1000 - CONSOLIDATED BALANCE SHE
1000 - CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Dec. 31, 2008 |
Current assets: | ||
Cash and cash equivalents | $2,260 | $2,449 |
Short term investments | 426 | 564 |
Trade receivables, net | 1,319 | 1,168 |
Inventories | 626 | 574 |
Deferred income tax assets | 146 | 221 |
Other current assets | 236 | 243 |
Total current assets | 5,013 | 5,219 |
Long term investments | 137 | 24 |
Property, plant and equipment, net | 1,191 | 1,138 |
Intangible assets, net | 78 | 91 |
Goodwill | 645 | 645 |
Long term deferred income tax assets | 352 | 342 |
Other assets | 103 | 92 |
Total assets | 7,519 | 7,551 |
Current liabilities: | ||
Accounts payable | 217 | 199 |
Short term borrowings | 883 | 1,059 |
Current maturities of long term debt | 1 | 1 |
Other current liabilities | 966 | 931 |
Total current liabilities | 2,067 | 2,190 |
Long term debt, net of current maturities | 57 | 61 |
Long term deferred income tax liabilities | 23 | 22 |
Other long term liabilities | 592 | 587 |
Contingencies (note 15) | - | - |
Shareholders' equity: | ||
Common shares, par value CHF 0.20 per share, 321,297,600 shares authorized; 304,825,766 shares issued and 298,804,196 shares outstanding at June 30, 2009; 304,722,706 shares issued and 298,648,353 shares outstanding at December 31, 2008 | 42 | 42 |
Additional paid-in capital | 1,490 | 1,449 |
Accumulated other comprehensive income | 139 | 80 |
Retained earnings | 3,684 | 3,699 |
Treasury shares, at cost; 6,021,570 shares at June 30, 2009 and 6,074,353 shares at December 31, 2008 | (575) | (579) |
Total shareholders' equity | 4,780 | 4,691 |
Total liabilities and shareholders' equity | $7,519 | $7,551 |
1100 - PARENTHETICAL DATA TO TH
1100 - PARENTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEETS (USD $) | ||
Jun. 30, 2009
| Dec. 31, 2008
| |
Shareholders' equity: | ||
Common shares, par value CHF per share | 0.2 | 0.2 |
Common shares, shares authorized | 321,297,600 | 321,297,600 |
Common shares, shares issued | 304,825,766 | 304,722,706 |
Common shares, shares outstanding | 298,804,196 | 298,648,353 |
Treasury shares, at cost; shares | 6,021,570 | 6,074,353 |
2000 - CONSOLIDATED STATEMENTS
2000 - CONSOLIDATED STATEMENTS OF EARNINGS (USD $) | ||||
In Millions, except Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Sales | $1,677 | $1,736 | $3,170 | $3,272 |
Cost of goods sold | 415 | 415 | 769 | 813 |
Gross profit | 1,262 | 1,321 | 2,401 | 2,459 |
Selling, general and administrative | 468 | 527 | 940 | 1,011 |
Research and development | 157 | 142 | 303 | 287 |
Amortization of intangibles | 5 | 6 | 12 | 15 |
Operating income | 632 | 646 | 1,146 | 1,146 |
Other income (expense): | ||||
Gain (loss) from foreign currency, net | 9 | (3) | (1) | 3 |
Interest income | 13 | 20 | 24 | 46 |
Interest expense | (5) | (14) | (10) | (32) |
Other, net | 2 | 1 | 6 | (10) |
Earnings before income taxes | 651 | 650 | 1,165 | 1,153 |
Income taxes | 69 | 83 | 131 | 157 |
Net earnings | $582 | $567 | $1,034 | $996 |
Basic earnings per common share | 1.95 | 1.9 | 3.46 | 3.34 |
Diluted earnings per common share | 1.94 | 1.88 | 3.44 | 3.3 |
Basic weighted average common shares | 298,744,287 | 298,477,807 | 298,663,437 | 298,100,370 |
Diluted weighted average common shares | 300,638,975 | 301,986,076 | 300,328,778 | 301,558,546 |
3000 - CONSOLIDATED STATEMENTS
3000 - CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash provided by (used in) operating activities: | ||
Net earnings | $1,034 | $996 |
Depreciation | 92 | 85 |
Amortization of intangibles | 12 | 15 |
Share-based payments | 41 | 54 |
Tax benefit from share-based compensation | 1 | 6 |
Deferred income taxes | 65 | (23) |
Loss (gain) on sale of assets | 55 | 0 |
Unrealized depreciation (appreciation) on trading securities | (66) | 10 |
Other | 6 | 0 |
Changes in operating assets and liabilities, net of effects from business acquisition: | ||
Trade receivables | (144) | (162) |
Inventories | (35) | (22) |
Other assets | (2) | 18 |
Increase (Decrease) in Accounts Payable | 18 | 35 |
Increase (Decrease) in Other Current Liabilities | 31 | 43 |
Other long term liabilities | 7 | 17 |
Net cash from operating activities | 1,115 | 1,072 |
Cash provided by (used in) investing activities: | ||
Purchases of property, plant and equipment | (139) | (127) |
Purchases of intangible assets | (1) | (28) |
Purchases of investments | (657) | (37) |
Proceeds from sales and maturities of investments | 717 | 41 |
Other, net | 0 | 2 |
Net cash from investing activities | (80) | (149) |
Cash provided by (used in) financing activities: | ||
Net proceeds from (repayment of) short term debt | (187) | (186) |
Repayment of long term debt | (1) | (1) |
Dividends on common shares | (1,048) | (750) |
Acquisition of treasury shares | (5) | (21) |
Proceeds from exercise of stock options | 10 | 94 |
Tax benefits from share-based payment arrangements | 0 | 38 |
Net cash from financing activities | (1,231) | (826) |
Effect of exchange rates on cash and cash equivalents | 7 | 6 |
Net increase in cash and cash equivalents | (189) | 103 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 2,449 | 2,134 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | $2,260 | $2,237 |
6000 - Condensed Consolidated F
6000 - Condensed Consolidated Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Condensed Consolidated Financial Statements | |
Condensed Consolidated Financial Statements | (1) Condensed Consolidated Financial Statements (in millions, except share and per share data) Alcon, Inc. ("Alcon"), a Swiss corporation, is a majority owned subsidiary of Nestl S.A. ("Nestl"), which owned 156,076,263 common shares of Alcon at June 30, 2009, as discussed in note 14. The interim condensed consolidated financial statements of Alcon and its subsidiaries (collectively, the "Company") are unaudited.Amounts presented at December 31, 2008 are based on the audited consolidated financial statements appearing in Alcon's annual report on Form 20-F filed with the U.S. Securities and Exchange Commission.The interim condensed consolidated financial statements and notes thereto do not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP") and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in Alcon's annual report on Form 20-F. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U.S. GAAP.Actual results could differ from those estimates. In management's opinion, the interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary to present fairly the results for the interim periods presented.Results for interim periods are not necessarily indicative of results that ultimately will be achievedfor a full year. Management has evaluated subsequent events through the time that this report was filed on July 23, 2009. |
6010 - Earnings Per Share
6010 - Earnings Per Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Earnings Per Share | |
Earnings Per Share | (2) Earnings Per Share (in millions, except share and per share data) Basic earnings per common share were computed by dividing net earnings by the weighted average number of common shares outstanding for the relevant period.The unvested portion of restricted common shares was excluded in the calculation of basic weighted average common shares outstanding.Diluted weighted average commonshares reflect the potential dilution, using the treasury stock method, that could occur if employee stock options for the purchase of common shares and share-settled stock appreciation rights were exercised and if share-settled restricted share units and contingent restricted common shares granted to employees were vested. The following table reconciles the weighted average shares of the basic and diluted share computations: Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 Basic weighted average common shares outstanding 298,744,287 298,477,807 298,663,437 298,100,370 Effect of dilutive securities: Employee stock options 1,622,748 2,918,094 1,443,077 2,978,647 Share-settled stock appreciation rights 53,385 408,904 26,840 317,872 Share-settled restricted share units 143,530 51,630 94,710 36,103 Contingent restricted common shares 75,025 129,641 100,714 125,554 Diluted weighted average common shares outstanding 300,638,975 301,986,076 300,328,778 301,558,546 Certain executives of the Company had deferred the receipt of 126,194 and 147,580 Alcon common shares at June 30, 2009 and 2008, respectively, into the Alcon Executive Deferred Compensation Plan ("DCP").Alcon common shares held in the DCP werereflected as outstanding in the condensed consolidated balance sheets and were included in the applicable basic and diluted earnings per share calculations. The computations of diluted weighted average common shares outstanding for the periods ended June 30, 2009 and 2008 did not include the following instruments, as their exercise prices and unrecognized costs were greater than the average market price of the common shares: 2009 2008 Stock options 506,327 133,042 Share-settled stock appreciation rights 3,590,405 18,356 The effect of their inclusion would have been anti-dilutive. |
6020 - Cash Flows Supplemental
6020 - Cash Flows Supplemental Disclosure | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Cash Flows-Supplemental Disclosure | |
Cash Flows-Supplemental Disclosure | (3) Cash FlowsSupplemental Disclosure (in millions, except share and per share data) Six months ended June 30, 2009 2008 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for the following: Interest expense, net of amount capitalized $ 9 $ 31 Income taxes $ 121 $ 112 Access to Cash Equivalents During 2008, Lehman Brothers International (Europe) London filed for administration in England.At that time, the Company's cash and cash equivalents included $707.0 of short term securities held in a segregated custodial account of Lehman Brothers International (Europe) London pursuant to a Custody Agreement.After the securities were released, Nestl invoiced the Company in December 2008 and, in 2009, the Company reimbursed Nestl for a total of $5.2 in fees paid by Nestl to the Joint Administrators of Lehman Brothers International (Europe) London (in administration) related to the release of the short-term securities held in the custodial account.This amount of fees is subject to adjustment depending on the final costs incurred to settle the administration of Lehman Brothers International (Europe) London. |
6030 - Supplemental Balance She
6030 - Supplemental Balance Sheet Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Supplemental Balance Sheet Information | |
Supplemental Balance Sheet Information | (4) Supplemental Balance Sheet Information(in millions, except share and per share data) June 30, December 31, 2009 2008 Inventories, at Lower of Cost or Market Finished products $ 375 $ 358 Work in process 53 40 Raw materials 198 176 Total $ 626 $ 574 June 30, December 31, 2009 2008 Property, Plant and Equipment, Net Property, plant and equipment, at cost $ 2,456 $ 2,318 Accumulated depreciation (1,265 ) (1,180 ) Total $ 1,191 $ 1,138 June 30, 2009 December 31, 2008 Accumulated Other Comprehensive Income (Loss) Foreign currency translation adjustment $ 222 $ 194 Unrealized gains (losses) on investments, net of income taxes 18 (10 ) Unrecognized postretirement benefits (losses) and prior service costs, net of tax benefits (101 ) (104 ) Total $ 139 $ 80 |
6040 - Investments
6040 - Investments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Investments | |
Investments | (5) Investments (in millions, except share and per share data) At June 30, 2009 and December 31, 2008, investments were: June 30, 2009 December 31, 2008 Short term investments: Trading securities $ 43 $ 433 Available-for-sale investments 383 131 Total short term investments $ 426 $ 564 Long term investmentsavailable-for-sale investments $ 137 $ 24 At June 30, 2009 and December 31, 2008, trading securities were: June 30, 2009 December 31, 2008 Net Estimated Net Estimated Unrealized Fair Unrealized Fair Gains (Losses) Value Gains (Losses) Value Total trading securities $ (19 ) $ 43 $ (85 ) $ 433 At June 30, 2009, available-for-sale investments were: Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short term investments: U.S. government and agency securities $ 91 $ -- $ -- $ 91 Mortgage-backed securities fund 67 -- (1 ) 66 Mortgage-backed securities 11 -- -- 11 Senior secured bank loans fund 115 12 -- 127 Corporate debt securities 88 -- -- 88 Total short term investments 372 12 (1 ) 383 Long term investments: U.S. government and agency securities 16 -- (1 ) 15 Foreign government bonds 4 -- -- 4 Mortgage-backed securities 60 2 -- 62 Corporate debt securities 17 2 -- 19 Equity securities 20 4 (1 ) 23 Other investments 13 1 -- 14 Total long term investments 130 9 (2 ) 137 Total available-for-sale investments $ 502 $ 21 $ (3 ) $ 520 The senior secured bank loans fund is a professionally managed fund investing in loans made by banks to large corporate borrowers whose assets are pledged as collateral. At December 31, 2008, available-for-sale investments were: Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short term investments: Mortgage-backed securities $ 58 $ 1 $ -- $ 59 Senior secured bank loans fund 83 -- (11 ) 72 Total short term investments 141 1 (11 ) 131 Long term investments: U.S. government and agency securities 2 -- -- 2 Equity securities 20 -- -- 20 Other investments 2 -- -- 2 Total long term investments 24 -- -- 24 Total available-for-sale investments $ 165 $ 1 $ (11 ) $ 155 The contractual maturities of available-for-sale investments at June 30, 2009 were: Amortized Estimated Cost Fair Value Securities not due at a single maturity date* $ 194 $ 207 Other debt securities, maturing: Within one year 138 138 After 1 year through 10 years 116 120 After 10 years through 15 years 7 |
6050 - Fair Value of Financial
6050 - Fair Value of Financial Instruments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (6) Fair Value of Financial Instruments (in millions, except share and per share data) At June 30, 2009 and December 31, 2008, the Company's financial instruments included cash and cash equivalents, investments, trade receivables, accounts payable, short term borrowings and long term debt.The estimated fair value of these financial instruments is provided below.Due to the short term maturities of cash and cash equivalents, trade receivables, accounts payable and short term borrowings, thecarrying amounts approximate fair values at the respective balance sheet dates.The fair values of long term debt were based on interest rates then currently available to the Company for issuance of debt with similar terms and remaining maturities.The fair values of investments were determined as discussedbelow. June 30, 2009 December 31, 2008 Carrying Amounts Fair Value Carrying Amounts Fair Value Assets: Short term trading and available-for-sale investments $ 426 $ 426 $ 564 $ 564 Long term available-for-sale investments 137 137 24 24 Forward exchange contracts 3 3 10 10 Interest rate swaps 1 1 1 1 Liabilities: Long term debt, excluding capital lease obligations 58 58 62 62 Forward exchange and option contracts 6 6 5 5 Financial instruments, such as equity and fixed income securities, other investments and derivatives, were presented at fair value in accordance with Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements," as adopted by the Financial Accounting Standards Board("FASB").Fair value is defined as the price at which an asset could be exchanged or a liability could be transferred in an orderly transaction between knowledgeable and willing market participants within the principal or most advantageous market at the measurement date.Where available, fair value is based on or derived from observable market prices or parameters.Where observable prices or inputs are not available, pricing for similar financial assets or liabilities, dealerquotes or valuation models are applied.These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments complexity. Financial assets and liabilities recorded at fair value in the condensed consolidated balance sheets were categorized based upon the level of judgment associated with the inputs used to measure their fair value.The SFAS No. 157 hierarchical levels, from lowest to highest based on the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: Level 1 Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of Company assets carried at Level 1 fair value are equities listed in active markets. Level 2 Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liabilities through correlation with market data at the m |
6060 - Derivative Instruments a
6060 - Derivative Instruments and Hedging Activities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Derivative Instruments and Hedging Activities | |
Derivative Instruments and Hedging Activities | (7) Derivative Instruments and Hedging Activities (in millions, except shareand per share data) Effective January 1, 2009, the Company implemented SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities."The Company is exposed to certain risks relating to its ongoing business operations.The primary risks managed byusing derivative instruments are foreign exchange risk and interest rate risk.Forward contracts on various foreign currencies are entered into to manage the foreign exchange risk associated with intercompany and third party transactions that are denominated in currencies other than the U.S. dollar.Interest rate swaps are entered into to manage interest rate risk associated with the Companys fixed rate borrowings. In accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," the Company designates both its foreign exchange forward contracts and interest rate swaps of fixed rate borrowings as fair value hedges.For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. The Company believes that, at the balance sheet date, counterparty credit risk was not significant due to the credit quality of the counterparties to the derivatives, which were all large financial institutions in Japan, South Korea, Switzerland and the United Kingdom, and the short-term maturities of most derivatives. The credit exposure related to these financial instruments is represented by the fair value of contracts with a positive fair value at the reporting date.To manage credit risks, the Company selects counterparties based on credit ratings and other financial metrics and monitors the market position of the program and its relative market position with each counterparty. As of June 30, 2009, the total notional amount of the foreign exchange forward contracts was $482 and the notional amount of the receive-fixed/pay-variable interest rate swaps was $52. Fair Values of Derivative Instruments Asset Derivatives June 30, 2009 Balance Sheet Location Fair Value Derivatives designated as hedging instruments under Statement 133 Foreign exchange forward contracts Other current assets $ 3 Interest rate contracts Other current assets 1 Liability Derivatives June 30, 2009 Balance Sheet Location Fair Value Derivatives designated as hedging instruments under Statement 133 Foreign exchange forward contracts Other current liabilities $ 6 Effects of Derivative Instruments Three months ended June 30, 2009 Derivatives in Statement 133 Fair Value Hedging Relationships Location of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) on the Hedged Items Foreign exchange forward Gain (loss) from contracts foreign currency, net $ 18 $ (19 ) Interest rate contracts |
6070 - Intangible Assets And Go
6070 - Intangible Assets And Goodwill | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | (8) Intangible Assets and Goodwill (in millions, except share and per share data) June 30, 2009 December 31, 2008 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Intangible Assets Subject to Amortization Licensed technology $ 329 $ (290 ) $ 328 $ (284 ) Other 151 (112 ) 158 (111 ) Total $ 480 $ (402 ) $ 486 $ (395 ) United States International Segment Segment Total Goodwill Balance,June 30, 2009 and December 31, 2008 $ 403 $ 242 $ 645 |
6080 - Short Term Borrowings An
6080 - Short Term Borrowings And Long Term Debt | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Short Term Borrowings and Long Term Debt | |
Short Term Borrowings and Long Term Debt | (9) Short Term Borrowings and Long Term Debt (in millions, except share and per share data) June 30, December 31, 2009 2008 Short Term Borrowings Lines of credit $ 269 $ 311 Commercial paper 482 622 From affiliates 88 97 Bank overdrafts 44 29 Total short term borrowings $ 883 $ 1,059 At June 30, 2009, the Company had unsecured credit and commercial paper facilities totaling $2,679, including bank overdraft agreements, with third parties that were denominated in various currencies.As of June 30, 2009, total borrowings from Nestl and its subsidiaries were $88 under unsecured revolving credit facilities of $313. June 30, December 31, 2009 2008 Long Term Debt License obligations $ 4 $ 5 Bank loan 54 56 Other - 1 Total long term debt 58 62 Less current maturities of long term debt 1 1 Long term debt, net of current maturities $ 57 $ 61 |
6090 - Income Taxes
6090 - Income Taxes | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Income Taxes | |
Income Taxes | (10) Income Taxes (in millions, except share and per share data) The Company or one of its subsidiaries files income tax returns in Switzerland, the U.S. federal jurisdiction, and various state and other foreign jurisdictions.With few exceptions, the Company is no longer subject to Swiss, U.S. federal, state and local,or non-U.S. income tax examinations by tax authorities for years before 2003.In the first quarter of 2007, the Internal Revenue Service ("IRS") commenced an examination of the Company's U.S. income tax returns for 2003 through 2005 that was substantially completed in May 2009.In June 2009, the IRS commenced an examination of the Companys U.S. income tax returns for 2006 and 2007 that is anticipated to be completed by the end of 2010.In May 2009, the IRS and the Company enteredthe Compliance Assurance Process (CAP) program for 2009.The Company also currently is subject to income tax examinations by various state, local and other foreign tax authorities.In addition, in June 2009, the Company and the IRS signed its advance pricing agreement (APA) contract memorializing the mutual agreement letter between Switzerland and the United States for years through 2014 that covers all material intercompany transactions involving the Company and its subsidiaries inthese two jurisdictions.Finally, during the fourth quarter of 2007, the Company submitted a similar request for a bilateral APA between Japanese and Swiss tax authorities that would cover the tax years 2008 through 2012.The Company expects that the Japanese-Swiss APA will be concluded in 2009 or 2010. The Company believes that it takes reasonable positions on its tax returns filed throughout the world; however, tax laws are complex and susceptible to differing interpretations.Tax authorities throughout the world, from time to time, routinely challenge positions taken by the Company, particularly in the case of transfer pricing issues.The Company has identified its uncertain tax positions and prepared its reserve for contingent tax liabilities to reflect the associated unrecognized tax benefits (the "Tax Reserves") in accordance with FASB Interpretation ("FIN") No. 48 which, among other things, requires that the Company assume that it will be subject to examination in every jurisdiction in which it is subject to tax.Management believes that the Tax Reservesare fairly stated and that the possibility of a significant increase during the next 12 months in the total amounts of unrecognized tax benefits reflected in the Tax Reserves related to periods through the end of this reporting period is remote.However, the Company believes it is reasonably possible that approximately 80% of the Tax Reserves could be eliminated during the next 12 months as a result of actual payment of amounts included in the Tax Reserves and/or developments in various audits concerning multiple issues, including transfer pricing concerns. The total amount of gross unrecognized tax benefits included in the Tax Reserves decreased by $12 to $118 in the first six months of 2009.The net decrease in unrecognized tax benefits reflects net reductions related to progress on audit settlements, APA negotiations, th |
6100 - Business Segments
6100 - Business Segments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Business Segments | |
Business Segments | (11) Business Segments (in millions, except share and per share data) The Company conducts its global business through two business segments:Alcon United States and Alcon International.Alcon United States includes sales to unaffiliated customers located in the United States of America, excluding Puerto Rico.Alcon United States operating income is derived from operating profits within the United States.Alcon International includes sales to all other unaffiliated customers. Each business segment markets and sells products principally in three product categories of the ophthalmic market: (1) pharmaceutical (prescription drugs), (2) surgical equipment and devices (cataract, vitreoretinal and refractive) and (3) consumer eye care (contact lens disinfectants and cleaning solutions, artificial tears and ocular vitamins).Business segment operations generally do not include research and development, certain manufacturing and other corporate functions. Certain manufacturing costs and manufacturing variances are not assigned to business segments because most manufacturing operations produce products for more than one business segment.Research and development costs, excluding regulatory costs which are included in the business segments, are treated as general corporate costs andare not assigned to business segments. Identifiable assets are not assigned by business segment and are not considered in evaluating the performance of the business segments. Depreciation and Sales Operating Income Amortization Three months ended June 30, 2009 2008 2009 2008 2009 2008 United States $ 790 $ 788 $ 475 $ 437 $ 11 $ 11 International 887 948 372 397 22 21 Segments total 1,677 1,736 847 834 33 32 Manufacturing operations -- -- (19 ) (10 ) 12 12 Research and development -- -- (137 ) (119 ) 5 4 General corporate -- -- (40 ) (39 ) 3 2 Share-based compensation -- -- (19 ) (20 ) -- -- Total $ 1,677 $ 1,736 $ 632 $ 646 $ 53 $ 50 Depreciation and Sales Operating Income Amortization Six months ended June 30, 2009 2008 2009 2008 2009 2008 United States $ 1,448 $ 1,460 $ 828 $ 804 $ 23 $ 24 International 1,722 1,812 751 745 42 41 Segments total 3,170 3,272 1,579 1,549 65 65 Manufacturing operations -- -- (36 ) (24 ) 24 23 Research and development -- -- (256 ) (234 ) 9 8 General corporate -- -- (99 ) (91 ) 6 4 Share-based compensation -- -- (42 ) (54 ) -- -- Total $ 3,170 $ 3,272 $ 1,146 $ 1,146 $ 104 $ 100 Certain 2008 expenses were reclassified to align with the 2009 reporting structure, the most significant of which was to move the operating expenses of the Swiss service center from the general corporate function to the Internation |
6110 - Share Based Compensation
6110 - Share Based Compensation Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Share-Based Compensation Plans | |
Share-Based Compensation Plans | (12) Share-Based Compensation Plans (in millions, except share and per share data) On February 10, 2009, pursuant to the 2002 Alcon Incentive Plan, the Company's board of directors approved the grant, effective February 17, 2009, to certain employees of share-settled stock appreciation rights ("SSARs") and stock options for approximately 2.1 million Alcon common shares.The exercise price of a SSAR or an optionwas set at the closing market price of one Alcon common share, as reported by the New York Stock Exchange on the date of the grant, February 17, 2009, which was $87.09 per share.The SSARs and stock options are scheduled to become exercisable in 2012 and expire in 2019.The board also approved the grant, effective February 17, 2009, to certain employees of approximately 420,000 share-settled restricted share units ("RSUs").The RSUs vest at the end of a three-year period, withforfeitures if the recipient is not fully vested at retirement before age 62.The Company's board of directors also approved the grant, effective February 17, 2009, of approximately 47,000 performance share units to senior executive officers and other selected executives.The performance share units are designed to award additional compensation in the form of Alcon shares if earnings per share targets during a three-year period are met.The final award may be adjusted by a totalshareholder return multiplier.The performance share units vest at the end of a three-year period, with forfeitures if the recipient is not fully vested at retirement before age 62. On May 5, 2009, the Companys board of directors approved an award effective May 8, 2009 to each non-employee director of Alcon of 3,150 SSARs and 700 RSUs.The exercise price of a SSAR was set at the closing price of one Alcon common share, as reported on the New York Stock Exchange on the date of grant, May 8, 2009, which was$96.02 per share.Both the SSARs and RSUs have a three-year cliff vesting period from the date of grant.A non-employee director is a director who is neither a member of Nestl's board of directors nor a full-time employee of Nestl or Alcon. The weighted average grant-date "fair value of SSARs and stock options granted during the period ended June 30, 2009 was $18.87 per instrument.The "fair value" of each SSAR and stock option grant was estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Six months ended June 30, 2009 Expected volatility 31.5% Risk-free interest rate 1.66% Expected dividend yield 3.0% Expected term 5 years The Company based its estimates of expected volatility on daily historical trading data of its common shares from March 2002 through the grant dates and, due to its short history as a public company, other factors, such as the volatility of the common share prices of other pharmaceutical and surgical companies. The risk-free interest rate assumptions were based on implied yields, at the grant dates, of U.S. Treasury zero-coupon bonds having a remaining term equal to the expected term of the employee share awards. The expected dividend yield was estimate |
6120 - Pension and Postretireme
6120 - Pension and Postretirement Benefits | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Pension and Postretirement Benefits | |
Pension and Postretirement Benefits | (13) Pension and Postretirement Benefits (in millions, except share and per share data) Components of net periodic benefit costs: Pension Benefits Postretirement Benefits Three months ended June 30, 2009 2008 2009 2008 Service cost $ 5 $ 6 $ 4 $ 3 Interest cost 7 6 4 4 Expected return on assets -- (1 ) (3 ) (3 ) Prior service cost -- -- -- -- Net losses (gains) 1 2 1 -- Net periodic benefit cost $ 13 $ 13 $ 6 $ 4 Pension Benefits Postretirement Benefits Six months ended June 30, 2009 2008 2009 2008 Service cost $ 10 $ 12 $ 7 $ 7 Interest cost 13 12 8 7 Expected return on assets (1 ) (1 ) (5 ) (6 ) Prior service cost -- -- -- -- Net losses (gains) 3 3 2 1 Net periodic benefit cost $ 25 $ 26 $ 12 $ 9 The Company adopted the measurement date provisions of SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans," effective January 1, 2008.The Company elected to utilize the alternate transition method to transition the measurement date for its defined pension benefit plan in Japan fromSeptember 30 to December 31.Under this transition method, the Company charged 3/15ths of the estimated pension cost from October 1, 2007 to December 31, 2008 (or $0.8, net of taxes) to retained earnings as of January 1, 2008. The Company maintains an irrevocable Rabbi trust to be held and invested in an unfunded arrangement for the payment of benefits to participants under certain defined benefit pension plans of the Company.At June 30, 2009, the accompanying condensed consolidated balance sheet included net assets of the trust (cash and cash equivalents of $44, short term investments of $213 and long term investments of $23) that were restricted to the payment of pension benefits except under certain conditions, such as the Company's insolvency or termination of the trust. |
6130 - Shareholders' Equity
6130 - Shareholders' Equity | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Shareholders' Equity | |
Shareholders' Equity | (14) Shareholders' Equity (in millions, except share and per share data) (a) Share Cancellation On May 5, 2009, Alcon's shareholders approved the cancellation of 1,043,400 Alcon common shares, which the Company purchased during 2008.After the fulfillment of certain formal Swiss law requirements, the cancellation is expected to become effective in July or August 2009. (b) Shareholder Agreement On April 6, 2008, Nestl and Novartis AG ("Novartis") executed the Purchase and Option Agreement pursuant to which Nestl agreed to sell approximately 74 million of its shares of Alcon common stock to Novartis in a cash transaction at a price of $143.18 per share.This sale wasconsummated on July 7, 2008, and Novartis now owns a minority stake in Alcon of slightly less than 25% of Alcon's outstanding shares, while Nestl remains Alcon's majority shareholder with approximately 156 million Alcon shares comprising approximately 52% of the Company's outstanding shares. The Purchase and Option Agreement between Nestl and Novartis also contains put and call option rights on the balance of approximately 156 million Alcon shares owned by Nestl.The option rights commence on January 1, 2010 and expire on July 31, 2011.As outlined by thetwo parties, these rights grant (i) Novartis a call option to buy all but 4.1 million (or 2.5%) of Nestl's remaining Alcon shares at a fixed price of $181 per share and the 4.1 million shares at the first stage price of $143.18 per share, and (ii) Nestl a put option to sell to Novartis all but 4.1 million of its remaining Alcon shares to Novartis at the lower of Novartis's call price of $181 per share or a 20.5% premium above the then-market price of Alcon shares, which will be calculated as the average marketprice of Alcon shares during the five trading days immediately preceding the exercise date of the put option, with the 4.1 million share balance to be sold at the first stage closing price of $143.18 per share. The consummation of a purchase and sale transaction under the Purchase and Option Agreement is subject to regulatory approvals.The consummation would trigger certain change of control provisions in the Company's share-based awards plan (including the vesting of certain outstanding share-based awards), certain retirement plans for Company employees and other agreements. |
6140 - Commitments and Continge
6140 - Commitments and Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Commitments and Contingencies | |
Commitments and Contingencies | (15) Commitments and Contingencies(in millions, except share and per share data) Alcon, either alone or jointly with its commercial partners, has filed ten patent infringement actions against five different generic drug companies.With the exception of one Canadian generic challenger, all of these generic drug companies are seeking U.S. Food and Drug Administration ("FDA") approval to market generic versionsof Alcon products, under what is known as an Abbreviated New Drug Application ("ANDA"). The first infringement action was filed after Alcon received notice that Teva Pharmaceuticals USA, Inc. had filed an ANDA seeking approval to sell a generic version of Alcon's Vigamox antibiotic ophthalmic solution.Moxifloxacin, the primary ingredient in Vigamox, is licensed to Alcon by Bayer HealthCare AG.As part of its ANDA, Teva challenged three patents covering Alcon's innovator product Vigamox. Two of the patentsare owned by Alcon's licensor, Bayer HealthCare AG, and the third, which expires in 2020, is owned by Alcon.The two Bayer HealthCare patents were also the subject of another Teva ANDA seeking approval to sell a generic version of Bayer HealthCare's systemic moxifloxacin product, Avelox.Suit was filed by Alcon and Bayer HealthCare as co-plaintiffs against Teva relative to the Vigamox ANDAon April 5, 2006 in the U.S. District Court in Delaware.Bayer HealthCare subsequently filed suit in the same court relative to the Avelox ANDA, and the two suits were merged.Trial was scheduled to begin February 26, 2008, but the dispute between Bayer HealthCare and Teva relative to the two Bayer HealthCare patents was resolved by settlement on the eve of trial.Under the terms of the settlement,Teva acknowledged the validity and enforceability of both Bayer HealthCare patents, and further acknowledged that its proposed generic ophthalmic product would infringe both patents.Teva has therefore relinquished any claim that it is entitled to market the generic ophthalmic product prior to September 4, 2014.Alcon remains the exclusive ophthalmic licensee under the Bayer HealthCare patents.The trial relative to the Alcon patent began on February 28, 2008 and concluded on March 6, 2008.Judgment is not expected until the second half of 2009.Should Teva succeed in overcoming the Alcon patent and secure FDA approval, it would be entitled to sell a generic moxifloxacin product that would compete with Alcon's Vigamox product in the United Stateson September 4, 2014, well before the 2020 expiration of the Alcon patent.Such competition would be expected to impact significantly the Company's sales and profits. The second patent infringement action was filed after Alcon received notice that Apotex, a Canadian-based generic drug company, had filed an ANDA challenging one of the patents covering Alcon's Patanol anti-allergyeye product.Alcon's raw material supplier, Kyowa Hakko Kirin Co., Ltd., holds another U.S. patent that has not been challenged in this case and expires on December 18, 2010.The patent that Apotex has challenged, which is co-owned by Alcon and Kyowa, will expire in 2015.Alcon and Kyowa, as co-plaintiffs, filed suit against Apotex Inc. and Apotex Corp. o |
Document Information
Document Information | |
3 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 6-K |
Document Period End Date | 2009-06-30 |
Amendment Flag | true |
Amendment Description | Filed to include XBRL exhibits |
Entity Information
Entity Information (USD $) | |
3 Months Ended
Jun. 30, 2009 | |
Entity Information [Line Items] | |
Entity Registrant Name | Alcon |
Entity Central Index Key | 0001167379 |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Large Accelerated Filer |
Entity Public Float | $7,973,576,740 |
Entity Common Stock, Shares Outstanding | 298,804,196 |