Alcon Reports Strong Fourth Quarter and Full Year 2002 Results

   
Back to News archiveHünenberg,Feb 19, 2003

  • Fourth Quarter Global Sales Increased 11.7%
  • Fourth Quarter Net Earnings Rose 49.1%

Alcon, Inc. (NYSE: ACL) reported global sales of USD 749.2 million for the fourth quarter of 2002, an increase of 11.7 percent over sales in the fourth quarter of 2001, or 11.1 percent excluding the impact of foreign exchange fluctuations. Net earnings for the fourth quarter of 2002 increased 49.1 percent to USD 85.0 million, or USD 0.26 per share on a diluted basis, compared to USD 57.0 million, or USD 0.19 per share, for the fourth quarter of 2001.

Adjusting net earnings in 2001 to eliminate the effect of goodwill amortization and adjusting both years for certain non-recurring charges, Alcon’s pro-forma net earnings would have increased 39.1 percent. Alcon’s pro-forma net earnings for the fourth quarter of 2002 would have been USD 101.7 million, or USD 0.33 per share. Pro-forma net earnings for the fourth quarter of 2001 would have been USD 73.1 million or USD 0.24 per share. For a more detailed explanation of the adjustments and non-recurring items, see the "Impact of Change in Accounting Standard and Non-Recurring Charges” section of this press release.

For the full year 2002, Alcon reported global sales of USD 3,009.1 million, an increase of 9.5 percent over sales of USD 2,747.7 million for the full year 2001, or 10.0 percent excluding the impact of foreign exchange fluctuations. Net earnings for the full year 2002 increased 47.9 percent to USD 466.9 million, or USD 1.53 per share on a diluted basis, compared to USD 315.6 million, or USD 1.05 per share, for the full year 2001.

Adjusting net earnings in 2001 for the impact of goodwill amortization and adjusting both years for certain non-recurring charges, Alcon’s pro-forma net earnings would have increased 35.0 percent for 2002. Alcon’s pro-forma net earnings would have been USD 488.7 million for the full year 2002, or USD 1.62 per share on a diluted basis. Pro-forma net earnings would have been USD 361.9 million for the full year 2001, or USD 1.21 per share. For a more detailed explanation of the adjustments and non-recurring items, see the "Impact of Change in Accounting Standard and Non-Recurring Charges” section of this press release.

Gross profit for the fourth quarter of 2002 was USD 515.9 million, or 68.9 percent of sales, compared to USD 471.8 million, or 70.4 percent of sales, in the prior year period. For the full year 2002, gross profit was USD 2,116.4 million, or 70.3 percent of sales, compared to USD 1,949.4 million, or 70.9 percent of sales for the full year 2001. Inventory and equipment write-offs associated with the SKBM® microkeratome recall had an adverse impact on gross profit margins in the full year and fourth quarter of 2002. Please see the "Impact of Change in Accounting Standard and Non-Recurring Charges” section of this press release for further discussion of this factor. Other factors negatively affecting gross profit margin for the full year 2002 included foreign exchange fluctuations, product mix within business segments and the one-time charge related to changes made to a deferred compensation plan.

Selling, General and Administrative expenses were USD 276.9 million, or 37.0 percent of sales, for the fourth quarter of 2002, compared to USD 238.6 million, or 35.6 percent of sales, for the fourth quarter of 2001. The main factors that caused SG&A as a percent of sales to rise in the fourth quarter of 2002 were customer refunds and other costs associated with the SKBM® microkeratome recall, the continued expansion of the US pharmaceutical sales force and payments for the termination of certain agreements related to surgical products. For the full year 2002, SG&A expenses were USD 1,014.7 million, or 33.7 percent of sales, versus USD 953.7 million, or 34.7 percent of sales, for 2001. The reduction of SG&A as a percent of sales for the full year 2002 would have been greater except for the aforementioned fourth quarter factors and a one-time charge related to changes made to a deferred compensation plan.

Research and development expenses were USD 96.1 million in the fourth quarter of 2002, a 19.1 percent increase over USD 80.7 million for the fourth quarter of 2001. For the full year 2002, R&D expenses were USD 323.5 million, an 11.6 percent increase over USD 289.8 million for the full year 2001. R&D expenses increased as a result of higher costs and funding of ongoing and new research projects and clinical studies, especially those in the area of age-related macular degeneration.

Alcon's effective tax rate was 23.7 percent in the fourth quarter of 2002, compared to 38.6 percent in the fourth quarter of 2001. For the full year 2002, the effective tax rate was 31.1 percent, compared to 38.6 percent in 2001. The decline in the effective tax rate for the fourth quarter of 2002 compared to the fourth quarter of 2001 reflects the required adjustment to fourth quarter tax expense to bring the prior estimate of full year tax expense into line with full year actual income tax expense. The decline in the full year effective tax rate was attributable mainly to the accounting change eliminating goodwill amortization in 2002, a more favorable mix of income earned in the company’s various taxing jurisdictions and settlements of several tax audits.

Tim Sear, Chairman, President and Chief Executive Officer of Alcon, commented, "We are pleased to report strong fourth quarter and full year results that exceeded both top and bottom line consensus expectations. Our solid performance across our three business segments reflects our ability to capitalize on our leadership position in ophthalmology to expand sales and introduce new products. We set challenging objectives for ourselves when we initiated our IPO, and the combined efforts of all our people around the world have allowed us to exceed them and bring value to our shareholders.”
Mr. Sear continued, “We stand at a point in time where our pipeline of new products has rarely been richer, and we look forward to the success of several of these products in 2003 and many more in the years to come. During the fourth quarter of 2002 we again expanded our pharmaceutical sales force to support the continued growth of TRAVATAN® and in preparation for the launch of three new pharmaceutical products in 2003.”

For the full year 2003, the company expects sales to range between USD 3,270 and USD 3,300 million and diluted earnings per share to range between USD 1.82 and USD 1.85.
Alcon's board of directors will submit to shareholders at the company's Annual General Meeting, to be held on May 20, 2003 at the Congress Center Metalli Zug, Parkhotel Zug, Zug, Switzerland, a proposal to pay a dividend equal to 0.45 Swiss francs per share. This dividend, if approved by shareholders, is expected to be paid on June 4, 2003. At the US$ / Swiss franc exchange rate in effect on February 18, 2003, this would represent a dividend payout ratio of approximately 22 percent of 2002 consolidated net earnings.

For information, contact:
Doug MacHatton (Alcon Investor Relations) 800-400-8599
Mary Dulle (Alcon Public Relations) 817-551-8058
http://www.alcon.com