Alcon Posts 12.5 Percent Rise in Second Quarter Sales

Alcon, Inc. (NYSE:ACL) reported that global sales rose 12.5 percent to

$1.89 billion for the second quarter of 2010, or 11.3 percent excluding

the impact of foreign exchange fluctuations and acquisitions. Revenue

from acquisitions added 40 basis points to sales growth in the quarter,

while foreign currency fluctuations added 80 basis points of growth.

Net earnings for the second quarter of 2010 grew 15.1 percent to $670

million, or $2.21 per diluted share, compared to $582 million, or $1.94

per diluted share in the second quarter of 2009. Non-GAAP adjusted net

earnings would have grown 15.8 percent to $674 million, or $2.22 per

diluted share, compared to second quarter 2009 net earnings.

Adjusted net earnings in the second quarter of 2010 exclude $4 million

in other operating expenses related to the potential change of control

and merger proposal from Novartis AG. Reconciliations of reported and

adjusted results for the second quarter are included in the financial

tables below.

“Our strong performance in the first half of this year was driven by the

successful global execution of our operational strategies and was

further supported by a lower first half comparison period. We have risen

above the global reimbursement challenges in 2010 to achieve very

positive organic sales growth at the Alcon group level and market share

expansion of our key promoted brands on a global basis. Key growth

drivers like advanced technology intraocular lenses, glaucoma treatments

and emerging markets are providing both near-term and durable long-term

opportunities,” said Kevin Buehler, Alcon’s president and chief

executive officer. “These results and our outlook for the balance of the

year reflect an improved market environment that we expect to support

sustainable organic sales growth and operating leverage in the future.”

Sales Highlights

Summarized below are sales highlights for the second quarter of 2010.

All growth comparisons are for the second quarter of 2010 compared to

the second quarter of 2009. 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.

• U.S. sales increased 12.7 percent due to strong contributions from

  advanced technology AcrySof^® intraocular

  lenses, healthy growth in glaucoma sales and the stronger seasonal

  impact of a severe allergy season on sales of Patanol^®

  and Pataday^® ophthalmic solutions and Patanase^®

  nasal spray. Sales growth included 90 basis points from acquisitions

  and also benefitted from a more favorable market environment when

  compared to the second quarter of 2009.

• Sales in international markets rose 10.8 percent on an organic basis

  (+12.3 percent reported) due to strong sales of pharmaceutical

  products and balanced contributions from most global markets.

  • Sales in emerging markets increased 24.2 percent on an organic

    basis (+28.8 percent reported), led by the BRIC nations (Brazil,

    Russia, India and China), which rose 28.9 percent organically

    (+40.0 percent reported).

  • International pharmaceutical sales rose 12.7 percent organically

    (+13.7 percent reported) with broadly-based growth in all

    therapeutic areas.

• Global sales of pharmaceutical products were $837 million, an increase

  of 16.5 percent on an organic basis (+17.4 percent reported), due to

  continued solid global performance of the glaucoma franchise and a

  severe allergy season in the United States.

  • Global glaucoma sales rose 17.2 percent organically (+17.5 percent

    reported). The Azopt^® family of products (Azopt^®

    and AZARGA^® ophthalmic suspensions)

    increased 15.1 percent organically (+14.8 percent reported), led

    by continued market penetration of AZARGA^®outside the United States. Global sales of the TRAVATAN^®family of products (TRAVATAN^®,

    TRAVATAN Z^® and DuoTrav^®

    ophthalmic solutions) rose 13.8 percent on an organic basis (+14.3

    percent reported).

  • Global sales of allergy products rose 31.9 percent on an organic

    basis (+32.5 percent reported) as the severe allergy season in the

    United States drove sales of Patanol^® and Pataday^®

    ophthalmic solutions.

• Global surgical sales increased 7.4 percent on an organic basis (+8.7

  percent reported) to $823 million, primarily attributable to a 7.3

  percent organic rise (+8.3 percent reported) in sales of intraocular

  lenses.

  • Global sales of advanced technology intraocular lenses rose 22.3

    percent organically (+23.8 percent reported) on increasing

    adoption and utilization by cataract surgeons of the AcrySof^®

    IQ ReSTOR^®+3.0 lens and the AcrySof^®

    IQ Toric lens.

• Global sales of consumer eye care products rose 7.7 percent on an

  organic basis (+9.2 percent reported) to $226 million on the strong

  global performance the Systane^® family of

  lubricant eye drops.

Earnings Highlights

Summarized below are earnings highlights for the second quarter of 2010.

All growth comparisons are for the second quarter of 2010 compared to

the second quarter of 2009.

• Gross profit margin was consistent with management expectations at

  77.4 percent compared to 75.3 percent in 2009. The increase was

  primarily attributable to the impact of foreign exchange rates on cost

  of goods sold in each period.

• Operating income rose 18.8 percent to $751 million, or 39.8 percent of

  sales. Non-GAAP adjusted operating income would have increased 19.5

  percent to $755 million, or 40.0 percent of sales. This performance

  was attributable to strong sales growth, positive price contribution

  and SG&A leverage, as well as the temporary impact of foreign exchange

  on gross profit margin. Adjusted operating income in the second

  quarter of 2010 excludes $4 million in pre-tax other operating

  expenses related to the potential change of control and the merger

  proposal from Novartis.

• Net earnings in the second quarter of 2010 rose 15.1 percent to $670

  million, or $2.21 per diluted share. Non-GAAP adjusted net earnings

  would have risen 15.8 percent to $674 million, or $2.22 per diluted

  share. Adjusted net earnings exclude $4 million in costs related to

  the potential change of control.

Other Highlights

• On July 6, 2010, the company announced it had entered into a

  definitive agreement to acquire LenSx Lasers, Inc., an ophthalmic

  laser surgery company that has developed a customizable, image-guided

  femtosecond laser. This laser provides the surgeon with a

  complementary technology to perform certain steps in a cataract

  procedure with the precision of a laser instead of performing these

  steps manually with handheld instruments.

• On June 11, 2010, Alcon Japan Ltd. announced the launch in Japan of DuoTrav^®

  combination ophthalmic solution for the treatment of glaucoma and

  ocular hypertension.

• The company has begun the transition to TRAVATAN Z^®

  ophthalmic solution as its exclusive prostaglandin analogue (PGA) in

  the United States for the treatment of open-angle glaucoma and ocular

  hypertension. TRAVATAN Z^® is the only PGA

  available in the United States that does not contain benzalkonium

  chloride (BAK), a common preservative to which some patients are

  sensitive or allergic.

• The company received a CE mark in the European Union for the AcrySof^®

  IQ ReSTOR^® Toric intraocular lens for the

  correction of both presbyopia and astigmatism and for the WaveLight^®

  FS-200 femtosecond laser for the creation of corneal flaps during

  refractive laser surgery.

• Systane

  ®

  BALANCE lubricant eye drops,

  designed specifically for patients with meibomian gland dysfunction,

  was launched in the United States in July.

• On May 7, 2010, the company filed a drug approval application in

  selected European Union markets for a BAK-free formulation of TRAVATAN^®ophthalmic solution.

• On May 20, 2010, the company filed a New Drug Application (NDA) with

  the U.S. Food and Drug Administration (FDA) for a new formulation of

  moxifloxacin for the treatment of bacterial conjunctivitis.

• The company filed an Abbreviated New Drug Application (ANDA) with the

  FDA on May 10, 2010 for a generic version of bromfenac sodium, a

  non-steroidal anti-inflammatory drug (NSAID) used to treat pain and

  swelling following eye surgery.

Financial Guidance

The company raised its full year 2010 guidance for organic sales growth

from the mid-to-high single digits to the high single digits. It also

raised its earnings per share guidance to a range of $7.45 to $7.62. The

higher guidance includes the impact of European fiscal austerity

actions, a currency headwind in the second half of the year and higher

research and development spending on internal projects as well as

business development initiatives. The guidance includes the on-going

impact of health care reform, which is expected to reduce full year 2010

sales by $20 million and earnings per share by $0.06. Full year guidance

excludes costs related to a potential change of control to and/or merger

with Novartis and the first quarter impacts of a change in royalty

estimate. It also excludes the catch-up impact of the change in tax

treatment of U.S. retiree medical expenses related to U.S. health care

reform. The full year guidance assumes renewal of the U.S. Research and

Experimentation tax credit in the fourth quarter of 2010 with

retroactive application.

Company Description

Alcon, Inc. is the world’s leading eye care company, with sales of

approximately $6.5 billion in 2009. 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. For more information on

Alcon, Inc., visit the Company’s web site at www.alcon.com.

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; completion of a potential change of control

to Novartis; completion of a potential merger with Novartis; pending or

future litigation, including with respect to a potential merger with

Novartis, 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.

N/M - Not Meaningful

Note: Change in constant currency calculates sales growth without the

impact of foreign exchange fluctuations. Management believes constant

currency 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.