Alcon’s First Quarter Net Earnings Rose 38.5% on 14.2% Sales Increase

Alcon, Inc. (NYSE: ACL) reported global sales of $807.1 million for the first quarter of 2003, an increase of 14.2 percent over global sales in the first quarter of 2002, or 10.5 percent excluding the impact of foreign exchange fluctuations. Net earnings for the first quarter of 2003 increased 38.5 percent to $130.2 million, or $0.42 per share on a diluted basis, compared to $94.0 million, or $0.33 per share on a diluted basis for the first quarter of 2002.

At the time of its initial public offering in March 2002, Alcon permitted employees to convert their balances in a pre-existing employee deferred compensation plan into new restricted common shares with stock options. This conversion resulted in the issuance of approximately 2.2 million restricted shares and a one-time, after-tax charge to net earnings of $14.2 million in the first quarter of 2002. Adjusting for this non-recurring charge, Alcon’s proforma net earnings for the first quarter of 2002 would have been $108.2 million. Net earnings for the first quarter of 2003 would have increased 20.3 percent compared to first quarter 2002 proforma net earnings.

Gross profit for the first quarter of 2003 was $553.8 million, or 68.6 percent of sales, compared to $496.1 million, or 70.2 percent of sales, in the prior year period. Gross profit margin declined mainly due to variations in geographical and product sales mix, startup costs for the Infiniti™ vision system and LADARWave® diagnostic device and the impact of currency fluctuations on cost of goods sold as product flows through internal distribution channels.

Selling, General and Administrative expenses were $264.2 million, or 32.7 percent of sales, for the first quarter of 2003, compared to $252.4 million, or 35.7 percent of sales, for the first quarter of 2002. SG&A expenses in the first quarter of 2003 included costs associated with an increase in the U.S. pharmaceutical sales force, while the previous year’s first quarter included no costs related to this expansion. After adjusting first quarter 2002 SG&A expenses for $12.6 million of the total pre-tax charge associated with changes to an employee deferred compensation plan, SG&A expenses as a percent of sales in the first quarter of 2003 declined 1.2 percentage points. This occurred because Alcon continued to take advantage of operating efficiencies gained from its established global infrastructure.

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posted by srikanth.....july10