Alcon's Second Quarter Sales Rise 17.9 Percent; Net Earnings Increase 26.3 Percent.

HUENENBERG, Switzerland -- Alcon, Inc. (NYSE:ACL) reported global sales of $1,735.2 million for the second quarter of 2008, an increase of 17.9 percent compared to the second quarter of 2007, or 11.2 percent excluding the impact of foreign exchange fluctuations. Net earnings for the second quarter of 2008 increased 26.3 percent to $566.4 million, or $1.88 per share on a diluted basis, compared to $448.4 million, or $1.48 per share for the second quarter of 2007.

"The results for the second quarter demonstrate the benefits of our global operations that experienced strong growth in our core product lines and solid sales performance around the world," said Cary Rayment, Alcon's chairman, president and chief executive officer. "Revenues in both developed and emerging markets outside the U.S. were particularly robust, while our advanced technology intraocular lenses and glaucoma franchise continued to deliver excellent sales growth."

Second Quarter Sales Highlights

Highlights of sales for the second quarter of 2008 are provided below. Unless otherwise noted, all comparisons are versus the second quarter of 2007.

* International sales rose 28.9 percent to $947.3 million, or 15.4 percent excluding foreign exchange, with emerging markets sales increasing 29.5 percent, or 18.9 percent excluding foreign exchange. Sales in the United States increased 7.0 percent to $787.9 million.

* Pharmaceutical sales grew 17.6 percent, or 12.1 percent on a constant currency basis, to $745.1 million. Sales of glaucoma products increased 26.9 percent, due to growth in sales of the TRAVATAN([R]) family of ophthalmic solutions and Azopt([R]) ophthalmic suspension on a global basis, continued market share gains of DuoTrav(TM) ophthalmic solution outside the United States and the impact of the launch of TRAVATANZ(TM) ophthalmic solution in Japan. Sales of infection/inflammation products rose 12.1 percent as a result of market share gains by Vigamox([R]) ophthalmic solution in the United States and sales growth for TobraDex([R]) ophthalmic suspension and ointment outside the United States. Sales of allergy products, which include Patanol([R]) ophthalmic solution and Pataday[TM] ophthalmic solution, despite a mild allergy season in the U.S., rose 5.3 percent on market share gains for Pataday[TM] in the United States and for Patanol([R]) in Japan. Sales of otic/nasal products grew 16.7 percent to $100.8 million, supported by the initial distribution and U.S. launch of Patanase([R]) nasal spray in May 2008.

* Surgical sales rose 21.6 percent or 13.1 percent on a constant currency basis, to $768.7 million. Sales of intraocular lenses increased 23.5 percent to $288.6 million, driven by the solid global performance of AcrySof([R]) IQ lenses and strong sales of advanced technology lenses. Advanced technology intraocular lens sales were $50.9 million, an increase of 52.0%. This strong performance in advanced technology lenses was attributable to the AcrySof([R]) Toric and the AcrySof([R]) ReSTOR([R]) Aspheric lenses, both of which posted healthy gains compared to last year. Sales of cataract and vitrectomy products rose 15.6 percent, due to continued market share gains and conversion to advanced technology such as Infiniti([R]) vision system with Ozil[TM] torsional hand piece, viscoelastics, disposable instruments and custom packs. Refractive revenue increased 215.5 percent due to revenues generated by the WaveLight Allegretto([R]) refractive laser, partially offset by declines in procedure revenues from the installed base of LADARVISION([R]) excimer lasers.

* Consumer eye care sales increased 7.8 percent, or 2.2 percent on a constant currency basis, to $221.4 million. Sales of contact lens disinfectants grew 4.6 percent, as OPTI-FREE([R]) RepleniSH([R]) and OPTI-FREE([R]) Express([R]) multipurpose disinfecting solutions continued to maintain their combined market share in the United States. The 2007 second quarter included the positive impact of the recall of a competitive product, which made the comparison to the second quarter of 2008 more challenging. Sales of artificial tears products increased 17.9 percent, led by increases in the global sales of Systane([R]) lubricant eye drops.

Second Quarter Earnings Details

Highlights of earnings for the second quarter of 2008 are provided below. Unless otherwise noted, all comparisons are versus the second quarter of 2007.

* Gross profit margin improved 0.1 percentage points to 76.1 percent of sales. Gross profit margin in 2008 improved due to favorable sales mix, price increases taken in the first quarter and continuous improvement in our global manufacturing processes. These positive contributions were partially offset by costs associated with the integration of the company's refractive operations.

* Selling, general and administrative expenses increased faster than sales and were 30.4 percent of sales due to costs related to the establishment and relocation of the company's shared service center in Switzerland, the integration and operating expenses of WaveLight AG, and sales force expansions in the United States, Japan and emerging markets.

* Research and development expenses were 8.2 percent of sales, 1.3 percentage points less than the second quarter of 2007. The decline in research and development expenses as a percent of sales was primarily attributable to project timing. In addition, because most research and development expenses are incurred in U.S. dollars, they do not rise in line with sales growth when there are large currency variations.

* Operating income increased 20.3 percent to $645.6 million or 37.2 percent of sales, a 0.7 percentage point improvement over the reported results for the second quarter of 2007.

* Total non-operating income declined by $12.3 million primarily because of lower net investment gains due to volatility in the global investment markets.

* The company's effective tax rate declined from 18.8 percent to 12.8 percent, primarily as a result of the tax benefits associated with the establishment of the company's shared service center in Switzerland.

* Net earnings increased 26.3 percent to $566.4 million as a result of strong sales growth, gross profit margin improvement, lower operating expenses as a percent of sales and a lower effective tax rate. These positive factors were partially offset by lower income from investments.

New Product and R&D Pipeline Update

Summarized below are updates on new products and significant research and development activities.

* In April 2008, the United States Food and Drug Administration (FDA) approved Patanase([R]) nasal spray for the treatment of symptoms of seasonal allergic rhinitis in patients twelve years of age and older.

* The company has reached agreement with the FDA on the testing protocol that will be used to address the information requirements specified in the approvable letter it received for TobraDex([R]) ST ophthalmic suspension. It expects to complete the testing and submit the data to the FDA in the third quarter of 2008.

* Alcon filed a Pre-Marketing Application for the AcrySof([R]) ReSTOR([R]) +3.0 Add intraocular lens in June 2008 in the United States. This intraocular lens was CE marked in Europe in the third quarter of 2007.

* The Japanese Ministry of Health, Labor and Welfare (MHLW) approved the AcrySof([R] )ReSTOR([R]) Aspheric intraocular lens with a 4.0 diopter add power in July 2008.

* In July 2008, the company announced its decision to terminate clinical development of anecortave acetate for the treatment of age-related macular degeneration. Development of anecortave acetate for the treatment of elevated intraocular pressure and glaucoma continues.

* In May 2008, the FDA approved the 510(k) filing for the CONSTELLATION([R] )vitrectomy system, the company's next-generation platform for vitreoretinal surgery.

* In June 2008, the collaboration agreement between Alcon and Amgen, established in 2006, to develop and commercialize ophthalmic therapies was terminated, pursuant to a non-advancement clause in the agreement, as no compounds had been identified for development in ophthalmology.

Financial Guidance

Financial guidance for the full year 2008 and factors impacting this guidance are provided below.

* The company increased its sales guidance to a range of $6,460 million to $6,510 million. The increase is primarily due to the continuation of a more favorable currency environment than originally expected.

* The company also increased its guidance for diluted earnings per share to a range of $6.48 to $6.54. This range includes SG&A expenses related to the expansion and relocation of the company's Swiss operations, as well as integration expenses related to the company's refractive surgery manufacturing and other operations, which will be booked to cost of goods sold. Consistent with the previously issued earnings guidance, the new range assumes the ultimate passage of the Research and Development Tax Credit in the United States in the fourth quarter of 2008, with retroactive applicability.

Other Items

* On July 8, 2008, Nestle S.A. and Novartis AG executed the sale of 74 million Alcon common shares from Nestle to Novartis pursuant to the agreement dated April 6, 2008. After Novartis acquired 24.85% of the outstanding shares, the Alcon board expanded from eight to ten members adding as new directors James Singh, Nestle's executive vice president and chief financial officer, and Daniel Vasella, M.D., Novartis' chairman and chief executive officer.

* The company entered into a patent cross-licensing agreement with Advanced Medical Optics, Inc. related to lubricious coatings for intraocular lens (IOL) insertion devices and specific one-piece IOL designs. In the second quarter of 2008, the company recognized a net reduction of $1.5 million in selling, general and administrative expenses from this transaction. It also recorded an asset of $22.5 million that will be amortized over the useful life of the patents.

* Alcon filed a counterclaim lawsuit against Synergetics USA, Inc. in response to a lawsuit filed by that company related to Alcon's vitreoretinal business.

Company Description

Alcon, Inc. is the world's leading eye care company, with sales of approximately $5.6 billion in 2007. Alcon, which has been dedicated to the ophthalmic industry for more than 60 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 Nestle, S.A., the world's largest food company. All trademarks noted in this release are the property of Alcon, Inc. Moxifloxacin, the active ingredient in Vigamox([R]), is licensed to Alcon, Inc. by Bayer HealthCare AG.

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Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth 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 with current year presentation.

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Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth 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 with current year presentation.

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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; 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.