Alcon, Inc. (NYSE:ACL) reported global sales rose 5.9 percent to $1,614 million for the third quarter of 2009, or a 9.0 percent increase excluding the impact of foreign exchange fluctuations. Net earnings for the third quarter of 2009 were $515 million, or $1.71 per diluted share. Excluding the impact of a $240 million tax benefit related to the refractive product line in 2008 and the impact of continuing expenses related to the first quarter 2009 reduction in force, adjusted net earnings for the third quarter 2009 would have grown 33.3 percent compared to non-GAAP adjusted net earnings for the third quarter of 2008.

“Continued execution of our operational strategies combined with an improved market environment drove our solid third quarter performance,” said Kevin Buehler, Alcon’s president and chief executive officer. “We continue to achieve organic sales growth and market share growth with contributions from multiple areas, but especially from advanced technology intraocular lenses, glaucoma treatments and emerging markets. We expect these factors to continue to support solid organic growth, which, along with a more favorable currency environment, allows us to raise our earnings outlook for the remainder of the year.”

Sales Highlights

Summarized below are sales highlights for the third quarter of 2009. All growth comparisons are for the third quarter of 2009 compared to the third 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.

• International organic sales growth was 10.1 percent (+4.5 percent reported), with the Brazil, Russia, India and China (BRIC) nations leading organic growth, rising 13.3 percent (+0.6 percent reported).
• U.S. sales rose 7.6 percent as prescription demand improved and on strong revenue growth in glaucoma and advanced technology AcrySof^® intraocular lenses.
• Global sales of advanced technology intraocular lenses rose 37.7 percent organically (34.2 percent reported) due to U.S. market share gains of the AcrySof^® IQ ReSTOR^® +3.0 lens and broader and more frequent use of the AcrySof^® IQ Toric lens by cataract surgeons.
• Global glaucoma sales increased 18.2 percent, led by a 23.6 percent rise in global sales of the TRAVATAN^® family of products (TRAVATAN^®, TRAVATAN Z^® and DuoTrav^TM ophthalmic solutions). Azopt^® and Azarga^® ophthalmic solutions also added to glaucoma sales growth, together rising 16.9 percent.
• The launch of the Constellation^® vitreoretinal system contributed to a 19.5 percent growth of sales in the company’s vitreoretinal business.

Earnings Highlights

Summarized below are earnings highlights for the third quarter of 2009. All growth comparisons are for the third quarter of 2009 compared to the third quarter of 2008.

• Gross profit margin was in line with management expectations at 75.3 percent compared to 77.2 percent in 2008. The decline was primarily attributable to the impact of foreign exchange rates on costs of goods sold in each period.
• Operating profit rose 17.0 percent and operating profit margin increased from 32.4 percent to 35.8 percent of sales. This improvement resulted from cost management programs that reduced selling, general and administrative expenses to 29.4 percent from 32.9 percent of sales. Research and development expenses were 9.8 percent of sales and were lower than 2008 due to timing differences for research projects and licensing transactions between the two periods.
• Net earnings in the third quarter of 2009 were $515 million compared to $627 million in 2008. Excluding a $240 million tax benefit in 2008 and the impact of continuing expenses related to the first quarter 2009 reduction in force, adjusted net earnings grew 33.3 percent. This increase was attributable to reduced operating expenses and investment portfolio gains compared to investment losses in the third quarter 2008.

Other Highlights

• On September 15, 2009, Alcon acquired the Swiss biotechnology firm ESBATech AG providing the company with a sustainable platform of biologic development utilizing antibody fragment technology particularly suited to treat ocular diseases.
• Alcon entered into a licensing and purchase option agreement in October with Potentia Pharmaceuticals for POT-4 for the treatment of age-related macular degeneration.
• On October 2, 2009, the company launched brimonidine 0.15% in the United States which is the only non-branded version of Alphagan^® P 0.15% on the market.
• Alcon received approval for DisCoVisc^® viscoelastic system, the PUREPOINT™ laser and the Laureate^® world phaco system in Japan in the third quarter of 2009.
• During the quarter Alcon received additional country approvals of Vigamox^® ophthalmic solution and the drug is now approved in a majority of European Union countries.
• The U.S. District Court for the District of Delaware issued an opinion on October 19, 2009 finding in Alcon’s favor on all claims and defenses in the Vigamox case against Teva that was tried in March 2008.

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 $6.55 and $6.65 and between $6.60 and $6.70 on a non-GAAP adjusted basis (excluding restructuring charges taken in 2009). This increase reflects the positive results year to date and an improving market environment, partially mitigated by the expectation of higher R&D and SG&A expenses in the remainder of the year.

Company Description

Alcon, Inc. is the world’s leading eye care company, with sales of $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, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon’s majority shareholder is Nestlé, S.A., the world’s largest food company. All trademarks noted in this release are the property of Alcon, Inc. For more information about Alcon, visit www.alcon.com.

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.

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.

Note: Adjusted net earnings measures 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.

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.

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.

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.