EX-99.1 2 acl6kprq22009results991.htm PRESS RELEASE acl6kprq22009results991.htm


Exhibit 99.1
 
 
 
 
Alcon Reports Solid Financial Results for Second Quarter
 

Second Quarter Highlights
·  
Organic sales growth was 3.3 percent in second quarter (-3.4 percent reported)
 
·  
Cost management programs contributed to earnings per share of $1.94
 
·  
Operational leverage continued as earnings per share rose 3.2  percent
 
·  
Management raises full year earnings per share guidance
 

HUENENBERG, Switzerland – July 22, 2009 – Alcon, Inc. (NYSE:ACL) reported global sales of $1,677 million for the second quarter of 2009, a 3.3 percent increase excluding the impact of foreign exchange fluctuations, or a decrease of 3.4 percent compared to the second quarter of 2008 on a reported basis. Net earnings for the second quarter of 2009 rose 2.6 percent to $582 million, or $1.94 per diluted share, compared to $567 million, or $1.88 per diluted share, in the second quarter of 2008.
“Organic sales growth is coming in as expected in 2009, as we continue to execute our sales and marketing strategies that allow us to grow even in the face of global economic weakness,” said Kevin Buehler, Alcon’s president and chief executive officer. “We expect that further development of key businesses like glaucoma, advanced technology intraocular lenses and emerging markets will enable us to achieve our full year guidance of mid-single digit organic sales growth with somewhat higher organic growth in the second half of the year than in the first, and to translate that growth into solid earnings performance.”

Sales Highlights
Summarized below are the key drivers of sales in the second quarter of 2009.  All growth comparisons are for the second quarter of 2009 compared to the second quarter of 2008.  Organic sales growth rates exclude currency impacts and acquisitions and are non-GAAP measures that are reconciled in a table at the end of this release.
 
Ø  
International organic sales growth was 5.9 percent (-6.4 percent reported), with emerging markets rising 8.1 percent organically (-8.2 percent reported).
 
Ø  
U.S. sales stabilized as they increased 0.3 percent due to strong contributions from advanced technology AcrySof® intraocular lenses and share gains and market growth in glaucoma offset by generic competition to TobraDex® ophthalmic suspension.
 
Ø  
Advanced technology intraocular lenses rose 38.3 percent organically, (+30.1 percent reported) due to market share gains by the AcrySof® ReSTOR® Aspheric +3.0 lens, which was launched in the United States in January of 2009, and the continued rapid adoption of AcrySof® IQ Toric by cataract surgeons.
 
Ø  
Glaucoma sales rose 16.6 percent organically (+8.3 percent reported) led by a 23.6 percent organic rise (+15.4 percent reported) in global sales of TRAVATAN®, TRAVATAN Z® and DuoTravTM ophthalmic solutions, as these products continued global market share growth in the prostaglandin category.  The launch of Azarga® ophthalmic solution in the European Union contributed to unit growth of 15.5 percent for the Azopt®/Azarga® family.
 
Ø  
Sales of allergy products declined 1.8 percent organically (-4.8 percent reported), consistent with the company’s expectations for a weaker spring allergy market in the United States.  The company increased combined Patanol® and Pataday™ ophthalmic solutions U.S. market share to 78.6 percent May year-to-date, an improvement of 0.8 percent over the prior year.
 
 

 
 
Earnings Highlights
 
 
Summarized below are the key drivers of earnings in the second quarter of 2009.  All growth comparisons are for the second quarter of 2009 compared to the second quarter of 2008.
 
 
Ø  
Operating income margin rose from 37.2 to 37.7 percent of sales and net income margin increased from 32.6 percent to 34.7 percent of sales.
 
Ø  
Cost management programs and foreign exchange fluctuations led to a sharp reduction in selling general and administrative expenses from 30.4 to 27.9 percent of sales.
 
Ø  
Other income in the second quarter of 2009 was $19 million compared to $4 million in the second quarter of 2008, due primarily to gains from foreign currency transactions.
 
Ø  
The effective tax rate for the second quarter of 2009 was 10.6 percent, which included approximately one percentage point of period benefits related to settlement with tax authorities on prior year taxes.

Other Highlights
Ø  
Alcon has entered into a five-year collaborative research agreement with AstraZeneca for the exclusive ophthalmic discovery and potential development rights to AstraZeneca’s compound library.  The agreement covers multiple classes of small molecules with lead compounds targeting development of drugs to treat sight-threatening conditions such as glaucoma, wet and dry age-related macular degeneration and other retinal diseases, as well as ocular allergy, dry eye and other inflammatory eye conditions.
 
Ø  
Alcon has entered into a research and licensing agreement with PhiloGene, Inc. for rights to a VEGF protein.  The company plans to develop this protein for the treatment of wet age related macular degeneration and diabetic macular edema.
 
Ø  
The company plans to launch TOBRADEX® ST ophthalmic suspension, a new formulation of tobramycin/dexamethasone formulated with the ZexioTM delivery system that enhances bioavailability to targeted tissues.
 
Ø  
Alcon completed the European Union decentralized registration procedure for Vigamox® ophthalmic solution. National licenses have been issued by Bulgaria, Iceland and Romania and the company is awaiting licensing from the remaining 23 countries.
 
Ø  
The company filed an NDA supplement requesting approval of Patanase™ nasal spray for use in patients from 6 months to 12 years of age.
 
Ø  
Alcon filed a drug approval application in selected European Union markets for CILODEX® otic suspension for the treatment of middle and outer ear infections.  CILODEX® is the European trade name for CiproDex® otic suspension marketed in the United States.
 
Ø  
Alcon commenced a Phase 2 clinical trial of the aganocide compound NVC-422 for viral conjunctivitis.  This compound is licensed from NovaBay, Inc.
 
Ø  
Alcon notified its publicly-listed German subsidiary, WaveLight AG, that it plans to acquire the remaining publicly-held WaveLight shares at a price of EUR 20.02 pursuant to German securities law.
 
Ø  
The court vacated the July 27, 2009 trial date that had been scheduled for Alcon’s patent infringement action against Apotex related to Patanol®. The court said a new trial date would be set by a separate order.
 
 

 
Financial Guidance
The company reaffirmed its previously-issued sales guidance for full year 2009 organic sales growth to be in the mid-single digits.  The company raised its guidance for full year 2009 diluted earnings per share on a U.S. GAAP basis to between $6.20 and $6.35 and between $6.25 and $6.40 on a non-GAAP adjusted basis (excluding restructuring charges taken in the first half of 2009).  This increase reflects positive earnings performance in the first half of the year, which is expected to be partially mitigated by higher R&D and SG&A expenses in the second half of the year.

About Alcon
Alcon, Inc. is the world’s leading eye care company, with sales of approximately $6.3 billion in 2008.  Alcon, which has been dedicated to the ophthalmic industry for 65 years, researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contacts lens solutions and other vision care products that treat diseases, disorders and other conditions of the eye.  Alcon operates in 75 countries and sells products in 180 markets. Alcon’s majority shareholder is Nestlé, S.A., the world’s largest food company.  For more information on Alcon, Inc., visit the Company’s web site at www.alcon.com.


 

 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(in millions, except share data)

   
Three months ended
    
Six months ended
  
   
June 30,
    
June 30,
  
   
2009
    
2008
    
2009
    
2008
  
                         
Sales
   $ 1,677     $ 1,736     $ 3,170     $ 3,272  
Cost of goods sold
     415       415       769       813  
                                 
Gross profit
     1,262       1,321       2,401       2,459  
                                 
Selling, general and administrative
     468       527       940       1,011  
Research and development
     157       142       303       287  
Amortization of intangibles
     5       6       12       15  
                                 
Operating income
     632       646       1,146       1,146  
                                 
Other income (expense):
                                
Gain (loss) from foreign currency, net
     9       (3 )     (1 )     3  
Interest income
     13       20       24       46  
Interest expense
     (5 )     (14 )     (10 )     (32 )
Other, net
     2       1       6       (10 )
                                 
Earnings before income taxes
     651       650       1,165       1,153  
                                 
Income taxes
     69       83       131       157  
                                 
Net earnings
   $ 582     $ 567     $ 1,034     $ 996  
                                 
                                 
Basic earnings per common share
   $ 1.95     $ 1.90     $ 3.46     $ 3.34  
                                 
Diluted earnings per common share
   $ 1.94     $ 1.88     $ 3.44     $ 3.30  
                                 
Basic weighted average common shares
     298,744,287       298,477,807       298,663,437       298,100,370  
                                 
Diluted weighted average common shares
     300,638,975       301,986,076       300,328,778       301,558,546  
                                 
                                 


 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Global Sales
(USD in millions)

 
Three Months Ended
          
Foreign
          
 
June 30,
          
Currency
    
Organic
    
 
2009
  
2008
    
Change
    
Change
    
Change
    
                         
Geographic Sales
                                
Alcon United States:
                                
Pharmaceutical
$
391
  
$
408
    
(4.2
)
%
--
  
%
(4.2
)
%
Surgical
  
296
    
276
    
7.2
    
--
    
7.2
    
Consumer Eye Care
  
103
    
104
    
(1.0
)
  
--
    
(1.0
)
  
                                 
Total United States Sales
  
790
    
788
    
0.3
    
--
    
0.3
    
                                 
Alcon International:
                                
Pharmaceutical
  
322
    
338
    
(4.7
)
  
(13.3
)
  
8.6
    
Surgical
  
461
    
492
    
(6.3
)
  
(11.8
)
  
5.5
    
Consumer Eye Care
  
104
    
118
    
(11.9
)
  
(11.9
)
  
--
    
                                 
Total International Sales
  
887
    
948
    
(6.4
)
  
(12.3
)
  
5.9
    
                                 
Total Global Sales
$
1,677
  
$
1,736
    
(3.4
)
  
(6.7
)
  
3.3
    
                                 
Global Product Sales
                                
Infection/inflammation
$
208
  
$
231
    
(10.0
)
%
(6.1
)
%
(3.9
)
%
Glaucoma
  
274
    
253
    
8.3
    
(8.3
)
  
16.6
    
Allergy
  
160
    
168
    
(4.8
)
  
(3.0
)
  
(1.8
)
  
Otic/nasal
  
103
    
103
    
--
    
(1.0
)
  
1.0
    
Other pharmaceuticals/rebates
  
(32
)
  
(9
)
  
N/M
    
N/M
    
N/M
    
                                 
Total Pharmaceutical
  
713
    
746
    
(4.4
)
  
(6.0
)
  
1.6
    
                                 
Intraocular lenses
  
289
    
288
    
0.3
    
(8.4
)
  
8.7
    
Cataract/vitreoretinal
  
440
    
449
    
(2.0
)
  
(7.1
)
  
5.1
    
Refractive
  
28
    
31
    
(9.7
)
  
(6.5
)
  
(3.2
)
  
                                 
Total Surgical
  
757
    
768
    
(1.4
)
  
(7.5
)
  
6.1
    
                                 
Contact lens disinfectants
  
116
    
123
    
(5.7
)
  
(3.3
)
  
(2.4
)
  
Artificial tears
  
70
    
70
    
--
    
(10.0
)
  
10.0
    
Other
  
21
    
29
    
(27.6
)
  
(10.4
)
  
(17.2
)
  
                                 
Total Consumer Eye Care
  
207
    
222
    
(6.8
)
  
(6.3
)
  
(0.5
)
  
                                 
Total Global Sales
$
1,677
  
$
1,736
    
(3.4
)
  
(6.7
)
  
3.3
    
                                 
N/M - Not Meaningful
Note: Organic change calculates sales growth without the impact of foreign exchange fluctuations and acquisitions. Management believes organic sales change is an important measure of the company’s operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices.  This measure is considered a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission.  Certain reclassifications have been made to prior year amounts to conform to current year presentation.

 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Global Sales
(USD in millions)

 
Six Months Ended
          
Foreign
          
 
June 30,
          
Currency
    
Organic
    
 
2009
  
2008
    
Change
    
Change
    
Change
    
                         
Geographic Sales
                                
                                 
Alcon United States:
                                
Pharmaceutical
$
698
  
$
726
    
(3.9
)
%
--
  
%
(3.9
)
%
Surgical
  
554
    
530
    
4.5
    
--
    
4.5
    
Consumer Eye Care
  
196
    
204
    
(3.9
)
  
--
    
(3.9
)
  
                                 
Total United States Sales
  
1,448
    
1,460
    
(0.8
)
  
--
    
(0.8
)
  
                                 
Alcon International:
                                
Pharmaceutical
  
641
    
648
    
(1.1
)
  
(13.1
)
  
12.0
    
Surgical
  
876
    
936
    
(6.4
)
  
(12.7
)
  
6.3
    
Consumer Eye Care
  
205
    
228
    
(10.1
)
  
(13.6
)
  
3.5
    
                                 
Total International Sales
  
1,722
    
1,812
    
(5.0
)
  
(13.0
)
  
8.0
    
                                 
Total Global Sales
$
3,170
  
$
3,272
    
(3.1
)
  
(7.2
)
  
4.1
    
Global Product Sales
                                
                                 
Infection/inflammation
$
410
  
$
459
    
(10.7
)
%
(6.1
)
%
(4.6
)
%
Glaucoma
  
507
    
463
    
9.5
    
(8.6
)
  
18.1
    
Allergy
  
303
    
299
    
1.3
    
(1.7
)
  
3.0
    
Otic/nasal
  
179
    
170
    
5.3
    
(2.3
)
  
7.6
    
Other pharmaceuticals/rebates
  
(60
)
  
(17
)
  
N/M
    
N/M
    
N/M
    
                                 
Total Pharmaceutical
  
1,339
    
1,374
    
(2.5
)
  
(6.1
)
  
3.6
    
                                 
Intraocular lenses
  
537
    
549
    
(2.2
)
  
(8.8
)
  
6.6
    
Cataract/vitreoretinal
  
840
    
855
    
(1.8
)
  
(7.9
)
  
6.1
    
Refractive
  
53
    
62
    
(14.5
)
  
(6.4
)
  
(8.1
)
  
                                 
Total Surgical
  
1,430
    
1,466
    
(2.5
)
  
(8.2
)
  
5.7
    
                                 
Contact lens disinfectants
  
222
    
237
    
(6.3
)
  
(4.6
)
  
(1.7
)
  
Artificial tears
  
135
    
136
    
(0.7
)
  
(11.7
)
  
11.0
    
Other
  
44
    
59
    
(25.4
)
  
(6.8
)
  
(18.6
)
  
                                 
Total Consumer Eye Care
  
401
    
432
    
(7.2
)
  
(7.2
)
  
--
    
                                 
Total Global Sales
$
3,170
  
$
3,272
    
(3.1
)
  
(7.2
)
  
4.1
    
                                 
N/M - Not Meaningful
Note: Organic change calculates sales growth without the impact of foreign exchange fluctuations and acquisitions. Management believes organic sales change is an important measure of the company’s operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices.  This measure is considered a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission.  Certain reclassifications have been made to prior year amounts to conform to current year presentation.



 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except share data)

   
June 30,
    
December 31,
  
   
2009
    
2008
  
Assets
            
Current assets:
            
Cash and cash equivalents
   $ 2,260     $ 2,449  
Short term investments
     426       564  
Trade receivables, net
     1,319       1,168  
Inventories
     626       574  
Deferred income tax assets
     146       221  
Other current assets
     236       243  
                 
Total current assets
     5,013       5,219  
                 
Long term investments
     137       24  
Property, plant and equipment, net
     1,191       1,138  
Intangible assets, net
     78       91  
Goodwill
     645       645  
Long term deferred income tax assets
     352       342  
Other assets
     103       92  
                 
Total assets
   $ 7,519     $ 7,551  
                 
Liabilities and Shareholders' Equity
                
Current liabilities:
                
Accounts payable
   $ 217     $ 199  
Short term borrowings
     883       1,059  
Current maturities of long term debt
     1       1  
Other current liabilities
     966       931  
                 
Total current liabilities
     2,067       2,190  
                 
Long term debt, net of current maturities
     57       61  
Long term deferred income tax liabilities
     23       22  
Other long term liabilities
     592       587  
Contingencies
                
Shareholders' equity:
                
Common shares, par value CHF 0.20 per share
     42       42  
Additional paid-in capital
     1,490       1,449  
Accumulated other comprehensive income
     139       80  
Retained earnings
     3,684       3,699  
Treasury shares, at cost
     (575 )     (579 )
                 
Total shareholders' equity
     4,780       4,691  
                 
Total liabilities and shareholders' equity
   $ 7,519     $ 7,551  
                 


 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in millions)

   
Six months ended June 30,
  
   
2009
    
2008
  
             
Cash provided by (used in) operating activities:
            
Net earnings
   $ 1,034     $ 996  
Adjustments to reconcile net earnings to cash provided from
                
operating activities:
                
Depreciation
     92       85  
Amortization of intangibles
     12       15  
Share-based payments
     41       54  
Tax benefits from share-based compensation
     1       6  
Deferred income taxes
     65       (23 )
Loss on sale of assets
     55       --  
Unrealized depreciation (appreciation) on trading securities
     (66 )     10  
Other
     6       --  
Changes in operating assets and liabilities:
                
Trade receivables
     (144 )     (162 )
Inventories
     (35 )     (22 )
Other assets
     (2 )     18  
Accounts payable
     18       35  
Other current liabilities
     31       43  
Other long term liabilities
     7       17  
Net cash from operating activities
     1,115       1,072  
                 
Cash provided by (used in) investing activities:
                
Purchases of property, plant and equipment
     (139 )     (127 )
Purchases of intangible assets
     (1 )     (28 )
Purchases of investments
     (657 )     (37 )
Proceeds from sales and maturities of investments
     717       41  
Other, net
     --       2  
Net cash from investing activities
     (80 )     (149 )
                 
Cash provided by (used in) financing activities:
                
Repayment of short term debt
     (187 )     (186 )
Repayment of long term debt
     (1 )     (1 )
Dividends on common shares
     (1,048 )     (750 )
Acquisition of treasury shares
     (5 )     (21 )
Proceeds from exercise of stock options
     10       94  
Tax benefits from share-based payment arrangements
     --       38  
Net cash from financing activities
     (1,231 )     (826 )
                 
Effect of exchange rates on cash and cash equivalents
     7       6  
                 
Net increase (decrease) in cash and cash equivalents
     (189 )     103  
Cash and cash equivalents, beginning of period
     2,449       2,134  
                 
Cash and cash equivalents, end of period
   $ 2,260     $ 2,237  
                 

 
 
 
 

ALCON, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures

   
Change
    
Foreign
Currency
Change
    
Organic
Change
  
                   
Emerging market sales
     (8.3 ) %     ( 16.4 ) %     8.1 %
                         
Travatan® Family of Products
     15.4 %     ( 8.2 ) %     23.6 %
                         
Global advanced technology intraocular lens sales
     30.1 %     ( 8.2 ) %     38.3 %

Note: Organic change presents sales growth without the impact of foreign exchange fluctuations and acquisitions. Management believes organic sales change is an important measure of the company’s operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices.  This measure is considered a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission.

   
EPS Guidance
  
2009 reported
   $ 6.20-6.35  
2009 restructuring adjustment
     0.05  
2009 adjusted
   $ 6.25-6.40  
         

Note: Adjusted net earnings and diluted EPS measure the results of the company's operations without certain items that pertained only to the period presented. Management believes these measures are an important measure of the company’s operations because it provides investors with a clearer picture of the core operations of the company.  This measure is considered a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission.


 
 
 
 

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Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements principally relate to statements regarding the expectations of our management with respect to the future performance of various aspects of our business. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by our forward-looking statements. Words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "hope," "intend," "estimate," "project," "predict," "potential" and similar expressions are intended to identify forward-looking statements. These statements reflect the views of our management as of the date of this press release with respect to future events and are based on assumptions and subject to risks and uncertainties and are not intended to give any assurance as to future results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following: the development of commercially viable products may take longer and cost more than expected; changes in reimbursement procedures by third-party payers may affect our sales and profits; a weakening economy could affect demand for our products; competition may lead to worse than expected financial condition and results of operations; currency exchange rate fluctuations may negatively affect our financial condition and results of operations; pending or future litigation may negatively impact our financial condition and results of operations; litigation settlements may adversely impact our financial condition; the occurrence of excessive property and casualty, general liability or business interruption losses, for which we are self-insured, may adversely impact our financial condition; product recalls or withdrawals may negatively impact our financial condition or results of operations; government regulation or legislation may negatively impact our financial condition or results of operations; changes in tax laws or regulations in the jurisdictions in which we and our subsidiaries are subject to taxation may adversely impact our financial performance; supply and manufacturing disruptions could negatively impact our financial condition or results of operations. You should read this press release with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, we undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.

For more information, contact:

Doug MacHatton
Vice President, Investor Relations and
Strategic Corporate Communications
(817) 551-8974
doug.machatton@alconlabs.com
John Selzer
Director, Investor Relations
(817) 568-6166
john.selzer@alconlabs.com
Bob Peterson
Manager, Investor Relations
(817) 551-4687
robert.peterson@alconlabs.com

www.alcon.com