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`acl20f2009.htm
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`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`FORM 20-F
`
`REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
`1934
`
`OR
`X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`For the fiscal year ended DECEMBER 31, 2009
`ACT OF 1934
`OR
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`OR
`SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`
`Commission file number 001-31269
`
`ALCON, INC.
`(Exact name of Registrant as specified in its charter)
`ALCON, INC.
` (Translation of Registrant's name into English)
`Switzerland
`(Jurisdiction of incorporation or organization)
`Bösch 69, P.O. Box 62, Hünenberg, Switzerland
`(Address of principal executive offices)
`Elaine E. Whitbeck, General Counsel & Corporate Secretary, Alcon Inc., 6201 South Freeway, TA7-1, Fort Worth, Texas, USA
`76134-2099; 817-293-0450; AlconSECContact@Alcon.com
`(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
`Securities registered or to be registered pursuant to Section 12(b) of the Act.
`Title of each class
`Name of each exchange on which registered
`Common Shares, par value CHF 0.20 per share
`The New York Stock Exchange
`
`Securities registered or to be registered pursuant to Section 12(g) of the
`Act. None
`Securities for which there is a reporting obligation pursuant to Section 15(d) of the
`Act. None
`Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by
`the annual report.
`299,550,733 Common Shares
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`No
`Yes
`
`X
`
`If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
`15(d) of the Securities Exchange Act of 1934.
`No
`Yes
`
`X
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
`Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
`been subject to such filing requirements for the past 90 days.
`No
`Yes
`X
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.
`Large Accelerated Filer
`Accelerated Filer
`Non-accelerated Filer
`X
`Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
`U.S. GAAP
`International Financial Reporting Standards as issued
`Other
`X
`by the International Accounting Standards Board
`If ″Other″ has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has
`elected to follow.
`Item 18 Exhibit 1064
`ARGENTUM
`1/238
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`If this report is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
`Exchange Act).
`
`X
`
`No
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`TABLE OF CONTENTS
`
`
`
`INTRODUCTION AND USE OF CERTAIN TERMS
`CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
`PART I
`ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
`ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
`ITEM 3. KEY INFORMATION
`ITEM 4. INFORMATION ON THE COMPANY
`ITEM 4A. UNRESOLVED STAFF COMMENTS
`ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
`ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
`ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
`ITEM 8. FINANCIAL INFORMATION
`ITEM 9. THE OFFER AND LISTING
`ITEM 10. ADDITIONAL INFORMATION
`ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
`ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
`PART II
`ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
` ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
`PROCEEDS
`ITEM 15. CONTROLS AND PROCEDURES
`ITEM 16. [RESERVED]
`ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
`ITEM 16B. CODE OF ETHICS
`ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
` ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
`ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
`ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
`ITEM 16G. CORPORATE GOVERNANCE
`PART III
`ITEM 17. FINANCIAL STATEMENTS
`ITEM 18. FINANCIAL STATEMENTS
`ITEM 19. EXHIBITS
`SIGNATURES
`
`2
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`INTRODUCTION AND USE OF CERTAIN TERMS
`
`
`
`Trademarks used by Alcon, Inc. ("Alcon") appear in italic type in this report and are the property of or are licensed by one of our
`subsidiaries.
`
`In this report, the trademark product brand names refer to the products noted below.
`
`Product Brand Name
`A-OK®
`Accurus®
`AcrySof®
`AcrySof® Aspheric Toric
`AcrySof® Cachet™
`AcrySof® IQ
`AcrySof® IQ ReSTOR®
`AcrySof® IQ ReSTOR® Toric
`AcrySof® IQ Toric
`AcrySof® Natural
`AcrySof® Phakic
`AcrySof® ReSTOR®
`AcrySof® ReSTOR® Aspheric
`AcrySof® ReSTOR® Aspheric, +3.0 add
`AcrySof® ReSTOR® Aspheric, +4.0 add
`AcrySof® ReSTOR® Toric
`AcrySof® Toric
`ALCON®
`ALLEGRETTO™
`ALLEGRETTO WAVE® Eye-Q
`ALLEGRO ANALYZER®
`ALLEGRO™
`ALLEGRO OCULYZER®
`ALLEGRO TOPOLYZER®
`AquaLase®
`AZARGA®
`Azopt®
`Betoptic S®
`BSS Plus®
`CiloDex®
`CIPRODEX®*
`Cipro® HC*
`CONSTELLATION®
`Custom Pak®
`DisCoVisc®
`DuoTrav® (EU)
`DuoVisc®
`Durezol™
`EXPRESS®
`Ex-PRESS®
`Grieshaber®
`ICAPS®
`Infiniti®
`LADARVision®
`Laureate®
`LEGACY®
`
`Referenced Product
`A-OK® ophthalmic knives
`Accurus® surgical system
`AcrySof® intraocular lens
`AcrySof® Aspheric Toric intraocular lens
`AcrySof® Cachet™ phakic lens
`AcrySof® IQ intraocular lens
`AcrySof® IQ ReSTOR® intraocular lens
`AcrySof® IQ ReSTOR® Toric intraocular lens
`AcrySof® IQ Toric intraocular lens
`AcrySof® Natural intraocular lens
`AcrySof® Phakic intraocular lens
`AcrySof® ReSTOR® intraocular lens
`AcrySof® ReSTOR® Aspheric intraocular lens
`AcrySof® ReSTOR® Aspheric, +3.0 add intraocular lens
`AcrySof® ReSTOR® Aspheric, +4.0 add intraocular lens
`AcrySof® ReSTOR® Toric intraocular lens
`AcrySof® Toric intraocular lens
`ALCON® house trademark
`ALLEGRETTO™ laser system
`ALLEGRETTO WAVE® Eye-Q 400 Hz laser
`ALLEGRO ANALYZER® wavefront system
`ALLEGRO™ biometry system
`ALLEGRO OCULYZER® pentacam diagnostic device
`ALLEGRO TOPOLYZER® corneal topography system
`AquaLase® liquefaction device
`AZARGA® ophthalmic suspension
`Azopt® ophthalmic suspension
`Betoptic S® ophthalmic suspension
`BSS Plus® irrigating solution
`CiloDex® otic solution
`CIPRODEX® otic suspension
`Cipro® HC Otic
`CONSTELLATION® vitreoretinal system
`Custom Pak® surgical procedure packs
`DisCoVisc® viscosurgical device
`DuoTrav® ophthalmic solution
`DuoVisc® viscoelastic system
`Durezol™ ophthalmic steroid
`EXPRESS® contact lens care solutions
`Ex-PRESS® mini glaucoma shunt
`Grieshaber® surgical instruments
`ICAPS® dietary supplements
`Infiniti® vision system
`LADARVision® excimer laser/system
`Laureate® compact phacoemulsification system
`LEGACY® surgical system
`
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`Product Brand Name
`NEVANAC®
`Opatanol® (EU)
`OPTI-FREE®
`OPTI-FREE® EXPRESS® No-Rub®
`OPTI-FREE® RepleniSH®
`OZil®
`Pataday™
`Patanase®
`Patanol®
`Perfluoron®
`ProVisc®
`PUREPOINT®
`Silikon®
`SOFZIA®
`Systane®
`Systane® Ultra
`Tears Naturale®
`TobraDex®
`Tobrex®
`TRAVATAN®
`TRAVATAN Z®
`TRIESENCE®
`Vegamox®* (Japan)
`Vigadexa®
`Vigamox®*
`VISCOAT®
`ZIRGAN™
`Zyclorin™
`
`Referenced Product
`NEVANAC® ophthalmic suspension
`Opatanol® ophthalmic solution
`OPTI-FREE® contact lens care solutions
`OPTI-FREE® EXPRESS® No-Rub® contact lens care solution
`OPTI-FREE® RepleniSH® multi-purpose disinfecting solution
`OZil® torsional hand piece/technology
`Pataday™ ophthalmic solution
`Patanase® nasal spray
`Patanol® ophthalmic solution
`Perfluoron® perfluoro-n-octane liquid
`ProVisc® ophthalmic viscosurgical device
`PUREPOINT® vitreoretinal laser
`Silikon® ophthalmic surgical oil
`SOFZIA® preservative system
`Systane® lubricant eye drops
`Systane® Ultra lubricant eye drops
`Tears Naturale® lubricant eye drops
`TobraDex® ophthalmic suspension or ointment
`Tobrex® ophthalmic solution or ointment
`TRAVATAN® ophthalmic solution
`TRAVATAN Z® ophthalmic solution
`TRIESENCE® injectable suspension
`Vegamox® ophthalmic solution
`Vigadexa® ophthalmic solution
`Vigamox® ophthalmic solution
`VISCOAT® ophthalmic viscosurgical device
`ZIRGAN™ topical ophthalmic gel
`Zyclorin™ ophthalmic formulation
`
`* Cipro® and CIPRODEX® are registered trademarks of Bayer AG, licensed to Alcon by Bayer Schering Pharma
`AG. Moxifloxacin, the primary ingredient in Vigamox® and Vegamox®, is licensed to Alcon by Bayer Schering Pharma AG.
`
`Avelox® is a trademark of Bayer Schering Pharma AG. Zaditor® is a trademark of Novartis AG. Timoptic-XE® is a trademark of
`Merck & Co., Inc. Lucentis® is a trademark of Genentech, Inc. CPT® is a trademark of the American Medical Association.
`
`In this report, references to "$", "U.S. $", "U.S. dollars" and "United States dollars" are to the lawful currency of the United States of
`America, references to "CHF" and "Swiss francs" are to the lawful currency of the Swiss Confederation, references to "euro" are to the
`lawful currency of the member states of the European Monetary Union that have adopted or that adopt the single currency in accordance
`with the Treaty establishing the European Community, as amended by the Treaty on European Union, and references to Japanese yen are to
`the lawful currency of Japan. Unless otherwise stated, figures provided are under United States generally accepted accounting principles
`("U.S. GAAP"). Unless we specify otherwise, all references in this report to "we," "our," "us," "the Company" and "our Company" refer to
`Alcon, Inc. and its subsidiaries.
`
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`This report uses certain terms defined below.
`
`Term
`AMD
`ANDA
`ANDS
`AOMT
`AREDS
`ASC
`ASERP
`BAC
`CEO
`CMS
`CP Program
`(the) Company
`DCP
`DTC
`EPS
`ESCP
`EU
`EUCMS
`Evaluation Date
`Exchange Act
`External auditors
`
`FASB
`FDA
`FDAAA
`FTC
`IFRS
`IPO
`
`IRB
`LASIK
`NDA
`Non-U.S. Holder
`NSAID
`NYSE
`OTC
`PMA
`Purchase and Option Agreement
`
`REMS
`RMS
`SAB
`SEC
`Second Stage Closing
`
`Securities Act
`Separation Agreement
`Services Agreement
`
`
`
`Definition
`Age-related macular degeneration
`Abbreviated New Drug Application
`Abbreviated New Drug Submission
`Otitis media in the presence of tympanostomy tubes
`National Eye Institute's Age Related Eye Disease Study
`Accounting Standards Codification
`Alcon Supplemental Executive Retirement Plan
`Benzalkonium chloride
`Chief Executive Officer
`The Centers for Medicare and Medicaid Services
`Alcon's Commercial Paper Program
`Alcon, Inc. and its subsidiaries
`Alcon Executive Deferred Compensation Plan
`Depository Trust Company
`Earnings Per Share
`Alcon's Executive Salary Continuation Plan
`European Union
`Concerned member state of the European Union
`End of the period covered by this annual report
`U.S. Securities Exchange Act of 1934
`The primary Alcon Group external auditors and additional external auditors specific to
`the Company subsidiary
`Financial Accounting Standards Board
`United States Food and Drug Administration
`Food and Drug Administration Amendments Act of 2007
`U.S. Federal Trade Commission
`International Financial Reporting Standards
`The initial public offering of approximately 69,750,000 of Alcon, Inc.'s common shares
`on March 20, 2002
`Institutional Review Board
`Laser-Assisted In Situ
`New Drug Application
`A holder that is not a U.S. Holder (see definition of U.S. Holder below)
`Non-steroidal anti-inflammatory drug
`New York Stock Exchange
`Over-the-Counter drugs available without a prescription
`Pre-Market Approval
`Purchase and Option Agreement between Nestlé S.A. and Novartis AG dated as of
`April 6, 2008
`Risk evaluation and mitigation strategies discussed in the FDAAA
`Reference member state of the European Union
`Staff Accounting Bulletin published by the SEC
`United States Securities and Exchange Commission
`The purchase and sale of Nestlé's remaining Alcon shares to Novartis under the
`Purchase and Option Agreement
`U.S. Securities Act of 1933, as amended
`Separation Agreement between Nestlé and Alcon described in Item 7.B.2
`Guarantee Fee and Commercial Paper Program Services Agreement, as described in
`Item 7.B, "Related Party Transactions"
`
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`Term
`SFAS
`Shareholders Agreement
`SSAR(s)
`Swiss Holder
`TSR
`U.S. GAAP
`U.S. Holder
`VHCA
`
`
`Definition
`Statement of Financial Accounting Standards
`Shareholders Agreement between Nestlé and Novartis dated as of April 6, 2008
`Share-settled stock appreciation right(s)
`Security holder as defined in Item 10.E.
`Total shareholder return
`United States generally accepted accounting principles
`Security holder as defined in Item 10.E.
`Veterans Health Care Act
`
`References to the ophthalmic industry in this report do not include eyeglasses or contact lenses. This report relies on and refers to
`statistics regarding the ophthalmic industry. Where specified, these statistics reflect the Company's internal estimates. Otherwise, we
`obtained these statistics from various third-party sources that we believe are reliable, but we have not independently verified these third-
`party statistics. Unless otherwise specified, all market share information was based on units sold.
`
`Statements in this report regarding the Company's market share position in the United States for ophthalmic pharmaceuticals
`(including generics) were based on total retail prescriptions filled as independently reported by the Wolters Kluwer Health Source
`Prescription Audit for the years ended December 31, 2009 and 2008.
`
`Statements in this report regarding the Company's worldwide market share position for ophthalmic surgical products by sales were
`based on internal estimates prepared using industry data for the nine months ended September 30, 2009 and 2008.
`
`Statements in this report regarding the Company's market position in the United States for consumer products by sales in U.S. dollars
`were based on internal estimates prepared using a variety of external sources.
`
`CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
`
`This report contains "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended,
`(the "Securities Act") and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, (the "Exchange Act") relating to our
`business and the sectors in which Alcon and its subsidiaries and interests operate. These forward-looking statements are contained
`principally in the sections entitled "Key Information," "Information on the Company," "Operating and Financial Review and Prospects,"
`"Financial Information," "Additional Information," and "Quantitative and Qualitative Disclosures about Market Risk." 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. Forward-looking statements include, but are not limited to, statements about: the progress of our research and development
`programs; the receipt of regulatory approvals; competition in our industry; the impact of pending or future litigation; the impact of any
`future product recalls; changes in, or the failure or inability to comply with, governmental regulation; the opportunities for growth, whether
`through internal development or acquisitions; exchange rate fluctuations; general economic conditions; and trends affecting the ophthalmic
`industry, our financial condition or results of operations.
`
`Words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "intend," "estimate," "project,"
`"predict," "potential" and similar expressions are intended to identify forward-looking statements. These statements reflect our current
`views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you
`should not place undue reliance on these forward-looking statements. We discuss many of these risks in this report in greater detail under
`the subheadings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These
`forward-looking statements represent our estimates and assumptions only as of the date of this report and are not intended to give any
`assurance as to future results. Factors that might cause future results to differ include, but are not limited to, the following:
`
`
`
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`· a change of control may trigger contractual obligations that have a significant adverse effect on results of operations or cause volatility
`in our share price;
`
`
`
`· resources devoted to research and development may not yield new products that achieve commercial success;
`
`· the production and launch of commercially viable products may take longer and cost more than expected;
`
`· competition may lead to worse than expected financial condition and results of operations;
`
`· changes in reimbursement procedures and/or amounts by third-party payors;
`
`· changes caused by regulatory or market forces in the prices we receive for our products;
`
`· changes in the global economic environment in which we operate, as well as changes in the economic conditions in our markets;
`
`· currency exchange rate fluctuations may negatively affect our financial condition and results of operations;
`
`· the impact of any future events with material unforeseen impacts, including, but not limited to, war, natural disasters, or acts of
`terrorism;
`
`· supply and manufacturing disruptions could negatively impact our financial condition or results of operations;
`
`· inability to attract qualified personnel, which could negatively impact our ability to grow our business;
`
`· difficulty protecting our intellectual property rights;
`
`· pending or future litigation may negatively impact our financial condition and results of operations;
`
`· government regulation or legislation may negatively impact our financial condition or results of operations;
`
`· product recalls or withdrawals may negatively impact our financial condition or results of operations;
`
`· the occurrence of environmental liabilities arising from our operations; and
`
`· the occurrence of any losses from property and casualty, general liability, business interruption and environmental liability risks could
`negatively affect our financial condition because we self-insure against those risks through our captive insurance subsidiaries.
`
`You should read this report completely and with the understanding that Alcon's 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 United States Securities and Exchange Commission ("SEC"), 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.
`
`
`ITEM 1.
`
`
`
`
`IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
`
`PART I
`
`Not Applicable.
`
`ITEM 2.
`
`OFFER STATISTICS AND EXPECTED TIMETABLE
`
`7
`
`Not Applicable.
`
`
`
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`ITEM 3.
`
`KEY INFORMATION
`
`A. SELECTED FINANCIAL DATA
`
`The following tables present our selected historical consolidated financial data in accordance with U.S. GAAP. This information
`should be read along with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 5 of
`this report and the consolidated financial statements, including the accompanying notes thereto, included in Item 18 of this report.
`
`Year Ended December 31,
`2006
`2008
`2007
`
`
`(in millions, except per share data)
`
`
`
`
`
`$
`6,294
`$
`5,599
`$
`1,472
`1,398
`
`
`4,822
`4,201
`1,961
`1,694
`619
`564
`--
`9
`29
`51
`
`
`2,213
`1,883
`76
`69
`(51)
`(50)
`(155)
`27
`
`
`2,083
`1,929
`36
`343
`
`
`2,047
`1,586
`
`
`
`
`
`2005
`
`
`
`
`
`4,368
`1,078
`
`3,290
`1,594
`422
`--
`86
`
`1,188
`49
`(39)
`5
`
`1,203
`272
`
`931
`
`
`
`$
`
`
`
`
`
`
`
`
`$
`
`
`
`4,897
`1,215
`
`3,682
`1,399
`512
`--
`199
`
`1,572
`74
`(43)
`14
`
`1,617
`269
`
`1,348
`
`
`
`
`
`
`
`
`
`$
`
`
`
`
`
`
`
`
`
`$
`
`
`2009
`
`
`
`
`$
`
`
`
`
`
`
`
`
`$
`
`
`
`6,499
`1,614
`
`4,885
`1,935
`665
`--
`24
`
`2,261
`46
`(16)
`22
`
`2,313
`306
`
`2,007
`
`
`299
`
`
`
`
`
`
`
`
`$
`
`
`
`
`
`Statement of Earnings Data:
`Sales
`Cost of goods sold
`
`
`
`
`
`
`
`
`
`
`
`Gross profit
`Selling, general and administrative
`Research and development
`In process research and development
`Amortization of intangibles
`
`Operating income
`Interest income
`Interest expense
`Other, net
`
`Earnings before income taxes
`Income taxes
`
`Net earnings
`
`Basic weighted-average common shares
` outstanding
`Diluted weighted-average common shares
` outstanding
`Basic earnings per common share
`Diluted earnings per common share
`Dividends paid on common shares
`Dividends paid per common share: U.S. $
`Dividends paid per common share: Swiss CHF
`
`
`Cash Flow Data:
`Cash provided by (used in):
`Operating activities
`Investing activities
`Financing activities
`
`
`
`
`Balance Sheet Data:
`Current assets
`Working capital
`Total assets
`Long term debt, net of current maturities
`Total shareholders' equity
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`298
`
`298
`
`304
`
`306
`
`302
`301
`$
`5.32
`$
`6.86
`$
`5.25
`$
`6.79
`$
`613
`$
`750
`$
`2.04
`$
`2.50
`2.50 CHF
`2.63 CHF
`
`
`
`
`
`
`
`
`
`
`
`
`1,470
`$
`2,032
`$
`(227)
`(365)
`(607)
`(1,333)
`
`
`
`At December 31,
`2007
`
`(in millions)
`5,219
`$
`4,825
`3,029
`1,963
`7,551
`7,016
`61
`52
`4,691
`3,375
`
`
`
`$
`
`309
`$
`4.43
`$
`4.37
`$
`417
`$
`1.38
`1.68 CHF
`
`
`
`
`
`
`1,406
`$
`(166)
`(1,225)
`
`
`
`
`$
`
`2006
`
`3,462
`1,461
`5,427
`49
`2,914
`
`312
`3.04
`2.98
`302
`0.99
`1.18
`
`
`
`1,235
`(382)
`(433)
`
`
`2005
`
`3,268
`990
`5,228
`56
`2,556
`
`2008
`
`301
`$
`6.72
`$
`6.66
`$
`1,048
`$
`3.50
`3.95 CHF
`
`
`
`
`
`
`2,416
`$
`(390)
`(1,481)
`
`
`
`
`$
`$
`$
`$
`CHF
`
`
`
`$
`
`
`
`2009
`
`
`
`
`
`$
`
`$
`
`5,833
`3,858
`8,686
`56
`5,905
`
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`Exchange Rates
`
`
`
`Fluctuations in the exchange rate between the Swiss franc and the U.S. dollar will affect the conversions into U.S. dollars of any cash
`dividends paid in Swiss francs on our common shares. In addition, these and other fluctuations in the exchange rates of the currencies of
`our various local operations affect our results of operations and financial condition as presented in our financial statements.
`
`The following table sets forth, for the periods indicated, information concerning the exchange rate between Swiss francs and U.S.
`dollars based upon the spot rate at the close of market, as published by Bloomberg Finance L.P.:
`
`
`Fiscal Year
`
`2005
`2006
`2007
`2008
`2009
`
`
`
`
`
`
`
`
`
`
`
`
`Period End (1)
`
`1.3134
`1.2201
`1.1335
`1.0687
`1.0352
`
`
`
`
`
`
`
`
`
`
`
`1.2463
`1.2529
`1.2000
`1.0824
`1.0850
`
`Exchange Rate for 1 U.S. Dollar
`Average (1) (2)
`High
`
`
`
`
`
`
`
`
`
`
`1.3256
`1.3228
`1.2535
`1.2254
`1.1852
`
`
`
`
`
`
`
`
`
`
`
`Low
`
`1.1481
`1.1923
`1.0969
`0.9844
`0.9964
`
`(1) The closing spot rate at each period end and the average rate for each period differed from the exchange rates used in the preparation
`of our financial statements.
`(2) Represents the average of the daily rates as published by Bloomberg Finance L.P. during the period.
`
`The following table sets forth the high and low closing spot rate for the Swiss franc for each of the prior six months:
`
`
`Month
`
`September 2009
`October 2009
`November 2009
`December 2009
`January 2010
`February 2010
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Period End
`
`1.0363
`1.0263
`1.0053
`1.0352
`1.0606
`1.0735
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1.0400
`1.0217
`1.0116
`1.0306
`1.0341
`1.0719
`
`Exchange Rate for 1 U.S. Dollar
`Average
`High
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1.0655
`1.0407
`1.0259
`1.0490
`1.0606
`1.0839
`
`Low
`
`1.0236
`1.0045
`0.9964
`0.9994
`1.0165
`1.0549
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Although we have translated selected Swiss franc amounts in this report into U.S. dollars for convenience, this does not mean that the
`Swiss franc amounts referred to could have been, or could be, converted into U.S. dollars at these rates or any other rate.
`
`B. CAPITALIZATION AND INDEBTEDNESS
`
`Not Applicable.
`
`C. REASONS FOR THE OFFER AND USE OF THE PROCEEDS
`
`Not Applicable.
`
`D. RISK FACTORS
`
`
`
`
`
`
`
`
`If the events discussed in these Risk Factors occur, our business, financial condition, results of operations or cash flows could be
`materially adversely affected. In such a case, the market price of our common shares could decline. The risks described below are not the
`only ones that may exist. Additional risks not currently known by us or that we deem immaterial also may impair our business operations.
`
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`Risks Related to Our Relationships with Nestlé and Novartis
`
`
`
`We will be controlled by Nestlé S.A. or Novartis AG as long as either owns a majority of our common shares, and our other
`shareholders will be unable to affect the outcome of a shareholder vote during that time.
`
`Nestlé, a Swiss corporation, owns approximately 52% of our outstanding common shares. As more fully discussed in Item 7.B,
`"Related Party Transactions," Novartis, also a Swiss corporation, announced on January 4, 2010 that it had exercised its option pursuant to
`the Purchase and Option Agreement to purchase the remaining approximately 156 million Alcon shares owned by Nestlé at a weighted
`average price of $180 per share in cash. Upon consummation of the purchase, Novartis would own an approximate 77% interest in Alcon.
`
`Because Nestlé's or Novartis's interests may differ from those of our other shareholders, actions Nestlé or Novartis takes with respect
`to us may be unfavorable to our other shareholders. Minority holders of common shares will not be able to affect the outcome of most
`shareholder votes so long as Nestlé or Novartis owns at least a majority of our outstanding common shares. So long as it owns at least a
`majority of our common shares, either Nestlé or Novartis will be able to control, among other things, the outcome of shareholder votes
`relating to the following: the election and removal of all of our directors; amendments to our Articles of Association (other than those
`subject to a two-thirds majority requirement); payment of dividends; changes to our capital structure unless the change is subject to the
`requirement that it be approved by holders of two-thirds of our common shares represented at a shareholders' meeting; and appointment and
`removal of our statutory and group auditors. In certain instances, Nestlé's rights as a shareholder are subject to the Shareholders Agreement
`(defined below) that Nestlé entered into with Novartis.
`
`Because Nestlé controls us, conflicts of interest between Nestlé and us could be resolved in a manner unfavorable to us.
`
`Most of our agreements with Nestlé (or Nestlé affiliates), including the Separation Agreement discussed in Item 7.B.2, "Separation
`Agreement with Nestlé," were finalized while we were a wholly owned subsidiary of Nestlé and, as a result, the terms of each may not be
`as favorable to us as if they had been negotiated between unaffiliated parties. Various conflicts of interest between Alcon and Nestlé could
`arise. For example, ownership interests of directors or officers of Alcon in Nestlé shares or service as a director or officer of both Alcon
`and Nestlé could create, or appear to create, potential conflicts of interest when a director or officer is faced with decisions that could have
`different implications for the two companies, such as disagreement over the desirability of a potential acquisition opportunity, employee
`retention or recruiting or our dividend policy.
`
`Nestlé is in the process of completing the sale of its majority interest to Novartis and the transaction may trigger change of control
`provisions in the Company's contractual obligations and may affect our business development opportunities.
`
`On April 6, 2008, Nestlé and Novartis executed a Purchase and Option Agreement ("Purchase and Option Agreement") pursuant to
`which Nestlé 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 was consummated on July 7, 2008, and Novartis now owns a stake in Alcon of slightly less than 25% of
`Alcon's outstanding shares, while Nestlé remains Alcon's majority shareholder with approximately 156 million Alcon shares comprising
`approximately 52% of the Company's outstanding shares.
`
`On April 6, 2008, Nestlé and Novartis also executed a Shareholders Agreement ("Shareholders Agreement") that provides for the
`expansion of the Alcon board of directors from eight to ten members upon the completion of the sale, with one of the additional members
`designated by Nestlé and one designated by Novartis. Alcon's shareholders voted to expand the Alcon board and elected two new directors
`at Alcon's annual general meeting held on May 6, 2008 in Zug, Switzerland. James Singh, Nestlé's Executive Vice President and Chief
`Financial Officer and Nestlé's designee, and Daniel Vasella, M.D., Chairman of Novartis and Novartis's designee, were elected to these two
`director positions and joined Alcon's board upon the closing of the 74 million share sale transaction on July 7, 2008.
`
`
`
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`
`The Purchase and Option Agreement between Nestlé and Novartis also contains put and call option rights on the balance of
`approximately 1