Slide 1: Alcon, Inc. Worldwide Leader in Ophthalmic Research and Manufacturing
Alcon, Inc. Worldwide Leader in Ophthalmic Research and Manufacturing
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements contained in this presentation that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. This presentation is being made on February 9, 2006, and Alcon does not undert
Slide 3: Management Presentation by
Management Presentation by Cary Rayment Chairman, President & CEO Jacqualyn Fouse Senior Vice President of Finance & CFO 3
Slide 4: Business Overview
Business Overview Cary Rayment Chairman, President & CEO 4
Slide 5: Global Sales
Global Sales $5,000 $4,500 +11.6% $4,000 $4,368.5 $3,500 $3,913.6 $3,000 $2,500 $2,000 $1,500 +10.7% $1,000 $500 $952.7 $1,054.9 $0 Q4 2004 Q4 2005 YTD 2004 YTD 2005 (dollars in millions) 5
Slide 6: Fourth Quarter Earnings Highlights
Fourth Quarter Earnings Highlights Q4 05 Q4 04 Growth Net Earnings $ 60.7 $ 187.3 (67.6)% Non-GAAP adjustments $ 207.7 $ -- Net Earnings as adjusted* $ 268.4 $ 187.3 43.3% Diluted EPS $ 0.19 $ 0.60 (68.3)% Non-GAAP adjustments $ 0.67 $ -- Diluted EPS as adjusted* $ 0.86 $ 0.60 43.3% *2005 excludes t
Slide 7: Full Year Earnings Highlights
Full Year Earnings Highlights 2005 2004 Growth Net Earnings $ 931.0 $ 871.8 6.8% Non-GAAP adjustments $ 207.7 $ (57.6) Net Earnings as adjusted* $ 1,138.7 $ 814.2 39.9% Diluted EPS $ 2.98 $ 2.80 6.4% Non-GAAP adjustments $ 0.67 $ (0.18) Diluted EPS as adjusted* $ 3.65 $ 2.62 39.3% *2005 excludes the
Slide 8: Financial Review
Financial Review Jacqualyn Fouse Senior Vice President Finance and CFO 8
Slide 9: Q4 2005 Sales and Growth by Business Unit
Q4 2005 Sales and Growth by Business Unit Reported Constant Sales Growth Currency Global Sales $ 1,054.9 10.7% 13.0% United States $ 518.8 13.8% 13.8% International $ 536.1 7.9% 12.2% Note: Constant currency sales growth is a non-GAAP measure presented (dollars in millions) to give investors a bette
Slide 10: 2005 Sales and Growth by Business Unit
2005 Sales and Growth by Business Unit Reported Constant Sales Growth Currency Global Sales $ 4,368.5 11.6% 10.5% United States $ 2,195.4 10.3% 10.3% International $ 2,173.1 13.0% 10.8% Note: Constant currency sales growth is a non-GAAP measure presented (dollars in millions) to give investors a bet
Slide 11: Geographic Sales Breakdown
Geographic Sales Breakdown 2005 Full Year 2004 Full Year 27.4% 27.6% 50.3% 7.2% 50.9% 7.7% 15.1% 13.8% United States United States EURMEA EURMEA Japan Japan Rest of World Rest of World 11
Slide 12: Sales by Market Development
Sales by Market Development Full Year 2005 Sales Growth Rate 25% 24.1% 20% 15% 17.7% 10% 9.9% 9.5% 5% 0% Developed Emerging Markets Reported Constant Currency Emerging markets contributed 13% of Full Year 2005 Sales Note: Constant currency sales growth is a non-GAAP measure presented to give investo
Slide 13: Pharmaceutical Sales
Pharmaceutical Sales $2,000 +14.6% $1,800 $1,600 $1,767.7 $1,400 $1,542.6 $1,200 $1,000 $800 $600 +14.1% $400 $200 $346.6 $395.3 $0 Q4 2004 Q4 2005 YTD 2004 YTD 2005 (dollars in millions) 13
Slide 14: Pharmaceutical Business Factors
Pharmaceutical Business Factors • Key brand development driving broad market share gains • Travatan® formulary success • NevanacTM launch • Patanol® & TobraDex® defend leadership • Continued shift toward higher margin products 14
Slide 15: Surgical Sales
Surgical Sales $2,200 +11.2% $2,000 $1,800 $2,016.9 $1,600 $1,814.4 $1,400 $1,200 $1,000 $800 $600 +10.7% $400 $200 $472.9 $523.5 $0 Q4 2004 Q4 2005 YTD 2004 YTD 2005 (dollars in millions) 15
Slide 16: Surgical Business Factors
Surgical Business Factors • Success of AcrySof® ReSTOR® • IOL market share gains • Continued adoption of phaco procedure in emerging markets • Shift toward higher margin products 16
Slide 17: AcrySof ReSTOR Sales
AcrySof® ReSTOR® Sales Q1 05 Q2 05 Q3 05 Q4 05 2005 Total US $ -- $ 2.9 $ 13.1 $ 19.3 $ 35.3 International $ 3.2 $ 4.7 $ 4.7 $ 6.3 $ 18.9 Total $ 3.2 $ 7.6 $ 17.8 $ 25.6 $ 54.2 (dollars in millions) 17
Slide 18: AcrySof ReSTOR Training
AcrySof® ReSTOR® Training • 4,700 physicians through initial training • 2,900 physicians completed all requirements • 2,000 physicians implanting 18
Slide 19: Consumer Sales
Consumer Sales $650 $600 +4.9% $550 $500 $583.9 $556.6 $450 $400 $350 $300 $250 $200 $150 +2.2% $100 $50 $133.2 $136.1 $0 Q4 2004 Q4 2005 YTD 2004 YTD 2005 (dollars in millions) 19
Slide 20: Consumer Business Factors
Consumer Business Factors • Systane® market share gains • Growth of Opti-Free® Express® despite competitive market environment • Decline of older contact lens disinfectants • Strong prescription growth from optometric channel 20
Slide 21: Q4 2005 Income Statement Detail
Q4 2005 Income Statement Detail Reported % of Adjusted % of % of Q4 05 Sales Q4 05* Sales Q4 04 Sales Gross Profit $ 799.2 75.8% $ 802.4 76.1% $ 683.7 71.8% SG & A $ 585.3 55.5% $ 339.8 32.3% $ 324.1 34.0% R&D $ 118.9 11.3% $ 118.9 11.3% $ 108.4 11.4% Operating $ 73.4 7.0% $ 322.1 30.5% $ 230.5 24.2
Slide 22: Q4 2005 Non-GAAP Adjustments
Q4 2005 Non-GAAP Adjustments Non-GAAP Adjusted Reported Adjustments Non-GAAP* Cost of Goods Sold $ 255.7 $ (3.2) $ 252.5 Gross Profit $ 799.2 $ 3.2 $ 802.4 SG & A $ 585.3 $ (245.5) $ 339.8 Operating Income $ 73.4 $ 248.7 $ 322.1 Earnings before taxes $ 77.0 $ 248.7 $ 325.7 Income Taxes $ 16.3 $ 41.0
Slide 23: Full Year 2005 Income Statement Detail
Full Year 2005 Income Statement Detail Reported % of Adjusted % of % of 2005 Sales 2005* Sales 2004 Sales Gross Profit $ 3,290.1 75.3% $ 3,293.3 75.4% $2,832.0 72.4% SG&A $ 1,594.7 36.5% $ 1,349.2 30.9% $1,237.3 31.6% R&D $ 421.8 9.7% $ 421.8 9.7% $ 390.4 10.0% Operating $ 1,187.9 27.2% $ 1,436.6 32
Slide 24: 2005 Full Year Non-GAAP Adjustments
2005 Full Year Non-GAAP Adjustments Non-GAAP Adjusted Reported Adjustments Non-GAAP* Cost of Goods Sold $ 1,078.4 $ (3.2) $ 1,075.2 Gross Profit $ 3,290.1 $ 3.2 $ 3,293.3 SG & A $ 1,594.7 $ (245.5) $ 1,349.2 Operating Income $ 1,187.9 $ 248.7 $ 1,436.6 Earnings before taxes $ 1,202.9 $ 248.7 $ 1,451
Slide 25: Reported Tax Rate vs. "Base" Rate
Reported Tax Rate vs. “Base” Rate 2005 2004 2003 Reported Effective Tax Rate 22.6% 22.6% 30.6% Total Net Impact of 2.5% 5.2% 2.6% “Non-structural” Items “Base” Effective Tax Rate 25.1% 27.8% 33.2% * “Base” effective tax rate is a non-GAAP measure presented to give investors a better comparison of in
Slide 26: Balance Sheet Highlights
Balance Sheet Highlights 12/31/05 12/31/04 Short and Long Term Borrowings $ 1,083.4 $ 988.0 Cash and Cash Equivalents $ 1,457.2 $ 1,093.4 Consolidated S/H Equity $ 2,556.1 $ 2,187.9 A/R Change (From 12/31/04) 4.1% N/A Inventory Change (From 12/31/04) (6.2%) N/A (dollars in millions) 26
Slide 27: Cash Flow Highlights
Cash Flow Highlights 2005 2004 Net Cash From Operations $ 1,235.0 $ 1,047.8 Net Cash From Investing $ (382.3) $ (255.5) Free Cash Flow* $ 852.7 $ 792.3 *Free cash flow is a non-GAAP term defined as net cash from operations less net cash from (dollars in millions) investing. Free cash flow is present
Slide 28: 2006 Outlook
2006 Outlook Alcon 2;
Slide 29: 2006 Full Year Financial Guidance
2006 Full Year Financial Guidance • Sales range from $4.75 to $4.80 billion – Global growth across major product lines – Share gains from recent product launches – Continued faster growth in emerging markets • AcrySof® ReSTOR® sales of $150-$170 million 29
Slide 30: 2006 Full Year Financial Guidance
2006 Full Year Financial Guidance • Reported EPS expected to be $3.98 to $4.07 – Higher gross margin from product mix and production efficiencies – Stable to slightly improving SG&A – Lower effective tax rate • Excluding FAS 123R option expense, Adjusted EPS expected to be $4.18 to $4.27 – 45% of op
Slide 31: Alcon, Inc.
Alcon, Inc. \X/orldwide Leader y in Ophthalmic Beseayen and Manufacturing