments: Alcon United States and Alcon International. Alcon United States includes sales to unaffiliated customers located in the United States of America, excluding Puerto Rico. Alcon United States operating profit is derived from operating profits within the United States, as well as operating profits earned outside of the United States related to the United States business. Alcon International includes sales to all other unaffiliated customers.

        Each business segment markets and sells products principally in three product categories of the ophthalmic market: (i) pharmaceutical (prescription drugs); (ii) surgical equipment and devices (cataract, vitreoretinal and refractive); and (iii) consumer eye care (contact lens disinfectants and cleaning solutions, artificial tears and ocular vitamins). Business segment operations generally do not include research and development, manufacturing and other corporate functions. We market our products to eye care professionals as well as to the direct purchasers of our products, such as hospitals, managed care organizations, government agencies/entities and individuals.

Market Environment

        Demand for health care products and services is increasing in established markets as a result of the aging of the population and the emergence of new drug therapies and treatments for previously untreatable conditions. Likewise, demand for health care products and services in emerging markets is increasing primarily due to the adoption of medically advanced technologies and improvements in living standards. As a result of these factors, health care costs are rising at a faster rate than economic growth in many countries. This faster rate of growth has led governments and other purchasers of health care products and services, either directly or through patient reimbursement, to exert pressure on the prices of health care products and services. These cost-containment efforts vary by jurisdiction.

        In the United States, Medicare reimbursement policies and the influence of managed care organizations continue to impact the pricing of health care products and services. The Medicare Prescription Drug Improvement and Modernization Act of 2003 will present opportunities and challenges for pharmaceutical companies. Some states are also moving to implement more aggressive price control programs and more liberal generic substitution rules that could result in price reductions. In addition, managed care organizations use formularies and their buying power to demand more effective treatments at lower prices. Both governments and managed care organizations have supported increased use of generic pharmaceuticals at the expense of branded pharmaceuticals. We are well-positioned to address this market opportunity with Falcon Pharmaceuticals, Ltd., our generic pharmaceutical business, which currently has the #1 market share position in generic ophthalmic pharmaceuticals in the United States, based on revenues in 2003. We also use third-party data to demonstrate both the therapeutic and cost effectiveness of our branded pharmaceutical products. Moreover, to achieve and maintain attractive positions on formularies, we need to continuously introduce medically advanced products that differentiate us from our competitors.

        The Medicare Prescription Drug Improvement and Modernization Act of 2003 puts additional pressure on policy makers to offset the Medicare program’s cost by controlling budgets for reimbursement to surgical facilities. This affects our industry’s ability to maintain premium pricing for older technologies and non-differentiated products. New technologies for surgical procedures are being challenged to substantiate that their higher cost is accompanied by significant clinical improvements for Medicare beneficiaries. We are preparing for this challenge by gathering the scientific and clinical data that demonstrate to Medicare that the products in our pipeline are cost effective when their higher costs are compared to their measurable benefits.

        Outside of the United States, third-party payor reimbursement of patients and health care providers and prices for health care products and services vary significantly and, in the case of pharmaceuticals, are generally lower than those in the United States. In Western Europe, where government reimbursement of health care costs is widespread, governments are requiring price reductions. The economic integration by European Union members and the introduction of the euro are also impacting pricing in these markets, as more affluent member countries are requesting prices for health care products and services comparable to those in less affluent member countries. In Latin America, where there is less government reimbursement of health care costs, many of our products are paid for by private health care systems covering a small portion of the population. As a result, economic conditions in this region have a significant impact on prices and demand for health care products and services.

        In most of the countries in Asia, average income levels are relatively low, government reimbursement for the cost of health care products and services is limited and prices and demand are sensitive to general economic conditions. However, demand for our products in many Asian countries has been rising. In addition, regulatory approval times are long and costs are very high in Japan, which delays the marketing of our pharmaceutical products there. In Japan, the National Health Ministry reviews prices of individual pharmaceutical products and health services biannually. In the past, these reviews have resulted in price decreases. In April 2002, a round of overall price decreases went into effect, including a reduction in the total reimbursement amount for cataract and vitreoretinal surgery procedures, which puts downward pressure on products we supply.

Currency Fluctuations

        Our products are sold in over 180 countries, and we sell products in a number of currencies in our Alcon International business segment. Our consolidated financial statements, which are presented in U.S. dollars, are impacted by currency exchange rate fluctuations through both translation risk and transaction risk. Translation risk is the risk that our financial statements for a particular period are affected by changes in the prevailing exchange rates of the various currencies of our subsidiaries relative to the U.S. dollar. Transaction risk is the risk that the currency structure of our costs and liabilities deviates to some extent from the currency structure of our sales proceeds and assets.

        Our translation risk exposures are principally to the euro and Japanese yen. With respect to transaction risk, because a significant percentage of our operating expenses are incurred in the currency in which sales proceeds are received, we do not have a significant net exposure. In addition, substantially all of our assets which are denominated in currencies other than the U.S. dollar are supported by loans or other liabilities of similar amounts denominated in the same currency. From time to time, we purchase or sell currencies forward to hedge currency risk in obligations or receivables; these transactions are designed to address transaction risk, not translation risk.

        Generally, a weakening of the U.S. dollar against other currencies has a positive effect on our overall sales and, to a lesser extent, profits while a strengthening of the U.S. dollar against other currencies has a negative effect on our overall sales and, to a lesser extent, profits. We experienced negative currency impacts as a result of the strengthening of the U.S. dollar during 2002 and 2001, but a positive impact during 2003. During 2003, the U.S. dollar weakened against most major currencies, positively impacting our sales and, to a lesser extent, profits. In 2002, we experienced the positive effect of the weakening of the U.S. dollar against the major European currencies; however, this positive effect was offset by the increase in the value of the U.S. dollar versus the Japanese yen and Latin American currencies. During 2001, the primary cause of the negative currency impact was the strengthening of the U.S. dollar against the Japanese yen and the major European currencies, with lesser negative impacts relating to the Canadian, Australian and Brazilian currencies. We refer to the effects of currency fluctuations and exchange rate movements throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which we have computed by applying translation rates from the prior comparative period to the more recent period amounts and comparing those results to the more recent period actual results.

Operating Revenues and Expenses

        We generate revenues largely from sales of ophthalmic pharmaceutical products, ophthalmic surgical equipment and devices and consumer eye care products. Our operating revenues and operating income are affected by various factors including unit volume, price, currency fluctuations, acquisitions, licensing and the mix between lower-margin and higher-margin products.

        Sales of ophthalmic pharmaceutical products are primarily driven by the development of safe and effective products that can be differentiated from competing products in the treatment of ophthalmic diseases and disorders and increased market acceptance of these new products. Inclusion of pharmaceutical products on managed care formularies covering the largest possible number of patients is another key competitive factor. We face significant competition in ophthalmic pharmaceuticals, including competition from other companies with an ophthalmic focus and from larger pharmaceutical companies. In general, sales of our pharmaceutical products are not affected by general economic conditions, although we face pressure to reduce prices from governments and United States managed care organizations. We experience seasonality in our ocular allergy medicines, with a large increase in sales in the spring and a lesser increase during the fall. Costs of goods sold for our pharmaceutical products include materials, labor, overhead and royalties.

        Our surgical product category includes three product lines: cataract, vitreoretinal and refractive. Sales of our products for cataract and vitreoretinal surgery are driven by technological innovation and aging demographic trends. However, the number of cataract and vitreoretinal surgical procedures is not generally affected by economic conditions. We believe that our innovative technology and our ability to provide customized (i.e., tailored to each surgeon’s preference) surgical procedure packs with a broad range of proprietary products are important to our success in these product categories. Sales of our refractive surgical equipment and the related technology fees are driven by consumer demand for laser refractive surgery. We sell lasers and other surgical equipment used to perform laser refractive surgeries and, in the United States, charge a technology fee for each surgery performed (one eye equals one surgery). Outside of the United States, we generally do not charge a technology fee, although we charge a technology fee when our LADARWave® CustomCornea® Wavefront System is used to guide our laser to perform a customized procedure. Because governments and private insurance companies generally do not cover the costs of laser refractive surgery, sales of laser refractive surgical products and related technology fees are sensitive to changes in general economic conditions and consumer confidence. There is no significant seasonality in our surgical business. Costs of goods sold for our surgical products include raw materials, labor, overhead, royalties and warranty costs. Operating income from cataract and vitreoretinal products is driven by the number of procedures in which our products are used. Operating income from laser refractive surgical equipment depends primarily on the number of procedures for which we are able to collect technology fees.

        Sales of our consumer eye care products are driven by ophthalmologist, optometrist and optician recommendations of lens care systems, our provision of starter kits to eye care professionals, advertising and consumer preferences for more convenient contact lens care solutions. Contact lens care products compete largely on product attributes, brand familiarity, professional recommendations and price. The use of less-advanced cleaning methods, especially outside of the United States, also affects demand for our contact lens care products. There is no seasonality in sales of contact lens care products, and we have experienced little impact from general economic conditions to date, although in low-growth economic environments consumers may switch to lower-priced brands. Costs of goods sold for contact lens care products include materials, labor, overhead and royalties. Operating income from contact lens care products is driven by market penetration and unit volumes.

        Our selling, general and administrative costs include the costs of selling, promoting and distributing our products and managing the organizational infrastructure of our business. The largest portion of these costs is salary for sales and marketing staff.

        Research and development costs include basic research, pre-clinical development of products, clinical trials, regulatory expenses and certain technology licensing costs. The largest portion of our research and development expenses relates to the research, development and regulatory approval of pharmaceutical products. During each of the years 2003, 2002 and 2001, a greater proportion of our research and development expenses were incurred during the second half of the year than during the first half.

        Our amortization costs relate to acquisitions and the licensing of intangible assets. Effective July 7, 2000, we acquired Summit Autonomous Inc. for a total purchase price of $948.0 million, which resulted in goodwill and intangible assets of $954.5 million. Effective January 1, 2002, Alcon adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. See note 4 to the consolidated financial statements. In the absence of new acquisitions, annual amortization expense on intangible assets with definite useful lives at December 31, 2003 is estimated to decrease from $67.4 million in 2003 to $46.5 million in 2008.

        In November 2003, the Company sold its manufacturing facility in Madrid, Spain, for $21.6 million in cash, resulting in a pre-tax gain of $8.2 million.

        In connection with the IPO, Alcon changed certain provisions of its 1994 Phantom Stock Plan. These changes resulted in a one time $22.6 million charge to operating income during the first quarter of 2002.

Material Opportunities, Challenges and Risks

        Alcon is focused on its ability to bring new products successfully to market in a competitive industry environment. Alcon’s long term profitability is dependent upon the ability of its research and development activities to provide a pipeline of new products that are successful in the marketplace. In general, we are able to generate higher margins from the sales of our products that are under patents or licenses restricting the production or sale of such products by others. Alcon’s goal is to consistently advance the state of our research and development so as to be in a position, as existing products approach the end of their patent or license protection periods, to introduce next generation or new products that provide greater efficacy, broader application or more convenience. Such products under new patents or licenses provide opportunities to maintain and grow Alcon’s sales.

        Part of Alcon’s strategy is to devote significant resources to research and development efforts. Over the past three years, Alcon has invested more than 10% of annual revenues into research and development. Alcon strives to be the first to introduce new products in the marketplace or to provide greater efficacy in treatment of ophthalmic conditions. Being first to the marketplace with a product category can often result in a significant marketing advantage, particularly as larger pharmaceutical companies increase their focus on the ophthalmology field.

        Alcon’s ability to maintain profit margins on its products may be affected by a number of regulatory activities throughout the world, from restrictive medical reimbursements for managed care to reduced regulation for imports of pharmaceutical products from other countries to the U.S. Alcon monitors these regulatory activities and the effects on product pricing in its major markets. Where appropriate, Alcon shares information with applicable regulatory bodies on the cost of developing new products and the importance of pricing and return of investment as an incentive to develop new and more effective therapeutic treatments. Alcon also monitors regulatory activities to identify initiatives that could undercut consumer protections by the introduction of nonregulated products into the U.S. distribution chain.

        Alcon also focuses on cost management. In addition to a strict evaluation of general and administrative expenses, Alcon seeks to reduce manufacturing costs through its continuous improvement program. The sale of the Madrid, Spain, manufacturing plant during the fourth quarter of 2003 is an example of Alcon’s efforts to reduce manufacturing costs. By shifting the Madrid production to other existing manufacturing locations, Alcon was able to reduce its fixed production overhead through the sale of the plant, while realizing a gain on the sale.

Results of Operations

        The following table sets forth, for the periods indicated, selected items from our consolidated financial statements.

							As a % of Total Sales
	2003		2002		2001		2003		2002		2001
	(in millions, except percentages)
Sales:
United States	$ 1,785.9		$ 1,632.6		$ 1,464.6		52.4	%	54.3	%	53.3	%
International	1,621.0		1,376.5		1,283.1		47.6		45.7		46.7
Total sales	3,406.9		3,009.1		2,747.7		100.0		100.0		100.0
Costs of goods sold	1,005.9		892.7		798.3		29.5		29.7		29.1
Gross profit	2,401.0		2,116.4		1,949.4		70.5		70.3		70.9
Selling, general and administrative	1,112.5		1,014.7		953.7		32.6		33.7		34.7
Research and development	349.9		323.5		289.8		10.3		10.7		10.5
Gain on sale of plant	(8.2	)	--		--		(0.2	)	--		--
Amortization of intangibles	67.4		74.5		117.0		2.0		2.5		4.3
Operating income	879.4		703.7		588.9		25.8		23.4		21.4
Gain (loss) from foreign currency,	2.0		4.2		(4.8	)	0.1		0.1		(0.2	)
net
Interest income	18.5		22.2		46.6		0.5		0.8		1.7
Interest expense	(41.8	)	(53.8	)	(107.7	)	(1.2	)	(1.8	)	(3.9	)
Other, net	--		1.2		(9.1	)	--		--		(0.3	)
Earnings before income taxes	858.1		677.5		513.9		25.2		22.5		18.7
Income taxes	262.7		210.6		198.3		7.7		7.0		7.2
Net earnings	$    595.4		$    466.9		$    315.6		17.5	%	15.5	%	11.5	%

        The following table sets forth, for the periods indicated, our sales and operating income by business segment.

				As a % of Total Sales
	2003	2002	2001	2003		2002		2001
	(in millions, except percentages)
ALCON UNITED STATES:
Pharmaceutical	$   813.3	$   706.9	$   581.9	45.5	%	43.3	%	39.7	%
Surgical	713.8	678.3	639.7	40.0		41.5		43.7
Consumer eye care	258.8	247.4	243.0	14.5		15.2		16.6
Total sales	$1,785.9	$1,632.6	$1,464.6	100.0	%	100.0	%	100.0	%
Segment operating income(1)	$   794.3	$   675.3	$   544.7	44.5	%	41.4	%	37.2	%
ALCON INTERNATIONAL:
Pharmaceutical	$   496.6	$   383.5	$   345.8	30.6	%	27.9	%	26.9	%
Surgical	872.1	760.2	718.0	53.8		55.2		55.9
Consumer eye care	252.3	232.8	219.3	15.6		16.9		17.2
Total sales	$1,621.0	$1,376.5	$1,283.1	100.0	%	100.0	%	100.0	%
Segment operating income(1)	$   514.9	$   428.1	$   405.9	31.8	%	31.1	%	31.6	%

(1)   Beginning in 2002, segment performance is measured based on sales and operating income reported in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Prior to 2002, Alcon measured performance on the basis of International Accounting Standards. For consistency of presentation, business segment information for 2001 has been restated on a U.S. GAAP basis. Certain manufacturing costs and manufacturing variances are not assigned to business segments because most manufacturing operations produce products for more than one business segment. Research and development costs, excluding regulatory costs which are included in the business segments, are treated as general corporate costs and are not assigned to business segments.

        The following table sets forth, for the periods indicated, Alcon International’s sales and our consolidated sales by product category, and includes the change in sales and change in sales in constant currency calculated by applying rates from the earlier period. All of Alcon United States’ sales are in U.S. dollars, and therefore it does not experience any currency translation gains or losses.

	2003	2002	Change		Foreign Currency Change		Change in Constant Currency(a)		2002	2001	Change		Foreign Currency Change		Change in Constant Currency (a)
	(in millions, except percentages)
ALCON INTERNATIONAL:
Pharmaceutical	$   496.6	$   383.5	29.5	%	8.8	%	20.7	%	$383.5	$   345.8	10.9	%	(3.0	)%	13.9	%
Surgical	872.1	760.2	14.7		10.7		4.0		760.2	718.0	5.9		0.3		5.6
Consumer eye care	252.3	232.8	8.4		5.3		3.1		232.8	219.3	6.2		(2.2	)	8.4
Total sales	$1,621.0	$1,376.5	17.8		9.3		8.5		$1,376.5	$1,283.1	7.3		(1.0	)	8.3
TOTAL:
Pharmaceutical	$1,309.9	$1,090.4	20.1		3.1		17.0		$1,090.4	$927.7	17.5		(1.2	)	18.7
Surgical	1,585.9	1,438.5	10.2		5.6		4.6		1,438.5	1,357.7	6.0		0.2		5.8
Consumer eye care	511.1	480.2	6.4		2.5		3.9		480.2	462.3	3.9		(1.0	)	4.9
Total sales	$3,406.9	$3,009.1	13.2		4.2		9.0		$3,009.1	$2,747.7	9.5		(0.5	)	10.0

(a)  Change in constant currency is determined by comparing adjusted 2003 reported amounts, calculated using 2002 monthly average exchange rates, to the actual 2002 reported amounts. The same process was used to compare 2002 to 2001. Sales change in constant currency is not a U.S. GAAP defined measure of revenue growth. This measure provides information on sales growth assuming that foreign currency exchange rates have not changed between years. 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. Sales change in constant currency, as defined and presented by the Company, may not be comparable to similar measures reported by other companies.

Year ended December 31, 2003 compared to year ended December 31, 2002

      Sales

Global

        All major product categories positively contributed to the 13.2% growth in global sales for year ended December 31, 2003. Growth in product unit volumes accounted for a majority of the sales increase. Currency exchange rates also favorably impacted sales growth for 2003, largely attributable to the strength of the euro which achieved a record high level relative to the U.S. dollar. Excluding the impact of foreign exchange fluctuations, sales would have grown by 9.0%.

GLOBAL SALES

	2003		2002		Change
	(in millions)
Infection/Inflammation Products	$    517.9		$    446.0		16.1	%
Glaucoma Products	432.4		349.6		23.7
Allergy Products	276.6		223.1		24.0
Otic Products	122.9		89.7		37.0
Other Pharmaceuticals/Rebates	(39.9	)	(18.0	)	*
TOTAL PHARMACEUTICAL	1,309.9		1,090.4		20.1
Intraocular Lenses	498.6		437.7		13.9
Cataract/Vitreoretinal	1,017.0		927.0		9.7
Refractive	70.3		73.8		(4.7	)
TOTAL SURGICAL	1,585.9		1,438.5		10.2
Contact Lens Disinfectants	282.2		275.1		2.6
Artificial Tears	117.3		99.2		18.2
Other	111.6		105.9		5.4
TOTAL CONSUMER EYE CARE	511.1		480.2		6.4
TOTAL GLOBAL SALES	$ 3,406.9		$ 3,009.1		13.2

* Not meaningful

Pharmaceutical       

      Global sales growth was led by sales of our pharmaceutical products, which increased 20.1% (17.0% in constant currency). Broad-based gains were achieved across most major therapeutic market segments and key products. Among our glaucoma products, Travatan® ophthalmic solution continued to expand its global market reach with sales of $135.3 million for the year ended December 31, 2003, compared to $70.9 million in 2002. Within the allergy segment, Patanol® ophthalmic solution achieved record sales for the year of $252.0 million and grew 27% over 2002. The European launch of this product under the tradename Opatanol® ophthalmic solution early in 2003 contributed to this allergy product's sales growth.

    Vigamox^TM ophthalmic solution, our newest fluoroquinolone ocular infection treatment product, was introduced in April 2003 and quickly built momentum. A portion of Vigamox^TM sales reduced sales of another fluoroquinolone antibiotic, Ciloxan® ophthalmic solution and ointment.

    Our line of otic products achieved the strongest growth rate within the pharmaceutical line. On July 25, 2003, approval was received from the FDA to market Ciprodex otic suspension for both middle ear infections in children with ear tubes and outer ear infections. The launch of Ciprodex otic combined with our existing Cipro HC Otic solution sparked the growth of this segment by extending the line to provide complete therapeutic coverage for both outer and middle ear infections. Ciprodex and Cipro are registered trademarks of Bayer AG, licensed to Alcon by Bayer AG

Surgical

    Our line of surgical products grew 10.2% (4.6% in constant currency) for the year ended December 31, 2003 compared to 2002, despite a decline of 4.7% in sales of refractive products. Sales of AcrySof® intraocular lenses led the growth of the surgical business. The AcrySof® Natural lens, launched in the U.S. during the third quarter 2003, contributed to the global growth. It is the first foldable intraocular lens that filters both ultraviolet and portions of high frequency blue light spectrum to receive FDA approval. Clinical evidence is emerging that links retinal damage with high frequency blue light.

   The Infiniti^TM vision system, our tri-modal lens removal system, was added to our line of surgical equipment in 2003. This product commands a premium price and boosted the growth of our equipment line.

     The commercial launch of the LADARWave® wavefront aberrometer and CustomCornea®, our custom ablation wavefront refractive technology, continued to gain acceptance in the marketplace as evidenced by increasing numbers of custom procedures being performed in the U.S. Sales of our refractive products, however, continued to be negatively affected by global economic conditions, flat consumer demand and low demand for laser equipment.

Consumer Eye Care

   Our global consumer eye care sales, which consists of contact lens care and other general eye care products, grew 6.4% (3.9% in constant currency). Contributing to the growth of the line were our OPTI-FREE® EXPRESS® contact lens care products and our line of artificial tears products, which includes Systane® lubricant eye drops. Systane®, our newest product used to treat dry eye, was launched early in 20

GEOGRAPHIC SALES

	2003	2002	Change		Foreign Currency Change	Change in Constant Currency (a)
	(in millions)
ALCON UNITED STATES:
Pharmaceutical	$   813.3	$   706.9	15.1	%	--	15.1	%
Surgical	713.8	678.3	5.2		--	5.2
Consumer Eye Care	258.8	247.4	4.6		--	4.6
Total Sales	1,785.9	1,632.6	9.4		--	9.4
ALCON INTERNATIONAL:
Pharmaceutical	496.6	383.5	29.5		8.8	20.7
Surgical	872.1	760.2	14.7		10.7	4.0
Consumer Eye Care	252.3	232.8	8.4		5.3	3.1
Total Sales	1,621.0	1,376.5	17.8		9.3	8.5
TOTAL GLOBAL SALES	$3,406.9	$3,009.1	13.2		4.2	9.0

(a)   Change in constant currency is determined by comparing adjusted 2003 reported amounts, calculated using 2002 monthly average exchange rates, to the actual 2002 reported amounts. Sales change in constant currency is not a U.S. GAAP defined measure of revenue growth. This measure provides information on sales growth assuming that foreign currency exchange rates have not changed between years. 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. Sales change in constant currency, as defined and presented by the Company, may not be comparable to similar measures reported by other companies.

United States

Pharmaceutical

    U.S.  sales growth was led by sales of our pharmaceutical products, which increased 15.1% for the year ended December 31, 2003. Strong prescription demand for several of our branded products translated into growth in unit volumes and market share for 2003. Sales of Travatan® grew to $73.1 million in 2003 from $44.5 million in 2002. Travatan® continued to increase its prescription share of the U.S. prostaglandin market and outpaced the overall growth of the segment. Patanol® made a significant contribution to the growth of the U.S. pharmaceuticals with record 2003 sales of $234.8 million, achieving 24.6% growth over 2002. The product continued to hold its market leadership position in the U.S.

        The launch of Vigamox™ has progressed successfully. We began converting our existing business from Ciloxan®, our third generation fluoroquinolone anti-infective product, in advance of its patent expiration in June 2004, to Vigamox™, as well as increase our overall combined market share in the fluoroquinolone segment. Launch results of Ciprodex otic, our newest FDA approved product with a broader indication for treatment of ear infections, were very encouraging. The product’s acceptance by the ear, nose and throat specialists contributed to increasing our market share growth in the otic segment.

Surgical

        Sales growth for the U.S. surgical products in 2003 was driven by key product contributions from AcrySof®, Infiniti™ and LADARWave®. The 2003 launch of our new AcrySof® Natural lens added to the growth of the overall AcrySof® franchise. The market introduction of Infiniti™ in August 2003 has gained momentum and generated much interest in this new tri-modal technology for lens removal. The commercial launch of our LADARWave® wavefront aberrometer and CustomCornea® was a boost to the refractive line as the number of custom procedures in the U.S. grew rapidly during 2003.

Consumer Eye Care

        Sales of our contact lens disinfectant products grew 1.9% in 2003 in the face of difficult competitive market conditions. Our artificial tears products made strong gains during the same period and benefited from the performance of our new dry eye product Systane®, which has steadily gained market share since its introduction in February 2003.

International

        Sales in the rest of the world grew 17.8% (8.5% in constant currency) for the year ended December 31, 2003 over 2002. The continued strengthening of the euro against the U.S. dollar throughout 2003 was largely accountable for the favorable impact of currency exchange on sales growth. Sales in the major Latin American markets of Brazil and Mexico attained significant constant currency growth during the year. Prevailing competitive market conditions and lower reimbursement for cataract and vitreoretinal surgery continued to restrain sales in Japan, our largest international market, during 2003.

Pharmaceuticals

        Sales for our pharmaceutical products outside of the U.S. registered growth of 29.5% (20.7% in constant currency) for the year ended December 31, 2003. Sales of Travatan® outside of the U.S. grew to $62.2 million in 2003, compared to $26.4 million in 2002. The product continued to achieve significant market share gains in the key European markets of Italy, Germany and France, as well as the Latin American markets of Brazil, Argentina, Mexico and Chile. Sales of allergy products were led by Patanol®. The European launch of this product under the tradename Opatanol® early in 2003 contributed to this allergy product’s sales growth. Our other key branded products that contributed to the growth of the pharmaceutical line were Azopt® ophthalmic suspension, TobraDex® ophthalmic solution and ointment, Maxitrol® ophthalmic solution and ointment, Ciloxan®, Tobrex® ophthalmic solution and ointment and Cipro HC.

Surgical

        Sales of surgical products increased 14.7% (4.0% in constant currency) in the year ended December 31, 2003 over 2002. Growth was generally very strong throughout most of our major markets except for Japan. Governmental reimbursement reductions and competitive pressures, particularly in the intraocular lens business, resulted in a contraction of surgical products sales in Japan by approximately 7%. Otherwise, AcrySof® and our line of viscoelastic products were primary drivers of sales growth outside the U.S. Shipments of Infinti™ began in markets outside of the U.S. during the third quarter of 2003 and contributed to the growth of our equipment line. In Japan, we believe the launch of the Infinti™ vision system in the fourth quarter of 2003, coupled with the planned introduction of the Acrysert® lens insertion device, will strengthen our surgical product offering there in 2004.

Consumer Eye Care

        Sales of consumer eye care products outside of the U.S. grew 8.4% (3.1% in constant currency) in the year ended December 31, 2003 over 2002. Growth of our contact lens disinfectants was hampered by Japan, our largest international market in these products, due to increased competition from new market entries in this segment and downward pressure on prices from cross channel trading. Sales of artificial tears were positively impacted by growth of our Tears Naturale® lubricant eye drops franchise.

      Gross Profit

        Gross profit increased 13.4% to $2,401.0 million, or 70.5% of sales in the year ended December 31, 2003 compared to $2,116.4 million, or 70.3% of sales in 2002. This slight improvement in gross profit as a percentage of sales is partially due to charges in 2002 of $3.4 million related to changes made to an employee deferred compensation plan and $5.9 million associated with the write-off of SKBM® microkeratome inventory and related manufacturing equipment. Gross profit was positively affected by price increases (primarily in the U.S.) and increased manufacturing efficiencies. Negatively affecting margins in 2003 were startup costs associated with the LADARWave® and the Infinti™, higher third party royalty expenses, price pressures in Japan and geographic sales mix.

      Operating Expenses

        Selling, general and administrative expenses were $1,112.5 million, or 32.6% of sales, in the year ended December 31, 2003 compared to $1,014.7 million, or 33.7% of sales, in 2002. This large decrease in selling, general and administrative expenses as a percentage of sales is primarily due to the fact that, in 2002, there were $12.6 million of expenses related to changes made to an employee deferred compensation plan and $14.1 million of customer refunds and other costs associated with the decision to recall and terminate the SKBM® microkeratome product line. Selling, general and administrative expenses in 2003 included the impact of the expansion of the U.S. pharmaceutical sales force and launch expenses of several new products including Ciprodex otic, AcrySof® Natural, Infiniti™, Vigamox™, LADARWave®and Opatanol®and pre-launch expenses associated with anecortave acetate. These increased costs were partially offset by declines in legal fees and bad debts expense.

        Research and development expenses for the year ended December 31, 2003 were $349.9 million, or 10.3% of sales, compared to $323.5 million, or 10.7% of sales, in 2002. Research and development expenses in 2002 included $6.6 million of expenses related to changes made to an employee deferred compensation plan. Research and development expenses in 2003 reflect increased investment in products in the therapeutic areas of glaucoma, age-related macular degeneration and nasal allergy, which are in the later stages of development.

        Amortization of intangibles decreased 9.5% to $67.4 million in the year ended December 31, 2003 from $74.5 million in 2002. The decrease is primarily due to a $5.9 million impairment loss on intangible assets, which was recorded as amortization, related to the voluntary recall and termination of the SKBM® microkeratome product line in 2002.

      Operating Income

        Operating income increased 25.0% to $879.4 million in the year ended December 31, 2003 from $703.7 million in 2002. In 2003, operating income was positively affected by an $8.2 million gain on the sale of the Madrid, Spain, manufacturing plant. Operating income was negatively impacted in 2002 by charges of $22.6 million related to changes made to an employee deferred compensation plan and $25.9 million of SKBM® microkeratome recall and termination costs. After considering the impact of these items, operating income would still have improved as a percentage of sales, in part due to continued operating efficiencies gained from the Company’s global infrastructure.

        Alcon United States business segment operating income increased 17.6% to $794.3 million, or 44.5% of sales, in the year ended December 31, 2003 from $675.3 million, or 41.4% of sales, in 2002. The improvement in operating income is partially due to the inclusion in 2002 of $12.6 million of costs associated with the decision to recall and terminate the SKBM® microkeratome. Operating income in 2003 also improved as a result of price increases on pharmaceuticals, lower manufactured cost of goods, improved mix of higher margin products, and slower growth in selling, general and administrative expenses.

        Alcon International business segment operating income increased 20.3% to $514.9 million, or 31.8% of sales, in the year ended December 31, 2003 from $428.1 million, or 31.1% of sales, in 2002. Operating income in 2002 reflected one-time costs of $13.3 million related to the decision to recall and terminate the SKBM® microkeratome. Operating income as a percent of sales was affected in 2003 by a reduction in gross profit margins as a result of the foreign currency and geographic mix of sales and operating profits. Japan, our second largest market, did not grow in line with our other international markets as we were faced with pricing pressures associated with government reimbursement cuts and new competitive entrants in the consumer and surgical product markets.

        Operating income for the Alcon United States and Alcon International business segments does not include: (1) certain manufacturing costs (e.g., manufacturing operation period costs and manufacturing variances); (2) all research and development costs other than regulatory costs; and (3) certain other general corporate expenses. Operating income for these two business segments is determined in accordance with U.S. GAAP.

      Interest and Other Expenses

        Interest income decreased 16.7% to $18.5 million in the year ended December 31, 2003 from $22.2 million in 2002, primarily as a result of lower short term interest rates in 2003. Interest expense decreased 22.3% to $41.8 million in the year ended December 31, 2003 from $53.8 million in 2002, primarily as a result of lower short term interest rates.

      Income Tax Expense

        Income tax expense increased 24.7% to $262.7 million in the year ended December 31, 2003 from $210.6 million in 2002, mainly due to higher earnings. The reported effective tax rate of 30.6% in the year ended December 31, 2003 is lower than the 2002 effective tax rate of 31.1%. The decrease in the effective tax rate is due to a more favorable mix of income earned in various tax jurisdictions, an increase in foreign sales corporation and extraterritorial income tax benefits related to the current and previous years, and utilization of certain tax credits and net operating loss carryforwards that had valuation allowances in prior years.

      Net Earnings

        Net earnings increased 27.5% to $595.4 million in the year ended December 31, 2003 from $466.9 million in 2002. The increase reflects the impact of the following income and expense items:

• in 2003, the gain on the sale of the Madrid, Spain, manufacturing plant of $5.7 million, net of income taxes, and
• o in 2002, changes to an employee deferred compensation plan of $14.2 million, net of income taxes, the SKBM® microkeratome recall and termination costs of $17.9 million, net of income taxes, and the estimated impact of the IPO proceeds on net interest expense of $6.5 million, net of income taxes.

Year ended December 31, 2002 compared to year ended December 31, 2001

      Sales

Global

        Global sales increased 9.5% to $3,009.1 million in 2002 from $2,747.7 million in 2001. Sales growth, in terms of constant currency, was slightly higher at 10.0%. The negative impact of foreign currency fluctuations on sales growth was mostly confined to Latin American countries and Japan.

        Global sales growth was led by the performance of our pharmaceutical business which delivered $1,090.4 million in revenue for 2002, an increase of 17.5% (18.7% in constant currency) over 2001. Travatan® generated $70.9 million in global sales in 2002 compared to $15.8 million in 2001. The settlement of all pending patent and trademark litigation over Travatan® with Pharmacia Corporation during the fourth quarter of 2002 assured Alcon’s continued right to sell the product globally without restriction. Our major allergy product, Patanol®, had an outstanding year and generated sales of $198.3 million in 2002, a 28.3% increase over 2001 sales of $154.5 million. 2002 sales of our other key branded pharmaceutical products Tobradex®, Ciloxan® and Cipro HC increased by 10.9%, 19.8% and 41.1%, respectively, over 2001.

        Global sales of our surgical business grew 6.0% during 2002 to $1,438.5 million from $1,357.7 million in 2001. The growth was primarily attributable to cataract and vitrectomy products, which include intraocular lenses, surgical equipment, devices and disposable products. Sales of products in our refractive product line declined by $16.0 million, in line with the trend of the industry in 2002, and reflected a slowdown in global economic activity that diminished both consumer confidence and demand for elective laser corrective surgery. Excluding the refractive line, sales for our surgical business increased 7.6% to $1,377.9 million from $1,281.1 million. We initiated a voluntary recall and termination of our SKBM® microkeratome product line during the fourth quarter of 2002 due to a small number of complaints that the applanation glass on the head of the handpiece could loosen or become misaligned. SKBM® microkeratome sales in 2002 were approximately $3 million.

        Our global consumer eye care business, which consists of contact lens care and other general eye care products, grew 3.9% (4.9% in constant currency) to $ 480.2 million in 2002 from $462.3 million in 2001. Sales of OPTI-FREE® disinfectants accounted for over 50% of the consumer line, or $264.5 million, and grew 5.4% over 2001 sales of $250.9 million.

United States

        Sales in the United States increased 11.5% to $1,632.6 million in 2002 from $1,464.6 million in 2001. Sales in our pharmaceutical business were consistent with the global trend and were primarily responsible for the growth in U.S. sales, with 2002 sales of $706.9 million, representing a 21.5% increase over 2001 sales of $581.9 million. Sales of Travatan®, which was launched in the U.S. for glaucoma treatment in 2001, increased to $44.5 million in 2002 from $13.4 million in 2001. Strong double-digit growth rates in U.S. sales were achieved for key therapeutic market segments by our branded products Patanol® at 29.2%, Ciloxan® at 21.3%, Tobradex® at 12.0% and Cipro HC at 42.8%.

        Sales in our U.S. surgical business totaled $678.3 million in 2002, a 6.0% gain over prior year sales of $639.7 million. Sales from our line of cataract and vitrectomy products increased 9.2% to $641.1 million in 2002 from $587.3 million in 2001, but were offset by a decline of 29.0% in the refractive line to $37.2 million in 2002 from $52.4 million in 2001. We received FDA approval in late 2002 for our new LADARWave® technology for customized wavefront-guided laser eye surgery in the treatment of myopia. Our consumer eye care business achieved modest growth of 1.8% in 2002 to $247.4 million from $243.0 million in 2001. Within the contact lens care line, sales related to our OPTI-FREE® disinfectant franchise increased 2.9% in 2002 to $143.0 million from $139.0 million in 2001 in a slow growing market segment. Following FDA approval, we commenced shipping OPTI-FREE® EXPRESS® No Rub™ multipurpose disinfecting solution during the fourth quarter of 2002 with our new “Lasting Comfort” claim.

International

        Sales outside the United States increased 7.3% (8.3% in constant currency) to $1,376.5 million in 2002 from $1,283.1 million in 2001. The market economies of Brazil and Argentina were largely accountable for the negative impact of currency exchange on sales growth. Sales growth in Japan, our second largest global market, lagged behind 2001 due to a weak yen and downward pricing pressures inflicted by reimbursement reductions and new generic competition against our BSS Plus® surgical irrigating solution. The euro and other major currencies strengthened against the U.S. dollar over the course of the year.

        Sales for our pharmaceutical business outside the United States in 2002 increased to $383.5 million from $345.8 million in 2001, registering growth of 10.9% (13.9% in constant currency). Travatan® was successfully launched in several major European markets in 2002 and recorded sales in more than 50 countries outside the United States. Tobradex® and Ciloxan® also made significant contributions to the pharmaceutical business totaling $55.5 million in 2002 sales. Sales of our international surgical business increased 5.9% (5.6% in constant currency) in 2002 to $760.2 million in 2002 from $718.0 million in 2001 with broad based growth across our line of cataract and vitrectomy products. Sales from our refractive business were also subject to difficult global economic conditions and declined 3.3% in 2002 to $23.4 million from $24.2 million in 2001. However, in December 2002, the first international sale of our new LADARWave® custom ablation system was recorded in Australia. Sales for our consumer eye care business outside the United States advanced 6.2% (8.4% in constant currency) to $232.8 million in 2002 from $219.3 million in 2001. Our OPTI-FREE® disinfectant franchise grew 8.6% (9.4% in constant currency) to $121.5 million in 2002 from $111.9 million in 2001.

      Gross Profit

        Gross profit increased 8.6% to $2,116.4 million in the year ended December 31, 2002 from $1,949.4 million in 2001. However, gross profit as a percent of sales decreased to 70.3% in the year ended December 31, 2002 from 70.9% in 2001. Some of this decrease was due to charges of $2.5 million in 2002 related to changes made to an employee deferred compensation plan (see note 1 to the consolidated financial statements) and costs associated with the write-off of SKBM® microkeratome inventory and related manufacturing equipment of $5.9 million, as well as negative currency effects and variations in product mix. The impact of these particular charges and costs reduced gross profit as a percent of sales for the year ended December 31, 2002 by 0.3 percentage points.

      Operating Expenses

        Selling, general and administrative expenses increased 6.4% to $1,014.7 million in the year ended December 31, 2002 from $953.7 million in 2001. This increase in expenses included charges of $9.3 million in 2002 related to changes made to an employee deferred compensation plan and $14.1 million of customer refunds and other costs associated with the decision to recall and terminate the SKBM® microkeratome product line. Selling, general and administrative expenses decreased as a percent of sales to 33.7% in the year ended December 31, 2002 from 34.7% in 2001. This percentage decrease is primarily due to overall attention to cost control, as well as lower direct-to-consumer advertising in 2002 as compared to 2001 and reduction of legal expenses as certain intellectual property dispute cases were settled in 2002.

        Research and development expenses increased 11.6% to $323.5 million in the year ended December 31, 2002 from $289.8 million in 2001. This increase in research and development expenses represents a continued investment across pharmaceutical and surgical products and charges of $4.8 million incurred in 2002 related to changes made to an employee deferred compensation plan. Research and development expenses increased slightly as a percent of sales to 10.7% in the year ended December 31, 2002 from 10.5% in 2001.

        Amortization of intangibles decreased 36.3% to $74.5 million in the year ended December 31, 2002 from $117.0 million in 2001. The decrease is primarily due to the implementation of SFAS No. 142, Goodwill and Other Intangible Assets, as discussed in note 4 to the consolidated financial statements. In connection with the voluntary recall and termination of the SKBM® microkeratome product line in the fourth quarter of 2002, a $5.9 million impairment loss on intangible assets was recorded as amortization.

      Operating Income

        Operating income increased 19.5% to $703.7 million in the year ended December 31, 2002 from $588.9 million in 2001. Operating income was negatively impacted by charges of $16.6 million in 2002 related to changes made to an employee deferred compensation plan and $25.9 million of SKBM® microkeratome recall and termination costs. Compared to 2001, operating income was favorably impacted by $42.5 million due to the change in accounting for goodwill and intangibles resulting from implementation of SFAS No. 142. The impact of these items on operating income was a decrease of $42.5 million in 2002 and $42.5 million in 2001.

        Alcon United States business segment operating income increased 24.0% to $675.3 million in the year ended December 31, 2002 from $544.7 million in 2001. Operating income was favorably impacted by $20.7 million due to the change in accounting for goodwill and intangibles resulting from implementation of SFAS No. 142. In addition, gross margin improvements and reduced selling, general and administrative spending were partially offset by $12.6 million of costs associated with the decision to recall and terminate the SKBM® microkeratome.

        Alcon International business segment operating income increased 5.5% to $428.1 million in the year ended December 31, 2002 from $405.9 million in 2001. Operating income was favorably impacted by $21.8 million due to the change in accounting for goodwill and intangibles resulting from implementation of SFAS No. 142. This favorability was offset by one time costs of $13.3 million related to the decision to recall and terminate the SKBM® microkeratome. Gross margins as a percentage of sales were negatively impacted due to the geographical sales mix and the difficult economic conditions in Latin America. Changes in exchange rates also negatively affected International business segment results.

        Operating income for the Alcon United States and Alcon International business segments does not include: (1) certain manufacturing costs (e.g., manufacturing operation period costs and manufacturing variances); (2) all research and development costs other than regulatory costs; and (3) certain other general corporate expenses. Operating income for these two business segments is determined in accordance with U.S. GAAP. Prior to 2002, Alcon measured performance on the basis of International Accounting Standards. For consistency of presentation, business segment information for 2001 has been restated on a U.S. GAAP basis.

      Interest and Other Expenses

        Interest income decreased 52.4% to $22.2 million in the year ended December 31, 2002 from $46.6 million in 2001, as a result of lower short term interest rates in 2002 and a lower average investment balance. Interest expense decreased 50.0% to $53.8 million in the year ended December 31, 2002 from $107.7 million in 2001, as a result of lower short term interest rates and lower average borrowings.

        Because the proceeds from the March 2002 IPO of Alcon common shares were not used to redeem the Alcon preferred shares held by Nestlé until May 29, 2002, they were used to reduce short term borrowings and to make short term investments during that period. If the preferred share redemption had occurred at the time of the IPO, management estimates that interest expense, net of interest income, would have been approximately $9.5 million more than actually incurred.

        Other, net, for the year ended December 31, 2002 reflected a $1.2 million gain on the sale of a marketable equity investment acquired as a result of the Summit acquisition. An impairment loss of $9.1 million was recorded in 2001 on this investment.

      Income Tax Expense

        Income tax expense increased 6.2% to $210.6 million in the year ended December 31, 2002 from $198.3 million in 2001, mainly due to higher earnings. The effective tax rate decreased to 31.1% in the year ended December 31, 2002 from 38.6% in 2001 mainly due to a larger portion of our earnings relating to jurisdictions with lower tax rates than in 2001, tax settlements and the impact of implementing SFAS No. 142.

      Net Earnings

        Net earnings increased 47.9% to $466.9 million in the year ended December 31, 2002 from $315.6 million in 2001. Excluding the impact of certain expenses for:

• changes to an employee deferred compensation plan of $10.4 million, net of income taxes, SKBM® microkeratome recall and termination costs of $17.9 million, net of income taxes, and the estimated impact of the IPO proceeds on net interest expense of $6.5 million, net of income taxes in 2002, and
• adjusting 2001 for the impact of goodwill amortization of $40.2 million, net of income taxes, to reflect the 2002 change in accounting method and impairment loss on a marketable equity investment acquired as a result of the acquisition of Summit of $6.1 million, net of income taxes,

adjusted net earnings would have increased 35.0% to $488.7 million for the year ended December 31, 2002 from $361.9 million in 2001.

Actual to Adjusted Reconciliation

	2002		2001
	(in millions)
Net earnings, as reported	$ 466.9		$ 315.6
Certain expenses:
2002 expense for changes to employee deferred compensation
plan related to Alcon’s IPO	16.6		--
2002 estimated impact of IPO proceeds on net interest expense	(9.5	)	--
2002 expense for SKBM® microkeratome recall and termination	25.9		--
2001 impairment loss on a marketable equity investment included
in a 2000 business acquisition	--		9.1
Add back 2001 goodwill amortization for 2002 change in
accounting method under SFAS No. 142	--		42.5
Income tax effects of above items	(11.2	)	(5.3	)
Adjusted net earnings	$ 488.7		$ 361.9

        The adjustments in the reconciliation above represent unusual items that have not occurred otherwise in the past two years and are not expected by management to occur in the next two years. Management believes that this information is useful to an investor’s understanding of Alcon’s financial condition and results of operations because it provides investors with a measure of the increase in 2002 net earnings over 2001 net earnings that would be attributable to Alcon’s ongoing operations without the effect of items that are unusual and not likely to recur in the future. Management’s views are based on these factors:

• The changes in deferred compensation expense and net interest expense were related to Alcon’s initial public offering during 2002 and are not expected to recur.
• A recall and termination of a product the size of the SKBM® microkeratome recall and termination is not a regular event and has not otherwise occurred in Alcon's history.
• The elimination of goodwill amortization beginning in 2002, resulting from the adoption of SFAS No.142, had a significant effect. Adjusting 2001 net earnings to reverse the 2001 goodwill amortization provides a comparable basis for analysis.
• The acquisition of Summit in 2000 included certain marketable equity securities among the assets acquired. An impairment of these securities was recorded in 2001. Such impairment losses on marketable equity securities had not occurred in the previous two years and are not expected to occur in the next two years.

        Management uses adjusted net earnings as a measure of Alcon’s economic performance. In management’s view, the normalized increase in net earnings in 2002 over 2001 should be considered to be 35.0% rather than 47.9%.

Sales by Quarter

        The following table sets forth our sales by quarter since 2001.

	Unaudited
	2003	2002	2001
	(in millions)
First	$   807.1	$   706.5	$   654.8
Second	925.4	809.5	745.9
Third	822.7	743.9	676.4
Fourth	851.7	749.2	670.6
Total	$3,406.9	$3,009.1	$2,747.7

        Our quarterly sales trends reflect seasonality in several products, including ocular allergy products and Cipro HC Otic, in the form of increased sales during the spring months, which occur during the second quarter in the northern hemisphere. The sales increase during the fourth quarter of 2003 compared to third quarter was driven by a strong performance in our International business segment, primarily in the surgical product line.

Liquidity and Capital Resources

Cash, Debt and Liquidity

        At December 31, 2003, Alcon reported cash and cash equivalents of $1,086.0 million, total debt of $1,410.3 million and consolidated shareholders’ equity of $1,591.5 million. The net debt balance (total debt minus cash and cash equivalents) declined $584.5 million during 2003 to $324.3 million as the Company continued to generate significant cash flow from operations.

        Management believes that the evolution of net debt is important to understanding the Company’s cash flow generation and overall financial health. Investors should also note that large balances of cash and cash equivalents are held in Switzerland, while the Company’s debt is located in subsidiary operating companies elsewhere. Net debt is calculated as follows:

NET DEBT	December 31, 2003	December 31, 2002
	(in millions)
Short term borrowings	$1,326.8	$1,772.8
Current maturities of long term debt	8.5	23.1
Long term debt	75.0	80.8
Total debt	1,410.3	1,876.7
Less: Cash and cash equivalents	1,086.0	967.9
Net debt	$   324.3	$   908.8

IPO — Related Activities

        The Company sold Alcon Germany to Nestlé’s German subsidiary effective January 1, 2001 for approximately $30 million, and, under the separation agreement, Nestlé’s German subsidiary sold it back to us effective January 1, 2002, for approximately $42 million. Alcon Germany’s results of operations have been consolidated by the Company and are reflected in all periods presented in the accompanying consolidated financial statements.

        On March 20, 2002, Alcon made a payment to Nestlé of $1,243.4 million for dividends and return of capital. This payment was financed from existing cash and cash equivalents and additional short term debt. The entire payment was considered a dividend under Swiss law.

        In February 2002, prior to the IPO, Nestlé converted 69,750,000 Alcon common shares into 69,750,000 Alcon non-voting preferred shares. On March 21, 2002, holders of Alcon common shares voted to redeem the preferred shares for an aggregate redemption price of CHF 3.634 billion. The proceeds, net of related costs including taxes, from the IPO were used to redeem the preferred shares for $2,188.0 million on May 29, 2002. No dividends were paid on the preferred shares.

        If the conversion of 69,750,000 Alcon common shares into Alcon preferred shares on February 25, 2002 had been delayed until the date of the IPO, earnings per share and the weighted average common shares for the year ended December 31, 2002 would have been less than reported:

	Proforma	As Reported
Basic earnings per common share	$1.51	$                  1.54
Diluted earnings per common share	$1.51	$                  1.53
Basic weighted average common shares	305,878,040	301,482,834
Diluted weighted average common shares	306,906,985	302,511,780

        On March 20, 2002, Alcon’s IPO was priced at $33.00 per share for 69,750,000 common shares. The net proceeds to Alcon from the IPO were $2,189.0 million, after offering expenses and taxes, and were used to redeem the preferred shares on May 29, 2002.

        Net proceeds of $219.1 million, after offering expenses and taxes, from the subsequent exercise of the underwriters’ over-allotment option to purchase 6,975,000 common shares were used to reduce short term indebtedness.

Preferred Shares of Subsidiary

        In May of 2000, Alcon Holdings, Inc. (“AHI”), a wholly owned subsidiary of Alcon, issued four series of non-voting, non-convertible cumulative preferred shares, with Series A, B and C denominated in Swiss francs and Series D denominated in U.S. dollars. These shares were issued as part of the creation of a U.S. holding company that would be used to make U.S. acquisitions.

        As part of a restructuring of AHI’s equity, on November 5, 2002 Alcon sold to two financial investors all of the AHI Series A and B preferred shares, 20,000 preferred shares, for a total sales price of 1.997 billion Swiss francs. Alcon also contributed to AHI, as capital in kind, all of the Series C and D preferred shares it owned. After the sale, Alcon continued to own 100% of AHI’s common shares and all voting rights in AHI.

        On November 26, 2002, AHI redeemed all of its outstanding Series A and B preferred shares. AHI paid the investors an aggregate of 2,003 million Swiss francs for the 20,000 preferred shares and accrued dividends. The preferred shares were immediately retired. AHI financed the redemption primarily with proceeds from the issuance of commercial paper.

        For the year ended December 31, 2002, earnings available to common shareholders and earnings per share were reduced by the preferred dividends and the excess of the redemption cost over the carrying value of the preferred shares, totaling approximately $3.9 million.

Other Financing Activities

        In 2002, the board of directors approved the purchase of up to 2,000,000 Alcon shares to satisfy the exercise of stock options granted to employees. During 2002, Alcon purchased 193,500 treasury shares on the market for $7.9 million. Under this same program, Alcon purchased an additional 585,100 treasury shares on the market for $34.1 million during 2003.

        The payment of dividends is subject to the availability of retained earnings or dividendable reserves under Swiss law, the proposal by our Board of Directors, and ultimately the approval of our shareholders. Future dividend payments will depend on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors in their proposal for approval to the shareholders. Subject to these limitations, we expect to declare a dividend based on 2003 operations of CHF 0.72 per common share, or approximately $0.57 per common share, totaling an estimated $176 million depending on exchange rates. We anticipate that the dividend, if it is approved by the shareholders on April 27, 2004, will be paid on or about May 14, 2004.

Investing Activities

        Net cash used in investing activities in the year ended December 31, 2003 was $175.7 million, including $157.9 million of capital expenditures related to improvements in our manufacturing and research and development facilities and other infrastructure. During this period, we also acquired intangible assets at a cost of $5.0 million. Our annual capital expenditures over the last three years were $157.9 million in 2003, $120.9 million in 2002 and $127.4 million in 2001, principally to expand and upgrade our manufacturing and research facilities.

        In 2003, the Company commenced construction of a new $24 million administrative facility located on the Fort Worth, Texas campus that will provide occupancy for offsite employees as well as serve as a training and education center for physicians, medical students and Alcon’s sales force. In order to establish manufacturing capacity for intraocular lenses outside the United States, the Company began converting the Cork, Ireland, manufacturing facility from its refractive equipment production to production of intraocular lenses. Additional expenditures were made to upgrade our manufacturing facilities in Puurs, Belgium, Kaysersberg, France, Huntington, West Virginia, and Fort Worth, Texas. We had capital expenditure commitments of $38.6 million at December 31, 2003. We expect to fund these capital projects through operating cash flow and, if necessary, short term borrowings.

        In November 2003, Alcon’s wholly owned subsidiary, Alcon Cusi S.A., completed the sale of its contact lens care solutions manufacturing facility located in Madrid, Spain, to AMO Manufacturing Spain, S.L., a wholly owned subsidiary of Advanced Medical Optics, Inc. (NYSE: AVO) for $21.6 million in cash. Alcon realized a pre-tax gain of $8.2 million from the sale during the fourth quarter of 2003.

        The production of contact lens care products previously manufactured in Madrid was transferred to the Alcon plant in Fort Worth, Texas. The Madrid plant was sold to optimize capacity levels, streamline manufacturing and distribution operations, gain efficiencies and reduce total production costs for contact lens care solutions.

Contractual Obligations

	Payments due by period
	Total	1 year or less	2-3 years	4-5 years	More than 5 years
	(in millions)
Long term debt	$  83.5	$  8.5	$  10.0	$  5.4	$  59.6
Operating leases	120.3	34.6	45.1	19.3	21.3
Purchase obligations	57.8	13.5	28.7	9.3	6.3
Other long term liabilities	302.3	24.5	50.9	37.6	189.3
Total contractual obligations	$563.9	$81.1	$134.7	$71.6	$276.5

Capital Resources

        We expect to meet our current liquidity needs, including the approximately CHF 222 million (or approximately $176 million) anticipated dividend payment subject to shareholder approval, principally through cash and cash equivalents, the liquidation of short term investments and, to the extent necessary, short term borrowings. We expect to meet future liquidity requirements through our operating cash flows and through issuances of commercial paper under the facility described below, the combination of which we believe would be sufficient even if our sales were adversely impacted as compared to expectations.

Credit and Commercial Paper Facilities

        As of December 31, 2003, Alcon and its subsidiaries had credit and commercial paper facilities of approximately $2.9 billion available worldwide, including a $2.0 billion commercial paper facility. As of December 31, 2003, $1,005.1 million of the commercial paper was outstanding at an average interest rate of 1.1% before fees. Related to this short term, floating interest rate borrowing, we have entered into two $25.0 million interest rate swaps which have a net effect of fixing the interest rate of a portion of the outstanding amount at an average rate of 2.77%, which is based on a two year rate at the time of initiation of the hedge. Nestlé guarantees the commercial paper facility and assists in its management, for which we pay Nestlé an annual fee based on the average outstanding commercial paper balances. In addition, we pay Nestlé a fee for serving as a guarantor on Japanese yen 5.0 billion ($48.9 million) of bonds maturing in 2011 arranged by ABN AMRO for our subsidiary in Japan. Nestlé’s guarantees permit Alcon to obtain more favorable interest rates, based upon Nestlé’s credit rating, than might otherwise be obtained. We believe that any fees paid by us to Nestlé for their guaranty of any indebtedness or for the management of the commercial paper program are comparable to the fees that would be paid in an arm’s length transaction. Total fees paid to Nestlé for the years ended December 31, 2003, 2002, and 2001 were $4.1million, $1.7 million and $0.1 million, respectively. The bonds contain a provision that may terminate and accelerate the obligations in the event that Nestlé’s ownership of Alcon falls below 51%.

        Alcon and its subsidiaries also had available commitments of $344.4 million under unsecured revolving credit facilities with Nestlé and its affiliates; at December 31, 2003, $111.5 million was outstanding under these credit facilities. Alcon’s subsidiaries had third-party lines of credit, including bank overdraft facilities, totaling approximately $603.2 million under which there was an aggregate outstanding balance of $210.2 million. These third-party credit facilities are arranged or provided by a number of international financial institutions, the most significant of which had the following aggregate limits: Citibank ($171.0 million); Mizuho Bank ($84.2 million); FORTIS ($47.3 million); Mitsui-Sumitomo Bank ($42.1 million); and ING ($41.6 million). The majority of the credit facilities with Nestlé and third parties are committed for less than one year and accrue interest at a rate consistent with local borrowing rates. In aggregate, these facilities had a weighted average interest rate of 2.6% at December 31, 2003.

Critical Accounting Estimates

        Our discussion and analysis of our financial condition and results of operations is based upon Alcon’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and costs, and related disclosures of contingent assets and liabilities. We base our estimates and judgments on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates and judgments under different assumptions or conditions.

        We believe that the following accounting policies involve the more significant estimates and judgments used in the preparation of our financial statements:

Sales Recognition: The Company recognizes sales in accordance with the United States Securities and Exchange Commission Staff Accounting Bulletins No. 101 and 104. Sales are recognized as the net amount to be received after deducting estimated amounts for product returns and rebates. Product returns are estimated based on historical trends and current market developments. Rebates are estimated based on historical analysis of trends and estimated compliance with contractual agreements. While we believe that our reserves for product returns and rebates are adequate, if the actual results are significantly different than the estimated costs, our sales may be over or under stated.

Inventory Reserves: The Company provides reserves on its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated fair market value based upon assumptions about future demand and market conditions. If actual market conditions become less favorable than those projected by management, additional inventory reserves may be required.

Allowances for Doubtful Accounts: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management regularly assesses the financial condition of the Company’s customers and the markets in which these customers participate. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments on our receivables from them, additional allowances may be required.

Impairment of Goodwill and Intangible Assets: The Company assesses the recoverability of goodwill annually and of intangible assets upon the occurrence of an event that might indicate conditions for an impairment could exist.

   Factors we consider important that could trigger an impairment review for intangible assets include the following:

• significant underperformance relative to expected historical or projected future operating results;
• significant changes in the manner or extent of our use of the acquired assets or the strategy for our overall business;
• significant negative industry or economic trends; and 
• significant decline in the market value of the intangible asset for a sustained period.

When we determine the carrying value of intangibles assets may not be recoverable from undiscounted cash flows based upon the existence of one or more of the above factors, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.

Management has determined that the reporting units for its annual testing for impairment of goodwill are the operating business segments used for segment reporting. Management performs its testing using both multiples of quoted market prices to operating profits and present value techniques.

To the extent that our management determines that goodwill or intangible assets cannot be recovered, such goodwill or intangible assets are considered impaired and the impairment is treated as an expense incurred in the period in which it occurs.

Tax Liabilities: Our tax returns are subject to examination by taxing authorities in various jurisdictions. Management records current tax liabilities based on their best estimate of what they will ultimately agree upon with the taxing authorities in the relevant jurisdictions following the completion of their examination. Our management believes that the estimates reflected in the financial statements accurately reflect our tax liabilities. However, our actual tax liabilities ultimately may differ from those estimates if we were to prevail in matters for which accruals have been established or if taxing authorities were to successfully challenge the tax treatment upon which our management has based its estimates.

Litigation Liabilities: Alcon and its subsidiaries are parties to a variety of legal proceedings arising out of the ordinary course of business, including product liability and patent infringement litigation. By its nature, litigation is subject to many uncertainties. Management reviews litigation claims with counsel to assess the probable outcome of such claims. Management records current liabilities for litigation based on their best estimates of what Alcon will ultimately incur to pursue such matters to final legal decisions or to settle them. Our management believes that the estimates reflected in the financial statements properly reflect our litigation liabilities. However, our actual litigation liabilities may ultimately differ from those estimates if we are unsuccessful in our efforts to defend or settle the claims being asserted.

Pension and Other Employee benefits: We must make certain assumptions in the calculation of the actuarial valuation of the Company sponsored defined benefit pension plans and postretirement benefits. These assumptions include the weighted average discount rates, rates of increase in compensation levels, expected long term rates of return on assets, and increases or trends in health care costs. If actual results are more or less favorable than those projected by management, future periods will reflect reduced or additional pension and postretirement medical expenses. See note 15 to the accompanying consolidated financial statements for additional information regarding assumptions used by the Company.

Market Risk

Interest Rate Risks

        Because we have previously financed, and expect to continue to finance, our operations in part through short term loans, we are exposed to interest rate risks. At December 31, 2003, the majority of our loans were short term, floating-rate loans that will become more expensive when interest rates rise and less expensive when they fall. We have partly mitigated this risk by investing our cash, cash equivalents, and short term investments in floating rate investments. Alcon evaluates the use of interest rate swaps and periodically uses such agreements to manage its interest risk on selected debt instruments.

Credit Risks

        In the normal course of our business, we incur credit risk because we extend trade credit to our customers. We believe that these credit risks are well diversified, and our internal staff actively manages these risks. Our principal concentrations of trade credit are generally with large and financially sound corporations, such as large retailers and grocery chains, drug wholesalers and governmental agencies. It is not unusual for our six largest customers in the United States to represent in the aggregate approximately 15% of the outstanding balance of our total accounts receivable; however, no single customer accounts for more than 10% of annual sales.

        As part of our sales of surgical equipment, we frequently finance the purchase of our equipment and enter into leases and other financial transactions with our customers. In general, transactions range in duration from one to five years and in principal amount range from $50,000 to $700,000. We conduct credit analysis on the customers we finance and secure the loans and leases with the purchased surgical equipment. Over the last 17 years, we have offered financing programs for cataract equipment with no significant losses. Our customer financing program for laser refractive surgical equipment has a shorter history, is of a larger size, and has relatively less credit strength and asset value for security. In countries that have a history of high inflation, such as Turkey, Brazil and Argentina, the credit risks to which we are exposed can be larger and less predictable.

        We conduct some of our business through export operations and are exposed to country credit risk. This risk is mitigated by the use, where applicable, of letters of credit confirmed by large commercial banks in Switzerland and the United States.

Currency Risks

        We are exposed to market risk from changes in currency exchange rates that could impact our results of operations and financial position. We manage our exposure to these currency risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. We use derivative financial instruments as risk management tools and not for speculative purposes.

        We use forward contracts to manage the volatility of non-functional currency cash flows resulting from changes in exchange rates. Currency exchange forward contracts are primarily used to hedge intercompany purchases and sales. The use of these derivative financial instruments allows us to reduce our overall exposure to exchange rate fluctuations, since the gains and losses on these contracts substantially offset losses and gains on the assets, liabilities and transactions being hedged. A number of these contracts are executed through Nestlé to take advantage of their expertise and economies of scale.

        While we hedge some non-U.S. dollar currency transactions, the decline in value of non-U.S. dollar currencies may, if not reversed, adversely affect our ability to contract for product sales in U.S. dollars because our products may become more expensive to purchase in U.S. dollars for local customers doing business in the countries of the affected currencies.

New Accounting Standards

        In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was subsequently revised in December 2003. FIN 46 interprets Accounting Research Bulletin No. 51, Consolidated Financial Statements. FIN 46 requires a variable interest entity to be consolidated when a company is subject to the majority of the risk of loss from the variable interest entity’s activities or is entitled to receive the majority of the entity’s residual returns, or both. The consolidation requirements for newly created variable interest entities and the transitional disclosure provisions of FIN 46 are effective for the Company immediately. The adoption of FIN 46 did not have an impact on our results of operations or financial position.

        In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This Statement amends and clarifies accounting for derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The Statement is effective for contracts entered into or modified and hedging relationships designated after June 30, 2003, and to certain preexisting contracts. The adoption of SFAS No. 149 did not have an impact on our results of operations or financial position.

        In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on our results of operations or financial position.

        In May 2003, the FASB’s Emerging Issues Task Force (“EITF”) reached consensus on EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF 00-21 sets forth criteria to govern how to identify whether goods or services or both that are to be delivered separately in bundled sales arrangements should be accounted for separately. The guidance in EITF 00-21 was effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 had no significant impact on our results of operations or financial position.

        In December 2003, the U.S. Securities and Exchange Commission’s Office of the Chief Accountant and the Division of Corporation Finance announced the release of Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.” This staff accounting bulletin updated portions of the interpretative guidance included in Topic 13 of the codification of staff accounting bulletins in order to make this interpretive guidance consistent with current authoritative accounting guidance.

        The principal revisions were related to the deletion of interpretive material no longer necessary because of private sector developments in U.S. generally accepted accounting principles (principally EITF 00-21), and the incorporation of certain sections of the staff’s “Revenue Recognition in Financial Statements – Frequently Asked Questions and Answers” document into Topic 13. The release of SAB No. 104 did not have a material impact on our results of operations or financial position.

        In December 2003, the FASB issued SFAS No. 132 (revised 2003) Employers’ Disclosures about Pensions and Other Postretirement Benefits. This statement requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined postretirement plans. The Company has adopted the portion of the Statement that is effective for financial statements with fiscal years ending after December 15, 2003. The Company is still analyzing this Statement to determine how it will affect the disclosures in future annual and interim periods.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.     DIRECTORS AND SENIOR MANAGEMENT.

        Below is information with respect to our current directors and officers. Unless otherwise indicated, the business address of all of our directors and officers is c/o Alcon, Inc., Bösch 69, P.O. Box 62, 6331 Hünenberg, Switzerland.

Name	Age	Title
Timothy R. G. Sear	66	Chairman, President, Chief Executive Officer and Director; Chairman, President and Chief Executive Officer, Alcon Laboratories, Inc.
Dr. Werner J. Bauer	53	Director; Executive Vice President, Technical, Production, Environment and R&D, Nestlé S.A.; Member, Supervisory Board of Cereal Partners Worldwide; Co-chairman, Life Ventures Nestlé S.A.; Chairman, Hans Rychiger AG; Member of Board of Trustees, Bertelsmann Foundation, Germany; Board Member of the Swiss Sociey of Chemical Industries
Peter Brabeck-Letmathe	59	Vice Chairman and Director; Vice Chairman and Chief Executive Officer, Nestlé S.A.; Vice Chairman, Dreyer’s Grand Ice Cream Holdings, Inc.; Vice Chairman, Credit Suisse Group; Director, Roche Holding AG and L'Oréal S.A.
Francisco Castañer	59	Director; Executive Vice President, Pharmaceutical and Cosmetic Products, Liaison with L'Oréal S.A., Human Resources, Corporate Affairs, Nestlé S.A.; Director, L'Oréal S.A.
Dr. Wolfgang H. Reichenberger	50	Director; Executive Vice President, Chief Financial Officer, Nestlé S.A.; Director, Société Montreux Palace S.A.; Admission Board, Member of Executive Committee, SWX Swiss Exchange
Philip H. Geier, Jr	69	Director; Chairman Emeritus, The Interpublic Group of Companies, Inc.; Director, AEA Investors Inc., Fiduciary Trust International, Intermedia Advertising Group, Foot Locker Inc., and Mettler Toledo International Inc.
Lodewijk J.R. de Vink	59	Director; Founding Partner, Blackstone Health Care Partners; Member, Supervisory Board of Royal Ahold, Advisory Board of Sotheby’s International, European Advisory Council of Rothschild & Cie.
Thomas G. Plaskett	60	Director; Chairman, Fox Run Capital Associates; Director, Radio Shack Corporation, Smart & Final, Inc., Novell Corporation, and several privately held companies; Trustee, Kettering University
Stefan Basler	49	Attorney-in-Fact (Prokurist)
Jacqualyn A. Fouse	42	Senior Vice President, Finance and Chief Financial Officer
Guido Koller	59	Senior Vice President (Direktor)
Martin Schneider	44	Attorney-in-Fact (Prokurist)
Elaine E. Whitbeck	49	Corporate Secretary and General Counsel

        Alcon, Inc. is a holding company which operates principally through its operating subsidiaries. Our board of directors is responsible for the ultimate direction of Alcon, Inc., as a holding company, and will determine our business strategy and policies and those of our operating subsidiaries. The executive officers of Alcon, Inc. are responsible for certain administrative matters, the exercise of shareholder rights with respect to our subsidiaries, the funding of research and development projects, the administration and purchase of intellectual property rights and the collection of related license income.

        Our principal subsidiary in the United States is Alcon Laboratories, Inc. Under the supervision of our board of directors, the executive officers of Alcon Laboratories, Inc. coordinate and manage the ongoing business and operations of our operating subsidiaries, including research and development, manufacturing, sales and distribution, marketing, financing and treasury.

        Below is information with respect to the current executive officers of Alcon Laboratories, Inc. Unless otherwise indicated, the business address of all of these officers is c/o Alcon Laboratories, Inc., 6201 South Freeway, Fort Worth, Texas 76134-2099.

Name	Age	Title
Timothy R.G. Sear	66	Chairman, President and Chief Executive Officer
Dr. G. André Bens	52	Senior Vice President, Global Manufacturing and Technical Support
Dr. Gerald D. Cagle	59	Senior Vice President, Research & Development
Jacqualyn A. Fouse	42	Senior Vice President, Finance and Chief Financial Officer
Cary R. Rayment	56	Senior Vice President, Alcon United States

Mr. Fred Pettinato, Senior Vice President, International of Alcon Laboratories, Inc., retired effective January 2, 2004.

        Under the separation agreement, Nestlé has the right to nominate four members to our board of directors for so long as Nestlé holds at least a majority of our outstanding common shares. In addition, Nestlé has agreed, for so long as Nestlé holds at least a majority of our outstanding common shares, to vote all of its common shares in favor of three nominees for election to our board of directors who are independent and neither affiliated with us nor with Nestlé and that the chief executive officer of Alcon Laboratories, Inc. will be a member of our board of directors. If a Nestlé-nominated director resigns from office, Nestlé will have the right to nominate a replacement director. Any vacancies among our independent directors will be filled by another independent person who will be nominated by the full board of directors.

B.     COMPENSATION

        We provide our board of directors with compensation and benefits that will attract and retain qualified directors. In 2003, all members of our board of directors, except for our chief executive officer, received an annual cash retainer of $50,000. We refer to a director who is neither a member of Nestlé’s board of directors nor a full-time employee of Nestlé or Alcon as a non-employee director. We expect to award our non-employee directors non-qualified stock options to purchase our common shares. Each year, the number of non-qualified stock options will be determined by dividing $100,000 by the expected Black-Scholes value of an option to purchase one common share on the date of grant. In 2003, each of the non-employee directors was awarded 4,500 non-qualified stock options.

        We do not have any service contracts with any of our directors.

        In the fiscal years ended December 31, 2003 and December 31, 2002, our directors did not receive any other compensation or benefits-in-kind from Alcon, Inc. except as noted above. The executive officers received stock options and in some cases, restricted shares from Alcon, Inc. as indicated in this Compensation section.

        The following compensation table sets forth information regarding compensation and benefits in-kind paid during the fiscal years ended December 31, 2003, 2002 and 2001 to the executive officers of Alcon Laboratories, Inc.

Summary Compensation Table

					Long Term Compensation
		Annual Compensation			Awards		Payouts
Name	Year	Salary ($)	Bonus (4) ($)	Other Compensation(5) ($)	Restricted Stock Awards(6) ($)	Securities Underlying Options (#)	LTIP Payouts (7) ($)	All Other Compensation(8) ($)
Timothy R.G. Sear(1)	2003	940,000	1,271,400	38,622		340,000	1,233,037	330,927
	2002	940,000	940,000	37,500		357,830	527,561	291,016
	2001	860,000	750,000	37,750			418,149	258,868
Dr. Gerald D. Cagle	2003	540,800	450,000	35,122		135,000	548,045	123,785
	2002	520,000	420,000	33,417		151,215	458,749	163,823
	2001	460,000	410,000	30,750			188,167	143,816
Dr. G. André Bens	2003	364,000	291,000	29,122		72,500	246,637	93,837
	2002	350,000	250,000	28,000		78,175	183,500	87,094
	2001	315,000	250,000	27,583			167,260	82,799
Fred J. Pettinato (2)	2003	412,000	359,000	31,622		85,000	163,598	112,695
	2002	400,000	300,000	30,083		91,614	137,625	104,032
	2001	315,000	230,000	27,583			83,630	85,337
Cary R. Rayment	2003	416,000	370,000	31,622		95,000	191,829	119,703
	2002	400,000	300,000	30,083		91,903	160,562	109,240
	2001	315,000	215,000	27,833			146,352	88,745
Jacqualyn A. Fouse(3)	2003	425,000	163,000	31,622		85,000		86,283
	2002	175,000		14,000		35,000		21,370

(1) In 2001, Mr. Sear received a grant of 4,300 stock options to purchase Nestlé shares. In 2002, all of Mr. Sear’s outstanding stock options to purchase shares of Nestlé stock were converted into 80,000 nonqualified stock options to purchase Alcon common shares.

(2) Mr. Pettinato retired effective January 2, 2004.

(3) Ms. Fouse was hired on July 1, 2002.

(4) Bonus paid in 2003 was for 2002 performance. Bonus paid in 2002 was for 2001 performance. Bonus paid in 2001 was for performance in 2000.

(5) Includes payments made for car allowance and financial consulting services.

(6) At the time of the IPO in March of 2002, employees had to make an election to convert units received under the 1994 Phantom Stock Plan to Alcon restricted shares. All persons named in the Summary Compensation Table elected to convert. Ms. Fouse had no Phantom Stock units to convert. Summarized below are the total restricted shares outstanding at December 31, 2003 and the value by vesting date. The value is based on the closing price of the shares on the New York Stock Exchange on December 31, 2003. The holders of all converted restricted shares will have all the rights of a shareholder of the Company, including the right to receive dividends thereon.

		Dollar Value Vesting in
Name	Total Restricted Shares at 12/31/03 (#)	2004	2005	2006
Timothy R.G. Sear	115,926	$2,324,857	$2,337,692	$2,355,611
Dr. Gerald D. Cagle	50,262	929,955	935,101	1,177,806
Dr. G. André Bens	24,759	418,513	420,814	659,583
Fred J. Pettinato	25,547	372,018	420,814	753,784
Cary R. Rayment	25,547	372,018	420,814	753,784

    Mr.  Pettinato’s restricted shares shown above vested upon his retirement effective January 2, 2004.

(7) The 2003 long term incentive plan (“LTIP”) payments reflect Restricted Stock shares vested in the current year that were converted from Phantom Stock Plan units in 2002 (see footnote 6). Payouts in 2002 and 2001 were payments made under the 1994 Phantom Stock Plan, which was created to provide additional incentives to key employees upon whom Alcon must depend for its growth and success.

(8) Provides the aggregate amount of employer contributions to the Alcon 401(k) Retirement Plan, and compensation payments made to the Executive Universal Life Insurance and the Umbrella Liability Insurance plans.

Stock Option Grant Table

        The following table sets forth the nonqualified stock option grants made during 2003.

Name	Alcon Incentive Stock Options Granted # (1)	% of Total Options Granted to Employees in 2003		Exercise or Base Price	Expiration Date	Grant Date Present Value (2)
Timothy R.G. Sear	340,000	5	.62%	$ 36.39	2/18/2013	3,419,040
Dr. Gerald D. Cagle	135,000	2	.23%	36.39	2/18/2013	1,357,560
Dr. G. André Bens	72,500	1	.20%	36.39	2/18/2013	729,060
Fred J. Pettinato	85,000	1	.40%	36.39	2/18/2013	854,760
Cary R. Rayment	95,000	1	.57%	36.39	2/18/2013	955,320
Jacqualyn A. Fouse	85,000	1	.40%	36.39	2/18/2013	854,760

(1) Options were granted in 2003 pursuant to the 2002 Alcon Incentive Plan. In general, incentive stock options will vest in full on the third anniversary of the date of grant, or on an option holder’s death, permanent disability or retirement. Upon the termination of an option holder’s employment with Alcon (not as a result of disability, death or retirement), all vested options will be exercisable for thirty days. All unvested options will be forfeited. Where the termination of employment is due to (a) retirement or (b) death or disability, they may be exercisable for their remaining term, or for 60 months, respectively.

(2) Based on the Black Scholes model of option valuation to determine grant date fair value, as prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the option is exercised, so there is no assurance the value realized will be at or near the value estimated by this model. The following assumptions were used in the Black-Scholes model: expected volatility, 33%; risk-free interest rate, 2.92%; dividend yield, 1%; expected life, 4 years.

Aggregated Option Exercises and Fiscal Year End Option Value Table

			Number of Securities Underlying Unexercised Options at 12/31/03 (#)		Value of Unexercised In-the- Money Options at 12/31/03 ($)
Name	Shares Acquired On Exercise	Value Realized $	Exercisable	Unexercisable	Exercisable	Unexercisable
Timothy R.G. Sear			19,083	758,747	525,546	19,743,292
Dr. Gerald D. Cagle			8,320	277,895	229,133	7,195,578
Dr. G. André Bens			4,017	146,658	110,628	3,793,187
Fred J. Pettinato (1)	3,832	51,732	0	172,782	0	4,470,267
Cary R. Rayment			3,927	182,976	108,150	4,717,109
Jacqualyn A. Fouse			0	120,000	0	3,021,900

(1)     Mr. Pettinato’s stock options shown above vested upon his retirement effective January 2, 2004.

Pension Plans

    Messrs.  Sear, Rayment and Pettinato and Drs. Cagle and Bens and Ms. Fouse participate in the non-qualified Executive Salary Continuation Plan (“ESCP”). This plan is unfunded and non-contributory and provides for a fixed retirement benefit based on the participant’s years of participation service under the plan, using the average of the annual base compensation in effect in the year of separation from service and for the two years preceding such year of separation. Benefits are payable upon retirement at the normal retirement age of 62 or earlier if certain conditions are met earlier. Annual compensation includes the amount shown as annual base salary in the Summary Compensation Table. The three-year average annual base compensation for 2003 is $913,333 for Mr. Sear, $506,933 for Dr. Cagle, $343,000 for Dr. Bens, $375,667 for Mr. Pettinato, $377,000 for Mr. Rayment and $387,500 for Ms. Fouse. At December 31, 2003, Mr. Sear and Dr. Cagle had participation service of 20 years or more, Dr. Bens had participation service of 17 years, Messrs. Pettinato and Rayment had participation service of 15 years and Ms. Fouse had participation service of 4 years based upon prior service with Alcon and Nestlé.

        The Executive Salary Continuation Plan’s benefit formula is three percent of a participant’s three-year average annual base compensation times years of participation, up to a maximum of 20 years. A participant must attain at least 10 years of participation service in order to have a vested benefit.

        In December 2003, the board of directors approved a new non-qualified Alcon Supplemental Executive Retirement Plan (“ASERP”). If certain conditions are met, the ASERP provides for a maximum benefit of up to 30% of the final three-years’ average base salary and bonus at retirement, payable for the remaining life of the participant. Effective January 1, 2004, all new participants will participate in the ASERP. Existing ESCP participants will continue to accrue benefits under the ESCP through December 31, 2008. Thereafter, they will begin to accrue benefits for future service under the provisions of the ASERP; however, the normal form of payment for benefits accrued under ASERP by current ESCP participants will be a single life annuity with a 50% surviving spouse’s benefit.

        As of January 1, 2002, the Alcon Laboratories, Inc. Employees’ Retirement Plan (money purchase plan) was merged into the Alcon Laboratories, Inc. Employees Profit Sharing Plan and Trust; the resulting plan is the Alcon 401(k) Retirement Plan. Subject to applicable legal limits, the Company matches employee contributions of up to 5% of compensation on a 2.4 to 1 basis; for every $1 contributed by the employee, up to 5% of compensation, Alcon contributes $2.40.

2002 Alcon Incentive Plan

        Our board of directors adopted the 2002 Alcon Incentive Plan prior to the initial public offering.

        The 2002 Alcon Incentive Plan is intended to help us retain and motivate our key employees. Through this plan, we are able to grant our employees’ stock options, stock appreciation rights, restricted shares and other awards based on our common shares, in addition to performance-based annual and long term incentive awards. Through share ownership, we are able to align employee and shareholder interests, by directly linking incentive awards to our profitability and increases in shareholder value.

Eligibility and Award Limits

        Our employees and directors and employees of our subsidiaries and affiliates are eligible to receive awards under the 2002 Alcon Incentive Plan. Employees of Nestlé and its subsidiaries other than Alcon are not eligible to receive awards under this plan.

        Under the 2002 Alcon Incentive Plan, limits are placed on the maximum award amounts that may be granted to any employee in any plan year.

Administration

        The 2002 Alcon Incentive Plan is administered by the compensation committee of our board of directors, which has the authority to recommend and set the terms and conditions of the grant awards. Our board of directors is responsible for approving the recommendations of the compensation committee.

        For our employees who are not considered executive officers, the compensation committee may delegate its authority under the Alcon Incentive Plan to our executive officers, subject to certain guidelines.

Shares Reserved for Awards

        Under the 2002 Alcon Incentive Plan, a total of 30 million common shares may be issued for awards. Through December 31, 2003, approximately 2.3 million of these common shares had been issued under this plan.

        Our board of directors has the authority to make appropriate adjustments to the limits described above as well as to the terms of outstanding awards, in the event of any transaction that affects our common shares such as share splits, share dividends or other similar events.

        Awards of stock options that expire unexercised, stock appreciation rights or restricted shares that are forfeited under the terms of this plan or stock appreciation rights that are exercised for cash are not included in applying the maximum limit for our common shares available for grant under this plan.

Annual and Long Term Incentive Awards

        Annual and long term incentive awards may be granted under the 2002 Alcon Incentive Plan. The awards are considered earned only if corporate, business segment or performance goals over the performance period satisfy the conditions established by the compensation committee and approved by our board of directors. The performance objectives, which may vary from employee to employee, are based on one or more financial measures and additional non-financial measures.

        Awards, as determined by our board of directors, may be paid in the form of cash, common shares or any combination of these items.

        Under the 2002 Alcon Incentive Plan, selected executive officers are awarded performance-based incentive awards, subject to a maximum limit.

Stock Options

        Under the 2002 Alcon Incentive Plan, we may grant to eligible employees stock options that are either incentive stock options or nonqualified stock options. Nonqualified stock options will not qualify as incentive stock options for federal income tax purposes under Section 422 of the U.S. Internal Revenue Code of 1986.

        The compensation committee will recommend to our board of directors for approval the number and type of stock options to grant, as well as the exercise price, applicable vesting schedule, option term and any applicable performance criteria. Unless otherwise decided by our board of directors, stock options will vest in full on the third anniversary of the date of grant, or on an option holder’s death, permanent disability or retirement (as defined in the 2002 Incentive Plan). Upon the termination of an option holder’s employment with us, all vested options will be exercisable for thirty days; provided, however, that where the termination of employment is due to (i) retirement or (ii) death or disability, they may be exercisable for their remaining term, or for 60 months, respectively. All unvested options will be forfeited. The grant price for any stock option will be not less than the fair market value of our common shares on the grant date. Unless our board of directors provides for a different period, stock options will have a term of ten years.

Stock Appreciation Rights

        We may grant stock appreciation rights, which will entitle the holder of the stock option to receive an amount equal to the difference between the fair market value and the grant price. Unless determined otherwise by our board of directors, stock appreciation rights will vest in full on the third anniversary of the date of grant or on a holder’s death, permanent disability or retirement. Upon the termination of a holder’s employment with us, all vested stock appreciation rights will be exercisable for thirty days; provided, however, that where the termination is due to (i) retirement or (ii) death or disability, they may be exercisable for the remaining term, or for 60 months, respectively. Stock appreciation rights granted in tandem with stock options can be exercised only if the related stock option is exercisable at that time. Unless our board of directors provides for a different period, stock appreciation rights will have a term of ten years.

Restricted Shares

        We are permitted to grant restricted shares. A restricted share is a common share granted to a participant subject to restrictions determined by the board of directors. A restricted share will vest and become transferable upon satisfaction of the conditions set forth in the restricted share award agreement. Restricted share awards will be forfeited if a recipient’s employment terminates prior to vesting of the award. Unless otherwise specified in the restricted share award agreement, restricted share awards will vest upon a holder’s death, permanent disability or retirement and holders of restricted shares will have the same rights on his or her restricted shares as holders of common shares.

Phantom Shares

        We are permitted to grant phantom shares under the 2002 Alcon Incentive Plan. The value of any phantom shares granted under the plan will be determined in relation to the fair market value of a common share. The board of directors will have the right to determine the initial value of the phantom share, the applicable valuation dates for the phantom share grants, vesting and the maximum amount of appreciation value payable on the phantom shares.

Other Share-Based Awards

        The 2002 Alcon Incentive Plan also allows us to provide awards that are denominated in or valued by reference to our common shares. These types of awards include performance shares and restricted share units. Upon satisfaction of certain performance goals, the recipient will be entitled to receive a specified number of common shares or the cash equivalent. The value of an award will be based on the difference between the fair market value of the covered shares and the exercise price. The grant price for the award will not be less than the fair market value of our common shares on the grant date.

Change-Of-Control Provisions

        In the event of a change-of-control (as defined under the 2002 Alcon Incentive Plan), the following events will occur if the agreement covering the award so provides:

• all stock options and stock appreciation rights will become fully vested and exercisable; 
• all restrictions on outstanding restricted shares and other share-based awards will lapse; and 
• all outstanding incentive awards will vest and be paid out on a prorated basis.

Corporate Transactions

        In the event of certain corporate transactions described in the 2002 Alcon Incentive Plan, our board of directors may:

• require the exercise of all outstanding awards during a specified time period, after which the awards shall be terminated;
• cancel all outstanding awards in exchange for a cash payment equal to the value of the awards; or
• immediately vest all outstanding stock options and stock appreciation rights, remove all restrictions on restricted share awards, performance-based awards and other share-based awards, and vest and pay pro rata (based on when the corporate transaction occurs in the applicable performance cycle) all outstanding incentive awards.

Amendment

        Our board of directors has the authority to amend the 2002 Alcon Incentive Plan at any time, provided that no amendment that increases the number of our common shares subject to the 2002 Alcon Incentive Plan is made without shareholder approval.

Transferability and Other Terms

        Options or awards granted to an employee under the 2002 Alcon Incentive Plan may not be transferred except by will or the laws of descent and distribution. In addition, only the employee may exercise options or awards during his or her lifetime.

        In the case of nonqualified stock options, however, the Board has the authority to permit all or any part of a nonqualified stock option to be transferred to members of the employee’s immediate family and certain family trusts or partnerships, subject to prior written consent of the compensation committee.

Alcon Executive Deferred Compensation Plan

        The Company adopted the Alcon Executive Deferred Compensation Plan (the “DCP”) effective October 25, 2002. The DCP allows certain U. S. employees the opportunity to defer the receipt of salary, bonus, restricted shares and stock option gains. The DCP further provides that restricted shares and stock option gains deferred by eligible executives can only be invested in Alcon common shares and distributed as Alcon common shares at the end of the deferral period.

Alcon Excess 401(k) Plan

        The Company adopted the Alcon Excess 401(k) Plan effective January 1, 2004. This plan provides deferral of excess employer contributions that cannot be made to the Alcon 401(k) Retirement Plan because of limitations under the U.S. Internal Revenue Code of 1986.

Phantom Stock Conversion

        Prior to the IPO, our board of directors approved a conversion plan for our 1994 Phantom Stock Plan. This new conversion plan converted the projected unit value of our Phantom Stock Plan to restricted shares through the voluntary decision of each participant. Participants who elected not to convert into restricted shares remained in the 1994 Phantom Stock Plan with respect to the units previously awarded. The number of restricted Alcon common shares converted was determined by dividing the conversion value by $33, the offering price of our common shares. Participants who so opted to convert their phantom shares received an additional 20% of the conversion value in non-qualified stock options. The number of non-qualified stock options was determined by taking 20% of the conversion value and dividing it by the approved Black-Scholes value of an option to purchase one Alcon common share on the date this offering was consummated, discounting for risk of forfeiture. Restricted shares and stock options issued in this conversion were disregarded in applying the limits on the maximum award amounts that may be granted to any employee in any year.

        This conversion plan was intended to align the interests of our middle and senior level management with the interests of our shareholders. For participants who were tax residents of a country where restricted stock was not possible or became immediately taxable, participants received other share-based awards such as restricted stock units. Retirees who were holding accrued balances under the 1994 Phantom Stock Plan were not eligible for the conversion.

        The restricted shares have the following vesting schedule: the number of restricted shares obtained from the conversion value of the 1998 Phantom Stock grant vested on January 1, 2003, the number of restricted shares obtained from the conversion value of the 1999 Phantom Stock grant will vest on January 1, 2004, the number of restricted shares obtained from the conversion value of the 2000 Phantom Stock grant will vest on January 1, 2005 and the number of restricted shares obtained from the conversion value of the 2001 Phantom Stock grant will vest on January 1, 2006. The restricted shares will vest in full upon a change of control of Alcon.

        Out of a possible 2,334,850 Phantom Stock units outstanding at December 31, 2001, 1,440,850 units were converted to Alcon Restricted Shares or Restricted Share Units. The following table sets forth the actual dollar values at March 20, 2002 that were converted into restricted shares or equivalent units:

Restricted Stock Recipient	Value
Timothy R.G. Sear	$  4,933,236
Dr. Gerald D. Cagle	2,150,973
Dr. G. André Bens	1,038,609
Cary R. Rayment	1,015,377
Fred J. Pettinato (1)	990,759
Executive officers of Alcon and Alcon Laboratories, Inc.
as a group (5 executives)	$10,128,954
All other eligible employees of Alcon and its subsidiaries as a
Group (approximately 951 employees)	$62,956,278

    (1)        Mr. Pettinato’s unvested restricted shares became vested upon his retirement effective January 2, 2004.

        The exercise price for the options or equivalent share based awards was equal to the offering price per common share. The options or share based awards will vest in phases: 33% became exercisable on the first anniversary date of the grant, 33% will become exercisable on the second anniversary date of the grant, and the remaining 34% will become exercisable on the third anniversary date of the grant. These awards will expire 10 years from the date of the grant, unless terminated earlier as a result of employment termination. The options and share based awards will vest in full upon a change of control of Alcon.

        The following table sets forth the actual dollar values at March 20, 2002 of options awarded as a result of conversion:

Stock Option Recipient	Value
Timothy R.G. Sear	$     986,638
Dr. Gerald D. Cagle	430,193
Dr. G. André Bens	207,718
Cary R. Rayment	203,077
Fred J. Pettinato (1)	198,146
Executive officers of Alcon and Alcon Laboratories, Inc.
as a group (5 executives)	$  2,025,772
All eligible employees of Alcon and its subsidiaries as a
group (approximately 951 employees)	$12,674,173

    (1)        Mr. Pettinato’s unvested stock options became vested upon his retirement effective January 2, 2004.

        Additionally, a non-compete clause was included in the restricted share awards and stock option agreements related to the Phantom Stock Plan conversion. The non-compete requirement applied to all participants of the Phantom Stock Plan and was effective immediately upon conversion of the phantom stock. The conditions of the non-compete requirement are similar to those outlined in the 1994 Phantom Stock Plan, which are briefly summarized below.

        Upon termination of employment, through voluntary or involuntary separation from Alcon by retirement or otherwise in circumstances that result in a participant holding or vesting in restricted shares, the participant must not compete in the same or a substantially similar business as those in which we and our affiliated companies that are engaged in the pharmaceutical business are engaged in or are contemplating entering at the time of termination of employment. This obligation will lapse as to given restricted shares on the date on which those shares would have otherwise vested in accordance with the vesting schedule set forth above. If any of the conditions of this non-compete requirement are violated, the participant will be required to return to us the number of restricted shares that were originally scheduled to vest after the date the participant first violated the non-competition agreement (or cash equal to their then-current value).

Alcon Directors

        The stock option grants to non-employee directors under the 2002 Alcon Incentive Plan will promote greater alignment of interests between our non-employee directors, our shareholders and Alcon. It will assist us in attracting and retaining highly qualified non-employee directors, by giving them an opportunity to share in our future success. Only non-employee directors will be eligible to receive awards under the 2002 Alcon Incentive Plan.

      Shares Reserved for Awards

        Approximately 60,000 of the 30 million common shares under the 2002 Alcon Incentive Plan will be available for awards to non-employee directors.

      Annual Awards

        Every year, each non-employee director will receive non-qualified stock options to purchase common shares. The number of non-qualified stock options will be calculated by dividing $100,000 by the expected Black-Scholes value of an Alcon stock option.

C.     BOARD PRACTICES

Board Composition

        Under the terms of the separation agreement that we entered into with Nestlé in connection with the initial public offering in March 2002, Nestlé has the right to nominate four members of our board of directors for so long as it owns at least a majority of our outstanding common shares. Nestlé has also agreed in the separation agreement to vote all of the common shares it owns in favor of three nominees for election to our board of directors who are not otherwise affiliated with either Nestlé or Alcon for so long as it owns at least a majority of our outstanding common shares.

        Our board of directors consists of eight members, including three independent directors, four directors affiliated with Nestlé and the chief executive officer of Alcon Laboratories, Inc. All of our directors began their current terms in 2002, with the exception of Thomas G. Plaskett, whom the shareholders elected as an independent director at the annual general meeting of the shareholders on May 20, 2003.

        Members of our board of directors generally are elected to serve three-year terms (subject to a maximum of two re-elections, except for the chief executive officer of Alcon Laboratories, Inc., who is exempt from this limitation). In 2002 our board of directors was divided into three classes serving staggered terms. As a result, some of our directors elected in 2002 and 2003 will serve terms that are less than three years. As their terms of office expire, the directors of one class will stand for election each year as follows:

• Class I directors have terms of office expiring at the annual general meeting of shareholders in 2006. These directors are Philip H. Geier, Jr., and Peter Brabeck-Letmathe;
• Class II directors have terms of office expiring at the annual general meeting of shareholders in 2004. These directors are Lodewijk J.R. de Vink, Francisco Castaner, and Werner Bauer; and
• Class III directors have terms of office expiring at the annual general meeting of shareholders in 2005. These directors are Dr. Wolfgang H. Reichenberger, Timothy R.G. Sear and Thomas G. Plaskett.

        Our organizational regulations provide that directors will retire from office no later than the annual general meeting after their 72nd birthday.

Board Committees

        Our board of directors has appointed an audit committee, a nominating/corporate governance committee and a compensation committee. In addition, our organizational regulations provide that the board of directors shall form a special committee of independent directors to consider the types of matters described below. Our board of directors also appointed in 2002 a research and development and scientific advisory board, which is not a committee of our board of directors.

Audit Committee

        The audit committee consists of three directors who are not otherwise affiliated with either Nestlé or Alcon. In 2003, the audit committee was comprised of Lodewijk J. R. de Vink (chairman), Philip G. Geier, Jr. and Thomas G. Plaskett. In September 2003, the Board affirmed that Mr. Plaskett was the “audit committee financial expert”. The functions of this committee include ensuring proper implementation of the financial strategy as approved by the board of directors, reviewing periodically the financial results as achieved, overseeing that the financial performance of the group is properly measured, controlled and reported, and recommending any share repurchase program for approval by our board of directors, as well as:

• review of the adequacy of our system of internal accounting procedures;
• recommendations to the board of directors as to the selection of independent auditors, subject to shareholder approval;
• discussion with our independent auditors regarding their audit procedures, including the proposed scope of the audit, the audit results and the related management letters;
• review of the audit results and related management letters; 
• review of the services performed by our independent auditors in connection with determining their independence; 
• review of the reports of our internal and outside auditors and the discussion of the contents of those reports with the auditors and our executive management; 
• overseeing the selection and the terms of reference of our internal and outside auditors; 
• review and discussion of our quarterly financial statements with our management and our outside auditors; and
• ensure our ongoing compliance with legal requirements, accounting standards and the provisions of the New York Stock Exchange. 

Nominating/Corporate Governance Committee

        The nominating/corporate governance committee shall consist of two directors who are not otherwise affiliated with either Nestlé or Alcon and one director designated by the majority shareholder, currently the vice chairman of our board of directors. This committee is comprised of Lodewijk J.R. de Vink, Philip G. Geier, Jr., and Peter Brabeck-Letmathe. The functions of this committee include:

• subject to certain nomination rights of Nestlé as provided in our organizational regulations and the separation agreement, identifying individuals qualified to become members of our board of directors and recommending such individuals to the board for nomination for election by the shareholders;
• making recommendations to the board concerning committee appointments; 
• developing, recommending, and annually reviewing corporate governance guidelines for Alcon;
• reviewing proposals of the chief executive officer for appointment of members of our executive management, to the extent such members are appointed by the board, and making recommendations to the board regarding such appointments;
• overseeing corporate governance matters; and 
• coordinating an annual evaluation of Alcon's board.

Compensation Committee

        The compensation committee consists of two members of our board of directors who are not otherwise affiliated with either Nestlé or Alcon and of one member of our board of directors nominated by Nestlé. The compensation committee is comprised of Philip G. Geier, Jr., J. R. de Vink and Francisco Castaner. The functions of this committee include:

• review of our general compensation strategy;
• recommendations for approval by our board of directors of compensation and benefits programs for our executive  officers;
• review of the terms of employment between Alcon and any executive officer or key employee;

• administration of our long term incentive plan and recommendations to our board of directors for approval of individual grants under this plan; and
• decisions with respect to the compensation of members of our board of directors.

Special Committee of Independent Directors

        Our organizational regulations provide that if any of the following transactions is proposed to be taken by the Company, the board of directors shall form a special committee of no less than three independent and disinterested directors who shall be responsible for protecting the interests of our minority shareholders and shall make recommendations to the board of directors with respect to:

• a proposed merger, takeover, business combination or related party transaction with our current majority shareholder or any group company of our current majority shareholder;
• a proposed bid for the minority shareholdings of Alcon by any entity owning a majority of our outstanding voting  rights; 
• a proposed repurchase by us of all our shares not owned by an entity owning a majority of the outstanding voting rights of Alcon; or 
• any change to the powers and duties of the special committee of independent directors.

        Our board of directors will only approve a decision with respect to any of these matters if a majority of the members of the special committee of independent directors so recommends.

Research and Development and Scientific Advisory Board

        The research and development and scientific advisory board is not a committee of our board of directors, and is composed of one representative of Alcon, one representative of Nestlé and scientists who are not otherwise affiliated with Alcon and Nestlé. The scientific advisory board reviews and makes recommendations regarding Alcon’s research and development objectives. It also monitors new developments, trends and initiatives in the pharmaceutical industry.

Compliance with NYSE Listing Standards on Corporate Governance

        On November 4, 2003, the Securities and Exchange Commission approved new rules proposed by the New York Stock Exchange (the “NYSE”) intended to strengthen corporate governance standards for listed companies. These new corporate governance listing standards supplement the corporate governance reforms already adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002.

         Alcon has adopted Corporate Governance Guidelines, which are publicly available on its Web site, www.AlconInc.com. Alcon will provide a printed copy of its Corporate Governance Guidelines to its shareholders upon request.

        The new NYSE rules do not change the NYSE traditional approach permitting listed companies that are foreign private issuers, such as Alcon, to follow their home jurisdiction governance practice where it differs from the NYSE requirements. However, listed companies that are foreign private issuers must disclose any significant ways in which their corporate governance practices differ from those followed by US companies under NYSE listing standards. These are identified in the first table below.

        In addition, certain of the NYSE’s corporate governance standards allow for an exemption for “controlled companies,” as defined under the NYSE listing standards. The NYSE listing standards require a controlled company that chooses to take advantage of any or all of these exemptions must disclose that choice, that it is a controlled company and the basis for the determination. Alcon has determined that it is a controlled company for purposes of the NYSE listing standards as approximately 75% of the outstanding common shares of Alcon are owned by Nestlé S.A., and Nestlé has the right to appoint a majority of our board of directors. The second table below identifies the NYSE listing standards from which Alcon has chosen to take advantage of the controlled company exemption.

NYSE rule applicable to U.S. listed companies	Alcon’s practice
A U.S. listed company’s compensation committee must have a written charter providing the committee with responsibility for approving corporate goals and objectives relevant to Chief Executive Officer (“CEO”) compensation.	Alcon’s compensation committee charter gives it the
	responsibility for reviewing and assessing the corporate goals and objectives relevant to CEO compensation , but the Board is responsible for actually approving those goals and objectives.
All listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.	Rule 10A-3 of the Exchange Act, requires the audit
	committee of a U.S. company to be directly responsible for the appointment of any registered public accounting firm engaged for the purpose of preparing or issuing anaudit report or performing other audit review or attest services. There is an exception for foreign privateissuers that are required under home country law to have statutory auditors selected pursuant to home country requirements.
	. Swiss law requires that Alcon’s statutory auditors be appointed by the Annual General Meeting and that the board of directors recommends to the shareholders whether to approve the statutory auditors. Alcon’s audit committee is responsible for evaluating the statutory auditors and advising the board of directors of its recommendation regarding their appointment.
A U.S. listed company must assign the responsibility to determine and approve the CEO’s compensation level to the compensation committee.	Pursuant to Swiss law, the determination of CEO
	compensation is the responsibility of the board of
	directors. Alcon’s compensation committee evaluates CEO compensation and makes a  recommendation to the board of directors.

NYSE rules under which Alcon claims exemption as a controlled company	Alcon’s practice
A majority of the directors of a U.S. listed company’s board must be independent.	Alcon’s board consists of three independent directors, four directors affiliated with Nestlé and the CEO of Alcon Laboratories.
A U.S. listed company’s nominating / corporate governance committee must be composed entirely of independent directors.
	Alcon’s nominating / corporate governance committee is composed of two independent directors and a director appointed by Nestlé.
A U.S. listed company’s compensation committee must be composed entirely of independent directors.
	Alcon’s compensation committee is composed of two independent directors and a director appointed by Nestlé.

D.       EMPLOYEES

     As of December 31, 2003, we employed approximately 11,900 full-time employees, including approximately 1,300 research and development employees, approximately 4,100 manufacturing employees and 3,300 sales and marketing employees. Currently, approximately 500 of our workers in Belgium are represented by a union. In other European countries, our workers are represented by works councils. We believe that our employee relations are good. 

The following table indicates the approximate number of employees by location:

December 31,	Total	United States	International
2003	11,900	6,100	5,800
2002	11,800	6,000	5,800
2001	11,600	5,900	5,700

E.     SHARE OWNERSHIP

        As of December 31, 2003, all of the officers and directors listed below had direct or beneficial ownership of less than 1% of the outstanding shares.

Timothy R.G. Sear

Dr. Werner J. Bauer

Peter Brabeck-Letmathe

Francisco Castañer

Dr. Wolfgang H. Reichenberger

Philip H. Geier, Jr.

Lodewijk J.R. de Vink

Thomas G. Plaskett

Stefan Basler

Jacqualyn A. Fouse

Guido Koller

Martin Schneider

Elaine E. Whitbeck

Dr. G. André Bens

Dr. Gerald D. Cagle

Fred J. Pettinato (1)

Cary R. Rayment

(1) Mr. Pettinato retired effective January 2, 2004.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.     MAJOR SHAREHOLDERS.

        After completion of the IPO in March 2002, Nestlé owned 230,250,000 of our common shares, or approximately 75% of the outstanding common shares after the underwriters exercised their overallotment option. The common shares owned by Nestlé carry the same voting rights as the common shares sold in the public offering. Alcon redeemed all of the nonvoting preferred shares held by Nestlé on May 29, 2002.

        Nestlé is not subject to any contractual obligation to retain its controlling interest in us. At December 31, 2003, Nestlé owned 230,250,000, or approximately 75%, of the outstanding common shares of Alcon.

        At December 31, 2003, three shareholders of record in Switzerland, including Nestlé, held 231,128,354 common shares of Alcon.

Based on a report on Schedule 13G filed by FMR Corp. (“Fidelity”), Edward C. Johnson 3d and Abigail P. Johnson, with the U.S. Securities and Exchange Commission on February 17, 2004, as of December 31, 2003, each of the foregoing persons is deemed to be the beneficial owner of 16,903,242 common shares of Alcon, representing 5.48% of the outstanding common shares of Alcon at December 31, 2003. The address of FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson is 82 Devonshire Street, Boston, Massachusetts 02109. None of Edward C. Johnson 3d, Abigail P. Johnson or any Fidelity officers or directors serve as officers or directors of Alcon.

B.     RELATED PARTY TRANSACTIONS.

Separation Agreement

        We entered into a separation agreement with Nestlé prior to the initial public offering in March 2002. This separation agreement governs certain pre-offering transactions, as well as the relationship between Alcon and Nestlé following this offering. The separation agreement was filed as an exhibit to the initial registration statement. The separation agreement is governed by and will be construed in accordance with the laws of Switzerland.

        The separation agreement with Nestlé governs the business and legal relationship between Nestlé and us. Below is a summary of the material provisions that are included in the separation agreement.

Our Corporate Governance

        Under the separation agreement, Nestlé has the right to nominate four members to our board of directors for so long as Nestlé holds at least 50% of our outstanding common shares. In addition, Nestlé has agreed, for so long as Nestlé holds at least a majority of our outstanding common shares, to vote all of its common shares in favor of three nominees for election to our board of directors who are independent and neither affiliated with us nor with Nestlé and that our chief executive officer will be a member of our board of directors. If a Nestlé-nominated director resigns from office, Nestlé will have the right to nominate a replacement director; any vacancies in the position of independent director will be filled by another independent person who will be nominated by the full board of directors.

Dividend Policy

        If our board of directors proposes to pay a dividend to shareholders, Nestlé has agreed to vote all of its shares in favor of such proposal so long as Nestlé holds at least a majority of our outstanding common shares.

Intercompany Debt and Future Financings

        The separation agreement contains provisions governing the refinancing of intercompany debt prior to the initial public offering in March 2002. During 2002, Nestlé’s role in our debt structure changed from being the largest direct lender to providing primarily indirect support of our third-party debts. Through the course of 2003, we reduced our direct borrowings from Nestlé or its affiliates from $116.1 million at December 31, 2002 to $111.5 million as of December 31, 2003.

        In 2002, we entered into a $2.0 billion U.S. commercial paper program, which had $1.0 billion outstanding as of December 31, 2003. Nestlé serves as the guarantor of this program, for which they receive a fee as discussed in note 6 to the consolidated financial statements.

        On a go-forward basis, we may continue to enter into financing transactions involving Nestlé, or we may decide to perform financing functions independently. We will agree with Nestlé, on a case by case basis, whether the guarantees, commitments or undertakings currently given by Nestlé in our favor will be renewed. If any guarantee, commitment or undertaking is renewed, the terms on which we will reimburse Nestlé will be agreed upon with Nestlé at the time of such renewal.

Cash Management and Treasury Functions

        The separation agreement provides that Nestlé will continue to perform the cash management and treasury functions that it currently performs for us.

Accounting and Reporting

        Our consolidated financial statements are prepared in accordance with U.S. GAAP; Nestlé’s consolidated accounts, consistent with past practice, will continue to be prepared in accordance with IFRS. The separation agreement provides that we will establish adequate procedures allowing for the timely conversion of our financial statements to IFRS for inclusion in Nestlé’s financial statements.

Allocation of Liabilities

        The separation agreement provides for the allocation of liabilities between us and Nestlé, particularly with respect to product liability and environmental, health and safety matters. Generally, we assume responsibility for all claims arising in connection with our business, including, without limitation, product liability claims and claims relating to environmental, health and safety matters, and we will indemnify Nestlé for all costs and expenses incurred in connection with any such claims.

        We also assumed liability for all employment matters of the employees engaged in our business at the time of the IPO. In this connection, we have entered into special arrangements with local Nestlé companies on the allocation of pension fund obligations between Nestlé and us. In certain countries, we continue to benefit from Nestlé’s existing pension funds, and will not establish independent pension funds for our employees.

Contracts

        The separation agreement contains provisions governing the continuation and termination of contracts between Alcon and Nestlé.

Shared Sites

        Three sites relating to the administration of our business continue to be shared with Nestlé. These offices are located in Norway, South Africa and Brazil.

Shared Services

        Nestlé continues to provide us with certain services, including information technology and an internal audit function for a period of time. To the extent that we were covered under Nestlé’s insurance arrangements prior to the initial public offering, we will continue to be covered under those arrangements. Nestlé charges us our portion of the cost of these arrangements based on arm’s length prices. Services Nestlé may provide include future financings for us upon our request. These arrangements will be on terms no less favorable to us than would be available from a third party.

Registration Rights

        Pursuant to the separation agreement, we have granted registration rights under the Securities Act of 1933 to Nestlé with respect to sales of our common shares by Nestlé.

Covenants Not to Compete and Not to Solicit

        Nestlé has undertaken, for so long as it continues to hold at least a majority of our common shares, not to compete with our business except in certain limited areas that are set out in the separation agreement. The separation agreement also governs the allocation of business opportunities which could be taken by both Nestlé and us. If Nestlé acquires the assets or securities of, or merges with, a business association that competes with our business, that acquisition or merger will be permitted if at the time of the transaction the competing business represents less than 50% of the gross revenues of the acquired business association, provided that Nestlé fully informs us of the particulars of the competing business to be acquired, and gives us the right of first refusal to acquire the products comprising the competing business on the basis of fair value.

        The separation agreement provides that Nestlé will not for a two-year period following the date of the initial public offering in March 2002, without our written consent, actively solicit for employment or hire any of our employees, subject to limited exceptions.

C.    INTEREST OF EXPERTS AND COUNSEL

       Not Applicable.

ITEM 8.   FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS See Item 18.

2. THREE YEARS COMPARATIVE FINANCIAL STATEMENTS See Item 18.

3. AUDIT REPORT See Report of Independent Auditors at page F-2.

4. LATEST AUDITED FINANCIAL STATEMENTS MAY BE NO OLDER THAN 15 MONTHS Alcon has complied with this requirement.

5. INTERIM FINANCIAL STATEMENTS IF DOCUMENT IS MORE THAN NINE MONTHS SINCE LAST AUDITED FINANCIAL YEAR Not Applicable.

6. EXPORT SALES IF SIGNIFICANT See Item 18.

7. LEGAL PROCEEDINGS

        From time to time we are involved in legal proceedings arising in the ordinary course of business. We may be subject to litigation or other proceedings, which could cause us to incur significant expenses or prevent us from selling certain products. We believe that there is no litigation pending that will likely have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows.

8.     DIVIDEND POLICY.

        We currently intend to pay annual dividends on our common shares from earnings up to and including the calendar year 2003, which we expect would be paid in May 2004. The payment of dividends is subject to the availability of retained earnings or dividendable reserves under Swiss law, the proposal by our board of directors, and, ultimately, the approval of our shareholders. Future dividend payments will depend on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors in their proposal for approval to the shareholders. Subject to these limitations, we expect to declare a dividend from 2003 operations of CHF 0.72 per common share (or approximately $0.57 per common share, depending on exchange rates). The separation agreement provides that Nestlé will vote in favor of the payment of dividends proposed by our board of directors for so long as it holds a majority of our outstanding common shares. We are required by Swiss corporate law to declare and pay dividends in Swiss francs. Holders of record of our common shares will receive dividend payments in U.S. dollars, unless they provide notice to our transfer agent, The Bank of New York, that they wish to receive dividend payments in Swiss francs. Holders of our common shares through The Depository Trust Company will receive dividend payments in U.S. dollars, unless they provide notice to The Depository Trust Company that they wish to receive payments in Swiss francs. The exchange rate applicable to dividend payments will be determined as of a date shortly before the payment date. The Bank of New York will be responsible for paying the U.S. dollars or Swiss francs to registered holders of common shares, as the case may be, and we will be responsible for withholding required amounts for taxes.

  B.     SIGNIFICANT CHANGES

        None.

ITEM 9.  THE OFFER AND LISTING

A. OFFER AND LISTING DETAILS

1. EXPECTED PRICE Not Applicable.

2.	METHOD TO DETERMINE EXPECTED PRICE Not Applicable.
3.	PRE-EMPTIVE EXERCISE RIGHTS

                   Not Applicable.

4. STOCK PRICE HISTORY

        Alcon’s common shares were not listed or traded prior to the IPO. The following table lists the high and low closing market prices for Alcon’s common shares for the periods indicated as reported:

	High	Low
Year ended December 31,
2002	$43.35	$26.75
2003	60.95	35.35
Year ended December 31,
2002:First quarter*	34.75	33.50
Second quarter	39.30	29.90
Third quarter	39.13	26.75
Fourth quarter	43.35	34.85
2003:First quarter	41.10	35.35
Second quarter	46.71	40.64
Third quarter	56.62	45.95
Fourth quarter	60.95	51.10
Month of:
September 2003	56.62	52.75
October 2003	57.06	53.16
November 2003	58.17	51.10
December 2003	60.95	55.67
January 2004	64.80	58.85
February 2004	64.95	62.86

        * From first trading date (March 21, 2002) to March 28, 2002; IPO price on March 20, 2002 was $33.00.

5. TYPE AND CLASS OF SECURITIES Not Applicable.

6. LIMITATIONS OF SECURITIES Not Applicable.

7. RIGHT CONVEYED BY SECURITIES ISSUED Not Applicable.

B.     PLAN OF DISTRIBUTION

        Not Applicable.

C.     MARKETS FOR STOCK

         The Company’s common shares are listed for trading on the New York Stock Exchange. Alcon’s common shares are traded under the symbol      “ACL”.

D.     SELLING SHAREHOLDERS

        Not Applicable.

E.     DILUTION FROM OFFERING

       Not Applicable.

F.     EXPENSES OF OFFERING

        Not Applicable.

ITEM 10.  ADDITIONAL INFORMATION

A.     SHARE CAPITAL

        Not Applicable.

B.     MEMORANDUM AND ARTICLES OF INCORPORATION

General

        Alcon, Inc. is registered in the commercial register of the Canton of Zug, Switzerland under number CH-170.3.017.372-9.

        As of December 31, 2003 our issued share capital was CHF 61,862,054.60 on 309,310,273 common shares at CHF 0.20 par value per common share.

        Set out below is information concerning our shares and a brief summary of some of the significant provisions of our Articles of Association (Statuten), written resolutions of our board of directors, known as organizational regulations (Organisationsreglement), which were included as exhibits to the initial registration statement and the Swiss Federal Code of Obligations (Schweizerisches Obligationenrecht). This description does not purport to be complete and is qualified by reference to our Articles of Association, our organizational regulations and the Swiss Federal Code of Obligations.

Common Shares

        All common shares are registered common shares which are fully paid, validly issued and non-assessable. There is no limitation under our Articles of Association on the right of non-Swiss residents or nationals to own or vote our common shares.

Share Register

        Our share register is kept by The Bank of New York in New York, New York, which acts as transfer agent and registrar. The share register reflects only record owners of our shares; beneficial owners of common shares holding their shares through The Depository Trust Company, which we refer to as DTC, are not recorded in our share register. Shares held through DTC are registered in our share register in the name of DTC’s nominee. We are entitled to accept only those persons as shareholders, usufructuaries or nominees who have been recorded in our share register, and to perform dividend payment and other obligations only to our shareholders of record, including DTC. A shareholder of record must notify The Bank of New York of any change in address. Until notice of a change in address has been given, all of our written communication to our shareholders of record shall be deemed to have validly been made if sent to the address recorded in the share register.

Share Certificates

        We issue certificates evidencing our common shares to our shareholders of record.

Transfers of Common Shares

        Beneficial owners of our common shares may transfer their shares through the book-entry system of DTC. Common shares held of record represented by share certificates may be transferred only by delivery of the share certificates representing those common shares duly endorsed or accompanied by an executed stock power. A transferee who wishes to become a shareholder of record must deliver the duly executed certificate in a form proper for transfer to our transfer agent and registrar, The Bank of New York, in order to be registered in our share register (Aktienregister).

Voting Rights

        Each common share carries one vote at a shareholders’ meeting. Voting rights may be exercised by our registered shareholders or by a duly appointed proxy of a shareholder, which proxy need not be a shareholder. This provision will allow for the exercise of voting rights by beneficial owners of our common shares. Our Articles of Association do not limit the number of shares that may be represented by a single shareholder. See “-Transfers of Common Shares” above and “Certain Provisions of Our Articles, Organizational Regulations and Swiss Law-Shareholders’ Meetings” below.

        Treasury shares, i.e., shares held by us or our majority-owned subsidiaries, will not be entitled to vote at our shareholders’ meetings.

Preemptive Rights

        Shareholders have preemptive rights to subscribe for newly issued common shares and other equity instruments, stock options and convertible bonds in proportion to the nominal amount of our common shares they own. The vote of a supermajority of two-thirds of the common shares represented at a shareholders’ meeting may, however, limit or suspend preemptive rights in certain limited circumstances.

Informational Rights

        At a shareholders’ meeting, each shareholder is entitled to request certain information from our board of directors concerning our affairs and to request information from our auditors concerning their audit and its results. Such information must be provided to the extent that it is necessary to exercise shareholder rights (for example, voting rights) and does not jeopardize business secrets or other legitimate interests of Alcon. Additionally, our books and correspondence may be inspected by our shareholders if such an inspection is expressly authorized by our shareholders or our board of directors, subject to the protection of business secrets. If information is withheld or a request to inspect refused, a court in our place of incorporation (Zug, Switzerland) may be petitioned to order access to information or to permit the inspection.

        The right to inspect our share register is limited to the right to inspect that shareholder’s own entry on our share register.

Preferred Shares

        As of December 31, 2003, no Alcon preferred shares were authorized, issued or outstanding.

Future Share Issuances

        Under Swiss law, all decisions with respect to capital increases, whether of common or nonvoting preferred shares and whether for cash, non-cash or no consideration, are subject to the approval or authorization by shareholders.

        Creation of Conditional Share Capital for the 2002 Alcon Incentive Plan. As of December 31, 2003, our share capital may be increased by a maximum aggregate amount of CHF 5,532,945.40 million through the issuance of a maximum of 27,664,727 million fully paid common shares, subject to adjustments to reflect share splits, upon the exercise of options to purchase common shares. New common shares will be issued upon the exercise of options which our management, employees and directors may be granted pursuant to the 2002 Alcon Incentive Plan. The grant of these options and the issuance of the underlying common shares upon option exercises will not entitle our shareholders to preemptive rights. The exercise price of the stock options shall be no less than the market price of common shares upon the date of grant of the options. See “Management-2002 Alcon Incentive Plan.”

        At December 31, 2003, 169,574 common shares, including 78,574 common shares during 2003, had been issued cumulatively from conditional share capital pursuant to the exercise of stock options granted under the 2002 Alcon Incentive Plan.

        In 2002, contemporaneously with the IPO, certain Alcon employees elected to convert $34.2 million of their interests in the 1994 Phantom Stock Plan into 2,165,699 contingent restricted common shares of Alcon. All of these shares were issued from conditional share capital and included in the issued common shares in the accompanying balance sheets at December 31, 2003 and 2002.

        The restricted common shares and the common shares issued pursuant to the exercise of stock options reduced the conditional share capital from the 30 million common shares originally authorized in 2002.

Certain Provisions of Our Articles, Organizational Regulations and Swiss Law

Business Purpose and Duration

        Article 2 of our Articles of Association provides that our business purpose is to purchase, administer and transfer patents, trademarks and technical and industrial know-how; to provide technical and administrative consultancy services; and to hold participations in other industrial or commercial companies. In addition, we may conduct all transactions to which our business purpose may relate.

        Our Articles of Association do not limit our duration.

Notices

        Article 31 of our Articles of Association requires us to publish notices, including notice of shareholders’ meetings, to our shareholders in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt). Our board of directors may, but is not generally required by Swiss law to, designate additional means of providing notice to shareholders. We may also communicate with our shareholders through the addresses registered in our share register.

Shareholders’ Meetings

      Annual General Meetings

        Under Swiss corporate law, we must hold an annual general meeting of shareholders within six months after the end of our financial year, which is the calendar year. Our board of directors has the authority to convene annual general meetings. Holders of common shares with a nominal value equal to at least CHF 1 million have the right to request that a specific proposal be discussed and voted upon at a shareholders’ meeting. Under Swiss corporate law, notice of a shareholders’ meeting must be given at least 20 days prior to the date of that meeting.

        The 2004 annual general meeting of shareholders is scheduled for April 27, 2004 in Zug, Switzerland.

      Extraordinary General Meetings

        Our board of directors is required to convene an extraordinary general meeting of shareholders, for among other reasons, if a shareholders’ meeting adopts a resolution to that effect or if holders of common shares representing an aggregate of at least 10% of our nominal share capital request in writing that it do so. An extraordinary general meeting is convened by publication of a notice as set forth above under “- Notices”.

      Powers and Duties

        Pursuant to Swiss corporate law, our shareholders have the exclusive right to decide on the following matters:

• adoption and amendment of our Articles of Association;
• election of members of our board of directors, statutory auditors, the auditors for our consolidated financial statements and the special auditors; 
• approval of our annual report, our statutory financial statements and our consolidated financial statements; 
• payments of dividends and any other distributions to shareholders; 
• discharge of the members of our board of directors from liability for previous business conduct to the extent such conduct is known to the shareholders; and
• any other resolutions which are submitted to a shareholders’ meeting pursuant to law, our Articles of Association or by voluntary submission by our board of directors.

      Proxies

        Shareholders can choose to be represented at a shareholders’ meeting by a proxy who is not required to be a shareholder. Shares held in collective custody through DTC will be able to participate in shareholders’ meetings regardless of record ownership. See “- Record Date” below.

      Quorum

        No quorum for shareholders’ meetings is specified in our Articles of Association.

      Action by Shareholders

        At a shareholders’ meeting, all voting takes place by a show of hands, unless voting by ballot is resolved by a majority vote of shareholders present or ordered by the chairman of the meeting or unless voting is done by electronic form as ordered by the chairman of the meeting. Resolutions of shareholders generally require the approval of a majority of the common shares represented at a shareholders’ meeting, with abstentions having the effect of votes against the resolution. Shareholders’ resolutions requiring the affirmative vote of a majority of the common shares represented at a shareholders’ meeting include:

• amendments to our Articles of Association, unless the amendment is subject to the requirement that it be approved by holders of two-thirds of our common shares represented at a shareholders’ meeting;
• elections of directors and auditors;
• approval of our annual report, statutory financial statements and consolidated financial statements;
• payment of dividends;
• decisions to discharge the directors and management from liability for matters disclosed to the shareholders' meeting; and 
• ordering of an independent investigation into specific matters proposed to the shareholders' meeting (Sonderprufung).

        Pursuant to Swiss corporate law, the affirmative vote of two-thirds of the common shares represented at a shareholders’ meeting is required to approve:

• changes in our business purpose;
• the creation of shares having different par values, each of which is entitled to one vote (i.e., dual-class common shares);
• the creation of restrictions on the transferability of common shares;
• the creation of authorized share capital or conditional share capital;
• an increase in our share capital by way of capitalization of reserves (Kapitalerhöhung aus Reserven), against contribution in kind (Sacheinlage), for the acquisition of assets (Sachübernahme), as well as involving the grant of preferences;
• a restriction or elimination of preemptive rights of shareholders in connection with a share capital increase;
• a relocation of our place of incorporation; and
• the dissolution of Alcon other than by liquidation, including through a merger in which we are not the surviving corporation.

        In addition, our Articles of Association require the approval of a supermajority of at least two-thirds of the common shares represented at a shareholders’ meeting to:

• create or abolish any restrictions on the exercise of voting rights;
• abolish any applicable restrictions on the transferability of shares;
• convert registered shares into bearer shares and vice versa; and
• modify any provisions in our Articles of Association requiring actions to be approved by a supermajority of the common shares represented at a shareholders’ meeting.

        Under Swiss corporate law, shareholders are not permitted to act by written consent in lieu of a shareholders’ meeting.

      Record Date

        We intend to announce the dates of forthcoming shareholders’ meetings not less than 30 days prior to the date of the shareholders’ meeting in question and to set a date for eligibility to vote at the shareholders’ meeting, which we refer to as the date of the closing of the books, not more than 20 days prior to the date of the shareholders’ meeting in question.

        We intend to mail shareholders’ meeting materials to record owners and to beneficial owners of shares holding their shares through DTC through customary banking and brokerage channels within seven business days after the date of the closing of the books.

        Shareholders of record and beneficial owners of shares holding their shares through DTC will have the opportunity to appoint proxies, in the case of shareholders of record, or give voting instructions, in the case of beneficial owners of shares holding their shares through DTC, or to request attendance at shareholders’ meetings. Any request must be mailed to the address indicated in the shareholders’ meeting material through the same banking and brokerage channels as we originally used to send the shareholders’ materials.

      Net Profits and Dividends

        Swiss corporate law requires us to retain at least 5% of our annual net profits as general reserves for so long as these reserves amount to less than 20% of our nominal share capital. Also, after having reached the statutory amount, 10% of the amounts which are distributed as a share of profits after payment of a dividend of 5% have to be allocated to the reserves. All other net profits may be paid as dividends if approved by our shareholders.

        Under Swiss corporate law, we may only pay dividends if we have sufficient distributable profits from prior business years, or if the reserves on our holding company-only balance sheet prepared in accordance with Swiss statutory accounting rules are sufficient to allow the distribution of a dividend. In either event, dividends may be distributed only following approval by our shareholders based on our statutory holding company-only accounts. Our board of directors may propose that a dividend be distributed, but our shareholders retain the final authority to determine whether a dividend is paid. Our statutory auditors must also confirm that the dividend proposal of the board of directors conforms to statutory law and our Articles of Association. Subject to the foregoing, we intend to pay dividends on our common shares. See “Dividend Policy”.

        We are required under Swiss corporate law to declare dividends on our shares in Swiss francs. Holders of our common shares will receive payments in U.S. dollars, unless they provide notice to our transfer agent, The Bank of New York, that they wish to receive dividend payments in Swiss francs. The Bank of New York will be responsible for paying the U.S. dollars or Swiss francs to registered holders of common shares, less amounts subject to withholding for taxes.

        Dividends usually become due and payable promptly after our shareholders approve their payment. Dividends which remain unclaimed for five years after the due date become barred by the statute of limitations under Swiss law and are allocated to our general reserves.

        Dividends on our common shares are subject to Swiss withholding taxes as described under the heading “Taxation.”

Borrowing Powers

        Neither Swiss law nor our Articles of Association restrict in any way our power to borrow and raise funds. The decision to borrow funds is made by or under the direction of our board of directors, and no approval by our shareholders is required.

Conflicts of Interest

        Swiss law does not have a general provision regarding conflicts of interest. However, the Swiss Federal Code of Obligations requires directors and officers to safeguard the interests of the company and, in this connection, imposes duties of care and loyalty. This rule is generally understood as disqualifying directors and officers from participating in decisions directly affecting them. A breach of these provisions results in the breaching director or officer incurring personal liability to us. Our organizational regulations provide special provisions addressing conflicts of interest of directors. In addition, under Swiss law, payments made to a shareholder or a director or any persons associated therewith, other than on arm’s length terms, must be repaid to us if the recipient of the payment was acting in bad faith.

Repurchases of Shares

        Swiss law limits the amount of our shares that we may hold or repurchase. We, together with our subsidiaries, may only repurchase shares if (i) we have sufficient freely distributable reserves to pay the purchase price and (ii) the aggregate par value of the repurchased shares does not exceed 10% of the nominal share capital of our company. Furthermore, we must create a reserve on our statutory balance sheet in the amount of the purchase price of the repurchased shares. On shares we or our subsidiaries repurchase any rights to vote are suspended, but these shares are entitled to the economic benefits applicable to our shares generally.

Dissolution; Merger

        We may be dissolved at any time with the approval of (i) a simple majority of our common shares represented at a shareholders’ meeting in the event we are being dissolved through a liquidation and (ii) two-thirds of the common shares represented at a shareholders’ meeting in all other cases of dissolution, including a merger where we are not the surviving entity. Dissolution by court order is possible if we become bankrupt, or for cause at the request of shareholders holding at least 10% of our share capital. Under Swiss law, any surplus arising out of a liquidation, after the settlement of all claims of all creditors, is distributed to shareholders in proportion to the paid-up par value of shares held, subject to a Swiss withholding tax of 35% on the amount exceeding the paid-up par value. See “Taxation-Swiss Tax Considerations-Swiss Withholding Tax on Dividends and Similar Distributions.”

Board of Directors

Number, Removal, Vacancies and Term

        Our Articles of Association provide that we will have at least seven directors at all times. All of our directors are elected by the vote of the holders of a majority of the common shares represented at a shareholders’ meeting, and directors may be removed at any time with or without cause by the holders of a majority of the common shares represented at a shareholders’ meeting. All vacancies on our board of directors must be filled by a vote of our shareholders. Each member of our board of directors must have nominal ownership of at least one common share, other than members of our board of directors who are representatives of a legal entity that owns common shares.

        Our Articles of Association provide that the term of office for each director is three years, with the interval between two annual general meetings being deemed a year for this purpose. The initial term of office for each director will be fixed in such a way as to assure that about one-third of all the members must be newly elected or re-elected every year. Swiss law permits staggered terms for directors. Directors, other than our chief executive officer, are eligible to be re-elected a maximum of two times. Our organizational regulations provide that directors will retire from office no later than the annual general meeting after their 72nd birthday.

Powers and Duties

        Pursuant to Swiss statutory law, our Articles of Association and organizational regulations, our board of directors is the corporate body responsible for our business strategy, financial planning and control, and supervision of executive management. Our organizational regulations contemplate that our board of directors is responsible for our business operations. Among other things, our board of directors as a whole has ultimate responsibility for: (i) the ultimate direction of Alcon and the issuance of the necessary guidelines; (ii) the determination of our organizational structure, including the enactment and amendment of the organizational regulations; (iii) the determination of our accounting principles, financial controls and financial planning; (iv) the appointment and removal of the secretary of the board of directors, members of board committees and our executive management, as well as the termination of their signatory power; (v) the ultimate supervision of our executive management; (vi) the preparation of our business report and financial statements, the preparation of shareholders’ meetings and the implementation of resolutions adopted by our shareholders; (vii) the examination of the professional qualifications of our auditors; (viii) the notification of the court if our liabilities exceed our assets (art. 725 CO); (ix) the approval of certain significant transactions, details of which are set out in our organizational regulations; (x) the exercise of shareholder rights in our subsidiaries, as well as the ultimate control of the business activities of our subsidiaries; (xi) the establishment of our dividend policy; (xii) the review and approval of the recommendations of the board committees; and (xiii) the response to any approach regarding a takeover offer.

        Except as otherwise provided in our organizational regulations with respect to the independent director committee, our organizational regulations may be amended with the approval of two-thirds of the members of our board of directors attending a meeting.

Certain Anti-Takeover Provisions

Business Combinations

        The separation agreement and our organizational regulations contemplate that certain mergers, takeovers or other business combinations involving us must be approved by a special committee of independent directors charged with protecting the interests of minority shareholders, as well as by the full board of directors.

        Our organizational regulations further obligate our board of directors to form a special committee of independent and disinterested directors charged with protecting the interests of minority shareholders to evaluate and decide upon (i) a proposed merger, takeover, other business combination or related party transaction of Alcon with its majority shareholder or any group company of the majority shareholder, (ii) a proposed bid for the minority shareholdings of Alcon by any entity owning a majority of our outstanding voting rights or (iii) a proposed repurchase by us of all of our shares not owned by an entity owning a majority of the outstanding voting rights of Alcon.

        Since our common shares are not listed on any Swiss stock exchange, the restrictions on implementing a poison pill set forth in the Swiss Act on Stock Exchanges and Securities Trading, which we refer to as the Swiss Stock Exchange Act, are not applicable to us. Anti-takeover measures implemented by our board of directors would be restricted by the principle of equal treatment of shareholders and the general rule that new shares may only be issued based on a shareholders’ resolution; this rule generally bars a board of directors from issuing shares or options to all shareholders other than a hostile bidder. Shareholders may, however, implement certain anti-takeover measures through a shareholders’ resolution.

Mandatory Bid Rules

        Since our common shares are not listed on any Swiss exchange, the mandatory bid rules specified in the Swiss Stock Exchange Act will not apply to us.

Notification and Disclosure of Substantial Share Interests

        The disclosure obligations generally applicable to shareholders of Swiss corporations under the Swiss Stock Exchange Act do not apply to us, since our common shares are not listed on a Swiss exchange. Since our common shares are listed on the New York Stock Exchange, the provisions of the United States Securities Exchange Act of 1934, as amended, requiring disclosure of certain beneficial interests will apply to our common shares.

Transfer and Paying Agents

        Our transfer agent and paying agent for dividends and all other similar payments on our common shares is The Bank of New York.

Auditors, Group Auditors and Special Auditors

        In May 2003, the shareholders re-elected KPMG Klynveld Peat Marwick Goerdeler SA, Zurich, as Group and Parent Company Auditors for a one-year term of office. KPMG Klynveld Peat Marwick Goerdeler SA meets the requirements of the Swiss Federal Code of Obligations for auditing Swiss public companies. The shareholders re-elected Zensor Revisions AG, Zug, as special auditors for a one-year term of office. The auditors, group auditors and the special auditors are elected for a term ending at our next annual general shareholders’ meeting.

Shares Eligible For Future Sale

        Our common shares held by Nestlé are deemed “restricted securities” as defined in Rule 144, and may not be sold other than through registration under the Securities Act or under an exemption from registration, such as the one provided by Rule 144.

        The separation agreement contains provisions granting registration rights under the Securities Act to Nestlé with respect to sales of our common shares by Nestlé.

    C.     MATERIAL CONTRACTS

        Except as noted below with respect to certain agreements we have entered into with Nestlé, our major shareholder, we are not party to any material contracts other than those entered into in the ordinary course of business.

1. As of December 31, 2003, the Company had a $2.0 billion commercial paper facility. As of December 31, 2003, $1,005.1 million of commercial paper was outstanding under this facility at an average interest rate of 1.1% before fees. Nestlé guarantees the commercial paper issued under this facility and assists in its management, for which we pay Nestlé an annual fee based on the average outstanding commercial paper balances. Nestlé’s guarantee permits Alcon to obtain more favorable interest rates based upon Nestlé’s credit rating, than might otherwise be obtained. We believe that any fees paid by us to Nestlé for their guarantee of any indebtedness or for the management of the commercial paper program are comparable to the fees that would be paid in an arm’s length transaction. Total fees paid to Nestlé for the years ended December 31, 2003, 2002, and 2001 were $4.1million, $1.7 million and $0.1 million, respectively.

2. The Company had available commitments of $344.4 million under unsecured demand notes payable to various Nestlé affiliates; at December 31, 2003, $111.5 million was outstanding under these demand notes. The demand notes are committed for less than one year and accrue interest at rates consistent with local borrowing rates.

3. On January 1, 2003, the Company entered into an agreement whereby Nestlé provides certain treasury and investment services for the Company for a fee that is comparable to fees that would be paid in an arm’s length transaction. The agreement may be terminated with sixty days written notice.

D. EXCHANGE CONTROLS

        Other than in connection with government sanctions that may currently be imposed on Iraq, Yugoslavia, Liberia, Sierra Leone, UNITA (Angola), Myanmar, Zimbabwe and on persons or organizations with links to Osama bin Laden, the “Al-Qaida” group, the Taliban and other terrorist groups, there are currently no Swiss governmental laws, decrees, or regulations that restrict the export or import of capital, including, but not limited to, Swiss foreign exchange controls on the payment of dividends, interest or liquidation proceeds, if any, to non-resident holders of registered shares.

  E.     TAXATION

        The following is a summary of the material U.S. Federal income tax and Swiss tax considerations relevant to the ownership, acquisition and disposition of our common shares.

        For purposes of this discussion, a “U.S. Holder” is any one of the following:

• an individual who is a citizen or resident of the United States;
• a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or of any political subdivision of the United States;
• an estate the income of which is subject to U.S. Federal income taxation regardless of its source;
• a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or
• a person otherwise subject to U.S. Federal income tax on its worldwide income.

        If a partnership holds common shares, the tax treatment of a partner will generally depend upon the partner’s circumstances and upon the activities of the partnership. Partners of partnerships holding these common shares should consult their tax advisors as to the tax consequences of owning or disposing of common shares.

        A “Non-U.S. Holder” is a holder that is not a U.S. Holder. This discussion does not address the U.S. Federal, local, state, foreign or other tax consequences to Non-U.S. Holders as a result of the ownership or disposal of common shares. NON-U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, LOCAL, STATE, FOREIGN AND OTHER TAX CONSEQUENCES TO THEM AS A RESULT OF THE OWNERSHIP OR DISPOSAL OF COMMON SHARES.

        This summary is not a complete description of all of the tax consequences of the ownership or disposition of common shares. It is based on the current tax laws of Switzerland and the United States, including the United States Internal Revenue Code of 1986, as amended, its legislative history, temporary, existing and proposed Treasury Regulations, U.S. Internal Revenue Service rulings and judicial opinions, all as in effect on the date of this report and all subject to change, possibly with retroactive effect. Your individual circumstances may affect the tax consequences arising from your ownership and disposal of common shares, and your particular facts or circumstances are not considered in the discussion below.

        The summary is not intended to apply to holders of common shares in particular circumstances, such as:

• dealers in securities;
• traders in securities who elect to apply a mark-to-market method of tax accounting;
• financial institutions;
• regulated investment companies;
• tax-exempt organizations;
• insurance companies;
• persons holding common shares as part of a hedging, straddle, conversion or other integrated transaction;
• U.S. Holders who hold their common shares other than as capital assets; 
• persons whose functional currency is not the U.S. dollar;
• certain U.S. expatriates;
• persons subject to the U.S. alternative minimum tax; and
• holders of common shares that will own directly or indirectly, or will be deemed to own, 10% or more of either the total voting power or the total value of our stock.

        Furthermore, this summary does not describe all the tax considerations relevant to persons who acquired common shares pursuant to compensatory arrangements.

Swiss Tax Considerations

Swiss Withholding Tax on Dividends and Similar Distributions

        Dividends paid and other similar cash or in-kind taxable distributions made by us to a holder of common shares (including dividends on liquidation proceeds and stock dividends) are subject to Swiss Federal withholding tax at a rate of 35%. The withholding tax will be withheld by us on the gross distributions and will be paid to the Swiss Federal Tax Administration.

      Swiss Holders

        A Swiss Holder who is an individual resident in Switzerland for tax purposes is generally entitled to a total refund or tax credit of the withholding tax incurred if that holder is the beneficial owner of such distributions at the time the distribution is due and duly reports the receipt thereof in the relevant tax return.

        Legal entities incorporated in Switzerland or legal entities holding the common shares in the company as part of a Swiss business operation or Swiss permanent establishment are generally entitled to a total refund of the withholding tax incurred if they are the beneficial owner of such distribution at the time the distribution is due and duly report the distribution in their profit and loss statement.

      U.S. Holders

        A U.S. Holder who is an individual or a legal entity not resident in Switzerland for tax purposes may be entitled to a partial refund of the withholding tax incurred on a taxable distribution from us if the conditions of the bilateral tax treaty between the U.S. and Switzerland are met. A U.S. Holder who is a resident of the United States for purposes of the bilateral tax treaty between the U.S. and Switzerland is eligible for a reduced rate of withholding tax on dividends equal to 15% of the dividend, provided that such holder (i) qualifies for benefits under this treaty and (ii) holds, directly or indirectly, less than 10% of our voting stock and (iii) does not conduct business through a permanent establishment or fixed base in Switzerland to which common shares are attributable. Such an eligible U.S. Holder may apply for a refund of the amount of the withholding tax in excess of the 15% treaty rate. The claim for refund must be filed on Swiss Tax Form 82 (82C for corporations; 82I for individuals; 82E for other entities), which may be obtained from any Swiss consulate general in the United States or from the Swiss Federal Tax Administration at the address below, together with an instruction form. Four copies of the form must be duly completed, signed before a notary public of the United States, and sent to the Swiss Federal Tax Administration, Eigerstrasse 65, CH 3003, Berne, Switzerland. The form must be accompanied by suitable evidence of deduction of Swiss tax withheld at source, such as certificates of deduction, signed bank vouchers or credit slips. The form may be filed on or after July 1 or January 1 following the date the dividend was payable, but no later than December 31 of the third year following the calendar year in which the dividend became payable.

      Other Holders

        Any other holder who is an individual or a legal entity not resident in Switzerland for tax purposes may be entitled to a total or partial refund of the withholding tax incurred on a taxable distribution from us if the country in which such holder resides for tax purposes has entered into a bilateral treaty for the avoidance of double taxation with Switzerland and the further conditions of such treaty are met. Other holders of common shares not resident in Switzerland should be aware that the procedures for claiming treaty benefits (and the time required for obtaining a refund) may differ from country to country. Other holders of common shares not resident in Switzerland should consult their own legal, financial or tax advisors regarding the receipt, ownership, purchase, sale or other disposition of shares and the procedures for claiming a refund of the withholding tax.

        As of January 1, 2004, Switzerland had entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with the following countries.

Albania	Greece	Macedonia	Singapore
Argentina (prov.)	Hungary	Malaysia	Slovakia
Australia	Iceland	Mexico	Slovenia
Austria	India	Moldova	South Africa
Belarus	Indonesia	Mongolia	South Korea
Belgium	Iran	Morocco	Spain
Bulgaria	Israel	Netherlands	Sri Lanka
Canada	Italy	New Zealand	Sweden
Croatia	Ivory Coast	Norway	Thailand
Czech Republic	Jamaica	Pakistan	Trinidad and Tobago
Denmark	Japan	People's Republic of China	Tunisia
Ecuador	Kazakhstan	Philippines	Ukraine
Egypt	Kuwait	Poland	United Kingdom
Estonia	Kyrgyzstan	Portugal	United States
Finland	Latvia	Republic of Ireland	Uzbekistan
France	Lithuania	Romania	Venezuela
Germany	Luxembourg	Russia	Vietnam

        In addition, negotiations have been completed for new double taxation treaties with Armenia, Azerbeidjan, Bangladesh, Georgia, Montenegro, North Korea, Serbia, and Zimbabwe. Negotiations for double taxation treaties with Brazil, Chile, Turkmenistan, Turkey, and Yugoslavia are in process. By exchange of notes, extension of the 1954 Treaty with the United Kingdom applies to Barbados, Belize, British Virgin Islands, Dominica, Gambia, Grenada, Melawi, Montserrat, St. Christopher Nevis and Anguilla, St. Lucia, St. Vincent, and Zambia. By extension of notes, the 1973 Treaty with Denmark applies to the Faroe Islands.

Income and Profit Tax on Dividends and Similar Distributions

      Swiss Holders

        A Swiss Holder of common shares who is an individual resident in Switzerland for tax purposes or a non-Swiss resident holding common shares as part of a Swiss business operation or a Swiss permanent establishment is required to report the receipt of taxable distributions received on the common shares in his or her relevant Swiss tax returns. A Swiss Holder that is a legal entity resident for tax purposes in Switzerland or a non-Swiss resident holding common shares as part of a Swiss establishment is required to include taxable distributions received on the common shares in its income subject to Swiss corporate income taxes. A Swiss corporation or co-operative or a non-Swiss corporation or co-operative holding common shares as part of a Swiss permanent establishment may, under certain circumstances, benefit from a tax relief with respect to dividends (Beteiligungsabzug).

      U.S. Holders and Other Holders

    U.S.        and Non-U.S. Holders of common shares who are neither residents of Switzerland for tax purposes nor hold common shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss income taxes in respect of dividends and similar distributions received from us.

Capital Gains Realized on Common Shares

      Swiss Holders

        A Swiss Holder who is an individual resident in Switzerland for tax purposes holding common shares as part of his or her private property generally is exempt from Swiss federal, cantonal and communal taxes with respect to capital gains realized upon the sale or other disposal of the shares, unless such individual is qualified as a security trading professional for income tax purposes. Gains realized upon a repurchase of the common shares by us for the purpose of a capital reduction are characterized as taxable distributions. The same is true for gains realized upon a repurchase of the common shares if we were not to dispose of the repurchased shares within six years after the repurchase or such shares were repurchased in view of a capital reduction. Taxable income would be the difference between the repurchase price and the nominal value of the common shares.

        A Swiss Holder that holds the shares as business assets or a non-Swiss resident holding shares as part of a Swiss business operation or Swiss permanent establishment is required to include capital gains realized upon the disposal of common shares in its income subject to Swiss income tax. A Swiss Holder that is a legal entity resident in Switzerland for tax purposes or a non-Swiss resident legal entity holding common shares as part of a Swiss permanent establishment is required to include capital gains realized upon the disposal of common shares in its income subject to Swiss corporate income tax.

        In both cases, capital gains would be the surplus (if any) of sales proceeds over book value.

      U.S. Holders and Other Holders

    U.S. and Non-U.S. Holders of common shares that are not resident in Switzerland for tax purposes and do not hold common shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss income taxes on gains realized upon the disposal of common shares.

Net Worth and Capital Taxes

      Swiss Holders

        A Swiss Holder of common shares who is an individual resident in Switzerland for tax purposes or is a non-Swiss resident holding common shares as part of a Swiss business operation or Swiss permanent establishment is required to include his or her shares in his or her wealth that is subject to cantonal and communal net worth tax. A Swiss Holder that is a legal entity resident in Switzerland for tax purposes or a non-Swiss resident legal entity holding common shares as part of a Swiss permanent establishment is required to include its common shares in its assets. The legal entity equity is then subject to cantonal and communal capital tax.

      U.S. Holders and Other Holders

    U.S. and Non-U.S. Holders of common shares that are not resident in Switzerland for tax purposes and do not hold common shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss cantonal and communal net worth and capital taxes.

Stamp Taxes upon Transfer of Securities

        The transfer of common shares by any holder may be subject to a Swiss securities transfer tax of 0.15% calculated on the transaction value if it occurs through or with a Swiss bank or other securities dealer as defined in the Swiss Federal Stamp Tax Act. The stamp duty is paid by the securities dealer and may be charged to the parties in a taxable transaction who are not securities dealers or exempt entities. Transactions in common shares effected by or through non-Swiss financial institutions are generally not subject to Swiss securities transfer tax, but may be subject to other local stamp taxes, stock exchange levies or other duties.

U.S.   Federal Income Tax Considerations for U.S. Holders

Taxation of Dividends

        The gross amount of a distribution made by us, including any amounts of Swiss tax withheld, will be taxable to a U.S. Holder as dividend income to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. Federal income tax purposes. Under recent U.S. Federal income tax legislation, the Company is a “qualified foreign corporation” and thus generally dividend income received by an individual tax payer (assuming certain holding period requirements are met) is taxable to a U.S. Holder at the rate imposed on net capital gains, which currently cannot exceed 15 percent. Dividends received on common shares will not be eligible for the dividends received deduction generally allowed to corporations.

        Distributions in excess of our current and accumulated earnings and profits will constitute a nontaxable return of capital to a U.S. Holder to the extent of the U.S. Holder’s tax basis in its common shares. To the extent that such distributions are in excess of the U.S. Holder’s basis in its common shares, the distribution will constitute gain from the deemed sale or exchange of his or her shares. See “- Tax on Sale or Exchange of Common Shares” below.

        The amount of a distribution will be the U.S. dollar value of the Swiss franc payment, determined at the spot Swiss franc/U.S. dollar rate on the date the dividend is includible in a U.S. Holder’s income, regardless of whether the payment in fact is converted into U.S. dollars. Generally, any gain or loss resulting from currency fluctuations during the period from the date a U.S. Holder includes the dividend in income to the date such U.S. Holder (or a third party acting for such U.S. Holder) converts the payment into U.S. dollars will be treated as ordinary income or loss. Any such income or loss generally will be income or loss from sources within the United States for U.S. foreign tax credit limitation purposes.

        A U.S. Holder will be entitled to claim a foreign tax credit with respect to distributions received from us only for foreign taxes (such as Swiss withholding taxes) imposed on dividends paid to such U.S. Holder and not for taxes imposed on us or on any entity in which we have made an investment. Distributions with respect to the common shares that are taxable as dividends generally will be treated as foreign source passive income (or for U.S. Holders that are “financial services entities” as defined in the Treasury Regulations, foreign source “financial services income”) for U.S. foreign tax credit purposes. For the purpose of determining the foreign tax credit limitation, the amount of such dividend distributions is reduced under a special rule that generally ensures that the amount of the foreign taxes imposed on the dividend that can be currently credited against the U.S. Holder’s U.S. Federal income tax liability will not exceed the U.S. Federal income tax on the distribution.

Tax on Sale or Exchange of Common Shares

        For U.S. Federal income tax purposes, a U.S. Holder generally will recognize gain or loss on a sale, exchange or other disposition of common shares, unless a specific nonrecognition provision applies. That gain or loss will be measured by the difference between the U.S. dollar value of the amount of cash, and the fair market value of any other property, received and the U.S. Holder’s tax basis in the common shares. A U.S. Holder’s tax basis in the common shares will generally equal the amount paid by the U.S. Holder for the common shares. Gain or loss arising from a sale or exchange of common shares will be capital gain or loss and will be long term if the holding period of the U.S. Holder for the shares exceeds one year. In general, gain from a sale or exchange of shares by a U.S. Holder will be treated as United States source income for U.S. foreign tax credit limitation purposes.

Controlled Foreign Corporation; Foreign Personal Holding Company

        We do not expect to be deemed a “controlled foreign corporation” or a “foreign personal holding company” because we expect more than 50% of the voting power and value of our shares to be held by non-U.S. persons. If more than 50% of the voting power or value of our shares were owned (directly or indirectly or by attribution) by U.S. Holders who hold 10% or more of the voting power of our outstanding shares, then we would become a controlled foreign corporation and the U.S. Holders who hold 10% or more of our voting power would be required to include in their taxable income as a constructive dividend an amount equal to their share of certain of our undistributed income. If more than 50% of the voting power or value of our shares were owned (directly or indirectly or by attribution) by five or fewer individuals who are citizens or residents of the U.S. and if at least 60% of our income were to consist of certain interest, dividend or other enumerated types of income, we would become a foreign personal holding corporation and all U.S. Holders (regardless of their ownership percentage) would be required to include in their taxable income as a constructive dividend an amount equal to their share of certain of our undistributed income.

Passive Foreign Investment Company

        We do not expect to be a passive foreign investment company because less than 75% of our gross income will consist of certain “passive” income and less than 50% of the average value of our assets will consist of assets that produce, or are held for the production of, such passive income. For this purpose, “passive” income generally includes dividends, interest, royalties, rents, annuities and the excess of gains over losses from the disposition of assets that produce passive income. If we were to become a passive foreign investment company, which determination will be made on an annual basis, the passive foreign investment company rules could produce significant adverse consequences for a U.S. Holder (regardless of the ownership percentage of our shares held by such holder).

Backup Withholding and Information Reporting

        Under certain circumstances, a U.S. Holder who is an individual may be subject to information reporting requirements and backup withholding, currently at a 28% rate, on dividends received on common shares. This withholding generally applies only if that individual holder:

• fails to furnish his or her taxpayer identification number to the U.S. financial institution that is in charge of the administration of that holder's common shares or any other person responsible for the payment of dividends on the common shares;
• furnishes an incorrect taxpayer identification number;
• is notified by the U.S. Internal Revenue Service that he or she has failed to properly report payments of interest or dividends and the U.S. Internal Revenue Service has notified us that the individual holder is subject to backup withholding; or
• fails, under specified circumstances, to comply with applicable certification requirements.

        Any amount withheld from a payment to a U.S. Holder under the backup withholding rules will be allowable as a credit against such U.S. Holder’s U.S. Federal income tax liability, provided that the required information is furnished to the U.S. Internal Revenue Service.

    U.S.  Holders should consult their own tax advisor as to the application of the U.S. Federal information reporting and backup withholding requirements to them and their qualification, if any, for an exemption under these rules.

        This discussion, which does not address any aspects of U.S. taxation other than Federal income taxation or any state or local law relevant to U.S. Holders of common shares, is of a general nature only and is not intended to be, and should not be construed to be, legal or tax advice to any prospective investor and no representation with respect to the tax consequences to any particular investor is made. DUE TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF COMMON SHARES, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES.

F. DIVIDENDS AND PAYING AGENTS Not Applicable.

G. STATEMENT OF EXPERTS Not Applicable.

H. DOCUMENTS ON DISPLAY

        The descriptions of each contract, agreement or other document filed as an exhibit to this report on Form 20-F are summaries only and do not purport to be complete. Each such description is qualified in its entirety by reference to such exhibit for a more complete description of the matter involved.

        We are subject to the informational requirements of the Securities Exchange Act and in accordance therewith will file reports and other information with the Securities and Exchange Commission. Such reports and other information can be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at its principal offices at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such information may be obtained from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a World Wide Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.

        As a foreign private issuer, we are not subject to the proxy rules under Section 14 of the Exchange Act and our officers, directors and principal shareholders are not subject to the insider short-swing profit disclosure and recovery provisions under Section 16 of the Exchange Act.

        As a foreign private issuer, we are not required to publish financial statements as frequently or as promptly as United States companies; however, we intend to furnish holders of our common shares with reports annually containing consolidated financial statements audited by independent accountants. We also intend to file quarterly financial statements under cover of Form 6-K.

I. SUBSIDIARY INFORMATION Not Applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks

        Because we have previously, and expect to continue, to finance our operations, in part, through loans, we are exposed to interest rate risks. At December 31, 2003, the majority of our loans were short term, floating-rate loans that will become more expensive when interest rates rise and less expensive when they fall. We have partly mitigated this risk by investing our cash, cash equivalents and short term investments in floating rate investments. Alcon evaluates the use of interest rate swaps and periodically uses such agreements to manage interest rate risk on selected debt instruments.

Credit Risks

        In the normal course of our business, we incur credit risk because we extend trade credit to our customers. We believe that these credit risks are well diversified, and our internal staff actively manages these risks. Our principal concentrations of trade credit are generally with large and financially sound corporations, such as large retailers and grocery chains, drug wholesalers and governmental agencies. It is not untypical that six larger customers in the United States may total approximately 15% of the outstanding balance of accounts receivable; however no single customer accounts for more than 10% of annual sales.

        As part of our sales of surgical equipment, we frequently finance the purchase of our equipment and enter into leases and other financial transactions with our customers. In general, these loans and other transactions range in duration from one to five years and in principal amount from $50,000 to $700,000. We conduct credit analysis on the customers we finance and secure the loans and leases with the purchased surgical equipment. Over the last 16 years, we have offered financing programs for cataract equipment with no significant losses. Our customer financing program for laser refractive surgical equipment has a shorter history, is of a larger size, and has relatively less credit strength and asset value for security. In countries that have a history of high inflation, such as Turkey, Brazil and Argentina, the credit risks to which we are exposed can be larger and less predictable.

        We conduct some of our business through export operations and are exposed to country credit risk. This risk is mitigated by the use, where applicable, of letters of credit confirmed by large commercial banks in Switzerland and the United States.

Quantitative Disclosure Concerning Market Risk

Currency Risk

        Because a significant portion of our revenues and earnings are denominated in foreign currencies, we are exposed to market risk from changes in currency exchange rates that could impact our results of operations and financial position. We manage our exposure to these currency risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. We use derivative financial instruments as risk management tools and not for speculative purposes.

        We use foreign currency forward contracts to manage the volatility of non-functional currency cash flows resulting from changes in exchange rates. Currency exchange contracts are used primarily to hedge inter-company purchases and sales. The use of these derivative financial instruments allows us to reduce our overall exposure to exchange rate fluctuations, since the gains and losses on these contracts substantially offset losses and gains on the assets, liabilities and transactions being hedged.

        The fair value of currency exchange contracts is subject to changes in currency exchange rates. For the purpose of assessing specific risks, we use a sensitivity analysis to determine the effects that market risk exposures may have on the fair value of our financial instruments and results of operations. The financial instruments included in our sensitivity analysis are currency forward contracts. Such contracts generally have a duration of one to twelve months and are used primarily to hedge transactions that are firmly committed on the date the forward contract is entered into or are anticipated to occur within twelve months of that date. The sensitivity analysis excludes the values of foreign currency denominated receivables and payables because of their short maturities and assumes that the change in one currency’s rate relative to the U.S. dollar would not have an effect on other currencies’ rates relative to the U.S. dollar. All other factors were held constant. To perform the sensitivity analysis, we assess the risk of loss in fair values from the effect of a hypothetical 10% change in currency exchange spot rates and assuming no change in interest rates. For contracts outstanding as of December 31, 2003, a 10% appreciation in currency exchange rates against the U.S. dollar from the prevailing market rates would have increased our pre-tax earnings by approximately $6.7 million. Conversely, a 10% depreciation in these exchange rates from the prevailing market rates would have decreased our pre-tax earnings by approximately $6.7 million. Consistent with the nature of the economic hedge of such currency exchange contracts, such gains or losses would be offset by corresponding decreases or increases, respectively, of the underlying instrument or transaction being hedged.

        The model used to perform the sensitivity analysis assumes a parallel shift in all currency exchange spot rates. Exchange rates, however, rarely move in the same direction. The assumption that all exchange rates change in a parallel manner does not necessarily represent the actual changes in fair value we would incur under normal market conditions because all variables other than the specific market risk are held constant.

        While we hedge some non-U.S. dollar currency transactions, the decline in value of non-U.S. dollar currencies may, if not reversed, adversely affect our ability to contract for product sales in U.S. dollars because our products may become more expensive to purchase in U.S. dollars for local customers doing business in the countries of the affected currencies. At December 31, 2003, the financial instruments are as follows:

$87 million notional amount of foreign currency forward-exchange contracts designated as fair value hedges to offset the potential earnings effects from short term net assets denominated in Swiss francs.

$20 million notional amount of foreign currency swaps designated as fair value hedges in Brazil where we borrow U.S. dollars and swap into Brazilian reis.

Interest Rate Risks

        We are exposed to market risk from changes in interest rates that could impact our results of operations and financial position. As of December 31, 2003, approximately 5.3% of our debt was long term fixed rate loans, including the impact of interest rate swaps. We also had short term floating rate investments and deposits equal to approximately 88.4% of our short term floating rate debt at December 31, 2003. The excess amount of our short term debt over our short term investments and deposits is exposed to fluctuations in short term interest rates. A 1% increase in short term interest rates would have decreased our pre-tax earnings by $1.5 million and a 1% decrease in short term interest rates would have increased our pre-tax earnings by $1.5 million. Alcon evaluates the use of interest rate swaps and periodically uses such agreements to manage its interest risk on selected debt instruments.

        In January 2001, we entered into a 10-year pay floating, receive fixed interest rate swap on a notional amount of Japanese yen 5 billion. This swap effectively converted our Japanese yen 5 billion fixed interest rate obligation to a floating rate instrument. In July 2002, we entered into two separate two-year pay fixed, receive floating interest rate swaps with a total notional amount of $50 million. The swaps effectively converted a portion of our floating rate commercial paper borrowings to fixed using a 3-month LIBOR interest rate swap.

        At December 31, 2003, the fair value of the interest rate swaps was $1.3 million. The fair values of the interest rate swaps are based on market data including the relevant interest rates at December 31, 2003.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

                  Not Applicable.

PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

                  None.

ITEM 14.  MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

                  Not Applicable.

ITEM 15. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. As of the end of the period covered by this annual report (the “Evaluation Date”), the Company conducted an evaluation (under the supervision and with the participation of the Company’s management, including its chief executive officer and its chief financial officer, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)). Based on this evaluation, the Company’s chief executive officer and its chief financial officer concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) Not Applicable.

(c) Not Applicable.

(d) Changes in Internal Control over Financial Reporting. There were no significant changes in the Company’s internal control over financial reporting identified in connection with the evaluation performed above that occurred during the period covered by this annual report that could significantly affect the Company’s disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.

ITEM 16.

  A.     AUDIT COMMITTEE FINANCIAL EXPERT

        Alcon’s board of directors has determined that Thomas G. Plaskett is an “audit committee financial expert” as defined in the instructions for Item 16A of Form 20-F. Mr. Plaskett is “independent,” as determined in accordance with the rules of the New York Stock Exchange.

  B.     CODE OF ETHICS

        Alcon has adopted a Code of Business Conduct and Ethics that applies to all employees including its Chief Executive Office, Chief Financial Officer and its principal accounting officer. The Company has posted this Code of Ethics to its Web site, www.AlconInc.com, where it is publicly available. In addition, Alcon will provide a printed copy of its Code of Business Conduct and Ethics to shareholders upon request.

  C.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The aggregate worldwide fees billed by KPMG LLP for professional services to the Company were $3.30 million in 2003 and $3.11 million in 2002, as noted below.

	2003	2002
	(in thousands)
Audit Fees (1)	$2,485	$2,272
Audit-Related Fees (2)	231	116
Tax Fees (3)	580	723
All Other Fees (4)	8	--
Total Fees	$3,304	$3,111

(1) Audit Fees represent fees for professional services provided for the audit of the Company’s annual financial statements, review of the Company’s quarterly financial statements, and statutory audits for the Company’s worldwide subsidiaries/affiliates.

(2) Audit related fees consisted principally of fees for audits of financial statements of certain employee benefit plans and assistance in documenting internal controls.

(3) Tax Fees represent fees for professional services related to tax compliance and tax planning / advisory consultation.

(4) All Other Fees represent professional services provided for services not directly supporting financial statement audits.

        The above professional services are covered within the scope of audit and permitted non-audit services as defined by SEC regulations. All fees disclosed for the fiscal year ended December 31, 2003 have been approved by the Audit Committee subject to the policy and procedures described below.

Audit Committee Pre-Approval Policy and Procedures

Policy

        The Audit Committee will pre-approve the following the professional services provided to Alcon, Inc. and its subsidiaries as rendered by the primary Alcon Group external auditors and additional external auditors specific to the Company subsidiary (“external auditors”):

(1) All auditing services (which may entail providing comfort letters in connection with securities underwritings or statutory audits); and,

(2) All non-audit services, including tax services.

Procedures

1. On an annual basis, the Audit Committee will review and approve the specific financial / statutory audits for the fiscal year ending to be rendered by the external auditors prior to the engagement of the service.

2. Specifically related to permitted tax services, the Audit Committee annually pre-approves such particular services for all company subsidiaries rendered by the external auditors. All other tax services to be performed by the external auditors as-needed or incremental to the annual pre-approved services list will be approved by the Audit Committee prior to engagement of the service.

3. Any other non-audit service by the external auditors not prohibited by Company policy or SEC regulation will be pre-approved on a case by case basis by the Audit Committee.

4. The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by this policy / procedure. The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service shall be presented to the full Audit Committee at its next scheduled meeting.

D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE

                 None.

  E.     PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

        The following table provides information with respect to purchases made by or on behalf of Alcon or any “affiliated purchaser,” of its common shares that are registered pursuant to section 12 of the Exchange Act.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (a)(b)(c)	Average Price Paid per Share	Total Number o Of Shares Purchased As Part of Publicly Announced Plans or Programs (c)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 2003	--	$     --	--	1,806,500
February 1 to 28, 2003	--	--	--	1,806,500
March 1 to 31, 2003	--	--	--	1,806,500
April 1 to 30, 2003	--	--	--	1,806,500
May 1 to 31, 2003	--	--	--	1,806,500
June 1 to 30, 2003	--	--	--	1,806,500
July 1 to 31, 2003	--	--	--	1,806,500
August 1 to 31, 2003	--	--	--	1,806,500
September 1 to 30, 2003	--	--	--	1,806,500
October 1 to 31, 2003	--	--	--	1,806,500
November 1 to 30, 2003	--	--	--	1,806,500
December 1 to 31, 2003(e)	585,100	$58.35	585,100	1,221,400
Total	585,100	$58.35	585,100	N/A

(a) Based on settlements occurring within the month.

(b) No shares were purchased other than through a publicly announced plan or program.

(c) In addition to the purchases above, during 2003 Alcon also acquired 6,590 treasury shares from forfeitures of restricted shares by employees who terminated employment with Alcon before vesting in such shares.

(d) On November 6, 2002, Alcon filed a report on Form 6-K that disclosed that Alcon’s board of directors authorized the purchase of up to 2,000,000 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in the open market.

(e) At December 31, 2003, Alcon had committed in the open market to purchase 91,000 common shares at an average price per share of $60.06 that did not settle until 2004. These transactions were not included in any of the purchases shown above.

        On February 11, 2004, Alcon’s board of directors approved the purchase of up to an additional 4,000,000 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in open market transactions.

PART III

ITEM 17.  FINANCIAL STATEMENTS

                Not Applicable.

ITEM 18.  FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

	Page Reference:
ALCON, INC. AND SUBSIDIARIES:
Report of Independent Auditors	F-2
Consolidated Balance Sheets - December 31, 2003 and
2002	F-3
Consolidated Statements of Earnings - Years ended
December 31, 2003, 2002 and 2001	F-4
Consolidated Statements of Shareholders' Equity and
Comprehensive Income - Years ended December 31,
2003, 2002 and 2001	F-5
Consolidated Statements of Cash Flows - Years ended
December 31, 2003, 2002 and 2001	F-6
Notes to Consolidated Financial Statements	F-7

ITEM 19.  EXHIBITS

EXHIBIT INDEX

Exhibit No.	Description
1.1	Registrant's Articles of Association, as of January 22, 2004
1.2	Registrant's Organizational Regulations, as of March 17, 2003
2.1	The Registrant agrees to furnish copies of any instruments defining the
	rights of holders of long term debt of the Registrant and its
	consolidated subsidiaries to the Commission upon request.
4.1	2002 Alcon Incentive Plan (Incorporated by reference to Exhibit 4.1 to the
	Registrant’s Annual Report on Form 20-F filed on March 31, 2003)
4.2	Alcon Executive Deferred Compensation Plan
	(Incorporated by reference to Exhibit 4.1 to the Registrant's
	Registration Statement on Form S-8 filed on December 12, 2003,
	File No. 333-100746)
4.3	Alcon 401(k) Retirement Plan and Trust
	(Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration
	Statement on Form S-8 filed on December 12, 2003, File No. 333-111145)
4.4	Alcon Excess 401(k) Plan
4.5	Alcon Supplemental Executive Retirement Plan for Alcon Holdings, Inc. and
	Affiliated Entities
4.6	Commercial Paper Guarantee
	(Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual
	Report on Form 20-F filed on March 31, 2003)
4.7	Demand Note payable to Nestlé Capital Corporation,
	dated June 21, 2002
	(Incorporated by reference to Exhibit 4.4 to the Registrant’s Annual
	Report on Form 20-F filed on March 31, 2003)
4.8	Investment Services Agreement with Nestlé S.A., as amended as of
	January 1, 2003
8.1	Significant Subsidiaries of the Registrant
12.1	Certification of Chief Executive Officer Required by
	Rule 13a-14(a) (17 CFR240.13a-14(a)) or Rule 15d-14(a)
	(17 CFR240.15d-14(a))
12.2	Certification of Chief Financial Officer Required by
	Rule 13a-14(a) (17 CFR240.13a-14(a)) or Rule 15d-14(a)
	(17 CFR240.15d-14(a))
13.1	Certification Furnished Pursuant to Rule 13a-14(b)
	(17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b))
	and Section 1350 of Chapter 63 of Title 18
	of the United States Code (18 U.S.C. Section 1350)
14.1	Consent of Independent Auditors

SIGNATURES

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

                                                                                        ALCON, INC
                                                                                                                          (Registrant)

(Signature)

                                                                               /s/ Jacqualyn A. Fouse
                                                                                                             Jacqualyn A. Fouse,
                                                                                                 Senior Vice President, Finance and
                                                                                                           Chief Financial Officer

Date:
March 12, 2004

INDEX TO FINANCIAL STATEMENTS

	Page Reference:
ALCON, INC. AND SUBSIDIARIES:
Report of Independent Auditors	F-2
Consolidated Balance Sheets - December 31, 2003 and
2002	F-3
Consolidated Statements of Earnings - Years ended
December 31, 2003, 2002 and 2001	F-4
Consolidated Statements of Shareholders' Equity and
Comprehensive Income - Years ended December 31,
2003, 2002 and 2001	F-5
Consolidated Statements of Cash Flows - Years ended
December 31, 2003, 2002 and 2001	F-6
Notes to Consolidated Financial Statements	F-7

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Alcon, Inc.

        We have audited the accompanying consolidated balance sheets of Alcon, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of earnings, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alcon, Inc. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

        As discussed in note 4 to the consolidated financial statements, effective January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

/s/ KPMG LLP

Fort Worth, Texas
January 30, 2004, 
      except for note 20 which is
      as of February 11, 2004

ALCON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	December 31,
	2003		2002
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$ 1,086.0		$    967.9
Investments	100.5		66.3
Trade receivables, net	622.8		547.5
Inventories	446.5		412.3
Deferred income tax assets	157.4		128.7
Other current assets	57.0		76.9
Total current assets	2,470.2		2,199.6
Property, plant and equipment, net	788.8		704.1
Intangible assets, net	331.5		392.8
Goodwill	552.1		549.8
Long term deferred income tax assets	118.8		90.1
Other assets	39.2		33.4
Total assets	$ 4,300.6		$ 3,969.8
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$    146.1		$    117.0
Short term borrowings	1,326.8		1,772.8
Current maturities of long term debt	8.5		23.1
Other current liabilities	751.6		659.4
Total current liabilities	2,233.0		2,572.3
Long term debt, net of current maturities	75.0		80.8
Long term deferred income tax liabilities	108.4		85.8
Other long term liabilities	292.7		256.6
Contingencies (note 16)
Shareholders' equity:
Common shares, par value CHF 0.20 per share, 336,975,000
shares authorized, 309,310,273 shares issued and
308,519,051 shares outstanding at December 31, 2003;
336,975,000 shares authorized, 309,231,699 shares issued and
309,032,167 shares outstanding at December 31, 2002	42.5		42.5
Additional paid-in capital	512.0		508.5
Accumulated other comprehensive income (loss)	135.8		(16.4	)
Deferred compensation	(7.5	)	(15.2	)
Retained earnings	951.2		463.0
Treasury shares, at cost; 791,222 shares at December 31, 2003;
and 199,532 shares at December 31, 2002	(42.5	)	(8.1	)
Total shareholders' equity	1,591.5		974.3
Total liabilities and shareholders' equity	$ 4,300.6		$ 3,969.8

        See accompanying notes to consolidated financial statements.

ALCON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS

	Years ended December 31,
	2003		2002		2001
	(in millions, except share data)
Sales	$              3,406.9		$              3,009.1		$              2,747.7
Cost of goods sold	1,005.9		892.7		798.3
Gross profit	2,401.0		2,116.4		1,949.4
Selling, general and administrative	1,112.5		1,014.7		953.7
Research and development	349.9		323.5		289.8
Gain on sale of plant	(8.2	)	--		--
Amortization of intangibles	67.4		74.5		117.0
Operating income	879.4		703.7		588.9
Other income (expense):
Gain (loss) from foreign currency, net	2.0		4.2		(4.8	)
Interest income	18.5		22.2		46.6
Interest expense	(41.8	)	(53.8	)	(107.7	)
Other	--		1.2		(9.1	)
Earnings before income taxes	858.1		677.5		513.9
Income taxes	262.7		210.6		198.3
Net earnings	$                 595.4		$                 466.9		$                 315.6
Basic earnings per common share	$                   1.93		$                   1.54		$                   1.05
Diluted earnings per common share	$                   1.92		$                   1.53		$                   1.05
Basic weighted average common shares	307,934,623		301,482,834		300,000,000
Diluted weighted average common shares	310,812,399		302,511,780		300,000,000

        See accompanying notes to consolidated financial statements.

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Years Ended December 31, 2003, 2002 and 2001

	Common Shares
	Number of shares outstanding		Amount		Additional Paid-in Capital		Accumulated other comprehensive income (loss)		Deferred Compensation		Retained Earnings		Treasury Shares		Total
	(in millions, except share data)
Balance, December 31, 2000	300,000,000		$ 42.9		$    592.0		$(91.4	)	$     --		$ 557.9		$   --		$ 1,101.4
Comprehensive income:
Net earnings	--		--		--		--		--		315.6		--		315.6
Change in net unrealized
gains on
investments	--		--		--		0.4		--		--		--		0.4
Impairment loss on
investment	--		--		--		7.3		--		--		--		7.3
Foreign currency
translation
adjustments	--		--		--		(27.1	)	--		--		--		(27.1	)
Total comprehensive income															296.2
Dividends on common shares	--		--		--		--		--		(8.0	)	--		(8.0	)
Balance, December 31, 2001	300,000,000		42.9		592.0		(110.8	)	--		865.5		--		1,389.6
Comprehensive income:
Net earnings	--		--		--		--		--		466.9		--		466.9
Change in net unrealized
losses on
investments	--		--		--		(1.6	)	--		--		--		(1.6	)
Change in net unrealized
losses on
cash flow hedges	--		--		--		(5.8	)	--		--		--		(5.8	)
Foreign currency
translation
adjustments	--		--		--		101.8		--		--		--		101.8
Total comprehensive income															561.3
Conversion of common shares
to preferred shares	(69,750,00)		(10.0	)	(2,178.0	)	--		--		--		--		(2,188.0	)
Initial public offering	76,725,000		9.3		2,398.8		--		--		--		--		2,408.1
Options exercised	91,000		--		3.3		--		--		--		--		3.3
Treasury shares acquired .	(199,532	)	--		--		--		--		--		(8.1	)	(8.1	)
Conversion of employee plan	2,165,699		0.3		70.3		--		(37.3	)	--		--		33.3
Compensation expense	--		--		--		--		22.1		--		--		22.1
Dividends and accretion of
discount
on preferred shares	--		--		--		--		--		(3.9	)	--		(3.9	)
of subsidiary
Dividends on common shares	--		--		(377.9	)	--		--		(865.5	)	--		(1,243.4	)
Balance, December 31, 2002	309,032,167		42.5		508.5		(16.4	)	(15.2	)	463.0		(8.1	)	974.3
Comprehensive income:
Net earnings	--		--		--		--		--		595.4		--		595.4
Change in net unrealized
losses on
investments	--		--		--		(0.3	)	--		--		--		(0.3	)
Change in net unrealized
losses on
cash flow hedges	--		--		--		5.8		--		--		--		5.8
Minimum pension liability
adjustment	--		--		--		(2.5	)	--		--		--		(2.5	)
Foreign currency
translation
adjustments	--		--		--		149.2		--		--		--		149.2
Total comprehensive income															747.6
Options exercised	78,574		--		3.5		--		--		--		--		3.5
Treasury shares acquired .	(591,690	)	--		--		--		--		--		(34.4	)	(34.4	)
Compensation expense	--		--		--		--		7.7		--		--		7.7
Dividends on common shares	--		--		--		--		--		(107.2	)	--		(107.2	)
Balance, December 31, 2003	308,519,051		$ 42.5		$    512.0		$ 135.8		$(7.5	)$	951.2		$(42.5	)	$ 1,591.5

See accompanying notes to consolidated financial statements.

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31,
	2003		2002		2001
	(in millions)
Cash provided by (used in) operating activities:
Net earnings	$    595.4		$    466.9		$    315.6
Adjustments to reconcile net earnings to cash provided
from operating activities:
Depreciation	110.4		92.0		78.3
Amortization of intangibles	67.4		74.5		117.0
Amortization of deferred compensation	7.7		22.1		--
Tax benefit from exercise of stock options	0.9		--		--
Deferred income taxes	(28.1	)	5.3		(2.4	)
(Gain) loss on sale of assets	(7.2	)	6.7		1.4
Changes in operating assets and liabilities:
Trade receivables	(19.6	)	(27.5	)	(27.6	)
Inventories	25.0		(3.3	)	(57.4	)
Other assets	36.5		28.6		31.0
Accounts payable and other current liabilities	92.9		26.1		58.0
Other long term liabilities	34.1		10.0		29.8
Net cash from operating activities	915.4		701.4		543.7
Cash provided by (used in) investing activities:
Proceeds from sale of assets	21.1		1.5		4.2
Purchases of property, plant and equipment	(157.9	)	(120.9	)	(127.4	)
Purchase of intangible assets	(5.0	)	(2.8	)	(10.9	)
Net purchases of investments	(33.9	)	(4.7	)	(15.2	)
Net cash from investing activities	(175.7	)	(126.9	)	(149.3	)
Cash provided by (used in) financing activities:
Net proceeds from (repayment of) short term debt	(506.9	)	951.4		(194.8	)
Proceeds from issuance of long term debt	--		0.9		42.2
Repayment of long term debt	(23.5	)	(630.4	)	(37.7	)
Dividends on common shares	(107.2	)	(1,243.4	)	(8.0	)
Proceeds from public sale of common shares	--		2,408.1		--
Redemption of preferred shares	--		(2,188.0	)	--
Proceeds from sale of common shares to employees	2.6		3.3		--
Acquisition of treasury shares	(34.1	)	(7.9	)	--
Proceeds from sale of preferred shares of subsidiary	--		1,362.5		--
Redemption of preferred shares of subsidiary	--		(1,364.4	)	--
Dividends on preferred shares of subsidiary	--		(2.0	)	--
Other	--		(42.8	)	42.8
Net cash from financing activities	(669.1	)	(752.7	)	(155.5	)
Effect of exchange rates on cash and cash equivalents	47.5		5.6		(10.4	)
Net increase (decrease) in cash and cash equivalents	118.1		(172.6	)	228.5
Cash and cash equivalents, beginning of year	967.9		1,140.5		912.0
Cash and cash equivalents, end of year	$ 1,086.0		$    967.9		$ 1,140.5

        See accompanying notes to consolidated financial statements.

ALCON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share data)

(1) Initial Public Offering

        At December 31, 2001, Alcon, Inc., a Swiss corporation (“Alcon”), was a wholly owned subsidiary of Nestlé S.A. (“Nestlé”). On September 20, 2001, the Board of Directors of Nestlé approved the exploration of an initial public offering (the “IPO”) of a minority stake in Alcon.

        Alcon declared on February 25, 2002, and made, on March 20, 2002, a payment to Nestlé of $1,243.4 (CHF 2,100) for dividends and return of capital. This payment was financed from existing cash and cash equivalents and additional short term borrowings. The entire payment was considered a dividend under Swiss law.

        On February 25, 2002 Nestlé converted 69,750,000 Alcon common shares that it owned into 69,750,000 Alcon non-voting preferred shares. On March 21, 2002, holders of Alcon common shares voted to redeem the preferred shares for an aggregate redemption price of CHF 3,634. The proceeds, net of related costs including taxes, from the IPO were used to redeem the preferred shares for $2,188.0 on May 29, 2002. No dividends were paid on the preferred shares.

        On March 20, 2002, Alcon’s IPO was priced at $33.00 per share for 69,750,000 common shares. The net proceeds to Alcon from the IPO were $2,189.0, after offering expenses and taxes. A portion of the IPO proceeds was utilized to repay $712.1 in short term debt until May 29, 2002, when the preferred shares were redeemed.

        Net proceeds of $219.1, after offering expenses and taxes, from the subsequent exercise of the underwriters’ over-allotment option to purchase 6,975,000 common shares were used to reduce short term indebtedness.

        In connection with the IPO, Alcon changed certain provisions of its deferred compensation plan. These changes resulted in a one time $22.6 charge to operating income ($14.2 net of tax) upon the completion of the IPO in March 2002.

(2) Summary of Significant Accounting Policies and Practices

(a) Description of Business

        The principal business of Alcon and all of its subsidiaries (collectively, the “Company”) is the development, manufacture and marketing of pharmaceuticals, surgical equipment and devices, contact lens care and other vision care products that treat eye diseases and disorders and promote the general health and function of the human eye. Due to the nature of the Company’s worldwide operations, it is not subject to significant concentration risks.

(b) Principles of Consolidation

        The consolidated financial statements include the accounts of the Company. All significant balances and transactions among the consolidated entities have been eliminated in consolidation. All consolidated entities are included on the basis of a calendar year.

(c) Management Estimates

        Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Actual results could differ from those estimates.

(d) Foreign Currency

        The reporting currency of the Company is the United States dollar. The financial position and results of operations of the Company’s foreign subsidiaries are generally determined using the local currency as the functional currency. Assets and liabilities of these subsidiaries have been translated at the rate of exchange at the end of each period. Revenues and expenses have been translated at the weighted average rate of exchange in effect during the period. Gains and losses resulting from translation adjustments are included in accumulated other comprehensive income (loss) in shareholders’ equity. The impact of subsidiaries located in countries whose economies are considered highly inflationary is insignificant. Gains and losses resulting from foreign currency transactions are included in nonoperating earnings. Under Swiss corporate law, Alcon is required to declare any dividends on its common shares in Swiss francs.

(e) Cash and Cash Equivalents

        Cash equivalents include demand deposits and all highly liquid investments with original maturities of three months or less.

(f) Inventories

        Inventories are stated at the lower of cost or market. Cost is determined primarily using the first-in, first-out method.

(g) Investments

        Investments consist of equity and fixed income securities classified as available-for-sale. Available-for-sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of accumulated other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis.

        A decline in the market value of any available-for-sale investments that is deemed to be other than temporary results in a reduction in carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. Dividend and interest income is recognized when earned.

(h) Financial Instruments

        The Company uses various derivative financial instruments on a limited basis as part of a strategy to manage the Company’s exposure to certain market risks associated with interest rate and foreign currency exchange rate fluctuations expected to occur within the next twelve months. The Company evaluates the use of interest rate swaps and periodically uses such agreements to manage its interest risk on selected debt instruments. The Company does not enter into financial instruments for trading or speculative purposes.

        The Company periodically uses foreign currency forward contracts to reduce the effect of fluctuating foreign currencies on foreign currency denominated intercompany transactions. The forward contracts establish the exchange rates at which the Company purchases or sells the contracted amount of foreign currencies for specified local currencies at a future date. The Company uses forward contracts, which are short term in nature, and receives or pays the difference between the contracted forward rate and the exchange rate at the settlement date.

        All of the Company’s derivative financial instruments are recorded at fair value. For derivative instruments designated and qualifying as fair value hedges, the gain or loss on these hedges is recorded immediately in earnings to offset the changes in the fair value of the assets or liabilities being hedged. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings.

(i) Property, Plant and Equipment

        Property, plant and equipment are stated at historical cost. Additions, major renewals and improvements are capitalized while repairs and maintenance costs are expensed. Upon disposition, the book value of assets and related accumulated depreciation is relieved and the resulting gains or losses are reflected in earnings.

        Depreciation on plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets, which are as follows:

Land improvements	25 years
Buildings and improvements	12-50 years
Machinery, other equipment and software	3-12 years

(j) Goodwill and Intangible Assets, Net

        Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company did not record an impairment loss as a result of the implementation of Statement 142. Statement 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their residual values and reviewed for impairment.

        Prior to 2002, goodwill, which represents the excess of purchase price over fair value of net assets acquired, was amortized on a straight-line basis over the expected periods to be benefited, which were 10 to 20 years.

        Intangible assets, net, consist of customer base, trademarks and patents, and licensed technology. The cost of these intangible assets is amortized straight line over the estimated useful lives of the respective assets, which are 5 to 20 years.

(k) Impairment

        Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(l) Pension and Other Postretirement Plans

        The Company sponsors several defined contribution plans, defined benefit retirement plans and a postretirement health care plan.

        The Company provides for the benefits payable to employees on retirement by charging current service costs to income systematically over the expected service lives of employees who participate in defined benefit plans. An actuarially computed amount is determined at the beginning of each year by using valuation methods that attribute the cost of the retirement benefits to periods of employee service. Such valuation methods incorporate assumptions concerning employees’ projected compensation and health care cost trends. Prior service costs for plan amendments are generally charged to income systematically over the remaining expected service lives of participating employees.

        The cost recognized for defined contribution plans is based upon the contribution required for the period.

        Under a Financial Accounting Standards Board Staff Position adopted in January 2004, the Company elected to defer recognition of the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in accounting for its postretirement health care plan under FASB Statement No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, or in making disclosures related to its plan required by FASB Statement No. 132, Employers’ Disclosure about Pensions and Other Postretirement Benefits, until authoritative guidance on accounting for subsidies provided by such act is issued. When issued, final guidance could require changes to previously reported information. Measures presented in these financial statements for accumulated postretirement benefit obligation or net periodic postretirement benefit cost do not reflect the results of this act.

(m) Revenue Recognition

        The Company recognizes revenue on product sales when the customer takes title and assumes risk of loss except for surgical equipment sales. If the customer takes title and assumes risk of loss upon shipment, revenue is recognized on the shipment date. If the customer takes title and assumes risk of loss upon delivery, revenue is recognized on the delivery date. Revenue is recognized as the net amount to be received after deducting estimated amounts for rebates and product returns.

        The Company recognizes revenue on surgical equipment sales when the customer takes title and assumes risk of loss and when installation and any required training have been completed. Per procedure technology fees related to refractive laser systems are recognized in the period when the procedure is performed.

        The Company recognizes revenue in accordance with the United States Securities and Exchange Commission Staff Accounting Bulletins No. 101 and 104.

   (n) Research and Development

        Internal research and development are expensed as incurred. Third-party research and development costs are expensed as the contracted work is performed or as milestone results have been achieved.

(o) Selling, General and Administrative

        Advertising costs are expensed as incurred. Advertising costs amounted to $119.5, $99.7 and $96.0 in 2003, 2002 and 2001, respectively.

        Shipping and handling costs amounted to $42.5, $37.0 and $33.5 in 2003, 2002 and 2001, respectively.

(p) Income Taxes

        The Company recognizes deferred income tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and expected benefits of utilizing net operating loss and credit carryforwards. The impact on deferred income taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and reflected in the financial statements in the period of enactment. Withholding taxes have been provided on unremitted earnings of subsidiaries which are not reinvested indefinitely in such operations. Dividends to Alcon do not result in Swiss income taxes.

(q) Basic and Diluted Earnings Per Common Share

        Basic earnings per common share were computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the relevant period. Earnings available to common shareholders were determined by deducting dividends and accretion of discount on preferred shares of subsidiary from net earnings. In 2003 and 2002, diluted weighted average common shares reflects the potential dilution, using the treasury stock method, that could occur if employee stock options for the issuance of common shares were exercised and if contingent restricted common shares granted to employees became vested. There were no dilutive securities outstanding in 2001.

A reconciliation of net earning to earnings available to common shareholders follows:

	2003	2002		2001
Net earnings	$595.4	$ 466.9		$315.6
Dividends and accretion of discount on preferred shares of subsidiary	--	(3.9	)	--
Earnings available to common shareholders	$595.4	$ 463.0		$315.6

        The following table reconciles the weighted average shares of the basic and diluted share computations:

	2003	2002	2001
Basic weighted average common shares outstanding	307,934,623	301,482,834	300,000,000
Effect of dilutive securities:
Employee stock options	2,106,941	303,665	--
Contingent restricted common shares	770,835	725,281	--
Diluted weighted average common shares outstanding	310,812,399	302,511,780	300,000,000

(r) Comprehensive Income

        Comprehensive income consists of net earnings, foreign currency translation adjustments, unrealized gains (losses) on investments, unrealized losses on cash flow hedges and minimum pension liability adjustment and is presented in the consolidated statements of shareholders’ equity and comprehensive income.

(s) Stock Based Compensation

        The Company applies the intrinsic value method provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for grants to Company directors, officers and employees under the 2002 Alcon Incentive Plan. No stock-based employee compensation cost was reflected in net earnings, as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per common share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standard No. 123, “Accounting for Stock-Based Compensation” in accounting for the plan.

	2003		2002
Net earnings, as reported	$   595.4		$   466.9
Deduct: Total stock-based employee compensation expense determined under the
fair value method for all awards, net of related tax benefits	(29.8	)	(15.2	)
Proforma net earnings	$   565.6		$   451.7
Earnings per common share:
Basic - as reported	$     1.93		$     1.54
Basic - proforma	$     1.84		$     1.49
Diluted - as reported	$     1.92		$     1.53
Diluted - proforma	$     1.82		$     1.48

(t) Warranty Reserves

        The Company generally warrants its surgical equipment against defects for a period of one year from the installation date. Warranty costs are estimated and expensed at the date of sale and the resulting accrued liability is amortized over the warranty period. Such costs are estimated based on actual cost experience.

(u) Reclassifications

        Certain reclassifications have been made to prior year amounts to conform with current year presentation.

(3)  Cash Flows—Supplemental Disclosures

	2003	2002	2001
Supplemental disclosure of cash flow information:
Cash paid during the year for the following:
Interest expense, net of amount capitalized	$  43.3	$  53.4	$111.6
Income taxes	$239.9	$210.6	$146.1

        Supplemental Disclosure of Non-cash Financing Activities:

a) On February 25, 2002, Nestlé converted 69,750,000 Alcon common shares that it owned into 69,750,000 Alcon non-voting preferred shares. The redemption price for these preferred shares was CHF 3,634.

b)

In connection with the IPO, certain Alcon employees elected to convert their interests in the 1994 Phantom Stock Plan into restricted Alcon common shares and options to purchase Alcon common shares. The effects on the 2002 financial statements were to: decrease other current liabilities by $10.9 decrease other long term liabilities by $23.3 increase common stock and additional paid-in capital by $71.5 decrease total equity for deferred compensation of $37.3 Deferred compensation was reduced by $7.7 and $22.1, which amounts were charged against earnings in the years ended December 31, 2003 and 2002, respectively, and were reflected as adjustments in net cash from operating activities.

c) During years ended December 31, 2003 and 2002, Alcon acquired 6,590 and 6,032 treasury shares respectively, when certain individuals terminated employment before vesting in their restricted common shares, as discussed in note 12.

(4) Goodwill and Intangible Assets

        Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company did not record an impairment as a result of the implementation of Statement 142. Statement 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their residual values and reviewed for impairment.

Intangible assets subject to amortization:

	December 31, 2003			December 31, 2002
	Gross Carrying Amount	Accumulated Amortization		Gross Carrying Amount	Accumulated Amortization
Amortized intangible assets:
Licensed technology	$ 511.6	$(258.	2)	$ 508.3	$(207.	0)
Other	186.0	(107.9	)	184.2	(92.7	)
	$ 697.6	$(366.	1)	$ 692.5	$(299.	7)

	Year Ended December 31,
	2003	2002	2001
Aggregate amortization expense related to intangible assets	$67.4	$74.5	$59.4

        In connection with a voluntary recall and termination of the SKBM® microkeratome product line, a $5.9 impairment loss on intangible assets was recorded as amortization in 2002.

   Estimated Amortization Expense:

  

For year ended December 31, 2004	$63.0
For year ended December 31, 2005	$60.8
For year ended December 31, 2006	$55.4
For year ended December 31, 2007	$52.0
For year ended December 31, 2008	$46.5

        The Company recorded no intangible assets with indefinite lives other than goodwill.

        The changes in the carrying amount of goodwill for the year ended December 31, 2003 were as follows:

	United States Segment		International Segment	Total
Balance, December 31, 2001	$ 338.4		$202.8	$541.2
Amounts reclassified to goodwill from intangibles	3.2		1.7	4.9
Reclassified balance, December 31, 2001	341.6		204.5	546.1
Impact of changes in foreign exchange rates	--		3.7	3.7
Balance, December 31, 2002	341.6		208.2	549.8
Impact of changes in foreign exchange rates and other	(2.3	)	4.6	2.3
Balance, December 31, 2003	$ 339.3		$212.8	$552.1

        The impact on net earnings, assuming the exclusion of amortization expense recognized in 2001 for goodwill and intangible assets that are no longer amortized, would have been:

	Year ended December 31,
	2003	2002	2001
Reported net earnings	$  595.4	$  466.9	$  315.6
Add back--goodwill amortization, net
of income taxes	--	--	40.2
Adjusted net earnings	$  595.4	$  466.9	$  355.8
Basic earnings per share:
Reported net earnings	$    1.93	$    1.54	$    1.05
Add back--goodwill amortization, net
of income taxes	--	--	0.13
Adjusted net earnings	$    1.93	$    1.54	$    1.18
Diluted earnings per share:
Reported net earnings	$    1.92	$    1.53	$    1.05
Add back--goodwill amortization, net
of income taxes	--	--	0.13
Adjusted net earnings	$    1.92	$    1.53	$    1.18

(5) Supplemental Balance Sheet Information

	December 31,
	2003	2002
Cash and Cash Equivalents
Cash	$     65.9	$  47.1
Cash equivalents on deposit with Nestle	0.1	--
Cash equivalents -- Other	1,020.0	920.8
	$1,086.0	$967.9

        Cash equivalents consisted of interest bearing deposits and repurchase agreements with an initial term of less than three months.

	December 31,
	2003		2002
Trade Receivables, Net
Trade receivables	$ 655.9		$ 580.5
Allowance for doubtful accounts	(33.1	)	(33.0	)
	$ 622.8		$ 547.5

        Bad debt expense for the years ended December 31, 2003, 2002 and 2001 was $2.2, $8.9 and $11.9, respectively. The allowance for doubtful accounts at the beginning of 2002 and 2001 was $24.0 and $20.3, respectively. Charge-offs (recoveries), net, for the years ended December 31, 2003, 2002 and 2001 were $2.1, $(0.1) and 8.2, respectively.

	December 31,
	2003	2002
Inventories
Finished products	$270.9	$245.0
Work in process	40.0	34.0
Raw materials	135.6	133.3
	$446.5	$412.3

	December 31,
	2003	2002
Other Current Assets
Prepaid expenses	$26.3	$39.9
Receivables from affiliates	0.1	0.3
Other	30.6	36.7
	$57.0	$76.9

	December 31,
	2003		2002
Property, Plant and Equipment, Net
Land and improvements	$      25.4		$      23.2
Buildings and improvements	494.3		466.7
Machinery, other equipment and software	848.1		790.5
Construction in progress	120.6		46.2
	1,488.4		1,326.6
Accumulated depreciation	(699.6	)	(622.5	)
	$    788.8		$    704.1

        Construction in progress at December 31, 2003 consisted primarily of various plant expansion projects. Commitments related to these projects at December 31, 2003 totaled $38.6.

	December 31,
	2003	2002
Other Current Liabilities
Deferred income tax liabilities	$  14.0	$  11.5
Payables to affiliates	6.1	4.3
Accrued warranties	7.3	6.4
Accrued payroll	206.3	183.0
Accrued taxes	267.1	224.9
Other	250.8	229.3
	$751.6	$659.4

        Warranty expense for the years ended December 31, 2003, 2002 and 2001 was $11.0, $13.4 and $11.0, respectively. The reserves to satisfy warranty obligations at the beginning of 2002 and 2001 was $6.4 and $6.5, respectively.

	December 31,
	2003	2002
Other Long Term Liabilities
Pension plans	$194.8	$171.5
Postretirement health care plan	60.2	41.4
Deferred compensation	29.4	32.2
Other	8.3	11.5
	$292.7	$256.6

	December 31,
	2003		2002
Accumulated Other Comprehensive Income (Loss)
Foreign currency translation adjustment	$ 139.4		$(9.7	)
Unrealized losses on investments	(1.1	)	(0.9	)
Unrealized losses on cash flow hedges	--		(5.8	)
Minimum pension liability adjustment	(2.5	)	--
	$ 135.8		$(16.4	)

(6)    Short Term Borrowings

	December 31,
	2003	2002
Lines of credit	$   167.3	$   240.6
Commercial paper	1,005.1	1,377.4
From affiliates	111.5	117.2
Bank overdrafts	42.9	37.6
	$1,326.8	$1,772.8

        At December 31, 2003, the Company had several unsecured line of credit agreements totaling $ 410.3 with third parties that were denominated in various currencies. The commitment fees related to unused borrowings under these facilities were nominal during 2003, 2002 and 2001. The weighted average interest rates at December 31, 2003 and 2002 were 2.5% and 5.9%, respectively. The amounts outstanding under these agreements at December 31, 2003 were due at various dates during 2004.

        At December 31, 2003, the Company had a $2,000 commercial paper facility. At December 31, 2003, the outstanding balance carried an average interest rate of 1.10% before fees. Related to this short term, floating interest rate borrowing, the Company has entered into two $25.0 interest rate swaps that have a net effect of fixing the interest rate of a portion of the outstanding amount at 2.77%, which is based on a two year rate at the time of initiation of the hedge. Nestlé guarantees the commercial paper facility and assists in its management, for which the Company pays Nestlé an annual fee based on the average outstanding commercial paper balances. The Company’s management believes that any fees paid by us to Nestlé for their guarantee of any indebtedness or for the management of the commercial paper program are comparable to the fees that would be paid in an arm’s length transaction. Total guarantee fees paid to Nestlé for the years ended December 31, 2003 and 2002 were $4.1 and $1.6, respectively.

        The Company had various unsecured promissory notes and line of credit agreements denominated in various currencies with several subsidiaries of Nestlé. These short term borrowings at December 31, 2003 were either due on demand or at various dates during 2004. The weighted average interest rates at December 31, 2003 and 2002 were 2.2% and 3.6%, respectively. The unused portion under the line of credit agreements was $232.9 at December 31, 2003.

        The Company had several unsecured bank overdraft lines of credit denominated in various currencies totaling $192.9 at December 31, 2003. The weighted average interest rates on bank overdrafts at December 31, 2003 and 2002 were 4.9% and 9.5%, respectively.

(7)    Long Term Debt

	December 31,
	2003	2002
License obligations	$21.7	$  43.9
Bonds	48.9	45.6
Other	12.9	14.4
Total long term debt	83.5	103.9
Less current maturities of long term debt	8.5	23.1
Long term debt, net of current maturities	$75.0	$  80.8

        License obligations represented the present value of noninterest bearing future fixed payments through 2007 that were capitalized as intangibles. These obligations were discounted at the Company’s borrowing rate (6.25% to 8.50%) at the time each license was obtained.

        The Company’s Japanese subsidiary has outstanding bonds with interest at yen LIBOR (0.1% at December 31, 2003) due 2011. Such bonds were guaranteed by Nestlé for a fee of approximately $0.1 annually in 2003, 2002 and 2001.

        Long term maturities for each of the next five years are $8.5 in 2004, $4.8 in 2005, $5.2 in 2006, $5.1 in 2007, and $0.3 in 2008.

        Interest costs of $ 0.5, $0.2 and $2.2 in 2003, 2002 and 2001, respectively, were capitalized as part of property, plant and equipment.

(8)  Income Taxes

        The components of earnings before income taxes were:

	2003	2002	2001
Switzerland	$244.8	$178.3	$267.7
Outside of Switzerland	613.3	499.2	246.2
Earnings before income taxes	$858.1	$677.5	$513.9

        Income tax expense (benefit) consisted of the following:

	2003		2002	2001
Current:
Switzerland	$   12.6		$  20.8	$   26.9
Outside of Switzerland	278.2		184.5	173.8
Total current	290.8		205.3	200.7
Deferred:
Switzerland	5.9		3.7	3.2
Outside of Switzerland	(34.0	)	1.6	(5.6	)
Total deferred	(28.1	)	5.3	(2.4	)
Total	$ 262.7		$210.6	$ 198.3

        A comparison of income tax expense at the statutory tax rate of 7.8% in Switzerland to the consolidated effective tax rate follows:

	2003		2002		2001
Statutory income tax rate	7.8	%	7.8	%	7.8	%
Effect of higher tax rates in other jurisdictions	23.9		25.2		26.0
Nondeductible items	0.1		--		4.2
Other	(1.2	)	(1.9	)	0.6
Effective tax rate	30.6	%	31.1	%	38.6	%

        At December 31, 2003, Alcon’s subsidiaries had net operating loss carryforwards as follows:

Year of Expiration	Amount
2004	$  0.3
2005	3.0
2006	2.7
2007	1.6
2008	2.0
2009-2011	0.2
Indefinite	45.4
Total net operating loss carry forwards	$55.2

        Deferred income taxes are recognized for tax consequences of “temporary differences” by applying enacted statutory tax rates, applicable to future years, to differences between the financial reporting and the tax basis of existing assets and liabilities.

        Temporary differences and carryforwards at December 31, 2003 and 2002 were as follows:

	December 31,
	2003		2002
Deferred income tax assets:
Trade receivables	$   28.5		$   20.8
Inventories	44.2		41.7
Other assets	25.9		37.1
Accounts payable and other current liabilities	59.3		67.3
Other liabilities	107.7		98.4
Net operating loss carryforwards	18.4		18.0
Gross deferred income tax assets	284.0		283.3
Unused tax credits	6.0		0.1
Valuation allowance	(19.3	)	(17.5	)
Total deferred income tax assets	270.7		265.9
Deferred income tax liabilities:
Property, plant and equipment	37.2		45.6
Goodwill and intangible assets	55.8		72.1
Other	23.9		26.7
Total deferred income tax liabilities	116.9		144.4
Net deferred income tax assets	$ 153.8		$ 121.5

        Based on the Company’s historical pre-tax earnings, management believes it is more likely than not that the Company will realize the benefit of the existing net deferred income tax assets at December 31, 2003. Management believes the existing net deductible temporary differences will reverse during periods in which the Company generates net taxable earnings; however, there can be no assurance that the Company will generate any earnings or any specific level of continuing earnings in future years. Certain tax planning or other strategies could be implemented, if necessary, to supplement earnings from operations to fully realize tax benefits.

        Withholding taxes of approximately $62.1 have not been provided on approximately $1,221.1 of unremitted earnings of certain subsidiaries since such earnings are, or will be, reinvested in operations indefinitely. Dividends to Alcon do not result in Swiss income taxes.

(9) Business Segments

        The Company conducts its global business through two business segments: Alcon United States and Alcon International. Alcon United States includes sales to unaffiliated customers located in the United States of America, excluding Puerto Rico. Alcon United States operating profit is derived from operating profits within the United States, as well as operating profits earned outside of the United States related to the United States business. Alcon International includes sales to all other unaffiliated customers.

        Each business segment markets and sells products principally in three product categories of the ophthalmic market: (1) pharmaceutical (prescription drugs), (2) surgical equipment and devices (cataract, vitreoretinal, and refractive), and (3) consumer eye care (contact lens disinfectants and cleaning solutions, artificial tears and ocular vitamins). Business segment operations generally do not include research and development, manufacturing and other corporate functions. Each business segment is managed by a single business segment manager who reports to the Chief Executive Officer, who is the chief operating decision maker of the Company.

        Beginning in 2002, segment performance is measured based on sales and operating income reported in accordance with U.S. GAAP. Prior to 2002, the Company measured performance on the basis of International Accounting Standards. For consistency of presentation, business segment information for 2001 has been restated to a U.S. GAAP basis.

        Certain manufacturing costs and manufacturing variances are not assigned to business segments because most manufacturing operations produce products for more than one business segment. Research and development costs, excluding regulatory costs which are included in the business segments, are treated as general corporate costs and are not assigned to business segments.

       Identifiable assets are not assigned by business segment and are not considered in evaluating the performance of the business segments.

	Sales			Operating Income						Depreciation and Amortization
	2003	2002	2001	2003		2002		2001		2003	2002		2001
United States	$1,785.9	$1,632.6	$1,464.6	$    794.3		$    675.3		$ 544.7		$  83.0	$      87	.0	$      96	.6
International	1,621.0	1,376.5	1,283.1	514.9		428.1		405.9		52.4	41	.4	64	.1
Segments total	3,406.9	3,009.1	2,747.7	1,309.2		1,103.4		950.6		135.4	128	.4	160	.7
Manufacturing operations	--	--	--	(30.1	)	(30.7	)	(34.2	)	28.7	27	.4	25	.4
Research and development	--	--	--	(325.0	)	(302.0	)	(270.2	)	8.1	7	.3	7	.4
General corporate	--	--	--	(74.7	)	(67.0	)	(57.3	)	5.6	3	.4	1	.8
U.S. GAAP total	$3,406.9	$3,009.1	$2,747.7	$    879.4		$    703.7		$ 588.9		$177.8	$    166	.5	$    195	.3

(10)     Geographic, Customer and Product Information

        Sales for the Company’s country of domicile and all individual countries accounting for more than 10% of total sales are noted below along with long lived assets in those countries. Sales by ophthalmic market segment are also included. Sales below are based on the location of the customer. No single customer accounts for more than 10% of total sales.

	Sales
	For the Year Ended December 31,			Property, Plant and Equipment At December 31,
	2003	2002	2001	2003	2002
United States	$1,785.9	$1,632.6	$1,464.6	$521.0	$477.0
Japan	263.9	271.7	284.8	10.5	5.8
Switzerland	25.5	19.6	16.2	9.5	7.4
Rest of World	1,331.6	1,085.2	982.1	247.8	213.9
Total	$3,406.9	$3,009.1	$2,747.7	$788.8	$704.1
Pharmaceutical	$1,309.9	$1,090.4	$   927.7
Surgical	1,585.9	1,438.5	1,357.7
Consumer eye care	511.1	480.2	462.3
Total	$3,406.9	$3,009.1	$2,747.7

(11)     Stock-Based Compensation Plans

        Contemporaneously with the IPO, the Company adopted the 2002 Alcon Incentive Plan. Under the plan, the Company’s Board of Directors may award to officers, directors and key employees options to purchase up to 30 million shares of the Company’s common shares at a price set by the Board, which may not be lower than the prevailing stock exchange price upon the grant of the option. Individual grants become exercisable generally on or after the third anniversary of the grant and lapse on the tenth anniversary of the grant. In the fourth quarter of 2002, the Board authorized the acquisition on the open market of up to two million common shares to satisfy the exercise of stock options granted under the plan.

        The plan also provides that the Board may grant Stock Appreciation Rights (“SARs”) whereby the grantee may receive the appreciation in stock value over the grant price. The Company’s operating results included expenses related to these SARs of $4.3 and $0.3 for the years ended December 31, 2003 and 2002, respectively.

        Under this plan the Company provided for a conversion of existing phantom stock units granted under the 1994 Phantom Stock Plan into restricted common shares of the Company and the grant of common stock options to any person who elected to make the conversion. See note 12 for additional information about this grant.

        Contemporaneously with the IPO, Alcon granted certain employees and the independent directors incentive options to purchase approximately 6.3 million Alcon common shares at $33 per share (the IPO price) pursuant to the 2002 Alcon Incentive Plan. The options are scheduled to vest in 2005 and expire in 2012.

        During 2003, Alcon granted certain employees and the independent directors incentive options to purchase approximately 6.0 million common shares at the market price (primarily at $36.39 per share) pursuant to the 2002 Alcon Incentive Plan. The options are scheduled to vest in 2006 and expire in 2013.

        The Company applies the intrinsic value based method to account for grants to Company directors, officers and employees under the 2002 Alcon Incentive Plan. Under this method, compensation expense is measured as soon as the number of shares and the exercise price is known. Compensation cost is measured by the amount by which the current market price of the underlying stock exceeds the exercise price. The Company discloses the proforma impact of the fair value based method of accounting for stock-based employee compensation plans.

        The fair value of each stock option grant was estimated as of the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

	2003		2002
Expected volatility	33.0	%	33.0	%
Risk-free interest rate	2.92	%	4.75	%
Expected lives	4 yea	rs	4 yea	rs
Dividend yield	1.0	%	1.0	%

        The status of the stock option awards as of December 31, 2003 and 2002 and the changes during the years then ended are presented below:

	2003			2002
	Options		Weighted Average Exercise Price	Options		Weighted Average Exercise Price
Balance at beginning of year	7,062,584		$33	--		$--
Granted	6,063,485		37	7,226,108		33
Forfeited	(65,709	)	33	(72,524	)	33
Exercised	(78,574	)	33	(91,000	)	33
Balance at the end of year	12,981,786		35	7,062,584		33
Options exercisable at year-end	752,325			132,681
Weighted average fair value of options granted during the year	$          10.09			$        10.03

        The following table summarizes information about fixed stock options as of December 31, 2003:

Options Outstanding					Options Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
$	33 to 35	6,944,551	8.25 years	$33	589,300	$         33
$	36 to 55	6,037,235	9.20 years	$37	163,025	$         36
		12,981,786			752,325

        At December 31, 2003, the Company had reserved 27,664,727 shares of common stock for issuance pursuant to the 2002 Alcon Incentive Plan.

(12) Deferred Compensation

        The Company has an unfunded deferred compensation plan referred to as the 1994 Phantom Stock Plan for which key management members and certain other employees were eligible to be considered for participation prior to 2002. A committee appointed by the Board of Directors administers the plan. Plan payments were $9.0 and $19.1 for 2003 and 2002, respectively. The plan’s liability was $24.6 and $29.5 at December 31, 2003 and 2002, respectively, which is included in other current liabilities and other long term liabilities in the accompanying consolidated balance sheets.

        Contemporaneously with the IPO, certain Alcon employees elected to convert $34.2 of their interests in the 1994 Phantom Stock Plan into approximately 2.2 million contingent restricted common shares of Alcon. Although all of these shares were included in the outstanding common shares in the accompanying balance sheets at December 31, 2003 and 2002, the unvested portion (which was contingent) of the restricted common shares was excluded in the calculation of basic weighted average common shares outstanding. In connection with this conversion, these employees were also granted options to purchase approximately 0.9 million Alcon common shares at $33.00 per share (the IPO price) under the 2002 Alcon Incentive Plan. These restricted shares and options are scheduled to vest at various times through January 1, 2006. The options expire on March 20, 2012.

        In 2002, the Board of Directors adopted the Alcon Executive Deferred Compensation Plan (“DCP”). The DCP permits certain executives of the Company to defer receipt of compensation and certain stock gains otherwise payable currently and to accumulate earnings thereon on a tax-deferred basis. The plan is designed to permit executives’ deferral elections to be held and owned by the Company in a Rabbi trust. At December 31, 2002, no deferrals had been recorded under the plan and no assets had been contributed to the trust. During the year ended December 31, 2003, certain executives elected to defer $3.4 of compensation which is included in other long term liabilities in the accompanying consolidated balance sheets. Additionally, as of December 31, 2003, 87,033 common shares have been deferred into the DCP. These shares are reflected as outstanding and are included in the basic and diluted earnings per share calculations at December 31, 2003.

(13) Financial Instruments

      Foreign Currency Risk Management

        A significant portion of the Company’s cash flows is denominated in foreign currencies. Alcon relies on sustained cash flows generated from foreign sources to support its long term commitments to U.S. dollar-based research and development. To the extent the dollar value of cash flows is diminished as a result of a strengthening dollar, the Company’s ability to fund research and other dollar-based strategic initiatives at a consistent level may be impaired. The Company has established balance sheet risk management programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by volatility in foreign exchange rates.

        A primary objective of the balance sheet risk management program is to protect the U.S. dollar value of foreign currency denominated net monetary assets from the effects of volatility in foreign exchange that might occur prior to their conversion to U.S. dollars. The Company seeks to fully offset the effects of exchange on exposures denominated in developed country currencies, primarily the euro and Japanese yen and will either partially offset or not offset at all exposures in developing countries where we consider the cost of derivative instruments to be uneconomic or when such instruments are unavailable at any cost. The Company will also minimize the effects of exchange on monetary assets and liabilities by managing operating activities and net asset positions at the local level. The Company primarily utilizes forward exchange contracts which enable it to buy and sell foreign currencies in the future at fixed exchange rates and offset the consequences of changes in foreign exchange on the amount of U.S. dollar cash flows derived from the net assets. Prior to conversion to U.S. dollars, monetary assets and liabilities denominated in U.S. dollars are remeasured at spot rates in effect on the balance sheet date. The effect of changes in spot rates is reported in foreign exchange gains and losses in other income (expense). Fair value forward contracts are marked to fair value through foreign exchange gains and losses in other income (expense). Fair value changes in the forward contracts offset the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short term nature of the contracts, which typically have average maturities at inception of less than one year.

        The fair values of forward exchange contracts are reported in other current assets and other current liabilities. For foreign currency cash flow hedges, the amount of net gain/loss related to ineffectiveness was immaterial. The fair value hedge derivative instruments have settlement dates in January 2004 and cover a notional amount of $107.0, of which $87.0 was executed through Nestlé.

      Interest Rate Risk Management

        The Company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does not use leveraged swaps and does not leverage any of its investment activities that would put principal capital at risk.

        At December 31, 2003 and 2002, in connection with long term bonds, the Company had an interest rate swap fair value hedge outstanding in the notional amount of $46.8. At December 31, 2003, in connection with its commercial paper program, the Company had interest rate swap agreements outstanding in the notional amount of $50.0. The fair values of interest rate swap agreements are reported in other current assets and other current liabilities.

      Fair Value of Financial Instruments

        At December 31, 2003 and 2002, the Company’s financial instruments included cash, cash equivalents, investments, trade receivables, accounts payable, short term borrowings and long term debt. The estimated fair value of all of these financial instruments is as noted below. Due to the short term maturities of cash, cash equivalents, trade receivables, accounts payable and short term borrowings, the carrying amount approximates fair value. The fair value of long term debt is based on interest rates then currently available to the Company for issuance of debt with similar terms and remaining maturities. The fair value of investments was based on quoted market prices at year end.

	December 31,
	2003		2002
	Carrying Amounts	Fair Value	Carrying Amounts	Fair Value
Assets:
Cash and cash equivalents	$1,086.0	$1,086.0	$   967.9	$   967.9
Investments:
Fixed income	100.5	100.5	66.3	66.3
Trade receivables, net	622.8	622.8	547.5	547.5
Forward exchange contracts	--	--	6.7	6.7
Interest rate swaps	2.1	2.1	7.4	7.4
Liabilities:
Accounts payable	146.1	146.1	117.0	117.0
Short term borrowings	1,326.8	1,326.8	1,772.8	1,772.8
Long term debt	83.5	85.7	103.9	106.8
Forward exchange contracts	1.0	1.0	3.0	3.0
Interest rate swaps	7.9	7.9	1.0	1.0

        Investment amounts include net unrealized holding losses of $1.1 and $0.9 at December 31, 2003 and 2002, respectively. During 2001, an impairment loss on a marketable equity investment of $9.1 was recorded in other nonoperating expenses ($5.7 net of tax).

      Concentrations of Credit Risk

        As part of its ongoing control procedures, the Company monitors concentrations of credit risk associated with corporate issuers of securities and financial institutions with which it conducts business. Credit risk is minimal as credit exposure limits are established to avoid a concentration with any single issuer or institution. The Company also monitors the credit-worthiness of its customers to which it grants credit terms in the normal course of business. Concentrations of credit risk associated with these trade receivables are considered minimal due to the Company’s diverse customer base. Bad debts have been minimal. The Company does not normally require collateral or other security to support credit sales.

(14)     Related Party Transactions

        At December 31, 2003, Nestlé owned 74.6% of the outstanding common shares of Alcon.

        The Company’s material transactions with related parties have been with Nestlé and its subsidiaries. All material related party transactions that are not disclosed elsewhere in these notes are included below.

        During 2003, 2002 and 2001 the Company had investments and borrowings with Nestlé and its subsidiaries which resulted in the following impact to earnings before income taxes:

	2003	2002	2001
Interest expense	$8.2	$19.4	$80.8
Interest income	$  --	$  3.8	$37.6

        The Company sold Alcon Germany to Nestlé’s German subsidiary effective January 1, 2001 for approximately $30.0, and, under the separation agreement, Nestlé’s German subsidiary sold it back to the Company effective January 1, 2002, for approximately $42.0. Alcon Germany’s results of operations have been consolidated by the Company and are reflected in all periods presented in the accompanying consolidated financial statements.

        The Company leases certain facilities from Nestlé subsidiaries which resulted in rent expense of $0.7, $0.2 and $0.6 in 2003, 2002 and 2001, respectively. Nestlé provides the Company with certain services, including a portion of the Company’s information technology licenses, corporate legal services, certain treasury and cash management activities and certain internal audit activities. Nestlé charges the Company for its portion of the costs of these services based on arm’s length prices. Such charges were less than $1.5 in each of the three years ended December 31, 2003.

        Prior to 2002 an officer of the Company had received options to purchase Nestlé common stock. Contemporaneously with the IPO, the officer agreed to surrender options to purchase 17,110 Nestlé shares, of which options to purchase 8,520 shares were exercisable, in exchange for options to purchase 80,000 Alcon common shares. The new options were granted pursuant to the 2002 Alcon Incentive Plan and generally contain the same terms as other options issued under the plan.

        The Company executes certain foreign exchange contracts through Nestlé Finance SA, Cham to benefit from Nestlé’s foreign exchange transaction volumes and expertise. At December 31, 2003, the Company had a notional amount outstanding with Nestlé of $87.0.

(15)     Pension and Postretirement Benefits

        The Company’s pension and postretirement benefit plans, which in aggregate cover substantially all employees in the United States and employees in certain other countries, consist of defined benefit pension plans, defined contribution plans and a postretirement health care plan. The Company’s cost of defined contribution plans was $53.7, $49.6 and $45.4 in 2003, 2002 and 2001, respectively. The information provided below pertains to the Company’s defined benefit pension plans and postretirement health care plan. The measurement date used to determine pension and postretirement benefit measurements for the majority of the benefit plans is December 31 of the respective year. In December 2003, Alcon’s board of directors approved the Alcon Supplemental Executive Retirement Plan (“ASERP”). The ASERP is a non-qualified pension plan for key employees who become eligible for participation on or after January 1, 2004. Existing participants in the non-qualified Executive Salary Continuation Plan (“ESCP”) will continue to accrue benefits under the ESCP through December 31, 2008. Thereafter, they will begin to accrue benefits for future service under the provisions of the ASERP. The following disclosures do not take into consideration the ASERP.

        The following table reconciles the changes in benefit obligations, fair value of plan assets, and funded status for the two-year period ending December 31, 2003:

	Pension benefits				Postretirement benefits
	2003		2002		2003		2002
Change in Benefit Obligation
Benefit obligation at beginning of year	$ 219.9		$ 193.5		$ 175.3		$   123.9
Service cost	14.5		13.4		10.1		7.3
Interest cost	13.2		12.1		11.7		9.1
Benefits paid	(8.4	)	(6.9	)	(4.2	)	(4.6	)
Foreign currency translation	2.3		1.5		--		--
Actuarial (gain)/loss	12.6		6.3		(19.9	)	39.6
Benefit obligation at end of year	$ 254.1		$ 219.9		$ 173.0		$   175.3
Change in Plan Assets
Fair value of plan assets at beginning of year	$   18.5		$   12.8		$   71.2		$     87.2
Actual return on plan assets	0.3		(0.2	)	16.2		(11.4	)
Employer contribution	5.5		5.0		--		--
Foreign currency translation	2.5		1.5		--		--
Benefits paid	(0.9	)	(0.6	)	(4.2	)	(4.6	)
Fair value of plan assets at end of year	$   25.9		$   18.5		$   83.2		$     71.2
Reconciliation of Funded Status to Consolidated Balance Sheet
Funded status	$(228.2	)	$(201.4	)	$(89.8	)	$(104.1	)
Unrecognized prior service cost	--		--		3.3		3.8
Unrecognized actuarial (gain)/loss	38.6		29.9		26.3		58.9
Adjustment required to reflect minimum liability	(3.8	)	--		--		--
Net amount recognized in the consolidated balance sheet	$(193.4	)	$(171.5	)	$(60.2	)	$  (41.4	)
Reconciliation to Consolidated Balance Sheet
Prepaid pension costs in other current assets	$     1.4		$       --		$       --		$        --
Pension and postretirement obligation in other long term	(194.8	)	(171.5	)	(60.2	)	(41.4	)
liabilities
Net amount recognized in the consolidated balance sheet	$(193.4	)	$(171.5	)	$(60.2	)	$  (41.4	)
Weighted-Average Assumptions as of December 31,
Discount rate	2.0-9.5	%	3.0-6.5	%	6.25 %		6.75	%
Expected return on plan assets	2.0	%	3.0	%	8.25 %		8.75	%
Rate of compensation increase	3.0-9.0	%	5.0-9.0	%	N/A		N/A

      The expected long term rate of return on plan assets is based on historical market index returns for the applicable asset classes weighted in proportion to the target asset allocation of the plan. A slight downward adjustment was made to the expected long term rate of return in 2003 and 2002 to incorporate near term volatile market conditions.

     The Company recorded a minimum pension liability of $2.5, net of tax, at December 31, 2003. The adjustment was reflected in other comprehensive income and other long term liabilities.

Plan Assets

      The Company's post retirement benefit plan weighted average asset allocations at December 31, 1003 and 2002, respectively, by asset category are as follows:

	Plan Assets At December 31,
	2003		2002
Asset Category
Equity securities	64	%	60	%
Debt Securities	36	%	40	%
Total	100	%	100	%

        The investment strategy for the postretirement benefit plan utilizes a variety of asset classes to provide return opportunities that are consistent with an acceptable risk tolerance. The weighted average target asset allocation for the plan is 60% equity securities and 40% debt securities. At December 31, 2003 and 2002, the equity securities consisted of an S&P 500 index and the debt securities were comprised of a Lehman Aggregate bond index and a money market fund.

Contributions

        The Company does not expect to make any contributions to its pension or post retirement benefit plans in 2004.

Estimated Future Benefit Payments

        The following benefit payments are expected to be paid:

	Pension Benefits	Post Retirement Benefits
2004	$  8.4	$  3.9
2005	8.5	4.3
2006	8.9	4.6
2007	9.5	4.9
2008	10.2	5.3
2009 - 2013	67.5	33.8

	Pension benefits					Postretirement benefits
Components of Net Periodic Benefit Cost	2003	2002		2001		2003		2002		2001
Service cost	$14.5	$ 13.4		$ 12.0		$ 10.1		$ 7.3		$ 7.6
Interest cost	13.2	12.1		9.7		11.7		9.1		9.3
Expected return on assets	0.5	(0.3	)	(0.2	)	(6.0	)	(7.6	)	(8.6	)
Prior service cost amortization	--	--		--		0.5		0.5		0.5
Recognized actuarial loss	2.7	1.8		0.2		2.6		--		--
Net periodic benefit cost	$30.9	$ 27.0		$ 21.7		$ 18.9		$ 9.3		$ 8.8

        The health care cost trend rate used to measure the expected cost of benefits covered by the postretirement plan is 10.0% in 2003, declining to 5.0% in 2007 and after. The effect of a one percentage point change in assumed medical cost trend rates is as follows:

	1% Increase	1% Decrease
Effect on total of service and interest cost components	$  3.6	$(3.3	)
Effect on the postretirement benefit obligation	$33.6	$(30.	5)

        In certain countries, the Company’s employees participate in defined benefit plans of Nestlé. No separate valuation for the Company’s employees has historically been prepared for the plans, as they are not material to the Company or to Nestlé. Accordingly, these plans are treated as multi-employer plans. Annual contributions to these plans are determined by Nestlé and charged to the Company. Company contributions to these plans during 2003, 2002 and 2001 were $5.2, $3.8 and $2.6, respectively.

(16)    Commitments and Contingencies

        The Company and its subsidiaries are parties to a variety of legal proceedings arising out of the ordinary course of business, including product liability and patent infringement. The Company believes that it has valid defenses and is vigorously defending the litigation pending against it.

        The Company’s tax returns are subject to examination by various taxing authorities. Management records current tax liabilities based on their best estimate of what they will ultimately settle with the taxing authorities upon examination.

        While the results of the aforementioned contingencies cannot be predicted with certainty, management believes that the final outcome of these contingencies are adequately covered by insurance and/or the ultimate liability, if any, will not have a material adverse effect on the Company’s consolidated financial position or results of operations. Although management believes that the tax treatments reflected in the accompanying financial statements comply with the various tax laws and regulations, some of the tax treatments may change if challenged by the taxing authorities. Litigation contingencies are subject to change based on settlements and court decisions.

        The Company leases certain facilities and equipment under operating leases. Lease expense incurred was $46.7, $43.1 and $44.3 during 2003, 2002 and 2001, respectively. Future minimum aggregate lease payments under non-cancelable operating leases with a term of more than one year are as follows:

Year	Amount
2004	$  34.6
2005	27.2
2006	17.9
2007	11.5
2008	7.8
Thereafter	21.3
Total minimum lease payments	$120.3

        The Company has entered into various fixed and variable purchase commitments and license agreements, requiring future minimum royalties, through 2017. All commitments are expected to be fulfilled with no adverse consequences to the Company’s operations or financial condition. The total unconditional fixed purchase obligations and future minimum royalties at December 31, 2003 were as follows:

Year	Amount
2004	$13.5
2005	14.9
2006	13.8
2007	4.9
2008	4.4
Thereafter	6.3
Total	$57.8

        Total payments related to the variable purchase commitments for the year ended December 31, 2003, 2002 and 2001 were $38.8, $41.2 and $38.5, respectively.

        At December 31, 2003, the Company had guaranteed less than $5.0 of debt for certain customers. At December 31, 2003, the Company had outstanding letters of credit of $6.9. The letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions.

(17) Preferred Shares of Subsidiary

        In May of 2000 Alcon Holdings Inc. (“AHI”, a wholly-owned subsidiary of Alcon) issued four series of non-voting, non-convertible cumulative preferred shares, with Series A, B and C denominated in Swiss francs and Series D denominated in U.S. dollars. These shares were issued as part of the creation of a U.S. holding company that would be used to make U.S. acquisitions.

        As part of a restructuring of AHI’s equity, on November 5, 2002, Alcon sold to two financial investors all of the AHI Series A and B preferred shares, 20,000 preferred shares, for a total sales price of 1,997 Swiss francs. Alcon also contributed to AHI all of the Series C and D preferred shares it owned. After the sale, Alcon continued to own 100% of AHI’s common shares and all voting rights in AHI.

        On November 26, 2002, AHI redeemed all of its outstanding Series A and B preferred shares. AHI paid the investors an aggregate of 2,003 Swiss francs for the 20,000 preferred shares and accrued dividends. The preferred shares were immediately retired. AHI financed the redemption primarily with proceeds from the issuance of commercial paper.

        For the year ended December 31, 2002, earnings available to common shareholders and earnings per share were reduced by the preferred dividends and the excess of the redemption cost over the carrying value of the preferred shares, totaling approximately $3.9.

(18) Exit Activities

        Prior to the purchase of Summit in July 2000, the Company began assessing and formulating a plan to exit the leased facility which represented Summit’s corporate headquarters. These actions resulted in the accrual of severance for approximately 180 employees and other costs, as well as lease payments on the vacated facility as of the acquisition date which was recorded as part of the purchase price of Summit. During the first half of 2001, the closure of this facility was completed and severance payments were made. The remaining lease costs will be paid out over the remaining lease term through 2005.

	Employee Termination Benefits		Other Exit Costs		Total
Balance, December 31, 2000	$ 6.7		$ 2.8		$ 9.5
Accrued	--		--		--
Spending	(6.7	)	(0.2	)	(6.9	)
Balance, December 31, 2001	--		2.6		2.6
Spending	--		(0.7	)	(0.7	)
Balance, December 31, 2002	--		1.9		1.9
Spending	--		(0.7	)	(0.7	)
Balance, December 31, 2003	$   --		$ 1.2		$ 1.2

        The exit cost accrual is included in other current liabilities in the accompanying consolidated balance sheets.

(19) Sale of Plant

        In November 2003, the Company sold its manufacturing facility in Madrid, Spain, for $21.6 in cash resulting in a pre-tax gain of $8.2.

(20) Subsequent Events

        On February 11, 2004, Alcon’s board of directors approved the purchase of up to an additional 4,000,000 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in open market transactions.

        On February 11, 2004, the board of directors approved the grant to certain employees incentive options to purchase approximately 4.2 million Alcon common shares at $63.32, the closing market price on this date, pursuant to the 2002 Alcon Incentive Plan. The options are scheduled to vest in 2007 and expire in 2014.

(21) Unaudited Quarterly Information

	Three Months Ended
	March 31,	June 30,	September 30,	December 31,
2003
Sales	$  807.1	$  925.4	$  822.7	$  851.7
Operating income	194.4	260.9	224.6	199.5
Net earnings	130.2	178.2	153.1	133.9
Basic earnings per common share	$    0.42	$    0.58	$    0.50	$    0.43
Diluted earnings per common share	$    0.42	$    0.57	$    0.49	$    0.43
2002
Sales	$  706.5	$  809.5	$  743.9	$  749.2
Operating income	151.6	236.9	195.9	119.3
Net earnings	94.0	162.8	125.1	85.0
Basic earnings per common share	$    0.33	$    0.53	$    0.41	$    0.26
Diluted earnings per common shares	$    0.33	$    0.53	$    0.41	$    0.26

        Quarterly sales trends reflect seasonality in several products, including ocular allergy and otic products, in the form of increased sales during the spring months.

EX-1.1

Exhibit 1.1

Statuten
der Alcon, Inc.
vom 22. Januar 2004
Articles of Association of
Alcon, Inc.
as of January 22, 2004      

		Abschnitt 1: Firma, Sitz, Zweck und Dauer der Gesellschaft			Section 1: Name, Place of Incorporation, Purpose and Duration
Firma, Sitz		Artikel 1 Unter der Firma Alcon, Inc. besteht eine Aktiengesellschaft mit Sitz in Hünenberg ZG.	Name, Place of Incorporation		Article 1 Under the name Alcon, Inc. there exists a corporation with its place of incorporation in Hünenberg, Canton of Zug, Switzerland.
Zweck	1	Artikel 2 Zweck der Gesellschaft ist der Erwerb, die Verwaltung und Übertragung von Patenten, Handelsmarken, technischen und industriellen Kenntnissen, Leistung technischer und administrativer Beratungsdienste sowie Beteiligung an anderen Industrie- und Handelsunternehmungen.	Purpose	1	Article 2 The business purpose of the company consists of the purchase, the administration and the transfer of patents, trademarks, technical and industrial know how, the provision of technical and administrative consultancy services and the holding of participations in other industrial and commercial companies.
	2	Die Gesellschaft kann alle Geschäfte tätigen und Massnahmen ergreifen, die geeignet erscheinen, den Zweck der Gesellschaft zu fördern oder mit diesem zusammenhängen.		2	The Company may engage in all types of transactions and may take all measures that appear appropriate to promote the purpose of the Company or that are related to the same.
Dauer		Artikel 3 Die Dauer der Gesellschaft ist unbeschränkt.	Duration		Article 3 The duration of the Company is unlimited.

		Abschnitt 2: Aktienkapital			Section 2: Share Capital
Aktienkapital	1	Artikel 4 Das Aktienkapital der Gesellschaft beträgt CHF 61'862'054.60, eingeteilt in 309'310'273 voll liberierte Namenaktien. Jede Aktie hat einen Nennwert von CHF 0.20.	Share Capital	1	Article 4 The share capital of the Company is CHF 61'862'054.60 and is divided into 309'310'273 fully paid registered shares. Each share has a par value of CHF 0.20.
	2	Durch Beschluss der Generalversammlung mit der in Art. 18 dieser Statuten festgeschriebenen Mehrheit können Namenaktien in Inhaberaktien und umgekehrt umgewandelt werden.		2	Upon resolution of the Shareholders' Meeting with the supermajority set out in Art. 18 of these Articles of Association, registered shares may be converted into bearer shares and vice versa.
Bedingtes Aktienkapital	1	Artikel 4 ter Das Aktienkapital kann sich durch Ausgabe von höchstens 27'664'727 voll zu liberierenden Namenaktien im Nennwert von je CHF 0.20 um höchstens CHF 5'532'945.40 erhöhen durch Ausgabe von Aktien oder Optionen an Mitarbeiter oder Verwaltungsräte der Gesellschaft und ihrer Konzerngesellschaften. Das Bezugsrecht wie auch das Vorwegzeichnungsrecht der Aktionäre der Gesellschaft sind ausgeschlossen. Die Ausgabe von Aktien oder diesbezüglichen Optionen an Mitarbeiter oder Verwaltungsräte erfolgt gemäss einem oder mehreren vom Verwaltungsrat zu erlassenden Reglementen und unter Berücksichtigung der Leistungen, Funktionen, Verantwortungsstufen und Rentabilitätskriterien. Die Ausgabe von Aktien oder Bezugsrechten darauf an Mitarbeiter oder Verwaltungsräte kann zu einem unter dem Börsenkurs liegenden Preis, mindestens aber zum Nennwert, erfolgen. Bei der Ausgabe von Optionen auf Aktien hat der Ausübungspreis mindestens dem Börsenkur s zur Zeit der Einräumung der Optionen zu entsprechen.	Conditional Share Capital	1	Article 4 ter The share capital may be increased in an amount not to exceed CHF 5'532'945.40 through the issuance of up to 27'664'727 fully paid registered shares with a par value of CHF 0.20 per share in connection with the issuance of new shares or options to employees or directors of the Company and group companies. The pre-emptive and advance subscription rights of the shareholders shall thereby be excluded. The shares or options to acquire shares shall be issued to employees pursuant to one or more regulations to be issued by the Board of Directors, taking into account performance, functions, levels of responsibility and profitability criteria. Shares may be issued to employees or directors at a price lower than the current market price quoted on the stock exchange on which the shares are traded, but at least at par value. In case of the issuance of options to purchase shares, the exercise price shall be no less than the prevailing stock exchange price upon grant of the options.

Aktienbuch und Ein-tragungsbe-schränkungen, Nominees	1	Artikel 5 Für die Namenaktien führt die Gesellschaft selbst oder durch Dritte ein Aktienbuch. Darin werden die Eigentümer und Nutzniesser der Namenaktien mit Namen und Vornamen Wohnort und Adresse (bei juristischen Personen die Firma und der Sitz) eingetragen. Wechselt eine im Aktienbuch eingetragene Person ihre Adresse, so hat sie dies dem Aktienbuchführer mitzuteilen. Solange dies nicht geschehen ist, erfolgen alle brieflichen Mitteilungen rechtsgültig an die bisher im Aktienbuch eingetragene Adresse.	Share Register and Restrictions on Registration, Nominees	1	Article 5The Company shall maintain, itself or through a third party, a share register listing the surname and first name and address (in the case of legal entities, the company name and place of incorporation) of the holders and usufructuaries of the registered shares. A shareholder must notify the share registrar of any change in address. Until such notification shall have occurred, all written communication from the Company to shareholders of record shall be deemed to have validly been made if sent to the address recorded in the share register.
	2	Erwerber von Namenaktien werden auf Gesuch als Aktionäre mit Stimmrecht im Aktienbuch eingetragen.		2	Acquirors of registered shares shall be recorded upon request in the share register as shareholders with voting rights.
	3	Der Verwaltungsrat kann nach Anhörung des eingetragenen Aktionärs Eintragungen im Aktienbuch als Aktionär mit Stimmrecht mit Rückwirkung auf das Datum der Eintragung streichen, wenn diese durch falsche Angaben zustande gekommen sind. Der Betroffene muss über die Streichung sofort informiert werden.		3	After hearing the registered shareholder, the Board of Directors may cancel the registration of such shareholder as a shareholder with voting rights in the share register, retroactive to the date of registration, if such registrations were made based on false information. The relevant shareholder shall be informed immediately as to the cancellation.
	4	Der Verwaltungsrat kann Nominees, die Aktien in eigenem Namen, aber auf fremde Rechnung halten, ins Aktienbuch eintragen. Aktionäre, die ihre Aktien über einen Nominee halten, üben ihre Aktionärsrechte mittelbar über den Nominee aus.		4	The board of directors may record nominees who hold shares in their own name, but for account of third parties, as shareholders of record in the share register of the Company. Beneficial owners of shares who hold their shares through nominees exercise their shareholders' rights through the intermediation of such nominees.
Aktien-zertifikate	1	Artikel 6 Die Gesellschaft gibt Namenaktien oder Zertifikate, welche mehrere Namenaktien verkörpern, aus, die auf den Namen des im Aktienbuch eingetragenen Eigentümers ausgestellt werden.	Share Certificates	1	Article 6 The Company shall issue registered shares or share certificates incorporating a number of registered shares to the name of record owners of shares.
	2	Namenaktien und Aktienzertifikate tragen die Unterschrift von zwei rechtsgültig bevollmächtigten Zeichnungsberechtigten, wovon mindestens einer Verwaltungsrat der Gesellschaft sein muss. Diese Unterschriften können Facsimile-Unterschriften sein.		2	Registered shares and share certificates shall bear the signatures of two duly authorized signatories of the Company, of which at least one shall be a member of the Board of Directors. These signatures may be facsimile signatures.
	3	Die Gesellschaft kann ausgegebene Namenaktien, die bei der Gesellschaft eingeliefert werden, mit der Zustimmung der betroffenen Aktionäre ersatzlos annullieren.		3	The Company may destroy issued share certificates without replacement with the consent of the affected shareholder of record.
	4	Nicht verurkundete Namenaktien einschliesslich daraus entspringende, nicht verurkundete Rechte können nur durch Zession übertragen werden. Die Zession bedarf zur Gültigkeit der Anzeige an den Aktienbuchführer.		4	Uncertificated registered shares, including any uncertificated rights arising thereunder, may be transferred only by way of written assignment. The assignment must be notified to the share registrar to be valid.
	5	Nicht verurkundete Namenaktien und die daraus entspringenden Vermögensrechte können nur zugunsten der Finanzinstitution, bei welcher der Aktionär dieselben buchmässig führen lässt, durch schriftlichen Pfandvertrag verpfändet werden. Eine Anzeige an die Gesellschaft ist nicht erforderlich.		5	Uncertificated registered shares and the pecuniary rights associated therewith may be pledged only by way of a written agreement, and only in favor of the financial institution at which the shareholder holds such shares in book-entry form. Notification to the Company shall not be necessary.
Rechts-ausübung	1	Artikel 7 Die Gesellschaft anerkennt nur einen Vertreter pro Aktie.	Exercise of Rights	1	Article 7 The Company shall only accept one representative per share.
	2	Soweit diese Statuten nichts anderes vorsehen, ist die Gesellschaft berechtigt, als Aktionär, Nutzniesser oder Nominee nur diejenigen Personen anzuerkennen, die im Aktienbuch eingetragen sind, und diesen Personen gegenüber Leistungen zu erbringen.		2	Unless the Articles of Association provide otherwise, the Company is entitled to accept only those persons as shareholders, usufructuaries of shares or nominees who have been recorded in the share register, and to perform only as against such persons.

		Abschnitt 3: Gesellschaftsorgane A. Generalversammlung			Section 3: Corporate Bodies A. Shareholders' meeting
Zuständigkeit		Artikel 8 Die Generalversammlung ist das oberste Organ der Gesellschaft.	Competence		Article 8 The Shareholders' Meeting is the supreme body of the Company.
Ordentliche Generalver-sammlungen		Artikel 9 Die ordentliche Generalversammlung findet alljährlich innerhalb von sechs Monaten nach Schluss des Geschäftsjahres statt; spätestens zwanzig Tage vor der Versammlung sind der Geschäftsbericht und der Revisionsbericht mit dem Bericht der Konzernprüfer den Aktionären am Gesellschaftssitz zur Einsicht aufzulegen. Jeder Aktionär kann verlangen, dass ihm unverzüglich eine Ausfertigung dieser Unterlagen ohne Kostenfolge zugestellt wird. Die im Aktienbuch eingetragenen Aktionäre werden hierüber durch schriftliche Mitteilung unterrichtet.	Ordinary Shareholders' Meetings		Article 9 The Ordinary Shareholders' Meeting shall be held each year within six months after the close of the fiscal year of the Company; the business report and the Auditor's report, together with the group auditor's report, shall be made available for inspection by the shareholders at the place of incorporation of the Company no later than twenty days prior to the meeting. Each shareholder is entitled to request immediate delivery of a copy of these documents free of charge. Shareholders of record will be notified of this in writing.
Ausserordent-liche Gene- ralversamm-lungen	1	Artikel 10 Ausserordentliche Generalversammlungen finden in den vom Gesetz vorgesehenen Fällen statt, insbesondere wenn der Verwaltungsrat es für angezeigt erachtet oder die Revisionsstelle dies verlangt.	Extraordinary Shareholders' Meetings	1	Article 10 Extraordinary Shareholders' Meetings shall be held in the circumstances foreseen under applicable law, in particular when deemed necessary by the Board of Directors or if requested by the Auditors.
	2	Ausserdem müssen ausserordentliche Generalversammlungen einberufen werden auf Beschluss einer Generalversammlung oder wenn es ein oder mehrere Aktionäre verlangen, welche zusammen mindestens den zehnten Teil des Aktienkapitals vertreten, in einer von dem- oder denselben unterzeichneten Eingabe, unter Anführung der Verhandlungsgegenstände und der Anträge.		2	Furthermore, Extraordinary Shareholders' Meetings shall be convened upon resolution of a Shareholders' Meeting or if requested by one or more shareholders who represent an aggregate of at least one-tenth of the share capital and who submit a petition signed by such shareholder(s), specifying the items for the agenda and the proposals.

Einberufung	1	Artikel 11 Die Generalversammlung wird durch den Verwaltungsrat, nötigenfalls die Revisionsstelle, spätestens 20 Tage vor dem Versammlungstag einberufen. Die Einberufung erfolgt durch einmalige Bekanntmachung im Publikationsorgan der Gesellschaft. Für die Einhaltung der Einberufungsfrist ist der Tag der Veröffentlichung der Einberufung im Publikationsorgan massgeblich, wobei der Tag der Veröffentlichung nicht mitzuzählen ist. Aktionäre können überdies mit uneingeschriebenem Brief orientiert werden.	Notice of Shareholders' Meetings	1	Article 11 Notice of Shareholders' Meetings shall be given by the Board of Directors or, if necessary, by the Auditors, no later than 20 days prior to the meeting date. Notice of the meeting shall be given by way of an announcement appearing once in the official means of publication of the Company. The notice period shall be deemed to have been observed if notice of the meeting is published in the official means of publication of the Company, whereby the date of publication is not calculated when computing the period. Shareholders may in addition be informed by ordinary mail.
	2	Die Einberufung muss die Verhandlungsgegenstände sowie die Anträge des Verwaltungsrates und der Aktionäre, welche die Durchführung einer Generalversammlung oder die Traktandierung eines Verhandlungsgegenstandes verlangt haben, und bei Wahlgeschäften die Namen der vorgeschlagenen Kandidaten enthalten.		2	The notice of a meeting shall state the items on the agenda and the proposals of the Board of Directors and of the shareholders who demanded that a Shareholders' Meeting be held or that an item be included on the agenda and, in case of elections, the names of the nominated candidates.
Traktan-dierung	1	Artikel 12 Aktionäre, die Aktien im Nennwert von CHF 1'000'000 oder mehr vertreten, können die Traktandierung eines Verhandlungsgegenstandes verlangen. Die Traktandierung muss mindestens 40 Tage vor der Versammlung schriftlich unter Angabe des Verhandlungsgegenstandes und der Anträge des Aktionärs oder der Aktionäre anbegehrt werden.	Agenda	1	Article 12 One or more shareholders whose combined shareholdings represent an aggregate par value of at least CHF 1,000,000 may request that an item be included on the agenda of a Shareholders' Meeting. Such inclusion must be requested in writing at least 40 days prior to the meeting and shall specify the agenda items and proposals of such shareholder(s).
	2	Zu nicht gehörig angekündigten Verhandlungsgegenständen können keine Beschlüsse gefasst werden. Hiervon sind jedoch der Beschluss über den in einer Generalversammlung gestellten Antrag auf Einberufung einer ausserordentlichen Generalversammlung sowie derjenige auf Durchführung einer Sonderprüfung ausgenommen.		2	No resolutions may be passed at a Shareholders' Meeting concerning agenda items for which proper notice was not given. This provision shall not apply, however, to proposals made during a Shareholders' Meeting to convene an Extraordinary Shareholders' Meeting or to initiate a special audit.
	3	Zur Stellung von Anträgen im Rahmen der Verhandlungsgegenstände und zu Verhandlungen ohne Beschlussfassung bedarf es nicht der vorgängigen Ankündigung.		3	No previous notification shall be required for proposals concerning items included on the agenda, and for debates as to which no vote is taken.
Vorsitz der Generalver-sammlung, Protokoll, Stimmen-zähler	1	Artikel 13 Die Generalversammlung findet am Sitz der Gesellschaft statt, sofern der Verwaltungsrat nichts anderes bestimmt. Der Präsident des Verwaltungsrates oder bei dessen Verhinderung der Vizepräsident oder eine andere vom Verwaltungsrat bezeichnete Person führt den Vorsitz.>	Presiding Officer, Minutes, Vote Counters	1	Article 13 The Shareholders' Meeting shall be held at the place of incorporation of the Company, unless the Board of Directors decides otherwise. The Chairman of the Board or, in his absence, a Vice-Chairman or any other person appointed by the Board, shall take the chair.
	2	Der Vorsitzende bestimmt den Protokollführer und die Stimmenzähler, die nicht Aktionäre sein müssen. Das Protokoll ist vom Vorsitzenden und vom Protokollführer zu unterzeichnen.		2	The acting chair of the Shareholders' Meeting shall appoint the secretary and the vote counters of such meeting who need not be shareholders. The minutes of the Shareholders' Meeting shall be signed by the acting chair of such meeting and the secretary.
	3	Der Vorsitzende hat sämtliche Leitungsbefugnisse, die für die ordnungsgemässe Durchführung der Generalversammlung nötig sind.		3	The acting chair of the Shareholders' Meeting shall have all powers and authority necessary to ensure the orderly conduct of such meeting.
Vertretung der Aktionäre	1	Artikel 14 Der Verwaltungsrat erlässt die Verfahrensvorschriften über die Teilnahme und Vertretung an der Generalversammlung.	Proxies	1	Article 14 The Board of Directors shall issue procedural rules regarding participation in and representation at the Shareholders' Meeting.
	2	Jeder im Aktienbuch eingetragene Aktionär ist berechtigt, an der Generalversammlung und an allen dort abgehaltenen Abstimmungen teilzunehmen. Ein Aktionär kann sich an der Generalversammlung durch eine Person vertreten lassen, die nicht Aktionär sein muss.		2	Each shareholder registered in the share register is entitled to participate at the Shareholders' Meeting and in any vote taken. The shareholders may be represented by proxies who need not be shareholders.

Stimmrecht		Artikel 15 Jede Aktie berechtigt zu einer Stimme.	Voting Rights		Article 15 Each share shall grant the right to one vote.
Beschlüsse, Wahlen	1	Artikel 16 Die Generalversammlung beschliesst und wählt, soweit das Gesetz oder diese Statuten es nicht anders bestimmen, mit der absoluten Mehrheit der vertretenen Aktienstimmen.	Resolutions, Elections	1	Article 16 Unless otherwise required by law or stated in these Articles of Association, the Shareholders' Meeting shall pass resolutions and decide elections upon an absolute majority of the votes represented.
	2	Die Abstimmungen und Wahlen erfolgen offen, es sei denn, dass die Generalversammlung schriftliche Abstimmung respektive Wahl beschliesst oder der Vorsitzende diese anordnet. Der Vorsitzende kann Abstimmungen und Wahlen auch mittels elektronischem Verfahren durchführen lassen. Elektronische Abstimmungen und Wahlen sind schriftlichen Abstimmungen und Wahlen gleichgestellt.		2	Resolutions and elections shall be decided by a show of hands, unless a secret ballot is resolved by the Shareholders' Meeting or is ordered by the acting chair of such meeting. The presiding officer may also hold resolutions and elections in electronic form. Electronic resolutions and elections shall be treated in the same manner as resolutions and elections by ballot.
	3	Der Vorsitzende kann eine offene Wahl oder Abstimmung immer durch eine schriftliche wiederholen lassen, sofern nach seiner Meinung Zweifel am Abstimmungsergebnis bestehen. In diesem Fall gilt die vorausgegangene offene Wahl oder Abstimmung als nicht geschehen.		3	The chair of the Shareholders' Meeting may at any time order that an election or resolution decided by a show of hands be repeated through a secret ballot if, in his view, the results of the vote are in doubt. In this case, the preceding decision by a show of hands shall be deemed to have not occurred.
	4	Kommt bei Wahlen im ersten Wahlgang eine Wahl nicht zustande und stehen mehr als ein Kandidat zur Wahl, ordnet der Vorsitzende einen zweiten Wahlgang an, in dem das relative Mehr entscheidet.		4	In elections, if the first ballot fails to result in an election and more than one candidate is standing for election, the chair of the Shareholders' Meeting shall order a second ballot in which a relative majority shall be decisive.
Befugnisse der Generalversammlung		Artikel 17 Der Generalversammlung sind folgende Geschäfte vorbehalten: a)die Festsetzung und Änderung der Statuten; b)die Wahl der Mitglieder des Verwaltungsrates, der Re-visionsstelle, des Konzernprüfers und der besonderen Revisionsstelle; c)die Genehmigung des Jahresberichtes und der Kon-zernrechnung; d)die Genehmigung der Jahresrechnung sowie die Be-schlussfassung über die Verwendung des Bilanzge-winnes, insbesondere die Festsetzung der Dividende; e)die Entlastung der Mitglieder des Verwaltungsrates; f)die Beschlussfassung über die Gegenstände, die der Generalversammlung durch das Gesetz oder die Statuten vorbehalten sind oder ihr, vorbehältlich Art. 716a OR, durch den Verwaltungsrat vorgelegtwerden.	Specific Powers of the Shareholders' Meeting		Article 17 The following powers shall be vested exclusively in the Shareholders' Meeting: a)adoption and amendment of these Articles of Association; b)election of the members of the Board of Directors, the Auditors, the Group Auditors and the special auditors; c)approval of the annual report and the consolidated financial statements; d)approval of the annual financial statements and de-cision on the allocation of profits shown on the balance sheet, in particular with regard to dividends; e)granting discharge to the members of the Board of Directors; f) passing resolutions as to all matters reserved to the authority of the Shareholders' Meeting by law or under these Articles of Association or that are submitted tothe Shareholders' Meeting by the Board of Directors,subject to art. 716a Swiss Code of Obligations.
Besonderes Quorum		Artikel 18 Ein Beschluss der Generalversammlung, der mindestens zwei Drittel der vertretenen Stimmen auf sich vereinigt, ist erforderlich für: a)die Änderung des Gesellschaftszweckes; b)die Einführung von Stimmrechtsaktien; c)die Beschränkung der Übertragbarkeit von Namenak-tien und die Aufhebung einer solchen Beschränkung; d)die Beschränkung der Ausübung des Stimm-rechts und die Aufhebung einer solchen Beschränkung; e) eine genehmigte oder eine bedingte Kapitalerhöhung; f)die Kapitalerhöhung aus Eigenkapital, gegen Sacheinlage oder zwecks Sachübernahme oder die Gewährung von besonderen Vorteilen; g)die Einschränkung oder Aufhebung des Bezugsrechts; h)die Verlegung des Sitzes der Gesellschaft; i)die Umwandlung von Namen- in Inhaberaktien und umgekehrt; j)die Auflösung der Gesellschaft ohne Liquidation; k)Änderungen dieses Artikels 18.	Special Quorum		Article 18 The approval of at least two-thirds of the votes represented at a Shareholders' Meeting shall be required for resolutions with respect to: a)a modification of the purpose of the Company; b)the creation of dual-class common stock; c)restrictions on the transfer of registered shares and the removal of such restrictions; d)restrictions on the exercise of the right to vote and the removal of such restrictions; e)an authorized or conditional increase in share capital; f)an increase in share capital through the conversion of capital surplus, through a contribution in kind or in exchange for an acquisition of assets, or a grant of special benefits upon a capital increase; g)the restriction or denial of pre-emptive rights; h)a change of the place of incorporation of the Company; i)the conversion of registered shares into bearer shares and vice versa; j)the dissolution of the Company without liquidation; k)any changes to this Article 18.
		B. Verwaltungsrat			B. Board of Directors
Anzahl der Verwaltungs-räte		Artikel 19 Der Verwaltungsrat besteht aus mindestens 7 Mitgliedern, die Aktionäre sein oder eine juristische Person, die Aktionärin ist, vertreten müssen.	Number of Directors		Article 19 The Board of Directors shall consist of no less than 7 members, all of whom shall be shareholders or representatives of a legal entity that is a shareholder.
Amtsdauer	1	Artikel 20 Die Verwaltungsratsmitglieder werden für eine Amtsdauer von drei Jahren gewählt. Mitglieder, deren Amtsdauer abgelaufen ist, sind wiederwählbar. Die maximale Amtszeit nicht geschäftsführender Mitglieder des Verwaltungsrates beträgt drei Amtsperioden.	Term of Office	1	Article 20 The members of the Board of Directors shall be elected to serve three-year terms. Members of the Board of Directors whose terms of office have expired shall be eligible for re-election. Non-executive Directors may only be appointed for up to three terms of office.
	2	Jedes Jahr wird der Verwaltungsrat teilweise erneuert. Soweit möglich soll die Anzahl der wiederzuwählenden Verwaltungsratsmitglieder jedes Jahr gleich gross sein und so gewählt werden, dass sich jedes Verwaltungsratsmitglied nach einer Amtsdauer von drei Jahren zur Wiederwahl stellen muss. Der Verwaltungsrat legt die Reihenfolge der Wiederwahl fest, wobei die erste Amtszeit einiger Verwaltungsräte auch weniger als drei Jahre betragen kann. Unter einem Jahr ist dabei der Zeitabschnitt zwischen zwei ordentlichen Generalversammlungen zu verstehen.		2	Each year the Board of Directors shall be renewed by rotation, to the extent possible in equal numbers and in such manner that, after a period of three years, all members will have been subject to re-election. The Board of Directors shall establish the order of rotation, whereas the first term of office of some members may be less than three years. In this regard, one year shall mean the period between two Ordinary Shareholders' Meetings.
	3	Sollte die Anzahl der Verwaltungsratsmitglieder verkleinert oder vergrössert werden, legt der Verwaltungsrat eine neue Reihenfolge der Wiederwahl fest. In diesem Fall kann die Amtszeit einiger Verwaltungsräte auch weniger als drei Jahre betragen.		3	In the event of an increase or a decrease in the number of Directors, the Board of Directors shall establish a new order of rotation. It follows that the term of office of some members may be less than three years.
	4	Wenn ein Verwaltungsratsmitglied vor Ablauf seiner Amtsdauer ersetzt wird, endet die Amtsdauer des an Stelle des ersetzten Verwaltungsratsmitgliedes gewählten neuen Verwaltungsratsmitgliedes mit dem Ende der normalen Amtsdauer des ersetzten Verwaltungsratsmitgliedes.		4	If, before the expiry of his or her term of office, a Director should be replaced for whatever reason, the term of office of the newly elected Directors shall expire at the end of the normal term of office of his or her predecessor.
Organisation des Verwaltungsrates, Entschädigung	1	Artikel 21 Der Verwaltungsrat wählt aus seiner Mitte einen Präsidenten und einen oder mehrere Vizepräsidenten. Er bestellt seinen Sekretär, welcher nicht Mitglied des Verwaltungsrates zu sein braucht. Der Verwaltungsrat ordnet im Übrigen unter Vorbehalt der Bestimmungen des Gesetzes und der Statuten seine Organisation durch ein Organisationreglement selbst.	Organization of the Board, Remuneration	1	Article 21 The Board of Directors shall elect from among its members one Chairman and one or more Vice-Chairmen. It shall appoint a secretary who need not be a member of the Board. The Board of Directors shall further regulate, subject to applicable law and these Articles of Association, its organization in written organizational regulations.
	2	Die Mitglieder des Verwaltungsrates haben Anspruch auf Ersatz ihrer im Interesse der Gesellschaft aufgewendeten Auslagen sowie auf eine ihrer Tätigkeit und Verantwortung entsprechende Entschädigung, die der Verwaltungsrat auf Antrag eines Ausschusses des Verwaltungsrates festlegt.		2	The members of the Board of Directors shall be entitled to reimbursement of all expenses incurred in the interests of the Company, as well as remuneration for their services that is appropriate in view of their functions and responsibilities. The amount of the remuneration shall be fixed by the Board of Directors upon recommendation by a committee of the Board.
Einberufung		Artikel 22 Der Präsident ruft den Verwaltungsrat zusammen, so oft es die Geschäfte erfordern, oder wenn ein Mitglied oder der Vorsitzende der Konzernleitung es schriftlich verlangt.	Convening of Meetings		Article 22 The Chairman shall convene meetings of the Board of Directors if and when the need arises or whenever a member or the chief executive officer so requests in writing.
Beschlüsse	1	Artikel 23 Zur Beschlussfähigkeit des Verwaltungsrates ist die Anwesenheit von mindestens der Mehrheit seiner Mitglieder erforderlich, vorbehältlich besonderer Bestimmungen im Organisationsreglement. Kein Präsenzquorum ist erforderlich für die Anpassungs- und Feststellungsbeschlüsse des Verwaltungsrates im Zusammenhang mit Kapitalerhöhungen.	Resolutions	1	Article 23 In order to pass resolutions, at least a majority of the members of the Board of Directors must be present, subject to additional provisions in the Organizational Regulations. No attendance quorum shall be required for resolutions of the Board of Directors providing for the confirmation of capital increases or for the amendment of the Articles of Association in connection therewith.
	2	Der Verwaltungsrat fasst seine Beschlüsse mit der Mehrheit der abgegebenen Stimmen. Der Vorsitzende hat den Stichentscheid.		2	Resolutions of the Board of Directors shall be adopted upon a majority of the votes cast. In the event of a tie, the Chairman shall have the deciding vote.

	3	Beschlüsse können im Zirkulationsverfahren (schriftlich) gefasst werden, sofern nicht ein Mitglied mündliche Beratung verlangt.		3	Resolutions may be passed by way of written consent, provided that no member requests oral deliberation.
Befugnisse des Verwaltungsrates	1	Artikel 24 Der Verwaltungsrat hat insbesondere folgende unübertragbare und unentziehbare Aufgaben: a)die Oberleitung der Gesellschaft und die Erteilung der nötigen Weisungen; b)die Festlegung der Organisation; c)die Ausgestaltung des Rechnungswesens, der Finanzkontrolle sowie der Finanzplanung; d)die Ernennung und Abberufung der mit der Ge-schäftsführung und der Vertretung betrauten Perso- nen; e)die Oberaufsicht über die mit der Geschäftsführung betrauten Personen, namentlich im Hinblick auf die Befolgung der Gesetze, Statuten, Reglemente und Weisungen; f)die Erstellung des Geschäftsberichtes sowie der Vor-bereitung der Generalversammlung und die Ausfüh-rung ihrer Beschlüsse; g) die Beschlussfassung über nachträgliche Leistungen von Einlagen auf nicht vollständig liberierten Aktien und daraus folgende Statutenänderungen; h)die Beschlussfassung über die Erhöhung des Aktien-kapitals, soweit diese in der Kompetenz des Verwaltungsrates liegt, die Fest-stellung von Kapitalerhöhungen und die Erstattung des erforderlichen Kapitalerhöhungsberichtes sowie die entsprechenden Statutenänderungen; i)die Prüfung der fachlichen Voraussetzungen der besonders befähigten Revisoren; j)die Benachrichtigung des Richters im Falle der Über-schuldu	Specific Powers of the Board	1	Article 24 The Board of Directors has, in particular, the following non-delegable and inalienable duties: a)the ultimate direction of the business of the Company and the issuance of the necessary instructions; b)the determination of the organization of the Company; c)the administration of accounting, financial controls and financial planning; d)the appointment and removal of the persons entrusted with management and representation of the Com-pany; e)the ultimate supervision of the persons entrusted with management of the Company, specifically in view of their compliance with law, these Articles of Asso-ciation, the regulations and directives; f)the preparation of business reports, the preparations for the Shareholders' Meetings and the implementation of shareholders' resolutions; g)the decision to call payments on shares that are not fully paid in, and the corresponding amendments to these Articles of Association; h)the adoption of resolutions concerning an increase in share capital to the extent that such power is vested in the Board of Directors of resolutions concerning the confirmation of capital increases, as well as making the required report on the capital increase and corresponding amendments to these Articles of Associati i)the examination of the professional qualifications of the qualified auditors; j)notification of the court if liabilities exceed asse
	2	Der Verwaltungsrat kann überdies in allen Angelegenheiten Beschluss fassen, die nicht nach Gesetz oder Statuten der Generalversammlung zugeteilt sind.		2	In addition, the Board of Directors may pass resolutions with respect to all matters that are not reserved to the Shareholders' Meeting by law or under these Articles of Association.
Übertragung von Befugnissen		Artikel 25 Der Verwaltungsrat kann unter Vorbehalt von Art. 24 dieser Statuten die Geschäftsführung nach Massgabe eines Organisationsreglementes ganz oder teilweise an eines oder mehrere seiner Mitglieder oder an Drittpersonen (Konzernleitung) übertragen.	Delegation of Powers		Article 25 Subject to art. 24 of these Articles of Association, the Board of Directors may delegate the management of the Company in whole or in part to individual directors or to third persons (Group Executive Management) pursuant to regulations governing the internal organization.

Zeichnungs-berechtigung		Artikel 26 Die rechtsverbindliche Vertretung der Gesellschaft durch Mitglieder des Verwaltungsrates oder durch Dritte wird in einem Organisationsreglement festgelegt.	Signature Power		Article 26 The due and valid representation of the Company by members of the Board of Directors or other persons shall be set forth in regulations governing the internal organization.
		C. Revisionsstelle, Konzernprüfer und Spezialrevisionsstelle			C. Auditors, Group Auditors and Special Auditors
Amtsdauer, Befugnisse und Pflichten	1	Artikel 27 Der Revisionsstelle und dem Konzernprüfer, die beide von der Generalversammlung gewählt werden, obliegen die ihnen vom Gesetz zugewiesenen Befugnisse und Pflichten. Dieselbe Person kann Revisionsstelle und Konzernprüfer sein.	Term, Powers and Duties	1	Article 27 The Auditors and the Group Auditors, both of which shall be elected by the Shareholders' Meeting, shall have the powers and duties vested in them by law. The duties of Auditors and Group Auditors may be performed by the same person.
	2	Die Generalversammlung kann eine besondere Revisionsstelle wählen, der die Vornahme der im Rahmen von Kapitalerhöhungen vorgeschriebenen besonderen Prüfungen (Art. 652f, 653f und 653i OR) obliegen.		2	The Shareholders' Meeting may appoint a special auditing firm entrusted with the examinations required under applicable law in connection with capital increases (Art. 652f, 653f and 653i CO).
	3	Die Amtsdauer der Revisionsstelle, des Konzernprüfers und gegebenenfalls der besonderen Revisionsstelle beträgt ein Jahr. Sie beginnt mit dem Tag ihrer Wahl und endet mit der ersten darauffolgenden ordentlichen Generalversammlung.		3	The term of office of the Auditors, the Group Auditors and (if appointed) the special auditors shall be one year. The term of office shall commence on the day of election, and shall terminate on the first Annual Shareholders' Meeting following their election.

		Abschnitt 4: Jahresrechnung, Konzernrechnung und Gewinnverteilung			Section 4: Annual Financial Statements, Consolidated Financial Statements and Profit Allocation
Geschäftsjahr, Geschäfts-bericht	1	Artikel 28 Das Geschäftsjahr endet am 31. Dezember jedes Jahres.	Fiscal Year, Business Report	1	Article 28 The fiscal year shall close as of December 31 of each year.
	2	Der Verwaltungsrat erstellt für jedes Geschäftsjahr einen Geschäftsbericht, der sich aus der Jahresrechnung (bestehend aus Erfolgsrechnung, Bilanz und Anhang), dem Jahresbericht und der Konzernrechnung zusammensetzt, sowie weitere unter anwendbarem Recht oder anwendbaren Vorschriften erforderliche Unterlagen.		2	For each fiscal year, the Board of Directors shall prepare a business report including the annual financial statements (consisting of the profit and loss statements, balance sheet and notes to the financial statements), the annual report and the consolidated financial statements, as well any other documentation that may be required by applicable law or stock exchange rules.
Verteilung des Bilanzge-winns, Reserven	1	Artikel 29 Über den Bilanzgewinn verfügt die Generalversammlung im Rahmen der gesetzlichen Vorschriften. Der Verwaltungsrat unterbreitet ihr seine Anträge.	Allocation of Profit Shown on the Balance Sheet, Reserves	1	Article 29 The profit shown on the balance sheet shall be allocated by the Shareholders' Meeting within the limits set by applicable law. The Board of Directors shall submit its proposals to the Shareholders' Meeting.
	2	Neben der gesetzlichen Reserve können weitere Reserven geschaffen werden.		2	Further reserves may be taken in addition to the reserves required by law.
	3	Dividenden, die während fünf Jahren von ihrem Verfalltag an nicht bezogen worden sind, fallen der Gesellschaft anheim und werden der allgemeinen Reserve zugeteilt.		3	Dividends that have not been collected within five years after their payment date shall enure to the Company and be allocated to the general reserves.

		Abschnitt 5: Auflösung und Liquidation			Section 5: Winding-up and Liquidation
Auflösung und Liquidation	1	Artikel 30 Die Generalversammlung kann jederzeit die Auflösung und Liquidation der Gesellschaft nach Massgabe der gesetzlichen und statutarischen Vorschriften beschliessen.	Winding-up and Liquidation		Article 30 The Shareholders' Meeting may at any time resolve on the winding-up and liquidation of the Company pursuant to applicable law and the provisions set forth in these Articles of Association.
	2	Die Liquidation wird durch den Verwaltungsrat durchgeführt, sofern sie nicht durch die Generalversammlung anderen Personen übertragen wird.			The liquidation shall be effected by the Board of Directors, unless the Shareholders' Meeting shall appoint other persons as liquidators.
	3	Die Liquidation der Gesellschaft erfolgt nach Massgabe der gesetzlichen Vorschriften.			The liquidation of the Company shall be effectuated pursuant to the statutory provisions.
	4	Nach erfolgter Tilgung der Schulden wird das Vermögen unter die Aktionäre nach Massgabe der eingezahlten Beträge verteilt, soweit diese Statuten nichts anderes vorsehen.			Upon discharge of all certified liabilities, the assets of the Company shall be distributed to the shareholders pursuant to the amounts paid in, unless these Articles of Association provide otherwise.
		Abschnitt 6: Bekanntmachungen, Mitteilungen			Section 6: Announcements, Communications
Bekannt-machungen, Mitteilungen	1 2	Artikel 31 Publikationsorgan der Gesellschaft ist das Schweizerische Handelsamtsblatt. Soweit das Gesetz oder die anwendbare Börsenvorschrift nicht zwingend eine persönliche Mitteilung verlangen, erfolgen sämtliche Mitteilungen der Gesellschaft an die Aktionäre gültig durch Publikation im Schweizerischen Handelsamtsblatt. Schriftliche Mitteilungen der Gesellschaft an Aktionäre erfolgen durch gewöhnlichen Brief an die im Aktienbuch zuletzt eingetragene Adresse des Aktionärs bzw. Zustellungsbevollmächtigten. Als Zustellungsbevollmächtigte gilt insbesondere die Finanzinstitution, die Aktien für wirtschaftlich Berechtigte hält und in dieser Eigenschaft im Aktienbuch eingetragen i	Announce-ments, Com-munications	1 2	Article 31 The official means of publication of the Company shall be the Swiss Official Gazette of Commerce. To the extent that personal notification is not mandated by law or stock exchange regulations, all communications to the shareholders shall be deemed valid if published in the Swiss Official Gazette of Commerce. Written communications by the Company to its shareholders shall be sent by ordinary mail to the last address of the shareholder or authorized recipient entered in the share register of the Company. Financial institutions holding shares for beneficial owners and recorded in such capacity in the share register shall be deemed to be authorized recipien
		Abschnitt 7: Sacheinlagen			Section 7: Contributions in Kind
Sacheinlagen	1	Artikel 32 Aus Anlass der Kapitalerhöhung der Gesellschaft von CHF 4'000'000 auf CHF 54'000'000, leistet die Nestlé AG, Cham und Vevey, die folgenden Einlagen: 1)99.95% des eingezahlten Aktienkapital der Gesellschaft Alcon Pharma GmbH, mit einem Nennwert von CHF 25'486'890; 2)100% des eingezahlten Aktienkapital der Gesellschaft Alcon Ophthalmika GmbH, mit einem Nennwert von CHF 56'950; 3)99.62% des eingezahlten Aktienkapital der Gesellschaft Alcon-Couvreur N.V., mit einem Nennwert von CHF 7'004'011; 4)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Cusi S.A., mit einem Nennwert von CHF 83'875'354; 5)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Finland Oy, mit einem Nennwert von CHF 131'950; 6)100 % des eingezahlten Aktienkapital der Gesellschaft Laboratoires Alcon S.A., mit einem Nennwert von CHF 19'720'727; 7)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories (UK) Ltd., mit einem Nennwert von CHF 7'316'000; 8)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories Hellas Commercial & Industrial S.A., mit einem Nennwert von CHF 651'050; 9)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Nederland B.V., mit einem Nennwert von CHF 28'424; 10)99 % des eingezahlten Aktienkapital der Gesellschaft Alcon Italia S.p.A., mit einem Nennwert von CHF 2'198'746; 11)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Norge AS, mit einem Nennwert von CHF 9'790; 12)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Polska Sp. z.o.o., mit einem Nennwert von CHF 300'000; 13)90 % des eingezahlten Aktienkapital der Gesellschaft Alcon Portugal Produtos e Equipamentos Oftalmologicos, Lda., mit einem Nennwert von CHF 35'100; 14)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Sverige AB, mit einem Nennwert von CHF 18'190; 15)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Pharmaceuticals Ltd., mit einem Nennwert von CHF 100'000; 16)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon S.A., mit einem Nennwert von CHF 100'000; 17)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratuvarlari Ticaret AS, mit einem Nennwert von CHF 1'420'000; 18)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories (South Africa) (Pty) Ltd., mit einem Nennwert von CHF 58'528; 19)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Korea Ltd., mit einem Nennwert von CHF 200'000; 20)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Hong Kong Limited, mit einem Nennwert von CHF 14'122; 21)98 % des eingezahlten Aktienkapital der Gesellschaft Alcon Japan Ltd., mit einem Nennwert von CHF 9'525'120; 22)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories (Philippines), Inc., mit einem Nennwert von CHF 651'124; 23)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Pte Ltd., mit einem Nennwert von CHF 143'533; 24)30 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories (Thailand) Ltd, mit einem Nennwert von CHF 10'050; 25)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories (Australia) Pty. Ltd., mit einem Nennwert von CHF 2'397'000; 26)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Canada Inc., ohne Nennwert; 27)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon (Puerto Rico) Inc., mit einem Nennwert von CHF 142; 28)100 % des eingezahlten Aktienkapital der Gesellschaft Alcon Laboratories, Inc., mit einem Nennwert von CHF 7'100; 29)100 % des eingezahlten Aktienkapital der Gesellschaft AlconLab Ecuador S.A., mit einem Nennwert von CHF 18'000; 30)gewerbliches und geistiges Eigentum. Diese Einlagen werden zu einem Wert von insgesamt CHF 298'022'970 übernommen. Als Gegenleistung für diese Sacheinlage gibt die Gesellschaft der Nestlé AG, Cham und Vevey, 50'000 voll einbezahlte Namenaktien der Gesellschaft mit einem Nominalwert von insgesamt CHF 50'000'000 aus. Dabei werden bei der Gesellschaft CHF 50'000'000 als Aktienkapital und CHF 248'022'970 in die Reserven gebuc		1	Article 32 In connection with the increase of the Company's share capital from CHF 4,000,000 to CHF 54,000,000, Nestlé Ltd, Cham and Vevey, effects the following contributions: 1)99.95% of the paid-in share capital of the company Alcon Pharma GmbH, with a par value of CHF 25,486,890; 2)100% of the paid-in share capital of the company Alcon Ophthalmika GmbH, with a par value of CHF 56,950; 3)99.62% of the paid-in share capital of the company Alcon-Couvreur N.V., with a par value of CHF 7,004,011; 4)100 % of the paid-in share capital of the company Alcon Cusi S.A., with a par value of CHF 83,875,354; 5)100 % of the paid-in share capital of the company Alcon Finland Oy, with a par value of CHF 131,950; 6)100 % of the paid-in share capital of the company Laboratoires Alcon S.A., with a par value of CHF 19,720,727; 7)100 % of the paid-in share capital of the company Alcon Laboratories (UK) Ltd., with a par value of CHF 7,316,000; 8)100 % of the paid-in share capital of the company Alcon Laboratories Hellas Commercial & Industrial S.A., with a par value of CHF 651,050; 9)100 % of the paid-in share capital of the company Alcon Nederland B.V., with a par value of CHF 28,424; 10)99 % of the paid-in share capital of the company Alcon Italia S.p.A., with a par value of CHF 2,198,746; 11)100 % of the paid-in share capital of the company Alcon Norge AS, with a par value of CHF 9,790; 12)100 % of the paid-in share capital of the company Alcon Polska Sp. z.o.o., with a par value of CHF 300,000; 13)90 % of the paid-in share capital of the company Alcon Portugal Produtos e Equipamentos Oftalmologicos, Lda., with a par value of CHF 35,100; 14)100 % of the paid-in share capital of the company Alcon Sverige AB, with a par value of CHF 18,190; 15)100 % of the paid-in share capital of the company Alcon Pharmaceuticals Ltd., with a par value of> CHF 100,000; 16)100 % of the paid-in share capital of the company Alcon S.A., with a par value of CHF 100,000; 17)100 % of the paid-in share capital of the company Alcon Laboratuvarlari Ticaret AS, with a par value of CHF 1,420,000; 18)100 % of the paid-in share capital of the company Alcon Laboratories (South Africa) (Pty) Ltd., with a par value of CHF 58,528; 19)100 % of the paid-in share capital of the company Alcon Korea Ltd., with a par value of CHF 200,000; 20)100 % of the paid-in share capital of the company Alcon Hong Kong Limited, with a par value of CHF 14,122; 21)98 % of the paid-in share capital of the company Alcon Japan Ltd., with a par value of CHF 9,525,120; 22)100 % of the paid-in share capital of the company Alcon Laboratories (Philippines), Inc., with a par value of CHF 651,124; 23)100 % of the paid-in share capital of the company Alcon Pte Ltd., with a par value of CHF 143,533; 24)30 % of the paid-in share capital of the company Alcon Laboratories (Thailand) Ltd, with a par value of CHF 10,050; 25)100 % of the paid-in share capital of the company Alcon Laboratories (Australia) Pty. Ltd., with a par value of CHF 2,397,000; 26)100 % of the paid-in share capital of the company Alcon Canada Inc., no par value; 27)100 % of the paid-in share capital of the company Alcon (Puerto Rico) Inc., with a par value of CHF 142; 28)100 % of the paid-in share capital of the company Alcon Laboratories, Inc., with a par value of CHF 7,100; 29)100 % of the paid-in share capital of the company AlconLab Ecuador S.A., with a par value of CHF 18,000; 30)industrial and intellectual property. These contributions are received at a total value of CHF 298,022,970. In consideration for such contribution in kind, the Company allots to Nestlé Ltd, Cham and Vevey, 50,000 fully paid registered shares of the Company with a total nominal value of CHF 50,000,000. The Company enters into its books CHF 50,000,000 as share capital and CHF 248,022,970 as reserves.
	2	Aus Anlass der Kapitalerhöhung der Gesellschaft von CHF 54'000'000 auf CHF 60'000'000, leistet die Nestlé AG, Cham und Vevey, die folgenden Einlagen: 1)ein Darlehen an Alcon Laboratories Inc. von CHF 306'400'000, 2)ein Darlehen an Alcon Laboratoires (UK) Ltd. von CHF 16'585'200, 3)ein Darlehen an Laboratoires Alcon S.A. von CHF 37'240'200. Diese Einlagen werden zu einem Wert von insgesamt CHF 360'225'400 übernommen. Als Gegenleistung für diese Sacheinlage gibt die Gesellschaft der Nestlé AG, Cham und Vevey, 6'000 voll einbezahlte Namenaktien der Gesellschaft mit einem Nominalwert von insgesamt CHF 6'000'000 aus. Dabei werden bei der Gesellschaft CHF 6'000'000 als Aktienkapital und CHF 354'225'400 in die Reserven gebucht.		2	In connection with the increase of the Company's share capital from CHF 54,000,000 to CHF 60,000,000, Nestlé Ltd, Cham and Vevey, effects the following contributions: 1)a loan to Alcon Laboratories Inc. of CHF 306,400,000, 2)a loan to Alcon Laboratoires (UK) Ltd. of CHF 16,585,200, 3)a loan to Laboratoires Alcon S.A. of CHF 37,240,200. These contributions are received at a total value of CHF 360,225,400. In consideration for such contribution in kind, the Company allots to Nestlé Ltd, Cham and Vevey, 6,000 fully paid registered shares of the Company with a total nominal value of CHF 6,000,000. The Company enters into its books CHF 6,000,000 as share capital and CHF 354,225,400 as reserves.

	Abschnitt 8: Verbindlicher Originaltext			Section 8: Original Language
Verbindlicher Originaltext	Artikel 33 Falls sich zwischen der deutschen und einer anderen sprachlichen Fassung dieser Statuten Differenzen ergeben, gilt der deutsche Originaltext.		Original Language	Article 33 In the event of deviations between the German version of these Articles of Incorporation and any version in another language, the German authentic text prevails.
Zug, den 25. Februar 2002 Revidiert: 18. März 2002 Revidiert: 21. März 2002 Revidiert: 25. März 2002 Revidiert: 23. Juli 2002 Revidiert: 4. Februar 2003 Revidiert: 22. Januar 2004		Zug, February 25, 2002 Revised: March 18, 2002 Revised: March 21, 2002 Revised: March 25, 2002 Revised: July 23, 2002 Revised: February 4, 2003 Revised: January 22, 2004   /s/ Francisco Castaner Francisco Castaner

EX-1.2

Exhibit 1.2

ALCON, INC.

BOARD OF DIRECTORS

ORGANIZATIONAL REGULATIONS

March 2003

ALCON, INC.BOARD
OF DIRECTORS

ORGANIZATIONAL REGULATIONS

Table of Contents

ARTICLE I Authority ...........................................................................................3
Article II Executive Bodies of the Company......................................................3
Article III The Board..............................................................................................4
Article IV Chairman and the Vice-Chairman.......................................................8
Article V Board Committees..................................................................................8
Article VI Executive Officers of the Company and the Group.......................15
Article VII Chief Executive Officer.....................................................................16
Article VIII Conflict of Interest...........................................................................16
Article IX Interests in Shares and Options.......................................................18
Article X General Provisions...............................................................................19
Article XI Final Provisions..................................................................................19

ARTICLE I

Authority

Section 1. Authority. These Organizational Regulations (the Regulations) are enacted by the Board of Directors of Alcon, Inc. (the Company) pursuant to art. 716b of the Swiss Code of Obligations (CO) and art. 21 para. 1 and 25 of the Company’s articles of association (the Articles of Association). They govern the powers and duties of the Company’s executive bodies and the organization of the Group Executive Management.

Section 2. Company. The Company is the holding company of an international group of companies active in the ophthalmic and related businesses. As such it performs strategic, financial and management functions not only for the Company itself but also with respect to the companies controlled by it. In view of this Group-wide function, the executive bodies and officers of the Company have to resolve on matters that pertain both to the Company and to other Group companies. Notwithstanding this, in any event, the executive bodies of the Company shall give due respect to the legal independence of all Group companies and to the local law applicable to them.

Section 3. Organization. For the purposes of these Regulations, the Group shall mean the Company and its Subsidiaries, where Subsidiaries means all such companies and a Subsidiary shall mean any such Company in which the Company holds directly or indirectly a majority of the voting rights or has the right to appoint a majority of the members of the Board of Directors.

References in these Regulations to the masculine gender (“he”) shall be deemed also to include the feminine gender (“she”).

ARTICLE II

Executive Bodies of the Company

Section 1. Executive Bodies and Management. The following are the Executive Bodiesof
the Company:

(a)     the Board of Directors (the Board);

(b)     the chairman of the Board (the Chairman);

(c)     the Board Committees established from time to time pursuant to these Regulations (the Board Committees);

(d)     the officers of the Company (the Officers); and

(e)     the managing director and Chief Executive Officer of the Group (the CEO).

Section 2. Group Executive Management. To the extent these Regulations do not reserve specific powers to the Board, the Officers or the CEO, group executive management (the Group Executive Management) shall be coordinated by the senior executive officers of Alcon Laboratories, Inc. (Alcon Laboratories).

ARTICLE III

The Board

Section 1. Organization. The Board elects a Chairman, a Vice-Chairman, and the members of the Board Committees from its members each year immediately following the annual general meeting.

The Board shall form three classes of directors serving staggered terms. The Board shall itself determine the classes of its members. The first terms of the Board members will expire as follows:

(a)     Class I Board members will have terms of office expiring at the annual general meeting of shareholders in 2003;

(b)     Class II Board members will have terms of office expiring at the annual general meeting of shareholders in 2004; and

(c)     Class III Board members will have terms of office expiring at the annual general meeting of shareholders in 2005.

Board members shall retire from office no later than the annual general meeting after their 72^nd birthday.

The Board further appoints a Company secretary who need not be a member of the Board.

Section 2. General Powers. The Board shall exercise its function as required by law, the Articles of Association and these Regulations. The Board shall determine the principles of the Company’s and the Group’s business strategy and policies.

The Board shall be authorized to pass resolutions on all matters which are not reserved to the shareholders’ meeting of the Company (Shareholders’ Meeting) by the Articles of Association or delegated to the CEO or the Officers, or the tasks reserved to any Board Committee by these Regulations.

Section 3. The Board has the following powers and duties:

(a)     the ultimate direction of the Company and the issuance of the necessary guidelines in accordance with applicable Swiss law and regulations;

(b)     the determination of the Company’s organizational structure, including the enactment and amendment of these Regulations;

(c)     the determination of the Company’s accounting principles, financial control and financial planning;

(d)     the appointment and removal of the Company secretary, the members of Committees nominated by the Board and the Executive Management of the Company and the Group, as well as the determination of their signatory power (see Article X, Section 1);

(e)     the ultimate supervision of the persons entrusted with the management of the Company, in particular with regard to their compliance with applicable law, the Articles of Association, these Regulations and any ancillary regulations and guidelines of the Company;

(f)     the adoption of resolutions concerning an increase in share capital to the extent that such power is vested pursuant to Swiss corporation law in the Board and of resolutions concerning the confirmation of capital increases and corresponding amendments to the Articles of Association, as well as making the required report on the capital increase;

(g)     the review and approval of the business report and the financial statements and any required filings with regulatory authorities or stock exchanges (unless delegated by these Regulations) as well as the preparation of the Shareholders’ Meeting and the implementation of its resolutions;

(h)     the examination of the professional qualifications of the Company’s auditors;

(i)     the notification of the court if the liabilities of the Company exceed the assets of the Company (art. 725 CO);

(j)     the certification of increases of capital and the amendment of the Articles of Association related thereto;

(k)     the approval of transactions as listed in Annex 3.3 (k) to these Regulations of the Company and any company of the Group;

(l)     the approval of the annual investment and operating budgets as well as the long-term plan of the Company and the Group;

(m)     the exercise of shareholder rights in the Subsidiaries, as well as the ultimate control of the business activities of the Subsidiaries;

(n)     the approval of executive regulations promulgated in accordance with Article XI, Section 2 of these Regulations;

(o)     the establishment of the Company’s dividend policy;

(p)     the approval of any registration statements, prospectuses, listing particulars, notices and circulars to holders of Company securities or recommendations in respect of any matters which may be submitted to holders of the Company’s securities (unless delegated by these Regulations);

(q)     the review and approval of the recommendations of the Board Committees;

(r)     the response to any approach regarding a takeover offer for the Company;

(s)     any code of ethics and business practice; and

(t)     membership and terms of reference of any Board Committees.

Section 4. Delegation of Other Duties. The Board herewith delegates all other duties, including the preparation and implementation of the Board resolutions as well as the supervision of particular aspects of the business in the sense of art. 716a para. 1 cif. 2 CO and the management of the Company in the sense of art. 716b CO to the CEO.

The Board may, upon giving appropriate notice to the corporate body or individual to whom it has delegated any of its powers and duties, re-assume responsibility for such powers and duties. Similarly, the Board may, upon giving appropriate notice, delegate such powers and duties to any other corporate bodies or individuals as it may from time to time deem appropriate. Any such delegation shall operate as a variation of the rules of competence set forth in these Regulations unless and until the Board re-assumes responsibility for any delegated matters.

Section 5. Meetings. The Board shall convene as often as necessary, at least four times a year. Board meetings shall be held at the Company’s place of incorporation or at such other place as the Board may determine.

The meetings shall be called by the Chairman or on his behalf by the Secretary. A meeting shall also be called by the Chairman upon the written request of a Board member indicating the items and the proposals to be submitted. The Chairman shall decide whether persons other than the directors may attend a meeting.

Notice of meetings shall be given ten days in advance in writing and the notice shall set forth the agenda. Each member of the Board may demand that items be placed on the agenda. The relevant request must be submitted in writing to the Chairman at least 14 days before the meeting. Urgent items that are brought up after the notice of the meeting has been distributed may be discussed at the meeting. Resolutions on such matters can only be passed if all Board members attending the meeting agree. In urgent cases, the Chairman may call a meeting at short notice in writing or by other convenient means of communication.

Meetings of the Board may be held in person or by telephone conference or other means of direct communication.

Section 6. Board Resolutions. The Board shall have a quorum when the majority of its members are present. Board members cannot appoint proxies. No attendance quorum is required if the meeting is called to certify an increase of capital and to effect the amendment of the Articles of Association related thereto.

Subject to Article V, Section 5 of these Regulations, resolutions of the Board shall be adopted upon a majority of the votes cast. In case of a tie, the acting chairman has a casting vote.

Resolutions may also be passed in writing, provided no Board member requests oral deliberation within 3 business days of notification of the proposal. To be valid, resolutions in writing must have been communicated to all Board members, and must have been approved in writing by a majority of the Board members.

Section 7. Board Minutes. All resolutions shall be properly recorded in Board minutes which must be signed by the acting chairman and the Secretary.

In the case of resolutions by circular letter (in writing), such letters qualify as Board minutes if signed by all, including the dissenting, members of the Board and the Secretary.

Section 8. Information and Reporting. Each member of the Board is entitled, at the Board meetings, to request and receive from the other Board members and from the management information on all affairs of the Company.

Outside of the Board meetings, each member of the Board may request information from the CEO on the general course of business and, upon approval by the Chairman, each member of the Board may obtain information on specific transactions and/or access to business documents.

Section 9. Compensation. All non-executive directors of the Company shall be paid a compensation for their services as directors out of the funds of the Company. Such compensation to directors (other than any director who for the time being holds an executive office or employment under the Company or a Subsidiary of the Company) shall be determined by the Compensation Committee.

In addition to the above, the directors shall be paid out of the funds of the Company all expenses properly incurred by them in the discharge of their duties, including their expenses of traveling to and from the meetings of the Board, meetings of the Board Committee, Shareholders’ Meetings and separate meetings of the holders of any class of securities of the Company.

The Board may grant special compensation to any director who performs any special or extra services to or at the request of the Company. Special compensation may be made payable to a director who has performed any special or extra services in addition to his ordinary compensation (if any) as a director.

ARTICLE IV

Chairman and the Vice-Chairman

Section 1. Powers and Duties. The Chairman has the following powers and duties:

(a)     organizing and preparing of the agenda for the Shareholders’ Meetings and Board meetings;

(b)     presiding over the Shareholders’ Meetings and Board meetings; and

(c)     signing of the Company’s application for registration with the Commercial Register (which function may be delegated).

Section 2. Authority. Should the Chairman be unable or unavailable to exercise his functions, his functions shall be assumed by the Vice-Chairman, or if the latter should also be unable or unavailable, another member of the Board appointed by the Board.

ARTICLE V

Board Committees

Section 1. General. The Board may appoint Board Committees for specific areas from among its members. Together with their appointment, the Board shall establish the appropriate rules with respect to the mission, the authority and the reporting of the pertinent Board Committee.

All members of the Board are invited to attend any meetings of any of the Board Committees and, upon request of the chairman of such Board Committee, will receive all material distributed to such Board Committee members.

Notwithstanding the generality of the above, the following permanent Board Committees shall be appointed.

Section 2. Compensation Committee. The Compensation Committee shall be comprised of three members of the Board, one of which shall be designated by Nestlé as the Company’s Majority Shareholder (the Majority Shareholder) and two of which shall be independent directors (as that term is understood pursuant to the rules and regulations of the New York Stock Exchange as applicable from time to time (the NYSE Rules)).

The members of the Compensation Committee shall be appointed for a one-year term. Members of the Compensation Committee shall be eligible for re-election.

The Compensation Committee shall have the following powers and duties:

(a)     review of the general compensation strategy of the Company and the Group;

(b)     recommendations for approval by the Board of compensation and benefits programs for the CEO and the members of Group Executive Management;

(c)     review of the terms of employment between the Company and any executive officer or key employee;

(d)     administration of the long-term incentive plan and recommendations to the Board for individual grants under this plan; and

(e)     decision on the remuneration of the Board members.

The Compensation Committee shall meet at least twice per year. It shall report to the full Board on any decisions taken and on any other important employment, salary and benefit matters.

The Compensation Committee may recommend to the Board of Directors that a discretionary pool of options or other incentive awards be made available to the CEO for grant to employees of the Group in any given business year. Any option grants by the CEO shall be ratified by the Compensation Committee on a quarterly basis. The size and terms of the discretionary pool of options shall be determined by the Board of Directors upon recommendation of the Compensation Committee on an annual basis. Any unawarded options out of the discretionary pool for a given business year will be available for allotment to employees in subsequent business years.

Section 3. Audit Committee. The Audit Committee shall be comprised of at least three members of the Board all of whom shall be independent directors as defined under the NYSE Rules. In addition, each member of the Audit Committee shall meet all applicable requirements of the Audit Committee Policy of the New York Stock Exchange with respect to financial literacy, accounting or related financial expertise, and any other matters required by the NYSE. The Audit Committee shall invite one representative of the Majority Shareholder to participate in the deliberations relating to the matters contemplated under paragraphs (h), (i), (j), (k) and (m) below, and on financial matters to be submitted to the Board of Directors for approval.

The purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities to oversee the Company’s financial reporting process, including monitoring the integrity of the Company’s financial statements and the independence and performance of the Company’s internal and external auditors. The Audit Committee’s responsibility is one of oversight and, in carrying out its responsibility, the Audit Committee is not providing any expert or other special assurance as to the Company’s financial statements.

The Chief Financial Officer of the Alcon Group may be invited to attend meetings of the Audit Committee as a guest.

The members of the Audit Committee shall be appointed for a one-year term. Members of the Audit Committee shall be eligible for re-election.

The Audit Committee shall have the following powers and duties:

(a)     to review the adequacy of the system of internal accounting procedures of the Company and the Group, and to oversee that effective systems of internal financial controls and for reporting non-financial operating data are maintained;

(b)     to make recommendations to the Board regarding the appointment of independent auditors of the Company and the Group;

(c)     to hold discussions with the independent auditors of the Company and the Group regarding their audit procedures, including the proposed scope of the audit, the audit results and the related management letters;

(d)     to review the audit results and related management letters;

(e)     to review the services performed by the independent auditors of the Company and the Group in connection with determining their independence;

(f)     to review the reports of the internal and outside auditors and to discuss their contents with the auditors and with the Group Executive Management;

(g)     to oversee the selection and terms of reference of the internal auditors and the outside auditors of the Company and the Group;

(h)     to make recommendations for approval by the Board of an asset and liability management policy and strategic direction;

(i)     to have overall supervisory responsibility to ensure proper implementation of the financial strategy as approved by the Board;

(j)     to monitor strategy execution, portfolio management, risk management and the carrying out of special actions necessary to support the strategy;

(k)     to review periodically the financial results of the Group as achieved;

(l)     to oversee that the financial performance of the Group is properly measured, controlled and reported;

(m)     to recommend any share repurchase program for approval by the Board;

(n)     to review and discuss the quarterly financial statements with management, and to review and discuss the annual financial statements with management and the outside auditors;

(o)     to ensure the ongoing compliance of the Company and the Group with legal requirements, accounting standards and the provisions of the NYSE Rules;

(p)     to approve (i) the form and contents of a press release containing information about the Company’s earnings (Earnings Release) for each quarter other than the quarter ending December 31, (ii) the issuance of each Earnings Release by the Company in the form approved by the Audit Committee, (iii) the form and contents of a Report of Foreign Issuer on Form 6-K containing financial statements and management’s discussion and analysis of financial condition and results of operations (a Report) for each quarter other than the quarter ending December 31, (iv) the furnishing of each Report to the United States Securities and Exchange Commission and all exchanges on which the Company’s securities are listed to the extent required by the rules of such exchanges, in each case in the form approved by the Audit Committee; and

(q)     to review and reassess the adequacy of the Audit Committee provisions of these Organizational Regulations annually and submit any proposals for revision to the Board for approval.

In discharging its oversight responsibilities, the Audit Committee shall have unrestricted access to the Company’s management, books and records.

The Audit Committee shall meet at least four times per year. It shall regularly report to the Board on its findings and propose the appropriate actions. The ultimate responsibility for approving the annual and quarterly financial statements will remain with the Board.

Section 4. Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall be comprised of three members of the Board, as determined from time to time by the Board. Two Committee members shall be chosen from among the independent Directors; in addition, one Committee member shall be designated by the Majority Shareholder.

The members of the Nominating and Corporate Governance Committee shall be appointed by the full board for a one year term. Members of the Committee shall be eligible for re-election. The chairperson of the Committee shall be designated by the Board.

The Nominating and Corporate Governance Committee shall have the following powers and duties:

(a) Determination of the criteria, objectives and procedures for selecting members of the Board;

(b) Search and review of potential candidates qualified to become members of the Board, and recommendation of such individuals to the full Board for a nomination for election by the shareholders;

(c) Review of nominations for re-election of Board members;

(d) Recommendation to the Board as to the class of directors on which a new director shall serve;

(e) Recommendation of Board members for appointment to a Board committee;

(f) Review of appropriateness of continued service on the Board of members whose circumstances (including business or professional affiliations or responsibilities) have changed or who contemplate accepting a directorship on another public company board or an appointment to an audit or compensation committee of another public company board;

(g) Recommendation to the Board for the appointment of the members of the Executive Management, upon motion of the CEO;

(h) Oversight of the Company’s orientation process for newly elected members of the board, and assistance of the board in its implementation; assessment of the adequacy of and need for additional continuing director education programs;

(i) Development of corporate governance guidelines for the Company, assessment of those guidelines at least on an annual basis;

(j) Oversight of the system and procedures for the education, development and orderly succession of senior members throughout the Group, including, at least annually, review of the CEO’s short- and long-term succession plans for the CEO and other senior management positions;

(k) Coordination of the annual evaluation of the Board and its committees;

(l) Review of its own performance and reassessment of the adequacy of its rules of procedures.

In discharging its functions, the Nominating and Corporate Governance Committee shall have the authority to retain and terminate any search firm to be used to identify candidates for the position of Board member or member of Executive Management. The Committee may further obtain, at the expense of the Company, advice and assistance from internal or external legal, accounting or other advisors as it deems advisable without having to seek Board approval. The Committee shall finally have the authority to conduct or authorize investigations into or studies of any matters within the Committee’s scope of responsibilities.

The Nominating and Corporate Governance Committee shall meet at least four times per year. It may request that any directors, officers or other employees of the Company, or any other person whose advice is sought by the Committee, attend any Committee meetings to provide such information as the Committee requests. The Committee shall take minutes of its meetings, and shall regularly report to the Board on its findings and propose the appropriate actions.

Except as set forth in this Article V, Section 4 or in any resolution of the Board of Directors, the Nominating and Corporate Governance Committee shall set its own rules of procedure.

Section 5. Independent Director Committee. If any of the following transactions is proposed to be taken by the Company, the Board shall form a special committee of no less than three independent and disinterested directors who shall be responsible for protecting the interests of the minority shareholders of the Company. The Board shall only resolve such matters if a majority of the members of Independent Director Committee so recommends. Such matters are

(a)     a proposed merger, takeover, business combination or related party transaction of the Company with the Majority Shareholder or any group company of the Majority Shareholder;

(b)     a proposed bid for the shares of the Company by any entity owning a majority of the Company’s outstanding voting rights;

(c)     a proposed repurchase by the Company of all the shares not owned by an entity owning a majority of the outstanding voting rights of the Company; or

(d)     any change to the powers and duties of the Independent Director Committee.

Section 6. Committee Procedures. Each of the Board Committees shall establish its own terms of reference which shall, to the extent necessary or expedient, comply with the provisions of the NYSE Rules.

Board Committees shall meet at the place of incorporation of the Company or at another place as determined by the chairman of the Board Committee.

Section 7. Research and Development and Scientific Advisory Board. The Board may appoint a research and development and scientific advisory board (the R&D Advisory Board) that is comprised of no fewer than five members. The chairman of the R&D Advisory Board shall be designated by the Board, one member shall be designated by the Majority Shareholder, and the remaining members of the R&D Advisory Board shall be designated by the Chairman of the Company and shall not otherwise be affiliated with the Company or the Majority Shareholder.

The members of the R&D Advisory Board shall be appointed for terms of up to three years. Members shall be eligible for re-election.

The R&D Advisory Board shall have no executive or managerial functions. Instead, its function shall be:

(a)     to review and make recommendations regarding the Company’s research and development objectives; and

(b)     to monitor new developments, trends and initiatives in the pharmaceutical industry.

The R&D Advisory Board shall meet at least twice per year. It shall regularly report to the full Board on its procedures.

ARTICLE VI

Executive Officers of the Company and the Group

Section 1. The Company. The Company is a holding company which operates principally through its operating Subsidiaries. All business and operational decisions (including cost control and similar measures) as well as decisions of business strategy of the Group shall be determined by the Board. In addition, the executive officers of the Company (other than the CEO) are responsible for

(a)     conducting the administrative affairs of a holding company, including handling all communications with the competent commercial register and tax authorities and keeping of the Company’s statutory books and records;

(b)     exercising the shareholder rights with respect to those Subsidiaries that are directly held by the Company;

(c)     administration of trademarks owned by the Company; and

(d)     funding of research and development projects of the Group on a Group-wide basis, administration of intellectual property rights derived from such research and development projects, collection of license income relating to intellectual property rights derived from such research and development projects; and purchase of intellectual property rights.

Section 2. The Group. The principal Subsidiary of the Company is Alcon Laboratories. The executive management of Alcon Laboratories will coordinate the activities of the Group, subject to the ultimate direction and control by the Board. In this capacity, the executive management of Alcon Laboratories will

(a)     coordinate the ongoing business and operations of the operating Subsidiaries of the Group;

(b)     coordinate research and development, manufacturing, sales and distribution activities of the Group;

(c)     coordinate marketing activities of the Group; and

(d)     coordinate financing, treasury, legal and tax functions (other than matters relating directly to the holding company).

ARTICLE VII

Chief Executive Officer

Section 1. Appointment and Term of Office. The CEO is appointed by the Board from among its members for an indeterminate term of office. Notwithstanding anything to the contrary, his term shall automatically end upon termination of his Board membership.

The CEO shall be registered in the commercial register as Managing Director (Delegierter des Verwaltungsrates). The CEO shall coordinate the group-wide activities in his function as Chief Executive Officer of Alcon Laboratories, Inc.

Section 2. Powers and Duties. The CEO shall have all the powers and duties that are not explicitly reserved to the Board or a Board Committee by these Regulations.

Section 3. Reporting. The CEO shall regularly inform the Board at the Board meetings on the current course of business and all major business matters of the Company and its Subsidiaries. Extraordinary matters shall be reported to the members of the Board without delay by circulation letter or any other means of communication.

ARTICLE VIII

Conflict of Interest

Section 1. Definitions. For purposes of Articles VIII and IX:

(a) Conflicting Interest shall mean the special interest the Board member has with respect to a transaction due to the fact the Board member or a Related Person has a financial or non-financial interest in, or is otherwise closely linked to, the transaction, and such interest is of such significance to the Board member or a Related Person that the interest would reasonably be expected to interfere on the Board member’s judgement if he were called upon to vote on the transaction.

(b) Related Person of a Board member means

(i) the spouse (or a parent or sibling thereof) of the Board member, or a child, grandchild, sibling, parent (or spouse of any thereof) of the Board member, or an individual having the same home as the Board member, or trust or estate of which an individual specified in this clause (i) is a substantial beneficiary;

(ii) a trust, estate, incompetent or minor of which the Board member is a trustee, administrator or guardian; or

(iii) one of the following persons or entities: (A) an entity of which the Board member is a director, general partner, agent, major shareholder or employee; (B) a person that controls one or more of the entities specified in subclause (A) or an entity that is controlled by, or is under common control with, one or more of the entities specified in subclause (A); or (C) an individual who is a general partner, principal or employer of the Board member.

Section 2. General. A director who has a Conflicting Interest which involves the Company shall disclose the nature of his interest at a meeting of the Board.

Subject to any applicable statutory provisions to the contrary, a director shall not be disqualified by his office from entering into any contract with the Company (either with regard to his tenure of any office or position with the Company, or as vendor, purchaser or otherwise).

Section 3. Duty to Abstain. Members of the Board shall abstain from exercising their voting rights in matters involving a Conflicting Interest. If a director is required to abstain from voting in a matter, he shall not be counted in the quorum of the meeting in question. In addition, such Board member shall use best efforts to ensure that he does not receive any confidential information with respect to such transaction. In particular, and without limitation to the foregoing, a director shall not vote or be counted in the quorum of the meeting in respect of any resolution concerning the following matters:

(a)     his own appointment, including fixing and varying its terms;

(b)     the termination of his own appointment as the holder of any office with the Company or any other company in which the Company holds an equity interest;

(c)     any transaction in which he or any Related Person is an interested party.

        Notwithstanding the provisions of the foregoing paragraph, a director shall be entitled to vote and be counted in the quorum on:

(a)     any issue or offer of securities of the Company in respect of which the director or any Related Party is or may be entitled to participate in their capacity as holder of any such securities;

(b)     any contract in which he or any Related Party is interested only by virtue of his interest in securities of the Company;

(c)     any contract concerning pension fund or retirement, death or disability benefits schemes under which he may benefit and which affords to directors only those privileges and advantages which are generally afforded to the employees to whom the fund or scheme relates;

(d)     on any proposal regarding the stock incentive plan which relates both to directors and employees and affords to any directors only those privileges and advantages which are generally afforded to the employees to which the scheme relates; and

(e)     any contract concerning the purchase or maintenance of insurance for any director or officer of the Company against any liability.

ARTICLE IX

Interests in Shares and Options

Section 1. General. Each Board member shall disclose to the Company the extent of his shareholdings and holdings of options to purchase shares of the Company on a regular basis as established by the Board from time to time.

Section 2. Specific Rules. Each director shall, upon assuming office, notify the Company in writing of

(a)     the number of shares (and options or conversion rights with respect to shares) of the Company held by himself or any Related Person;

(b)     the number of other securities of the Company held by himself or any Related Person;

(c)     the number of shares (and options or conversion rights with respect to shares) of any Subsidiary of the Company held by himself or any Related Person

(the securities referred to in lit. (a) through (c) above collectively, the Relevant Securities).

This information shall be updated at least once annually or more frequently if requested by the Board.

Other events which require notification include (i) the acquisition or disposal of any Relevant Securities, (ii) the entering into of a contract to sell any such Relevant Securities, and (iii) the assignment of any right granted to a Board member to subscribe for Relevant Securities.

Section 3. Share Dealings. The Board will establish a separate insider trading policy and a policy on dealings in shares of the Company.

ARTICLE X

General Provisions

Section 1. Signatory Power. The Board members and all other persons authorized to represent the Company shall have joint signatory power by two for the Company.

Section 2. Confidentiality. The Board members and officers shall keep confidential all information and documents obtained in connection with the exercise of their function for the Company.

Upon termination of their function, the Board members and officers shall without delay return to the Company all documents obtained in connection therewith.

Section 3. Insurance. The Company may procure Directors and Officers’ liability insurance for the Board members and for the key executive officers of the Company and the Group in line with best practice for US listed pharmaceutical companies. Any costs of such insurance shall be charged to the Company.

ARTICLE XI

Final Provisions

Section 1. Effectiveness. These Regulations shall become effective as of the date of approval by the Board.

Section 2. The corporate bodies and officers entrusted with the management of the Company shall promulgate such executive regulations as are necessary for the implementation of these Regulations subject to prior approval by the Board as mentioned in Article III, Section 3(n) above.

Section 3. The Board shall review these Regulations from time to time with a view to ascertain whether they are appropriate for their purpose. Such a review shall first be undertaken prior to the annual general meeting approving the financial statements for the business year 2002 and thereafter no less than once annually. Any amendment of these Regulations shall only be valid if such amendment is in writing and is approved by at least two-thirds of the Board members attending such meeting. Any amendment affecting the powers and duties of the Independent Director Committee shall only be valid if approved by a majority of the members of such committee.

Section 4. Any provisions of these Regulations relating to nomination and/or appointment rights of the Majority Shareholder shall be amended or repealed as and when the equity interest of the Majority Shareholder in the Company shall fall below 50% of the voting rights of the Company.

SO RESOLVED as of March 17, 2003

The Chairman:                                                The Vice-Chairman:

/s/ T.R.G. Sear                                                 /s/ Peter Brabeck-Letmathe

EX-1.2A

Annex 3.3 to Exhibit 1.2(k): Transactions subject to approval by the Board

		Board approval Required in excess of USD
A	LEGAL AND FINANCIAL STRUCTURE AND ACQUISITIONS/DIVESTITURES:
1	Creating/closing/merging companies or branch offices	NR*
2	Acquisition/divestitures of companies (100% stock purchase), products and
	intangible assets	5,000,000
	including patents and trademarks including financing and choice of acquisition
	vehicle
B	INTANGIBLE ASSETS:
1	Transfer of intangible assets - Within Alcon Group	NR
2	New Royalty and Technical Assistance Fees agreements - Within Alcon Group	NR
3	Changes to Royalty and Technical Assistance Fees agreements - Within Alcon	NR
	Group
C	EQUITY TRANSACTIONS:
1	Purchase and redemption of equity securities of the Company	R
2	Issuance of equity securities of the Company under
	a. Approved compensation plan	NR
	b. Other	R
3	Increase/decrease Capital of subsidiaries	NR*
4	Dividends to Alcon Inc. shareholders	R
5	Dividends from subsidiaries to Alcon Inc. if less than 97% of available profit	NR*
D	EXTERNAL FINANCING TRANSACTIONS: (limits apply per transaction and to the
	cumulative amount done between Board meetings)
1	USD or Foreign Equivalent Loans - less than 1 year	500'000'000
2	USD or Foreign Equivalent Loans - longer than 1 year	50'000'000
3	Rollover of Nestle guaranteed CP programme (aggregate limit)	2'000'000'000
4	Public and Private Debt Securities	R
5	Foreign Exchange Cover- less than 1 year	NR
6	Foreign Exchange Cover- longer than 1 year	20'000'000
7	Guarantees/Letters of awareness or comfort	NR
8	Interest rate derivatives - less than 1 year	NR
9	Interest rate derivatives - longer than 1 year	50'000'000
10	Investments (Purchase or Sale) - less than 1 year	NR
11	Investments (Purchase or Sale) - longer than 1 year	20'000'000
E	AFFILIATE TRANSACTIONS INCLUDING SPECIAL PROVISIONS:
1	All - Nestle Affiliates (with documentation of arms-length conditions)	NR
2	All - Alcon Affiliates	NR
F	CAPITAL EXPENDITURES:
1	Approved in Capital Budget, incl. Budgeted Unforeseen	NR
	Additional credits not included in budget (credits below these limits are to
	be accommodated within unforeseen)
2	Production:	2'000'000
	IT/Others:	1'000'000
G	PURCHASING TRANSACTION(S) AND EXPENSE(S) (INCLUDING EXECUTING/TERMINATING
	CONTRACTS, POLITICAL AND CHARITABLE DONATIONS):
1	Approved in Operating Plan	NR
2	Exceeding approved Operating Plan as long as budgeted EBITA remains at or	10'000'000
	above plan
H	SALES TERMS, CREDIT MEMOS, REBATES AND RECEIVABLES
	(INCLUDING EXECUTING/TERMINATING CONTRACTS):	NR
I	TAX:
1	Income Tax Settlements:
	a. Within limits of accounting provisions	NR
	b. Not within limits of accounting provisions	R
J	RISK MANAGEMENT:
1	Insurance Contracts: Change of risk covers
	a. Within limits of operating plan	NR
	b. Not within limits of operating plan	R
2	Insurance Contracts: No change of risk covers	NR
3	Self-insured Settlements	20'000'000
K	OTHER GRANTS:
	Milestone, fixed or minimum payments related to licensing and RnD evaluation	10'000'000
1	agreements in their entirety (covers entire agreements, even if they span
	several years and include multiple payments).
	Payments to comply with approved contracts and government regulations
2	(including but not limited to royalties, interest, insurance premiums, leases,	NR
	customs duties, taxes)
3	Disposition of Tangible Assets (Greater of NBV or Market Value) Excluding
	Sales in the Ordinary Course of business	10'000'000
4	Institution and Settlement of Legal Proceedings	25'000'000
	Grant of Authority is applicable to the following legal entities/market	ALL
	organiations/Business Units and/or functions:
L	Important Inter-company Financial Transactions	NR
		Board to be
		informed

R- Board approval required NR=Board approval not required. The Board must be kept Informed on all material transactions.

* Grant delegated by Board to a Director who will determine which issues will be brought before the board.

It is understood that the above transaction limits are per complete business transaction and that such transaction cannot be split into parts in order to circumvent the limits.

EX-4.4

Exhibit 4.4

ALCON EXCESS 401(k) PLAN

EFFECTIVE JANUARY 1, 2004

I. Name and Purpose

The name of the plan is the Alcon Excess 401(k) Plan (the “Plan”). Its purpose is to provide certain individuals with benefits attributable to contributions, which would have been made to the Alcon 401(k) Retirement Plan but for limitations imposed by the Code regarding the compensation that can be considered in making contributions on behalf of an employee. This program has been adopted in recognition of these limits to restore the benefits that would have otherwise been available without such restrictions. This Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

II. Effective Date

        The plan shall be effective as of January 1, 2004.

III. Definitions

A. Account means the balance credited to a Participant’s Excess Contribution Account. The Account shall not constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes and, moreover, contingent amounts credited thereto shall not be considered “plan assets” for ERISA purposes. The Account merely provides a record of the bookkeeping entries relating to the contingent benefits the Sponsor intends to provide the Participant and shall thus reflect a mere unsecured promise to pay amounts in the future.

B. Affiliate means a member of a controlled group of corporations (defined in Code Section 414(b)), trades of business (whether or not incorporated) which are under common control (defined in Code Section 414(c)) or an affiliated service group (defined in Code Section 414(m) or in Code Section 414(c)).

C. Alcon 401(k) Retirement Plan means the Alcon 401(k) Retirement Plan and Trust, Restated Effective January 1, 1997, or any other successor defined contribution plan maintained by the Company that qualifies under Section 401(a) of the Code, and satisfies the requirements thereof.

D. Allocation Form means the form completed by the Participant and delivered to the Committee which indicated the Participant’s choice of the Investment Alternatives as described in Section VI.

E. Beneficiary means any person or persons so designated in accordance with the provisions of Section VIII.

F. Board of Directors means the board of directors of Alcon Holdings Inc.

G. Code means the Internal Revenue Code of 1986, as amended, and the regulations and other authority issued thereunder by the appropriate governmental authority. References to the Code shall include references to any successor section or provision of the Code.

H. Committee means the Chief Executive Officer and Chief Financial Officer of Alcon Holdings Inc. or any other persons appointed by the Board of Directors to administer the Plan and to perform the functions set forth herein.

I. Company means Alcon Holdings Inc. and each Participating Employer except as otherwise provided in Section VI.E.2.c. of the Plan.

J. Compensation means (i) base salary earned by a Participant on a periodic basis throughout the Plan Year, and (ii) cash bonuses paid to a Participant during a Plan Year. For purposes of this Plan, Compensation shall also include amounts which would otherwise meet the definition hereunder but for the voluntary deferral of such amounts pursuant to the Alcon 401(k) Retirement Plan or the Alcon Executive Deferred Compensation Plan, effective October 25, 2002, as may be amended from time to time.

K. Disability means any mental or physical impairment that continuously disables and wholly prevents an Employee from being able to engage in the Employee’s normal and customary duties with the Employer or any Affiliate. The permanence and degree of the impairment shall be supported by competent medical evidence.

L. Discretionary Contribution means the amount contributed by the Company to a Participant’s Account pursuant to Section VI of the Plan.

M. Distribution Event means the date of termination of service of the Participant with the Company for any reason, including death, upon which payment of the Participant’s Account shall be deemed triggered for subsequent distribution, pursuant to Section VII.

N. Eligible Individual means each employee of the Company selected for participation in this Plan pursuant to Section IV of the Plan.

O. Excess Contribution Account means the sum of (i) the amounts credited on behalf of a Participant under the terms of this Plan; and (ii) additional amounts credited/debited to the Participant’s Excess Contribution Account as a result of the Participant’s selection of Investment Alternatives in accordance with Section VI, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan from the Participant’s Excess Contribution Account, including any applicable penalties imposed pursuant to Section VIII.C.

P. Excess Contribution Amount means an amount which would have been credited on behalf of the Participant to the Alcon 401(k) Retirement Plan, but for the limitations imposed by Section 401(a)(17) of the Code, as may be modified from time to time. Such amount shall be determined by multiplying the Participant’s Compensation in excess of the Compensation Limit as defined in Section 401(a)(17) of the Code, by twelve percent (12%) or such other amount may be determined to be the maximum Company Matching Contribution under the provisions of the Alcon 401(k) Retirement Plan; such amounts shall be credited to Excess Contribution Account pursuant to Section VI.

Q. Investment Alternatives means those Investment Alternatives chosen from time to time by the Committee, as described in Section VI, and reflected on the Allocation Form provided on an annual basis by the Company to the Participants. Such Investment Alternatives will allow individual Participants to hypothetically invest the balance of his or her Account during each Plan Year, among Investment Alternatives selected by the Participant, and shall determine the rate of appreciation (or depreciation) attributable to the balance of such Participant’s Account for that Plan Year.

R. Participant means an employee who is both eligible to participate in the Plan under the terms of Section IV and has elected to participate in the Plan.

S. Participating Employer means Alcon Laboratories, Inc., Alcon Research, Ltd., Alcon Manufacturing, Ltd. and Falcon Pharmaceuticals, Ltd. or any other corporation or business organization which adopts the Plan, with the consent of Sponsor.

T. Plan Year means the twelve (12) month period ending on the December 31st of each year during which the Plan is in effect, provided that the first Plan Year shall commence on the Effective Date and end on December 31, 2004.

U. Sponsor means Alcon Holdings Inc. and its successors and assigns.

V. Trust means the grantor trust established pursuant to the Plan.

W. Trustee means the trustee named in the agreement establishing the Trust and such successor and/or additional trustees as may be named pursuant to the terms of the agreement establishing the Trust.

IV. Eligibility

An employee of the Company shall be eligible to participate in the Plan if the employee is approved to participate in the Plan by the Committee. An employee shall become a Participant under the Plan upon the timely filing of a statement indicating his or her willingness to be a participant in this Plan and an Allocation Form, as described in Section VI.

V. Administration of the Plan

A. The Plan shall be administered by the Committee which shall hold meetings at such times as may be necessary for the proper administration of the Plan. The Committee shall have the sole discretion to interpret the provisions of the Plan. Neither the Committee nor any members of the board of directors of any Alcon Affiliated Company shall be liable to any person for any action taken or omitted in connection with the administration or interpretation of the Plan.

B. Subject to the limitations herein set forth, the Committee shall establish from time to time the rules or regulations for the administration of the Plan and the transaction of its business, provided that no such rule or regulation shall be contrary to the specific provisions of the Plan. The Committee has full discretion to interpret the Plan, to determine whether a claimant is eligible for benefits; to decide the amount, form, and timing of benefits; and to resolve any other matter under the Plan which is raised by a claimant or identified by the Committee. The Committee shall determine all questions arising from or in connection with the provisions of the Plan and its administration, and any determination so made shall be final, conclusive and binding upon all persons affected thereby.

C. Communications to the Committee shall be addressed to the Chairman of the Committee, 6201 South Freeway, Fort Worth, Texas 76134. The Secretary of the Committee is hereby designated as agent for service of legal process with respect to any claims arising under the Plan.

VI. Excess Contribution Account

      A. Investment Alternatives

The Investment Alternatives available for the Participant’s Account will be selected by the Committee, in its sole discretion, and specified on the Allocation Form provided to the Participant by the Committee. Such Investment Alternatives will allow individual Participants to hypothetically invest the balance of their Account during each Plan Year and shall determine the rate of appreciation (or depreciation) which shall be credited on the balance of such Account. Allocation among the Investment Alternatives shall be in increments of whole percentages. A Participant shall have no actual ownership rights in any assets of the Company or the Trust as a result of such Participant’s selection of Investment Alternatives. Moreover, the Company and/or Trust shall have no obligation to invest actual assets in accordance with the Participant’s selection of Investments.

      B. Reallocation Among Investment Alternatives

A Participant may choose, on the first day of each month, to reallocate the deemed investment of the amounts credited to such Participant’s Account among the Investment Alternatives in increments of whole percentages. Such reallocation shall be achieved by submitting an Investment Alternative Change Form to the Committee pursuant to the procedures established by the Committee.

      C. Periodic Credits of Amounts

The Participant’s Excess Contribution Account shall be credited with the amount of the Excess Contribution Amount on the day on which such Excess Contribution Amount would have otherwise been contributed on behalf of the Participant under the Alcon 401(k) Retirement Plan. All periodic credits to a Participant’s Excess Contribution Account shall be accounted for based on the Investment Alternatives selected by the Participant on the Allocation Form or Investment Alternative Change Form. In addition, the Committee, in its sole discretion, may from time to time make Discretionary Contributions to a Participant’s Account.

      D. Increase or Decrease to Account

A Participant’s Excess Contribution Account will be increased or decreased on the last day of each month, in accordance with the Participant’s Investment Alternative election reflected on his or her Allocation Form or Investment Alternative Change Form.

      E. Vesting in the Excess Contribution Account

1. The Participant shall be vested in the Excess Contribution Account according to the following schedule based on the Participant’s Years of Service (“YOS”) as defined under the 401(k) Plan:

If the Participant has...	Then the vested percentage shall be...
Less than 2 YOS	0	%
2 or more YOS but less than 3	20	%
3 or more YOS but less than 4	40	%
4 or more YOS but less than 5	70	%
5 or more YOS	100	%

                                                         2.     In addition, a Participant’s vested percentage shall be one hundred percent (100%) if:

                                                       a.        Such Participant while an Employee-

                                                                   (i)        Attains age 55;

                                                                  (ii)        Dies; or

                                                                 (iii)        Suffers a Disability.

b. Such Participant is terminated from service as a result of the closing of the business unit or facility by which he is employed, provided that he/she continues in the employ of such business unit or facility until such date as his/her Participating Employer releases him/her from employment; or

c. A Change-of-Control occurs while the Participant is an Employee. Change-of-Control means the happening of any of the following:

                       (i)           any “person” including a “group” (as such terms are used in Sections 13(d) and 14(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)), but excluding (i) the Company (ii) any entity controlling, controlled by or under common control with the Company including Nestlé S.A. (Nestlé), (iii) any employee benefit plan of the Company or any such entity, (iv) any entity or group acting to facilitate any initial public offering of the Shares and, (v) with respect to any particular Participant, the Participant and any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which such Participant is a member, and (vi) any acquisition of securities directly from the Company is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of either (i) the combined voting power of the Company’s then outstanding securities or (ii) the then outstanding Shares; or

 (ii)         the consummation of any consolidation or merger of the Company or subsidiary where the shareholders of the Company immediately prior to the consolidation or merger, do not, immediately after the consolidation or merger, beneficially own (as such term is used in Rule 13(d)(3) under the Exchange Act), directly or indirectly, securities representing in the aggregate 51% or more of the combined voting power of the then outstanding voting securities of the corporation issuing cash or securities in the consolidation or merger (or its ultimate parent corporation, if any), except any such transaction with Nestlé or any entity controlled by Nestlé; or

(iii)         any sale, lease, exchange or other transfer (in one transaction or in a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company other than the sale or disposition by the Company of all or substantially all of the Company’s assets either (i) to an entity, at least 51% of the combined voting power of the voting securities of which are beneficially owned by shareholders in substantially the same proportion as their ownership of the Company immediately prior to such sale or (ii) to Nestlé or to an entity controlled by Nestlé, or

(iv)         during any period of two consecutive years commencing on or after January 1, 2002, individuals who, at the beginning of the period, constituted the Board of Directors (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors then in office.

Solely for purposes of this definition the following terms have the meanings set forth below:

(a)         “Board of Directors” means, the Board of Directors of Alcon, Inc.

(b)         “Company” means, Alcon, Inc., the parent Company of Alcon Holdings Inc., a corporation organized in Switzerland, and who shares are traded on the New York Stock Exchange (NYSE) under the symbol ACL, and its subsidiaries, successors and assigns.

(c)         “Shares” means the registered outstanding common stock of Alcon, Inc., CHF 0.20 par value per share.

VII. Method of Distribution

      A. In General

Distribution of a Participant’s Account balance will commence upon the Participant reaching a Distribution Event, and the Participant shall have the ability to elect to receive distribution of his or her Account balance as follows:

1. A lump sum payment, or,

2. In substantially equal annual installments over a predetermined number of years, selected by the Participant. If annual installments are selected by the Participant, the initial installment shall be based on the value of the Participant’s Account, measured just prior to distribution, and shall be equal to 1/n (where ‘n’ is equal to the total number of annual installments not yet distributed). Subsequent installment shall be computed in a consistent fashion, with the measurement date being the anniversary of the original measurement date.

      B. Timing of Payments

The annual installments will commence on the business day coinciding with or next following the April 1st subsequent to the Participant’s applicable Distribution Event and continuing on each April 1st until all annual installments have been distributed. Lump sum distributions shall be paid by the Company no later than thirty (30) days following the applicable Distribution Event.

VIII. Change in Distribution Schedule

A. Death of Participant – In the event of the death of a Participant before distribution of the Participant’s Account balance has commenced or been completed, the Trustee shall pay the remaining balance of any Account in one lump sum, to the individual designated as primary beneficiary on the latest executed Notice of Change of Beneficiary form on file, within a reasonable time period but not later than one hundred (100) days after the date of the Participant’ s death. If the primary beneficiary designated on the latest executed Notice of Change of Beneficiary form is no longer living at the time of the Participant’s death, the Trustee shall pay the remaining Account balance in one lump sum to the individual designated as secondary beneficiary on the latest executed Notice of Change of Beneficiary form on file. If the Secondary Beneficiary designated on the latest executed Notice of Change of Beneficiary form is no longer living at the time of the Participant’s death, the Trustee shall pay the remaining balance of any Account in one lump sum to the Participant’s estate.

If the Participant wishes to change the beneficiary, the Participant may do so at any time by submitting a new Notice of Change of Beneficiary form to the Committee, which form shall become effective upon receipt by the Committee.

B. Change in Distribution Date – If a Participant wishes to modify the payment schedule noted in Section VII, he or she must submit a written petition to the Committee for such change. The Committee has sole discretion in whether to permit the requested change. The written petition must be submitted to the Committee at least one (1) year prior to the date the Participant would otherwise be receiving a distribution in accordance with the most recently executed petition.

C. Early Lump Sum Distribution – Notwithstanding any other provision of this Plan, a Participant may elect to receive a lump sum distribution of all or a portion of the funds accumulated in his or her Account upon submission of a written request and its approval by the Committee; however, the distribution will be subject to a ten (10) percent early withdrawal penalty. The withdrawal penalty is ten (10) percent of the amount of the lump sum distribution and will reduce such distribution. In addition, the Participant shall not be eligible to have his or her Account credited with an Excess Contribution Amount for a period of no less than twelve (12) calendar months following the distribution under this provision.

IX. Offset for Obligations to Company

If the Participant has any debt, obligation or other liability representing an amount owing to the Company or any affiliate of the Company, and if such debt, obligation, or other liability is due and owing at the time benefit payments are payable hereunder, the Company may offset the amount owing it or any affiliate against the amount of benefits otherwise distributable hereunder.

X. Liability of Company

Except as provided below, all contributions and distributions to be made as required by this Plan shall be obligations of the Sponsor. On the basis of the information furnished by the Committee, the Trustee shall keep separate books and records concerning the affairs of each Participating Employer hereunder and as to the accounts and credits of the Participants of each Participating Employer.

XI. Rights of a Participant

Establishment of the Plan shall not be construed as giving any Participant the right to be retained in the Company’s service or employ or the right to receive any benefits not specifically provided by the Plan.

Any amounts due or credited under this Plan will not be segregated from the general funds of the Company, and no Participant will have any claim on any specific assets of the Company. To the extent that any Participant acquires a right to receive benefits under this Plan, his or her right will be no greater than the right of any unsecured general creditor of the Company and is not assignable or transferable except to the Participant’s estate as defined in Section VIII.

XII. Amendment and Termination

The Board may amend, modify, or terminate the Plan at any time. No amendment, modification, or termination shall reduce any benefits accrued or rights entitled to by any Participant prior to such amendment, modification, or termination.

XIII. Determination of Benefits

      See Appendix A.

XIV.     Notices

Notices and elections under this Plan must be in writing. A notice or election is deemed delivered if it is delivered personally or mailed by registered or certified mail to the person at his or her last known business address.

XV. General Provisions

A. Controlling Law – Except to the extent superseded by federal law, the laws of the State of Texas shall be controlling in all matters relating to the Plan, including construction and performance thereof.

B. Captions – The captions of sections and paragraphs of this Plan are for the convenience of reference only and shall not control or affect the meaning or construction of any of its provisions.

C. Facility of Payment – Any amounts payable hereunder to any Participant who is under legal disability or who, in the judgment of the Committee, is unable to properly manage his or her financial affairs may be paid to the legal representative of such Participant or may be applied for the benefit of such Participant in any manner which the Committee may select, and any such payment shall be deemed to be payment for such Participant’s Account and shall be a complete discharge of all liability of the Company with respect to the amount so paid.

D. Withholding of Payroll Taxes – The Company shall withhold from a Participant’s Compensation, all federal, state and local income, employment and other taxes required to be withheld by the Company with respect to any amounts credited or due under the Plan, in amounts and in a manner to be determined in the sole discretion of the Company.

The Company, or the Trustee of the Trust, shall withhold from any distributions made to a Participant under this Plan, all federal, state and local income, employment, and other taxes required to be withheld by the Company or the Trustee of the Trust, in connection with such distributions, in amounts and in a manner to be determined in the sole discretion of the Company and/or the Trustee of the Trust.

E. Administrative Expenses – All expenses of administering the Plan shall be borne by the Company. No part thereof shall be charged against any Participant’s Account or any amounts distributable hereunder.

F. Severability – Any provision of this Plan prohibited by the law of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining provisions hereof.

G. No Liabilities – Except as otherwise expressly provided herein, no member of the Board of Directors of the Company and no officer, employee, or agent of the Company shall have any liability to any person, firm, or corporation based on or arising out of the Plan, except in the case of gross negligence or fraud.

H. Binding on all Successors – In the event of a Change of Control, any surviving or acquiring corporation shall assume the Plan and all obligations hereunder. In the event any surviving or acquiring corporation refuses to assume the terms set out in this section, then each Participant will receive the balance in his or her Account in a single lump sum immediately upon a Change of Control.

I. Section 162(m) Deduction Limitation – In the event the Company would be denied a deduction for amounts otherwise payable in any Plan Year to a Participant under Section VII by reason of the application of section 162(m) of the Code, the Committee, in its sole discretion, may reduce any payment otherwise due to such Participant (but not below zero) to the extent necessary to avoid such application of section 162(m) and such amount not paid and the net appreciation or depreciation credited thereon shall be paid to the Participant in the earliest Plan Year(s) in which payment may be made without application of section 162(m).

XVI. Unfunded Status of Plan

It is the intention of the parties that the arrangements herein described be unfunded for tax purposes and for purposes of Title I of ERISA. Plan Participants have the status of general unsecured creditors of the Company or any Participating Company. The Plan constitutes a mere promise by the Company to make payments in the future.

The Company may establish the Trust(s) with the Trustee, pursuant to such terms and conditions as are set forth in the Trust agreement(s) to be entered into between the Company and the Trustee. The Trust is intended to be treated as a “grantor” trust under the Code and the establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto, and the Trust shall be so interpreted.

XVII. Rights to Benefits

A Participant’s rights’ to benefit payments under the plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant’s beneficiaries.

IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed this the 19th day of December, 2003.

      ALCON HOLDINGS INC.

      By:

      /s/ T.R.G. Sear
      T.R.G. Sear,
     Chairman of the Board
     President and CEO

      By:

      /s/ J.A. Fouse
     Jacqualyn A. Fouse
     Senior V. P., Finance and CFO

Page 1 of 2

APPENDIX A

I. Determination of Benefits

A. Claim – A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Board of the Company related to the Participant at its then principal place of business.

B. Claim Decision – Upon receipt of a claim, the Company shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Company may, however, extend the reply period for an additional ninety (90) days for reasonable cause. If the claim is denied in whole or in part, the Company shall adopt a written report, using language calculated to be understood by the Claimant, setting forth:

                                                      1.        The specific reason or reasons for such denial;

2. The specific reference to pertinent provisions of this Plan upon which such denial is based;

3. A description of any additional material or information necessary for the Claimant to clarify his claim and an explanation why such material or such information is necessary;

                                                     4,           Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

                                                     5,            The time limits for requesting a review.

C. Request for a Review – Within sixty (60) days after the receipt by the Claimant of the written report described above, the Claimant may request in writing that the Board review the determination of the Company. Such request must be addressed to the Board’s principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Board within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

D. Review of Decision – Within sixty (60) days after the Board’s receipt of a request for review, they will review the Company’s determinations. After considering all materials presented by the Claimant, the Board will render a written report, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Plan on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Board will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

EX-4.5

Exhibit 4.5

ALCON SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

FOR

ALCON HOLDINGS INC.

AND

AFFILIATED ENTITIES

EFFECTIVE JANUARY 1, 2004

ALCON SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

FOR

ALCON HOLDINGS INC.

AND

AFFILIATED COMPANIES

EFFECTIVE JANUARY 1, 2004

TABLE OF CONTENTS

ARTICLE I: PLAN DESCRIPTION..............................................................................................I-1
ARTICLE II: DEFINITIONS.........................................................................................................II-1
ARTICLE III: ASERP BENEFITS................................................................................................III-1
ARTICLE IV: VESTING BENEFIT EVENTS AND BENEFIT ACCRUAL RULES...................IV-1
ARTICLE V: CHANGE OF CONTROL BENEFITS....................................................................V-1
ARTICLE VI: FORFEITURES AND COVENANTS APPLICABLE TO RECIPIENTS OF ASERP BENEFITS....................................................................................................................................VI-1
ARTICLE VII: AUTHORITY TO ADMINISTER........................................................................VII-1
ARTICLE VIII: SOURCE OF BENEFITS..................................................................................VIII-1
ARTICLE IX: MISCELLANOUS..................................................................................................IX-1
ARTICLE X: SIGNATURE AND ATTESTATION........................................................................X-1

THE

ALCON SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

FOR

ALCON HOLDINGS INC.

AND

AFFILIATED COMPANIES

EFFECTIVE JANUARY 1, 2004

ARTICLE I: PLAN DESCRIPTION

          The Alcon Supplemental Executive Retirement Plan (ASERP) is an unfunded retirement plan with certain death and disability benefits. Participation is limited to a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ASERP Participants”) of Alcon Holdings Inc. and its related affiliates who adopt the ASERP and agree to pay the amounts necessary to fulfill their obligation for administrative expenses and benefits under ASERP.

END OF ARTICLE I

ARTICLE II: DEFINITIONS

          For purposes of the ASERP, the following definitions shall apply unless the context requires otherwise:

2.01.....“Actuarial Assumptions” means the interest rate, mortality assumptions or any other statistically derived rate or index commonly used by the actuaries for Alcon Holdings Inc. on a consistent basis in determining its accrued liabilities under the ASERP for financial accounting purposes. It is intended that the Moody’s AA Corporate Bond Rate will be the interest rate used for this purpose; however, if GAAP reporting requirements mandate that another interest rate be used to calculate the liabilities under the ASERP, use of such rate will be considered for calculating benefits.

2.02 “Alcon Affiliated Company” means any legal entity directly or indirectly owned or controlled by Alcon Holdings Inc.

                                                                   2.03     "Annual Benefit Accrual Rate" means one point five percent (1.5%).

2.04 “Applicable Penalty Percentage” means the percentage by which an ASERP Participant’s Normal Retirement Benefit will be reduced based upon the ASERP Participant’s age on the date of separation from service as determined pursuant to subparagraph 3.01 (b)(ii).

2.05 “ASERP Benefit(s)” means the Normal Retirement Benefit or Reduced Normal Retirement due an ASERP Participant or Surviving Spouse, as a result of termination of employment of an ASERP Participant with a Vested Benefit, or an Eligible Employee’s Disability or death while employed by an Alcon Affiliated Company or upon a Change of Control.

2.06 “ASERP Committee” means the Chief Executive Officer and Chief Financial Officer of Alcon Holdings Inc. or any other persons appointed by the Board of Directors of Alcon Holdings Inc. who have been delegated authority to administer this ASERP.

2.07 “ASERP Participant” means an Eligible Employee who has been designated as an ASERP Participant by the ASERP Committee in its sole and absolute discretion. An ASERP Participant shall also mean (i) a retired or terminated employee who continues to be entitled to retirement benefits under the ASERP after separation from service and (ii) an individual who was designated as an Eligible Employee but who is no longer designated as such but who has become entitled to a Vested Benefit.

2.08 “Average Annual Compensation” means one-third (1/3) of the ASERP Participant’s aggregate annual base salary in effect the year of such ASERP Participant’s separation from service or Disability and for the two (2) years preceding such ASERP Participant’s separation from service or Disability and the cash performance bonus paid in each of said three (3) years for which the annual base salary is being determined, if any. For a former Eligible Employee, who loses his eligibility, but has a Vested Benefit at the time he/she is no longer an Eligible Employee, Average Annual Compensation shall be one-third (1/3) of the former Eligible Employee’s aggregate annual base salary applicable and cash performance bonus paid, if any, for the last 3 years as an Eligible Employee.

2.09 “Benefit Percentage” means the ASERP Participant’s accrued benefit (as a percentage of Average Annual Compensation) determined by multiplying Years of Service times the Annual Benefit Accrual Rate in accordance with the provisions of this Plan document after the ASERP Participant has a Vested Benefit. The Benefit Percentage may never exceed twenty (20) times the Annual Benefit Accrual Rate.

2.10 “Disability” shall mean a condition arising out of any injury or disease which the disability insurance carrier and/or the employer determines is permanent and prevents an ASERP Participant from engaging in any occupation with an Alcon Affiliated Company commensurate with the ASERP Participant’s education, training, and experience, excluding:

(a) any condition incurred as a result of or incidental to a criminal act perpetrated by the ASERP Participant; and

(b) any condition resulting from excessive use of alcohol, drugs or narcotics or from willful, self-inflicted injury; provided, however, that a condition shall constitute a Disability only if the ASERP Participant incurs such condition prior to the termination of his/her employment with all Alcon Affiliated Companies.

                                                                   2.11 "Early Retirement Age" means age fifty-five (55).

2.12 “Eligible Employee” means an individual employed by an Alcon Affiliated Company who is determined by the ASERP Committee to be a key employee based upon grade level, job duties, and/or job performance and who is not a participant in the Alcon Pharmaceuticals, Ltd. International Umbrella Plan or any other retirement plan sponsored by an Alcon Affiliated Company determined by the ASERP Committee to be similar to or the equivalent of the ASERP. The ASERP Committee may change an individual’s status on a prospective basis at any time from that of an Eligible Employee to an employee who is not an Eligible Employee.

2.13 “Joint & Survivor Payment Option” means an actuarially reduced payment made to an ASERP Participant for the Participant’s life, with subsequent payment, reduced by fifty percent (50%), made to the Participant’s Surviving Spouse until the death of the Surviving Spouse.

                                                                   2.14 "Normal Retirement Age" means age sixty-two (62).

2.15 “Normal Retirement Benefit” means an amount equal to the Benefit Percentage times the ASERP Participant’s Average Annual Compensation less the applicable Social Security Offset.

2.16 “Reduced Normal Retirement Benefit” means the Normal Retirement Benefit reduced by the Applicable Penalty Percentage as determined pursuant to subparagraph 3.01(b).

2.17 “Social Security Offset” means the product of (i) total Years of Service multiplied by two and one-half percent (2.5%) of the ASERP Participant’s annual Social Security benefit. If an ASERP Participant is not eligible to receive Social Security benefits at the time benefits are payable under the ASERP but later becomes entitled to receive Social Security benefits, the amount of the Social Security Offset will be calculated when Social Security benefits begin. Once Social Security benefits have become payable, however, subsequent increases in Social Security benefits shall not cause the amount of the Social Security Offset to be recalculated to reduce the benefits payable under the ASERP. If Social Security benefits are decreased because of a change in dependent status, or if Social Security benefits cease because of a failure to meet Social Security benefit guidelines, the Social Security Offset under the ASERP will be recalculated to reflect those changes assuming entitlement to benefits under this ASERP continues.

                                                                 2.18 “Surviving Spouse” shall mean —

(a) in the case of an ASERP Participant who dies while employed by an Alcon Affiliated Company and prior to commencement of an ASERP Benefit, an individual who was the spouse of such ASERP Participant at the time of his/her death;

(b) in the case of an ASERP Participant who is no longer employed by an Alcon Affiliated Company but has a Vested Benefit that has not yet commenced, an individual who was the spouse of such ASERP Participant both at the time of such ASERP Participant’s termination of employment with the Alcon Affiliated Company and at the time of death; or

(c) in the case of an ASERP Participant whose ASERP Benefit has commenced or who is receiving Disability benefits, an individual who was the spouse of the ASERP Participant both at the time such ASERP Participant’s ASERP Benefit or Disability benefit commenced, and at the time of the ASERP Participant’s death.

2.19 “Vested Benefit” means that an ASERP Participant has accumulated ten (10) Years of Service, has died or become Disabled while an Eligible Employee and while employed, or that there is a Change of Control as provided in Article V when the ASERP Participant is an Eligible Employee. An ASERP Participant’s Vested Benefit is subject to the forfeiture provisions and limitations set forth in Article VI.

                                                  2.20 "Year of Service" means the following:

(a) the calendar year in which an ASERP Participant is designated as an Eligible Employee

(b) each calendar year in which the individual continues to be designated as an Eligible Employee subsequent to such calendar year of entry, including any periods of Disability;

(c) the calendar year of an Eligible Employee’s termination, retirement, or death (collectively, the “events”) if the first of the events occurs on or after July 1 of such calendar year; if the first of the events occurs on or before June 30 of such calendar year, then the year shall not constitute a “Year of Service”; and

(d) one (1) year for every five (5) years of employment with any Alcon Affiliated Company and/or any entity (incorporated or unincorporated) acquired by an Alcon Affiliated Company. A year of employment shall be 365 days of employment. Years of employment shall be counted from the first day of employment to the day before the first date that an individual is designated as an Eligible Employee. Notwithstanding the foregoing, ASERP Participants who have at least five (5) years of employment with an Alcon Affiliated Company before the first date designated as Eligible Employees shall have years of employment counted from the first day of such employment through the end of the first year of designation as an Eligible Employee.

The maximum number of Years of Service that can be recognized under the ASERP is twenty (20).

END OF ARTICLE II

ARTICLE III: ASERP BENEFITS

                                                                   3.01 Benefits. .........

(a) Normal Retirement Benefit. ASERP provides a Normal Retirement Benefit to each ASERP Participant who separates from service at or after attaining Normal Retirement Age provided such ASERP Participant has a Vested Benefit and does not violate the covenants set forth or otherwise forfeit his Benefit as set forth in Article VI.

(b) Reduced Normal Retirement Benefit. ASERP provides a Reduced Normal Retirement Benefit to each ASERP Participant who separates from service with a Vested Benefit prior to having attained Normal Retirement Age and does not violate the covenants set forth or otherwise forfeit his ASERP Benefit as set forth in Article VI.

(i) Calculation of Reduced Normal Retirement Benefit. The Reduced Normal Retirement Benefit is calculated by reducing the ASERP Participant’s Average Annual Compensation by the Applicable Penalty Percentage then multiplying such reduced Average Annual Compensation by the ASERP Participant’s Benefit Percentage and reducing such amount by the Social Security Offset.

(ii)         Applicable Penalty Percentage. The Applicable Penalty Percentage is as follows:

AGE AT SEPARATION FROM SERVICE (DEATH)	APPLICABLE PENALTY
61	4	%
60	8	%
59	12	%
58	16	%
57	20	%
56	25	%
55	30	%

                                                    (c) Death Benefits.

(i) ASERP provides a death benefit if an Eligible Employee dies prior to separation from service and is survived by a Surviving Spouse.

(ii) A Surviving Spouse’s Reduced Normal Retirement Benefit death benefit shall begin as soon as administratively practicable after the ASERP Participant’s death. The amount of the deceased ASERP Participant’s benefit shall be determined pursuant to subparagraph 3.01(b).

                                                     (d) Disability Benefits.

(i) Eligible Employee Approved for Long Term Disability. If an Eligible Employee suffers a Disability while employed by an Alcon Affiliated Company, ASERP Benefits shall begin (A) when the ASERP Participant attains Normal Retirement Age, or (B) if earlier, when benefits payable under an Alcon Affiliated Company’s long term disability plan or program cease. An ASERP Participant who is receiving benefits under an Alcon Affiliated Company’s long term disability plan or program at Normal Retirement Age will have his ASERP Benefits reduced dollar-for-dollar by such long term disability benefits. ASERP Benefits paid before Normal Retirement Age shall be subject to the Applicable Penalty Percentage.

(ii) ASERP Participant No Longer Disabled. Notwithstanding the foregoing provisions of this paragraph, if the ASERP Participant, subsequent to approval for long term disability coverage under the long term disability plan or program maintained by an Alcon Affiliated Company, is medically certified as no longer disabled and chooses not to resume employment with an Alcon Affiliated Company such ASERP Participant shall be deemed to have terminated employment as of the date of such certification and shall no longer accrue any benefits under ASERP.

                                                                 3.02 Cost of Living Adjustment. All ASERP Benefit payments shall be increased by a Cost of Living Adjustment  as follows:

(a) Each January 1, the ASERP Benefit shall be increased by an annual percentage adjustment equal to the greater of (i) one and one-half percent (1.5%) or (ii) any cost-of-living adjustment taking effect on or immediately prior to such January 1 under Section 215(i) of the United States Social Security Act (relating to a cost-of-living increase) for benefits under Title II of such Act (relating to Federal old-age, survivors, and disability insurance benefits). The percentage adjustment shall be compounded annually. Any applicable percentage adjustment shall commence not earlier than the January payment immediately following the commencement of ASERP Benefits.

(b) Notwithstanding the provisions of the foregoing subparagraph 3.02(a), in the event that other than an annual percentage becomes applicable for purposes of Section 215(i) of the Social Security Act or the cost-of-living adjustment becomes effective on a date other than January 1, the annual percentage adjustment for ASERP Benefit payment purposes shall be redetermined and applied as of the date the adjustment becomes effective for benefits under Title II of the Social Security Act. If more than one rate is applicable for a calendar year, the rates should be combined or averaged, as the case may be, so that compounding occurs not more than annually. However, the annual percentage adjustment may never be less than one and one-half percent (1.5%).

3.03      Payment of Benefit. Unless a lump sum payment is chosen pursuant to subparagraph 3.04(b), ASERP Benefits shall be paid to the ASERP Participant each year in equal semi-monthly installments until and including the month in which such ASERP Participant shall die. Such installments shall commence not later than the first day of the second month after such ASERP Participant’s employment by any and all Alcon Affiliated Companies has terminated. Notwithstanding the foregoing, if the ASERP Participant terminates employment prior to attaining Early Retirement Age, ASERP Benefit payments shall commence the first day of the second month following ASERP Participant’s attainment of Early Retirement Age. Payments to the Surviving Spouse of a retired or terminated ASERP Participant who has elected the Joint & Survivor payment option shall begin as soon as administratively practicable, but not earlier than the date the ASERP Participant would have attained Early Retirement Age. If an ASERP Participant elects a lump sum payment, the payment shall be made not later than the first day of the second month after such ASERP Participant’s employment by any and all Alcon Affiliate Companies has terminated, unless the ASERP Participant terminates employment prior to attaining Early Retirement Age, in which case the lump sum payment shall be made on the first day of the second month following the ASERP Participant’s attainment of Early Retirement Age.

                                                                    3.04 Benefit Payment Options. Upon being designated as an Eligible Employee, each

ASERP Participant shall file with the ASERP Committee a written election of the form of benefit, from among the options set forth in this Article III. Any such election must be made within 6 months after the date on which such Eligible Employee’s participation hereunder first commences, and, except as expressly provided otherwise herein, shall be irrevocable; provided, however, that an ASERP Participant may change such election once during any year, with the new election to be effective for a distribution arising from termination of employment only if such distribution is to be made or commence more than twelve (12) months after the date of the new election. The ASERP Committee shall, as of the last day of the month within which the ASERP Participant terminates employment, certify to the employer the method of payment selected by the ASERP Participant.

(a) Normal Form of Payment. The normal form of benefit payment is a single life annuity. That is, the Normal Retirement Benefit or the Reduced Normal Retirement Benefit will be paid for the life of the ASERP Participant.

(b) Lump Sum Payment. An ASERP Participant may elect to receive a lump sum payment equal to the present value of the ASERP Participant’s ASERP Benefit. Such election can be made at anytime permitted by this Section. Payment of the lump sum amount may be made as of the first date that benefits would be paid under the ASERP pursuant to paragraph 3.03. The lump sum payment shall be the present value of the actuarial equivalent of the single life annuity otherwise payable under paragraph 3.04(a), determined using the Actuarial Assumptions.

(c) Joint & Survivor Payment. An ASERP Participant who is married at the time of retirement or separation from service may elect to receive his/her ASERP Benefit as a Joint & Survivor Annuity. The Joint & Survivor Annuity shall consist of an immediate annuity for the life of the ASERP Participant, with a survivor annuity for the life of his/her Surviving Spouse which is equal to fifty percent (50%) of the amount of the payment made to the ASERP Participant during his/her life. The Joint & Survivor Annuity shall be the actuarial equivalent of the single life annuity otherwise payable under paragraph 3.04(a), determined using the Actuarial Assumptions.

                                                                     3.05 Lump Sum Payment Election and Penalty. A lump sum payment other than elected pursuant to paragraph 3.04 above shall be available only with the written approval of the ASERP Committee. An ASERP Participant or a Surviving Spouse who has commenced receiving an ASERP Benefit, or is eligible to do so, may make an irrevocable election to receive, in lieu of continued annuity payments, a lump sum payment with an actuarial present value of the then remaining ASERP Benefit, reduced by ten percent (10%). The calculation of such lump sum amount shall be based on the Actuarial Assumptions. This election must be in writing, and will be effective as soon as administratively feasible following the date the election is received and approved by the ASERP Committee.

END OF ARTICLE III

ARTICLE IV: VESTED BENEFIT EVENTS AND BENEFIT ACCRUAL RULES

        [This Article IV was intentionally left blank.]

END OF ARTICLE IV

ARTICLE V: CHANGE OF CONTROL BENEFITS

      5.01    Benefit Upon Change of Control.

(a) Credited Service. An Eligible Employee who is employed by an Alcon Affiliated Company on the date of a Change of Control shall be deemed to have a Vested Benefit. The Benefit Percentage for such Vested Benefit shall be equal to the product of (i) the ASERP Participant’s Years of Service as of the date of the Change of Control multiplied by (ii) the Annual Benefit Accrual Rate.

                                                         (b)        “Change of Control” means the happening of any of the following: (i) any “person” including a “group” (as  such terms are used in Sections 13(d) and 14(d) of the U.S.

Securities Exchange Act of 1934, as amended (the “Exchange Act”)), but excluding (i) the Company, (ii) any entity controlling, controlled by or under common control with the Company including Nestlé S.A. (Nestlé), (iii) any employee benefit plan of the Company or any such entity, (iv) any entity or group acting to facilitate any initial public offering of the Shares and, (v) with respect to any particular Participant, the Participant and any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which such Participant is a member, and (vi) any acquisition of securities directly from the Company is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of either (i) the combined voting power of the Company’s then outstanding securities or (ii) the then outstanding Shares; or

(ii) the consummation of any consolidation or merger of the Company or subsidiary where the shareholders of the Company immediately prior to the consolidation or merger, do not, immediately after the consolidation or merger, beneficially own (as such term is used in Rule 13(d)(3) under the Exchange Act), directly or indirectly, securities representing in the aggregate 51% or more of the combined voting power of the then outstanding voting securities of the corporation issuing cash or securities in the consolidation or merger (or its ultimate parent corporation, if any), except any such transaction with Nestlé or any entity controlled by Nestlé; or

(iii) any sale, lease, exchange or other transfer (in one transaction or in a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company other than the sale or disposition by the Company of all or substantially all of the Company’s assets either (i) to an entity, at least 51% of the combined voting power of the voting securities of which are beneficially owned by shareholders in substantially the same proportion as their ownership of the Company immediately prior to such sale or (ii) to Nestlé or to an entity controlled by Nestlé, or

iv)         during any period of two consecutive years commencing on or after January 1, 2002, individuals who, at the beginning of the period, constituted the Board of Directors (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors then in office.

Solely for purposes of this definition the following terms have the meanings set forth below:

a.) “Board of Directors” means, the Board of Directors of Alcon, Inc.

b.) “Company” means, Alcon, Inc., the parent Company of Alcon Holdings Inc., a corporation organized in Switzerland, the shares of which are traded on the New York Stock Exchange (NYSE) under the symbol ACL, its subsidiaries, successors and assigns.

c.) “Shares” means, the registered common stock, CHF 0.20 par value per share of Alcon, Inc.

(c) Benefit. Upon a Change of Control an Eligible Employee’s ASERP Benefit shall commence to be paid not earlier than (i) the first day of the second month following the Change of Control, (ii) the first day of the month following the ASERP Participant’s attainment of age fifty (50), or (iii) upon termination of employment with the successor entity, whichever is later. The provisions of this Article V supersede all other provisions of the ASERP regarding benefit calculation and payment (except that paragraph 3.02 shall continue to apply to all benefit amounts from the date of Change of Control); however, this Article V does not affect ASERP Benefits of ASERP Participants or Surviving Spouses being paid or pending ASERP Benefits of ASERP Participants who separated from service prior to Early Retirement Age and before the Change of Control. An ASERP Participant who does not already have an effective lump sum election in place may elect to receive an immediate lump sum payment of any ASERP Benefit due as a result of this Article V. Such lump sum must be requested in writing. The lump sum amount shall be the present value of the actuarial equivalent of the Participant’s ASERP Benefit (in the form of a single life annuity), determined using the Actuarial Assumptions, reduced by ten percent (10%). Payment of the calculated lump sum shall be made as soon as administratively feasible following termination of employment, regardless of age.

(d) At the time of a Change of Control, the Alcon Affiliated Companies shall establish a grantor trust and contribute to said trust the present value as of the Change of Control of accrued ASERP Benefits (based on the Actuarial Assumptions) for the purpose of holding assets for the payment of ASERP Benefits to Participants. If such trust has been previously established, the Alcon Affiliated Companies shall contribute the amount necessary such that the assets of the trust are not less than the present value as of the Change of Control of accrued ASERP Benefits.

END OF ARTICLE V

ARTICLE VI: FORFEITURES AND COVENANTS APPLICABLE

TO RECIPIENTS OF ASERP BENEFITS

                                                  6.01 Limitations and Forfeiture of Right to Benefits.

(a) If an ASERP Participant’s employment is terminated voluntarily or involuntarily prior to accruing a Vested Benefit, such ASERP Participant forfeits all rights to the benefits provided by ASERP.

(b) If an ASERP Participant ceased to be an Eligible Employee prior to accruing a Vested Benefit, such ASERP Participant forfeits all rights to benefits provided by ASERP.

(c) If an ASERP Participant has chosen to participate in the Alcon Pharmaceuticals Ltd. International Umbrella Plan or any other retirement plan sponsored by an Alcon Affiliated Company determined by the ASERP Committee to be similar to or the equivalent of ASERP, such ASERP Participant forfeits all rights to the benefits provided by ASERP.

                                                                  6.02 Covenants

(a) Confidential Information. ASERP Participants will, in the course of performing and fulfilling their duties, have access to and be entrusted with confidential information concerning the present and contemplated activities of, the techniques and modes of business operations evolved and used or to be evolved and used by any Alcon Affiliated Company and their respective customers and clients, which information is not generally known in the industry in which they do business, the disclosure of any of which confidential information to competitors or to other persons would be highly detrimental to the interests of the Alcon Affiliated Companies (the “Confidential Information”). As a condition to receipt of ASERP Benefits, each Participant will not directly or indirectly disclose or make any use of the Confidential Information without the written consent of the Alcon Affiliated Companies for himself or any third parties, and will return the originals and all copies of any documents or other media containing Confidential Information in his possession or under his control to the Alcon Affiliated Companies; provided, however that the Participant shall not be prohibited from using the personal skills and know-how developed by him during the term of his employment, and subject to the provisions of this Article VI, the Participant shall be allowed to pursue a career and earn his livelihood after the termination of his employment, through the use of such general skills and know-how he has obtained (but not any Confidential Information) before and during his employment without the express consent of, or any liability to, the Alcon Affiliated Companies. In the event of any actual or threatened violation of the provisions of this Article VI, the Alcon Affiliated Companies may commence proceedings in any court of competent jurisdiction for, and shall be entitled to obtain, preliminary and permanent injunctive relief or other appropriate equitable remedies (without any bond or other security being required) and an accounting of all profits and benefits arising out of such violation, which rights and remedies shall be in addition to any other rights or remedies to which the Alcon Affiliated Companies may be entitled at law.

(b) Non-Solicitation. As a condition to receipt of ASERP Benefits, each Participant shall not, without the prior written consent of the Alcon Affiliated Companies, engage in any of the conduct described in subparagraphs (1) and (2) below, either directly or indirectly or in any capacity for any person, firm, partnership, corporation or other entity:

                        (1)         Directly or indirectly hire, attempt to hire, or assist any other person or entity in hiring or attempting to hire any current employee of the Alcon Affiliated Companies or any person who was such an employee within the 12-month period prior to the termination of the Participant’s employment; or

(2)         Directly or indirectly solicit, divert or take away, in competition with the Alcon Affiliated Companies, the business or patronage of any current customer.

                                               6.03 Covenant Not to Compete. As an ancillary covenant to the terms and conditions set

 forth above, and in consideration of the access to Confidential Information, and as a condition to receipt          of  ASERP Benefits, for a period of five (5) years following termination of employment, each Participant will not (without the prior written consent of the Alcon Affiliated Companies) either individually or in partnership or in conjunction with any other person or entity, as principal, agent, shareholder, guarantor, creditor, employee, consultant or in any other manner whatsoever, carry on any business of, or be engaged in, consult or advise, lend money to, guarantee the debts or obligations of, or permit his name or any part thereof to be used by, any person or entity engaged in or concerned with or interested in any business carried on, anywhere in which the Alcon Affiliated Companies carry on their businesses, which competes with the products manufactured and sold or services provided by the Alcon Affiliated Companies (the “Business”). If the Participant violates the Covenant Not To Compete set forth herein, he or she shall forfeit all ASERP Benefits. The ASERP Committee shall make the determination of whether a terminated ASERP Participant’s post-termination activities violate this covenant.

                                              6.04 Forfeiture based on Felony Conviction. If an ASERP Participant who has a Vested

Benefit is terminated voluntarily or involuntarily from employment with any Alcon Affiliated Company for reason of activity or conduct which results in a felony conviction or a plea of nolo contendere to a felony, under the law of any jurisdiction, such ASERP Participant shall forfeit all right to benefits under the ASERP at the discretion of the ASERP Committee.

END OF ARTICLE VI

ARTICLE VII: AUTHORITY TO ADMINISTER

7.01 The Board of Directors of Alcon Holdings Inc. shall have the right, at any time, to amend or terminate the ASERP, except that it may not terminate a Vested Benefit hereunder except as provided in Article VI.

7.02 Neither the ASERP Committee nor any members of the Board of Directors of any Alcon Affiliated Company shall be liable to any person for any action taken or omitted in connection with the administration or interpretation of the ASERP.

7.03 Subject to the limitations herein set forth, the ASERP Committee shall establish from time to time the rules or regulations for the administration of the ASERP and the transaction of its business, provided that no such rule or regulation shall be contrary to the specific provisions of the ASERP. The ASERP Committee has full discretion to interpret the ASERP, to determine whether a claimant is eligible for benefits; to decide the amount, form, and timing of benefits; and to resolve any other matter under the ASERP which is raised by a claimant or identified by the ASERP Committee. The ASERP Committee shall determine all questions arising from or in connection with the provisions of the ASERP and its administration, and any determination so made shall be final, conclusive and binding upon all persons affected thereby.

(a) Claims under the ASERP by an ASERP Participant or anyone claiming through an ASERP Participant (hereinafter referred to as a “Claimant”) shall be presented to the ASERP Committee in writing, which shall either arrange for payment of the claim or otherwise dispose of it. Upon receipt of a claim, the ASERP Committee shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The ASERP Committee may, however, extend the reply period for an additional ninety (90) days for reasonable cause. If the claim is denied in whole or in part, the ASERP Committee shall adopt a written report, using language calculated to be understood by the Claimant, setting forth:

(i) The specific reason or reasons for such denial;

(ii) The specific reference to pertinent provisions of the ASERP upon which such denial is based;

(iii) A description of any additional material or information necessary for the Claimant to clarify his/her claim and an explanation why such material or such information is necessary;

(iv) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

(v) The time limits for requesting a review.

(b) Any person whose claim for benefits has been denied may, within sixty (60) days after receipt of notice of denial, submit a written request for review of the decision denying the claim. In such case, the ASERP Committee shall make a full and fair review of such decision within sixty (60) days after receipt of a request for review and notify the claimant in writing of the review decision, specifying the reasons for such decision. If Claimant does not request a review of the ASERP Committee’s determination within such sixty (60) day period, he/she shall be barred and estopped from challenging the ASERP Committee’s determination.

7.04 Communications to the ASERP Committee shall be addressed to the Chairman of the ASERP Committee, 6201 South Freeway, Fort Worth, Texas 76134. The Secretary of the ASERP Committee is hereby designated as agent for service of legal process with respect to any claims arising under the ASERP.

END OF ARTICLE VII

ARTICLE VIII: SOURCE OF BENEFITS

8.01 Benefits Payable from General Assets. Benefits payable under the ASERP shall be paid exclusively from the general assets of the Alcon Affiliated Company(ies) which is (or was) the employer of the ASERP Participant, and no person entitled to payment under the ASERP shall have any claim, right, priority, security interest, or other interest in any fund, trust, account, or other asset of the Alcon Affiliated Companies that may be looked to for such payment. The liability for the payment of benefits hereunder shall be evidenced only by the ASERP and by the existence of a book reserve established and maintained by the Alcon Affiliated Companies for purposes of the ASERP.

                                                 8.02 Investments to Facilitate Payment of Benefits. Although the Alcon Affiliated

Companies are not obligated to invest in any specific asset or fund in order to provide the means for the payment of any liabilities under the ASERP, they may elect to do so. In such event, the Participant shall not have any interest whatever in such asset or fund. Although the Alcon Affiliated Companies may earmark, invest or segregate assets representing its commitment to the Participant under the ASERP, no such action shall give the Participant or any person claiming through him any claim to any such earmarked or segregated account or investment asset at any time or any security for the payment of benefits. All such investments and accounts shall remain the general assets of the Alcon Affiliated Companies. Similarly, no investment earnings, increases or gains realized or unrealized upon any such earmarked or segregated account or investment shall inure to the benefit of the Participant directly or indirectly, but all shall remain the property of the Alcon Affiliated Companies. In addition, benefits payable under the terms of the ASERP shall not be limited or governed in any way by the value or proceeds of any such asset or its earnings. All Participants shall in all events have the status of general unsecured creditors of the Alcon Affiliated Companies, and the ASERP shall constitute a mere unsecured promise to make benefit payments in the future.

To the extent that funds are actually invested, earmarked and/or segregated for the purpose of payment of an Alcon Affiliated Company’s obligations under the ASERP, (1) no trust or secured arrangement shall be deemed to have been created because of such investment, earmarking or segregation, (2) all earnings, gains, losses and expenses experienced on such investments shall remain the property of the Alcon Affiliated Companies and shall have no effect on the Alcon Affiliated Company’s obligations to the Participant, and (3) all such assets or funds shall remain subject to the claims of the Alcon Affiliated Company’s general creditors.

                                                 8.03 Unfunded Plan. It is the intention of the Alcon Affiliated Companies that the

 ASERP and the benefits provided hereunder be administered as an unfunded pension benefit plan  for federal income tax purposes and established and maintained for members of a select group of management or highly compensated employees as described in Sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974 (“ERISA”). The employers and the Committee shall comply in all respects with the requirements imposed by ERISA upon such plans.

END ARTICLE VIII

ARTICLE IX: MISCELLANOUS

9.01 The ASERP Participant’s ASERP Benefit granted hereunder or any interest therein is not transferable or assignable and shall not be subject to alienation, encumbrance, garnishment, attachment, execution, or levy of any kind, voluntary or involuntary, except when, where, and if compelled by any applicable law.

9.02 As used in this ASERP, reference to any gender shall include the masculine and feminine genders, and defined terms shall include the singular or plural, as appropriate.

9.03 The obligations of Alcon and/or any Alcon Affiliated Company under the ASERP shall be binding upon its successors and assigns.

9.04 In the event that any provision of the ASERP is determined by any judicial, quasi-judicial, or administrative body to be invalid or unenforceable for any reason, all other provisions of the ASERP shall remain in full force and effect as if such provision had never been a part of the ASERP.

9.05 Nothing herein shall be construed as an offer or commitment by Alcon and/or any Alcon Affiliated Company to continue any ASERP Participant’s employment for any period of time.

9.06 Amounts paid to an ASERP Participant or if the Joint & Survivor Payment Option is elected by the Participant, his/her designated Surviving Spouse under the ASERP shall be net of any taxes or other amounts required to be withheld by the payor under any applicable law, rule, or regulation.

         9.07 This writing constitutes the final and complete embodiment of the terms of the ASERP.

END ARTICLE IX

X-1

ARTICLE X: SIGNATURE AND ATTESTATION

        Effective as of the 1st day of January, 2004.

ALCON HOLDINGS INC.

By: /s/ T.R.G. Sear
T.R.G. Sear,
Chairman of the Board, Chief Executive Officer and President of Alcon Laboratories, Inc.
and Chief Executive Officer, and President of the Management Group

Date: December 19, 2003

By: /s/ J. A. Fouse
Jacqualyn Fouse,
Sr. Vice President, Finance and Chief Financial Officer

Date: December 19, 2003

ATTEST:

/s/ Elaine E. Whitbeck
Elaine E. Whitbeck, Vice President, AssociateGeneral
Counsel/Assistant Secretary

EX-4.8

Exhibit 4.8

SERVICES AGREEMENT

This Services Agreement (the “Agreement”) is made and entered into as of this .1st day of January, 2003, by and between

NESTLÉ S.A., a Swiss corporation whose address is 55 avenue Nestlé, CH-1800 Vevey, Switzerland (“Nestlé”)

and

ALCON, INC., a Swiss corporation whose address is Bösch 69, CH-6331 Hünenberg, Switzerland (“Alcon”).

WHEREAS, Nestlé has agreed to provide treasury and investment services to Alcon on the terms and conditions set forth in this Services Agreement.

NOW, THEREFORE, Nestlé and Alcon do hereby mutually agree as follows:

1. Provision of Services

1.1 During the Term of this Agreement (as defined in Clause 2), Nestlé shall, in the name and on behalf of Alcon, invest funds entrusted to it by Alcon and manage the investment portfolio so constituted (the “Services”). Such funds (the “Capital”) managed by Nestlé shall at all times remain the property of Alcon. Any company directly or indirectly controlled by Alcon which wishes, with Nestlé’s agreement, to benefit of the Services (“Alcon Affiliate”) shall be covered by the terms and conditions of this Agreement. All payments due under Clause 3 below shall be made by Alcon for itself and for the Alcon Affiliates.

1.2 Subject to any limitation contained in this Agreement or communicated in writing by Alcon to Nestlé, Alcon hereby gives Nestlé full power, and expressly authorizes Nestlé, to act and invest in the name and on behalf of Alcon. Such power and authorization is strictly limited to any action taken by Nestlé for the purpose of rendering the Services under this Agreement.

1.3 In rendering the Services under this Agreement, Nestlé will follow the Nestlé Money Market Investment Guidelines and the Nestlé Treasury Money Market Limits.

1.4 Alcon shall communicate to Nestlé its instructions, which Nestlé is bound to follow, in terms of: — currency and capital of the portfolio, — minimum and maximum duration of the investment, — counterpart limits (name, rating, amounts), — portfolio benchmark.

In case Alcon’s instructions contradict Nestlé’s rules and guidelines under Subclause 1.3, Alcon’s instructions shall govern. However, Nestlé shall not be bound by any instruction from Alcon regarding the choice of investment instruments used to render the Services, which shall be determined solely by Nestlé.

1.5 The parties agree that Nestle may furnish the Services through affiliates of Nestle.

2. Term

The “Term” of this Agreement shall be the period commencing on the date hereof and ending on any termination date specified in a written notice from one party to the other sixty (60) days in advance of such termination.

3. Consideration

In consideration of the Services furnished, Alcon shall pay Nestlé 10 basis points (“bps”) for a total Capital up to and including USD 500 mio (or equivalent) and 7 bps if the total Capital exceeds USD 500 mio (or equivalent) (the “Fees”).

4. Expenses

Alcon shall bear the cost of, and shall promptly reimburse Nestlé for, all reasonable out-of-pocket costs incurred by Nestlé personnel in connection with furnishing the Services to Alcon and its affiliates, including but not limited to photocopying, telephone, telefax, postage, delivery costs, transportation and travel costs (airfare to be agreed in advance on a case by case basis) and out of town lodging and meal expenses.

5. Invoicing and Payment

During each quarter, Nestlé shall invoice Alcon for the Services rendered during the previous quarter. The invoice shall include the Fees and the expenses incurred by Nestlé during the previous quarter in rendering the Services. Alcon shall pay the total invoiced amount to Nestlé within thirty (30) days from the date of invoice.

6. Liability

Nestlé shall not be held liable for any damages suffered by Alcon arising from the rendering of the Services by Nestlé, unless Nestlé has acted in reckless disregard of the instructions given by Alcon as per Clause 1.4, in which case Nestlé shall only be liable for direct damages incurred by Alcon (excluding in particular any consequential or incidental damages or lost profits).

7. Confidentiality

Each party hereby agrees to keep, hold and maintain in confidence all information of every kind and character of the other party that it may receive or collect, whether directly or indirectly, in the performance of the Services. The parties agree to use all reasonable efforts to neither directly nor indirectly disclose such information to any third party outside of Nestlé or Alcon.

8. Notices

Any notices required or permitted to be given hereunder shall be in writing and shall be directed to the address of the receiving party as written above and to the attention of:

   if to Nestlé: Group Treasurer

   if to Alcon: Head of Finance

or to such other persons or addressees as either party may from time to time designate by a subsequent notice in writing to the other.

9. Applicable Law

This Services Agreement is governed by the laws of Switzerland. In particular, the provisions on the ordinary mandate (articles 394 ff) of the Swiss Code of Obligations shall apply.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized representatives as of the date first above written.

NESTLE S.A.                               ALCON, INC.

/s/ Philippe Blondiaux                               /s/ Guido Koller

Philippe Blondiaux                                  Guido Koller
Vice President, Group Treasurer           General Manager

                                                                     /s/ Stefan Basler

                                                                     Stefan Basler
                                                                    Finance Manager

EX-8.1

Exhibit 8.1

Entity	Jurisdiction of Incorporation	Names Under Which the Entities Conduct Business
N.V. Alcon Coordination Center	Belgium	N/A
Alcon Credit Corporation	Canton of Zug, Switzerland	N/A
Alcon Holdings Inc.	State of Delaware, U.S.A.	N/A
Alcon Laboratories, Inc.	State of Delaware, U.S.A.	N/A
Alcon Pharmaceuticals, Inc.	State of Delaware, U.S.A.	N/A
Alcon Pharmaceuticals Ltd.	Canton of Zug, Switzerland	N/A
Alcon RefractiveHorizons, Inc.	State of Delaware, U.S.A.	N/A

EX-12.1

Exhibit 12.1

CHIEF EXECUTIVE OFFICER

CERTIFICATION

I, Timothy R. G. Sear, certify that:

1. I have reviewed this annual report on Form 20-F of Alcon, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 12, 2004

      /s/ T.R.G. Sear
      Timothy R.G. Sear nbsp;     
     Chairman, President & Chief ExecutiveOfficer

EX-12.2

Exhibit 12.2

CHIEF FINANCIAL OFFICER

CERTIFICATION

I, Jacqualyn A. Fouse, certify that:

1. I have reviewed this annual report on Form 20-F of Alcon, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 12,  2004

      /s/ Jacqualyn A. Fouse
     Jacqualyn A. Fouse,
    Senior Vice President, Finance and Chief  Financial Officer

EX-13.1

Exhibit 13.1

Certification Pursuant to

        Rule 13a-14(b) (17 CFR240.13a-14(b)) or Rule 15d-14(b) (17 CFR240.15d-14(b))

and Section 1350 of Chapter 63 of Title 18 of the United States Code

(18 U.S.C. Section 1350)

        In connection with the Annual Report on Form 20-F of Alcon, Inc., a corporation organized under the laws of Switzerland (the “Company”), for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certify pursuant to Rule 13a-14(b) (17 CFR240.13a-14(b)) or Rule 15d-14(b) (17 CFR240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as to such officer’s best knowledge, that:

1.) the Report fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Report.

        The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not intended to be used or relied upon for any other purpose.

Dated: March 12, 2004                                             /s/ T. R. G. Sear
                                                                         Timothy R.G. Sear 

Chairman, President & Chief Executive Officer

Dated: March 12, 2004                                                      /s/ Jacqualyn A. Fouse
                                                                                                Jacqualyn A. Fouse

                                                                                                 Senior Vice President, 
                                                                                               Finance and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Alcon, Inc. and will be retained by Alcon, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-14.1

Exhibit 14.1

Consent of Independent Auditors

The Board of Directors
Alcon, Inc.:

We consent to incorporation by reference in the registration statements on Form S-8 (Nos. 333-11145, 333-100746 and 333-86882) of Alcon, Inc. of our report dated January 30, 2004, except for note 20 which is as of February 11, 2004, relating to the consolidated balance sheets of Alcon, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of earnings, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2003, which report appears in the December 31, 2003 annual report on Form 20-F of Alcon, Inc. Our report dated January 30, 2004 contains an explanatory paragraph that states that the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," as required for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001.

KPMG LLP

Fort Worth, Texas

March 11, 2004