UNITED STATESSECURITIES AND EXCHANGE
 COMMISSIONWashington, D.C. 20549 FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
 (g) OF THE SECURITIES EXCHANGE ACT

OR

X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934           For the fiscal
 year ended                                 
 DECEMBER 31, 2003

OR

Commission file number 001-31269

Alcon, Inc.(Exact name of Registrant as specified in its charter)Not Applicable(Translation of
 Registrants name into English) Switzerland(Jurisdiction
 of incorporation or organization) Bösch 69P.O.  Box 62Hünenberg,
 Switzerland (Address of principal executive
 offices)

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. 308,519,051 Common Shares

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.Yes
 X No __Indicate by check
 mark which financial statement item the registrant has elected to follow. Item 17 __ Item 18
 X

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TABLE OF CONTENTS

|                                                                                     | SEQUENTIALPAGE
|------------------------------------------------------------------------------------ | --------------
|INTRODUCTION AND USE OF CERTAIN TERMS                                                | 3             
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS                                 | 4             
|PART I                                                                               | 5             
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                        | 5             
|ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE                                     | 5             
|ITEM 3. KEY INFORMATION                                                              | 5             
|ITEM 4. INFORMATION ON THE COMPANY                                                   | 15            
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 | 37            
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   | 59            
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 72            
|ITEM 8. FINANCIAL INFORMATION                                                        | 75            
|ITEM 9. THE OFFER AND LISTING                                                        | 76            
|ITEM 10. ADDITIONAL INFORMATION                                                      | 77            
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  | 91            
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      | 92            
|PART II                                                                              | 92            
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             | 92            
|ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 92            
|ITEM 15. CONTROLS AND PROCEDURES                                                     | 93            
|ITEM 16.                                                                             | 93            
|PART III                                                                             | 95            
|ITEM 17. FINANCIAL STATEMENTS                                                        | 95            
|ITEM 18. FINANCIAL STATEMENTS                                                        | 96            
|ITEM 19. EXHIBITS                                                                    | 97            
|SIGNATURES                                                                           | 98            

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INTRODUCTION AND USE OF CERTAIN TERMS

In
 this report, the United States Food and Drug Administration is often referred to as the FDA.

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. Timoptic-XE® is a trademark of Merck & Co., Inc. Claritin® is a trademark
 of Schering-Plough HealthCare Products, Inc.

In
 this report, references toAlomide® are toAlomide® ophthalmic solution, references to
 Azopt® are to Azopt® ophthalmic suspension, references to Betoptic S® are to Betoptic
 S® ophthalmic suspension, references to BSS Plus® are to BSS Plus® irrigating solution,
 references to Ciloxan® are toCiloxan® ophthalmic solution and ointment, references to
 Emadine® are toEmadine® ophthalmic solution, references to Maxitrol® are toMaxitrol® ophthalmic suspension and ointment, references to OPTI-FREE®, with or without EXPRESS®
 No-Rub, are to OPTI-FREE®contact lens care solutions, references to Patanol® are
 to Patanol® ophthalmic solution, references toTobraDex® are to TobraDex® ophthalmic
 suspension and ointment, references to Tobrex® are to Tobrex® ophthalmic solution and
 ointment, references to Travatan® are to Travatan® ophthalmic solution, and references
 to Vigamox are to Vigamox ophthalmic solution.

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
 Alcon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 is based on units sold.

Statements
 in this report regarding Alcons market share position in the United States in various markets are based
 on the following sources:

- Cataract surgery: internal estimates prepared using industry data for the nine months ended September 30, 2003; and
- Ophthalmic pharmaceuticals (including generics): total prescriptions filled as provided by the Verispan Source Prescription Audit for the year ended December 31, 2003.



Statements
 in this report regarding Alcons market share position worldwide in the ophthalmic surgical market are
 based on the following source:

|Ophthalmic surgical products by sales: internal estimates prepared using industry data for the nine months ended September 30, 2003. |  | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | 

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
 generally accepted accounting principles in the United States (U.S. GAAP). References to IFRS are
 to International Financial Reporting Standards.

IPO
 in this document refers to the initial public offering of approximately 69,750,000 of Alcon, Inc.s
 common shares on March 20, 2002. Prior to the IPO, Alcon, Inc. was a wholly owned subsidiary of Nestlé
 S.A., a Swiss corporation (Nestlé).

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This
 report contains forward-looking statements within the meaning of Section 27A of the Securities Act
 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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:

- the production and launch of commercially viable products may take longer and cost more than expected;
- resources devoted to research and development may not yield new products that achieve commercial success;
- competition may lead to worse than expected financial condition and results of operations;
- changes in reimbursement procedures by third-party payors;
- the global economic environment in which we operate, as well as 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;
- qualified personnel may not be available, which could negatively impact our ability to grow our business;
- difficulty in 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; and
- the occurrence of environmental liabilities arising from our operations;

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 U. S. 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.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE

Not Applicable.

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.

We
 have accounted for the acquisition of Summit Autonomous Inc. (Summit) as a purchase and have included
 Summits results of operations since July 7, 2000 in our financial statements.

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|                                                       | Year Ended December 31,
|------------------------------------------------------ | -----------------------
|
|
|Statement of Earnings Data:                            |                        
|                                                       |                        
|Sales                                                  |                        
|                                                       |                        
|Cost of goods sold                                     |                        
|                                                       |                        
|                                                       |                        
|Gross profit                                           |                        
|                                                       |                        
|Selling, general and administrative                    |                        
|                                                       |                        
|Research and development                               |                        
|                                                       |                        
|In-process research and development                    |                        
|                                                       |                        
|Gain on sale of plant                                  |                        
|                                                       |                        
|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.........CHF |                        
|                                                       |                        
|                                                       |                        
|Cash Flow Data:                                        |                        
|                                                       |                        
|Cash provided by (used in):                            |                        
|                                                       |                        
|Operating activities                                   |                        
|                                                       |                        
|Investing activities                                   |                        
|                                                       |                        
|Financing activities                                   |                        
|                                                       |                        

|                                          | At December 31,
|----------------------------------------- | ---------------
|
|
|Balance Sheet Data:                       |                
|Current assets                            |                
|Working capital (deficit)                 |                
|Total assets                              |                
|Long term debt, net of current maturities |                
|Total shareholders' equity                |                

| | (*) We believe that net earnings are a more appropriate measure of our profitability prior to the IPO than earnings per share, since we were a wholly owned subsidiary of Nestlé. We have not included dividends paid and dividends per share information prior to the IPO as they are not relevant to the investor, since prior to the IPO we were a wholly owned subsidiary of Nestlé. On March 20, 2002, we made a payment to Nestlé that was considered a dividend and repayment of capital under U.S. GAAP of CHF 2.1 billion (or approximately $1.24 billion). This payment was financed by existing cash and cash equivalents and additional borrowings. This entire payment was considered a dividend under Swiss law.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 on the noon buying rate in the City of New York for cable transfers
 of Swiss francs as certified for customs purposes by the Federal Reserve Bank of New York:

|Fiscal Year | Period End (1) | Average (1) (2) | High | Low   
|----------- | -------------- | --------------- | ---- | ------
|1999        |                | 1.5930          |      | 1.5045
|2000        |                | 1.6202          |      | 1.6904
|2001        |                | 1.6598          |      | 1.6891
|2002        |                | 1.3833          |      | 1.5567
|2003        |                | 1.2380          |      | 1.3450

(1)     The noon buying 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 the Federal Reserve Bank of New York during the period.

The
 following table sets forth the high and low noon buying rate for the Swiss franc for each of the prior
 six months:

|Month          | Period End | Average | High | Low   
|-------------- | ---------- | ------- | ---- | ------
|September 2003 |            | 1.3208  |      | 1.3743
|October 2003   |            | 1.3382  |      | 1.3222
|November 2003  |            | 1.2917  |      | 1.3318
|December 2003  |            | 1.2380  |      | 1.2643
|January 2004   |            | 1.2593  |      | 1.2391
|February 2004  |            | 1.2680  |      | 1.2448

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. The Federal Reserve Bank of New York certifies this rate
 for customs purposes on each date the rate is given.

B.     CAPITALIZATION AND INDEBTEDNESS

C.     REASONS FOR THE OFFER
 AND USE OF THE PROCEEDS

D.     RISK FACTORS

You
 should carefully consider the risks described below and the other information contained in this report
 before making a decision to invest in our common shares. The risks described below are not the only
 ones that may exist. Additional risks not currently known by us or that we deem immaterial may also
 impair our business operations. If any of these risks actually occurs, our business, financial condition
 and results of operations could suffer, in which case the trading price of our common shares could decline.

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Risks Related to Our Business and Industry

If we fail to keep pace with advances in our industry
 or fail to persuade physicians to adopt new products we introduce, customers may not buy our products
 and our sales and profits may decline.

The
 ophthalmic industry is characterized by rapid product development, constant innovation in products and
 techniques, frequent new product introductions and price competition. Companies that introduce products
 that are first to market gain a significant competitive advantage. Our future growth depends, in part,
 on our ability to develop products which are more effective in treating diseases and disorders of the
 eye or that incorporate the latest technologies. In addition, we must be able to manufacture and effectively
 market those products and persuade a sufficient number of eye care professionals to use the new products
 we introduce. For example, glaucoma requires ongoing treatment over a long period of time; thus, many
 doctors are reluctant to switch a patient to a new treatment if the patients current treatment for
 glaucoma remains effective. Sales of our existing products may decline rapidly if a new product is introduced
 by one of our competitors or if we announce a new product that, in either case, represents a substantial
 improvement over our existing products. Similarly, if we fail to make sufficient investments in research
 and development programs or if we focus on technologies that do not lead to more effective products,
 our current and planned products could be surpassed by more effective or advanced products.

We may not successfully develop and launch replacements
 for our products that lose patent protection.

Most
 of our products are covered by patents that give us a degree of market exclusivity during the term of
 the patent. Upon patent expiration, our competitors may introduce products using the same technology.
 As a result of this possible increase in competition, we may need to charge a lower price in order to
 maintain sales of our products which could result in these products becoming less profitable. If we
 fail to develop and successfully launch new products prior to the expiration of patents for our existing
 products, our sales and profits with respect to those products could decline significantly. We may not
 be able to develop and successfully launch more advanced replacement products before these and other
 patents expire.

Resources devoted to research and development may
 not yield new products that achieve commercial success.

We
 devote substantial resources to research and development. The research and development process is expensive,
 prolonged and entails considerable uncertainty. Development of a new product, from discovery through
 testing and registration to initial product launch, typically takes between eight and fifteen years
 or more for a pharmaceutical product and three and seven years or more for a medical device. Each of
 these periods varies considerably from product to product and country to country. Because of the complexities
 and uncertainties associated with ophthalmic research and development, products we are currently developing
 may not complete the development process or obtain the regulatory approvals required for us to market
 such products successfully. For example, we are investing substantial sums in the research and development
 of new treatments for age-related macular degeneration, a condition in which the retina degenerates,
 thereby reducing sight. These may take longer and cost more to develop and may be less successful than
 we currently anticipate, or than other therapies that are presently or soon may be on the market. None
 of the products currently in our development pipeline may be commercially successful.

Economic conditions and price competition may cause
 sales of our products used in elective surgical procedures to decline and reduce our profitability.

Sales
 of products used in elective surgical procedures have been and may continue to be adversely impacted
 by economic conditions. Generally, the costs of elective surgical procedures are borne by individuals
 without reimbursement from their medical insurance providers or government programs. Accordingly, individuals
 may be less willing to incur the costs of these procedures in weak or uncertain economic conditions
 and there may be a decline in the number of these procedures. Sales of our laser refractive surgical
 equipment worldwide and our revenues from technology fees in the United States have come under pressure
 and may remain under pressure if uncertain economic conditions persist or if the pricing environment
 for technology fees does not improve. A softening in demand for laser refractive surgery could also
 impact us by reducing our profits as customers to whom we have leased, or have extended financing for
 the purchase of, laser refractive surgical equipment are unable to make required payments to us.

---

The FDA may authorize sales of some prescription
 pharmaceuticals on a non-prescription basis, which would reduce the profitability of our prescription
 products.

Managed
 care organizations have petitioned the FDA to permit sales of some pharmaceuticals currently sold on
 a prescription basis, including anti-allergy medications, without a prescription. In late 2002, the
 FDA revised the status of Claritin® (Schering-Plough) from prescription only to over-the-counter,
 or OTC, following such a petition, although the sponsor ultimately sought the change in status. The
 FDA may also undertake OTC switching on its own initiative. Approval by the FDA of the sale of these
 products without a prescription would reduce demand for our competing prescription products and, accordingly,
 reduce our profits. In the future, additional managed care organizations or other third-party payors
 may petition the FDA to permit sales of some of our pharmaceutical products on a non-prescription basis,
 which could reduce our profits.

Failure of users of our products to obtain adequate
 reimbursement from third-party payors could limit market acceptance of our products, which could impact
 our sales and profits.

The
 initiatives of managed care organizations and governments to contain health care costs in the United
 States and elsewhere are placing an increased emphasis on the delivery of more cost-effective medical
 therapies. This emphasis could adversely affect sales and prices of our products. Physicians, hospitals
 and other health care providers may be reluctant to purchase our products if they do not receive reimbursement
 for the cost of our pharmaceutical and surgical products and for procedures performed using our surgical
 medical device products from third-party payors such as Medicare, Medicaid and health insurance programs,
 both governmental and private. For example:

- major third-party payors for hospital services, including government insurance plans, Medicare, Medicaid and private health care insurers, have substantially revised their payment methodologies during the last few years, resulting in stricter standards for and lower levels of reimbursement of hospital and outpatient charges for some medical procedures, including cataract procedures and intraocular lenses;
- most European Union member states impose controls on the prices at which medicines and medical devices are reimbursed under state health care schemes; because of increased pressures to reduce government health care spending and increased transparency of prices following the adoption of the euro, member governments in some countries in the European Union are requesting price reductions to match prices charged in other countries in the European Union; furthermore, with increased price transparency, parallel importation of pharmaceuticals from lower price level countries to higher priced markets has grown; these parallel imports lower our effective average selling price;
- managed care organizations restrict the pharmaceutical products that doctors in those organizations can prescribe through the use of formularies, the lists of drugs which physicians are permitted to prescribe to patients in a managed care organization, and a failure of our pharmaceutical products to be included on formularies could have an adverse effect on our revenues and profits;
- our competitors may reduce the prices of their products which could result in our competitors being reimbursed for a larger number of procedures by third-party payors;
- competitors may introduce generic products that compete directly or indirectly with our products and such generic products may reduce our unit sales and prices;
- there are proposed and existing laws and regulations governing product prices and the profitability of companies in the health care industry; and
- there have been recent initiatives by third-party payors to challenge the prices charged for medical products which could affect our profitability.

Reductions
 in the prices for our products in response to these trends could reduce our profits. Moreover, our products
 may not be covered in the future by third-party payors. The failure of our products to be so covered
 could cause our profits to decline.

We may experience pressure to lower the prices of
 some or all of our prescription pharmaceutical products because of new and/or proposed federal legislation.

New
 U.S. federal legislation, enacted in December 2003, has added an outpatient prescription drug benefit
 to Medicare, effective January 2006. In the interim, Congress has established a discount drug card program
 for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which
 will attempt to negotiate price concessions from pharmaceutical manufacturers. These negotiations may
 increase pressures to lower prices. While the new law specifically prohibits the United States government
 from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, some members
 of Congress are pursuing legislation that would permit the United States government to use its enormous
 purchasing power to negotiate discounts from pharmaceutical companies, thereby creating de facto price
 controls on prescription drugs. In addition, the new law contains triggers for Congressional consideration
 of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level.
 These cost containment measures could include certain limitations on prescription drug prices.

The global nature of our business may result in
 fluctuations and declines in our sales and profits.

Our
 products are sold in more than 180 countries. We have more than 70 local operations worldwide and approximately
 48% of our revenues in 2003 came from customers outside of the United States.

The
 results of operations and the financial position of our local operations are generally reported in the
 relevant local currencies and then translated into U.S. dollars at the applicable exchange rates for
 inclusion in our consolidated financial statements, exposing us to translation risk. In 2003, our most
 significant currency exposures were to the U.S. dollar, euro, Japanese yen and Swiss franc.

The
 exchange rates between these and other foreign currencies and the U.S. dollar may fluctuate substantially.
 In addition, we are exposed to transaction risk because some of our expenses are incurred in a different
 currency from the currency in which our revenues are received. Fluctuations in the value of the U.S.
 dollar against other currencies have had in the past, and may have in the future, a material adverse
 effect on our operating margins and profitability.

Economic,
 social and political conditions, laws, practices and local customs vary widely among the countries in
 which we sell our products. Our operations outside of the United States are subject to a number of risks
 and potential costs, including lower product margins, less stringent protection of intellectual property
 and economic, political and social uncertainty in countries in which we operate, especially in emerging
 markets. Our continued success as a global company depends, in part, on our ability to develop and implement
 policies and strategies that are effective in anticipating and managing these and other risks in the
 countries where we do business. These and other risks may have a material adverse effect on our operations
 in any particular country and on our business as a whole. For example, many emerging markets have currencies
 that fluctuate substantially, in response to which we may reduce our prices, making our products less
 profitable. Inflation in emerging markets also makes our products less profitable and increases the
 credit risks to which we are exposed. We have experienced currency fluctuations, inflation and volatile
 economic conditions, which have impacted our profitability in the past in several markets, including
 Argentina, Brazil, Poland and Turkey, and we may experience such impacts in the future. We expect currency
 devaluation and weak economic conditions to persist in Latin America and Turkey and these conditions
 may have a negative impact on our performance in these markets.

During
 the past three years, the economy of Japan, our second largest market, continued to experience slight
 deflation and very low growth. Because a majority of our sales in Japan are to parties who are reimbursed
 by the government, a prolonged downturn in the Japanese economy coupled with an aging population could
 lead to downward pricing pressures on government reimbursement rates for our products. For example,
 in April 2002, the Japanese Ministry of Health reduced procedure reimbursements for cataract surgery
 by 18%. This put pressure on the prices of Alcons cataract surgery products in Japan.

We single source many of the active ingredients
 and components used in our products and interruptions in the supply of these raw materials could disrupt
 our manufacturing of specific products and cause our sales and profitability to decline.

We
 single source active ingredients contained in a majority of our pharmaceutical and contact lens care
 products, including Travatan® ophthalmic solution, OPTI-FREE® EXPRESS® No Rub multi-purpose
 disinfecting solution, Patanol® ophthalmic solution and Vigamox ophthalmic solution.
 In these cases, obtaining the required regulatory approvals, including from the FDA, to use alternative
 suppliers may be a lengthy process. In many cases, we use single-source suppliers for other components
 and raw materials used in our products. The loss of any of these or other significant suppliers or the
 inability of a supplier to meet performance and quality specifications, requested quantities or delivery
 schedules could cause our sales and profitability to decline and have a negative impact on our customer
 relations. In addition, a significant price increase from any of our single-source suppliers could cause
 our profitability to decline if we cannot increase our prices to our customers. In order to ensure sufficient
 supply, we may determine that we need to provide financing to some of our single-source suppliers, which
 could increase our financial exposure to those suppliers.

In many cases, we manufacture a product, at a single-source
 facility, and an inability to produce a sufficient quantity of, or any disruption in the manufacturing
 of, a product at the relevant facility could impair our ability to fill customer orders and could reduce
 our sales.

In
 many cases, we manufacture a product, including some of our key products, at a single-source manufacturing
 facility. FDA product approval is generally limited to a specific approved manufacturing facility. If
 we fail to produce enough of a product at a facility, or if our manufacturing process at that facility
 is disrupted, we may be unable to deliver that product to our customers on a timely basis. A failure
 to deliver products on a timely basis could lead to customer dissatisfaction and damage our reputation.
 Significant delays in the delivery of our products or a delay in the delivery of a key product could
 also negatively impact our sales and profitability.

We depend on proprietary technologies. We may not
 be able to protect our intellectual property rights adequately and are currently subject to at least
 two claims of infringement of intellectual property.

We
 currently hold more than 3,000 patents and have nearly 1,800 pending patent applications. We rely on
 a combination of contractual provisions, confidentiality procedures and patent, trademark, copyright
 and trade secrecy laws to protect the proprietary aspects of our technology. These legal measures afford
 limited protection and may not prevent our competitors from gaining access to our intellectual property
 and proprietary information. Any of our patents may be challenged, invalidated, circumvented or rendered
 unenforceable. From time to time, we have faced challenges of our intellectual property rights. Furthermore,
 we cannot assure you that any pending patent application held by us will result in an issued patent,
 or that if patents are issued to us, such patents will provide meaningful protection against competitors
 or competitive technologies. We have taken measures to enforce our intellectual property rights, to
 protect our trade secrets and to determine the validity and scope of our proprietary rights. Any litigation
 could result in substantial expense, may reduce our profits and may not adequately protect our intellectual
 property rights. In addition, we may be exposed to future litigation by third parties based on claims
 that our products infringe their intellectual property rights. This risk is exacerbated by the fact
 that the validity and breadth of patents in our industry frequently involve complex legal issues that
 are not easily resolved.

Any
 litigation or claims against us, whether or not successful, could result in substantial costs and harm
 our reputation. In addition, intellectual property litigation or claims could force us to do one or
 more of the following: cease selling or using any of our products that incorporate the challenged intellectual
 property, which would adversely affect our revenue; obtain a license from the holder of the intellectual
 property right alleged to have been infringed, which license may not be available on reasonable terms,
 if at all; and redesign or, in the case of trademark claims, rename our products to avoid infringing
 the intellectual property rights of third parties, which may not be possible and could be costly and
 time-consuming if it is possible to do so.

Importation of products from Canada and other countries
 into the U.S. may lower the prices we receive for our products.

In
 the U.S., our products are subject to competition from lower priced versions of our products and competing
 products from Canada, Mexico, and other countries where there are government price controls or other
 market dynamics that make the products lower priced. The ability of patients and other customers to
 obtain these lower priced imports has grown significantly as a result of the Internet, an expansion
 of pharmacies in Canada and elsewhere targeted to American purchasers, the increase in U.S.-based businesses
 affiliated with Canadian pharmacies marketing to American purchasers, and other factors. Most of these
 foreign imports are illegal under current law. However, the volume of imports continues to rise due
 to the limited enforcement resources of the FDA and the U.S. Customs Service, and there is increased
 political pressure to permit the imports as a mechanism for expanding access to lower priced medicines.

In
 addition, in December 2003 federal legislation was enacted to change United States import laws and expand
 the ability to import lower priced versions of our and competing products from Canada, where there are
 government price controls. These changes to the import laws will not take effect unless and until the
 Secretary of Health and Human Services certifies that the changes will lead to substantial savings for
 consumers and will not create a public health safety issue. The current Secretary of Health and Human
 Services has indicated that there is not a basis to make such a certification at this time. However,
 it is possible that this Secretary or a subsequent Secretary could make the certification in the future.
 In addition, legislative proposals have been made to implement the changes to the import laws without
 any certification, and to broaden permissible imports in other ways. Even if the changes to the import
 laws do not take effect, and other changes are not enacted, imports from Canada and elsewhere may continue
 to increase due to market and political forces, and the limited enforcement resources of the FDA, the
 Customs Service, and other government agencies. For example, state and local governments have suggested
 that they may import drugs from Canada for employees covered by state health plans or others, and some
 already have put such plans in place.

The
 importation of foreign products adversely affects our profitability in the U.S. This impact could become
 more significant in the future, and the impact could be even greater if there is a further change in
 the law or if state or local governments take further steps to import products from abroad.

We are subject to extensive government regulation
 that increases our costs and could prevent us from selling our products.

The
 research, development, testing, manufacturing and marketing of our products are subject to extensive
 governmental regulation. Government regulation includes inspection of and controls over testing, manufacturing,
 safety and environmental controls, efficacy, labeling, advertising, marketing, promotion, record keeping,
 reporting, the sale and distribution of pharmaceutical products, import, export and samples and electronic
 records and electronic signatures. We are also subject to government regulation with respect to the
 prices we charge and the rebates we offer to customers. Government regulation substantially increases
 the cost of developing, manufacturing and selling our products.

In
 the United States, we must obtain approval from the FDA for each pharmaceutical product that we market
 and FDA approval or clearance for each medical device that we market. The FDA approval process is typically
 lengthy and expensive, and approval is never certain. Products distributed outside of the United States
 are also subject to government regulation, which may be equally or more demanding. Our new products
 could take a significantly longer time than we expect to gain regulatory approval and may never gain
 approval. If a regulatory authority delays approval of a potentially significant product, our market
 value and operating results may decline. Even if the FDA or another regulatory agency approves a product,
 the approval may limit the indicated uses for a product, may otherwise limit our ability to promote,
 sell and distribute a product or may require post-marketing studies or impose other post-marketing obligations.
 If we are unable to obtain regulatory approval of our products, we will not be able to market these
 products, which would result in a decrease in our sales. Currently, we are actively pursuing approval
 for a number of our products from regulatory authorities in a number of countries, including, among
 others, the United States, countries in the European Union and Japan. Continued growth in our sales
 and profits will depend, in part, on the timely and successful introduction and marketing of some or
 all of these products.

The
 clinical trials required to obtain regulatory approvals are complex and expensive and their outcomes
 are uncertain. We incur substantial expense for, and devote significant time to, clinical trials, yet
 we cannot be certain that the trials will result in the commercial sale of a product. Positive results
 from preclinical studies and early clinical trials do not ensure positive results in later clinical
 trials that form the basis of an application for regulatory approval. We may suffer significant setbacks
 in clinical trials, even after earlier clinical trials show promising results. Any of our products may
 produce undesirable side effects that could cause us or regulatory authorities or research sites to
 interrupt, delay or halt clinical trials of a pharmaceutical or medical device candidate. We, the FDA
 or another regulatory authority or an institutional review board charged with overseeing the research
 to protect study subjects may suspend or terminate clinical trials at any time if we or they believe
 the trial participants face unacceptable health risks.

Noncompliance
 with applicable United States regulatory requirements can result in fines, injunctions, penalties, mandatory
 recalls or seizures, suspensions of production, denial or withdrawal of pre-marketing approvals, recommendations
 by the FDA against governmental contracts and criminal prosecution. The FDA also has authority to request
 repair, replacement or refund of the cost of any device we manufacture or distribute. Regulatory authorities
 outside of the United States may impose similar sanctions for noncompliance with applicable regulatory
 requirements.

We may implement a product recall or voluntary market
 withdrawal and could be exposed to significant product liability claims; we may have to pay significant
 amounts to those harmed and may suffer from adverse publicity as a result.

The
 manufacturing and marketing of pharmaceuticals, medical devices and surgical equipment and instruments
 involve an inherent risk that our products may prove to be defective and cause a health risk. In that
 event, we may voluntarily implement a recall or market withdrawal or may be required to do so by a regulatory
 authority. We have recalled products in the past and, based on this experience, believe that the occurrence
 of a recall could result in significant costs to us, potential disruptions in the supply of our products
 to our customers and adverse publicity, all of which could harm our ability to market our products.
 A recall of one of our products or a product manufactured by another manufacturer could impair sales
 of other similar products we market as a result of confusion concerning the scope of the recall.

Although
 we are not currently subject to any material product liability proceedings, we may incur material liabilities
 relating to product liability claims in the future, including product liability claims arising out of
 procedures performed using our surgical equipment. We currently rely on a combination of self-insurance
 and third-party insurance to cover potential product liability claims. The combination of our insurance
 coverage, cash flows and reserves may not be adequate to satisfy product liabilities we may incur in
 the future. Even meritless claims could subject us to adverse publicity, hinder us from securing insurance
 coverage in the future and require us to incur significant legal fees. Successful product liability
 claims brought against Alcon could have a material adverse effect on our financial condition.

Our activities involve hazardous materials and emissions
 and may subject us to environmental liability.

Our
 manufacturing, research and development practices involve the controlled use of hazardous materials.
 We are subject to federal, state and local laws and regulations in the various jurisdictions in which
 we have operations governing the use, manufacturing, storage, handling and disposal of these materials
 and certain waste products. Although we believe that our safety and environmental procedures for handling
 and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate
 the risk of accidental contamination or injury from these materials. Remedial environmental actions
 could require us to incur substantial unexpected costs which would materially and adversely affect our
 results of operations. If we were involved in a major environmental accident or found to be in substantial
 non-compliance with applicable environmental laws, we could be held liable for damages or penalized
 with fines that could be material.

We
 currently rely on a combination of self-insurance and third-party insurance to cover potential environmental
 liability claims. The combination of our insurance coverage, cash flows and reserves may not be adequate
 to satisfy environmental liabilities we may incur in the future. Any environmental claims could subject
 us to adverse publicity, hinder us from securing insurance coverage in the future and require us to
 incur significant legal fees.

We self-insure some of our business risks.

The
 pharmaceutical and medical device business involves an inherent risk of product liability and any claims
 of this type could have an adverse impact on us. We have taken, and will continue to take, what we believe
 are appropriate measures, including a self-insured retention combined with product liability insurance
 coverage, to provide adequate coverage for possible product liability claims. Though our insurance coverage
 and cash flows have been adequate to provide for liability claims in the past, product liability claims
 could exceed our insurance coverage limits and cash flows, and insurance may not be available on commercially
 reasonable terms or at all in the future.

We may not successfully complete and integrate strategic
 acquisitions to expand or complement our business.

As
 part of our growth strategy, we evaluate and pursue strategic business acquisitions to expand or complement
 our business. Such ventures may bring new products, increased market share or new customers to Alcons
 prominent position in the ophthalmic industry. We cannot assure you that suitable acquisition candidates
 will be identified. Acquisition activities can be thwarted by overtures from competitors for the targeted
 candidates, governmental regulation, (including market concentration limitations) and rapid replacement
 product developments in our industry. Further, after an acquisition, successful integration of the venture
 can be complicated by corporate cultural differences, difficulties in retention of key personnel and
 suppliers, and coordination with other products and processes. Also, acquisitions could divert managements
 attention from our existing business and could result in liabilities being incurred that were not known
 at the time of acquisition or the creation of tax or accounting issues. If we fail to timely recognize
 or address these matters or to devote adequate resources to them, we may fail to achieve our growth
 strategy or otherwise not realize the intended benefits of any acquisition.

---

Risks Related to Our Relationship with Nestlé

We will be controlled by Nestlé as long as it 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
 owns approximately 75% of our outstanding common shares. Because Nestlés interests may differ from
 those of our other shareholders, actions Nestlé 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 any shareholder
 vote so long as Nestlé owns at least a majority of our outstanding common shares. So long as it owns
 at least two-thirds of our common shares, Nestlé will be able to control, among other things: increases
 in our share capital; the approval of a dissolution other than by liquidation, including by way of merger;
 the creation of restrictions on the transferability of our common shares; and the restriction or elimination
 of preemptive rights in connection with a share capital increase. So long as it owns at least a majority
 of our common shares, Nestlé will be able to control, among other things: the election and removal of
 all of our directors; amendments to our Articles of Association (other than those subject to the two-thirds
 majority requirement referred to above); 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.

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, including the separation agreement, 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.

The price of our common shares may fluctuate.

The
 market price of our common shares may fluctuate significantly in response to factors, some of which
 are beyond our control, such as announcements of innovations and discoveries or new products by us or
 our competitors, developments concerning intellectual property rights and regulatory approvals, and
 changes in estimates of our financial performance or changes in recommendations by securities analysts.

The
 stock market in general sometimes experiences extreme price and volume fluctuations. The market prices
 of securities of pharmaceutical and medical device companies have experienced fluctuations that often
 have been unrelated or disproportionate to the operating results of these companies. These market fluctuations
 could result in extreme volatility in the price of our common shares, which could cause a decline in
 the value of our common shares. You should also be aware that price volatility may be worse if the trading
 volume of our common shares is low.

Sales or distributions of our common shares by Nestlé
 could depress the market price for our common shares.

Nestlé
 may sell all or part of our common shares that it owns or distribute those common shares to its shareholders.
 There can be no assurance that any of our shareholders will be included in any transaction in which
 Nestlé sells a controlling interest in us or realize a premium with respect to their common shares.
 In addition, sales or distributions by Nestlé of substantial amounts of our common shares in the public
 market or to its shareholders could adversely affect prevailing market prices for our common shares.
 Nestlé is not subject to any contractual obligation to maintain its ownership position in our shares.

Risks Related to Our Jurisdiction of Incorporation

We are incorporated in Switzerland and Swiss law
 governs our internal corporate affairs.

We
 are a corporation incorporated under the laws of Switzerland. The rights of holders of our common shares
 are governed by Swiss corporate law and by our Articles of Association. In particular, Swiss corporate
 law limits the ability of a shareholder to challenge resolutions or actions of our board of directors
 in court. Shareholders generally are not permitted to file a suit to reverse a decision or action by
 directors but are permitted to seek damages for breaches of fiduciary duty. Shareholder claims against
 a director for breach of fiduciary duty would, as a matter of Swiss law, have to be brought at our place
 of incorporation in the Canton of Zug, Switzerland, or at the domicile of the involved director. In
 addition, under Swiss law, any claims by shareholders against us must be brought exclusively at our
 place of incorporation.

Under
 Swiss corporate law, we are required to declare dividends in Swiss francs. As a result, any currency
 fluctuations between the U.S. dollar and the Swiss franc will affect the dollar value of the dividends
 we pay.

In
 addition, in several instances we follow Swiss corporate governance practices instead of the corporate
 governance practices applicable to a U.S. company under New York Stock Exchange listing standards. A
 summary of the principal areas of difference is provided under Directors, Senior Management and Employees
  Board Practices  Compliance with NYSE Listing Standards on Corporate Governance.

A.     HISTORY AND DEVELOPMENT
 OF THE COMPANY

General Information

The
 entity that is now Alcon, Inc. was originally incorporated in Switzerland in 1971 as Société Fromagère
 Nestlé S.A., and, after a change of our name to Alcon Universal S.A. in 1978, was registered in the
 Commercial Register of the Canton of Zug on March 13, 1992. Effective on December 21, 2001, we changed
 our name to Alcon, Inc. Our principal executive offices are located at Bösch 69, P.O. Box 62, 6331 Hünenberg,
 Switzerland, and our telephone number is +41-41-785-8888. Our principal United States offices are located
 at 6201 South Freeway, Fort Worth, Texas 76134-2099, and the telephone number at those offices is (817)
 293-0450.

Capital Expenditures, Acquisitions and Divestitures
 for the Last Three Years(January 1, 2001 through December 31, 2003):

The
 Companys capital expenditures for property, plant and equipment, to expand and upgrade manufacturing
 facilities, research and development facilities, and other infrastructure, for the years ended December
 31, 2003, 2002 and 2001 were $157.9 million, $120.9 million and $127.4 million, respectively.

On
 November 6, 2003, Alcon Cusi S.A., a wholly owned subsidiary of the Company, sold its contact lens care
 solutions manufacturing facility located in Madrid, Spain, to AMO Manufacturing Spain, S. L., a wholly
 owned subsidiary of Advanced Medical Optics, Inc., for $21.6 million in cash.

Capital Expenditures, Acquisitions and Divestitures
 Currently Underway:

In
 2003, the Company commenced construction of a new $24 million administrative facility located on the
 Fort Worth, Texas campus that will provide occupancy for offsite employees as well as serve as a training
 and education center for physicians, medical students and Alcons sales force. In order to establish
 manufacturing capacity for intraocular lenses outside the United States, the Company began converting
 the Cork, Ireland manufacturing facility from its refractive equipment production to production of intraocular
 lenses. Additional expenditures were made to upgrade our manufacturing facilities in Puurs, Belgium,
 Kaysersberg, France, Huntington, West Virginia, and Fort Worth, Texas. We had capital expenditure commitments
 of $38.6 million at December 31, 2003. We expect to fund these capital projects through operating cash
 flow and, if necessary, short term borrowings.

The
 Company has not announced any acquisitions or divestitures subsequent to December 31, 2003.

B.     BUSINESS OVERVIEW

Alcon
 is a research and development driven, global medical specialty company focused on eye care. We develop,
 manufacture and market pharmaceuticals, surgical equipment and devices and consumer eye care products
 to treat diseases and disorders of the eye. Our broad range of products represents one of the strongest
 portfolios in the ophthalmic industry. We believe we have the largest commitment to ophthalmic research
 and development of any company worldwide. Currently, our products are sold in over 180 countries, and
 we are present in every significant market in the world where ophthalmology is practiced. In 2003, we
 had sales of $3.4 billion, operating income of $879 million and net earnings of $595 million.

Our Competitive Strengths

Depth, Breadth and Quality of Our Products

Our
 broad range of products represents one of the strongest portfolios in the ophthalmic industry, with
 high-quality and technologically advanced products across all major product categories. Our leadership
 position across most of our product categories enhances our ability to extend our product offerings,
 through the launch of new and innovative products, and to expand our geographic reach into ophthalmic
 markets worldwide. With over 50 years of experience in the ophthalmic industry, we believe that the
 ALCON® brand is synonymous with quality, service and innovation among eye care professionals
 worldwide. The depth, breadth and market positions of our products combined with our sales infrastructure
 enhance our ability to sell our products effectively across product categories.

Our Significant Research and Development Commitment
 and Commercial Success

Our
 commitment to ophthalmic research and development is substantial. In 2003, we spent $349.9 million on
 our research and development efforts. Currently, we have approximately 1,300 individuals dedicated to
 our research and development efforts, including more than 280 individuals who are either medical doctors,
 Ph.D.s or doctors of optometry. Our research and development team has built substantial research relationships
 with numerous leading academic institutions worldwide, and our scientists work closely with researchers
 at each of these institutions. These research and development efforts have yielded a strong intellectual
 property portfolio, including approximately 3,000 patents and 1,800 pending patent applications throughout
 the world as of December 31, 2003.

We
 also have a strong track record of converting discoveries into commercially viable products and bringing
 those products to market. The integration of our regulatory affairs staff and research and development
 department together with our level of regulatory expertise has enabled us to reduce the time required
 to bring new products to market around the world. We believe that our research and development capabilities
 together with our experience in converting discoveries into marketable products and improving our existing
 products have resulted in, and will continue to provide us with, a very strong development pipeline.

Our Long-Standing Commitment to Eye Care

For
 over 50 years, we have specialized in developing, manufacturing and marketing innovative and high-quality
 branded products for eye care professionals. Through our long-standing commitment to eye care, we have
 established close relationships with ophthalmologists, optometrists, opticians and other eye care professionals
 around the world. We have built and maintained these relationships through sales and marketing efforts,
 programs at our training facilities in 40 countries, funding ophthalmic research, product development
 collaborations and humanitarian efforts. For example, during the course of 2003, we hosted over 1,000
 eye care professionals at our Fort Worth campus and manufacturing locations throughout the United States
 for multi-day training sessions covering ophthalmic procedures using our products. We believe that our
 broad and established relationships give us a competitive advantage in maintaining and growing our business.

Our Global Scale

We
 are present in every significant market in the world where ophthalmology is practiced and currently
 our products are sold in over 180 countries. We have our own local operations in over 70 countries and
 sales representatives dedicated to the sale of our products in other countries. Our extensive network
 of local operations differentiates us from our competitors through the level of direct selling activities
 and technical service support we provide for our customers. We built this network over time through
 our local surgical training programs and facilities and through substantial investments in emerging
 markets when the practice of ophthalmology was in its developmental stage. We believe that our global
 infrastructure enables us to provide a level of customer service and technical support on a global basis
 unmatched in the ophthalmic industry.

Our Manufacturing Expertise

We
 have state-of-the-art pharmaceutical and medical device manufacturing facilities that employ our proprietary
 technologies. In these facilities, we manufacture the vast majority of our products, with only limited
 reliance on third-party manufacturers. The broad experience, long tenure and low turnover rate among
 our workforce allow us to maintain and enhance our manufacturing know-how and expertise. Our manufacturing
 operations work closely with our research and development and regulatory staff throughout the process
 of product development to promote a rapid and successful launch once a product is approved. Our knowledge
 base in manufacturing, state-of-the-art facilities and capacity planning enable us to handle increased
 levels of product demand and product complexity, while controlling manufacturing costs.

Our Experienced Management Team and Workforce

The
 long and diverse experience of our management team in the ophthalmic industry allows them to understand
 our business and add value to our operations. As a result, the long industry experience of our senior
 executives and managers and their strong relationships with eye care professionals, academic researchers
 and regulators are important to our business and differentiate us from other companies in the ophthalmic
 industry.

We
 also benefit from an experienced multinational and multidisciplinary workforce of approximately 11,900
 employees, many of whom have been with us for over two decades. The long tenure of our staff represents
 a competitive advantage because of their knowledge of our industry, familiarity with our customers and
 understanding of the development, manufacture and sale of our products. Since individuals at many levels
 of our organization interact with important customers, researchers and regulators, the experience of
 our personnel forms an integral part of the relationship-building that is important to the effective
 conduct of our business.

Our Strategy

Build on Our Leadership Positions in Attractive
 Markets

We
 build on the proven quality of our products and their leadership positions across a broad range of product
 categories to increase sales in established markets and grow our market share, particularly in attractive
 segments of the ophthalmic market, such as the treatment of glaucoma and cataracts. This strategy is
 implemented by using market-leading products such as our Infiniti® and LEGACY® phacoemulsification
 machines and AcrySof® intraocular lenses to inform potential customers about related products,
 including viscoelastics and related pharmaceutical products. We also intend to continue to rely on our
 leading products and existing infrastructure in markets as a base to launch new products and drive sales
 of our existing products.

Continue to Make Significant Investments in Research
 and Development

Research
 and development is fundamental to our long term growth and profitability. We will target areas we believe
 present new and attractive growth opportunities, including age-related macular degeneration and other
 retinal disorders. We will continue to focus our efforts on introducing the next generation of our products,
 with a particular emphasis on the replacement of products reaching the end of their product life cycle.
 We will also continue to license compounds from other pharmaceutical companies that have potential ophthalmic
 uses as part of our research and development efforts.

Grow Our Sales in Emerging Markets

Our
 strategy is to accelerate the adoption of medically advanced technologies in emerging markets through
 our global scale and ophthalmic expertise. The adoption of these technologies not only benefits local
 populations but should also increase the size of the global market for our products. We seek to increase
 our sales in emerging markets by capitalizing on our long-standing tradition of setting up in-country
 infrastructure, including training programs and facilities, local sales and marketing organizations
 and technical service and support teams. We currently have permanent surgical training facilities in
 40 countries around the world on six continents. These facilities introduce ophthalmologists to our
 surgical equipment and cataract products through hands-on training in surgical techniques while exposing
 them to leading ophthalmologists. In our experience, this infrastructure has led to increased sales
 of our complete product offering and helped establish relationships that have resulted in faster approval
 times for our products. Furthermore, our local sales forces build on the relationships begun in our
 training programs.

Capitalize on Sales Forces Across Product Categories

Our
 strategy is to dedicate expert and focused sales forces to the specialized needs of our customers. Our
 selling efforts are organized around pharmaceutical, surgical and consumer eye care products, and we
 customize these efforts to the medical practice needs of each customer. We organize our sales teams
 to ensure appropriate reach and frequency of promotion to all customer channels for our product portfolio.
 We encourage our sales representatives to go beyond traditional selling efforts and to provide our customers
 with access to clinical education programs, clinical studies, technical service assistance and practice
 management feedback. We educate our specialized sales forces to recognize cross-selling opportunities
 for key products from other product categories and involve the appropriate sales representatives to
 market these products.

Launch Products Globally

We
 intend to use our extensive regulatory capabilities, with personnel in 40 countries, to accelerate the
 approval and launch of new products in key countries around the world. We coordinate the introduction
 of new products under the ALCON® brand and, where possible, globally brand our products to promote
 better recognition and broad customer acceptance. Our strategy enables us to benefit more quickly from
 sales outside of the United States and realize a faster return on our research and development investments.

Our Products

We
 manage our business through two business segments: Alcon United States and Alcon International. Our
 portfolio spans three key ophthalmic categories: pharmaceutical, surgical and consumer eye care products.
 See notes 9 and 10 to the consolidated financial statements for a three year history of our sales by
 category and segment.

Our Pharmaceutical Products

We
 are a global leader in ophthalmic pharmaceuticals. We develop, manufacture and market a broad offering
 of prescription ophthalmic pharmaceutical products.

The
 following table lists our principal pharmaceutical products:

|Glaucoma    | OcularAnti-Infectives | OcularCombination | OcularAllergy | Generics  | Otic Combination
|----------- | --------------------- | ----------------- | ------------- | --------- | ----------------
|Travatan®   |                       | Ciloxan®          |               | TobraDex® |                 
|Betoptic S® |                       | Tobrex®           |               | Maxitrol® |                 
|Azopt®      |                       | Vigamox®          |               |           |                 
|            |                       |                   |               |           |                 

(1) Cipro and Ciprodexare registered
 trademarks of Bayer AG, licensed to Alcon by Bayer AG.

Glaucoma Treatment

We
 offer a complete line of products to treat glaucoma. In 2003, sales of our glaucoma products were $432.4
 million, or 33% of our total pharmaceutical sales.

In
 April 2001, we launched Travatan®, our entry into the prostaglandin analogue class of glaucoma
 treatments, in the United States. Prostaglandin analogues are the newest and most effective class of
 compounds currently available to reduce intraocular pressure (IOP), the primary characteristic of
 glaucoma. Travatan® contains the most potent prostaglandin analogue available today. We have
 launched Travatan® in more than 70 countries in addition to the United States. In 2003, we expanded
 our indication in the European Union to include the use of Travatan® as a first-line therapy.

In
 addition to Travatan®, we offer a complete line of glaucoma products, including Azopt®
 ophthalmic suspension and Betoptic S®, both of which utilize other classes of compounds. Azopt®,
 a carbonic anhydrase inhibitor, has shown to be an excellent adjunct therapy when used with other glaucoma
 therapies, including prostaglandin analogues, to control IOP in difficult cases. In 2003 Azopt®
 global sales totaled $ 92.7 million. Azopt® was approved and launched in Japan in December 2002
 and has increased in market share during 2003. Betoptic S®, a beta-blocker, also was approved
 for sale in Japan during 2002. These products are important to our glaucoma franchise and currently
 make up a majority of our glaucoma sales. We expect these glaucoma products to continue to contribute
 to our sales.

---

Anti-infectives,
 Anti-inflammatories and Combination Therapies

We
 currently manufacture and market a broad range of drugs to treat bacterial, viral and fungal infections
 of the eye and to control ocular inflammation. In 2003, combined sales of our ocular anti-infectives,
 ocular anti-inflammatories and combination therapies were $517.9 million, or 39.5% of our total pharmaceutical
 sales.

Our
 combination ocular anti-infective/anti-inflammatory product, TobraDex®, is convenient and cost-effective
 because it combines a broad-spectrum antibiotic with a proven anti-inflammatory. TobraDex® is
 currently the only branded combination product of this type in the U.S. market without a generic equivalent.
 We currently sell TobraDex® in more than 80 countries.

Our
 leading ocular anti-infective product is Ciloxan®, a topical ophthalmic solution utilizing ciprofloxacin
 that is effective against a broad spectrum of bacteria, including strains resistant to more than one
 antibiotic. Ciloxan® is offered in both ointment and solution form, providing options for treating
 ocular infection in a variety of patients. We currently sell Ciloxan® in more than 90 countries.
 The patents for Ciloxan® have expired in virtually all of the countries where it is marketed;
 the U.S. patent will expire in June 2004.

In
 April 2003, Alcon launched Vigamox ophthalmic solution in the U.S. for the treatment of bacterial
 conjunctivitis. Vigamox has quickly become one of the leading topical antibiotics in the U.S.
 due to its broad spectrum, ability to eradicate resistant bacteria, its ability to penetrate the surface
 of the eye and its three times a day dosing. Over the next two years, we expect Vigamox to
 become our leading ocular antibiotic and we plan to introduce Vigamox in key international markets.

We
 also market combination anti-infective/anti-inflammatory products for ear infections. In 1998, we licensed
 Cipro HC Otic drops to treat otitis externa, commonly known as swimmers ear. Sales of Cipro
 HC Otic were $92.5 million in 2003 and $85.8 million in 2002, and Cipro HC Otic currently
 is marketed in over 30 countries. Sales of this product are seasonal, with the majority of prescriptions
 written during the summer months.

In
 2003 Alcon strengthened its otic portfolio with the introduction of Ciprodexotic suspension
 for the treatment of otitis media in the presence of tympanostomy tubes (AOMT) and of otitis externa.
 The AOMT indication allows Alcon to compete in the market for patients who have middle ear infections
 and ear tubes. Clinical trials for Ciprodex otic showed higher cure rates versus market-leading
 products. Sales of Ciprodexotic were $18.5 million in 2003.

Allergy

We
 currently market and manufacture products for the treatment of ocular allergies. In 2003, sales of our
 ocular allergy pharmaceutical products were $276.6 million, or 21.1% of our total pharmaceutical sales.
 The allergy market is, by its very nature, seasonal, peaking in the spring and again, but to a lesser
 extent, in the fall.

Patanol®
 ophthalmic solution was the first twice-daily ocular allergy product with a dual-action active ingredient,
 which acts as both an antihistamine and a mast-cell stabilizer. When we introduced Patanol® in
 1997, we estimated the total topical ocular allergy market to be less than $100 million. Due in large
 part to the effectiveness of this drug, our related marketing efforts to physicians and direct-to-consumer
 advertising, the methods for treating ocular allergy have been expanded to include topical eye drops.
 This evolution in treatment methods has resulted in sales of topical ocular allergy products in the
 United States increasing to more than $300 million in 2003. We have launched, in 2003, a European version
 of Patanol®, under the name Opatanol® ophthalmic solution, and we also are seeking approval
 of Patanol® in Japan. We currently sell Patanol® in more than 50 countries.

Generic Pharmaceuticals

We
 established Falcon Pharmaceuticals in 1994 to manufacture and market generic ophthalmic pharmaceutical
 products in the United States. Falcons sales in 2003 were $93.2 million, or 7.1% of our total global
 pharmaceutical sales.

Falcons
 main product is Timolol GFS, a patented gel forming solution used to treat glaucoma. Timolol GFS is
 currently the sole generic pharmaceutical approved by the FDA as a therapeutically equivalent substitute
 for Mercks Timoptic-XE® at the pharmacy. In 2003, Timolol GFS accounted for over 87% of the U.S. prescriptions
 written for gel formulated timolol. We expect Timolol GFSs status as the sole generic substitute for
 Timoptic-XE® to last until 2006, when Mercks patent protection expires. Falcon currently manufactures
 and markets 27 brands of generic pharmaceutical products. Falcons other principal generic products
 include Pred Acetate 1% (which is a steroid used for the treatment of inflammation of the eye), Timolol
 Solution (for the treatment of glaucoma), Trifluridine (used to treat virus infections of the eye),
 Brimonidine 0.2% (introduced in 2003 for the treatment of glaucoma), and Neomycin and Polymyxin B Sulfates
 and Hydrocortisone otic and ophthalmic suspensions (sterile antibacterial and anti-inflammatory combination
 products for the treatment of bacterial infections in the ear and the eye, respectively).

Product Development
 and Registrations

We
 are developing new products to treat a variety of ophthalmic diseases. In glaucoma, we have filed a
 U.S. New Drug Application (NDA) in the fourth quarter of 2003 for Travatan®/timolol ophthalmic
 solution, a prostaglandin analogue-beta blocker combination therapy, and are continuing Phase III clinical
 trials in the U.S. and Europe to complete our global development. We are in Phase III clinical trials
 for brimonidine 0.15% preserved with POLYQUAD® (polyquaternium-1) for the treatment of glaucoma.

Age-related
 Macular Degeneration (AMD) frequently causes rapid loss of vision and is the leading cause of blindness
 in the U.S., Europe and Japan in people over fifty years of age. The causes of AMD are currently unknown,
 and no cure has been discovered, although certain laser treatments and other procedures exist. The expected
 development of more effective AMD treatments during the next three years is anticipated to expand the
 market for AMD treatments into a multi-billion dollar global market. Today, the AMD market is largely
 undeveloped because of limited knowledge and available treatments.

We
 have a new product in development for AMD treatment. RETAANE 15 mg anecortave acetate for depot
 suspension is in Phase III clinical trials for the treatment of the wet form of AMD. In 2004, Phase
 III studies on a second indication will be initiated, directed toward arresting the progression of the
 dry form of AMD in patients who are at risk to convert to wet AMD. RETAANE Depot development
 has also been initiated in Japan.

During
 2003, we reviewed our development plans for combination anti-infective/anti-inflammatory eye drops to
 treat eye infections and control inflammation. Based on this review, we have changed our focus from
 a product that combines ciprofloxacin and dexamethasone to a product that combines moxifloxacin and
 dexamethasone. Because we are at an earlier stage of development with the moxifloxacin and dexamethasone
 combination, we now are projecting a 2006 or later approval of a combination product in this area. Previously
 we had expected approval of the ciprofloxacin and dexamethasone combination product in late 2005.

We
 are currently developing Nepafenac, a proprietary molecule, for control of post-surgical inflammation.
 Phase II/III studies have already demonstrated efficacy in the treatment of this indication. An NDA
 is projected to be filed in the latter part of 2004.

In
 our allergy group, we have filed for U.S. approval on a Patanol® formulation that requires only
 once-a-day dosing. We also are developing Patanase®, a unique nasal formulation for the treatment
 of allergic rhinitis. An NDA for Patanase® is targeted for the second half of 2004.

In
 another pharmaceutical category, we are conducting Phase III clinical trials on 15(S)-HETE, a new potential
 prescription treatment for the discomfort and irritation of dry eye syndrome. We expect to complete
 these studies in the first half of 2004.

---

The
 following table includes additional detail about each of these products in development, including their
 expected approval date in the U.S.

|Name                           | Condition             | ExpectedApprovalDate | Status      
|------------------------------ | --------------------- | -------------------- | ------------
|Travatan®/Timolol,             | Glaucoma              | 2005                 | Filed       
|new combination therapy        |                       |                      |             
|Brimonidine 0.15% with         | Glaucoma              | 2005                 | Phase III   
|POLYQUAD®                      |                       |                      |             
|RETAANE 15 mg Depot,          | Wet AMD               | 2005                 | Phase III   
|anecortave acetate             |                       |                      |             
|Moxifloxacin/Dexamethasone     | Anti-infective/ Anti- | (1)                  | Pre-clinical
|                               | inflammatory          |                      |             
|Nepafenac                      | Anti-inflammatory     | (1)                  | Phase III   
|Patanol® once-a-day            | Allergy               | 2004                 | Filed       
|Patanase®, nasal antihistamine | Allergy               | 2005                 | Phase III   
|Prescription dry eye product   | Dry eye               | (1)                  | Phase III   
|(15(S) HETE)                   |                       |                      |             

(1) We currently expect an approval date in 2006 or later.

The expected approval dates in the table above reflect those
 for the United States. We also expect to file for approval of these products in most of the countries
 where we currently market our products. For pharmaceutical products, these approvals generally are received
 after U.S. approvals. We maintain a significant regulatory presence in major countries to support the
 filing process outside the U.S.

Our Surgical Products

We are the global leader in ophthalmic surgical products and manufacture
 and market the most comprehensive product offering available today.

The following table lists our principal surgical products:

|Cataract                                | Refractive | Vitreoretinal          | General Surgical
|--------------------------------------- | ---------- | ---------------------- | ----------------
|Infiniti vision system                 |            | LADARVision® 4000laser |                 
|Infiniti AquaLase® surgicalinstruments |            | LADARWave®             |                 
|Series 20000® LEGACY®surgical system    |            | CustomCornea®          |                 
|LEGACY® consumables                     |            | Wavefront System       |                 
|AcrySof®intraoccular lenses             |            |                        |                 
|Viscoelastic devices                    |            |                        |                 
|- Viscoat®                              |           
|- Provisc®                              |           
|- Duovisc®                              |           
|                                        |           

Cataract Surgery

We
 support our market leadership position through a comprehensive offering of single-use disposable products.
 Sales of our products for cataract surgery in 2003 were $1.32 billion, or 83.6% of our total surgical
 sales. We currently market our products for cataract surgery in substantially all of Alcons markets.

The
 Infiniti vision system, our newest lens removal system, was introduced in May 2003. Based on
 initial customer interest, we expect the Infiniti to maintain our position as worldwide leader
 in lens removal systems. The Infiniti vision system is the worlds first and only tri-modal
 lens removal surgical instrument. With this single instrument, surgeons now have a choice of three different
 methods to remove a cataract:

- advanced ultrasound phacoemulsification alone,
- the combination of ultrasound and oscillation provided by the NeoSoniX® handpiece, or
- Alcons entirely new AquaLase® liquefaction device that generates pulses of surgical solution to safely break up and remove the natural lens material.

Our
 comprehensive line of single-use products for cataract procedures includes the cassettes used in the
 LEGACY® and Infiniti vision systems, a full line of viscoelastics to protect delicate
 tissues of the eye during the procedure, surgical knives and surgical irrigating solutions.

Our
 AcrySof® intraocular lenses are the most widely implanted foldable intraocular lenses in the
 world. AcrySof® intraocular lenses are made of the first material specially engineered for use
 in an intraocular lens. This acrylic material is more compatible with the human eye than silicone. In
 2003, with the exception of Japan, we globally launched the AcrySof® Natural intraocular
 lens. The AcrySof® Naturalis the first foldable ultraviolet (UV) and blue light-filtering
 intraocular lens on the market in the U.S. and is specially designed to approximate the light filtration
 properties of a healthy human lens. The AcrySof® Natural is currently sold in over 50 countries.

We
 also had a limited and controlled launch in 2003 of the AcrySof® ReSTOR® intraocular lens in
 countries other than the U.S. and Japan. This newly developed lens has a unique optical system that
 incorporates an apodized diffractive, refractive pattern that provides distance, near and intermediate
 vision for the patient following lens removal surgery, thereby reducing the patients need for or dependence
 on eyeglasses.

Vitreoretinal
 Surgery

Our
 vitreoretinal surgical product offering is one of the most comprehensive in the industry for surgical
 procedures for the back of the eye. In 2003, market-leading sales of our products for vitreoretinal
 surgery were $161.8 million, or 10.2% of our total surgical sales. We currently market our vitreoretinal
 surgical products in substantially all of the countries in which we sell products.

The
 Accurus® surgical system integrates all automated, non-laser surgical functions used in vitreoretinal
 surgery. Some Accurus® models can also perform phaco procedures for cataract removal. At the
 end of 2003, we introduced a series of instruments for use in new small gauge (25 gauge) posterior segment
 surgical procedures. These new offerings will enhance ourAccurus® consumable products offerings,
 along with additional 25 gauge products that we plan to introduce in 2004. We support the leading position
 of the Accurus® through our full line of vitreoretinal products, including lasers, ultrasound
 diagnostics and hand-held microsurgical instruments.

Custom Pak®
 Surgical Procedure Packs

To
 provide convenience, efficiency and superior value for ophthalmic surgeons, we have developed the Custom
 Pak® surgical procedure pack. We market our Custom Pak® for cataract, refractive and vitreoretinal
 surgical procedures. Unlike conventional surgical procedure packs, the Custom Pak® allows ophthalmic
 surgeons and their staff to customize and sequence the products included in the surgical procedure pack.
 For a single price, our Custom Pak® includes our single-use products required for the procedure,
 combined with non-Alcon products. We believe that ourCustom Pak® allows ophthalmic surgeons
 to improve their efficiency in the operating room, and this gives us the opportunity to provide access
 to our single-use products in a value-added package. We estimate that a Custom Pak® was used
 in a majority of the cataract surgeries performed in the United States in 2003. Our Custom Pak®
 has been successful in Europe, and we see growth potential in other markets, including Latin America
 and Japan.

Refractive Surgery

We
 are one of the leaders in the global market for laser refractive surgical products. We entered the laser
 refractive market with our acquisition of Summit Autonomous, Inc. during 2000. In 2003, sales of our
 laser refractive products and related technology fees were $70.3 million, or 4.4% of our total surgical
 sales. We currently market our laser refractive surgical equipment in over 50 countries.

Our
 LADARVision® 4000 excimer laser combines the fastest active laser radar eye tracker and a true
 small-spot laser beam to deliver to surgeons advanced laser technology that they can use to treat their
 refractive patients.

Alcon
 also manufactures and markets the LADARWave® aberrometer, a wave front device which measures
 refractive errors of the entire optical system. LADARWave® can create and display this information
 as a three-dimensional map of the cornea. When used in combination with the LADARVision® 4000,
 physicians can measure and treat visual aberrations that previously went undetected, and provide a customized
 treatment for each individual patient. The clinical trials we conducted to gain approval of the CustomCornea®
 system produced better quality of vision for patients than conventional treatment. We received the first
 FDA approval of customized procedures in late 2002 to correct patients with spherical myopia and have
 additional FDA filings planned to broaden the range of correction for LADARWave®.

Product Development

We
 currently have products in development in the three primary areas of our surgical markets: cataract,
 vitreoretinal and refractive surgery.

We
 intend to build on our AcrySof® intraocular lenses franchise with several additions. The AcrySof®
 ReSTOR® lens, a pseudoaccommodative intraocular lens, is targeted for approval in the U.S. in early
 2005. We also are developing the AcrySof® ReSTOR® for the Japanese market. We expect U.S. approval
 of AcrySof® Natural Toric intraocular lens in 2005. We plan to release to the market in 2004
 the Acrysert® insertion device, an advancement in the packaging and insertion of intraocular
 lenses.

We
 also are developing the next-generation viscoelastic, optimized for all phases of cataract and/or certain
 refractive procedures, based on new proprietary polymer ratios. We expect to launch this product in
 the U.S. in 2005.

We
 plan to expand our offerings in the irrigating solutions market with Stableyz ophthalmic solution,
 a next-generation irrigating solution with improved surgical performance and ocular protection based
 on a proprietary polymer system. The product has already demonstrated improved efficacy (reduced turbulence)
 in clinical studies.

In
 vitreoretinal surgery, we are developing the next-generation vitreoretinal system. We expect that this
 new system will replace the Accurus® system beyond 2006.

As
 a complement to our existing refractive business, Alcon is conducting clinical studies with its Angle-Supported
 Phakic intraocular lens. Made from the same biocompatible AcrySof® material, this product will
 offer refractive patients an alternative to the current laser-based offerings. We anticipate that the
 Angle-Supported Phakic intraocular lens will receive approval in the EU in 2005, followed by FDA approval
 in the U.S. several years later. Also, Alcon will seek approval for CustomCornea® treatment of
 hyperopia patients in 2005 for the U.S. and EU markets.

The
 following table includes additional details about surgical products in development including their expected
 approval date in the U.S.

|Name                                  | Condition | ExpectedApprovalDate   | Status
|------------------------------------- | --------- | ---------------------- | ------
|AcrySof® ReSTOR® lens                 |           | Cataract               |       
|AcrySof ® Natural Toric lens          |           | Cataract               |       
|Acrysert® lens insertion device       |           | Cataract               |       
|New viscoelastic                      |           | Cataract               |       
|Stableyz irrigating solution         |           | Cataract/Vitreoretinal |       
|Next generation vitreoretinal system  |           | Vitreoretinal          |       
|AcrySof ® Angle-Supported Phakic lens |           | Refractive             |       
|CustomCornea®, myopia with            |           | Refractive             |       
|astigmatism                           |          
|(expanded approval)                   |          
|CustomCornea®, hyperopia              |           | Refractive             |       

(1) We currently expect an approval date in 2006 or later.

The expected approval dates in the table above reflect those for
 the United States. We also expect to file for approval of these products in most of the countries where
 we currently market our products. For surgical products, these approvals are often obtained before U.S.
 approvals. We maintain a significant regulatory presence in major countries to support the filing process
 outside the U.S.

Our Consumer Eye Care Products

We market contact lens care products, artificial tears and ocular
 vitamins. We currently market our contact lens care and artificial tears products in most of the countries
 where we sell products. The following table lists our principal products in these areas:

|Contact Lens Care                                              | Artificial Tears | Ocular Vitamins                                          
|-------------------------------------------------------------- | ---------------- | ---------------------------------------------------------
|OPTI-FREE® EXPRESS® No Rubmulti-purpose disinfecting solution |                  | Systane® lubricant eye drops                             
|                                                               |                  | Tears Naturale® Forte lubricant eye                      
|OPTI-FREE® multi-purpose solution                              |                  | drops                                                    
|OPTI-FREE® SupraClens® liquid                                  |                  | Tears NaturaleFree® lubricant eye                        
|enzyme                                                         |                  | drops                                                    
|CLERZ® Plus lens rewetting drops                               |                  | Tears Naturale® II lubricant eye                         
|Opti-One® No Rub multi-purpose solution                       |                  | drops with POLYQUAD®                                     
|UNIQUE-pH® disinfecting solution                               |                  | antimicrobial preservativeBion® Tears lubricant eye drops
|                                                               |                 

Contact Lens
 Care Products

Our
 contact lens care products include disinfecting solutions to destroy harmful microorganisms in and on
 the surface of contact lenses, cleaners to remove undesirable film and deposits from contact lenses,
 weekly enzymatic cleaners to remove protein deposits from contact lenses and lens rewetting drops to
 improve wearing comfort for contact lenses. Sales of our contact lens care products in 2003 were $282.2
 million, or 55.2% of our total consumer eye care sales.

OPTI-FREE®
 EXPRESS® No Rub multi-purpose disinfecting solution, our leading contact lens care product
 was the first multi-purpose disinfecting solution to obtain FDA approval to make a no rub claim. OPTI-FREE®
 EXPRESS® No Rub utilizes a multi-purpose disinfecting solution with high-capacity disinfection
 and superior protein cleaning benefits, without requiring rubbing of the contact lenses. We introduced
 this product in 1999 and currently market it in most major markets throughout the world. In 2002, we
 completed and submitted studies to the FDA that demonstrated superior comfort for OPTI-FREE® EXPRESS®
 No Rub, which allowed us to add the claim Lasting Comfort Formula to our package. This
 new claim has been added to our EXPRESS® packages around the world as appropriate approvals are
 obtained.

Our
 line of contact lens care products also includes CLERZ® Plus lens rewetting drops, which moisten
 contact lenses during wear and are clinically proven to reduce protein build-up, OPTI-FREE® SupraClens®
 preservative-free active cleaning solution and UNIQUE- pH® multi-purpose solution for hard contact
 lenses.

Other Vision
 Care Products

We
 manufacture and market artificial tears to treat dry eye syndrome and vitamins formulated to promote
 good ocular health. We offer a complete line of products for the dry eye sufferer. In February 2003,
 we added Systane® lubricating eye drops to our product line in the U.S. and, in 2004, we plan
 to launch the product in over 20 additional countries. Systane® has a unique in-the-eye gelling
 formula that provides longer-lasting relief of dry-eye symptoms. The bulk of our sales of artificial
 tears still comes from our Tears Naturale® line of products. Our Bion® Tears contains
 zinc and bicarbonate and is specially formulated for severe dry eye sufferers.

We
 market ICAPS®, Lutein and Zeaxanthin formula, a vitamin specially formulated to promote good
 ocular health. In its Age Related Eye Disease Study (AREDS), the National Eye Institute found that
 high levels of anti-oxidants and zinc reduce the risk of AMD in patients at risk for developing it.
 In 2002 we launched ICAPS® AREDS, a formula that includes the anti-oxidants and zinc ingredients
 referenced in the AREDS study.

---

Product Development

We
 currently are developing products in the areas of contact lens care and dry eye, including a new disinfectant
 for contact lenses that we believe will be more comfortable than existing solutions. In the area of
 dry eye, we are developing both a new preservative system and a single-use, preservative-free formulation
 for Systane®.

The
 following table includes additional detail about each of these products in development.

|Name                                     | Condition | ExpectedApprovalDate | Status
|---------------------------------------- | --------- | -------------------- | ------
|New contact lens disinfectant solution   |           | Contact lens care    |       
|Systane® next generation tears           |           | Dry eye              |       
|Systane® tears preservative free product |           | Dry eye              |       
|(single use)                             |          

The
 expected approval dates in the table above reflect those for the United States. We also expect to file
 for approval of these products in most of the countries where we currently market our products. For
 consumer eye care products, these approvals generally are received after U.S. approvals. We maintain
 a significant regulatory presence in major countries to support the filing process outside the U.S.

Sales and Marketing

We
 conduct our sales activities through more than 50 local operating entities and 20 representative/branch
 offices around the world. We have a sales force of over 2,350 sales representatives consisting of approximately
 750 sales representatives in the United States, our largest market, and approximately 1,600 sales representatives
 outside of the United States. We use the broad reach of our local operations to provide technical service
 to our optometry customers in the United States and optometric fitters outside of the United States.
 All of our surgical technical service in the United States and a high percentage of that service outside
 the United States are provided by our service technicians. In countries where we do not have local operations
 or a scientific office, we use distributors to sell and handle the physical distribution of our products.
 Outside of the United States, our largest markets by sales are Japan, France, Spain, Germany, Italy,
 Canada, the United Kingdom, Brazil, Australia and Mexico.

We
 organize our selling efforts around pharmaceutical, surgical and consumer eye care products and customize
 these efforts to the medical practice needs of each customer. We encourage our sales representatives
 to go beyond traditional selling efforts and to provide our customers with access to clinical education
 programs, clinical studies, technical service assistance and practice management programs. We educate
 our specialized sales forces to recognize cross-selling opportunities for key products from other product
 categories.

In
 each of our markets, we rely on our strong relationships with eye care professionals to maintain and
 expand our market share. We have established several long-standing programs that bring ophthalmic residents,
 optometrists and other eye care professionals to our Fort Worth campus and other locations for multi-day
 training sessions and educational seminars. We also sponsor ophthalmic conferences around the world,
 and we conduct training seminars where leading ophthalmologists discuss the therapeutic attributes of
 our products and demonstrate surgical techniques using our products. We support these programs by having
 our sales representatives work closely with our customers and their staffs to better understand their
 practices and solicit feedback, which is important to our development of new products. We currently
 have permanent surgical training facilities in 40 countries around the world on six continents. These
 facilities introduce ophthalmologists to our surgical equipment and cataract products through hands-on
 training in surgical techniques while exposing them to leading ophthalmologists. Our local sales forces
 build on the relationships begun in our training programs to advance the sale of our products.

Most
 of our global marketing efforts are supported by advertising in trade publications and by sales representatives
 attending regional and national medical conferences. We reinforce our marketing efforts with targeted
 and timely promotional materials that our sales force presents to the eye care professional in the office,
 hospital or surgery center setting. We supplement these marketing efforts through direct mailings to
 eye care professionals and e-detailing. To coordinate our sales efforts, we have begun using customer
 relationship management software. Moreover, in the United States and Japan, we use direct-to-consumer
 advertising to promote selected products.

While
 we market all of our products by calling on eye care professionals, our direct customers and distribution
 methods differ across business lines. Distributors, wholesalers, hospitals, government agencies, large
 retailers and physicians are the direct customers for our pharmaceutical products. We sell our surgical
 products directly to hospitals and ambulatory surgical centers. In the United States, over 80% of our
 contact lens care products are sold to large grocery, drug and general merchandise retailers. Outside
 of the United States, we sell most of our consumer eye care products directly to retailers and optical
 chains, while a smaller amount is sold to distributors for resale directly to smaller retailers and
 eye care professionals. No single customer accounted for 10% or more of our sales in 2003.

As
 a result of changes in health-care economics, managed care organizations have become the largest payors
 for health care services in the United States. In an effort to control prescription drug costs, over
 95% of managed care organizations use a formulary. We have a dedicated managed care sales team that
 actively seeks to get our products on these formularies and to improve the position of our products
 once they are on a formulary.

Research and Development

We
 have the largest research and development commitment of any eye care company worldwide. Our research
 and development organization consists of approximately 1,300 employees, including more than 280 individuals
 who are either M.D.s, doctors of optometry or Ph.D.s. Our researchers have extensive experience in the
 field of ophthalmology and frequently have academic or practitioner backgrounds to complement their
 commercial experience. We organize our research teams around our pharmaceutical, surgical and consumer
 eye care products. Candidates for pharmaceutical and contact lens care product development originate
 from our internal research, from our extensive relationships with academic institutions and from our
 licensing of molecules from other companies. Our surgical design concepts are internally developed by
 staff engineers and scientists who, in addition to their own research, gather ideas from ophthalmic
 surgeons and clinicians in the involved fields. Our research and development organization has been designed
 to drive global registration of products through a focused central research facility in Fort Worth,
 Texas, combined with regionally based clinical and regulatory personnel in 40 countries outside of the
 United States.

We
 have invested approximately $1.4 billion over the last five years (including $350 million in 2003, $323
 million in 2002 and $290 million in 2001) to carry out our strategy of developing products primarily
 from our own research and development activities.

We
 enter into license agreements in the ordinary course of our business with respect to compounds used
 in our pharmaceutical products. We have a number of agreements with pharmaceutical companies that allow
 us to screen compounds for potential uses in the eye. We also have a small number of contracts with
 companies that give us the right to develop ophthalmic products from their compounds.

Our
 research and development department maintains an extensive network of relationships with scientists
 working in university laboratories and with leading ophthalmologists, inventors and investigators in
 the pharmaceutical and surgical products fields. The principal purpose of these collaborative scientific
 interactions is to take advantage of leading-edge research from academic investigators and recognized
 surgeons to complement our internal technical capabilities. We also support our direct academic relationships
 with grants from the Alcon Research Institute, which we fund. These grants recognize research undertaken
 in the general area of ophthalmology and are awarded by an independent board of ophthalmologists and
 academic researchers.

Manufacturing and Supplies

Manufacturing

We
 generally organize our manufacturing facilities along product categories, with most plants being primarily
 dedicated to the manufacture of either surgical equipment and surgical medical devices or pharmaceutical
 and contact lens care products. Our functional division of plants reflects the unique differences in
 regulatory requirements governing the production of surgical medical devices and pharmaceuticals, as
 well as the different technical skills required of employees in these two manufacturing environments.
 All of our manufacturing plants in the United States and Europe are ISO 9001 certified.

We
 employ cost reduction programs, known as continuous improvement programs, involving activities such
 as cycle-time reductions, efficiency improvements, automation, plant consolidations and material negotiation
 programs as a means to reduce manufacturing and component costs. To comply with good manufacturing practices
 and to improve the skills of our employees, we train our direct labor manufacturing staff throughout
 the year. Our professional employees are trained in various aspects of management, regulatory and technical
 issues through a combination of in-house seminars, local university classes and trade meetings.

As
 of December 31, 2003, we employed approximately 2,000 people to manufacture our pharmaceutical and contact
 lens care products at seven facilities in the United States, Belgium, France, Spain, Brazil and Mexico.
 As of December 31, 2003, we employed approximately 2,100 people to manufacture surgical equipment and
 other surgical medical devices at nine facilities in the United States, Belgium, Switzerland, Ireland
 and China. Currently, we manufacture substantially all of our pharmaceutical, contact lens care and
 surgical products internally and rely on third-party manufacturers for only a small number of products.

Due
 to the complexity of certain manufacturing technologies and the costs of constructing and maintaining
 duplicate facilities, a number of our key products are manufactured at only one of our facilities. Some
 of these key products include:

|Products                                   | Facility
|------------------------------------------ | --------
|U.S. pharmaceutical products               |         
|Intraocular lenses (l)                     |         
|Provisc®, Viscoat®, Duovisc® viscoelastics |         
|OPTI-FREE® EXPRESS® No Rub                |         
|Accurus®/LEGACY®/Infiniti                 |         
|LADARVision® LADARWave® (1)                |         

| | (l) | We are in the process of converting the Cork, Ireland, manufacturing facility from its refractive equipment production to production of intraocular lenses to provide additional capacity.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
 addition, Cipro HC Otic is produced for us by Bayer Aktiengesellschaft, at a single location,
 pursuant to contracts in the ordinary course of business. We have begun to move production of this product
 to Alcons Barcelona, Spain, manufacturing facility.

Supplies

The
 active ingredients used in our pharmaceutical and consumer eye care products are sourced from facilities
 approved by the FDA or by other applicable health regulatory authorities. Because of the proprietary
 nature and complexity of the production of these active ingredients, a number of them are only available
 from a single FDA-approved source. When supplies are single-sourced, we try to maintain a sufficient
 inventory consistent with prudent practice and production lead-times. The majority of active chemicals
 and biological raw materials and selected inactive chemicals are acquired pursuant to long term supply
 contracts. The sourcing of components used in our surgical products differs widely due to the breadth
 and variety of products. Inventory levels for components used in the production of our surgical products
 are established based on delivery times and other supply chain factors to ensure sufficient inventory
 at all times. The prices of our supplies are generally not volatile.

---

The
 following table identifies certain single-source suppliers of raw materials acquired pursuant to contracts
 entered into in the ordinary course of business and the Alcon products that contains these raw materials:

|Supplier Name                  | Raw Material | Alcon Product                      
|------------------------------ | ------------ | -----------------------------------
|Dow Chemical Co.               |              | travoprost                         
|Bayer Aktiengesellschaft       |              | ciprofloxacin                      
|                               |              | moxifloxacin                       
|Kyowa Hakko Kogyo Co. Ltd.     |              | olopatadine                        
|Solutia, Inc.                  |              | myristinamide                      
|Plantex USA, Inc.              |              | timolol                            
|Genzyme Corporation            |              | hyaluronate (high molecular weight)
|Lifecore Biomedical, Inc.      |              | hyaluronate (low molecular weight) 
|Biogal Pharmaceutical Works LT |              | Tobramycin                         
|                               |              |                                    
|Sanofi Winthrop                |              | Betaxolol                          
|                               |              |                                    
|Napp Technologies LLC          |              | Fluorescein                        
|                               |              |                                    
|Pfizer Centre Source           |              | Neomycin Sulphate                  
|Alpharma Inc.                  |              | Polymixin B                        

Competition

The
 ophthalmic industry is highly competitive and subject to rapid technological change and evolving industry
 requirements and standards. Companies within our industry compete on technological leadership and innovation,
 quality and efficacy of their products, relationships with eye care professionals and health care providers,
 breadth and depth of product offering and pricing. The presence of these factors varies across our product
 offerings. We provide a broad line of proprietary eye care products and compete in all product categories
 in the ophthalmic market. Even if our principal competitors do not have a comparable range of products,
 they can, and often do, form strategic alliances and enter into co-marketing agreements to achieve comparable
 coverage of the ophthalmic market.

Pharmaceutical

Competition
 in the ophthalmic pharmaceutical market is characterized by category leadership of products with superior
 technology, including increases in clinical effectiveness (e.g., new drug delivery systems, formulations
 and combination products), the development of therapies for previously untreated conditions (e.g., AMD)
 and competition based on price from lower-priced generic pharmaceuticals.

Surgical

Competition
 in the ophthalmic surgical market is characterized by category leadership with products that provide
 superior technology and performance. Innovation, performance and long term relationships are also key
 factors in this competitive environment. Surgeons rely on the quality, convenience, value and efficiency
 of a product and the availability and quality of technical service. While we compete throughout the
 field of ophthalmic surgery, our principal competitors vary somewhat in each area. We compete with Bausch
 & Lomb across most of the ophthalmic surgical market. Advanced Medical Optics, Inc. (AMO), and
 Pfizer, Inc. each compete in limited segments of the surgical market. In addition to Bausch & Lomb,
 our principal competitors in laser refractive surgical equipment are VISX, Incorporated, Nidek Co.,
 Ltd. and Lumenis Ltd.

Consumer Eye Care Products

The
 consumer eye care business is characterized by competition for market share in a maturing market through
 the introduction of products that provide superior technology or effectiveness. Recommendations from
 eye care professionals and customer brand loyalty as well as our product quality and price are key factors
 in maintaining market share in these products. Our principal competitors in contact lens care products
 are Bausch & Lomb, AMO and Novartis. We compete with Allergan, Pfizer and Novartis in artificial
 tears products and Bausch & Lomb in ocular vitamins. All consumer eye care markets include significant
 competition from private label store brands, which generally are less costly to the consumer.

Intellectual Property

We
 strive to protect our investment in the research, development, manufacturing and marketing of our products
 through the use of patents, trademarks, copyrights, trade secrets and other intellectual property. We
 own or have rights to a number of patents, trademarks, copyrights, trade secrets and other intellectual
 property directly related and important to our businesses. As of January 1, 2004, we owned 984 United
 States patents and pending United States patent applications and approximately 3,800 corresponding patents
 and patent applications outside of the United States.

We
 believe that our patents are important to our business but that no single patent, or group of related
 patents, currently is of material importance in relation to our business as a whole. Patents for individual
 products extend for varying periods of time according to the date a patent application is filed or a
 patent is granted and the term of patent protection available in the jurisdiction granting the patent.
 The scope of protection provided by a patent can vary significantly from country to country. Our strategy
 is to develop patent portfolios for our research and development projects in order to obtain market
 exclusivity for our products in our major markets. Although the expiration of a patent for a product
 normally results in the loss of market exclusivity, we may continue to derive commercial benefits from
 these products. We routinely monitor the activities of our competitors and other third parties with
 respect to their use of intellectual property. If we believe our patents have been infringed, we generally
 file patent infringement suits with the appropriate courts. We aggressively assert the patents we hold
 relating to our lines of business. We vigorously contest claims of infringement brought by other patent
 holders against us.

In
 addition to our patents and pending patent applications in the United States and selected non-U.S. markets,
 we use proprietary know-how and trade secrets in our businesses. In some instances, we also obtain from
 third parties licenses of the right to use intellectual property, principally patents, which are important
 to our businesses.

Worldwide,
 all of our major products are sold under trademarks that we consider in the aggregate to be important
 to our businesses as a whole. We consider trademark protection to be particularly important in the protection
 of our investment in the sales and marketing of our pharmaceutical and contact lens care and general
 eye care products. The scope and duration of trademark protection varies widely throughout the world.
 In some countries, trademark protection continues only as long as the mark is used. Other countries
 require registration of trademarks and the payment of registration fees. Trademark registrations are
 generally for fixed but renewable terms.

We
 rely on copyright protection in various jurisdictions to protect the exclusivity of the code for the
 software used in our surgical equipment. The scope of copyright protection for computer software varies
 throughout the world, although it is generally for a fixed term which begins on the date of copyright
 registration.

Philanthropic Efforts

We
 have a long-standing commitment to bringing ophthalmic products to those who would not otherwise have
 access to them. Our Medical Missions Program supported more than 980 humanitarian efforts in 2003 involving
 over 2,900 volunteer eye care professionals in 87 countries. Using products that we provided without
 charge, these eye care professionals performed over 22,000 cataract procedures in 2003. We also conduct
 a glaucoma assistance program in the United States, which provided Alcon glaucoma products to more than
 31,000 patients in 2003.

Government Regulation

Overview

We
 are subject to comprehensive government controls governing the research, design, clinical and non-clinical
 development, manufacturing, labeling, advertising, promotion, safety and other reporting, storage, distribution,
 import, export and marketing of our products in essentially all countries of the world. National health
 regulatory agencies generally require pre-approval of pharmaceuticals and medical devices prior to their
 entry into that countrys marketplace. State and local laws also apply to our activities. This section
 summarizes the applicable regulations in the United States, European Union and Japan. Please also refer
 to Risk Factors  Risks Related to Our Business and Industry  We are subject to extensive government
 regulation that increases our costs and could prevent us from selling our products.

Pharmaceutical Development and Registration Process
 in the United States

The
 pharmaceutical research, development and registration process in the United States is typically intensive,
 uncertain, lengthy and rigorous and can generally take several years, or more, depending on the product
 under consideration. During pre-clinical testing, studies are conducted to demonstrate the activity
 of the compound against the targeted disease in animal models and to evaluate the effects of the new
 drug candidate on other organ systems in order to assess its potential therapeutic effectiveness relative
 to its safety. This testing includes studies on the chemical and physical stability of candidate formulations,
 as well as biological testing of the compound. Pre-clinical testing is subject to good laboratory practice
 requirements. Failure to follow these requirements can invalidate the data, among other things.

In
 order for human clinical studies of a new drug to commence in the United States, an Investigational
 New Drug Application, or IND, must be filed with the FDA; similar notifications are required in other
 countries. Informed consent must also be obtained from study participants. In general, studies may begin
 in the United States without specific approval by the FDA after a 30-day review period has passed. However,
 the FDA may prevent studies from moving forward, and may suspend or terminate studies once initiated.
 Studies are also subject to review by independent institutional review boards, or IRBs, responsible
 for overseeing studies at particular sites and protecting human research study subjects. An IRB may
 prevent a study from beginning or suspend or terminate a study once initiated.

Clinical
 testing generally follows a prescribed format that involves initial exposure to normal, non-diseased
 subjects in Phase I clinical trials, followed by exposure of patients with disease to the new drug candidate
 in larger Phase II and Phase III clinical trials. United States law requires that studies conducted
 to support approval of a new drug be adequate and well-controlled as a way to control possible bias.
 This generally means that a control, either a placebo or a drug already approved in the market for the
 same disease, is used as a reference. Studies must also be conducted and monitored in accordance with
 good clinical practice and other requirements.

Following
 the completion of clinical trials, we thoroughly analyze the data to determine if the clinical trials
 successfully demonstrate safety and efficacy. If they do, in the case of a drug product, a New Drug
 Application, or NDA, is filed with the FDA along with proposed labeling for the product and information
 about the manufacturing processes and facilities that will be used to ensure product quality. Each NDA
 submission requires a substantial user fee payment for which the FDA has committed generally to review
 and make a decision concerning approval within 10 months, and of a new priority drug within 6 months.
 However, final FDA action on the NDA can take substantially longer and also may involve review and recommendations
 by an independent FDA advisory committee. The FDA may conduct a pre-approval inspection of our manufacturing
 facility to assess conformance to the current good manufacturing practice requirements and may also
 inspect sites of clinical investigators involved in our clinical development program to ensure their
 conformance to good clinical practices. The FDA may not approve an NDA, or may require revisions to
 the product labeling, require that additional studies be conducted prior to or as a condition of approval,
 or impose other limitations or conditions on product distribution, including, for example, adoption
 of a special risk management plan.

A different
 but similar application is used for biological products, and generally equivalent FDA review and approval
 procedures and requirements apply.

Generic
 drugs are approved through a different abbreviated process. Generally an abbreviated new drug application,
 or ANDA, is filed with the FDA. The ANDA must seek approval of a drug product that has the same active
 ingredient(s), dosage form, strength, route of administration, and conditions of use (labeling) as a
 so-called reference listed drug approved under an NDA with full supporting data to establish safety
 and effectiveness. Only limited exceptions exist to this ANDA sameness requirement, including certain
 limited variations approved by the FDA through a special petition process. The ANDA may also contain
 clinical data to demonstrate that the product covered by the ANDA is absorbed in the body at the same
 rate and to the same extent as the reference listed drug. This is known as bioequivalence. In addition,
 the ANDA must contain information regarding the manufacturing processes and facilities that will be
 used to ensure product quality, and must contain certifications to patents listed with the FDA for the
 reference listed drug.

Special
 procedures apply when an ANDA contains certifications stating that a listed patent is invalid or not
 infringed, and if the owner of the patent or the NDA for the reference listed drug brings a patent infringement
 suit within a specified time, an automatic stay bars FDA approval of the ANDA for a specified period
 of time pending resolution of the suit or other action by the court. The first complete ANDA filed with
 the FDA that contains a certification challenging the patents listed with the FDA for a reference listed
 drug is also eligible to receive 180 days of exclusivity during which the FDA is prohibited from approving
 subsequent ANDAs. Certain aspects of these patent and related provisions have been the subject of recent
 changes by legislation and by FDA rulemaking. Among other things, these changes in the law affect what
 patents an NDA holder may submit to the FDA for listing, prevent the triggering of multiple automatic
 stays on FDA approval of an ANDA following initiation of patent infringement suits, require ANDA applicants
 with 180-day exclusivity to bring a product to market within certain prescribed deadlines or forfeit
 the exclusivity, and clarify or change other aspects of the operation of 180-day exclusivity. The impact
 of all of these new provisions is not entirely clear at this point, given the newness and complexity
 of the changes in law.

As
 a general matter, the amount of testing and effort that is required to prepare and submit an ANDA is
 substantially less than that required for an NDA. Conducting the necessary formulation development work,
 performing the bioequivalence testing, and preparing the ANDA typically takes one to three years, although
 the time can be shorter or longer. FDA review and approval can take two years, although this time can
 also be shorter or longer.

In
 addition to the NDA and ANDA procedures, there is an additional approval mechanism known as a 505(b)(2)
 application. A 505(b)(2) application is a form of an NDA where the applicant does not have a right to
 reference some of the data being relied upon for approval. Under current regulations, 505(b)(2) applications
 can be used where the applicant is relying in part on published literature or on findings of safety
 or effectiveness in another companys NDA. This might be done, for example, where the applicant is seeking
 approval for a new use for a drug that has already been approved for a different use or for a different
 formulation of the same drug that is already approved for the same use. The use of 505(b)(2) applications
 is the subject of an ongoing legal challenge, and it is thus not clear what the permitted use of a 505(b)(2)
 application might be in the future.

Medical Device Development and Registration Process
 in the United States

Medical
 devices, including intraocular lenses and surgical equipment used in cataract procedures and laser refractive
 surgery, are also subject to regulation in the United States by the FDA. Approval to market new device
 products is, in general, achieved by a process not unlike that for new pharmaceuticals, requiring submission
 of extensive pre-clinical and clinical evaluations in a new product application. The process of developing
 data sufficient to support a regulatory filing on a new device is costly and generally requires at least
 several years for completion.

In
 the United States, medical devices are classified by the FDA as Class I, Class II or Class III based
 upon the level of risk presented by the device. Class I devices present the least risk and are generally
 exempt from the requirement of pre-market review. Certain Class II devices are also exempt from pre-market
 review. Most Class II devices and certain Class III devices are marketed after submission of a pre-market
 notification under a process which is known as a 510(k) notification procedure. The pre-market notification
 must demonstrate that the proposed device is substantially equivalent in intended use and in safety
 and effectiveness to a legally marketed predicate device. Class III devices and devices not substantially
 equivalent to a predicate device are subject to the most stringent regulatory review and cannot be marketed
 for commercial sale in the United States until the FDA grants a pre-market approval, a PMA, for the
 device.

A PMA
 must contain proposed directions for use for the device, information about the manufacturing processes
 and facilities, clinical data demonstrating that the device is safe and effective for its intended use,
 and other information required by FDA. The PMA filing is subject to a substantial user fee payment.
 Clinical trials for a medical device must be conducted in accordance with FDA requirements, including
 informed consent from study participants, review by an IRB, and the submission of an investigational
 device exemption (IDE) application for significant risk devices.

If
 the FDAs evaluation of a PMA application is favorable, the FDA typically issues an approvable letter
 requiring the applicants agreement to comply with specific conditions, to supply specific additional
 data or information or to finalize the labeling, in order to secure final approval of the PMA application.
 Once the conditions contained in the approvable letter are satisfied, the FDA will issue a PMA order
 for the approved indications, which can be more limited than those originally sought by the manufacturer.
 The PMA order can include post-approval conditions that the FDA believes are necessary to ensure the
 safety and effectiveness of the device including, among other things, post-market studies or restrictions
 on labeling, promotion, sale and distribution. Products manufactured and distributed pursuant to a PMA
 are subject to extensive, ongoing regulation by the FDA. The FDA review of a PMA application generally
 takes one to two years from the date the application is accepted for filing but may take significantly
 longer.

FDA
 User Fees, similar to those established for new drug products, were established for medical device products
 in 2003. Although User Fees are being collected by FDA at this time, FDA performance targets are proposed
 to begin in 2005.

---

Pharmaceutical and Medical Device Registration
 Outside the United States

European Union

In
 the European Union, our products are subject to extensive regulatory requirements. As in the United
 States, the marketing of medicinal products has for many years been subject to the granting of marketing
 authorizations by regulatory agencies. Particular emphasis is also being placed on more sophisticated
 and faster procedures for reporting of adverse events to the competent authorities.

In
 common with the United States, the various phases of pre-clinical and clinical research are subject
 to significant regulatory controls. The regulatory controls on clinical research are currently undergoing
 a harmonization process following the adoption of the Clinical Trials Directive 2001/20/EC. Compliance
 with the national implementations of this Directive will be mandatory from May 1, 2004. Until that date,
 variations in the member state regimes will exist. However, all member states currently require institutional
 review board approval of interventional clinical trials. With the exception of United Kingdom Phase
 1 studies in healthy volunteers, all clinical trials require either prior governmental notification
 or approval. This exemption for Phase 1 research will cease to exist from May 1, 2004, although the
 United Kingdom will operate a simplified pre-approval system for such studies. Most European regulators
 also require the submission of adverse event reports during a study and a copy of the final study report.

In
 the European Union, approval of new medicinal products can be obtained only through one of two processes:

| |  | Mutual recognition procedure. An applicant submits an application in one European Union member state, known as the Reference Member State. Once the Reference Member State has granted the marketing authorization, the applicant may choose to submit applications in other concerned member states, requesting them to mutually recognize the marketing authorization already granted. Under this mutual recognition process, authorities in other concerned member states have 55 days to raise objections, which must then be resolved by discussions among the concerned member states, the Reference Member State and the applicant within 90 days of the commencement of the mutual recognition procedure. If any disagreement remains, all considerations by authorities in the concerned member states are suspended and the disagreement is resolved through an arbitration process. The mutual recognition process results in separate national marketing
authorizations in the Reference Member State and each concerned member state.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Centralized procedure. This procedure is currently mandatory for products developed by means of a biotechnological process and optional for new active substances and other innovative medicinal products with novel characteristics. Under this procedure, an application is submitted to the European Agency for the Evaluation of Medical Products. Two European Union member states are appointed to conduct an initial evaluation of each application. These countries each prepare an assessment report, which are then used as the basis of a scientific opinion of the Committee on Proprietary Medical Products. If this opinion is favorable, it is sent to the European Commission which drafts a decision. After consulting with the member states, the European Commission adopts a decision and grants a marketing authorization, which is valid throughout the European Union and confers the same rights and obligations in each of the member
states as a marketing authorization granted by that member state.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
 European Union is currently expanding its membership, with a number of eastern European countries expected
 to join over the coming years. Several other European countries outside of the European Union, particularly
 those intending to accede to the European Union, accept European Union review and approval as a basis
 for their own national approval.

The
 European Union regulatory regime for most medical devices became mandatory in June 1998. Under this
 regime, a medical device may be placed on the market within the European Union if it conforms with certain
 essential requirements. The most fundamental essential requirement is that a medical device must be
 designed and manufactured in such a way that it will not compromise the clinical condition or safety
 of patients, or the safety and health of users and others. In addition, the device must achieve the
 performances intended by the manufacturer and be designed, manufactured and packaged in a suitable manner.
 To assist manufacturers in satisfying the essential requirements, the European Commission has requested
 the preparation of standards applicable to medical devices. These include standards governing common
 requirements, such as sterilization and safety of medical electrical equipment, and product standards
 for certain types of medical devices. There are also harmonized quality standards relating to design
 and manufacture. While not mandatory, compliance with these standards is viewed as the easiest way to
 satisfy the essential requirements as a practical matter. Compliance with a standard developed to implement
 an essential requirement also creates a rebuttable presumption that the device satisfies that essential
 requirement.

Manufacturers
 must demonstrate that their devices conform with the relevant essential requirements through a conformity
 assessment procedure. The nature of the assessment depends upon the classification of the device. The
 classification rules are mainly based on three criteria: the length of time the device is in contact
 with the body, the degree of invasiveness, and the extent to which the device affects the anatomy. Medical
 devices in all but the lowest risk classification are also subject to a conformity assessment, which
 includes a review of the manufacturers quality systems and certification by a notified body. Notified
 bodies are often private entities and are authorized or licensed to perform such assessments by government
 authorities.

Japan

In
 Japan, our largest market outside of the United States, the regulatory process is also quite complex.
 Pre-marketing approval and clinical studies are required, as is governmental reimbursement approval
 for medical devices and pharmaceuticals. The regulatory regime for pharmaceuticals in Japan has historically
 been so lengthy and costly that it has been cost-prohibitive for many pharmaceutical companies. Historically,
 Japan has required that all clinical data submitted in support of a new drug application be performed
 on Japanese patients. This has slowed the development of some new drugs in Japan. Recently, however,
 as a part of the global drug harmonization process, Japan has signaled a willingness to accept United
 States or European Union patient data when submitted along with a bridging study, which demonstrates
 that Japanese and non-Japanese subjects react comparably to the product. This approach, which is executed
 on a case-by-case basis, enables companies like Alcon to potentially reduce the time to approval and
 introduction of new drugs into the Japanese market, and we are currently employing these approaches
 to petition for approval of new ocular drugs in Japan.

Japan
 is currently in the process of phasing in new drug regulatory legislation adopted in 2002. Under the
 new legislation, a marketing authorization comparable to the EU authorization and U.S. NDA will replace
 the current approval/permit requirements. This is expected to allow greater flexibility on the part
 of manufacturers to efficiently organize their production/marketing activities. The Japanese government
 has also announced its intention to introduce a new proprietary data exclusivity period of up to 10
 years in order to protect the value of clinical data by 2006.

Other Regulation

Ongoing Reporting

Following
 approval, a pharmaceutical or device company generally must engage in various monitoring activities
 and continue to submit periodic and other reports to the applicable regulatory agencies, including any
 cases of adverse events and appropriate quality control records. Some medical devices also may be subject
 to tracking requirements.

Advertising
 and Promotion

Drug
 and medical device advertising and promotion are subject to federal and state regulations. In the United
 States, the FDA regulates company and product promotion, including direct-to-consumer advertising. Violative
 materials may lead to FDA enforcement action. The U.S. Federal Trade Commission (FTC) also has certain
 authority over medical device advertising. In the European Union, the promotion of prescription medicines
 is subject to intense regulation and control, including a prohibition on direct-to-consumer advertising.
 Some European Union member states also restrict the advertising of medical devices. The restrictions
 vary from state to state. Some subject only those medical devices that are reimbursed under state health
 care systems to specific advertising and promotion restrictions. Others restrict the advertising and
 promotion of devices for the treatment or diagnosis of certain listed conditions.

Manufacturing

In
 the United States, the European Union and Japan, the manufacturing of our products is subject to comprehensive
 and continuing regulation. These regulations require us to manufacture our products in specific approved
 facilities and in accordance with their quality system rules and/or current Good Manufacturing Practices,
 and to list or notify our products and register or authorize our manufacturing establishments with the
 government agencies, such as the FDA. These regulations also impose certain organizational, procedural
 and documentation requirements upon us with respect to manufacturing and quality assurance activities.
 Our manufacturing facilities are subject to comprehensive, periodic inspections by the FDA and other
 regulatory agencies.

---

Lasers

In
 the United States, our lasers are subject to the Electronic Product Radiation Control provisions of
 the Federal Food, Drug, and Cosmetic Act, previously codified as the Radiation Control for Health and
 Safety Act, which are administered by the Center for Devices and Radiological Health of the FDA. This
 law requires laser manufacturers to file new product and annual reports, comply with performance standards
 and maintain quality control, product testing and sales records. In addition, lasers sold to end users
 must comply with labeling and certification requirements. Various warning labels must be affixed to
 the laser depending on the class of the product under the performance standard.

In
 the European Union, medical device rules regulate lasers intended for medical purposes. Depending on
 the class and purpose of each laser, member states may also impose additional restrictions and controls,
 such as limitations on those entitled to use the products and the facilities where their use is permitted.

Other

Our
 manufacturing, sales, promotion, and other activities following product approval are subject to regulation
 by numerous regulatory authorities, including, in the United States, the FDA, the FTC, the Department
 of Justice, the Centers for Medicare & Medicaid Services, other divisions of the Department of Health
 and Human Services, and state and local governments. Among other laws and requirements, our post-approval
 manufacturing and promotion activities must comply with the Federal Food, Drug, and Cosmetic Act and
 the implementing regulations of the FDA, and we must submit post-approval reports required by these
 laws. We must file marketing authorization variations or supplemental applications with FDA or other
 regulators and obtain their approval for labeling, manufacturing, and other product changes, depending
 on the nature of the changes. Our distribution of pharmaceutical samples to physicians must comply with
 applicable rules, including the Prescription Drug Marketing Act. Our sales, marketing and scientific/educational
 programs must comply with the medicines advertising and anti-bribery rules and related laws, such as
 anti-kickback provisions of the Social Security Act, the False Claims Act, and similar state laws. Our
 pricing and rebate programs must comply with pricing and reimbursement rules, including the Medicaid
 rebate requirements of the Omnibus Budget Reconciliation Act of 1990. If products are made available
 to authorized users of the Federal Supply Schedule of the General Services Administration, additional
 laws and requirements apply. All of our activities are potentially subject to federal and state consumer
 protection and unfair competition laws. Finally, certain jurisdictions have other trade regulations
 from time to time to which our business is subject such as technology or environmental export controls
 and political trade embargoes. Most European Union member states impose controls and restrictions that
 are similar in nature or effect.

Depending
 on the circumstances, failure to meet these applicable regulatory requirements can result in criminal
 prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial
 suspension of production, denial or withdrawal of pre-marketing product approvals, private qui tam
 actions brought by individual whistleblowers in the name of the government, or refusal to allow us to
 enter into supply contracts, including government contracts. In addition, even if we comply with FDA
 and other requirements, new information regarding the safety or effectiveness of a product could lead
 FDA to modify or withdraw a product approval.

Environmental, Health and Safety

We
 are subject to a wide range of laws and regulations relating to protection of the environment and employee
 health and safety, both in the United States and elsewhere. In addition, internal corporate policies
 and procedures provide a common format for managing these aspects of our business. Our manufacturing
 facilities, research and development and other support operations undergo regular internal audits relating
 to environmental, health and safety requirements. Our facilities in the United States are required to
 comply with applicable Environmental Protection Agency and Occupational Safety and Health Administration
 regulations. Our facilities outside the United States are required to comply with locally mandated regulations
 that vary by country. Alcon continues to obtain certifications under the internationally recognized
 environmental standard ISO 14001. Currently we have three ISO 14001 certified facilities in Europe.
 These include the Puurs, Belgium, facilitys Custom Pak® operations and the Barcelona, Spain,
 and Kaysersberg, France, pharmaceutical facilities. In addition, the R&D facilities in Barcelona,
 Spain, and Fort Worth, Texas, are certified under this standard. Alcon has also developed its own internal
 Alcon Environmental Management System based on the core elements of ISO 14001 and implemented this system
 at all of our other domestic and international manufacturing locations. Based upon our reviews and the
 outcome of local, state and federal inspections, we believe that our manufacturing facilities are in
 substantial compliance with all applicable environmental, health and safety requirements. We are not
 aware of any pending litigation or significant financial obligations arising from any alleged failure
 to comply with health and safety laws and regulations that are likely to have a material adverse impact
 on our financial position.

We
 are subject to environmental laws, including the Comprehensive Environmental Response, Compensation
 and Liability Act, that require the cleanup of soil and groundwater contamination at sites currently
 or formerly owned or operated by us, or at sites where we may have sent waste for disposal. These laws
 often require parties to fund remedial action at sites regardless of fault. We have been named as a
 potentially responsible party with respect to the remediation costs at two sites which are in the process
 of being remediated or might be remediated in the future. As a result of our long history of manufacturing
 operations, there may be other sites for which we may be responsible for all or a portion of the clean-up
 costs. However, we believe that we have adequate reserves for our currently known remediation matters
 and that such matters will not have a material adverse effect on our results of operation, liquidity
 or consolidated financial position. In an effort to ensure ongoing compliance with applicable environmental
 laws and regulations, we have a program to continually monitor waste, air emissions, ozone depletion
 components and energy consumption.

We
 are not aware of any pending litigation or significant financial obligations arising from current or
 past environmental practices that are likely to have a material adverse impact on our financial position.
 There can be no assurance, however, that environmental problems relating to properties owned or operated
 by us will not develop in the future, and we cannot predict whether any such problems, if they were
 to develop, could require significant expenditures on our part. In addition, we are unable to predict
 what legislation or regulations may be adopted or enacted in the future with respect to environmental
 protection and waste disposal.

Price Controls

In
 many of the markets where we operate, the prices of pharmaceutical products are subject to direct price
 controls (by law) and to drug reimbursement programs with varying price control mechanisms.

In
 the United States, debate over the reform of the health care system has resulted in an increased focus
 on pricing. Although there are currently no government price controls over private sector purchases
 in the United States, federal legislation requires pharmaceutical manufacturers to pay prescribed rebates
 on certain drugs to enable them to be eligible for reimbursement under certain public health care programs.
 Various states have adopted mechanisms under Medicaid and otherwise that seek to control drug prices,
 including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers.
 In the absence of new government regulation, managed care has become a potent force in the market place
 that increases downward pressure on the prices of pharmaceutical products. New federal legislation,
 enacted in December 2003, has added an outpatient prescription drug benefit to Medicare, effective January
 2006. In the interim, Congress has established a discount drug card program for Medicare beneficiaries.
 Both benefits will be provided primarily through private entities, which will attempt to negotiate price
 concessions from pharmaceutical manufacturers. While these negotiations may increase pricing pressures,
 it is also possible that the new Medicare prescription drug benefit may increase the volume of pharmaceutical
 drug purchases, offsetting, at least in part, potential price discounts. The new law specifically prohibits
 the United States government from interfering in price negotiations between manufacturers and Medicare
 drug plan sponsors, but some members of Congress are still pursuing legislation that would permit the
 United States government to use its enormous purchasing power to demand discounts from pharmaceutical
 companies thereby creating de facto price controls on prescription drugs. In addition, the new law contains
 triggers for Congressional consideration of cost containment measures for Medicare in the event Medicare
 cost increases exceed a certain level. These cost containment measures could include certain limitations
 on prescription drug prices.

This
 focus on pricing has led to other adverse government action, and may lead to other action in the future.
 For example, in December 2003 federal legislation was enacted to change United States import laws and
 expand the ability to import lower priced versions of our and competing products from Canada, where
 there are government price controls. These changes to the import laws will not take effect unless and
 until the Secretary of Health and Human Services certifies that the changes will lead to substantial
 savings for consumers and will not create a public health safety issue. The current Secretary of Health
 and Human Services has indicated that there is not a basis to make such a certification at this time.
 However, it is possible that this Secretary or a subsequent Secretary could make the certification in
 the future. In addition, legislative proposals have been made to implement the changes to the import
 laws without any certification, and to broaden permissible imports in other ways. Even if the changes
 to the import laws do not take effect, and other changes are not enacted, imports from Canada and elsewhere
 may increase due to market and political forces, and the limited enforcement resources of the FDA, the
 Customs Service, and other government agencies. For example, numerous states and localities have proposed
 programs to facilitate Canadian imports, and at least one locality has already begun such a program,
 notwithstanding questions raised by FDA about the legality of such actions. We expect that pressures
 on pricing and operating results will continue.

In
 the EU, governments influence the price of pharmaceutical products and medical devices through their
 pricing and reimbursement rules and control of national health care systems that fund a large part of
 the cost of such products to consumers. The approach taken varies from member state to member state.
 Some jurisdictions operate positive and/or negative list systems under which products may only be marketed
 once a reimbursement price has been agreed. Other member states allow companies to fix their own prices
 for medicines, but monitor and control company profits. The downward pressure on health care costs in
 general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers
 are being erected to the entry of new products, as exemplified by the National Institute for Clinical
 Excellence in the UK which evaluates the data supporting new medicines and passes reimbursement recommendations
 to the government. In addition, in some countries cross-border imports from low-priced markets (parallel
 imports) exert a commercial pressure on pricing within a country.

In
 Japan, the National Health Ministry biannually reviews the pharmaceutical prices of individual products.
 In the past, these reviews have resulted in price reductions. In the 2002 biannual review, the Japanese
 government lowered procedure reimbursement by 18% for cataract surgery and 20% for vitreoretinal surgery.
 This action places downward pressure on sales of our products for cataract and vitreoretinal surgeries
 in Japan. We expect a similar price review in 2004, in line with the governments previously announced
 plan for controlling health care costs. On the other hand, compensation for new medical devices often
 takes the form of doctors fee. Adding new technologies or products to the compensation schedule is
 possible only biannually.

C.     ORGANIZATIONAL STRUCTURE

Alcon,
 Inc. is the parent holding company of the worldwide group of Alcon companies. It owns 100% of the common
 voting stock in Alcon Holdings Inc., the holding company for our U.S. operations. The U.S. operations
 include a diverse group of legal entities. Alcon Manufacturing, Ltd. and Alcon RefractiveHorizons, Inc.
 are our U.S. manufacturing arms. These two entities have operations in Texas, California, Florida, Pennsylvania,
 and West Virginia. Alcon Laboratories, Inc. and Alcon RefractiveHorizons, Inc. are our selling, marketing,
 and distribution arms with physical locations in Texas, California, Maryland, Hawaii, and Florida. Alcon
 Laboratories, Inc. also maintains sales and technical service staff in almost all 50 states and the
 District of Columbia. Alcon Research, Ltd. is our research arm with operations primarily in Texas, California,
 and Florida. With headquarters in Texas, Falcon Pharmaceuticals, Ltd. markets our generic brand products.
 Alcon Pharmaceuticals, Inc. is a distribution operation based in Nevada.

Alcon,
 Inc. directly or indirectly owns numerous other operating entities located throughout the world with
 significant presence in Europe, Japan, South America, Canada, and Australia. Our International companies
 are primarily selling, marketing, and distribution entities, but several of these companies also have
 manufacturing operations and a few have small research facilities. Some of the major companies in our
 International operations are Alcon Pharmaceuticals Ltd. (Switzerland), S.A. Alcon-Couvreur N.V. (Belgium),
 Laboratoires Alcon S.A. (France), Alcon Pharma GmbH (Germany), Alcon Laboratories (U.K.) Limited (United
 Kingdom), Alcon Laboratorios Argentina S.A. (Argentina), Laboratorios Alcon de Colombia, S.A. (Colombia),
 Alcon Laboratorios, S.A. de C.V. (Mexico), Alcon Laboratorios do Brazil Ltda. (Brazil), Alcon Laboratories
 (Australia) Pty. Ltd. (Australia), Alcon Canada Inc. (Canada), and Alcon Japan Ltd. (Japan).

D.     PROPERTY, PLANT AND EQUIPMENT

Our
 principal executive offices and registered office are located at Bösch 69, P.O. Box 62, 6331 Hünenberg,
 Canton of Zug, Switzerland. The principal offices for our United States operations are located at 6201
 South Freeway, Fort Worth, Texas 76134.

We
 believe that our current manufacturing and production facilities have adequate capacity for our medium-term
 needs. To ensure that we have sufficient manufacturing capacity to meet future production needs, we
 continually review the capacity and utilization of our manufacturing facilities. The FDA and other regulatory
 agencies regulate the approval for use of manufacturing facilities for pharmaceuticals and medical devices,
 and compliance with these regulations requires a substantial amount of validation time prior to start-up
 and approval. Accordingly, it is important to our business that we ensure we have sufficient manufacturing
 capacity to meet our future production needs. We presently anticipate expanding the capacity of six
 of our manufacturing facilities over the next two years. We plan to move into the expansion of our research
 and development facilities in Fort Worth in early 2004. Item 4.A provides additional discussion of capital
 expenditures underway.

---

The
 following table sets forth, by location, size and principal use of our main manufacturing and other
 facilities at December 31, 2003:



|Location                      | Size | Principal Use(s) | Owned/Leased
|----------------------------- | ---- | ---------------- | ------------
|
|United States:                |      |                  |             
|                              |      |                  |             
|Fort Worth, Texas             |      | 1,084,000        |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Fort Worth, Texas             |      | 127,890          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Fort Worth, Texas             |      | 334,000          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Fort Worth, Texas             |      | 342,990          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Houston, Texas                |      | 352,000          |             
|                              |      |                  |             
|Irvine, California            |      | 189,193          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Huntington, West Virginia     |      | 116,000          |             
|                              |      |                  |             
|Sinking Spring, Pennsylvania  |      | 165,000          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Orlando, Florida              |      | 89,997           |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Outside of the United States: |     
|                              |      |                  |             
|Barcelona, Spain              |      | 439,042          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Puurs, Belgium                |      | 469,673          |             
|                              |      |                  |             
|                              |      |                  |             
|                              |      |                  |             
|Kaysersberg, France           |      | 133,481          |             
|                              |      |                  |             
|Sao Paulo, Brazil             |      | 88,748           |             
|                              |      |                  |             
|Sao Paulo, Brazil             |      | 58,448           |             
|                              |      |                  |             
|Cork, Ireland                 |      | 60,299           |             
|                              |      |                  |             
|                              |      |                  |             
|Schaffhausen, Switzerland     |      | 17,696           |             
|                              |      |                  |             
|Schaffhausen, Switzerland     |      | 17,481           |             
|                              |      |                  |             
|Mexico City, Mexico           |      | 43,625           |             
|                              |      |                  |             
|Mexico City, Mexico           |      | 74,864           |             
|                              |      |                  |             
|Beijing, China                |      | 4,900            |             
|                              |      |                  |             

In
 addition to these principal facilities, we have office facilities worldwide. These facilities are generally
 leased. In some countries, we lease or sublease facilities from Nestlé.

We
 believe that all of our facilities and our equipment in those facilities are in good condition and are
 well maintained.

ITEM 5.   OPERATING AND FINANCIAL REVIEW
 AND PROSPECTS

You
 should read the following discussion and analysis in conjunction with our financial statements and notes
 thereto included elsewhere in this report. This Managements Discussion and Analysis of Financial Condition
 and Results of Operations contains forward-looking statements. Please see Cautionary Note Regarding
 Forward-Looking Statements for a discussion of the risks, uncertainties and assumptions relating to
 these statements.

Overview of Our Business

General

Alcon,
 Inc. and its subsidiaries develop, manufacture and market pharmaceuticals, surgical equipment and devices
 and consumer eye care products that treat eye diseases and disorders and promote the general health
 and function of the human eye. Founded in 1945, we have local operations in over 70 countries and our
 products are sold in more than 180 countries around the world. In 1977, we were acquired by Nestlé S.A.
 Since then, we have operated largely as an independent company, separate from most of Nestlés other
 businesses and have grown our annual sales from $82 million to over $3.4 billion primarily as a result
 of internal development and selected acquisitions. In March 2002, Nestlé sold approximately 25% of its
 ownership of Alcon through an initial public offering (IPO).

We
 conduct our 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 profit is derived from operating profits within
 the United States, as well as operating profits earned outside of the United States related to the United
 States business. 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: (i) pharmaceutical (prescription drugs); (ii) surgical equipment and devices (cataract, vitreoretinal
 and refractive); and (iii) consumer eye care (contact lens disinfectants and cleaning solutions, artificial
 tears and ocular vitamins). Business segment operations generally do not include research and development,
 manufacturing and other corporate functions. We market our products to eye care professionals as well
 as to the direct purchasers of our products, such as hospitals, managed care organizations, government
 agencies/entities and individuals.

Market Environment

Demand
 for health care products and services is increasing in established markets as a result of the aging
 of the population and the emergence of new drug therapies and treatments for previously untreatable
 conditions. Likewise, demand for health care products and services in emerging markets is increasing
 primarily due to the adoption of medically advanced technologies and improvements in living standards.
 As a result of these factors, health care costs are rising at a faster rate than economic growth in
 many countries. This faster rate of growth has led governments and other purchasers of health care products
 and services, either directly or through patient reimbursement, to exert pressure on the prices of health
 care products and services. These cost-containment efforts vary by jurisdiction.

In
 the United States, Medicare reimbursement policies and the influence of managed care organizations continue
 to impact the pricing of health care products and services. The Medicare Prescription Drug Improvement
 and Modernization Act of 2003 will present opportunities and challenges for pharmaceutical companies.
 Some states are also moving to implement more aggressive price control programs and more liberal generic
 substitution rules that could result in price reductions. In addition, managed care organizations use
 formularies and their buying power to demand more effective treatments at lower prices. Both governments
 and managed care organizations have supported increased use of generic pharmaceuticals at the expense
 of branded pharmaceuticals. We are well-positioned to address this market opportunity with Falcon Pharmaceuticals,
 Ltd., our generic pharmaceutical business, which currently has the #1 market share position in generic
 ophthalmic pharmaceuticals in the United States, based on revenues in 2003. We also use third-party
 data to demonstrate both the therapeutic and cost effectiveness of our branded pharmaceutical products.
 Moreover, to achieve and maintain attractive positions on formularies, we need to continuously introduce
 medically advanced products that differentiate us from our competitors.

The
 Medicare Prescription Drug Improvement and Modernization Act of 2003 puts additional pressure on policy
 makers to offset the Medicare programs cost by controlling budgets for reimbursement to surgical facilities.
 This affects our industrys ability to maintain premium pricing for older technologies and non-differentiated
 products. New technologies for surgical procedures are being challenged to substantiate that their higher
 cost is accompanied by significant clinical improvements for Medicare beneficiaries. We are preparing
 for this challenge by gathering the scientific and clinical data that demonstrate to Medicare that the
 products in our pipeline are cost effective when their higher costs are compared to their measurable
 benefits.

Outside
 of the United States, third-party payor reimbursement of patients and health care providers and prices
 for health care products and services vary significantly and, in the case of pharmaceuticals, are generally
 lower than those in the United States. In Western Europe, where government reimbursement of health care
 costs is widespread, governments are requiring price reductions. The economic integration by European
 Union members and the introduction of the euro are also impacting pricing in these markets, as more
 affluent member countries are requesting prices for health care products and services comparable to
 those in less affluent member countries. In Latin America, where there is less government reimbursement
 of health care costs, many of our products are paid for by private health care systems covering a small
 portion of the population. As a result, economic conditions in this region have a significant impact
 on prices and demand for health care products and services.

In
 most of the countries in Asia, average income levels are relatively low, government reimbursement for
 the cost of health care products and services is limited and prices and demand are sensitive to general
 economic conditions. However, demand for our products in many Asian countries has been rising. In addition,
 regulatory approval times are long and costs are very high in Japan, which delays the marketing of our
 pharmaceutical products there. In Japan, the National Health Ministry reviews prices of individual pharmaceutical
 products and health services biannually. In the past, these reviews have resulted in price decreases.
 In April 2002, a round of overall price decreases went into effect, including a reduction in the total
 reimbursement amount for cataract and vitreoretinal surgery procedures, which puts downward pressure
 on products we supply.

Currency Fluctuations

Our
 products are sold in over 180 countries, and we sell products in a number of currencies in our Alcon
 International business segment. Our consolidated financial statements, which are presented in U.S. dollars,
 are impacted by currency exchange rate fluctuations through both translation risk and transaction risk.
 Translation risk is the risk that our financial statements for a particular period are affected by changes
 in the prevailing exchange rates of the various currencies of our subsidiaries relative to the U.S.
 dollar. Transaction risk is the risk that the currency structure of our costs and liabilities deviates
 to some extent from the currency structure of our sales proceeds and assets.

Our
 translation risk exposures are principally to the euro and Japanese yen. With respect to transaction
 risk, because a significant percentage of our operating expenses are incurred in the currency in which
 sales proceeds are received, we do not have a significant net exposure. In addition, substantially all
 of our assets which are denominated in currencies other than the U.S. dollar are supported by loans
 or other liabilities of similar amounts denominated in the same currency. From time to time, we purchase
 or sell currencies forward to hedge currency risk in obligations or receivables; these transactions
 are designed to address transaction risk, not translation risk.

Generally,
 a weakening of the U.S. dollar against other currencies has a positive effect on our overall sales and,
 to a lesser extent, profits while a strengthening of the U.S. dollar against other currencies has a
 negative effect on our overall sales and, to a lesser extent, profits. We experienced negative currency
 impacts as a result of the strengthening of the U.S. dollar during 2002 and 2001, but a positive impact
 during 2003. During 2003, the U.S. dollar weakened against most major currencies, positively impacting
 our sales and, to a lesser extent, profits. In 2002, we experienced the positive effect of the weakening
 of the U.S. dollar against the major European currencies; however, this positive effect was offset by
 the increase in the value of the U.S. dollar versus the Japanese yen and Latin American currencies.
 During 2001, the primary cause of the negative currency impact was the strengthening of the U.S. dollar
 against the Japanese yen and the major European currencies, with lesser negative impacts relating to
 the Canadian, Australian and Brazilian currencies. We refer to the effects of currency fluctuations
 and exchange rate movements throughout this Managements Discussion and Analysis of Financial Condition
 and Results of Operations, which we have computed by applying translation rates from the prior comparative
 period to the more recent period amounts and comparing those results to the more recent period actual
 results.

Operating Revenues and Expenses

We
 generate revenues largely from sales of ophthalmic pharmaceutical products, ophthalmic surgical equipment
 and devices and consumer eye care products. Our operating revenues and operating income are affected
 by various factors including unit volume, price, currency fluctuations, acquisitions, licensing and
 the mix between lower-margin and higher-margin products.

Sales
 of ophthalmic pharmaceutical products are primarily driven by the development of safe and effective
 products that can be differentiated from competing products in the treatment of ophthalmic diseases
 and disorders and increased market acceptance of these new products. Inclusion of pharmaceutical products
 on managed care formularies covering the largest possible number of patients is another key competitive
 factor. We face significant competition in ophthalmic pharmaceuticals, including competition from other
 companies with an ophthalmic focus and from larger pharmaceutical companies. In general, sales of our
 pharmaceutical products are not affected by general economic conditions, although we face pressure to
 reduce prices from governments and United States managed care organizations. We experience seasonality
 in our ocular allergy medicines, with a large increase in sales in the spring and a lesser increase
 during the fall. Costs of goods sold for our pharmaceutical products include materials, labor, overhead
 and royalties.

Our
 surgical product category includes three product lines: cataract, vitreoretinal and refractive. Sales
 of our products for cataract and vitreoretinal surgery are driven by technological innovation and aging
 demographic trends. However, the number of cataract and vitreoretinal surgical procedures is not generally
 affected by economic conditions. We believe that our innovative technology and our ability to provide
 customized (i.e., tailored to each surgeons preference) surgical procedure packs with a broad range
 of proprietary products are important to our success in these product categories. Sales of our refractive
 surgical equipment and the related technology fees are driven by consumer demand for laser refractive
 surgery. We sell lasers and other surgical equipment used to perform laser refractive surgeries and,
 in the United States, charge a technology fee for each surgery performed (one eye equals one surgery).
 Outside of the United States, we generally do not charge a technology fee, although we charge a technology
 fee when our LADARWave® CustomCornea® Wavefront System is used to guide our laser to perform
 a customized procedure. Because governments and private insurance companies generally do not cover the
 costs of laser refractive surgery, sales of laser refractive surgical products and related technology
 fees are sensitive to changes in general economic conditions and consumer confidence. There is no significant
 seasonality in our surgical business. Costs of goods sold for our surgical products include raw materials,
 labor, overhead, royalties and warranty costs. Operating income from cataract and vitreoretinal products
 is driven by the number of procedures in which our products are used. Operating income from laser refractive
 surgical equipment depends primarily on the number of procedures for which we are able to collect technology
 fees.

Sales
 of our consumer eye care products are driven by ophthalmologist, optometrist and optician recommendations
 of lens care systems, our provision of starter kits to eye care professionals, advertising and consumer
 preferences for more convenient contact lens care solutions. Contact lens care products compete largely
 on product attributes, brand familiarity, professional recommendations and price. The use of less-advanced
 cleaning methods, especially outside of the United States, also affects demand for our contact lens
 care products. There is no seasonality in sales of contact lens care products, and we have experienced
 little impact from general economic conditions to date, although in low-growth economic environments
 consumers may switch to lower-priced brands. Costs of goods sold for contact lens care products include
 materials, labor, overhead and royalties. Operating income from contact lens care products is driven
 by market penetration and unit volumes.

Our
 selling, general and administrative costs include the costs of selling, promoting and distributing our
 products and managing the organizational infrastructure of our business. The largest portion of these
 costs is salary for sales and marketing staff.

Research
 and development costs include basic research, pre-clinical development of products, clinical trials,
 regulatory expenses and certain technology licensing costs. The largest portion of our research and
 development expenses relates to the research, development and regulatory approval of pharmaceutical
 products. During each of the years 2003, 2002 and 2001, a greater proportion of our research and development
 expenses were incurred during the second half of the year than during the first half.

Our
 amortization costs relate to acquisitions and the licensing of intangible assets. Effective July 7,
 2000, we acquired Summit Autonomous Inc. for a total purchase price of $948.0 million, which resulted
 in goodwill and intangible assets of $954.5 million. Effective January 1, 2002, Alcon adopted Statement
 of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which
 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but
 instead be tested for impairment at least annually. See note 4 to the consolidated financial statements.
 In the absence of new acquisitions, annual amortization expense on intangible assets with definite useful
 lives at December 31, 2003 is estimated to decrease from $67.4 million in 2003 to $46.5 million in 2008.

In
 November 2003, the Company sold its manufacturing facility in Madrid, Spain, for $21.6 million in cash,
 resulting in a pre-tax gain of $8.2 million.

In
 connection with the IPO, Alcon changed certain provisions of its 1994 Phantom Stock Plan. These changes
 resulted in a one time $22.6 million charge to operating income during the first quarter of 2002.

---

Material Opportunities, Challenges and Risks

Alcon
 is focused on its ability to bring new products successfully to market in a competitive industry environment.
 Alcons long term profitability is dependent upon the ability of its research and development activities
 to provide a pipeline of new products that are successful in the marketplace. In general, we are able
 to generate higher margins from the sales of our products that are under patents or licenses restricting
 the production or sale of such products by others. Alcons goal is to consistently advance the state
 of our research and development so as to be in a position, as existing products approach the end of
 their patent or license protection periods, to introduce next generation or new products that provide
 greater efficacy, broader application or more convenience. Such products under new patents or licenses
 provide opportunities to maintain and grow Alcons sales.

Part
 of Alcons strategy is to devote significant resources to research and development efforts. Over the
 past three years, Alcon has invested more than 10% of annual revenues into research and development.
 Alcon strives to be the first to introduce new products in the marketplace or to provide greater efficacy
 in treatment of ophthalmic conditions. Being first to the marketplace with a product category can often
 result in a significant marketing advantage, particularly as larger pharmaceutical companies increase
 their focus on the ophthalmology field.

Alcons
 ability to maintain profit margins on its products may be affected by a number of regulatory activities
 throughout the world, from restrictive medical reimbursements for managed care to reduced regulation
 for imports of pharmaceutical products from other countries to the U.S. Alcon monitors these regulatory
 activities and the effects on product pricing in its major markets. Where appropriate, Alcon shares
 information with applicable regulatory bodies on the cost of developing new products and the importance
 of pricing and return of investment as an incentive to develop new and more effective therapeutic treatments.
 Alcon also monitors regulatory activities to identify initiatives that could undercut consumer protections
 by the introduction of nonregulated products into the U.S. distribution chain.

Alcon
 also focuses on cost management. In addition to a strict evaluation of general and administrative expenses,
 Alcon seeks to reduce manufacturing costs through its continuous improvement program. The sale of the
 Madrid, Spain, manufacturing plant during the fourth quarter of 2003 is an example of Alcons efforts
 to reduce manufacturing costs. By shifting the Madrid production to other existing manufacturing locations,
 Alcon was able to reduce its fixed production overhead through the sale of the plant, while realizing
 a gain on the sale.

---

Results of Operations

The
 following table sets forth, for the periods indicated, selected items from our consolidated financial
 statements.

|                                    |  |            |   | As a % of Total Sales
|----------------------------------- |  | ---------- | - | ---------------------
|
|
|Sales:                              |  |            |   |                      
|United States                       |  | $ 1,785.9  |   | $ 1,632.6            
|International                       |  | 1,621.0    |   | 1,376.5              
|                                    |  |            |   |                      
|Total sales                         |  | 3,406.9    |   | 3,009.1              
|Costs of goods sold                 |  | 1,005.9    |   | 892.7                
|                                    |  |            |   |                      
|Gross profit                        |  | 2,401.0    |   | 2,116.4              
|Selling, general and administrative |  | 1,112.5    |   | 1,014.7              
|Research and development            |  | 349.9      |   | 323.5                
|Gain on sale of plant               |  | (8.2       | ) | --                   
|Amortization of intangibles         |  | 67.4       |   | 74.5                 
|                                    |  |            |   |                      
|Operating income                    |  | 879.4      |   | 703.7                
|Gain (loss) from foreign currency,  |  | 2.0        |   | 4.2                  
|net                                 | 
|Interest income                     |  | 18.5       |   | 22.2                 
|Interest expense                    |  | (41.8      | ) | (53.8                
|Other, net                          |  | --         |   | 1.2                  
|                                    |  |            |   |                      
|Earnings before income taxes        |  | 858.1      |   | 677.5                
|Income taxes                        |  | 262.7      |   | 210.6                
|                                    |  |            |   |                      
|                                    |  |            |   |                      
|Net earnings                        |  | $    595.4 |   | $    466.9           
|                                    |  |            |   |                      

The
 following table sets forth, for the periods indicated, our sales and operating income by business segment.

|                            |  |           |  | As a % of Total Sales
|--------------------------- |  | --------- |  | ---------------------
|
|
|ALCON UNITED STATES:        |  |           |  |                      
|Pharmaceutical              |  | $   813.3 |  | $   706.9            
|Surgical                    |  | 713.8     |  | 678.3                
|Consumer eye care           |  | 258.8     |  | 247.4                
|                            |  |           |  |                      
|Total sales                 |  | $1,785.9  |  | $1,632.6             
|                            |  |           |  |                      
|                            |  |           |  |                      
|Segment operating income(1) |  | $   794.3 |  | $   675.3            
|                            |  |           |  |                      
|ALCON INTERNATIONAL:        | 
|Pharmaceutical              |  | $   496.6 |  | $   383.5            
|Surgical                    |  | 872.1     |  | 760.2                
|Consumer eye care           |  | 252.3     |  | 232.8                
|                            |  |           |  |                      
|Total sales                 |  | $1,621.0  |  | $1,376.5             
|                            |  |           |  |                      
|                            |  |           |  |                      
|Segment operating income(1) |  | $   514.9 |  | $   428.1            
|                            |  |           |  |                      

|(1) | Beginning in 2002, segment performance is measured based on sales and operating income reported in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Prior to 2002, Alcon measured performance on the basis of International Accounting Standards. For consistency of presentation, business segment information for 2001 has been restated on a U.S. GAAP basis. 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 and are not assigned to business segments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
 following table sets forth, for the periods indicated, Alcon Internationals sales and our consolidated
 sales by product category, and includes the change in sales and change in sales in constant currency
 calculated by applying rates from the earlier period. All of Alcon United States sales are in U.S.
 dollars, and therefore it does not experience any currency translation gains or losses.

|                     | 2003 | 2002      | Change | ForeignCurrencyChange | ChangeinConstantCurrency(a) | 2002 | 2001 | Change | ForeignCurrencyChange | ChangeinConstantCurrency (a)
|-------------------- | ---- | --------- | ------ | --------------------- | --------------------------- | ---- | ---- | ------ | --------------------- | ----------------------------
|
|ALCON INTERNATIONAL: |      |           |        |                       |                             |      |      |        |                       |                             
|Pharmaceutical       |      | $   496.6 |        | $   383.5             |                             | 29.5 | %    | 8.8    | %                     | 20.7                        
|Surgical             |      | 872.1     |        | 760.2                 |                             | 14.7 |      | 10.7   |                       | 4.0                         
|Consumer eye care    |      | 252.3     |        | 232.8                 |                             | 8.4  |      | 5.3    |                       | 3.1                         
|                     |      |           |        |                       |                             |      |      |        |                       |                             
|Total sales          |      | $1,621.0  |        | $1,376.5              |                             | 17.8 |      | 9.3    |                       | 8.5                         
|                     |      |           |        |                       |                             |      |      |        |                       |                             
|TOTAL:               |     
|Pharmaceutical       |      | $1,309.9  |        | $1,090.4              |                             | 20.1 |      | 3.1    |                       | 17.0                        
|Surgical             |      | 1,585.9   |        | 1,438.5               |                             | 10.2 |      | 5.6    |                       | 4.6                         
|Consumer eye care    |      | 511.1     |        | 480.2                 |                             | 6.4  |      | 2.5    |                       | 3.9                         
|                     |      |           |        |                       |                             |      |      |        |                       |                             
|Total sales          |      | $3,406.9  |        | $3,009.1              |                             | 13.2 |      | 4.2    |                       | 9.0                         
|                     |      |           |        |                       |                             |      |      |        |                       |                             

|(a) | Change in constant currency is determined by comparing adjusted 2003 reported amounts, calculated using 2002 monthly average exchange rates, to the actual 2002 reported amounts. The same process was used to compare 2002 to 2001. Sales change in constant currency is not a U.S. GAAP defined measure of revenue growth. This measure provides information on sales growth assuming that foreign currency exchange rates have not changed between years. 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. Sales change in constant currency, as defined and presented by the Company, may not be comparable to similar measures reported by other companies.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Year ended December 31, 2003 compared to year
 ended December 31, 2002

Sales

Global

All
 major product categories positively contributed to the 13.2% growth in global sales for year ended December
 31, 2003. Growth in product unit volumes accounted for a majority of the sales increase. Currency exchange
 rates also favorably impacted sales growth for 2003, largely attributable to the strength of the euro
 which achieved a record high level relative to the U.S. dollar. Excluding the impact of foreign exchange
 fluctuations, sales would have grown by 9.0%.



---



GLOBAL SALES

|                                | 2003 | 2002       | Change
|------------------------------- | ---- | ---------- | ------
|
|Infection/Inflammation Products |      | $    517.9 |       
|Glaucoma Products               |      | 432.4      |       
|Allergy Products                |      | 276.6      |       
|Otic Products                   |      | 122.9      |       
|Other Pharmaceuticals/Rebates   |      | (39.9      | )     
|                                |      |            |       
|TOTAL PHARMACEUTICAL            |      | 1,309.9    |       
|                                |      |            |       
|Intraocular Lenses              |      | 498.6      |       
|Cataract/Vitreoretinal          |      | 1,017.0    |       
|Refractive                      |      | 70.3       |       
|                                |      |            |       
|TOTAL SURGICAL                  |      | 1,585.9    |       
|                                |      |            |       
|Contact Lens Disinfectants      |      | 282.2      |       
|Artificial Tears                |      | 117.3      |       
|Other                           |      | 111.6      |       
|                                |      |            |       
|TOTAL CONSUMER EYE CARE         |      | 511.1      |       
|                                |      |            |       
|TOTAL GLOBAL SALES              |      | $ 3,406.9  |       
|                                |      |            |       

Pharmaceutical

Global sales growth was led by sales of our pharmaceutical
 products, which increased 20.1% (17.0% in constant currency). Broad-based gains were achieved across
 most major therapeutic market segments and key products. Among our glaucoma products, Travatan®
 ophthalmic solution continued to expand its global market reach with sales of $135.3 million for the
 year ended December 31, 2003, compared to $70.9 million in 2002. Within the allergy segment, Patanol®
 ophthalmic solution achieved record sales for the year of $252.0 million and grew 27% over 2002. The
 European launch of this product under the tradename Opatanol® ophthalmic solution early in 2003
 contributed to this allergy product's sales growth.

VigamoxTM ophthalmic solution, our newest fluoroquinolone
 ocular infection treatment product, was introduced in April 2003 and quickly built momentum. A portion
 of VigamoxTM sales reduced sales of another fluoroquinolone antibiotic, Ciloxan®
 ophthalmic solution and ointment.

Our line of otic products achieved the strongest growth rate within the
 pharmaceutical line. On July 25, 2003, approval was received from the FDA to market Ciprodex
 otic suspension for both middle ear infections in children with ear tubes and outer ear infections.
 The launch of Ciprodex otic combined with our existing Cipro HC Otic solution sparked
 the growth of this segment by extending the line to provide complete therapeutic coverage for both outer
 and middle ear infections. Ciprodexand Cipro are registered trademarks of Bayer AG, licensed
 to Alcon by Bayer AG

Surgical

Our line of surgical products grew 10.2% (4.6% in constant currency)
 for the year ended December 31, 2003 compared to 2002, despite a decline of 4.7% in sales of refractive
 products. Sales of AcrySof® intraocular lenses led the growth of the surgical business. The AcrySof®
 Natural lens, launched in the U.S. during the third quarter 2003, contributed to the global growth.
 It is the first foldable intraocular lens that filters both ultraviolet and portions of high frequency
 blue light spectrum to receive FDA approval. Clinical evidence is emerging that links retinal damage
 with high frequency blue light.

The InfinitiTM vision system, our tri-modal lens removal
 system, was added to our line of surgical equipment in 2003. This product commands a premium price and
 boosted the growth of our equipment line.

The commercial launch of the LADARWave® wavefront aberrometer
 and CustomCornea®, our custom ablation wavefront refractive technology, continued to gain acceptance
 in the marketplace as evidenced by increasing numbers of custom procedures being performed in the U.S.
 Sales of our refractive products, however, continued to be negatively affected by global economic conditions,
 flat consumer demand and low demand for laser equipment.

Consumer Eye Care

Our global consumer eye care sales, which consists of contact lens care and
 other general eye care products, grew 6.4% (3.9% in constant currency). Contributing to the growth of
 the line were our OPTI-FREE® EXPRESS® contact lens care products and our line of artificial tears
 products, which includes Systane® lubricant eye drops. Systane®, our newest product used
 to treat dry eye, was launched early in 20

GEOGRAPHIC SALES

|                     | 2003 | 2002      | Change | ForeignCurrencyChange | Change inConstantCurrency (a)
|-------------------- | ---- | --------- | ------ | --------------------- | -----------------------------
|
|ALCON UNITED STATES: |      |           |        |                       |                              
|Pharmaceutical       |      | $   813.3 |        | $   706.9             |                              
|Surgical             |      | 713.8     |        | 678.3                 |                              
|Consumer Eye Care    |      | 258.8     |        | 247.4                 |                              
|                     |      |           |        |                       |                              
|Total Sales          |      | 1,785.9   |        | 1,632.6               |                              
|                     |      |           |        |                       |                              
|ALCON INTERNATIONAL: |     
|Pharmaceutical       |      | 496.6     |        | 383.5                 |                              
|Surgical             |      | 872.1     |        | 760.2                 |                              
|Consumer Eye Care    |      | 252.3     |        | 232.8                 |                              
|                     |      |           |        |                       |                              
|Total Sales          |      | 1,621.0   |        | 1,376.5               |                              
|                     |      |           |        |                       |                              
|TOTAL GLOBAL SALES   |      | $3,406.9  |        | $3,009.1              |                              
|                     |      |           |        |                       |                              

|(a) | Change in constant currency is determined by comparing adjusted 2003 reported amounts, calculated using 2002 monthly average exchange rates, to the actual 2002 reported amounts. Sales change in constant currency is not a U.S. GAAP defined measure of revenue growth. This measure provides information on sales growth assuming that foreign currency exchange rates have not changed between years. 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. Sales change in constant currency, as defined and presented by the Company, may not be comparable to similar measures reported by other companies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

United States

Pharmaceutical

U.S.  sales growth was
 led by sales of our pharmaceutical products, which increased 15.1% for the year ended December 31, 2003.
 Strong prescription demand for several of our branded products translated into growth in unit volumes
 and market share for 2003. Sales of Travatan® grew to $73.1 million in 2003 from $44.5 million
 in 2002. Travatan® continued to increase its prescription share of the U.S. prostaglandin market
 and outpaced the overall growth of the segment. Patanol® made a significant contribution to the
 growth of the U.S. pharmaceuticals with record 2003 sales of $234.8 million, achieving 24.6% growth
 over 2002. The product continued to hold its market leadership position in the U.S.

The
 launch of Vigamox has progressed successfully. We began converting our existing business from
 Ciloxan®, our third generation fluoroquinolone anti-infective product, in advance of its patent
 expiration in June 2004, to Vigamox, as well as increase our overall combined market share in
 the fluoroquinolone segment. Launch results ofCiprodex otic, our newest FDA approved product
 with a broader indication for treatment of ear infections, were very encouraging. The products acceptance
 by the ear, nose and throat specialists contributed to increasing our market share growth in the otic
 segment.

Surgical

Sales
 growth for the U.S. surgical products in 2003 was driven by key product contributions from AcrySof®,
 Infiniti and LADARWave®. The 2003 launch of our new AcrySof® Natural lens added to
 the growth of the overall AcrySof® franchise. The market introduction of Infiniti in
 August 2003 has gained momentum and generated much interest in this new tri-modal technology for lens
 removal. The commercial launch of our LADARWave® wavefront aberrometer and CustomCornea®
 was a boost to the refractive line as the number of custom procedures in the U.S. grew rapidly during
 2003.

Consumer Eye Care

Sales
 of our contact lens disinfectant products grew 1.9% in 2003 in the face of difficult competitive market
 conditions. Our artificial tears products made strong gains during the same period and benefited from
 the performance of our new dry eye product Systane®, which has steadily gained market share since
 its introduction in February 2003.

International

Sales
 in the rest of the world grew 17.8% (8.5% in constant currency) for the year ended December 31, 2003
 over 2002. The continued strengthening of the euro against the U.S. dollar throughout 2003 was largely
 accountable for the favorable impact of currency exchange on sales growth. Sales in the major Latin
 American markets of Brazil and Mexico attained significant constant currency growth during the year.
 Prevailing competitive market conditions and lower reimbursement for cataract and vitreoretinal surgery
 continued to restrain sales in Japan, our largest international market, during 2003.

Pharmaceuticals

Sales
 for our pharmaceutical products outside of the U.S. registered growth of 29.5% (20.7% in constant currency)
 for the year ended December 31, 2003. Sales of Travatan® outside of the U.S. grew to $62.2 million
 in 2003, compared to $26.4 million in 2002. The product continued to achieve significant market share
 gains in the key European markets of Italy, Germany and France, as well as the Latin American markets
 of Brazil, Argentina, Mexico and Chile. Sales of allergy products were led by Patanol®. The European
 launch of this product under the tradename Opatanol® early in 2003 contributed to this allergy
 products sales growth. Our other key branded products that contributed to the growth of the pharmaceutical
 line were Azopt® ophthalmic suspension, TobraDex® ophthalmic solution and ointment, Maxitrol®
 ophthalmic solution and ointment, Ciloxan®, Tobrex® ophthalmic solution and ointment and
 Cipro HC.

Surgical

Sales
 of surgical products increased 14.7% (4.0% in constant currency) in the year ended December 31, 2003
 over 2002. Growth was generally very strong throughout most of our major markets except for Japan. Governmental
 reimbursement reductions and competitive pressures, particularly in the intraocular lens business, resulted
 in a contraction of surgical products sales in Japan by approximately 7%. Otherwise, AcrySof®
 and our line of viscoelastic products were primary drivers of sales growth outside the U.S. Shipments
 of Infinti began in markets outside of the U.S. during the third quarter of 2003 and contributed
 to the growth of our equipment line. In Japan, we believe the launch of the Infinti vision system
 in the fourth quarter of 2003, coupled with the planned introduction of the Acrysert® lens insertion
 device, will strengthen our surgical product offering there in 2004.

Consumer Eye Care

Sales
 of consumer eye care products outside of the U.S. grew 8.4% (3.1% in constant currency) in the year
 ended December 31, 2003 over 2002. Growth of our contact lens disinfectants was hampered by Japan, our
 largest international market in these products, due to increased competition from new market entries
 in this segment and downward pressure on prices from cross channel trading. Sales of artificial tears
 were positively impacted by growth of our Tears Naturale® lubricant eye drops franchise.

Gross Profit

Gross
 profit increased 13.4% to $2,401.0 million, or 70.5% of sales in the year ended December 31, 2003 compared
 to $2,116.4 million, or 70.3% of sales in 2002. This slight improvement in gross profit as a percentage
 of sales is partially due to charges in 2002 of $3.4 million related to changes made to an employee
 deferred compensation plan and $5.9 million associated with the write-off of SKBM® microkeratome
 inventory and related manufacturing equipment. Gross profit was positively affected by price increases
 (primarily in the U.S.) and increased manufacturing efficiencies. Negatively affecting margins in 2003
 were startup costs associated with the LADARWave® and the Infinti, higher third party
 royalty expenses, price pressures in Japan and geographic sales mix.

Operating Expenses

Selling,
 general and administrative expenses were $1,112.5 million, or 32.6% of sales, in the year ended December
 31, 2003 compared to $1,014.7 million, or 33.7% of sales, in 2002. This large decrease in selling, general
 and administrative expenses as a percentage of sales is primarily due to the fact that, in 2002, there
 were $12.6 million of expenses related to changes made to an employee deferred compensation plan and
 $14.1 million of customer refunds and other costs associated with the decision to recall and terminate
 the SKBM® microkeratome product line. Selling, general and administrative expenses in 2003 included
 the impact of the expansion of the U.S. pharmaceutical sales force and launch expenses of several new
 products including Ciprodexotic, AcrySof® Natural, Infiniti, Vigamox, LADARWave®and
 Opatanol®and pre-launch expenses associated with anecortave acetate. These increased costs were
 partially offset by declines in legal fees and bad debts expense.

Research
 and development expenses for the year ended December 31, 2003 were $349.9 million, or 10.3% of sales,
 compared to $323.5 million, or 10.7% of sales, in 2002. Research and development expenses in 2002 included
 $6.6 million of expenses related to changes made to an employee deferred compensation plan. Research
 and development expenses in 2003 reflect increased investment in products in the therapeutic areas of
 glaucoma, age-related macular degeneration and nasal allergy, which are in the later stages of development.

Amortization
 of intangibles decreased 9.5% to $67.4 million in the year ended December 31, 2003 from $74.5 million
 in 2002. The decrease is primarily due to a $5.9 million impairment loss on intangible assets, which
 was recorded as amortization, related to the voluntary recall and termination of theSKBM® microkeratome
 product line in 2002.

Operating Income

Operating
 income increased 25.0% to $879.4 million in the year ended December 31, 2003 from $703.7 million in
 2002. In 2003, operating income was positively affected by an $8.2 million gain on the sale of the Madrid,
 Spain, manufacturing plant. Operating income was negatively impacted in 2002 by charges of $22.6 million
 related to changes made to an employee deferred compensation plan and $25.9 million of SKBM®
 microkeratome recall and termination costs. After considering the impact of these items, operating income
 would still have improved as a percentage of sales, in part due to continued operating efficiencies
 gained from the Companys global infrastructure.

Alcon
 United States business segment operating income increased 17.6% to $794.3 million, or 44.5% of sales,
 in the year ended December 31, 2003 from $675.3 million, or 41.4% of sales, in 2002. The improvement
 in operating income is partially due to the inclusion in 2002 of $12.6 million of costs associated with
 the decision to recall and terminate the SKBM® microkeratome. Operating income in 2003 also improved
 as a result of price increases on pharmaceuticals, lower manufactured cost of goods, improved mix of
 higher margin products, and slower growth in selling, general and administrative expenses.

Alcon
 International business segment operating income increased 20.3% to $514.9 million, or 31.8% of sales,
 in the year ended December 31, 2003 from $428.1 million, or 31.1% of sales, in 2002. Operating income
 in 2002 reflected one-time costs of $13.3 million related to the decision to recall and terminate the
 SKBM® microkeratome. Operating income as a percent of sales was affected in 2003 by a reduction
 in gross profit margins as a result of the foreign currency and geographic mix of sales and operating
 profits. Japan, our second largest market, did not grow in line with our other international markets
 as we were faced with pricing pressures associated with government reimbursement cuts and new competitive
 entrants in the consumer and surgical product markets.

Operating
 income for the Alcon United States and Alcon International business segments does not include: (1) certain
 manufacturing costs (e.g., manufacturing operation period costs and manufacturing variances); (2) all
 research and development costs other than regulatory costs; and (3) certain other general corporate
 expenses. Operating income for these two business segments is determined in accordance with U.S. GAAP.

---

Interest and
 Other Expenses

Interest
 income decreased 16.7% to $18.5 million in the year ended December 31, 2003 from $22.2 million in 2002,
 primarily as a result of lower short term interest rates in 2003. Interest expense decreased 22.3% to
 $41.8 million in the year ended December 31, 2003 from $53.8 million in 2002, primarily as a result
 of lower short term interest rates.

Income Tax Expense

Income
 tax expense increased 24.7% to $262.7 million in the year ended December 31, 2003 from $210.6 million
 in 2002, mainly due to higher earnings. The reported effective tax rate of 30.6% in the year ended December
 31, 2003 is lower than the 2002 effective tax rate of 31.1%. The decrease in the effective tax rate
 is due to a more favorable mix of income earned in various tax jurisdictions, an increase in foreign
 sales corporation and extraterritorial income tax benefits related to the current and previous years,
 and utilization of certain tax credits and net operating loss carryforwards that had valuation allowances
 in prior years.

Net Earnings

Net
 earnings increased 27.5% to $595.4 million in the year ended December 31, 2003 from $466.9 million in
 2002. The increase reflects the impact of the following income and expense items:

- in 2003, the gain on the sale of the Madrid, Spain, manufacturing plant of $5.7 million, net of income taxes, and
- o in 2002, changes to an employee deferred compensation plan of $14.2 million, net of income taxes, the SKBM® microkeratome recall and termination costs of $17.9 million, net of income taxes, and the estimated impact of the IPO proceeds on net interest expense of $6.5 million, net of income taxes.

| | 
| | 

Year ended December 31, 2002 compared to year
 ended December 31, 2001

Sales

Global

Global
 sales increased 9.5% to $3,009.1 million in 2002 from $2,747.7 million in 2001. Sales growth, in terms
 of constant currency, was slightly higher at 10.0%. The negative impact of foreign currency fluctuations
 on sales growth was mostly confined to Latin American countries and Japan.

Global
 sales growth was led by the performance of our pharmaceutical business which delivered $1,090.4 million
 in revenue for 2002, an increase of 17.5% (18.7% in constant currency) over 2001. Travatan® generated
 $70.9 million in global sales in 2002 compared to $15.8 million in 2001. The settlement of all pending
 patent and trademark litigation over Travatan® with Pharmacia Corporation during the fourth quarter
 of 2002 assured Alcons continued right to sell the product globally without restriction. Our major
 allergy product, Patanol®, had an outstanding year and generated sales of $198.3 million in 2002,
 a 28.3% increase over 2001 sales of $154.5 million. 2002 sales of our other key branded pharmaceutical
 products Tobradex®, Ciloxan® and Cipro HC increased by 10.9%, 19.8% and 41.1%, respectively,
 over 2001.

Global
 sales of our surgical business grew 6.0% during 2002 to $1,438.5 million from $1,357.7 million in 2001.
 The growth was primarily attributable to cataract and vitrectomy products, which include intraocular
 lenses, surgical equipment, devices and disposable products. Sales of products in our refractive product
 line declined by $16.0 million, in line with the trend of the industry in 2002, and reflected a slowdown
 in global economic activity that diminished both consumer confidence and demand for elective laser corrective
 surgery. Excluding the refractive line, sales for our surgical business increased 7.6% to $1,377.9 million
 from $1,281.1 million. We initiated a voluntary recall and termination of our SKBM® microkeratome
 product line during the fourth quarter of 2002 due to a small number of complaints that the applanation
 glass on the head of the handpiece could loosen or become misaligned.SKBM® microkeratome sales
 in 2002 were approximately $3 million.

Our
 global consumer eye care business, which consists of contact lens care and other general eye care products,
 grew 3.9% (4.9% in constant currency) to $ 480.2 million in 2002 from $462.3 million in 2001. Sales
 of OPTI-FREE® disinfectants accounted for over 50% of the consumer line, or $264.5 million, and
 grew 5.4% over 2001 sales of $250.9 million.

United States

Sales
 in the United States increased 11.5% to $1,632.6 million in 2002 from $1,464.6 million in 2001. Sales
 in our pharmaceutical business were consistent with the global trend and were primarily responsible
 for the growth in U.S. sales, with 2002 sales of $706.9 million, representing a 21.5% increase over
 2001 sales of $581.9 million. Sales of Travatan®, which was launched in the U.S. for glaucoma
 treatment in 2001, increased to $44.5 million in 2002 from $13.4 million in 2001. Strong double-digit
 growth rates in U.S. sales were achieved for key therapeutic market segments by our branded products
 Patanol® at 29.2%, Ciloxan® at 21.3%, Tobradex® at 12.0% and Cipro HC at
 42.8%.

Sales
 in our U.S. surgical business totaled $678.3 million in 2002, a 6.0% gain over prior year sales of $639.7
 million. Sales from our line of cataract and vitrectomy products increased 9.2% to $641.1 million in
 2002 from $587.3 million in 2001, but were offset by a decline of 29.0% in the refractive line to $37.2
 million in 2002 from $52.4 million in 2001. We received FDA approval in late 2002 for our new LADARWave®
 technology for customized wavefront-guided laser eye surgery in the treatment of myopia. Our consumer
 eye care business achieved modest growth of 1.8% in 2002 to $247.4 million from $243.0 million in 2001.
 Within the contact lens care line, sales related to our OPTI-FREE® disinfectant franchise increased
 2.9% in 2002 to $143.0 million from $139.0 million in 2001 in a slow growing market segment. Following
 FDA approval, we commenced shipping OPTI-FREE® EXPRESS® No Rub multipurpose disinfecting solution
 during the fourth quarter of 2002 with our new Lasting Comfort claim.

International

Sales
 outside the United States increased 7.3% (8.3% in constant currency) to $1,376.5 million in 2002 from
 $1,283.1 million in 2001. The market economies of Brazil and Argentina were largely accountable for
 the negative impact of currency exchange on sales growth. Sales growth in Japan, our second largest
 global market, lagged behind 2001 due to a weak yen and downward pricing pressures inflicted by reimbursement
 reductions and new generic competition against our BSS Plus® surgical irrigating solution. The
 euro and other major currencies strengthened against the U.S. dollar over the course of the year.

Sales
 for our pharmaceutical business outside the United States in 2002 increased to $383.5 million from $345.8
 million in 2001, registering growth of 10.9% (13.9% in constant currency). Travatan® was successfully
 launched in several major European markets in 2002 and recorded sales in more than 50 countries outside
 the United States. Tobradex® and Ciloxan® also made significant contributions to the pharmaceutical
 business totaling $55.5 million in 2002 sales. Sales of our international surgical business increased
 5.9% (5.6% in constant currency) in 2002 to $760.2 million in 2002 from $718.0 million in 2001 with
 broad based growth across our line of cataract and vitrectomy products. Sales from our refractive business
 were also subject to difficult global economic conditions and declined 3.3% in 2002 to $23.4 million
 from $24.2 million in 2001. However, in December 2002, the first international sale of our new LADARWave®
 custom ablation system was recorded in Australia. Sales for our consumer eye care business outside the
 United States advanced 6.2% (8.4% in constant currency) to $232.8 million in 2002 from $219.3 million
 in 2001. Our OPTI-FREE® disinfectant franchise grew 8.6% (9.4% in constant currency) to $121.5
 million in 2002 from $111.9 million in 2001.

Gross Profit

Gross
 profit increased 8.6% to $2,116.4 million in the year ended December 31, 2002 from $1,949.4 million
 in 2001. However, gross profit as a percent of sales decreased to 70.3% in the year ended December 31,
 2002 from 70.9% in 2001. Some of this decrease was due to charges of $2.5 million in 2002 related to
 changes made to an employee deferred compensation plan (see note 1 to the consolidated financial statements)
 and costs associated with the write-off of SKBM® microkeratome inventory and related manufacturing
 equipment of $5.9 million, as well as negative currency effects and variations in product mix. The impact
 of these particular charges and costs reduced gross profit as a percent of sales for the year ended
 December 31, 2002 by 0.3 percentage points.

Operating Expenses

Selling,
 general and administrative expenses increased 6.4% to $1,014.7 million in the year ended December 31,
 2002 from $953.7 million in 2001. This increase in expenses included charges of $9.3 million in 2002
 related to changes made to an employee deferred compensation plan and $14.1 million of customer refunds
 and other costs associated with the decision to recall and terminate the SKBM® microkeratome
 product line. Selling, general and administrative expenses decreased as a percent of sales to 33.7%
 in the year ended December 31, 2002 from 34.7% in 2001. This percentage decrease is primarily due to
 overall attention to cost control, as well as lower direct-to-consumer advertising in 2002 as compared
 to 2001 and reduction of legal expenses as certain intellectual property dispute cases were settled
 in 2002.

Research
 and development expenses increased 11.6% to $323.5 million in the year ended December 31, 2002 from
 $289.8 million in 2001. This increase in research and development expenses represents a continued investment
 across pharmaceutical and surgical products and charges of $4.8 million incurred in 2002 related to
 changes made to an employee deferred compensation plan. Research and development expenses increased
 slightly as a percent of sales to 10.7% in the year ended December 31, 2002 from 10.5% in 2001.

Amortization
 of intangibles decreased 36.3% to $74.5 million in the year ended December 31, 2002 from $117.0 million
 in 2001. The decrease is primarily due to the implementation of SFAS No. 142, Goodwill and Other
 Intangible Assets, as discussed in note 4 to the consolidated financial statements. In connection
 with the voluntary recall and termination of the SKBM® microkeratome product line in the fourth
 quarter of 2002, a $5.9 million impairment loss on intangible assets was recorded as amortization.

Operating Income

Operating
 income increased 19.5% to $703.7 million in the year ended December 31, 2002 from $588.9 million in
 2001. Operating income was negatively impacted by charges of $16.6 million in 2002 related to changes
 made to an employee deferred compensation plan and $25.9 million of SKBM® microkeratome recall
 and termination costs. Compared to 2001, operating income was favorably impacted by $42.5 million due
 to the change in accounting for goodwill and intangibles resulting from implementation of SFAS No. 142.
 The impact of these items on operating income was a decrease of $42.5 million in 2002 and $42.5 million
 in 2001.

Alcon
 United States business segment operating income increased 24.0% to $675.3 million in the year ended
 December 31, 2002 from $544.7 million in 2001. Operating income was favorably impacted by $20.7 million
 due to the change in accounting for goodwill and intangibles resulting from implementation of SFAS No.
 142. In addition, gross margin improvements and reduced selling, general and administrative spending
 were partially offset by $12.6 million of costs associated with the decision to recall and terminate
 the SKBM® microkeratome.

Alcon
 International business segment operating income increased 5.5% to $428.1 million in the year ended December
 31, 2002 from $405.9 million in 2001. Operating income was favorably impacted by $21.8 million due to
 the change in accounting for goodwill and intangibles resulting from implementation of SFAS No. 142.
 This favorability was offset by one time costs of $13.3 million related to the decision to recall and
 terminate the SKBM® microkeratome. Gross margins as a percentage of sales were negatively impacted
 due to the geographical sales mix and the difficult economic conditions in Latin America. Changes in
 exchange rates also negatively affected International business segment results.

Operating
 income for the Alcon United States and Alcon International business segments does not include: (1) certain
 manufacturing costs (e.g., manufacturing operation period costs and manufacturing variances); (2) all
 research and development costs other than regulatory costs; and (3) certain other general corporate
 expenses. Operating income for these two business segments is determined in accordance with U.S. GAAP.
 Prior to 2002, Alcon measured performance on the basis of International Accounting Standards. For consistency
 of presentation, business segment information for 2001 has been restated on a U.S. GAAP basis.

Interest and
 Other Expenses

Interest
 income decreased 52.4% to $22.2 million in the year ended December 31, 2002 from $46.6 million in 2001,
 as a result of lower short term interest rates in 2002 and a lower average investment balance. Interest
 expense decreased 50.0% to $53.8 million in the year ended December 31, 2002 from $107.7 million in
 2001, as a result of lower short term interest rates and lower average borrowings.

Because
 the proceeds from the March 2002 IPO of Alcon common shares were not used to redeem the Alcon preferred
 shares held by Nestlé until May 29, 2002, they were used to reduce short term borrowings and to make
 short term investments during that period. If the preferred share redemption had occurred at the time
 of the IPO, management estimates that interest expense, net of interest income, would have been approximately
 $9.5 million more than actually incurred.

Other,
 net, for the year ended December 31, 2002 reflected a $1.2 million gain on the sale of a marketable
 equity investment acquired as a result of the Summit acquisition. An impairment loss of $9.1 million
 was recorded in 2001 on this investment.

Income Tax Expense

Income
 tax expense increased 6.2% to $210.6 million in the year ended December 31, 2002 from $198.3 million
 in 2001, mainly due to higher earnings. The effective tax rate decreased to 31.1% in the year ended
 December 31, 2002 from 38.6% in 2001 mainly due to a larger portion of our earnings relating to jurisdictions
 with lower tax rates than in 2001, tax settlements and the impact of implementing SFAS No. 142.

Net Earnings

Net
 earnings increased 47.9% to $466.9 million in the year ended December 31, 2002 from $315.6 million in
 2001. Excluding the impact of certain expenses for:

- changes to an employee deferred compensation plan of $10.4 million, net of income taxes, SKBM® microkeratome recall and termination costs of $17.9 million, net of income taxes, and the estimated impact of the IPO proceeds on net interest expense of $6.5 million, net of income taxes in 2002, and
- adjusting 2001 for the impact of goodwill amortization of $40.2 million, net of income taxes, to reflect the 2002 change in accounting method and impairment loss on a marketable equity investment acquired as a result of the acquisition of Summit of $6.1 million, net of income taxes,

adjusted net earnings would have increased 35.0% to
 $488.7 million for the year ended December 31, 2002 from $361.9 million in 2001.

Actual to Adjusted Reconciliation

|                                                                | 2002 | 2001   
|--------------------------------------------------------------- | ---- | -------
|
|Net earnings, as reported                                       |      | $ 466.9
|Certain expenses:                                               |     
|2002 expense for changes to employee deferred compensation      |     
|plan related to Alcons IPO                                     |      | 16.6   
|2002 estimated impact of IPO proceeds on net interest expense   |      | (9.5   
|2002 expense for SKBM® microkeratome recall and termination     |      | 25.9   
|2001 impairment loss on a marketable equity investment included |     
|in a 2000 business acquisition                                  |      | --     
|Add back 2001 goodwill amortization for 2002 change in          |     
|accounting method under SFAS No. 142                            |      | --     
|Income tax effects of above items                               |      | (11.2  
|                                                                |      |        
|Adjusted net earnings                                           |      | $ 488.7
|                                                                |      |        

The
 adjustments in the reconciliation above represent unusual items that have not occurred otherwise in
 the past two years and are not expected by management to occur in the next two years. Management believes
 that this information is useful to an investors understanding of Alcons financial condition and results
 of operations because it provides investors with a measure of the increase in 2002 net earnings over
 2001 net earnings that would be attributable to Alcons ongoing operations without the effect of items
 that are unusual and not likely to recur in the future. Managements views are based on these factors:

- The changes in deferred compensation expense and net interest expense were related to Alcons initial public offering during 2002 and are not expected to recur.
- A recall and termination of a product the size of the SKBM® microkeratome recall and termination is not a regular event and has not otherwise occurred in Alcon's history.
- The elimination of goodwill amortization beginning in 2002, resulting from the adoption of SFAS No.142, had a significant effect. Adjusting 2001 net earnings to reverse the 2001 goodwill amortization provides a comparable basis for analysis.
- The acquisition of Summit in 2000 included certain marketable equity securities among the assets acquired. An impairment of these securities was recorded in 2001. Such impairment losses on marketable equity securities had not occurred in the previous two years and are not expected to occur in the next two years.

Management
 uses adjusted net earnings as a measure of Alcons economic performance. In managements view, the normalized
 increase in net earnings in 2002 over 2001 should be considered to be 35.0% rather than 47.9%.

Sales by Quarter

The
 following table sets forth our sales by quarter since 2001.

|       | Unaudited
|------ | ---------
|
|
|First  |          
|Second |          
|Third  |          
|Fourth |          
|       |          
|Total  |          
|       |          

Our
 quarterly sales trends reflect seasonality in several products, including ocular allergy products and
 Cipro HC Otic, in the form of increased sales during the spring months, which occur during the
 second quarter in the northern hemisphere. The sales increase during the fourth quarter of 2003 compared
 to third quarter was driven by a strong performance in our International business segment, primarily
 in the surgical product line.

Liquidity and Capital Resources

Cash, Debt and Liquidity

At
 December 31, 2003, Alcon reported cash and cash equivalents of $1,086.0 million, total debt of $1,410.3
 million and consolidated shareholders equity of $1,591.5 million. The net debt balance (total debt
 minus cash and cash equivalents) declined $584.5 million during 2003 to $324.3 million as the Company
 continued to generate significant cash flow from operations.

Management
 believes that the evolution of net debt is important to understanding the Companys cash flow generation
 and overall financial health. Investors should also note that large balances of cash and cash equivalents
 are held in Switzerland, while the Companys debt is located in subsidiary operating companies elsewhere.
 Net debt is calculated as follows:

|NET DEBT                             | December 31,2003 | December 31,2002
|------------------------------------ | ---------------- | ----------------
|
|Short term borrowings                |                  | $1,326.8        
|Current maturities of long term debt |                  | 8.5             
|Long term debt                       |                  | 75.0            
|                                     |                  |                 
|Total debt                           |                  | 1,410.3         
|Less: Cash and cash equivalents      |                  | 1,086.0         
|                                     |                  |                 
|Net debt                             |                  | $   324.3       
|                                     |                  |                 

IPO  Related Activities

The
 Company sold Alcon Germany to Nestlés German subsidiary effective January 1, 2001 for approximately
 $30 million, and, under the separation agreement, Nestlés German subsidiary sold it back to us effective
 January 1, 2002, for approximately $42 million. Alcon Germanys results of operations have been consolidated
 by the Company and are reflected in all periods presented in the accompanying consolidated financial
 statements.

On
 March 20, 2002, Alcon made a payment to Nestlé of $1,243.4 million for dividends and return of capital.
 This payment was financed from existing cash and cash equivalents and additional short term debt. The
 entire payment was considered a dividend under Swiss law.

In
 February 2002, prior to the IPO, Nestlé converted 69,750,000 Alcon common shares into 69,750,000 Alcon
 non-voting preferred shares. On March 21, 2002, holders of Alcon common shares voted to redeem the preferred
 shares for an aggregate redemption price of CHF 3.634 billion. The proceeds, net of related costs including
 taxes, from the IPO were used to redeem the preferred shares for $2,188.0 million on May 29, 2002. No
 dividends were paid on the preferred shares.

If
 the conversion of 69,750,000 Alcon common shares into Alcon preferred shares on February 25, 2002 had
 been delayed until the date of the IPO, earnings per share and the weighted average common shares for
 the year ended December 31, 2002 would have been less than reported:

|                                       | Proforma | As Reported
|-------------------------------------- | -------- | -----------
|Basic earnings per common share        |          | $1.51      
|                                       |          |            
|                                       |          |            
|Diluted earnings per common share      |          | $1.51      
|                                       |          |            
|                                       |          |            
|Basic weighted average common shares   |          | 305,878,040
|                                       |          |            
|                                       |          |            
|                                       |          |            
|Diluted weighted average common shares |          | 306,906,985
|                                       |          |            

On
 March 20, 2002, Alcons IPO was priced at $33.00 per share for 69,750,000 common shares. The net proceeds
 to Alcon from the IPO were $2,189.0 million, after offering expenses and taxes, and were used to redeem
 the preferred shares on May 29, 2002.

Net
 proceeds of $219.1 million, after offering expenses and taxes, from the subsequent exercise of the underwriters
 over-allotment option to purchase 6,975,000 common shares were used to reduce short term indebtedness.

Preferred Shares of Subsidiary

In
 May of 2000, Alcon Holdings, Inc. (AHI), a wholly owned subsidiary of Alcon, issued four series of
 non-voting, non-convertible cumulative preferred shares, with Series A, B and C denominated in Swiss
 francs and Series D denominated in U.S. dollars. These shares were issued as part of the creation of
 a U.S. holding company that would be used to make U.S. acquisitions.

As
 part of a restructuring of AHIs equity, on November 5, 2002 Alcon sold to two financial investors all
 of the AHI Series A and B preferred shares, 20,000 preferred shares, for a total sales price of 1.997
 billion Swiss francs. Alcon also contributed to AHI, as capital in kind, all of the Series C and D preferred
 shares it owned. After the sale, Alcon continued to own 100% of AHIs common shares and all voting rights
 in AHI.

On
 November 26, 2002, AHI redeemed all of its outstanding Series A and B preferred shares. AHI paid the
 investors an aggregate of 2,003 million Swiss francs for the 20,000 preferred shares and accrued dividends.
 The preferred shares were immediately retired. AHI financed the redemption primarily with proceeds from
 the issuance of commercial paper.

For
 the year ended December 31, 2002, earnings available to common shareholders and earnings per share were
 reduced by the preferred dividends and the excess of the redemption cost over the carrying value of
 the preferred shares, totaling approximately $3.9 million.

Other Financing Activities

In
 2002, the board of directors approved the purchase of up to 2,000,000 Alcon shares to satisfy the exercise
 of stock options granted to employees. During 2002, Alcon purchased 193,500 treasury shares on the market
 for $7.9 million. Under this same program, Alcon purchased an additional 585,100 treasury shares on
 the market for $34.1 million during 2003.

The
 payment of dividends is subject to the availability of retained earnings or dividendable reserves under
 Swiss law, the proposal by our Board of Directors, and ultimately the approval of our shareholders.
 Future dividend payments will depend on various factors, including our net earnings, financial condition,
 cash requirements, future prospects and other factors deemed relevant by our board of directors in their
 proposal for approval to the shareholders. Subject to these limitations, we expect to declare a dividend
 based on 2003 operations of CHF 0.72 per common share, or approximately $0.57 per common share, totaling
 an estimated $176 million depending on exchange rates. We anticipate that the dividend, if it is approved
 by the shareholders on April 27, 2004, will be paid on or about May 14, 2004.

---

Investing Activities

Net
 cash used in investing activities in the year ended December 31, 2003 was $175.7 million, including
 $157.9 million of capital expenditures related to improvements in our manufacturing and research and
 development facilities and other infrastructure. During this period, we also acquired intangible assets
 at a cost of $5.0 million. Our annual capital expenditures over the last three years were $157.9 million
 in 2003, $120.9 million in 2002 and $127.4 million in 2001, principally to expand and upgrade our manufacturing
 and research facilities.

In
 2003, the Company commenced construction of a new $24 million administrative facility located on the
 Fort Worth, Texas campus that will provide occupancy for offsite employees as well as serve as a training
 and education center for physicians, medical students and Alcons sales force. In order to establish
 manufacturing capacity for intraocular lenses outside the United States, the Company began converting
 the Cork, Ireland, manufacturing facility from its refractive equipment production to production of
 intraocular lenses. Additional expenditures were made to upgrade our manufacturing facilities in Puurs,
 Belgium, Kaysersberg, France, Huntington, West Virginia, and Fort Worth, Texas. We had capital expenditure
 commitments of $38.6 million at December 31, 2003. We expect to fund these capital projects through
 operating cash flow and, if necessary, short term borrowings.

In
 November 2003, Alcons wholly owned subsidiary, Alcon Cusi S.A., completed the sale of its contact lens
 care solutions manufacturing facility located in Madrid, Spain, to AMO Manufacturing Spain, S.L., a
 wholly owned subsidiary of Advanced Medical Optics, Inc. (NYSE: AVO) for $21.6 million in cash. Alcon
 realized a pre-tax gain of $8.2 million from the sale during the fourth quarter of 2003.

The
 production of contact lens care products previously manufactured in Madrid was transferred to the Alcon
 plant in Fort Worth, Texas. The Madrid plant was sold to optimize capacity levels, streamline manufacturing
 and distribution operations, gain efficiencies and reduce total production costs for contact lens care
 solutions.

Contractual Obligations

|                              | Payments due by period
|----------------------------- | ----------------------
|
|
|Long term debt                |                       
|                              |                       
|Operating leases              |                       
|                              |                       
|Purchase obligations          |                       
|                              |                       
|Other long term liabilities   |                       
|                              |                       
|                              |                       
|Total contractual obligations |                       
|                              |                       

Capital Resources

We
 expect to meet our current liquidity needs, including the approximately CHF 222 million (or approximately
 $176 million) anticipated dividend payment subject to shareholder approval, principally through cash
 and cash equivalents, the liquidation of short term investments and, to the extent necessary, short
 term borrowings. We expect to meet future liquidity requirements through our operating cash flows and
 through issuances of commercial paper under the facility described below, the combination of which we
 believe would be sufficient even if our sales were adversely impacted as compared to expectations.

Credit and Commercial Paper Facilities

As
 of December 31, 2003, Alcon and its subsidiaries had credit and commercial paper facilities of approximately
 $2.9 billion available worldwide, including a $2.0 billion commercial paper facility. As of December
 31, 2003, $1,005.1 million of the commercial paper was outstanding at an average interest rate of 1.1%
 before fees. Related to this short term, floating interest rate borrowing, we have entered into two
 $25.0 million interest rate swaps which have a net effect of fixing the interest rate of a portion of
 the outstanding amount at an average rate of 2.77%, which is based on a two year rate at the time of
 initiation of the hedge. Nestlé guarantees the commercial paper facility and assists in its management,
 for which we pay Nestlé an annual fee based on the average outstanding commercial paper balances. In
 addition, we pay Nestlé a fee for serving as a guarantor on Japanese yen 5.0 billion ($48.9 million)
 of bonds maturing in 2011 arranged by ABN AMRO for our subsidiary in Japan. Nestlés guarantees permit
 Alcon to obtain more favorable interest rates, based upon Nestlés credit rating, than might otherwise
 be obtained. We believe that any fees paid by us to Nestlé for their guaranty of any indebtedness or
 for the management of the commercial paper program are comparable to the fees that would be paid in
 an arms length transaction. Total fees paid to Nestlé for the years ended December 31, 2003, 2002,
 and 2001 were $4.1million, $1.7 million and $0.1 million, respectively. The bonds contain a provision
 that may terminate and accelerate the obligations in the event that Nestlés ownership of Alcon falls
 below 51%.

Alcon
 and its subsidiaries also had available commitments of $344.4 million under unsecured revolving credit
 facilities with Nestlé and its affiliates; at December 31, 2003, $111.5 million was outstanding under
 these credit facilities. Alcons subsidiaries had third-party lines of credit, including bank overdraft
 facilities, totaling approximately $603.2 million under which there was an aggregate outstanding balance
 of $210.2 million. These third-party credit facilities are arranged or provided by a number of international
 financial institutions, the most significant of which had the following aggregate limits: Citibank ($171.0
 million); Mizuho Bank ($84.2 million); FORTIS ($47.3 million); Mitsui-Sumitomo Bank ($42.1 million);
 and ING ($41.6 million). The majority of the credit facilities with Nestlé and third parties are committed
 for less than one year and accrue interest at a rate consistent with local borrowing rates. In aggregate,
 these facilities had a weighted average interest rate of 2.6% at December 31, 2003.

Critical Accounting Estimates

Our
 discussion and analysis of our financial condition and results of operations is based upon Alcons consolidated
 financial statements, which have been prepared in accordance with accounting principles generally accepted
 in the United States. The preparation of these financial statements requires us to make estimates and
 judgments that affect the reported amounts of assets, liabilities, revenues and costs, and related disclosures
 of contingent assets and liabilities. We base our estimates and judgments on historical experience,
 current conditions and various other assumptions that are believed to be reasonable under the circumstances,
 the results of which form the basis for making judgments about the carrying values of assets and liabilities,
 as well as identifying and assessing our accounting treatment with respect to commitments and contingencies.
 Actual results may differ from these estimates and judgments under different assumptions or conditions.

We
 believe that the following accounting policies involve the more significant estimates and judgments
 used in the preparation of our financial statements:

| | Sales Recognition: The Company recognizes sales in accordance with the United States Securities and Exchange Commission Staff Accounting Bulletins No. 101 and 104. Sales are recognized as the net amount to be received after deducting estimated amounts for product returns and rebates. Product returns are estimated based on historical trends and current market developments. Rebates are estimated based on historical analysis of trends and estimated compliance with contractual agreements. While we believe that our reserves for product returns and rebates are adequate, if the actual results are significantly different than the estimated costs, our sales may be over or under stated.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Inventory Reserves: The Company provides reserves on its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated fair market value based upon assumptions about future demand and market conditions. If actual market conditions become less favorable than those projected by management, additional inventory reserves may be required.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Allowances for Doubtful Accounts: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management regularly assesses the financial condition of the Companys customers and the markets in which these customers participate. If the financial condition of the Companys customers were to deteriorate, resulting in an impairment of their ability to make payments on our receivables from them, additional allowances may be required.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Impairment of Goodwill and Intangible Assets: The Company assesses the recoverability of goodwill annually and of intangible assets upon the occurrence of an event that might indicate conditions for an impairment could exist.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Factors we consider important that could
 trigger an impairment review for intangible assets include the following:

- significant underperformance relative to expected historical or projected future operating results;
- significant changes in the manner or extent of our use of the acquired assets or the strategy for our overall business;
- significant negative industry or economic trends; and
- significant decline in the market value of the intangible asset for a sustained period.

| | When we determine the carrying value of intangibles assets may not be recoverable from undiscounted cash flows based upon the existence of one or more of the above factors, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Management has determined that the reporting units for its annual testing for impairment of goodwill are the operating business segments used for segment reporting. Management performs its testing using both multiples of quoted market prices to operating profits and present value techniques.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | To the extent that our management determines that goodwill or intangible assets cannot be recovered, such goodwill or intangible assets are considered impaired and the impairment is treated as an expense incurred in the period in which it occurs.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Tax Liabilities: Our tax returns are subject to examination by taxing authorities in various jurisdictions. Management records current tax liabilities based on their best estimate of what they will ultimately agree upon with the taxing authorities in the relevant jurisdictions following the completion of their examination. Our management believes that the estimates reflected in the financial statements accurately reflect our tax liabilities. However, our actual tax liabilities ultimately may differ from those estimates if we were to prevail in matters for which accruals have been established or if taxing authorities were to successfully challenge the tax treatment upon which our management has based its estimates.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Litigation Liabilities: Alcon and its subsidiaries are parties to a variety of legal proceedings arising out of the ordinary course of business, including product liability and patent infringement litigation. By its nature, litigation is subject to many uncertainties. Management reviews litigation claims with counsel to assess the probable outcome of such claims. Management records current liabilities for litigation based on their best estimates of what Alcon will ultimately incur to pursue such matters to final legal decisions or to settle them. Our management believes that the estimates reflected in the financial statements properly reflect our litigation liabilities. However, our actual litigation liabilities may ultimately differ from those estimates if we are unsuccessful in our efforts to defend or settle the claims being asserted.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pension and Other Employee benefits: We must make certain assumptions in the calculation of the actuarial valuation of the Company sponsored defined benefit pension plans and postretirement benefits. These assumptions include the weighted average discount rates, rates of increase in compensation levels, expected long term rates of return on assets, and increases or trends in health care costs. If actual results are more or less favorable than those projected by management, future periods will reflect reduced or additional pension and postretirement medical expenses. See note 15 to the accompanying consolidated financial statements for additional information regarding assumptions used by the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Market Risk

Interest Rate Risks

Because
 we have previously financed, and expect to continue to finance, our operations in part through short
 term loans, we are exposed to interest rate risks. At December 31, 2003, the majority of our loans were
 short term, floating-rate loans that will become more expensive when interest rates rise and less expensive
 when they fall. We have partly mitigated this risk by investing our cash, cash equivalents, and short
 term investments in floating rate investments. Alcon evaluates the use of interest rate swaps and periodically
 uses such agreements to manage its interest risk on selected debt instruments.

Credit Risks

In
 the normal course of our business, we incur credit risk because we extend trade credit to our customers.
 We believe that these credit risks are well diversified, and our internal staff actively manages these
 risks. Our principal concentrations of trade credit are generally with large and financially sound corporations,
 such as large retailers and grocery chains, drug wholesalers and governmental agencies. It is not unusual
 for our six largest customers in the United States to represent in the aggregate approximately 15% of
 the outstanding balance of our total accounts receivable; however, no single customer accounts for more
 than 10% of annual sales.

---

As
 part of our sales of surgical equipment, we frequently finance the purchase of our equipment and enter
 into leases and other financial transactions with our customers. In general, transactions range in duration
 from one to five years and in principal amount range from $50,000 to $700,000. We conduct credit analysis
 on the customers we finance and secure the loans and leases with the purchased surgical equipment. Over
 the last 17 years, we have offered financing programs for cataract equipment with no significant losses.
 Our customer financing program for laser refractive surgical equipment has a shorter history, is of
 a larger size, and has relatively less credit strength and asset value for security. In countries that
 have a history of high inflation, such as Turkey, Brazil and Argentina, the credit risks to which we
 are exposed can be larger and less predictable.

We
 conduct some of our business through export operations and are exposed to country credit risk. This
 risk is mitigated by the use, where applicable, of letters of credit confirmed by large commercial banks
 in Switzerland and the United States.

Currency Risks

We
 are exposed to market risk from changes in currency exchange rates that could impact our results of
 operations and financial position. We manage our exposure to these currency risks through our regular
 operating and financing activities and, when appropriate, through the use of derivative financial instruments.
 We use derivative financial instruments as risk management tools and not for speculative purposes.

We
 use forward contracts to manage the volatility of non-functional currency cash flows resulting from
 changes in exchange rates. Currency exchange forward contracts are primarily used to hedge intercompany
 purchases and sales. The use of these derivative financial instruments allows us to reduce our overall
 exposure to exchange rate fluctuations, since the gains and losses on these contracts substantially
 offset losses and gains on the assets, liabilities and transactions being hedged. A number of these
 contracts are executed through Nestlé to take advantage of their expertise and economies of scale.

While
 we hedge some non-U.S. dollar currency transactions, the decline in value of non-U.S. dollar currencies
 may, if not reversed, adversely affect our ability to contract for product sales in U.S. dollars because
 our products may become more expensive to purchase in U.S. dollars for local customers doing business
 in the countries of the affected currencies.

New Accounting Standards

In
 January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46, Consolidation
 of Variable Interest Entities (FIN 46), which was subsequently revised in December 2003. FIN 46 interprets
 Accounting Research Bulletin No. 51, Consolidated Financial Statements. FIN 46 requires a variable interest
 entity to be consolidated when a company is subject to the majority of the risk of loss from the variable
 interest entitys activities or is entitled to receive the majority of the entitys residual returns,
 or both. The consolidation requirements for newly created variable interest entities and the transitional
 disclosure provisions of FIN 46 are effective for the Company immediately. The adoption of FIN 46 did
 not have an impact on our results of operations or financial position.

In
 April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
 Activities. This Statement amends and clarifies accounting for derivative instruments embedded in other
 contracts, and for hedging activities under SFAS No. 133. The Statement is effective for contracts entered
 into or modified and hedging relationships designated after June 30, 2003, and to certain preexisting
 contracts. The adoption of SFAS No. 149 did not have an impact on our results of operations or financial
 position.

In
 May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics
 of both Liabilities and Equity. This Statement establishes standards for how a company classifies and
 measures certain financial instruments with characteristics of both liabilities and equity. This Statement
 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is
 effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of
 SFAS No. 150 did not have a material impact on our results of operations or financial position.

In
 May 2003, the FASBs Emerging Issues Task Force (EITF) reached consensus on EITF Issue No. 00-21,
 Revenue Arrangements with Multiple Deliverables. EITF 00-21 sets forth criteria to govern how to identify
 whether goods or services or both that are to be delivered separately in bundled sales arrangements
 should be accounted for separately. The guidance in EITF 00-21 was effective for revenue arrangements
 entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 had no significant
 impact on our results of operations or financial position.

---

In
 December 2003, the U.S. Securities and Exchange Commissions Office of the Chief Accountant and the
 Division of Corporation Finance announced the release of Staff Accounting Bulletin (SAB) No. 104,
 Revenue Recognition. This staff accounting bulletin updated portions of the interpretative guidance
 included in Topic 13 of the codification of staff accounting bulletins in order to make this interpretive
 guidance consistent with current authoritative accounting guidance.

The
 principal revisions were related to the deletion of interpretive material no longer necessary because
 of private sector developments in U.S. generally accepted accounting principles (principally EITF 00-21),
 and the incorporation of certain sections of the staffs Revenue Recognition in Financial Statements
  Frequently Asked Questions and Answers document into Topic 13. The release of SAB No. 104 did not
 have a material impact on our results of operations or financial position.

In
 December 2003, the FASB issued SFAS No. 132 (revised 2003) Employers Disclosures about Pensions and
 Other Postretirement Benefits. This statement requires additional disclosures to those in the original
 Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit
 pension plans and other defined postretirement plans. The Company has adopted the portion of the Statement
 that is effective for financial statements with fiscal years ending after December 15, 2003. The Company
 is still analyzing this Statement to determine how it will affect the disclosures in future annual and
 interim periods.

---

A.     DIRECTORS AND SENIOR
 MANAGEMENT.

Below
 is information with respect to our current directors and officers. Unless otherwise indicated, the business
 address of all of our directors and officers is c/o Alcon, Inc., Bösch 69, P.O. Box 62, 6331 Hünenberg,
 Switzerland.

|Name                          | Age | Title
|----------------------------- | --- | -----
|Timothy R. G. Sear            |     | 66   
|Dr. Werner J. Bauer           |     | 53   
|                              |     |      
|Peter Brabeck-Letmathe        |     | 59   
|                              |     |      
|Francisco Castañer            |     | 59   
|                              |     |      
|Dr. Wolfgang H. Reichenberger |     | 50   
|                              |     |      
|Philip H. Geier, Jr           |     | 69   
|                              |     |      
|Lodewijk J.R. de Vink         |     | 59   
|                              |     |      
|Thomas G. Plaskett            |     | 60   
|                              |     |      
|Stefan Basler                 |     | 49   
|Jacqualyn A. Fouse            |     | 42   
|Guido Koller                  |     | 59   
|Martin Schneider              |     | 44   
|Elaine E. Whitbeck            |     | 49   

Alcon,
 Inc. is a holding company which operates principally through its operating subsidiaries. Our board of
 directors is responsible for the ultimate direction of Alcon, Inc., as a holding company, and will determine
 our business strategy and policies and those of our operating subsidiaries. The executive officers of
 Alcon, Inc. are responsible for certain administrative matters, the exercise of shareholder rights with
 respect to our subsidiaries, the funding of research and development projects, the administration and
 purchase of intellectual property rights and the collection of related license income.

Our
 principal subsidiary in the United States is Alcon Laboratories, Inc. Under the supervision of our board
 of directors, the executive officers of Alcon Laboratories, Inc. coordinate and manage the ongoing business
 and operations of our operating subsidiaries, including research and development, manufacturing, sales
 and distribution, marketing, financing and treasury.

Below
 is information with respect to the current executive officers of Alcon Laboratories, Inc. Unless otherwise
 indicated, the business address of all of these officers is c/o Alcon Laboratories, Inc., 6201 South
 Freeway, Fort Worth, Texas 76134-2099.

|Name                | Age | Title
|------------------- | --- | -----
|Timothy R.G. Sear   |     | 66   
|Dr. G. André Bens   |     | 52   
|                    |     |      
|Dr. Gerald D. Cagle |     | 59   
|Jacqualyn A. Fouse  |     | 42   
|                    |     |      
|Cary R. Rayment     |     | 56   

Mr. Fred Pettinato, Senior Vice President, International
 of Alcon Laboratories, Inc., retired effective January 2, 2004.

Under
 the separation agreement, Nestlé has the right to nominate four members to our board of directors for
 so long as Nestlé holds at least a majority of our outstanding common shares. In addition, Nestlé has
 agreed, for so long as Nestlé holds at least a majority of our outstanding common shares, to vote all
 of its common shares in favor of three nominees for election to our board of directors who are independent
 and neither affiliated with us nor with Nestlé and that the chief executive officer of Alcon Laboratories,
 Inc. will be a member of our board of directors. If a Nestlé-nominated director resigns from office,
 Nestlé will have the right to nominate a replacement director. Any vacancies among our independent directors
 will be filled by another independent person who will be nominated by the full board of directors.

B.     COMPENSATION

We
 provide our board of directors with compensation and benefits that will attract and retain qualified
 directors. In 2003, all members of our board of directors, except for our chief executive officer, received
 an annual cash retainer of $50,000. We refer to a director who is neither a member of Nestlés board
 of directors nor a full-time employee of Nestlé or Alcon as a non-employee director. We expect to award
 our non-employee directors non-qualified stock options to purchase our common shares. Each year, the
 number of non-qualified stock options will be determined by dividing $100,000 by the expected Black-Scholes
 value of an option to purchase one common share on the date of grant. In 2003, each of the non-employee
 directors was awarded 4,500 non-qualified stock options.

We
 do not have any service contracts with any of our directors.

In
 the fiscal years ended December 31, 2003 and December 31, 2002, our directors did not receive any other
 compensation or benefits-in-kind from Alcon, Inc. except as noted above. The executive officers received
 stock options and in some cases, restricted shares from Alcon, Inc. as indicated in this Compensation
 section.

The
 following compensation table sets forth information regarding compensation and benefits in-kind paid
 during the fiscal years ended December 31, 2003, 2002 and 2001 to the executive officers of Alcon Laboratories,
 Inc.

---

Summary Compensation Table

|                      |  |      |  |         | Long Term Compensation |          
|--------------------- |  | ---- |  | ------- | ---------------------- | ---------
|
|
|Timothy R.G. Sear(1)  |  | 2003 |  | 940,000 |                        | 1,271,400
|                      |  | 2002 |  | 940,000 |                        | 940,000  
|                      |  | 2001 |  | 860,000 |                        | 750,000  
|Dr. Gerald D. Cagle   |  | 2003 |  | 540,800 |                        | 450,000  
|                      |  | 2002 |  | 520,000 |                        | 420,000  
|                      |  | 2001 |  | 460,000 |                        | 410,000  
|Dr. G. André Bens     |  | 2003 |  | 364,000 |                        | 291,000  
|                      |  | 2002 |  | 350,000 |                        | 250,000  
|                      |  | 2001 |  | 315,000 |                        | 250,000  
|Fred J. Pettinato (2) |  | 2003 |  | 412,000 |                        | 359,000  
|                      |  | 2002 |  | 400,000 |                        | 300,000  
|                      |  | 2001 |  | 315,000 |                        | 230,000  
|Cary R. Rayment       |  | 2003 |  | 416,000 |                        | 370,000  
|                      |  | 2002 |  | 400,000 |                        | 300,000  
|                      |  | 2001 |  | 315,000 |                        | 215,000  
|Jacqualyn A. Fouse(3) |  | 2003 |  | 425,000 |                        | 163,000  
|                      |  | 2002 |  | 175,000 |                        |          

| | (1) | In 2001, Mr. Sear received a grant of 4,300 stock options to purchase Nestlé shares. In 2002, all of Mr. Sears outstanding stock options to purchase shares of Nestlé stock were converted into 80,000 nonqualified stock options to purchase Alcon common shares.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Mr. Pettinato retired effective January 2, 2004.
| | --- | ------------------------------------------------

| | (3) | Ms. Fouse was hired on July 1, 2002.
| | --- | ------------------------------------

| | (4) | Bonus paid in 2003 was for 2002 performance. Bonus paid in 2002 was for 2001 performance. Bonus paid in 2001 was for performance in 2000.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes payments made for car allowance and financial consulting services.
| | --- | ---------------------------------------------------------------------------

| | (6) | At the time of the IPO in March of 2002, employees had to make an election to convert units received under the 1994 Phantom Stock Plan to Alcon restricted shares. All persons named in the Summary Compensation Table elected to convert. Ms. Fouse had no Phantom Stock units to convert. Summarized below are the total restricted shares outstanding at December 31, 2003 and the value by vesting date. The value is based on the closing price of the shares on the New York Stock Exchange on December 31, 2003. The holders of all converted restricted shares will have all the rights of a shareholder of the Company, including the right to receive dividends thereon.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                    |  | Dollar Value Vesting in
|------------------- |  | -----------------------
|
|Timothy R.G. Sear   |  | 115,926                
|                    |  |                        
|Dr. Gerald D. Cagle |  | 50,262                 
|                    |  |                        
|Dr. G. André Bens   |  | 24,759                 
|                    |  |                        
|Fred J. Pettinato   |  | 25,547                 
|                    |  |                        
|Cary R. Rayment     |  | 25,547                 
|                    |  |                        

Mr.  Pettinatos restricted
 shares shown above vested upon his retirement effective January 2, 2004.

| | (7) | The 2003 long term incentive plan (LTIP) payments reflect Restricted Stock shares vested in the current year that were converted from Phantom Stock Plan units in 2002 (see footnote 6). Payouts in 2002 and 2001 were payments made under the 1994 Phantom Stock Plan, which was created to provide additional incentives to key employees upon whom Alcon must depend for its growth and success.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Provides the aggregate amount of employer contributions to the Alcon 401(k) Retirement Plan, and compensation payments made to the Executive Universal Life Insurance and the Umbrella Liability Insurance plans.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock Option Grant Table

The
 following table sets forth the nonqualified stock option grants made during 2003.

|Name                | AlconIncentive StockOptionsGranted # (1) | % of TotalOptionsGranted toEmployees in2003 | Exercise orBase Price | ExpirationDate | Grant DatePresent Value(2)
|------------------- | ---------------------------------------- | ------------------------------------------- | --------------------- | -------------- | --------------------------
|Timothy R.G. Sear   |                                          | 340,000                                     |                       | 5              | .62%                      
|Dr. Gerald D. Cagle |                                          | 135,000                                     |                       | 2              | .23%                      
|Dr. G. André Bens   |                                          | 72,500                                      |                       | 1              | .20%                      
|Fred J. Pettinato   |                                          | 85,000                                      |                       | 1              | .40%                      
|Cary R. Rayment     |                                          | 95,000                                      |                       | 1              | .57%                      
|Jacqualyn A. Fouse  |                                          | 85,000                                      |                       | 1              | .40%                      

| | (1) | Options were granted in 2003 pursuant to the 2002 Alcon Incentive Plan. In general, incentive stock options will vest in full on the third anniversary of the date of grant, or on an option holders death, permanent disability or retirement. Upon the termination of an option holders employment with Alcon (not as a result of disability, death or retirement), all vested options will be exercisable for thirty days. All unvested options will be forfeited. Where the termination of employment is due to (a) retirement or (b) death or disability, they may be exercisable for their remaining term, or for 60 months, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Based on the Black Scholes model of option valuation to determine grant date fair value, as prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the option is exercised, so there is no assurance the value realized will be at or near the value estimated by this model. The following assumptions were used in the Black-Scholes model: expected volatility, 33%; risk-free interest rate, 2.92%; dividend yield, 1%; expected life, 4 years.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Aggregated Option Exercises and Fiscal Year End
 Option Value Table

|                      |  |       | Number of SecuritiesUnderlying UnexercisedOptions at 12/31/03 (#) | Value of Unexercised In-the-Money Options at12/31/03 ($)
|--------------------- |  | ----- | ----------------------------------------------------------------- | --------------------------------------------------------
|
|Timothy R.G. Sear     |  |       |                                                                   |                                                         
|Dr. Gerald D. Cagle   |  |       |                                                                   |                                                         
|Dr. G. André Bens     |  |       |                                                                   |                                                         
|Fred J. Pettinato (1) |  | 3,832 |                                                                   | 51,732                                                  
|Cary R. Rayment       |  |       |                                                                   |                                                         
|Jacqualyn A. Fouse    |  |       |                                                                   |                                                         
|                      |  |       |                                                                   |                                                         

(1)     Mr. Pettinatos stock options
 shown above vested upon his retirement effective January 2, 2004.

Pension Plans

Messrs.  Sear, Rayment
 and Pettinato and Drs. Cagle and Bens and Ms. Fouse participate in the non-qualified Executive Salary
 Continuation Plan (ESCP). This plan is unfunded and non-contributory and provides for a fixed retirement
 benefit based on the participants years of participation service under the plan, using the average
 of the annual base compensation in effect in the year of separation from service and for the two years
 preceding such year of separation. Benefits are payable upon retirement at the normal retirement age
 of 62 or earlier if certain conditions are met earlier. Annual compensation includes the amount shown
 as annual base salary in the Summary Compensation Table. The three-year average annual base compensation
 for 2003 is $913,333 for Mr. Sear, $506,933 for Dr. Cagle, $343,000 for Dr. Bens, $375,667 for Mr. Pettinato,
 $377,000 for Mr. Rayment and $387,500 for Ms. Fouse. At December 31, 2003, Mr. Sear and Dr. Cagle had
 participation service of 20 years or more, Dr. Bens had participation service of 17 years, Messrs. Pettinato
 and Rayment had participation service of 15 years and Ms. Fouse had participation service of 4 years
 based upon prior service with Alcon and Nestlé.

The
 Executive Salary Continuation Plans benefit formula is three percent of a participants three-year
 average annual base compensation times years of participation, up to a maximum of 20 years. A participant
 must attain at least 10 years of participation service in order to have a vested benefit.

In
 December 2003, the board of directors approved a new non-qualified Alcon Supplemental Executive Retirement
 Plan (ASERP). If certain conditions are met, the ASERP provides for a maximum benefit of up to 30%
 of the final three-years average base salary and bonus at retirement, payable for the remaining life
 of the participant. Effective January 1, 2004, all new participants will participate in the ASERP. Existing
 ESCP participants will continue to accrue benefits under the ESCP through December 31, 2008. Thereafter,
 they will begin to accrue benefits for future service under the provisions of the ASERP; however, the
 normal form of payment for benefits accrued under ASERP by current ESCP participants will be a single
 life annuity with a 50% surviving spouses benefit.

As
 of January 1, 2002, the Alcon Laboratories, Inc. Employees Retirement Plan (money purchase plan) was
 merged into the Alcon Laboratories, Inc. Employees Profit Sharing Plan and Trust; the resulting plan
 is the Alcon 401(k) Retirement Plan. Subject to applicable legal limits, the Company matches employee
 contributions of up to 5% of compensation on a 2.4 to 1 basis; for every $1 contributed by the employee,
 up to 5% of compensation, Alcon contributes $2.40.

2002 Alcon Incentive Plan

Our
 board of directors adopted the 2002 Alcon Incentive Plan prior to the initial public offering.

The
 2002 Alcon Incentive Plan is intended to help us retain and motivate our key employees. Through this
 plan, we are able to grant our employees stock options, stock appreciation rights, restricted shares
 and other awards based on our common shares, in addition to performance-based annual and long term incentive
 awards. Through share ownership, we are able to align employee and shareholder interests, by directly
 linking incentive awards to our profitability and increases in shareholder value.

---

Eligibility and Award Limits

Our
 employees and directors and employees of our subsidiaries and affiliates are eligible to receive awards
 under the 2002 Alcon Incentive Plan. Employees of Nestlé and its subsidiaries other than Alcon are not
 eligible to receive awards under this plan.

Under
 the 2002 Alcon Incentive Plan, limits are placed on the maximum award amounts that may be granted to
 any employee in any plan year.

Administration

The
 2002 Alcon Incentive Plan is administered by the compensation committee of our board of directors, which
 has the authority to recommend and set the terms and conditions of the grant awards. Our board of directors
 is responsible for approving the recommendations of the compensation committee.

For
 our employees who are not considered executive officers, the compensation committee may delegate its
 authority under the Alcon Incentive Plan to our executive officers, subject to certain guidelines.

Shares Reserved for Awards

Under
 the 2002 Alcon Incentive Plan, a total of 30 million common shares may be issued for awards. Through
 December 31, 2003, approximately 2.3 million of these common shares had been issued under this plan.

Our
 board of directors has the authority to make appropriate adjustments to the limits described above as
 well as to the terms of outstanding awards, in the event of any transaction that affects our common
 shares such as share splits, share dividends or other similar events.

Awards
 of stock options that expire unexercised, stock appreciation rights or restricted shares that are forfeited
 under the terms of this plan or stock appreciation rights that are exercised for cash are not included
 in applying the maximum limit for our common shares available for grant under this plan.

Annual and Long Term Incentive Awards

Annual
 and long term incentive awards may be granted under the 2002 Alcon Incentive Plan. The awards are considered
 earned only if corporate, business segment or performance goals over the performance period satisfy
 the conditions established by the compensation committee and approved by our board of directors. The
 performance objectives, which may vary from employee to employee, are based on one or more financial
 measures and additional non-financial measures.

Awards,
 as determined by our board of directors, may be paid in the form of cash, common shares or any combination
 of these items.

Under
 the 2002 Alcon Incentive Plan, selected executive officers are awarded performance-based incentive awards,
 subject to a maximum limit.

Stock Options

Under
 the 2002 Alcon Incentive Plan, we may grant to eligible employees stock options that are either incentive
 stock options or nonqualified stock options. Nonqualified stock options will not qualify as incentive
 stock options for federal income tax purposes under Section 422 of the U.S. Internal Revenue Code of
 1986.

The
 compensation committee will recommend to our board of directors for approval the number and type of
 stock options to grant, as well as the exercise price, applicable vesting schedule, option term and
 any applicable performance criteria. Unless otherwise decided by our board of directors, stock options
 will vest in full on the third anniversary of the date of grant, or on an option holders death, permanent
 disability or retirement (as defined in the 2002 Incentive Plan). Upon the termination of an option
 holders employment with us, all vested options will be exercisable for thirty days; provided, however,
 that where the termination of employment is due to (i) retirement or (ii) death or disability, they
 may be exercisable for their remaining term, or for 60 months, respectively. All unvested options will
 be forfeited. The grant price for any stock option will be not less than the fair market value of our
 common shares on the grant date. Unless our board of directors provides for a different period, stock
 options will have a term of ten years.

Stock Appreciation Rights

We
 may grant stock appreciation rights, which will entitle the holder of the stock option to receive an
 amount equal to the difference between the fair market value and the grant price. Unless determined
 otherwise by our board of directors, stock appreciation rights will vest in full on the third anniversary
 of the date of grant or on a holders death, permanent disability or retirement. Upon the termination
 of a holders employment with us, all vested stock appreciation rights will be exercisable for thirty
 days; provided, however, that where the termination is due to (i) retirement or (ii) death or
 disability, they may be exercisable for the remaining term, or for 60 months, respectively. Stock appreciation
 rights granted in tandem with stock options can be exercised only if the related stock option is exercisable
 at that time. Unless our board of directors provides for a different period, stock appreciation rights
 will have a term of ten years.

Restricted Shares

We
 are permitted to grant restricted shares. A restricted share is a common share granted to a participant
 subject to restrictions determined by the board of directors. A restricted share will vest and become
 transferable upon satisfaction of the conditions set forth in the restricted share award agreement.
 Restricted share awards will be forfeited if a recipients employment terminates prior to vesting of
 the award. Unless otherwise specified in the restricted share award agreement, restricted share awards
 will vest upon a holders death, permanent disability or retirement and holders of restricted shares
 will have the same rights on his or her restricted shares as holders of common shares.

Phantom Shares

We
 are permitted to grant phantom shares under the 2002 Alcon Incentive Plan. The value of any phantom
 shares granted under the plan will be determined in relation to the fair market value of a common share.
 The board of directors will have the right to determine the initial value of the phantom share, the
 applicable valuation dates for the phantom share grants, vesting and the maximum amount of appreciation
 value payable on the phantom shares.

Other Share-Based Awards

The
 2002 Alcon Incentive Plan also allows us to provide awards that are denominated in or valued by reference
 to our common shares. These types of awards include performance shares and restricted share units. Upon
 satisfaction of certain performance goals, the recipient will be entitled to receive a specified number
 of common shares or the cash equivalent. The value of an award will be based on the difference between
 the fair market value of the covered shares and the exercise price. The grant price for the award will
 not be less than the fair market value of our common shares on the grant date.

Change-Of-Control Provisions

In
 the event of a change-of-control (as defined under the 2002 Alcon Incentive Plan), the following events
 will occur if the agreement covering the award so provides:

- all stock options and stock appreciation rights will become fully vested and exercisable;
- all restrictions on outstanding restricted shares and other share-based awards will lapse; and
- all outstanding incentive awards will vest and be paid out on a prorated basis.

Corporate Transactions

In
 the event of certain corporate transactions described in the 2002 Alcon Incentive Plan, our board of
 directors may:

- require the exercise of all outstanding awards during a specified time period, after which the awards shall be terminated;
- cancel all outstanding awards in exchange for a cash payment equal to the value of the awards; or
- immediately vest all outstanding stock options and stock appreciation rights, remove all restrictions on restricted share awards, performance-based awards and other share-based awards, and vest and pay pro rata (based on when the corporate transaction occurs in the applicable performance cycle) all outstanding incentive awards.

| |  | 
| |  | 

Amendment

Our
 board of directors has the authority to amend the 2002 Alcon Incentive Plan at any time, provided that
 no amendment that increases the number of our common shares subject to the 2002 Alcon Incentive Plan
 is made without shareholder approval.

Transferability and Other Terms

Options
 or awards granted to an employee under the 2002 Alcon Incentive Plan may not be transferred except by
 will or the laws of descent and distribution. In addition, only the employee may exercise options or
 awards during his or her lifetime.

In
 the case of nonqualified stock options, however, the Board has the authority to permit all or any part
 of a nonqualified stock option to be transferred to members of the employees immediate family and certain
 family trusts or partnerships, subject to prior written consent of the compensation committee.

Alcon Executive Deferred Compensation Plan

The
 Company adopted the Alcon Executive Deferred Compensation Plan (the DCP) effective October 25, 2002.
 The DCP allows certain U. S. employees the opportunity to defer the receipt of salary, bonus, restricted
 shares and stock option gains. The DCP further provides that restricted shares and stock option gains
 deferred by eligible executives can only be invested in Alcon common shares and distributed as Alcon
 common shares at the end of the deferral period.

Alcon Excess 401(k) Plan

The
 Company adopted the Alcon Excess 401(k) Plan effective January 1, 2004. This plan provides deferral
 of excess employer contributions that cannot be made to the Alcon 401(k) Retirement Plan because of
 limitations under the U.S. Internal Revenue Code of 1986.

Phantom Stock Conversion

Prior
 to the IPO, our board of directors approved a conversion plan for our 1994 Phantom Stock Plan. This
 new conversion plan converted the projected unit value of our Phantom Stock Plan to restricted shares
 through the voluntary decision of each participant. Participants who elected not to convert into restricted
 shares remained in the 1994 Phantom Stock Plan with respect to the units previously awarded. The number
 of restricted Alcon common shares converted was determined by dividing the conversion value by $33,
 the offering price of our common shares. Participants who so opted to convert their phantom shares received
 an additional 20% of the conversion value in non-qualified stock options. The number of non-qualified
 stock options was determined by taking 20% of the conversion value and dividing it by the approved Black-Scholes
 value of an option to purchase one Alcon common share on the date this offering was consummated, discounting
 for risk of forfeiture. Restricted shares and stock options issued in this conversion were disregarded
 in applying the limits on the maximum award amounts that may be granted to any employee in any year.

This
 conversion plan was intended to align the interests of our middle and senior level management with the
 interests of our shareholders. For participants who were tax residents of a country where restricted
 stock was not possible or became immediately taxable, participants received other share-based awards
 such as restricted stock units. Retirees who were holding accrued balances under the 1994 Phantom Stock
 Plan were not eligible for the conversion.

The
 restricted shares have the following vesting schedule: the number of restricted shares obtained from
 the conversion value of the 1998 Phantom Stock grant vested on January 1, 2003, the number of restricted
 shares obtained from the conversion value of the 1999 Phantom Stock grant will vest on January 1, 2004,
 the number of restricted shares obtained from the conversion value of the 2000 Phantom Stock grant will
 vest on January 1, 2005 and the number of restricted shares obtained from the conversion value of the
 2001 Phantom Stock grant will vest on January 1, 2006. The restricted shares will vest in full upon
 a change of control of Alcon.

Out
 of a possible 2,334,850 Phantom Stock units outstanding at December 31, 2001, 1,440,850 units were converted
 to Alcon Restricted Shares or Restricted Share Units. The following table sets forth the actual dollar
 values at March 20, 2002 that were converted into restricted shares or equivalent units:

|Restricted Stock Recipient                                      | Value
|--------------------------------------------------------------- | -----
|Timothy R.G. Sear                                               |      
|Dr. Gerald D. Cagle                                             |      
|Dr. G. André Bens                                               |      
|Cary R. Rayment                                                 |      
|Fred J. Pettinato (1)                                           |      
|                                                                |      
|Executive officers of Alcon and Alcon Laboratories, Inc.        |      
|as a group (5 executives)                                       |      
|                                                                |      
|All other eligible employees of Alcon and its subsidiaries as a |      
|Group (approximately 951 employees)                             |      
|                                                                |      

(1)       
 Mr. Pettinatos unvested restricted shares became vested upon his retirement effective January 2, 2004.

The
 exercise price for the options or equivalent share based awards was equal to the offering price per
 common share. The options or share based awards will vest in phases: 33% became exercisable on the first
 anniversary date of the grant, 33% will become exercisable on the second anniversary date of the grant,
 and the remaining 34% will become exercisable on the third anniversary date of the grant. These awards
 will expire 10 years from the date of the grant, unless terminated earlier as a result of employment
 termination. The options and share based awards will vest in full upon a change of control of Alcon.

The
 following table sets forth the actual dollar values at March 20, 2002 of options awarded as a result
 of conversion:

|Stock Option Recipient                                    | Value
|--------------------------------------------------------- | -----
|Timothy R.G. Sear                                         |      
|Dr. Gerald D. Cagle                                       |      
|Dr. G. André Bens                                         |      
|Cary R. Rayment                                           |      
|Fred J. Pettinato (1)                                     |      
|                                                          |      
|Executive officers of Alcon and Alcon Laboratories, Inc.  |      
|as a group (5 executives)                                 |      
|                                                          |      
|All eligible employees of Alcon and its subsidiaries as a |      
|group (approximately 951 employees)                       |      
|                                                          |      

(1)       
 Mr. Pettinatos unvested stock options became vested upon his retirement effective January 2, 2004.

Additionally,
 a non-compete clause was included in the restricted share awards and stock option agreements related
 to the Phantom Stock Plan conversion. The non-compete requirement applied to all participants of the
 Phantom Stock Plan and was effective immediately upon conversion of the phantom stock. The conditions
 of the non-compete requirement are similar to those outlined in the 1994 Phantom Stock Plan, which are
 briefly summarized below.

Upon
 termination of employment, through voluntary or involuntary separation from Alcon by retirement or otherwise
 in circumstances that result in a participant holding or vesting in restricted shares, the participant
 must not compete in the same or a substantially similar business as those in which we and our affiliated
 companies that are engaged in the pharmaceutical business are engaged in or are contemplating entering
 at the time of termination of employment. This obligation will lapse as to given restricted shares on
 the date on which those shares would have otherwise vested in accordance with the vesting schedule set
 forth above. If any of the conditions of this non-compete requirement are violated, the participant
 will be required to return to us the number of restricted shares that were originally scheduled to vest
 after the date the participant first violated the non-competition agreement (or cash equal to their
 then-current value).

Alcon Directors

The
 stock option grants to non-employee directors under the 2002 Alcon Incentive Plan will promote greater
 alignment of interests between our non-employee directors, our shareholders and Alcon. It will assist
 us in attracting and retaining highly qualified non-employee directors, by giving them an opportunity
 to share in our future success. Only non-employee directors will be eligible to receive awards under
 the 2002 Alcon Incentive Plan.

---

Shares Reserved
 for Awards

Approximately
 60,000 of the 30 million common shares under the 2002 Alcon Incentive Plan will be available for awards
 to non-employee directors.

Annual Awards

Every
 year, each non-employee director will receive non-qualified stock options to purchase common shares.
 The number of non-qualified stock options will be calculated by dividing $100,000 by the expected Black-Scholes
 value of an Alcon stock option.

C.     BOARD PRACTICES

Board Composition

Under
 the terms of the separation agreement that we entered into with Nestlé in connection with the initial
 public offering in March 2002, Nestlé has the right to nominate four members of our board of directors
 for so long as it owns at least a majority of our outstanding common shares. Nestlé has also agreed
 in the separation agreement to vote all of the common shares it owns in favor of three nominees for
 election to our board of directors who are not otherwise affiliated with either Nestlé or Alcon for
 so long as it owns at least a majority of our outstanding common shares.

Our
 board of directors consists of eight members, including three independent directors, four directors
 affiliated with Nestlé and the chief executive officer of Alcon Laboratories, Inc. All of our directors
 began their current terms in 2002, with the exception of Thomas G. Plaskett, whom the shareholders elected
 as an independent director at the annual general meeting of the shareholders on May 20, 2003.

Members
 of our board of directors generally are elected to serve three-year terms (subject to a maximum of two
 re-elections, except for the chief executive officer of Alcon Laboratories, Inc., who is exempt from
 this limitation). In 2002 our board of directors was divided into three classes serving staggered terms.
 As a result, some of our directors elected in 2002 and 2003 will serve terms that are less than three
 years. As their terms of office expire, the directors of one class will stand for election each year
 as follows:

- Class I directors have terms of office expiring at the annual general meeting of shareholders in 2006. These directors are Philip H. Geier, Jr., and Peter Brabeck-Letmathe;
- Class II directors have terms of office expiring at the annual general meeting of shareholders in 2004. These directors are Lodewijk J.R. de Vink, Francisco Castaner, and Werner Bauer; and
- Class III directors have terms of office expiring at the annual general meeting of shareholders in 2005. These directors are Dr. Wolfgang H. Reichenberger, Timothy R.G. Sear and Thomas G. Plaskett.

Our
 organizational regulations provide that directors will retire from office no later than the annual general
 meeting after their 72nd birthday.

Board Committees

Our
 board of directors has appointed an audit committee, a nominating/corporate governance committee and
 a compensation committee. In addition, our organizational regulations provide that the board of directors
 shall form a special committee of independent directors to consider the types of matters described below.
 Our board of directors also appointed in 2002 a research and development and scientific advisory board,
 which is not a committee of our board of directors.

Audit Committee

The
 audit committee consists of three directors who are not otherwise affiliated with either Nestlé or Alcon.
 In 2003, the audit committee was comprised of Lodewijk J. R. de Vink (chairman), Philip G. Geier, Jr.
 and Thomas G. Plaskett. In September 2003, the Board affirmed that Mr. Plaskett was the audit committee
 financial expert. The functions of this committee include ensuring proper implementation of the financial
 strategy as approved by the board of directors, reviewing periodically the financial results as achieved,
 overseeing that the financial performance of the group is properly measured, controlled and reported,
 and recommending any share repurchase program for approval by our board of directors, as well as:

- review of the adequacy of our system of internal accounting procedures;
- recommendations to the board of directors as to the selection of independent auditors, subject to shareholder approval;
- discussion with our independent auditors regarding their audit procedures, including the proposed scope of the audit, the audit results and the related management letters;
- review of the audit results and related management letters;
- review of the services performed by our independent auditors in connection with determining their independence;
- review of the reports of our internal and outside auditors and the discussion of the contents of those reports with the auditors and our executive management;
- overseeing the selection and the terms of reference of our internal and outside auditors;
- review and discussion of our quarterly financial statements with our management and our outside auditors; and
- ensure our ongoing compliance with legal requirements, accounting standards and the provisions of the New York Stock Exchange.

| |  | 
| |  | 

Nominating/Corporate Governance Committee

The
 nominating/corporate governance committee shall consist of two directors who are not otherwise affiliated
 with either Nestlé or Alcon and one director designated by the majority shareholder, currently the vice
 chairman of our board of directors. This committee is comprised of Lodewijk J.R. de Vink, Philip G.
 Geier, Jr., and Peter Brabeck-Letmathe. The functions of this committee include:

- subject to certain nomination rights of Nestlé as provided in our organizational regulations and the separation agreement, identifying individuals qualified to become members of our board of directors and recommending such individuals to the board for nomination for election by the shareholders;
- making recommendations to the board concerning committee appointments;
- developing, recommending, and annually reviewing corporate governance guidelines for Alcon;
- reviewing proposals of the chief executive officer for appointment of members of our executive management, to the extent such members are appointed by the board, and making recommendations to the board regarding such appointments;
- overseeing corporate governance matters; and
- coordinating an annual evaluation of Alcon's board.

Compensation Committee

The
 compensation committee consists of two members of our board of directors who are not otherwise affiliated
 with either Nestlé or Alcon and of one member of our board of directors nominated by Nestlé. The compensation
 committee is comprised of Philip G. Geier, Jr., J. R. de Vink and Francisco Castaner. The functions
 of this committee include:

- review of our general compensation strategy;
- recommendations for approval by our board of directors of compensation and benefits programs for our executive  officers;
- review of the terms of employment between Alcon and any executive officer or key employee;





---



- administration of our long term incentive plan and recommendations to our board of directors for approval of individual grants under this plan; and
- decisions with respect to the compensation of members of our board of directors.

Special Committee of Independent Directors

Our
 organizational regulations provide that if any of the following transactions is proposed to be taken
 by the Company, the board of directors shall form a special committee of no less than three independent
 and disinterested directors who shall be responsible for protecting the interests of our minority shareholders
 and shall make recommendations to the board of directors with respect to:

- a proposed merger, takeover, business combination or related party transaction with our current majority shareholder or any group company of our current majority shareholder;
- a proposed bid for the minority shareholdings of Alcon by any entity owning a majority of our outstanding voting rights;
- a proposed repurchase by us of all our shares not owned by an entity owning a majority of the outstanding voting rights of Alcon; or
- any change to the powers and duties of the special committee of independent directors.

Our
 board of directors will only approve a decision with respect to any of these matters if a majority of
 the members of the special committee of independent directors so recommends.

Research and Development and Scientific Advisory
 Board

The
 research and development and scientific advisory board is not a committee of our board of directors,
 and is composed of one representative of Alcon, one representative of Nestlé and scientists who are
 not otherwise affiliated with Alcon and Nestlé. The scientific advisory board reviews and makes recommendations
 regarding Alcons research and development objectives. It also monitors new developments, trends and
 initiatives in the pharmaceutical industry.

Compliance with NYSE Listing Standards on Corporate
 Governance

On
 November 4, 2003, the Securities and Exchange Commission approved new rules proposed by the New York
 Stock Exchange (the NYSE) intended to strengthen corporate governance standards for listed companies.
 These new corporate governance listing standards supplement the corporate governance reforms already
 adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002.

Alcon
 has adopted Corporate Governance Guidelines, which are publicly available on its Web site, www.AlconInc.com.
 Alcon will provide a printed copy of its Corporate Governance Guidelines to its shareholders upon request.

The
 new NYSE rules do not change the NYSE traditional approach permitting listed companies that are foreign
 private issuers, such as Alcon, to follow their home jurisdiction governance practice where it differs
 from the NYSE requirements. However, listed companies that are foreign private issuers must disclose
 any significant ways in which their corporate governance practices differ from those followed by US
 companies under NYSE listing standards. These are identified in the first table below.

In
 addition, certain of the NYSEs corporate governance standards allow for an exemption for controlled
 companies, as defined under the NYSE listing standards. The NYSE listing standards require a controlled
 company that chooses to take advantage of any or all of these exemptions must disclose that choice,
 that it is a controlled company and the basis for the determination. Alcon has determined that it is
 a controlled company for purposes of the NYSE listing standards as approximately 75% of the outstanding
 common shares of Alcon are owned by Nestlé S.A., and Nestlé has the right to appoint a majority of our
 board of directors. The second table below identifies the NYSE listing standards from which Alcon has
 chosen to take advantage of the controlled company exemption.



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|NYSE rule applicable toU.S. listed companies                                                                                                                                                                                  | Alcons practice
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------
|A U.S. listed companys compensation committee must have a written charter providing the committee with responsibility for approving corporate goals and objectives relevant to Chief Executive Officer (CEO) compensation. |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|All listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.                                                                                                       |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|A U.S. listed company must assign the responsibility to determine and approve the CEOs compensation level to the compensation committee.                                                                                     |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 
|                                                                                                                                                                                                                              |                 





|NYSE rules under which Alcon claims exemption as acontrolled company                                                     | Alcons practice
|------------------------------------------------------------------------------------------------------------------------ | ----------------
|A majority of the directors of a U.S. listed companys
 board must be independent.                                       |                 
|A U.S. listed companys nominating / corporate governance
 committee must be composed entirely of independent directors. |                 
|                                                                                                                         |                 
|                                                                                                                         |                 
|A U.S. listed companys compensation committee must be composed entirely of independent directors.                       |                 
|                                                                                                                         |                 
|                                                                                                                         |                 
|                                                                                                                         |                 
|                                                                                                                         |                 





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D.       EMPLOYEES

As of December 31, 2003, we employed approximately 11,900 full-time
 employees, including approximately 1,300 research and development employees, approximately 4,100 manufacturing
 employees and 3,300 sales and marketing employees. Currently, approximately 500 of our workers in Belgium
 are represented by a union. In other European countries, our workers are represented by works councils.
 We believe that our employee relations are good.

The following table indicates the approximate number of employees by location:



|December 31, | Total | United States | International
|------------ | ----- | ------------- | -------------
|2003         |       | 11,900        |              
|2002         |       | 11,800        |              
|2001         |       | 11,600        |              

E.     SHARE OWNERSHIP

As
 of December 31, 2003, all of the officers and directors listed below had direct or beneficial ownership
 of less than 1% of the outstanding shares.

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A.     MAJOR SHAREHOLDERS.

After
 completion of the IPO in March 2002, Nestlé owned 230,250,000 of our common shares, or approximately
 75% of the outstanding common shares after the underwriters exercised their overallotment option. The
 common shares owned by Nestlé carry the same voting rights as the common shares sold in the public offering.
 Alcon redeemed all of the nonvoting preferred shares held by Nestlé on May 29, 2002.

Nestlé
 is not subject to any contractual obligation to retain its controlling interest in us. At December 31,
 2003, Nestlé owned 230,250,000, or approximately 75%, of the outstanding common shares of Alcon.

At
 December 31, 2003, three shareholders of record in Switzerland, including Nestlé, held 231,128,354 common
 shares of Alcon.

Based on a report on Schedule 13G filed by FMR Corp.
 (Fidelity), Edward C. Johnson 3d and Abigail P. Johnson, with the U.S. Securities and Exchange Commission
 on February 17, 2004, as of December 31, 2003, each of the foregoing persons is deemed to be the beneficial
 owner of 16,903,242 common shares of Alcon, representing 5.48% of the outstanding common shares of Alcon
 at December 31, 2003. The address of FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson is 82 Devonshire
 Street, Boston, Massachusetts 02109. None of Edward C. Johnson 3d, Abigail P. Johnson or any Fidelity
 officers or directors serve as officers or directors of Alcon.

B.     RELATED PARTY TRANSACTIONS.

Separation Agreement

We
 entered into a separation agreement with Nestlé prior to the initial public offering in March 2002.
 This separation agreement governs certain pre-offering transactions, as well as the relationship between
 Alcon and Nestlé following this offering. The separation agreement was filed as an exhibit to the initial
 registration statement. The separation agreement is governed by and will be construed in accordance
 with the laws of Switzerland.

The
 separation agreement with Nestlé governs the business and legal relationship between Nestlé and us.
 Below is a summary of the material provisions that are included in the separation agreement.

Our Corporate Governance

Under
 the separation agreement, Nestlé has the right to nominate four members to our board of directors for
 so long as Nestlé holds at least 50% of our outstanding common shares. In addition, Nestlé has agreed,
 for so long as Nestlé holds at least a majority of our outstanding common shares, to vote all of its
 common shares in favor of three nominees for election to our board of directors who are independent
 and neither affiliated with us nor with Nestlé and that our chief executive officer will be a member
 of our board of directors. If a Nestlé-nominated director resigns from office, Nestlé will have the
 right to nominate a replacement director; any vacancies in the position of independent director will
 be filled by another independent person who will be nominated by the full board of directors.

Dividend Policy

If
 our board of directors proposes to pay a dividend to shareholders, Nestlé has agreed to vote all of
 its shares in favor of such proposal so long as Nestlé holds at least a majority of our outstanding
 common shares.

Intercompany Debt and Future Financings

The
 separation agreement contains provisions governing the refinancing of intercompany debt prior to the
 initial public offering in March 2002. During 2002, Nestlés role in our debt structure changed from
 being the largest direct lender to providing primarily indirect support of our third-party debts. Through
 the course of 2003, we reduced our direct borrowings from Nestlé or its affiliates from $116.1 million
 at December 31, 2002 to $111.5 million as of December 31, 2003.

In
 2002, we entered into a $2.0 billion U.S. commercial paper program, which had $1.0 billion outstanding
 as of December 31, 2003. Nestlé serves as the guarantor of this program, for which they receive a fee
 as discussed in note 6 to the consolidated financial statements.

On
 a go-forward basis, we may continue to enter into financing transactions involving Nestlé, or we may
 decide to perform financing functions independently. We will agree with Nestlé, on a case by case basis,
 whether the guarantees, commitments or undertakings currently given by Nestlé in our favor will be renewed.
 If any guarantee, commitment or undertaking is renewed, the terms on which we will reimburse Nestlé
 will be agreed upon with Nestlé at the time of such renewal.

Cash Management and Treasury Functions

The
 separation agreement provides that Nestlé will continue to perform the cash management and treasury
 functions that it currently performs for us.

Accounting and Reporting

Our
 consolidated financial statements are prepared in accordance with U.S. GAAP; Nestlés consolidated accounts,
 consistent with past practice, will continue to be prepared in accordance with IFRS. The separation
 agreement provides that we will establish adequate procedures allowing for the timely conversion of
 our financial statements to IFRS for inclusion in Nestlés financial statements.

Allocation of Liabilities

The
 separation agreement provides for the allocation of liabilities between us and Nestlé, particularly
 with respect to product liability and environmental, health and safety matters. Generally, we assume
 responsibility for all claims arising in connection with our business, including, without limitation,
 product liability claims and claims relating to environmental, health and safety matters, and we will
 indemnify Nestlé for all costs and expenses incurred in connection with any such claims.

We
 also assumed liability for all employment matters of the employees engaged in our business at the time
 of the IPO. In this connection, we have entered into special arrangements with local Nestlé companies
 on the allocation of pension fund obligations between Nestlé and us. In certain countries, we continue
 to benefit from Nestlés existing pension funds, and will not establish independent pension funds for
 our employees.

Contracts

The
 separation agreement contains provisions governing the continuation and termination of contracts between
 Alcon and Nestlé.

Shared Sites

Three
 sites relating to the administration of our business continue to be shared with Nestlé. These offices
 are located in Norway, South Africa and Brazil.

Shared Services

Nestlé
 continues to provide us with certain services, including information technology and an internal audit
 function for a period of time. To the extent that we were covered under Nestlés insurance arrangements
 prior to the initial public offering, we will continue to be covered under those arrangements. Nestlé
 charges us our portion of the cost of these arrangements based on arms length prices. Services Nestlé
 may provide include future financings for us upon our request. These arrangements will be on terms no
 less favorable to us than would be available from a third party.

Registration Rights

Pursuant
 to the separation agreement, we have granted registration rights under the Securities Act of 1933 to
 Nestlé with respect to sales of our common shares by Nestlé.

Covenants Not to Compete and Not to Solicit

Nestlé
 has undertaken, for so long as it continues to hold at least a majority of our common shares, not to
 compete with our business except in certain limited areas that are set out in the separation agreement.
 The separation agreement also governs the allocation of business opportunities which could be taken
 by both Nestlé and us. If Nestlé acquires the assets or securities of, or merges with, a business association
 that competes with our business, that acquisition or merger will be permitted if at the time of the
 transaction the competing business represents less than 50% of the gross revenues of the acquired business
 association, provided that Nestlé fully informs us of the particulars of the competing business to be
 acquired, and gives us the right of first refusal to acquire the products comprising the competing business
 on the basis of fair value.

The
 separation agreement provides that Nestlé will not for a two-year period following the date of the initial
 public offering in March 2002, without our written consent, actively solicit for employment or hire
 any of our employees, subject to limited exceptions.





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C.    INTEREST OF EXPERTS AND COUNSEL

Not Applicable.

ITEM 8.   FINANCIAL INFORMATION

| | A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
| | -- | -------------------------------------------------------

| | 1. | AUDITED CONSOLIDATED FINANCIAL STATEMENTS


See Item 18.
| | -- | --------------------------------------------------------

| | 2. | THREE YEARS COMPARATIVE FINANCIAL STATEMENTS


See Item 18.
| | -- | -----------------------------------------------------------

| | 3. | AUDIT REPORT


See Report of Independent Auditors at page F-2.
| | -- | --------------------------------------------------------------



| | 4. | LATEST AUDITED FINANCIAL STATEMENTS MAY BE NO OLDER
 THAN 15 MONTHS


Alcon has complied with this requirement.
| | -- | ---------------------------------------------------------------------------------------------------------------

| | 5. | INTERIM FINANCIAL STATEMENTS IF DOCUMENT IS MORE THAN
 NINE MONTHS SINCE LAST AUDITED FINANCIAL YEAR


Not Applicable.
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | 6. | EXPORT SALES IF SIGNIFICANT


See Item 18.
| | -- | ------------------------------------------

| | 7. | LEGAL PROCEEDINGS
| | -- | -----------------

From
 time to time we are involved in legal proceedings arising in the ordinary course of business. We may
 be subject to litigation or other proceedings, which could cause us to incur significant expenses or
 prevent us from selling certain products. We believe that there is no litigation pending that will likely
 have, individually or in the aggregate, a material adverse effect on our financial position, results
 of operations or cash flows.

8.     DIVIDEND POLICY.

We
 currently intend to pay annual dividends on our common shares from earnings up to and including the
 calendar year 2003, which we expect would be paid in May 2004. The payment of dividends is subject to
 the availability of retained earnings or dividendable reserves under Swiss law, the proposal by our
 board of directors, and, ultimately, the approval of our shareholders. Future dividend payments will
 depend on various factors, including our net earnings, financial condition, cash requirements, future
 prospects and other factors deemed relevant by our board of directors in their proposal for approval
 to the shareholders. Subject to these limitations, we expect to declare a dividend from 2003 operations
 of CHF 0.72 per common share (or approximately $0.57 per common share, depending on exchange rates).
 The separation agreement provides that Nestlé will vote in favor of the payment of dividends proposed
 by our board of directors for so long as it holds a majority of our outstanding common shares. We are
 required by Swiss corporate law to declare and pay dividends in Swiss francs. Holders of record of our
 common shares will receive dividend payments in U.S. dollars, unless they provide notice to our transfer
 agent, The Bank of New York, that they wish to receive dividend payments in Swiss francs. Holders of
 our common shares through The Depository Trust Company will receive dividend payments in U.S. dollars,
 unless they provide notice to The Depository Trust Company that they wish to receive payments in Swiss
 francs. The exchange rate applicable to dividend payments will be determined as of a date shortly before
 the payment date. The Bank of New York will be responsible for paying the U.S. dollars or Swiss francs
 to registered holders of common shares, as the case may be, and we will be responsible for withholding
 required amounts for taxes.

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B.     SIGNIFICANT
 CHANGES

None.

ITEM 9.  THE OFFER AND LISTING

| | A. | OFFER AND LISTING DETAILS
| | -- | -------------------------

| | 1. | EXPECTED PRICE


Not Applicable.
| | -- | --------------------------------

| | 2. | METHOD TO DETERMINE EXPECTED PRICE


Not Applicable.
| | -- | ----------------------------------------------------
| | 3. | PRE-EMPTIVE EXERCISE RIGHTS                         

Not Applicable.

| | 4. | STOCK PRICE HISTORY
| | -- | -------------------

Alcons
 common shares were not listed or traded prior to the IPO. The following table lists the high and low
 closing market prices for Alcons common shares for the periods indicated as reported:

|                        | High | Low   
|----------------------- | ---- | ------
|Year ended December 31, |      |       
|2002                    |      | $43.35
|2003                    |      | 60.95 
|Year ended December 31, |     
|2002:First quarter*     |      | 34.75 
|Second quarter          |      | 39.30 
|Third quarter           |      | 39.13 
|Fourth quarter          |      | 43.35 
|2003:First quarter      |      | 41.10 
|Second quarter          |      | 46.71 
|Third quarter           |      | 56.62 
|Fourth quarter          |      | 60.95 
|Month of:               |     
|September 2003          |      | 56.62 
|October 2003            |      | 57.06 
|November 2003           |      | 58.17 
|December 2003           |      | 60.95 
|January 2004            |      | 64.80 
|February 2004           |      | 64.95 

* From
 first trading date (March 21, 2002) to March 28, 2002; IPO price on March 20, 2002 was $33.00.

| | 5. | TYPE AND CLASS OF SECURITIES


Not Applicable.
| | -- | ----------------------------------------------

| | 6. | LIMITATIONS OF SECURITIES


Not Applicable.
| | -- | -------------------------------------------

| | 7. | RIGHT CONVEYED BY SECURITIES ISSUED


Not Applicable.
| | -- | -----------------------------------------------------

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B.     PLAN OF DISTRIBUTION

Not
 Applicable.

C.     MARKETS FOR STOCK

The
 Companys common shares are listed for trading on the New York Stock Exchange. Alcons common shares
 are traded under the symbol      ACL.

D.     SELLING SHAREHOLDERS

E.     DILUTION FROM OFFERING

F.     EXPENSES OF OFFERING

Not Applicable.

ITEM 10.  ADDITIONAL INFORMATION

A.     SHARE CAPITAL

B.     MEMORANDUM AND ARTICLES
 OF INCORPORATION

General

Alcon,
 Inc. is registered in the commercial register of the Canton of Zug, Switzerland under number CH-170.3.017.372-9.

As
 of December 31, 2003 our issued share capital was CHF 61,862,054.60 on 309,310,273 common shares at
 CHF 0.20 par value per common share.

Set
 out below is information concerning our shares and a brief summary of some of the significant provisions
 of our Articles of Association (Statuten), written resolutions of our board of directors, known
 as organizational regulations (Organisationsreglement), which were included as exhibits to the
 initial registration statement and the Swiss Federal Code of Obligations (Schweizerisches Obligationenrecht).
 This description does not purport to be complete and is qualified by reference to our Articles of Association,
 our organizational regulations and the Swiss Federal Code of Obligations.

Common Shares

All
 common shares are registered common shares which are fully paid, validly issued and non-assessable.
 There is no limitation under our Articles of Association on the right of non-Swiss residents or nationals
 to own or vote our common shares.

Share Register

Our
 share register is kept by The Bank of New York in New York, New York, which acts as transfer agent and
 registrar. The share register reflects only record owners of our shares; beneficial owners of common
 shares holding their shares through The Depository Trust Company, which we refer to as DTC, are not
 recorded in our share register. Shares held through DTC are registered in our share register in the
 name of DTCs nominee. We are entitled to accept only those persons as shareholders, usufructuaries
 or nominees who have been recorded in our share register, and to perform dividend payment and other
 obligations only to our shareholders of record, including DTC. A shareholder of record must notify The
 Bank of New York of any change in address. Until notice of a change in address has been given, all of
 our written communication to our shareholders of record shall be deemed to have validly been made if
 sent to the address recorded in the share register.

Share Certificates

We
 issue certificates evidencing our common shares to our shareholders of record.

Transfers of Common Shares

Beneficial
 owners of our common shares may transfer their shares through the book-entry system of DTC. Common shares
 held of record represented by share certificates may be transferred only by delivery of the share certificates
 representing those common shares duly endorsed or accompanied by an executed stock power. A transferee
 who wishes to become a shareholder of record must deliver the duly executed certificate in a form proper
 for transfer to our transfer agent and registrar, The Bank of New York, in order to be registered in
 our share register (Aktienregister).

Voting Rights

Each
 common share carries one vote at a shareholders meeting. Voting rights may be exercised by our registered
 shareholders or by a duly appointed proxy of a shareholder, which proxy need not be a shareholder. This
 provision will allow for the exercise of voting rights by beneficial owners of our common shares. Our
 Articles of Association do not limit the number of shares that may be represented by a single shareholder.
 See -Transfers of Common Shares above and Certain Provisions of Our Articles, Organizational Regulations
 and Swiss Law-Shareholders Meetings below.

Treasury
 shares, i.e., shares held by us or our majority-owned subsidiaries, will not be entitled to vote at
 our shareholders meetings.

Preemptive Rights

Shareholders
 have preemptive rights to subscribe for newly issued common shares and other equity instruments, stock
 options and convertible bonds in proportion to the nominal amount of our common shares they own. The
 vote of a supermajority of two-thirds of the common shares represented at a shareholders meeting may,
 however, limit or suspend preemptive rights in certain limited circumstances.

Informational Rights

At
 a shareholders meeting, each shareholder is entitled to request certain information from our board
 of directors concerning our affairs and to request information from our auditors concerning their audit
 and its results. Such information must be provided to the extent that it is necessary to exercise shareholder
 rights (for example, voting rights) and does not jeopardize business secrets or other legitimate interests
 of Alcon. Additionally, our books and correspondence may be inspected by our shareholders if such an
 inspection is expressly authorized by our shareholders or our board of directors, subject to the protection
 of business secrets. If information is withheld or a request to inspect refused, a court in our place
 of incorporation (Zug, Switzerland) may be petitioned to order access to information or to permit the
 inspection.

The
 right to inspect our share register is limited to the right to inspect that shareholders own entry
 on our share register.

Preferred Shares

As
 of December 31, 2003, no Alcon preferred shares were authorized, issued or outstanding.

Future Share Issuances

Under
 Swiss law, all decisions with respect to capital increases, whether of common or nonvoting preferred
 shares and whether for cash, non-cash or no consideration, are subject to the approval or authorization
 by shareholders.

Creation
 of Conditional Share Capital for the 2002 Alcon Incentive Plan. As of December 31, 2003, our share
 capital may be increased by a maximum aggregate amount of CHF 5,532,945.40 million through the issuance
 of a maximum of 27,664,727 million fully paid common shares, subject to adjustments to reflect share
 splits, upon the exercise of options to purchase common shares. New common shares will be issued upon
 the exercise of options which our management, employees and directors may be granted pursuant to the
 2002 Alcon Incentive Plan. The grant of these options and the issuance of the underlying common shares
 upon option exercises will not entitle our shareholders to preemptive rights. The exercise price of
 the stock options shall be no less than the market price of common shares upon the date of grant of
 the options. See Management-2002 Alcon Incentive
 Plan.

At
 December 31, 2003, 169,574 common shares, including 78,574 common shares during 2003, had been issued
 cumulatively from conditional share capital pursuant to the exercise of stock options granted under
 the 2002 Alcon Incentive Plan.

In
 2002, contemporaneously with the IPO, certain Alcon employees elected to convert $34.2 million of their
 interests in the 1994 Phantom Stock Plan into 2,165,699 contingent restricted common shares of Alcon.
 All of these shares were issued from conditional share capital and included in the issued common shares
 in the accompanying balance sheets at December 31, 2003 and 2002.

The
 restricted common shares and the common shares issued pursuant to the exercise of stock options reduced
 the conditional share capital from the 30 million common shares originally authorized in 2002.

Certain Provisions of Our Articles, Organizational
 Regulations and Swiss Law

Business Purpose and Duration

Article
 2 of our Articles of Association provides that our business purpose is to purchase, administer and transfer
 patents, trademarks and technical and industrial know-how; to provide technical and administrative consultancy
 services; and to hold participations in other industrial or commercial companies. In addition, we may
 conduct all transactions to which our business purpose may relate.

Our
 Articles of Association do not limit our duration.

Notices

Article
 31 of our Articles of Association requires us to publish notices, including notice of shareholders
 meetings, to our shareholders in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt).
 Our board of directors may, but is not generally required by Swiss law to, designate additional means
 of providing notice to shareholders. We may also communicate with our shareholders through the addresses
 registered in our share register.

Shareholders Meetings

Annual General
 Meetings

Under
 Swiss corporate law, we must hold an annual general meeting of shareholders within six months after
 the end of our financial year, which is the calendar year. Our board of directors has the authority
 to convene annual general meetings. Holders of common shares with a nominal value equal to at least
 CHF 1 million have the right to request that a specific proposal be discussed and voted upon at a shareholders
 meeting. Under Swiss corporate law, notice of a shareholders meeting must be given at least 20 days
 prior to the date of that meeting.

The
 2004 annual general meeting of shareholders is scheduled for April 27, 2004 in Zug, Switzerland.

Extraordinary
 General Meetings

Our
 board of directors is required to convene an extraordinary general meeting of shareholders, for among
 other reasons, if a shareholders meeting adopts a resolution to that effect or if holders of common
 shares representing an aggregate of at least 10% of our nominal share capital request in writing that
 it do so. An extraordinary general meeting is convened by publication of a notice as set forth above
 under - Notices.

Powers and Duties

Pursuant
 to Swiss corporate law, our shareholders have the exclusive right to decide on the following matters:

- adoption and amendment of our Articles of Association;
- election of members of our board of directors, statutory auditors, the auditors for our consolidated financial statements and the special auditors;
- approval of our annual report, our statutory financial statements and our consolidated financial statements;
- payments of dividends and any other distributions to shareholders;
- discharge of the members of our board of directors from liability for previous business conduct to the extent such conduct is known to the shareholders; and
- any other resolutions which are submitted to a shareholders meeting pursuant to law, our Articles of Association or by voluntary submission by our board of directors.

Proxies

Shareholders
 can choose to be represented at a shareholders meeting by a proxy who is not required to be a shareholder.
 Shares held in collective custody through DTC will be able to participate in shareholders meetings
 regardless of record ownership. See - Record Date below.

Quorum

No
 quorum for shareholders meetings is specified in our Articles of Association.

Action by Shareholders

At
 a shareholders meeting, all voting takes place by a show of hands, unless voting by ballot is resolved
 by a majority vote of shareholders present or ordered by the chairman of the meeting or unless voting
 is done by electronic form as ordered by the chairman of the meeting. Resolutions of shareholders generally
 require the approval of a majority of the common shares represented at a shareholders meeting, with
 abstentions having the effect of votes against the resolution. Shareholders resolutions requiring the
 affirmative vote of a majority of the common shares represented at a shareholders meeting include:

- amendments to our Articles of Association, unless the amendment is subject to the requirement that it be approved by holders of two-thirds of our common shares represented at a shareholders meeting;
- elections of directors and auditors;
- approval of our annual report, statutory financial statements and consolidated financial statements;
- payment of dividends;
- decisions to discharge the directors and management from liability for matters disclosed to the shareholders' meeting; and
- ordering of an independent investigation into specific matters proposed to the shareholders' meeting (Sonderprufung).

Pursuant
 to Swiss corporate law, the affirmative vote of two-thirds of the common shares represented at a shareholders
 meeting is required to approve:

- changes in our business purpose;
- the creation of shares having different par values, each of which is entitled to one vote (i.e., dual-class common shares);
- the creation of restrictions on the transferability of common shares;
- the creation of authorized share capital or conditional share capital;
- an increase in our share capital by way of capitalization of reserves (Kapitalerhöhung aus Reserven), against contribution in kind (Sacheinlage), for the acquisition of assets (Sachübernahme), as well as involving the grant of preferences;
- a restriction or elimination of preemptive rights of shareholders in connection with a share capital increase;
- a relocation of our place of incorporation; and
- the dissolution of Alcon other than by liquidation, including through a merger in which we are not the surviving corporation.

In
 addition, our Articles of Association require the approval of a supermajority of at least two-thirds
 of the common shares represented at a shareholders meeting to:

- create or abolish any restrictions on the exercise of voting rights;
- abolish any applicable restrictions on the transferability of shares;
- convert registered shares into bearer shares and vice versa; and
- modify any provisions in our Articles of Association requiring actions to be approved by a supermajority of the common shares represented at a shareholders meeting.

Under
 Swiss corporate law, shareholders are not permitted to act by written consent in lieu of a shareholders
 meeting.

Record Date

We
 intend to announce the dates of forthcoming shareholders meetings not less than 30 days prior to the
 date of the shareholders meeting in question and to set a date for eligibility to vote at the shareholders
 meeting, which we refer to as the date of the closing of the books, not more than 20 days prior to the
 date of the shareholders meeting in question.

We
 intend to mail shareholders meeting materials to record owners and to beneficial owners of shares holding
 their shares through DTC through customary banking and brokerage channels within seven business days
 after the date of the closing of the books.

Shareholders
 of record and beneficial owners of shares holding their shares through DTC will have the opportunity
 to appoint proxies, in the case of shareholders of record, or give voting instructions, in the case
 of beneficial owners of shares holding their shares through DTC, or to request attendance at shareholders
 meetings. Any request must be mailed to the address indicated in the shareholders meeting material
 through the same banking and brokerage channels as we originally used to send the shareholders materials.

Net Profits
 and Dividends

Swiss
 corporate law requires us to retain at least 5% of our annual net profits as general reserves for so
 long as these reserves amount to less than 20% of our nominal share capital. Also, after having reached
 the statutory amount, 10% of the amounts which are distributed as a share of profits after payment of
 a dividend of 5% have to be allocated to the reserves. All other net profits may be paid as dividends
 if approved by our shareholders.

Under
 Swiss corporate law, we may only pay dividends if we have sufficient distributable profits from prior
 business years, or if the reserves on our holding company-only balance sheet prepared in accordance
 with Swiss statutory accounting rules are sufficient to allow the distribution of a dividend. In either
 event, dividends may be distributed only following approval by our shareholders based on our statutory
 holding company-only accounts. Our board of directors may propose that a dividend be distributed, but
 our shareholders retain the final authority to determine whether a dividend is paid. Our statutory auditors
 must also confirm that the dividend proposal of the board of directors conforms to statutory law and
 our Articles of Association. Subject to the foregoing, we intend to pay dividends on our common shares.
 See Dividend Policy.

We
 are required under Swiss corporate law to declare dividends on our shares in Swiss francs. Holders of
 our common shares will receive payments in U.S. dollars, unless they provide notice to our transfer
 agent, The Bank of New York, that they wish to receive dividend payments in Swiss francs. The Bank of
 New York will be responsible for paying the U.S. dollars or Swiss francs to registered holders of common
 shares, less amounts subject to withholding for taxes.

Dividends
 usually become due and payable promptly after our shareholders approve their payment. Dividends which
 remain unclaimed for five years after the due date become barred by the statute of limitations under
 Swiss law and are allocated to our general reserves.

Dividends
 on our common shares are subject to Swiss withholding taxes as described under the heading Taxation.

Borrowing Powers

Neither
 Swiss law nor our Articles of Association restrict in any way our power to borrow and raise funds. The
 decision to borrow funds is made by or under the direction of our board of directors, and no approval
 by our shareholders is required.

Conflicts of Interest

Swiss
 law does not have a general provision regarding conflicts of interest. However, the Swiss Federal Code
 of Obligations requires directors and officers to safeguard the interests of the company and, in this
 connection, imposes duties of care and loyalty. This rule is generally understood as disqualifying directors
 and officers from participating in decisions directly affecting them. A breach of these provisions results
 in the breaching director or officer incurring personal liability to us. Our organizational regulations
 provide special provisions addressing conflicts of interest of directors. In addition, under Swiss law,
 payments made to a shareholder or a director or any persons associated therewith, other than on arms
 length terms, must be repaid to us if the recipient of the payment was acting in bad faith.

Repurchases of Shares

Swiss
 law limits the amount of our shares that we may hold or repurchase. We, together with our subsidiaries,
 may only repurchase shares if (i) we have sufficient freely distributable reserves to pay the purchase
 price and (ii) the aggregate par value of the repurchased shares does not exceed 10% of the nominal
 share capital of our company. Furthermore, we must create a reserve on our statutory balance sheet in
 the amount of the purchase price of the repurchased shares. On shares we or our subsidiaries repurchase
 any rights to vote are suspended, but these shares are entitled to the economic benefits applicable
 to our shares generally.

Dissolution; Merger

We
 may be dissolved at any time with the approval of (i) a simple majority of our common shares represented
 at a shareholders meeting in the event we are being dissolved through a liquidation and (ii) two-thirds
 of the common shares represented at a shareholders meeting in all other cases of dissolution, including
 a merger where we are not the surviving entity. Dissolution by court order is possible if we become
 bankrupt, or for cause at the request of shareholders holding at least 10% of our share capital. Under
 Swiss law, any surplus arising out of a liquidation, after the settlement of all claims of all creditors,
 is distributed to shareholders in proportion to the paid-up par value of shares held, subject to a Swiss
 withholding tax of 35% on the amount exceeding the paid-up par value. See Taxation-Swiss Tax Considerations-Swiss
 Withholding Tax on Dividends and Similar Distributions.

Board of Directors

Number, Removal, Vacancies and Term

Our
 Articles of Association provide that we will have at least seven directors at all times. All of our
 directors are elected by the vote of the holders of a majority of the common shares represented at a
 shareholders meeting, and directors may be removed at any time with or without cause by the holders
 of a majority of the common shares represented at a shareholders meeting. All vacancies on our board
 of directors must be filled by a vote of our shareholders. Each member of our board of directors must
 have nominal ownership of at least one common share, other than members of our board of directors who
 are representatives of a legal entity that owns common shares.

Our
 Articles of Association provide that the term of office for each director is three years, with the interval
 between two annual general meetings being deemed a year for this purpose. The initial term of office
 for each director will be fixed in such a way as to assure that about one-third of all the members must
 be newly elected or re-elected every year. Swiss law permits staggered terms for directors. Directors,
 other than our chief executive officer, are eligible to be re-elected a maximum of two times. Our organizational
 regulations provide that directors will retire from office no later than the annual general meeting
 after their 72nd birthday.

Powers and Duties

Pursuant
 to Swiss statutory law, our Articles of Association and organizational regulations, our board of directors
 is the corporate body responsible for our business strategy, financial planning and control, and supervision
 of executive management. Our organizational regulations contemplate that our board of directors is responsible
 for our business operations. Among other things, our board of directors as a whole has ultimate responsibility
 for: (i) the ultimate direction of Alcon and the issuance of the necessary guidelines; (ii) the determination
 of our organizational structure, including the enactment and amendment of the organizational regulations;
 (iii) the determination of our accounting principles, financial controls and financial planning; (iv)
 the appointment and removal of the secretary of the board of directors, members of board committees
 and our executive management, as well as the termination of their signatory power; (v) the ultimate
 supervision of our executive management; (vi) the preparation of our business report and financial statements,
 the preparation of shareholders meetings and the implementation of resolutions adopted by our shareholders;
 (vii) the examination of the professional qualifications of our auditors; (viii) the notification of
 the court if our liabilities exceed our assets (art. 725 CO); (ix) the approval of certain significant
 transactions, details of which are set out in our organizational regulations; (x) the exercise of shareholder
 rights in our subsidiaries, as well as the ultimate control of the business activities of our subsidiaries;
 (xi) the establishment of our dividend policy; (xii) the review and approval of the recommendations
 of the board committees; and (xiii) the response to any approach regarding a takeover offer.

Except
 as otherwise provided in our organizational regulations with respect to the independent director committee,
 our organizational regulations may be amended with the approval of two-thirds of the members of our
 board of directors attending a meeting.

Certain Anti-Takeover Provisions

Business Combinations

The
 separation agreement and our organizational regulations contemplate that certain mergers, takeovers
 or other business combinations involving us must be approved by a special committee of independent directors
 charged with protecting the interests of minority shareholders, as well as by the full board of directors.

Our
 organizational regulations further obligate our board of directors to form a special committee of independent
 and disinterested directors charged with protecting the interests of minority shareholders to evaluate
 and decide upon (i) a proposed merger, takeover, other business combination or related party transaction
 of Alcon with its majority shareholder or any group company of the majority shareholder, (ii) a proposed
 bid for the minority shareholdings of Alcon by any entity owning a majority of our outstanding voting
 rights or (iii) a proposed repurchase by us of all of our shares not owned by an entity owning a majority
 of the outstanding voting rights of Alcon.

Since
 our common shares are not listed on any Swiss stock exchange, the restrictions on implementing a poison
 pill set forth in the Swiss Act on Stock Exchanges and Securities Trading, which we refer to as the
 Swiss Stock Exchange Act, are not applicable to us. Anti-takeover measures implemented by our board
 of directors would be restricted by the principle of equal treatment of shareholders and the general
 rule that new shares may only be issued based on a shareholders resolution; this rule generally bars
 a board of directors from issuing shares or options to all shareholders other than a hostile bidder.
 Shareholders may, however, implement certain anti-takeover measures through a shareholders resolution.

Mandatory Bid Rules

Since
 our common shares are not listed on any Swiss exchange, the mandatory bid rules specified in the Swiss
 Stock Exchange Act will not apply to us.

Notification and Disclosure of Substantial Share
 Interests

The
 disclosure obligations generally applicable to shareholders of Swiss corporations under the Swiss Stock
 Exchange Act do not apply to us, since our common shares are not listed on a Swiss exchange. Since our
 common shares are listed on the New York Stock Exchange, the provisions of the United States Securities
 Exchange Act of 1934, as amended, requiring disclosure of certain beneficial interests will apply to
 our common shares.

Transfer and Paying Agents

Our
 transfer agent and paying agent for dividends and all other similar payments on our common shares is
 The Bank of New York.

Auditors, Group Auditors and Special Auditors

In
 May 2003, the shareholders re-elected KPMG Klynveld Peat Marwick Goerdeler SA, Zurich, as Group and
 Parent Company Auditors for a one-year term of office. KPMG Klynveld Peat Marwick Goerdeler SA meets
 the requirements of the Swiss Federal Code of Obligations for auditing Swiss public companies. The shareholders
 re-elected Zensor Revisions AG, Zug, as special auditors for a one-year term of office. The auditors,
 group auditors and the special auditors are elected for a term ending at our next annual general shareholders
 meeting.

Shares Eligible For Future Sale

Our
 common shares held by Nestlé are deemed restricted securities as defined in Rule 144, and may not
 be sold other than through registration under the Securities Act or under an exemption from registration,
 such as the one provided by Rule 144.

The
 separation agreement contains provisions granting registration rights under the Securities Act to Nestlé
 with respect to sales of our common shares by Nestlé.

C.     MATERIAL
 CONTRACTS

Except
 as noted below with respect to certain agreements we have entered into with Nestlé, our major shareholder,
 we are not party to any material contracts other than those entered into in the ordinary course of business.

| | 1. | As of December 31, 2003, the Company had a $2.0 billion commercial paper facility. As of December 31, 2003, $1,005.1 million of commercial paper was outstanding under this facility at an average interest rate of 1.1% before fees. Nestlé guarantees the commercial paper issued under this facility and assists in its management, for which we pay Nestlé an annual fee based on the average outstanding commercial paper balances. Nestlés guarantee permits Alcon to obtain more favorable interest rates based upon Nestlés credit rating, than might otherwise be obtained. We believe that any fees paid by us to Nestlé for their guarantee of any indebtedness or for the management of the commercial paper program are comparable to the fees that would be paid in an arms length transaction. Total fees paid to Nestlé for the years ended December 31, 2003, 2002, and 2001 were $4.1million, $1.7 million and $0.1
million, respectively.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The Company had available commitments of $344.4 million under unsecured demand notes payable to various Nestlé affiliates; at December 31, 2003, $111.5 million was outstanding under these demand notes. The demand notes are committed for less than one year and accrue interest at rates consistent with local borrowing rates.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | On January 1, 2003, the Company entered into an agreement whereby Nestlé provides certain treasury and investment services for the Company for a fee that is comparable to fees that would be paid in an arms length transaction. The agreement may be terminated with sixty days written notice.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | D. | EXCHANGE CONTROLS
| | -- | -----------------

Other
 than in connection with government sanctions that may currently be imposed on Iraq, Yugoslavia, Liberia,
 Sierra Leone, UNITA (Angola), Myanmar, Zimbabwe and on persons or organizations with links to Osama
 bin Laden, the Al-Qaida group, the Taliban and other terrorist groups, there are currently no Swiss
 governmental laws, decrees, or regulations that restrict the export or import of capital, including,
 but not limited to, Swiss foreign exchange controls on the payment of dividends, interest or liquidation
 proceeds, if any, to non-resident holders of registered shares.

E.     TAXATION

The
 following is a summary of the material U.S. Federal income tax and Swiss tax considerations relevant
 to the ownership, acquisition and disposition of our common shares.

For
 purposes of this discussion, a U.S. Holder is any one of the following:

- an individual who is a citizen or resident of the United States;
- a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or of any political subdivision of the United States;
- an estate the income of which is subject to U.S. Federal income taxation regardless of its source;
- a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or
- a person otherwise subject to U.S. Federal income tax on its worldwide income.

If
 a partnership holds common shares, the tax treatment of a partner will generally depend upon the partners
 circumstances and upon the activities of the partnership. Partners of partnerships holding these common
 shares should consult their tax advisors as to the tax consequences of owning or disposing of common
 shares.

A Non-U.S.
 Holder is a holder that is not a U.S. Holder. This discussion does not address the U.S. Federal, local,
 state, foreign or other tax consequences to Non-U.S. Holders as a result of the ownership or disposal
 of common shares. NON-U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL,
 LOCAL, STATE, FOREIGN AND OTHER TAX CONSEQUENCES TO THEM AS A RESULT OF THE OWNERSHIP OR DISPOSAL OF
 COMMON SHARES.

This
 summary is not a complete description of all of the tax consequences of the ownership or disposition
 of common shares. It is based on the current tax laws of Switzerland and the United States, including
 the United States Internal Revenue Code of 1986, as amended, its legislative history, temporary, existing
 and proposed Treasury Regulations, U.S. Internal Revenue Service rulings and judicial opinions, all
 as in effect on the date of this report and all subject to change, possibly with retroactive effect.
 Your individual circumstances may affect the tax consequences arising from your ownership and disposal
 of common shares, and your particular facts or circumstances are not considered in the discussion below.

The
 summary is not intended to apply to holders of common shares in particular circumstances, such as:

- dealers in securities;
- traders in securities who elect to apply a mark-to-market method of tax accounting;
- financial institutions;
- regulated investment companies;
- tax-exempt organizations;
- insurance companies;
- persons holding common shares as part of a hedging, straddle, conversion or other integrated transaction;
- U.S. Holders who hold their common shares other than as capital assets;
- persons whose functional currency is not the U.S. dollar;
- certain U.S. expatriates;
- persons subject to the U.S. alternative minimum tax; and
- holders of common shares that will own directly or indirectly, or will be deemed to own, 10% or more of either the total voting power or the total value of our stock.

Furthermore,
 this summary does not describe all the tax considerations relevant to persons who acquired common shares
 pursuant to compensatory arrangements.

Swiss Tax Considerations

Swiss Withholding Tax on Dividends and Similar Distributions

Dividends
 paid and other similar cash or in-kind taxable distributions made by us to a holder of common shares
 (including dividends on liquidation proceeds and stock dividends) are subject to Swiss Federal withholding
 tax at a rate of 35%. The withholding tax will be withheld by us on the gross distributions and will
 be paid to the Swiss Federal Tax Administration.

---

Swiss Holders

A Swiss
 Holder who is an individual resident in Switzerland for tax purposes is generally entitled to a total
 refund or tax credit of the withholding tax incurred if that holder is the beneficial owner of such
 distributions at the time the distribution is due and duly reports the receipt thereof in the relevant
 tax return.

Legal
 entities incorporated in Switzerland or legal entities holding the common shares in the company as part
 of a Swiss business operation or Swiss permanent establishment are generally entitled to a total refund
 of the withholding tax incurred if they are the beneficial owner of such distribution at the time the
 distribution is due and duly report the distribution in their profit and loss statement.

U.S. Holders

A U.S.
 Holder who is an individual or a legal entity not resident in Switzerland for tax purposes may be entitled
 to a partial refund of the withholding tax incurred on a taxable distribution from us if the conditions
 of the bilateral tax treaty between the U.S. and Switzerland are met. A U.S. Holder who is a resident
 of the United States for purposes of the bilateral tax treaty between the U.S. and Switzerland is eligible
 for a reduced rate of withholding tax on dividends equal to 15% of the dividend, provided that such
 holder (i) qualifies for benefits under this treaty and (ii) holds, directly or indirectly, less than
 10% of our voting stock and (iii) does not conduct business through a permanent establishment or fixed
 base in Switzerland to which common shares are attributable. Such an eligible U.S. Holder may apply
 for a refund of the amount of the withholding tax in excess of the 15% treaty rate. The claim for refund
 must be filed on Swiss Tax Form 82 (82C for corporations; 82I for individuals; 82E for other entities),
 which may be obtained from any Swiss consulate general in the United States or from the Swiss Federal
 Tax Administration at the address below, together with an instruction form. Four copies of the form
 must be duly completed, signed before a notary public of the United States, and sent to the Swiss Federal
 Tax Administration, Eigerstrasse 65, CH 3003, Berne, Switzerland. The form must be accompanied by suitable
 evidence of deduction of Swiss tax withheld at source, such as certificates of deduction, signed bank
 vouchers or credit slips. The form may be filed on or after July 1 or January 1 following the date the
 dividend was payable, but no later than December 31 of the third year following the calendar year in
 which the dividend became payable.

Other Holders

Any
 other holder who is an individual or a legal entity not resident in Switzerland for tax purposes may
 be entitled to a total or partial refund of the withholding tax incurred on a taxable distribution from
 us if the country in which such holder resides for tax purposes has entered into a bilateral treaty
 for the avoidance of double taxation with Switzerland and the further conditions of such treaty are
 met. Other holders of common shares not resident in Switzerland should be aware that the procedures
 for claiming treaty benefits (and the time required for obtaining a refund) may differ from country
 to country. Other holders of common shares not resident in Switzerland should consult their own legal,
 financial or tax advisors regarding the receipt, ownership, purchase, sale or other disposition of shares
 and the procedures for claiming a refund of the withholding tax.

---

As
 of January 1, 2004, Switzerland had entered into bilateral treaties for the avoidance of double taxation
 with respect to income taxes with the following countries.

|                  |  |             | 
|----------------- |  | ----------- | 
|Albania           |  | Greece      | 
|Argentina (prov.) |  | Hungary     | 
|Australia         |  | Iceland     | 
|Austria           |  | India       | 
|Belarus           |  | Indonesia   | 
|Belgium           |  | Iran        | 
|Bulgaria          |  | Israel      | 
|Canada            |  | Italy       | 
|Croatia           |  | Ivory Coast | 
|Czech Republic    |  | Jamaica     | 
|Denmark           |  | Japan       | 
|Ecuador           |  | Kazakhstan  | 
|Egypt             |  | Kuwait      | 
|Estonia           |  | Kyrgyzstan  | 
|Finland           |  | Latvia      | 
|France            |  | Lithuania   | 
|Germany           |  | Luxembourg  | 

In
 addition, negotiations have been completed for new double taxation treaties with Armenia, Azerbeidjan,
 Bangladesh, Georgia, Montenegro, North Korea, Serbia, and Zimbabwe. Negotiations for double taxation
 treaties with Brazil, Chile, Turkmenistan, Turkey, and Yugoslavia are in process. By exchange of notes,
 extension of the 1954 Treaty with the United Kingdom applies to Barbados, Belize, British Virgin Islands,
 Dominica, Gambia, Grenada, Melawi, Montserrat, St. Christopher Nevis and Anguilla, St. Lucia, St. Vincent,
 and Zambia. By extension of notes, the 1973 Treaty with Denmark applies to the Faroe Islands.

Income and Profit Tax on Dividends and Similar Distributions

Swiss Holders

A Swiss
 Holder of common shares who is an individual resident in Switzerland for tax purposes or a non-Swiss
 resident holding common shares as part of a Swiss business operation or a Swiss permanent establishment
 is required to report the receipt of taxable distributions received on the common shares in his or her
 relevant Swiss tax returns. A Swiss Holder that is a legal entity resident for tax purposes in Switzerland
 or a non-Swiss resident holding common shares as part of a Swiss establishment is required to include
 taxable distributions received on the common shares in its income subject to Swiss corporate income
 taxes. A Swiss corporation or co-operative or a non-Swiss corporation or co-operative holding common
 shares as part of a Swiss permanent establishment may, under certain circumstances, benefit from a tax
 relief with respect to dividends (Beteiligungsabzug).

U.S. Holders
 and Other Holders

U.S.       
 and Non-U.S. Holders of common shares who are neither residents of Switzerland for tax purposes nor
 hold common shares as part of a Swiss business operation or a Swiss permanent establishment are not
 subject to Swiss income taxes in respect of dividends and similar distributions received from us.

Capital Gains Realized on Common Shares

Swiss Holders

A Swiss
 Holder who is an individual resident in Switzerland for tax purposes holding common shares as part of
 his or her private property generally is exempt from Swiss federal, cantonal and communal taxes with
 respect to capital gains realized upon the sale or other disposal of the shares, unless such individual
 is qualified as a security trading professional for income tax purposes. Gains realized upon a repurchase
 of the common shares by us for the purpose of a capital reduction are characterized as taxable distributions.
 The same is true for gains realized upon a repurchase of the common shares if we were not to dispose
 of the repurchased shares within six years after the repurchase or such shares were repurchased in view
 of a capital reduction. Taxable income would be the difference between the repurchase price and the
 nominal value of the common shares.

A Swiss
 Holder that holds the shares as business assets or a non-Swiss resident holding shares as part of a
 Swiss business operation or Swiss permanent establishment is required to include capital gains realized
 upon the disposal of common shares in its income subject to Swiss income tax. A Swiss Holder that is
 a legal entity resident in Switzerland for tax purposes or a non-Swiss resident legal entity holding
 common shares as part of a Swiss permanent establishment is required to include capital gains realized
 upon the disposal of common shares in its income subject to Swiss corporate income tax.

In
 both cases, capital gains would be the surplus (if any) of sales proceeds over book value.

U.S. Holders
 and Other Holders

U.S. and Non-U.S. Holders
 of common shares that are not resident in Switzerland for tax purposes and do not hold common shares
 as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss income
 taxes on gains realized upon the disposal of common shares.

Net Worth and Capital Taxes

Swiss Holders

A Swiss
 Holder of common shares who is an individual resident in Switzerland for tax purposes or is a non-Swiss
 resident holding common shares as part of a Swiss business operation or Swiss permanent establishment
 is required to include his or her shares in his or her wealth that is subject to cantonal and communal
 net worth tax. A Swiss Holder that is a legal entity resident in Switzerland for tax purposes or a non-Swiss
 resident legal entity holding common shares as part of a Swiss permanent establishment is required to
 include its common shares in its assets. The legal entity equity is then subject to cantonal and communal
 capital tax.

U.S. Holders
 and Other Holders

U.S. and Non-U.S. Holders
 of common shares that are not resident in Switzerland for tax purposes and do not hold common shares
 as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss cantonal
 and communal net worth and capital taxes.

Stamp Taxes upon Transfer of Securities

The
 transfer of common shares by any holder may be subject to a Swiss securities transfer tax of 0.15% calculated
 on the transaction value if it occurs through or with a Swiss bank or other securities dealer as defined
 in the Swiss Federal Stamp Tax Act. The stamp duty is paid by the securities dealer and may be charged
 to the parties in a taxable transaction who are not securities dealers or exempt entities. Transactions
 in common shares effected by or through non-Swiss financial institutions are generally not subject to
 Swiss securities transfer tax, but may be subject to other local stamp taxes, stock exchange levies
 or other duties.

U.S.   Federal Income Tax Considerations
 for U.S. Holders

Taxation of Dividends

The
 gross amount of a distribution made by us, including any amounts of Swiss tax withheld, will be taxable
 to a U.S. Holder as dividend income to the extent paid out of our current or accumulated earnings and
 profits, as determined for U.S. Federal income tax purposes. Under recent U.S. Federal income tax legislation,
 the Company is a qualified foreign corporation and thus generally dividend income received by an individual
 tax payer (assuming certain holding period requirements are met) is taxable to a U.S. Holder at the
 rate imposed on net capital gains, which currently cannot exceed 15 percent. Dividends received on common
 shares will not be eligible for the dividends received deduction generally allowed to corporations.

Distributions
 in excess of our current and accumulated earnings and profits will constitute a nontaxable return of
 capital to a U.S. Holder to the extent of the U.S. Holders tax basis in its common shares. To the extent
 that such distributions are in excess of the U.S. Holders basis in its common shares, the distribution
 will constitute gain from the deemed sale or exchange of his or her shares. See - Tax on Sale or Exchange
 of Common Shares below.

The
 amount of a distribution will be the U.S. dollar value of the Swiss franc payment, determined at the
 spot Swiss franc/U.S. dollar rate on the date the dividend is includible in a U.S. Holders income,
 regardless of whether the payment in fact is converted into U.S. dollars. Generally, any gain or loss
 resulting from currency fluctuations during the period from the date a U.S. Holder includes the dividend
 in income to the date such U.S. Holder (or a third party acting for such U.S. Holder) converts the payment
 into U.S. dollars will be treated as ordinary income or loss. Any such income or loss generally will
 be income or loss from sources within the United States for U.S. foreign tax credit limitation purposes.

A U.S.
 Holder will be entitled to claim a foreign tax credit with respect to distributions received from us
 only for foreign taxes (such as Swiss withholding taxes) imposed on dividends paid to such U.S. Holder
 and not for taxes imposed on us or on any entity in which we have made an investment. Distributions
 with respect to the common shares that are taxable as dividends generally will be treated as foreign
 source passive income (or for U.S. Holders that are financial services entities as defined in the
 Treasury Regulations, foreign source financial services income) for U.S. foreign tax credit purposes.
 For the purpose of determining the foreign tax credit limitation, the amount of such dividend distributions
 is reduced under a special rule that generally ensures that the amount of the foreign taxes imposed
 on the dividend that can be currently credited against the U.S. Holders U.S. Federal income tax liability
 will not exceed the U.S. Federal income tax on the distribution.

Tax on Sale or Exchange of Common Shares

For
 U.S. Federal income tax purposes, a U.S. Holder generally will recognize gain or loss on a sale, exchange
 or other disposition of common shares, unless a specific nonrecognition provision applies. That gain
 or loss will be measured by the difference between the U.S. dollar value of the amount of cash, and
 the fair market value of any other property, received and the U.S. Holders tax basis in the common
 shares. A U.S. Holders tax basis in the common shares will generally equal the amount paid by the U.S.
 Holder for the common shares. Gain or loss arising from a sale or exchange of common shares will be
 capital gain or loss and will be long term if the holding period of the U.S. Holder for the shares exceeds
 one year. In general, gain from a sale or exchange of shares by a U.S. Holder will be treated as United
 States source income for U.S. foreign tax credit limitation purposes.

Controlled Foreign Corporation; Foreign Personal
 Holding Company

We
 do not expect to be deemed a controlled foreign corporation or a foreign personal holding company
 because we expect more than 50% of the voting power and value of our shares to be held by non-U.S. persons.
 If more than 50% of the voting power or value of our shares were owned (directly or indirectly or by
 attribution) by U.S. Holders who hold 10% or more of the voting power of our outstanding shares, then
 we would become a controlled foreign corporation and the U.S. Holders who hold 10% or more of our voting
 power would be required to include in their taxable income as a constructive dividend an amount equal
 to their share of certain of our undistributed income. If more than 50% of the voting power or value
 of our shares were owned (directly or indirectly or by attribution) by five or fewer individuals who
 are citizens or residents of the U.S. and if at least 60% of our income were to consist of certain interest,
 dividend or other enumerated types of income, we would become a foreign personal holding corporation
 and all U.S. Holders (regardless of their ownership percentage) would be required to include in their
 taxable income as a constructive dividend an amount equal to their share of certain of our undistributed
 income.

Passive Foreign Investment Company

We
 do not expect to be a passive foreign investment company because less than 75% of our gross income will
 consist of certain passive income and less than 50% of the average value of our assets will consist
 of assets that produce, or are held for the production of, such passive income. For this purpose, passive
 income generally includes dividends, interest, royalties, rents, annuities and the excess of gains over
 losses from the disposition of assets that produce passive income. If we were to become a passive foreign
 investment company, which determination will be made on an annual basis, the passive foreign investment
 company rules could produce significant adverse consequences for a U.S. Holder (regardless of the ownership
 percentage of our shares held by such holder).

Backup Withholding and Information Reporting

Under
 certain circumstances, a U.S. Holder who is an individual may be subject to information reporting requirements
 and backup withholding, currently at a 28% rate, on dividends received on common shares. This withholding
 generally applies only if that individual holder:

- fails to furnish his or her taxpayer identification number to the U.S. financial institution that is in charge of the administration of that holder's common shares or any other person responsible for the payment of dividends on the common shares;
- furnishes an incorrect taxpayer identification number;
- is notified by the U.S. Internal Revenue Service that he or she has failed to properly report payments of interest or dividends and the U.S. Internal Revenue Service has notified us that the individual holder is subject to backup withholding; or
- fails, under specified circumstances, to comply with applicable certification requirements.

Any
 amount withheld from a payment to a U.S. Holder under the backup withholding rules will be allowable
 as a credit against such U.S. Holders U.S. Federal income tax liability, provided that the required
 information is furnished to the U.S. Internal Revenue Service.

U.S.  Holders should
 consult their own tax advisor as to the application of the U.S. Federal information reporting and backup
 withholding requirements to them and their qualification, if any, for an exemption under these rules.

This
 discussion, which does not address any aspects of U.S. taxation other than Federal income taxation or
 any state or local law relevant to U.S. Holders of common shares, is of a general nature only and is
 not intended to be, and should not be construed to be, legal or tax advice to any prospective investor
 and no representation with respect to the tax consequences to any particular investor is made.DUE
 TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
 WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF COMMON SHARES, INCLUDING
 THE EFFECTS OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES.

| | F. | DIVIDENDS AND PAYING AGENTS


Not Applicable.
| | -- | ---------------------------------------------

| | G. | STATEMENT OF EXPERTS


Not Applicable.
| | -- | --------------------------------------

| | H. | DOCUMENTS ON DISPLAY
| | -- | --------------------

The
 descriptions of each contract, agreement or other document filed as an exhibit to this report on Form
 20-F are summaries only and do not purport to be complete. Each such description is qualified in its
 entirety by reference to such exhibit for a more complete description of the matter involved.

We
 are subject to the informational requirements of the Securities Exchange Act and in accordance therewith
 will file reports and other information with the Securities and Exchange Commission. Such reports and
 other information can be inspected and copied at the public reference facilities maintained by the Securities
 and Exchange Commission at its principal offices at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
 20549. Copies of such information may be obtained from the Public Reference Section of the Securities
 and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
 also maintains a World Wide Web site (http://www.sec.gov) that contains reports, proxy and information
 statements and other information regarding registrants that file electronically with the Securities
 and Exchange Commission.

As
 a foreign private issuer, we are not subject to the proxy rules under Section 14 of the Exchange Act
 and our officers, directors and principal shareholders are not subject to the insider short-swing profit
 disclosure and recovery provisions under Section 16 of the Exchange Act.

As
 a foreign private issuer, we are not required to publish financial statements as frequently or as promptly
 as United States companies; however, we intend to furnish holders of our common shares with reports
 annually containing consolidated financial statements audited by independent accountants. We also intend
 to file quarterly financial statements under cover of Form 6-K.

| | I. | SUBSIDIARY INFORMATION


Not Applicable.
| | -- | ----------------------------------------

---

Interest Rate Risks

Because
 we have previously, and expect to continue, to finance our operations, in part, through loans, we are
 exposed to interest rate risks. At December 31, 2003, the majority of our loans were short term, floating-rate
 loans that will become more expensive when interest rates rise and less expensive when they fall. We
 have partly mitigated this risk by investing our cash, cash equivalents and short term investments in
 floating rate investments. Alcon evaluates the use of interest rate swaps and periodically uses such
 agreements to manage interest rate risk on selected debt instruments.

Credit Risks

In
 the normal course of our business, we incur credit risk because we extend trade credit to our customers.
 We believe that these credit risks are well diversified, and our internal staff actively manages these
 risks. Our principal concentrations of trade credit are generally with large and financially sound corporations,
 such as large retailers and grocery chains, drug wholesalers and governmental agencies. It is not untypical
 that six larger customers in the United States may total approximately 15% of the outstanding balance
 of accounts receivable; however no single customer accounts for more than 10% of annual sales.

As
 part of our sales of surgical equipment, we frequently finance the purchase of our equipment and enter
 into leases and other financial transactions with our customers. In general, these loans and other transactions
 range in duration from one to five years and in principal amount from $50,000 to $700,000. We conduct
 credit analysis on the customers we finance and secure the loans and leases with the purchased surgical
 equipment. Over the last 16 years, we have offered financing programs for cataract equipment with no
 significant losses. Our customer financing program for laser refractive surgical equipment has a shorter
 history, is of a larger size, and has relatively less credit strength and asset value for security.
 In countries that have a history of high inflation, such as Turkey, Brazil and Argentina, the credit
 risks to which we are exposed can be larger and less predictable.

We
 conduct some of our business through export operations and are exposed to country credit risk. This
 risk is mitigated by the use, where applicable, of letters of credit confirmed by large commercial banks
 in Switzerland and the United States.

Quantitative Disclosure Concerning Market Risk

Currency Risk

Because
 a significant portion of our revenues and earnings are denominated in foreign currencies, we are exposed
 to market risk from changes in currency exchange rates that could impact our results of operations and
 financial position. We manage our exposure to these currency risks through our regular operating and
 financing activities and, when appropriate, through the use of derivative financial instruments. We
 use derivative financial instruments as risk management tools and not for speculative purposes.

We
 use foreign currency forward contracts to manage the volatility of non-functional currency cash flows
 resulting from changes in exchange rates. Currency exchange contracts are used primarily to hedge inter-company
 purchases and sales. The use of these derivative financial instruments allows us to reduce our overall
 exposure to exchange rate fluctuations, since the gains and losses on these contracts substantially
 offset losses and gains on the assets, liabilities and transactions being hedged.

The
 fair value of currency exchange contracts is subject to changes in currency exchange rates. For the
 purpose of assessing specific risks, we use a sensitivity analysis to determine the effects that market
 risk exposures may have on the fair value of our financial instruments and results of operations. The
 financial instruments included in our sensitivity analysis are currency forward contracts. Such contracts
 generally have a duration of one to twelve months and are used primarily to hedge transactions that
 are firmly committed on the date the forward contract is entered into or are anticipated to occur within
 twelve months of that date. The sensitivity analysis excludes the values of foreign currency denominated
 receivables and payables because of their short maturities and assumes that the change in one currencys
 rate relative to the U.S. dollar would not have an effect on other currencies rates relative to the
 U.S. dollar. All other factors were held constant. To perform the sensitivity analysis, we assess the
 risk of loss in fair values from the effect of a hypothetical 10% change in currency exchange spot rates
 and assuming no change in interest rates. For contracts outstanding as of December 31, 2003, a 10% appreciation
 in currency exchange rates against the U.S. dollar from the prevailing market rates would have increased
 our pre-tax earnings by approximately $6.7 million. Conversely, a 10% depreciation in these exchange
 rates from the prevailing market rates would have decreased our pre-tax earnings by approximately $6.7
 million. Consistent with the nature of the economic hedge of such currency exchange contracts, such
 gains or losses would be offset by corresponding decreases or increases, respectively, of the underlying
 instrument or transaction being hedged.

The
 model used to perform the sensitivity analysis assumes a parallel shift in all currency exchange spot
 rates. Exchange rates, however, rarely move in the same direction. The assumption that all exchange
 rates change in a parallel manner does not necessarily represent the actual changes in fair value we
 would incur under normal market conditions because all variables other than the specific market risk
 are held constant.

While
 we hedge some non-U.S. dollar currency transactions, the decline in value of non-U.S. dollar currencies
 may, if not reversed, adversely affect our ability to contract for product sales in U.S. dollars because
 our products may become more expensive to purchase in U.S. dollars for local customers doing business
 in the countries of the affected currencies. At December 31, 2003, the financial instruments are as
 follows:

| | $87 million notional amount of foreign currency forward-exchange contracts designated as fair value hedges to offset the potential earnings effects from short term net assets denominated in Swiss francs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | $20 million notional amount of foreign currency swaps designated as fair value hedges in Brazil where we borrow U.S. dollars and swap into Brazilian reis.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Rate Risks

We
 are exposed to market risk from changes in interest rates that could impact our results of operations
 and financial position. As of December 31, 2003, approximately 5.3% of our debt was long term fixed
 rate loans, including the impact of interest rate swaps. We also had short term floating rate investments
 and deposits equal to approximately 88.4% of our short term floating rate debt at December 31, 2003.
 The excess amount of our short term debt over our short term investments and deposits is exposed to
 fluctuations in short term interest rates. A 1% increase in short term interest rates would have decreased
 our pre-tax earnings by $1.5 million and a 1% decrease in short term interest rates would have increased
 our pre-tax earnings by $1.5 million. Alcon evaluates the use of interest rate swaps and periodically
 uses such agreements to manage its interest risk on selected debt instruments.

In
 January 2001, we entered into a 10-year pay floating, receive fixed interest rate swap on a notional
 amount of Japanese yen 5 billion. This swap effectively converted our Japanese yen 5 billion fixed interest
 rate obligation to a floating rate instrument. In July 2002, we entered into two separate two-year pay
 fixed, receive floating interest rate swaps with a total notional amount of $50 million. The swaps effectively
 converted a portion of our floating rate commercial paper borrowings to fixed using a 3-month LIBOR
 interest rate swap.

At
 December 31, 2003, the fair value of the interest rate swaps was $1.3 million. The fair values of the
 interest rate swaps are based on market data including the relevant interest rates at December 31, 2003.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.  MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable.



---



ITEM 15. CONTROLS AND PROCEDURES

| | (a) | Disclosure Controls and Procedures. As of the end of the period covered by this annual report (the Evaluation Date), the Company conducted an evaluation (under the supervision and with the participation of the Companys management, including its chief executive officer and its chief financial officer, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the Exchange Act) of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)). Based on this evaluation, the Companys chief executive officer and its chief financial officer concluded that as of the Evaluation Date, the Companys disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by the Company in reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Not Applicable.
| | --- | ---------------

| | (c) | Not Applicable.
| | --- | ---------------

| | (d) | Changes in Internal Control over Financial Reporting. There were no significant changes in the Companys internal control over financial reporting identified in connection with the evaluation performed above that occurred during the period covered by this annual report that could significantly affect the Companys disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 16.

A.     AUDIT COMMITTEE
 FINANCIAL EXPERT

Alcons
 board of directors has determined that Thomas G. Plaskett is an audit committee financial expert as
 defined in the instructions for Item 16A of Form 20-F. Mr. Plaskett is independent, as determined
 in accordance with the rules of the New York Stock Exchange.

B.     CODE OF ETHICS

Alcon
 has adopted a Code of Business Conduct and Ethics that applies to all employees including its Chief
 Executive Office, Chief Financial Officer and its principal accounting officer. The Company has posted
 this Code of Ethics to its Web site, www.AlconInc.com, where it is publicly available. In addition,
 Alcon will provide a printed copy of its Code of Business Conduct and Ethics to shareholders upon request.

C.     PRINCIPAL
 ACCOUNTANT FEES AND SERVICES

The aggregate worldwide
 fees billed by KPMG LLP for professional services to the Company were $3.30 million in 2003 and $3.11
 million in 2002, as noted below.

|                       | 2003 | 2002  
|---------------------- | ---- | ------
|
|Audit Fees (1)         |      | $2,485
|Audit-Related Fees (2) |      | 231   
|Tax Fees (3)           |      | 580   
|All Other Fees (4)     |      | 8     
|                       |      |       
|Total Fees             |      | $3,304
|                       |      |       

| | (1) | Audit Fees represent fees for professional services provided for the audit of the Companys annual financial statements, review of the Companys quarterly financial statements, and statutory audits for the Companys worldwide subsidiaries/affiliates.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Audit related fees consisted principally of fees for audits of financial statements of certain employee benefit plans and assistance in documenting internal controls.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Tax Fees represent fees for professional services related to tax compliance and tax planning / advisory consultation.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (4) | All Other Fees represent professional services provided for services not directly supporting financial statement audits.
| | --- | ------------------------------------------------------------------------------------------------------------------------

The
 above professional services are covered within the scope of audit and permitted non-audit services as
 defined by SEC regulations. All fees disclosed for the fiscal year ended December 31, 2003 have been
 approved by the Audit Committee subject to the policy and procedures described below.

Audit Committee Pre-Approval Policy and Procedures

Policy

The
 Audit Committee will pre-approve the following the professional services provided to Alcon, Inc. and
 its subsidiaries as rendered by the primary Alcon Group external auditors and additional external auditors
 specific to the Company subsidiary (external auditors):

| | (1) | All auditing services (which may entail providing comfort letters in connection with securities underwritings or statutory audits); and,
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------

| | (2) | All non-audit services, including tax services.
| | --- | -----------------------------------------------

Procedures

| | 1. | On an annual basis, the Audit Committee will review and approve the specific financial / statutory audits for the fiscal year ending to be rendered by the external auditors prior to the engagement of the service.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Specifically related to permitted tax services, the Audit Committee annually pre-approves such particular services for all company subsidiaries rendered by the external auditors. All other tax services to be performed by the external auditors as-needed or incremental to the annual pre-approved services list will be approved by the Audit Committee prior to engagement of the service.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Any other non-audit service by the external auditors not prohibited by Company policy or SEC regulation will be pre-approved on a case by case basis by the Audit Committee.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by this policy / procedure. The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service shall be presented to the full Audit Committee at its next scheduled meeting.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
| | -- | ---------------------------------------------------------

---

E.    
 PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The
 following table provides information with respect to purchases made by or on behalf of Alcon or any
 affiliated purchaser, of its common shares that are registered pursuant to section 12 of the Exchange
 Act.

|ISSUER PURCHASES OF EQUITY SECURITIES
|-------------------------------------
|
|January 1 to 31, 2003                
|February 1 to 28, 2003               
|March 1 to 31, 2003                  
|April 1 to 30, 2003                  
|May 1 to 31, 2003                    
|June 1 to 30, 2003                   
|July 1 to 31, 2003                   
|August 1 to 31, 2003                 
|September 1 to 30, 2003              
|October 1 to 31, 2003                
|November 1 to 30, 2003               
|December 1 to 31, 2003(e)            
|                                     
|Total                                
|                                     

| | (a) | Based on settlements occurring within the month.
| | --- | ------------------------------------------------

| | (b) | No shares were purchased other than through a publicly announced plan or program.
| | --- | ---------------------------------------------------------------------------------

| | (c) | In addition to the purchases above, during 2003 Alcon also acquired 6,590 treasury shares from forfeitures of restricted shares by employees who terminated employment with Alcon before vesting in such shares.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | On November 6, 2002, Alcon filed a report on Form 6-K that disclosed that Alcons board of directors authorized the purchase of up to 2,000,000 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in the open market.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | At December 31, 2003, Alcon had committed in the open market to purchase 91,000 common shares at an average price per share of $60.06 that did not settle until 2004. These transactions were not included in any of the purchases shown above.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On
 February 11, 2004, Alcons board of directors approved the purchase of up to an additional 4,000,000
 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy
 the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in
 open market transactions.

PART III

ITEM 17.  FINANCIAL STATEMENTS

Not Applicable.



---



ITEM 18.  FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

|                                                    | PageReference:
|--------------------------------------------------- | --------------
|ALCON, INC. AND SUBSIDIARIES:                       |               
|Report of Independent Auditors                      |               
|Consolidated Balance Sheets - December 31, 2003 and |               
|2002                                                |               
|Consolidated Statements of Earnings - Years ended   |               
|December 31, 2003, 2002 and 2001                    |               
|Consolidated Statements of Shareholders' Equity and |               
|Comprehensive Income - Years ended December 31,     |               
|2003, 2002 and 2001                                 |               
|Consolidated Statements of Cash Flows - Years ended |               
|December 31, 2003, 2002 and 2001                    |               
|Notes to Consolidated Financial Statements          |               

---

EXHIBIT INDEX

|Exhibit No. | Description
|----------- | -----------
|1.1         |            
|1.2         |            
|2.1         |            
|            |            
|            |            
|4.1         |            
|            |            
|4.2         |            
|            |            
|            |            
|            |            
|4.3         |            
|            |            
|            |            
|4.4         |            
|4.5         |            
|            |            
|4.6         |            
|            |            
|            |            
|4.7         |            
|            |            
|            |            
|            |            
|4.8         |            
|            |            
|8.1         |            
|12.1        |            
|            |            
|            |            
|12.2        |            
|            |            
|            |            
|13.1        |            
|            |            
|            |            
|            |            
|14.1        |            

---

SIGNATURES

The registrant hereby certifies that it meets all the
 requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign
 this annual report on its behalf.

(Signature)

Date:March 12, 2004



# INDEX TO FINANCIAL STATEMENTS

|                                                    | PageReference:
|--------------------------------------------------- | --------------
|ALCON, INC. AND SUBSIDIARIES:                       |               
|Report of Independent Auditors                      |               
|Consolidated Balance Sheets - December 31, 2003 and |               
|2002                                                |               
|Consolidated Statements of Earnings - Years ended   |               
|December 31, 2003, 2002 and 2001                    |               
|Consolidated Statements of Shareholders' Equity and |               
|Comprehensive Income - Years ended December 31,     |               
|2003, 2002 and 2001                                 |               
|Consolidated Statements of Cash Flows - Years ended |               
|December 31, 2003, 2002 and 2001                    |               
|Notes to Consolidated Financial Statements          |               

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Alcon,
 Inc.

We
 have audited the accompanying consolidated balance sheets of Alcon, Inc. and subsidiaries as of December
 31, 2003 and 2002, and the related consolidated statements of earnings, shareholders equity and comprehensive
 income, and cash flows for each of the years in the three-year period ended December 31, 2003. These
 consolidated financial statements are the responsibility of the Companys management. Our responsibility
 is to express an opinion on these consolidated financial statements based on our audits.

We
 conducted our audits in accordance with auditing standards generally accepted in the United States of
 America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
 whether the financial statements are free of material misstatement. An audit includes examining, on
 a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
 also includes assessing the accounting principles used and significant estimates made by management,
 as well as evaluating the overall financial statement presentation. We believe that our audits provide
 a reasonable basis for our opinion.

In
 our opinion, the consolidated financial statements referred to above present fairly, in all material
 respects, the financial position of Alcon, Inc. and subsidiaries as of December 31, 2003 and 2002, and
 the results of their operations and their cash flows for each of the years in the three-year period
 ended December 31, 2003, in conformity with accounting principles generally accepted in the United States
 of America.

As
 discussed in note 4 to the consolidated financial statements, effective January 1, 2002, the Company
 adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
 Assets.

/s/ KPMG LLP

Fort Worth, TexasJanuary 30, 2004,except for note
 20 which isas
 of February 11, 2004

---

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED
 BALANCE SHEETS

|                                                               | December 31,
|-------------------------------------------------------------- | ------------
|
|
|Assets                                                         |             
|                                                               |             
|Current assets:                                                |             
|                                                               |             
|Cash and cash equivalents                                      |             
|                                                               |             
|Investments                                                    |             
|                                                               |             
|Trade receivables, net                                         |             
|                                                               |             
|Inventories                                                    |             
|                                                               |             
|Deferred income tax assets                                     |             
|                                                               |             
|Other current assets                                           |             
|                                                               |             
|                                                               |             
|Total current assets                                           |             
|                                                               |             
|Property, plant and equipment, net                             |             
|                                                               |             
|Intangible assets, net                                         |             
|                                                               |             
|Goodwill                                                       |             
|                                                               |             
|Long term deferred income tax assets                           |             
|                                                               |             
|Other assets                                                   |             
|                                                               |             
|                                                               |             
|Total assets                                                   |             
|                                                               |             
|Liabilities and Shareholders' Equity                           |             
|                                                               |             
|Current liabilities:                                           |             
|                                                               |             
|Accounts payable                                               |             
|                                                               |             
|Short term borrowings                                          |             
|                                                               |             
|Current maturities of long term debt                           |             
|                                                               |             
|Other current liabilities                                      |             
|                                                               |             
|                                                               |             
|Total current liabilities                                      |             
|                                                               |             
|                                                               |             
|Long term debt, net of current maturities                      |             
|                                                               |             
|Long term deferred income tax liabilities                      |             
|                                                               |             
|Other long term liabilities                                    |             
|                                                               |             
|Contingencies (note 16)                                        |             
|                                                               |             
|Shareholders' equity:                                          |             
|                                                               |             
|Common shares, par value CHF 0.20 per share, 336,975,000       |             
|                                                               |             
|shares authorized, 309,310,273 shares issued and               |             
|                                                               |             
|308,519,051 shares outstanding at December 31, 2003;           |             
|                                                               |             
|336,975,000 shares authorized, 309,231,699 shares issued and   |             
|                                                               |             
|309,032,167 shares outstanding at December 31, 2002            |             
|                                                               |             
|Additional paid-in capital                                     |             
|                                                               |             
|Accumulated other comprehensive income (loss)                  |             
|                                                               |             
|Deferred compensation                                          |             
|                                                               |             
|Retained earnings                                              |             
|                                                               |             
|Treasury shares, at cost; 791,222 shares at December 31, 2003; |             
|                                                               |             
|and 199,532 shares at December 31, 2002                        |             
|                                                               |             
|                                                               |             
|Total shareholders' equity                                     |             
|                                                               |             
|                                                               |             
|Total liabilities and shareholders' equity                     |             
|                                                               |             

See
 accompanying notes to consolidated financial statements.

---

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED
 STATEMENTS OF EARNINGS

|                                       | Years ended December 31,
|-------------------------------------- | ------------------------
|
|
|Sales                                  |                         
|                                       |                         
|Cost of goods sold                     |                         
|                                       |                         
|                                       |                         
|Gross profit                           |                         
|                                       |                         
|Selling, general and administrative    |                         
|                                       |                         
|Research and development               |                         
|                                       |                         
|Gain on sale of plant                  |                         
|                                       |                         
|Amortization of intangibles            |                         
|                                       |                         
|                                       |                         
|                                       |                         
|Operating income                       |                         
|                                       |                         
|Other income (expense):                |                         
|                                       |                         
|Gain (loss) from foreign currency, net |                         
|                                       |                         
|Interest income                        |                         
|                                       |                         
|Interest expense                       |                         
|                                       |                         
|Other                                  |                         
|                                       |                         
|                                       |                         
|Earnings before income taxes           |                         
|                                       |                         
|Income taxes                           |                         
|                                       |                         
|                                       |                         
|                                       |                         
|Net earnings                           |                         
|                                       |                         
|                                       |                         
|Basic earnings per common share        |                         
|                                       |                         
|                                       |                         
|                                       |                         
|Diluted earnings per common share      |                         
|                                       |                         
|                                       |                         
|Basic weighted average common shares   |                         
|                                       |                         
|Diluted weighted average common shares |                         
|                                       |                         

See
 accompanying notes to consolidated financial statements.

---

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
 Years Ended December 31, 2003, 2002 and 2001

|                            | Common Shares |             |   |        |   |            |  
|--------------------------- | ------------- | ----------- | - | ------ | - | ---------- | -
|
|
|Balance, December 31, 2000  |               | 300,000,000 |   | $ 42.9 |   | $    592.0 |  
|Comprehensive income:       |              
|Net earnings                |               | --          |   | --     |   | --         |  
|Change in net unrealized    |              
|gains on                    |              
|investments                 |               | --          |   | --     |   | --         |  
|Impairment loss on          |              
|investment                  |               | --          |   | --     |   | --         |  
|Foreign currency            |              
|translation                 |              
|adjustments                 |               | --          |   | --     |   | --         |  
|                            |               |             |   |        |   |            |  
|Total comprehensive income  |               |             |   |        |   |            |  
|                            |               |             |   |        |   |            |  
|Dividends on common shares  |               | --          |   | --     |   | --         |  
|                            |               |             |   |        |   |            |  
|Balance, December 31, 2001  |               | 300,000,000 |   | 42.9   |   | 592.0      |  
|Comprehensive income:       |              
|Net earnings                |               | --          |   | --     |   | --         |  
|Change in net unrealized    |              
|losses on                   |              
|investments                 |               | --          |   | --     |   | --         |  
|Change in net unrealized    |              
|losses on                   |              
|cash flow hedges            |               | --          |   | --     |   | --         |  
|Foreign currency            |              
|translation                 |              
|adjustments                 |               | --          |   | --     |   | --         |  
|                            |               |             |   |        |   |            |  
|Total comprehensive income  |               |             |   |        |   |            |  
|                            |               |             |   |        |   |            |  
|Conversion of common shares |              
|to preferred shares         |               | (69,750,00) |   | (10.0  | ) | (2,178.0   | )
|Initial public offering     |               | 76,725,000  |   | 9.3    |   | 2,398.8    |  
|Options exercised           |               | 91,000      |   | --     |   | 3.3        |  
|Treasury shares acquired .  |               | (199,532    | ) | --     |   | --         |  
|Conversion of employee plan |               | 2,165,699   |   | 0.3    |   | 70.3       |  
|Compensation expense        |               | --          |   | --     |   | --         |  
|Dividends and accretion of  |              
|discount                    |              
|on preferred shares         |               | --          |   | --     |   | --         |  
|of subsidiary               |              
|Dividends on common shares  |               | --          |   | --     |   | (377.9     | )
|                            |               |             |   |        |   |            |  
|Balance, December 31, 2002  |               | 309,032,167 |   | 42.5   |   | 508.5      |  
|Comprehensive income:       |              
|Net earnings                |               | --          |   | --     |   | --         |  
|Change in net unrealized    |              
|losses on                   |              
|investments                 |               | --          |   | --     |   | --         |  
|Change in net unrealized    |              
|losses on                   |              
|cash flow hedges            |               | --          |   | --     |   | --         |  
|Minimum pension liability   |              
|adjustment                  |               | --          |   | --     |   | --         |  
|Foreign currency            |              
|translation                 |              
|adjustments                 |               | --          |   | --     |   | --         |  
|                            |               |             |   |        |   |            |  
|Total comprehensive income  |               |             |   |        |   |            |  
|                            |               |             |   |        |   |            |  
|Options exercised           |               | 78,574      |   | --     |   | 3.5        |  
|Treasury shares acquired .  |               | (591,690    | ) | --     |   | --         |  
|Compensation expense        |               | --          |   | --     |   | --         |  
|Dividends on common shares  |               | --          |   | --     |   | --         |  
|                            |               |             |   |        |   |            |  
|Balance, December 31, 2003  |               | 308,519,051 |   | $ 42.5 |   | $    512.0 |  
|                            |               |             |   |        |   |            |  

---

ALCON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                       | Years ended December 31,
|------------------------------------------------------ | ------------------------
|
|
|Cash provided by (used in) operating activities:       |                         
|Net earnings                                           |                         
|Adjustments to reconcile net earnings to cash provided |                         
|from operating activities:                             |                         
|Depreciation                                           |                         
|Amortization of intangibles                            |                         
|Amortization of deferred compensation                  |                         
|Tax benefit from exercise of stock options             |                         
|Deferred income taxes                                  |                         
|(Gain) loss on sale of assets                          |                         
|Changes in operating assets and liabilities:           |                         
|Trade receivables                                      |                         
|Inventories                                            |                         
|Other assets                                           |                         
|Accounts payable and other current liabilities         |                         
|Other long term liabilities                            |                         
|                                                       |                         
|                                                       |                         
|Net cash from operating activities                     |                         
|                                                       |                         
|Cash provided by (used in) investing activities:       |                         
|Proceeds from sale of assets                           |                         
|Purchases of property, plant and equipment             |                         
|Purchase of intangible assets                          |                         
|Net purchases of investments                           |                         
|                                                       |                         
|Net cash from investing activities                     |                         
|                                                       |                         
|Cash provided by (used in) financing activities:       |                         
|Net proceeds from (repayment of) short term debt       |                         
|Proceeds from issuance of long term debt               |                         
|Repayment of long term debt                            |                         
|Dividends on common shares                             |                         
|Proceeds from public sale of common shares             |                         
|Redemption of preferred shares                         |                         
|Proceeds from sale of common shares to employees       |                         
|Acquisition of treasury shares                         |                         
|Proceeds from sale of preferred shares of subsidiary   |                         
|Redemption of preferred shares of subsidiary           |                         
|Dividends on preferred shares of subsidiary            |                         
|Other                                                  |                         
|                                                       |                         
|                                                       |                         
|Net cash from financing activities                     |                         
|                                                       |                         
|                                                       |                         
|Effect of exchange rates on cash and cash equivalents  |                         
|                                                       |                         
|Net increase (decrease) in cash and cash equivalents   |                         
|Cash and cash equivalents, beginning of year           |                         
|                                                       |                         
|                                                       |                         
|Cash and cash equivalents, end of year                 |                         
|                                                       |                         

See
 accompanying notes to consolidated financial statements.

---

ALCON, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in millions,
 except share data)

(1) Initial Public Offering

At
 December 31, 2001, Alcon, Inc., a Swiss corporation (Alcon), was a wholly owned subsidiary of Nestlé
 S.A. (Nestlé). On September 20, 2001, the Board of Directors of Nestlé approved the exploration of
 an initial public offering (the IPO) of a minority stake in Alcon.

Alcon
 declared on February 25, 2002, and made, on March 20, 2002, a payment to Nestlé of $1,243.4 (CHF 2,100)
 for dividends and return of capital. This payment was financed from existing cash and cash equivalents
 and additional short term borrowings. The entire payment was considered a dividend under Swiss law.

On
 February 25, 2002 Nestlé converted 69,750,000 Alcon common shares that it owned into 69,750,000 Alcon
 non-voting preferred shares. On March 21, 2002, holders of Alcon common shares voted to redeem the preferred
 shares for an aggregate redemption price of CHF 3,634. The proceeds, net of related costs including
 taxes, from the IPO were used to redeem the preferred shares for $2,188.0 on May 29, 2002. No dividends
 were paid on the preferred shares.

On
 March 20, 2002, Alcons IPO was priced at $33.00 per share for 69,750,000 common shares. The net proceeds
 to Alcon from the IPO were $2,189.0, after offering expenses and taxes. A portion of the IPO proceeds
 was utilized to repay $712.1 in short term debt until May 29, 2002, when the preferred shares were redeemed.

Net
 proceeds of $219.1, after offering expenses and taxes, from the subsequent exercise of the underwriters
 over-allotment option to purchase 6,975,000 common shares were used to reduce short term indebtedness.

In
 connection with the IPO, Alcon changed certain provisions of its deferred compensation plan. These changes
 resulted in a one time $22.6 charge to operating income ($14.2 net of tax) upon the completion of the
 IPO in March 2002.

(2) Summary of Significant Accounting Policies and
 Practices

(a) Description of Business

The
 principal business of Alcon and all of its subsidiaries (collectively, the Company) is the development,
 manufacture and marketing of pharmaceuticals, surgical equipment and devices, contact lens care and
 other vision care products that treat eye diseases and disorders and promote the general health and
 function of the human eye. Due to the nature of the Companys worldwide operations, it is not subject
 to significant concentration risks.

(b) Principles of Consolidation

The
 consolidated financial statements include the accounts of the Company. All significant balances and
 transactions among the consolidated entities have been eliminated in consolidation. All consolidated
 entities are included on the basis of a calendar year.

(c) Management Estimates

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 accounting principles generally accepted in the United States of America (U.S. GAAP).
 Actual results could differ from those estimates.

---

(d) Foreign Currency

The
 reporting currency of the Company is the United States dollar. The financial position and results of
 operations of the Companys foreign subsidiaries are generally determined using the local currency as
 the functional currency. Assets and liabilities of these subsidiaries have been translated at the rate
 of exchange at the end of each period. Revenues and expenses have been translated at the weighted average
 rate of exchange in effect during the period. Gains and losses resulting from translation adjustments
 are included in accumulated other comprehensive income (loss) in shareholders equity. The impact of
 subsidiaries located in countries whose economies are considered highly inflationary is insignificant.
 Gains and losses resulting from foreign currency transactions are included in nonoperating earnings.
 Under Swiss corporate law, Alcon is required to declare any dividends on its common shares in Swiss
 francs.

(e) Cash and Cash Equivalents

Cash
 equivalents include demand deposits and all highly liquid investments with original maturities of three
 months or less.

(f) Inventories

Inventories
 are stated at the lower of cost or market. Cost is determined primarily using the first-in, first-out
 method.

(g) Investments

Investments
 consist of equity and fixed income securities classified as available-for-sale. Available-for-sale securities
 are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale
 securities are excluded from earnings and are reported as a separate component of accumulated other
 comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities
 are determined on a specific identification basis.

A decline
 in the market value of any available-for-sale investments that is deemed to be other than temporary
 results in a reduction in carrying amount to fair value. The impairment is charged to earnings and a
 new cost basis for the security is established. Dividend and interest income is recognized when earned.

(h) Financial Instruments

The
 Company uses various derivative financial instruments on a limited basis as part of a strategy to manage
 the Companys exposure to certain market risks associated with interest rate and foreign currency exchange
 rate fluctuations expected to occur within the next twelve months. The Company evaluates the use of
 interest rate swaps and periodically uses such agreements to manage its interest risk on selected debt
 instruments. The Company does not enter into financial instruments for trading or speculative purposes.

The
 Company periodically uses foreign currency forward contracts to reduce the effect of fluctuating foreign
 currencies on foreign currency denominated intercompany transactions. The forward contracts establish
 the exchange rates at which the Company purchases or sells the contracted amount of foreign currencies
 for specified local currencies at a future date. The Company uses forward contracts, which are short
 term in nature, and receives or pays the difference between the contracted forward rate and the exchange
 rate at the settlement date.

All
 of the Companys derivative financial instruments are recorded at fair value. For derivative instruments
 designated and qualifying as fair value hedges, the gain or loss on these hedges is recorded immediately
 in earnings to offset the changes in the fair value of the assets or liabilities being hedged. For derivative
 instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss
 on these hedges is reported as a component of accumulated other comprehensive income (loss) in shareholders
 equity, and is reclassified into earnings when the hedged transaction affects earnings.

---

(i) Property, Plant and Equipment

Property,
 plant and equipment are stated at historical cost. Additions, major renewals and improvements are capitalized
 while repairs and maintenance costs are expensed. Upon disposition, the book value of assets and related
 accumulated depreciation is relieved and the resulting gains or losses are reflected in earnings.

Depreciation
 on plant and equipment is calculated on the straight-line method over the estimated useful lives of
 the assets, which are as follows:

|                                        | 
|--------------------------------------- | 
|Land improvements                       | 
|Buildings and improvements              | 
|Machinery, other equipment and software | 

(j) Goodwill and Intangible Assets, Net

Effective
 January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill
 and Other Intangible Assets. Statement 142 requires that goodwill and intangible assets with indefinite
 useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company
 did not record an impairment loss as a result of the implementation of Statement 142. Statement 142
 also requires that intangible assets with estimable useful lives be amortized over their respective
 estimated useful lives to their residual values and reviewed for impairment.

Prior
 to 2002, goodwill, which represents the excess of purchase price over fair value of net assets acquired,
 was amortized on a straight-line basis over the expected periods to be benefited, which were 10 to 20
 years.

Intangible
 assets, net, consist of customer base, trademarks and patents, and licensed technology. The cost of
 these intangible assets is amortized straight line over the estimated useful lives of the respective
 assets, which are 5 to 20 years.

(k) Impairment

Long-lived
 assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes
 in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
 of assets to be held and used is measured by a comparison of the carrying amount of an asset to future
 net cash flows expected to be generated by the asset. If such assets are considered to be impaired,
 the impairment to be recognized is measured by the amount by which the carrying amount of the assets
 exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying
 amount or fair value less costs to sell.

(l) Pension and Other Postretirement Plans

The
 Company sponsors several defined contribution plans, defined benefit retirement plans and a postretirement
 health care plan.

The
 Company provides for the benefits payable to employees on retirement by charging current service costs
 to income systematically over the expected service lives of employees who participate in defined benefit
 plans. An actuarially computed amount is determined at the beginning of each year by using valuation
 methods that attribute the cost of the retirement benefits to periods of employee service. Such valuation
 methods incorporate assumptions concerning employees projected compensation and health care cost trends.
 Prior service costs for plan amendments are generally charged to income systematically over the remaining
 expected service lives of participating employees.

The
 cost recognized for defined contribution plans is based upon the contribution required for the period.

Under
 a Financial Accounting Standards Board Staff Position adopted in January 2004, the Company elected to
 defer recognition of the effects of the Medicare Prescription Drug, Improvement and Modernization Act
 of 2003 in accounting for its postretirement health care plan under FASB Statement No. 106, Employers
 Accounting for Postretirement Benefits Other Than Pensions, or in making disclosures related to
 its plan required by FASB Statement No. 132, Employers Disclosure about Pensions and Other Postretirement
 Benefits, until authoritative guidance on accounting for subsidies provided by such act is issued.
 When issued, final guidance could require changes to previously reported information. Measures presented
 in these financial statements for accumulated postretirement benefit obligation or net periodic postretirement
 benefit cost do not reflect the results of this act.

(m) Revenue Recognition

The
 Company recognizes revenue on product sales when the customer takes title and assumes risk of loss except
 for surgical equipment sales. If the customer takes title and assumes risk of loss upon shipment, revenue
 is recognized on the shipment date. If the customer takes title and assumes risk of loss upon delivery,
 revenue is recognized on the delivery date. Revenue is recognized as the net amount to be received after
 deducting estimated amounts for rebates and product returns.

The
 Company recognizes revenue on surgical equipment sales when the customer takes title and assumes risk
 of loss and when installation and any required training have been completed. Per procedure technology
 fees related to refractive laser systems are recognized in the period when the procedure is performed.

The
 Company recognizes revenue in accordance with the United States Securities and Exchange Commission Staff
 Accounting Bulletins No. 101 and 104.

(n) Research and Development

Internal
 research and development are expensed as incurred. Third-party research and development costs are expensed
 as the contracted work is performed or as milestone results have been achieved.

(o) Selling, General and Administrative

Advertising
 costs are expensed as incurred. Advertising costs amounted to $119.5, $99.7 and $96.0 in 2003, 2002
 and 2001, respectively.

Shipping
 and handling costs amounted to $42.5, $37.0 and $33.5 in 2003, 2002 and 2001, respectively.

(p) Income Taxes

The
 Company recognizes deferred income tax assets and liabilities for temporary differences between the
 financial reporting basis and the tax basis of the Companys assets and liabilities and expected benefits
 of utilizing net operating loss and credit carryforwards. The impact on deferred income taxes of changes
 in tax rates and laws, if any, are applied to the years during which temporary differences are expected
 to be settled and reflected in the financial statements in the period of enactment. Withholding taxes
 have been provided on unremitted earnings of subsidiaries which are not reinvested indefinitely in such
 operations. Dividends to Alcon do not result in Swiss income taxes.

(q) Basic and Diluted Earnings Per Common Share

Basic
 earnings per common share were computed by dividing earnings available to common shareholders by the
 weighted average number of common shares outstanding for the relevant period. Earnings available to
 common shareholders were determined by deducting dividends and accretion of discount on preferred shares
 of subsidiary from net earnings. In 2003 and 2002, diluted weighted average common shares reflects the
 potential dilution, using the treasury stock method, that could occur if employee stock options for
 the issuance of common shares were exercised and if contingent restricted common shares granted to employees
 became vested. There were no dilutive securities outstanding in 2001.

---

A reconciliation of net earning to earnings available
 to common shareholders follows:

|                                                                      | 2003 | 2002   | 2001
|--------------------------------------------------------------------- | ---- | ------ | ----
|Net earnings                                                          |      | $595.4 |     
|Dividends and accretion of discount on preferred shares of subsidiary |      | --     |     
|                                                                      |      |        |     
|Earnings available to common shareholders                             |      | $595.4 |     
|                                                                      |      |        |     

The
 following table reconciles the weighted average shares of the basic and diluted share computations:

|                                                   | 2003 | 2002        | 2001
|-------------------------------------------------- | ---- | ----------- | ----
|Basic weighted average common shares outstanding   |      | 307,934,623 |     
|Effect of dilutive securities:                     |     
|Employee stock options                             |      | 2,106,941   |     
|Contingent restricted common shares                |      | 770,835     |     
|                                                   |      |             |     
|Diluted weighted average common shares outstanding |      | 310,812,399 |     
|                                                   |      |             |     

(r) Comprehensive Income

Comprehensive
 income consists of net earnings, foreign currency translation adjustments, unrealized gains (losses)
 on investments, unrealized losses on cash flow hedges and minimum pension liability adjustment and is
 presented in the consolidated statements of shareholders equity and comprehensive income.

(s) Stock Based Compensation

The
 Company applies the intrinsic value method provisions of Accounting Principles Board Opinion No. 25,
 Accounting for Stock Issued to Employees, and related interpretations in accounting for grants to
 Company directors, officers and employees under the 2002 Alcon Incentive Plan. No stock-based employee
 compensation cost was reflected in net earnings, as all options granted under the plan had an exercise
 price equal to the market value of the underlying common stock on the date of grant. The following table
 illustrates the effect on net earnings and earnings per common share if the Company had applied the
 fair value recognition provisions of Statement of Financial Accounting Standard No. 123, Accounting
 for Stock-Based Compensation in accounting for the plan.

|                                                                             | 2003 | 2002      
|---------------------------------------------------------------------------- | ---- | ----------
|Net earnings, as reported                                                    |      | $   595.4 
|Deduct: Total stock-based employee compensation expense determined under the |     
|fair value method for all awards, net of related tax benefits                |      | (29.8     
|                                                                             |      |           
|Proforma net earnings                                                        |      | $   565.6 
|                                                                             |      |           
|Earnings per common share:                                                   |     
|Basic - as reported                                                          |      | $     1.93
|                                                                             |      |           
|Basic - proforma                                                             |      | $     1.84
|                                                                             |      |           
|Diluted - as reported                                                        |      | $     1.92
|                                                                             |      |           
|Diluted - proforma                                                           |      | $     1.82
|                                                                             |      |           

(t) Warranty Reserves

The
 Company generally warrants its surgical equipment against defects for a period of one year from the
 installation date. Warranty costs are estimated and expensed at the date of sale and the resulting accrued
 liability is amortized over the warranty period. Such costs are estimated based on actual cost experience.

(u) Reclassifications

Certain
 reclassifications have been made to prior year amounts to conform with current year presentation.

(3)  Cash FlowsSupplemental Disclosures

|                                                  | 2003 | 2002    | 2001
|------------------------------------------------- | ---- | ------- | ----
|Supplemental disclosure of cash flow information: |      |         |     
|Cash paid during the year for the following:      |     
|Interest expense, net of amount capitalized       |      | $  43.3 |     
|                                                  |      |         |     
|                                                  |      |         |     
|Income taxes                                      |      | $239.9  |     
|                                                  |      |         |     

Supplemental
 Disclosure of Non-cash Financing Activities:

| | a) | On February 25, 2002, Nestlé converted 69,750,000 Alcon common shares that it owned into 69,750,000 Alcon non-voting preferred shares. The redemption price for these preferred shares was CHF 3,634.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | In connection with the IPO, certain Alcon employees
 elected to convert their interests in the 1994 Phantom Stock Plan into restricted Alcon common shares
 and options to purchase Alcon common shares. The effects on the 2002 financial statements were to:

decrease other current liabilities by $10.9decrease other long term liabilities by $23.3increase common stock and additional paid-in capital by $71.5decrease total equity for deferred compensation of $37.3Deferred compensation was reduced by $7.7 and $22.1, which amounts were charged against earnings in the years ended December 31, 2003 and 2002, respectively, and were reflected as adjustments in net cash from operating activities.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | During years ended December 31, 2003 and 2002, Alcon acquired 6,590 and 6,032 treasury shares respectively, when certain individuals terminated employment before vesting in their restricted common shares, as discussed in note 12.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(4) Goodwill and Intangible Assets

Effective
 January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill
 and Other Intangible Assets. Statement 142 requires that goodwill and intangible assets with indefinite
 useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company
 did not record an impairment as a result of the implementation of Statement 142. Statement 142 also
 requires that intangible assets with estimable useful lives be amortized over their respective estimated
 useful lives to their residual values and reviewed for impairment.

---

Intangible assets subject to amortization:

|                             | December 31, 2003 | December 31, 2002
|---------------------------- | ----------------- | -----------------
|
|Amortized intangible assets: |                   |                  
|Licensed technology          |                   | $ 511.6          
|Other                        |                   | 186.0            
|                             |                   |                  
|                             |                   | $ 697.6          
|                             |                   |                  

|                                                            | Year Ended December 31,
|----------------------------------------------------------- | -----------------------
|
|Aggregate amortization expense related to intangible assets |                        
|                                                            |                        

In
 connection with a voluntary recall and termination of the SKBM® microkeratome product line, a
 $5.9 impairment loss on intangible assets was recorded as amortization in 2002.

Estimated Amortization Expense:

|                                 | 
|-------------------------------- | 
|For year ended December 31, 2004 | 
|For year ended December 31, 2005 | 
|For year ended December 31, 2006 | 
|For year ended December 31, 2007 | 
|For year ended December 31, 2008 | 

The
 Company recorded no intangible assets with indefinite lives other than goodwill.

The
 changes in the carrying amount of goodwill for the year ended December 31, 2003 were as follows:

|                                                      | UnitedStatesSegment | InternationalSegment | Total
|----------------------------------------------------- | ------------------- | -------------------- | -----
|Balance, December 31, 2001                            |                     | $ 338.4              |      
|Amounts reclassified to goodwill from intangibles     |                     | 3.2                  |      
|                                                      |                     |                      |      
|Reclassified balance, December 31, 2001               |                     | 341.6                |      
|Impact of changes in foreign exchange rates           |                     | --                   |      
|                                                      |                     |                      |      
|Balance, December 31, 2002                            |                     | 341.6                |      
|Impact of changes in foreign exchange rates and other |                     | (2.3                 | )    
|                                                      |                     |                      |      
|Balance, December 31, 2003                            |                     | $ 339.3              |      
|                                                      |                     |                      |      

The
 impact on net earnings, assuming the exclusion of amortization expense recognized in 2001 for goodwill
 and intangible assets that are no longer amortized, would have been:

|                                     | Year ended December 31,
|------------------------------------ | -----------------------
|
|Reported net earnings                |                        
|Add back--goodwill amortization, net |                        
|of income taxes                      |                        
|                                     |                        
|Adjusted net earnings                |                        
|                                     |                        
|Basic earnings per share:            |                        
|Reported net earnings                |                        
|Add back--goodwill amortization, net |                        
|of income taxes                      |                        
|                                     |                        
|Adjusted net earnings                |                        
|                                     |                        
|Diluted earnings per share:          |                        
|Reported net earnings                |                        
|Add back--goodwill amortization, net |                        
|of income taxes                      |                        
|                                     |                        
|Adjusted net earnings                |                        
|                                     |                        

(5) Supplemental Balance Sheet Information

|                                        | December 31,
|--------------------------------------- | ------------
|
|Cash and Cash Equivalents               |             
|Cash                                    |             
|Cash equivalents on deposit with Nestle |             
|Cash equivalents -- Other               |             
|                                        |             
|                                        |             
|                                        |             

Cash
 equivalents consisted of interest bearing deposits and repurchase agreements with an initial term of
 less than three months.

|                                | December 31,
|------------------------------- | ------------
|
|Trade Receivables, Net          |             
|Trade receivables               |             
|Allowance for doubtful accounts |             
|                                |             
|                                |             
|                                |             

---

Bad
 debt expense for the years ended December 31, 2003, 2002 and 2001 was $2.2, $8.9 and $11.9, respectively.
 The allowance for doubtful accounts at the beginning of 2002 and 2001 was $24.0 and $20.3, respectively.
 Charge-offs (recoveries), net, for the years ended December 31, 2003, 2002 and 2001 were $2.1, $(0.1)
 and 8.2, respectively.

|                  | December 31,
|----------------- | ------------
|
|Inventories       |             
|Finished products |             
|Work in process   |             
|Raw materials     |             
|                  |             
|                  |             
|                  |             
|                  |             

|                            | December 31,
|--------------------------- | ------------
|
|Other Current Assets        |             
|Prepaid expenses            |             
|Receivables from affiliates |             
|Other                       |             
|                            |             
|                            |             
|                            |             

|                                        | December 31,
|--------------------------------------- | ------------
|
|Property, Plant and Equipment, Net      |             
|Land and improvements                   |             
|Buildings and improvements              |             
|Machinery, other equipment and software |             
|Construction in progress                |             
|                                        |             
|                                        |             
|Accumulated depreciation                |             
|                                        |             
|                                        |             
|                                        |             

Construction
 in progress at December 31, 2003 consisted primarily of various plant expansion projects. Commitments
 related to these projects at December 31, 2003 totaled $38.6.

|                                | December 31,
|------------------------------- | ------------
|
|Other Current Liabilities       |             
|Deferred income tax liabilities |             
|Payables to affiliates          |             
|Accrued warranties              |             
|Accrued payroll                 |             
|Accrued taxes                   |             
|Other                           |             
|                                |             
|                                |             
|                                |             
|                                |             

Warranty
 expense for the years ended December 31, 2003, 2002 and 2001 was $11.0, $13.4 and $11.0, respectively.
 The reserves to satisfy warranty obligations at the beginning of 2002 and 2001 was $6.4 and $6.5, respectively.

---

|                                | December 31,
|------------------------------- | ------------
|
|Other Long Term Liabilities     |             
|Pension plans                   |             
|Postretirement health care plan |             
|Deferred compensation           |             
|Other                           |             
|                                |             
|                                |             
|                                |             
|                                |             

|                                              | December 31,
|--------------------------------------------- | ------------
|
|Accumulated Other Comprehensive Income (Loss) |             
|Foreign currency translation adjustment       |             
|Unrealized losses on investments              |             
|Unrealized losses on cash flow hedges         |             
|Minimum pension liability adjustment          |             
|                                              |             
|                                              |             
|                                              |             

(6)    Short Term Borrowings

|                 | December 31,
|---------------- | ------------
|
|Lines of credit  |             
|Commercial paper |             
|From affiliates  |             
|Bank overdrafts  |             
|                 |             
|                 |             
|                 |             
|                 |             

At
 December 31, 2003, the Company had several unsecured line of credit agreements totaling $ 410.3 with
 third parties that were denominated in various currencies. The commitment fees related to unused borrowings
 under these facilities were nominal during 2003, 2002 and 2001. The weighted average interest rates
 at December 31, 2003 and 2002 were 2.5% and 5.9%, respectively. The amounts outstanding under these
 agreements at December 31, 2003 were due at various dates during 2004.

At
 December 31, 2003, the Company had a $2,000 commercial paper facility. At December 31, 2003, the outstanding
 balance carried an average interest rate of 1.10% before fees. Related to this short term, floating
 interest rate borrowing, the Company has entered into two $25.0 interest rate swaps that have a net
 effect of fixing the interest rate of a portion of the outstanding amount at 2.77%, which is based on
 a two year rate at the time of initiation of the hedge. Nestlé guarantees the commercial paper facility
 and assists in its management, for which the Company pays Nestlé an annual fee based on the average
 outstanding commercial paper balances. The Companys management believes that any fees paid by us to
 Nestlé for their guarantee of any indebtedness or for the management of the commercial paper program
 are comparable to the fees that would be paid in an arms length transaction. Total guarantee fees paid
 to Nestlé for the years ended December 31, 2003 and 2002 were $4.1 and $1.6, respectively.

The
 Company had various unsecured promissory notes and line of credit agreements denominated in various
 currencies with several subsidiaries of Nestlé. These short term borrowings at December 31, 2003 were
 either due on demand or at various dates during 2004. The weighted average interest rates at December
 31, 2003 and 2002 were 2.2% and 3.6%, respectively. The unused portion under the line of credit agreements
 was $232.9 at December 31, 2003.

The
 Company had several unsecured bank overdraft lines of credit denominated in various currencies totaling
 $192.9 at December 31, 2003. The weighted average interest rates on bank overdrafts at December 31,
 2003 and 2002 were 4.9% and 9.5%, respectively.

(7)    Long Term Debt

|                                          | December 31,
|----------------------------------------- | ------------
|
|License obligations                       |             
|Bonds                                     |             
|Other                                     |             
|                                          |             
|Total long term debt                      |             
|Less current maturities of long term debt |             
|                                          |             
|                                          |             
|Long term debt, net of current maturities |             
|                                          |             

License
 obligations represented the present value of noninterest bearing future fixed payments through 2007
 that were capitalized as intangibles. These obligations were discounted at the Companys borrowing rate
 (6.25% to 8.50%) at the time each license was obtained.

The
 Companys Japanese subsidiary has outstanding bonds with interest at yen LIBOR (0.1% at December 31,
 2003) due 2011. Such bonds were guaranteed by Nestlé for a fee of approximately $0.1 annually in 2003,
 2002 and 2001.

Long
 term maturities for each of the next five years are $8.5 in 2004, $4.8 in 2005, $5.2 in 2006, $5.1 in
 2007, and $0.3 in 2008.

Interest
 costs of $ 0.5, $0.2 and $2.2 in 2003, 2002 and 2001, respectively, were capitalized as part of property,
 plant and equipment.

(8)  Income Taxes

The
 components of earnings before income taxes were:

|                             | 2003 | 2002   | 2001
|---------------------------- | ---- | ------ | ----
|Switzerland                  |      | $244.8 |     
|Outside of Switzerland       |      | 613.3  |     
|                             |      |        |     
|                             |      |        |     
|Earnings before income taxes |      | $858.1 |     
|                             |      |        |     
|                             |      |        |     

---

Income
 tax expense (benefit) consisted of the following:

|                       | 2003 | 2002     | 2001
|---------------------- | ---- | -------- | ----
|Current:               |      |          |     
|Switzerland            |      | $   12.6 |     
|Outside of Switzerland |      | 278.2    |     
|                       |      |          |     
|Total current          |      | 290.8    |     
|                       |      |          |     
|Deferred:              |     
|Switzerland            |      | 5.9      |     
|Outside of Switzerland |      | (34.0    | )   
|                       |      |          |     
|Total deferred         |      | (28.1    | )   
|                       |      |          |     
|Total                  |      | $ 262.7  |     
|                       |      |          |     

A comparison
 of income tax expense at the statutory tax rate of 7.8% in Switzerland to the consolidated effective
 tax rate follows:

|                                                  | 2003 | 2002 | 2001
|------------------------------------------------- | ---- | ---- | ----
|Statutory income tax rate                         |      | 7.8  | %   
|Effect of higher tax rates in other jurisdictions |      | 23.9 |     
|Nondeductible items                               |      | 0.1  |     
|Other                                             |      | (1.2 | )   
|                                                  |      |      |     
|Effective tax rate                                |      | 30.6 | %   
|                                                  |      |      |     

At
 December 31, 2003, Alcons subsidiaries had net operating loss carryforwards as follows:

|Year of Expiration                      | Amount
|--------------------------------------- | ------
|2004                                    |       
|2005                                    |       
|2006                                    |       
|2007                                    |       
|2008                                    |       
|2009-2011                               |       
|Indefinite                              |       
|                                        |       
|Total net operating loss carry forwards |       
|                                        |       

Deferred
 income taxes are recognized for tax consequences of temporary differences by applying enacted statutory
 tax rates, applicable to future years, to differences between the financial reporting and the tax basis
 of existing assets and liabilities.

---

Temporary
 differences and carryforwards at December 31, 2003 and 2002 were as follows:

|                                               | December 31,
|---------------------------------------------- | ------------
|
|Deferred income tax assets:                    |             
|Trade receivables                              |             
|Inventories                                    |             
|Other assets                                   |             
|Accounts payable and other current liabilities |             
|Other liabilities                              |             
|Net operating loss carryforwards               |             
|                                               |             
|Gross deferred income tax assets               |             
|Unused tax credits                             |             
|Valuation allowance                            |             
|                                               |             
|Total deferred income tax assets               |             
|                                               |             
|Deferred income tax liabilities:               |             
|Property, plant and equipment                  |             
|Goodwill and intangible assets                 |             
|Other                                          |             
|                                               |             
|Total deferred income tax liabilities          |             
|                                               |             
|Net deferred income tax assets                 |             
|                                               |             

Based
 on the Companys historical pre-tax earnings, management believes it is more likely than not that the
 Company will realize the benefit of the existing net deferred income tax assets at December 31, 2003.
 Management believes the existing net deductible temporary differences will reverse during periods in
 which the Company generates net taxable earnings; however, there can be no assurance that the Company
 will generate any earnings or any specific level of continuing earnings in future years. Certain tax
 planning or other strategies could be implemented, if necessary, to supplement earnings from operations
 to fully realize tax benefits.

Withholding
 taxes of approximately $62.1 have not been provided on approximately $1,221.1 of unremitted earnings
 of certain subsidiaries since such earnings are, or will be, reinvested in operations indefinitely.
 Dividends to Alcon do not result in Swiss income taxes.

(9) Business Segments

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 profit is derived from operating profits within
 the United States, as well as operating profits earned outside of the United States related to the United
 States business. 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,
 manufacturing and other corporate functions. Each business segment is managed by a single business segment
 manager who reports to the Chief Executive Officer, who is the chief operating decision maker of the
 Company.

Beginning
 in 2002, segment performance is measured based on sales and operating income reported in accordance
 with U.S. GAAP. Prior to 2002, the Company measured performance on the basis of International Accounting
 Standards. For consistency of presentation, business segment information for 2001 has been restated
 to a U.S. GAAP basis.

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
 and are 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.

|                         | Sales | Operating Income | Depreciation andAmortization
|------------------------ | ----- | ---------------- | ----------------------------
|
|United States            |       | $1,785.9         |                             
|International            |       | 1,621.0          |                             
|                         |       |                  |                             
|Segments total           |       | 3,406.9          |                             
|Manufacturing operations |       | --               |                             
|Research and development |       | --               |                             
|General corporate        |       | --               |                             
|                         |       |                  |                             
|U.S. GAAP total          |       | $3,406.9         |                             
|                         |       |                  |                             

---

(10)     Geographic, Customer
 and Product Information

Sales
 for the Companys country of domicile and all individual countries accounting for more than 10% of total
 sales are noted below along with long lived assets in those countries. Sales by ophthalmic market segment
 are also included. Sales below are based on the location of the customer. No single customer accounts
 for more than 10% of total sales.

|                  | Sales |         
|----------------- | ----- | --------
|
|
|United States     |       | $1,785.9
|Japan             |       | 263.9   
|Switzerland       |       | 25.5    
|Rest of World     |       | 1,331.6 
|                  |       |         
|Total             |       | $3,406.9
|                  |       |         
|Pharmaceutical    |       | $1,309.9
|Surgical          |       | 1,585.9 
|Consumer eye care |       | 511.1   
|                  |       |         
|Total             |       | $3,406.9
|                  |       |         

(11)     Stock-Based Compensation
 Plans

Contemporaneously
 with the IPO, the Company adopted the 2002 Alcon Incentive Plan. Under the plan, the Companys Board
 of Directors may award to officers, directors and key employees options to purchase up to 30 million
 shares of the Companys common shares at a price set by the Board, which may not be lower than the prevailing
 stock exchange price upon the grant of the option. Individual grants become exercisable generally on
 or after the third anniversary of the grant and lapse on the tenth anniversary of the grant. In the
 fourth quarter of 2002, the Board authorized the acquisition on the open market of up to two million
 common shares to satisfy the exercise of stock options granted under the plan.

The
 plan also provides that the Board may grant Stock Appreciation Rights (SARs) whereby the grantee may
 receive the appreciation in stock value over the grant price. The Companys operating results included
 expenses related to these SARs of $4.3 and $0.3 for the years ended December 31, 2003 and 2002, respectively.

Under
 this plan the Company provided for a conversion of existing phantom stock units granted under the 1994
 Phantom Stock Plan into restricted common shares of the Company and the grant of common stock options
 to any person who elected to make the conversion. See note 12 for additional information about this
 grant.

Contemporaneously
 with the IPO, Alcon granted certain employees and the independent directors incentive options to purchase
 approximately 6.3 million Alcon common shares at $33 per share (the IPO price) pursuant to the 2002
 Alcon Incentive Plan. The options are scheduled to vest in 2005 and expire in 2012.

During
 2003, Alcon granted certain employees and the independent directors incentive options to purchase approximately
 6.0 million common shares at the market price (primarily at $36.39 per share) pursuant to the 2002 Alcon
 Incentive Plan. The options are scheduled to vest in 2006 and expire in 2013.

The
 Company applies the intrinsic value based method to account for grants to Company directors, officers
 and employees under the 2002 Alcon Incentive Plan. Under this method, compensation expense is measured
 as soon as the number of shares and the exercise price is known. Compensation cost is measured by the
 amount by which the current market price of the underlying stock exceeds the exercise price. The Company
 discloses the proforma impact of the fair value based method of accounting for stock-based employee
 compensation plans.

The
 fair value of each stock option grant was estimated as of the date of grant using the Black-Scholes
 option pricing model using the following weighted average assumptions:

|                        | 2003 | 2002 
|----------------------- | ---- | -----
|Expected volatility     |      | 33.0 
|Risk-free interest rate |      | 2.92 
|Expected lives          |      | 4 yea
|Dividend yield          |      | 1.0  

The
 status of the stock option awards as of December 31, 2003 and 2002 and the changes during the years
 then ended are presented below:

|                                                               | 2003 | 2002            
|-------------------------------------------------------------- | ---- | ----------------
|
|Balance at beginning of year                                   |      | 7,062,584       
|Granted                                                        |      | 6,063,485       
|Forfeited                                                      |      | (65,709         
|Exercised                                                      |      | (78,574         
|                                                               |      |                 
|                                                               |      |                 
|Balance at the end of year                                     |      | 12,981,786      
|                                                               |      |                 
|                                                               |      |                 
|Options exercisable at year-end                                |      | 752,325         
|Weighted average fair value of options granted during the year |      | $          10.09

---

The
 following table summarizes information about fixed stock options as of December 31, 2003:

|Options Outstanding | Options Exercisable
|------------------- | -------------------
|
|$                   |                    
|$                   |                    
|                    |                    
|                    |                    
|                    |                    

At
 December 31, 2003, the Company had reserved 27,664,727 shares of common stock for issuance pursuant
 to the 2002 Alcon Incentive Plan.

(12) Deferred Compensation

The
 Company has an unfunded deferred compensation plan referred to as the 1994 Phantom Stock Plan for which
 key management members and certain other employees were eligible to be considered for participation
 prior to 2002. A committee appointed by the Board of Directors administers the plan. Plan payments were
 $9.0 and $19.1 for 2003 and 2002, respectively. The plans liability was $24.6 and $29.5 at December
 31, 2003 and 2002, respectively, which is included in other current liabilities and other long term
 liabilities in the accompanying consolidated balance sheets.

Contemporaneously
 with the IPO, certain Alcon employees elected to convert $34.2 of their interests in the 1994 Phantom
 Stock Plan into approximately 2.2 million contingent restricted common shares of Alcon. Although all
 of these shares were included in the outstanding common shares in the accompanying balance sheets at
 December 31, 2003 and 2002, the unvested portion (which was contingent) of the restricted common shares
 was excluded in the calculation of basic weighted average common shares outstanding. In connection with
 this conversion, these employees were also granted options to purchase approximately 0.9 million Alcon
 common shares at $33.00 per share (the IPO price) under the 2002 Alcon Incentive Plan. These restricted
 shares and options are scheduled to vest at various times through January 1, 2006. The options expire
 on March 20, 2012.

In
 2002, the Board of Directors adopted the Alcon Executive Deferred Compensation Plan (DCP). The DCP
 permits certain executives of the Company to defer receipt of compensation and certain stock gains otherwise
 payable currently and to accumulate earnings thereon on a tax-deferred basis. The plan is designed to
 permit executives deferral elections to be held and owned by the Company in a Rabbi trust. At December
 31, 2002, no deferrals had been recorded under the plan and no assets had been contributed to the trust.
 During the year ended December 31, 2003, certain executives elected to defer $3.4 of compensation which
 is included in other long term liabilities in the accompanying consolidated balance sheets. Additionally,
 as of December 31, 2003, 87,033 common shares have been deferred into the DCP. These shares are reflected
 as outstanding and are included in the basic and diluted earnings per share calculations at December
 31, 2003.

(13) Financial Instruments

Foreign
 Currency Risk Management

A significant
 portion of the Companys cash flows is denominated in foreign currencies. Alcon relies on sustained
 cash flows generated from foreign sources to support its long term commitments to U.S. dollar-based
 research and development. To the extent the dollar value of cash flows is diminished as a result of
 a strengthening dollar, the Companys ability to fund research and other dollar-based strategic initiatives
 at a consistent level may be impaired. The Company has established balance sheet risk management programs
 to protect against volatility of future foreign currency cash flows and changes in fair value caused
 by volatility in foreign exchange rates.

A primary
 objective of the balance sheet risk management program is to protect the U.S. dollar value of foreign
 currency denominated net monetary assets from the effects of volatility in foreign exchange that might
 occur prior to their conversion to U.S. dollars. The Company seeks to fully offset the effects of exchange
 on exposures denominated in developed country currencies, primarily the euro and Japanese yen and will
 either partially offset or not offset at all exposures in developing countries where we consider the
 cost of derivative instruments to be uneconomic or when such instruments are unavailable at any cost.
 The Company will also minimize the effects of exchange on monetary assets and liabilities by managing
 operating activities and net asset positions at the local level. The Company primarily utilizes forward
 exchange contracts which enable it to buy and sell foreign currencies in the future at fixed exchange
 rates and offset the consequences of changes in foreign exchange on the amount of U.S. dollar cash flows
 derived from the net assets. Prior to conversion to U.S. dollars, monetary assets and liabilities denominated
 in U.S. dollars are remeasured at spot rates in effect on the balance sheet date. The effect of changes
 in spot rates is reported in foreign exchange gains and losses in other income (expense). Fair value
 forward contracts are marked to fair value through foreign exchange gains and losses in other income
 (expense). Fair value changes in the forward contracts offset the changes in the value of the remeasured
 assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent
 of the spot-forward differences. These differences are not significant due to the short term nature
 of the contracts, which typically have average maturities at inception of less than one year.

The
 fair values of forward exchange contracts are reported in other current assets and other current liabilities.
 For foreign currency cash flow hedges, the amount of net gain/loss related to ineffectiveness was immaterial.
 The fair value hedge derivative instruments have settlement dates in January 2004 and cover a notional
 amount of $107.0, of which $87.0 was executed through Nestlé.

Interest
 Rate Risk Management

The
 Company may use interest rate swap contracts on certain investing and borrowing transactions to manage
 its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does
 not use leveraged swaps and does not leverage any of its investment activities that would put principal
 capital at risk.

At
 December 31, 2003 and 2002, in connection with long term bonds, the Company had an interest rate swap
 fair value hedge outstanding in the notional amount of $46.8. At December 31, 2003, in connection with
 its commercial paper program, the Company had interest rate swap agreements outstanding in the notional
 amount of $50.0. The fair values of interest rate swap agreements are reported in other current assets
 and other current liabilities.

Fair
 Value of Financial Instruments

At
 December 31, 2003 and 2002, the Companys financial instruments included cash, cash equivalents, investments,
 trade receivables, accounts payable, short term borrowings and long term debt. The estimated fair value
 of all of these financial instruments is as noted below. Due to the short term maturities of cash, cash
 equivalents, trade receivables, accounts payable and short term borrowings, the carrying amount approximates
 fair value. The fair value of long term debt is based on interest rates then currently available to
 the Company for issuance of debt with similar terms and remaining maturities. The fair value of investments
 was based on quoted market prices at year end.

---

|                           | December 31,
|-------------------------- | ------------
|
|
|Assets:                    |             
|Cash and cash equivalents  |             
|Investments:               |             
|Fixed income               |             
|Trade receivables, net     |             
|Forward exchange contracts |             
|Interest rate swaps        |             
|Liabilities:               |             
|Accounts payable           |             
|Short term borrowings      |             
|Long term debt             |             
|Forward exchange contracts |             
|Interest rate swaps        |             

Investment
 amounts include net unrealized holding losses of $1.1 and $0.9 at December 31, 2003 and 2002, respectively.
 During 2001, an impairment loss on a marketable equity investment of $9.1 was recorded in other nonoperating
 expenses ($5.7 net of tax).

Concentrations
 of Credit Risk

As
 part of its ongoing control procedures, the Company monitors concentrations of credit risk associated
 with corporate issuers of securities and financial institutions with which it conducts business. Credit
 risk is minimal as credit exposure limits are established to avoid a concentration with any single issuer
 or institution. The Company also monitors the credit-worthiness of its customers to which it grants
 credit terms in the normal course of business. Concentrations of credit risk associated with these trade
 receivables are considered minimal due to the Companys diverse customer base. Bad debts have been minimal.
 The Company does not normally require collateral or other security to support credit sales.

(14)     Related Party Transactions

At
 December 31, 2003, Nestlé owned 74.6% of the outstanding common shares of Alcon.

The
 Companys material transactions with related parties have been with Nestlé and its subsidiaries. All
 material related party transactions that are not disclosed elsewhere in these notes are included below.

During
 2003, 2002 and 2001 the Company had investments and borrowings with Nestlé and its subsidiaries which
 resulted in the following impact to earnings before income taxes:

|                 | 2003 | 2002  | 2001
|---------------- | ---- | ----- | ----
|Interest expense |      | $8.2  |     
|Interest income  |      | $  -- |     

The
 Company sold Alcon Germany to Nestlés German subsidiary effective January 1, 2001 for approximately
 $30.0, and, under the separation agreement, Nestlés German subsidiary sold it back to the Company effective
 January 1, 2002, for approximately $42.0. Alcon Germanys results of operations have been consolidated
 by the Company and are reflected in all periods presented in the accompanying consolidated financial
 statements.

The
 Company leases certain facilities from Nestlé subsidiaries which resulted in rent expense of $0.7, $0.2
 and $0.6 in 2003, 2002 and 2001, respectively. Nestlé provides the Company with certain services, including
 a portion of the Companys information technology licenses, corporate legal services, certain treasury
 and cash management activities and certain internal audit activities. Nestlé charges the Company for
 its portion of the costs of these services based on arms length prices. Such charges were less than
 $1.5 in each of the three years ended December 31, 2003.

Prior
 to 2002 an officer of the Company had received options to purchase Nestlé common stock. Contemporaneously
 with the IPO, the officer agreed to surrender options to purchase 17,110 Nestlé shares, of which options
 to purchase 8,520 shares were exercisable, in exchange for options to purchase 80,000 Alcon common shares.
 The new options were granted pursuant to the 2002 Alcon Incentive Plan and generally contain the same
 terms as other options issued under the plan.

The
 Company executes certain foreign exchange contracts through Nestlé Finance SA, Cham to benefit from
 Nestlés foreign exchange transaction volumes and expertise. At December 31, 2003, the Company had a
 notional amount outstanding with Nestlé of $87.0.

(15)     Pension and Postretirement
 Benefits

The
 Companys pension and postretirement benefit plans, which in aggregate cover substantially all employees
 in the United States and employees in certain other countries, consist of defined benefit pension plans,
 defined contribution plans and a postretirement health care plan. The Companys cost of defined contribution
 plans was $53.7, $49.6 and $45.4 in 2003, 2002 and 2001, respectively. The information provided below
 pertains to the Companys defined benefit pension plans and postretirement health care plan. The measurement
 date used to determine pension and postretirement benefit measurements for the majority of the benefit
 plans is December 31 of the respective year. In December 2003, Alcons board of directors approved the
 Alcon Supplemental Executive Retirement Plan (ASERP). The ASERP is a non-qualified pension plan for
 key employees who become eligible for participation on or after January 1, 2004. Existing participants
 in the non-qualified Executive Salary Continuation Plan (ESCP) will continue to accrue benefits under
 the ESCP through December 31, 2008. Thereafter, they will begin to accrue benefits for future service
 under the provisions of the ASERP. The following disclosures do not take into consideration the ASERP.

The
 following table reconciles the changes in benefit obligations, fair value of plan assets, and funded
 status for the two-year period ending December 31, 2003:

---

|                                                              | Pension benefits | Postretirementbenefits
|------------------------------------------------------------- | ---------------- | ----------------------
|
|Change in Benefit Obligation                                  |                  |                       
|Benefit obligation at beginning of year                       |                  | $ 219.9               
|Service cost                                                  |                  | 14.5                  
|Interest cost                                                 |                  | 13.2                  
|Benefits paid                                                 |                  | (8.4                  
|Foreign currency translation                                  |                  | 2.3                   
|Actuarial (gain)/loss                                         |                  | 12.6                  
|                                                              |                  |                       
|Benefit obligation at end of year                             |                  | $ 254.1               
|                                                              |                  |                       
|                                                              |                  |                       
|Change in Plan Assets                                         |                 
|Fair value of plan assets at beginning of year                |                  | $   18.5              
|Actual return on plan assets                                  |                  | 0.3                   
|Employer contribution                                         |                  | 5.5                   
|Foreign currency translation                                  |                  | 2.5                   
|Benefits paid                                                 |                  | (0.9                  
|                                                              |                  |                       
|Fair value of plan assets at end of year                      |                  | $   25.9              
|                                                              |                  |                       
|Reconciliation of Funded Status to Consolidated Balance Sheet |                 
|Funded status                                                 |                  | $(228.2               
|Unrecognized prior service cost                               |                  | --                    
|Unrecognized actuarial (gain)/loss                            |                  | 38.6                  
|Adjustment required to reflect minimum liability              |                  | (3.8                  
|                                                              |                  |                       
|Net amount recognized in the consolidated balance sheet       |                  | $(193.4               
|                                                              |                  |                       
|Reconciliation to Consolidated Balance Sheet                  |                 
|Prepaid pension costs in other current assets                 |                  | $     1.4             
|Pension and postretirement obligation in other long term      |                  | (194.8                
|liabilities                                                   |                 
|                                                              |                  |                       
|Net amount recognized in the consolidated balance sheet       |                  | $(193.4               
|                                                              |                  |                       
|Weighted-Average Assumptions as of December 31,               |                 
|Discount rate                                                 |                  | 2.0-9.5               
|Expected return on plan assets                                |                  | 2.0                   
|Rate of compensation increase                                 |                  | 3.0-9.0               



The expected long term rate of return on plan assets is based
 on historical market index returns for the applicable asset classes weighted in proportion to the target
 asset allocation of the plan. A slight downward adjustment was made to the expected long term rate of
 return in 2003 and 2002 to incorporate near term volatile market conditions.

The Company recorded a minimum pension liability of $2.5, net of
 tax, at December 31, 2003. The adjustment was reflected in other comprehensive income and other long
 term liabilities.

Plan Assets

The Company's post retirement benefit plan weighted average
 asset allocations at December 31, 1003 and 2002, respectively, by asset category are as follows:



---



|                  | Plan AssetsAt December 31,
|----------------- | --------------------------
|
|Asset Category    |                           
|                  |                           
|Equity securities |                           
|                  |                           
|Debt Securities   |                           
|                  |                           
|                  |                           
|Total             |                           
|                  |                           

The
 investment strategy for the postretirement benefit plan utilizes a variety of asset classes to provide
 return opportunities that are consistent with an acceptable risk tolerance. The weighted average target
 asset allocation for the plan is 60% equity securities and 40% debt securities. At December 31, 2003
 and 2002, the equity securities consisted of an S&P 500 index and the debt securities were comprised
 of a Lehman Aggregate bond index and a money market fund.

Contributions

The
 Company does not expect to make any contributions to its pension or post retirement benefit plans in
 2004.

Estimated Future Benefit Payments

The
 following benefit payments are expected to be paid:

|            | PensionBenefits | PostRetirementBenefits
|----------- | --------------- | ----------------------
|2004        |                 | $  8.4                
|            |                 |                       
|2005        |                 | 8.5                   
|            |                 |                       
|2006        |                 | 8.9                   
|            |                 |                       
|2007        |                 | 9.5                   
|            |                 |                       
|2008        |                 | 10.2                  
|            |                 |                       
|2009 - 2013 |                 | 67.5                  

|                                | Pension benefits | Postretirement benefits
|------------------------------- | ---------------- | -----------------------
|
|Service cost                    |                  | $14.5                  
|Interest cost                   |                  | 13.2                   
|Expected return on assets       |                  | 0.5                    
|Prior service cost amortization |                  | --                     
|Recognized actuarial loss       |                  | 2.7                    
|                                |                  |                        
|Net periodic benefit cost       |                  | $30.9                  
|                                |                  |                        

The
 health care cost trend rate used to measure the expected cost of benefits covered by the postretirement
 plan is 10.0% in 2003, declining to 5.0% in 2007 and after. The effect of a one percentage point change
 in assumed medical cost trend rates is as follows:

|                                                        | 1%Increase | 1%Decrease
|------------------------------------------------------- | ---------- | ----------
|Effect on total of service and interest cost components |            | $  3.6    
|Effect on the postretirement benefit obligation         |            | $33.6     

In
 certain countries, the Companys employees participate in defined benefit plans of Nestlé. No separate
 valuation for the Companys employees has historically been prepared for the plans, as they are not
 material to the Company or to Nestlé. Accordingly, these plans are treated as multi-employer plans.
 Annual contributions to these plans are determined by Nestlé and charged to the Company. Company contributions
 to these plans during 2003, 2002 and 2001 were $5.2, $3.8 and $2.6, respectively.

(16)    Commitments and Contingencies

The
 Company and its subsidiaries are parties to a variety of legal proceedings arising out of the ordinary
 course of business, including product liability and patent infringement. The Company believes that it
 has valid defenses and is vigorously defending the litigation pending against it.

The
 Companys tax returns are subject to examination by various taxing authorities. Management records current
 tax liabilities based on their best estimate of what they will ultimately settle with the taxing authorities
 upon examination.

While
 the results of the aforementioned contingencies cannot be predicted with certainty, management believes
 that the final outcome of these contingencies are adequately covered by insurance and/or the ultimate
 liability, if any, will not have a material adverse effect on the Companys consolidated financial position
 or results of operations. Although management believes that the tax treatments reflected in the accompanying
 financial statements comply with the various tax laws and regulations, some of the tax treatments may
 change if challenged by the taxing authorities. Litigation contingencies are subject to change based
 on settlements and court decisions.

The
 Company leases certain facilities and equipment under operating leases. Lease expense incurred was $46.7,
 $43.1 and $44.3 during 2003, 2002 and 2001, respectively. Future minimum aggregate lease payments under
 non-cancelable operating leases with a term of more than one year are as follows:

|Year                         | Amount
|---------------------------- | ------
|2004                         |       
|2005                         |       
|2006                         |       
|2007                         |       
|2008                         |       
|Thereafter                   |       
|                             |       
|Total minimum lease payments |       
|                             |       

The
 Company has entered into various fixed and variable purchase commitments and license agreements, requiring
 future minimum royalties, through 2017. All commitments are expected to be fulfilled with no adverse
 consequences to the Companys operations or financial condition. The total unconditional fixed purchase
 obligations and future minimum royalties at December 31, 2003 were as follows:

|Year       | Amount
|---------- | ------
|2004       |       
|2005       |       
|2006       |       
|2007       |       
|2008       |       
|Thereafter |       
|           |       
|Total      |       
|           |       

Total
 payments related to the variable purchase commitments for the year ended December 31, 2003, 2002 and
 2001 were $38.8, $41.2 and $38.5, respectively.

At
 December 31, 2003, the Company had guaranteed less than $5.0 of debt for certain customers. At December
 31, 2003, the Company had outstanding letters of credit of $6.9. The letters of credit typically act
 as a guarantee of payment to certain third parties in accordance with specified terms and conditions.

(17) Preferred Shares of Subsidiary

In
 May of 2000 Alcon Holdings Inc. (AHI, a wholly-owned subsidiary of Alcon) issued four series of non-voting,
 non-convertible cumulative preferred shares, with Series A, B and C denominated in Swiss francs and
 Series D denominated in U.S. dollars. These shares were issued as part of the creation of a U.S. holding
 company that would be used to make U.S. acquisitions.

As
 part of a restructuring of AHIs equity, on November 5, 2002, Alcon sold to two financial investors
 all of the AHI Series A and B preferred shares, 20,000 preferred shares, for a total sales price of
 1,997 Swiss francs. Alcon also contributed to AHI all of the Series C and D preferred shares it owned.
 After the sale, Alcon continued to own 100% of AHIs common shares and all voting rights in AHI.

On
 November 26, 2002, AHI redeemed all of its outstanding Series A and B preferred shares. AHI paid the
 investors an aggregate of 2,003 Swiss francs for the 20,000 preferred shares and accrued dividends.
 The preferred shares were immediately retired. AHI financed the redemption primarily with proceeds from
 the issuance of commercial paper.

For
 the year ended December 31, 2002, earnings available to common shareholders and earnings per share were
 reduced by the preferred dividends and the excess of the redemption cost over the carrying value of
 the preferred shares, totaling approximately $3.9.

(18) Exit Activities

Prior
 to the purchase of Summit in July 2000, the Company began assessing and formulating a plan to exit the
 leased facility which represented Summits corporate headquarters. These actions resulted in the accrual
 of severance for approximately 180 employees and other costs, as well as lease payments on the vacated
 facility as of the acquisition date which was recorded as part of the purchase price of Summit. During
 the first half of 2001, the closure of this facility was completed and severance payments were made.
 The remaining lease costs will be paid out over the remaining lease term through 2005.

|                           | EmployeeTerminationBenefits | OtherExit Costs | Total
|-------------------------- | --------------------------- | --------------- | -----
|Balance, December 31, 2000 |                             | $ 6.7           |      
|Accrued                    |                             | --              |      
|Spending                   |                             | (6.7            | )    
|                           |                             |                 |      
|Balance, December 31, 2001 |                             | --              |      
|Spending                   |                             | --              |      
|                           |                             |                 |      
|Balance, December 31, 2002 |                             | --              |      
|Spending                   |                             | --              |      
|                           |                             |                 |      
|Balance, December 31, 2003 |                             | $   --          |      
|                           |                             |                 |      

The
 exit cost accrual is included in other current liabilities in the accompanying consolidated balance
 sheets.

---

(19) Sale of Plant

In
 November 2003, the Company sold its manufacturing facility in Madrid, Spain, for $21.6 in cash resulting
 in a pre-tax gain of $8.2.

(20) Subsequent Events

On
 February 11, 2004, Alcons board of directors approved the purchase of up to an additional 4,000,000
 Alcon common shares. The purpose of the share purchases is to acquire and hold treasury shares to satisfy
 the exercise of stock options granted to employees. From time to time, Alcon will purchase shares in
 open market transactions.

On
 February 11, 2004, the board of directors approved the grant to certain employees incentive options
 to purchase approximately 4.2 million Alcon common shares at $63.32, the closing market price on this
 date, pursuant to the 2002 Alcon Incentive Plan. The options are scheduled to vest in 2007 and expire
 in 2014.

(21) Unaudited Quarterly Information

|                                   | Three Months Ended
|---------------------------------- | ------------------
|
|2003                               |                   
|Sales                              |                   
|Operating income                   |                   
|Net earnings                       |                   
|                                   |                   
|Basic earnings per common share    |                   
|                                   |                   
|Diluted earnings per common share  |                   
|                                   |                   
|2002                               |                   
|Sales                              |                   
|Operating income                   |                   
|Net earnings                       |                   
|                                   |                   
|Basic earnings per common share    |                   
|                                   |                   
|Diluted earnings per common shares |                   
|                                   |                   

Quarterly
 sales trends reflect seasonality in several products, including ocular allergy and otic products, in
 the form of increased sales during the spring months.