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Alcon Posts Solid Fourth Quarter Financial Results

Alcon, Inc. (NYSE:ACL) reported that global sales rose 5.7 percent to $1.81 billion for the fourth quarter of 2010. Revenue from acquisitions added 100 basis points to sales growth in the quarter, while foreign currency fluctuations reduced reported sales growth by 20 basis points. Excluding these two factors, the organic sales growth rate was 4.9 percent.

Net earnings for the fourth quarter of 2010 rose 13.8 percent to $521 million, or $1.71 per diluted share, compared to $458 million, or $1.51 per diluted share, in the fourth quarter of 2009. Reported net earnings in the fourth quarter of 2010 included $9 million in after-tax other operating expenses related to the change of majority ownership and merger proposal from Novartis AG. Reported net earnings in the fourth quarter of 2009 included a $30 million tax provision related to a change in tax law regarding the deductibility of foreign currency losses. Excluding these expenses, non-GAAP adjusted net earnings would have grown 8.6 percent to $530 million, or $1.74 per diluted share, compared to adjusted net earnings in the fourth quarter 2009.

For the full year 2010, Alcon, Inc. reported global sales of $7.18 billion, an increase of 10.5 percent over 2009. Revenue from acquisitions and foreign currency fluctuations added 60 and 130 basis points, respectively, to reported sales growth in 2010. Excluding these two factors, the organic sales growth rate was 8.6 percent. Based on these results and an analysis of market factors, Alcon expects to achieve constant currency sales growth in the high single digits in 2011.

Net earnings for 2010 rose 10.1 percent to $2.21 billion, or $7.27 per share on a diluted basis, compared to $2.01 billion, or $6.66 per diluted share, in 2009. Reported net earnings in 2010 included a $24 million pre-tax reduction to cost of goods sold related to changes in estimates for accrued royalties, $130 million in after-tax other operating expenses related to the change of majority ownership and merger proposal from Novartis AG and a $25 million period tax charge related to a change in the tax treatment of retiree medical benefits resulting from U.S. health care reform legislation. Reported net earnings in 2009 included $14 million of after-tax costs related to a reduction in force and $30 million related to the aforementioned tax provision. Excluding these expenses, non-GAAP adjusted net earnings for 2010 would have risen 14.3 percent to $2.34 billion, or $7.71 per diluted share compared to adjusted net earnings in 2009.

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