HUNENBERG, Switzerland, Oct. 20 /PRNewswire-FirstCall/ -- Alcon, Inc. reported global sales of $958.1 million for the third quarter of 2004, an increase of 16.5 percent over global sales in the third quarter of 2003, or 13.3 percent excluding the impact of foreign exchange fluctuations. Net earnings for the third quarter of 2004 increased 26.9 percent to $194.3 million, or $0.62 per share on a diluted basis, compared to $153.1 million, or $0.49 per share, for the third quarter of 2003.
Cary Rayment, Alcon's President and Chief Executive Officer commented, "This quarter reinforced our market leadership and the value of the many sales drivers we have in our portfolio. We are early into a new product cycle for many of these important products and expect to see healthy growth from them for many years to come. As this quarter also demonstrated, with our established manufacturing, distribution and sales infrastructure in place around the world, we expect to consistently translate this growth to faster profit growth."
Sales Highlights
Highlights of sales for the third quarter of 2004 are provided below. Unless otherwise noted, all comparisons are versus the third quarter of 2003.
* U.S. sales grew 15.0 percent to $499.9 million, accounting for
52.2 percent of total sales.
* International sales grew 18.1 percent to $458.2 million, accounting
for 47.8 percent of total sales. International sales growth was aided
by a favorable currency environment, although constant currency growth
was still 11.4 percent.
* Pharmaceutical sales grew 20.1 percent and contributed 39.3 percent of
total sales.
* Sales of glaucoma products increased 26.3 percent, led by a
52.2 percent rise in sales of Travatan(R) ophthalmic solution, which
continued to build share on a global basis.
* Sales of allergy products, including Patanol(R) ophthalmic solution,
rose 31.1 percent. Changes in U.S. wholesaler inventories had a large
positive impact on sales growth. In 2003, U.S. wholesaler inventories
declined during the third quarter, negatively influencing sales, while
in 2004 they had a neutral impact on sales in the quarter.
Furthermore, less severe allergy seasons in 2004 and increased
competitive product sampling has led to slower year-to-date growth in
U.S. prescriptions for ocular allergy treatments than in 2003.
* Sales of infection/inflammation products rose 13.4 percent as the
growth in sales of Vigamox(TM) solution more than offset declines in
Ciloxan(R) ophthalmic solution, which lost patent protection in the
second quarter of 2004. Increased sales of Tobradex(R) ophthalmic
suspension and ointment also added to overall category growth.
* Continued market share gains by Ciprodex(R) otic suspension led to a
51.5 percent increase in sales of otic products.
* Surgical sales rose 15.2 percent to $438.5 million, accounting for
45.8 percent of total sales.
* Sales of intraocular lenses increased 17.7 percent to $139.6 million.
Sales growth was attributable to market share gains, conversion from
multi-piece to single-piece intraocular lenses and continued physician
adoption of the AcrySof(R) Natural lens, which accounted for
38 percent of intraocular lenses sold by Alcon in the U.S. in
September, 2004.
* Sales of cataract and vitrectomy products rose 15.1 percent, with
shipments of the Infiniti(R) cataract removal system a key driver of
growth in this sector.
* Refractive revenue declined 1.2 percent as growth in procedures and
conversion to higher-priced custom procedures almost overcame lower
sales of equipment.
* Consumer eye care sales increased 11.4 percent, accounting for
14.9 percent of total sales.
* Expanded global distribution of Systane(R) lubricant eye drops and
share gains in existing markets, contributed strongly to a
25.4 percent growth in sales of artificial tears.
Earnings Highlights
Highlights of earnings for the third quarter of 2004 are provided below. Unless otherwise noted, all comparisons are versus the third quarter of 2003.
* Gross profit margin increased 1.9 percentage points to 74.1 percent of
sales, due to higher production volumes, manufacturing efficiencies
and product mix.
* Selling, general and administrative expenses rose 16.8 percent,
primarily as a result of higher promotion and marketing expenses,
increased provisions for professional fees and other expenses. SG&A
expenses as a percent of sales were 32.4 percent, up slightly from
32.3 percent in 2003.
* Research and development expenses rose 16.5 percent, mostly because of
the execution of a development and license agreement for a new
compound it plans to develop to treat retinal disease. As a percent
of sales, R&D expenses were constant at 10.6 percent of sales.
* Led primarily by the increase in gross margins, operating profit
increased 23.3 percent to $277.0 million, or 28.9 percent of sales,
compared to 27.3 percent of sales in 2003.
* Net interest expense declined $4.1 million to $0.8 million in the
quarter due mostly to lower debt levels.
Research and Development Update
Summarized below are updates on key research and development activities.
* Alcon acquired a license for a new compound in the third quarter of
2004 to complement its internal development activities related to
therapies for retinal diseases. The company intends to develop this
compound, which is a receptor tyrosine kinase inhibitor, as a
treatment for macular degeneration and macular edema. It may also
research this compound to treat other retinal diseases.
* The company filed a new drug application in Japan for Travatan(R)
ophthalmic solution.
* Alcon received an approvable letter from the U.S. Food and Drug
Administration (FDA) for its investigational glaucoma drug,
Extravan(TM) ophthalmic pharmaceutical preparations. After meeting
with the FDA to clarify what is required to gain final approval of
this drug, the company has begun to organize an additional clinical
trial to support its application.
* After the end of the third quarter, the company reported data on its
Phase III clinical trial for RETAANE(R) 15mg (anecortave acetate for
depot suspension). In the study, the percentage of patients who
maintained vision (defined as less than a three line loss in logMAR
visual acuity) when treated per protocol with anecortave acetate was
45 percent, compared to 49 percent for photodynamic therapy. Although
this result did not meet the primary non-inferiority endpoint of the
clinical study, these overall results indicate that the two therapies
are not statistically different from each other. Analysis of the data
continues and the company plans to file a new drug application for the
drug by the end of 2004.
* Over 750 patients have been enrolled in the two risk reduction
clinical trials on RETAANE(R). The company expects to enroll the full
complement of 2,500 patients for the trials by the end of 2005. Once
fully enrolled, these studies are expected to last four years.
Financial Guidance
Financial guidance for the full year 2004 is provided below.
* Sales are expected to be between $3,850 million and $3,900 million.
* Diluted earnings per share are expected to be between $2.52 and $2.55.
This range excludes $0.18 per share in tax benefits realized in the
second quarter of 2004. Diluted earnings per share, including the
impact of these tax benefits, are expected to be between $2.70 and
$2.73.
Company Description
Alcon, Inc. is the world's leading eye care company. Alcon, which has been dedicated to the ophthalmic industry for more than 50 years, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon's majority shareholder is Nestle, S.A., the world's largest food company. All trademarks noted in this release are the property of Alcon, Inc., with the exception of Ciprodex(R), which is the property of Bayer, AG and licensed to Alcon.
ALCON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited) (USD in millions, except share and per share data) Three months ended Nine months ended September 30, September 30, 2004 2003 2004 2003 Sales $ 958.1 $ 822.7 $ 2,960.9 $ 2,555.2 Cost of goods sold 248.6 228.3 812.6 748.7 Gross profit 709.5 594.4 2,148.3 1,806.5 Selling, general and administrative 310.1 265.4 913.2 820.7 Research and development 101.8 87.4 282.0 254.9 Amortization of intangibles 20.6 17.0 51.8 51.0 Operating income 277.0 224.6 901.3 679.9 Other income (expense): Gain (loss) from foreign currency, net 1.4 0.3 (1.8) 1.9 Interest income 5.7 4.7 15.9 13.8 Interest expense (6.5) (9.6) (19.8) (32.6) Other (0.1) --- (0.1) 0.1 Earnings before income taxes 277.5 220.0 895.5 663.1 Income taxes 83.2 66.9 211.0 201.6 Net earnings $ 194.3 $ 153.1 $ 684.5 $ 461.5 Basic earnings per common share $ 0.64 $ 0.50 $ 2.24 $ 1.50 Diluted earnings per common share $ 0.62 $ 0.49 $ 2.20 $ 1.49 Basic weighted average common shares 305,519,598 307,963,762 305,909,907 307,935,416 Diluted weighted average common shares 311,019,235 311,491,817 310,941,464 310,415,208 ALCON, INC. AND SUBSIDIARIES Global Sales (USD in millions) Three months ended Foreign %Change in September 30, Currency Constant 2004 2003 %Change %Change Currency GEOGRAPHIC SALES United States: Pharmaceutical $ 226.5 $ 188.6 20.1% ---% 20.1% Surgical 200.7 181.8 10.4 --- 10.4 Consumer eye care 72.7 64.2 13.2 --- 13.2 Total United States Sales 499.9 434.6 15.0 --- 15.0 International: Pharmaceutical 149.9 124.9 20.0 6.2 13.8 Surgical 237.8 198.8 19.6 7.3 12.3 Consumer eye care 70.5 64.4 9.5 5.2 4.3 Total International Sales 458.2 388.1 18.1 6.7 11.4 Total Global Sales $ 958.1 $ 822.7 16.5% 3.2% 13.3% PRODUCT SALES Infection/inflammation products $ 138.8 $ 122.4 13.4% Glaucoma products 134.9 106.8 26.3 Allergy products 70.9 54.1 31.1 Otic products 54.1 35.7 51.5 Other pharmaceuticals/rebates (22.3) (5.5) N/M Total Pharmaceutical 376.4 313.5 20.1 2.5% 17.6% Intraocular lenses 139.6 118.6 17.7 Cataract/vitreoretinal products 282.4 245.3 15.1 Refractive products 16.5 16.7 (1.2) Total Surgical 438.5 380.6 15.2 3.8 11.4 Contact lens disinfectants 79.5 72.1 10.3 Artificial tears 36.5 29.1 25.4 Other 27.2 27.4 (0.7) Total Consumer Eye Care 143.2 128.6 11.4 2.6 8.8 Total Global Sales $ 958.1 $ 822.7 16.5% 3.2% 13.3% N/M - Not Meaningful Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth is an important measure of the Company's operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices. ALCON, INC. AND SUBSIDIARIES Global Sales (USD in millions) Nine months ended Foreign %Change in September 30, Currency Constant 2004 2003 %Change %Change Currency GEOGRAPHIC SALES United States: Pharmaceutical $ 746.1 $ 645.1 15.7% ---% 15.7% Surgical 578.1 527.2 9.7 --- 9.7 Consumer eye care 210.3 200.0 5.2 --- 5.2 Total United States Sales 1,534.5 1,372.3 11.8 --- 11.8 International: Pharmaceutical 449.9 363.2 23.9 7.8 16.1 Surgical 763.4 632.2 20.8 9.2 11.6 Consumer eye care 213.1 187.5 13.7 7.2 6.5 Total International Sales 1,426.4 1,182.9 20.6 8.5 12.1 Total Global Sales $2,960.9 $2,555.2 15.9% 3.9% 12.0% PRODUCT SALES Infection/inflammation products $ 440.9 $ 388.6 13.5% Glaucoma products 394.6 314.7 25.4 Allergy products 268.9 230.1 16.9 Otic products 138.8 98.0 41.6 Other pharmaceuticals/rebates (47.2) (23.1) N/M Total Pharmaceutical 1,196.0 1,008.3 18.6 2.8% 15.8% Intraocular lenses 429.7 362.7 18.5 Cataract/vitreoretinal products 863.6 742.4 16.3 Refractive products 48.2 54.3 (11.2) Total Surgical 1,341.5 1,159.4 15.7 5.0 10.7 Contact lens disinfectants 229.9 214.6 7.1 Artificial tears 104.9 87.3 20.2 Other 88.6 85.6 3.5 Total Consumer Eye Care 423.4 387.5 9.3 3.5 5.8 Total Global Sales $2,960.9 $2,555.2 15.9% 3.9% 12.0% N/M - Not Meaningful Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth is an important measure of the Company's operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices. ALCON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (USD in millions) September 30, December 31, 2004 2003 Assets Current assets: Cash and cash equivalents $ 880.2 $ 1,086.0 Investments 138.4 100.5 Trade receivables, net 698.9 622.8 Inventories 420.8 446.5 Deferred income tax assets 157.4 157.4 Other current assets 70.3 57.0 Total current assets 2,366.0 2,470.2 Property, plant and equipment, net 799.7 788.8 Intangible assets, net 349.5 331.5 Goodwill 551.2 552.1 Long term deferred income tax assets 153.7 118.8 Other assets 43.4 39.2 Total assets $ 4,263.5 $ 4,300.6 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 117.0 $ 146.1 Short term borrowings 818.3 1,326.8 Current maturities of long term debt 4.6 8.5 Other current liabilities 906.0 751.6 Total current liabilities 1,845.9 2,233.0 Long term debt, net of current maturities 68.6 75.0 Long term deferred income tax liabilities 100.6 108.4 Other long term liabilities 311.9 292.7 Contingencies Shareholders' equity: Common shares 42.6 42.5 Additional paid-in capital 536.1 512.0 Accumulated other comprehensive income 112.2 135.8 Deferred compensation (3.8) (7.5) Retained earnings 1,466.3 951.2 Treasury shares, at cost (216.9) (42.5) Total shareholders' equity 1,936.5 1,591.5 Total liabilities and shareholders' equity $ 4,263.5 $ 4,300.6 ALCON, INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Disclosures Three months ended Nine months ended September 30, September 30, 2004 2003 2004 2003 Diluted earnings per common share as reported $ 0.62 $ 0.49 $ 2.20 $ 1.49 Less: Tax benefits from resolution of significant tax audit issues and amended returns --- --- 0.18 --- Diluted earnings per common share, excluding tax benefits above $ 0.62 $ 0.49 $ 2.02 $ 1.49 2004 Financial Guidance Lower Higher Estimate Estimate Expected diluted earnings per common share on same basis as reported $ 2.70 $ 2.73 Less: Tax benefits from resolution of significant tax audit issues and amended returns 0.18 0.18 Expected diluted earnings per common share, excluding tax benefits above $ 2.52 $ 2.55 Diluted earning per common share excluding tax benefits and expected diluted earnings per common share excluding tax benefits are non-GAAP financial measures as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. Alcon presents these non-GAAP measures to improve the comparability and consistency of financial results of Alcon's core business activities and to enhance the overall understanding of Alcon's performance and future prospects. Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements principally relate to statements regarding the expectations of our management with respect to the future performance of various aspects of our business. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by our forward-looking statements. Words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "hope," "intend," "estimate," "project," "predict," "potential" and similar expressions are intended to identify forward-looking statements. These statements reflect the views of our management as of the date of this press release with respect to future events and are based on assumptions and subject to risks and uncertainties and are not intended to give any assurance as to future results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following: the development of commercially viable products may take longer and cost more than expected; changes in reimbursement procedures by third party payers may affect our sales and profits; competition may lead to worse than expected financial condition and results of operations; currency exchange rate fluctuations may negatively affect our financial condition and results of operations; pending or future litigation may negatively impact our financial condition and results of operations; litigation settlements may adversely impact our financial condition; product recalls or withdrawals may negatively impact our financial condition or results of operations; government regulation or legislation may negatively impact our financial condition or results of operations; changes in tax laws or regulations in the jurisdictions in which we and our subsidiaries are subject to taxation may adversely impact our financial performance; supply and manufacturing disruptions could negatively impact our financial condition or results of operations. You should read this press release with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward- looking statements by these cautionary statements. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, we undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
For information, contact: Doug MacHatton (Investor Relations) 800-400-8599 News media and other inquiries: Mary Dulle (Public Relations) 817-551-8058 http://www.alconinc.com/
Alcon, Inc.CONTACT: investor relations, Doug MacHatton, +1-800-400-8599, or publicrelations, Mary Dulle, +1-817-551-8058, both of Alcon, Inc.
Web site: http://www.alconinc.com/
