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 10, 2005, and Alcon does not under
Slide 3: Management Presentation by
Management Presentation by Cary Rayment President & CEO Jacqualyn Fouse Senior Vice President of Finance & CFO Jerry Cagle, Ph.D. Senior Vice President, Research and Development 3
Slide 4: Financial Results
Financial Results (For the quarters and years ended December 31, 2004 and 2003) 4
Slide 5: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights Q4 04 Q4 03 Growth Global Sales $ 952.7 $ 851.7 11.9% Net Earnings $ 187.3 $ 133.9 39.9% Reported EPS* $ 0.60 $ 0.43 39.5% *Diluted earnings per share. (dollars in millions, except per share amounts) 5
Slide 6: 2004 Financial Highlights
2004 Financial Highlights 2004 2003 Growth Global Sales $ 3,913.6 $ 3,406.9 14.9% Reported Net Earnings $ 871.8 $ 595.4 46.4% Adjusted Net Earnings $ 814.2 $ 595.4 36.7% Reported EPS* $ 2.80 $ 1.92 45.8% Adjusted EPS* $ 2.62 $ 1.92 36.5% *Diluted earnings per share for both reported and adjusted. (d
Slide 7: Reported vs. Adjusted Net Earnings
Reported vs. Adjusted Net Earnings Q4 04 Q4 03 2004 2003 Reported Net Earnings $ 187.3 $ 133.9 $ 871.8 $ 595.4 Tax Settlements and Credits -- -- (57.6) -- Adjusted Net Earnings* $ 187.3 $ 133.9 $ 814.2 $ 595.4 *Adjusted net earnings is a non-GAAP measure and is provided to help investors better comp
Slide 8: Reported vs. Adjusted Earnings Per Share
Reported vs. Adjusted Earnings Per Share Q4 04 Q4 03 2004 2003 Reported Diluted EPS $ 0.60 $ 0.43 $ 2.80 $ 1.92 Tax Settlements and Credits -- -- (0.18) -- Adjusted Diluted EPS* $ 0.60 $ 0.43 $ 2.62 $ 1.92 *Adjusted diluted EPS is a non-GAAP measure and is provided to help investors better compare r
Slide 9: Fourth Quarter Income Statement Detail
Fourth Quarter Income Statement Detail % of % of Q4 04 Sales Q4 03 Sales Gross Profit $ 683.7 71.8% $ 594.5 69.8% SG & A $ 324.1 34.0% $ 291.8 34.3% Research & Development $ 108.4 11.4% $ 95.0 11.2% (dollars in millions) 9
Slide 10: 2004 Income Statement Detail
2004 Income Statement Detail % of % of 2004 Sales 2003 Sales Gross Profit $2,832.0 72.4% $2,401.0 70.5% SG & A $1,237.3 31.6% $1,112.5 32.6% Research & Development $ 390.4 10.0% $ 349.9 10.3% Effective Tax Rate* 27.7% 30.6% Reported Eff. Tax Rate 22.6% 30.6% *2004 excludes the impact of tax settleme
Slide 11: Balance Sheet Highlights
Balance Sheet Highlights 12/31/04 12/31/03 Short and Long Term Borrowings $ 988.0 $ 1,410.3 Cash and Cash Equivalents $ 1,093.4 $ 1,086.0 Consolidated S/H Equity $ 2,187.9 $ 1,591.5 A/R Change (From 12/31/03) 11.9% N/A Inventory Change (From 12/31/03) 1.9% N/A (dollars in millions) 11
Slide 12: Revenue History
Revenue History $1,200 $1,039.2 $1,000 $963.6 $958.1 $952.7 $925.4 $851.7 $807.1 $822.7 $800 $809.5 $743.9 $749.2 $706.5 $600 Q1 Q2 Q3 Q4 2002 2003 2004 (dollars in millions) 12
Slide 13: Earnings Per Share History
Earnings Per Share History $0.80 $0.78 * $0.61 $0.62 $0.57 $0.60 $0.60 $0.49 $0.42 $0.43 $0.50* $0.40 $0.40 * $0.36* $0.33 * $0.20 Q1 Q2 Q3 Q4 *See non-GAAP reconciliation. Adjusted numbers presented to help investors better 2002 Adjusted 2003 2004 Adjusted compare results between years. 13
Slide 14: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reported Adjusted 2002 EPS Adjustments EPS Q1 $ 0.33 $ (1) 0.03 $ 0.36 Q2 $ 0.53 $ (2) (0.03) $ 0.50 Q3 $ 0.41 $ (3) (0.01) $ 0.40 Q4 $ 0.26 $ (4) 0.07 $ 0.33 (1) Includes changes to a deferred employee compensation plan at the time of Alcon's IPO and adjustment f
Slide 15: 2005 Outlook
2005 Outlook Alcon;
Slide 16: 2005 Full Year Financial Guidance: Sales
2005 Full Year Financial Guidance • Sales range from $4.275 to $4.375 billion – Global growth across major product lines – Share gains from recent product launches – Full year comparisons 2003 introductions – Ciloxan® patent expiration (first half of year) 16
Slide 17: 2005 Full Year Financial Guidance: EPS
2005 Full Year Financial Guidance • EPS range from $3.08 to $3.14 – Higher gross margin from product mix and production efficiencies – Ciloxan® patent expiration (first half of year) – Stock option expensing (second half of year) – Lower effective tax rate 17
Slide 18: R&D Funding
R&D Funding • New IRS regulations raised the markup on intercompany services • More stringent IRS regulations reduce benefit of ex-US ownership of intellectual property • IRS audit experience impact on funding strategy • Evolving nature of R&D spending – Increased allocation to retina and glaucoma –
Slide 19: Tax Rate Impact
Tax Rate Impact • Expect three percent decline in 2005 effective tax rate – Increasing U.S. tax deduction – Royalties earned on projects previously funded ex- U.S. • Two to three percent decline in tax rate in 2006 and 2007 19
Slide 20: Alcon, Inc.
Alcon, Inc. \X/orldwide Leader y in Ophthalmic Beseayen and Manufacturing