20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________

Commission file number: 001-31269

Alcon Inc.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant's name into English)

Switzerland

(Jurisdiction of incorporation or organization)

Rue Louis-d'Affry 6, 1701 Fribourg, Switzerland

(Address of principal executive office)

Royce Bedward, Chemin de Blandonnet 8, 1214 Vernier, Geneva, Switzerland; Tel: +41 58 911 20 00; Fax +41 58 911 32 22

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value CHF 0.04 per share	ALC	SIX Swiss Exchange
		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. 488,262,870

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐    No ☒

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer  ☐ Accelerated Filer  ☐ Non-accelerated Filer ☒ Emerging Growth Company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP	☐	International Financial Reporting Standards	☒	Other	☐
		as issued by the International Accounting Standards Board

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐    Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

INDEX		Page
Introduction and Use of Certain Terms		1
Market Information		1
Special Note About Forward-Looking Statements		2
PART I
Item 1.	Identity of Directors, Senior Management and Advisers	3
Item 2.	Offer Statistics and Expected Timetable	4
Item 3.	Key Information	5
Item 4.	Information on the Company	29
Item 4A.	Unresolved Staff Comments	56
Item 5.	Operating and Financial Review and Prospects	57
Item 6.	Directors, Senior Management and Employees	86
Item 7.	Major Shareholders and Related Party Transactions	140
Item 8.	Financial Information	141
Item 9.	The Offer and Listing	142
Item 10.	Additional Information	143
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	152
Item 12.	Description of Securities Other than Equity Securities	153
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	154
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	155
Item 15.	Controls and Procedures	156
Item 16A.	Audit Committee and Financial Expert	157
Item 16B.	Code of Ethics	157
Item 16C.	Principal Accountant Fees and Services	157
Item 16D.	Exemptions from the Listing Standards for Audit Committees	158
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	159
Item 16F.	Change in Registrant's Certifying Accountant	160
Item 16G.	Corporate Governance	161
Item 16H.	Mine Safety Disclosure	161
PART III
Item 17.	Financial Statements	162
Item 18.	Financial Statements	162
Item 19.	Exhibits	163
Consolidated Financial Statements of Alcon Inc.		F-1

INTRODUCTION AND USE OF CERTAIN TERMS

Alcon Inc. publishes Consolidated Financial Statements expressed in US dollars. Our Consolidated Financial Statements responsive to Item 18 of this Annual Report filed on Form 20-F with the US Securities and Exchange Commission (the "Annual Report") are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). "Item 5. Operating and Financial Review and Prospects", together with the sections on products in development and key development projects of our businesses (see "Item 4. Information on the Company—4.B. Business Overview"), constitute the Operating and Financial Review ("Rapport annuel"), as defined by the Swiss Code of Obligations.

Unless the context requires otherwise, the words "we", "our", "us", "Alcon", "Company" and similar words or phrases in this Annual Report refer to Alcon Inc. and its consolidated subsidiaries and the words "Novartis" and "Novartis Group" refer to Novartis AG and its consolidated affiliates. The term "Alcon Division" means the Alcon business as it was operated under Novartis. In this Annual Report, references to the "eye care market" are to the eye care market in which we participate, including the sale of ophthalmic surgical devices, contact lenses and ocular health products, but not including the sale of spectacles and prescription ophthalmic pharmaceutical products; references to "United States dollars", "US dollars", "USD" or "$" are to the lawful currency of the United States of America, and references to "CHF" are to Swiss francs, the lawful currency of Switzerland; references to "Latin America" are to Central and South America, including the Caribbean, unless the context otherwise requires; references to "associates" are to our employees; references to the "SEC" are to the US Securities and Exchange Commission, references to the "FDA" are to the US Food and Drug Administration, and references to "EMA" are to the European Medicines Agency, an agency of the EU; references to the "NYSE" are to the New York Stock Exchange; and references to the "SIX" are to the SIX Swiss Exchange; references to "AT-IOL" mean advanced technology intraocular lenses; and references to "Alcon shares" or "our shares" are to Alcon ordinary shares, nominal value CHF 0.04 per share.

All product names appearing in italics are trademarks owned by or licensed to Alcon or its subsidiaries. Product names identified by a "®" or a "™" are trademarks that are not owned by or licensed to Alcon or its subsidiaries and are the property of their respective owners.

MARKET INFORMATION

This Annual Report contains certain industry and market data that were obtained from third-party sources, such as industry surveys and industry publications, including, but not limited to, publications by Market Scope, GfK and Nielsen. This Annual Report also contains other industry and market data, including market sizing estimates, growth and other projections and information regarding our competitive position, prepared by our management on the basis of such industry sources and our management's knowledge of and experience in the industry and markets in which we operate (including management's estimates and assumptions relating to such industry and markets based on that knowledge). Our management has developed its knowledge of such industry and markets through its experience and participation in these markets.

In addition, industry surveys and industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and that any projections they contain are based on a number of significant assumptions. Forecasts, projections and other forward-looking information obtained from these sources involve risks and uncertainties and are subject to change based on various factors, including those discussed in the section "Special Note About Forward-Looking Statements" below. You should not place undue reliance on these statements.

1

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report contains, and our officers and representatives may from time to time make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “commitment,” “look forward,” “maintain,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. You should not place undue reliance on these statements.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on Alcon’s current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict. Such forward-looking statements are subject to various risks and uncertainties facing Alcon, including:

▪ the commercial success of its products and its ability to maintain and strengthen its position in its markets;

▪ the success of its research and development efforts, including its ability to innovate to compete effectively;

▪ its success in completing and integrating strategic acquisitions;

▪ pricing pressure from changes in third party payor coverage and reimbursement methodologies;

▪ global economic, financial, legal, tax, political, and social change;

▪ ongoing industry consolidation;

▪ its ability to properly educate and train healthcare providers on its products;

▪ changes in inventory levels or buying patterns of its customers;

▪ disruption in its global supply chain or important facilities;

▪ ability to service its debt obligations;

▪ the uncertainty as to what interest rate benchmark will replace LIBOR;

▪ the need for additional financing through the issuance of debt or equity;

▪ its reliance on outsourcing key business functions;

▪ its ability to protect its intellectual property;

▪ the impact on unauthorized importation of its products from countries with lower prices to countries with higher prices;

▪ the effects of litigation, including product liability lawsuits, and governmental investigations;

▪ its ability to comply with all laws to which it may be subject;

▪ effect of product recalls or voluntary market withdrawals;

▪ data breaches or other disruptions of its information technology systems;

▪ the implementation of its enterprise resource planning system;

▪ its ability to attract and retain qualified personnel;

▪ the accuracy of its accounting estimates and assumptions, including pension plan obligations, the carrying value of intangible assets, and our separation and transformation programs cost;

▪ the ability to obtain regulatory clearance and approval of its products as well as compliance with any post-approval obligations, including quality control of its manufacturing;

▪ legislative and regulatory reform;

▪ the ability of Alcon Pharmaceuticals Ltd. to comply with its investment tax incentive agreement with the Swiss State Secretariat for Economic Affairs in Switzerland and the Canton of Fribourg, Switzerland;

▪ the impact of environmental, social, and governance matters;

▪ its ability to operate as a stand-alone company;

▪ whether the transitional services Novartis has agreed to provide Alcon are sufficient;

▪ the impact of being listed on two stock exchanges;

▪ the ability to declare and pay dividends;

▪ the different rights afforded to its shareholders as a Swiss corporation compared to a US corporation; and

▪ the effect of maintaining or losing its foreign private issuer status under US securities laws.

Some of these factors are discussed in more detail in this Annual Report, including under “Item 3. Key Information—3.D. Risk Factors”, “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Annual Report as anticipated, believed, estimated or expected. We provide the information in this Annual Report as of the date of its filing. We do not intend, and do not assume any obligation, to update any information or forward-looking statements set out in this Annual Report as a result of new information, future events or otherwise.

2

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

1.A. DIRECTORS AND SENIOR MANAGEMENT

Not Applicable.

1.B. ADVISERS

Not Applicable.

1.C. AUDITORS

Not Applicable.

3

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

4

ITEM 3. KEY INFORMATION

3.A. SELECTED FINANCIAL DATA

The following selected financial data should be read together with the Consolidated Financial Statements and related Notes and "Item 5. Operating and Financial Review and Prospects".

The selected financial data in this section are not intended to replace the Consolidated Financial Statements and the related Notes. Our historical results could differ from those that would have resulted if we operated autonomously or as an entity independent of Novartis in the periods for which historical financial data is presented below prior to our spin-off from Novartis on April 9, 2019 ("Spin-off"), and such results are not necessarily indicative of the results that may be expected in the future.

For additional details regarding the preparation of the Consolidated Financial Statements, please see "Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Overview—Basis of Preparation", and "Note 2. Basis of Preparation" to the Consolidated Financial Statements.

The Consolidated Financial Statements are prepared in accordance with IFRS, as issued by the IASB.

Income statement data

($ millions except (loss)/earnings per share)	2019		2018		2017		2016		2015
Net sales to third parties	7,362		7,149		6,785		6,589		6,751
Net sales and other revenues	7,508		7,153		6,792		6,596		6,776
Operating (loss)/income	(187	)	(248	)	(77	)	10		417
Interest expense	(113	)	(24	)	(27	)	(31	)	(18	)
Other financial income & expense	(32	)	(28	)	(23	)	(92	)	(48	)
(Loss)/income before taxes	(332	)	(300	)	(127	)	(113	)	351
Taxes	(324	)	73		383		(57	)	(43	)
Net (loss)/income	(656	)	(227	)	256		(170	)	308
(Loss)/earnings per share
Basic	(1.34	)	(0.46	)	0.52		(0.35	)	0.63
Diluted	(1.34	)	(0.46	)	0.52		(0.35	)	0.63
Weighted average number of shares outstanding (millions)(1)
Basic	488.2		488.2		488.2		488.2		488.2
Diluted	488.2		488.2		488.2		488.2		488.2

(1) For periods prior to the Spin-off, the denominator for basic and diluted earnings per share was calculated using the 488.2 million shares of common stock distributed in the Spin-off.

5

Balance sheet data

	At December 31,
($ millions)	2019	2018	2017	2016	2015
Cash and cash equivalents	822	227	172	162	285
Inventories	1,505	1,440	1,303	1,207	1,149
Other current assets	1,909	1,732	1,812	1,650	1,540
Non-current assets	23,419	23,663	24,101	24,721	25,228
Total assets	27,655	27,062	27,388	27,740	28,202
Trade payables	833	663	615	516	493
Other current liabilities	1,467	1,230	1,163	1,149	1,150
Non-current liabilities	6,052	2,530	2,581	3,063	2,922
Total liabilities	8,352	4,423	4,359	4,728	4,565
Equity	19,303	22,639	23,029	23,012	23,637
Total equity and liabilities	27,655	27,062	27,388	27,740	28,202
Net assets	19,303	22,639	23,029	23,012	23,637
Outstanding share capital	20	—	—	—	—
Total outstanding shares (millions)(1)	488.3	488.2	488.2	488.2	488.2

(1) For periods prior to the Spin-off, the shares outstanding represent the 488.2 million shares of common stock distributed in the Spin-off.

6

Exchange Rates

The following table shows, for the years and dates indicated, certain information concerning the rate of exchange of US dollar per Swiss franc based on exchange rate information found on Bloomberg Market System. The exchange rate in effect on February 21, 2020 as found on Bloomberg Market System was CHF 1.00 = USD 1.02.

($ per CHF)	Average(1)
Year ended December 31, 2015	1.04
Year ended December 31, 2016	1.01
Year ended December 31, 2017	1.02
Year ended December 31, 2018	1.02
Year ended December 31, 2019	1.01

($ per CHF)	Low(2)	High(2)
January 2019	1.00	1.01
February 2019	1.00	1.01
March 2019	1.00	1.01
April 2019	0.98	0.98
May 2019	0.99	1.00
June 2019	1.02	1.03
July 2019	1.01	1.01
August 2019	1.01	1.01
September 2019	1.00	1.01
October 2019	1.01	1.01
November 2019	1.00	1.00
December 2019	1.03	1.04
January 2020	1.00	1.03
February 2020 (through February 21, 2020)	1.02	1.04

(1) Represents the average of the exchange rates on the last day of each month during the relevant time period.

(2) Represents the lowest and highest, respectively, of the exchange rates on the last day of each month during the year.

3.B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

7

3.D. RISK FACTORS

You should carefully consider the risks described below, together with all of the other information included in this Annual Report, in evaluating Alcon and our securities. The following risk factors could adversely affect our business, financial condition, results of operations and the price of our securities.

Risks Related to Our Business Generally

Our financial performance depends on the commercial success of our products and our ability to maintain our position in the markets in which we compete and to build and expand our markets.

Our financial performance depends heavily on the commercial success of our products. If any of our major products were to become subject to problems such as: decreases in growth rates for clinical procedures using our products; quality concerns; loss of intellectual property protection; pricing and reimbursement cuts; tax changes; supply chain issues or other product shortages; social or environmental concerns; regulatory actions; negative publicity affecting doctor, eye care professional or patient confidence in the product; unfavorable guidance from healthcare or other governmental agencies; material product liability litigation; pressure from new or existing competitive products; or if our products fail to meet consumer needs, the adverse impact on our revenue and profit could be significant. In addition, our revenue and profit could be significantly impacted by the timing and rate of commercial acceptance of our products.

The adverse impact on our results of operations from these factors could be compounded to the extent that we need to make significant additional investments such as in marketing and sales to counter these factors.

Furthermore, while we currently enjoy leading positions within our industry, our success highly depends on our ability to maintain or build on those leading positions. We continue to experience pressures across our businesses due to competitive activity, increased buying power of our healthcare industry customers and retail distributors, economic pressures experienced by the end-users of our vision care products, trade disputes among the countries in which we operate or sell our products, and the impact of managed care organizations and other third-party payors for our surgical products. These and other factors may adversely impact market sizes, as well as our position in the markets in which we compete, and the medical procedure volumes or average selling prices for our products.

Our financial performance also depends on our ability to successfully build and expand our markets. For example, while we currently expect our key markets to grow, particularly in multifocal contact lenses and AT-IOLs, the size of the markets in which we compete may not increase above existing levels, we may not be able to regain or gain market share, expand our market penetration or the size of the market for our products, or compete effectively, and the number of procedures in which our products are used may not increase above existing levels. Decreases in market sizes or our market share and declines in average selling prices or procedural volumes could materially adversely affect our results of operations or financial condition. Furthermore, our failure to expand our markets beyond existing levels could impact our ability to grow in line with or above current industry standards.

We operate in a highly competitive industry and if we fail to innovate, we may be unable to maintain our position in the markets in which we compete.

Our industry is highly competitive and, in both our surgical and vision care businesses, we face a mixture of competitors and intense competition from competitors' products. To compete effectively, we must continue to create, invest in, or acquire advanced technology, incorporate this technology into our proprietary products, obtain regulatory approvals in a timely manner where required, and manufacture and successfully market our products. We may experience design, manufacturing, marketing or other difficulties that could delay or prevent our development, introduction or marketing of new products or new versions of our existing products. As a result of such difficulties and delays, our development expenses may increase and, as a consequence, our results of operations could suffer. Our failure to respond to competitive pressures in a timely manner could have a material adverse effect on our business, financial condition and results of operations.

For example, in our surgical business, we face a mixture of competitors ranging from large manufacturers with multiple business lines to small manufacturers that offer a limited selection of specialized products. Development by other companies of new or improved products, processes, or technologies may make our products or proposed products less competitive or obsolete. We also face competition from providers of alternative medical therapies such as pharmaceutical companies that have the potential to disrupt core elements of our business. Competitive factors include:

▪ disruptive product technology;

▪ alternative treatment modalities;

▪ breadth of product lines and product services;

8

▪ ability to identify new market trends;

▪ acceptance of equipment and other products by ophthalmic surgeons;

▪ customer and clinical support;

▪ regulatory status and speed to market;

▪ price;

▪ product quality, reliability and performance;

▪ capacity to recruit engineers, scientists and other qualified associates;

▪ digital initiatives that change business models;

▪ reimbursement approval from governmental payors and private healthcare insurance providers; and

▪ reputation for technical leadership.

Shifts in industry market share can occur in connection with product issues, physician advisories, safety alerts, and publications about our products. In the current environment of managed care, consolidation among healthcare providers, increased competition and declining reimbursement rates, we are increasingly required to compete on the basis of price.

In addition, our vision care business operates within a highly competitive environment. In contact lenses, we face intense competition from competitors' products and may face increasing competition as other new products enter the market, for example with increased product entries from contact lens manufacturers in Asia. New market entrants and existing competitors are also challenging distribution models, with innovation in non-traditional, disruptive models such as direct-to-consumer, internet and other e-commerce sales opportunities, which could adversely impact the traditional eye care professional ("ECP") channel in which Alcon has a significant presence. Our major competitors in contact lenses offer competitive products and differentiated materials, plus a variety of other eye care products including ophthalmic pharmaceuticals, which may give them a competitive advantage in marketing their lenses. Our vision care business also competes with manufacturers of eyeglasses and providers of other forms of vision correction including ophthalmic surgery. The market for contact lenses is intensely competitive and is characterized by declining sales volumes for older and reusable product lines and growing demand for daily lenses and advanced materials lenses. As the market for contact lenses shifts toward daily lenses, we expect our sales in daily lenses to, at least in part, cannibalize sales of our reusable contact lenses and contact lens care offerings. Furthermore, our ocular health product category is also highly competitive. We cannot predict the timing or impact of the introduction of competitive products, including new market entries, "generic" versions of our approved products, or private label products that treat the same conditions as those of our products. In addition, the introduction of alternatives in medical devices and medical prescriptions could also alter the dry eye product market and impede our sales growth. Our ability to respond to these competitive pressures will depend on our ability to decrease our costs and maintain gross margins and operating results and to introduce new products successfully and on a timely basis, and to achieve manufacturing efficiencies and sufficient manufacturing capacity and capabilities for such products.

With respect to all of our other businesses, competitive pressures could decrease sales volumes for existing products or require us to decrease prices to respond to competitive pressures.

Our research and development efforts may not succeed in bringing new products to market, or may fail to do so in a cost-efficient manner, or in a manner sufficient to grow our business, replace lost revenue and income or take advantage of new technologies.

Our ability to continue to maintain and grow our business, to replace sales lost due to competition, and to bring to market products that take advantage of new and potentially disruptive technologies depends heavily on the success of our research and development activities. Our success relies on our ability to identify and successfully develop cost-effective new products that address unmet medical and consumer needs. To accomplish this, we commit substantial financial, human and capital resources to product research and development, both through our internal dedicated resources and through external investments, alliances, license arrangements, acquisitions and other transactions, which we collectively refer to as BD&L transactions. Developing and marketing new products involves a costly, lengthy and uncertain process. Even when our new product development projects make it to market, there have been, and in future may be, instances where projects are subsequently discontinued for technical, clinical, regulatory or commercial reasons. In spite of our investments, our research and development activities and external investments may not produce commercially successful new products that will enable us to replace income lost to our competitors or increase revenue to grow our business. We may not be able to successfully identify and obtain value from our external business development and strategic collaborative efforts. In addition, our new products may cannibalize a portion of the revenues we derive from existing products, therefore driving replacement revenue instead of incremental revenue.

Finally, even if we are able to secure regulatory approval and achieve initial commercial success of our products, our products may abruptly cease to be commercially viable due to the discovery of adverse health effects. See"—We may implement product recalls or voluntary market withdrawals of our products" below.

If we are unable to maintain a cost-effective flow of successful new products sufficient to maintain and grow our business, cover any sales erosion due to competition, and take advantage of market opportunities, this lack of innovation could have

9

a material adverse effect on our business, financial condition or results of operations. For a description of the government approval processes which must be followed to market our products, see "—Regulatory clearance and approval processes for our products are expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products" below and "Item 4. Information on the Company—4.B. Business Overview—Government Regulation".

Pricing pressure from changes in third-party payor coverage and reimbursement methodologies and potential regulatory price controls may adversely impact our ability to sell our products at prices necessary to support our current business strategy.

The prices, sales, and demand for some of our products, in particular our surgical products, could be adversely affected by the increased emphasis managed care organizations and governments continue to place on the delivery of more cost-effective medical therapies. For example, major third-party payors for hospital services, including government insurance programs, such as Medicare and Medicaid in the United States and certain private healthcare 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 clinical procedures. In addition, some third-party payors will not provide reimbursement for new products until we demonstrate the innovative value or improved patient outcome of the new product. If we are unable to demonstrate such innovative value or improved patient outcome, our products may not be eligible for reimbursement, which would severely impact our ability to grow the market for sales of those products. There have also been recent initiatives by third-party payors to challenge the prices charged for medical products. Physicians, eye care professionals and other healthcare providers may be reluctant to purchase our surgical products if they do not receive adequate reimbursement from third-party payors to cover the cost of those products and for procedures performed using those products. Reductions in the prices for our products in response to these trends could reduce our profit margins, which would adversely affect our ability to invest and grow our business.

Outside the US, governmental programs that typically reimburse at predetermined fixed rates may also decrease or otherwise limit amounts available through reimbursement. For example, in the EU, member states impose controls on whether products are reimbursable by national or regional health service providers and on the prices at which medical devices are reimbursed under state-run healthcare schemes. Some member states operate reference pricing systems in which they set national reimbursement prices by reference to those in other member states. Other governmental funding restrictions, legislative proposals and interpretations of policy may negatively impact amounts available through reimbursement, including by restricting payment increases to hospitals and other providers through reimbursement systems, or by restricting whether reimbursement is available for our products at all.

We expect that additional health care reform measures will be adopted in the future in the countries in which we operate, including those initiatives affecting coverage and reimbursement for our products, any of which could limit the amounts that governments will pay for health care products and services, which could adversely affect the growth of the market for our products or the demand for our products, or result in additional pricing pressures. We cannot predict the effect such reforms or the prospect of their enactment may have on our business.

Finally, the implementation of government price controls on our products or product categories in the jurisdictions in which we operate, or to which we may intend to expand in the future, could adversely affect the revenue we could obtain from sales of our products. For example, in India, the National Pharmaceutical Pricing Authority ("NPPA") controls the prices of drugs and medical devices listed under the National List of Essential Medicines and in 2017 imposed 75% to 85% price reductions on coronary stents (implantable medical devices intended to ensure an adequate flow of blood to the heart). The NPPA has begun to evaluate prices on other categories of medical devices, potentially including IOLs used in cataract surgeries. If the NPPA chooses to impose similar price reductions on IOLs from Alcon, this could have a negative impact on our surgical sales in India. It is also possible that regulatory agencies in other countries may consider similar or comparable price controls on our eye care products in the future, which could have an adverse impact on our business, financial condition and results of operations.

The unstable economic and financial environment in many countries and increasing global political and social instability may adversely impact our business.

We sell our products in more than 140 countries. As a result, local and regional economic and financial environments throughout the world influence and affect our results of operations and business.

Unpredictable political conditions currently exist in various parts of the world, including a backlash in certain areas against free trade, anti-immigrant sentiment, social unrest, a refugee crisis, terrorism and the risk of direct conflicts between nations. In addition, the current trade environment is extremely volatile, including the imposition of trade tariffs, trade or economic sanctions, or other restrictions. Changes in trade policy vis-à-vis countries that we operate in could affect our ability to and/or the cost of doing business in such countries. For example, we expect that the ongoing trade disputes between the United States and China and Russia, respectively, could potentially have an adverse effect on the export of our surgical equipment to either or both countries. In the United States, the current presidential administration's opposition to free trade agreements

10

could cause barriers to be raised to international trade, and the elimination of the Affordable Care Act's individual mandate could have a negative impact on individuals' ability to afford health insurance. Similarly, following the UK's "Brexit" vote and with the rise of nationalist, separatist and populist sentiment in various countries, there is a risk that barriers to free trade and the free movement of people may rise in Europe. As we have a sizable commercial presence in the UK, the uncertainty surrounding the implementation and effect of "Brexit" may impact our business in the UK and the rest of Europe, including our costs and the distribution of our products in those markets. Further, significant conflicts continue in parts of the Middle East, including conflicts involving Saudi Arabia and Iran, and with respect to places such as North Korea. Collectively, such difficult conditions could, among other things, disturb the international flow of goods and increase the costs and difficulties of international transactions.

In addition, local economic conditions may adversely affect the ability of payors, as well as our distributors, customers, suppliers and service providers, to pay for our products, or otherwise to buy necessary inventory or raw materials, and to perform their obligations under agreements with us. Although we make efforts to monitor these third parties' financial condition and their liquidity, our ability to do so is limited, and some of them may become unable to pay their bills in a timely manner, or may even become insolvent, which could negatively impact our business and results of operations. These risks may be elevated with respect to our interactions with fiscally-challenged government payors, or with third parties with substantial exposure to such payors. For example, we have significant outstanding receivable balances that are dependent upon either direct or indirect payment by various governmental and non-governmental entities across the world. The ultimate payment of these receivables is dependent on the ability of these governments to maintain liquidity primarily through borrowing capacity, particularly in the EU. If certain governments are not able to maintain access to liquidity through borrowing capacity, the ultimate payment of their respective portion of outstanding receivables could be at risk and impact profits and cash flow.

Economic conditions in our markets may also deteriorate due to epidemics or pandemics; natural and man-made disasters, including climatic events (including any potential effect of climate change), acts of war or terrorism, political unrest, fires or explosions; and other external factors over which we have no control. For example, an outbreak of a recent strain of coronavirus in China has resulted in thousands of cases in China and continues to spread in China and to other countries. As the Chinese government continues its attempts to contain the coronavirus by restricting the movement of goods and people in China, our business operations and ability to sell our products to customers and patients in China will be adversely impacted. In addition, if the coronavirus continues to spread outside of China, our activities worldwide could be adversely affected. These disruptions to our business could materially, adversely affect our revenues, financial condition, profitability, and cash flows. While we believe the coronavirus outbreak will have some negative impact on our near-term financial results as a result of a decline in surgical procedures and customer demand, the longer-term impact is difficult to assess or predict at this time.

To the extent that economic and financial conditions directly affect consumers, some of our businesses, including the elective surgical and contact lens businesses, may be particularly sensitive to declines in consumer spending, as the costs of elective surgical procedures and discretionary purchases of contact lenses are typically borne by individuals with limited reimbursement from their medical insurance providers or government programs. For example, while cataract surgery involving our monofocal IOLs is generally fully covered by medical insurance providers or government reimbursement programs, implantation of certain of our AT-IOL products may only be partially covered, with the individual paying out-of-pocket for the non-covered component. Accordingly, individuals may be less willing to incur the costs of these private pay or discretionary procedures or purchases in weak or uncertain economic conditions and may elect to forgo such procedures or products or to trade down to more affordable options.

Significant breaches of data security or disruptions of information technology systems and the use of Internet, social media and mobile technologies could adversely affect our business and expose people's personal information.

We are heavily dependent on critical, complex and interdependent information technology systems, including Internet-based systems, to support our business processes. In addition, Alcon and our associates rely on the Internet, social media tools, and mobile technologies as a means of communication and to gather information, which can include people's personal information. We are also increasingly seeking to develop technology-based products to improve patient welfare in a variety of ways, which could also result in us gathering personal information about patients and others electronically.

The size and complexity of these information technology systems, and, in some instances, their age, make them potentially vulnerable to external or internal security incidents, breakdowns, power outages, malicious intrusions, cybercrimes, including state-sponsored cybercrimes, malware, misplaced or lost data, programming or human errors, or other similar events. Furthermore, because cyber-threats continue to evolve, it is becoming increasingly difficult to detect and successfully defend against them. Consequently, there is a risk that a breach remains undetected for a period of time. 

We also currently rely on a number of older legacy information systems that are increasingly harder to maintain as we began implementing our new ERP system. By attempting to implement new systems while maintaining the legacy systems, we may be unable to integrate all of our systems to work together. See the risk factor "-We may experience difficulties implementing our new enterprise resource planning system" below for more details on our ongoing implementation of a new ERP system. 

11

Like many companies, we have experienced certain adverse incidents and expect to continue to experience them in the future and, as the external cyber-attack threat only keeps growing, we may not be able to prevent future breakdowns or breaches in our systems and we may not be able to prevent such events from having a material adverse effect on our business, financial condition, results of operations or reputation. Our risks are heightened because we are heavily reliant on our former parent company for operating and maintaining much of our information technology infrastructure until we are able to fully migrate our data and processes onto our own system.  We must rely on our former parent company to invest in the latest security capabilities to protect our systems from threats and disruptions. 

Any disruptive event could negatively impact important business processes, such as the conduct of scientific research and clinical trials, the submission of the results of such efforts to health authorities in support of requests for product approvals, the functioning of our manufacturing and supply chain processes, our compliance with legal obligations and our other key business activities, including our associates' ability to communicate with one another and with third parties. Such potential information technology issues could also lead to the loss of important information such as trade secrets or other intellectual property and could accelerate the development or manufacturing of competing products by third parties. Furthermore, malfunctions in software or in devices that make significant use of information technology, including our surgical equipment, could lead to a risk of harm to patients.

In addition, our routine business operations, including through the use of information technologies such as the Internet, social media, mobile technologies, and technology-based medical devices like our surgical equipment, also increasingly involve our gathering personal information (including sensitive personal information) about patients, vendors, customers, associates, collaborators and others. Breaches of our systems or those of our third-party contractors, or other failures to protect such information, could expose such people's personal information to unauthorized persons. Any such event could give rise to significant potential liability and reputational harm, including potentially substantial monetary penalties. We also make significant efforts to ensure that any international transfers of personal data are done in compliance with applicable law. We are subject to certain privacy laws, including Swiss privacy laws, the EU's General Data Protection Regulation and the California Consumer Privacy Act, which include operational and compliance requirements that are different than those previously in place and also includes significant penalties for non-compliance. Failure to comply with these laws could lead to significant liability. In addition, any additional restraints that may be placed on our ability to transfer such data could have a material adverse effect on our business, financial condition, results of operations and reputation.

We also use Internet, social media and mobile tools as a means to communicate with the public, including about our products or about the diseases our products are intended to treat. However, such uses create risks, such as the loss of trade secrets or other intellectual property. In addition, there continue to be significant uncertainties as to the rules and regulations that apply to such communications, and as to the interpretations that health authorities will apply in this context to the rules that do exist. As a result, despite our efforts to comply with applicable rules and regulations, there is a significant risk that our use of Internet, social media and mobile technologies for such purposes may cause us to nonetheless be found in violation of them.

Breaches of data security, technology disruptions, privacy violations, or similar issues could cause the loss of trade secrets or other intellectual property, expose personal information, interrupt our operations, all of which could result in enforcement actions or liability, including potential government fines, claims for damages, and shareholders' litigation. Any such events could require us to expend significant resources beyond those we already invest to further modify or enhance our protective measures, to remediate any damage, and to enable the continuity of our business.

We may experience difficulties implementing our new enterprise resource planning system.

We are engaged in a multi-year implementation of a new ERP system across our global commercial and manufacturing operations, which is intended to enhance and streamline our existing ERP system. ERP implementations are inherently complex and time-consuming projects that involve substantial expenditures on system software, implementation activities and business process reengineering. Any significant disruption or deficiency in the design and implementation of our new ERP system could adversely affect our ability to process orders, ship our products, provide services and customer support, fulfill contractual obligations or otherwise operate our business. For additional information, see "Item 4. Information on the Company—4.A. History and Development of the Company—Significant Acquisitions, Dispositions and other Events".

Financial markets, including inflation and volatile exchange rates, are unpredictable.

Financial market issues may also adversely affect our earnings, the return on our financial investments and the value of some of our assets. For example, inflation could accelerate, which could lead to higher interest rates, increasing our costs of raising capital. Uncertainties around future central bank and other economic policies in the United States and EU, as well as high debt levels in certain other countries, could also impact world trade. Sudden increases in economic, currency or financial market volatility in different countries have also impacted, and may continue to unpredictably impact, our business and results of operations, including the value of our investments in our pension plans. See also "—We may be underestimating our future pension plan obligations" below.

12

Changes in exchange rates between the US dollar, our reporting currency, and other currencies can also result in significant increases or decreases in our reported sales, costs and earnings as expressed in US dollars, and in the reported value of our assets, liabilities and cash flows. Despite any measures we may undertake in the future to reduce, or hedge against, foreign currency exchange risks, because a significant portion of our earnings and expenditures are in currencies other than the US dollar, and the fact that our expenditures in Swiss francs and US dollars are significantly higher than our revenue in Swiss francs and US dollars, respectively, any such exchange rate volatility may negatively and materially impact our business, results of operations and financial condition, and may impact the reported value of our net sales, earnings, assets and liabilities. The timing and extent of such volatility can be difficult to predict. Further, depending on the movements of particular foreign exchange rates, we may be materially adversely affected at a time when the same currency movements are benefiting some of our competitors. For more information on the effects of currency fluctuations on our Consolidated Financial Statements and on how we manage currency risk, see "Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Effects of Currency Fluctuations" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk".

Countries facing financial difficulties, including countries experiencing high inflation rates and highly indebted countries facing large capital outflows, may impose controls on the exchange of foreign currency. Such exchange controls could limit our ability to distribute retained earnings from our local affiliates, or to pay intercompany payables due from those countries.

Ongoing consolidation among distributors, retailers and healthcare provider organizations could increase both the purchasing leverage of key customers and the concentration of credit risk.

Increasingly, a significant portion of our global sales are made to a relatively small number of distributors, retail chains and other purchasing organizations, as consolidation and vertical integration have the potential to disrupt existing channels. The recent trend, which is present globally including in the United States (our largest market), has been toward further consolidation among distributors, retailers and other eye care industry customers, such as eye care professionals, including through the acquisition of consolidated ophthalmology practices by private equity and other venture fund investors. As a result, our customers are gaining additional purchasing leverage, which increases the pricing pressures facing our businesses.

In our surgical business, healthcare providers, physician practices, hospitals, and surgery centers around the world continue to consolidate in response to declining reimbursement rates and intensifying pressure to reduce healthcare delivery expenses. This consolidation is increasing the ability of large groups to negotiate price, accelerating the transition of the decision maker from physicians to cost-focused professional buyers, and potentially increasing price transparency or price referencing in instances of consolidation across borders. Such consolidation in the surgical market adds considerable downward pricing pressure to our product sales and margins.

In vision care, private label growth and retailer-branded lenses may drive the commoditization of contact lenses and further boost the bargaining power of our distributors and retailers. Moreover, we could become exposed to a concentration of credit risk as a result of any such concentration among our customers. If our customers consolidate and one or more of our major customers experienced financial difficulties, the effect on us would be substantially greater than in the past, and could include a substantial loss of sales and an inability to collect amounts owed to us.

If we fail to properly educate and train healthcare providers on our products, then customers may not buy our products.

We market our surgical products to healthcare providers, including ECPs, public and private hospitals, ambulatory surgical centers, eye clinics and ophthalmic surgeons' offices and group purchasing organizations and our vision care products to retailers and distributors. We have developed, and strive to maintain, strong relationships with members of each of these groups who assist in product research and development and advise us on how to satisfy the full range of consumer and surgeon needs. We rely on these groups to recommend our products to their patients and to other members of their organizations.

Contact lens and lens care consumers have a tendency not to switch products regularly and are repeat consumers. As a result, the success of these products relies on an ECP’s initial recommendation of our products, which may be based on our ability to educate the ECP on our products. Even if we are successful at educating ECPs on our products, ECPs may continue to lose influence in the consumer's selection of contact lenses, which would cause our business to become more dependent upon the success of educating consumers directly. If we had to increase our direct-to-consumer marketing, we could potentially face challenges in maintaining our good relationships with ECPs, who may view our direct-to-consumer marketing as a threat to their business.

In our surgical business, ophthalmic surgeons play a significant role in determining the course of treatment and, ultimately, the type of products that will be used to treat a patient for cataracts, vitreoretinal conditions, refractive errors and glaucoma, among other things. As a result, it is important for us to properly and effectively market our surgical products to surgeons. Acceptance of our surgical products also depends on our ability to train ophthalmic surgeons and their clinical staff on the safe and appropriate use of our products, which takes time. This training process may take longer than expected and may therefore affect our ability to increase sales. Following completion of training, we rely on the trained ophthalmic surgeons to advocate the benefits of our products in the broader marketplace. Convincing ophthalmic surgeons to dedicate the time and energy necessary for adequate training is challenging, and we may not be successful in these efforts. If we are not

13

successful in convincing ophthalmic surgeons of the merits of our products or educating them on the use of our products, they may not use our products and we will be unable to fully commercialize or profit from such products.

Our inability to forecast demand accurately may adversely affect our sales and earnings and add to sales variability from quarter to quarter.

We balance the need to maintain inventory levels that are sufficient to ensure competitive lead times against the risk of inventory obsolescence because of changing customer requirements, fluctuating commodity prices, changes to our products, product transfers or the life cycle of our products. To successfully manage our inventories, we must estimate demand from our customers and produce products in sufficient quantity that substantially correspond to that demand. If we fail to adequately forecast demand for any product, or fail to determine the optimal product mix for production purposes, we may face production capacity issues in manufacturing sufficient quantities of a given product, such as our IOLs, daily contact lenses or certain ocular health products. In addition, failures in our information technology systems, issues created by the implementation of our new enterprise resource planning ("ERP") system or human error could also lead to inadequate forecasting of our overall demand or product mix.

As the number of unique products (SKUs) we offer grows, particularly an increasing number of IOL and contact lens styles with varying diopters, the demand forecasting precision required for us to avoid production capacity issues will also increase. Accordingly, the continued proliferation of unique SKUs in our surgical and vision care portfolios could increase the risk of product unavailability and lost sales. Moreover, an increasing number of SKUs could increase global inventory requirements, especially for consigned products such as IOLs, negatively impacting our working capital performance and leading to write-offs due to obsolescence and expired products.

Compounding the risk of inaccurate forecasts, the manufacturing process for our products have lengthy lead times to acquire and install new equipment and product lines to ramp up production. Thus, if we fail to adequately forecast demand, then we may be unable to scale production in a timely manner to meet unexpected higher demand. For example, in 2016, we experienced shortfalls in our inventory that resulted in a temporary disruption in our ability to timely deliver sufficient amounts of our IOL products in the US, which had an adverse impact on our business and reputation.

In addition, the manufacturing process for our products is technically complex (such as sterile products that require sophisticated environmental controls), which heightens the risk of production failures. As a result, as the chance of production failures and lengthy supply interruptions is increased, the risk of inadequate supply increases.

Finally, a significant portion of our vision care products are sold to major healthcare distributors and major retail chains in the United States. Consequently, our sales and quarterly growth comparisons, as well as our estimates for required inventory levels, may be affected by fluctuations in the buying patterns of such buyers. These fluctuations may result from seasonality, pricing, a recall of a competitor’s product, large retailers' and distributors' buying decisions or other factors. If we overestimate demand and produce too much of a particular product, we face a risk of inventory obsolescence, leaving us with inventory that we cannot sell profitably or at all. By contrast, if we underestimate demand and produce insufficient quantities of a product, we could be forced to choose between producing additional unexpected quantities of that product at a higher price or foregoing sales.

Disruptions in our global supply chain or important facilities could cause production interruptions, delays and inefficiencies.

We are engaged in manufacturing and sourcing of products and materials on a global scale. Our operations and those of our suppliers could be disrupted by a number of factors, including: disruptions in logistics; strikes and other labor disputes; loss or impairment of key manufacturing sites; loss of key suppliers; supplier capacity constraints; raw material and product quality or safety issues; industrial accidents or other occupational health and safety issues; the impact on our suppliers of tighter credit or capital markets; epidemics and pandemics; and natural and man-made disasters, including climatic events (including any potential effect of climate change), acts of war or terrorism, political unrest, fires or explosions and other external factors over which we have no control.

In addition, we single-source or rely on limited sources of supply for many components, raw materials and production services, such as sterilization, used in the production of our products. The loss of one of these suppliers or the inability of any such 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. For example, some of our products and product components are sterilized using ethylene oxide (“EtO”), which we purchase from large-scale suppliers. Recent concerns about the impact of EtO on the environment when released at unsafe levels have led to regulatory enforcement activities against EtO suppliers, including closures of their facilities. Any facility closures or disruption to the operations of these EtO suppliers could delay or prevent our ability to commercialize our products and lead to product backorders for our customers, which could have a materially negative impact on our sales and profitability. In addition, any regulatory enforcement activities against us for our use of EtO could result in financial, legal, business, and reputational harm to us. Moreover, a price increase from a supplier where we do not have a supply alternative could cause our profitability to decline if we cannot increase our prices to our customers. 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 such suppliers.

14

Finally, in some cases, we manufacture our products at a single manufacturing facility. In many cases, regulatory approvals of our products are limited to a specifically 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. Problems may arise during the manufacturing process for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, failure to follow specific protocols and procedures, destruction of or damage to any facility (as a result of a natural or man-made disaster, use and storage of hazardous materials or other events) or other reasons. In the event of a quality control issue, we may voluntarily, or our regulators may require us to, close a facility indefinitely. If any such problems arise, we may be unable to purchase substitute products from third-party manufacturers to make up any resulting shortfall in the production of a product, as such third-party manufacturers may only exist in limited numbers or appropriate substitutes may not be available. This risk is particularly relevant with respect to products for which we represent a substantial portion of the market, such as vitreoretinal equipment and other vitreoretinal-related products. A failure to deliver products on a timely basis could lead to customer dissatisfaction and damage to 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.

Our existing debt may limit our flexibility to operate our business or adversely affect our business and our liquidity position.

We incurred $3.5 billion in total indebtedness in connection with the Spin-off. In addition, we may incur additional indebtedness in the future for various reasons, including fluctuations in operating results, capital expenditures and potential acquisitions. Our existing (and any future) debt requires us to dedicate a portion of our cash flows to service interest and principal payments and, if interest rates rise, this amount may increase.

Our indebtedness may:

▪ make it difficult for us to satisfy our obligations, including making interest payments on our debt obligations;

▪ require us to dedicate a portion of our cash flows to payments on our debt, reducing our ability to use our cash flows to fund capital expenditures, BD&L or other strategic transactions, working capital and other general operational requirements, or to pay dividends to our shareholders;

▪ limit our flexibility to plan for and react to changes in our business;

▪ negatively impact our credit rating and increase the cost of servicing our debt;

▪ place us at a competitive disadvantage relative to some of our competitors that have less debt than us;

▪ increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy; and

▪ make it difficult to refinance our existing debt or incur new debt on terms that we would consider to be commercially reasonable, if at all.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition or result of operations or cause a significant decrease in our liquidity and impair our ability to pay amounts due on our indebtedness.

Certain debt under our Facilities Agreement has a variable interest rate based on LIBOR.

On March 6, 2019, we entered into a $0.8 billion unsecured five-year term loan facility ("Facility B") and a $1.0 billion unsecured five-year committed multicurrency revolving credit facility (the "Revolving Facility”). The Revolving Facility was undrawn as of December 31, 2019. Facility B bears an interest rate equal to the interest rate benchmark (USD prevailing London Interbank Offered Rate (“LIBOR”)), plus an applicable margin.

On July 27, 2017, the UK’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. The announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. It is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR, whether LIBOR rates will cease to be published or supported before or after 2021 or whether any additional reforms to LIBOR may be enacted in the UK or elsewhere.

Our Facilities Agreement provides for an alternative reference rate in the event LIBOR is discontinued. The alternative reference rate is based on the rate for which each of three reference banks could fund itself in USD for the relevant period with reference to the unsecured wholesale funding market. This alternative reference rate may perform differently than LIBOR for a number of reasons, including the fact that LIBOR is calculated using a greater number of participating banks. As a result, we may incur significant costs to transition our borrowing arrangements from LIBOR, which may have an adverse effect on our results of operations.

15

We may need to obtain additional financing which may not be available or, if it is available, may not be on favorable terms and may result in a reduction in the percentage ownership of our then-existing shareholders.

We may need to raise additional funds to:

▪ finance unanticipated working capital requirements or refinance our existing indebtedness;

▪ develop or enhance our infrastructure and our existing products and services;

▪ engage in mergers and acquisitions or strategic BD&L transactions;

▪ fund strategic relationships; and

▪ respond to competitive pressures.

If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our then-existing shareholders may be diluted, and holders of these securities may have rights, preferences or privileges senior to those of our then-existing shareholders.

Our reliance on outsourcing key business functions to third parties heightens the risks faced by our businesses.

We outsource the performance of certain key business functions to third parties, and invest a significant amount of effort and resources into doing so. Such outsourced functions can include research and development collaborations, clinical trial activities, manufacturing operations, human resources, warehousing and distribution activities, certain finance functions, submission of regulatory applications, marketing activities, data management and others. Outsourcing of services to third parties could expose us to suboptimal quality of service delivery or deliverables and potentially result in repercussions such as missed deadlines or other timeliness issues, erroneous data, supply disruptions, non-compliance (including with applicable legal or regulatory requirements and industry standards) and/or reputational harm, with potential negative effects on our results.

For example, some of our products are manufactured or assembled fully or in part by third parties under contract. Business conditions and regulatory actions may lead to recalls of products assembled or manufactured by these companies over which we have no control, may result in delays in shipments of such products or may cause these contractors to abandon their contract manufacturing agreements. Also, in many developing countries, we rely heavily on third party distributors and other agents for the sales, marketing and distribution of our products. Our reliance on outsourcing may reduce the potential profitability of such products.

In addition, we continue to rely on our former parent company for certain key business functions, including certain transitional services that are covered under the Transitional Services Agreement, certain manufacturing needs that are covered under the Manufacturing and Supply Agreement and certain transitional distribution services that are covered under a Transitional Distribution and Services Agreement. For example, we continue to rely on our former parent company for the production of our entire supply of viscoelastics. We currently sell viscoelastics on a standalone basis for procedures using our products and also use them as a component in our surgical pack offerings. As a result, a shortage in our supply of viscoelastics could not only cause a failure in our ability to meet our commitments to our customers, but could also have significant collateral impacts on other parts of our business due to related decreases in the rates of procedures requiring viscoelastics that feature our equipment or other products.

Ultimately, if the third parties, including our former parent company, fail to meet their obligations to us, we may lose our investment in the collaborations and fail to receive the expected benefits of these arrangements. Contractual remedies may be inadequate to compensate us for the damage to our business or lost profits. In addition, many of the companies to which we outsource key business functions may have more limited resources compared to us, and, in particular, may not have internal compliance resources comparable to those within our organization. Should any of these third parties fail to carry out their contractual duties or regulatory obligations or fail to comply with the law, including laws relating to export and trade controls, or should they act inappropriately in the course of their performance of services for us, there is a risk that we could be held responsible for their acts, that our reputation may suffer, and that penalties may be imposed upon us. Any such failures by third parties could have a material adverse effect on our business, financial condition, results of operations or reputation.

Even if we protect our intellectual property to the fullest extent permitted by applicable law, our competitors and other third parties could develop and commercialize products similar or identical to ours, which could impair our ability to compete.

We rely on a combination of patents, trademarks, and copyrights to protect our intellectual property. The scope, strength and duration of those intellectual property rights can vary significantly from product to product and country to country. We also rely on a variety of trade secrets, know-how, and other confidential information to supplement these protections. In the aggregate, these intellectual property rights are of material importance to our business.

The protections afforded by these intellectual property rights may limit the ability of competitors to commercialize products covered by the applicable intellectual property rights, but they do not prevent competitors from marketing non-infringing products that compete with our products. In addition, these intellectual property rights may be challenged by third parties

16

and regulatory agencies, and intellectual property treated as trade secrets and protected through confidentiality agreements may be independently developed by third parties and/or subject to misappropriation by others. Furthermore, in certain countries, particularly in China, due to ambiguities in the law and enforcement difficulties, intellectual property rights may not be as effective as in Western Europe or the United States. Therefore, even if we protect our intellectual property to the fullest extent permitted by applicable law, competitors and other third parties may nonetheless develop and commercialize products similar or identical to ours, which could impair our ability to compete and have an adverse effect on our business, financial condition and results of operations.

Unauthorized or illegal activity may occur within the distribution channel for our products, which may result in lowering the prices we receive for our products and could harm our business and reputation.

In the United States and elsewhere, our products are subject to competition from lower priced versions of our products and competing products from countries where there are government imposed price controls or other market dynamics that make the products lower priced. Despite government regulations aimed at limiting such imports, the volume of imports may continue to rise in certain countries. This importation may adversely affect our profitability in the United States and elsewhere, and could become more significant in the future.

In addition, our industry continues to be challenged by the vulnerability of distribution channels to counterfeiting. Reports of increased levels of counterfeiting could materially affect consumer confidence in the authentic product and harm our business or lead to litigation. In addition, it is possible that adverse events caused by unsafe counterfeit products could mistakenly be attributed to the authentic product. If a product of ours was the subject of counterfeits, we could incur substantial reputational and financial harm.

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

As part of our growth strategy, we regularly evaluate and pursue strategic BD&L transactions to expand or complement our business. Such ventures may bring new technologies, products, or customers to enhance our prominent position in the ophthalmic industry. We may be unable to identify suitable acquisition candidates. Acquisition activities can be thwarted by overtures from competitors for the targeted candidates and governmental regulation (including market concentration limitations and other competition laws). Further, even if we are successful in completing an acquisition, successful integration of the venture can be complicated by corporate cultural differences, difficulties in retention of key personnel, customers and suppliers, coordination with other products and processes, and changing market preferences. Moreover, acquisitions demand significant company resources and could divert management's attention from our existing business, could result in liabilities being incurred that were not known at the time of acquisition or could create tax or accounting issues. We often acquire early-stage technologies, which may fail in the development process or proof-of-concept stage, or which we may not be able to integrate into or use to develop commercialized products. 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.

Litigation, including product liability lawsuits, and governmental investigations may harm our business or otherwise distract our management.

We, from time to time, are, and may in the future be, subject to various investigations and legal proceedings that arise or may arise, such as proceedings regarding sales and marketing practices, pricing, corruption, trade regulation and embargo legislation (including laws relating to export and trade controls), product liability, commercial disputes, employment and wrongful discharge, business disputes, securities, insider trading, occupational health and safety, environmental, tax audits, cybersecurity, data privacy and intellectual property matters.

We also periodically receive inquiries from antitrust and competition authorities in various jurisdictions and, from time to time, are named as a defendant in antitrust lawsuits. For example, since the first quarter of 2015, more than 50 putative class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested. See "Item 8. Financial Information—8.A. Consolidated Statements and Other Financial Information—Legal Proceedings".

In addition, from time to time, we are named as a defendant in product liability lawsuits and, to the extent we are, we may in the future incur material liabilities relating to such product liability claims, including claims alleging product defects and/or alleged failure to warn of product risks. The risk of material product liability litigation is increased in connection with product recalls and voluntary market withdrawals. We have voluntarily taken products off the market in the past, including global voluntary market withdrawal of the CyPass micro-stent. The combination of our insurance coverage, cash flows and reserves may not be adequate to satisfy product liabilities that we may incur in the future. Successful product liability claims brought against us or recalls of any of our products could have a material adverse effect on our business, results of operations or our financial condition.

17

Because of our extensive international operations, we could be adversely affected by violations of worldwide anti-bribery laws, including those that prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business, such as the U.S. Foreign Corrupt Practices Act (the “FCPA”), and laws that prohibit commercial bribery. Our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our associates or agents. Violations of these laws, or allegations of such violations, could disrupt our business and adversely affect our reputation and our business, results of operations, cash flows and financial condition.

Substantial, complex or extended litigation could cause us to incur large expenditures, affect our ability to market and distribute our products and distract our management. For example, intellectual property litigation in which we are named as a defendant from time to time could result in significant damage awards and injunctions that could prevent the manufacture and sale of the affected products or require us to make significant royalty payments to continue to sell the affected products. Lawsuits by associates, shareholders, customers or competitors, or potential indemnification obligations and limitations of our director and officer liability insurance, could be very costly and substantially disrupt our business. Disputes with such companies or individuals from time to time are not uncommon, and we may be unable to resolve such disputes on terms favorable to us.

Even meritless claims could subject us to adverse publicity, hinder us from securing insurance coverage in the future or require us to incur significant legal costs. As a result, significant claims or legal proceedings to which we are a party could have a material adverse effect on our business, prospects, financial condition and results of operations.

Failure to comply with law, legal proceedings and government investigations may have a significant negative effect on our results of operations.

We are obligated to comply with the laws of all of the countries around the world in which we operate and sell products. These laws cover an extremely wide and growing range of activities. Such legal requirements can vary from country to country and new requirements may be imposed on us from time to time as government and public expectations regarding acceptable corporate behavior change, and enforcement authorities modify interpretations of legal and regulatory provisions and change enforcement priorities. In addition, our associates, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, in violation of such laws and public expectations.

For example, we are faced with increasing pressures, including new laws and regulations from around the world, to be more transparent with respect to how we do business, including with respect to our interactions with healthcare professionals and organizations. These laws and regulations include requirements that we disclose payments or other transfers of value made to healthcare professionals and organizations, including by our associates or third parties acting on our behalf, as well as with regard to the prices for our products. We are also subject to certain privacy laws, including Swiss privacy laws, the EU's General Data Protection Regulation, and the California Consumer Privacy Act, which include operational and compliance requirements that are different than those previously in place and also includes significant penalties for non-compliance.

In addition, we have significant activities in a number of developing countries around the world, both through our own associates, and through third parties retained to assist us. In some of these countries, a culture of compliance with law may not be as fully developed as in other countries.

To help us in our efforts to comply with the many requirements that impact us, we have a significant global ethics and compliance program in place, and we devote substantial time and resources to efforts to conduct our business in a lawful and publicly acceptable manner. Nonetheless, our ethics and compliance program may be insufficient or associates may fail to comply with the training they received, and any actual or alleged failure to comply with law or with heightened public expectations could lead to substantial liabilities that may not be covered by insurance, or to other significant losses, and could affect our business, financial position and reputation.

In particular, in recent years, there has been a trend of increasing government investigations, legal proceedings and law enforcement activities against companies and executives operating in our industry. Increasingly, such activities can involve criminal proceedings, and can retroactively challenge practices previously considered to be acceptable. For instance, in 2017 and 2018, Alcon and Novartis, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the US Department of Justice ("DoJ") and the SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third-party distributors, both before and after Alcon became part of the Novartis Group. Alcon is cooperating with this investigation. Alcon aggregate net sales for its surgical and vision care businesses in the Asia and Russia region represented 25.8%, 24.2%, and 21.1% of Alcon total net sales during the years ended December 31, 2019, 2018 and 2017, respectively. For additional information, including with respect to certain Novartis obligations to indemnify Alcon, see "Item 8. Financial Information—8.A. Consolidated Statements and Other Financial Information—Legal Proceedings".

18

Such proceedings are inherently unpredictable, and large judgments or penalties sometimes occur. As a consequence, we may in the future incur judgments or penalties that could involve large cash payments, including the potential repayment of amounts allegedly obtained improperly, and other penalties, including enhanced damages. In addition, such proceedings may affect our reputation, create a risk of potential exclusion from government reimbursement programs, and may lead to civil litigation. As a result, having taken into account all relevant factors, we may in the future enter into major settlements of such claims without bringing them to final legal adjudication by courts or other such bodies, despite having potentially significant defenses against them, in order to limit the risks they pose to our business and reputation. Such settlements may require us to pay significant sums of money, and to enter into corporate integrity or similar agreements intended to regulate company behavior for a period of years, which can be costly to operate under.

Any such judgments or settlements, and any accruals that we may take with respect to potential judgments or settlements, could have a material adverse impact on our business, financial condition or results of operations, as well as on our reputation.

We may implement product recalls or voluntary market withdrawals of our products.

The manufacturing and marketing of medical devices, including surgical equipment and instruments, involve an inherent risk that our products may prove to be defective and cause a health risk. We are also subject to a number of laws and regulations requiring us to report adverse events associated with our products. Such adverse events and potential health risks identified in our monitoring efforts or from ongoing clinical studies may lead to voluntary or mandatory market actions, including recalls, product withdrawals or changes to the instructions for using our devices.

Governmental authorities throughout the world, including the FDA, have the authority to require the recall of our commercialized products in the event of material deficiencies or defects in, for example, design, labeling or manufacture. In the case of the FDA, it has the authority to require a recall of a medical device if there is a finding of a reasonable probability that the device would cause serious adverse health consequences or death.

We may also voluntarily initiate certain field actions, such as a correction or removal of our products in the future as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. If a correction or removal of one of our devices is initiated to reduce a health risk posed by the device, or to remedy a violation of the Federal Food, Drug, and Cosmetic Act ("FDCA") caused by the device that may present a risk to health, the correction or removal must be reported to the FDA. Similarly, field actions conducted for safety reasons in the European Economic Area ("EEA") must be reported to the regulatory authority in each country where the field action occurs.

We have voluntarily taken products off the market in the past, including the global discontinuation of the AcrySof Cachet phakic IOL, the voluntary recall of AcrySof IQ ReSTOR, AcrySof IQ ReSTORToric, and certain AcrySof IQ Toric IOLs manufactured specifically for the Japan market, and the global voluntary market withdrawal of the CyPass micro-stent. In the year ended December 31, 2018, we recognized an impairment charge of $337 million in relation to the CyPass micro-stent market withdrawal. Based on this experience, we 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 similar competing product manufactured by another manufacturer could impair sales and subsequent regulatory approvals of other similar products we market and lead to a general loss of customer confidence in our products. A product recall could also lead to a health authority inspection or other regulatory action or to us being named as a defendant in lawsuits. See "—Litigation, including product liability lawsuits, and governmental investigations may harm our business or otherwise distract our management" above.

We may be unable to attract and retain qualified personnel.

We highly depend upon skilled personnel in key parts of our organization, and we invest heavily in recruiting, training and retaining qualified individuals, including significant efforts to enhance the diversity of our workforce. The loss of the service of key members of our organization—including senior members of our scientific and management teams, high-quality researchers and development specialists and skilled personnel in developing countries—could delay or prevent the achievement of major business objectives.

Our future growth will demand talented associates and leaders, yet the market for talent has become increasingly competitive. In particular, emerging markets are expected to continue to be an important source of growth, but in many of these countries there is a limited pool of executives with the training and international experience needed to work successfully in a global organization like Alcon.

The supply of talent for certain key functional and leadership positions is decreasing, and a talent gap is visible for some professions and geographies—engineers in Germany, for example. Recruitment is increasingly regional or global in specialized fields such as clinical development, biosciences, chemistry and information technology. In addition, the geographic mobility of talent is expected to decrease in the future, with talented individuals in developed and developing countries anticipating ample career opportunities closer to home than in the past. This decrease in mobility may be worsened by anti-immigrant sentiments in many countries, and laws discouraging immigration.

19

In addition, our ability to hire qualified personnel also depends on the flexibility to reward superior performance and to pay competitive compensation. Laws, regulations and customary practice on executive compensation, including legislation and customary practice in our home country, Switzerland, may restrict our ability to attract, motivate and retain the required level of qualified personnel. For example, pay benchmarks for Swiss and other European companies may be inconsistent with the current market in the United States, making it more difficult to recruit US talent. Further, certain functions are now maintained in Switzerland, which may require certain US associates to relocate to Switzerland. Alternatively, certain associates will be required to travel frequently between Switzerland and the US These associates may be unwilling or unable to make such a commitment.

We may be underestimating our future pension plan obligations.

We sponsor pension and other post-employment benefit plans in various forms. These plans cover a significant portion of our associates. While most of our plans are now defined contribution plans, certain of our associates remain under defined benefit plans. For these defined benefit plans, we are required to make significant assumptions and estimates about future events in calculating the present value of expected future plan expenses and liabilities. These include assumptions used to determine the discount rates we apply to estimated future liabilities and rates of future compensation increases. Assumptions and estimates we use may differ materially from the actual results we experience in the future, due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants, among other variables. For example, in 2019, a decrease in the interest rate we apply in determining the present value of expected future total defined benefit plan obligations (consisting of pension and other post-employment benefit obligations) of one-quarter of one percent would have increased our year-end defined benefit obligation by $46 million. Any differences between our assumptions and estimates and our actual experience could require us to make additional contributions to our pension funds. Further, additional employer contributions might be required if plan funding falls below the levels required by local rules.

Our operations in emerging markets, particularly China, expose us to heightened risks associated with conditions in those markets.

Economic, social and political conditions, laws, practices and local customs vary widely among the countries, particularly in emerging markets, in which we sell our products. Our operations in emerging markets, particularly China, are subject to a number of heightened risks and potential costs, including lower profit margins, less stringent protection of intellectual property and economic, political and social uncertainty. For example, many emerging markets have currencies that fluctuate substantially. If currencies devalue and we cannot offset with price increases, our products may become less profitable. Inflation in emerging markets also can make our products less profitable and increase our exposure to credit risks. We have previously experienced currency fluctuations, unstable social and political conditions, inflation and volatile economic conditions in emerging markets, which have impacted our profitability in the emerging markets in which we operate and we may experience such impacts in the future.

Further, in many emerging markets, average income levels are relatively low, government reimbursement for the cost of healthcare products and services is limited and prices and demand are sensitive to general economic conditions. These challenges may prevent us from realizing the expected benefits of our investments in such emerging markets, which could have an adverse impact on our business, financial condition and results of operations.

Regulatory clearance and approval processes for our products are expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products.

Our businesses are subject to varying degrees of governmental regulation in the countries in which we operate, and the general trend is toward increasingly stringent regulation. The exercise of broad regulatory powers by the FDA continues to result in increases in the amounts of testing and documentation required for the commercialization of regulated products and a corresponding increase in the expense of product introduction. Similar trends are also evident in the EU and in other markets throughout the world. Compliance with these laws and regulations is costly and materially affects our business. Among other effects, health care regulations substantially increase the time, difficulty, and costs incurred in obtaining and maintaining approval to market newly developed and existing products.

Most of our products are regulated as medical devices and face difficult development and approval processes in most jurisdictions we operate in, particularly in the US and EU; however other products may be regulated as other categories such as lasers, drug products, dietary supplements, and medical foods. We discuss these regulations more thoroughly "Item 4. Information on the Company—4.B. Business Overview—Government Regulation—Product Approval and Monitoring".

The process of developing new products and obtaining necessary FDA clearance or approval, CE marking, or other regulatory marketing authorization is lengthy, expensive, and uncertain. Our potential products could take a significantly longer time than we expect to gain marketing authorization or may never gain such marketing authorization. Regulatory authorities may require additional testing or clinical data to support marketing authorization, delaying authorization and market entry of our products. Even if the FDA or another regulatory agency or notified body 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-

20

marketing studies or impose other post-marketing obligations. We may be unable to obtain the necessary regulatory clearances or approvals for any product on a timely basis or at all. If a regulatory authority delays authorization of a potentially significant product, our market value and operating results may decline. Similarly, if we are unable to obtain regulatory approval or CE marking of our products, we will not be able to market these products, which would result in a decrease in our sales.

We may be unable to successfully maintain the registrations, licenses, clearances or other authorizations we have received or may receive in the future. We also routinely make minor modifications to our products, labeling, instructions for use, manufacturing process and packaging that may trigger a requirement to notify regulatory authorities or to update such registrations or authorizations. This may subsequently require us to manage multiple versions of individual products around the world, depending on the status of any re-registration approvals. Managing such multiple versions may require additional inventory in the form of "bridging stock", extensive redress operations and inventory increases that could exceed our manufacturing capacity or supply chain ability at the time. This could result in prolonged product shortages that could negatively impact our sales, both in terms of any unavailable products and the potential loss of customers that opt for another supplier.

The loss of previously received clearances or approvals, or the failure to comply with existing or future regulatory requirements could also have a material adverse effect on our business. For example, we offer custom surgical pack products that combine both Alcon and third-party products. Changes in local regulatory statutes, health authority practices, or local importation laws, or the failure of Alcon or our suppliers comply with them, could result in our products being barred from importation into a given territory. Continued growth in our sales and profits will depend, in part, on the timely and successful introduction and marketing of some or all of the products for which we are currently pursuing approval.

The manufacture of our products is highly regulated and complex.

The manufacture of our product portfolio is complex and heavily regulated by governmental health authorities around the world, including the FDA. Whether our products are manufactured at our own dedicated manufacturing facilities or by third parties, we must ensure that all manufacturing processes comply with current Good Manufacturing Practices, quality system requirements, and other applicable regulations, as well as with our own high quality standards. In recent years, health authorities have substantially intensified their scrutiny of manufacturers' compliance with such requirements.

Any significant failure by us or our third-party suppliers to comply with these requirements or the health authorities' expectations may cause us to shut down our production facilities or production lines or we could be prevented from importing our products from one country to another. Moreover, if we fail to properly plan for manufacturing capacity, the complexity of our manufacturing process could lead to a long lead time to increase capacity. Any of these events could lead to product shortages, or to our being entirely unable to supply products to customers and consumers for an extended period of time. Such shortages or shutdowns have led to, and could continue to lead to, significant losses of sales revenue and to potential third-party litigation. In addition, health authorities have in some cases imposed significant penalties for such failures to comply with regulatory requirements. A failure to comply fully with regulatory requirements could also lead to a delay in the approval of new products to be manufactured at the impacted site.

We may be subject to penalties if we fail to comply with post-approval legal and regulatory requirements and our products could be subject to restrictions or withdrawal from the market.

The research, development, testing, manufacturing, sale 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, tracking, reporting, distributing, import, export, samples, electronic records and electronic signatures.

Among other requirements, we are required to comply with applicable adverse event and malfunction reporting requirements for our products. For example, for our medical device products, in the US, we are required to report to the FDA any incident in which one of our marketed devices may have caused or contributed to a death or serious injury or has malfunctioned and the malfunction of the device or a similar device that we market would be likely to cause or contribute to death or serious injury if the malfunction were to recur. In addition, all manufacturers placing medical devices on the market in the EEA are legally required to report any serious or potentially serious incidents involving devices produced or sold by the manufacturer to the relevant authority in those jurisdictions where any such incident occurred.

Our advertising and promotional activities are also subject to stringent regulatory rules and oversight. The marketing approvals from the FDA and other regulators of certain of our products are, or are expected to be, limited to specific uses. We are prohibited from marketing or promoting any uncleared or unapproved use of our product, referred to as "off-label" use. In addition to promoting our products in a manner consistent with our clearances and approvals, we must have adequate substantiation for the claims we make for our products. If any of our claims are determined to be false, misleading or deceptive, we could be subject to enforcement action. As Alcon and our associates increasingly use social media to communicate, and given the speed of dissemination of information online, there is a heightened risk that Alcon or one of our associates sends a message that may be deemed inappropriate or prohibited by a regulatory authority. In addition, unsubstantiated claims

21

also present a risk of consumer class action or consumer protection litigation and competitor challenges. In the past, we have had to change or discontinue promotional materials because of regulatory agency requests, and we are exposed to that possibility in the future.

Failure to comply with statutes and regulations administered by the FDA and other regulatory bodies or failure to adequately respond to any notices of violation or any similar reports could result in, among other things, any of the following enforcement actions:

▪ warning letters or untitled letters issued by the FDA;

▪ fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution;

▪ detention of imported products;

▪ delays in approving, or refusal to approve, our products;

▪ withdrawal or suspension of approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies;

▪ product recall or seizure;

▪ operating restrictions or interruption of production; and

▪ inability to export to certain countries.

If any of these items were to occur, it could result in unanticipated expenditures to address or defend such actions, could harm our reputation and could adversely affect our business, financial condition and results of operations.

We are subject to laws targeting fraud and abuse in the healthcare industry.

We are subject to various global laws pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws. For example, the US federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for, purchasing, leasing, ordering, arranging for or recommending the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. These US laws have been interpreted to apply to arrangements between medical device manufacturers, on the one hand, and prescribers, purchasers, formulary managers and other healthcare-related professionals, on the other hand. The US government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Pricing and rebate programs for drugs reimbursed under federal healthcare programs must comply with the Medicaid drug rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, the Veterans Health Care Act of 1992, as amended, and the Deficit Reduction Act of 2005, as amended. The statutes and regulations governing the various price reporting requirements are complex and have changed over time, and the US government has not given clear guidance on many issues. In addition, recent statutory and regulatory developments have not yet been applied by the government or courts to specific factual situations. We believe that we are in compliance with all applicable government price reporting requirements, but there is the potential that the Centers for Medicare & Medicaid Services ("CMS"), other regulatory and law enforcement agencies or a court could arrive at different interpretations, with adverse financial or other consequences for us. 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 these activities are also potentially subject to federal and state consumer protection and unfair competition laws. Some European Union bodies and most European Union member states and Japan impose controls and restrictions that are similar in nature or effect to those described above.

In recent years, the US government and several US states have enacted legislation requiring medical device companies to establish marketing compliance programs and file other periodic reports. Similar legislation is being considered in other US states. Many of these requirements are new and uncertain, and available guidance is limited. We could face enforcement action, fines and other penalties and could receive adverse publicity, all of which could harm our business, if it is alleged that we have failed to fully comply with such laws and regulations. Similarly, if the physicians or other providers or entities that we do business with are found to have not complied with applicable laws, they may be subject to sanctions, which could also have a negative impact on our business.

Depending on the circumstances, failure to meet these applicable legal and 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, any of which could have a material adverse effect on our business, financial condition or results of operations.

Legislative and regulatory reforms may impact our ability to develop and commercialize our products.

The global regulatory environment is increasingly stringent and unpredictable. Unexpected changes can have an adverse impact on our business, financial condition and results of operations.

First, it could be costly and onerous to comply with changes or new requirements relating to the regulatory approval process or postmarket requirements applicable to our products in various jurisdictions. As discussed in "Item 4. Information on the

22

Company—4.B. Business Overview—Government Regulation—Product Approval and Monitoring" the EU has made recent changes to its regulatory regime. In addition, several countries that did not have regulatory requirements for medical devices have established such requirements in recent years, and other countries have expanded, or plan to expand, their existing regulations. While harmonization of global regulations has been pursued, requirements continue to differ significantly among countries. Further, the FDA is also pursuing various efforts to modernize its regulation of devices, including potential changes to the 510(k) pathway such as limiting reliance on older predicate devices and establishing an alternative 510(k) pathway that permits reliance on objective performance criteria. We expect this global regulatory environment to continue to evolve, which could impact the cost of, the time needed to approve, and ultimately, our ability to maintain existing approvals or obtain future approvals for, our products.

Second, new legislation and new regulations and interpretations of existing health care statutes and regulations are frequently adopted, any of which could affect our future business and results of operations. For example, in the US, there have been a number of health care reform legislative and regulatory measures proposed and adopted at the federal and state government levels that affect the health care system generally and that have had significant impact on our business.

Third, changes to current regulations in certain countries, including the United States, requiring a prescription for the purchase of contact lenses could have a significant impact on the way we market and distribute contact lens and contact lens care products, by limiting the role of the ECP as an intermediary in the sale of our vision care products. Such changes could require us to incur significant costs to update our marketing and distribution methodologies and could adversely affect the sales of our vision care products.

Finally, within our surgical business, a considerable portion of our sales and sales growth rely on patient-pay premium technologies, in markets where access to these technologies has been established. For example, in the US, two landmark rulings issued by the CMS established a bifurcated payment system for certain of our AT-IOLs pursuant to which part of the cost of the cataract surgery with such AT-IOLs would be reimbursed under Medicare, with the remaining cost paid out-of-pocket. For more details, see "Item 4. Information on the Company—4.B. Business Overview—Our Products—Surgical". To the extent regulatory bodies in the US, such as CMS, or other health authorities outside the US, decide to amend the regulations governing patient-pay reimbursement for advanced technologies, our sales and sales growth could be negatively impacted.

We are subject to environmental, health and safety laws and regulations.

We are subject to numerous national and local environmental, health and safety laws and regulations, including relating to the discharge of regulated materials into the environment, human health and safety, laboratory procedures and the generation, handling, use, storage, treatment, release and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these hazardous materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our generation, handling, use, storage, treatment, release or disposal of hazardous materials or wastes, we could be held liable for any resulting damages, and any liability could materially adversely affect our business, operating results or financial condition. Our insurance may not provide adequate coverage against potential liabilities. If we fail to comply with applicable environmental, health and safety laws and regulations, we may face significant administrative, civil or criminal fines, penalties or other sanctions. In addition, we may incur substantial costs to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time, including any potential laws and regulations that may be implemented in the future to address global climate change concerns. Compliance with current or future environmental, health and safety laws and regulations may increase our costs or impair our research, development or production efforts.

We must comply with certain tax incentive agreements in Switzerland.

While operating as a division of Novartis, our subsidiary, Alcon Pharmaceuticals Ltd. (“APL”), benefited from an investment tax incentive granted by the Swiss State Secretariat for Economic Affairs in Switzerland (the “SECO”) and the Canton of Fribourg, Switzerland in respect of both Swiss federal taxes and Fribourg cantonal / communal taxes for the fiscal years ended December 31, 2007 through December 31, 2017. This tax incentive is subject to a five year "claw-back" period if Alcon does not continue to meet certain requirements related to its operations in Fribourg.

In connection with the Spin-off, our former parent retained certain assets of APL related to APL’s former pharmaceutical business. As a result, Novartis agreed with the Canton of Fribourg that each of APL and a subsidiary of Novartis (Novartis Ophthalmics AG, Fribourg) will have separate and standalone obligations and potential liabilities in connection with the five year claw-back period relating to the Fribourg investment tax incentive granted to APL. In particular, APL may be required to pay a "claw-back" amount of up to CHF 1.3 billion to the Fribourg tax authorities if APL fails to continue certain business activities in Fribourg and if Alcon Inc., APL, and Alcon Services AG fail to (1) remain tax resident in Fribourg, and (2) employ a certain minimum number of associates in Fribourg. Since December 31, 2018, our "claw-back" obligation has begun to be reduced each year by 20% of the original maximum amount and will expire on December 31, 2022.

23

We intend to conduct APL's operations so as to comply with these requirements in all respects; however, we may be unable to meet, or the Canton of Fribourg may successfully challenge our compliance with, these requirements. If the Canton of Fribourg successfully challenges our compliance with these requirements, we would be required to pay all or a portion of the "claw-back" amount.

We are a multinational business that operates in numerous tax jurisdictions.

We conduct operations in multiple tax jurisdictions, and the tax laws of those jurisdictions generally require that the transfer prices between affiliated companies in different jurisdictions be the same as those between unrelated companies dealing at arm's length, and that such prices are supported by contemporaneous documentation. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities. If tax authorities in any of these jurisdictions were to successfully challenge our transfer prices as not reflecting arm's length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in a higher overall tax liability to us and possibly interest and penalties.

Additionally, the integrated nature of our worldwide operations can produce conflicting claims from tax authorities in different countries as to the profits to be taxed in the individual countries. The majority of the jurisdictions in which we operate have double tax treaties with other foreign jurisdictions, which provide a framework for mitigating the impact of double taxation on our revenues and capital gains. However, mechanisms developed to resolve such conflicting claims are largely untested, can be expected to be very lengthy, and do not always contain a mandatory dispute resolution clause.

In recent years, tax authorities around the world have increased their scrutiny of company tax filings, and have become more rigid in exercising any discretion they may have. As part of this, the Organization for Economic Co-operation and Development ("OECD") has proposed certain changes to the International tax standards that have resulted and will continue to result in local tax law changes under its Base Erosion and Profit Shifting ("BEPS") Action Plans to address issues of transparency, coherence and substance. Most recently, the OECD has released its plans for proposing further amendments to the international tax standards, including a new attribution of the right to tax corporate profits where customers are located and a mechanism ensuring that all corporate profits would be subject to a minimum taxation level.

At the same time, the EU Member States are implementing the European Commission’s Anti Tax Avoidance Directives I and II, which seek to prevent tax avoidance by companies and to ensure that companies pay appropriate taxes in the markets where profits are effectively made and business is effectively performed. The European Commission also continues to extend the application of its policies seeking to limit fiscal aid by Member States to particular companies, including by investigating Member States' practices regarding the issuance of rulings on tax matters relating to individual companies. Furthermore, new EU regulations introducing mandatory automatic exchange of information in relation to "reportable cross-border arrangements" entered into effect on June 25, 2018 and the Member States are required to transpose such regulation into their respective national legislation by December 31, 2019 and apply the new rules from July 1, 2020. The first automatic exchange of information in relation to "reportable cross-border arrangements" will have to take place by October 31, 2020. Over time, these new disclosure requirements may result in significant changes to the manner in which tax authorities and taxpayers view the application of established tax rules.

These OECD and EU tax reform initiatives require local country implementation, including in our home country of Switzerland, which may result in significant changes to established tax principles. Although we have taken steps to be in compliance with the evolving OECD and EU tax initiatives, and will continue to do so, significant uncertainties remain as to the outcome of these initiatives and their impact on us as a taxpayer.

Furthermore, Switzerland and the various Swiss cantons in which Alcon is present have adopted their own corporate tax reform. The main elements of the Swiss tax reform became effective in 2020 and will result in an increase in Alcon’s tax burden and effective tax rate in Switzerland.

In general, tax reform efforts, including with respect to tax base or rate, transfer pricing, intercompany dividends, cross border transactions, controlled corporations, and limitations on tax relief allowed on the interest on intercompany debt, will require us to continually assess our organizational structure and could lead to an increased risk of international tax disputes, an increase in our effective tax rate and an adverse effect on our financial condition.

Intangible assets and goodwill on our books may lead to significant impairment charges.

We carry a significant amount of goodwill and other intangible assets on our consolidated balance sheet, primarily due to the value of the Alcon brand name, but also intangible assets associated with our technologies, acquired research and development, currently marketed products, and marketing know-how. As a result, we may incur significant impairment charges if the fair value of the intangible assets and the groupings of cash generating units containing goodwill would be less than their carrying value on our consolidated balance sheet at any point in time.

We regularly review our long-lived intangible and tangible assets, including identifiable intangible assets, investments in associated companies and goodwill, for impairment. Goodwill, intangible assets with an indefinite useful life (such as the

24

Alcon brand name), acquired research projects not ready for use, and acquired development projects not yet ready for use are subject to impairment review at least annually. We review other long-lived assets for impairment when there is an indication that an impairment may have occurred.

For a detailed discussion of how we determine whether an impairment has occurred, what factors could result in an impairment and the impact of impairment charges on our results of operations, see "Note 3. Selected Accounting Policies—Goodwill and intangible assets—Impairment of goodwill, Alcon brand name and definite lived intangible assets" to our Consolidated Financial Statements included elsewhere in this Annual Report.

Our previously announced estimates for the costs we expect to incur in connection with our separation from Novartis and our previously announced transformation program may be inaccurate.

We have previously announced that we expect to incur costs of $500 million in connection with our separation from Novartis. We have also previously announced that we expect to incur costs of $300 million and realize savings of $200 to $225 million on an annualized run rate by 2023 in connection with our transformation program. While we believe that these estimates are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. In addition, we may not be able to obtain the estimated cost savings and benefits that were initially anticipated in connection with our transformation program in a timely manner or at all. Should any of these estimates or underlying assumptions change or prove to have been incorrect, it could adversely affect our results of operations.

Environmental, social and governance matters may impact our business and reputation.

Increasingly, in addition to the importance of their financial performance, companies are being judged by their performance on a variety of environmental, social and governance ("ESG") matters, which are considered to contribute to the long-term sustainability of companies’ performance.

A variety of organizations measure the performance of companies on such ESG topics, and the results of these assessments are widely publicized. In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions. Topics taken into account in such assessments include, among others, the company’s efforts and impacts on climate change and human rights, ethics and compliance with law, and the role of the company’s board of directors in supervising various sustainability issues. In addition to the topics typically considered in such assessments, in the healthcare industry, issues of the public’s ability to access our products and solutions are of particular importance.

We actively manage a broad range of such ESG matters, taking into consideration their expected impact on the sustainability of our business over time, and the potential impact of our business on society and the environment. However, in light of investors’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s expectations as to our proper role. Any failure or perceived failure by us in this regard could have a material adverse effect on our reputation and on our business, share price, financial condition, or results of operations, including the sustainability of our business over time.

Risks Related to the Separation from Novartis

Our ability to operate our business effectively may suffer if we do not, quickly and cost effectively, establish our own administrative and support functions necessary to operate as a standalone public company.

As a division of Novartis, we historically relied on financial (including financial and compliance controls) and certain legal, administrative and other resources of Novartis to operate our business. In particular, Novartis Business Services ("NBS"), the Novartis shared service organization, historically provided us with services across the following service domains: human resources operations, real estate and facility services, procurement, information technology, commercial and medical support services and financial reporting and accounting operations.

Since our separation from Novartis, we have continued to expand our own financial, administrative, corporate governance and listed company compliance and other support systems, including for the services NBS had historically provided to us, or have contracted with third parties to replace Novartis systems that we are not establishing internally. This process has been complex, time consuming and costly.

Novartis will continue to provide support for certain of our key business functions until April 2021 pursuant to a Transitional Services Agreement and certain other agreements. Any failure or significant downtime in our own financial, administrative or other support systems or in the Novartis financial, administrative or other support systems during the transitional period in which Novartis provides us with support could negatively impact our results of operations or prevent us from paying our suppliers and associates, executing business combinations and foreign currency transactions or performing administrative or other services on a timely basis, which could negatively affect our results of operations.

25

In particular, our day-to-day business operations rely on our information technology systems. For example, our production facilities utilize information technology to increase efficiencies and limit costs. Furthermore, a significant portion of the communications among our personnel, customers and suppliers take place on our information technology platforms. While the transfer of information technology systems from Novartis to us has commenced, we expect that the full transfer to be complex, time consuming and costly. There is also a risk of data loss in the process of transferring information technology. As a result of our reliance on information technology systems, the cost of such information technology integration and transfer and any such loss of key data could have an adverse effect on our business, financial condition and results of operations.

The transitional services Novartis has agreed to provide us may not be sufficient for our needs. In addition, we or Novartis may fail to perform under various transaction agreements that will be executed as part of the separation or we may fail to have necessary systems and services in place when certain of the transaction agreements expire.

In connection with the separation, we entered into a Separation and Distribution Agreement and various other agreements with Novartis, including the Transitional Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Manufacturing and Supply Agreement and other separation-related agreements. See "Item 10. Additional Information—10.C. Material Contracts—Our Agreements with Novartis". Certain of these agreements will provide for the performance of key business services by Novartis for our benefit for a period of time after the separation. These services may not be sufficient to meet our needs and the terms of such services may not be equal to or better than the terms we may have received from unaffiliated third parties, including our ability to obtain redress.

We rely on Novartis to satisfy its performance and payment obligations under these agreements. If Novartis does not satisfactorily perform its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses. If we do not have in place our own systems and services, or if we do not have agreements with other providers of these services once certain transitional agreements expire, we may not be able to operate our business effectively. In addition, after our agreements with Novartis expire, we may not be able to obtain these services at as favorable prices or on as favorable terms.

The separation and Spin-off could result in significant tax liability. In addition, we agreed to certain restrictions designed to preserve the tax treatment of the separation and Spin-off.

The relevant Swiss tax consequences of the separation and Spin-off have been taken up with the Swiss tax authorities. Novartis received written confirmations (the "Swiss Tax Rulings") from the Swiss Federal Tax Administration and from the tax administrations of the Canton of Basel-Stadt and the Canton of Fribourg addressing the relevant Swiss tax consequences of the separation and Spin-off. In addition, Novartis received a private letter ruling from the US Internal Revenue Service (the "IRS", and such ruling, the "IRS Ruling") and obtained a written opinion of Cravath, Swaine & Moore LLP, counsel to Novartis (the "Tax Opinion") to the effect that the separation and Spin-off should qualify for nonrecognition of gain and loss to Novartis and its shareholders under Section 355 of the Code.

If the separation and/or Spin-off were determined not to qualify for the treatments described in the Tax Rulings and Tax Opinion, or if any conditions in the Tax Rulings or Tax Opinion are not observed, then we could suffer adverse Swiss stamp duty and Novartis could suffer Swiss and US income, withholding and capital gains tax consequences and, under certain circumstances, we could have an indemnification obligation to Novartis with respect to some or all of the resulting tax to Novartis under the tax matters agreement (the "Tax Matters Agreement") we entered into with Novartis, as described in "Item 10. Additional Information—10.C. Material Contracts—Our Agreements with Novartis—Tax Matters Agreement".

In addition, under the Tax Matters Agreement, we agreed to certain restrictions designed to preserve the expected tax neutral nature of the separation and the Spin-off for Swiss tax and US federal income tax purposes. These restrictions may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that might be beneficial and could discourage or delay strategic transactions that our shareholders may consider favorable. See "Item 10. Additional Information—10.C. Material Contracts—Our Agreements with Novartis—Tax Matters Agreement" for more information.

Risks related to the Ownership of our Shares

Your percentage ownership in Alcon may be diluted in the future.

In the future, your percentage ownership in Alcon may be diluted because of equity issuances from acquisitions, capital markets transactions or otherwise, including equity awards that we may grant to our directors, officers and associates under our associate participation plans. These additional issuances will have a dilutive effect on our earnings per share, which could adversely affect the market price of our shares.

26

Our maintenance of two exchange listings could result in pricing differentials of our ordinary shares between the two exchanges.

Our shares trade on the NYSE in US dollars and on the SIX in Swiss francs, which may result in price differentials between the two exchanges for a variety of factors, including fluctuations in the US dollar/Swiss franc exchange rate and differences in trading schedules.

We may not pay or declare dividends.

Although Alcon expects that it will recommend the payment of a regular cash dividend based upon the prior year’s core net income, we may not pay or declare dividends in the future. The declaration, timing, and amount of any dividends to be paid by Alcon will be subject to the approval of shareholders at the relevant General Meeting of shareholders. The determination by the Board as to whether to recommend a dividend and the approval of any such proposed dividend by the shareholders will depend upon many factors, including our financial condition, earnings, corporate strategy, capital requirements of our operating subsidiaries, covenants, legal requirements and other factors deemed relevant by the Board and shareholders.

In addition, any dividends that we may declare will be denominated in Swiss francs. Consequently, exchange rate fluctuations will affect the US dollar equivalent of dividends received by holders of shares held via DTC or shares directly registered with Computershare Trust Company, N.A. in the US If the value of the Swiss franc decreases against the US dollar, the value of the US dollar equivalent of any dividend will decrease accordingly.

See "Item 8. Financial Information—8.A. Consolidated Statements and Other Financial Information—Dividend Policy" for more information.

We are a foreign private issuer and, as a result, we are not subject to US proxy rules and are subject to Securities Exchange Act of 1934 ("Exchange Act") reporting obligations that, to some extent, are more lenient and less frequent than those of a US domestic public company.

We report under the Exchange Act as a non-US company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act and although we are subject to Swiss laws and regulations with regard to such matters and intend to continue to furnish quarterly financial information to the SEC, we are exempt from certain provisions of the Exchange Act that are applicable to US domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each financial year, while US domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

In addition, as a foreign private issuer, we are entitled to rely on exceptions from certain corporate governance requirements of the NYSE. As a result, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

Furthermore, we prepare our financial statements under IFRS. There are, and may continue to be, certain significant differences between IFRS and US Generally Accepted Accounting Principles, or US GAAP, including but not limited to potentially significant differences related to the accounting and disclosure requirements relating to associate benefits, nonfinancial assets, taxation and impairment of long-lived assets. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with US GAAP, and you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under US GAAP.

We may lose our foreign private issuer status.

We are a foreign private issuer and therefore we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to US domestic issuers. To maintain our status as a foreign private issuer, either (a) a majority of our shares must be directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be United States citizens or residents, (ii) more than 50 percent of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States.

If we were to lose our foreign private issuer status, we would be required to comply with the Exchange Act reporting and other requirements applicable to US domestic issuers, which are more detailed and extensive than the requirements for

27

foreign private issuers. For instance, we would be required to change our basis of accounting from IFRS as issued by the IASB to US GAAP, which we expect would be difficult and costly and could also result in potentially material changes to historical financial statements previously prepared on the basis of IFRS. We may also be required to make changes in our corporate governance practices in accordance with various SEC and NYSE rules. The regulatory and compliance costs to us under US securities laws could be significantly higher than the costs we will incur as a foreign private issuer. As a result, a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time-consuming and costly. If we were required to comply with the rules and regulations applicable to US domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we could be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board of Directors.

Our status as a Swiss corporation means that our shareholders enjoy certain rights that may limit our flexibility to raise capital, issue dividends and otherwise manage ongoing capital needs.

Swiss law reserves for approval by shareholders certain corporate actions over which a board of directors would have authority in some other jurisdictions. For example, shareholders must approve the payment of dividends and cancellation of treasury shares. Swiss law also requires that our shareholders themselves resolve to, or authorize our Board of Directors to, increase our share capital. While our shareholders may authorize share capital that can be issued by our Board of Directors without additional shareholder approval, Swiss law limits this authorization to 50% of the issued share capital at the time of the authorization. The authorization, furthermore, has a limited duration of up to two years and must be renewed by the shareholders from time to time thereafter in order to be available for raising capital. Additionally, Swiss law grants pre-emptive rights to existing shareholders to subscribe for new issuances of shares and advance-subscription rights to subscribe for convertible bonds or similar instruments with conversion or option rights. A resolution adopted at a shareholders' meeting by a qualified majority of two-thirds of the votes represented, and the absolute majority of the nominal value of the shares represented, may restrict or exclude such pre-emptive or advance-subscription rights in certain limited circumstances. Swiss law also does not provide as much flexibility in the various rights and regulations that can attach to different categories of shares as do the laws of some other jurisdictions. These Swiss law requirements relating to our capital management may limit our flexibility, and situations may arise where greater flexibility would have provided benefits to our shareholders.

It may be difficult to enforce US judgments against us.

We are organized under the laws of Switzerland. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon such persons or to enforce against them judgments obtained in US courts, including judgments in actions predicated upon the civil liability provisions of the federal securities laws of the United States. We have been advised by our Swiss counsel that there is doubt as to the enforceability in Switzerland of original actions, or in actions for enforcement of judgments of US courts, of civil liabilities to the extent predicated upon the federal and state securities laws of the United States. Original actions against persons in Switzerland based solely upon the US federal or state securities laws are governed, among other things, by the principles set forth in the Swiss Federal Act on International Private Law. This statute provides that the application of provisions of non-Swiss law by the courts in Switzerland shall be precluded if the result is incompatible with Swiss public policy. Also, mandatory provisions of Swiss law may be applicable regardless of any other law that would otherwise apply.

Switzerland and the United States do not have a treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters. The recognition and enforcement of a judgment of the courts of the United States in Switzerland are governed by the principles set forth in the Swiss Federal Act on Private International Law. This statute provides in principle that a judgment rendered by a non-Swiss court may be enforced in Switzerland only if:

▪ the non-Swiss court had jurisdiction pursuant to the Swiss Federal Act on Private International Law;

▪ the judgment of such non-Swiss court has become final and non-appealable;

▪ the judgment does not contravene Swiss public policy;

▪ the court procedures and the service of documents leading to the judgment were in accordance with the due process of law; and

▪ no proceeding involving the same position and the same subject matter was first brought in Switzerland, or adjudicated in Switzerland, or was earlier adjudicated in a third state and this decision is recognizable in Switzerland.

28

ITEM 4. INFORMATION ON THE COMPANY

4.A. HISTORY AND DEVELOPMENT OF THE COMPANY

General Corporate Information

Alcon is a stock corporation (Aktiengesellschaft) organized under the laws of Switzerland in accordance with article 620 et seq. of the Swiss Code of Obligations and registered with the Swiss Register of Commerce under registration number CHE‑234.781.164. Alcon is registered in the Swiss Register of Commerce under each of Alcon AG, Alcon SA and Alcon Inc., all of which are stated in Alcon's Articles of Incorporation (our "Articles of Incorporation") as our corporate name. Alcon was formed for an unlimited duration, effective as of the date of the registration of Alcon in the Swiss Register of Commerce on September 21, 2018. As a result of Novartis’ Spin-off of Alcon and its consolidated subsidiaries on April 9, 2019, Alcon became an independent, standalone corporation. Alcon’s shares are listed on the SIX and the NYSE under the ticker symbol “ALC.”

Alcon is domiciled in Fribourg, Switzerland and our registered office is located at Rue Louis‑d’Affry 6, 1701 Fribourg, Switzerland. Our headquarters is located in Geneva, Switzerland at the following address: Chemin de Blandonnet 8, 1214 Vernier, Geneva, Switzerland. Our telephone number is +41 58 911 2110. Our principal website is www.alcon.com. The information contained on our website is not a part of this Form 20‑F.

General Development of Business

Alcon was originally founded in 1945 by pharmacists Robert Alexander and William Conner, who opened a small pharmacy under the “Alcon” name in Fort Worth, Texas. In 1947, Alcon Laboratories, Inc. was first incorporated and began manufacturing specialty pharmaceutical products to address ocular health needs. In the succeeding years, Alcon began operating internationally with the opening of an office in Canada and first formed its surgical division.

In 1977, Alcon was acquired by a Swiss subsidiary of Nestlé S.A. and, consequently, Alcon began operating as a wholly owned subsidiary of Nestlé until 2002. In 2001, the name of the entity was officially changed to Alcon, Inc. and, on March 20, 2002, Nestlé completed an initial public offering of approximately 25% of the outstanding common shares of Alcon, Inc. From March 20, 2002 until its 2011 merger into Novartis discussed below, Alcon was publicly listed and traded on the New York Stock Exchange under the symbol “ACL”.

On July 7, 2008, Nestlé sold to Novartis approximately 25% of the then outstanding Alcon shares and granted Novartis an option for Novartis to acquire Nestlé’s remaining shares in Alcon beginning in 2010. On August 25, 2010, Novartis exercised its option and purchased the remaining approximately 52% of the total outstanding Alcon shares owned by Nestlé. Following this purchase, Novartis owned an approximate 77% interest in Alcon. On December 14, 2010, Novartis entered into a definitive agreement to acquire the remaining 23% of Alcon through a merger of Alcon, Inc. into Novartis in consideration for Novartis shares and a contingent value amount. The merger was consummated on April 8, 2011, creating the Alcon Division within Novartis. In connection with the Novartis acquisition of Alcon, Novartis also merged its then‑existing contact lens and contact lens care unit, CIBA Vision, and certain of its ophthalmic pharmaceutical products into Alcon, and moved the generic ophthalmic pharmaceutical business conducted by Alcon prior to the merger into the Sandoz Division of Novartis. In 2016, Novartis moved the management and reporting of Alcon ophthalmic pharmaceutical and over‑the‑counter ocular health products to the Innovative Medicines Division of Novartis. Subsequently, effective January 1, 2018, Novartis returned to Alcon the management and reporting of over‑the‑counter ocular health products and certain surgical diagnostic medications previously transferred from Alcon in 2016.

On June 29, 2018, Novartis announced its intention to seek shareholder approval for the Spin‑off of its Alcon Division, following the complete legal and structural separation of Alcon into a standalone company consisting of Alcon Inc. and its consolidated subsidiaries. Novartis shareholders approved the Spin-off on February 28, 2019, and the Spin-off transaction was consummated on April 9, 2019. Following the Spin-off, Alcon became a standalone, independent company.

Significant Acquisitions, Dispositions and other Events

In 2012, we began a multi‑year software implementation project to standardize our processes, enhance data transparency and globally integrate our fragmented and aging information technology systems across our commercial, supply and manufacturing operations worldwide, through a new foundation of Systems, Applications and Products in Data Processing ("SAP"), which is an Enterprise Resource Planning, or ERP, software platform. We expect to pay a total of approximately $850

29

million relating to the implementation of the new ERP system. Through December 31, 2019, the total amount paid with respect to the implementation was $584 million.

In addition, we have made significant investments in certain of our manufacturing facilities to enhance our production capabilities. For more information, see “Item 4.D. Property, Plants and Equipment—Major Facilities”.

In the past three years, we have also entered into certain acquisition transactions, including the acquisition of 100% of the outstanding shares and equity of ClarVista Medical, Inc. on September 20, 2017, TrueVision Systems, Inc. on December 19, 2018, Tear Film Innovations, Inc. on December 17, 2018 and PowerVision, Inc. on March 13, 2019. For further details on certain of our significant transactions in 2019, 2018 and 2017, see “Item 5. Operating and Financial Review and Prospects—5.A. Operating results—Factors Affecting Comparability of Period to Period”.

On September 23, 2019, we refinanced certain shorter-term borrowings through the issuance of Senior Notes (“Notes”) with maturity dates 2026, 2029, and 2049. The Notes were issued by Alcon Finance Corporation in a private placement and guaranteed by the Company. The total notional amount of the Notes is $2.0 billion. The Notes were issued at a discount totaling $7 million, which was recorded as a reduction to the carrying value of the Notes and will be amortized to Interest expense over the term of the Notes. AFC incurred $15 million of debt issuance costs, which were recorded as a reduction to the carrying value of the Notes and will be amortized to Other financial income & expense over the term of the Notes. The Notes consist of the following:

▪ Series 2026 Notes - $0.5 billion due in 2026 issued at 99.5%, 2.750% interest is payable twice per year in March and September, beginning in March 2020 (“2026 Notes”).

▪ Series 2029 Notes - $1.0 billion due in 2029 issued at 99.6%, 3.000% interest is payable twice per year in March and September, beginning March 2020 (“2029 Notes”).

▪ Series 2049 Notes - $0.5 billion due in 2049 issued at 99.8%, 3.800% interest is payable twice per year in March and September, beginning March 2020 (“2049 Notes”).

The funds borrowed through the issuance of the Notes were used to refinance the $1.5 billion Bridge Facility and $0.5 billion Facility A, both of which had been entered into on March 6, 2019. For more information on the Notes, see our Consolidated Financial Statements.

On November 19, 2019, we announced a multi-year transformation program including organizational realignment, process simplification, and the creation of global shared services designed to create efficiencies for reinvestment into key growth drivers. We estimate that the transformation program will result in total charges of approximately $300 million by 2023.

The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file documents electronically with the SEC. Our Internet website is www.alcon.com. The information included on our internet website or the information that might be accessed through such website is not included in this Annual Report and is not incorporated into this Annual Report by reference.

30

4.B. BUSINESS OVERVIEW

Overview

Alcon is the largest eye care company in the world, with $7.4 billion in net sales during the year ended December 31, 2019. We research, develop, manufacture, distribute and sell a full suite of eye care products within two key businesses: Surgical and Vision Care. Based on sales for the year ended December 31, 2019, we are the number one company by global market share in the ophthalmic surgical market and the number two company by global market share in the vision care market. We employ over 20,000 associates from more than 90 nationalities, operating in over 70 countries and serving consumers and patients in over 140 countries. We believe our market leading position and global footprint allow us to benefit from economies of scale, maximize the potential of our commercialized products and pipeline and will permit us to effectively grow the market and expand into new product categories.

Our Surgical business is focused on ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. Our broad surgical portfolio includes implantables, consumables and surgical equipment required for these procedures and supports the end-to-end needs of the ophthalmic surgeon. Our Vision Care business comprises daily disposable, reusable and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including devices and over-the-counter products for dry eye, over-the-counter products for contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. Alongside our world-class products, Alcon provides best-in-class service, training, education and technical support for our customers.

Our Surgical and Vision Care businesses are complementary and benefit from synergies in R&D, manufacturing, distribution and consumer awareness and education. This allows us to position ourselves as a trusted partner for eye care products across the continuum of care from retail consumer, to optometry, to surgical ophthalmology. For example, in R&D, we can apply our expertise in material and surface chemistry to develop innovative next-generation products for both our IOL and contact lens product lines. Similarly, our global commercial footprint and expertise as a global organization provide us with product development, manufacturing, distribution and commercial promotion and marketing knowledge that can be applied to both of our businesses.

We are dedicated to providing innovative products that enhance quality of life by helping people see brilliantly. Our strong foundation is based on our longstanding success as a trusted brand, our legacy of industry firsts and advancements, our leading positions in the markets in which we compete and our continued commitment to substantial investment in innovation. With over 70 years of history in the ophthalmic industry, we believe the Alcon brand name is synonymous with innovation, quality, service and leadership among eye care professionals worldwide.

Our Markets

Overview

We currently operate in the global ophthalmic surgical and vision care markets, which are large, dynamic and growing. As the world population grows and ages, the need for quality eye care is expanding and evolving, and we estimate that the size of the eye care market in which we operate was approximately $25 billion and is projected to grow at approximately 4% to 5% per year from 2019 to 2024.

Although it is estimated that 80% of all visual impairments are currently preventable, treatable or curable, we operate in markets that have substantial unmet medical and consumer needs. For example, based on market research, it is estimated that there are currently 20 million people globally that are blind from treatable cataracts, 1.7 billion who suffer from presbyopia, 153 million with uncorrected refractive errors, 93 million with diabetic retinopathy, 67 million living with glaucoma and approximately 352 million affected by dry eye, among other unaddressed ocular health conditions. In addition, there are over 1 billion people living with some form of visual impairment, as well as 70% of the global population needing basic vision correction. Below is a brief description of these ocular disorders.

31

Our Surgical and Vision Care products are targeted at addressing many of these unmet medical and consumer needs. We expect the surgical and vision care markets to continue to grow, driven by multiple factors and trends, including but not limited to:

• Aging population with growing eye care needs:  A growing aging population continues to drive the increased prevalence of eye care conditions worldwide, as the number of persons aged 60 years or over is expected to more than double by 2050, rising from 962 million globally in 2017 to 2.1 billion in 2050.

• Innovation improving the quality of eye care:  Technology innovation in eye care is driving an increased variety of products that more effectively treat eye conditions. Given the importance of vision correction and preservation, which can provide a high return on healthcare spend, the resulting better patient outcomes are leading to increased coverage and reimbursement opportunities from governmental and private third-party payers, expanding patient access to such eye care products.

• Increasing wealth and growth from emerging economies:  It is estimated that between 2015 and 2030, the middle class population in emerging markets will grow by approximately 1.5 billion people, from 2.0 billion to 3.5 billion; this major demographic shift is generating a large, new customer base with increased access to eye care products and services along with the resources to pay for them. The expansion of training opportunities for eye care professionals in emerging markets is also leading to increased patient awareness and access to premium eye care products and surgical procedures, facilitating their growth.

• Increasing prevalence of myopia, progressive myopia and digital eye strain:  It is estimated that by 2050, half of the world's population (nearly five billion people) will be myopic. Further, the modern work environment, along with leisure preferences, have increased the number of hours people spend in front of a screen, adversely impacting vision and increasing the risk of progressive myopia and digital eye strain.

The Surgical Market

The surgical market in which we operate was estimated to be $10 billion and is projected to grow at 4% per year from 2019 to 2024. The surgical market includes sales of implantables, consumables, and surgical equipment, including associated technical, clinical and service support and training. Surgical implantables are medical devices designed to remain in the eye, such as monofocal and AT-IOLs placed in the eye during cataract surgery. Consumables include hand-held instruments, surgical solutions, equipment cassettes, patient interfaces and other disposable items typically used during a single ophthalmic surgical procedure. Finally, surgical equipment includes multi-use surgical consoles, lasers and diagnostic instruments used across procedures to enable surgeons to visualize and conduct ophthalmic surgeries.

The major conditions of the eye for which surgical products and equipment are offered include cataracts, vitreoretinal disorders, refractive errors such as myopia, hyperopia and astigmatism, glaucoma and corneal disease. For cataracts, surgical removal of the clouded lens followed by insertion of a transparent artificial replacement lens, called an intraocular lens, is the standard treatment. Vitreoretinal surgery, which allows a surgeon to operate directly on the retina or on membranes or tissues that have covered the retina, is indicated for the treatment of various conditions such as diabetic retinopathy, trauma, tumors, complications of surgery on the front of the eye and pediatric disorders. Finally, for treatment of myopia, hyperopia

32

and astigmatism, laser refractive surgery targeting the cornea, such as LASIK, offers an alternative to eyeglasses or contact lenses.

Cataract, vitreoretinal, refractive and glaucoma surgeries are generally performed in hospitals or ambulatory surgery centers and are supported through a network of eye clinics, ophthalmic surgery offices and group purchasing organizations. The primary ophthalmic surgical procedures for cataract, vitreoretinal, and glaucoma surgery are broadly reimbursed in most mature markets. Third-party coverage or patient co-pay options are also available for refractive laser correction and AT-IOLs. Finally, a growing private pay market for premium surgical devices provides a mutually beneficial environment for patients, providers and medical device companies by allowing patients to pay the non-reimbursable cost of a procedure associated with selecting premium devices, such as AT-IOLs.

The surgical market in which we participate is projected to grow at a compound annual growth rate of approximately 4% from 2019 through 2024. In particular, growth drivers in the surgical market include:

• Global growth of cataract and vitreoretinal procedures, driven by an aging population;

• Increased access to care, for example, in emerging markets and other markets outside the US where the cataract surgery rate is 3.2 procedures per 1,000 people as compared to 12.7 in the US;

• Higher uptake of premium patient-pay technologies, for example AT-IOL penetration is only 7% outside the US versus 14% in the US;

• Increased adoption of advanced technologies, for example, improved diagnostic instruments, surgical options for glaucoma management, and the growing use of phacoemulsification during cataract removal, which is utilized in less than 50% of cases in emerging markets versus over 95% in the US; and

• Eye disease as a comorbidity linked to the global prevalence of diabetes, which has nearly doubled from 4.7% in 1980 to 8.5% in 2014, combined with improving diagnostics capabilities and new product innovations, driving uptake of premium procedures.

The Vision Care Market

The vision care market in which we operate was estimated to be $15 billion and is projected to grow at 5% per year from 2019 to 2024. The vision care market is comprised of products designed for ocular care and consumer use. Products are largely categorized across two product lines: contact lenses and ocular health.

Contact lenses are thin lenses placed directly on the surface of the eye that are commonly used to treat refractive errors such as myopia, hyperopia, astigmatism and presbyopia. They are also often worn for additional reasons, such as aesthetic or cosmetic enhancement, to improve peripheral vision or to achieve spectacle independence. Contact lenses are frequently classified according to their modality, with daily and reusable modalities being the most common. Daily contact lenses are designed for one-time use and are disposed of every day. Reusable contact lenses are designed for periodic use and require daily cleaning and maintenance. Contact lenses may also be classified by their design, with spherical, multifocal and toric designs being the most common. The majority of contact lenses have a spherical design to address the most common visual acuity needs (e.g., myopia). Beyond the standard spherical designs, contact lenses also come in designs to address astigmatism (called toric designs), presbyopia (called multifocal designs) and to change the appearance of the eye (called cosmetic lens designs). The contact lens market was estimated to be approximately $9 billion.

Maintaining ocular health is also an essential part of people's daily lives. Ocular health products can address conditions such as dry eye, ensure effective contact lens care, supplement overall eye health, or provide temporary relief from allergies and related symptoms, such as red eye. The ocular health market was estimated to be approximately $6 billion.

Dry eye is a common condition that occurs when the eye's natural tear film is disturbed or insufficient. It leads to discomfort and potentially serious and chronic vision deterioration and loss, which and can be addressed by artificial tear products and thermal pulsation devices among other treatments. In addition, the increased use of diagnostic tools can help improve the treatment recommendations of eye care professionals for dry eye.

Effective contact lens care is important for any reusable contact lens user, and is a significant factor in reducing the risk of infection and irritation associated with contact lens use. It is also an important factor in maintaining visual acuity and increasing the comfort of wearing reusable contact lenses. When used correctly, contact lens care products remove contaminants from the surface of the contact lens. Lens rewetting drops may also be used to rehydrate the lens during wear and to clear away surface material.

Ocular health is frequently supported by the use of ocular vitamins, which are dietary supplements often sold over the counter and formulated to support eye health. Finally, ocular health products also address allergic conjunctivitis, which occurs when the conjunctiva of the eye becomes swollen or inflamed due to a reaction to pollen, dander, mold, or other allergy-causing

33

substances. 'Allergy eyes' can become red and itchy very quickly. Treatment for allergy eye includes medications, such as antihistamines, and combinations of antihistamines and redness relievers.

The primary customers of the vision care market include optometrists, ophthalmologists, and other eye care professionals, retailers, optical chains and pharmacies, as well as distributors that resell directly to smaller retailers and eye care professionals, who sell the products to end-users. The vision care market is primarily private pay, with patients substantially paying for contact lenses and ocular health products out-of-pocket. Partial reimbursement is available in some countries for visits to eye care professionals and a portion of either spectacle or contact lens costs.

The vision care market in which we participate is projected to grow at a compound annual growth rate of approximately 5% from 2019 through 2024, driven mainly by:

• Continued modality shift to daily disposable lenses from reusable lenses and the resulting sales premium (an increase of 2-3x sales per patient, after customary rebates and discounts) associated with daily disposable wearers as compared to users of reusable lenses;

• Advancements in specialty lenses combined with increasing demand for toric, multifocal and cosmetic lenses, which command an approximately 15-30% pricing premium over spherical lenses, allowing patients to continue wearing contact lenses as they become older and helping to expand the market;

• A significant population of approximately 194 million undiagnosed dry eye patients, with an additional 42 million self-diagnosed dry eye patients using unsuitable products for treatment, and advances in diagnostics and ocular health treatments, facilitating the increase in patient awareness of dry eye and treatment;

• Growing access and consumption of vision care products in emerging markets such as Asia, which had an estimated single-digit contact lens penetration as compared to double digits in the developed world; and

• Increasing consumer access through the expansion of distribution models, including internet sales and other direct-to-consumer channels.

Our Business

Overview

With $7.4 billion in net sales during the year ended December 31, 2019, we are the number one eye care company worldwide by revenues. Our broad range of products represents one of the most complete portfolios in the ophthalmic device industry, and comprises high-quality and technologically advanced products across all major product categories in the surgical and vision care markets. Our Surgical and Vision Care products are used in treating multiple ocular health conditions and offer leading eye care solutions for patients throughout their lives.

34

Our leadership position across most of our product categories enhances our ability to extend our product offering through the launch of new and innovative products, and to expand our geographic reach into ophthalmic markets worldwide. Our Surgical business had approximately $4.2 billion in net sales of implantables, consumables and equipment, as well as services and other surgical products, and our Vision Care business had approximately $3.2 billion in net sales of our contact lens and ocular health products, during the year ended December 31, 2019. The US accounted for 41% of our sales during the year ended December 31, 2019.

We believe the Alcon brand name is synonymous with innovation, quality, service and leadership among eye care professionals worldwide. In each of our markets, we rely on our strong relationships with eye care professionals and consumers to attract and retain customers and expand the market. We customize our selling efforts with the goal of surrounding eye care professionals with Alcon representatives that can help address each aspect of a customer's needs. Our field force supplements the direct promotion of our products by providing customers with access to clinical education programs, hands on training, data from clinical studies and technical service assistance.

We have 18 state-of-the-art manufacturing facilities that employ our proprietary technologies and know-how. We believe our global footprint, knowledge base in manufacturing, state-of-the-art facilities and capacity planning enable us to handle increased levels of product demand and product complexity. Furthermore, our global manufacturing and supply chain allows us to leverage economies of scale and reduce cost per unit as we ramp up production.

We have also made one of the largest commitments to research and development of any surgical and vision care company, with over 1,200 associates worldwide researching and developing treatments for vision conditions and eye diseases, and have sought innovation from both internal and external sources. In 2019, we invested $656 million in research and development, representing 9% of our total 2019 net sales. In addition to our in-house R&D capabilities, we also consider external innovation opportunities and routinely screen for companies developing emerging technologies that we believe could enhance our existing product offerings or develop into innovative new products. We intend to continue to pursue acquisition, licensing and collaboration opportunities as part of our goal of remaining a market leader in innovation.

Our Surgical Business

We hold the number one position in the global surgical market, offering implantable products, consumables and equipment for use in surgical procedures to address cataracts, vitreoretinal conditions, refractive errors and glaucoma. Our Surgical business has the most complete line of ophthalmic surgical devices in the industry, creating a "one-stop shop" for our customers that we consider to be a key differentiator for our business. For the year ended December 31, 2019, our Surgical business had $4.2 billion in net sales.

35

Our Surgical portfolio includes implantable devices, consumables and equipment, as well as services and other ancillary surgical products. We have the most extensive global installed base of surgical equipment in the industry, including the largest installed base of cataract phacoemulsification consoles and vitrectomy consoles. Our global installed equipment base drives pull-through sales of consumables specific to our equipment and helps cross-promote the sales of our implantable devices. Our key surgical equipment offerings include the Centurion vision system for phacoemulsification and cataract removal, our Constellation vision system for vitreoretinal surgery and our WaveLight refractive lasers used in LASIK and other laser-based vision correction procedures, including topography-guided procedures marketed under the Contoura brand. The key brands in our implantables portfolio include our AcrySof family of IOLs, with offerings from monofocal IOLs for basic cataract surgery to AT-IOLs for the correction of presbyopia, such as our PanOptix brand, and astigmatism at the time of cataract surgery. Our UltraSert and Clareon AutonoMe pre-loaded IOL delivery systems are intended to reduce lens handling and simplify the surgical procedure. Alongside our implantable business, we sell a broad line of consumable products that support ophthalmic surgical procedures, such as viscoelastic products, surgical solutions, incisional instruments, such as our MIVS platform, and dedicated consumables, including fluidics cassettes and patient interfaces, which work with Alcon equipment. The Alcon consumables portfolio also includes our Custom Pak surgical procedure pack, which can be custom built for the surgeon and which includes drapes, incisional instruments and all of the materials needed to perform a surgery.

Across our Surgical portfolio, we sell a tiered offering of products intended to meet the specific needs of customers in markets around the world at different price points. Newly launched offerings that bring considerable technology innovation to the market are typically introduced at a price premium to offset the cost of research and development. As these products age and/or competitive products advance, prices typically trend downward, requiring continuous innovation cycles to maintain and/or grow our margins. We also develop specific products to match customer needs in different customer segments, for example, premium-tier and mid-tier surgical consoles that can be manufactured and sold at different price points in different markets.

Our Vision Care Business

Our Vision Care business consists of an extensive portfolio of contact lens and ocular health products, aimed at helping consumers see better. Our product lines include daily disposable, reusable and color-enhancing contact lenses. We also offer a comprehensive portfolio of ocular health products, including devices and over-the-counter products for dry eye, over-the-counter products for contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. With $3.2 billion in vision care net sales for the year ended December 31, 2019, we aim to continue to innovate across our vision care portfolio to improve the lives of consumers and eye care professionals around the world.

36

We have a broad portfolio of daily disposable, reusable and color-enhancing contact lenses, including Dailies and Air Optix, two of our key brands. Our Dailies product line includes DAILIES AquaComfort PLUS and DAILIES TOTAL1, the first and only water gradient contact lens in the market, which is also offered in a multifocal design to address the fast growing presbyopia market. We designed DAILIES TOTAL1 to be a super-premium lens positioned to compete at a premium price point in the contact lens market. PRECISION1, recently launched in select markets, is a daily disposable lens priced in between the super-premium DAILIES TOTAL1 and the more value-conscious DAILIES AquaComfort PLUS. Our Air Optix monthly replacement product line features silicone hydrogel contact lenses in monofocal, astigmatism-correcting, and multifocal options, as well as Air Optix Colors and Air Optix plus HydraGlyde contact lenses. Our key brands in our ocular health portfolio include the Systane family of artificial tear and related dry eye products, as well as the Opti-Free and Clear Care lines of multi-purpose and hydrogen peroxide disinfecting solutions, respectively.

Sales of our contact lens and ocular health products are influenced by optometrist and other eye care professional recommendations, our marketing and consumer education efforts and consumer preferences. In addition to price, contact lenses compete on functionality, design and comfort, while ocular health products compete largely on product attributes, brand familiarity and professional recommendations. For our contact lens and ocular health products, we typically compete in the premium price segments of the market and we use improvements in functionality, design and consumer convenience to maintain our pricing position over time.

Our Strengths

We have a strong foundation based on robust industry expertise, leading brands and excellence in customer service, backed by more than 70 years of history as a trusted brand. Our strengths include:

• Global leader in highly attractive markets with the most complete brand portfolio.  With $7.4 billion in net sales in the year ended December 31, 2019, we are the leader in an attractive eye care market, which is supported by favorable population megatrends and is expected to grow at approximately 4% to 5% per year from 2019 to 2024. Our Surgical business is the market leader in sales of ophthalmic equipment used in the operating room and is supported by the largest installed base of equipment worldwide, which we use to cross-promote our surgical consumables and IOLs. In our Vision Care business, our extensive portfolio of contact lens and ocular health products includes well-recognized brands such as Dailies, Systane and Opti-Free. We believe our global leadership position and extensive brand portfolio allow us to benefit and build on the robust fundamentals driving growth in our markets.

• Innovation-focused with market leading development capabilities and investment.  We have made one of the largest commitments to research and development in the eye care market, with proven R&D capabilities in the areas of optical design, material and surface chemistry, automation and equipment platforms. Currently, we employ over 1,200 individuals dedicated to our research and development efforts, including physicians, doctors of optometry and PhDs. In addition, we actively seek opportunities to collaborate with third parties on advanced technologies to support our eye care business.

37

• Global scale and reach supported by high-quality manufacturing network.  We have an extensive global commercial footprint that provides us with the scale and reach to support future growth, maximize the potential of new launches, enter new geographies efficiently and to take advantage of the large, dynamic and growing surgical and vision care markets. Our commercial footprint, which includes operations in over 74 countries, reaches consumers and patients in over 140 countries and is supported by over 3,000 sales force associates, 18 state-of-the-art manufacturing facilities employing our proprietary technologies and know-how, and our extensive global regulatory capability. Our extensive sales and distribution network, supported by our market leadership position and focus on innovation and customer experience, enhances our ability to expand our geographic reach and extend our product offerings through the launch of new and innovative products worldwide.

• Outstanding customer relationships and a trusted reputation for customer service, training and education. We believe that maintaining the highest levels of service excellence in our customer experience is a critical success factor in our industry. In our Vision Care business, we regularly meet with eye care practitioners to gain feedback and insights on our products and consumers' needs. We also provide training support at our approximately 30 state-of-the-art interactive training centers around the world, as well as through numerous digital and event-based training programs that we provide for practitioners, clinical support staff, students, residents, patients and consumers. In each of our businesses, we have built and maintained our relationships with key stakeholders to establish our trusted reputation in the industry.

• World leading expertise in eye care led by a first-class management team.  Our expertise in eye care is driven by our more than 70-year history in the industry and is supported by a high-quality workforce of more than 20,000 associates. We believe our institutional knowledge provides a competitive advantage because our associates' industry expertise, relationships with our customers and understanding of the development, manufacture and sale of our products helps us to better identify new customer needs, assess markets for entry and identify promising technologies. In addition, we believe the diverse experience of our management team in running complex businesses allows them to add significant value to our company. In particular, we benefit from having a management team with an extensive background in the medical device industry. Led by David J. Endicott, our Chief Executive Officer, our management team's deep knowledge of eye care has allowed us to build a more nimble medical device culture within Alcon and created excitement among our workforce for our mission.

Our Strategy

Our going-forward strategy builds on five key pillars in order to generate sustainable and profitable growth:

• Maximize the potential of our near-term portfolio by growing key products.  In Surgical, we plan to build on our leading position in the IOL market through the launch of new AT-IOLs, where premium pricing drives market value. In addition, we expect improved diagnostics and new optical designs will address historical barriers to AT-IOL adoption to further grow this patient-pay market. We will also continue to invest behind our presbyopia-correcting products (e.g. Panoptix), and will continue to invest in our vitreoretinal equipment and consumables, where we also see meaningful opportunities for near-term growth. In Vision Care, we intend to maintain and grow our leading position in most of our product categories through increased eye care professional and consumer education, supported by continuous production innovation. We intend to expand our position in the daily disposable category behind our DAILIES TOTAL1 and PRECISION1 family of products. We also aim to expand the dry eye product market by leveraging our well-recognized Systane family of eye drops and increasing investment in dry eye education and awareness, where we see a significant unmet need and an opportunity for robust market growth.

• Accelerate innovation and deliver the next wave of technologies.  We are committed to accelerating innovation by continuing to be one of the market leaders in investment in ophthalmic research and development. The R&D activities of our Surgical business are focused on expanding our AT-IOL portfolio to further improve surgical and refractive outcomes, including through the use of advanced optics, light adjustable materials, accommodating lenses and modular platforms. We are also developing next-generation lasers, robotics and other equipment for cataract, vitreoretinal and laser-refractive surgery, as well as improved visualization equipment. In our Vision Care business, our focus is on developing and launching new contact lens materials, coatings and designs to extend our product lines and improve patient comfort, as well as on new products to expand our portfolio of dry eye diagnostic and treatment, presbyopia and ocular health products. Finally, we expect to continue to supplement our internal innovation investments by identifying and executing on attractive acquisition, licensing and collaboration opportunities with leading academic institutions and early-stage companies.

• Capture opportunities to expand markets and pursue adjacencies.  We believe there is a significant opportunity for growth in markets around the world due to under-penetration of both premium surgical devices, such as AT-IOLs, and of our Vision Care portfolio. We intend to facilitate this growth by continued investment in promotion and

38

customer education across all of our markets. In emerging markets in particular, we believe that the growing number of eye care professionals and dedicated eye hospitals, increased levels of affluence, improving technology access and better patient awareness will increase the adoption of our products. In addition, we believe we have significant opportunities to expand into adjacent product categories in which Alcon has not significantly participated in the past, through a combination of internal development efforts and potential bolt-on mergers and acquisitions activity. These opportunities include office-based diagnostics, surgical visualization, pharmaceuticals, solutions for myopia control and consumer driven ocular health products, where we expect our eye care expertise and global commercial footprint will allow us to attract and retain new customers.

• Support new business models to expand customer experience.  In Surgical, we intend to continue to identify new business models that benefit healthcare providers and improve access to leading Alcon products and technologies. For example, we are pursuing value-based business models that reward improved patient outcomes, as well as models that contract the entire procedure versus individual products. In Vision Care, where e-commerce entries have created some disruption of traditional sales channels, we believe that digital technology can address pain points experienced in existing paths to purchase. We intend to continue investing and innovating in digital capabilities to develop new business models in response to channel shifts and the increase in direct-to-consumer influence.

• Leverage infrastructure to improve operating efficiencies and margin profile over time.  With the significant organizational and infrastructure investments we have made over the last several years, we believe we have established a stable foundation that will allow us to continue to enhance the productivity of our commercial resources and meaningfully improve our core operating income margins over time. Further, we intend to improve the mix of our products, implement further supply chain efficiency initiatives and support new lower-cost manufacturing platforms to drive future operating profit and cash flows.

Our Industry

Selected Conditions That Are Treated By Eye Surgery and Surgical Products

Below are the major conditions of the eye that are treated by surgeries for which we offer surgical products and equipment.

Cataracts

A cataract is the progressive clouding of the normally transparent natural lens in the eye. This clouding is usually caused by the aging process, although it can also be caused by heredity, diabetes, environmental factors and, in some cases, medications. As cataracts grow, they typically result in blurred vision and increased sensitivity to light. Cataract formations occur at different rates and may affect one or both eyes. Cataract surgery is one of the most frequently performed surgical procedures. According to the National Eye Institute, cataracts are the leading cause of blindness worldwide even though effective surgical treatment exists. Currently, surgical removal of the clouded lens followed by insertion of a transparent artificial replacement lens, called an IOL, is the preferred treatment for cataracts. The clouded lens is usually removed through a process known as phacoemulsification. During phacoemulsification, an ophthalmic surgeon makes a small surgical incision in the cornea (approximately 2-3 millimeters wide) and inserts an ultrasonic probe that breaks up, or emulsifies, the clouded lens while a hollow needle removes the pieces of the lens. Once the cataract is removed, the surgeon inserts an intraocular lens through the same surgical incision. An AT-IOL is a type of IOL that also corrects for refractive errors, like presbyopia and astigmatism, at the time of cataract surgery.

Retinal Disorders

Vitreoretinal procedures involve surgery on the back portion of the eye, namely the retina and surrounding structures. Vitrectomy is the removal of the gel-like substance, known as vitreous, that fills the back portion of the eye. Removal of the vitreous allows a vitreoretinal surgeon to operate directly on the retina or on membranes or tissues that have covered the retina. These procedures typically treat conditions such as diabetic retinopathy, retinal detachment / tears, macular holes, complications of surgery on the front of the eye, diabetic macular edema, trauma, tumors and pediatric disorders. Vitreoretinal surgery can also involve electronic surgical equipment, lasers and hand-held microsurgical instruments as well as gases and liquids that are injected into the eye.

Refractive Errors

Refractive errors, such as myopia, commonly known as near-sightedness, hyperopia, commonly known as farsightedness, and astigmatism, a condition in which images are not focused at any one point, result from an inability of the cornea and the lens to focus images on the retina properly. If the curvature of the cornea is incorrect, light passing through it onto the retina is not properly focused and a blurred image results. For many years, eyeglasses and contact lenses were the only

39

solutions for individuals afflicted with common visual impairments; however, they are not always convenient or attractive solutions. Laser refractive surgery offers an alternative to eyeglasses and contact lenses. Excimer lasers, which are low-temperature lasers that remove tissue without burning, are currently used to correct refractive errors by removing small amounts of tissue to reshape the cornea. These lasers remove tissue precisely without the use of heat and without affecting the surrounding tissue. In the LASIK procedure, the surgeon uses either a femtosecond laser or an automated microsurgical instrument, called a microkeratome, to create a thin corneal flap that remains hinged to the eye. The corneal flap is then folded back and excimer laser pulses are applied to the exposed layer of the cornea to change the shape of the cornea. The corneal flap is then returned to its normal position. LASIK has become the most commonly practiced form of laser refractive surgery globally.

Presbyopia

Presbyopia is another common refractive error in which the natural crystalline lens inside the eye becomes less flexible and loses the ability to focus on close objects. Presbyopia is a vision condition that accompanies the natural aging process of the eye. It cannot be prevented, and affects nearly two billion people worldwide. Although the onset of presbyopia among patients may seem to occur suddenly, generally becoming noticeable when patients reach their mid- to late 30s or early to mid-40s, sight reduction typically occurs gradually over time and continues for the rest of the patient's life. Some signs of presbyopia include difficulty reading materials held close to the reader, blurred vision while viewing a computer screen and eye fatigue along with headaches when reading. Presbyopia can be accompanied by other common vision conditions, such as myopia, hyperopia and astigmatism. Presbyopia, while most commonly managed with reading glasses, can be addressed surgically by the implantation of an AT-IOL that allows for the correction of presbyopia at the time of cataract surgery.

Surgical Glaucoma

Glaucoma, a group of eye conditions that damage the optic nerve, is the second leading cause of blindness worldwide, estimated to affect more than 90 million people around the globe, with only an estimated 32 million people (or approximately 35% of patients) diagnosed. While elevated intraocular pressure ("IOP") was historically considered to be synonymous with glaucoma, it is now known that many patients with glaucoma have normal IOP. Treating glaucoma is typically aimed at lowering IOP for patients with normal or elevated pressure.

Most commonly, glaucoma is managed using medication (e.g., drops). For cases requiring additional intervention, laser-based procedures and conventional surgical techniques, such as filtration surgery and tube shunts, have typically been used to lower IOP. Filtration surgeries, such as trabeculectomy, involve the creation of a new channel to drain aqueous humor from inside the eye. Similarly, tube shunts establish a route for fluid to exit through an implanted device. More recently, a new category of device and procedure-based surgical intervention, known as Micro-Invasive Glaucoma Surgery ("MIGS"), has emerged and is experiencing rapid adoption among both glaucoma and cataract specialists.

Selected Conditions and Eye Care Considerations That Are Addressed By Vision Care Products

Below are the major eye care conditions and considerations that are addressed, treated or supported by our contact lens and ocular health products.

Refractive Errors

Refractive errors such as myopia, hyperopia, astigmatism and presbyopia are commonly addressed by the use of contact lenses. Presbyopia, for example, can be addressed by the use of multifocal contact lenses.

Dry Eye Disease

Dry eye disease is a ubiquitous, complex, and multifactorial condition, and its effect on patients ranges from intermittent and annoying discomfort to a serious, chronic, progressive, and irreversible vision-threatening disorder. The incidence of dry eyes rises with age, and longer life spans and aging populations throughout the world are key contributors to increased demand for treatment. Evolving patterns of work and play also contribute to increased demand for treatment, as more people spend significant amounts of time working on computers and other digital devices. Wealthier, professional and urban population segments are expanding in rapidly emerging economies and other developing nations, and these populations have greater access to health care and more resources with which to acquire treatment. In addition, more sophisticated diagnostic tools and a greater variety of dry eye products and treatments, such as artificial tear products, are offering improved effectiveness and greater relief as they simultaneously stimulate demand.

40

Infections and Contamination due to Inadequate Contact Lens Care

Proper care of contact lenses through compliance with disinfection regimens is important in reducing the risk of infection and irritation associated with the use of reusable contact lenses, as contact lenses are subject to contamination from cosmetics, grease, bacteria, soaps, hand lotions and atmospheric pollutants, and from proteins contained in natural tears. When used properly, contact lens care products remove such contaminants from the surface of the contact lens. In addition, lens rewetting drops may be used to rehydrate the lens during wear and to clear away surface material.

Ocular Allergies

Allergic conjunctivitis occurs when the conjunctiva of the eye becomes swollen from inflammation due to a reaction to pollen, dander, mold or other allergy-causing substances. When the eyes are exposed to allergy-causing substances, which can vary from person-to-person and are often dependent on geography, a substance called histamine is released by the body and causes blood vessels in the conjunctiva to swell. 'Allergy eyes' can become red and itchy very quickly. Seasonal Allergic Conjunctivitis ("SAC") is the most common type of eye allergy. People affected by SAC experience symptoms during certain seasons of the year. Allergy eye can be treated with various ocular health products including medications, such as antihistamines, and combinations of antihistamines and redness relievers.

Our Products

We research, develop, manufacture, distribute and sell eye care products. Our broad range of products represents one of the strongest portfolios in the eye care industry, with high-quality and technologically advanced products across all major product categories in ophthalmic surgical devices and vision care. We are organized into two global business segments: Surgical and Vision Care.

Surgical

We hold the number one position in the global ophthalmic surgical market, offering implantable products, consumables and equipment for use in surgical procedures to address cataracts, vitreoretinal conditions, refractive errors and glaucoma. Our Surgical portfolio includes equipment, instrumentation and diagnostics, IOLs and other implantables, and a broad line of consumables, including viscoelastics, surgical solutions, incisional instruments, surgical custom packs, and other products. For the year ended December 31, 2019, net sales for our implantables, consumables and equipment and other surgical products were $1.2 billion, $2.3 billion and $0.7 billion, respectively.

Our installed base of equipment is core to our market leading position in our Surgical business, with best-in-class platforms in cataract and vitreoretinal equipment and the largest installed base of cataract phacoemulsification consoles, vitrectomy consoles and refractive lasers in the industry. These platforms each have long buying cycles that last approximately seven to ten years and act as anchoring technologies that drive recurring sales of our consumables and help cross-promote sales of our implantable devices.

Our cataract offerings include the Centurion vision system for phacoemulsification and cataract removal, the LenSx femtosecond laser used for specific steps in the cataract surgical procedure, the LuxOR ophthalmic microscope, the Verion imaged guided system for cataract surgery planning and image guidance throughout the cataract procedure, and the ORA System for intra-operative measurements, guidance and outcomes analysis/optimization. Our AcrySof family of IOLs includes offerings ranging from monofocal IOLs for basic cataract surgery to AT-IOLs under our PanOptix and ReSTOR brands for the correction of presbyopia and/or astigmatism at the time of cataract surgery. We also offer a collection of pre-loaded options with the UltraSert and AutonoMe IOL delivery devices. Beginning in 2017, we launched a new IOL material under the Clareon CE Mark in the EU, Japan, Brazil, and Australia and we intend to continue to launch worldwide following receipt of the necessary regulatory approvals in other countries.

Our vitreoretinal portfolio includes the Constellation vision system, Grieshaber DSP and MIVS instrumentation and Ultravit high speed vitrectomy probes, the Purepoint laser, and the NGENUITY 3D visualization system.

Our refractive surgery portfolio includes WaveLight lasers and diagnostics used for LASIK and other laser-based vision correction procedures, including topography guided procedures marketed under the Contoura brand.

Our glaucoma portfolio includes the EX-PRESS glaucoma filtration device.

41

The following table lists certain key marketed Surgical products. While we intend to sell our marketed products throughout the world, not all products and indications are currently available in every country:

Cataract		AcrySof family of IOLs, including: AcrySof IQ monofocal IOLs
		UltraSert pre-loaded IOL delivery system with the AcrySof IQ monofocal IOL
		AcrySof IQ Toric astigmatism-correcting IOLs AcrySof IQ ReSTOR presbyopia-correcting IOLs AcrySof IQ ReSTOR Toric presbyopia- and astigmatism-correcting IOLs AcrySof IQ PanOptix presbyopia-correcting IOLs AcrySof IQ PanOptix Toric presbyopia- and astigmatism-correcting IOLs
		Clareon monofocal IOL with the automated, disposable AutonoMe pre-loaded IOL delivery system
		Cataract Refractive Suite by Alcon, including:
		Centurion vision system LenSx femtosecond laser
		LuxOR ophthalmic microscope ORA System for intra-operative measurements and guidance Verion imaged guided system
Surgical Procedure Packs		Custom Pak surgical procedure packs

42

Vitreoretinal		Constellation vision system
		Grieshaber DSP and MIVS instrumentation
		Purepoint laser
		Ultravit high speed vitrectomy probes
		NGENUITY 3D visualization system
Refractive		WaveLight EX500 excimer laser for LASIK and other refractive correction procedures
		WaveLight Topolyzer VARIO diagnostic device for measurement and planning before refractive surgery
		WaveLight FS200 femtosecond laser for refractive surgery
Glaucoma		EX-PRESS glaucoma filtration device

Cataract Equipment

We maintain our market leadership in cataract surgical products by providing a comprehensive offering of surgical equipment, single-use and disposable products, viscoelastics, surgical solutions and surgical packs, all supported by our broad and experienced team of field service professionals. We currently market products for cataract surgery in substantially all of our markets.

Our strong installed base of equipment and extensive clinician relationships drive sales of our IOLs and consumables. We consider the quality and breadth of our portfolio to be a key differentiator as a "one-stop-shop" offering for our customers, synonymous with quality, reliability, and accessibility. Our Cataract Refractive Suite covers every stage of the surgical workflow from clinical planning to cataract removal and post-operative optimization.

In 2013, we launched our Centurion vision system for cataract surgery. This system includes Active Fluidics technology, an automated system that optimizes anterior chamber stability by allowing surgeons to proactively set and maintain target IOP within the eye during the cataract removal procedure, thereby delivering an unprecedented level of intraoperative control.

We also sell the LenSx laser system. The first femtosecond laser to receive FDA clearance for use in cataract surgery, LenSx is used to create incisions in the cornea, create a capsulorhexis, and complete lens fragmentation as part of the cataract procedure. This enables surgeons to perform some of the most delicate manual steps of cataract surgery with image-guided visualization and micron precision.

Our Verion reference unit and Verion digital marker together form an advanced surgical planning, imaging and guidance technology designed to provide greater accuracy and efficiency during cataract surgery. Our ORA System also provides key intra-operative measurements to improve the placement precision of an implanted IOL during cataract surgery, for example, by aligning the rotation of a toric IOL to the axis of astigmatism. Post-operatively, our ORA System aids with outcomes analysis and ongoing optimization for improved outcomes.

In addition, we launched the NGENUITY 3D visualization system globally to provide surgeons improved visualization by combining a high-dynamic 3D camera, advanced high-speed image optimization, polarizing surgeon glasses and an ultra-

43

high definition 4K OLED 3D display that offers improved depth perception. Within visualization, we also sell the LuxOR surgical ophthalmic microscope (acquired from Endure Medical Systems) with its proprietary ILLUMIN-i technology, which provides an expanded illumination field with a 6x-larger, highly stable red reflex zone.

Cataract IOLs

Our AcrySof IOL is the most implanted intraocular lens in the world. AcrySof IOLs are made of the first material specifically engineered for use in an intraocular lens.

We have a longstanding record of innovation within the IOL market. In 2005, we introduced a new class of IOLs to correct presbyopia with our multifocal AcrySof ReSTOR offering. In 2006, we also launched the AcrySof Toric IOL, designed to correct various levels of preexisting astigmatism in cataract patients. In 2009, the AcrySof IQ Toric lens was launched globally, incorporating the aspheric technology into a toric design.

We have continued to grow our ReSTOR portfolio. In 2016, the AcrySof IQ ReSTOR 3.0D Toric IOL was approved by the FDA and launched in the US to address presbyopia and preexisting astigmatism at the time of cataract surgery in adult patients who desire improved near, intermediate and distance vision with an increased potential for spectacle independence. In 2017, the AcrySof IQ ReSTOR +2.5D Toric IOL was approved by the FDA and launched in the US

In recent years, presbyopia correction lenses have evolved to include trifocal designs. In 2015, we launched the AcrySof IQ PanOptix trifocal IOL in select markets outside the US to complement our ReSTOR multifocal offering. This novel diffractive optic sends light to three foci to support near, intermediate and distance vision. In 2017, the AcrySof IQ PanOptix Toric lens was launched in select markets outside the US to address both astigmatism and presbyopia. We launched the AcrySof IQ PanOptix trifocal IOL in the US in 2019.

We have also introduced several innovations to the delivery device used for introducing an IOL into the capsular bag during cataract surgery. Our UltraSert pre-loaded IOL delivery system combines the control of a manually loaded device with the safety and convenience of a disposable, pre-loaded injector to optimize the implantation of the AcrySof IQ Aspheric IOL into the cataract patient's eye.

In 2017, we received a European CE Mark for the Clareon IOL with the AutonoMe delivery system. AutonoMe is the first automated, disposable, pre-loaded IOL delivery system that enables precise delivery of the IOL into the capsular bag in patients undergoing cataract surgery. The new device is being introduced with the Clareon IOL, a new material with an advanced design that enables sharp, crisp vision, low edge glare and unsurpassed optic clarity.

Our AT-IOLs provide significant visual benefits to patients above standard monofocal IOLs. Accordingly, the price for these AT-IOLs is higher than the price for monofocal styles. This impacts the market penetration of AT-IOLs in the majority of countries, as patients must pay incremental charges above the cost of traditional cataract surgery to obtain an AT-IOL and, in some markets, must pay out-of-pocket for the entire surgical procedure and the AT-IOL.

In the US, our monofocal IOLs are generally fully covered by medical insurance providers or government reimbursement programs, whereas certain of our AT-IOLs may only be partially covered. This payment model was established by two landmark rulings issued by CMS in May 2005 and January 2007. The CMS rulings provide Medicare beneficiaries a choice between cataract surgery with a monofocal IOL, which would be reimbursed as a covered benefit under Medicare, or cataract surgery with an AT-IOL, such as our AcrySof ReSTOR lens and AcrySof Toric lens, which would be partially reimbursed under Medicare and partially paid out-of-pocket. Many commercial insurance plans mirror the CMS rulings, although commercial plans may vary based on third-party payor. The bifurcated payment for the implantation of AT-IOLs has increased the market acceptance of our AT-IOLs in the US Outside the US, payment and reimbursement models vary widely from country to country, generally depending on the policy adopted by the relevant local healthcare authority on coverage and payment.

Surgical Procedure Packs

To provide convenience, efficiency and value for ophthalmic surgeons, Alcon offers Custom Pak surgical procedure packs for use in ophthalmic surgery. Unlike conventional surgical procedure packs, our Custom Pak surgical procedure packs allow individual surgeons to customize the products included in their pack. Our Custom Pak surgical procedure packs include both our single-use products as well as third-party items not manufactured by Alcon. We believe that our Custom Pak offering allows ophthalmic surgeons to improve their efficiency in the operating room, while avoiding the complexity and cost of having to kit surgical items for each respective procedure. We offer more than 11,000 configurations of our Custom Pak surgical procedure packs globally, using more than 2,500 components.

44

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. We currently market our vitreoretinal surgical products in substantially all of the countries in which we sell products.

For vitrectomy procedures, we sell our Constellation vision system globally. We believe this system delivers a higher level of control to the physician through higher vitreous cutting rates and embedded laser technology. The Constellation vision system platform continues to drive our market share in the global premium segment of vitrectomy packs.

In addition to our Constellation vision system, we also sell a full line of vitreoretinal products, including procedure packs, lasers, and hand-held microsurgical instruments, as well as our Grieshaber and MIVS lines of disposable retinal surgery instruments. We also sell a full line of scissors, forceps, and micro-instruments in varying gauge sizes, as well as a range of medical grade vitreous tamponades, which replace vitreous humor during many retinal procedures.

We continue to advance our portfolio with smaller gauge (27+) instruments and higher cut speed vitrectomy probes. We also sell Ultravit high speed vitrectomy probes, which operate at a speed of 7,500 cuts per minute ("cpm"). This increased speed helps reduce traction that can cause iatrogenic tears and post-operative complications.

Refractive Surgery

Our refractive sales include lasers, disposable patient interfaces used during laser correction procedures, technology fees, and diagnostic devices necessary to plan the refractive procedure. Our WaveLight refractive suite includes the EX500 excimer laser, designed to reshape the cornea, and the FS200 femtosecond laser, designed to create a corneal flap and to deliver laser refractive therapy as part of the LASIK refractive procedure.

We also recently launched Contoura Vision, a topography-guided LASIK treatment designed to provide surgeons with the ability to perform more personalized laser procedures for patients with nearsightedness, or nearsightedness with astigmatism. This procedure is based on the unique corneal topography of each eye, as measured through the WaveLight Topolyzer VARIO diagnostic device.

Glaucoma Surgery

Our EX-PRESS glaucoma filtration device is approved and marketed in the US, Europe, Canada, Australia and several other markets. This shunt is implanted under the scleral flap to enhance outflow of aqueous humor and reduce intraocular pressure in patients with open-angle glaucoma. The EX-PRESS glaucoma filtration device creates consistent and predictable outcomes when used as part of a trabeculectomy.

Vision Care

Our Vision Care portfolio comprises daily disposable, reusable and color-enhancing contact lenses, as well as a comprehensive portfolio of ocular health products, including devices and over-the-counter products for dry eye, over-the-counter products for contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. For the year ended December 31, 2019, net sales of our contact lens and ocular health products were $2.0 billion and $1.2 billion, respectively.

Our broad portfolio of daily disposable, reusable and color-enhancing contact lenses includes TOTAL, PRECISION, Air Optix, and DAILIES AquaComfort PLUS. Our TOTAL product line includes DAILIES TOTAL1, the first and only water gradient contact lens in the market, which is also offered in a multifocal design to address the fast growing presbyopia market. DAILIES TOTAL1 is designed to be a super-premium lens positioned to compete at the highest levels across the contact lens market. PRECISION1, our new mainstream daily disposable Silicone-Hydrogel lens with aqueous extraction and surface treatment, was launched in select markets. PRECISION1 is designed to provide vision that lasts until the end of day and longer-lasting lens surface moisture with easier handling. Our Air Optix monthly replacement product line features silicone hydrogel contact lenses in monofocal, astigmatism-correcting, and multifocal options, as well as Air Optix Colors and Air Optix plus HydraGlyde contact lenses.

Our key brands in our ocular health portfolio include the Systane family of artificial tear and related dry eye products, including the Systane iLux MGD thermal pulsation system, as well as the Opti-Free and Clear Care lines of multi-purpose and hydrogen peroxide disinfecting solutions, respectively. Select ocular health products include artificial tear and related dry eye products marketed under the Tears Naturale and Genteal brands, Naphcon-A and Zaditor eye drops for the temporary relief of ocular itching due to allergies, and vitamins for ocular health marketed under the ICAPS and Vitalux brands.

The following table lists certain key marketed vision care products. While we intend to sell our marketed products throughout the world, not all products and indications are currently available in every country:

45

Contact Lenses		DAILIES TOTAL1
		PRECISION1
		DAILIES AquaComfort PLUS
		Air Optix family of silicone hydrogel contact lenses (including Air Optix plus HydraGlyde and Air Optix Colors lenses)
		FreshLook family of color contact lenses
Ocular Health		Clear Care family of hydrogen peroxide contact lens care solution (AOSEPT PLUS outside of North America)
		Opti-Free family of multi-purpose disinfecting contact lens care solution
		Genteal family of artificial tears
		Systane family of artificial tears and related dry eye products
		Tears Naturale family of lubricant eye drops
		Systane iLux Thermal Pulsation System

Contact Lenses

Alcon is the number two company in the branded contact lens market based on net sales in 2019. This position is driven largely by our core brands Dailies, and Air Optix. The growth of our portfolio is also driven by our market-leading soft contact lens technology DAILIES TOTAL1. Our market-leading multifocal offering provides a platform for expanding the presbyopia market, which we believe is a potential multibillion dollar opportunity for market participants, by combining the center-near precision profile aspheric design with DAILIES TOTAL1 water gradient technology. The recent launch of DAILIES TOTAL1 Multifocal has the potential to capture more presbyopes, including consumers who have traditionally dropped out of contact lenses due to discomfort. We continue to experience market growth due to trade-up to daily disposable lenses and premium silicone hydrogel ("SiHy") materials, uptake of toric and multifocal specialty lenses, as well as increasing penetration in emerging markets. We have a broad contact lens offering, ranging from entry-level disposable lenses to premium water gradient technology, in addition to colored options and reusable contact lenses. We continue to focus on core product performance

46

while increasing consumer investment behind a best-in-class innovation portfolio of key products, such as our DAILIES TOTAL1 water gradient SiHy, PRECISION1, Air Optix Colors, Air Optix plus HydraGlyde and FreshLook contact lenses.

In 2016, we launched Air Optix plus HydraGlyde in the US and the EU, which is an innovation upgrade to monthly SiHy contact lenses featuring the HydraGlyde moisture matrix technology for longer lasting lens surface wettability. These contact lenses bring together two innovative technologies—SmartShield technology and HydraGlyde moisture matrix—for a unique combination of deposit protection and longer-lasting lens surface moisture. SmartShield technology is a patented, ultra-thin protective shield that helps the lens resist lipid deposits and delivers outstanding wettability. It also helps the lens resist changes from everyday cosmetic product use. HydraGlyde moisture matrix is a wetting agent specifically designed for SiHy lenses that helps attract lens surface moisture and retain lens surface hydration. This is the latest innovation in the Air Optix family of monthly replacement contact lenses, whose comprehensive portfolio includes monthly replacement clear and color contact lenses, overnight and flexible wear options, toric and multifocal lens correction.

In 2016, we launched DAILIES TOTAL1 Multifocal contact lenses in the US and the EU to provide refractive correction for distance, intermediate and near vision for people with presbyopia. The DAILIES TOTAL1 water gradient technology reduces end-of-day dryness, as the water content approaches nearly 100% at the outermost surface of the lens. The "hydrophilic" (water-loving) surface of the lens is almost as soft as the surface of the cornea (corneal epithelium) to enhance comfort, while the innovative optical design of this new multifocal lens offers a smooth progression of power designed to provide a seamless experience between distant, intermediate and near vision.

We also expect to continue launching our new line of contact lenses, PRECISION1, in different jurisdictions in 2020. We launched PRECISION1 in the US in August 2019. PRECISION1 is a daily disposable, SiHy contact lens intended to compete within the mainstream subcategory of the global daily disposable contact lens market. We believe that PRECISION1 has been engineered for the highest visual clarity of any contact lens in its class.

Ocular Health

Alcon currently holds a market leading position in artificial tears. We continue to focus on core product performance while increasing promotion behind a best-in-class innovation portfolio under the brand leadership of Systane artificial tears. The Systane portfolio is a comprehensive offering of ocular health solutions, most of which are indicated for the temporary relief of burning and irritation due to dryness of the eye. The Systane portfolio includes products for daily and nighttime relief, as well as products for discomfort associated with contact lens wear.

In 2017, Systane COMPLETE lubricant eye drops received a CE Mark. This addition to the Systane product line offers fast hydration and long-lasting, optimal relief from various types of dry eye problems with nano-droplet technology for enhanced coverage. We launched Systane COMPLETE in the US, Canada and the EU in 2018.

In 2018, we added Systane iLux thermal pulsation dry eye devices to our ocular health portfolio. We intend to continue to add to our portfolio to address large unmet needs for dry eye and meibomian gland dysfunction patients.

Alcon is also a market leader in contact lens care in both multi-purpose and hydrogen peroxide solutions. The vast majority of our contact lens care products are comprised of disinfecting solutions to remove harmful micro-organisms on contact lenses, with a smaller amount of sales coming from cleaners to remove undesirable film and deposits from contact lenses and lens rewetting drops to improve wearing comfort for contact lenses. We also benefit from strong synergies between our contact lens business and our contact lens care products; however, we expect demand for disinfecting solutions to continue to decrease as contact lens wearers shift their preference from reusable contact lenses to daily disposable lenses.

In 2011, we received approval in the US to market Opti-Free PureMoist, our fastest growing multi-purpose disinfecting solution, which is approved for SiHy and all other soft contact lenses. PureMoist contains our patented HydraGlyde moisture matrix technology to provide long lasting comfort to contact lens wearers and is now our flagship brand in most key markets. In 2015, we received approval to add HydraGlyde moisture matrix technology to Clear Care, our market leading hydrogen peroxide contact lens care solution. Clear Care is branded AOSEPT PLUS in many markets outside of the US. We currently market these product in most major markets throughout the world.

Finally, our ocular health portfolio also includes artificial tear and related dry eye products marketed under the Tears Naturale and Genteal brands, products for the temporary relief of ocular itching due to ocular allergies marketed under the Naphcon-A and Zaditor brands and vitamins for the maintenance of general ocular health marketed under the ICAPS and Vitalux brands.

Our ocular health portfolio is typically over the counter but, in a small number of our markets, certain of our ocular health products require a prescription.

47

Principal Markets

Alcon serves consumers and patients in over 140 countries worldwide. The US is our largest market with 41% of our net sales in 2019, see Note 5. Segment information for net sales by geography. US sales of the vast majority of our products are not subject to material changes in seasonal demand. However, sales of certain of our vision care products, including those for allergies and dry eye, are subject to seasonal variation. In addition, sales of our surgical equipment are also subject to variation based on hospital or clinic purchasing cycles.

Research and Development

Alcon has made one of the largest commitments to research and development in the eye care market, with proven R&D capabilities in the areas of optical design, material and surface chemistry, automation and equipment platforms. Currently, our research and development organization employs over 1,300 individuals dedicated to our research and development efforts, including physicians, doctors of optometry and PhDs. Our researchers have extensive experience in the field of ophthalmology and frequently have academic or practitioner backgrounds to complement their product development expertise.

We organize cross-functional development teams to drive new innovations to our customers and our patients around the world. New projects for our Surgical and Vision Care pipelines originate either from concepts developed internally by staff scientists and engineers, ideas from eye care professionals in ophthalmology, or through strategic partnerships with academic institutions or other companies. We have designed our research and development organization to achieve global registration of products through the efforts of a global clinical and regulatory affairs organization.

In 2019, we invested $656 million in research and development, representing 9% of our total 2019 net sales, and we invested approximately $587 million in 2018 and $584 million in 2017. In addition to our in-house R&D capabilities, as part of our efforts to pursue strategic R&D partnerships with third parties, our dedicated business development team has completed approximately 30 BD&L transactions since 2016. For example, in 2018 we acquired US-based PowerVision, Inc., which is developing fluid-based accommodating IOLs for cataract patients. In addition, we expect our recent partnership with Philips Healthcare to create a new digital health platform to support our cataract equipment that will allow us to deliver fully integrated information to ophthalmic surgeons. We continually review and refine our operating model to optimize for efficiency and productivity. Recent improvements in productivity coupled with a number of strategic partnerships have collectively led to more than 60% growth in the number of projects within our portfolio of internal and external innovation over the past four years. Across our Surgical and Vision Care pipelines, we have more than 110 pipeline projects in process as of December 31, 2019, including over 35 that have achieved positive proof of concept or are undergoing regulatory review.

Our research and development organization maintains an extensive network of relationships with top-tier scientists in academia and with leading healthcare professionals, surgeons, inventors and clinician-scientists working in ophthalmology. The principal purpose of these collaborative scientific interactions is to supplement our internal pipeline and leverage technological advancements in academia and the clinical setting.

While our primary focus is on delivering new products to our patients and customers, we also support the advancement of basic science through the Alcon Research Institute, which seeks to encourage, advance and support vision research. The Alcon Research Institute is one of the largest corporately funded research organizations devoted to vision research in the world. The Institute's activities are planned and directed by an autonomous Executive Steering Committee that is comprised of distinguished ophthalmologists and vision researchers. The institute has worldwide representation and operates under the premise that improvements in the diagnosis and treatment of ocular diseases are dependent upon advances in basic science and clinical research carried out by independent investigators in institutions throughout the world. The institute has also awarded more than 350 awards and research grants over the past 38 years.

Research and development activities within our Surgical business are focused on expanding intraocular lens capabilities to further improve surgical and refractive outcomes and on developing equipment and instrumentation for cataract, vitreoretinal, refractive and glaucoma surgeries, as well as new platforms for diagnostics and visualization. Our focus within the Vision Care business is on the research and development of new manufacturing platforms and novel contact lens materials, coatings and optical designs for various lens replacement schedules, with the ultimate goal of improving patient outcomes. In addition to our efforts to develop next-generation contact lens technologies, we are strengthening our ocular health portfolio with new products and novel technologies that safely provide relief from symptoms of dry eye and ocular allergies.

We continue to seek opportunities to collaborate with third parties on advanced technologies for various ophthalmic conditions. These include the potential to provide accommodative contact and intraocular lenses for patients living with presbyopia.

48

Marketing and Sales

Alcon conducts sales and marketing activities throughout the world. During the year ended December 31, 2019, 41% of our sales were in the US. We are present in every significant market in the world where ophthalmology and optometry are practiced, with operations in over 74 countries supported by over 3,000 associates dedicated to direct sales and with products sold in over 140 countries.

Our global commercial capability is organized around sales and marketing organizations dedicated to our Surgical and Vision Care businesses and we customize these efforts to the medical practice needs of each customer. In addition to direct promotion of our products, our sales representatives provide customers with access to clinical education programs, data from clinical studies and technical service assistance. Our selling models also include focused efforts in key channels, including strategic accounts, key accounts and pharmacies.

In each of our markets, we rely on our strong relationships with eye care professionals to attract and retain customers. We engage healthcare professionals to serve as clinical consultants, to participate on advisory boards and to conduct presentations regarding our products. In addition, we have established or sponsor several long-standing programs that provide training and education to eye care professionals, including providing training support at our approximately 30 state-of-the-art interactive training centers around the world. 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 Surgical business, our marketing efforts are supported by global advertising campaigns, claims from clinical registration and post-approval studies and by the participation of marketing and sales representatives in regional and global medical conferences. Technical service after the sale is provided using an integrated customer relationship management system in place in many markets. All of our technical service in the US, and a high percentage of that service outside the US, is provided by service technicians employed directly by Alcon. 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. Within our Surgical business, the practices of our marketing and sales representatives continue to change to meet emerging market trends, namely consolidation of providers, increasing pricing pressures, proliferation of smaller competitors, increasing demands for outcome evidence, and a shift from relationship-based selling orientated toward physicians versus professional economic buyers focused on cost.

In our Vision Care business, we support our products with direct-to-consumer marketing campaigns, including advertising, promotions and other marketing materials, and with retailer-focused marketing and promotional materials. The fast-evolving landscape for our Vision Care business varies significantly by country. Three key trends in marketing and sales help drive the continuing evolution of our Vision Care business: (1) internet-based purchasing is increasing, as online players grow and the internet plays a bigger role as a source of consumer information and a platform for price referencing, (2) channel consolidation is accelerating, as chains grow in size and vertically integrate, and (3) independent eye care professionals vary in influence, as many align more closely with retailers. We see an opportunity to leverage digital technology to address pain points experienced by consumers and patients in existing paths to purchase. We also intend to continue investing and innovating in digital capabilities to develop new business models and practice implementation support in response to channel shifts and increases in direct-to-consumer influence.

While we market all of our products by calling on medical professionals, direct customers and distribution methods differ across our business lines. Surgical products are sold directly to hospitals and ambulatory surgical centers, although we sell through distributors in certain markets outside the US where we do not have local operations or a scientific office. In many countries, contact lenses are available only by prescription. Our contact lenses can be purchased from eye care professionals, optical chains and large retailers, subject to country regulation. Our ocular health products can be found in major drugstores, pharmacies, food stores and mass merchandising and optical retail chains globally, with access subject to country regulations, including free-sale, pharmacy-only and prescription regulations. No single customer accounted for more than 10% of our global sales in 2019.

Manufacturing and Supplies

Manufacturing

We generally organize our manufacturing facilities along product categories, with most plants being primarily dedicated to the manufacture of either our Surgical or Vision Care product offerings. As of December 2019, we employed approximately 4,000 people to manufacture surgical products at ten facilities in the US, Belgium, Switzerland, Ireland, Germany and Israel, and approximately 5,300 people to manufacture Vision Care products at eight facilities in the US, Germany, Singapore, Malaysia and Indonesia. Our functional division of plants reflects the unique differences in regulatory requirements governing the production of surgical medical devices as well as the different technical skills required of associates in these manufacturing environments. All of our manufacturing plants are ISO 13485 and ISO 14001:2015 certified. Currently, we manufacture

49

approximately 90% of our products internally and rely on third-party manufacturers (including Novartis) for a limited number of products.

The goal of our supply chain strategy is to efficiently produce and distribute high quality products. To that end, we employ cost-reduction programs, known as continuous improvement programs, involving activities such as cycle-time reductions, efficiency improvements, automation, plant consolidations and procurement savings programs as a means to reduce manufacturing and component costs. To comply with good manufacturing practices and to improve the skills of our associates, we train our direct labor manufacturing staff throughout the year. Our professional associates are trained in various aspects of management, regulatory and technical issues through a combination of in-house seminars, local university classes and trade meetings.

The manufacture of our products is complex, involves advanced technology and is heavily regulated by governmental health authorities around the world, including the FDA. Risks inherent to the medical device industry, specifically as they relate to Class III devices, are part of our operations. If we or our third-party manufacturers fail to comply fully with regulations, there could be a product recall or other shutdown or disruption of our production activities. We have implemented a global manufacturing strategy to maximize business continuity in case of such events or other unforeseen catastrophic events.

Supplies

The components used in certain of our Surgical products, such as viscoelastics, and our ocular health products, such as our products for dry eye, are sourced from facilities that meet the regulatory requirements of the FDA or other applicable health regulatory authorities. Because of the proprietary nature and complexity of the production of these components, a number of them are only available from a single or limited number of FDA-approved sources. The majority of active chemicals, biological raw materials and selected inactive chemicals used in our products 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, with a number of the components sourced from a single or limited number of suppliers. When we rely upon a sole source or limited sources of supply for certain components, we try to maintain a sufficient inventory consistent with prudent practice and production lead-times and to take other steps necessary to ensure our continued supply. The prices of our supplies are generally not volatile.

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 December 31, 2019, we owned approximately 1,900 patent families consisting of approximately 2,300 US patents and pending US patent applications and approximately 8,600 corresponding patents and patent applications outside the US.

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. Our strategy is to develop patent portfolios for our research and development projects in order to obtain market exclusivity for the innovative features of our products in our major markets. The scope and duration of protection provided by a patent can vary significantly from country to country. However, even after the expiration of all patents covering a product, we may continue to derive commercial benefits from such product.

We routinely monitor the activities of our competitors and other third parties with respect to their use of our intellectual property. When appropriate, we will enforce our intellectual property rights to ensure that we are receiving the protections they afford us. Similarly, we will staunchly defend our right to develop and market products against unfounded claims of infringement by others. We will aggressively pursue or defend our position in the appropriate courts if the dispute cannot otherwise be promptly resolved.

In addition to our patents and pending patent applications in the US and selected non-US markets, we rely on proprietary know-how and trade secrets in our businesses and work to ensure the confidentiality of this information, including through the use of confidentiality agreements with associates and third parties. In some instances, we also acquire, or obtain licenses to, intellectual property rights that are important to our businesses from third parties.

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 contact lens care and ocular health products. The scope and duration of trademark protection varies widely throughout the world.

50

We also rely on copyright protection in various jurisdictions to protect the software and printed materials our business relies upon, including software used in our surgical and diagnostic equipment. The scope and duration of copyright protection for these materials also varies widely throughout the world.

Competition

The eye care industry is highly competitive and subject to rapid technological change and evolving industry requirements and standards. We compete with a number of different companies across our two business segments-Surgical and Vision Care. Companies within our industry compete on technological leadership and innovation, quality and efficacy of their products, relationships with eye care professionals and healthcare providers, breadth and depth of product offerings and pricing. The presence of these factors varies across our Surgical and Vision Care product offerings. Our principal competitors also sometimes form strategic alliances and enter into co-marketing agreements in an effort to better compete. We face strong local competitors in some markets, especially in developed markets, such as the US, Western Europe and Japan.

Surgical

The surgical market is highly competitive. Superior technology and product performance give rise to category leadership in the surgical market. Service 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. We primarily compete with Carl Zeiss Meditec AG, Bausch Health Companies Inc., Hoya Corporation, and Johnson & Johnson in the surgical market.

We expect to compete against companies that offer alternative surgical treatment methodologies, including multifocal and accommodating AT-IOL approaches, and companies that promote alternative approaches for responding to the conditions our products address. At any time, our known competitors and other potential market entrants may develop new devices or treatment alternatives that may compete directly with our products. In addition, they may gain a market advantage by developing and patenting competitive products or processes earlier than we can or by obtaining regulatory approvals / clearances or market registrations more rapidly than we can.

We believe that the principal competitive factors in our surgical market include:

• disruptive product technology;

• alternative treatment modalities;

• breadth of product lines and product services;

• ability to identify new market trends;

• acceptance by ophthalmic surgeons;

• customer and clinical support;

• regulatory status and speed to market;

• price;

• product quality, reliability and performance;

• capacity to recruit engineers, scientists and other qualified associates;

• digital initiatives that change business models;

• reimbursement approval from governmental payers and private healthcare insurance providers; and

• reputation for technical leadership.

Shifts in industry market share can occur in connection with product issues, physician advisories, safety alerts, and publications about our products. In the current environment of managed care, with consolidation among healthcare providers, increased competition, and declining reimbursement rates, there is also increasing pressure on price.

Vision Care

The vision care market is also highly competitive, and our primary competitors are Johnson & Johnson, Bausch Health Companies, Inc. and The Cooper Companies, Inc. For ocular health, our largest competitor is Allergan, Inc.

In contact lenses, all companies continue to focus on growing the daily disposable SiHy segment due to the price trade-up opportunity from non-SiHy and reusable lenses. We believe our DAILIES TOTAL1 provides the most advanced daily disposable SiHy contact lens with its advanced "water gradient" technology, but currently only caters to the premium market given its higher price point. We also compete with manufacturers of eyeglasses and with surgical procedures that correct visual defects. We believe that there are opportunities for contact lenses to attract new customers in the markets in which we operate, particularly in markets where the penetration of contact lenses in the vision correction market is low. Additionally, we compete with new market entrants with disruptive distribution models that could potentially innovate to challenge traditional models, including the eye care professional channel in which we have a significant presence. We also believe that laser vision correction

51

is not a significant threat to our sales of contact lenses based on the growth of the contact lens market over the past decade and our involvement in the laser vision correction market through our Surgical business.

In ocular health, the market is characterized by competition for market share through the introduction of products that provide superior effectiveness and reduced burden for treating eye conditions. 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.

Government Regulation

Overview

Our businesses are subject to varying degrees of governmental regulation in the countries in which we operate, and the general trend is toward increasingly stringent regulation. In the US, the drug, device and dietary supplement industries have long been subject to regulation by various federal and state agencies, primarily as to product safety, efficacy, manufacturing, advertising, labeling and safety reporting. The exercise of broad regulatory powers by the FDA continues to result in increases in the amounts of testing and documentation required for the commercialization of regulated products and a corresponding increase in the expense of product introduction. Similar trends are also evident in the EU and in other markets throughout the world. In addition to market access regulation, our businesses are also subject to other forms of regulation, such as those relating to anti-bribery, data privacy and cybersecurity and trade regulation matters. We are also subject to regulations related to environmental and safety matters, which are discussed in greater detail in "Item 4.D. Property, Plants and Equipment—Environmental Matters".

Product Approval and Monitoring

Most of our products are regulated as medical devices in the US and the EU. These jurisdictions each use a risk-based classification system to determine the type of information that must be provided to the local regulatory bodies in order to obtain the right to market a product. In the US, the FDA classifies devices into three classes: Class I (low risk), Class II (moderate risk) and Class III (high risk). Many of our devices are Class II or III devices that require premarket review by the FDA. The primary pathway for our Class II devices is FDA clearance of a premarket notification under section 510(k) of the FDCA. With a 510(k) submission, the manufacturer must submit a notification to the FDA that includes performance data that establish that the product is substantially equivalent to a "predicate device", which is typically another Class II previously-cleared device. Our Class III devices require FDA approval of a PMA application. With a PMA application, the manufacturer must submit extensive supporting evidence, including clinical data, sufficient to demonstrate a reasonable assurance that the device is safe and effective for its intended use.

In the EU, CE marking is required for all medical devices sold. Prior to affixing the CE Mark, the manufacturer must demonstrate that their device conforms to the relevant essential requirements of the EU's Medical Device Directive through a conformity assessment procedure. The nature of the assessment depends upon the classification of the device. The method of assessing conformity varies depending on the type and classification of the product. For most Class I devices, the assessment is a self-certification process by the manufacturer. For all other devices, the conformity assessment procedure requires review by a "notified body", which is authorized or licensed to perform conformity assessments by national device regulatory authorities. The conformity assessment procedures require a technical review of the manufacturer's product and an assessment of relevant clinical data. Notified bodies may also perform audits of the manufacturer's quality system. If satisfied that the product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity and application of the CE mark.

The EU published a new Medical Device Regulation in 2017 which will impose significant additional requirements on medical device manufacturers, including with respect to clinical development, labeling, technical documentation and quality management systems. The regulation has a three-year implementation period. Medical devices placed on the market in the EU after May 2020 will require certification according to these new requirements, except that devices with valid CE certificates, issued pursuant to the Medical Device Directives before May 2020, can be placed on the market until those certificates expire, at the latest in May 2024, provided there are no significant changes in the design or intended purpose of the device.

We also market products that are regulated in other product categories, including lasers, drug products, dietary supplements, and medical foods. These products are also subject to extensive government regulation, which vary by jurisdiction. For example, in the US, our drug products must either be marketed in compliance with an applicable over-the-counter drug monograph or receive FDA approval of a New Drug Application. In the EEA, our drug products must receive a marketing authorization from the competent regulatory authority before they may be placed on the market. There are various application procedures available, depending on the type of product involved.

52

Clinical trials may be required to support the marketing of our drug or device products. In the US, clinical trials must be conducted in accordance with FDA requirements, including informed consent from study participants, and review and approval by an institutional review board ("IRB"), among other requirements. Additionally, FDA authorization of an Investigational Device Exemption ("IDE") application must be obtained for studies involving significant risk devices prior to commencing the studies. In the EU, clinical trials usually require the approval of an ethics review board and the prior notification to, or authorization of the study from, the regulatory authority in each country in which the trial will be conducted.

Regulations of the FDA and other regulatory agencies in and outside the US impose extensive manufacturing requirements as well as postmarket compliance and monitoring obligations on our business. The manufacture of our device, drug and dietary supplement products is subject to extensive and complex good manufacturing practice and quality system requirements, which govern the methods used in, and the facilities and controls used for, the design, manufacture, packaging, storage, handling and servicing of our products. We are also subject to requirements for product labeling and advertising, recordkeeping, reporting of adverse experiences and other information to identify potential problems with our marketed products, as well as recalls and field actions. We are also subject to periodic inspections for compliance with these requirements. We expect this regulatory environment will continue to require significant technical expertise and capital investment to ensure compliance.

Medical device, drug, and dietary supplement manufacturers are also subject to taxes, as well as application, product, user, establishment, and other fees. For example, in 2010, the ACA imposed an excise tax on medical device manufacturers and importers. This excise tax was subsequently repealed in December 2018; however, other similar taxes can be imposed in the future.

Price Controls

The prices of our medical devices and drugs that require prescriptions are subject to reimbursement programs and price control mechanisms that vary from country to country. Due to increasing political pressure and governmental budget constraints, we expect these programs and mechanisms to remain robust, and to potentially even be strengthened. As a result, such programs and mechanisms could have a negative influence on the prices we are able to charge for our medical device products, particularly those used in cataract and vitreoretinal surgeries.

Regulations Governing Reimbursement

In the US, patient access to our drug and device products that require a prescription is determined in large part by the coverage and reimbursement policies of third-party health insurers, including government programs such as Medicare and Medicaid. Both government and commercial health insurers are increasingly focused on containing health care costs and have imposed, and are continuing to consider, additional measures to exert downward pressure on device and drug prices. Outside the US, global trends toward cost-containment measures likewise may influence prices for healthcare products in those countries. Adverse decisions relating to either coverage for our products or the amount of reimbursement for our products, could significantly reduce the acceptance of and demand for our products and the prices that our customers are willing to pay for them.

Health Care Fraud and Abuse; Anti-Bribery

We are subject to health care fraud and abuse and anti-bribery laws and regulations in the US and around the world, including state and federal anti-kickback, anti-self-referral, and false claims laws in the US These laws are complex and subject to evolving interpretation by government agencies and courts. For example, in the US, relationships between manufacturers of products paid for by federal and state healthcare programs and healthcare professionals are regulated by a series of federal and state laws and regulations, such as the Federal Anti-Kickback Statute, that restrict the types of financial relationships with referral sources that are permissible. As discussed in greater detail in "Item 4.B. Business Overview—Marketing and Sales", we engage in marketing activities targeted at healthcare professionals, which include among others the provision of training programs. If one or more of these activities were found to be in violation of the Federal Anti-Kickback Statute or comparable state laws, or if we otherwise generally fail to comply with any of the health care fraud and abuse and anti-bribery laws and regulations or any other law or governmental regulation, or there are changes to the interpretation of any of the foregoing, we could be subject to, among other things, civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of our operations.

53

Data Privacy and Cybersecurity

The regulation of data privacy and security, and the protection of the confidentiality of certain personal information (including patient health information and financial information), is increasing. For example, the EU General Data Protection Regulation contains enhanced financial penalties for noncompliance. Similarly, the US Department of Health and Human Services has issued rules governing the use, disclosure and security of protected health information, and the FDA has issued further guidance concerning cybersecurity for medical devices.

In addition, certain countries have issued or are considering data localization laws, which limit companies' ability to transfer protected data across country borders. Failure to comply with data privacy and cybersecurity laws and regulations can result in enforcement actions, including civil or criminal penalties.

Trade Regulation

The movement of products, services, and investment across borders subject us to extensive trade regulations. A variety of laws and regulations in the countries in which we transact business apply to the sale, shipment and provision of goods, services and technology across borders. These laws and regulations govern, among other things, our import, export and other business activities. We are also subject to the risk that these laws and regulations could change in a way that would expose us to additional costs, penalties or liabilities. Some governments also impose economic sanctions against certain countries, persons or entities.

In addition to our need to comply with such regulations in connection with our direct activities, we also sell and provide goods, technology and services to agents, representatives and distributors who may export such items to customers and end-users. Failure by us or the third parties through which we do business to comply with applicable import, export control or economic sanctions laws and regulations may subject us to civil or criminal enforcement action, and varying degrees of liability.

54

4.C. ORGANIZATIONAL STRUCTURE

Organizational Structure

See "Item 4.B. Business Overview” for additional information.

Significant Subsidiaries

Below is a list of subsidiaries that had, as of December 31, 2019, total assets exceeding 10% of our consolidated assets, or net sales in excess of 10% of our consolidated net sales:

Name	Country of formation	% of equity interest
Alcon Pharmaceuticals Ltd.	Switzerland	100
Alcon Vision, LLC	United States	100
Alcon Laboratories, Inc.	United States	100

4.D. PROPERTY, PLANTS AND EQUIPMENT

Our corporate headquarters is located in Geneva, Switzerland. The principal office for our Swiss and international operations, which is also our registered office, is located in Fribourg, Switzerland, and the principal office for our US operations is located in Fort Worth, Texas.

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 regularly review the capacity and utilization of our manufacturing facilities. The FDA and other regulatory agencies regulate the approval for use of manufacturing facilities for 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.

Major Facilities

The following table sets forth our most significant production and research and development facilities:

Location	Size of Site (in m2)	Major Activity
Fort Worth, Texas	315,200	Production, research and development for Surgical and Vision Care businesses
Johns Creek, Georgia	84,100	Production, research and development for Vision Care business
Grosswallstadt, Germany	82,300	Production, research and development for Vision Care business
Johor, Malaysia	43,900	Production for Vision Care business
Irvine, California	40,800	Production, research and development for Surgical business
Houston, Texas	37,400	Production for Surgical business
Batam, Indonesia	35,000	Production for Vision Care business
Singapore	35,000	Production for Vision Care business
Huntington, West Virginia	27,500	Production for Surgical business
Sinking Spring, Pennsylvania	21,800	Production for Surgical business
Cork, Ireland	13,600	Production for Surgical business
Puurs, Belgium	8,000	Production for Surgical business
Schaffhausen, Switzerland	4,100	Production for Surgical business

We launched an expansion of our Johns Creek, Georgia facility in 2017 to add three production lines of DAILIES TOTAL1 contact lenses. We completed the project in 2019 and incurred costs of approximately $100 million.

55

In March 2018, we commenced the second phase of expansion of our Grosswallstadt, Germany and Singapore facilities relating to the production of contact lenses. We expect to pay a total amount of approximately $450 million on the Grosswallstadt project and approximately $125 million on the Singapore project, in each case for both the first and second phases of expansion. Through December 31, 2019, the total amount paid and committed on the Grosswallstadt project was approximately $350 million and the total amount paid and committed on the Singapore project was approximately $120 million.

In September 2019, we launched a further expansion of our Johns Creek, Georgia facility to add four production lines for PRECISION1 contact lenses. This project is ongoing. We expect to pay a total amount of approximately $175 million on this project. Through December 31, 2019, the total amount paid and committed was approximately $90 million.

We funded each of the projects discussed above from working capital.

Environmental Matters

We integrate core values of environmental protection into our business strategy to protect the environment, to add value to the business, manage risk and enhance our reputation.

We are subject to laws and regulations concerning the environment, safety matters, regulation of chemicals and product safety in the countries where we manufacture and sell our products or otherwise operate our business. As a result, we have established internal policies and standards that aid our operations in systematically identifying relevant hazards, assessing and mitigating risks and communicating risk information. These internal policies and standards are in place to ensure our operations comply with relevant environmental, health and safety laws and regulations, and that periodic audits of our operations are conducted. The potential risks we identify are integrated into our business planning, including investments in reducing safety and health risks to our associates and reducing our impact on the environment. We have also dedicated resources to monitor legislative and regulatory developments and emerging issues to anticipate future requirements and undertake policy advocacy when strategically relevant.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

56

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS   

5.A. OPERATING RESULTS

This operating and financial review should be read together with the section captioned "Item 3. Key Information —3.A Selected Financial Data", "Item 4. Information on the Company—4.B. Business Overview" and our Consolidated Financial Statements and the related notes to those statements included elsewhere in this Annual Report. Among other things, those financial statements include more detailed information regarding the basis of preparation for the following information. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under "Item 3. Key Information —3.D Risk Factors" and elsewhere in this Annual Report, Alcon actual results may differ materially from those anticipated in these forward-looking statements. Please see "Special Note About Forward-Looking Statements" in this Annual Report. “Item 5. Operating and Financial Review and Prospects”, together with “Item 4.B Business Overview” and “Item 6.D. Employees”, constitute the Operating and Financial Review (“Rapport annuel”), as defined by the Swiss Code of Obligations.

OVERVIEW

Alcon researches, develops, manufactures, distributes and sells a full suite of eye care products within two segments: Surgical and Vision Care. The Surgical segment is focused on ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery, and includes implantables, consumables and surgical equipment required for these procedures. The Vision Care segment comprises daily disposable, reusable and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. Prior to April 9, 2019, Alcon was operated as a division of Novartis.

We are the largest eye care company in the world, based on 2019 net sales. We are dedicated to providing innovative products that enhance quality of life by helping people see better. Our strong foundation is based on our longstanding success as a trusted brand, our legacy of industry firsts and advancements, our leading positions in the markets in which we compete and our continued commitment to substantial investment in innovation. With over 70 years of history in the ophthalmic industry, we believe the Alcon brand name is synonymous with innovation, quality, service and leadership among eye care professionals worldwide. We employ over 20,000 associates from more than 90 nationalities, operating in over 74 countries and serving consumers and patients in over 140 countries.

Between 2011, when we were acquired by Novartis, and April 9, 2019, we operated as a division within Novartis. Novartis transferred to us substantially all of the assets and liabilities of its eye care devices business, consisting of our surgical and vision care businesses. Our financial statements include, in all periods presented, the assets, liabilities and results of operations of the ophthalmic over-the-counter products and a small portfolio of surgical diagnostics medications, which was transferred to Alcon from Novartis, effective as of January 1, 2018.

In 2019, Alcon achieved net sales to third parties of $7.4 billion. The United States accounted for $3.1 billion, or 41%, of total net sales, Japan accounted for $0.7 billion, or 9%, of total net sales, China accounted for $0.4 billion or 5%, of total net sales, Switzerland accounted for $56 million or 1%, of total net sales, and the rest of the world accounted for $3.2 billion, or the remaining 44%, of total net sales.

Basis of Preparation

The Consolidated Financial Statements included elsewhere in this Annual Report, which present our financial position, results of operations, comprehensive income/(loss), and cash flows have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The preparation of the Consolidated Financial Statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the year, that affect the reported amounts of assets and liabilities as well as revenues and expenses. Actual outcomes and results could differ from those estimates and assumptions.

The businesses of Alcon did not form a separate legal group of companies prior to the Spin-off. For periods prior to the Spin-off, the financial statements were prepared on a combined basis and are derived (carved-out) from the Novartis Consolidated Financial Statements and accounting records, as if Alcon was a stand-alone company for all periods presented. Our Consolidated Financial Statements include the assets and liabilities within Novartis subsidiaries in such historical periods

57

that are attributable to Alcon and exclude the assets and liabilities within Alcon subsidiaries in such historical periods not attributable to its businesses. For periods prior to the Spin-off, the Consolidated Financial Statements include charges and allocation of expenses related to certain Novartis business support functions across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations. In addition, allocations were made for Novartis corporate general and administration functions in the areas of corporate governance, including board of directors, corporate responsibility and other corporate functions, such as tax, corporate governance and listed company compliance, investor relations, internal audit, treasury and communications functions.

Management believes that the allocation methodology used was reasonable and all allocations have been performed on a basis that reasonably reflects the services received by Alcon, the cost incurred on behalf of Alcon and the assets and liabilities of Alcon. Although the Consolidated Financial Statements reflect management's best estimate of all historical costs related to Alcon, this may however not necessarily reflect what the results of operations, financial position or cash flows of Alcon would have been had Alcon operated as an independent, publicly traded company for the periods prior to the Spin-off.

Agreements entered into between Alcon and Novartis in connection with the Spin-off govern the relationship between the parties following the Spin-off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.

For further information on the basis of preparation of the Consolidated Financial Statements see Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report.

Items You Should Consider When Evaluating Our Consolidated Financial Statements

For periods prior to the Spin-off, our results of operations, financial position and cash flows could differ from those that would have resulted if we operated autonomously or as an entity independent of Novartis. As a result, you should consider the following facts when evaluating our historical results of operations:

• For certain of the periods covered by our Consolidated Financial Statements, our business was operated within legal entities which hosted portions of other Novartis businesses. In addition, in all the periods presented, our Consolidated Financial Statements include the ophthalmic over-the-counter products and a small portfolio of surgical diagnostics medications, the management and reporting of which was transferred to Alcon from the Innovative Medicines Division of Novartis effective as of January 1, 2018.

• For periods prior to the Spin-off, income taxes attributable to the Alcon Division were determined using the separate return approach, under which current and deferred income taxes were calculated as if a separate tax return had been prepared in each tax jurisdiction. In various tax jurisdictions, Alcon and Novartis businesses operated within the same legal entity and certain Alcon subsidiaries were part of a Novartis tax group. This required an assumption that the subsidiaries and operations of Alcon in those tax jurisdictions operated on a standalone basis and constitute separate taxable entities. Actual outcomes and results could differ from these separate tax return estimates, including those estimates and assumptions related to realization of tax benefits within these Novartis tax groups.

• For periods prior to the Spin-off, our Consolidated Financial Statements also include an allocation and charges of expenses related to certain Novartis functions. However, the allocations and charges may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company during those periods. For example, historically, our business has been charged with a significant portion of appropriate administrative costs, such as those related to services Alcon has received from Novartis across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations, and these have been reflected in our Consolidated Financial Statements based on historical allocations and charges. Accordingly, these overhead costs were affected by the historical arrangements that existed between the historical reporting units of the Alcon Division and Novartis and typically did not include a profit margin.

• For periods prior to the Spin-off, our Consolidated Financial Statements also include an allocation from Novartis of certain corporate related general and administrative expenses that we would have incurred as a publicly traded company. These include costs associated with corporate governance, including board of directors, corporate responsibility and other corporate functions, such as tax, corporate governance and listed company compliance, investor relations, internal audit, treasury and communications functions. The allocation of these additional expenses may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company for those periods.

58

• On August 28, 2018, we announced our immediate, voluntary market withdrawal of our CyPass micro-stent surgical glaucoma product from the global market. Our Consolidated Financial Statements include the sales of CyPass micro-stent products from and after the launch of the product in 2016 until our withdrawal of the product from the market in August 2018. As a result, in the year ended December 31, 2018, we recognized a one-time pre-tax charge of $282 million (after tax $206 million). This consisted of $11 million for the costs associated with the market withdrawal and $337 million for the impairment of the CyPass intangible assets. These charges were partially offset by the $66 million gain for the reduction in the related contingent consideration liability.

The preparation of financial statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the period that affects the reported amounts of assets and liabilities as well as revenues and expenses. In particular, due to the fact that the presented Consolidated Financial Statements for periods prior to the Spin-off have been carved out from Novartis financial statements, actual outcomes and results could differ from those estimates and assumptions as indicated in the Critical accounting policies and estimates section of this document. See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report and in the "Critical accounting policies and estimates" section within this Item 5.A.

Segment description

Alcon has two identified reporting segments: Surgical and Vision Care. Both segments are supported by Research and Development and Manufacturing and Technical Operations, whose results are incorporated into the respective segment contribution. Segment contribution excludes amortization and impairment costs for acquired product rights or other intangibles, general and administrative expenses for corporate activities, and certain other income and expense items such as spin readiness and separation costs, transformation program costs, and restructuring costs and legal settlements that are not attributable to a specific segment.

In Surgical, Alcon researches, develops, manufactures, distributes and sells ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. The surgical portfolio also includes implantables, consumables and surgical equipment required for these procedures and supports the end-to-end procedure needs of the ophthalmic surgeon. Alcon also provides services, training, education and technical support for the Surgical business. In 2019, the Surgical segment accounted for $4.2 billion, or 57%, of Alcon net sales to third parties, and contributed $923 million, or 62%, of Alcon operating income (excluding unallocated income and expenses).

In Vision Care, Alcon researches, develops, manufactures, distributes and sells daily disposable, reusable, and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. Alcon also provides services, training, education and technical support for the Vision Care business. In 2019, the Vision Care segment accounted for $3.2 billion, or 43%, of Alcon net sales to third parties, and contributed $563 million, or 38%, of Alcon operating income (excluding unallocated income and expenses).

OPPORTUNITY AND RISK SUMMARY

The surgical and vision care markets in which Alcon operates are large, dynamic and growing. As the world population grows and ages, the need for quality eye care is expanding and evolving. In addition, although it is estimated that 80% of all visual impairments are currently preventable, treatable or curable, we operate in markets that have substantial unmet medical and consumer needs. Our surgical and vision care products are targeted at addressing many of these unmet medical and consumer needs through products that are used in treating multiple ocular health conditions and offer leading eye care solutions for patients throughout their lives.

The surgical market in which we operate includes sales of implantables, consumables, and surgical equipment, including associated technical, clinical and service support and training, and is projected to grow at approximately 4% per year from 2019 to 2024. Growth drivers in the surgical market include: global growth of cataract and vitreoretinal procedures, driven by an aging population; increased access to care; higher uptake of premium patient-pay technologies; increased adoption of advanced technologies; and eye disease as a comorbidity linked to the global prevalence of diabetes.

The vision care market in which we operate is comprised of products designed for ocular care and consumer use, and is projected to grow at approximately 5% per year from 2019 to 2024. Growth drivers in the vision care market include: continued modality shift to daily disposable lenses from reusable lenses and the resulting sales premium; advancements in specialty lenses combined with increasing demand for toric, multifocal and cosmetic lenses; a significant population of approximately 194 million undiagnosed dry eye patients, with an additional 42 million self-diagnosed dry eye patients using unsuitable products for treatment; growing access and consumption of vision care products in emerging markets; and increasing consumer access through the expansion of distribution models.

59

In each of our markets, we rely on our strong relationships with eye care professionals and consumers to attract and retain customers and expand the market. We have also made one of the largest commitments to research and development in the eye care market, which we expect to continue through internal innovation investments and identifying and executing on attractive acquisition, licensing and collaboration opportunities.

We are in the middle of executing a turnaround plan to return Alcon to sustainable, profitable growth and address existing challenges. Prior to 2016, Alcon, as a division of Novartis, had experienced stagnating growth driven by challenges in maximizing investments in its pipeline, the need for additional investment in promotional activities for existing Alcon products, an aging information technology infrastructure and difficulties in optimizing customer service, training, field service and inventory levels. The goal of the turnaround plan was to first fix the Alcon foundation, then to execute the growth plan and, in future periods, accelerate innovation, expand markets and adjacencies and develop new business models. Our growth acceleration plan consists of three phases:

• Fix the foundation (2016–2017): The initial phase of our growth plan in 2016 and 2017 focused on fixing the foundation of Alcon by investing in promotion, capital and systems, reinvigorating the innovation pipeline, and strengthening our customer relationships. Improving the culture at Alcon has also been a top priority, and the organization has responded with significant morale improvement. Strong results have followed, including sales returning to growth.

• Execute the growth plan (2018–2020): We began the second phase of our growth plan in 2018, with a focus on superior execution, further investing in high-potential products and market segments and accelerating our product development cycle. We have begun to transform our company by cultivating a more nimble and agile culture. In our surgical business, we intend to continue to expand and grow the premium IOL market with our AT-IOL offerings and our PanOptix brand of presbyopia correcting IOLs ("PC-IOLs"). We also plan to expand our vitreoretinal business, in part through enhancing technology penetration in key markets and by accelerating conversion from optical to digital surgery. In our vision care business, we intend to grow our DAILIES TOTAL1 family of products and expand the presbyopia category through increased consumer awareness, lens comfort and quality. We also plan to continue the global roll-out of our Systane COMPLETE product and grow consumer demand with investments in direct-to-consumer marketing.

• Deliver leading-edge solutions (2021 and beyond): Following the completion of the second phase of our growth plan, the third phase will focus on accelerating innovation, capturing opportunities to expand markets and pursue adjacencies and developing new business models to improve access to our leading product portfolio.

Alcon future expectations are subject to various risks and uncertainties, including market dynamics in the surgical and vision care markets, general economic conditions and the pace of innovation in our industry, as well as successfully achieving our growth strategies and efficiency initiatives. These expectations were, in the view of management, prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management's knowledge and belief, the expected future financial performance of Alcon. However, this information is not fact and should not be relied upon as necessarily indicative of future results, and you are cautioned not to place undue reliance on the prospective financial information. There will likely be differences between Alcon expectations and the actual results and those differences could be material. We can give no assurance that Alcon expectations will be achieved and we do not undertake any obligation to release publicly the results of any future revisions we may make to the expectations. When considering Alcon expectations, you should keep in mind the risk factors and other cautionary statements in "Item 3. Key Information —3.D Risk Factors" and "Special Note About Forward-Looking Statements" in this Annual Report.

Our financial results are affected to varying degrees by internal and external factors. For example, our ability to grow depends on the commercial success of our products and our ability to maintain our position in the highly competitive markets in which we operate. Even if we protect our intellectual property to the fullest extent permitted by applicable law, competitors may market products that compete with our products. Our ability to grow also depends on the success of our research and development efforts in bringing new products to market, as well as the commercial acceptance of our products. Increased pricing pressure in the healthcare industry in general could also impact our ability to generate returns and invest for the future. Additionally, our products are subject to competition from lower priced versions of our products, and our industry continues to be challenged by the vulnerability of distribution channels to counterfeiting. Product recalls or voluntary market withdrawals in connection with defects or unanticipated use of our products could also have a material adverse effect upon our business. We are also implementing new information technology systems and integrating those new systems into our legacy systems. All of our operations, including our information technology systems, can be vulnerable to a variety of business interruptions.

Further, our ability to grow may be impacted by the ongoing consolidation among distributors, retailers and healthcare provider organizations, which could increase both the purchasing leverage of key customers and the concentration of credit risk. We also may be adversely affected by changes in inventory levels or fluctuations in buying patterns by our large distributor and retail customers. If we overestimate demand and produce too much of a particular product, we face a risk of inventory

60

obsolescence. In addition, for certain materials, components and services, we rely on sole or limited sources of supply. Our customer relations could be negatively impacted by the loss of our significant suppliers or the inability of any such supplier to meet certain specifications or delivery schedules. Further, we have developed strong relationships with numerous healthcare providers, and rely on them to recommend our products to their patients and to other members of their organizations. Consumers in the eye health industry have a tendency not to switch products regularly and are repeat consumers, meaning that a physician's initial recommendation of our products, and a consumer's initial choice to use our products, have an impact on the success of our products. Therefore, it is important to our business and results of operations to retain and grow these relationships.

Given our global presence, our operations and business results are also influenced and affected by the global economic and financial environment, including unpredictable political conditions that currently exist in various parts of the world. Additionally, a portion of our operations are conducted in emerging markets and are subject to risks and potential costs such as economic, political and social uncertainty, as well as relatively low average income levels and limited government reimbursement for the cost of healthcare products and services. Our operations and business results are also affected by the varying degrees of governmental regulation in the countries in which we operate, making the process of developing new products and obtaining necessary regulatory marketing authorization lengthy, expensive and uncertain. The manufacture of our products is also highly regulated. Any changes or new requirements related to the regulatory approval process or postmarket requirements applicable to our products in any jurisdiction could be costly and onerous to comply with.

For more details on these trends and how they could impact our results, see "Item 3. Key Information—3.D. Risk Factors".

COMPONENTS OF RESULTS OF OPERATIONS

Net sales to third parties

Revenue on the sale of Alcon products and services, which is recorded as "Net sales to third parties" in the consolidated income statements, is recognized when a contractual promise to a customer (i.e., a performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to or receipt of the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue would be recognized upon the satisfaction of acceptance criteria. The amount of revenue to be recognized is based on the consideration Alcon expects to receive in exchange for its goods and services which may be fixed or variable. Variable consideration may include rebates, discounts including cash discounts, and sales returns. Variable consideration is only recognized when it is highly probable that a significant reversal of cumulative sales will not occur.

Surgical equipment may be sold together with other products and services under a single contract. The total consideration is allocated to the separate performance obligations based on the relative standalone selling price for each performance obligation. Revenue is recognized upon satisfaction of each performance obligation under the contract.

Other revenues

"Other revenues" mainly include revenue from contract manufacturing services provided to our Former Parent which are recognized over time as the service obligations are completed. Associated costs incurred are recognized in "Cost of other revenues".

Inventories

Inventory is valued at acquisition or production cost determined on a first-in, first-out basis. This value is used for the "Cost of net sales" and "Cost of other revenues" in the consolidated income statements. Unsalable inventory is fully written off in the consolidated income statements under "Cost of net sales" and "Cost of other revenues".

Research & development

Internal research and development ("R&D") costs are fully charged to "Research & development" in the consolidated income statements in the period in which they are incurred. Alcon considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset until marketing approval from a regulatory authority is obtained in relevant major markets, such as the United States, the European Union, Switzerland or Japan.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Selected accounting policies are set out in Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report, which are prepared in accordance with IFRS as issued by the IASB.

61

Given the uncertainties inherent in our business activities, we must make certain estimates and assumptions that require difficult, subjective and complex judgments. Because of uncertainties inherent in such judgments, actual outcomes and results may differ from our assumptions and estimates, which could materially affect our Consolidated Financial Statements. Application of the following accounting policies requires certain assumptions and estimates that have the potential for the most significant impact on the Consolidated Financial Statements.

Impairment of goodwill and intangible assets

We review long-lived intangible assets for impairment whenever events or changes in circumstance indicate that the asset's balance sheet carrying amount may not be recoverable. Goodwill, the Alcon brand name and intangible assets not yet ready for use are not amortized but are reviewed for impairment at least annually. Our annual impairment testing date is Alcon's year-end, December 31.

An asset is generally considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. Usually, Alcon uses the fair value less costs of disposal method for its impairment evaluation. In most cases, no directly observable market inputs are available to measure the fair value less costs of disposal. Therefore, an estimate of fair value less costs of disposal is derived indirectly and is based on net present value techniques utilizing post-tax cash flows and discount rates. In the limited cases where the value in use method is applied, net present value techniques are utilized using pre-tax cash flows and discount rates.

Fair value reflects estimates of assumptions that market participants would be expected to use when pricing the asset and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset. The estimates used in calculating net present values are highly sensitive and depend on assumptions, which includes the following:

• the amount and timing of projected cash flows;

• the timing and probability of regulatory and commercial success;

• the royalty rate for the Alcon brand name;

• the terminal growth rate; and

• the discount rate.

Due to the above factors and those further described in the "Opportunity and risk summary" section above, actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using discounting techniques.

The recoverable amount of the grouping of cash generating units to which goodwill and indefinite life intangible assets are allocated is based on fair value less costs of disposal. For additional information on intangible assets, see Note 10 to the Consolidated Financial Statements included elsewhere in this Annual Report.

Goodwill and other intangible assets represent a significant part of our consolidated balance sheet, primarily due to acquisitions. Although no significant additional impairments are currently anticipated, impairment evaluation could lead to material impairment charges in the future.

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill, or directly in the income statement if it is a bargain purchase. Alcon primarily uses net present value techniques, utilizing post-tax cash flows and discount rates in calculating the fair value of net identifiable assets acquired when allocating the purchase consideration paid for the acquisition. The estimates in calculating fair values are highly sensitive and depend on assumptions, which include the following:

• the amount and timing of projected cash flows;

• long-term sales forecasts;

• the timing and probability of regulatory and commercial success; and

• the appropriate discount rate.

62

Contingent consideration

In a business combination, it is necessary to recognize contingent future payments to previous owners, representing contractually defined potential amounts as a liability. Usually for Alcon these are linked to milestone or royalty payments related to certain assets and are recognized as a financial liability at their fair value, which is then re-measured at each subsequent reporting date.

For the determination of the fair value of contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the timing and probability of regulatory and commercial success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration. These estimations typically depend on factors such as technical milestones or market performance and are adjusted for the probability of their likelihood of payment and, if material, are appropriately discounted to reflect the impact of time.

Changes in the fair value of contingent consideration liabilities in subsequent periods are recognized in the consolidated income statements in "Cost of net sales" for currently marketed products and in "Research & development" for in-process research & development.

The effect of unwinding the discount over time is recognized in "Interest expense" in the consolidated income statements.

Taxes

The estimated amounts for current and deferred tax assets or liabilities, including any amounts related to any uncertain tax positions, are based on currently known facts and circumstances. Tax returns are based on an interpretation of tax laws and regulations and reflect estimates based on these judgments and interpretations. The tax returns are subject to examination by the competent taxing authorities which may result in an assessment being made requiring payments of additional tax, interest or penalties. Inherent uncertainties exist in the estimates of the tax positions.

Research & development

Internal research & development costs are fully charged to the income statement in the period in which they are incurred. Alcon considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset usually until marketing approval from the regulatory authority is obtained in a relevant major market, such as the United States, the European Union, Switzerland or Japan.

FACTORS AFFECTING COMPARABILITY OF PERIOD TO PERIOD RESULTS OF OPERATIONS

The comparability of the period to period results of our operations can be significantly affected by our Spin-off from Novartis, issuance and refinancing of financial debts and acquisitions. The transactions of significance during 2019 include the acquisition of PowerVision, Inc., Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders, and refinancing of the bridge and term loans which had been issued in April 2019. Transactions of significance during 2018 and 2017 included the acquisitions of TrueVision Systems, Inc. and Tear Film Innovations, Inc. in 2018 and the acquisition of ClarVista Medical, Inc. in 2017. Refer to Note 4 to the Consolidated Financial Statements for details related to each of these significant transactions.

63

RESULTS OF OPERATIONS

In evaluating our performance, we consider not only the IFRS results, but also certain non-IFRS measures, including various "core" results and constant currency ("cc") results. These measures assist us in evaluating our ongoing performance from period to period and we believe this additional information is useful to investors in understanding the performance of our business. Refer to "Item 5.A. Operating Results —Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables. These measures are not intended to be substitutes for the equivalent measures of financial performance prepared in accordance with IFRS and may differ from similarly titled non-IFRS measures of other companies.

Key figures

	2019 compared to 2018								2018 compared to 2017
					Change %						Change %
($ millions unless indicated otherwise)	2019		2018		$		cc(1)		2017		$	cc(1)
Net sales to third parties	7,362		7,149		3		5		6,785		5	5
Gross profit	3,662		3,192		15		19		3,204		—	(1	)
Operating (loss)	(187	)	(248	)	25		54		(77	)	nm	nm
Operating margin (%)	(2.5	)	(3.5	)					(1.1	)
Net (loss)/income	(656	)	(227	)	(189	)	(163	)	256		nm	nm
Basic and diluted (loss)/earnings per share ($)(2)	(1.34	)	(0.46	)	(191	)	(163	)	0.52		nm	nm
Core results(1)
Core operating income	1,265		1,212		4		11		1,086		12	12
Core operating margin %	17.2		17.0						16.0
Core net income	925		974		(5	)	1		908		7	8
Core basic earnings per share ($)(2)	1.89		2.00		(6	)	1		1.86		8	8
Core diluted earnings per share ($)(3)	1.89		2.00		(6	)	1		1.86		8	8

nm = not meaningful

(1) Core results and constant currencies (cc) as presented in this table are non-IFRS measures. Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods. Refer to "Item 5.A. Operating Results —Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.

(2) Calculated using 488.2 million shares for both current and prior year periods.

(3) Calculated using 490.1 million weighted average diluted shares for the year ended December 31, 2019, and 488.2 million shares for the prior year periods.

64

All comments below focus on constant currencies (cc) movements for the year ended December 31, 2019 compared to 2018 unless otherwise noted. Commentary for the year ended December 31, 2018 compared to 2017 may be found in Item 5 of Amendment No. 6 to the Company's Registration Statement on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 22, 2019, ("2018 Form 20-F").

Net sales by segment

The following table provides an overview of net sales to third parties by segment:

	2019 compared to 2018				2018 compared to 2017
			Change %			Change %
($ millions unless indicated otherwise)	2019	2018	$	cc(1)	2017	$	cc(1)
Surgical
Implantables	1,210	1,136	7	9	1,045	9	9
Consumables	2,304	2,227	3	6	2,104	6	5
Equipment/other	660	636	4	6	584	9	9
Total Surgical	4,174	3,999	4	7	3,733	7	7
Vision Care
Contact lenses	1,969	1,928	2	4	1,836	5	4
Ocular health	1,219	1,222	—	2	1,216	—	1
Total Vision Care	3,188	3,150	1	3	3,052	3	3
Net sales to third parties	7,362	7,149	3	5	6,785	5	5

(1) Constant currencies is a non-IFRS measure. Refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company" section for additional information.

Surgical

Surgical net sales were $4.2 billion (+4%, +7% cc) in 2019 as all key categories grew. Implantables grew (+7%, +9% cc), driven by continued strong demand for Advanced Technology IOLs, including AcrySof IQ PanOptix trifocal IOLs, particularly with the recent launches in the US and Japan. Consumables grew (+3%, +6% cc), driven by cataract and vitreoretinal consumables which continue to benefit from a strong global installed equipment base. Equipment/other grew (+4%, +6% cc), driven by growth in service revenue and procedural eye drops, while the base equipment sales remained broadly in line with prior year.

Vision Care

Vision Care net sales were $3.2 billion (+1%, +3% cc). Contact lenses grew (+2%, +4% cc), driven by continued double-digit growth of DAILIES TOTAL1 globally, including multifocal lenses to treat presbyopia, partially offset by a decline in other contact lenses. Ocular health grew (0%, +2% cc), driven by artificial tears, primarily Systane in the US and Europe following the 2018 launch of Systane COMPLETE, partially offset by declines in contact lens care as the global market continues to shift to daily lens modalities.

65

Operating (loss)/income

	2019 compared to 2018								2018 compared to 2017
					Change %						Change %
($ millions unless indicated otherwise)	2019		2018		$		cc(1)		2017		$		cc(1)
Gross profit	3,662		3,192		15		19		3,204		—		(1	)
Selling, general & administration	(2,847	)	(2,801	)	(2	)	(4	)	(2,596	)	(8	)	(7	)
Research & development	(656	)	(587	)	(12	)	(12	)	(584	)	(1	)	—
Other income	55		47		17		19		47		—		1
Other expense	(401	)	(99	)	nm		nm		(148	)	33		33
Operating (loss)	(187	)	(248	)	25		54		(77	)	nm		nm
Operating margin (%)	(2.5	)	(3.5	)					(1.1	)
Core results(1)
Core gross profit	4,663		4,541		3		6		4,211		8		8
Core operating income	1,265		1,212		4		11		1,086		12		12
Core operating margin (%)	17.2		17.0						16.0

nm = not meaningful

(1) Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.

Operating loss was $187 million, compared to $248 million in the prior year period. The prior year period included an unfavorable impact of $282 million from the CyPass voluntary market withdrawal, including a $337 million expense for impairment of the intangible asset and $11 million in other costs, partially offset by a $66 million reduction of the contingent consideration liability. The current year period includes higher sales and improved gross margin which were more than offset by spin readiness costs, separation costs, transformation program costs, and investments in research and development and IT, including SAP implementation. There was a negative 1.0% point impact on operating margin from currency in 2019.

Adjustments to arrive at core operating income were $1.5 billion, mainly due to $1.0 billion of amortization, $237 million of separation costs, $72 million of spin readiness costs and $52 million of transformation program costs.

Core operating income was $1.3 billion (+4%, +11% cc), compared to $1.2 billion in the prior year period. Higher sales were partially offset by investments in research & development and IT, including the SAP implementation. Core gross margin was broadly in line with prior year, as improved surgical sales mix and vision care manufacturing efficiencies were offset by SAP implementation costs, vision care production expansion costs and China tariffs. There was a negative 0.6% point impact on core operating margin from currency in 2019.

66

Segment contribution⁽¹⁾ 

	2019 compared to 2018								2018 compared to 2017
($ millions unless indicated otherwise)					Change %						Change %
	2019		2018		$		cc(2)		2017		$		cc(2)
Surgical segment contribution	923		813		14		19		691		18		18
As % of net sales	22.1		20.3						18.5
Vision Care segment contribution	563		594		(5	)	(1	)	625		(5	)	(5	)
As % of net sales	17.7		18.9						20.5
Not allocated to segments	(1,673	)	(1,655	)	(1	)	(1	)	(1,393	)	(19	)	(18	)
Operating (loss)	(187	)	(248	)	25		54		(77	)	nm		nm
Core results(2)
Core Surgical segment contribution	957		846		13		19		701		21		21
As % of net sales	22.9		21.2						18.8
Core Vision Care segment contribution	580		600		(3	)	1		625		(4	)	(3	)
As % of net sales	18.2		19.0						20.5
Core not allocated to segments	(272	)	(234	)	(16	)	(17	)	(240	)	3		3
Core operating income	1,265		1,212		4		11		1,086		12		12

nm = not meaningful

(1) For additional information regarding segment contribution please refer to Note 5 to the Consolidated Financial Statements.

(2) Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results —Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.

Surgical

Surgical segment contribution was $923 million (+14%, +19% cc), compared to $813 million in the prior year period. Higher sales, improved gross margin, and improved selling, general & administrative expenses leverage, were partially offset by higher research & development investments.

Adjustments to arrive at core Surgical segment contribution were $34 million, primarily for business development charges and manufacturing sites consolidation activities partially offset by fair value adjustments to contingent consideration liabilities.

Core Surgical segment contribution was $957 million (+13%, +19% cc), compared to $846 million in the prior year period. Higher sales, improved gross margin, and improved selling, general & administrative expenses leverage, were partially offset by higher research & development investments. There was a negative 0.6% point impact on core Surgical segment contribution margin from currency.

Vision Care

Vision Care segment contribution was $563 million (-5%, -1% cc), compared to $594 million in the prior year period. Higher sales and lower marketing and selling costs were offset by lower gross margin from product mix, production expansion costs, higher research & development investments, and separation costs.

Adjustments to arrive at core Vision Care segment contribution were $17 million primarily due to spin readiness and separation costs partially offset by fair value adjustments to contingent consideration liabilities.

Core Vision Care segment contribution was $580 million (-3%, +1% cc), compared to $600 million in the prior year period. Higher sales and lower marketing and selling costs were partially offset by lower gross margin from product mix, production expansion costs, and higher research & development investments. There was a negative 0.5% point impact on core Vision Care segment contribution margin from currency.

67

Not allocated to segments

Operating loss not allocated to segments was $1.7 billion, broadly in line with the prior year period which was affected by the CyPass voluntary market withdrawal. The current year period included $214 million of separation costs, $62 million of spin readiness costs, $52 million of transformation program costs, and higher corporate costs, consisting of legal items and IT costs.

Core operating income not allocated to segments amounted to net core expense of $272 million, compared to $234 million in the prior year period, driven primarily by higher IT costs.

68

Non-operating income & expense

	2019 compared to 2018								2018 compared to 2017
					Change %						Change %
($ millions unless indicated otherwise)	2019		2018		$		cc(1)		2017		$		cc(1)
Operating (loss)	(187	)	(248	)	25		54		(77	)	nm		nm
Interest expense	(113	)	(24	)	nm		nm		(27	)	11		(2	)
Other financial income & expense	(32	)	(28	)	(14	)	(15	)	(23	)	(22	)	(29	)
(Loss) before taxes	(332	)	(300	)	(11	)	13		(127	)	(136	)	(129	)
Taxes	(324	)	73		nm		nm		383		(81	)	(81	)
Net (Loss)/income	(656	)	(227	)	(189	)	(163	)	256		nm		nm
Basic and diluted (loss)/earnings per share ($)	(1.34	)	(0.46	)	(191	)	(163	)	0.52		nm		nm
Core results(1)
Core taxes	(195	)	(186	)	(5	)	(12	)	(128	)	(45	)	(45	)
Core net income	925		974		(5	)	1		908		7		8
Core basic earnings per share ($)	1.89		2.00		(6	)	1		1.86		8		8
Core diluted earnings per share ($)	1.89		2.00		(6	)	1		1.86		8		8

nm = not meaningful

(1) Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.

Interest expense

Interest expense was $113 million, compared with $24 million in the prior year period, driven by financial debts, including the bridge and other term loans, notes and local bilateral facilities, and the adoption of IFRS 16, Leases.

Other financial income & expense

Other financial income & expense was a net expense of $32 million, compared to $28 million in the prior year period, and consisted primarily of hedging costs and foreign currency exchange gains and losses. The current year period also included a $4 million write-off of unamortized deferred financing costs at the time of refinancing.

Taxes

Tax expense was $324 million, compared to a tax benefit of $73 million in the prior year period. The prior year period included a $76 million tax benefit for the release of the deferred tax liability associated with the CyPass intangible asset. Taxes recognized in the current period include $304 million in non-cash tax expense related to the re-measurement of deferred tax assets and liabilities as a result of Swiss tax reform, tax expense related to rate changes in the US following legal entity reorganizations executed related to the Spin-off, non-cash tax expense related to the re-measurement of deferred tax assets and liabilities following a tax rate change in India, and net changes in uncertain tax positions.

Adjustments to arrive at core tax expense were $129 million, primarily related to Swiss tax reform, partially offset by tax associated with operating income core adjustments.

Core tax expense was $195 million, compared to $186 million in the prior year period. The average core tax rate increased to 17.4% from 16.0% in the prior year period. The increase in the core effective tax rate is primarily driven by a loss of certain tax benefits in the US due to the Spin-off and the mix of pre-tax income across geographical tax jurisdictions.

69

Net (loss)/income and (loss)/earnings per share

Net loss was $656 million, compared to a net loss of $227 million in the prior year period. The increase was mainly attributable to an operating loss driven mainly by spin readiness costs, separation costs, and transformation program costs, higher interest and tax expense. The associated basic and diluted (loss) per share were $(1.34), compared to $(0.46) in the prior year period.

Core net income was $925 million, compared to $974 million in the prior year period, as higher core operating income was offset by higher interest and tax expense. The associated core basic and diluted earnings per share were $1.89 compared to $2.00 in the prior year period.

70

EFFECTS OF CURRENCY FLUCTUATIONS

We prepare our Consolidated Financial Statements in US dollars. As a result, fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on both our results of operations as well as on the reported value of our assets, liabilities and cash flows. This in turn may significantly affect reported earnings (both positively and negatively) and the comparability of period-to-period results of operations.

For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into US dollars at the prevailing market exchange rates as of the relevant balance sheet date. For purposes of our consolidated income statements and statements of cash flows, revenue, expense and cash flow items in local currencies are translated into US dollars at average exchange rates prevailing during the relevant period. As a result, even if the amounts or values of these items remain unchanged in the respective local currency, changes in exchange rates have an impact on the amounts or values of these items in our Consolidated Financial Statements.

Alcon manages its global currency exposure by engaging in hedging transactions where management deems appropriate (forward contracts and swaps). Specifically, Alcon enters into various contracts that reflect the changes in the value of foreign currency exchange rates to preserve the value of assets.

There is also a risk that certain countries could devalue their currency. If this occurs, then it could impact the effective prices we would be able to charge for our products and also have an adverse impact on both our consolidated income statement and balance sheet. Alcon is exposed to a potential adverse devaluation risk on its intercompany funding and total investment in certain subsidiaries operating in countries with exchange controls.

The hyperinflationary economies in which we operate are Argentina and Venezuela. Venezuela was hyperinflationary for all years presented, and Argentina became hyperinflationary effective July 1, 2018, requiring implementation of hyperinflation accounting as of January 1, 2018. Refer to Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

71

Foreign exchange rates for foreign currency translation

The following tables set forth the foreign exchange rates of the US dollar against key currencies used for foreign currency translation when preparing the Consolidated Financial Statements:

	Average for year				As of December 31
($ per unit unless indicated otherwise)	2019	2018	Change %		2019	2018	Change %
AUD	0.695	0.748	(7	)	0.701	0.707	(1	)
BRL	0.254	0.275	(8	)	0.249	0.258	(3	)
CAD	0.754	0.772	(2	)	0.767	0.735	4
CHF	1.006	1.023	(2	)	1.032	1.014	2
CNY	0.145	0.151	(4	)	0.144	0.145	(1	)
EUR	1.120	1.181	(5	)	1.121	1.144	(2	)
GBP	1.277	1.336	(4	)	1.313	1.274	3
JPY (100)	0.917	0.906	1		0.920	0.907	1
RUB (100)	1.546	1.600	(3	)	1.613	1.437	12

	Average for year				As of December 31
($ per unit unless indicated otherwise)	2018	2017	Change %		2018	2017	Change %
AUD	0.748	0.766	(2	)	0.707	0.779	(9	)
BRL	0.275	0.313	(12	)	0.258	0.302	(15	)
CAD	0.772	0.771	—		0.735	0.797	(8	)
CHF	1.023	1.016	1		1.014	1.024	(1	)
CNY	0.151	0.148	2		0.145	0.154	(6	)
EUR	1.181	1.129	5		1.144	1.195	(4	)
GBP	1.336	1.288	4		1.274	1.347	(5	)
JPY (100)	0.906	0.892	2		0.907	0.888	2
RUB (100)	1.600	1.715	(7	)	1.437	1.734	(17	)

72

Currency impact on key figures

The following table provides a summary of the currency impact on key company figures due to their conversion into US dollars, Alcon's reporting currency, of the financial data from entities reporting in non-US dollars.

	2019 compared to 2018						2018 compared to 2017
	Change %				Percentage point currency impact		Change %		Percentage point currency impact
	$		cc(1)				$	cc(1)
Net sales to third parties	3		5		(2	)	5	5	—
Gross profit	15		19		(4	)	—	(1)	1
Operating (loss)	25		54		(29	)	nm	nm	nm
Net (loss)/income	(189	)	(163	)	(26	)	nm	nm	nm
Basic and diluted (loss)/earnings per share	(191	)	(163	)	(28	)	nm	nm	nm
Core results(1)
Core operating income	4		11		(7	)	12	12	—
Core net income	(5	)	1		(6	)	7	8	(1	)
Core basic earnings per share	(6	)	1		(7	)	8	8	—
Core diluted earnings per share	(6	)	1		(7	)	8	8	—

(1) Core results and constant currencies (cc) as presented in this table are non-IFRS measures. Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods. Refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company" section for additional information.

A 1% movement in the USD versus our basket of currencies would result in a $40 million change in annual net sales and $15 million change in annual core operating income.

73

NON-IFRS MEASURES AS DEFINED BY THE COMPANY

Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods, including core results, percentage changes measured in constant currencies, EBITDA, free cash flow, and net liquidity/(debt).

Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS measures) may not be comparable to the calculation of similar measures of other companies. These supplemental non-IFRS measures are presented solely to permit investors to more fully understand how Alcon management assesses underlying performance. These supplemental non-IFRS measures are not, and should not be viewed as, a substitute for IFRS measures.

Core results

Alcon core results, including core operating income and core net income, exclude all amortization and impairment charges of intangible assets, excluding software, net gains and losses on fund investments and equity securities valued at fair value through profit and loss ("FVPL"), fair value adjustments of financial assets in the form of options to acquire a company carried at FVPL, obligations related to product recalls, and certain acquisition related items. The following items that exceed a threshold of $10 million and are deemed exceptional are also excluded from core results: integration and divestment related income and expenses, divestment gains and losses, restructuring charges/releases and related items, legal related items, gains/losses on early extinguishment of debt or debt modifications, impairments of property, plant and equipment and software, as well as income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a $10 million threshold.

Taxes on the adjustments between IFRS and core results take into account, for each individual item included in the adjustment, the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although this is not always the case for items arising from legal settlements in certain jurisdictions.

Alcon believes that investor understanding of its performance is enhanced by disclosing core measures of performance because, since they exclude items that can vary significantly from period to period, the core measures enable a helpful comparison of business performance across periods. For this same reason, Alcon uses these core measures in addition to IFRS and other measures as important factors in assessing its performance.

A limitation of the core measures is that they provide a view of Alcon operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of purchased intangible assets and restructurings.

Constant currencies

Changes in the relative values of non-US currencies to the US dollar can affect Alcon financial results and financial position. To provide additional information that may be useful to investors, including changes in sales volume, we present information about changes in our net sales and various values relating to operating and net income that are adjusted for such foreign currency effects.

Constant currency calculations have the goal of eliminating two exchange rate effects so that an estimate can be made of underlying changes in the consolidated income statement excluding:

• the impact of translating the income statements of consolidated entities from their non-US dollar functional currencies to the US dollar; and

• the impact of exchange rate movements on the major transactions of consolidated entities performed in currencies other than their functional currency.

Alcon calculates constant currency measures by translating the current year's foreign currency values for sales and other income statement items into US dollars, using the average exchange rates from the prior year and comparing them to the prior year values in US dollars.

For additional information on the effects of foreign currencies, refer to "Item 5.A. Operating Results- Effects of currency fluctuations" section.

74

EBITDA

Alcon defines earnings before interest, tax, depreciation and amortization ("EBITDA") as net (loss)/income excluding income taxes, depreciation of property, plant and equipment (including any related impairment charges), depreciation of right-of-use assets, amortization of intangible assets (including any related impairment charges), interest expense and other financial income and expense. Alcon management primarily uses EBITDA together with net (debt)/liquidity to monitor leverage associated with financial debts. For a reconciliation of EBITDA to the most directly comparable measure presented in accordance with IFRS, see "Item 5.B. Liquidity and Capital Resources—EBITDA (non-IFRS measure)" section.

Free cash flow

Alcon defines free cash flow as net cash flows from operating activities less cash flow associated with the purchase or sale of property, plant and equipment. Free cash flow is presented as additional information because Alcon management believes it is a useful supplemental indicator of Alcon's ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS. For a reconciliation of free cash flow to the most directly comparable measure presented in accordance with IFRS, see "Item 5.B. Liquidity and Capital Resources—Free cash flow (non-IFRS measure)" section.

Net liquidity/(debt)

Alcon defines net liquidity/(debt) as current and non-current financial debt less cash and cash equivalents, current investments and derivative financial instruments. Net liquidity/(debt) is presented as additional information because management believes it is a useful supplemental indicator of Alcon's ability to pay dividends, to meet financial commitments and to invest in new strategic opportunities, including strengthening its balance sheet. For a reconciliation of net liquidity/(debt) to the most directly comparable measure presented in accordance with IFRS, see "Item 5.B. Liquidity and Capital Resources—Net (debt)/liquidity (non-IFRS measure)" section.

Growth rate and margin calculations

For ease of understanding, Alcon uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared to the prior year is shown as a positive growth.

Gross margins, operating income/(loss) margins and core operating income margins are calculated based upon net sales to third parties unless otherwise noted.

75

RECONCILIATION OF IFRS RESULTS TO CORE RESULTS

Segment contribution

2019

($ millions)	IFRS results		Amortization of intangible assets(1)	Separation costs(2)	Transformation Costs(3)	Legal items(4)	Other items(5)	Core results
Surgical segment contribution	923		—	7	—	—	27	957
Vision Care segment contribution	563		—	16	—	—	1	580
Not allocated to segments	(1,673	)	1,040	214	52	32	63	(272	)
Total operating (loss)/income	(187	)	1,040	237	52	32	91	1,265

(1) Includes recurring amortization for all intangible assets other than software.

(2) Separation costs are expected to be incurred over the two to three-year period following the completion of the Spin-off from Novartis and primarily include costs related to IT and third party consulting fees.

(3) Transformation costs, primarily related to restructuring and third party consulting fees, for the multi-year transformation program.

(4) Includes legal settlement costs and certain external legal fees.

(5) Surgical segment contribution includes $85 million for the amortization of option rights, manufacturing sites consolidation activities, post marketing study following a product's voluntary market withdrawal expenses, integration of recent acquisitions, and spin readiness costs and other items, partially offset by $58 million in fair value adjustments to contingent consideration liabilities. Vision Care segment contribution includes $18 million in spin readiness costs and the integration of recent acquisitions, partially offset by $17 million in fair value adjustments to contingent consideration liabilities. Not allocated to segments primarily includes spin readiness costs and fair value adjustments of a financial asset.

2018

($ millions)	IFRS results		Amortization of intangible assets(1)	Impairments(2)	Restructuring items(3)	Legal items(4)	Other items(5)		Core results
Surgical segment contribution	813		—	—	—	—	33		846
Vision Care segment contribution	594		—	—	—	—	6		600
Not allocated to segments	(1,655	)	1,007	378	9	28	(1	)	(234	)
Total operating (loss)/income	(248	)	1,007	378	9	28	38		1,212

(1) Includes recurring amortization for all intangible assets other than software.

(2) Includes impairment charges related to intangible assets.

(3) Includes restructuring income and charges and related items. Certain amounts previously reported under "restructuring items" in the 2018 Form 20-F have been reclassified to "other items" to conform with presentation in the current year.

(4) Includes legal costs related to an investigation.

(5) Surgical segment contribution includes $99 million for the amortization of option rights and charges and reversal of charges related to a product's voluntary market withdrawal, spin readiness costs, and other items, partially offset by a $66 million fair value adjustment to a contingent consideration liability due to a product's voluntary market withdrawal. Vision Care segment contribution includes spin readiness costs and other items. Not allocated to segments includes $21 million in fair value adjustments of a financial asset and other items, partially offset by $20 million spin readiness costs. Certain amounts previously reported under "restructuring items" in the 2018 Form 20-F have been reclassified to "other items" to conform with presentation in the current year.

76

2017

($ millions)	IFRS results		Amortization of intangible assets(1)	Impairments(2)	Restructuring items(3)	Legal items(4)	Other items(5)		Core results
Surgical segment contribution	691		—	29	—	—	(19	)	701
Vision Care segment contribution	625		—	—	—	—	—		625
Not allocated to segments	(1,393	)	1,017	57	30	61	(12	)	(240	)
Total operating (loss)/income	(77	)	1,017	86	30	61	(31	)	1,086

(1) Includes recurring amortization for all intangible assets other than software.

(2) Includes impairment charges related to intangible and financial assets.

(3) Includes restructuring income and charges and related items.    

(4) Includes an increase to a legal settlement provision and legal costs related to an investigation.

(5) Includes fair value adjustments to contingent consideration liabilities, a gain from a Swiss pension plan amendment and the partial reversal of a prior period charge.

77

RECONCILIATION OF IFRS RESULTS TO CORE RESULTS

Operating (loss)/income, net (loss)/income, and (loss)/earnings per share

2019

($ millions except (loss)/earnings per share)	IFRS Results		Amortization of certain intangible assets(1)		Separation costs(2)		Transformation Costs(3)		Legal items(4)		Other items(5)		Core Results
Gross profit	3,662		1,007		10		—		—		(16	)	4,663
Operating (loss)/income	(187	)	1,040		237		52		32		91		1,265
(Loss)/income before taxes	(332	)	1,040		237		52		32		91		1,120
Taxes(6)	(324	)	(140	)	(54	)	(7	)	(8	)	338		(195	)
Net (loss)/income	(656	)	900		183		45		24		429		925
Basic (loss)/earnings per share	(1.34	)											1.89
Diluted (loss)/earnings per share	(1.34	)											1.89
Basic - weighted average shares outstanding(7)	488.2												488.2
Diluted - weighted average shares outstanding(7)	488.2												490.1
Adjustments to arrive at core operating income
Selling, general & administration	(2,847	)	—		30		—		—		15		(2,802	)
Research & development	(656	)	33		4		—		—		35		(584	)
Other income	55		—		—		—		—		(9	)	46
Other expense	(401	)	—		193		52		32		66		(58	)

(1) Includes recurring amortization for all intangible assets other than software.

(2) Separation costs are expected to be incurred over the two to three-year period following the completion of the Spin-off from Novartis and primarily include costs related to IT and third party consulting fees.

(3) Transformation costs, primarily related to restructuring and third party consulting fees, for the multi-year transformation program.

(4) Includes legal settlement costs and certain external legal fees.

(5) Gross Profit includes $37 million in fair value adjustments of contingent consideration liabilities, partially offset by $21 million in spin readiness costs, manufacturing sites consolidation activities, and integration of recent acquisitions. Selling, general & administration primarily includes spin readiness costs and the integration of recent acquisitions. Research & development includes $73 million for the amortization of option rights, post-marketing study following a product's voluntary market withdrawal, and the integration of recent acquisitions, partially offset by $38 million in fair value adjustments for contingent consideration liabilities. Other income primarily includes a realized gain on a financial asset. Other expense primarily includes spin readiness costs, fair value adjustments of a financial asset and other items.

(6) Total tax adjustments of $129 million include tax associated with operating income core adjustments and discrete tax items. Tax associated with operating income core adjustments of $1.5 billion totaled $215 million with an average tax rate of 14.8%.

Core tax adjustments for discrete items totaled $344 million, primarily including $304 million in non-cash tax expense for re-measurement of deferred tax balances as a result of Swiss tax reform, tax expense related to rate changes in the US following legal entity reorganizations executed related to the Spin-off, non-cash tax expense related to the re-measurement of deferred tax assets and liabilities following a tax rate change in India, and net changes in uncertain tax positions.

(7) Core basic earnings per share is calculated using the weighted-average shares of common stock outstanding during the period. Core diluted earnings per share also contemplate dilutive shares associated with unvested equity-based awards as described in Note 8 to the Consolidated Financial Statements.

78

2018

($ millions except (loss)/earnings per share)	IFRS Results		Amortization of certain intangible assets(1)	Impairments(2)	Restructuring items(3)		Legal items(4)	Other items(5)		Core Results
Gross profit	3,192		996	376	—		—	(23	)	4,541
Operating (loss)/income	(248	)	1,007	378	9		28	38		1,212
(Loss)/income before taxes	(300	)	1,007	378	9		28	38		1,160
Taxes(6)	73									(186	)
Net (loss)/income	(227	)								974
Basic (loss)/earnings per share	(0.46	)								2.00
Diluted (loss)/earnings per share	(0.46	)								2.00
Basic - weighted average shares outstanding(7)	488.2									488.2
Diluted - weighted average shares outstanding(7)	488.2									488.2
Adjustments to arrive at core operating income
Selling, general & administration	(2,801	)	—	2	—		—	13		(2,786	)
Research & development	(587	)	11	—	—		—	47		(529	)
Other income	47		—	—	(4	)	—	(19	)	24
Other expense	(99	)	—	—	13		28	20		(38	)

(1) Includes recurring amortization for all intangible assets other than software.

(2) Includes impairment charges related to intangible assets.

(3) Includes restructuring income and charges and related items. Certain amounts previously reported under "restructuring items" in the 2018 Form 20-F have been reclassified to "other items" to conform with presentation in the current year.

(4) Includes legal costs related to an investigation.

(5) Gross profit, selling, general & administration and research & development include charges and reversal of charges related to a product’s voluntary market withdrawal. Research & development also includes amortization of option rights and a fair value adjustment of a contingent consideration liability. Other income includes fair value adjustments on a financial asset. Other expense includes spin-readiness costs and other items. Certain amounts previously reported under "restructuring items" in the 2018 Form 20-F have been reclassified to "other items" to conform with presentation in the current year.

(6) Total tax adjustments of $259 million included tax associated with operating income adjustments and discrete tax items. Tax associated with operating income adjustments of $1.5 billion totaled $237 million with average tax rate of 16.2%. Core tax adjustments for discrete items totaled $22 million, including a net out of period income tax benefit of $55 million partially offset by net changes in uncertain tax positions of $33 million.

(7) For periods prior to the Spin-off, the denominator for both core basic and diluted earnings per share was calculated using the shares of common stock distributed in the Spin-off.

79

2017

($ millions except earnings per share)	IFRS Results		Amortization of certain intangible assets(1)	Impairments(2)	Restructuring items(3)		Legal items(4)	Other items(5)		Core Results
Gross profit	3,204		1,007	—	—		—	—		4,211
Operating (loss)/income	(77	)	1,017	86	30		61	(31	)	1,086
(Loss)/income before taxes	(127	)	1,017	86	30		61	(31	)	1,036
Taxes(6)	383									(128	)
Net income	256									908
Basic earnings per share	0.52									1.86
Diluted earnings per share	0.52									1.86
Basic - weighted average shares outstanding(7)	488.2									488.2
Diluted - weighted average shares outstanding(7)	488.2									488.2
Adjustments to arrive at core operating income
Research & development	(584	)	10	86	—		—	(18	)	(506	)
Other income	47		—	—	(4	)	—	(13	)	30
Other expense	(148	)	—	—	34		61	—		(53	)

(1) Includes recurring amortization for all intangible assets other than software.

(2) Includes impairment charges related to intangible and financial assets.

(3) Includes restructuring income and charges and related items.

(4) Includes an increase to a legal settlement provision and legal costs related to an investigation.

(5) Research & development includes fair value adjustments to contingent consideration liabilities; other income includes a gain from a Swiss pension plan amendment and the partial reversal of a prior period charge.

(6) The required revaluation of the deferred tax assets and liabilities and a portion of current tax payables to the newly enacted tax rate at the date of enactment of the US enacted tax reform legislation (Tax Cuts and Jobs Act), resulted in a net tax income of $413 million that has been adjusted out of core taxes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of $1.2 billion to arrive at the core results before tax amounts to $98 million, excluding the tax income from US tax reform. The average tax rate on these adjustments is 8.4%.

(7) For periods prior to the Spin-off, the denominator for both core basic and diluted earnings per share was calculated using the shares of common stock distributed in the Spin-off.

80

5.B. LIQUIDITY AND CAPITAL RESOURCES

Our sources of funds have consisted principally of cash flow from operations, bank debt, credit facilities with lenders, and other financial liabilities to our Former Parent. Our uses of those funds (other than for operations) have consisted principally of investments in our growth plan, capital expenditures, cash paid for acquisitions and associated expenses and other obligations.

We believe that we have adequate liquidity to meet our needs. At December 31, 2019, we had cash and cash equivalents of $822 million, compared to $227 million at December 31, 2018. At December 31, 2019 we had current financial debt of $261 million, compared to $47 million at December 31, 2018, consisting of bank and other financial debt. At December 31, 2019 we had non-current financial debt of $3.2 billion consisting of bank debt and senior notes primarily as a result of the Spin-off.

To date, all of our sales are generated by our subsidiaries and not directly by us. Thus, we are dependent on dividends, other payments or loans from our subsidiaries to meet our liquidity needs. Some of our subsidiaries may be subject to legal requirements of their respective jurisdictions of organization that may restrict their paying dividends or other payments, or making loans, to us.

Potential future uses of our liquidity include capital expenditures, acquisitions, debt repayments, dividend payments, and other general corporate purposes.

We use the US Dollar as our reporting currency and are therefore exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs, and emerging market currencies.  We manage our global currency exposure by engaging in hedging transactions where management deems appropriate (forward contracts and swaps) to preserve the value of assets. As of December 31, 2019, unsettled derivative positions included $1 million in unrealized gains and $16 million in unrealized losses.

All comments in this section relate to the year ended December 31, 2019 compared to 2018. Commentary for the year ended December 31, 2018 compared to 2017 may be found in Item 5 of the 2018 Form 20-F.

Cash flow and net (debt)/liquidity

($ millions)	2019		2018
Net cash flows from operating activities	920		1,140
Net cash flows used in investing activities	(1,011	)	(1,001	)
Net cash flows from/(used in) financing activities	659		(78	)
Effect of exchange rate changes on cash and cash equivalents	27		(6	)
Net change in cash and cash equivalents	595		55
Change in derivative financial instrument assets	1		—
Change in current and non-current financial debts	(3,432	)	18
Change in other financial liabilities to former parent	67		(21	)
Change in other financial receivables from former parent	(39	)	(26	)
Change in net (debt)(1)	(2,808	)	26
Net liquidity at January 1	152		126
Net (debt)/liquidity at December 31(1)	(2,656	)	152

(1) The balances previously reported in "Financial debts" for a finance lease obligation have been reclassified from "Financial debts" to "Non-current lease liabilities". This reclassification resulted in an increase in Net liquidity as of January 1, 2019 and January 1, 2018 of $89 million and $84 million, respectively.

Net cash flows from operating activities amounted to $920 million in 2019, compared to $1.1 billion in the prior year period. The decrease in operating cash flows was primarily attributable to spin readiness and separation costs, a legal settlement, and interest payments on our financial debts.

Changes in net working capital were primarily driven by an increase in Trade receivables in 2019 broadly in line with increased sales. The current year period has contract manufacturing receivables from our Former Parent, which are included within Other current assets. Trade payables and other current liabilities increased during the current reporting period primarily due

81

to various transition agreements and separation costs incurred. Refer to Note 21 to the Consolidated Financial Statements for additional details regarding changes within net working capital.

Net cash flows used in investing activities amounted to $1.0 billion in 2019, in line with 2018. The cash outflows in the current period were primarily driven by $553 million for the purchase of property, plant and equipment, $123 million for intangible assets, and $283 million for the acquisition of PowerVision, Inc. in March 2019.

Net cash flows from financing activities amounted to $659 million in 2019, compared to $78 million of net cash outflows in 2018. Cash inflows in the current period were attributable to proceeds from the issuance of non-current and current financial debts totaling $3.4 billion associated with borrowings from the bridge and other term loans and local bilateral facilities. This was partially offset by movements of financing provided to our Former Parent, which increased by $2.5 billion from the prior year period, due to $3.1 billion in cash payments made to our Former Parent and its affiliates prior to the Spin-off. The cash flows from financing activities also reflect the proceeds from the issuance of $2.0 billion senior notes and repayments of the $1.5 billion Bridge Facility and $0.5 billion Facility A in 2019. Refer to Notes 4 and 17 of the Consolidated Financial Statements for additional information.

Free cash flow (non-IFRS measure)

The following is a summary of Alcon free cash flow for 2019, 2018 and 2017, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure.

($ millions)	2019		2018		2017
Net cash flows from operating activities	920		1,140		1,218
Purchase of property, plant & equipment	(553	)	(524	)	(415	)
Proceeds from sales of property, plant & equipment	—		—		1
Free cash flow	367		616		804

Free cash flow amounted to $367 million in 2019, compared to $616 million in 2018, with the decrease mainly caused by lower cash flows from operating activities. For additional information refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company".

Balance sheet

Assets

Total non-current assets were $23.4 billion at December 31, 2019, a decrease of $244 million compared to $23.7 billion as of December 31, 2018. There was a decrease of $448 million in Intangible assets other than goodwill related to the amortization for the period offset by In-process research and development intangible assets acquired through the PowerVision acquisition, a decrease of $316 million in Deferred tax assets related to offsetting deferred tax liabilities within the same tax jurisdiction based on the legally enforceable right of offset following the Spin-off, and a decrease of $81 million in Financial assets primarily due to movement of balances to Other current assets as maturity has become less than twelve months and continued amortization of option rights. This was largely offset by increases of $313 million in Property, plant & equipment due to continued capital expenditures net of recurring depreciation and $245 million in Right-of-use assets from the adoption of IFRS 16, Leases as described in Note 16 to the Consolidated Financial Statements.

Total current assets were $4.2 billion as of December 31, 2019, an increase of $837 million when compared to December 31, 2018, mainly due to increases in Cash and cash equivalents of $595 million attributable to the net impact of operating, investing, and financing activities as described earlier in this section. Trade receivables of $1.4 billion increased $137 million broadly in line with sales, and Other current assets of $0.5 billion increased $115 million primarily due to movement of certain assets from non-current financial assets as maturity has become less than twelve months and contract manufacturing receivables. Inventories of $1.5 billion also increased $65 million in line with sales and new product launches.

We consider our doubtful debt provisions to be adequate. The majority of the outstanding trade receivables from Greece, Italy, Portugal, Spain, Brazil, Russia, Turkey, Saudi Arabia, and Argentina are due directly from local governments or from government-funded entities except for Russia, Brazil, and Turkey. We evaluate trade receivables in these countries for potential collection risk. Should there be a substantial deterioration in our economic exposure with respect to those countries, we may increase our level of provisions by updating our expected loss provision or may change the terms of trade on which we operate.

The gross trade receivables from these countries at December 31, 2019 amount to $209 million ($216 million at December 31, 2018), of which $10 million are past due for more than one year ($14 million at December 31, 2018) and for which provisions

82

of $13 million have been recorded ($16 million at December 31, 2018). At December 31, 2019, amounts past due for more than one year are not significant in any of these countries.

The following table summarizes the aging of trade receivables as of December 31, 2019 and 2018:

($ millions)	2019		2018
Not overdue	1,135		1,018
Past due for not more than one month	118		118
Past due for more than one month but less than three months	81		70
Past due for more than three months but less than six months	47		34
Past due for more than six months but less than one year	21		20
Past due for more than one year	36		47
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

There is also a risk that certain countries could devalue their currency. Currency exposures are described in more detail in the "Item 5.A. Operating Results — Effects of currency fluctuations" section.

Liabilities

Total non-current liabilities were $6.1 billion as of December 31, 2019, an increase of $3.5 billion when compared to $2.5 billion as of December 31, 2018. There was an increase to Financial debts of $3.2 billion due to borrowings immediately prior to Spin-off which were partially refinanced in September 2019. Provisions and other non-current liabilities increased $255 million primarily due to contingent consideration liabilities and employee benefit obligations. Lease liabilities also increased $191 million from the implementation of IFRS 16, Leases. Refer to Notes 4, 16, and 17 to the Consolidated Financial Statements for additional details related to contingent consideration, IFRS 16 adoption, and borrowings under the Notes and Facilities. Deferred tax liabilities decreased $142 million due to the net of the re-measurement of deferred tax liabilities associated with the Swiss tax reform and deferred tax assets offsetting deferred tax liabilities within the same tax jurisdiction, as discussed above.

Total current liabilities were $2.3 billion as of December 31, 2019, an increase of $407 million when compared to $1.9 billion as of December 31, 2018. There were increases in Financial debts of $214 million related to local bilateral facilities entered in different countries, Trade payables of $170 million due to various transition agreements and higher spend for separation costs, Provisions and other current liabilities of $158 million primarily for taxes other than income taxes, restructuring, and interest on financial debts, and Lease liabilities of $61 million from the implementation of IFRS 16, Leases. These increases were partially offset by decreases in Payables to former parent of $85 million, and Other financial liabilities to former parent of $67 million as a result of eliminating cash pooling arrangements with Novartis and Current income tax liabilities of $44 million due to timing of payments. While there is some uncertainty about the final taxes to be assessed in the major countries in which we operate, we believe that our estimated amounts for current income tax liabilities, including any amounts related to any uncertain tax positions, are appropriate based on currently known facts and circumstances. Refer to Notes 17 and 18 to the Consolidated Financial Statements for additional details related to financial debts.

Equity

Equity was $19.3 billion as of December 31, 2019, a decrease of $3.3 billion when compared to Invested capital of $22.6 billion as of December 31, 2018. The decrease was primarily attributable to $3.1 billion paid to Novartis and its affiliates immediately prior to the Spin-off, as described in Note 4 to the Consolidated Financial Statements.

83

Net (debt)/liquidity⁽¹⁾ (non-IFRS measure)

The following is a summary of net (debt)/liquidity as of December 31, 2019 and 2018, together with a reconciliation to total financial debt, the most directly comparable IFRS measure.

($ millions)	2019		2018
Current financial debt	(261	)	(47	)
Other financial liabilities to former parent	—		(67	)
Other financial receivables from former parent	—		39
Non-current financial debt	(3,218	)	—
Total financial debt	(3,479	)	(75	)
Less liquidity:
Cash and cash equivalents	822		227
Derivative financial instruments	1		—
Total liquidity	823		227
Net (debt)/liquidity	(2,656	)	152

(1) The balance previously reported in "Financial debts" for a finance lease obligation has been reclassified from "Financial debts" to "Non-current lease liabilities". This reclassification resulted in an increase in Net (debt)/liquidity of $89 million as of December 31, 2018.

Alcon's liquidity amounted to $823 million as of December 31, 2019 compared to $227 million as of December 31, 2018, while total financial debt increased to $3.5 billion as of December 31, 2019, compared to $75 million as of December 31, 2018. Net debt increased to $2.7 billion as of December 31, 2019 compared to net liquidity of $152 million as of December 31, 2018.

The increase in financial debts is attributable to borrowings immediately prior to the Spin-off, which were partially refinanced in September 2019. Refer to Notes 4 and 17 to the Consolidated Financial Statements for additional information. For additional information regarding net (debt)/liquidity, which is a non-IFRS measure, see the explanation of non-IFRS measures in "Item 5. Operating and Financial Review and Prospects — 5.A. Operating Results —Non-IFRS measures as defined by the Company".

EBITDA (non-IFRS measure)

($ millions)	2019		2018		2017
Net (loss)/income	(656	)	(227	)	256
Taxes	324		(73	)	(383	)
Depreciation of property, plant & equipment	267		239		215
Depreciation on right-of-use assets	66		—		—
Amortization of intangible assets	1,084		1,019		1,033
Impairments of property, plant & equipment, and intangible assets	8		380		57
Interest expense	113		24		27
Other financial income & expense	32		28		23
EBITDA	1,238		1,390		1,228

84

Liquidity and financial debt by currency

The following table summarizes liquidity and financial debts by currency as of December 31, 2019 and 2018.

	Liquidity (%)(1)		Financial debts (%)(2)
	2019	2018	2019	2018
USD	63	35	80	5
EUR	6	41	11	3
CHF	1	8	—	—
JPY	—	—	5	—
Other	30	16	4	92
Total	100	100	100	100

(1) Liquidity includes cash and cash equivalents and time deposits.

(2) Financial debt includes non-current and current financial debts. The balances previously reported in "Financial debts" for a finance lease obligation have been reclassified from "Financial debts" to "Non-current lease liabilities". This reclassification has also been reflected in the computation of financial debts by currency.

5.C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Alcon research & development spending totaled $656 million, $587 million and $584 million for the years 2019, 2018 and 2017, respectively. As described in the "Risk Factors" section and elsewhere in this Annual Report, we are subject to varying degrees of governmental regulation in the countries in which we operate, which makes the process of developing new products and obtaining necessary regulatory marketing authorization lengthy, expensive and uncertain. See "Item 3. Key Information—3.D. Risk Factors". For further information on Alcon research and development policies and additional product information, as well as a description of the regulatory approval process, see "Item 4. Information on the Company—4.B. Business Overview".

5.D. TREND INFORMATION

Please see "Item 5.A. Operating Results—Opportunity and risk summary" and "Item 4. Information on the Company—4.B. Business Overview" for trend information.

5.E. OFF-BALANCE SHEET ARRANGEMENTS

We have no unconsolidated special purpose financing or partnership entities or other off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors. See also Note 26 to the Consolidated Financial Statements included elsewhere in this Annual Report and matters described in "Item 5.F. Aggregate Contractual Obligations".

85

5.F. AGGREGATE CONTRACTUAL OBLIGATIONS

The following table summarizes Alcon's undiscounted contractual obligations and other commercial commitments at December 31, 2019, as well as the effect these obligations and commitments are expected to have on our liquidity and cash flow in future periods.

	Payments due by period
($ millions)	Total	1 year	2 - 3 years	4 - 5 years	After 5 years
Financial debt	3,508	261	55	1,192	2,000
Interest on financial debt	1,083	94	168	168	653
Leases	449	73	109	67	200
Pensions and other post-employment benefit plans	573	62	99	110	302
Property, plant & equipment purchase commitments	212	194	18	—	—
Research & development potential milestone commitments	181	28	45	37	71
Other purchase commitments	169	42	68	49	10
Total contractual cash obligations	6,175	754	562	1,623	3,236

For other contingencies, see "Item 4. Information on the Company—4.D. Property, Plants and Equipment" section, "Item 8. Financial Information—8.A. Consolidated Statements and Other Financial Information" section and Notes 19 and 26 to the Consolidated Financial Statements included elsewhere in this Annual Report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. DIRECTORS AND SENIOR MANAGEMENT

The information set forth under “Item 6.C. Board Practices—Corporate Governance—Board of Directors—Composition” and “Item 6.C. Board Practices—Corporate Governance—Executive Committee—Composition of the Executive Committee” is incorporated by reference.

86

6.B. COMPENSATION

Introduction

Dear Shareholder

On behalf of the Board of Directors and the Compensation, Governance and Nomination Committee ("CGNC"), I am pleased to introduce the 2019 Compensation Report. It was an exciting year for Alcon because on April 9, 2019, Alcon was spun-off as an independent company with listings on both the SIX Swiss Exchange and the New York Stock Exchange ("NYSE"). This inaugural report outlines Alcon’s overall 2019 compensation framework and philosophy for the members of the Board of Directors as well as for the members of the Executive Committee of Alcon ("ECA").

The Compensation Report covers the financial year 2019 from January to December, including compensation prior to the Spin-off date of April 9, 2019.

Activities of the CGNC in 2019

We believe in a strong pay-for-performance compensation philosophy that motivates our senior executives to create value for the Company and its shareholders. During 2019, we evaluated our overall compensation structure, selected a peer group for executive compensation benchmarking and engaged in an active dialogue with shareholders.

Compensation Structure Review

For ECA compensation in 2019, we leveraged, with only slight modifications, the Novartis executive compensation framework, which remained broadly unchanged from the structure in place when Alcon was a division of Novartis. Following the Spin-off, we focused our efforts on creating a compensation framework and philosophy that considers Alcon's position as a newly-independent company with ambitious growth and business objectives and the realities of the competitive global market for executive talent. The compensation philosophy we developed serves as the foundation in establishing our pay for performance framework and guides us in our decision-making process. Key elements of our new compensation framework include:

• Attracting exceptional executive talent to lead the Company, and retaining and motivating them over the long term through a mix of fixed and variable compensation elements;

• Designing and structuring programs that appropriately incentivize executives to achieve short and long-term strategic business objectives established by our Board of Directors ("Board"); and

• Aligning the interests of Alcon executives with those of shareholders.

By establishing our own compensation philosophy and framework early after our Spin-off, we set a strong course going forward for the Company and our shareholders.

Peer Group

The CGNC followed a comprehensive approach in selecting the companies to include in Alcon’s peer group for external compensation benchmarking. The peer group companies selected are a blend of European and North American companies and provide a good balance of industries, companies and geographies from which executive talent is sourced. The CGNC believes that benchmarking against a consistent and relevant set of peer companies that are similar to Alcon in size and scope will assist the Company in maintaining appropriate pay levels and benefits that will attract and retain the talent that has the experience and deep expertise needed to lead the Company.

Engagement with Shareholders on Compensation

Shareholder engagement and feedback is important to us as a newly established company and we undertook a formal outreach to engage shareholders beginning in the fall of 2019.

During that formal outreach initiative, we appreciated the opportunity to meet with shareholders who collectively hold over 40% of our shares. During these meetings we discussed our pay-for-performance orientation, sought feedback on our

87

compensation programs, and explained our approach to performance measurement. The 2019 Compensation Report provides additional insights into our 2020 compensation plans. We intend to continue this dialogue and evaluate and consider the feedback received to align our compensation structure with shareholder interests.

2020 Annual General Meeting

In line with the Articles of Incorporation, we will ask our shareholders to cast a binding vote on the maximum aggregate amount of compensation for members of the Board of Directors for their term of office from the 2020 AGM to the 2021 AGM. We will also ask our shareholders to cast a binding vote on the maximum aggregate amount of compensation for members of the ECA for the 2021 financial year. In addition, we will ask our shareholders to endorse this 2019 Compensation Report in an advisory vote.

On behalf of the Board of Directors and the members of the Compensation, Governance and Nomination Committee, we thank you for your trust in Alcon and for your feedback.

Sincerely,

Karen May
Chair of the Compensation, Governance and Nomination Committee

88

Compensation at a Glance

2019 ECA Compensation—Summary

Last year represented a transition year for Alcon as we became an independent, stand-alone company following the Spin-off from Novartis on April 9, 2019. We leveraged, with only slight modifications, the executive compensation program of our former parent company.

The compensation program consisted of a balanced set of fixed and variable elements rewarding short-term and long-term performance through the delivery of cash payments and equity awards. Performance goals were aligned to the strategic plan in a mix of absolute and relative measures including financial and non-financial metrics.

Exhibit 1

	Annual Base Salary	Short-Term Incentive (annual incentive)	Long-Term Incentive	Benefits
Purpose	In line with global pay practices, reflects responsibilities, experience and skills	Rewards annual performance against key objectives	Rewards long-term value creation in line with Alcon’s strategy and business priorities	Retirement savings and insurances in line with local market practices and benefits associated with global mobility and international relocation
Payment	Cash	Cash and equity	Equity (Performance Stock Units)	Cash or in-kind, contributions to retirement savings and insurance policies
Performance period	—	One year	Three year cliff vesting	—
Performance measures	—	Three financial performance measures and individual performance rating	Four equally weighted performance measures including financial, external and innovation metrics	—
Payout range		0%-200% of the individual target award	0%-200% of the number of Performance Stock Units granted
Basis	Fixed	Variable	Variable	Fixed and variable

89

Total Compensation for 2019

From January 1, 2019 to December 31, 2019, we awarded the ECA members the amounts set out below. The amounts include payments made to the ECA members while they were employees of Novartis from January 1, 2019 through April 8, 2019. For more detailed information, see section "ECA Compensation 2019" in this 2019 Compensation Report.

Exhibit 2

Compensation	Fixed compensation		Variable compensation			Additional compensation	Totals
From January 1, 2019 to December 31, 2019	Annual base salary	Pension and insurance benefits	2019 short-term incentive		2019-2021 long-term incentive awards	Other benefits	Total compensation
USD	Amount in cash	Total amount	Cash amount	RSU1  value at grant	PSU2 target value at grant	Amount	Amount
David J. Endicott, CEO	1,134,358	279,851	745,380	745,380	2,738,036	1,177,487	6,820,492
Other ECA members	3,541,122	960,531	2,459,312	1,053,990	7,821,030	3,396,392	19,232,377
Totals in USD3	4,675,480	1,240,382	3,204,692	1,799,370	10,559,066	4,573,879	26,052,869
Totals in CHF4	4,647,132	1,232,862	3,185,262	1,788,460	10,495,046	4,546,148	25,894,910

¹  Restricted Stock Units

²  Performance Stock Units

³  Includes the CEO and six other ECA members post Spin-off date, and the CEO and five other ECA members pre Spin-off date.

⁴  The amounts were converted at the rate of 1.0 CHF : 1.0061 USD.

2019 Board of Directors Compensation—Summary

We paid our Directors a fixed fee for services covering the term of their office from the date of Spin-off on April 9, 2019 to the 2020 Annual General Meeting ("2020 AGM").

The fixed compensation consists of a base fee for Board membership and additional fees for service on Board committees. Board members and the Board Chair receive fifty percent of their compensation in cash and fifty percent in unrestricted Alcon shares. On a voluntary basis, a Board member may opt to receive all or part of the cash portion in additional shares. Alcon does not provide any performance-based components of pay to the members of the Board.

90

Exhibit 3

	Fee for the period from April 9, 2019 to the 2020 AGM
Board function	USD1	CHF
Annual base fee:
Board Chair	955,795	950 000
Board member base fee (Board retainer fee)	201,220	200 000
Additional fees:
Vice Chair	40,244	40 000
Chair of the Audit and Risk Committee	70,427	70 000
Chair of the Compensation, Governance and Nomination Committee	50,305	50 000
Chair of the Innovation Committee	50,305	50 000
Member of the Audit and Risk Committee	35,214	35 000
Member of the Compensation, Governance and Nomination Committee	25,153	25 000
Member of the Innovation Committee	25,153	25 000

¹  The Board fees are paid in Swiss Francs, converted at the rate of 1.0 CHF : 1.0061 USD.

Alcon Board Fee Payments in 2019

In 2019, Alcon paid the members of the Board the following total amounts.

Exhibit 4

	Payment in cash	Payment in shares	Number of shares	Other payments	Total fees
Total fees paid in 20191 in USD	953,725	866,688	14,512	102,440	1,922,853
Total fees paid in 2019 in CHF2	947,943	861,433	14,512	101,819	1,911,195

¹  Represents compensation for nine out of ten members of the Board as David J. Endicott does not receive additional compensation for his service as a member of the Board.

²  The payments in cash were made in Swiss Francs (CHF) for consistency they are reported in USD as all compensation in this report. The amounts were converted at the rate of 1.0 CHF : 1.0061 USD. All amounts are before deduction of the social security contributions and income tax due by the Board member.

For more details regarding the compensation paid to the individual members of the Board, see section "Board of Directors 2019".

91

2020 Compensation Outlook

ECA compensation

The CGNC is committed to a pay-for-performance framework to align executive performance with shareholder interests. Following a thorough review of Alcon's compensation structures during 2019, we have made refinements to our overall compensation structures to better reflect Alcon's status as an independent, stand-alone company.

Headquartered in Switzerland, Alcon operates on a truly global basis. Our main business competitors are found in both Europe and North America, which is where we compete for talent. Consequently, our new executive compensation framework has been benchmarked against a carefully selected peer group, consisting of European and North American companies with a blend of similar size, industry and geographic characteristics to Alcon. The inclusion of European and North American companies reflects our global footprint and business mix. Based on Alcon’s strategic plan and our peer group analysis, we adopted the following key features of ECA compensation for 2020:

• Substantially the same overall structure of ECA compensation as compared to 2019 (base pay, STI, LTI and benefits);

• STI to be delivered in cash;

• An additional profitability funding mechanism added to the 2019 STI metrics;

• LTI metrics unchanged compared to 2019;

• An increase to the CEO’s LTI award at target to align total compensation closer to the median of the blended peer group;

• Broadly no significant change to the other ECA member’s compensation except slight adjustments;

• Continuation of robust share ownership requirements; and

• No material changes to benefits provisions.

Board compensation

The Board compensation framework will remain broadly unchanged for the upcoming term of office from the 2020 AGM to the 2021 AGM with the exception of the split of the CGNC described below, including:

• Board Chair fee unchanged compared to 2019;

• Same mix of fees payable in cash and shares as in 2019, including the option for a higher percentage of shares; and

• Establishing fees for the new Governance and Nomination Committee’s Chair and members.

Effective as of the date of our 2020 AGM, the Board has split the current responsibilities of the Compensation, Governance and Nomination Committee (CGNC) into two separate committees: the Compensation Committee and the Governance and Nomination Committee. The Board recognized the heavy workload assigned to the CGNC since the Spin-off from Novartis; this split enables the two newly created committees to better focus on their respective key responsibilities. For the Governance and Nomination Committee, this includes a focus on leading governance practices and ESG topics in general. And for the Compensation Committee, this includes a focus on human resource strategy and executive compensation. Finally, this reorganization is line with best corporate governance standards. The annual fee for the Chair of the Governance and Nomination Committee will be USD 50,305 (CHF 50,000) and each member will receive USD 25,153 (CHF 25,000). The fees for the Compensation Committee will remain the same as the CGNC. These additional fees will increase the Board compensation budget subject to approval by vote at the 2020 AGM.

Corporate Governance

The Board makes decisions regarding Board compensation upon proposals from the CGNC. These proposals are based on analysis and review of board compensation practices, policies and benchmarking information. Similarly, the Board makes decisions regarding CEO compensation upon proposals from the CGNC. The CGNC makes decisions with regard to compensation of the other ECA members based upon the analysis of relevant executive compensation practices, policies and benchmarking information.

The Board is responsible for approving the Compensation Report and for the proposal of the aggregate budget of Board compensation and ECA compensation to the shareholders at the AGM. The Corporate Governance Report contained in Item 6.C. Board Practices of the 2019 Annual Report provides further details regarding the responsibilities of the CGNC.

92

Adherence to Strong Governance Practices

The CGNC evaluates many governance factors when designing and establishing compensation for members of the ECA. It uses these mechanisms to help guide its decisions to ensure that the Company is rewarding long-term success, discouraging excessive risk-taking and aligning executive and shareholder interests.

Exhibit 5

What we do	What we don’t do
•    Provide a majority of executive pay in variable, rather than fixed, compensation in order to ensure pay for performance	•    No severance agreements
•    Tie 100% of Short-Term and Long-Term Incentive awards to appropriately ambitious performance metrics	•    No single-trigger change in control payments
•    Follow best practices in executive compensation design	•    No change in control related excise tax gross ups
•    Prohibit hedging, pledging, and short sales of Company stock by executive officers and Directors	•    No termination notice period in excess of twelve months
•    Have robust share ownership requirements to reinforce alignment between executives and shareholders	•    No stock option awards
•    Include forfeiture and claw-back provisions for all variable compensation payments	•    No active defined benefit pension plans
•    Ensure that STI and LTI plans have target and maximum payout limits	•    No compensation guarantees
•    Award all equity grants at market value
•    Conduct ongoing investor outreach

93

ECA Compensation 2019

Compensation Program

As an independent company, we leveraged Novartis’ compensation framework for the ECA. That framework includes the strategic objectives of:

• Paying for performance and the execution of the Alcon strategy;

• Pursuing value for shareholders over the long-term;

• Creating alignment in the interests of executives and shareholders; and

• Motivating and retaining executives for the long-term.

The general principles for ECA compensation are defined in Articles 31 and 32 of our Articles of Incorporation (http://investor.alcon.com/governance//default.aspx). ECA compensation comprises fixed and variable elements. Fixed elements include an annual base salary and benefits. Variable compensation consists of elements from short-term and long-term incentive plans, which are subject to performance measures and caps.

Pay for Performance

Variable compensation represents a majority of total compensation and affirms our pay for performance philosophy (see more information in exhibits 10 and 17). Actual payout is contingent on the achievement of Company and individual performance goals. Performance metrics and goals are aligned with the Company’s business strategy and compensation philosophy as well as long-term value creation for shareholders.

Forfeiture and Claw-back Rules

Any variable compensation paid or payable to ECA members is subject to forfeiture and claw-back rules under our short-term incentive ("STI") and long-term incentive ("LTI") plans, which allow the Company to retain unpaid or unvested compensation (forfeiture) or even recover compensation already paid in cash or shares (claw-back). Such rules apply in cases where the action or behavior of an executive violates internal codes, guidelines or policies, or conflicts with management standards, including Company and accounting rules and regulations or violates laws. These forfeiture or claw-back rules apply to payments under both the STI and LTI plans. The action to retain or recover variable compensation is subject to applicable law of the jurisdiction involved.

Share Ownership Requirements for ECA Members

The Board has established share ownership requirements for members of the ECA in order to align executives’ interests with those of shareholders. The ownership requirement is expressed as a multiple of the executive’s annual base salary and is in line with the practices of our peer group. The following exhibit illustrates those requirements.

Exhibit 6

Leadership level	Share ownership requirement
David J. Endicott, CEO	5 times annual base salary
Other members of the ECA	3 times annual base salary
Members of the ELT (Executive Leadership Team)	2 times annual base salary

All members of the ECA and ELT must meet these requirements within five years of service from the later of the Spin-off or commencement of employment. If any of the ECA or ELT members fail to meet the requirement, or if they are not on track with the requirements, they will be prevented from selling Alcon shares until such time the requirement is met. At the end of 2019, each member of the ECA and ELT is on track to meet the applicable ownership requirement.

94

Compensation Governance

Authority for ECA Compensation Decisions

All decisions regarding CEO compensation and performance are made by the Board as a whole, excluding the CEO who is recused from such matters. The Board has delegated the authority to make compensation decisions for ECA members, excluding the CEO, to the CGNC.

The CEO makes recommendations to the CGNC regarding the executive compensation policy and principles and incentive plan design and makes proposals to the CGNC regarding the compensation and performance targets of members of the ECA. The CEO also makes proposals regarding the assessment of performance achievements of members of the ECA. The CEO does not make proposals regarding his own compensation or performance.

Exhibit 7

Authority levels in ECA compensation	CEO	CGNC	Board	AGM
ECA compensation policy and principles	R	A
CEO compensation and benefits		R	A
Other ECA member compensation and benefits	R	A
CEO performance targets and assessment of achievements		R	A
Other ECA members' performance targets and assessment of achievements	R	A
Share ownership requirements for the CEO and other members of the ECA		R	A
Maximum aggregate ECA compensation		R	P	A1
Incentive plan design and rules	R	P	A
Compensation report of the Company		R	P	A2

R   Recommend     P   Propose     A   Approve

¹  binding vote

²  advisory vote

Compensation Elements

Alcon’s compensation program has three broad components: annual base salary, variable compensation elements and employment benefits. Variable compensation elements are geared towards encouraging executives to deliver outstanding results and create sustainable shareholder value. They are also designed to prevent executives from taking excessive risks. The compensation program balances:

• fixed and variable compensation elements;

• short-term and long-term incentive compensation; and

• Company and individual performance.

Exhibit 8

Annual Base Salary

Annual Base Salary Annual base salary is set and reviewed considering: •    Market value of the role •    Benchmark information of peer companies •    Market median within the peer companies •    Executive’s role, performance, experience and potential •    Increases in line with inflation and market •    Business performance and the external environment

95

Exhibit 9

Variable Compensation

Short-Term Incentive

The Short-Term Incentive (STI) is designed and delivers awards based on: Target value •    Annual base salary ("ABS") x STI target (% of ABS) = STI target value in USD/CHF Performance measurement •    Measurement of financial performance (Business Performance Factor “BPF”) and individual performance (Individual Performance Factor “IPF”) (see the description of the STI below for more information) Payout •    Performance period: 1 year •    Range 0%-200% of the target value •    Payout formula: STI target value x IPF x BPF = STI payout •    Paid in the first quarter of the following year •    Delivered in cash and in Restricted Stock Units ("RSUs"), RSUs vest after 3 years

Long-Term Incentive

The Long-Term Incentive (LTI) is designed and delivers awards based on: Target value •    Annual Base Salary (ABS) x LTI target (% of ABS) = Target value in USD/CHF Target award •    Target value divided by the Alcon share price at grant date = number of Performance Stock Units ("PSUs") at target •    Granted at the onset of the performance period Performance measurement •    Measurement of metrics (see the description of the LTI below for more information) Payout •    Performance period: 3 years •    Range 0%-200% of the target number of PSUs •    Payout formula: Target number of PSUs x LTI payout factor = number of PSUs vested •    Cliff vesting of PSUs (e.g., all PSUs vest at the end of the performance period, subject to performance conditions) •    Conversion of vested PSUs to Alcon shares •    Payout delivered in unrestricted Alcon shares •    Paid in the first quarter of the year following the performance period •    PSUs carry dividend equivalents payable in shares at the end of the performance period based on the number of PSU vested

Variable compensation represents a majority of total direct compensation for ECA members. At target opportunity, the variable compensation represents 80% of the CEO’s total direct compensation. The average variable compensation of the other ECA members represents 72% of total direct compensation.

96

Exhibit 10

Mix of Fixed and Variable Compensation at Target

CEO	Other ECA members (excl. CEO)

Abbreviations: ABS, Annual Base Salary; STI, Short Term Incentive; LTI, Long-Term Incentive
CEO ratios and average ratios of other ECA members are based on values 2019 of ABS, target STI and target 2019-2021 LTI (annualized)
Graphics exclude retirement savings and insurance benefits as well as any other benefits

Short-Term Incentive

The short-term incentive compensation element is designed to reward the ECA members for their contribution towards achieving annual Company results and for their individual annual performance. The metrics used for the Business Performance Factor are the same for all ECA members. The Individual Performance Factor varies by individual. Based on this design, each member of the ECA participates in the overall Company’s success while also being rewarded for their individual contributions. The annual STI award value at target is based on a percentage of the ECA member’s annual base salary.

Exhibit 11

STI payout opportunity as a % of annual base salary	at target*		at maximum*
David J. Endicott, CEO	120	%	240	%
Other members of the ECA (average)	80	%	160	%

* Effective post-spin

The financial metrics for short-term performance in 2019 are set out in the exhibit below. The payout of STI is calculated by multiplying the target award by the BPF and IPF.

97

Exhibit 12

Financial metrics1

Non-financial metric

Metric

Group Net Sales

Core Operating Income

Free Cash Flow

Individual performance

Definition

Measures the Company's top line performance

Measures the Company’s operating income

Measures the Company’s capacity to realize cash

Measures the achievement of individual objectives and individual values and behaviors

Rationale

Fosters the Company’s top line performance

Recognizes the primary indicator of Company performance and profitability

Indicates the cash realized from operating activities

Considers individual contribution to the Company’s results

Weighting

40%

40%

20%

100%

Performance factors

BPF (total weightings of financial metrics 100%)

IPF

Payout formula

ABS

X

STI Target

X

BPF

X

IPF

=

STI Payout

BPF maximum 150% x IPF maximum 150% = maximum 225% (capped at 200%)

Payout range

0-200%

Note

¹  Financial achievements are measured in constant currencies to reflect operational performance.

Performance, thresholds, targets and maximum values for the financial performance metrics are determined at the onset of the one-year performance period. In line with good governance practice, the Board and the CGNC set targets that are appropriately ambitious and in support of the Company’s business strategy and the Board’s strategic plan without encouraging the ECA member to take undue risks.

At the end of the performance period, the Board and the CGNC determine the financial performance achievements against the targets originally set and determine the BPF. In addition, they consider the Individual Performance Factor (IPF) of the ECA members. The IPF is determined by the achievement of individual objectives and the demonstration of values and behaviors. The performance rating is the basis for setting the IPF between 0% and 150%. The CEO and other ECA members are not present when their IPF are discussed and determined.

The Board and the CGNC may apply discretion in determining the final outcome of the STI payout. At the end of the performance period of each STI award, we intend to disclose in the applicable compensation report details of the outcome of the final STI payout.

Long-Term Incentive

The long-term incentive program is designed to make a significant portion of compensation of ECA members contingent on long-term Company performance and to ensure alignment with shareholders’ interests. LTI awards consist of PSUs, which convert to shares at vesting, contingent on the achievement of the performance measures. The annual LTI grant value at target is based on a percentage of the ECA member’s annual base salary.

Exhibit 13

LTI payout opportunity as a % of annual base salary	Below threshold		at target		at maximum1
David J. Endicott, CEO	0	%	280	%	560	%
Other members of the ECA (average)	0	%	167	%	334	%

¹  The maximum number of units that may be awarded is limited to 200% of the target number of units granted.

The financial metrics for the measurement of long-term performance are set out in the exhibit below. The payout is calculated by adding the weighted achievements of the individual financial targets in a range from 0-200% and multiplying the number

98

of PSUs granted by the resulting performance factor. At the end of the performance period of each LTI award, we intend to disclose in the applicable compensation report details of the outcome of the final LTI payout.

Exhibit 14

Performance metrics

Metric

Group Net Sales CAGR1,2

Core EPS CAGR2

Share of Peers3

Innovation scorecard4

Definition

Measures the Company's top Line performance

Measure of the profitability by the earnings per share

A set of measures to compare the Company to the market shares of competitors

Measure of key product pipeline and achievement of milestones

Rationale

Fosters the Company’s top line performance

Aligns ECA with shareholders by measuring earnings per share

Indicates relative competitive position against peers in terms of market share

Delivery of future products and key future growth drivers

Weighting

25%

25%

25%

25%

Payout formula

Metric 1 25%

+

Metric 2 25%

+

Metric 3 25%

+

Metric 4 25%

ABS

X

LTI Target

X

Addition of weighted metrics = Performance Factor

=

Payout/Number of PSUs

Weighted achievements of metrics = additive payout factor maximum 200% (cap)

Payout range

0-200%

Notes

¹  CAGR means Compound Annual Growth Rate

²  Financial achievements are measured in constant currencies to reflect operational performance.

³  Metric “Share of peers” measures Alcon’s market share of key products in the Surgical and Vision Care segments against a peer group of competitors.

⁴  The innovation scorecard for 2019-2021 includes 10 milestones: one sales-related; one related to the cost of a development program; and eight related to the timeline of achievements. Each milestone is tied to a key internal development project. The LTI payout for the innovation metric will depend upon the number of milestones achieved within the relevant performance period. The milestones established are approved by the Board’s Innovation Committee.

Similar to the performance target-setting and measurement of the STI award, the thresholds, targets and maximum values for the LTI performance metrics are determined at the onset of the three-year performance period. In line with good governance practice, the Board and the CGNC set targets and ensure they are appropriately ambitious and in support of the strategic plan but do not encourage the ECA member to take undue risks.

At the end of the three-year performance period of each LTI award, the Board and the CGNC determine the performance achievements of each metric against the targets originally set, as well as assess the achievements and results of the innovation scorecard. The Board and the CGNC may apply discretion in determining the final outcome of the performance results used for the vesting of LTI awards. At the end of the performance period of each LTI award, we intend to disclose in the applicable compensation report details of the outcome of the final LTI payout.

99

Benefits

ECA members are enrolled in local benefit plans providing for retirement income savings and insurance for disability and loss of life. These plans are in line with local market practices and legislation, and are subject to the Company's plan rules and policies. The ECA members and the Company pay statutory contributions. The sole ECA member with an employment contract governed by US law is enrolled in a Company-provided health insurance plan.

Exhibit 15

Retirement savings and insurance contributions

Retirement and insurance benefits plan contributions provided in line with local market practice (most governed by legal provisions) Employer-paid •    Contributions to retirement savings plan •    Insurance premiums for disability and survivor benefits •    Health insurance (only in the US) •    Contributions to mandatory social security systems

Other benefits

•    Expense and representation allowance in line with Swiss market practice (covering small expenses) •    Mandatory allowances for children and education (only in Switzerland) •    Car allowance •    Employer-paid international benefits (e.g. relocation cost, cost of living adjustments, settling in allowance, international health insurance, housing, schooling/education fees) in line with Alcon’s global mobility policies

Alcon is a global company headquartered in Switzerland with multinational operations and international business strategies. As a result, from time to time, executives are relocated to Switzerland or will be relocated from their home country in the future. Relocated executives receive relocation support and are provided with international benefits in line with Alcon’s global mobility and relocation policies (e.g. relocation support, tax and social security equalization, benefit equalization, and other international benefits as appropriate).

Compensation Payments to the ECA Members in 2019

The following exhibit 16 sets forth the total compensation received by the CEO (highest paid member of the ECA) and the aggregate total compensation received by all of the other ECA members for the period from January 1, 2019 to December 31, 2019. The disclosed compensation includes payments made to six ECA members while they were executives of Alcon prior to the Spin-off on April 9, 2019. A seventh ECA member was appointed as of the Spin-off. In addition, the aggregate total of other ECA members includes the prorated compensation Alcon paid to the seventh ECA member.

The compensation Alcon paid to the ECA members in 2019 remained within the 2019 budget.

100

Exhibit 16

Compensation	Fixed compensation		Variable compensation			Additional compensation	Totals
From January 1, 2019 to December 31, 2019	Annual base salary1	Pension and insurance2	2019 short-term incentive3, 4		2019-2021 long-term incentive5-9	Other benefits10	Total compensation11
	Amount in cash	Amount/ value	Amount in cash	RSU value at grant	PSU target value FMV at grant	Amount/ value	Total amount
David J. Endicott, CEO12	1,134,358	279,851	745,380	745,380	2,738,036	1,177,487	6,820,492
Aggregate amount of 6 other ECA members13	3,541,122	960,531	2,459,312	1,053,990	7,821,030	3,396,392	19,232,377
Totals in USD14	4,675,480	1,240,382	3,204,692	1,799,370	10,559,066	4,573,879	26,052,869
Totals in CHF14	4,647,132	1,232,862	3,185,262	1,788,460	10,495,046	4,546,148	25,894,910

Notes

¹  The Annual Base Salaries of the six designated ECA members pre Spin-off date (including the CEO) and the seven active ECA members post Spin-off date (including the CEO) are based on their individual compensation arrangements pre and post Spin-off.

²  The retirement pension and insurance benefits are the actual contributions paid to benefit plans for the period from January 1 to December 31, 2019. It also includes the amount of USD 71,994 for mandatory contributions paid by Alcon to governmental social security systems for all ECA members, which provide the ECA members with the right to the maximum future insured government pension benefit. The aforementioned amount is a portion of a total amount of contributions of USD 622,142 paid by Alcon to the social security systems.

³  The STI award disclosed is the amount earned for the performance year 2019. It will be paid in March 2020. Fifty percent of the value of the STI award of the CEO will be paid in cash, and fifty percent in RSUs. For other ECA members, seventy percent of the value of the STI award will be paid in cash, and thirty percent in RSUs. RSUs are subject to a vesting period of 3 years. The deferred portions are shown at the value that will be delivered in RSUs based on the underlying Alcon share at the closing price on the future grant date in March 2020.

⁴  The aggregate Short-Term Incentive awards in cash disclosed for this period includes the STI award at target value of Alcon's former CFO who stepped down from the function when Alcon was still a division of Novartis on April 8, 2019. This individual did not join Alcon as an independent company and remained with the Novartis organization.

⁵  The amounts of the 2019-2021 LTI awards represent the total value of the target number of PSUs granted to the then designated members of the future ECA on January 22, 2019. The value of the PSUs is based on the closing price of the underlying Novartis share on the date of grant of USD 88.32 or CHF 88.14 respectively. The amount of the LTI awards disclosed includes also the award made to Alcon's former CFO who stepped down from the function when Alcon was still a division of Novartis on April 8, 2019, prorated for the period from the onset of the performance period 2019 through to April 8, 2019.

⁶  The amount includes the value of the target number of PSUs of the 2019-2021 LTI award granted to the seventh ECA member on January 22, 2019, pro-rated for the period from April 9, 2019 to the end of the performance period in 2021. The value of the PSUs is based on the underlying Novartis share price as described above.

⁷  The amount includes the value of the target number of PSUs of the 2019-2021 LTI award granted to the new incumbent of the CFO role on April 10, 2019, prorated to his period of service as acting member of the ECA within the performance period 2019-2021. The value of the PSUs is based on the closing price of the underlying Alcon share on the date of grant of CHF 58.05.

⁸  The amount includes the total value of the target PSUs of additional 2019-2021 LTI awards granted to the members of the ECA (excluding the CFO) on April 10, 2019 for increasing their pre Spin-off LTI awards to the new target LTI award levels effective from Spin-off date. The value of the PSUs is based on the closing price of the underlying Alcon share on the date of grant of USD 58.04 and CHF 58.05 respectively.

⁹  The amount includes further the value of the target number of PSUs of the special LTI award granted to the new incumbent of the CFO role on April 10, 2019, subject to the same performance conditions as the 2019-2021 LTI awards. The value of the PSUs is based on the closing price of the underlying Alcon share on the date of grant of CHF 58.05.

¹⁰  The amounts of other benefits include the Company-paid benefits, values of benefits in kind, payments made, and payments or values promised to ECA members for the relevant period in 2019. They include mostly benefits for relocation to the new Alcon headquarters in Switzerland (e.g. relocation support, housing, schooling, tax and social security equalization, benefit equalization, other international relocation benefits). The amounts of other benefits also includes cost to the Company for transferring the relevant ECA members to Switzerland such as immigration cost, search of housing, pre-visit to the location and other costs related to relocation.

¹¹  The vesting and forfeiture of Novartis shares and their replacement by Alcon shares under the equity restoration plan did not provide additional values earned, paid or granted and therefore no value is included in the total compensation. The restoration of equity awards is outlined below in section "Alcon Equity Restoration Plan."

101

¹²  The total compensation of the CEO from January 1, 2019 to December 31, 2019 includes his compensation as designated CEO from January 1, 2019 to April 8, 2019 under the Novartis compensation structure and terms.

¹³  The compensation of the six other members of the ECA from January 1, 2019 to December 31, 2019 includes (i) the compensation of five designated members of the ECA from January 1, 2019 to April 8, 2019 under the Novartis compensation structure and terms, and (ii) the compensation of six active ECA members from April 9, 2019 to December 31, 2019 under Alcon's compensation terms.

¹⁴  Payments to ECA members were made in CHF and/or USD. The amounts were converted at the rate of 1.0 CHF : 1.0061 USD.

Alcon reports the 2019-2021 Long-Term Incentive Awards at the value at grant in accordance with Swiss market practice. The basis for disclosure is the target value of the PSU at grant, reflecting the assumption that the awards will vest at 100% achievement, excluding any share price movement that may occur over the performance period. The future payout will be determined only after the conclusion of the performance period in three years (i.e. at the end of 2021) and the awards will vest in January 2022. The payout range is between 0% and 200% of the target number of PSUs.

Outcome of Performance Awards 2019

2019 Short-Term Incentive

The Company generally achieved the financial targets for the 2019 STI payout. It slightly exceeded the targets for third party sales and core operating income and significantly exceeded the target for free cash flow. However, the CGNC and the Board recognized that evaluating performance against STI metrics over less than one year, including significant uncertainty and variability in the business due to the Spin-off from Novartis, was uniquely challenging.

The CGNC and the Board decided to apply discretion, as foreseen in the plan rules, and reduced the total Business Performance Factor to the target level (100%). This is seen as an appropriate reflection of the Company’s overall financial performance for the year. The 2019 STI award payouts made to the CEO and the ECA members averaged 122% of their target award. The value of the 2019 STI award for the CEO and the aggregate value of the 2019 STI awards for the other members of the ECA are disclosed in exhibit 16 above. The payment of the 2019 STI will be made in March 2020.

The values of financial targets and their achievements are not disclosed as they are commercially sensitive information and would give insights into confidential business strategies. This could result in a competitive disadvantage to the Company and its shareholders.

2017-2019 Long-Term Incentive

The LTI awards of the CEO and the other ECA members for the performance period 2017-2019 will vest in 2020. As a result of Alcon being spun-out from Novartis during the final year of this three-year LTI performance cycle, payouts under the program have been split into two periods. For the first twenty-seven months period when Alcon was still a division of Novartis, ECA payouts will be determined based upon Novartis performance. For the truncated nine-month period from Spin-off to the end of the performance period in December 2019 (Refill Awards), PSUs will be subject to Alcon performance. The performance factor for the post Spin-off period is based on Alcon's underlying financial measures and has resulted in a 100% of the target award vesting. The prorated award for twenty-seven months of service to Novartis prior to Spin-off is subject to achieved Novartis performance measures, which are not disclosed in Alcon’s 2019 Compensation Report.

The value of financial targets and their achievement used for the vesting of LTI awards are not disclosed for the same reason as the short-term incentive targets and achievements.

102

Fixed and Variable Compensation

Based on the compensation disclosed in exhibit 16 that ECA members received over the period from January 1, 2019 to December 31, 2019, the mix of fixed and variable compensation is as follows:

Exhibit 17

Mix of Fixed and Variable Compensation at Actual 2019 STI Payout and 2019-2021 LTI at Grant

CEO	Other ECA members (excl. CEO)

Abbreviations: ABS, Annual Base Salary; STI, Short Term Incentive; LTI, Long-Term Incentive.

Average ratios are based on, ABS, payout of 2019 STI (in March 2020), and grants of 2019-2021 LTI awards at grant value. Mix excludes retirement savings and insurance benefits as well as any other benefits.

Compensation Payments to the ECA Members in 2018

During 2018, Alcon was a division of Novartis. The compensation received by designated members of the then future ECA is unrelated to the current compensation of active members of the ECA. The compensation received in 2018 by the then designated members of the ECA was reported in Amendment No. 6 to the Company's Registration Statement on Form 20-F filed with the US Securities and Exchange Commission on March 22, 2019 ("2018 Form 20-F").

Alcon Equity Restoration Plan

Effective as of Spin-off, the Alcon equity restoration plan governed the transition of incentive awards denominated in Novartis share-based instruments into Alcon share-based instruments. Under this plan, the Novartis share-based awards were replaced and restored with Alcon share-based awards. These equity restoration awards did not provide any additional value to the ECA members. These awards only compensated for (i) the lost value of the original Novartis award resulting from holders not receiving the Spin-off dividend, and (ii) for the forfeiture of the awards for time of service to Alcon after Spin-off.

Keep Whole Awards

At the Alcon Spin-off from Novartis on April 9, 2019, all Alcon associates, including the ECA members, holding vested Novartis shares or unvested awards in the form of restricted Novartis shares received the dividend in kind resulting from the Spin-off. This dividend in kind was provided in a ratio of one Alcon share distributed for every five Novartis shares held.

ECA members who held unvested Restricted Stock Units and Performance Stock Units awarded under the Novartis Deferred Share Plan and/or the Novartis Long-Term Incentive Plans did not receive the dividend in kind resulting from the Spin-off. Because the value of the underlying Novartis share decreased due to the Alcon Spin-off, ECA members would have experienced a devaluation of the award value equal to their pro-rata share of the value of the Alcon business.

As a result, immediately following the Spin-off, Alcon granted equity awards to its associates, including ECA members, to compensate for the devaluation of their unvested awards in RSUs or PSUs. These awards were called “Keep Whole Awards”. Awards were granted in the same equity instrument as the underlying award and had a value equivalent to the dividend in kind that each PSU or RSU would have received had the unit been a Novartis share.

The “Keep Whole Award” value was determined by Novartis.

103

Refill Awards

The unvested Novartis PSU awards held by Alcon associates, including ECA members, granted under the LTI Plans were pro-rated for time of service to Novartis between the beginning of the performance period and the Spin-off date. The prorated amounts of Novartis PSUs for time of service to Alcon after Spin-off up to the end of the performance period forfeited under so called “good leaver” rules. The values of the forfeited Novartis PSU awards were replaced by Alcon PSU awards. The latter were called “Refill Awards”. The performance conditions of the Alcon PSUs for the period of service to Alcon following the Spin-off were defined by the Alcon Board. The pro-rated amounts of units for time of service to Novartis were retained in Novartis PSUs and remain subject to Novartis performance conditions and terms for the remainder of their performance period.

Unvested RSUs of Alcon associates, including ECA members, were subject to the same treatment as PSUs. The RSUs were replaced through Refill Awards in RSUs. The only differences between the treatment of RSU awards and PSU awards are that the pro-rated amounts of RSU awards for time of service to Novartis are calculated from the grant date, the vesting of the RSUs is not subject to Novartis performance conditions, and the “Refill Award” in Alcon RSU awards are not subject to Alcon performance conditions.

The value used for granting these “Refill Awards” was determined by Novartis.

The number of Alcon shares that ECA members received as Keep Whole Awards to replace the dividend in kind and as Refill Awards to replace the forfeited portion of the original Novartis PSU award are set out in the following section.

Equity Instruments Granted to the ECA Members in 2019

In the transition year 2019, the number of share-based units granted to the designated and active members of the ECA include grants in Novartis shares and grants in Alcon shares. The exhibits below set out the number of units granted.

Equity Grants in Novartis Shares

The LTI awards for the performance period 2019-2021 were granted on January 22, 2019 to the then designated members of the ECA prior to the Alcon Spin-off. The value of the award is based on the closing price of the underlying Novartis share on the date of grant and disclosed in section "Compensation Payments to the ECA Members in 2019."

Exhibit 18

Number of units granted to	PSUs (target number)
David J. Endicott, CEO	24,740
Other ECA members1	32,086
Total	56,826

Note

¹  Includes the number of PSUs granted to the Alcon's former CFO who stepped down from the function when Alcon was still a division of Novartis, prorated from January 1 to April 8, 2019, and the number of PSUs granted to the seventh ECA member, prorated from April 9, 2019 to the end of the performance period in 2021.

Equity Grants in Alcon Shares Post Spin-Off

(excluding the Number of Refill and Keep Whole Awards)

The ECA members’ LTI target value as a percentage of annual base salary increased effective from the Spin-off date to reflect their new responsibilities as executives of an independent public company. On April 10, 2019, each received a prorated additional LTI award in PSUs based on the underlying Alcon share at market value on the day of grant for the performance period 2019-2021. The additional Alcon PSUs increased their 2019-2021 LTI award to the new target levels.

The new CFO received a prorated 2019-2021 LTI award in PSUs based on the underlying Alcon share price on April 10, 2019. In addition, he received a special LTI award in PSUs subject to the same performance conditions as the 2019-2021 LTI award, based on the underlying Alcon share price on April 10, 2019.

104

Exhibit 19

Number of units granted to	Deferred Share Plan  RSUs based on the   2019 STI1	PSUs based on the 2019-2021 LTI   target Award2, 3
David J. Endicott, CEO	na	9,317
Other ECA members	na	85,086
Total	na	94,403

Notes

¹  Number of RSUs that will be granted in 2020 based on a percentage of the 2019 STI delivered in Alcon equity is not available at the time of editing this 2019 Compensation Report (na) as the number of shares is dependent on the stock price when the STI award is paid in March 2020. The value that will be granted is set out in exhibit 16.

²  Number of PSUs granted to the new CFO of a prorated LTI award for the performance period 2019-2021, and of a special LTI award subject to the same the performance period and conditions.

³  Number of PSU granted to the ECA members (excluding the CFO) for increasing their pre Spin-off target LTI award to the new target award level effective from Spin-off.

Equity Restoration, Keep Whole and Refill Awards in Alcon Shares

The following exhibit sets out the number of Alcon share-based instruments granted to ECA members pursuant to the Alcon equity restoration plan.

Exhibit 20

Number of units granted to	Alcon equity units granted as   Refill awards1	Alcon equity units   granted as Keep Whole awards2
David, J. Endicott, CEO	124,062	23,639
Other ECA members	222,966	39,764
Total	347,028	63,403

Notes

¹  Number of Alcon shares granted to replace the forfeited value of Novartis share-based instruments.

²  Number of Alcon shares granted to compensate for the dividend in kind based on Novartis unvested PSUs and RSUs.

Equity Instruments Granted to the ECA Members in 2018

During 2018, Alcon was a division of Novartis. The numbers of Novartis equity instruments received by designated members of the future ECA were reported in Alcon’s 2018 Form 20-F.

105

Share Ownership of the ECA Members as of December 31, 2019

The number of Alcon shares or share-based units held by ECA members and “persons closely linked” (as defined below) to them as of December 31, 2019 is set out in the exhibit below. As of this same date, no ECA members, either individually or together with “persons closely linked”, owned 1% or more of the outstanding shares of Alcon.

Exhibit 21

Number of units	Vested shares	Unvested RSUs	Unvested target PSUs	Total
David J. Endicott	25,346	69,798	82,187	177,331
Laurent Attias	0	24,855	22,435	47,290
Ian Bell	0	36,432	27,836	64,268
Leon Sergio Duplan Fraustro	4,183	29,393	26,595	60,171
Rajkumar Narayanan	0	21,293	19,380	40,673
Michael Onuscheck	6,424	36,524	35,877	78,825
Tim C. Stonesifer	0	0	61,672	61,672
Total	35,953	218,295	275,982	530,230

Additional Disclosures

Employment Agreements

The Company and the members of the ECA entered into employment agreements for an indefinite period of time. Six of seven ECA members’ employment agreements are governed by Swiss law. The seventh ECA member’s employment agree-ment is governed by US law.

All employment contracts with ECA members provide that termination of employment requires a 12-months advance notice in accordance with our Articles of Incorporation. None of the employment agreements with the ECA members provide for any severance payment.

Such employment agreements also prohibit the ECA member from competing against Alcon for a period up to 12 months after termination in accordance with our Articles of Incorporation.

Payments to Current or Former Members of the ECA

During 2019, no payments (or waivers of claims) other than those set out in the exhibit 16 (including the related notes) under section "Compensation payments to the ECA members in 2019" were made to current or former members of the ECA or to “persons closely linked” to them.

Loans to Members of the ECA

Alcon’s Articles of Incorporation and corporate policies do not permit loans to current or former members of the ECA or to “persons closely linked” to them. As a result, no loans were granted in 2019, and none were outstanding as of December 31, 2019.

106

Persons Closely Linked

Persons closely linked to members of the ECA are (i) their spouse, (ii) their children below age 18, (iii) any legal entities that they own or otherwise control, and (iv) any legal or natural person who is acting as their fiduciary or agent.

Compensation Expense 2019

The total expense for the year 2019 for compensation awarded to ECA members, using International Financial Reporting Standards (IFRS) measurement rules, is presented in Note 25 to the Company’s audited consolidated financial statements. The numbers of compensation expense in the Note 25 may differ from the numbers reported in this 2019 Compensation Report due to the accounting and disclosure standards applied.

Alcon Share-based Units Awarded to Alcon Associates in 2019

In the financial year 2019, the total of approximately 5 million restricted shares, RSUs and target PSUs (all unvested) were granted, and approximately 0.1 million Alcon shares vested and were delivered to Alcon associates under the various equity-based incentive or participation plans. Current unvested equity instruments (restricted shares, RSUs and target PSUs) represent approximately 1% of issued shares. Alcon delivers treasury shares to associates to fulfill these obligations.

107

Board of Directors Compensation 2019

Compensation Framework

Novartis, as our sole shareholder prior to the Spin-off, established the compensation of the Alcon non-executive members of the Board for the term of office from the Spin-off to the 2020 AGM. The Board compensation was set at a level that allowed for the attraction and appointment of high-caliber talent for Board roles with the relevant background and skills, including global experience in the medical devices and ophthalmology industry. The Board is comprised of both Swiss and international members.

Non-executive Board members are awarded a base fee. Further, they are entitled to additional fees for their roles of Chair and/or member on the Board committees. The Vice Chair also receives an additional fee. The Board Chair does not receive such additional fees for work in committees. David J. Endicott, the CEO of Alcon, does not receive any additional fees for his Board membership. He is compensated as a member of the ECA and his compensation is disclosed in section "ECA Compensation 2019."

Prior to the Spin-off date, the then designated non-executive members of the future Alcon Board invested a significant amount of time by attending a number of planning meetings. Each director, other than the Board Chair, received a one-time fee of CHF 10,000 (USD 10,061) for their on-boarding activities.

The following table sets out the compensation for the non-executive members of the Board from the Spin-off date to the 2020 AGM:

Exhibit 22

	Fee for the period from April 9, 2019 to the 2020 AGM
Board function	USD1	CHF
Annual base fee:
Board Chair	955,795	950 000
Board member base fee (Board retainer fee)	201,220	200 000
Additional fees:
Vice Chair	40,244	40 000
Chair of the Audit and Risk Committee	70,427	70 000
Chair of the Compensation, Governance and Nomination Committee	50,305	50 000
Chair of the Innovation Committee	50,305	50 000
Member of the Audit and Risk Committee	35,214	35 000
Member of the Compensation, Governance and Nomination Committee	25,153	25 000
Member of the Innovation Committee	25,153	25 000
One-off fee (on-boarding fee)2	10,061	10 000

Notes:

¹  Converted into USD at a rate of CHF 1.0 = USD 1.0061

²  Fee for services to prepare the Spin-off (on-boarding fee)

In 2019, the following framework applied to the compensation of non-executive Board members:

• Fifty percent of the total fees is paid in shares on a mandatory basis in two installments: September 2019 and March 2020

• Fifty percent of the total fees is paid in cash in four installments: June, September, and December 2019 and March 2020

• Each board member may elect to receive up to one hundred percent of their fees in shares

• The fees are paid in Swiss Francs

• The shares delivered are unrestricted (free shares) listed at the SIX Swiss Exchange

108

• The members of the Board are subject to share ownership requirements (see below)

• Board members bear the full cost of their own social security contributions

• Board members do not receive variable compensation, in line with their focus on corporate strategy, supervision and governance. Their payment in shares is in unrestricted shares. They do not receive share options or other share-based instruments.

The general principles of compensation of the members of the Board are defined in our Articles of Incorporation. According to our Articles of Incorporation, Alcon may enter into agreements with members of the Board relating to their compensation for a fixed term of up to one year.

Share Ownership Requirements for Members of the Board

Board members are committed to align their interests with those of shareholders. The Board has set forth share ownership requirements which apply to the non-executive members of the Board.

Each member of the Board, including the Board Chair, is required to own Alcon shares that represent the value of his or her annual base fee. This requirement needs to be met within four years in office.

Exhibit 23

Board level	Share ownership requirement
Board Chair	1 times annual base fee, within 4 years
Other Board members	1 times annual base fee, within 4 years

Each member of the Board is on track to meet the ownership requirement. Board members are prohibited from hedging or pledging their ownership positions in Alcon shares that are part of the share ownership requirement.

Compensation Governance

Authority for Board Compensation Decisions

Decisions regarding Board compensation are taken by the Board upon proposals from the CGNC. The CGNC's proposals are based on analysis and review of compensation practices, policies and benchmarking information.

The Board is responsible for approving the Compensation Report and for proposing the aggregate budget of Board compensation subject to a shareholders’ vote at the applicable AGM.

Exhibit 24

Authority levels in Board compensation	CGNC	Board	AGM
Board compensation policy and principles	P	A
Board Chair compensation	P	A
Other Board member compensation	P	A
Share ownership requirements for Board members	P	A
Maximum aggregate compensation of the Board members	R	P	A1
Compensation Report of the company	R	P	A2

R   Recommend     P   Propose     A   Approve

¹  binding vote

²  advisory vote

The Corporate Governance Report in Item 6.C. Board Practices of this Annual Report provides further details to the authorities of the CGNC.

109

Independence of Members of the Compensation, Governance and Nomination Committee

Each of the members of the CGNC meets the independence criteria set forth in our Board Regulations. From Spin-off, the CGNC has been comprised of the following four members: Karen J. May (Chair), Thomas H. Glanzmann, D. Keith Grossman, and Ines Pöschel. At the AGM, the shareholders elect the CGNC Chair and its members individually for a term of office of one year. Our Articles of Incorporation permit re-election. The 2019 Corporate Governance Report in Item 6.B. of the Alcon 2019 Annual Report provides details regarding the members of the Board and the independence criteria for Board members. The Board Chair, the CEO and the Secretary of the Board attend the CGNC meetings by invitation. None is present when decisions relating to their own interest are taken.

The Compensation, Governance and Nomination Committee’s External Advisors

Commencing in April 2019, the CGNC retained Willis Towers Watson as its external compensation advisor. The CGNC also retained HCM International (Switzerland) for advice with regard to Swiss compensation matters. The CGNC appointed each of them following a thorough process of evaluating proposals from various consulting firms.

At the end of 2019, the CGNC conducted a review of the support received from the retained external advisors and is satisfied with the result of the first nine months of work. At least annually, the CGNC will evaluate the quality of the consulting services received and the need to use an additional advisor for specific matters.

Compensation of the Members of the Board of Directors in 2019

The following exhibit 25 sets out the total compensation received by non-executive members of the Board during 2019. The compensation disclosed in this exhibit was received for their service on the Board from April 9, 2019 to December 31, 2019, and includes the one-time fee of USD 10,061 (CHF 10,000) paid in March 2019 for activities prior to the Spin-off date. Board members participated in multi-day on-boarding sessions with management in the months prior to Spin-off in order to prepare for their service on the Board.

The disclosed compensation in the blue-shaded portion of the table in exhibit 25 represents only a part of their total fees they will receive for their service on the Board for the term of office from April 9, 2019 to the 2020 AGM. In accordance with our normal payout schedule, a further payment of fees in cash and shares will be made in March 2020, which is reflected in the unshaded columns of the table in exhibit 25.

110

The CEO of Alcon, David J. Endicott, is not included in this exhibit as he is not compensated for his Board membership. His compensation is disclosed as CEO and member of the ECA in section "ECA Compensation 2019."

Exhibit 25

Board members, functions9	Payment in  cash1,2	Payment in  shares3	Number of  shares4	Other  payments5	Total  fees 2019	Fee payable March 20206	Total fees for term7
F. Michael Ball Board Chair	418,206	179,166	3,000	—	597,372	358,423	955,795
Lynn D. Bleil Member ARC and IC	83,685	73,518	1,231	—	157,203	114,444	271,647
Arthur B. Cummings Member IC	112,486	39,058	654	89,243	240,787	84,890	325,677
Thomas H. Glanzmann Chair IC, member CGNC	16,474	131,926	2,209	4,399	152,799	138,339	291,138
D. Keith Grossman Vice Chair, member CGNC, IC	137,711	54,706	916	—	192,417	109,413	301,830
Scott H. Maw Chair ARC	44,058	101,826	1,705	—	145,884	135,824	281,708
Karen J. May Chair CGNC, member ARC	45,930	107,500	1,800	—	153,430	143,369	296,799
Ines Pöschel Member CGNC	77,980	67,904	1,137	4,399	150,283	90,549	240,832
Dieter P. Spälti Member ARC	17,195	111,084	1,860	4,399	132,678	118,217	250,895
Total fees paid in 2019 in USD	953,725	866,688	14,512	102,440	1,922,853	1,293,468	3,216,321
Total fees paid in 2019 in CHF8	947,943	861,433	14,512	101,819	1,911,195	1,285,626	3,196,820

Notes

¹  The amounts include the USD 10,061 (CHF 10,000) on-boarding fee paid in March 2019.

²  The amounts represent the fees paid in cash or the value of tax and, if applicable, social security withheld upon the allocation of shares to be paid in cash to the applicable authorities.

³  The amounts in USD represent the converted value in CHF based on the Alcon shares granted on September 11, 2019 at the closing price of CHF 59.36 per share on the date of grant. The shares granted are listed at the SIX Swiss Exchange.

⁴  The number of shares reported were delivered to each Board member in the first installment of shares in September 2019. The second and final installment in shares for the services from the Spin-off date April 9, 2019 to the 2020 AGM will be delivered in March 2020.

⁵  Includes (i) an amount of USD 17,596 for mandatory employer contributions for all Board members paid by Alcon to governmental social security systems, which provides a right to the maximum future insured government pension benefit for the relevant Board members (this amount is a part out of total employer contributions of USD 47,826 to the governmental social security systems) and (ii) USD 84,844 paid to Dr. Cummings (or his related entities) for consulting services, including assistance with clinical trials that Dr. Cummings, as an ophthalmologist, provided to Alcon (these services were unrelated to Dr. Cummings' board service).

⁶  Fees payable in March 2020, the final installment of the total fees payable for service from the Spin-off to the 2020 AGM, which includes both shares and cash portions.

⁷  Total fees that will be paid for the Board members' term of office from the Spin-off to the 2020 AGM.

⁸  The payments in cash were made in Swiss Francs (CHF). For consistency they are reported in USD as all compensation in this 2019 Compensation Report. The amounts in CHF were converted to USD at the exchange rate of 1.0 CHF : 1.0061 USD. All amounts are before deductions of social security contributions and income tax paid by the Board members.

⁹  Board Committees: “ARC” Audit and Risk Committee; “CGNC” Compensation, Governance and Nomination Committee; “IC” Innovation Committee.

Compensation of the Members of the Board of Directors in 2018

Information on compensation of the Board as a company of the Novartis Group in 2018 is not available. Individuals who served as directors of Alcon Inc. from its incorporation in 2018 until the Spin-off date in 2019, during which time it was a company of the Novartis Group, did not receive compensation for their service on the Board.

All members of the current Board of Alcon have taken their office from the Spin-off date of April 9, 2019. No payments (or waivers of claims) were made to them in 2018.

111

Share Ownership of the Board Members

The number of Alcon shares held by members of the Board and “persons closely linked” to them as of December 31, 2019 are set out in the exhibit below. As of this same date, no Board member, either individually or together with “persons closely linked”, owned 1% or more of the outstanding shares of Alcon. The CEO of Alcon and Board member, David J. Endicott, is not included in this exhibit as his share ownership is disclosed in exhibit 21.

Exhibit 26

Board member	Total shares
F. Michael Ball	13,202
D. Keith Grossman	916
Lynn D. Bleil	1,231
Arthur B. Cummings	787
Thomas H. Glanzmann	2,473
Scott H. Maw	1,705
Karen J. May	1,800
Ines Pöschel	1,679
Dieter P. Spälti	8,860
Total	32,653

Additional Disclosures

Loans to Board Members

Alcon’s Articles of Incorporation and corporate policies do not permit loans to current or former members of the Board or to persons closely linked to them. No loans were granted in 2019, and none were outstanding as of December 31, 2019.

Other Payments to Board Members

No payments (or waivers of claims) other than those set out in exhibit 25 (including the related notes) under section "Compensation of the Members of the Board of Directors in 2019" were made to current Board members or to persons closely linked to them.

Persons Closely Linked

Persons closely linked to members of the Board are (i) their spouse, (ii) their children below age 18, (iii) any legal entities that they own or otherwise control, and (iv) any legal or natural person who is acting as their fiduciary or agent.

Payments to Former Board Members

The current members of the Board have served in such capacity since the date of Spin-off, April 9, 2019. The individuals serving as board members of Alcon Inc. from the Company's incorporation in 2018 until April 8, 2019 included F. Michael Ball our current Board Chair and three individuals employed by Novartis. None of these individuals received any additional compensation for service in such capacity.

The payments made to F. Michael Ball as former member of the Executive Committee of Novartis are disclosed in the 2018 and 2019 compensation reports of Novartis AG. His compensation received prior to his term of office as Board Chair of Alcon is not related to Alcon as an independent company. It is therefore not disclosed in this 2019 Compensation Report. He did not receive any compensation for his role as designated Board Chair of Alcon prior to April 9, 2019.

112

Outlook for 2020

Compensation Philosophy and Principles

The Company has developed a compensation philosophy which:

• Ensures a broadly competitive level of remuneration appropriate to each executives’ scale of responsibility and individual performance

• Attracts, retains and motivates a world-class executive team to drive performance

• Supports long-term value creation for shareholders

• Considers the geographic and industry-specific nature of our talent pool and the medical device industry

• Aligns the compensation program for the senior executives with the broader management and employee population

• Fully embraces Swiss governance expectations and follows principles of simplicity and transparency

Exhibit 27

Pay for performance	•    Programs are designed to compensate short-term performance and long-term success •    Rewards are achieved if financial and non-financial performance metrics are met
Alignment with shareholders	•    A significant part of compensation is delivered in Alcon equity •    Executives are expected to hold a meaningful level of Alcon shares
Market competitiveness	•    Overall compensation is competitive with other companies in the medical device and other industries in which Alcon competes for talent •    Total opportunity is targeted at market median
Motivation and retention	•    Compensation is designed to attract, retain and motivate executives to achieve Company objectives •    Compensation is reviewed periodically to ensure competitiveness and alignment to key strategic objectives

Peer Group

External peer compensation is an important reference point for consideration of market competitive compensation for the members of the ECA, including our CEO. The CGNC adopted a comprehensive approach to peer group construction and, at the onset of Alcon as an independent company, identified a global peer group for executive compensation benchmarking. It provides a good balance of industries, companies and geographies from which executive talent is drawn. The global peer group consists of a blend of both European and North American companies, which are similar in size and scope and compete with Alcon for talent.

The CGNC believes that a consistent and relevant set of peer companies that are similar in size and scope enables shareholders to assess the appropriate levels and practices of compensation and allows for pay-for-performance comparisons. Alcon’s revenue and market capitalization place it at approximately the median of the peer group companies.

113

Exhibit 28

Global Peer Group
•    Agilent Technologies Inc. •    Align Technology Inc. •    Allergan plc •    Bausch Health Companies Inc. •    Baxter International Inc. •    Becton Dickinson & Company •    Biogen Inc. •    Boston Scientific Corporation •    Dentsply Sirona Inc. •    Edwards Lifesciences Corporation	•    EssilorLuxottica •    Fresenius Medical Care •    Givaudan •    Lonza Group •    Merck KGaA •    Smith & Nephew •    Stryker Corporation •    The Cooper Companies Inc. •    UCB •    Zimmer Biomet Holding Inc.

The CGNC considers compensation practices, structures, and levels based on benchmarking information and advice provided by the committee’s independent external advisors (see more information under the section "Compensation Governance"). The annual total compensation of ECA members is targeted to the market median of benchmarks for comparable roles within this group.

The CGNC and the Board will review the compensation of the CEO and the other ECA members periodically and consider relevant benchmark information. The CGNC will also review periodically the peer group and make adjustments to its composition as appropriate.

ECA Compensation

Based on the Company’s business strategy, the compensation philosophy and framework and the analysis of peer group compensation practices, the Board has adopted the following key features of ECA compensation in 2020:

• The overall structure of ECA compensation including annual base salary, variable compensation elements STI and LTI, and benefits will remain unchanged in 2020;

• Slight adjustments will be made to some ECA member’s total target compensation but overall it will broadly remain unchanged;

• The 2020 STI payouts will be delivered in cash to align it with peer group compensation practices;

• The LTI award target percent of the CEO will be increased, to align his total compensation with the median of the peer group;

• An additional profitability funding mechanism will be added to the current STI metrics to align the measurements better with company performance;

• The performance metrics of the 2019-2021 LTI cycle will also be used for the performance measurement of the 2020-2022 LTI cycle (group net sales CAGR; Core EPS CAGR; Share of Peers; and Innovation);

• The robust share ownership requirements will continue to apply; and

• There will be no material change to benefit provisions.

114

Board Compensation

The Board compensation framework will remain broadly unchanged for the upcoming term of office from the 2020 AGM to the 2021 AGM, including:

• The overall framework of Board compensation from Spin-off date in 2019 to the 2020 AGM will be carried forward to the term from the 2020 AGM to 2021 AGM;

• The Board Chair fee will remain unchanged;

• The payment of fifty percent in shares (mandatory) and a voluntary election of a higher percentage in shares will continue; and

• As a result of the split of the CGNC into two separate committees, fees for an additional Board committee Chair and members will be added to the Board compensation framework.

During 2020, the Board intends to undertake a comprehensive review of the compensation of its members, including the Board Chair, based on an assessment of the benchmark data of a peer group and on advice regarding compensation practices prepared by its external advisors.

Effective as of the date of our 2020 AGM, the Board has split the current responsibilities of the Compensation, Governance and Nomination Committee (CGNC) into two separate committees. The Board recognized the heavy workload assigned to the CGNC since the Spin-off from Novartis; this split will enable the two newly created committees to better focus on their respective key responsibilities. For the Governance and Nomination Committee, this includes a focus on leading governance practices and ESG topics in general.  And for the new Compensation Committee, this includes a focus on human resource strategy and executive compensation. Finally, this reorganization is in line with best corporate governance standards. The annual fee for the Chair of the Governance and Nomination Committee will be USD 50,305 (CHF 50,000), and each member will receive USD 25,153 (CHF 25,000). The Compensation Committee will retain the current levels of Chair and member fees of USD 50,305 (CHF 50,000) and USD 25,153 (CHF 25,000) respectively. These committee fees will be included in the budget of Board compensation from the 2020 AGM to the 2021 AGM, subject to approval by the binding vote of shareholders at the 2020 AGM.

Shareholder Vote at the 2020 AGM

In accordance with Article 29 of the Articles of Incorporation (http://investor.alcon.com/governance//default.aspx), the Board will ask shareholders at the 2020 AGM meeting to cast a binding vote on:

• The aggregate amount of compensation payable to non-executive members of the Board for their term of office from the 2020 AGM to the 2021 AGM;

• The aggregate amount of compensation payable to ECA members in the financial year 2021.

In addition, the Board will ask shareholders to cast an advisory vote on the 2019 Compensation Report.

The procedures of voting on the compensation of ECA members and the Board are defined in our Articles of Incorporation. Our Articles allow for an additional amount of compensation to be used when promoting or adding new members to the ECA.

115

The exhibit below depicts the voting at the 2020 AGM and the respective period of the compensation affected by the vote.

Exhibit 29

116

(This page has been left blank intentionally.)

117

6.C. BOARD PRACTICE

Corporate Governance

Group Structure and Shareholders

Operational Group Structure

The Company, with its registered office at Rue Louis-d’Affry 6, 1701 Fribourg, Switzerland, is a corporation organized under Swiss law and is the ultimate parent company of Alcon. As of December 31, 2019, the market capitalization of the Company was $27.622 billion (CHF 26.758 billion).

Alcon is the largest eye care company in the world, with $7.4 billion in net sales during the year ended December 31, 2019. We research, develop, manufacture, distribute and sell a full suite of eye care products within two key businesses: Surgical and Vision Care. Our Surgical business is focused on ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. Our Vision Care business comprises various contact lenses and a comprehensive portfolio of ocular health products, including devices and over-the-counter products for dry eye, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. Further information is available under "Item 4. Information on the Company".

Listed and Non-listed Companies Belonging to the Alcon Group

The registered shares of the Company are listed on the SIX Swiss Exchange (Valor 43249246 / ISIN code CH0432492467) and the New York Stock Exchange (CUSIP code H01301128). The Company owns directly or indirectly all consolidated entities of Alcon, none of which has its shares otherwise listed.

The following table lists the most significant subsidiaries of the Company, being those entities with total assets or net sales to third parties in excess of 5% of the Company’s consolidated total assets or net sales to third parties, as applicable, at December 31, 2019. The referenced share capital may not reflect the taxable share capital and does not include any paid in surplus. Further information regarding the Company’s subsidiaries is disclosed in Note 28 of the Consolidated Financial Statements. The combination of the Company’s subsidiaries disclosed in the table below and in Note 28 of the Consolidated Financial Statements does not cover all subsidiaries of the Company.

Country of Organization/ Entity Name	Equity Interest	Principal Place of Business	Share Capital
Japan
Alcon Japan Ltd.	100%	Tokyo	JPY 500,000,000
Switzerland
Alcon Pharmaceuticals Ltd.	100%	Fribourg	CHF 200,000
United States
Alcon Finance Corporation	100%	Fort Worth, TX	USD 1
Alcon Laboratories, Inc.	100%	Fort Worth, TX	USD 1
Alcon Research, LLC	100%	Fort Worth, TX	USD 12.5
Alcon Vision, LLC	100%	Fort Worth, TX	USD 1,000

Significant Shareholders

According to the Alcon share register, the following nominee shareholders held more than 3% of the share capital of Alcon Inc. as of December 31, 2019:

Holder	Number of Shares	Percentage
Chase Nominee Ltd., London (UK)	84,771,429	17.24%
Cede & Co (DTC nominee), New York, NY (USA)	82,425,818	16.76%

In addition, according solely to disclosure of shareholdings notifications filed with Alcon and the SIX Swiss Exchange ("SIX Threshold Notifications") pursuant to the obligations set forth in the Swiss Federal Act on Financial Market Infrastructure and

118

Market Conduct in Securities and Derivatives Trading ("FMIA") and the rules and regulations promulgated thereunder, there are three shareholders that held shares representing at least 3% of the Company’s total share capital as of December 31, 2019, but were not registered with the Alcon share register. Those three shareholders are identified in the table below.

The information required to be included in the SIX Threshold Notifications regarding these shareholders varies from the information required to be included in beneficial ownership statements filed with the SEC (“SEC Notifications”).

Interested persons can access the relevant SIX Threshold Notifications online at the SIX Swiss Exchange:https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html.

The below table shows the information available to the Company, based on both notification regimes, with respect to shareholders reported to have significant positions in Alcon’s share capital as of December 31, 2019:

Holder	Number of shares and voting rights as per SIX Threshold Notification	Percentage as per SIX Threshold Notification1	Number of shares beneficially owned as per SEC Notification2	Percentage as per SEC Notification3
T. Rowe Price Associates, Inc. 100 East Pratt Street, Baltimore, MD 21202	26,641,2064	5.45 %	49,485,4115	10.1 %
The Capital Group Companies, Inc.                                                                                                                                       333 South Hope Street, Los Angeles, CA 90071	25,357,3466	5.19 %	31,824,5427	6.5 %
BlackRock, Inc. c/o BlackRock Investment Management (UK) Limited 12 Throgmorton Ave, London, EC2N 2DL, UK	24,679,2318	5.06 %	--	--

¹   Percentages indicated in this column have been established based on the share capital of the Company registered with the commercial register of the Canton of Fribourg on the date on which the respective disclosure obligation pursuant to the FMIA was triggered. Furthermore, according to the FMIA, these shareholders are required to notify Alcon and the SIX Swiss Exchange only at the time they reach, exceed or fall below any of the thresholds set forth in the FMIA; therefore, their shareholding as of December 31, 2019 may differ from the figures indicated as per the contents of the relevant SIX Threshold Notifications.

²  In general, under SEC rules, "beneficial ownership", for the purposes of this column, refers to shares that an entity had the power to vote or the power to dispose of, and shares that such entity or individual had the right to acquire within 60 days after December 31, 2019.

³  Percentage ownership is calculated by dividing the number of shares reported as beneficially owned by such entity by the 488,349,066 shares of our common stock outstanding as of January 31, 2020.

⁴  Based solely on a SIX Threshold Notification dated May 1, 2019.

⁵  Based solely on a Statement on Schedule 13G filed on January 10, 2020. Such filing indicates that T. Rowe Price Associates, Inc. has sole voting power with respect to 17,419,268 shares and sole dispositive power with respect to 49,485,111 shares.

⁶  Based solely on a SIX Threshold Notification dated October 25, 2019.

⁷  Based solely on a Statement on Schedule 13G filed on February 14, 2020. Such filing indicates that The Capital Group Companies, Inc. has sole voting power with respect to 31,808,983 shares and sole dispositive power with respect to 31,824,542 shares.

⁸  Based solely on a SIX Threshold Notification dated November 9, 2019. This figure does not include its derivative position.

Cross-Shareholdings

Neither the Company nor any of its consolidated entities has any shareholdings exceeding 5% of the holdings of capital or voting rights in any entity that also has shareholdings exceeding 5% of the holdings of the capital or voting rights in the Company or any of its consolidated entities.

Capital Structure

Share Capital

As of December 31, 2019, the share capital of Alcon Inc. was CHF 19,668,000, fully paid-in and divided into 491,700,000 registered shares, each with a nominal value of CHF 0.04.

119

Authorized and Conditional Share Capital

On January 29, 2019, the Company’s annual general meeting approved the creation of an authorized share capital. According to this shareholder resolution, the Board was authorized, at any time until January 29, 2021, to increase the Company’s share capital by a maximum of CHF 977,400 through the issue of up to 24,435,000 fully paid up new shares of CHF 0.04 nominal value each for the purpose of any share-based incentive or other participation plans, schemes or arrangements for directors, associates or advisors of the Company or its consolidated subsidiaries (“Employees Participation Plans”). Additional terms and conditions of this authorized share capital are set forth in Article 4a of the Articles of Incorporation (http://investor.alcon.com/governance//default.aspx).

The Board resolved on November 19, 2019 to increase the share capital by CHF 120,000 through the issuance of 3,000,000 new registered shares under the authorized share capital in order to comply with Alcon’s obligations under the relevant Employees Participation Plans. These new shares were listed on December 4, 2019.

As of December 31, 2019, the Board remained authorized, at any time until January 29, 2021, to further increase the Company’s share capital by a maximum of CHF 857,400 through the issue of up to 21,435,000 fully paid up new shares of CHF 0.04 nominal value each for the purpose of any Employees Participation Plans.

The Company did not have any conditional share capital available on December 31, 2019.

Changes in Capital

The Company was formed on September 21, 2018 with a share capital of CHF 100,000 divided into 2,500,000 registered shares with a nominal value of CHF 0.04 each. In view of the contemplated Spin-off from the Novartis group, the Company’s share capital was increased on January 29, 2019 to amount to CHF 19,548,000 divided into 488,700,000 registered shares with a par value of CHF 0.04 each. Following the increase through the authorized share capital, as described above under “Authorized and conditional share capital”, the share capital of the Company was, as of December 31, 2019, CHF 19,668,000 divided into 491,700,000 registered shares.

No other historical data is available regarding changes in capital during the last three financial years.

Shares, Participation Certificates and Profit-sharing Certificates

The Company has a single class of shares, being registered shares in the form of uncertificated securities (in the sense of the Swiss Code of Obligations). A portion of these uncertificated shares is issued as intermediated securities (titres intermédiés) within the meaning of the Swiss Federal Intermediated Securities Act via the settlement system operated by SIX SIS, with the remaining shares directly held through Computershare Trust Company, N.A. in the U.S. (including shares held through Computershare Trust Company, N.A. at DTC). All Alcon shares have equal voting rights and carry equal entitlements to dividends. No participation certificates (bons de participations) or profit-sharing certificates (bons de jouissance) have been issued.

Based solely upon shares registered in the Alcon share registry, as of December 31, 2019, approximately 16.7% of the Company's total share capital was held in Switzerland by 95,198 registered shareholders.

Limitations on Transferability and Nominees Registrations

The Articles of Incorporation of the Company do not provide for any limitation on transferability of shares or nominees registration.

Convertible Bonds and Options

As of December 31, 2019, Alcon did not have any convertible bonds, warrants, options or other securities granting rights to Alcon shares.

120

Board of Directors

Composition

The Board consists of eight to 13 members according to the Articles of Incorporation. As of December 31, 2019, the size of the Board was 10 members and the Board was comprised of the following members:

F. Michael Ball, Chairman F. Michael Ball held the position of Chief Executive Officer of the Alcon Division and served as a member of the Novartis Executive Committee from February 1, 2016 until June 30, 2018. He previously served as Chief Executive Officer of Hospira, Inc. from 2011 to 2015. Prior to that, Mr. Ball held a number of senior leadership positions at Allergan, Inc., including President from 2006 to 2011. Before joining Allergan, Inc. in 1995, he held roles of increasing responsibility in marketing and sales at Syntex Corporation and Eli Lilly & Co. He has served on the board of the ICO Foundation since January 2016. Mr. Ball served on the board of directors of several organizations, including Kythera Biopharmaceuticals Inc., Hospira, Inc., IntraLase Corp., AdvaMed and sTec, Inc. He began his career in the healthcare industry in 1981. He holds a Bachelor of Science and a Master of Business Administration from Queen’s University in Canada.

Age: 64 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

Lynn D. Bleil Lynn D. Bleil has been a member of the boards of directors of Stericycle, Inc. since 2015 (where she chairs the Nominating & Governance Committee), Sonova Holding AG since 2016, and Amicus Therapeutics, Inc. since 2018. Ms. Bleil has also served on the advisory boards of private healthcare companies, including Navigen Pharmaceuticals and Halo Neuroscience since 2016. She is a former member of the board of directors of DST Systems Inc and Auspex Pharmaceuticals (until their sale to SS&C Technologies) and Teva Pharmaceuticals. She also has served as vice chair of the governing board of Intermountain’s Park City Hospital since 2014. From 1985 through 2013, Ms. Bleil was a Senior Partner at McKinsey & Company where she led the West Coast healthcare practice and advised CEOs and boards of directors in the healthcare and life sciences industry.  Ms. Bleil holds a Bachelor of Science in Chemical Engineering from Princeton University, U.S., and a Master of Business Administration from the Stanford Graduate School of Business, U.S.

Age: 56 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

121

Arthur Cummings, M.D. Arthur Cummings, M.D., has been Consultant Ophthalmologist at Beacon Hospital, since 2007, and Owner and Medical Director at Wellington Eye Clinic, since 1998, both in Dublin, Ireland. Also, he has been Owner of Arthur Cummings Eye Clinic Ltd. since 2014 and a member of the board of directors of Beacon Audiology Ltd. since 2015. Dr. Cummings holds a Bachelor of Science in Medicine and Surgery (MB. ChB.), and a Master of Medicine in Ophthalmology (M. Med) from the University of Pretoria, South Africa. Dr. Cummings is a Fellow of the College of Surgeons in South Africa (FCS SA) in Ophthalmology, and a Fellow of the Royal College of Surgeons of Edinburgh (FRCSEd) in Ophthalmology.

Age: 57 Nationality: Irish and South African Year of initial appointment: 2019 Expiration of current term of office: 2020

David J. Endicott David J. Endicott is the Chief Executive Officer of the Alcon Group. He joined the Alcon Division, when still operating under the Novartis group, in July 2016 as President, Commercial and Innovation, and Chief Operating Officer. Prior to joining the Alcon Division in 2016, Mr. Endicott was President of Hospira Infusion Systems, a Pfizer company. Before joining Hospira, Mr. Endicott served as an officer and executive committee member of Allergan, Inc. where he spent more than 25 years of his career in leadership roles across Europe, Asia and Latin America, as well as the U.S. Mr. Endicott served on the board of directors of Zeltiq, Inc. and Orexigen Therapeutics, Inc. He currently serves on the board of AdvaMed. He holds an undergraduate degree in Chemistry from Whitman College and a Master’s degree in Business Administration from the University of Southern California, both in the United States.

Age: 54 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

122

Thomas Glanzmann Thomas Glanzmann is the Founder and has been a Partner at Medtech Ventures Partners since 2016. He has been a member of the board of directors of Grifols S.A. since 2006, including serving as Vice Chairman since 2017, and a member of the healthcare advisory board of Madison Dearborn Partners, LLC since 2011. He is also Chairman of Glanzmann Enterprises AG. He was President and Chief Executive Officer of Gambro AB from 2006 to 2011, and Chief Executive Officer and Managing Director of HemoCue AB from 2005 to 2006. Mr. Glanzmann was Senior Advisor to the Executive Chairman and Acting Managing Director of the World Economic Forum from 2004 to 2005. From 1988 to 2004, Mr. Glanzmann worked in various positions at Baxter International Inc., including President of Baxter Bioscience, Chief Executive Officer of Immuno International Co., Ltd. and President of Europe Biotech Group. In 2004, he was a Senior Vice President and Corporate Officer of Baxter AG. He holds a Bachelor of Science in Political Science from Dartmouth College, U.S., a Master of Business Administration from the IMD Business School, Switzerland and a Board of Directors Certification from the UCLA Anderson School of Management, U.S.

Age: 61 Nationality: Swiss Year of initial appointment: 2019 Expiration of current term of office: 2020

D. Keith Grossman D. Keith Grossman has been the Chairman, Chief Executive Officer, and President of Nevro, Inc. since March 2019. He has also been Chairman of the board of directors of Outset Medical, Inc. since 2014 and a member of the board of directors of ViewRay, Inc. since 2018. He was President and Chief Executive Officer of Thoratec Corporation from 1996 to 2006 and from 2014 to 2015, and was a member of the board of directors from 1996 to 2015. Mr. Grossman was Chief Executive Officer and a member of the board of directors at Conceptus, Inc. from 2011 to 2013. He was Managing Director and Senior Advisor at TPG Capital, L.P. from 2007 to 2011. Mr. Grossman also served as a member of the board of directors of Zeltiq, Inc., as Lead Director, from 2013 to 2017, of Intuitive Surgical, Inc. from 2004 to 2010 and of Kyphon Inc. in 2007, and served on a number of private boards of directors. Mr. Grossman holds a Bachelor of Science in Animal Sciences from The Ohio State University, U.S., and Master of Business Administration in Finance from Pepperdine Graziadio Business School at Pepperdine University, U.S.

Age: 59 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

123

Scott Maw Scott Maw has been managing director of WestRiver Group since September 2019. Previously, he was Executive Vice President and Chief Financial Officer at Starbucks Corporation from 2014 until the end of 2018. He was also Senior Vice President in Corporate Finance at Starbucks Corporation from 2012 to 2013, and Senior Vice President and Global Controller from 2011 to 2012. Since 2016, he has been a member of the board of directors of Avista Corporation, and since 2019, a member of the board of directors of Chipotle Mexican Grill Inc. Mr. Maw is also member of the board of trustees of Gonzaga University. From 2010 to 2011, he was Senior Vice President and Chief Financial Officer of SeaBright Holdings, Inc. From 2008 to 2010, he was Senior Vice President and Chief Financial Officer of the Consumer Bank at JP Morgan Chase and Company. Prior to this, Mr. Maw held leadership positions in finance at Washington Mutual, Inc. from 2003 to 2008, and GE Capital from 1994 to 2004. Mr. Maw holds a Bachelor of Business Administration in Accounting from Gonzaga University,

Age: 52 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

Karen May Karen May has been a member of the board of directors of Ace Hardware Corporation, where she is Chair of the Audit Committee, since 2017. Previously, Ms. May was on the board of directors of MB Financial, Inc., where she served as Chair of the Compensation Committee until 2019. From 2012 to 2018, she was Executive Vice President and Chief Human Resources Officer at Mondelez International, Inc. (name changed from Kraft Foods, Inc. after the spin-off of selected Kraft North American businesses in 2012). From 2005 to 2012, Ms. May was the Executive Vice President and Chief Human Resources Officer of Kraft Foods, Inc. Between 1990 and 2005, she held various positions in Human Resources and Finance at Baxter International Inc., including Corporate Vice President and Chief Human Resources Officer and Vice President, International Finance. Prior to Baxter International Inc., Ms. May was a Certified Public Accountant in the audit practice of Price Waterhouse. Ms. May holds a Bachelor of Science in Accounting from the University of Illinois, U.S., and was a licensed Certified Public Accountant in the U.S. from 1980 to 1990.

Age: 61 Nationality: American Year of initial appointment: 2019 Expiration of current term of office: 2020

124

Ines Pöschel Ines Pöschel has been a Partner at Kellerhals Carrard Zurich KIG since 2007. She has been a member of the board of directors of Implenia AG since 2016 and Graubündner Kantonalbank since 2018, and serves on the board of directors of the non-listed Swiss companies of Reichle Holding, Wirz Partner Holding and Bioengineering Holding. Ms. Pöschel is also a member of the Swiss Federal expert commission for commercial register. From 2002 to 2007, Ms. Pöschel was a Senior Associate at Bär & Karrer AG. She was a Senior Manager at Andersen Legal LLC from 1999 to 2002. Ms. Pöschel has a Master in Law from the University of Zurich, Switzerland, and passed the Swiss Bar Exam in 1996.

Age: 51 Nationality: Swiss Year of initial appointment: 2019 Expiration of current term of office: 2020

Dieter Spälti, Ph.D. Dieter Spälti has been Chief Executive Officer and a member of the board of directors at Spectrum Value Management Ltd., Switzerland since 2006. He was Managing Partner from 2002 to 2006. He has been a member of the board of directors at LafargeHolcim Ltd. since 2003. He has also been a member of the board of directors at SCI (Schweizerische Cement Industrie AG) since 2003. Dr. Spälti has been Chairman of the board of directors at Dorsay Development Corporation, Canada, since 2003. He has also served as Vice Chairman of the board of directors at Grand Resort Bad Ragaz AG, Switzerland, since 2005 and Vice Chairman of the board of directors at IHAG Holding AG, Switzerland, since 2002. Dr. Spälti served, or continues to serve, on the board of directors of various non-listed Swiss and international companies that are controlled by the same beneficial owner. Dr. Spälti was a Partner at McKinsey and Company from 1993 to 2001. He holds a Ph.D. in Law from the University of Zurich, Switzerland.

Age: 58 Nationality: Swiss Year of initial appointment: 2019 Expiration of current term of office: 2020

125

Independence and Executive Function

Independence of Board members is a key element of Alcon’s corporate governance framework. Therefore, Alcon has developed a strong set of independence criteria for its board members based on international best practice standards, including the Swiss Code of Best Practices for Corporate Governance and the NYSE standards, which can be found in the Alcon Board Regulations, available under the investor relations portion of the Alcon website (https://investor.alcon.com/governance/governance/default.aspx).

The Board assesses the independence of its Board members on a regular basis, at least annually. As of December 31, 2019, all Board members qualified as independent, except for F. Michael Ball, David J. Endicott and Dr. Arthur Cummings. 

Other than (i) F. Michael Ball, who previously served as Chief Executive Officer of the Alcon Division of Novartis and as a member of the Novartis Executive Committee from February 1, 2016 until June 30, 2018 and (ii) David J. Endicott, who currently serves as Alcon’s Chief Executive Officer, no Board member was a member of the management of the Company or any other Alcon consolidated subsidiary in the last three financial years up to December 31, 2019.

Other than Dr. Arthur Cummings, who, in his capacity as an ophthalmologist, provides certain consulting services, including assistance with various clinical trials, to Alcon, no Board member has a significant business relationship with the Company or with any other Alcon consolidated subsidiary.

David J. Endicott is an executive member of the Board of Directors by reason of his function as Chief Executive Officer of Alcon. All other members of the Board are non-executive directors since none of them carries out operational management tasks within Alcon.

Limitations of Number of Mandates

No member of the Board may hold more than 10 additional mandates in other companies, of which no more than four shall be in other listed companies. Chairs of the board of directors of other listed companies count as two mandates. Mandates in different legal entities which are under joint control are deemed one mandate. Further details can be found in Article 34 of the Articles of Incorporation, available under https://investor.alcon.com/governance/governance/default.aspx.

Elections and Terms of Office

The Board members, the Chair of the Board of Directors and the members of the Compensation Committee shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders.

There is no mandatory term limit for Board members.

Internal Organizational Structure

General Principles and Areas of Responsibilities

The Board constitutes itself in compliance with legal requirements and taking into consideration the resolutions of the General Meeting of Shareholders. It shall elect one or two Vice-Chairs. It shall appoint a secretary, who need not be a member of the Board of Directors.

The Board is the ultimate governance body of the Company, under the leadership of the Chairman. F. Michael Ball has been the Chairman of the Board since the Spin-off from Novartis. In this role, Mr. Ball leads the Board to represent the interests of all stakeholders. The Vice Chair has been held by D. Keith Grossman, also acting in this role as the Senior Independent Director. The duties of Mr. Ball and Mr. Grossman in their respective functions are laid out in Articles 20 and 21, respectively, of the Alcon Board Regulations.

126

The Board is responsible for the duties assigned to it by the Articles of Incorporation and the Alcon Board Regulations, which include the overall direction and supervision of management. It holds the ultimate decision-making authority for Alcon, with the exception of any decisions reserved to the shareholders. In performing its tasks, the Board follows the highest standards of ethics, integrity and governance. It undertakes annually a self-assessment process to evaluate its performance, the performance of its committees and the individual performance of its members.

Within the limits of the law and the Articles of Incorporation, the Alcon Board has delegated certain of its duties to the Executive Committee and the Board’s Committees.

Delegation to the Executive Committee

The Alcon Board has delegated to the Executive Committee the management of the business in accordance with the terms set forth in the Alcon Board Regulations. Such delegation has been formalized in Article 12 of the Alcon Board Regulations and further regulated in a set of internal regulations. Under the lead of the Chief Executive Officer, the Executive Committee is responsible for the management of the business and functions as a coordination committee, independent of any legal entity of the Alcon Group. A non-exhaustive list of the duties assigned to the Executive Committee can be found in Article 23 of the Alcon Board Regulations.

Delegation to the Board’s Committees

The Board’s Committees enable the Alcon Board to work in an efficient and effective manner, ensuring a thorough review and discussion of issues, while giving the Alcon Board more time for deliberation and decision-making. For this purpose, the Alcon Board has delegated certain of its duties to each of its three permanent committees, i.e. the Audit and Risk Committee, the Compensation, Governance and Nomination Committee and the Innovation Committee. Details of the duties and responsibilities of each committee can be found in the respective committee’s charter, contained in the Alcon Board Regulations, available under https://investor.alcon.com/governance/governance/default.aspx.

In 2019, the composition of the respective Board’s Committees was as follows:

Name	Audit and Risk Committee	Compensation, Governance and Nomination Committee	Innovation Committee
F. Michael Ball
Lynn D. Bleil	Member		Member
Arthur Cummings			Member
David J. Endicott
Thomas Glanzmann		Member	Chair
D. Keith Grossman		Member	Member
Scott Maw	Chair
Karen May	Member	Chair
Ines Pöschel		Member
Dieter Spälti	Member

On February 18, 2020, the Board approved the split of the Compensation, Governance and Nomination Committee (“CGNC”) into two distinct committees, a Compensation Committee (“CC”) and a Governance and Nomination Committee (“GNC”). The Board recognized the heavy workload assigned to the CGNC since the Spin-off from Novartis; this split will enable the two newly created committees to better focus on their respective key responsibilities. For the Governance and Nomination Committee, this includes a focus on leading governance practices and ESG topics in general. And for the new Compensation Committee, this includes a focus on human resource strategy and executive compensation. Finally, this reorganization is line with best corporate governance standards. The split will be effective as of the date of our 2020 AGM.

127

Audit and Risk Committee

The Audit and Risk Committee consisted of four members in 2019, all of whom were determined by the Board of Directors as being independent and in possession of the financial literacy and accounting or related financial management expertise, as defined in the NYSE standards. The Audit and Risk Committee meets and consults regularly with the management, the Alcon Internal Audit function, the independent external auditors and external consultants. The Audit and Risk Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

• Supervising external auditors, and selecting and nominating external auditors for election at the Annual General Meeting of shareholders

• Overseeing internal auditors

• Overseeing accounting policies, financial controls, and compliance with accounting and internal control standards

• Approving quarterly financial statements and financial results releases

• Overseeing internal control and compliance processes and procedures

• Overseeing compliance with laws, and external and internal regulations

• Ensuring that Alcon has implemented an appropriate and effective risk management system and process

• Ensuring that all necessary steps are taken to foster a culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation

• Approving guidelines and reviewing policies and processes

• Reviewing with management, internal auditors and external auditors the identification, prioritization and management of risks; the accountabilities and roles of the functions involved in risk management; the risk portfolio; and the related actions implemented by management.

Compensation, Governance and Nomination Committee

The Compensation, Governance and Nomination Committee consisted of four members in 2019, all of whom were determined by the Board of Directors as being independent. The Compensation, Governance and Nomination Committee meets and consults regularly with management and external consultants. The Compensation, Governance and Nomination Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

• Designing, reviewing and recommending corporate governance principles to the Alcon Board

• Identifying candidates for election as Directors

• Assessing existing Directors and recommending to the Alcon Board whether they should stand for re-election

• Preparing and reviewing the succession plan for the Chief Executive Officer of Alcon

• Developing and reviewing an onboarding program for new Directors, and an ongoing education plan for existing Directors

• Reviewing on a regular basis the Articles of Incorporation with a view to reinforcing shareholder rights

• Reviewing on a regular basis the composition and size of the Alcon Board and its committees

• Reviewing annually the independence status of each Director

• Reviewing directorships and agreements of Directors for conflicts of interest, and dealing with conflicts of interest

• Overseeing Alcon strategy and governance on corporate responsibility

• Designing, reviewing and recommending to the Alcon Board compensation policies and programs

• Advising the Alcon Board on the compensation of Directors and the Chief Executive Officer of Alcon

• Determining the compensation of ECA members

• Preparing the annual compensation report and submitting it to the Alcon Board for approval.

Innovation Committee

The Innovation Committee consisted of four members in 2019. The Innovation Committee meets and consults regularly with management. The Innovation Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

• Providing counsel and know-how to the Alcon Board and management in the area of technology, application of technology and new business models

• Assisting the Alcon Board with oversight and evaluation of management’s development and implementation of Alcon technology and innovation strategies and its alignment with Alcon overall strategy and objectives

• Informing the Alcon Board on a periodic basis about emerging scientific trends, research and development programs and opportunities and activities critical to the success of the Alcon product development pipeline

• Advising the Alcon Board on scientific, technological and research development matters

128

• Reviewing and discussing significant emerging science and technology issues and trends

• Reviewing such other matters in relation to Alcon research and development, technology and innovation programs as the committee may, in its own discretion, deem desirable in connection with its responsibilities

Frequency, duration and attendance of the meetings of the Board of Directors and its Committees

The Board of Directors and its Committees are convened as often as the conduct of the business may require. The Charters of the respective committees set forth the minimum number of meetings required for a full calendar year.

In 2019, the Board of Directors and its Committees met as follows:

	Board of Directors	Audit and Risk Committee	Compensation, Governance and Nomination Committee	Innovation Committee
Number of meetings1	6	6	6	3
Approximate average duration2	6 hrs 35 min	2 hrs 20 min	1 h 50 min	2 hrs
Overall attendance	98%	96%	100%	100%

The members of the Board of Directors and its Committees attended the respective meetings as follows:

Meeting attendance	Board of Directors	Audit and Risk Committee	Compensation, Governance and Nomination Committee	Innovation Committee
	Number of Meetings   6	Number of Meetings   6	Number of Meetings   6	Number of Meetings   3
F. Michael Ball	6
Lynn D. Bleil	5	6		3
Arthur Cummings	6			3
David J. Endicott	6
Thomas Glanzmann	6		6	3
D. Keith Grossman	6		6	3
Scott Maw	6	6
Karen May	6	6	6
Ines Pöschel	6		6
Dieter Spälti	6	5

¹  The number of meetings includes physical meetings as well as meetings held through videoconference or conference call, but excludes any meetings prior to April 9, 2019, the effective date of the current Board of Directors' appointment.

²  The approximate average duration does not include dinners, lunches and breaks. Meetings held through videoconference or conference calls had in principle a shorter duration than physically held meetings.

129

Information and Control System of the Board vis-à-vis the Management

The Alcon Board ensures that it receives through several channels sufficient information from the Executive Committee to perform its supervisory duties and to make the decisions that are reserved to it by law, i.e. its non-delegable decisions.

Information to the Board of Directors

Prior to Alcon’s Spin-off from Novartis in April of 2019, the designated Directors for the new company met with Alcon management for a series of multi-day onboarding sessions. These sessions served to introduce the designated Directors to the ECA and key management personnel; provided information about the company’s products in a hands-on fashion; and provided in-depth presentations on the company’s strategy, control mechanisms, risks and opportunities. Among other matters, the designated Directors received in-depth briefings on: financial controls and internal audit; manufacturing footprint and strategies; compliance programs; quality systems; research and development programs and product pipeline and IT systems and controls.

The Alcon Board Regulations confer to the members of the Alcon Board the right to have full and unrestricted access to management and employees of the Company and its subsidiaries in the execution of their duties. Also, the Chief Executive Officer regularly informs the Alcon Board on business developments, including significant transactions and risk issues. The Alcon Board and its Committees meet as often as required with the Chief Executive Officer and members of the Executive Committee or other members of the senior management. Further, the Alcon Board may invite, in accordance with the Alcon Board Regulations, external advisors to attend board or committee meetings in order to obtain a third party independent perspective on certain topics. Information is further communicated to the Alcon Board through regular reports (please refer to the section below “Alcon Management Information System”).

Alcon Management Information System

The Alcon Board receives monthly reports on the financial performance of the Company, including the performance of the Surgical and Vision Care franchises. On a quarterly basis, prior to the release of each quarter’s results, the Board receives the consolidated financial statement information and an outlook of the full-year results in accordance with IFRS and “core” results together with related commentary.

On an annual basis, the Board receives and approves the financial targets for the following year. Mid-year, the Board met for a strategic review of the business and approved the strategic plan for the next five years.

Additionally, throughout the year, the Board directly or through its Committees also received reports on, among other things:

• The Enterprise Risk Management program and risk assessment reports

• The Compliance Program

• The Internal Audit function

• Manufacturing and Technical Operations

• Research & Development and product pipeline

• Commercial strategies and product launches

In matters of significance, the Board receives direct, immediate information.

Internal Audit

The purpose of the internal audit function is to review the financial, operational, IT and compliance activities of Alcon. Internal audit is led by the Chief Audit Executive (“CAE”), who functionally reports to the Audit and Risk Committee. The CAE is responsible for the development, review and modification to the audit policies and procedures for such audits’ conduct. The CAE shall ensure effectiveness and efficiency of the internal control framework with existing policies and regulations and propose remediation actions where deficiencies were identified. The CAE periodically submits to the Audit and Risk Committee reports on the activities of the internal audit function. In 2019, since the Spin-off from Novartis on April 9, they have carried out audits, all of which have been reported to the Audit and Risk Committee.

Internal Control System

Alcon's internal control system is designed to provide reasonable assurance to the Board and management regarding the reliability of financial reporting and accounting policies and the preparation and the presentation of the Company’s financial statements. In 2019, Alcon designed an internal control system that is in process of being fully tested for effectiveness. The Audit and Risk Committee has ultimate responsibility to oversee the adequacy and effectiveness of internal control over financial reporting.

130

Risk Management

The Audit and Risk Committee has the responsibility to ensure the implementation of an appropriate and effective risk management system and process and to foster a culture of risk-adjusted decision-making without constraining reasonable risk taking and innovation. It shall approve guidelines and review policies and processes. Also, the Audit and Risk Committee shall review with management, internal auditors and external auditors, the identification, prioritization and management of the risks, the accountabilities and roles of the functions involved with risk management, the risk portfolio and the related actions implemented by management. The Executive Committee and the Board shall be informed by the Audit and Risk Committee on a periodic basis on the risk management system and on the most significant risks and how these are managed. The CAE shall support the Audit and Risk Committee and perform appropriate reviews of Alcon's risk management strategy.

Alcon’s key risk management tool is the Enterprise Risk Management ("ERM") program, the purpose of which is to help execute on Alcon’s strategy within the boundaries of regulations and improve the probability for achieving Alcon’s strategic and financial objectives. Alcon’s vision is to design a simple, sustainable and appropriately scaled ERM program to proactively manage existing and emerging threats and opportunities to the business. The ERM program aims in particular to provide the business with (i) operation discipline and rigor to enable business continuity, creation and preservation of value, (ii) forums for frequent risk discussions and escalation of relevant items with leadership, and (iii) guidance, techniques and support to identify, assess, manage, monitor and report on major risks.

Compliance Function

As part of its global control system, Alcon has also established a comprehensive global integrity and compliance program, under the supervision of the Audit and Risk Committee. The program is led by the Global Head, Integrity and Compliance under the functional leadership of Alcon’s General Counsel and is intended to prevent, detect and mitigate compliance risk across the organization. The program is built on a culture and expectation of compliance at all levels. The fundamental elements of the program include dedicated resources to address compliance globally, formal compliance governance, a global intake process to receive questions and concerns, written standards, communications, training, multiple levels of risk-based auditing and monitoring, review of alleged misconduct and corrective/disciplinary actions for violations. The Audit and Risk Committee of the Board receives periodic updates on the performance of the Integrity and Compliance program and compliance related matters. The program also includes compliance committees, which have been established at the corporate, regional and country-levels and include participation by the Executive Committee and other senior leadership to provide strategic direction and oversight relating to the management of compliance risks for Alcon. Policies are reviewed and updated on a regular basis to address changes in laws and regulations and to strengthen compliance.

131

Executive Committee

Composition of the Executive Committee

As of December 31, 2019, the Executive Committee of Alcon was composed of the following members:

	David J. Endicott, Chief Executive Officer Please refer to the biography set forth under "Board of Directors".
Age: 54 Nationality: American

Tim C. Stonesifer, Chief Financial Officer Mr. Stonesifer has been the Chief Financial Officer of Alcon since April 2019. Prior to joining Alcon, he served as Executive Vice President and Chief Financial Officer at Hewlett Packard Enterprise.  He had served in that role from November 2015 through September 2018.  Prior to that role, Mr. Stonesifer acted as Senior Vice President and Chief Financial Officer, Enterprise Group at HP Co. from February 2014 to November 2015. Before joining HP Co., he served as Chief Financial Officer of General Motors’ International Operations from May 2011 to January 2014. Previously, he served as Chief Financial Officer of Alegco Scotsman, a storage company, from June 2010 to May 2011. Prior to that, Mr. Stonesifer served as Chief Financial Officer of Sabic Innovative Plastics (formerly GE Plastics) from August 2007 to June 2010 after having served in various other positions at General Electric since joining the company in 1989. Mr. Stonesifer holds a Bachelor of Arts in Economics from the University of Michigan in the U.S.

Age: 52 Nationality: American

132

Laurent Attias, Head Corporate Development, Strategy, Business Development and Licensing (BD&L) and Mergers and Acquisitions (M&A) Laurent Attias is Head of Corporate Development, Strategy, BD&L and M&A of Alcon. In this role, Mr. Attias leads the development of long-term strategic plans for the Surgical and Vision Care franchises of Alcon. He is also responsible for the Alcon’s BD&L, M&A, partnerships and alliance activities. Mr. Attias joined Alcon in March 1994. During his more than 25 years with Alcon, Mr. Attias progressed through the Sales and Marketing organizations by defining key strategic directions for Surgical and Pharmaceutical flagship brands. Starting in 2002, Mr. Attias held the position of Vice President, Refractive Sales and Marketing, where he helped define Alcon’s participation in the laser refractive market. Mr. Attias moved to Europe in 2009 to assume the role of Vice President, Central & Eastern Europe, Italy and Greece. In 2010, Mr. Attias was promoted to President, EMEA. Previously, Mr. Attias served as Vice President/General Manager of Alcon Canada, an international relocation role he assumed in 2007. Mr. Attias holds both a Bachelor of Business Administration in Marketing and a Master of Business Administration from Texas Christian University in the U.S.

Age: 52 Nationality: American and French

Ian Bell, President International Ian Bell is the President-International of Alcon, overseeing the Europe, Russia, Middle East and Africa, Asia Pacific, Japan and Latin America and Caribbean markets. He joined Alcon in March 2016 as President of Europe, Middle East and Africa (“EMEA”). Mr. Bell brings more than 20 years of experience in the medical device and pharmaceutical industries. Mr. Bell joined Alcon from Hospira, where he served as Corporate Vice President and President of the EMEA region. Prior to his work at Hospira, Mr. Bell was Corporate Vice President and President of Allergan, Inc.’s Asia Pacific region, based in Singapore, from 2008 to 2014. Mr. Bell joined Allergan, Inc. in 2005 as Vice President and Managing Director of its neurosciences division for the EMEA region. Mr. Bell began his career at GlaxoSmithKline, where he held roles of increasing responsibility and scope in sales, marketing and strategy for more than 10 years. Mr. Bell was awarded the degree of Bachelor of Arts with honors in Economics from the University of York in the United Kingdom.

Age: 49 Nationality: British

133

Leon Sergio Duplan Fraustro, President North America Sergio Duplan is President-North America of Alcon, overseeing the United States and Canada markets. He leads about 3,000 associates across these two unique markets and the Surgical and Vision Care franchises of Alcon. He is a board member of The Alcon Foundation. Mr. Duplan began his career with Novartis in 2004, as Vice President of Sales in General Medicines, in Mexico. In 2006, he was promoted to Head of Marketing and Sales for Latin America, General Medicines, Pharma. In 2008, he became Country Pharma Organization Head and Country President of Novartis Mexico. Mr. Duplan joined Alcon in August 2012. Prior to his current role, Mr. Duplan was President of Latin America and Canada for Alcon for three years. He was appointed to his current role in August 2015. Prior to joining Novartis, Mr. Duplan held several positions of increasing responsibility in Sales, Finance and Country Management at Procter & Gamble and Eli Lilly & Co. Mr. Duplan holds a Bachelor degree in Industrial Engineering from Universidad Iberoamericana in Mexico and a Master of Business Administration from The Wharton School at the University of Pennsylvania in the U.S.

Age: 52 Nationality: American and Mexican

Michael Onuscheck, President Global Businesses and Innovation Michael Onuscheck is the President-Global Businesses and Innovation of Alcon. Mr. Onuscheck joined Alcon in January 2015, as President and General Manager of the Global Surgical franchise. He joined Alcon from Boston Scientific, where he spent 10 years in leadership positions of increasing responsibility. Prior to joining Alcon, Mr. Onuscheck most recently held the position of President of Boston Scientific, overseeing the company’s business operations in Europe and Russia. He previously served as Senior Vice President and President of Boston Scientific’s Neuromodulation division, with responsibility for research and development, manufacturing, marketing, sales, clinical research and customer service. Prior to joining Boston Scientific, Mr. Onuscheck held a variety of management positions at Medtronic in spinal reconstructive surgery and stereotactic image guided surgery, and various sales and marketing positions for Pfizer. Mr. Onuscheck earned his degree in Business Administration and Psychology from Washington and Jefferson College in the U.S.

Age: 53 Nationality: American

134

Rajkumar Narayanan, Operational Strategy and Chief Transformation Officer Mr. Narayanan is the Senior Vice President Operational Strategy and Chief Transformation Officer of Alcon and is responsible for leading the development and implementation of Alcon’s Transformation program. He has over 25 years’ experience in pharmaceutical / medical devices businesses. He joined Alcon in June 2017 as President Asia Pacific Region and moved into his current role in April 2019. Mr. Narayanan joined Alcon from Allergan Inc., where he worked for 22 years in roles of increasing responsibility, initially in the Finance function and subsequently in the commercial organization. He was Senior Vice President Asia Pacific Region between 2015-2017. Prior to this role, he was Vice President and Managing Director of the Medical Aesthetic Franchise for Europe Africa and Middle East from 2011-2014. He served as Vice-President, Greater China & Japan between 2008-2011. Between 1995 and 2007, Mr. Narayanan was a part of Allergan’s Finance function in a number of Country, Region and Corporate Finance roles. Mr. Narayanan started his career with Hindustan Unilever India in 1987 and worked in a number of roles in the Finance function. Mr. Narayanan holds a Bachelor of Science degree in Accounting and Finance from Mumbai University. He is also Chartered Accountant and Cost and Works Accountant from India.

Age: 55 Nationality: American

Role of the Executive Committee

The members of the Executive Committee are appointed by the Alcon Board. In accordance with the Articles of Incorporation and the Alcon Board Regulations, the Alcon Board delegated the responsibility for the management of the business to the Executive Committee, under the lead of the Chief Executive Officer.

The Executive Committee shall in particular (i) develop strategies and policies and implement those upon approval by the Alcon Board, (ii) coordinate and monitor the group’s functions to achieve the business targets, (iii) ensure the efficient operation of the group, (iv) manage the proper provision and use of capacity and financial and other resources within the group and (v) ensure the development and succession of the senior management.

Alcon has not entered into any management agreements with any third parties pursuant to which Alcon would delegate any business management responsibilities to any such third parties.

Limitations of Number of Mandates

No member of the Executive Committee may hold more than 6 additional mandates in other companies, of which no more than 2 additional mandates shall be in other listed companies. Each of these mandates shall be subject to approval by the Board of Directors. Members of the Executive Committee are not allowed to hold chairs of the board of directors of other listed companies. Further details can be found in Article 34 of the Articles of Incorporation, available under https://investor.alcon.com/governance/governance/default.aspx.

Compensation, Shareholdings and Loans

Please refer to "Item 6.B - Compensation".

135

Shareholders’ Participations Rights

Voting-right Restrictions and Representation

Alcon has not imposed any restriction regarding share ownership or voting rights. Nominees shareholdings are not subject to any limitations. The right to vote at Alcon general meetings may only be exercised by a shareholder, usufructuary or nominee who is duly registered in Alcon share register on the record date for the applicable general meeting. Shareholders can be represented at general meetings by the independent proxy or by a third person authorized by written proxy who does not need to be a shareholder. As required by law, shareholders will also be given the opportunity to issue their voting instructions to the independent proxy electronically through an online voting platform.

Each Alcon share has the right to one vote. Shares held by the Company or any of its consolidated subsidiaries are not entitled to vote. Votes are taken either by a show of hands or by electronic voting, unless the General Meeting of Shareholders resolves to have a ballot or where a ballot is ordered by the chairman of the meeting.

Statutory Quorums

Unless otherwise required by law, the general meeting passes resolutions and elections with the absolute majority of the votes duly represented. As a result, abstentions have the effect of votes against such resolutions.

According to Article 704 of the Swiss Code of Obligation, the following shareholders’ resolutions require the approval of at least two thirds of the votes represented at a General Meeting of Shareholders: (1) an alteration of Alcon’s corporate purpose; (2) the creation of shares with increased voting powers; (3) an implementation of restrictions on the transfer of registered shares and the removal of such restrictions; (4) an authorized or conditional increase of the share capital; (5) an increase of the share capital by conversion of equity, by contribution in kind, or for the purpose of an acquisition of property or the grant of special rights; (6) a restriction or an exclusion of shareholders’ pre-emptive rights; (7) a change of Alcon’s registered office; (8) Alcon’s dissolution; or (9) any amendment to the Articles of Incorporation which would create or eliminate a supermajority requirement.

Swiss law further provides for a qualified majority for certain special resolutions, such as in case of merger or demerger.

Convocation of General Meetings

The Annual General Meeting shall be held within six months after the close of the financial year of the Company. Extraordinary General Meetings may be convened upon request of the Alcon Board, the auditors or one or more shareholders representing in aggregate not less than 10% of the Company’s share capital. At least 20 days before the general meeting, the invitation including the agenda is published in the Swiss Gazette of Commerce and mailed to the registered shareholders.

Agenda

One or more Alcon shareholders whose combined shareholdings represent an aggregate nominal value of at least CHF 1 million may demand that an item be included in the agenda of a General Meeting of Shareholders. Such a demand must be made in writing at the latest 45 days before the meeting and shall specify the items and the proposals of such a shareholder.

Registration in the Share Register

The share register of the Company is a non-public register, subject to confidentiality and privacy and data protections imposed on Alcon to protect registered shareholders. Alcon shares can be voted only if their relevant holder is registered in the Alcon share register by the record date determined by the Alcon Board. The Articles of Incorporation do not provide for any specific rule regarding the closure of the share register.

136

Changes of Control and Defense Measures

Duty to Make an Offer

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who acquire more than 33.3% of Alcon shares would be under an obligation to make an offer to acquire all remaining Alcon shares. Alcon has neither opted out from the mandatory takeover offer obligation nor opted to increase the threshold for mandatory takeover offers in the Articles of Incorporation.

Clauses on Change of Control

In accordance with the rules of the Ordinance against Excessive Compensation in Listed Companies, Alcon does not provide severance payments upon a change of control or “golden parachute” provisions in its agreements with its Directors, Executive Committee members or other members of senior management. Alcon’s Long Term Incentive Plan and Deferred Bonus Stock Plan, each applicable to all employee participants including Executive Committee members, provide for double trigger accelerated vesting of outstanding stock awards in the event a participant leaves the company for “good reason” or Alcon terminates the employee without “cause,” as such terms are defined in the plans, within two years following a change of control. If such a double trigger event occurs, the participant’s outstanding unvested awards would vest in full. In the case of Performance Share Units, awards less than 50% vested would vest at target and awards more than 50% vested would vest in accordance with Alcon’s actual performance, as determined by the CGNC.

Auditors

Duration of the Mandate and Terms of Office of the Auditors

PricewaterhouseCoopers SA, Switzerland (“PwC Switzerland”), is the statutory auditor of the Company and shall conduct the audit activities required by Swiss law and the related SIX regulations. It was elected on January 29, 2019 for a term of one year until the 2020 Company’s Annual General Meeting. Mike Foley has been the auditor in charge of the statutory audit since 2019. Alcon has a policy to rotate the lead audit partner of the statutory auditor at least every five years.

Separately, on April 29, 2019, the Company appointed PricewaterhouseCoopers LLP, United States (“PwC US”), for a term of one year, as its independent registered accounting firm to conduct the audit activities required by US law and the related NYSE regulations. The appointment of PwC US does not require approval of the Company’s shareholders.

Auditing Fees and Additional Fees

The following table sets forth the amount of audit fees, audit-related fees, tax fees and all other fees billed or expected to be billed in aggregate by PwC Switzerland, PwC US and any other member firm of PricewaterhouseCoopers International Limited that rendered audit and relates services to any member of Alcon, for the fiscal years ended December 31, 2019 and December 31, 2018:

($ millions)	Year ended December 31, 2019	Year ended December 31, 2018
Audit fees	11.7	7.0
Audit related fees	0.2	0.5
Tax fees	–	–
All other fees	–	–
Total	11.9	7.5

Audit fees include fees billed for professional services rendered for audits of our annual consolidated and standalone financial statements, reviews of consolidated quarterly financial information and statutory audits of the Company (including in particular the Compensation Report) and our subsidiaries.

Audit-related fees include fees billed for assurance and related services such as due diligence, accounting consultations and audits in connection with mergers and acquisitions, employee benefit plan audits, internal control reviews, and consultations concerning financial accounting and reporting standards.

137

Tax fees include fees billed for professional services for tax compliance, tax advice, and tax planning.

All other fees include fees billed for products and services other than as reported above.

Control Measures over the Activities of the Auditors

The Alcon Board has delegated to the Audit and Risk Committee ("ARC") the oversight of the activities of the external auditors. The ARC shall in particular evaluate on an annual basis the qualifications and performance of our auditors and determine whether PwC Switzerland should be proposed to the general meeting to stand for re-election. The criteria applicable of the performance assessment of our auditors include professional competence, sufficiency of resources to complete the audit mandate, independence and objectivity, capability to provide effective and pragmatic recommendations and coordination with the ARC and other functions of the Alcon group, including internal audit.

Upon recommendation of the ARC, the Alcon Board proposed to the shareholders the acceptance of the audited consolidated financial statements of the Alcon group and the financial statements of the Company.

The ARC is further responsible for the compensation of our auditors and pre-approve all auditing services, internal control-related services and non-audit services permitted under applicable statutory law, regulations and listing requirements.

In 2019, our auditors participated in four meetings of the ARC in order to discuss auditing matters and present the 2019 audit strategy and audit results. Our auditors shall render to the ARC at least once a year a report regarding (i) the external auditor’s internal quality-control procedures, (ii) any material issues raised by quality-control reviews or any inquiry or investigation by governmental or professional authorities, (iii) any step taken to deal with such issues and (iv) all relationships between the external auditor and the Alcon group.

Information Policy

Alcon is committed to pursuing an open and transparent communication with shareholders, suppliers, customers and other stakeholders. It publishes information in a professional manner in accordance with best practices and legal requirements.

Investor Relations

Effective communication with shareholders is an important part of Alcon's governance framework. The Chairman and the CEO, supported by the Investor Relations team, are responsible for actively engaging with shareholders and keeping them informed about Alcon's business, governance, strategy and performance, in accordance with applicable laws and regulations. The Company believes good engagement and dialogue with the financial community is critical in securing support and confidence in management's leadership and Board's governance of Alcon. The Investor Relations team regularly organizes opportunities to learn about the Company through in-person and virtual meetings and product showcases throughout the year, subject to its quiet period policy.

Communications

Financial information is published in the form of annual and quarterly financial results, in accordance with internationally recognized accounting standards. Related material, including annual reports, Form 20-Fs, quarterly results releases, presentations and conference call webcasts are available on the Alcon website. From time to time, Alcon issues press releases regarding business developments. Investors may subscribe to receive via email distributions providing news and notification about Alcon. The dissemination of material information about business developments is made in accordance with the rules of the SIX and the NYSE.

Information contained in reports and releases may only be deemed accurate in any material respect at the time of the publication. Past releases are not updated to reflect subsequent events.

138

Alcon's website provides regular information and updates about the Company at www.alcon.com. Detailed information regarding certain topics may be found as follows:

Topic	Website
Investor relations	https://www.alcon.com/about-us#investors
Media releases	https://www.alcon.com/about-us#media-releases
Leadership	https://www.alcon.com/about-us#leadership
Governance	https://investor.alcon.com/governance/governance/default.aspx
Financials	https://investor.alcon.com/financials/quarterly-results/default.aspx

Differences from Corporate Governance Standards Relevant to US-listed Companies

According to the NYSE listing standards on corporate governance, listed foreign private issuers are required to disclose any significant ways in which their corporate governance practices differ from those governance practices that must be followed by NYSE-listed U.S. domestic companies. We briefly summarize those differences in the following paragraphs.

Responsibility of the Audit Committee with regard to Independent Auditors

Our Audit and Risk Committee is responsible for the compensation, retention and oversight of our independent statutory auditors. It assesses the performance and qualification of our statutory auditors and submits its proposal for appointment, reappointment or removal of our statutory auditors to the full Board. As required by the Swiss Code of Obligations, our Board then submits its proposal to the shareholders for their vote at the Annual General Meeting (AGM). In contrast, under NYSE listing standards, the audit committee for U.S. domestic companies is also responsible for the appointment of the independent auditors.

Supervision of the Internal Audit Function

The CFO and the Audit and Risk Committee share the supervisory responsibility with respect to the internal audit function. In contrast, under NYSE standards, only the audit committee supervises the internal audit function.

Responsibility of the Compensation Committee for Performance Evaluations of Senior Management

In line with Swiss law, our Compensation, Governance and Nomination Committee, together with the Board, proposes for shareholder approval at the AGM the maximum aggregate amount of compensation for the Board and the maximum aggregate amount of fixed and variable compensation for the Executive Committee of Alcon. Our shareholders elect each of the members of the Compensation, Governance and Nomination Committee at the Annual General Meeting. In contrast, under NYSE standards, it is the responsibility of the compensation committee to evaluate senior management performance and to determine and approve, as a committee or together with the other independent directors, the compensation for senior officers and the board. U.S. domestic companies listed on NYSE are only required to provide shareholders a periodic advisory non-binding vote on a company’s executive compensation practices.

Shareholders’ Votes on Equity Compensation Plans

Swiss law authorizes the Board to approve equity-based compensation plans. Shareholder approval is only mandatory if equity-based compensation plans require an increase in capital. No shareholder approval is required if shares for issuance under such plans are purchased by the issuer in the open market. In contrast, the NYSE standards require shareholder approval for the establishment of and material revisions to all equity compensation plans.

139

6.D. EMPLOYEES

The table below sets forth the breakdown of the total year-end number of our full-time equivalent employees by main category of activity for the past three years.

	For the year ended December 31,
	2019	2018(1)	2017(1)
Marketing & Sales	7,301	7,162	6,595
Production & Supply	11,026	10,655	10,218
Research & Development	1,695	1,431	1,356
General & Administration	2,120	1,133	961
Total full-time equivalent employees	22,142	20,381	19,130

(1) Alcon historically received certain services from NBS, the shared service organization of Novartis. The corresponding full time equivalents providing such services were part of NBS and have therefore not been included in the table above for 2018 and 2017.

Unions or works councils represent a significant number of our associates. We have not experienced any material work stoppages in recent years, and we consider our employee relations to be good.

6.E. SHARE OWNERSHIP

The information set forth under “Item 6.B. Compensation” is incorporated by reference. Also, refer to Note 24 to the Consolidated Financial Statements for a discussion of our equity-based compensation programs.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. MAJOR SHAREHOLDERS

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance” is incorporated by reference.

7.B. RELATED PARTY TRANSACTIONS

Dr. Arthur Cummings, an Alcon director, in his capacity as an ophthalmologist, provides certain consulting services, including assistance with various clinical trials to Alcon. In 2019, Alcon paid to Dr. Cummings (or his related entities) approximately $84,844.

7.C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable.

140

ITEM 8. FINANCIAL INFORMATION

8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Please refer to the financial statements beginning on page F-1 of this Annual Report.

Legal Proceedings

From time to time, we may become involved in litigation or may receive inquiries from regulatory authorities, including antitrust and competition authorities in various jurisdictions relating to matters arising from the ordinary course of business. In addition, we are from time to time and may in the future be subject to audit or investigation by tax authorities in the ordinary course of business in the various jurisdictions in which we operate. Our management believes that, except as described below, there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows. In addition, under the Separation and Distribution Agreement we entered into with Novartis, we and Novartis have agreed, subject to certain conditions and except to the extent otherwise described below with respect to any matter, to indemnify the other party and its directors, officers, employees and other representatives against any pending or future liabilities or claims that constitute either a Novartis liability, in the case of Novartis, or an Alcon liability, in the case of Alcon, under the terms of the Separation and Distribution Agreement, based on whether such claim or liability relates to the Novartis business and products or our business and products. For more information, see "Item 10. Additional Information—10.C. Material Contracts—Our Agreements with Novartis".

Southern District of New York / Western District of New York Healthcare Fraud Investigation. In 2011, Alcon received a subpoena from the United States Department of Health & Human Services relating to an investigation into allegations of healthcare fraud and potential off-label promotion of certain products. The subpoena requested the production of documents relating to marketing practices and the remuneration of healthcare providers in connection with surgical equipment and certain Novartis products (Vigamox®, Nevanac®, Omnipred®, Econopred®). Alcon has cooperated with this investigation.

Asia / Russia Investigation. In 2017 and 2018, Alcon and Novartis, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the DoJ and the SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third-party distributors, both before and after Alcon was acquired by Novartis. Alcon is cooperating with this investigation. Under the Separation and Distribution Agreement, Novartis must indemnify Alcon in respect of defined direct monetary liabilities relating to the current scope of the ongoing investigation by the DoJ and the SEC relating to certain business practices in Asia and Russia and related accounting treatment.

Contact Lenses Class Actions Since the first quarter of 2015, more than 50 class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested.

Dividend Policy

Alcon expects that it will recommend to shareholders the payment of a regular annual cash dividend based on the prior year’s core net income; however, the declaration, timing, and amount, including potential increases, of any dividends will be subject to the approval of our shareholders at a General Meeting. The determination of the Board as to whether to recommend a dividend and the approval of any such proposed dividend by our shareholders will depend upon many factors, including our financial condition, earnings, corporate strategy, capital requirements of our operating subsidiaries, covenants, legal requirements and other factors deemed relevant by the Board and shareholders. For additional information, see "Item 3. Key Information—3.D. Risk Factors—Risks related to the Ownership of our Shares—We may not pay or declare dividends".

For information about deduction of the withholding tax or other duties from dividend payments, see "Item 10. Additional Information—10.E. Taxation—Swiss Taxation—Swiss Residents—Withholding Tax on Dividends" and "Item 10. Additional Information—10.E. Taxation—US Federal Income Taxation—Distributions on the Shares".

141

Past Dividends

Since the formation of Alcon, which became effective as of the date of the registration of Alcon in the Swiss Register of Commerce on September 21, 2018, Alcon has not paid any dividends.

8.B. SIGNIFICANT CHANGES

A discussion of significant changes in our business can be found under "Item 4. Information on the Company —4.A. History and Development of the Company", "Item 4. Information on the Company — 4.B. Business Overview" and "Item 5. Operating and Financial Review and Prospects — 5.A. Operating Results".

ITEM 9. THE OFFER AND LISTING

9.A. OFFER AND LISTING DETAILS

Alcon Inc. shares are listed on the SIX and the NYSE as global registered shares under the trading ticker “ALC”. As such, they can be traded and transferred across applicable borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies. During 2019, the average daily trading volume of Alcon Inc. shares was approximately 2.0 million shares on the SIX and approximately 1.3 million shares on the NYSE.

As of the date of this Annual Report, our shares are included in a number of indices, including the “Swiss Market Index”, or SMI, the principal Swiss index published by the SIX. This index contains 20 of the largest and most liquid stocks based on market capitalization and the most active stocks listed on the SIX. The SMI indicates trends in the Swiss stock market as a whole and is one of the most widely followed stock price indices in Switzerland.

9.B. PLAN OF DISTRIBUTION

Not applicable.

9.C. MARKETS

See “Item 9.A. Offer and listing Details.”

9.D. SELLING SHAREHOLDERS

Not applicable.

9.E. DILUTION

Not applicable.

9.F. EXPENSES OF THE ISSUE

Not applicable.

142

ITEM 10. ADDITIONAL INFORMATION

10.A. SHARE CAPITAL

Not Applicable.

10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION

We incorporate by reference into this Annual Report the description of our Articles of Incorporation and our Regulations of the Board of Directors contained in our Registration Statement on Form 20-F, as amended, initially filed with the SEC on November 13, 2018 (File No. 001-31269).

10.C. MATERIAL CONTRACTS

Our Agreements with Novartis

Following the separation and the Spin‑off, we and Novartis operate separately, each as an independent public company. Prior to the completion of the Spin‑off, we entered into a Separation and Distribution Agreement and several other agreements with Novartis to effect the separation and provide a framework for our relationship with Novartis after the Spin‑off. These agreements govern the relationships between Novartis and and are attributable to periods prior to, at and after the separation. In addition to the Separation and Distribution Agreement (which contains many of the key provisions related to our separation from Novartis and the distribution of the Alcon shares to holders of Novartis shares and ADRs), these agreements include:

▪ tax matters agreement;

▪ employee matters agreement;

▪ manufacturing and supply agreements;

▪ transitional services agreement; and

▪ certain IP arrangements.

The material agreements described below have been filed as exhibits to this Form 20‑F and the summaries below set forth the terms of the agreements that we believe are material. These summaries are qualified in their entireties by reference to the full text of the applicable agreements, which are incorporated by reference into this Form 20‑F.

In addition, we entered into other agreements with Novartis prior to the completion of the Spin‑off that are not material to our business. These agreements include agreements relating to information sharing and access rights, data transfer, confidentiality and systems access, transfer of marketing authorizations, certain manufacturing quality control and pharmacovigilance matters, certain leases to Novartis and certain transitional distribution and other services matters, including shared premises services, as well as a third party claims and investigations management agreement.

Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth our agreements with Novartis regarding the principal actions taken in connection with the separation and the Spin‑off.

Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement identified the assets to be transferred, liabilities to be assumed and contracts to be assigned to each of Novartis and Alcon as part of the internal transactions effected prior to the distribution, the purpose of which was to ensure that, at the time of the distribution, each of Alcon and Novartis held the assets required to operate their respective businesses and retained or assumed (as applicable) liabilities, including pending and future claims, which relate to such business (whether arising prior to, at or after the date of execution of the Separation and Distribution Agreement), subject to certain limited exceptions set out under the heading “Asia/Russia Investigation” below.

The Distribution. The Separation and Distribution Agreement governed the rights and obligations of the parties with respect to the distribution.

Intercompany Arrangements. All agreements, arrangements, commitments and understandings, including most intercompany accounts payable or accounts receivable, between us, on the one hand, and Novartis, on the other hand, terminated effective

143

as of completion of the separation, except specified agreements and arrangements that survived completion of the separation that were either transactional in nature or at arms’ length terms.

Representations and Warranties. We and Novartis each provided customary warranties as to our respective capacity to enter into the Separation and Distribution Agreement. Except as expressly set forth in the Separation and Distribution Agreement or any ancillary agreement, neither we nor Novartis made any representation or warranty as to the assets, business or liabilities transferred or assumed as part of the separation, or as to the legal sufficiency of any assignment, document or instrument delivered to convey title to any asset or thing of value transferred in connection with the separation. Except as expressly set forth in the Separation and Distribution Agreement and certain other ancillary agreements, all assets were transferred on an “as is”, “where is” basis.

Indemnification. We and Novartis each agreed to indemnify the other and each of the other’s directors, officers, managers, members, agents and employees against certain liabilities incurred in connection with the Spin‑off and our and Novartis respective businesses. The amount of either Novartis or our indemnification obligations will be reduced by any insurance proceeds the party being indemnified receives.

Asia/Russia Investigation. Novartis indemnified Alcon in respect of defined direct monetary liabilities relating to the current scope of the ongoing investigation by the DoJ and the SEC relating to certain business practices in Asia and Russia and related accounting treatment. See the section entitled “Asia Investigation” in the Separation and Distribution Agreement attached as Exhibit 4.1 to this Form 20‑F.

Release of Claims. We and Novartis each agreed to release the other and its affiliates, successors and assigns, and all persons that, prior to completion of the Spin‑off, were the other’s shareholders, directors, officers, managers, members, agents or employees, and their respective heirs, executors, administrators, successors and assigns, from any claims against any of them that arise out of or relate to our respective businesses. These releases are subject to limited exceptions set forth in the Separation and Distribution Agreement (including in respect of fraud and criminal conduct).

Term / Termination. Neither we nor Novartis may rescind the Separation and Distribution Agreement in any circumstances whatsoever following the completion of the distribution.

Switch Rights. Novartis granted us the right, from the date of separation, to switch certain specified olopatadine products from prescription products to over‑the‑counter products and to develop, manufacture and commercialize such products as over‑the‑counter products going forward. This right is exercisable on notice and, for jurisdictions outside US, subject to Novartis consent. We have provided notice to Novartis to exercise our right to develop, manufacture and commercialize certain of those products in the US. The FDA approved Pataday Twice Daily Relief (0.1%) and Pataday Once Daily Relief (0.2%) in February 2020.

Brazil and Belgian Sites. Novartis and we each granted each other a right of last look in respect of any third party disposal of our portion of the Puurs site and Novartis granted us a right of last look in respect of any third party disposal by Novartis of its portion of the Brazilian manufacturing facility.

Other matters governed by the Separation and Distribution Agreement. Other matters governed by the Separation and Distribution Agreement include, without limitation, insurance arrangements, confidentiality, mutual assistance and information sharing after completion of the distribution, treatment and replacement of credit support, and transfer of and post‑separation access to certain books and records.

Tax Matters Agreement

We entered into a Tax Matters Agreement with Novartis prior to completion of the Spin‑off. The Tax Matters Agreement imposed certain restrictions on us (including restrictions on share issuances, business combinations, sales of assets and similar transactions) designed to preserve the tax‑neutral nature of the Spin‑off for Swiss tax and US federal income tax purposes. Nonetheless, we are able to engage in an otherwise restricted action if we obtain appropriate advice from counsel or a ruling from a competent taxing authority. However, our indemnification obligation to Novartis, as discussed below, is still applicable in circumstances in which we are permitted to engage in an otherwise restricted action.

The Tax Matters Agreement provides that we will indemnify Novartis if our breach of a representation or covenant that serves as the basis for the Tax Opinion or the Tax Rulings or our taking, or failure to take, certain actions results in the failure of the Spin‑off or certain internal restructuring steps to qualify for tax‑neutral treatment under Swiss tax or US federal income tax laws, as applicable. The Tax Matters Agreement also provides that we will generally indemnify Novartis for any taxes of Novartis and its subsidiaries to the extent such taxes are attributable to the Alcon Division, and Novartis will generally indemnify us for any of our or our subsidiaries’ taxes to the extent such taxes are attributable to the Novartis retained businesses, in each case whether accruing before, on or after the date of the Spin‑off.

144

Employee Matters Agreement

We entered into an Employee Matters Agreement with Novartis prior to completion of the Spin‑off. The Employee Matters Agreement sets forth our agreements with Novartis regarding the identification of the employees transferred to and retained by each of Novartis and Alcon as part of the operational separation prior to the Spin‑off, as well as the allocation of liabilities and responsibilities with respect to certain employee matters.

Allocation of employment liabilities. Subject to certain exceptions, the general principle for the allocation of employment and service‑related liabilities is that (i) Alcon assumes all such liabilities relating to Alcon employees and former employees of the Novartis Group who worked wholly or substantially in the Alcon Division as of the date immediately prior to the termination of their employment (“former Alcon employees”) and (ii) Novartis retains all such liabilities relating to all other current and former employees of the Novartis Group (including employees who are identified as Alcon employees, but did not in fact transfer to Alcon), in each case, regardless of when such liabilities arise.

Terms and conditions of Alcon employees. Until January 1, 2021, Alcon will provide each current Alcon employee with the same basic salary and contractual benefits that are substantially comparable, taken as a whole, to the contractual benefits received prior to the date of his or her transfer to Alcon (excluding share‑based incentive schemes and long‑term incentive plans). If the employment of any Alcon employee is terminated by reason of redundancy within 24 months following the date of his or her transfer, Alcon will provide severance benefits that are no less favorable than those that would have been provided prior to the date of his or her transfer.

Employee benefit and cash bonus plans. Alcon employees were generally, as of the date of the Spin‑off, eligible to participate in Alcon employee benefit plans and cash bonus plans that are the same as, or comparable to, those that apply to them prior to the date of the Spin‑off.

Share‑based incentive schemes. Awards granted under share‑based incentive schemes were treated as follows:

▪ Holders of unvested awards in the form of restricted Novartis shares received the dividend in‑kind resulting from the Spin‑off.

▪ Holders of unvested RSUs and PSUs did not receive the dividend in‑kind resulting from the Spin‑off, and such awards were treated as described in the section entitled “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Section 3—ECA Compensation 2019—Section 3.6—Alcon Equity Restoration Plan”.

In addition, Alcon was required to establish, and employees were eligible to participate in, new Alcon equity plans in relation to Alcon shares following the Spin‑off.

Restrictions on post‑Spin‑off employee employment and engagement.

▪ Subject to certain exceptions, Novartis agreed that each member of the Novartis Group will not, for a period of two years following the Spin‑off, directly or indirectly: (i) solicit or induce certain senior Alcon employees to become employed or engaged by any member of the Novartis Group; or (ii) knowingly induce or encourage such employees to no longer be employed or engaged by Alcon.

▪ Subject to certain exceptions, Novartis agreed that it would not, and would undertake to procure that each member of the Novartis Group would not, for a period of two years following the Spin‑off, employ or engage certain senior Alcon employees.

Long‑term employee benefits. As of the date of the Spin‑off, Alcon generally assumed sponsorship of and responsibility for any standalone long‑term employee benefit arrangements relating to Alcon employees and former Alcon employees. Further, subject to certain exceptions, the accrued (past service) liabilities relating to the Alcon employees and former Alcon employees under Novartis Group‑wide plans providing retirement, disability or death, old‑age part‑time retirements or jubilee benefits, transfered to Alcon. In the UK, Novartis paid to Alcon a sum equal to the liabilities and expenses incurred, sustained or paid by Alcon, after the date of the Spin‑off, arising pursuant to section 75 of the UK Pensions Act 1995 in respect of Alcon or of any Alcon subsidiary’s cessation of participation in the Novartis UK Pension Scheme.

Manufacturing and Supply Agreements

We entered into manufacturing and supply agreements with Novartis prior to the completion of the Spin‑off. The manufacturing and supply agreements set forth our agreements with Novartis pursuant to which we and Novartis each manufacture, label, package and supply products for the other and conduct relevant quality control, assurance and testing activities for the other in relation to the manufacture and supply of applicable products (the “Forward and Reverse MSAs”). The terms of the manufacturing and supply agreements, including terms relating to pricing, were determined at arm’s length and are based on the prevailing cost of manufacturing with mutually agreed mark‑ups and adjustment mechanisms.

145

The terms of the Forward and Reverse MSAs are equivalent, except where specific provision is required to address a manufacturing site or product specific issue. The Forward and Reverse MSAs each include a transfer plan specifically addressing the relocation and transfer of certain products between the parties and manufacturing sites, key milestones in relation to product technical transfer and the anticipated date of expiration of the relevant Forward and Reverse MSA for those products, as required to achieve separation of the relevant Novartis and Alcon Division following the distribution. The Forward and Reverse MSAs additionally contain customary provisions for the transfer of manufacturing technology and processes to the other party (or other manufacturers where applicable) for all products for the benefit of the relevant purchasing party. For products not included in the transfer plan the Forward and Reverse MSAs have an initial term of three years, with automatic renewal subject to rights of termination on three years’ notice from the relevant purchaser party and five years’ notice from the relevant supplier party. The Forward and Reverse MSAs contain customary fault based termination triggers (such as an insolvency related event or a material breach (which if curable is uncured)) and customary liability provisions.

The Forward and Reverse MSAs also contain certain capacity reservation and minimum volume off‑take obligations on each party that reflect the movement of products in the transfer plan and the agreed use of existing capacities at the related sites. Failure to meet volume forecasts and minimum off‑take obligations will result in price adjustment and take or pay obligations in respect of certain products.

The manufacturing and supply obligations will generally be performed under the Forward and Reverse MSAs on the basis of total product cost plus a margin with certain adjustments where volume, inflation and materials cost criteria are met. Certain products are to be supplied from Novartis to Alcon through toll manufacturing.

Transitional Services Agreement

We entered into a Transitional Services Agreement with Novartis prior to completion of the Spin‑off pursuant to which we and Novartis, to the extent that shared business functions have not been separated prior to the Spin‑off, each provide to the other various services and support on an interim transitional basis until such time as we (or Novartis in the case of services we will provide to Novartis) have developed the capability to provide the relevant services and support ourselves or have appointed a third party provider to provide those services and support.

The Transitional Services Agreement sets forth the agreement with Novartis regarding the provision of these transitional services and support. The Transitional Services Agreement is two‑way and reciprocal. Services and support are provided on substantially the same basis as prior to the Spin‑off. The charges for the services are on a costs‑plus basis (with a mark‑up to reflect the management and administrative cost of providing the services). The services generally commenced on the date of the Spin‑off and are intended to terminate within 24 months of the date of the Spin‑off. The recipient of the services will generally have the ability to: (i) extend the term that a service is provided for, subject to a maximum aggregate service term of 24 months; and (ii) terminate a service early in whole or, with the service provider’s agreement, in part, in each case subject to a specified notice period. Each party has standard termination rights for unremedied material breach or insolvency.

Subject to standard limitations and exceptions, the liability of each of Alcon and Novartis as service provider under the Transitional Services Agreement is capped, for all claims in each 12 month period of the agreement, at the level of service charges payable to the service provider in that 12 month period.

The services and support provided by Novartis to us includes: information technology, human resources, real estate and facilities, non‑strategic corporate services and financial reporting and accounting services. The services to be provided by us to Novartis include information technology and real estate and facilities support.

IP Arrangements

Assignment of Alcon intellectual property rights. We entered into assignment agreements with Novartis prior to, or with effect from, completion of the Spin‑off, under which:

• Novartis transferred to us: (i) all intellectual property rights owned by the Novartis Group and used exclusively within the Alcon Division; and (ii) certain intellectual property rights owned by the Novartis Group used within both the Alcon Division and the other businesses of Novartis including, but not limited to, the Alcon brand; and

• We transferred to Novartis: (i) all intellectual property rights owned by Alcon and used exclusively within the Novartis businesses; and (ii) certain intellectual property rights owned by the Alcon group used within both the Alcon Division and the other businesses of Novartis.

Perpetual shared intellectual property rights license agreements. In connection with any intellectual property rights owned by Alcon or Novartis and which are used by both Alcon and Novartis in our respective businesses following the completion of the Spin‑off, we entered into reciprocal licenses with Novartis under which we and Novartis were each granted the right to

146

continue to use those shared intellectual property rights in connection with our respective businesses. The intellectual property rights covered by these licenses will include trade‑marks, patents, know‑how and other forms of intellectual property rights. The licenses are on a perpetual, worldwide, and royalty‑free basis. The licenses contain standard termination rights for material breach or insolvency.

Transitional trademark license agreements. We agreed with Novartis that we will each phase out our respective use of a limited number of corporate and product marks which are owned by the other party following completion of the Spin‑off. We entered into reciprocal transitional trademark license agreements with Novartis under which each party grants the other a royalty‑free, worldwide non‑exclusive license to use certain corporate and product trademarks following the Spin‑off on substantially the same basis as currently used. Each license permits the licensee to continue using the licensed trademarks for a transitional period to provide the licensee with sufficient time to rebrand or phase out its use of the licensed trademarks, subject in most cases to a longstop date of three years. The licenses contain standard termination rights for material breach or insolvency.

Trademark co‑existence agreement. In addition, we entered into a perpetual co‑existence agreement with Novartis regulating our respective use of the Alcon CIBA VISION and Novartis CIBA brands with the objective of mitigating any potential customer confusion in connection with our respective use of those brands and addressing certain related trade mark formalities, including in connection with the registration of new trade mark applications.

2019 Bond Offering

On September 23, 2019, Alcon Finance Corporation (the “Issuer”), an indirect, wholly owned subsidiary of Alcon, completed an offering of $500,000,000 aggregate principal amount of its 2026 Notes, $1,000,000,000 aggregate principal amount of its 2029 Notes, and $500,000,000 aggregate principal amount its 2049 Notes. The Notes were issued under an Indenture, dated September 23, 2019 (the “Indenture”), by and among the Issuer, Alcon Inc. and Citibank, N.A., as trustee (the “Trustee”). The Notes are senior unsecured obligations of the Issuer and are fully and unconditionally guaranteed on a senior basis by Alcon.

Interest is payable on the Notes on March 23 and September 23 of each year, beginning on March 23, 2020. The 2026 Notes will mature on September 23, 2026, the 2029 Notes will mature on September 23, 2029 and the 2049 Notes will mature on September 23, 2049.

The Issuer may redeem the 2026 Notes prior to July 23, 2026 (the date that is two months prior to their maturity date), the 2029 Notes prior to June 23, 2029 (the date that is three months prior to their maturity date) or the 2049 Notes prior to March 23, 2049 (the date that is six months prior to their maturity date) at a redemption price equal to 100% of the principal amount of the applicable series of Notes plus a “make-whole premium” and accrued and unpaid interest, if any, up to, but excluding, the redemption date. The Issuer may also redeem the 2026 Notes on or after the date that is two months prior to their maturity date, the 2029 Notes on or after the date that is three months prior to their maturity date or the 2049 Notes on or after the date that is six months prior to their maturity date at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, the Issuer may redeem any series of the Notes at its option, in whole, but not in part, for cash, at any time prior to their respective maturities at a price equal to 100% of the outstanding principal amount of such Notes, plus accrued and unpaid interest, to, but excluding, the redemption date, if certain tax events occur that would obligate the Issuer to pay additional amounts as described in the Indenture.

Subject to certain limitations, in the event of a change of control triggering event, the Issuer will be required to make an offer to purchase each series of the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indenture also contains certain limitations on the Issuer’s ability to incur liens, as well as customary events of default.

Bridge Loan, Term Loan and Revolving Credit Facilities

In connection with the Spin‑off, we entered into a $1.5 billion unsecured 364‑day bridge loan facility with two extension options, each for a period of 180 days (the “Bridge Facility”), a $0.5 billion unsecured three‑year term loan facility (“Facility A”), a $0.8 billion unsecured five‑year term loan facility (“Facility B”), a $0.4 billion (or the equivalent in EUR) unsecured five‑year term loan facility (“Facility C”) and a $1.0 billion unsecured five‑year committed multicurrency revolving credit facility (the “Revolving Facility” and, together with the Bridge Facility, Facility A, Facility B and Facility C, the “Facilities” and the related agreement, the “Group Facilities Agreement”).

We and certain of our subsidiaries are borrowers under the Facilities. We guarantee the borrowings of such subsidiaries under the Facilities. In addition, the Revolving Facility includes a mechanism through which certain of our subsidiaries, as approved by the lenders, can accede as a borrower.

147

Prior to the Spin‑off, we borrowed an aggregate of approximately $3.2 billion under the Facilities and paid to Novartis approximately $3.0 billion of the net proceeds of the Bridge Facility, Facility A, Facility B and Facility C, including in satisfaction of certain intercompany indebtedness owed by Alcon and its subsidiaries to Novartis and its affiliates. We retained the remaining net proceeds of such Facilities for general corporate and working capital purposes. In September 2019, we used the proceeds of our Notes Offering to pay off in full the Bridge Facility and Facility A. The Bridge Facility and Facility A are no longer available to us for borrowings.

We are permitted to voluntarily prepay loans under the Facilities, in whole or in part, without penalty or premium subject to certain minimum prepayment amounts and the payment of accrued interest on the amount prepaid and customary breakage costs.

The terms of the Facilities include certain events of default and covenants customary for investment grade credit facilities, including restrictive covenants that limit, among other things, the grant or incurrence of security interests over any of our assets, the incurrence of certain indebtedness and entry into certain fundamental change transactions. The Facilities do not contain any financial covenants.

The Facilities bear interest at a rate equal to the interest rate benchmark (EURIBOR in the case of loans denominated in EUR, USD LIBOR in the case of loans denominated in USD and CHF LIBOR in the case of loans denominated in CHF), plus an applicable margin.

As of December 31, 2019, $1.2 billion of borrowings was outstanding under the Facilities. Such indebtedness requires us to dedicate a portion of our future cash flows to payments on our debt, reducing our ability to use our cash flows to pay dividends, fund capital expenditures, BD&L or other strategic transactions, working capital and other general operational requirements.

10.D. EXCHANGE CONTROLS

There are no Swiss governmental laws, decrees or regulations that restrict, in a manner material to Alcon, the export or import of capital, including any foreign exchange controls, or that generally affect the remittance of dividends or other payments to non-residents or non-citizens of Switzerland who hold Alcon shares.

10.E. TAXATION

The taxation discussion set forth below is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all potential tax effects relevant to the ownership or disposition of our shares. The statements of US and Swiss tax laws set forth below are based on the laws and regulations in force as of the date of this Annual Report, including the current Convention Between the United States and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, entered into force on December 19, 1997 (the "Treaty"), and the US Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, rulings, judicial decisions and administrative pronouncements, and may be subject to any changes in US and Swiss law, and in any double taxation convention or treaty between the United States and Switzerland occurring after that date, which changes may have retroactive effect.

Swiss Taxation

The following is a general summary of certain tax consequences relating to owning and disposing of Alcon shares based on the Swiss tax laws and regulations and regulatory practices in force on the date of this Annual Report. Tax consequences are subject to changes in applicable law (or subject to changes in interpretation), including changes that could have a retroactive effect.

This is not a complete summary of the potential Swiss tax effects relevant to the Alcon shares nor does the summary take into account or discuss the tax laws of any jurisdiction other than Switzerland. For example, this summary does not address estate, gift, inheritance, capital or wealth taxes. It also does not take into account investors' individual circumstances. This summary does not purport to be a legal opinion or to address all tax aspects that may be relevant to any particular investor.

YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO ACQUIRING, OWNING AND DISPOSING OF ALCON SHARES.

Swiss Residents

Withholding Tax on Dividends

Dividends that we pay and any similar cash or in-kind distributions we may make to a holder of our shares (including distributions of liquidation proceeds in excess of the nominal value, stock dividends and, under certain circumstances, proceeds from repurchases of shares by us in excess of the nominal value) are generally subject to a Swiss federal withholding tax (the "Withholding Tax") at a current rate of 35%. Under certain circumstances distributions out of capital contribution

148

reserves made by shareholders after December 31, 1996 are exempt from the Withholding Tax. We are required to withhold this Withholding Tax from the gross distribution and to pay the Withholding Tax to the Swiss Federal Tax Administration. The Withholding Tax is refundable in full to Swiss residents who are the beneficial owners of the taxable distribution at the time it is resolved and duly report the gross distribution received on their personal tax return or in their financial statements for tax purposes, as the case may be.

The Swiss corporate tax reform, which entered into force on January 1, 2020, requires that Swiss listed companies must make distributions as dividends subject to Withholding Tax to the extent distributions are made out of capital contribution reserves, which, as described above, are not subject to Withholding Tax.

Swiss Issuance Stamp Duty

Switzerland levies a one-time Issuance Stamp Duty (Emissionsabgabe) on the issuance of corporate equity capital by Swiss companies. A 1% Swiss Issuance Stamp Duty applies to capital contributions received for the issuance of corporate shares, non-voting shares, participation rights, as well as informal capital contributions in cash or in kind for no consideration.

Swiss Transfer Stamp Duty upon Transfer of Securities

The sale of our shares, whether by Swiss residents or Non-resident Holders, may be subject to federal securities Transfer Stamp Duty (Umsatzabgabe) of 0.15%, calculated on the gross sale proceeds, if the sale occurs through or with a Swiss bank or other Swiss securities dealer (Effektenhändler), as defined in the Swiss Federal Stamp Duty Act. The Transfer Stamp Duty has to be paid by the securities dealer and may be charged to the parties in a taxable transaction who are not securities dealers. In addition to this Transfer Stamp Duty, the sale of shares by or through a member of the SIX may be subject to a minor stock exchange levy.

Income Tax on Dividends

A Swiss Holder who holds Alcon shares as private assets ("Swiss Resident Private Shareholder") is required to report the receipt of dividends and similar distributions (including stock dividends and liquidation surplus) in its individual income tax returns and is subject to Swiss federal, cantonal and communal income tax on any net taxable income for the relevant tax period.

A Swiss Holder who is Swiss resident for tax purposes, a non-Swiss individual who is subject to Swiss income tax for reasons other than residency and a legal entity tax resident in Switzerland, in each case that holds Alcon shares as business assets, and a non-Swiss tax resident legal entity that holds Alcon shares as part of a Swiss permanent establishment or fixed place of business (each, a "Swiss Resident Commercial Shareholder") is required to recognize dividends and similar distributions (including stock dividends and liquidation surplus) on Alcon shares in its income statement for the relevant taxation period and is subject to Swiss federal, cantonal and communal individual or corporate income tax, as the case may be, on any net taxable earnings for such taxation period. The same tax treatment also applies to a Swiss Holder who, for income tax purposes, is classified as a "professional securities dealer" for reasons of, inter alia, frequent dealing, or leveraged investments, in shares and other securities. Swiss Resident Commercial Shareholders who are corporate taxpayers may be eligible for a participation deduction (Beteiligungsabzug) in respect of dividends if the Alcon shares held by them as part of a Swiss business have an aggregate market value of at least CHF 1 million.

Taxes upon Disposition of Alcon Shares

Capital gains realized on the sale or other disposal of Alcon shares held by a Swiss Resident Private Shareholder are generally not subject to any federal, cantonal or communal income taxation. However, gain realized upon a repurchase of shares by us may be characterized as taxable dividend income if certain conditions are met. Capital gains realized on shares held by a Swiss Resident Commercial Shareholder are, in general, included in the taxable income of such person.

Residents of Other Countries

Recipients of dividends and similar distributions on our shares who are neither residents of Switzerland for tax purposes nor holding shares as part of a business conducted through a permanent establishment situated in Switzerland ("Non-resident Holders") are not subject to Swiss income taxes in respect of such distributions. Moreover, gain realized by such recipients upon the disposal of our shares is not subject to Swiss income tax.

Non-resident Holders of our shares are, however, subject to the Withholding Tax on dividends and similar distributions mentioned above and under certain circumstances to the Transfer Stamp Duty described above. Such Non-resident Holders may be entitled to a partial refund of the Withholding Tax if the country in which they reside has entered into a bilateral treaty for the avoidance of double taxation with Switzerland. Non-resident Holders should be aware that the procedures for claiming treaty refunds (and the time frame required for obtaining a refund) may differ from country to country. Non-resident Holders should consult their own tax advisors regarding the receipt, ownership, purchase, sale or other dispositions of our shares and the procedures for claiming a refund of the Withholding Tax.

149

A Non-resident Holder of our shares will not be liable for any Swiss taxes other than the Withholding Tax described above and, if the transfer occurs through or with a Swiss bank or other Swiss securities dealer, the Transfer Stamp Duty described above. If, however, the shares of Non-resident Holders can be attributed to a permanent establishment or a fixed place of business maintained by such person within Switzerland during the relevant tax year, the shares may be subject to Swiss income taxes in respect of income and gains realized on the shares and such person may qualify for a full refund of the Withholding Tax based on Swiss tax law.

Residents of the United States

Non-resident Holders who are residents of the United States for purposes of the Treaty are eligible for a reduced rate of tax on dividends equal to 15% of the dividend, provided that such holders qualify for benefits under the Treaty and do not conduct business through a permanent establishment or fixed base in Switzerland to which our shares are attributable. Such holders should consult their own tax advisors regarding their eligibility to claim the reduced rate and the procedures for claiming a refund of the amount of the Withholding Tax in excess of the 15% Treaty rate.

International Automatic Exchange of Information in Tax Matters

On November 19, 2014, Switzerland signed the Multilateral Competent Authority Agreement, which is based on article 6 of the OECD/Council of Europe administrative assistance convention and is intended to ensure the uniform implementation of automatic exchange of information (the "AEOI"). The Federal Act on the International Automatic Exchange of Information in Tax Matters (the "AEOI Act") entered into force on January 1, 2017. The AEOI Act is the legal basis for the implementation of the AEOI standard in Switzerland.

The AEOI is being introduced in Switzerland through bilateral agreements or multilateral agreements. The agreements have been, and will be, concluded on the basis of guaranteed reciprocity, compliance with the principle of specialty (i.e. the information exchanged may only be used to assess and levy taxes (and for criminal tax proceedings)) and adequate data protection. The United States is not a treaty state.

Based on such multilateral agreements and bilateral agreements and the implementing laws of Switzerland, Switzerland has begun to collect data in respect of financial assets (including shares) held in, and income derived thereon and credited to, accounts or deposits with a paying agent in Switzerland for the benefit of individuals resident in a EU member state or in a treaty state from, depending on the effective date of the respective agreement, 2017 or 2018, as the case may be, and will begin to exchange such data in 2018 or 2019, as the case may be.

US Federal Income Taxation

The following discussion is a general summary of the US federal income tax consequences of the ownership and disposition of our shares. It applies only to US Holders (as defined below) that hold our shares as capital assets (generally, property held for investment purposes) and is of a general nature. This summary should not be construed to constitute legal or tax advice to any particular US Holder.

This summary does not apply to or address US Holders subject to special rules, including, without limitation, brokers, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, banks, thrifts and other financial institutions, persons liable for alternative minimum tax, persons that hold an interest in an entity that holds our shares, persons that will own, or will have owned, directly, indirectly or constructively 10% or more (by vote or value) of our stock, persons that hold our shares as part of a hedging, integration, conversion or constructive sale transaction or a straddle, or persons whose functional currency is not the US dollar.

This summary does not purport to be a complete analysis of all of the potential US federal income tax considerations that may be relevant to US Holders in light of their particular circumstances. Further, it does not address any aspect of foreign, state, local or estate or gift taxation or the 3.8% surtax imposed on certain net investment income. Each holder of our shares should consult its own tax advisor as to the US federal, state, local, foreign and any other tax consequences of the ownership and disposition of our shares.

This summary is based on the Code, its legislative history, US Treasury Regulations, IRS rulings, published court decisions, and the Treaty, all as in effect as of the date hereof, and any of which may be repealed, revoked or modified (possibly with retroactive effect) so as to result in US federal income tax consequences different from those discussed below. This summary is applicable to US Holders who are residents of the United States for purposes of the Treaty and who qualify for the full benefits of the Treaty.

A “US Holder” is a beneficial owner of our shares who, for US federal income tax purposes, is a citizen or individual resident of the United States, a corporation (or other entity that is classified as a corporation for US federal income tax purposes) that is created or organized in or under the laws of the United States or any State thereof or the District of Columbia, an estate whose income is subject to US federal income tax regardless of its source, or a trust (i) if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorized to control all substantial decisions of the trust, or (ii) that validly elects to be treated as a US person for US federal income tax purposes.

150

If a partnership or other pass-through entity holds our shares, the US federal income tax treatment of a partner, beneficiary, or other stakeholder in such pass-through entity will generally depend on the status of that person and the tax treatment of the pass-through entity. A partner, beneficiary, or other stakeholder in a pass-through entity holding our shares should consult its own tax advisor with regard to the US federal income tax treatment of its investment in our shares.

Distributions on the Shares

Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any distribution received by a US Holder with respect to our shares (including any amounts withheld to pay Swiss withholding taxes) will be included in the gross income of the US Holder as a dividend to the extent attributable to the Company’s current or accumulated earnings and profits, as determined under US federal income tax principles. The Company may not calculate its earnings and profits under US federal income tax rules. Accordingly, US Holders should expect that a distribution generally will be treated as a dividend for US federal income tax purposes. Unless the Company is treated as a PFIC for the taxable year in which it pays a distribution or in the preceding taxable year (see “Passive foreign investment company rules” below), the Company believes that it may qualify as a “qualified foreign corporation,” in which case distributions treated as dividends and received by non-corporate US Holders may be eligible for a preferential tax rate. Distributions on our shares generally will not be eligible for the dividends received deduction available to US Holders that are corporations.

The amount of any dividend paid in Swiss francs (including any amounts withheld to pay Swiss withholding taxes) will equal the US dollar value of the Swiss francs calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by the US Holder, regardless of whether the Swiss francs are converted into US dollars. A US Holder will have a tax basis in the Swiss francs equal to their US dollar value on the date of receipt. If the Swiss francs received are converted into US dollars on the date of receipt, the US Holder should generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Swiss francs received are not converted into US dollars on the date of receipt, a US Holder may recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Swiss francs. Such gain or loss will be treated as US source ordinary income or loss.

A US Holder may be entitled to deduct or credit Swiss withholding tax imposed on dividends paid to a US Holder, subject to applicable limitations in the Code. The rules governing the foreign tax credit are complex. US Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Sale, Exchange or Other Taxable Disposition of Our Shares

Subject to the PFIC rules discussed below, a US Holder will recognize a capital gain or loss on the sale, exchange or other taxable disposition of our shares in an amount equal to the difference between the amount realized for the shares and the US Holder’s adjusted tax basis in the shares. Capital gains of non-corporate US Holders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any capital gain or loss recognized by a US Holder generally will be treated as US source gain or loss for US foreign tax credit purposes.

Passive Foreign Investment Company Rules

A foreign corporation will be considered a PFIC for any taxable year in which (i) 75% or more of its gross income is “passive income” or (ii) 50% or more of the average quarterly value of its assets produce (or are held for the production of) “passive income.” For this purpose, “passive income” generally includes interest, dividends, rents, royalties and certain gains. We currently do not believe that we were a PFIC in the taxable year ending December 31, 2019, nor do we anticipate that we will be a PFIC in the current taxable year or in future taxable years. However, the determination as to whether we are a PFIC for any taxable year is based on the application of complex US federal income tax rules, which are subject to differing interpretations, and is not determinable until after the end of such taxable year. Further, the determination is based in part on the mix, use and value of our assets, which values may be treated as changing for US federal income tax purposes as our market capitalization changes. Because of the above described uncertainties, there can be no assurance that the IRS will not challenge the determination made by us concerning our PFIC status or that we will not be a PFIC for any taxable year. If we were classified as a PFIC in any taxable year during which a US Holder owns our shares, certain adverse tax consequences could apply to such US Holder. Certain elections may be available to US Holders of our shares that may mitigate some of the adverse consequences resulting from our treatment as a PFIC. US Holders should consult their own tax advisors regarding the application of the PFIC rules to their investments in our shares and whether to make an election or protective election.

Required Disclosure with Respect to Foreign Financial Assets

Certain US Holders are required to report information relating to an interest in our shares, subject to certain exceptions (including an exception for shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in our shares. US Holders should consult their own tax advisors regarding information reporting requirements relating to their ownership of our shares.

151

10.F. DIVIDENDS AND PAYING AGENTS

Not applicable.

10.G. STATEMENTS BY EXPERTS

Not applicable.

10.H. DOCUMENTS ON DISPLAY

We maintain a website at the following address: www.alcon.com. The information on our website is not incorporated by reference in this Annual Report. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Exchange Act. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

You may read and copy any reports or other information that we file through the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system through the SEC’s website on the Internet at www.sec.gov.

We also make certain other documents available to the public (such as our Board committee charters, press releases, and investor presentations) on our website (www.alcon.com).

Any statement in this Annual Report about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an exhibit to this Annual Report, the contract or document is deemed to modify the description contained in this Annual Report. You must review the exhibits themselves for a complete description of the contract or document.

Unless stated otherwise in this Annual Report, none of these documents form part of this Annual Report. 

10.I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The major financing risks faced by Alcon are managed by the Alcon treasury function. For information about the effects of currency and interest rate fluctuations and how we manage currency and interest risk, see "Item 5. Operating and Financial Review and Prospects—5.A. Operating Results" and "—5.B. Liquidity and Capital Resources". Please also see the information set forth under Note 18 to the Consolidated Financial Statements and related notes included elsewhere in this Annual Report.

152

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. DEBT SECURITIES

Not applicable.

12.B. WARRANTS AND RIGHTS

Not applicable.

12.C. OTHER SECURITIES

Not applicable.

12.D. AMERICAN DEPOSITARY SHARES

Not applicable.

153

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

154

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

None.

155

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2019, the end of the period covered by this Annual Report, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2019, the end of the period covered by this Annual Report, we maintained effective disclosure controls and procedures.

Management’s Annual Report on Internal Control Over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the fiscal year ended December 31, 2019 that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

156

ITEM 16A. AUDIT COMMITTEE AND FINANCIAL EXPERT

Our Board of Directors has determined that Lynn D. Bleil, Scott Maw, Karen May, and Dieter Spälti who serve on our Audit and Risk Committee ("ARC"), are independent for purposes of serving on the audit committee under Rule 10A-3 and the listing standards promulgated by the New York Stock Exchange, and are audit committee financial experts.

ITEM 16B. CODE OF ETHICS

Our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer are bound to adhere to our Code of Business Conduct, which applies to all of our associates and members of our Board of Directors. Our Code of Business Conduct is available on our website at www.alcon.com/about-us/responsible-business-practice.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance—Auditors—Auditing Fees and Additional Fees" is incorporated by reference.

Policy on Audit and Risk Committee Pre-Approval of Services of Principal Accountant

The Audit and Risk Committee has established a written policy to pre-approve, on an annual basis, all anticipated audit and nonaudit services provided by our independent auditors (“Pre-Approval Policy”). These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to 12 months from the date of pre-approval, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget.

The Pre-Approval Policy provides that the independent auditors may not perform any services for Alcon unless the independent auditors are engaged pursuant to the Pre-Approval Policy. In addition, the Pre-Approval Policy prohibits the Audit and Risk Committee from pre-approving certain non-audit services that are prohibited from being performed by the independent auditors by applicable securities laws. Management is required to periodically report to the Audit and Risk Committee regarding the extent of services provided by the independent auditors. In 2019, all audit-related, tax and other services provided by PwC were pre-approved.

In connection with its review and evaluation of non-audit services, the Audit and Risk Committee is required to and does consider and conclude that the provision of the non-audit services is compatible with maintaining the independence of the independent auditor.

157

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

158

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table sets forth purchases of our Ordinary Shares by us and our affiliated purchasers during the fiscal year ended December 31, 2019:

Period	Total Number of Shares Purchased	Average Price Paid per Share (USD)	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs
January 1-31	—	—	—	—
February 1-28	—	—	—	—
March 1-31	—	—	—	—
April 1-30	—	—	—	—
May 1-31	—	—	—	—
June 1-30	—	—	—	—
July 1-31	—	—	—	—
August 1-31	—	—	—	—
September 1-30	—	—	—	—
October 1-31	—	—	—	—
November 1-30	20,000	56.65	—	—
December 1-31	7,000	56.03	—	—
Total	27,000	56.49	—	—

159

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Following the Spin-off of Alcon from Novartis, the Audit and Risk Committee determined that PricewaterhouseCoopers LLP (“PwC US”), the US member firm of PricewaterhouseCoopers International Limited (“PwCIL”), would become our Principal Auditor as set forth in the audit standard guidance of the Public Company Accounting Oversight Board (PCAOB). As required under Swiss law and as mandated by our shareholders, PricewaterhouseCoopers SA (“PwC CH”), the Swiss member firm of PwCIL, would remain the auditor under International Standards on Auditing (ISA) for purposes of the group and company statutory IFRS statements issued for SIX and Swiss regulatory purposes. Consequently, on April 29, 2019 the Committee approved the appointment of PwC US as our independent registered public accounting firm for the year ending December 31, 2019. Simultaneously, the Committee dismissed PwC CH as our independent registered public accounting firm.

The reports of PwC CH on our Consolidated Financial Statements as of and for the years ended December 31, 2017 and 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

PwC US participated in a portion of the audit of our Consolidated Financial Statements for the years ended December 31, 2017 and 2018. During the Company’s fiscal years ended December 31, 2017 and 2018 and in the subsequent interim period through April 29, 2019, there were (i) no disagreements between the Company and PwC CH on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC CH, would have caused PwC CH to make reference to the subject matter of the disagreements in its audit reports as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto); and (ii) no “reportable events” as defined in Item 16F(a)(1)(v) of Form 20-F.

The Company has provided PwC CH with a copy of this Form 20-F and requested that PwC CH provide the Company with a letter addressed to the SEC stating whether it agrees with the above statements. A copy of PwC CH’s letter, dated February 25, 2020 is attached as Exhibit 15.3 to this Form 20-F.

During the Company’s fiscal years ended December 31, 2017 and 2018 and in the subsequent interim period through April 29, 2019, other than in the normal course of the audit, neither the Company nor anyone on its behalf consulted with PwC US, on either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PwC US concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement”, as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto), or a “reportable event” as defined in Item 16F(a)(1)(v) of Form 20-F.

160

ITEM 16G. CORPORATE GOVERNANCE

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance—Differences from Corporate Governance Standards Relevant to US-listed Companies" is incorporated by reference.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

161

PART III

ITEM 17. FINANCIAL STATEMENTS

See response to "Item 18. Financial Statements."

ITEM 18. FINANCIAL STATEMENTS

Please refer to the financial statements beginning on page F-1 of this Annual Report.

162

ITEM 19. EXHIBITS

Exhibit Number	Description
1.1	Articles of Incorporation of Alcon Inc., as amended November 29, 2019 (English Translation)
1.2	Regulations of the Board of Directors of Alcon Inc. - incorporated by reference to Exhibit 2.2 to Amendment No. 5 to the Registration Statement on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on March 13, 2019
2.1	Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934
2.2	The total amount of long-term debt securities authorized under any instrument does not exceed 10% of the total assets of Alcon and its subsidiaries on a consolidated basis. We hereby agree to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of long-term debt of Alcon or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1	Separation and Distribution Agreement by and between Novartis AG and Alcon Inc. - incorporated by reference to Exhibit 99.1 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.2	Tax Matters Agreement by and between Novartis AG and Alcon Inc. - incorporated by reference to Exhibit 99.2 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.3	Employee Matters Agreement by and between Novartis AG and Alcon Inc. - incorporated by reference to Exhibit 99.3 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.4	Forward Manufacturing and Supply Agreement by and between Novartis Pharma AG and Alcon Inc. - incorporated by reference to Exhibit 99.4 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.5	Reverse Manufacturing and Supply Agreement by and between Novartis Pharma AG and Alcon Inc. - incorporated by reference to Exhibit 99.5 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.6	Transitional Services Agreement by and between Novartis AG and Alcon Inc. - incorporated by reference to Exhibit 99.6 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.7	Patent and Know-How License Agreement by Novartis AG for the benefit of Alcon Inc. - incorporated by reference to Exhibit 99.7 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.8	Patent and Know-How License Agreement by Alcon Inc. for the benefit of Novartis AG - incorporated by reference to Exhibit 99.8 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.9	Brand License Agreement by Novartis AG for the benefit of Alcon Inc. - incorporated by reference to Exhibit 99.9 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.10	Brand License Agreement by Alcon Inc. for the benefit of Novartis AG - incorporated by reference to Exhibit 99.10 to the Current Report on Form 6-K (File No. 001-31269) filed with the Securities and Exchange Commission on April 9, 2019
4.11	Facilities Agreement by and among Alcon Inc., as borrower, Bank of America Merrill Lynch International Designated Activity Company, BNP Paribas Fortis SA/NV, Citigroup Global Markets Limited, Morgan Stanley Bank International Limited and UBS AG, London Branch, as joint lead arrangers and joint bookrunners, and Citibank Europe PLC, UK Branch, as agent, dated as of March 6, 2019 - incorporated by reference to Exhibit 4.11 to the Registration Statement on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on March 13, 2019
4.12	Alcon Inc. Long Term Incentive Plan, as amended

163

4.13	Alcon Inc. Deferred Bonus Stock Plan, as amended
4.14	Alcon Swiss Employee Share Ownership Plan - incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-8 (File No. 333-230794) filed with the Securities and Exchange Commission on April 10, 2019
4.15	Alcon Laboratories Ireland Share Participation Scheme - incorporated by reference to Exhibit 99.4 to the Registration Statement on Form S-8 (File No. 333-230794) filed with the Securities and Exchange Commission on April 10, 2019
4.16	Alcon Inc. UK Share Incentive Plan - incorporated by reference to Exhibit 99.5 to the Registration Statement on Form S-8 (File No. 333-230794) filed with the Securities and Exchange Commission on April 10, 2019
8.1	For a list of all principal subsidiaries of Alcon Inc., see "Item 18. Financial Statements-Note 28. Alcon subsidiaries".
12.1	Certification of David J. Endicott, Chief Executive Officer of Alcon Inc., Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
12.2	Certification of Timothy C. Stonesifer, Chief Financial Officer of Alcon Inc., Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
13.1	Certification of David J. Endicott, Chief Executive Officer of Alcon Inc., Pursuant to 18 U.S.C Section 1350
13.2	Certification of Timothy C. Stonesifer, Chief Financial Officer of Alcon Inc., Pursuant to 18 U.S.C Section 1350
15.1	Consent of PricewaterhouseCoopers LLP
15.2	Consent of PricewaterhouseCoopers SA
15.3	Letter from PricewaterhouseCoopers SA
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation
101.DEF	Inline XBRL Taxonomy Extension Definition
101.LAB	Inline XBRL Taxonomy Extension Label
101.PRE	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

164

Signatures

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

Alcon Inc.
By:	/s/ David J. Endicott
	Name:	David J. Endicott
	Title:	Authorized Representative
By:	/s/ Timothy C. Stonesifer
	Name:	Timothy C. Stonesifer
	Title:	Authorized Representative

Date: February 25, 2020

165

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.

Audited Consolidated Financial Statements
Consolidated Income Statements	F-2
Consolidated Statements of Comprehensive (Loss)/Income	F-3
Consolidated Balance Sheets	F-4
Consolidated Statements of Changes in Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
Report of Independent Registered Public Accounting Firm	F-78
Report of Predecessor Independent Registered Public Accounting Firm	F-79

F-1

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.

CONSOLIDATED INCOME STATEMENTS

(For the years ended December 31, 2019, 2018 and 2017)

($ millions except (loss)/earnings per share)	Note	2019		2018		2017
Net sales to third parties	5	7,362		7,149		6,785
Sales to former parent	25	—		4		4
Other revenues	5	146		—		3
Net sales and other revenues		7,508		7,153		6,792
Cost of net sales		(3,719	)	(3,961	)	(3,588	)
Cost of other revenues		(127	)	—		—
Gross profit		3,662		3,192		3,204
Selling, general & administration		(2,847	)	(2,801	)	(2,596	)
Research & development		(656	)	(587	)	(584	)
Other income		55		47		47
Other expense		(401	)	(99	)	(148	)
Operating (loss)		(187	)	(248	)	(77	)
Interest expense	6	(113	)	(24	)	(27	)
Other financial income & expense	6	(32	)	(28	)	(23	)
(Loss) before taxes		(332	)	(300	)	(127	)
Taxes	7	(324	)	73		383
Net (loss)/income		(656	)	(227	)	256
(Loss)/earnings per share
Basic	8	(1.34	)	(0.46	)	0.52
Diluted	8	(1.34	)	(0.46	)	0.52
Weighted average number of shares outstanding (millions)(1)
Basic	8	488.2		488.2		488.2
Diluted	8	488.2		488.2		488.2

(1) For periods prior to the Spin-off, the denominator for basic and diluted earnings per share was calculated using 488.2 million shares of common stock distributed in the Spin-off.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-2

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

(For the years ended December 31, 2019, 2018 and 2017)

($ millions)	2019		2018		2017
Net (loss)/income	(656	)	(227	)	256
Other comprehensive income to be eventually recycled into the consolidated income statement:
Fair value adjustments on marketable securities, net of taxes(1)	—		—		21
Currency translation effects	(4	)	(58	)	184
Total of items to eventually recycle	(4	)	(58	)	205
Other comprehensive income never to be recycled into the consolidated income statement:
Actuarial (losses)/gains from defined benefit plans, net of taxes(2)	(55	)	8		36
Fair value adjustments on equity securities, net of taxes(3)	(2	)	(23	)	—
Total of items never to be recycled	(57	)	(15	)	36
Total comprehensive (loss)/income	(717	)	(300	)	497

(1) No taxes were recorded in 2019, 2018 and 2017.

(2) Amounts are net of tax benefit of $11 million in 2019 and net of tax expenses of $2 million and $26 million in 2018 and 2017, respectively.

(3) Amount is net of tax benefit of $5 million in 2019. No taxes were recorded in 2018 and 2017.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-3

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

CONSOLIDATED BALANCE SHEETS

(At December 31, 2019 and 2018)

($ millions)	Note	2019	2018
Assets
Non-current assets
Property, plant & equipment(1)(2)	9	3,113	2,800
Right-of-use assets(1)(2)	16	324	79
Goodwill	10	8,905	8,899
Intangible assets other than goodwill	10	10,231	10,679
Deferred tax assets	11	354	670
Financial assets	12	307	388
Other non-current assets	12	185	148
Total non-current assets		23,419	23,663
Current assets
Inventories	13	1,505	1,440
Trade receivables	14	1,390	1,253
Receivables from former parent	25	—	20
Income tax receivables		17	33
Other financial receivables from former parent	25	—	39
Cash and cash equivalents	18	822	227
Other current assets	15	502	387
Total current assets		4,236	3,399
Total assets		27,655	27,062
Equity and liabilities
Equity
Invested capital		—	22,639
Share capital	8.1	20	—
Reserves		19,283	—
Total equity		19,303	22,639
Liabilities
Non-current liabilities
Financial debts(1)(2)	17	3,218	—
Lease liabilities(1)(2)	16	280	89
Deferred tax liabilities	11	1,386	1,528
Provisions and other non-current liabilities	19	1,168	913
Total non-current liabilities		6,052	2,530
Current liabilities
Trade payables		833	663
Payables to former parent	25	—	85
Financial debts	17	261	47
Lease liabilities	16	61	—
Other financial liabilities to former parent	25	—	67
Current income tax liabilities		107	151
Provisions and other current liabilities	20	1,038	880
Total current liabilities		2,300	1,893
Total liabilities		8,352	4,423
Total equity and liabilities		27,655	27,062

(1) Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

(2) The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-4

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(For the years ended December 31, 2019, 2018 and 2017)

($ millions)	Share Capital	Other Reserves		Former parent net investment(1)		Fair value adjustments on marketable securities		Fair value adjustments on equity securities		Actuarial (losses)/gains from defined benefit plans		Cumulative currency translation effects		Total value adjustments(2)		Equity(1)
Balance as of January 1, 2017	—	—		23,166		4		—		(61	)	(97	)	(154	)	23,012
Net income				256												256
Other comprehensive income						21		—		36		184		241		241
Total comprehensive income	—	—		256		21		—		36		184		241		497
Movements of financing provided to former parent, net				(424	)											(424	)
Other transactions with former parent				(56	)											(56	)
Total Other movements	—	—		(480	)	—		—		—		—		—		(480	)
Balance as of December 31, 2017, as previously reported	—	—		22,942		25		—		(25	)	87		87		23,029
Impact of change in accounting policies(3)				25		(25	)	—		—		—		(25	)	—
Restated balance as of January 1, 2018	—	—		22,967		—		—		(25	)	87		62		23,029
Net (loss)				(227	)											(227	)
Other comprehensive (loss)				—		—		(23	)	8		(58	)	(73	)	(73	)
Total comprehensive (loss)	—	—		(227	)	—		(23	)	8		(58	)	(73	)	(300	)
Movements of financing provided to former parent, net				(119	)											(119	)
Other transactions with former parent				27												27
Other movements(4)				2												2
Total Other movements	—	—		(90	)	—		—		—		—		—		(90	)
Balance as of December 31, 2018	—	—		22,650		—		(23	)	(17	)	29		(11	)	22,639
Net (loss)		(547	)	(109	)											(656	)
Other comprehensive (loss)						—		(2	)	(55	)	(4	)	(61	)	(61	)
Total comprehensive (loss)	—	(547	)	(109	)	—		(2	)	(55	)	(4	)	(61	)	(717	)
Movements of financing provided to former parent, net				(2,658	)											(2,658	)
Other transactions with former parent				(46	)											(46	)
Reclassification of deferred equity-compensation				(7	)											(7	)
Distribution by former parent of share capital	20	19,812		(19,832	)											—
Equity-based compensation		87		—												87
Other movements(4)		3		2												5
Total Other movements	20	19,902		(22,541	)	—		—		—		—		—		(2,619	)
Balance as of December 31, 2019	20	19,355		—		—		(25	)	(72	)	25		(72	)	19,303

(1) "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

(2) "Total value adjustments" recorded through Comprehensive Income are presented net of the corresponding tax effects.

(3) The impact of change in accounting policies includes $25 million relating to IFRS 9 implementation and nil relating to IFRS 15 implementation.

(4) Activity relates to hyperinflationary accounting (see Note 3 to the Consolidated Financial Statements).

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-5

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(For the years ended December 31, 2019, 2018 and 2017)

($ millions)	Note	2019		2018		2017
Net (loss)/income		(656	)	(227	)	256
Adjustments to reconcile net (loss)/income to net cash flows from operating activities
Depreciation, amortization, impairments and fair value adjustments	21.1	1,456		1,622		1,334
Equity-based compensation expense		83		—		—
Non-cash change in provisions and other non-current liabilities		(4	)	(10	)	75
Losses on disposal and other adjustments on property, plant & equipment and other non-current assets, net		5		4		41
Interest expense		113		24		27
Other financial income & expense		32		28		23
Taxes		324		(73	)	(383	)
Interest received		7		1		—
Interest paid		(67	)	(10	)	(13	)
Other financial payments		(18	)	(29	)	(22	)
Taxes paid		(224	)	(203	)	(84	)
Net cash flows before working capital changes and net payments out of provisions and other non-current liabilities		1,051		1,127		1,254
Net payments out of provisions and other cash movements in non-current liabilities		(83	)	(67	)	(72	)
Change in net current assets and other operating cash flow items	21.2	(48	)	80		36
Net cash flows from operating activities		920		1,140		1,218
Purchase of property, plant & equipment		(553	)	(524	)	(415	)
Proceeds from sales of property, plant & equipment		—		—		1
Purchase of intangible assets		(123	)	(188	)	(81	)
Purchase of financial assets		(59	)	(57	)	(114	)
Proceeds from sales of financial assets		8		7		2
Purchase of other non-current assets		(1	)	—		(2	)
Acquisitions of businesses, net	21.3	(283	)	(239	)	(70	)
Net cash flows used in investing activities		(1,011	)	(1,001	)	(679	)
Movements of financing provided to former parent, net		(2,658	)	(119	)	(424	)
Proceeds from non-current financial debts, net of issuance costs	21.4	3,724		—		—
Proceeds from Bridge Facility, net of issuance costs	21.4	1,495		—		—
Repayment of non-current financial debts	21.4	(509	)	—		—
Repayment of Bridge Facility	21.4	(1,500	)	—		—
Change in current financial debts	21.4	202		(6	)	(111	)
Lease payments		(52	)	—		—
Change in other financial receivables from former parent	21.4	39		26		(24	)
Change in other financial liabilities to former parent	21.4	(67	)	21		20
Other financing cash flows		(15	)	—		—
Net cash flows from/(used in) financing activities		659		(78	)	(539	)
Effect of exchange rate changes on cash and cash equivalents		27		(6	)	10
Net change in cash and cash equivalents		595		55		10
Cash and cash equivalents at January 1		227		172		162
Cash and cash equivalents at December 31		822		227		172

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.

1. Description of business

Alcon Inc. (the "Company") and the subsidiaries it controls (collectively "Alcon") is a leading eye care company globally. Alcon is a multinational company specializing in the research, development, manufacturing and marketing of a broad range of eye care products within two businesses: Surgical and Vision Care. Alcon is a stock corporation organized under the laws of Switzerland, domiciled in Fribourg, Switzerland, with global headquarters located in Geneva, Switzerland.

On February 28, 2019, Novartis AG (“Novartis” or “Former Parent”) shareholders at their Annual General Meeting approved the proposed 100% spin-off of Alcon through the distribution of a dividend-in-kind of new Alcon shares to Novartis shareholders and Novartis American Depositary Receipt (“ADR”) holders (the “Spin-off”), subject to completion of certain conditions precedent to the distribution. Amendment No. 6 to the Company's Registration Statement on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 22, 2019, ("2018 Form 20-F"), was declared effective by the SEC on that same day.  On April 9, 2019 (the “Distribution Date”), the Company became an independent, publicly-traded company as a result of the Spin-off and the shares of the Company are listed on the SIX Swiss Stock Exchange ("SIX") and on the New York Stock Exchange ("NYSE") under the symbol “ALC”. Each Novartis shareholder of record as of April 8, 2019 and each holder of Novartis’ ADR of record as of April 1, 2019 received one share of Alcon common stock for every five shares of Novartis common stock or Novartis ADR held.

The Consolidated Financial Statements of Alcon are comprised of Consolidated Balance Sheets as of December 31, 2019 and 2018 and the Consolidated Income Statements, Consolidated Statements of Comprehensive (Loss)/Income, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows for the three years ended December 31, 2019, 2018 and 2017.

The country of operation and percentage ownership of the legal entities with "Total assets" or "Net sales to third parties" in excess of $5 million included in the Consolidated Financial Statements are disclosed in Note 28.

2. Basis of preparation

The accompanying Consolidated Financial Statements present our historical financial position, results of operations, comprehensive income/(loss), and cash flows in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), including the basis of preparation as described in this Note and with the accounting policies as described in Note 3 to these Consolidated Financial Statements.

The preparation of Consolidated Financial Statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the year that affect the reported amounts of assets and liabilities as well as revenues and expenses. Actual outcomes and results could differ from those estimates and assumptions.

Relationship with Former Parent and affiliates prior to Spin-off

The financial statements for periods prior to the Spin-off were prepared on a combined basis because the business of Alcon did not form a separate legal group until the Spin-off occurred. The information in the financial statements for periods prior to the Spin-off was derived from Novartis’ Consolidated Financial Statements and accounting records, which were prepared in accordance with IFRS. Through the date of the Spin-off, all revenues and expenses as well as assets and liabilities directly associated with Alcon have been included in the financial statements. For periods prior to the Spin-off, the financial statements also include allocations of certain expenses for services provided by Novartis to Alcon and allocations of related assets, liabilities, and the Former Parent’s invested capital, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had Alcon been an entity that operated independently of Novartis during the applicable periods.

IFRS does not provide principles for the preparation of combined financial statements for carve-out financial statements, and accordingly in preparing the financial statements for periods prior to the Spin-off certain accounting and allocation conventions commonly used in practice for the preparation of carve-out financial statements were applied. The assets and liabilities included in the balance sheets prior to Spin-off were measured at the carrying amounts recorded in Novartis Group Consolidated Financial Statements.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The financial statements for periods prior to the Spin-off include all Alcon subsidiaries and all Alcon business operated within Novartis Group subsidiaries over which Alcon has control, by applying the principles of IFRS 10, Consolidated Financial Statements. Alcon controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements for the periods prior to the Spin-off include the assets and liabilities within Novartis subsidiaries that were attributable to the Alcon business and excluded the assets and liabilities within Alcon subsidiaries not attributable to the Alcon business.

In addition, the financial statements include, for the periods prior to the Spin-off, the assets, liabilities and results of operations of the ophthalmic over-the-counter products and a small portfolio of surgical diagnostics products that in connection with a Novartis Group business reorganization, effective as of January 1, 2018, were transferred to Alcon from the Innovative Medicines Division of Novartis.

Certain Novartis manufacturing sites performed production services for both the Alcon and Innovative Medicines Divisions of Novartis Group ("multi-divisional manufacturing sites"). The financial statements, for periods prior to the Spin-off include the carrying value of the manufacturing sites where the majority of the production is attributable to Alcon and where such sites were transferred to Alcon in connection with the Spin-off. The inventory, sales and production costs of these multi-divisional manufacturing sites that were attributable to the products of the Alcon and Innovative Medicines Divisions of Novartis Group were accounted for and reported separately by the Alcon and Innovative Medicines Divisions of Novartis Group within Novartis Group accounting systems. The supply chains of the Alcon and Innovative Medicines Divisions of Novartis Group each managed separately the distribution of their respective products produced in these multi-divisional manufacturing sites. As a result, there was no requirement for inter-divisional trading arrangements between the Alcon and Innovative Medicines Divisions of Novartis Group for the products produced in these multi-divisional manufacturing sites. Manufacturing costs attributable to the Alcon business' products produced in these multi-divisional manufacturing sites were recognized in the financial statements for periods prior to the Spin-off at cost of production.

For periods prior to the Spin-off, the financial statements include the attribution of certain assets and liabilities that were historically held at the Novartis corporate level that were specifically identifiable or attributable to Alcon on a standalone basis and were recognized on the pre-Spin-off balance sheets through retained earnings in invested capital. The most significant of which were defined benefit plans, current and deferred income taxes, financial debts, financial investments and the Alcon brand name. The Alcon brand name was used to market the products of Alcon and the products within Novartis Innovative Medicines Divisions' ophthalmology pharmaceutical business. The Novartis Group transferred the full rights to the Alcon brand name to Alcon in connection with the Spin-off. As a result, the carrying value of the Alcon brand name was fully attributed to Alcon in the financial statements.

The income and expenses related to the hedging transactions prior to the Spin-off were allocated to Alcon based on the estimated currency exposure of Alcon and are recorded to Other financial income & expense in the income statements and recognized directly through retained earnings in Invested capital.

The majority of Alcon's subsidiaries were party to Novartis cash pooling arrangements with several financial institutions to maximize the availability of cash for general operating and investing purposes. Under these cash pooling arrangements, cash balances were swept by Novartis regularly from Alcon's bank accounts. The net position with the Novartis cash pooling accounts at the end of each reporting period prior to the Spin-off are reflected in the balance sheet in Other financial receivables from former parent or Other financial liabilities to former parent.

Financing transactions between Novartis and Alcon, except for receivables and payables against the Novartis cash pool described above, were excluded from the financial statements in the periods prior to the Spin-off, as none of the financing transactions were specifically related to the operation of Alcon's business. The exclusion of these financing transactions was recognized through retained earnings in Invested capital.

Dividend and other equity transactions between Alcon and Novartis were recognized directly to retained earnings in Invested capital.

Novartis third-party debt and the related interest expense were not allocated to Alcon when Alcon's subsidiaries were not the legal obligor of the debt and when Novartis borrowings were not directly attributable to Alcon's

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

business. The financial statements for periods prior to the Spin-off include third-party debt and the related interest expense when Alcon's subsidiaries were the legal obligor of the debt and when the borrowings were directly attributable to Alcon's business. Refer to Note 17 to these Consolidated Financial Statements.

Both before and after the Spin-off, Alcon's associates participate in defined benefit pension and other postretirement plans sponsored by Novartis; in some countries these are single employer plans dedicated to the Alcon business associates and in other countries these are plans where associates of Alcon and associates of the Novartis Group are participants. The net defined benefit and other postretirement plan liabilities and pension costs attributable to Alcon are included in the Consolidated Financial Statements for periods prior to and after the Spin-off, to the extent that the corresponding pension obligations and plan assets under those plans transferred to Alcon at the time of Spin-off or will subsequently transfer pursuant to the Employee Matters Agreement entered into with Novartis. Refer to Note 23 to these Consolidated Financial Statements for additional disclosure on post-employment benefits for associates.

Income taxes attributable to the Alcon business in the financial statements were determined using the separate return approach, under which current and deferred income taxes are calculated as if a separate tax return had been prepared in each tax jurisdiction. In various tax jurisdictions, Alcon and Novartis businesses operated within the same legal entity and certain Alcon subsidiaries were part of a Novartis tax group. This required an assumption that the subsidiaries and operations of Alcon in those tax jurisdictions operated on a standalone basis and constitute separate taxable entities. Actual outcomes and results could differ from these separate tax return estimates, including those estimates and assumptions related to realization of tax benefits within these Novartis tax groups. Refer to Note 7 and Note 11 to these Consolidated Financial Statements for additional disclosures on income taxes.

Alcon's Invested capital in the financial statements for the periods prior to Spin-off represents the excess of total assets over total liabilities and, in addition to the items described above, was impacted by the following:

• Currency translation adjustments of the Novartis Group multi-divisional subsidiaries were allocated between Alcon and the Novartis retained businesses by applying allocation keys based on net assets of each respective business.

• Other transactions with Novartis Group as shown on the Consolidated Statements of Changes in Equity represents the movements in Invested capital resulting from the preparation of the financial statements in accordance with the basis of preparation described in this Note.

• Movements of financing provided to Novartis Group as shown on the Consolidated Statements of Changes in Equity and on the Consolidated Statements of Cash Flows primarily represent the net contributions from Alcon to Novartis Group.

For the periods prior to the Spin-off, the financial statements include charges and allocation of expenses related to certain Novartis business support functions and Novartis corporate general and administration functions. Alcon considers the charges and allocation methodology and results to be reasonable. However, the charges and allocations may not be indicative of the actual expense that would have been incurred had Alcon operated as an independent, publicly traded company for the periods prior to the Spin-off. The following is a brief description of the nature of these charges and allocations:

• Alcon received services from Novartis Business Services (“NBS”), the shared service organization of Novartis Group, across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations. The financial statements include the appropriate costs related to the services rendered, without profit margin, in accordance with the historical arrangements that existed between Novartis and the Alcon business prior to the Spin-off. Refer to Note 25 to these Consolidated Financial Statements for additional disclosures.

• Certain Novartis corporate general and administrative functions costs, in the areas of corporate governance, including board of directors, corporate responsibility and other corporate functions, such as tax, corporate governance and listed company compliance, investor relations, internal audit, treasury, communications functions and the net interest on the net defined benefit liability were not charged or allocated to the Alcon business in the past. The financial statements include a reasonable allocation of these Novartis corporate general and administrative functions costs and net interest on the net defined

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

benefit liability, based on reasonable assumptions and estimates. The corporate general and administrative function costs allocations were based on the direct and indirect costs incurred to provide the respective services. When specific identification was not practicable, a proportional cost allocation method was used, primarily based on sales, or headcount. Management believes that the allocations reasonably approximate the corporate general and administrative functions costs Alcon may have incurred had it operated as a standalone company. However, the allocations may not be indicative of the actual expense that would have been incurred had Alcon operated on a standalone basis prior to the Spin-off. Refer to Note 25 to these Consolidated Financial Statements for additional disclosures.

Management believes that all allocations were performed on a reasonable basis and reflect the services received by Alcon, the costs incurred on behalf of Alcon and the assets and liabilities of Alcon. Although the financial statements for the periods prior to the Spin-off reflect management's best estimate of all historical costs related to Alcon, this may not necessarily reflect what the results of operations, financial position, or cash flows would have been had Alcon been a separate entity prior to the Spin-off.

Agreements entered into between Alcon and Novartis in connection with the Spin-off govern the relationship between the parties following the Spin-off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.

Following the Spin-off, the Consolidated Financial Statements include the accounts of Alcon and no longer include any allocations from Novartis.

3. Selected accounting policies

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. In the event that the Company has an interest in another entity that is not wholly owned, the assets, liabilities, results of operations and cash flows of such entity are included in the Company's Consolidated Financial Statements, if the Company is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Consolidated Financial Statements of the Company are prepared in accordance with IFRS as issued by the IASB. They are prepared in accordance with the historical cost convention except for items that are required to be accounted for at fair value. All intercompany transactions and accounts within Alcon were eliminated.

The Company's financial year-end is December 31, which is also the annual closing date of the individual entities' financial statements incorporated into the Consolidated Financial Statements.

Foreign currencies

The Consolidated Financial Statements are presented in US dollars ("USD"). The functional currency of individual entities incorporated into the Consolidated Financial Statements are generally the local currency of the respective entity. The functional currency used for the reporting of certain Swiss entities is USD instead of their respective local currencies. This reflects the fact that the cash flows and transactions of these entities are primarily denominated in these currencies.

For entities not operating in hyperinflationary economies, the entities results, financial position and cash flows that do not have USD as their functional currency are translated into USD using the following exchange rates:

• Income, expense and cash flows using for each month the average exchange rate with the USD  values for each month being aggregated during the year.

• Balance sheets using year-end exchange rates.

• Resulting exchange rate differences are recognized in other comprehensive income.

The hyperinflationary economies in which Alcon operates are Argentina and Venezuela. Venezuela was hyperinflationary for all years presented, and Argentina became hyperinflationary effective July 1, 2018, requiring retroactive implementation of hyperinflation accounting as of January 1, 2018.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period is recorded in "Other Reserves" in equity. The subsequent gains or losses resulting from the restatement of non-monetary assets are recorded in "Other financial income & expense" in the consolidated income statements.

Acquisition of assets

Acquired assets are initially recognized on the balance sheet at cost if they meet the criteria for capitalization. The capitalized cost of the asset includes the purchase price and any directly attributable costs for bringing the asset into the condition to operate as intended. Expected costs for obligations to dismantle and remove property, plant and equipment when it is no longer used are included in their cost.

Property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Freehold land is not depreciated. The related depreciation expense is included in the costs of the functions using the asset or "Cost of net sales" in the consolidated income statements.

Property, plant and equipment are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

The following table shows the respective useful lives for property, plant and equipment:

	Useful life
Buildings	20 to 40 years
Machinery and other equipment
Machinery and equipment	7 to 20 years
Furniture and vehicles	5 to 10 years
Computer hardware	3 to 7 years

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary may include:

• fair values of the assets transferred;

• liabilities incurred to the former owners of the acquired business;

• equity interests issued by the Company;

• fair value of an asset or liability resulting from a contingent consideration arrangement; and

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill, or directly in the income statement if it is a bargain purchase. Alcon primarily uses net present value techniques, utilizing post-tax cash flows and discount rates in calculating the fair value of net identifiable assets acquired when allocating the purchase consideration paid for the acquisition. The estimates in calculating fair values are highly sensitive and depend on assumptions, which includes the amount and timing of projected cash flows, long-term sales forecasts, the timing and probability of regulatory and commercial success, and the appropriate discount rate.

Acquisition related costs are expensed as incurred.

Goodwill and intangible assets

The annual impairment testing date is Alcon's financial year-end, December 31.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Goodwill

Goodwill arises in a business combination and is the excess of the consideration transferred to acquire a business over the underlying fair value of the net identified assets acquired. It is allocated to groups of cash generating units ("CGUs") which are usually represented by the reported segments. Goodwill is tested for impairment annually at the level of these groups of CGUs, and any impairment charges are recorded under "Other expense" in the consolidated income statements.

Intangible assets available for use

Alcon has the following classes of available-for-use intangible assets: Currently marketed products, Marketing know-how, Technologies, Other intangible assets (including computer software) and the Alcon brand name.

Currently marketed products represent the composite value of acquired intellectual property, patents, and distribution rights and product trade names.

Marketing know-how represents the value attributable to the expertise acquired for marketing and distributing Alcon surgical products.

Technologies represent identified and separable acquired know-how used in the research, development and production processes.

Significant investments in internally developed and acquired software are capitalized and included in the "Other" category and amortized once available for use.

The Alcon brand name is shown separately as it is the only Alcon intangible asset that is available for use with an indefinite useful life. Alcon considers it appropriate that the brand name has an indefinite life since the branded products have a history of strong revenue and cash flow performance, and Alcon has the intent and ability to support the brand with spending to maintain its value for the foreseeable future.

Except for the Alcon brand name, intangible assets available for use are amortized over their estimated useful lives on a straight-line basis and evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The Alcon brand name is not amortized, but evaluated for potential impairment annually.

The following table shows the respective useful lives for available-for-use intangible assets and the location in the consolidated income statements in which the respective amortization and any potential impairment charge is recognized:

	Useful life	Income statement location for amortization and impairment charges
Currently marketed products	5 to 20 years	"Cost of net sales"
Marketing know-how	25 years	"Cost of net sales"
Technologies	10 to 20 years	"Cost of net sales" or "Research and Development"
Other (including software)	3 to 10 years	In the respective functional expense
Alcon brand name	Not amortized, indefinite useful life	"Other expense"

From July 1, 2019, the useful life of Alcon's new SAP ERP software was extended from 7 years to 10 years on a prospective basis based on Alcon's multi-year transformation program which centers on one ERP platform across the organization. This change in estimate resulted in a $5 million reduction in amortization expense during the six months ended December 31, 2019 and will reduce amortization expense up to $10 million per year during the remaining useful life of the SAP ERP software assets placed in service at the time of the change.

The corresponding "Intangible assets available for use" portion of the accounting policy was updated to reflect that the useful life for Other intangible assets (including software) was extended from 3 to 7 years to 3 to 10 years.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Acquired In-Process Research & Development ("IPR&D")

Acquired research and development intangible assets, which are still under development and have accordingly not yet obtained marketing approval, are recognized as IPR&D.

IPR&D is not amortized, but evaluated for potential impairment on an annual basis or when facts and circumstances warrant. IPR&D is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal ("FVLCOD") and its value in use ("VIU"). Usually, Alcon applies the FVLCOD method for its impairment assessments. Under this approach when evaluating IPR&D for potential impairment, FVLCOD is estimated using net present value techniques utilizing post-tax cash flows and discount rates as there are no direct or indirect observable prices in active markets for identical or similar assets. The estimates used in calculating the net present values are highly sensitive and depend on assumptions, including amount and timing of projected future cash flows, long-term sales forecasts, discount rate, and the timing and probability of regulatory and commercial success. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

Any impairment charge is recorded in the consolidated income statements under "Research & development".

Once a project included in IPR&D has been successfully developed it is transferred to the "Currently marketed products" category.

Impairment of goodwill, Alcon brand name and definite lived intangible assets

An asset is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its FVLCOD and its VIU. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. Usually, Alcon applies the FVLCOD method for its impairment assessment. In most cases no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of FVLCOD is based on net present value techniques utilizing post-tax cash flows and discount rates. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

FVLCOD reflects estimates of assumptions that market participants would be expected to use when pricing the asset or CGUs, and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset.

The estimates used in calculating the net present values are highly sensitive and depend on assumptions, which includes the following:

• Amount and timing of projected future cash flows;

• Long-term sales forecasts for periods of up to 25 years including sales growth rates;

• Royalty rate for the Alcon brand name;

• Terminal growth rate; and

• Discount rate.

Other assumptions used in the net present values calculation include:

• Future tax rate;

• Actions of competitors (launch of competing products, marketing initiatives, etc.); and

• Outcome of R&D activities and forecast of related costs (future product developments).

Generally, for intangible assets with a definite useful life Alcon uses cash flow projections for the whole useful life of these assets. For goodwill and the Alcon brand name, Alcon generally utilizes cash flow projections for a five-year period based on management forecasts, with a terminal value based on cash flow projections considering the long-term expected inflation rates and impact of demographic trends of the population to which Alcon products are prescribed, for later periods. Probability-weighted scenarios are typically used.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Discount rates used consider Alcon estimated weighted average cost of capital adjusted for specific country and currency risks associated with cash flow projections to approximate the weighted average cost of capital of a comparable market participant. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using discounting techniques.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short-term and highly liquid investments with original or weighted-average maturities of three months or less which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are usually presented within current financial debts on the consolidated balance sheets except in cases where a right of offset has been agreed with a bank which then allows for presentation on a net basis.

Financial assets

Non-current financial assets such as loans and long-term receivables from customers, primarily related to surgical equipment sales arrangements, advances and other deposits, are carried at amortized cost, which reflects the time value of money, less any allowances for uncollectable amounts.

Alcon assesses on a forward-looking basis the expected credit losses associated with its non-current financial assets valued at amortized cost.

For loans, advances and other deposits valued at amortized costs, impairments, which are based on their expected credit losses, and exchange rate losses are included in "Other expense" in the consolidated income statements and exchange rate gains and interest income, using the effective interest rate method, are included in "Other income" in the consolidated income statements.

For long-term receivables from customers, provisions for uncollectable amounts, which are based on their expected credit losses, are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Fund investments are valued at fair value through profit and loss ("FVPL"). Unrealized gains and losses, including exchange gains and losses, are recognized in the consolidated income statements in "Other income" for gains and "Other expense" for losses.

Equity securities and convertible notes receivable held as strategic investments are generally designated at the date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss. Unrealized gains and losses, including exchange gains and losses, are recorded as a fair value adjustment in the consolidated statements of comprehensive income. They are reclassified to "Other Reserves" when the equity security is sold. If these equity securities and convertible notes receivable are not designated at the date of acquisition as financial assets valued at fair value through other comprehensive income, they are valued at FVPL, as described above for fund investments. Changes in fair value of options to acquire development stage companies are charged to research and development expense.

Derivative financial instruments are initially recognized in the consolidated balance sheets at fair value and are remeasured to their current fair value at the end of each subsequent reporting period. The valuation of forward exchange rate contracts and foreign exchange swaps are based on the discounted cash flow model, using interest curves and spot rates at the reporting date as observable inputs. Unsettled forward contracts and swaps are measured at fair value at quarter-end with changes in fair value recorded to the consolidated income statements as unrealized gains or losses in "Other financial income & expense". Settled forward contracts and swaps are measured at maturity date at fair value with corresponding realized gains or losses recognized in the consolidated income statements in "Other financial income & expense". No hedge accounting is applied for these arrangements.

Inventories

Inventory is valued at acquisition or production cost determined on a first-in, first-out basis. This value is used for the "Cost of net sales" and "Cost of other revenues" in the consolidated income statements. Unsalable inventory is fully written off in the consolidated income statements under "Cost of net sales" and "Cost of other revenues."

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Trade receivables

Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for estimated revenue deductions such as chargebacks and cash discounts.

Provisions for expected credit losses are established using an expected credit loss model ("ECL"). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivable. These provisions represent the difference between the trade receivable's carrying amount in the consolidated balance sheets and the estimated net collectible amount. Charges for doubtful trade receivables are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Leases

From January 1, 2019, with the implementation of the new standard IFRS 16, Leases, Alcon's accounting policy for leases is as follows:

As lessee, Alcon assesses whether a contract contains a lease at inception of a contract based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Alcon recognizes a right-of-use asset and a corresponding lease liability for all arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases for which Alcon has elected the recognition exemptions allowed under IFRS 16.

Right-of-use assets

Right-of-use assets are initially recognized at cost, which is comprised of the amount of the initial measurement of the corresponding lease liabilities, adjusted for any lease payments made at or prior to the commencement date of the lease, lease incentives received and initial direct costs incurred, as well as any expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the useful life of the right-of-use asset or the end of the lease term.

Right-of-use assets are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

Lease liabilities

Lease liabilities are accounted for at amortized cost and are initially measured at the present value of future lease payments and are classified as current or non-current based on the due dates of the underlying principal payments. In determining the lease term, Alcon evaluates the renewal options and termination options reasonably certain to be exercised. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the incremental borrowing rate Alcon would be expected to pay within the respective markets, on a borrowing with a similar term and security. Interest in the period is recorded within "Interest expense" in Alcon's consolidated income statements.

Lease liabilities are remeasured for changes in estimated lease term, future lease payments arising from a change in an index or rate, amounts expected to be payable under a residual value guarantee, or in assessment of whether Alcon will exercise a purchase, extension or termination option. Changes to initial lease contract terms are assessed to determine their impact on the scope of lease, and any modifications increasing the scope of the lease are treated as new contracts under the initial measurement principles, while modifications that do not increase or that decrease the scope of the lease result in an adjustment to the right-of-use asset which is remeasured as of the date of the modification.

Principal payments made on lease liabilities and any initial direct costs paid are classified as financing cash outflows, while interest payments are classified as operating cash outflows.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the consolidated income statements and are classified as cash flows from operating activities. Short-term leases are leases with a lease term of twelve months in duration or less.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Prior to the adoption of IFRS 16 on January 1, 2019, Alcon's accounting policy for leases was as follows:

As lessee, Alcon classified leases of property, plant & equipment where Alcon had substantially all the risks and rewards of ownership as finance leases. Finance leases were capitalized at the lease's inception at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The corresponding lease liabilities, net of finance charges, were classified as current and non-current based on the due dates of the underlying principal payments. Each lease payment was allocated between the liability and interest expense. The interest expense was charged to Alcon's consolidated income statements over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The asset acquired under the finance lease was depreciated over the shorter of the asset’s useful life and the lease term.

Alcon classified leases in which a significant portion of the risks and rewards of ownership were not transferred to Alcon as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were recognized in the consolidated income statements on a straight-line basis over the period of the lease.

Refer to the "Impact of adopting significant new IFRS standards in 2019" section in this Note and Note 16 for additional details on the impact of adoption.

Legal liabilities

Alcon and its subsidiaries are subject to contingencies arising in the ordinary course of business such as patent litigation and other product-related litigation, commercial litigation, and governmental investigations and proceedings. Provisions are recorded where a reliable estimate can be made of the probable outcome of legal or other disputes against the subsidiary.

Contingent consideration

In a business combination, it is necessary to recognize contingent future payments to previous owners representing contractually defined potential amounts as a liability. Usually for Alcon, these are linked to milestone or royalty payments related to certain assets and are recognized as a financial liability at their fair value, which is then re-measured at each subsequent reporting date.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the timing and probability of regulatory and commercial success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration. These estimations typically depend on factors such as technical milestones or market performance and are adjusted for the probability of their likelihood of payment, and if material, appropriately discounted to reflect the impact of time.

Changes in the fair value of contingent consideration liabilities in subsequent periods are recognized in the consolidated income statements in "Cost of net sales" for currently marketed products and in "Research & development" for IPR&D.

The effect of unwinding the discount over time is recognized in "Interest expense" in the consolidated income statements.

Defined benefit pension plans and other post-employment benefits

The liability or asset recognized in the balance sheet in respect of defined benefit pension plans and other post-employment benefits is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no sufficient market for such bonds, the market rates on government bonds are used.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The current service cost for such post-employment benefit plans is included in the personnel expenses of the various functions where the associates are employed. The net interest on the net defined benefit liability is recognized as "Other expense" or "Other income". The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income/(loss).

Defined contribution plans

For defined contribution plans, Alcon contributes to publicly or privately administered plans. Alcon has no further payment obligations once the contributions have been paid. The contributions are included in the personnel expenses of the various functions where the associates are employed.

Financial debts

Financial debts are initially recognized at fair value, net of transaction costs incurred. Financial debts are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs and discounts) and the redemption amount is recognized in the consolidated income statements over the period of the financial debts using the effective interest method. Fees paid on the establishment of credit facilities are recognized as transaction costs of the financial debt to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates, and is recognized in "Other financial income & expense" in the consolidated income statements.

Financial debts are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial debt that has been extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in "Other financial income & expense" in the consolidated income statements.

Interest paid on financial debts is classified as operating activities in the consolidated statements of cash flows. Financial debts are classified as current liabilities unless Alcon has an unconditional right and intent to defer the settlement of the liability for at least twelve months after the reporting period.

Revenue

Net sales to third parties

Revenue on the sale of Alcon products and services, which is recorded as "Net sales to third parties" in the consolidated income statements, is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to or receipt of the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue would be recognized upon the satisfaction of acceptance criteria. The amount of revenue to be recognized is based on the consideration Alcon expects to receive in exchange for its goods and services. If a contract contains more than one performance obligation, the consideration is allocated based on the relative standalone selling price of each performance obligation.

Surgical equipment may be sold together with other products and services under a single contract and may be structured as an outright cash sale, an installment sale, or lease. Surgical equipment installment sales and leases have a fixed payment amount which the customer may pay either in fixed intervals or as the customer purchases consumables and/or implantables. Revenues are recognized upon satisfaction of each of the performance obligations in the contract and the consideration is allocated based on the relative standalone selling price of each performance obligation.

• Surgical equipment revenue from outright cash sales and installment sales arrangements is recognized at the point in time when control is transferred to the customer. Current portion of long-term receivables from customers and long-term receivables from customers for installment sales arrangements are recorded in "Other current assets" (see "Current portion of long-term receivables from customers" in Note 15 of these Consolidated Financial Statements) and "Financial assets" (see "Long-term receivables

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

from customers" in Note 12 of these Consolidated Financial Statements), respectively. Financing income for installment sales arrangements longer than twelve months is recognized over the term of the arrangement in "Other Income". Alcon applies the practical expedient under IFRS 15 to installment sales arrangements that are twelve months or less in duration.

• In addition to cash and installment sales, revenue is recognized under finance and operating lease arrangements. Leases in which Alcon transfers substantially all the risks and rewards incidental to ownership to the customer are treated as finance lease arrangements. Revenue from finance lease arrangements is recognized at amounts equal to the fair value of the equipment, which approximates the present value of the minimum lease payments under the arrangements. As interest rates embedded in lease arrangements are approximately market rates, revenue under finance lease arrangements is comparable to revenue for outright sales. Finance income for arrangements longer than twelve months is deferred and subsequently recognized based on a pattern that approximates the use of the effective interest method and recorded in "Other income". Operating lease revenue for equipment rentals is recognized on a straight-line basis over the lease term in "Net sales to third parties".

The consideration Alcon receives in exchange for its goods or services may be fixed or variable. Variable consideration is only recognized when it is highly probable that a significant reversal of cumulative sales will not occur. The most common elements of variable consideration are listed below:

• Rebates and discounts granted to government agencies, wholesalers, retail pharmacies and other customers are provisioned and recorded as a deduction from revenue at the time the related revenues are recorded or when the incentives are offered. They are calculated on the basis of historical experience and the specific terms in the individual agreements.

• Cash discounts are offered to customers to encourage prompt payment and are provisioned and recorded as revenue deductions at the time the related sales are recorded.

• Sales returns provisions are recognized and recorded as revenue deductions when there is historical experience of Alcon agreeing to customer returns and Alcon can reasonably estimate expected future returns. In doing so, the estimated rate of return is applied, determined based on historical experience of customer returns and considering any other relevant factors. This is applied to the amounts invoiced, also considering the amount of returned products to be destroyed versus products that can be placed back in inventory for resale. Where shipments are made on a re-sale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired.

Provisions for revenue deductions are adjusted to actual amounts as rebates, discounts and returns are processed. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions.

Prior to Alcon's adoption of IFRS 15 on January 1, 2018, Alcon's accounting policy for revenue recognition was substantially consistent with the revenue recognition principles under IFRS 15.

Other revenues

"Other revenues" include revenue from contract manufacturing services provided to the Former Parent which are recognized over time as the service obligations are completed and third party royalty income. Associated costs for contract manufacturing services are recognized in "Cost of other revenues".

Research & development

Internal research & development ("R&D") costs are fully charged to "Research & development" in the consolidated income statements in the period in which they are incurred. Alcon considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset until marketing approval from a regulatory authority is obtained in a major market such as the United States, the European Union, Switzerland or Japan.

Payments made to third parties to in-license or acquire intellectual property rights and products, including initial upfront and subsequent milestone payments, are capitalized as intangible assets. If additional payments are made to the originator company to continue to perform R&D activities, an evaluation is made as to the nature

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

of the payments. Such additional payments will be expensed if they are deemed to be compensation for subcontracted R&D services not resulting in an additional transfer of intellectual property rights to Alcon. Such additional payments will be capitalized if they are deemed to be compensation for the transfer to Alcon of additional intellectual property developed at the risk of the originator company. Subsequent internal R&D costs in relation to IPR&D and other assets are expensed until such time that technical feasibility can be proven, as demonstrated by the receipt of marketing approval for the related product from a regulatory authority in a major market.

Equity-based compensation

Each of the periods presented include expense related to incentive compensation provided to eligible Alcon associates in the form of equity-settled or equity-based awards including restricted stock units ("RSUs") and performance stock units ("PSUs").

Alcon expenses the fair values of RSUs and PSUs granted to associates as compensation over the related vesting periods within the various functions where the associates are employed. The fair values of the awards are determined on their grant dates and are adjusted to account for the specific provisions of each of the corresponding grant agreements.

Alcon RSUs do not entitle the recipients to dividends. As such, the fair value upon grant is therefore based on the Alcon share price at the grant date adjusted for potential future dividends to be paid within the holding period. The fair value of these grants, after making adjustments for assumptions related to their forfeiture during the vesting period, is expensed on a straight-line basis over the respective vesting period.

PSUs are subject to certain performance criteria being achieved during the vesting period and require plan participants to provide services during the vesting period. PSUs granted under Alcon's plans are subject to performance criteria based on internal performance metrics. The expense is determined taking into account assumptions concerning performance during the period relative to targets and expected forfeitures due to plan participants not meeting their service conditions. These assumptions are periodically adjusted. Any change in estimates for past services is recorded immediately as an expense or income in the consolidated income statements and amounts for future periods are expensed over the remaining vesting period. As a result, at the end of the vesting period, the total charge during the whole vesting period represents the amount that will finally vest. The number of equity instruments that finally vest is determined at the vesting date.

If a plan participant leaves Alcon for reasons other than retirement, disability or death, then unvested restricted shares, RSUs and PSUs are forfeited, unless determined otherwise by the provision of the plan rules or by the Compensation, Governance and Nomination Committee of the Alcon Board of Directors, for example, in connection with a reorganization.

Restructuring charges

Restructuring provisions are recognized for the direct expenditures arising from the restructuring, where the plans are sufficiently detailed and where appropriate communication to those affected has been made.

Charges to increase restructuring provisions are included in "Other expense" in the consolidated income statements. Corresponding releases are recorded in "Other income" in the consolidated income statements.

Taxes

Taxes on income are expensed in the same periods as the revenues and expenses to which they relate and include any interest and penalties incurred during the period. Deferred taxes are determined using the comprehensive liability method and are calculated on the temporary differences that arise between the tax base of an asset or liability and its carrying value in the balance sheet prepared for purposes of these Consolidated Financial Statements, except for those temporary differences related to investments in subsidiaries where the timing of their reversal can be controlled and it is probable that the difference will not reverse in the foreseeable future. Since the retained earnings are reinvested, withholding or other taxes on eventual distribution of a subsidiary's retained earnings are only taken into account when a dividend has been planned.

The estimated amounts for current and deferred tax assets or liabilities, including any amounts related to any uncertain tax positions, are based on currently known facts and circumstances. Tax returns are based on an interpretation of tax laws and regulations and reflect estimates based on these judgments and interpretations.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The tax returns are subject to examination by the competent taxing authorities which may result in an assessment being made requiring payments of additional tax, interest or penalties. Inherent uncertainties exist in the estimates of the tax positions.

Earnings (loss) per share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

Impact of adopting significant new IFRS standards in 2019

Effective January 1, 2019, Alcon implemented IFRS 16, Leases, which provides a new model for lessee accounting in which substantially all leases are now recognized on the balance sheet as Right-of-use assets with corresponding Lease liabilities. The standard replaces IAS 17, Leases.

Upon adoption of IFRS 16, right-of-use assets are recognized based on the amount of the lease liability adjusted for payments made before the lease commencement date, lease incentives and other items related to the lease agreements. Lease liabilities are recognized based on the net present value of remaining lease payments and are classified as current or non-current based on the due dates of the underling principal payments. Upon adoption of the new standard, a portion of the annual operating lease costs previously fully recognized as a functional expense is recorded as interest expense. In addition, the portion of the lease payments representing a reduction of the lease liability is recognized in the cash flow statement as an outflow from financing activities, which was previously fully recognized as an outflow from operating activities for operating leases.

IFRS 16 substantially carries forward the lessor accounting requirements under IAS 17 such that adoption of the standard did not have a significant impact upon Alcon's accounting for surgical equipment leases where Alcon is the lessor and for which Alcon's accounting policy is included in the Revenue accounting policy in this Note to the Consolidated Financial Statements.

Alcon applied the modified retrospective method, with right-of-use assets measured at an amount equal to the lease liability, adjusted by the amount of the prepaid or accrued lease payments relating to those leases recognized in the balance sheet immediately before the date of initial application. In applying IFRS 16 for the first time, Alcon has used the practical expedients discussed in Note 16 of these Consolidated Financial Statements. The adoption of the standard did not have an impact on "Other Reserves" in the period of adoption and prior years were not restated.

Refer to Note 16 to these Consolidated Financial Statements for further information on the impact of adoption of IFRS 16, Leases.

New standards and interpretations not yet adopted

Amendments to IFRS 3, Business Combinations, are effective for transactions occurring after January 1, 2020. The amendments change the definition of a business in evaluating business combinations and asset acquisitions, and also provide Alcon an option to apply a concentration test to determine if the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets. Under the concentration test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The changes to the definition of a business will likely result in Alcon accounting for more acquisitions as asset acquisitions.

There are no other IFRS standards or interpretations not yet effective that would be expected to have a material impact on Alcon.

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

4. Significant transactions

Significant transactions in 2019

Refinancing of Bridge Facility and Facility A financial debts

On September 23, 2019, Alcon through its wholly-owned subsidiary, Alcon Finance Corporation ("AFC"), refinanced $2 billion of the bridge and term loans, which had been issued in April 2019, with $500 million of 2.750% senior notes due 2026, $1 billion of 3.000% senior notes due 2029, and $500 million of 3.800% senior notes due 2049. The bridge and term loans, notes, and refinancing are described in Note 17 of these Consolidated Financial Statements.

Completion of Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders

The Spin-off was executed on April 9, 2019 as described in Note 1. The below transactions occurred in April 2019, immediately preceding the Spin-off.

On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans which were executed on March 6, 2019 and are described in Note 17 of these Consolidated Financial Statements. These borrowings increased the Company's third party financial debts to $3.5 billion at the date of Spin-off. Through a series of intercompany transactions, Alcon then paid approximately $3.1 billion in cash to Novartis and its affiliates prior to the Spin-off, decreasing Alcon's net assets to approximately $20.0 billion at the date of Spin-off.

Surgical-Acquisition of PowerVision, Inc.

On March 13, 2019, Alcon acquired 100% of the outstanding shares and equity of PowerVision, Inc. ("PowerVision"), a privately-held, US-based company focused on developing accommodative, implantable intraocular lenses. This technology allows the intraocular lens to respond to natural muscular movements in the eye to alter shape and focus. The PowerVision acquisition was executed as part of Alcon's commitment to innovation in advanced technology intraocular lenses ("AT-IOLs").

The fair value of the total purchase consideration was $424 million. This amount consisted of an initial cash payment of $289 million and the fair value of the probability weighted contingent consideration of $135 million due to PowerVision shareholders, which they are eligible to receive upon the achievement of specified regulatory and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $418 million, which consisted of in-process research & development intangible assets of $505 million, a net deferred tax liability of $93 million, and other net assets of $6 million. Goodwill of $6 million was also recognized which is attributable to the assembled workforce. Cash paid for the acquisition, net of cash acquired, was $283 million. The 2019 results of operations since the date of acquisition and transaction costs for the acquisition were not material.

Significant transactions in 2018

Surgical-Acquisition of TrueVision Systems, Inc.

On December 19, 2018, Alcon acquired 100% of the outstanding shares and equity of TrueVision Systems, Inc. ("TrueVision"), a privately held US-based company. TrueVision developed the 3D scope technology currently used in the commercially marketed Alcon product NGENUITY. This technology allows retina surgery specialists to have a 3D visualization of the back of the eye with greater depth and detail than traditional microscopes.

The fair value of the total purchase consideration was $146 million. This amount consists of an initial cash payment of $110 million and the fair value of the probability weighted contingent consideration of $36 million due to TrueVision shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $144 million, which consisted of intangible assets of $172 million, net deferred tax liability of $29 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Vision Care-Acquisition of Tear Film Innovations, Inc.

On December 17, 2018, Alcon acquired 100% of the outstanding shares and equity of Tear Film Innovations, Inc. ("Tear Film"), a privately held US-based company. Tear Film is the manufacturer of the iLux device, an innovative therapeutic device used to treat Meibomian Gland Dysfunction, a leading cause of dry eye.

The fair value of the total purchase consideration was $145 million. This amount consists of an initial cash payment of $79 million and the fair value of the probability weighted contingent consideration of $66 million due to Tear Film previous owners, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $143 million, which consisted of intangible assets of $174 million, net deferred tax liability of $37 million, cash of $5 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

Significant transactions in 2017

Surgical-Acquisition of ClarVista Medical, Inc.

On September 20, 2017, Alcon acquired 100% of the outstanding shares and equity of ClarVista Medical, Inc., a privately held California, US-based company focused on developing the HARMONI Modular IOL System, a novel intraocular lens ("IOL") used to restore vision after cataract surgery.

The fair value of the total purchase consideration was $125 million. This amount consists of an initial cash payment of $71 million and the net present value of the contingent consideration of $54 million due to ClarVista shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $123 million, which consisted of intangible assets of $178 million, deferred tax assets of $8 million, cash and cash equivalents of $1 million and deferred tax liabilities of $64 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2017 results of operations since the date of acquisition were not material.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Segment information

The segment information disclosed in these Consolidated Financial Statements reflects historical results consistent with the identifiable reporting segments of Alcon and financial information that the Chief Operating Decision Maker ("CODM") reviews to evaluate segmental performance and allocate resources among the segments. The CODM is the Executive Committee of Alcon.

The businesses of Alcon are divided operationally on a worldwide basis into two identified reporting segments, Surgical and Vision Care. As indicated below, certain income and expenses are not allocated to segments.

Reporting segments are presented in a manner consistent with the internal reporting to the CODM. The reporting segments are managed separately due to their distinct needs and activities for research, development, manufacturing, distribution, and commercial execution.

The Executive Committee of Alcon is responsible for allocating resources and assessing the performance of the reporting segments.

In Surgical, Alcon researches, develops, manufactures, distributes and sells ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. The surgical portfolio also includes implantables, consumables and surgical equipment required for these procedures and supports the end-to-end procedure needs of the ophthalmic surgeon.

In Vision Care, Alcon researches, develops, manufactures, distributes and sells daily disposable, reusable, and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers.

Alcon also provides services, training, education and technical support for both the Surgical and Vision Care businesses.

The basis of preparation described in Note 2, and the selected accounting policies mentioned in Note 3 are used in the reporting of segment results.

The Executive Committee of Alcon evaluates segmental performance and allocates resources among the segments primarily based on net sales and segment contribution.

Net identifiable assets are not assigned to the segments in the internal reporting to the CODM, and are not considered in evaluating the performance of the business segments by the Executive Committee of Alcon.

Segment contribution excludes amortization and impairment costs for acquired product rights or other intangibles, general and administrative expenses for corporate activities, and certain other income and expense items.

General & administration (corporate) includes the costs of the Alcon corporate headquarters, including all related corporate function costs. For the historical comparative period only, the related corporate function costs were allocated to Alcon from its Former Parent.

Other expense, net of other income, includes other items of income and expense such as spin readiness and separation costs, transformation program costs, restructuring costs and legal settlements that are not attributable to a specific segment.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Segmentation - Consolidated income statements

	Surgical		Vision Care		Company
($ millions)	2019	2018	2019	2018	2019		2018
Net sales to third parties	4,174	3,999	3,188	3,150	7,362		7,149
Sales to former parent	—	2	—	2	—		4
Other revenues	—	—	146	—	146		—
Net sales and other revenues	4,174	4,001	3,334	3,152	7,508		7,153
Segment contribution(1)	923	813	563	594	1,486		1,407
Amortization of intangible assets					(1,084	)	(1,019	)
Impairment charges on intangible assets					—		(378	)
General & administration (corporate)					(243	)	(206	)
Other (expense)/income, net					(346	)	(52	)
Operating (loss)					(187	)	(248	)
Interest expense					(113	)	(24	)
Other financial income & expense					(32	)	(28	)
(Loss) before taxes					(332	)	(300	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Total
($ millions)	2019		2018		2019		2018		2019		2018		2019		2018
Depreciation of property, plant & equipment	(112	)	(114	)	(155	)	(125	)	—		—		(267	)	(239	)
Depreciation of right-of-use assets	(42	)	—		(24	)	—		—		—		(66	)	—
Impairment charges on property, plant & equipment, net	(3	)	(1	)	(5	)	(1	)	—		—		(8	)	(2	)
Equity-based compensation(2)	(55	)	(45	)	(44	)	(36	)	(15	)	(12	)	(114	)	(93	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 reflects an estimate of the allocation for corporate functions in the historical period based on 2019 actual percentages.  

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

	Surgical		Vision Care		Company
($ millions)	2018	2017	2018	2017	2018		2017
Net sales to third parties	3,999	3,733	3,150	3,052	7,149		6,785
Sales to former parent	2	3	2	1	4		4
Other revenues	—	—	—	3	—		3
Net sales and other revenues	4,001	3,736	3,152	3,056	7,153		6,792
Segment contribution(1)	813	691	594	625	1,407		1,316
Amortization of intangible assets					(1,019	)	(1,033	)
Impairment charges on intangible assets					(378	)	(57	)
General & administration (corporate)					(206	)	(202	)
Other (expense)/income, net					(52	)	(101	)
Operating (loss)					(248	)	(77	)
Interest expense					(24	)	(27	)
Other financial income and expense					(28	)	(23	)
(Loss) before taxes					(300	)	(127	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Company
($ millions)	2018		2017		2018		2017		2018		2017		2018		2017
Depreciation of property, plant & equipment	(114	)	(106	)	(125	)	(109	)	—		—		(239	)	(215	)
Impairment charges on property, plant & equipment, net	(1	)	—		(1	)	—		—		—		(2	)	—
Equity-based compensation(2)	(45	)	(34	)	(36	)	(27	)	(12	)	(10	)	(93	)	(71	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 and 2017 reflects an estimate of the allocation for corporate functions in the historical periods based on 2019 actual percentages.  

Segmentation - Additional balance sheet disclosure

	Surgical		Vision Care		Not allocated(1)		Total
($ millions)	2019	2018	2019	2018	2019	2018	2019	2018
Goodwill	4,544	4,538	4,361	4,361	—	—	8,905	8,899
Intangible assets other than goodwill	5,770	6,053	1,481	1,646	2,980	2,980	10,231	10,679

(1) Alcon brand name.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Net sales by segment

($ millions)	2019	2018	2017
Surgical
Implantables	1,210	1,136	1,045
Consumables	2,304	2,227	2,104
Equipment/other	660	636	584
Total Surgical	4,174	3,999	3,733
Vision Care
Contact lenses	1,969	1,928	1,836
Ocular health	1,219	1,222	1,216
Total Vision Care	3,188	3,150	3,052
Net sales to third parties	7,362	7,149	6,785

Geographical information

The following table shows the United States, International and countries that accounted for more than 5% of at least one of the respective Alcon totals, for net sales for the years ended December 31, 2019, 2018 and 2017, and for selected non-current assets at December 31, 2019, and 2018:

	Net sales(1)									Total of selected non-current assets(2)
($ millions unless indicated otherwise)	2019			2018			2017			2019			2018
Country
United States	3,055	41	%	2,942	41	%	2,800	41	%	10,559	47	%	10,056	45	%
International	4,307	59	%	4,207	59	%	3,985	59	%	12,014	53	%	12,401	55	%
thereof:
Switzerland (country of domicile)	56	1	%	57	1	%	57	1	%	10,486	46	%	11,166	50	%
Japan	656	9	%	593	8	%	561	8	%	66	—	%	12	—	%
China	377	5	%	341	5	%	279	4	%	18	—	%	2	—	%
Other	3,218	44	%	3,216	45	%	3,088	46	%	1,444	6	%	1,221	5	%
Company total	7,362	100	%	7,149	100	%	6,785	100	%	22,573	100	%	22,457	100	%

(1) Net sales from operations by location of third-party customer.

(2) Includes property, plant & equipment, right-of-use assets, goodwill and other intangible assets.

No customer accounted for 10% or more of Alcon's net sales.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Interest expense and other financial income & expense

For the years ended December 31, 2019, 2018 and 2017, "Interest expense" and "Other financial income & expense" are:

Interest expense

($ millions)	2019		2018		2017
Interest expense on financial debts	(81	)	(10	)	(12	)
Interest expense from discounting long-term liabilities	(21	)	(9	)	(10	)
Interest expense on lease liabilities(1)	(11	)	(5	)	(5	)
Total interest expense	(113	)	(24	)	(27	)

(1) For the years ended December 31, 2018 and 2017, interest expense on finance leases was included in "Interest expense on lease liabilities".

Other financial income & expense

($ millions)	2019		2018		2017
Interest income	8		2		—
Loss on extinguishment of financial debt	(4	)	—		—
Other financial expense	(18	)	(3	)	(3	)
Monetary loss from hyperinflation accounting	(2	)	(1	)	—
Currency result, net	(16	)	(26	)	(20	)
Total other financial income & expense	(32	)	(28	)	(23	)

    

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

7. Taxes

(Loss) before taxes

($ millions)	2019		2018		2017
Switzerland	(274	)	(227	)	(104	)
Foreign	(58	)	(73	)	(23	)
Total (loss) before taxes	(332	)	(300	)	(127	)

Current and deferred income tax (expense)/income

($ millions)	2019		2018		2017
Switzerland	(34	)	(77	)	(8	)
Foreign	(168	)	(157	)	(95	)
Current income tax expense	(202	)	(234	)	(103	)
Switzerland	(246	)	78		7
Foreign	124		229		479
Deferred tax (expense)/income	(122	)	307		486
Total income tax (expense)/income	(324	)	73		383

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Analysis of tax rate

Alcon's overall applicable tax rate can change each year since it is calculated as the weighted average tax rate based on pre-tax (loss)/income of each subsidiary. The main elements contributing to the difference between Alcon's overall applicable tax rate and the effective tax rate are summarized in the below table.

	2019				2018				2017
	$ m		%		$ m		%		$ m		%
Applicable tax rate	39		11.7	%	82		27.3	%	37		29.1	%
Effect of disallowed expenditures	(23	)	(6.9	)%	(26	)	(8.7	)%	(12	)	(9.4	)%
Effect of share based compensation	(1	)	(0.3	)%	(2	)	(0.7	)%	(4	)	(3.1	)%
Effect of income taxed at reduced rates	2		0.6	%	2		0.7	%	—		—
Effect of tax credits and allowances	7		2.1	%	13		4.3	%	5		3.9	%
Effect of adjustments to contingent consideration liabilities	11		3.3	%	11		3.7	%	(8	)	(6.3	)%
Effect of option payments	(12	)	(3.6	)%	(17	)	(5.7	)%	(12	)	(9.4	)%
Effect of liquidation of a subsidiary	—		—		—		—		(10	)	(7.9	)%
Effect of tax benefits expiring in 2017(1)	—		—		—		—		(12	)	(9.4	)%
Effect of tax rate changes (2)	(342	)	(103.0	)%	(14	)	(4.7	)%	—		—
Effect of changes in uncertain tax positions	10		3.0	%	(33	)	(11.0	)%	(10	)	(7.9	)%
Effect of other items	(2	)	(0.6	)%	(4	)	(1.2	)%	(4	)	(3.2	)%
Effect of prior year items(3)	(13	)	(3.9	)%	61		20.3	%	—		—	%
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform (4)	—		—	%	—		—	%	413		325.2	%
Effective tax rate	(324	)	(97.6	)%	73		24.3	%	383		301.6	%

(1) Effect of tax benefits expiring in 2017 relates to a Swiss subsidiary that was not subject to income tax through the end of calendar year 2017.

(2) Effect of tax rate changes in 2019 relates primarily to (i) the adoption of the Swiss Tax Reform which has resulted in a non-cash tax increase in the tax expense of $304 million relating to the re-measurement of the Swiss deferred tax balances and (ii) a $31 million re-measurement of US deferred tax balances as a result of rate changes in the US following legal entity reorganizations executed related to the Spin-off.

(3) In 2019, the prior year items relate to changes in certain estimates which resulted in a $13 million tax expense. In 2018, the prior year items relate to out of period income tax benefit of $61 million, which Alcon concluded was not material to the current period or the prior periods to which they relate.

(4) Effect of tax rate change on US current and deferred tax assets and liabilities in 2017 relate to the enactment of the Tax Cuts and Jobs Act by the US, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. This required a re-measurement of the deferred tax balances and a portion of the current tax payables.

Alcon has a substantial business presence in many countries and is therefore subject to different income and expense items that are non-taxable (permanent differences) or are taxed at different rates in those tax jurisdictions. This results in a difference between Alcon's applicable tax rate and effective tax rate as shown in the table above.

The applicable tax rate in 2019, 2018 and 2017 was impacted by pre-tax losses in certain tax jurisdictions. The fluctuation in the taxes and the effective tax rates, excluding Swiss and US tax reform, is primarily due to the geographical pre-tax income and loss mix across certain tax jurisdictions relative to Alcon's consolidated (loss)/income before taxes, changes in uncertain tax positions and certain non-recurring items.

8. Share capital and earnings/(loss) per share

8.1    Share capital

The share capital of the Company as of December 31, 2019 is CHF 20 million, which is comprised of 491.7 million common shares, nominal value of CHF 0.04 per share.

On April 9, 2019, the date of the Spin-off, 488.2 million shares of the Company's common stock were distributed to Novartis shareholders and Novartis ADR holders. The shares were distributed from the Company's existing

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

share capital of 488.7 million shares. On November 19, 2019, the Board of Directors approved an increase of CHF 120,000 out of the Company’s authorized share capital through the issuance of 3.0 million additional shares, nominal value CHF 0.04 per share, to fulfill the future vesting of existing and future equity-based awards. These additional shares were issued as Treasury shares in December 2019 as part of the Company’s authorized share capital according to the authority granted by the shareholders at the Company’s last Annual General Meeting held on January 29, 2019 and reflected in the Company’s Articles of Incorporation. While the transaction increases the number of shares available for delivery under the Company’s equity-based compensation plans, there is no immediate impact on the number of shares outstanding or earnings per share calculations until shares are delivered to plan participants under the plans.

During the period, 0.1 million shares were delivered for awards vesting under the Company's equity incentive programs. At December 31, 2019, the Company had 488.3 million outstanding common shares and 3.4 million shares held in the Company's treasury share accounts. Of the Company's 3.4 million shares held in treasury, 3.0 million may only be used to fulfill the future vesting of existing and future equity-based awards.

No dividends were declared or paid from April 9, 2019 through December 31, 2019.

8.2    Earnings/(loss) per share

Basic earnings/(loss) per share is computed by dividing net (loss)/income for the period by the weighted average number of common shares outstanding during the period. For the year ended December 31, 2019, the weighted average number of shares outstanding was 488.2 million shares. For periods prior to the Spin-off, the denominator for basic earnings/(loss) per share uses the number of shares distributed on the date of the Spin-off.

The only potentially dilutive securities are the outstanding unvested equity-based awards under the Company's equity-based incentive plans, as described in Note 24 to these Consolidated Financial Statements. Except when the effect would be anti-dilutive, the calculation of diluted earnings/(loss) per common share includes the weighted average net impact of unvested equity-based awards. For the year ended December 31, 2019, 1.9 million shares related to unvested equity-based awards have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. For periods prior to the Spin-off, the denominator for diluted earnings per share uses the number of shares distributed on the date of the Spin-off.

The average market value of the Company's shares for the purposes of calculating the potentially dilutive effects of unvested equity-based awards was based on quoted market prices for the period that the unvested awards were outstanding.

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

9. Property, plant & equipment

The following table summarizes the movements of property, plant & equipment during 2019:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2019	60		1,527		657		2,646		4,890
Additions(1)			11		514		82		607
Impact of business combinations							1		1
Disposals and derecognitions(2)			(17	)	(1	)	(161	)	(179	)
Transfers with former parent			4		2		29		35
Reclassifications for assets placed in service			104		(417	)	313		—
Other reclassifications	(27	)							(27	)
Currency translation effects			(1	)			(4	)	(5	)
December 31, 2019	33		1,628		755		2,906		5,322
Accumulated depreciation
January 1, 2019	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Depreciation charge			(73	)			(194	)	(267	)
Impairment charge					(1	)	(7	)	(8	)
Disposals and derecognitions(2)			14				151		165
Transfers with former parent			(2	)			(15	)	(17	)
Other reclassifications	7								7
Currency translation effects			1						1
December 31, 2019	—		(618	)	(8	)	(1,583	)	(2,209	)
Net book value at December 31, 2019	33		1,010		747		1,323		3,113

(1) Includes $56 million in non-cash additions.

(2) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2019, commitments for purchases of property, plant & equipment were $212 million. There were no capitalized borrowing costs.

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes the movements of property, plant and equipment during 2018:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2018	53		1,386		503		2,506		4,448
Additions			4		468		52		524
Impact of business combinations							1		1
Disposals and derecognitions(1)			(16	)			(71	)	(87	)
Reclassifications and transfers with former parent	10		252		(302	)	203		163
Reclassification to right-of-use assets(2)			(86	)					(86	)
Currency translation effects	(3	)	(13	)	(12	)	(45	)	(73	)
December 31, 2018	60		1,527		657		2,646		4,890
Accumulated depreciation
January 1, 2018	(3	)	(447	)			(1,438	)	(1,888	)
Depreciation charge			(70	)			(169	)	(239	)
Impairment charge					(1	)	(1	)	(2	)
Disposals and derecognitions(1)			15				72		87
Transfers with former parent	(4	)	(69	)	(6	)	(12	)	(91	)
Reclassification to right-of-use assets(2)			7						7
Currency translation effects			6				30		36
December 31, 2018	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Net book value at December 31, 2018	53		969		650		1,128		2,800

(1) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

(2) The December 31, 2018 balance previously reported for a finance lease asset of $79 million has been reclassified from "Property, Plant, & Equipment" to "Right-of-use assets".

As of December 31, 2018, commitments for purchases of property, plant & equipment were $93 million and capitalized borrowing costs were $1 million.

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

10. Goodwill and intangible assets

The following table summarizes the movements of goodwill and other intangible assets in 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2019	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Impact of business combinations	6		505										505
Additions			7								125		132
Reclassifications	—	—	(33	)	—		—		—		33		—
Disposals and derecognitions(1)											(41	)	(41	)
December 31, 2019	8,905	2,980	728		5,369		4,440		5,960		611		20,088
Accumulated amortization
January 1, 2019			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Amortization charge					(508	)	(250	)	(240	)	(86	)	(1,084	)
Accumulated amortization on disposals and derecognitions(1)											40		40
December 31, 2019			(3	)	(4,692	)	(2,842	)	(2,146	)	(174	)	(9,857	)
Net book value at December 31, 2019	8,905	2,980	725		677		1,598		3,814		437		10,231

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,544		721	677	374	3,814	184	5,770
Vision Care	4,361		4		1,224		253	1,481
Not allocated to segment(1)		2,980						2,980
Net book value at December 31, 2019	8,905	2,980	725	677	1,598	3,814	437	10,231

(1) Alcon brand name

The Surgical and Vision Care segments' cash generating units, to which goodwill is allocated are comprised of a group of smaller cash generating units. The valuation method of the recoverable amount of the cash generating units, to which goodwill is allocated, is based on the fair value less costs of disposal.

The Alcon brand name is an intangible asset with an indefinite life. The intangible asset is not allocated to the segments as it is used to market the Alcon-branded products of both the Surgical and Vision Care businesses. Net sales of these products together are the grouping of cash generating units, which is used to determine the recoverable amount. The valuation method is based on the fair value less costs of disposal.

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following assumptions are used in the calculations for the recoverable amounts of goodwill and the Alcon brand name:

(As a percentage)	Surgical	Vision Care
Terminal growth rate	3.0	3.0
Discount rate (post-tax)	7.5	7.0

The Surgical and Vision Care segments' terminal growth rate assumption of 3% takes into consideration how the industry is expected to grow, analysis of industry expert reports, and expected relevant changes in demographics for various markets. The discount rates for both Surgical and Vision Care segments consider Alcon's weighted average cost of capital, adjusted to approximate the weighted average cost of capital of comparable market participants. Both the terminal growth rate and the discount rate are consistent with external sources of information.

The fair value less costs of disposal, for all groupings of cash generating units containing goodwill or indefinite life intangible assets, is reviewed for the impact of reasonably possible changes in key assumptions. In particular Alcon considered an increase in the discount rate, a decrease in the terminal growth rate and certain negative impacts on the forecasted cash flows. These reasonably possible changes in key assumptions did not indicate an impairment.

Refer to "Impairment of goodwill, Alcon brand name and definite lived intangible assets" in Note 3 in these Consolidated Financial Statements for additional disclosures on how Alcon performs goodwill and intangible asset impairment testing.

The following table summarizes the movements of goodwill and other intangible assets in 2018:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2018	8,895	2,980	242		5,368		4,094		5,960		370		19,014
Impact of business combinations	4						346						346
Additions			71		1						125		197
Disposals and derecognitions(1)			(64	)							(1	)	(65	)
December 31, 2018	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Accumulated amortization
January 1, 2018			(58	)	(3,635	)	(2,008	)	(1,668	)	(104	)	(7,473	)
Amortization charge					(510	)	(247	)	(238	)	(24	)	(1,019	)
Accumulated amortization on disposals and derecognitions(1)			57										57
Impairment charge			(2	)	(39	)	(337	)					(378	)
December 31, 2018			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Net book value at December 31, 2018	8,899	2,980	246		1,185		1,848		4,054		366		10,679

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2018:

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,538		216	1,185	438	4,054	160	6,053
Vision Care	4,361		30		1,410		206	1,646
Not allocated to segment		2,980						2,980
December 31, 2018	8,899	2,980	246	1,185	1,848	4,054	366	10,679

Intangible asset impairment charges

The following table shows the intangible asset impairment charges for 2019 and 2018:

($ millions)	2019	2018
Surgical	—	(378	)
Vision Care	—	—
Total	—	(378	)

There were no intangible asset impairment charges in 2019. For the year 2018, there was a full impairment of $337 million related to the write-down of CyPass within the Surgical segment due to a voluntary market withdrawal, and an impairment of $39 million related to the write-down of the Optonol technologies also within the Surgical segment.

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

11. Deferred tax assets and liabilities

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards		Other assets, provision and accruals		Total
Gross deferred tax assets at December 31, 2018	12				125		262		39		235		673
Gross deferred tax liabilities at December  31, 2018	(94	)	(1,403	)	(2	)	(14	)			(18	)	(1,531	)
Net deferred tax balance at December  31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
At December 31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
(Charged)/credited to income	(71	)	(194	)	18		111		50		(36	)	(122	)
Credited to equity											25		25
Credited to other comprehensive income					11						5		16
Impact of business combinations			(121	)					28				(93	)
Other movements	(6	)	11		(11	)	(11	)	(7	)	24		—
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)
Gross deferred tax assets at December 31, 2019	13		6		151		371		110		281		932
Gross deferred tax liabilities at December 31, 2019	(172	)	(1,713	)	(10	)	(23	)	—		(46	)	(1,964	)
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)

The below table presents the Net deferred tax balance as of December 31, 2019 after offsetting $578 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2019
Deferred tax assets	354
Deferred tax liabilities	(1,386	)
Net deferred tax balance	(1,032	)

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards	Other assets, provisions and accruals		Total
Gross deferred tax assets at January 1, 2018	10				121		169		18	232		550
Gross deferred tax liabilities at January 1, 2018	(69	)	(1,531	)	(7	)	(32	)		(25	)	(1,664	)
Net deferred tax balance at January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
At January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
Credited/(charged) to income	(23	)	212		13		82		9	14		307
Charged to equity										(2	)	(2	)
Charged to other comprehensive income					(2	)						(2	)
Impact of business combinations			(78	)					12			(66	)
Other movements			(6	)	(2	)	29			(2	)	19
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)
Gross deferred tax assets at December 31, 2018	12				125		262		39	235		673
Gross deferred tax liabilities at December 31, 2018	(94	)	(1,403	)	(2	)	(14	)		(18	)	(1,531	)
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)

The below table presents the Net deferred tax balance as of December 31, 2018 after offsetting $3 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2018
Deferred tax assets	670
Deferred tax liabilities	(1,528	)
Net deferred tax balance	(858	)

The below table presents deferred tax assets and deferred tax liabilities expected to have an impact on current taxes payable after more than twelve months.

($ billions)	At December 31, 2019	At December 31, 2018
Deferred tax assets	0.6	0.3
Deferred tax liabilities	1.8	1.5

For foreign unremitted earnings retained by consolidated entities for reinvestment, which amounted to $7 billion as of December 31, 2019, no provision is made for income taxes that would be payable upon the distribution of these earnings. If these earnings were remitted, an income tax charge could result based on the tax statutes currently in effect.

Temporary differences on which no deferred tax has been provided as they are permanent in nature relate to goodwill from acquisitions and amounted to $9 billion as of December 31, 2019 and 2018.

The gross value of tax loss carry forwards capitalized as deferred tax assets amount to $521 million (2018: $146 million), of which $33 million expire in five years and $488 million expire in more than five years. All tax loss carry forwards have been capitalized as deferred tax assets in 2019 as it is probable that sufficient taxable income will be available for the foreseeable future.

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

No tax losses carried forward have expired in 2019, 2018 or 2017.

Swiss tax reform

On June 30, 2019, Swiss voters approved the Swiss Tax Reform and Old Age Insurance financing bill ("Swiss tax reform"). As a result, the corporate income tax rate applicable to Alcon’s Swiss profits as of January 1, 2020 will increase from approximately 9.4% in 2019 to approximately 14.2% beginning in 2020. This change resulted in a non-cash increase in tax expense of $304 million related to the re-measurement of Swiss deferred tax assets and liabilities in 2019.

US tax reform

On December 22, 2017, the US enacted tax reform legislation (Tax Cuts and Jobs Act), which among other provisions, reduced the US corporate tax rate from 35% to 21%, effective January 1, 2018. This required a revaluation of the deferred tax assets and liabilities and a portion of current tax payables to the newly enacted tax rates at the date of enactment. This resulted in the recognition of a $413 million credit to income and an $18 million charge to equity in 2017.

12. Financial and other non-current assets

The below tables provide details related to Financial assets and Other non-current assets as of December 31, 2019 and 2018.

Financial assets

($ millions)	2019	2018
Long-term financial investments measured at FVOCI	31	19
Long-term financial investments measured at FVPL	28	67
Long-term receivables from customers	136	164
Minimum lease payments from finance lease agreements	78	91
Long-term loans, advances, and security deposits	34	47
Total financial assets	307	388

Minimum lease payments from finance lease agreements

The following table shows the receivables of the gross investments in finance leases and the net present value of the minimum lease payments, as well as unearned finance income, related to surgical equipment lease arrangements. The finance income is recorded in "Other income".

	2019							2018
($ millions)	Total future payments	Unearned interest income		Present value	Provision		Net book value	Total future payments	Unearned interest income		Present value	Provision		Net book value
Not later than one year(1)	51	(4	)	47	(1	)	46	64	(5	)	59	(2	)	57
Between one and five years	94	(5	)	89	(23	)	66	117	(9	)	108	(28	)	80
Later than five years	46	(1	)	45	(33	)	12	48	(2	)	46	(35	)	11
Total	191	(10	)	181	(57	)	124	229	(16	)	213	(65	)	148

(1) The current portion of the minimum lease payments is recorded in trade receivables or other current assets (to the extent not yet invoiced).

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Other non-current assets

($ millions)	2019	2018
Deferred compensation plans	122	95
Prepaid post-employment benefit plans	13	12
Other non-current assets	50	41
Total other non-current assets	185	148

13. Inventories

The amount of inventory recognized as an expense in "Cost of net sales" in the consolidated income statements during 2019 amounted to $2.2 billion (2018: $2.2 billion, 2017: $2.1 billion). The amount of inventory recognized as an expense in "Cost of other revenues" in the consolidated income statements during 2019 amounted to $127 million (2018: $0 million, 2017: $0 million).

($ millions)	2019	2018
Raw material, consumables	286	334
Work in progress	101	127
Finished products	1,118	979
Total inventories	1,505	1,440

Alcon recognized inventory provisions amounting to $140 million in 2019 (2018: $148 million, 2017: $73 million) and reversed inventory provisions amounting to $65 million (2018: $56 million, 2017: $15 million). Inventory provisions mainly relate to the adjustment of inventory balances to their net realizable value based on the forecasted sales. Reversals are made when the products become saleable.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

14. Trade receivables

The following table provides details related to Trade receivables as of December 31, 2019 and 2018:

($ millions)	2019		2018
Total gross trade receivables	1,438		1,307
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

The following table summarizes the movement in the provision for doubtful trade receivables:

($ millions)	2019		2018		2017
January 1	(54	)	(77	)	(55	)
Transfers with former parent	—		4		—
Provisions for doubtful trade receivables charged to the consolidated income statement	(17	)	(17	)	(28	)
Utilization of provisions for doubtful trade receivables	7		16		2
Reversal of provisions for doubtful trade receivables	15		16		6
Currency translation effects	1		4		(2	)
December 31	(48	)	(54	)	(77	)

The following sets forth the trade receivables that are not overdue as specified in the payment terms and conditions established with Alcon's customers, as well as an analysis of overdue amounts and related provisions for doubtful trade receivables:

($ millions)	2019		2018
Not overdue	1,135		1,018
Past due for not more than one month	118		118
Past due for more than one month but less than three months	81		70
Past due for more than three months but less than six months	47		34
Past due for more than six months but less than one year	21		20
Past due for more than one year	36		47
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

Trade receivable balances include sales to wholesalers, retailers, doctor groups, private health systems, government agencies, pharmacy benefit managers and government-supported healthcare systems.

We consider our doubtful debt provisions to be adequate. The majority of the outstanding trade receivables from Greece, Italy, Portugal, Spain, Brazil, Russia, Turkey, Saudi Arabia, and Argentina (the closely monitored countries) are due directly from local governments or from government-funded entities except for Russia, Brazil, and Turkey. We evaluate trade receivables in these countries for potential collection risk. Should there be a substantial deterioration in our economic exposure with respect to those countries, we may increase our level of provisions by updating our expected loss provision or may change the terms of trade on which we operate.

The following table shows the gross trade receivables balance from these closely monitored countries as of December 31, 2019 and 2018, the amounts that are past due for more than one year and the related amount of the provisions for doubtful trade receivables that have been recorded:

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

($ millions)	2019		2018
Total balance of gross trade receivables from closely monitored countries	209		216
Past due for more than one year	10		14
Provisions for doubtful trade receivables	(13	)	(16	)

Trade receivables include amounts denominated in the following major currencies:

($ millions)	2019	2018
US dollar (USD)	463	449
Euro (EUR)	243	215
Japanese yen (JPY)	168	152
Chinese yuan (CNY)	102	74
Indian rupee (INR)	33	34
Canadian dollar (CAD)	30	30
Australian dollar (AUD)	29	27
British pound (GBP)	24	25
Russian ruble (RUB)	34	24
South Korean won (KRW)	29	23
Other currencies	235	200
Total trade receivables, net	1,390	1,253

15. Other current assets

The following table provides details related to Other current assets as of December 31, 2019 and 2018:

($ millions)	2019	2018
Current portion of long-term financial investments measured at FVPL	33	31
Current portion of long-term receivables from customers	122	133
Current portion of minimum lease payments from finance lease agreements	46	57
Prepaid expenses	89	46
Other receivables, security deposits and current assets	147	52
Derivative financial instruments	1	—
VAT receivable	64	68
Total other current assets	502	387

16. Right-of-use assets and Lease liabilities

Alcon adopted IFRS 16, Leases effective January 1, 2019, as described in Note 3 to these Consolidated Financial Statements.

Alcon has applied the modified retrospective method, with right-of-use assets measured at an amount equal to the lease liability, adjusted by the amount of the prepaid or accrued lease payments relating to those leases recognized in the balance sheet immediately before the date of initial application.

In applying IFRS 16 for the first time, Alcon has used the following practical expedients on a lease by lease basis as permitted by the standard:

• contracts previously identified as leases by applying IAS 17, Leases and IFRIC 4, Determining whether an Arrangement contains a Lease, have not been re-assessed under IFRS 16,

• leases with a remaining lease term less than twelve months from the date of adoption and leases of low-value assets have not been recognized as right-of-use assets and lease liabilities,

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

• measurement of right-of-use assets at the date of adoption excluded the initial direct costs, and

• use of hindsight in determining the lease term for contracts containing options to extend or terminate the lease.

Right-of-use assets

Right-of-use assets as of December 31, 2019 and January 1, 2019 were comprised of the following:

($ millions)	December 31, 2019	January 1, 2019
Land	20	20
Buildings	277	226
Machinery & equipment and other assets	27	33
Total right-of-use assets(1)	324	279

(1) Right-of-use assets, related to operating leases at the date of implementation of IFRS 16, were higher than the lease liabilities at the date of implementation of IFRS 16 by $3 million, due to the net impact of prepayments and accrued lease payments recognized at December 31, 2018. This impact was offset by the lease liability related to the finance lease exceeding the corresponding capital asset by $10 million.

Depreciation charges of $66 million for the year ended December 31, 2019 are shown in the table below by underlying class of asset:

($ millions)	2019
Land	1
Buildings	47
Machinery & equipment and other assets	18
Total	66

Additions to right-of-use assets amounted to $116 million for the year ended December 31, 2019. 

Lease liabilities

Lease liabilities of $286 million were recorded on January 1, 2019. The reconciliation of lease commitments disclosed as of December 31, 2018 and lease liabilities recorded on January 1, 2019 is as follows:

($ millions)
Operating lease commitments as of December 31, 2018	222
Effect of discounting	(21	)
Operating leases discounted using the incremental borrowing rate(1)	201
Finance lease liabilities recognized as at December 31, 2018	89
Recognition exemption for short term and low-value leases	(4	)
Lease liabilities as of January 1, 2019	286

(1) Weighted average incremental borrowing rate of 2.9% was applied at January 1, 2019, the date of implementation of IFRS 16, Leases.

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Lease liabilities totaled $341 million as of December 31, 2019, including $61 million in current lease liabilities and $280 million in non-current lease liabilities. The contractual maturities of the undiscounted lease liabilities as of December 31, 2019, are as follows:

($ millions)	Lease liabilities undiscounted
Not later than one year	73
Between one and five years	176
Later than five years	200
Total lease liabilities undiscounted	449

($ millions)	Lease liabilities
Not later than one year	61
Between one and five years	140
Later than five years	140
Total lease liabilities	341

Additional disclosures

The following table provides additional disclosures related to right-of-use assets and lease liabilities:

($ millions)	2019
Interest expense on lease liabilities	11
Expense on short-term and low value leases	3
Total cash outflows for leases	59
Thereof:
Lease liability payments(1)	52
Interest payments(2)	5
Short-term and low value lease payments(2)	2

(1) Reported as cash outflows from financing activities net of lease incentives received

(2) Included within total net cash flows from operating activities

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Prior to the adoption of IFRS 16, Alcon prepared the required disclosures for operating lease commitments and finance lease future minimum lease payments. Operational lease commitments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	50
Between one and five years	135
Later than five years	37
Total operational lease commitments	222

Future minimum lease payments under finance leases, together with the present value of the minimum lease payments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	—
Between one and five years	27
Later than five years	153
Total minimum lease liabilities	180
Less future finance charges	(91	)
Present value of minimum lease payments	89

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

17. Non-current and current financial debts

The below table summarizes current and non-current Financial debts outstanding as of December 31, 2019 and 2018.

($ millions)	2019	2018
Non-current financial debts
Facility B	793	—
Facility C	391	—
Local facilities (Japan)	55	—
Series 2026 notes	495	—
Series 2029 notes	991	—
Series 2049 notes	493	—
Revolving facility	—	—
Total non-current financial debts	3,218	—
Current financial debts
Local facilities:
Japan	115	—
All others	101	32
Other short-term financial debts	29	15
Derivatives	16	—
Total current financial debts	261	47
Total financial debts	3,479	47

Alcon entered into the below borrowing arrangements in connection with the Spin-off, as described in Note 4 to these Consolidated Financial Statements, and refinanced a portion of those borrowing arrangements, as further described below. Interest expense recognized for Financial debts, excluding lease liabilities, was $81 million, $10 million and $12 million for the years ended December 31, 2019, 2018 and 2017, respectively. The weighted average interest rate on Financial debts was 2.9% in 2019 and 17.4% in 2018.

Bridge Loan, Term Loan, and Revolving Credit Facilities

On March 6, 2019, Alcon entered into a $1.5 billion unsecured 364-day bridge loan facility with two extension options, each for a period of 180 days (the "Bridge Facility"), a $0.5 billion unsecured three-year term loan facility ("Facility A"), a $0.8 billion unsecured five-year term loan facility ("Facility B"), a $0.4 billion (or the equivalent in EUR) unsecured five-year term loan facility ("Facility C") and a $1.0 billion unsecured five-year committed multicurrency revolving credit facility (the "Revolving Facility" and, together with the Bridge Facility, Facility A, Facility B and Facility C, the "Facilities"). On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans. The Revolving Facility was undrawn as of December 31, 2019.

The Facilities bear interest rates equal to the interest rate benchmark (prevailing Euro Interbank Offered Rate (“EURIBOR”) in the case of loans denominated in EUR, USD prevailing London Interbank Offered Rate (“LIBOR”) in the case of loans denominated in USD and CHF LIBOR in the case of loans denominated in CHF), plus an applicable margin.

Alcon and certain of its subsidiaries are the borrowers under the Facilities and Alcon guarantees the borrowings of such subsidiaries under the Facilities. In addition, the Revolving Facility includes a mechanism through which certain subsidiaries, as approved by the lenders, can accede as a borrower.

Alcon is permitted to voluntarily prepay loans under the Facilities, in whole or in part, without penalty or premium subject to certain minimum prepayment amounts and the payment of accrued interest on the amount prepaid and customary breakage costs. The Bridge Facility had a mandatory prepayment provision, pursuant to which

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Alcon would have to apply proceeds from relevant debt capital markets transactions in prepayment under the Bridge Facility.

The terms of the Facilities include certain events of default and covenants customary for investment grade credit facilities, including restrictive covenants that will limit, among other things, the grant or incurrence of security interests over any of Alcon's assets, the incurrence of certain indebtedness and entry into certain fundamental change transactions. The Facilities do not contain any financial covenants.

Refinancing of Bridge Facility and Facility A

On September 23, 2019, AFC issued Senior Notes ("Notes") with maturity dates in 2026, 2029, and 2049, which are guaranteed by the Company. The Notes are unsecured senior obligations of AFC issued in a private placement. The total notional amount of the Notes is $2.0 billion. The Notes were issued at a discount totaling $7.0 million, which was recorded as a reduction to the carrying value of the Notes and will be amortized to Interest expense over the term of the Notes. AFC incurred $15 million of debt issuance costs, which were recorded as a reduction to the carrying value of the Notes and will be amortized to Other financial income & expense over the term of the Notes.

The Notes consist of the following:

• Series 2026 Notes - $0.5 billion due in 2026 issued at 99.5%, 2.750% interest is payable twice per year in March and September, beginning in March 2020.

• Series 2029 Notes - $1.0 billion due in 2029 issued at 99.6%, 3.000% interest is payable twice per year in March and September, beginning March 2020.

• Series 2049 Notes - $0.5 billion due in 2049 issued at 99.8%, 3.800% interest is payable twice per year in March and September, beginning March 2020.

The funds borrowed through the issuance of the Notes were used to repay the $1.5 billion Bridge Facility and $0.5 billion Facility A. The transaction was accounted for as an extinguishment of a liability. Alcon recognized a loss of $4 million associated with the write-off of unamortized deferred financing costs due to extinguishment of the original financing. This loss on extinguishment was recognized in Other financial income & expense.

The following table provides details on the maturity of the contractual undiscounted cash flows for Alcon's borrowings as of December 31, 2019:

($ millions)	Nominal amount - Current and non-current financial debt		Derivatives	Total
Not later than one year	245		16	261
Between one and five years	1,247		—	1,247
Later than five years	2,000		—	2,000
Total cash flows	3,492		16	3,508
Unamortized debt discount and issuance costs	(29	)	—	(29	)
Total carrying value	3,463		16	3,479

The following table provides details on the maturity of the future contractual interest payments commitments:

($ millions)	Interest
Not later than one year	94
Between one and five years	336
Later than five years	653
Total cash flows	1,083

As of December 31, 2018, the contractual undiscounted cash flows for borrowings was $47 million for the current financial debts reflected in Financial debts on the Consolidated Balance Sheets.

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Local Bilateral Facilities

In February 2019, Alcon entered into a number of local bilateral facilities in different countries, with the largest share of borrowings in Japan. A total of $0.3 billion was drawn including $0.2 billion in two lines for Japan. All local bilateral lines are classified as current with a maturity date in one year or less, with the exception of one line in Japan with a maturity date in 2021 which is classified as non-current. As of December 31, 2019, there was $35 million undrawn on the facility in Japan.

Derivatives

As of December 31, 2019, the net value of unsettled positions for derivative forward contracts and swaps was $15 million, including $1 million of unrealized gains in Other current assets and $16 million of unrealized losses in Current financial debts. Master agreements were executed with several banking counterparties for derivatives financial instruments, however, there were no derivative financial instruments meeting the offsetting criteria under IFRS as of December 31, 2019. Alcon did not hold derivative financial instruments as of December 31, 2018.

F-47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

18. Financial instruments - additional disclosures

The below table provides detail related to financial instruments as of December 31, 2019 and 2018.

($ millions)	Note	2019		2018
Cash and cash equivalents
Cash in current accounts		392		227
Cash held in time deposits and money market funds		430		—
Total Cash and cash equivalents		822		227
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	31		19
Total financial assets - measured at FVOCI		31		19
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,390		1,253
Receivables from former parent	25	—		20
Income tax receivables		17		33
Other financial receivables from former parent	25	—		39
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	379		310
Long-term receivables from customers	12	136		164
Non-current minimum lease payments from finance lease agreements	12	78		91
Long-term loans, advances, and security deposits	12	34		47
Total financial assets - measured at amortized costs		2,034		1,957
Financial assets - measured at fair value through profit and loss ("FVPL")
Current portion of long-term financial investments	15	33		31
Derivative fInancial instruments	15	1		—
Long-term financial investments	12	28		67
Total financial assets - measured at FVPL		62		98
Total financial assets		2,949		2,301
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	245		47
Lease liabilities	16	61		—
Trade payables		833		663
Payables to former parent	25	—		85
Other financial liabilities to former parent	25	—		67
Total current financial liabilities - measured at amortized cost or cost		1,139		862
Non-current financial liabilities
Financial debts	17	3,218		—
Lease liabilities	16	280		89
Total non-current financial liabilities - measured at amortized cost or cost		3,498		89
Total financial liabilities - measured at amortized cost or cost		4,637		951
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	243		162
Derivative financial instruments	17	16		—
Total financial liabilities - measured at FVPL		259		162
Total financial liabilities		4,896		1,113
Net financial assets and financial liabilities		(1,947	)	1,188

(1) The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029 and 2049 notes recorded in Non-current financial debts with a fair value of $2,049 million and carrying value of $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Fair value by hierarchy

As required by IFRS, financial assets and liabilities recorded at fair value in the Consolidated Financial Statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. There are three hierarchical levels, based on an increasing amount of judgment associated with the inputs to derive fair value for these financial assets and liabilities, which are as follows:

Financial assets and liabilities carried at Level 1 fair value hierarchy are listed in active markets.

Financial assets and liabilities carried at Level 2 fair value hierarchy are valued using corroborated market data.

As of December 31, 2019 , Level 1 financial assets include money market funds . There were no financial liabilities carried at Level 1 fair value, and Level 2 financial assets and liabilities include derivative financial instruments. As of December 31, 2018, there were no financial assets or liabilities carried at Level 1 fair value or Level 2 fair value.

Investments in money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The investments are classified as Cash & cash equivalents within our Consolidated Balance Sheets.

Level 3 inputs are unobservable for the financial asset or liability. The financial assets and liabilities generally included in Level 3 fair value hierarchy are equity securities and convertible notes receivable measured at FVOCI, and fund investments, options to acquire private companies, and contingent consideration liabilities measured at FVPL.

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following tables summarize financial assets and liabilities measured at fair value on a recurring basis or at amortized cost or cost as of December 31, 2019 and 2018.

	December 31, 2019
($ millions)	Level 1	Level 2		Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—		31		—		31
Long-term financial investments measured at FVPL	—	—		28		—		28
Long-term receivables from customers	—	—		—		136		136
Non-current minimum lease payments from finance lease agreements	—	—		—		78		78
Long-term loans, advances, and security deposits	—	—		—		34		34
Total non-current financial assets	—	—		59		248		307
Current financial assets
Money market funds	120	—		—		—		120
Current portion of long-term financial investments measured at FVPL(1)	—	—		33		—		33
Current portion of long-term receivables from customers(1)	—	—		—		122		122
Current portion of minimum lease payments from finance lease agreements(1)	—	—		—		46		46
Other receivables, security deposits and current assets(1)	—	—		—		147		147
VAT receivables(1)	—	—		—		64		64
Derivative financial instruments(1)	—	1		—		—		1
Total current financial assets	120	1		33		379		533
Total financial assets at fair value and amortized cost or cost	120	1		92		627		840
Financial liabilities
Contingent consideration liabilities	—	—		(243	)	—		(243	)
Non-current financial debt	—	—		—		(3,218	)	(3,218	)
Current financial debt	—	—		—		(245	)	(245	)
Derivative financial instruments	—	(16	)	—		—		(16	)
Total financial liabilities at fair value and amortized cost	—	(16	)	(243	)	(3,463	)	(3,722	)

(1) Recorded in Other current assets.

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

	December 31, 2018
($ millions)	Level 1	Level 2	Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—	19		—		19
Long-term financial investments measured at FVPL	—	—	67		—		67
Long-term receivables from customers	—	—	—		164		164
Non-current minimum lease payments from finance lease agreements	—	—	—		91		91
Long-term loans, advances, and security deposits	—	—	—		47		47
Total non-current financial assets	—	—	86		302		388
Current financial assets(1)
Current portion of long-term financial investments measured at FVPL	—	—	31		—		31
Current portion of long-term receivables from customers	—	—	—		133		133
Current portion of minimum lease payments from finance lease agreements	—	—	—		57		57
Other receivables, security deposits and current assets	—	—	—		52		52
VAT receivables	—	—	—		68		68
Derivative financial instruments	—	—	—		—		—
Total current financial assets	—	—	31		310		341
Total financial assets at fair value and amortized cost or cost	—	—	117		612		729
Financial liabilities
Contingent consideration liabilities	—	—	(162	)	—		(162	)
Non-current financial debt	—	—	—		—		—
Current financial debt	—	—	—		(47	)	(47	)
Derivative financial instruments	—	—	—		—		—
Total financial liabilities at fair value and amortized cost	—	—	(162	)	(47	)	(209	)

(1) Current financial assets referenced in the above table are recorded in Other current assets.

There were no transfers of financial instruments between levels in the fair value hierarchy during the year ended December 31, 2019 and 2018.

Certain prior period amounts have been reclassified to reflect the inclusion of options to acquire private companies measured at FVPL in Level 3 of the fair value hierarchy to conform with current period presentation.

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Level 3 financial instruments measured at fair value on a recurring basis

Financial assets

	Long-term financial investments measured at FVOCI				Financial investments measured at FVPL
($ millions)	2019		2018		2019		2018
Balance as of January 1(1)	19		26		98		78
Additions	17		11		34		92
Cash receipts and payments	—		—		(7	)	(5	)
Gains/(losses) recognized in consolidated statements of comprehensive (loss)/income	(7	)	(23	)	—		—
Unrealized gains/(losses) in consolidated income statements	—		—		(3	)	7
Amortization	—		—		(61	)	(74	)
Reclassification	2		5		—		—
Balance as of December 31	31		19		61		98

(1) January 1, 2018 balances reflected in this table are as adjusted for adoption of IFRS 9, Financial Instruments.

If the pricing parameters for the Level 3 input were to change for Long-term financial investments measured at FVOCI and Financial investments measured at FVPL by 10% positively or negatively, this would change the amount recorded in the 2019 Consolidated Statements of Comprehensive Loss by $3 million.

Financial liabilities

	Contingent consideration liabilities
($ millions)	2019		2018
Balance as of January 1	(162	)	(113	)
Additions	(135	)	(102	)
Accretion for passage of time	(21	)	(9	)
Adjustments for changes in assumptions	75		62
Payments	—		—
Balance as of December 31	(243	)	(162	)

Contingent consideration additions of $135 million relate to the acquisition of PowerVision, Inc. in March 2019 as described in Note 4 of these Consolidated Financial Statements. Adjustments for changes in assumptions of $75 million are primarily related to revised expectations for achievement of commercial milestones and changes in assumptions related to the expected timing of settlement for development milestones. As of December 31, 2019, the maximum remaining potential payments related to contingent consideration from business combinations is $510 million plus other amounts calculated as a percentage of commercial sales in cases where there is not a specified maximum contractual payment amount.

Changes in the contingent consideration liability balance for the same period in prior year included additions of $102 million related to the acquisitions as described in Note 4 to these Consolidated Financial Statements. Adjustments for changes in assumptions of $62 million are primarily related to revised expectations for achievement of milestones due to a product's voluntary market withdrawal.

Contingent consideration liabilities are reported in “Provisions & other non-current liabilities" and "Provisions & other current liabilities” based on the projected timing of settlement which is estimated to range from 2020 through 2029 for contingent consideration obligations as of December 31, 2019.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

are, among others, the probability of success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration.

If the most significant parameters for the Level 3 input were to change by 10% positively or negatively, or where the probability of success is the most significant input parameter 10% were added or deducted from the applied probability of success, for contingent consideration payables, this would change the amounts recorded in the 2019 Consolidated Income Statements by $34 million and $32 million respectively.

Nature and extent of risks arising from financial instruments

Market risk

Alcon is exposed to market risk, primarily related to foreign currency exchange rates, interest rates and the market value of the investments of liquid funds. Alcon actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures. It is Alcon policy and practice to enter into a variety of derivative financial instruments to manage the volatility of these exposures and to enhance the yield on the investment of liquid funds. Alcon does not enter into any financial transactions containing a risk that cannot be quantified at the time the transaction is concluded. In addition, Alcon does not sell short assets it does not have, or does not know it will have, in the future. Alcon only sells existing assets or enters into transactions and future transactions (in the case of anticipatory hedges) that it confidently expects it will have in the future, based on past experience. In the case of liquid funds, Alcon writes call options on assets it has, or writes put options on positions it wants to acquire and has the liquidity to acquire. Alcon expects that any loss in value for these instruments generally would be offset by increases in the value of the underlying transactions.

Foreign currency exchange rate risk

Alcon uses the US Dollar as its reporting currency and is therefore exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs, and emerging market currencies. Fluctuations in the exchange rate between the US Dollar and other currencies can have a significant effect on both the Alcon’s results of operations, including reported sales and earnings, as well as on the reported value of our assets, liabilities and cash flows. This, in turn, may significantly affect the comparability of period-to-period results of operations.

Alcon manages its global currency exposure by engaging in hedging transactions where management deems appropriate (forward contracts and swaps). Specifically, Alcon enters into various contracts that reflect the changes in the value of foreign currency exchange rates to preserve the value of assets.

Interest rate risk

Alcon's exposure to cash flow interest rate risks arises mainly from non-current financial debts at variable rates. Alcon may enter into interest rate swap agreements, in which it exchanges periodic payments based on a notional amount and agreed-upon fixed and variable rate interests. If the interest rates had been higher / lower by 1%, the loss before taxes would have been higher / lower by $12 million from the impacts of interest expense and interest income based on the change in the interest rate.

Commodity price risk

Alcon has only a very limited exposure to price risk related to anticipated purchases of certain commodities used as raw materials by Alcon's businesses. A change in those prices may alter the gross margin of a specific business, but generally by not more than 10% of the margin and thus below Alcon's risk management tolerance levels. Accordingly, Alcon does not enter into significant forward and option contracts to manage fluctuations in prices of anticipated purchases.

Credit risk

Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, Alcon periodically assesses credit risk, assigns individual credit limits, and takes actions to mitigate credit risk where appropriate. For further information, refer to Note 14 of these Consolidated Financial Statements.

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

No customer accounted for 10% or more of Alcon's net sales in 2019, 2018, or 2017.

Liquidity risk

Liquidity risk is defined as the risk that Alcon could not be able to settle or meet its obligations on time or at a reasonable price. Alcon Treasury is responsible for liquidity, funding and settlement management. In addition, liquidity and funding risks, and related processes and policies, are overseen by management. Alcon manages its liquidity risk on a consolidated basis according to business needs, tax, capital or regulatory considerations, if applicable, through numerous sources of financing in order to maintain flexibility. Management monitors Alcon's net debt or liquidity position through rolling forecasts on the basis of expected cash flows. For further information on maturity of the contractual undiscounted cash flows for Alcon's borrowings and interest on borrowing, refer to Note 17 of these Consolidated Financial Statements.

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

19. Provisions and other non-current liabilities

The below table provides details related to Provisions and other non-current liabilities as of December 31, 2019, and 2018.

($ millions)	2019	2018
Accrued liability for employee benefits:
Defined benefit pension plans(1)	291	254
Other long-term employee benefits and deferred compensation	140	104
Other post-employment benefits(1)	423	345
Provisions for product liabilities, governmental investigations and other legal matters	—	—
Contingent consideration(2)	208	143
Other non-current liabilities	106	67
Total provisions and other non-current liabilities	1,168	913

(1) Note 23 to these Consolidated Financial Statements provides additional disclosures related to post-employment benefits.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Alcon believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities in this area, Alcon may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to Alcon's financial condition but could be material to the results of operations or cash flows in a given period.

Provisions for product liabilities, governmental investigations and other legal matters

Alcon has established provisions for certain product liabilities, governmental investigations and other legal matters, where a potential cash outflow is probable and a reliable estimate can be made of the amount of the outflow. These provisions represent the current best estimate of the total financial effect for the matters described below and for other less significant matters. Potential cash outflows reflected in a provision may be fully or partially off-set by insurance in certain circumstances.

Alcon has not established provisions for potential damage awards for certain additional legal claims if Alcon currently believes that a payment is either not probable or cannot be reliably estimated. A number of other legal matters are in such early stages or the issues presented are such that Alcon has not made any provisions since it cannot currently estimate either a potential outcome or the amount of any potential losses. For these reasons, among others, Alcon generally is unable to make a reliable estimate of possible loss with respect to such cases. It is therefore not practicable to provide information about the potential financial impact of those cases.

There might also be cases for which Alcon was able to make a reliable estimate of the possible loss or the range of possible loss, but Alcon believes that publication of such information on a case-by-case basis would seriously prejudice Alcon's position in ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, information has been disclosed with respect to the nature of the contingency, but no disclosure is provided as to an estimate of the possible loss or range of possible loss.

Note 26 contains additional information on contingencies.

Summary of significant legal proceedings

Under the Separation and Distribution Agreement Alcon entered into with Novartis in connection with the separation and the Spin-off, Alcon and Novartis agreed, subject to certain conditions and except to the extent otherwise described below with respect to any matter, to indemnify the other party and its directors, officers, associates and other representatives against any pending or future liabilities or claims that constitute either a Novartis Group liability, in the case of Novartis, or an Alcon liability, in the case of Alcon, under the terms of the Separation and Distribution Agreement, based on whether such claim or liability relates to the Novartis business and products or Alcon's respective business and products.

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing

F-55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect our business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow. The following is a summary as of February 25, 2020 of significant legal proceedings of the Alcon business to which Alcon or its subsidiaries are a party.

Southern District of New York / Western District of New York healthcare fraud investigation

In 2011, Alcon received a subpoena from the United States Department of Health & Human Services relating to an investigation into allegations of healthcare fraud and potential off-label promotion of certain products. The subpoena requests the production of documents relating to marketing practices and the remuneration of healthcare providers in connection with surgical equipment and certain Novartis products (Vigamox®, Nevanac®, Omnipred®, Econopred®). Alcon is cooperating with this investigation.

Asia / Russia investigation

In 2017 and 2018, Alcon and Novartis, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the US Department of Justice ("DoJ") and the US SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third party distributors, both before and after Alcon was acquired by Novartis. Alcon is cooperating with this investigation. Under the Separation and Distribution Agreement, Novartis must indemnify Alcon in respect of defined direct monetary liabilities relating to the current scope of the ongoing investigation by the DoJ and the SEC relating to certain business practices in Asia and Russia and related accounting treatment.

Contact lenses class actions

Since the first quarter of 2015, more than 50 class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested.

MIVS platform patent infringement investigation

In June 2015, Johns Hopkins University ("JHU") filed a patent infringement lawsuit against certain Alcon entities alleging that the use of certain Alcon surgical products, principally by third parties, infringes a patent directed to certain methods of ocular surgery. In March 2019, Alcon and JHU entered into a settlement agreement in full settlement of all claims relating to this proceeding.

LenSx laser system and WaveLight FS200 laser patent infringement litigations

Two consolidated cases were filed against Alcon claiming that the LenSx laser system and WaveLight FS200 femtosecond laser infringe two US patents expiring in 2018 and 2030. The district court entered summary judgment for Alcon, and the plaintiff appealed to the US Court of Appeals for the Federal Circuit. The Court of Appeals affirmed the district court’s judgment for Alcon on August 8, 2019.

TCPA matter

In April 2016, a putative class action lawsuit was filed in Illinois federal court alleging that the defendants, Alcon and Novartis Pharmaceuticals Corporation ("NPC"), sent unsolicited facsimiles in violation of the Telephone Consumer Protection Act, and seeking to certify a representative putative nationwide class of affected consumers. The claims are being vigorously contested.

F-56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Product liability, governmental investigations and other legal matters provision movements

($ millions)	2019		2018		2017
January 1	42		49		9
Additions to provisions	—		1		55
Cash payments	(40	)	(1	)	(6	)
Releases of provisions	(2	)	(7	)	(9	)
December 31	—		42		49
Less current portion	—		(42	)	(43	)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	—		—		6

Alcon believes that its total provisions for investigations, product liability, arbitration and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, there can be no assurance that additional liabilities and costs will not be incurred beyond the amounts provided.

20. Provisions and other current liabilities

The following table provides details related to Provisions and other current liabilities as of December 31, 2019 and 2018:

($ millions)	2019	2018
Taxes other than income taxes	81	57
Restructuring provisions	28	8
Accrued expenses for goods and services received but not invoiced	79	71
Accruals for royalties	10	6
Accruals for deductions from revenue	212	194
Accruals for compensation and benefits including social security	382	363
Deferred income	97	94
Provisions for product liabilities, governmental investigations and other legal matters(1)	—	42
Accrued share-based payments	10	6
Accrued interest on financial debts	19	—
Contingent considerations(2)	35	19
Other payables	85	20
Total provisions and other current liabilities	1,038	880

(1) Note 19 to these Consolidated Financial Statements provides additional disclosures related to legal provisions.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Provisions and accruals are based upon management's best estimate and adjusted for actual experience. Such adjustments to the historic estimates have not been material.

F-57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Accruals for deductions from revenue

The following table shows the movement of the accruals for deductions from revenue:

($ millions)	2019		2018		2017
January 1	194		213		182
Additions	662		603		619
Payments/utilizations	(646	)	(613	)	(601	)
Changes in offset against gross trade receivables	1		2		7
Currency translation effects	1		(11	)	6
December 31	212		194		213

Restructuring provisions

The following table shows the movement of the restructuring provisions:

($ millions)	2019		2018		2017
January 1	8		3		13
Additions	32		13		—
Cash payments	(10	)	(7	)	(6	)
Releases	(2	)	(2	)	(4	)
Currency translation effects	—		1		—
December 31	28		8		3

In 2019, additions to restructuring provisions of $32 million were related to the multi-year transformation program announced by Alcon on November 19, 2019. The additions to restructuring provisions in 2019 were related to accrued severance for the associates whose positions will be eliminated.

In 2018, additions to restructuring provisions of $13 million were related to initiatives aimed at improving the efficiency and agility of Alcon's operating model.

In 2017, no additions to restructuring provisions were recorded. Alcon continued initiatives to realign its operations to focus on the surgical and vision care business after the opthamology pharmaceutical business transfer to the Novartis Innovative Medicines Division.

21. Consolidated statements of cash flows - additional details

The Consolidated Statements of Cash Flows were prepared in accordance with IAS 7, Statement of Cash Flows. The below tables provide additional detail supporting select line items in the Consolidated Statements of Cash Flows.

21.1 Depreciation, amortization, impairments and fair value adjustments

($ millions)	2019	2018		2017
Property, plant & equipment	275	241		215
Right-of-use assets	66	—		—
Intangible assets	1,084	1,397		1,090
Financial assets	31	(16	)	29
Total	1,456	1,622		1,334

F-58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

21.2 Change in net current assets and other operating cash flow items

($ millions)	2019		2018		2017
(Increase) in inventories	(108	)	(150	)	(87	)
(Increase)/decrease in trade receivables	(115	)	53		(54	)
Increase in trade payables	84		44		48
Net change in other current assets	(26	)	83		87
Net change in other current liabilities	117		50		42
Total	(48	)	80		36

21.3 Acquisitions of businesses, net

($ millions)	2019		2018		2017
Net assets recognized as a result of business combinations	(418	)	(286	)	(124	)
Payables contingent consideration	135		102		54
Other payments	—		(55	)
Cash flows	(283	)	(239	)	(70	)

Notes 4 and 22 to these Consolidated Financial Statements provide further information regarding acquisitions of businesses. All acquisitions were for cash.

21.4 Reconciliation of assets and liabilities arising from financing activities

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent		Total
January 1, 2019	(39	)	—		47		67		114
Proceeds from non-current financial debts, net of issuance costs			3,724						3,724
Repayment of non-current financial debts			(509	)					(509	)
Proceeds from Bridge Facility, net of issuance costs					1,495				1,495
Repayment of Bridge Facility					(1,500	)			(1,500	)
Change in current financial debts					202				202
Non-cash changes in derivatives and other fair value adjustments			2		20				22
Change in other financial receivables from former parent	39
Change in other financial liabilities to former parent							(67	)	(67	)
Currency translation effects			1		(3	)			(2	)
December 31, 2019	—		3,218		261		—		3,479

F-59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent	Total
January 1, 2018	(65	)	84		65		46	195
Change in current financial debts					(6	)		(6	)
Change in other financial receivables from former parent	26
Change in other financial liabilities to former parent							21	21
Non-cash change in finance lease obligation			5					5
Currency translation effects					(12	)		(12	)
Reclassification from non-current financial debts to lease liabilities			(89	)				(89	)
December 31, 2018	(39	)	—		47		67	114

22. Acquisitions of businesses

Fair value of assets and liabilities arising from acquisitions

($ millions)	2019		2018		2017
Property, plant & equipment	1		1		—
Currently marketed products	—		346		—
Acquired research & development	505		—		178
Deferred tax assets	28		12		8
Inventories	—		3		—
Trade receivables and other current assets	—		2		—
Cash and cash equivalents	6		5		1
Deferred tax liabilities	(121	)	(78	)	(64	)
Trade payables and other liabilities	(1	)	(4	)	—
Net identifiable assets acquired	418		287		123
Acquired liquidity	(6	)	(5	)	(1	)
Goodwill	6		4		2
Net assets recognized as a result of business combinations	418		286		124

Note 4 of these Consolidated Financial Statements details significant acquisitions of businesses, which were PowerVision in 2019, TrueVision and Tear Film in 2018 and ClarVista in 2017. No goodwill from 2019, 2018 or 2017 is tax-deductible.

23. Post-employment benefits for associates

Defined benefit plans

In addition to the legally required social security schemes, Alcon has sponsored numerous independent pension and other post-employment benefit plans and participates in plans of Novartis. In most cases, these plans are externally funded in entities that are legally separate from Alcon. For certain subsidiaries, however, no independent plan assets exist for the pension and other post-employment benefit obligations of associates. In these cases the related unfunded liability is included in the consolidated balance sheet. The value of the post-employment benefits promised under the pension and other post-employment benefit plans is represented by the defined benefit obligation ("DBO"), which is measured based on the projected unit credit method ("PUC").

F-60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Independent actuaries reappraise the DBOs of all major pension and other post-employment benefit plans annually. Plan assets are recognized at fair value.

The major plans are based in Switzerland, the United States, Germany, and the United Kingdom. They represent 87% of Alcon's total DBO. Details of the plans in those significant countries are provided below.

The pension plans in Switzerland represent the most significant portion of Alcon's total DBO and the largest component of Alcon's total plan assets. The principal plans in Switzerland are funded. Following the Spin-off, all Alcon Swiss associates are continuing to participate in the Novartis pension funds in which they were previously participating for a temporary period. It is expected that Alcon's employee benefit obligation will be transferred to an Alcon sponsored pension arrangement in early 2021. For the principal plans, active insured members born on or after January 1, 1956, or having joined the plans after December 31, 2010, their benefits are partially linked to the contributions paid into the plan. Certain features of Swiss pension plans required by law preclude the plans from being categorized as defined contribution plans. These factors include a minimum interest guarantee on retirement savings accounts, a pre-determined factor for converting the accumulated savings account balance into a pension and embedded death and disability benefits.

All benefits granted under Swiss-based principal pension plans are vested, and Swiss legislation prescribes that the employer has to contribute a fixed percentage of an associate's pay to an external pension fund. Additional employer contributions may be required whenever the plan's statutory funding ratio falls below a certain level. The associate also contributes to the plan. The pension plans are run by separate legal entities, each governed by a board of trustees, that, for the principal plans, consists of representatives nominated by Alcon's Former Parent and the active insured associates. The boards of trustees are responsible for the plan design and asset investment strategy.

The United States pension plans represent the second largest component of Alcon's total pension DBO and the third largest component of Alcon's total plan assets. The principal plans (Qualified Plans) are funded, whereas the plan providing additional benefits for executives (Defined Benefit Restoration Plan) is unfunded. Employer contributions are required for Qualified Plans whenever the statutory funding ratio falls below a certain level. Furthermore, associates in the United States are covered under other post-employment benefit plans which represent 99% of the total DBO for other post-employment benefit plans. These benefits in the US primarily consist of post-employment healthcare which has been closed to new members since 2015. Part of the costs of these plans is reimbursable under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. There is no statutory funding requirement for these plans.

The major pension arrangements in Germany are governed by the Occupational Pensions Act ("BetrAVG") and represent the third largest component of Alcon's total pensions DBO. The plans are partly funded by a Contractual Trust arrangement or direct insurances. The employer is responsible for contributing the premiums to the insurances and paying certain benefits when they fall due. All plans are closed for new entrants and the benefits are fully vested for all participants. For some participants the benefits are based on final salary and length of employment, and for others the benefit is earned each year based on the current salary in the year of service. Associates do not contribute towards the cost of the benefits.

The pension plans in the United Kingdom represent the fourth largest component of Alcon's total DBO and the second largest component of Alcon's total plan assets. The Alcon United Kingdom Pension Scheme is governed and administered by a board of trustees in accordance with its Trust Deed. United Kingdom legislation requires that pension schemes are funded prudently (i.e., to a level in excess of the "best estimate" expected cost of providing benefits). Funding is assessed on a triennial basis using (prudent) assumptions agreed by the board of trustee(s) and Alcon. The board of trustees are responsible for jointly agreeing with Alcon the level of contributions needed to eliminate any shortfall over a reasonable period of time, typically not exceeding 10 years. Under the governing documentation, if a surplus remains once liabilities have been settled it would be refunded to Alcon.

One of Alcon's pension plans has a surplus that is not recognized, on the basis that future economic benefits are not available to the entity in the form of a reduction in future contributions or a cash refund.

F-61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following tables summarize the funded and unfunded DBO for pension and other post-employment benefit plans of Alcon associates at December 31, 2019 and 2018:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Benefit obligation at January 1	662		671		385		382
Current service cost	22		28		8		11
Interest cost	13		15		15		13
Past service costs and settlements	2		—		—		—
Administrative expenses	1		1		—		—
Remeasurement losses/(gains) arising from changes in financial assumptions	71		(17	)	52		(3	)
Remeasurement losses/(gains) arising from changes in demographic assumptions	6		1		(1	)	6
Experience-related remeasurement (gains)/losses	(5	)	2		(20	)	(11	)
Currency translation effects	1		(15	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Contributions of associates	5		4		—		—
Effect of acquisitions, divestments or transfers	(40	)	1		—		—
Benefit obligation at December 31	723		662		423		385
Fair value of plan assets at January 1	424		445		40		65
Interest income	8		9		1		2
Return on plan assets excluding interest income	36		(13	)	3		(3	)
Currency translation effects	7		(9	)	—		—
Employer contributions	21		19		(28	)	(11	)
Contributions of associates	5		4		—		—
Settlements	—		(1	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Effect of acquisitions, divestments or transfers	(35	)	(1	)	—		—
Fair value of plan assets at December 31	451		424		—		40
Funded status	(272	)	(238	)	(423	)	(345	)
Limitation on recognition of fund surplus at January 1	(4	)	(6	)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(2	)	2
Limitation on recognition of fund surplus at December 31	(6	)	(4	)
Net liability in the balance sheet at December 31	(278	)	(242	)	(423	)	(345	)

F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The reconciliation of the net liability from January 1 to December 31 is as follows:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Net liability at January 1	(242	)	(232	)	(345	)	(317	)
Current service cost	(22	)	(28	)	(8	)	(11	)
Net interest expense	(5	)	(6	)	(14	)	(11	)
Administrative expenses	(1	)	(1	)	—		—
Past service costs and settlements	(2	)	(1	)	—		—
Remeasurements	(36	)	1		(28	)	5
Currency translation effects	6		6		—		—
Employer contributions	21		19		(28	)	(11	)
Effect of acquisitions, divestments or transfers	5		(2	)	—		—
Change in limitation on recognition of fund surplus	(2	)	2		—		—
Net liability at December 31	(278	)	(242	)	(423	)	(345	)
Amounts recognized in the balance sheet
Prepaid benefit cost	13		12		—		—
Accrued benefit liability	(291	)	(254	)	(423	)	(345	)

The following tables show a breakdown of the DBO for pension plans by geography and type of member and the breakdown of plan assets into the geographical locations in which they are held:

	2019
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	244		127		109		98	145		723
Thereof: unfunded plans	47		29		—		—	23		99
Thereof: unfunded portion of funded plans(1)	65		18		92		—	17		192
By type of member
Active	216		40		61		—	123		440
Deferred pensioners	12		46		27		54	12		151
Pensioners	16		41		21		44	10		132
Fair value of plan assets at December 31	132		80		17		109	113		451
Funded status	(112	)	(47	)	(92	)	11	(32	)	(272	)

(1) Excludes $8 million of Prepaid benefit costs and the limitation on recognition of fund surplus.

F-63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

	2018
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	201		111		94		86	170		662
Thereof: unfunded plans	49		21		—		—	18		88
Thereof: unfunded portion of funded plans(1)	46		23		78		—	19		166
By type of member
Active	166		36		56		—	148		406
Deferred pensioners	18		32		22		69	9		150
Pensioners	17		43		16		17	13		106
Fair value of plan assets at December 31	106		67		16		98	137		424
Funded status	(95	)	(44	)	(78	)	12	(33	)	(238	)

(1) Excludes $4 million of Prepaid benefit cost and the limitation on recognition of fund surplus.

The following table shows the principal weighted average actuarial assumptions used for calculating defined benefit plans and other post-employment benefits of Alcon associates:

	Pension plans				Other post-employment benefit plans
	2019		2018		2019		2018
Discount rate	1.7	%	2.2	%	3.3	%	4.3	%
Expected rate of pension increase	1.2	%	1.1	%
Expected rate of salary increase	3.3	%	2.8	%
Interest on savings account	1.0	%	0.8	%
Current average life expectancy for a 65-year-old male (in years)	21		21		21		21
Current average life expectancy for a 65-year-old female (in years)	24		23		23		23

Changes in the aforementioned actuarial assumptions can result in significant volatility in the accounting for the pension plans in the Consolidated Financial Statements. This can result in substantial changes in Alcon's other comprehensive income, non-current liabilities and prepaid pension assets.

The DBO is significantly impacted by assumptions related to the rate used to discount the actuarially determined post-employment benefit liability. This rate is based on yields of high-quality corporate bonds in the country of the plan. Decreasing corporate bond yields decrease the discount rate, so that the DBO increases and the funded status decreases.

In Switzerland, an increase in the DBO due to lower discount rates is slightly offset by lower future benefits expected to be paid on the associate's savings account where the assumption on interest accrued changes in line with the discount rate.

The impact of decreasing interest rates on a plan's assets is more difficult to predict. A significant part of the plan assets is invested in bonds. Bond values usually rise when interest rates decrease and may therefore partially compensate for the decrease in the funded status. Furthermore, pension assets also include significant holdings of equity instruments. Share prices tend to rise when interest rates decrease and therefore often counteract the negative impact of the rising DBO on the funded status (although the correlation of interest rates with equities is not as strong as with bonds, especially in the short term).

The expected rate for pension increases significantly affects the DBO of most plans in Switzerland, Germany and the United Kingdom. Such pension increases also decrease the funded status, although there is no strong correlation between the value of the plan assets and pension/inflation increases.

F-64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Assumptions regarding life expectancy significantly impact the DBO. An increase in longevity increases the DBO. There is no offsetting impact from the plan assets, as no longevity bonds or swaps are held by the pension funds. Generational mortality tables are used where this data is available.

The following table shows the sensitivity of the defined benefit pension and other post-employment benefit obligations to the principal actuarial assumptions as of December 31, 2019:

($ millions)	Change in 2019 year-end
25 basis point increase in discount rate	(43	)
25 basis point decrease in discount rate	46
1 year increase in life expectancy	32
25 basis point increase in rate of pension increase	15
25 basis point decrease in rate of pension increase	(27	)
25 basis point increase of interest on savings account	2
25 basis point decrease of interest on savings account	(2	)
25 basis point increase in rate of salary increase	6
25 basis point decrease in rate of salary increase	(6	)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes of the assumptions may be correlated. When calculating the sensitivity of the DBO to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the PUC method at the end of the reporting period) has been applied as when calculating the net liability recognized in the Consolidated Balance Sheets.

The healthcare cost trend rate assumptions used for other post-employment benefits are as follows:

	2019		2018		2017
Healthcare cost trend rate assumed for next year	6.5	%	7.0	%	6.5	%
Rate to which the cost trend rate is assumed to decline	4.5	%	4.5	%	4.5	%
Year that the rate reaches the ultimate trend rate	2028		2028		2025

The following table shows the weighted average plan asset allocation of funded defined benefit pension plans at December 31, 2019, and 2018:

	Pension plans
(as a percentage)	Long-term target minimum	Long-term target maximum	2019	2018
Equity securities	15	40	32	28
Debt securities	20	60	42	43
Real estate	5	20	7	9
Alternative investments	0	20	15	17
Cash and other investments	0	15	4	3
Total			100	100

Cash and most of the equity and debt securities have a quoted market price in an active market. Real estate and alternative investments, which include hedge fund and private equity investments, usually do not have a quoted market price.

The strategic allocation of assets of the different pension plans is determined with the objective of achieving an investment return that, together with employer contributions and contributions of associates, is sufficient to

F-65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

maintain reasonable control over the various funding risks of the plans. Based upon the market and economic environments, actual asset allocations may temporarily be permitted to deviate from policy targets.

The weighted average duration of the DBO is 15.6 years (2018: 16.9 years).

Alcon's ordinary contribution to the various pension plans is based on the rules of each plan. Additional contributions are made whenever required by statute or law (i.e., usually when statutory funding levels fall below pre-determined thresholds).

The following table summarizes expected future cash flows for pension and other post-employment benefit plans as of December 31, 2019:

($ millions)	Pension plans	Other post-employment benefit plans
Employer contributions
2020 (estimated)	14	—
Expected future benefit payments
2020	41	21
2021	26	22
2022	27	24
2023	27	25
2024	32	26
2025-2029	169	133

Defined contribution plans

In many subsidiaries, associates are covered by defined contribution plans. Contributions charged to the 2019 Consolidated Income Statement for the defined contribution plans were $128 million (2018: $105 million; 2017: $97 million).

24. Equity-based compensation

For the year ended December 31, 2019, Alcon recorded equity-based compensation expense of $114 million (2018: $93 million, 2017: $71 million).

Liabilities from cash-settled equity-based compensation plans were $10 million as of December 31, 2019 (2018: $6 million).

On April 9, 2019, Alcon adopted various equity-based incentive plans, under which Alcon may grant awards in the form of restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs"), restricted stock awards ("RSAs"), or any other form of award at the discretion of the Board. Certain associates in select countries may also participate in share ownership savings plans.

Prior to the Spin-off, Alcon associates participated in Novartis equity-based participation plans, which included stock options, RSUs, PSUs, RSAs and certain share savings ownership plans. Such awards were settled in shares or options of the Former Parent. For periods prior to the Spin-off, the Consolidated Income Statements reflect the compensation expense for the Novartis’s equity-based incentive plans in which Alcon associates participated.

Replacement awards

Concurrent with the Spin-off, certain outstanding Novartis awards granted to Alcon associates under Novartis’ equity-based incentive plans vested in Novartis equity on a pro rata basis, in proportion to the amount of the vesting period completed. The remaining unvested Novartis awards were replaced and restored with Alcon awards as governed by the Alcon equity restoration plan with terms and vesting schedules substantially similar to the replaced Novartis awards.

F-66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The pro rata vesting of Novartis awards and replacement of forfeited unvested Novartis awards with Alcon awards represents a modification under IFRS 2, Share-based Payment. Alcon measured the fair value of the awards immediately prior to and subsequent to the modification and concluded that no incremental fair value was provided to associates. Accordingly, Alcon continues to recognize as an expense the amount of unrecognized compensation cost of the original awards over the remaining vesting periods. Alcon issued 4.2 million unvested equity-based awards in connection with the modification at the time of the the Spin-off.

The replacement awards consist primarily of RSUs and PSUs, and vest over a period consistent with the original vesting schedule of the awards which they replaced. In addition to the replacement awards, Alcon has granted additional equity-based awards under the newly-established Alcon incentive plans which were also granted in the form of RSUs and PSUs that will settle in Alcon Inc. shares upon vesting.

Summary of unvested share movements

Alcon granted 0.7 million unvested equity-based awards subsequent to the Spin-off. There were 4.7 million unvested equity-based Alcon awards outstanding as of December 31, 2019 after giving effect to 0.1 million equity-based awards vested and 0.1 million awards forfeited during the period.

The below table summarizes unvested share movements for all Alcon equity-based incentive plans from the Spin-off through December 31, 2019:

	2019
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Replacement awards issued at Spin-off(1)	4,222		n/a	212,367
Granted
Restricted awards	625		56.1	35,037
Performance awards	117		58.0	6,782
Vested(1)	(108	)	n/a	(5,432	)
Forfeited(1)	(114	)	n/a	(5,734	)
Unvested shares at December 31	4,742		51.2	243,020

(1) Based on estimated fair value per share at the time of Spin-off.

The remaining weighted-average vesting period of unvested equity-based awards as of December 31, 2019 was 1.5 years.

Alcon equity-based incentive plans

The table below discloses the number of shares authorized under the plans as of December 31, 2019:

(thousands)	2019
Long-term Incentive Plan	20,000
Deferred Bonus Stock Plan	1,500
Swiss Employee Share Ownership Plan	475
Other share savings plans	275
Authorized as of December 31, 2019	22,250

F-67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Long-Term Incentive Plan ("LTIP") - Restricted Stock Units and Restricted Stock Awards

Under Alcon's LTIP, certain eligible executives and management personnel may receive grants of RSUs and RSAs (together "Restricted awards"). The awards generally vest on the third anniversary of the award and are generally forfeited if the employment relationship with Alcon terminates prior to vesting. Recipients of RSU awards do not have any shareholder rights, such as voting or dividend rights, until the shares are delivered. Alcon associates receiving grants of RSAs are entitled to the dividend equivalents that may be declared and paid over the vesting period only if the associates vest in such award.

For the periods prior to the Spin-off, Alcon associates participated in the Former Parent's "Select" plan. The Company's LTIP plan is substantially similar to and replaced the Former Parent plan.

LTIP - Performance Stock Units

The Alcon CEO and Alcon Top Leaders ("ATLs") participate in Alcon's long-term performance program. PSUs granted under the LTIP each convert to one unrestricted Alcon Inc. share at vesting, subject to the achievement of performance measures.

PSUs awarded to plan participants are granted at target incentive ranges from 30% to 280% of base compensation and vest over a three-year period. The payout between 0% and 200% of target is dependent upon four equally weighted performance metrics which are determined at the onset of the performance period by the Alcon Inc. Board of Directors. The metrics include cumulative annual growth rate of Net sales, Core EPS, market share, and innovation. The Alcon Inc. Board of Directors and the Compensation, Governance and Nomination Committee assess the performance against the defined measures and approve the final payout. PSUs granted under the performance plan do not carry voting rights, but do carry dividend equivalents that are paid in Alcon Inc. shares at vesting, provided participants remain associates of Alcon.

For the periods prior to the Spin-off, Alcon associates participated in the Former Parent's Long-Term Performance Plan ("LTPP") and Long-Term Relative Performance Plan ("LTRPP"), which were substantially similar to Alcon's LTIP performance program.

Deferred Bonus Stock Plan ("DBSP")

The Alcon CEO's annual incentive is paid 50% in cash in the year following the performance period, and 50% in Alcon Inc. RSUs or RSAs. ATLs receive 70% of their annual incentive in cash and 30% in Alcon Inc. RSUs or RSAs. The RSUs and RSAs are granted in first quarter of the year following the performance period, which are deferred and restricted for three years. Each RSU is converted into one Alcon Inc. share at the vesting date. RSUs granted under the DBSP do not carry any dividend, dividend equivalent or voting rights. Executives in certain countries may elect to also receive some or all of their cash incentive in shares or share units that are not subject to vesting conditions.

The Alcon DBSP is substantially similar to and replaces the Annual Incentive plan, which existed in the periods prior to the Spin-off.

Swiss Employee Share Ownership Plan and other share savings plans

Alcon associates in certain countries are encouraged to invest their annual incentive in a share savings plans. Under the share savings plans, participants may elect to receive some or all of their annual incentive in Alcon Inc. shares in lieu of cash. Subject to plan rules and limitations, as a reward for their participation in the share savings plans, at no additional cost to the participant, Alcon may fully or partially match their investments in shares after a holding period of three or five years.

Prior to the Spin-off, Alcon associates participated in the Former Parent's share savings plans, which were substantially similar to and replaced by Alcon's share savings plans.

F-68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Equity-based incentive plans under Former Parent

The below table summarizes unvested share movements for all plans under the Former Parent for the year ended December 31, 2018 (Novartis AG RSAs, RSUs, and PSUs):

	2018
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Unvested shares at January 1	2,800		74.4	208,300
Granted
Annual incentive	168		83.7	14,062
Share savings plans	109		85.5	9,320
Select North America	689		77.9	53,673
Select outside North America	141		79.8	11,252
Long-Term Performance Plan	316		88.4	27,934
Long-Term Relative Performance Plan	37		51.2	1,894
Other share awards	205		83.1	17,036
Vested	(814	)	93.0	(75,702	)
Forfeited	(208	)	80.4	(16,723	)
Unvested shares at December 31	3,443		72.9	251,046

Until 2013, participants in the Former Parent's "Select" plan could also elect to receive part or all of their grant in the form of Novartis AG tradable share options. Novartis AG tradable share options expire on their tenth anniversary from the grant date. Each Novartis AG tradable share option entitles the holder to purchase after vesting (and before the tenth anniversary from the grant date) one Novartis AG share at a stated exercise price that equals the closing market price of the underlying Novartis AG share at the grant date.

Options under Novartis equity plan "Select" outside North America

The following table shows the activity associated with the Novartis AG share options during the year ended December 31, 2018. The weighted average prices in the table below are translated from Swiss francs into USD at historical rates.

	2018
	Options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	0.5		61.1	24.7
Sold or exercised	(0.1	)	59.7	29.1
Outstanding at December 31	0.4		61.4	26.5
Exercisable at December 31	0.4		61.4	26.5

All Novartis AG share options were granted at an exercise price that was equal to the closing market price of the Novartis AG shares at the grant date. The weighted average Novartis AG share price at the dates of sale or exercise was $86.2.

F-69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes information about Novartis AG share options outstanding at December 31, 2018:

	Options outstanding
Range of exercise prices($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	32	0.7	52.4
56 - 66	394	3.5	62.1
Total	426	3.3	61.4

Options under Novartis equity plan "Select" for North America

The following table shows the activity associated with the Novartis AG American Depositary Receipts ("ADR") options during the period:

	2018
	ADR  options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	1.8		62.5	21.4
Sold or exercised	(0.5	)	62.4	25.8
Outstanding at December 31	1.3		62.6	23.2
Excercisable at December 31	1.3		62.6	23.2

All ADR options were granted at an exercise price that was equal to the closing market price of the ADRs at the grant date. The weighted average ADR price at the dates of sale or exercise was $81.4.

The following table summarizes information about ADR options outstanding at December 31, 2018:

	ADR options outstanding
Range of exercise prices ($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	30	0.6	50.7
56 - 66	1,258	3.6	62.9
Total	1,288	3.5	62.6

25. Related parties transactions

Prior to the Spin-off, the Alcon business was a segment of Novartis such that transactions with Novartis were considered related party transactions. In connection with the Spin-off, Alcon entered into a separation and distribution agreement as well as various other agreements governing relationships with Novartis going forward, including manufacturing and supply, transitional services, tax matters, employee matters, and patent and know-how license and brand license agreements. Information included in this Note with respect to Novartis is strictly limited to related party transactions with Novartis prior to the Spin-off on April 9, 2019.

Transactions with Novartis (up to April 9, 2019)

Transactions from trading activities related to products and services invoiced between other Novartis Group companies and Alcon's business, have been retained in the historical Consolidated Financial Statements. The ultimate controlling parent of both, the other Novartis Group companies and Alcon's business, was Novartis AG until the Spin-off.

F-70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes amounts for the years ended December 31, 2019, 2018, and 2017:    

($ millions)	2019 (1)	2018	2017
Sales to former parent	—	4	4
Contract manufacturing revenues from former parent	47	—	—
Purchases from former parent	19	4	3

($ millions)	December 31, 2018(1)
Trade and other receivables from former parent	20
Trade and other payables to former parent	85
Other financial receivables from former parent	39
Other financial liabilities to former parent	67

(1) Activity presented strictly relates to the period during which Novartis was a related party (up to April 9, 2019).

Sales to and purchases from former parent

Beginning in 2019, product sales to Novartis are recorded in Other revenues in line with Alcon's contract manufacturing arrangement executed with Novartis. Other revenues in 2019 prior to the Spin-off were $47 million. Purchases of products from Novartis under the contract manufacturing arrangement totaled $19 million in 2019 prior to the Spin-off.

Other financial receivables and payables related to former parent

Prior to the Spin-off, the majority of Alcon's subsidiaries were party to Novartis cash pooling arrangements with several financial institutions to maximize the availability of cash for general operating and investing purposes. Under these cash pooling arrangements, cash balances were swept by Novartis regularly from Alcon's bank accounts, and the net position with the Novartis cash pooling accounts at the end of each reporting period was reflected in the consolidated balance sheet in Other financial receivables from former parent or Other financial liabilities to former parent. These cash pooling arrangements were eliminated during the three months ended March 31, 2019 in anticipation of the Spin-off and replaced with third party financing arrangements as needed.

Novartis Business Services ("NBS") Charges, Corporate Overhead and Other Allocations from Novartis

Prior to January 1, 2019, Novartis Group provided Alcon certain services from NBS, the shared service organization of Novartis Group, across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations. The Consolidated Financial Statements include the appropriate costs related to the services rendered, without profit margin, in accordance with the historical arrangements that existed between the Alcon business and NBS.

Further, certain general and administrative costs of Novartis Group were not charged or allocated to the Alcon business in the past. For the purpose of the 2017 and 2018 financial statements, such costs were allocated based on reasonable assumptions and estimates, based on the direct and indirect costs incurred to provide the respective service. When specific identification was not practicable, a proportional cost method was used, primarily based on sales or headcount.

These NBS charges, corporate overhead and other allocations amounted to $553 million in 2018 and $535 million in 2017.

During 2018, Alcon formed its own business and corporate support functions, including its own service organization, such that certain activities and associates were transferred from Novartis to Alcon, operationally effective January 1, 2019. Services provided by Novartis Group to Alcon in 2019 prior to the Spin-off totaled $40 million and primarily related to human resources operations, real estate and facility services, and information technology.

Management believes that the net charges and methods used for allocations to Alcon were performed on a reasonable basis and reflect the services received by Alcon and the cost incurred on behalf of Alcon. Although the Consolidated Financial Statements reflect management's best estimate of all historical costs related to Alcon,

F-71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

this may however not necessarily reflect what the results of operations, financial position, or cash flows would have been had Alcon been a separate entity, nor the future results of Alcon as it exists following completion of the separation on April 9, 2019.

Transactions with members of the Board of Directors

Dr. Arthur Cummings, an Alcon Board of Director, in his capacity as an ophthalmologist, provides certain consulting services, including assistance with various clinical trials to Alcon. In 2019, Alcon paid to Dr. Cummings (or his related entities) approximately $84,844.

Executive officers

The following table summarizes compensation information for key management personnel (7 members for all years presented):

($ millions)	2019	2018	2017
Cash and other compensation	12.5	10.3	9.3
Post-employment benefits	0.9	0.8	0.8
Equity-based compensation	10.7	11.3	6.8
Total	24.1	22.4	16.9

26. Commitments and contingencies

Commitments

Research & development

Alcon has entered into long-term research agreements with various institutions which provide for potential milestone payments and other payments by Alcon that may be capitalized. As of December 31, 2019, the commitments to make payments under those agreements, and their estimated timing, were as follows:

($ millions)	2019
2020	28
2021	41
2022	4
2023	4
2024	33
Thereafter	71
Total	181

Other

Alcon entered into various purchase commitments for services and materials as well as for equipment in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations. For disclosure of Property, plant and equipment purchase commitments, see Note 9 .

Contingencies

The Alcon companies have to observe the laws, government orders and regulations of the country in which they operate.

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect our business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material

F-72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow.

Governments and regulatory authorities around the world have been stepping up their compliance and law enforcement activities in recent years in key areas, including marketing practices, pricing, corruption, trade restrictions, embargo legislation, insider trading, antitrust, cyber security and data privacy. Further, when one government or regulatory authority undertakes an investigation, it is not uncommon for other governments or regulators to undertake investigations regarding the same or similar matters. Responding to such investigations is costly and requires an increasing amount of management's time and attention. In addition, such investigations may affect Alcon's reputation, create a risk of potential exclusion from government reimbursement programs in the United States and other countries, and may lead to (or arise from) litigation. These factors have contributed to decisions by Alcon and other companies in the medical device and healthcare industry, when deemed in their interest, to enter into settlement agreements with governmental authorities around the world prior to any formal decision by the authorities or a court. Those government settlements have involved and may continue to involve, in current government investigations and proceedings, large cash payments, sometimes in the hundreds of millions of dollars or more, including the potential repayment of amounts allegedly obtained improperly and other penalties, including treble damages. In addition, settlements of government healthcare fraud cases often require companies to enter into corporate integrity agreements, which are intended to regulate company behavior for a period of years. Also, matters underlying governmental investigations and settlements may be the subject of separate private litigation.

While provisions have been made for probable losses, which management deems to be reasonable or appropriate, there are uncertainties connected with these estimates. Note 19 contains additional information on these matters.

Alcon is involved in legal proceedings concerning intellectual property rights. The inherent unpredictability of such proceedings means that there can be no assurances as to their ultimate outcome. A negative result in any such proceeding could potentially adversely affect the ability of certain Alcon companies to sell their products, or require the payment of substantial damages or royalties.

Alcon's potential for environmental remediation liability is assessed based on a risk assessment and investigation of the various sites identified by Alcon as at risk for environmental remediation exposure. Alcon's future remediation expenses are affected by a number of uncertainties. These uncertainties include, but are not limited to, the method and extent of remediation, the percentage of material attributable to Alcon at the remediation sites relative to that attributable to other parties, and the financial capabilities of the other potentially responsible parties.

Alcon has no significant environmental liabilities as at December 31, 2019 and 2018 and has incurred no significant remediation costs for the years ended December 31, 2019, 2018 and 2017.

F-73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

27. Subsequent events

Subsequent to December 31, 2019, the Revolving Facility was extended to March 2025. The Revolving Facility remained undrawn as of February 25, 2020.

On February 25, 2020, the Alcon Board of Directors approved the proposal to submit the 2019 financial statements of Alcon Inc. and these Consolidated Financial Statements for approval at the Annual General Meeting on May 6, 2020.  Additionally on February 25, 2020, the Board proposed a dividend of CHF 0.19 per share to be approved at the same Annual General Meeting.  If approved, the total dividend payments would amount to approximately $95 million using the CHF/USD exchange rate as of February 21,2020.

The Board of Directors has evaluated subsequent events as they relate to Alcon for potential recognition or disclosures from January 1, 2020 to the date of the approval of these Consolidated Financial Statements and has determined there are no additional subsequent events to be reported in these Consolidated Financial Statements.

F-74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

28. Alcon subsidiaries

The following table lists the Alcon legal entities with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements at and for the year ended December 31, 2019, respectively. The equity interest percentage shown in the table represents Alcon's share in voting rights in those entities. Unless otherwise stated, each entity has share capital consisting of equity held directly by the Company or another of its consolidated subsidiaries.

Country of organization/Entity name	Place of business	Equity interest
Argentina
Alcon Laboratorios Argentina S.A.	Buenos Aires	100	%
Australia
Alcon Laboratories (Australia) Pty Ltd	Frenchs Forest, NSW	100	%
Austria
Alcon Ophthalmika GmbH	Wein	100	%
Belgium
Alcon Laboratories Belgium BVBA	Puurs	100	%
N.V. Alcon S.A.	Vilvoorde	100	%
Canada
Alcon Canada Inc.	Mississauga, Ontario	100	%
Chile
Alcon Laboratorios Chile Ltd.	Santiago de Chile	100	%
China
Alcon (China) Ophthalmic Product Co., Ltd.	Beijing	100	%
Alcon Hong Kong Limited	Hong Kong	100	%
Colombia
Laboratorios Alcon de Colombia S.A.	Santafé de Bogotá	100	%
Czech Republic
Alcon Pharmaceuticals (Czech Republic) s.r.o.	Prague	100	%
Denmark
Alcon Nordic A/S	Copenhagen	100	%
Dominican Republic
Alcon Dominicana, SRL	Santo Domingo	100	%
Ecuador
AlconLab Ecuador S.A.	Quito	100	%
France
Laboratoires Alcon S.A.S.	Rueil-Malmaison	100	%
Germany
Alcon Pharma GmbH	Freiburg im Breisgau	100	%
CIBA Vision GmbH	Grosswallstadt	100	%
WaveLight GmbH	Erlangen	100	%
Greece
Alcon Laboratories Hellas- Single Member Commercial and Industrial S.A.C.I.	Maroussi, Athens	100	%
Hungary
Alcon Hungary Pharmaceuticals Trading Limited Liability Company	Budapest	100	%
India
Alcon Laboratories (India) Private Limited	Bangalore	100	%
Indonesia
PT. CIBA Vision Batam	Batam	100	%
Ireland
Alcon Laboratories Ireland Limited	Cork City	100	%
Israel
Optonol Ltd.	Neve-Ilan	100	%

F-75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Country of organization/Entity name	Place of business	Equity interest
Italy
Alcon Italia S.p.A.	Milano	100	%
Japan
Alcon Japan Ltd.	Tokyo	100	%
Malaysia
Alcon Laboratories (Malaysia) Sdn. Bhd.	Petaling Jaya	100	%
CIBA Vision Johor Sdn. Bhd.	Kuala Lumpur	100	%
Mexico
Alcon Laboratorios, S.A. de C.V.	Ciudad de Mexico	100	%
Morocco
Alcon Maroc SARL D´Associé Unique	Casablanca	100	%
Netherlands
Alcon Nederland B.V.	Arnhem	100	%
New Zealand
Alcon Laboratories (New Zealand) Ltd.	Auckland	100	%
Panama
Alcon Centroamerica S.A.	Panama City	100	%
Peru
Alcon Pharmaceutical del Peru S.A.	Lima	100	%
Philippines
Alcon Laboratories (Philippines), Inc.	Manila	100	%
Poland
Alcon Polska Sp. z o.o.	Warszawa	100	%
Portugal
Alcon Portugal-Produtos e Equipamentos Oftalmológicos Lda.	Porto Salvo	100	%
Puerto Rico
Alcon (Puerto Rico), Inc.	Cataño, PR	100	%
Romania
Alcon Romania S.R.L.	Bucharest	100	%
Russian Federation
Alcon Farmacevtika LLC	Moscow	100	%
Singapore
Alcon Pte Ltd	Singapore	100	%
Alcon Singapore Manufacturing Pte Ltd	Singapore	100	%
CIBA Vision Asian Manufacturing and Logistics Pte Ltd.	Singapore	100	%
South Africa
Alcon Laboratories (South Africa) (Pty) Ltd.	Midrand	100	%
South Korea
Alcon Korea Ltd.	Seoul	100	%
Spain
Alcon Healthcare S.A.	Barcelona	100	%
Switzerland
Alcon Inc.	Fribourg	100	%
Alcon Grieshaber AG	Schaffhausen	100	%
Alcon Management SA	Vernier	100	%
Alcon Pharmaceuticals Ltd.	Fribourg	100	%
Alcon Services AG	Fribourg	100	%
Alcon Switzerland SA	Risch	100	%
Thailand
Alcon Laboratories (Thailand) Limited	Bangkok	100	%
Turkey
Alcon Laboratuvarlari Ticaret A.S.	Istanbul	100	%

F-76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Country of organization/Entity name	Place of business	Equity interest
Ukraine
Alcon Ukraine LLC	Kiev	100	%
United Kingdom
Alcon Eye Care UK Limited	Frimley/Camberley	100	%
United States of America
Alcon Finance Corporation	Wilminton, DE	100	%
Alcon Laboratories, Inc.	Wilminton, DE	100	%
Alcon RefractiveHorizons, LLC	Fort Worth, TX	100	%
Alcon Research, LLC	Fort Worth, TX	100	%
Alcon Vision, LLC	Fort Worth, TX	100	%
CIBA Vision, LLC	Duluth, GA	100	%
WaveLight, Inc.	Sterling, VA	100	%
ClarVista Medical, Inc.	Aliso Viejo, CA	100	%
PowerVision, Inc.	Fort Worth, TX	100	%
Tear Film Innovations, Inc.	Fort Worth, TX	100	%
TrueVision Systems, Inc.	Fort Worth, TX	100	%
Alcon Lensx, Inc.	Fort Worth, TX	100	%

The list below shows the principal Novartis legal entities containing assets, liabilities and results of operations attributable to the Alcon business with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements.

Brazil⁽¹⁾

Novartis Biociências S.A.

Mexico

Novartis Farmacéutica, S.A. de C.V.

(1) In accordance with the Separation and Distribution Agreement with Novartis, the separation from Novartis of the Alcon business in Brazil was delayed, and the Alcon business in Brazil remained in Novartis Biociências S.A. following the Spin-off.  On February 3, 2020, the Alcon business in Brazil was transferred from Novartis Biociências S.A. to Alcon Brasil Cuidados com a Saúde Ltda. (“Alcon Brazil”), and on February 4, 2020, Alcon acquired from Novartis 100% of the ownership interests of Alcon Brazil, thereby completing the delayed transfer of the Alcon business in Brazil from Novartis to Alcon. 

F-77

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Alcon Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Alcon Inc. and its subsidiaries (the “Company”) as of December 31, 2019, and the related consolidated statements of income, comprehensive (loss)/income, changes in equity and cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited the effects of disclosing earnings/(loss) per share information, as described in Note 8.2. In our opinion, such disclosures are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2018 or 2017 financial statements of the Company other than with respect to the earnings/(loss) per share disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2018 or 2017 financial statements taken as a whole.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Fort Worth, Texas

February 25, 2020

We have served as the Company's auditor since 2019.

F-78

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Alcon Inc.

Opinion on the Financial Statements

We have audited the balance sheet of Alcon Inc. (formerly known as the Novartis AG Alcon business)(the ‘‘Company’’), as of December 31, 2018, and the related income statements, statements of comprehensive income, statements of changes in equity, and statements of cash flow for each of the two years in the period ended December 31, 2018, including the related notes (collectively referred to as the ‘‘financial statements’’) before the effects of disclosing earnings/(loss) per share information discussed in Note 8.2. In our opinion, the financial statements, before the effects of disclosing earnings/(loss) per share information discussed in Note 8.2, present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (the 2018 financial statements before the effects of disclosing earnings/(loss) per share information discussed in Note 8.2 are not presented herein).

We were not engaged to audit, review, or apply any procedures to the earnings/(loss) per share information described in Note 8.2 and accordingly, we do not express an opinion or any other form of assurance about whether such disclosures are appropriate and have been properly applied. Those disclosures were audited by other auditors.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements, before the effects of disclosing earnings/(loss) per share information described above, based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers SA

Geneva, Switzerland

February 28, 2019

We served as the Company’s auditor from 2017 to 2019.

F-79

EX-1.1

Exhibit 1.1

Articles of Incorporation of Alcon Inc.

1 | Articles of Incorporation of Alcon Inc.

Section 1	Corporate Name, Registered Office, Purpose and Duration 2
Section 2	Share Capital 4
Section 3	Corporate Bodies 7
	A. General Meeting of Shareholders 7
	B. Board of Directors 13
	C. Auditors 19
Section 4	Compensation of the Board of Directors and the Executive Committee 20
Section 5	Annual Financial Statements, Consolidated Financial Statements and Profit Allocation 26
Section 6	Publications and Place of Jurisdiction 27
Section 7	Language 27

2 | Articles of Incorporation of Alcon Inc.

Section 1		Corporate Name, Registered Office, Purpose and Duration
		Article 1
Corporate name, Registered office		Under the Corporate name Alcon AG Alcon SA Alcon Inc. there exists a company limited by shares with its registered office in Fribourg.
		Article 2
Purpose	1	The purpose of the Company is to acquire, hold, manage, sell direct and indirect participations in enterprises of any kind, in particular in the area of health care, medical devices, biology, chemistry, physics, information technology and related areas in Switzerland and abroad.
	2	The Company may establish enterprises of any kind in Switzerland and abroad, hold equity interest in these enterprises, and conduct their management. The Company may acquire, mortgage, operate or sell real estate and intellectual property rights in Switzerland or abroad. The Company may provide loans, guarantees and other kinds of financing and security for Group companies as well as borrow and invest money on the money and capital markets.
	3	The Company may engage in all other types of activities or transactions and may take all measures that appear appropriate to promote the purpose of the Company or that are related to the same.
	4	In pursuing its purpose, the Company strives to create sustainable value.
		Article 3
Duration		The duration of the Company is unlimited.
Section 2		Share Capital
		Article 4

3 | Articles of Incorporation of Alcon Inc.

Ordinary share capital	1	The share capital of the Company is CHF 19,668,000, fully paid-in and divided into 491,700,000 registered shares. Each share has a nominal value of CHF 0.04.
	2	Upon resolution of the General Meeting of Shareholders registered shares may be converted into bearer shares and reversed bearer shares may be converted into registered shares.
		Article 4a
Authorized share capital for employee participation plans	1	The Board of Directors is authorized, at any time until 29 January 2021, to increase the Company’s share capital by a maximum of CHF 857,400 through the issue of up to 21,435,000 fully paid up new shares of CHF 0.04 nominal value each for the purpose of any share-based incentive or other participation plans, schemes or arrangements for directors, employees or advisors of the Company or its consolidated subsidiaries ("Employee Participation Plans"). Share capital increases representing one or several portions of this maximum are permitted.
	2	The Board of Directors shall determine the amount of share capital to be issued, the form of payment required for subscription, the date of issue, and the commencement of dividend entitlement.
	3	Existing shareholders’ subscription rights shall be excluded and the Board of Directors is authorized to allocate the shares as it deems appropriate (including to any group company or third party involved in the administration of any Employee Participation Plan) to fulfil or cover existing or future obligations to deliver shares under any Employee Participation Plan.
		Article 5
Shareholders register		The Company shall maintain a shareholders register showing the last names, first names, domicile (in the case of legal entities the registered office) and address of the holders or usufructuaries of registered shares.
		Article 6
Form of shares	1	Subject to paragraph 3 of this Article, the registered shares of the Company are issued as uncertificated securities (in terms of the Swiss Code of Obligations). The Company may cause all or a part of such uncertificated securities to be entered into a main register of a custodian as an underlying security for book entry securities (in terms of the Book Entry Securities Act).

4 | Articles of Incorporation of Alcon Inc.

	2	Provided that the shareholder is registered in the shareholders register, the shareholder may request from the Company a statement of his or her registered shares at any time.
	3	The shareholder has no right to the printing and delivery of certificates. The Company may, however, in its sole discretion, transform the underlying securities for book entry securities into another form or withdraw such securities from the custodian system at any time; in particular, the Company may print and deliver certificates (individual share certificates, certificates or global certificates) for shares and deregister uncertificated securities entered into the main register of a custodian.
	4	A disposition of shares in the form of uncertificated securities which are not entered into the main register of a custodian shall be effected by way of a written declaration of assignment and requires, as a condition for validity, to be notified to the Company. In contrast, a disposition of shares which exist in the form of book entry securities based on uncertificated securities entered into the main register of a custodian shall solely be effected by entries in securities accounts in accordance with applicable law, without prerequisite to be notified to the Company; a disposition of such shares by way of assignment without corresponding entry in a securities account is excluded.
	5	The Company may prescribe the use of forms for purposes of notification in accordance with paragraph 4 of this Article.
		Article 7
Exercise of rights	1	The shares are not divisible. The Company accepts only one representative per share.
	2	The right to vote and the rights associated therewith may only be exercised vis-à-vis the Company by a shareholder, usufructuary or nominee who is registered in the share register in respect of the shares concerned.
Section 3		Corporate Bodies A. General Meeting of Shareholders
		Article 8
Competence		The General Meeting of Shareholders is the supreme body of the Company.
		Article 9

5 | Articles of Incorporation of Alcon Inc.

General Meetings a. Annual General Meeting		The Annual General Meeting of Shareholders shall be held each year within six months after the close of the financial year of the Company; at the latest twenty days before the meeting the annual report and the reports of the auditors shall be made available for inspection by the Shareholders at the registered office of the Company. Notification thereof may be made by way of a publication in the publication organs set forth in Article 38 of these Articles of Incorporation.
		Article 10
b. Extraordinary General Meetings of Shareholders	1	Extraordinary General Meetings of Shareholders shall take place upon request of the Board of Directors or the Auditors.
	2	Furthermore, Extraordinary General Meetings of Shareholders shall be convened upon resolution of a General Meeting of Shareholders or if it is required by one or more shareholders who are representing in the aggregate not less than one tenth of the share capital and submit a petition signed by such shareholder or shareholders specifying the items for the agenda and the proposals.
		Article 11
Convening of General Meetings of Shareholders	1	General Meetings of Shareholders shall be convened by the Board of Directors at the latest twenty days before the date of the meeting. The meeting shall be convened by way of a notice appearing once in the official publication organs of the Company. Registered shareholders may also be informed by mail.
	2	The notice of a meeting shall state the items on the agenda and the proposals of the Board of Directors and as the case may be of the shareholders who demanded that a General Meeting of Shareholders be convened and, in case of elections, the names of the nominated candidates.
		Article 12
Agenda	1	One or more shareholders whose combined shareholdings represent an aggregate nominal value of at least CHF 1 million may demand that an item be included in the agenda of a General Meeting of Shareholders. Such a demand must be made in writing at the latest forty-five days before the meeting and shall specify the items and the proposals of such a shareholder.

6 | Articles of Incorporation of Alcon Inc.

	2	No resolution shall be passed at a General Meeting of Shareholders on matters for which no proper notice was given. This provision shall not apply to proposals to convene an Extraordinary General Meeting of Shareholders or to initiate a special audit.
		Article 13
Presiding officer, Minutes, Vote counters	1	The General Meeting of Shareholders shall take place in Switzerland, unless the Board of Directors decides otherwise. The General Meeting shall be presided by the chair of the Board of Directors, in his absence, by the vice-chair or another member of the Board of Directors chosen by the Board of Directors.
	2	The chairperson of the meeting shall appoint a secretary and the vote counters. The minutes shall be signed by the chairperson of the meeting and the secretary.
		Article 14
Proxies	1	The Board of Directors may issue regulations regarding the participation and the representation at the General Meeting of Shareholders and may allow electronic proxies without qualified signatures.
	2	A shareholder may be represented at a General Meeting of Shareholders by means of a written proxy by a third person who does not need to be a shareholder.
	3	The General Meeting of Shareholders shall elect the Independent Proxy for a term of office lasting until completion of the next Annual General Meeting of Shareholders. Re-election is possible.
	4	If the Company does not have an Independent Proxy, the Board of Directors shall appoint the Independent Proxy for the next General Meeting of Shareholders.
		Article 15
Voting rights		Each share entitles to one vote.
		Article 16
Resolutions, Elections	1	Unless the law requires otherwise, the General Meeting passes resolutions and elections with the absolute majority of the votes validly represented.
	2	Resolutions and elections shall be taken either on a show of hands or by electronic voting, unless the General Meeting decides for, or the presiding officer orders, a secret ballot.

7 | Articles of Incorporation of Alcon Inc.

	3	The presiding officer may at any time order to repeat an election or resolution taken on a show of hands with a secret ballot, if he doubts the results of the vote. In this case, the preceding election or resolution taken on a show of hands is deemed not to have taken place.
	4	If no election has taken place at the first ballot and if there is more than one candidate, the presiding officer shall order a second ballot in which the relative majority shall be decisive.
		Article 17	Article 17
Powers of the General Meeting of Shareholders		The following powers shall be vested exclusively in the General Meeting of Shareholders: a) To adopt and amend the Articles of Incorporation; b) To elect and remove the members of the Board of Directors, the Chair of the Board of Directors, the members of the compensation committee, the Independent Proxy and the Auditors; c) To approve the management report and the consolidated financial statements; d) To approve the financial statements and to decide on the appropriation of available earnings shown on the balance sheet, in particular with regard to dividends;

8 | Articles of Incorporation of Alcon Inc.

	e) To approve the aggregate amounts of compensation of the Board of Directors and the Executive Committee in accordance with Article 29 of these Articles of Incorporation; f) To grant discharge to the members of the Board of Directors and to the members of the Executive Committee; g) To decide on matters that are reserved by law or by the Articles of Incorporation to the General Meeting of Shareholders.
	Article 18
Special quorum	The approval of at least two-thirds of the votes represented is required for resolutions of the General Meeting of Shareholders on: a) An alteration of the purpose of the Company; b) The creation of shares with increased voting powers; c) An implementation of restrictions on the transfer of registered shares and the removal of such restrictions; d) An authorized or conditional increase of the share capital; e) An increase of the share capital out of equity, by contribution in kind or for the purpose of an acquisition of property and the grant of special rights; f) A restriction or suspension of rights of option to subscribe; g) A change of location of the registered office of the Company; h) The dissolution of the Company.
	B. Board of Directors

9 | Articles of Incorporation of Alcon Inc.

		Article 19
Number of Directors		The Board of Directors shall consist of a minimum of 8 and a maximum of 13 members.
		Article 20
Term of office	1	The members of the Board of Directors and the Chair of the Board of Directors shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders.
	2	Members whose term of office has ended may be immediately re-elected.
		Article 21
Organization	1	The Board of Directors constitutes itself in compliance with legal requirements and taking into consideration the resolutions of the General Meeting of Shareholders. It shall elect one or two Vice‑Chairs. It shall appoint a secretary, who need not be a member of the Board of Directors.
	2	If the office of the Chair of the Board of Directors is vacant, the Board of Directors shall appoint a new Chair from amongst its members for the remaining term of office.
		Article 22
Convening of meetings		The Chair shall convene meetings of the Board of Directors if and when the need arises or if a member so requires in writing.
		Article 23
Resolutions	1	The organization of the meetings, including the presence quorum and the passing of resolutions, shall be set out in the organizational regulations.
	2	In the event of a tie vote, the Chair is not entitled to a tie-breaking vote.
		Article 24

10 | Articles of Incorporation of Alcon Inc.

Powers of the Board of
Directors 1 The Board of Directors has in particular the following non-delegable and inalienable duties: a) The ultimate direction of the Company’s business and issuing of the necessary directives; b) The determination of the organization of the Company; c) The determination of the principles of accounting, financial controlling and financial planning; d) The appointment and removal of the persons entrusted with the management and representation of the Company (including the CEO and the other members of the Executive Committee);

11 | Articles of Incorporation of Alcon Inc.

		e) The ultimate supervision of the persons entrusted with the management of the Company, specifically in view of their compliance with the law, Articles of Incorporation, regulations and directives; f) The preparation of the annual report and the compensation report in accordance with the provisions of the law and the Articles of Incorporation; g) The preparations for the General Meeting of Shareholders and carrying out of the resolutions of the General Meeting of Shareholders; h) The notification to the court in the event of over-indebtedness; and i) The adoption of resolutions concerning increases in share capital to the extent that such power is vested in the Board of Directors (Article 651 paragraph 4 of the Swiss Code of Obligations), as well as resolutions concerning the confirmation of capital increases and respective amendments to the Articles of Incorporation.
	2	In addition, the Board of Directors can pass resolutions with respect to all matters which are not reserved to the authority of the General Meeting of Shareholders by law or by these Articles of Incorporation.
		Article 25
Delegation of powers		The Board of Directors may, within the limits of the law and the Articles of Incorporation, delegate the management of the Company in whole or in part to one or several of its members (including to ad hoc or permanent committees of the Board of Directors) or to third persons (Executive Committee).
		Article 26

12 | Articles of Incorporation of Alcon Inc.

Signature power		The Board of Directors shall designate those of its members as well as those third persons who shall have legal signatory power for the Company, and shall further determine the manner in which such persons may sign on behalf of the Company.
		Article 27
Organization and powers of the Compensation Committee	1	The compensation committee shall consist of a minimum of 3 members of the Board of Directors.
	2	The members of the compensation committee shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders. Members of the compensation committee whose term of office has expired shall be immediately eligible for re-election.
	3	If there are vacancies on the compensation committee, the Board of Directors shall appoint substitutes for the remaining term of office.
	4	The Board of Directors shall elect a chair of the compensation committee. The Board of Directors shall, within the limits of the law and the Articles of Incorporation, define the organization of the compensation committee in regulations.

13 | Articles of Incorporation of Alcon Inc.

5	The compensation committee has the following powers: a) Develop a compensation strategy in line with the principles described in the Articles of Incorporation and submit it for approval to the Board of Directors; b) Propose to the Board of Directors the principles and structure of the compensation plans; c) Support the Board of Directors in preparing the proposals to the General Meeting of Shareholders regarding the compensation of the members of the Board of Directors and the Executive Committee; d) Submit the compensation report to the Board of Directors for approval; e) Inform the Board of Directors about policies, programs and key decisions as well as comparisons of compensation levels at key competitors;
	f) Regularly report to the Board of Directors on the decisions and deliberations of the compensation committee; g) Assume other responsibilities assigned to it by law, the Articles of Incorporation or by the Board of Directors. In particular, the Board of Directors may, in its discretion, assign responsibilities regarding nomination and governance to the compensation committee.
6	The Board of Directors issues regulations to determine for which positions of the Board of Directors and of the Executive Committee the compensation committee shall submit proposals regarding compensation, and for which positions it shall determine the compensation in accordance with the Articles of Incorporation.

14 | Articles of Incorporation of Alcon Inc.

		C. Auditors
		Article 28
Term, Powers and Duties		The Auditors, who shall be elected by the General Meeting of Shareholders each year, shall have the powers and duties vested in them by law.
Section 4		Compensation of the Board of Directors and the Executive Committee
		Article 29
Approval of compensation by the General Meeting of Shareholders	1	The General Meeting of Shareholders shall approve annually and separately the proposals of the Board of Directors in relation to the maximum aggregate amount of: a) Compensation of the Board of Directors for the period until the next Annual General Meeting of Shareholders; and b) Compensation of the Executive Committee for the following financial year. The Board of Directors may submit for approval by the General Meeting of Shareholders additional proposals relating to the same or different periods.
	2	If the General Meeting of Shareholders rejects the proposal of the Board of Directors for the total compensation of the Board of Directors and/or the Executive Committee, the decision on how to proceed shall reside with the Board of Directors. The options for the Board of Directors shall be to submit a new compensation proposal to the same General Meeting, to convene an Extraordinary General Meeting for that purpose, or to determine the compensation for the corresponding period on an interim basis, subject to approval at the next Annual General Meeting of Shareholders.
	3	Notwithstanding the preceding paragraphs, the Company or companies controlled by it may pay out compensation prior to approval by the General Meeting of Shareholders subject to subsequent approval by a General Meeting of Shareholders.

15 | Articles of Incorporation of Alcon Inc.

	4	The Board of Directors shall submit the compensation report to an advisory vote of the General Meeting of Shareholders.
		Article 30
Additional amount		If the maximum aggregate amount of compensation already approved by the General Meeting of Shareholders is not sufficient to also cover the compensation of one or more members who become members of or are promoted within the Executive Committee during a compensation period for which the General Meeting of Shareholders has already approved the compensation of the Executive Committee, the Company or companies controlled by it shall be authorized to pay or grant to such member(s) an additional amount during the compensation period(s) already approved. The total additional amount for each relevant compensation period for which approval by the General Meeting of Shareholders has already been obtained shall not exceed (in full and not pro rata temporis) 40% of the aggregate amount of compensation of the Executive Committee last approved by the General Meeting of Shareholders per compensation period.
		Article 31
General compensation principles	1	Compensation of the non-executive members of the Board of Directors comprises fixed compensation elements only. In particular, non-executive members of the Board of Directors shall receive no company contributions to any pension plan, no performance-related elements and no financial instruments (e.g. options).
	2	Compensation of the members of the Executive Committee comprises fixed and variable compensation elements. Fixed compensation comprises the base salary and may comprise other compensation elements and benefits. Variable compensation may comprise short-term and long-term compensation elements.
	3	Compensation (to non-executive members of the Board of Directors and to members of the Executive Committee) may be in the form of cash, shares, other benefits or in kind. Compensation to members of the Executive Committee may also be in the form of financial instruments or similar units. Compensation may be paid by the Company or companies controlled by it. The Board of Directors determines the valuation of each compensation element on the basis of the principles that apply to the establishment of the compensation report.

16 | Articles of Incorporation of Alcon Inc.

		Article 32
Variable compensation	1	The variable compensation of the members of the Executive Committee in a certain year shall consist of compensation elements from short- and long-term compensation plans (as defined in this Article).
	2	The short-term compensation plans are based on performance metrics that take into account the performance of the Alcon Group and/or parts thereof, and/or individual targets. Achievements are generally measured based on the one-year period to which the short-term compensation relates. The short-term compensation pay-outs shall be subject to caps that may be expressed as predetermined multipliers of the respective target levels and may be deferred subject to vesting periods and conditions.
	3	The long-term compensation plans are based on i) performance metrics that take into account strategic objectives of the Alcon Group (such as financial, innovation, shareholder return and/or other metrics), and/or ii) the share price that determines the value of the award at expiry of the vesting period. Achievements and share price are generally measured based on a period of not less than three years. The long-term compensation pay-outs shall be subject to caps that may be expressed as predetermined multipliers of the respective target levels.
	4	The Board of Directors or, to the extent delegated to it, the compensation committee determines performance metrics, target levels, and their achievement.
	5	The Board of Directors or, to the extent delegated to it, the compensation committee determines grant, vesting, blocking, exercise and forfeiture conditions of the compensation; they may provide for continuation, acceleration or removal of exercise and vesting conditions or provide other conditions for the grant, acquisition or forfeiture of rights as the consequence of certain predefined events such as death, disability, retirement or termination of an employment or mandate agreement.
		Article 33

17 | Articles of Incorporation of Alcon Inc.

Agreements with Members of the Board of Directors and of the Executive Committee	1	The Company or companies controlled by it may enter into agreements with members of the Board of Directors relating to their compensation for a fixed term of up to one year. The Company or companies controlled by it may enter into contracts of employment with members of the Executive Committee for a fixed term not exceeding one year or for an indefinite period of time with a notice period not exceeding 12 months.
	2	Contracts of employment with members of the Executive Committee may contain a prohibition of competition for the time after the end of employment for a duration of up to one year. The annual consideration for such prohibition shall not exceed the total annual compensation (i.e. base salary and annual incentive) last paid to such member of the Executive Committee.
		Article 34
Mandates outside of the Alcon Group	1	No member of the Board of Directors may hold more than 10 additional mandates in other companies, of which no more than 4 additional mandates shall be in other listed companies. Chairs of the board of directors of other listed companies count as two mandates.
	2	No member of the Executive Committee may hold more than 6 additional mandates in other companies, of which no more than 2 additional mandates shall be in other listed companies. Each of these mandates shall be subject to approval by the Board of Directors. Members of the Executive Committee are not allowed to hold chairs of the board of directors of other listed companies.

18 | Articles of Incorporation of Alcon Inc.

	3	The following mandates are not subject to these limitations: a) Mandates in companies which are controlled by the Company; b) Mandates which a member of the Board of Directors or of the Executive Committee holds at the request of the Company or companies controlled by it. No member of the Board of Directors or of the Executive Committee shall hold more than 5 such mandates; and c) Mandates in associations, charitable organizations, foundations, trusts and employee welfare foundations. No member of the Board of Directors or of the Executive Committee shall hold more than 10 such mandates.
	4	Mandates shall mean mandates in the supreme governing body of a legal entity which is required to be registered in the commercial register or a comparable foreign register. Mandates in different legal entities which are under joint control are deemed one mandate.
	5	The Board of Directors may issue regulations that may determine additional restrictions, taking into account the position of the respective member.
		Article 35
Loans		No loans or credits shall be granted to the members of the Board of Directors or the Executive Committee.
Section 5		Annual Financial Statements, Consolidated Financial Statements and Profit Allocation
		Article 36
Financial year		The Board of Directors shall prepare for each financial year as of 31 December an annual report consisting of financial statements with a management report and the consolidated financial statements.
		Article 37

19 | Articles of Incorporation of Alcon Inc.

Allocation of profit shown on the balance sheet, reserves	1	The allocation of the profit shown on the balance sheet shall be determined by the General Meeting of Shareholders subject to the legal provisions. The Board of Directors shall submit to the General Meeting of Shareholders its proposals.
	2	In addition to statutory reserves additional reserves may be accrued.
	3	Dividends which have not been claimed within five years after the due date fall back to the Company.
Section 6		Publications and Place of Jurisdiction
		Article 38
Publications		Shareholder communications of the Company shall be made in the Swiss Official Gazette of Commerce. The Board of Directors may designate additional publication organs.
		Article 39
Place of jurisdiction		The place of jurisdiction for any disputes arising from or in connection with the shareholdership in the Company shall be at the registered office of the Company.
Section 7		Language
		Article 40
Prevailing version		A French and an English version exist of these Articles of Incorporation. In case of any discrepancies, the French version shall prevail.

20 | Articles of Incorporation of Alcon Inc.

EX-2.1

Exhibit 2.1

DESCRIPTION OF SECURITIES

REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT

As of December 31, 2019 Alcon Inc. (“Alcon,” “we,” “us,” and “our”) had the following securities registered pursuant to Section 12(b) of the Exchange Act:

A.    OFFER AND LISTING DETAILS

Alcon is a stock corporation (Aktiengesellschaft) organized under the laws of Switzerland in accordance with article 620 et seq. of the Swiss Code of Obligations (“Swiss CO”) and registered with the Swiss Register of Commerce under registration number CHE‑234.781.164. Alcon is registered in the Swiss Register of Commerce under each of Alcon AG, Alcon SA and Alcon Inc., all of which are stated in Alcon's Articles of Incorporation (our “Articles”) as our corporate name. Alcon was formed for an unlimited duration, effective as of the date of the registration of Alcon in the Swiss Register of Commerce on September 21, 2018. As a result of Novartis’ Spin-off of Alcon and its consolidated subsidiaries on April 9, 2019, Alcon became an independent, standalone corporation. Alcon Inc. shares are listed on the SIX Swiss Exchange (“SIX”) and the New York Stock Exchange (“NYSE”) as global registered shares under the trading ticker “ALC”. As such, they can be traded and transferred across applicable borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies.

As of December 31, 2019, the share capital of Alcon Inc. was CHF 19,668,000, fully paid-in and divided into 491,700,000 registered shares, each with a nominal value of CHF 0.04.

The Company has a single class of shares, being registered shares in the form of uncertificated securities (in the sense of the Swiss Code of Obligations). A portion of these uncertificated shares is issued as intermediated securities (titres intermédiés) within the meaning of the Swiss Federal Intermediated Securities Act via the settlement system operated by SIX SIS, with the remaining shares directly held through Computershare Trust Company, N.A. in the U.S. All Alcon shares have equal voting rights and carry equal entitlements to dividends. No participation certificates (bons de participations) or profit-sharing certificates (bons de jouissance) have been issued.

The shares have the rights, preferences and restrictions described below in “Memorandum and Articles of Incorporation.”

B. MEMORANDUM AND ARTICLES OF INCORPORATION

The following is a summary of certain provisions of our Articles, our Regulations of the Board of Directors ("Board Regulations") and of Swiss law, particularly, the Swiss CO. This is not a summary of all the significant provisions of the Articles, the Board Regulations or of Swiss law and does not purport to be complete. This description is qualified in its entirety by reference to the Articles and the Board Regulations, for which English translations are filed as exhibits to this Form 20-F, and to Swiss law.

Shareholder Rights

Because Alcon has only one class of registered shares, the following information applies to all shareholders.

Dividend Rights

The Swiss CO requires that, among other things, at least 5% of our annual profit be retained as general reserves, so long as these reserves amount to less than 20% of our registered share capital. Swiss law and the Articles permit us to accrue additional reserves.

Under the Swiss CO, we may only pay dividends out of balance sheet profits, out of reserves created for this purpose or out of free reserves. In any event, under the Swiss CO, while the Board may propose that a dividend be paid, we may only pay dividends upon shareholders' approval at a General Meeting of Shareholders.

To the extent approved, dividends are usually due and payable shortly after the shareholders have passed a resolution approving the payment. Dividends which have not been claimed within five years after the due date revert to us, and are allocated to our general reserves.

Voting Rights

Each share is entitled to one vote at a General Meeting of Shareholders. Voting rights may only be exercised for shares registered on the Alcon share register on the record date for the applicable General Meeting of Shareholders. In order to do so, the shareholder must file a share registration form with us, setting forth the shareholder's name, address and domicile (or, in the case of a legal entity, its registered office). If the shareholder has not timely filed the form, then the shareholder may not vote at, or participate in, General Meetings of Shareholders. Shareholders should contact their bank or broker if they wish to register their Alcon shares. Acquirers of Alcon shares that are registered on the Alcon U.S. share register maintained by Alcon's U.S. share registrar, Computershare Trust Company, N.A., should file a registration form with Computershare Trust Company, N.A.

Except as noted in the paragraph immediately below, shareholders' resolutions require the approval of a majority of the votes present at a General Meeting of Shareholders. As a result, abstentions have the effect of votes against such resolutions. Some examples of shareholders' resolutions requiring a vote by such "absolute majority of the votes" are (1) amendments to the Articles; (2) elections of Directors, the Chairman of the Board, the compensation committee members, the independent proxy and the statutory auditors; (3) approval of the management report and the financial statements; (4) setting the annual dividend, if any; (5) approval of the aggregate amounts of compensation of the Directors and the members of the ECA; (6) decisions to discharge Directors and management from liability for matters disclosed to the General Meeting of Shareholders; and (7) the ordering of an independent investigation into specific matters proposed to the General Meeting of Shareholders. As a matter of Swiss law, certain other matters also require a supermajority, including certain mergers, scissions and transformations under the Swiss Merger Act.

According to the Articles and Swiss law, the following types of shareholders’ resolutions require the approval of a "supermajority" of at least two thirds of the votes present at a General Meeting of Shareholders: (1) an alteration of our corporate purpose; (2) the creation of shares with increased voting powers; (3) an implementation of restrictions on the transfer of registered shares and the removal of such restrictions; (4) an authorized or conditional increase of the share capital; (5) an increase of the share capital by conversion of equity, by contribution in kind, or for the purpose of an acquisition of property or the grant of special rights; (6) a restriction or an exclusion of shareholders' pre-emptive rights; (7) a change of our registered office; (8) our dissolution; or (9) any amendment to the Articles which would create or eliminate a supermajority requirement.

Our shareholders are required to annually elect all of the members of the Board, as well as the Chair of the Board, the members of the compensation committee (i.e., currently our Compensation, Governance and Nomination Committee) and the independent proxy. The Articles do not provide for cumulative voting of shares.

At General Meetings of Shareholders, shareholders can be represented by the independent proxy or by a third person authorized by written proxy who does not need to be a shareholder. Votes are taken either by a show of hands or by electronic voting, unless the General Meeting of Shareholders resolves to have a ballot or where a ballot is ordered by the chair of the meeting.

Rights to Share in the Company’s Profits

Shareholders have the right to allocate the profit shown on our balance sheet and to distribute dividends by vote taken at the General Meeting of Shareholders, subject to the legal requirements described above.

Rights to Share in any Surplus in the Event of Liquidation

Under the Swiss CO, any surplus arising out of a liquidation of Alcon (i.e., after the settlement of all claims of all creditors) would be distributed to the shareholders in proportion to the paid in nominal value of their shares.

Redemption Provisions

The Swiss CO limits a corporation’s ability to hold or repurchase its own shares. We and our subsidiaries may only repurchase shares if we have freely disposable equity available in the amount necessary for this purpose. The aggregate nominal value of all Alcon shares held by us and our subsidiaries may not exceed 10% of our

registered share capital. However, it is accepted that a corporation may repurchase its own shares beyond the statutory limit of 10%, if the repurchased shares are clearly earmarked for cancellation and such repurchase has been approved by our shareholders. In addition, we are required to recognize a negative position for our own shares acquired by Alcon or, if our subsidiaries acquire our shares, create a special reserve on our balance sheet in each case in the amount of the purchase price of the acquired shares. Repurchased shares held by us or our subsidiaries do not carry any rights to vote at a General Meeting of Shareholders but are entitled to the economic benefits generally connected with the shares.

Under the Swiss CO, we may not cancel treasury shares without the approval of a capital reduction by our shareholders.

Changes to Shareholder Rights

Under the Swiss CO, we may not issue new shares without the prior approval of a capital increase by our shareholders, subject to the existing authorized share capital of Alcon pursuant to the Articles. If a capital increase is approved, then our shareholders would generally have certain pre-emptive rights to obtain newly issued shares in an amount proportional to the nominal value of the shares they already hold. These pre-emptive rights could be excluded in certain limited circumstances with the approval of a resolution adopted at a General Meeting of Shareholders by a supermajority of two thirds of the votes present. In addition, we may not create shares with increased voting powers or place restrictions on the transfer of registered shares without the approval of a resolution adopted at a General Meeting of Shareholders by a supermajority of votes.

Limitations

There are no limitations under the Swiss CO or our Articles on the right of non-Swiss residents or nationals to own or vote shares.

Change in Control

The Articles and the Board Regulations contain no provision that would have an effect of delaying, deferring or preventing a change in control of Alcon and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

According to the Swiss Merger Act, shareholders may pass a resolution to merge with another corporation at any time. Such a resolution would require the consent of at least two thirds of all votes present at the necessary General Meeting of Shareholders.

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who acquire more than 33 1/3% of our shares would be under an obligation to make an offer to acquire all remaining Alcon shares. Alcon has neither opted out from the mandatory takeover offer obligation nor opted to increase the threshold for mandatory takeover offers in the Articles.

Disclosure of Shareholdings

Under the Swiss Financial Market Infrastructure Act, persons who directly, indirectly or in concert with other parties acquire or dispose of our shares or purchase or sale rights relating to our shares are required to notify us and the SIX of the level of their holdings whenever such holdings reach, exceed, or fall below certain thresholds—3%, 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% and 66 2/3%—of the voting rights represented by our share capital (whether exercisable or not). This also applies to anyone who has discretionary power to exercise voting rights associated with our shares. Following receipt of such notification we are required to inform the public by publishing the information via the electronic publication platform operated by the SIX.

An additional disclosure obligation exists under the Swiss CO which requires us to disclose, once a year in the notes to the financial statements published in our annual report, the identity of all of our shareholders (or related groups of shareholders) that hold a participation exceeding 5% of all voting rights.

Changes in Capital

The requirements of the Articles regarding changes in capital are not more stringent than the requirements of Swiss law.

EX-4.12

Alcon Inc.

Long Term Incentive Plan

Adopted on April 9, 2019

Amended on February 4, 2020

1

Alcon Inc.

Long Term Incentive Plan

Contents

1	DEFINITIONS AND INTERPRETATION	1
	1.1     Definitions	1
	1.2     Interpretation	7
2	PURPOSE OF THE PLAN	7
3	SHARES SUBJECT TO THE PLAN	7
	3.1     Shares Subject to the Plan	7
	3.2     Lapsed Awards	9
4	GRANTING OF AWARDS	9
	4.1     Selection of Participants	9
	4.2     Timing of Awards	9
	4.3     Form of Awards	9
	4.4     Decisions Relating to Awards	9
	4.5     Grant Procedure and Award Documentation	10
	4.6     Determining the Number of Shares subject to an Award	10
5	VESTING OF AWARDS	11
	5.1     General	11
	5.2     Normal Vesting	11
	5.3     Vesting at End of Performance Period	11
	5.4     Dealing Restrictions	11
	5.5     Fractional Entitlements	11
	5.6     Settlement of Restricted Stock Units	12
	5.7     Settlement of Performance Stock Units	12
	5.8     Consequences of Vesting – Restricted Stock	12
	5.9     Consequences of Vesting – Stock Options	12
	5.10     Consequences of Vesting – SARs	13
	5.11     Cash and Share Alternatives	13
6	FORFEITURE OF AWARDS	13
7	TERMINATION OF EMPLOYMENT	13
	7.1     General	13
	7.2     Special Termination Reasons	13
	7.3     Termination of Employment as a Result of Retirement	14
	7.4     Termination of Employment as a Result of Death or Disability	14
	7.5     Termination of Employment for Other Good Reasons	14
	7.6     Termination of Employment as a Result of Mutual Agreement	15
	7.7     Forfeiture of Awards on Joining a Competitor	15
	7.8     Leave of Absence	15
	7.9     Assignments and Transfers	16
8	CORPORATE EVENTS	16
	8.1     Change of Control	16
	8.2     Exchange of Awards	16
	8.3     Demerger, Variations of Share Capital and Other Corporate Events	17
9	SHAREHOLDER RIGHTS AND DIVIDEND EQUIVALENTS	17
	9.1     Restricted Stock Units and SARs	17
	9.2     Restricted Stock	17

i

Alcon Inc.

Long Term Incentive Plan

	9.3     Stock Options	18
	9.4     Dividend Equivalents	18
10	PARTICIPANT RIGHTS AND OBLIGATIONS	18
	10.1     General	18
	10.2     No Employment Rights	19
	10.3     No Continued Entitlement	19
	10.4     Clawback	19
	10.5     Non-Transferability of Awards	19
	10.6     Tax, Social Security and Other Charges	20
	10.7     Participant to Provide Information	20
	10.8     Confidentiality	20
11	BOARD’S POWERS	20
	11.1     General	20
	11.2     Schedules to the Plan	20
	11.3     Change of Performance Conditions	21
12	PLAN ADMINISTRATION	21
13	COMPANY DOCUMENTS	21
14	NOTICES	21
15	AWARDS NOT PENSIONABLE ETC.	22
16	DATA PROTECTION	22
17	AMENDMENT AND TERMINATION OF THE PLAN	22
18	COMPLIANCE WITH LAW AND ARTICLES OF INCORPORATION	22
	18.1     Compliance with Law etc.	22
	18.2     Swiss law with Respect to the Compensation of Certain Executives of Listed Companies	23
	18.3     US Code Section 409A	23
19	GOVERNING LAW	23
SCHEDULE 1		24
1	APPLICATION OF THIS SCHEDULE	24
2	CONSEQUENCES OF VESTING – PERFORMANCE STOCK UNITS AND RESTRICTED STOCK UNITS	24
3	CORPORATE EVENTS	24
4	CODE SECTION 409A	24
SCHEDULE 2		25
1	APPLICATION	25
2	PARTICIPANT’S ENTITLEMENT TO ELECT THE AWARD TYPE	25
3	TERMINATION OF EMPLOYMENT	26

ii

Alcon Inc.

Long Term Incentive Plan

1Definitions and Interpretation

1.1Definitions

In this Plan, unless the context otherwise requires, the following words and expressions shall have the following meanings:

Applicable Law	all applicable laws, rules, regulations and requirements, including, but not limited to, the rules and regulations of any stock exchange or quotation system on which the Shares are listed or quoted, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are, or will be, granted under the Plan or Participants reside or provide services to the Company, as such laws, rules, and regulations shall be in effect from time to time.
Articles	the Articles of Incorporation of the Company as amended from time to time.
Award	an award under the Plan (which may be an award of Performance Stock Units, Restricted Stock Units, Restricted Stock, Stock Appreciation Rights, Stock Options or such other form of award referable to the Company’s equity as the Board may determine).
Award Agreement	a written or electronic agreement evidencing an Award issued in accordance with Rule 4.5 in such form as the Board may determine.
Board	the Company’s Board of Directors or, to the extent permitted by Applicable Law, the Board’s delegate(s).
Cashless Exercise	a cashless exercise program enabling a Participant to exercise a Stock Option without making a cash payment. The program may include, without limitation, authorising the sale on the Participant’s behalf (after exercise of a Stock Option) of such number of Shares as will be required to cover the aggregate Exercise Price and/or Taxation.
Cause	(i) the Participant’s conviction or plea of nolo contendere to a felony; (ii) gross misconduct on the Participant’s part which results, or is intended to result, in material damage to the Company’s business or reputation; or (iii) repeated material failure by the Participant to perform his or her job duties (other than while on vacation, approved leave of absence or due to medical or similar reasons), which failure is willful and deliberate on the Participant’s part and which results, or is intended to result, in material damage to the Company’s business or reputation. The Board, by majority vote (or, to the extent permitted by Applicable Law, the Board’s delegate(s)), shall make the determination of whether Cause exists, after providing the Participant with notice of the reasons the Board believes Cause may exist, and after giving the Participant 60 days to respond to the allegations that Cause exists.

1

Alcon Inc.

Long Term Incentive Plan

Change of Control	any of the following:
	(a) any person or group of persons who are acting together purchase or otherwise become the beneficial owner or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately or subject to passage of time or other conditions) of voting securities representing more than 50% of the combined voting power of all outstanding securities of the Company;
	(b) the merger or consolidation of the Company with or into another corporation as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity are or will be owned by the former shareholders of the Company; or
	(c) the sale of all or substantially all of the Company’s business and/ or assets to a person or entity which is not a subsidiary of the Company.
	provided that an Internal Reorganisation shall not be a Change of Control.
Code of Conduct	the Code of Conduct adopted by the Company which describes the fundamental principles concerning ethical business conduct as amended from time to time.
Company	Alcon Inc. or any of its subsidiaries, as applicable.
Compensation Ordinance	the ordinance of the Swiss Federal Council against excessive compensation in listed companies (in German “Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften”) or later equivalent implementing legislation.
Competitor	any company or other organisation that is, from time to time, part of the Company’s comparator peer group of peer companies in the Medical Device, Life Sciences and Med Tech industry, as determined by the Board from time to time.
Dealing Day	a day on which the Swiss Exchange (SIX) or the New York Stock Exchange (NYSE) in the US on which Shares are listed, is open for business.
Dealing Restrictions	restrictions on the dealing in Shares or the grant of Awards imposed by any Applicable Law or code of practice (including the Company’s Global Insider Trading Policy, as amended or replaced from time to time) or otherwise.
Disability	the Participant is permanently incapable of performing his duties and responsibilities due to illness or accident, in accordance with Applicable Law, or in the absence of such Applicable Law, based on reasonable and customary evidence of such status of the Participant as determined by the Board.
Dividend Equivalents	a right to cash or Shares as described in Rule 9.

2

Alcon Inc.

Long Term Incentive Plan

Eligible Employee	any employee or group of employees of the Company or any director, including, but not limited to members of the Executive Committee and key executives, as the Board shall determine.
Employer	the Company or a subsidiary of the Company under which the Eligible Employee or Participant is or was employed.
Employment	the employment of an Eligible Employee or a Participant as an employee or director by the Company.
Exercise Date	the date that a Stock Option is exercised.
Exercise Price	the price at which a Share under a Stock Option may be acquired. The Exercise Price is determined on the Grant Date and typically equals the Fair Market Value on the Grant Date.
Fair Market Value	in relation to a Share on the determination date
	(a) if the Shares are admitted to trading on the Swiss Exchange (SIX) an amount equal to the closing price on the Dealing Day (or if there is no such price on that day the last preceding Dealing Day for which such closing price is available);
	(b) if the Shares are listed on a national securities exchange in the US an amount equal to the closing price on the exchange on which the Share is listed on the Dealing Day (or if there is no such price on that day the last preceding Dealing Day for which such closing price is available); or
	(c) if the Shares are not admitted to trading on the Swiss Exchange (SIX) or listed on a national securities exchange in the US, then such value as is determined by the Board in good faith on such basis as it deems appropriate and applied consistently with respect to Participants.
	Notwithstanding the foregoing, if the Shares are listed on both the Swiss Exchange (SIX) and on a national securities exchange in the US, Fair Market Value shall be determined as required by Applicable Law or as the Board determines to obtain intended favourable tax treatment for Awards.

3

Alcon Inc.

Long Term Incentive Plan

Good Reason	For purposes of this Plan, “Good Reason” means the occurrence of one or more of the following through a single action or series of actions (and for purposes of the Plan and any Award, continued employment by a Participant shall not be deemed for any purpose to be a waiver by the Participant of any of his or her rights under the Plan or any Award Agreement (including without limitation with respect to any rights of the Participant triggered by a resignation pursuant to this definition of Good Reason nor an implied consent of the Participant to any of the following)): (i) a reduction of the Participant’s duties, authority or responsibilities, relative to such duties, authority or responsibilities in effect immediately prior to such reduction (including, without limitation, (A) a reduction in such duties, authority or responsibilities in connection with a Change in Control in which the Company becomes part of a larger entity or group of companies and the Participant’s pre-reduction duties, authority or responsibilities do not thereafter extend to such larger entity or group; (B) a change in the Participant’s reporting duties made on account of or in connection with a Change in Control which effect a reduction in the Participant’s duties, authority or responsibilities, or (C) assignment to the Participant of duties or responsibilities inconsistent in any respect with the duties or position of the Participant immediately prior to such assignment); (ii) a reduction in the Participant’s base salary, target bonus or target long-term incentives; (iii) a reduction in the overall level of employee benefits provided to the Participant; (iv) a material change in the geographic location of the Participant’s primary work facility or location; provided, that a relocation of less than twenty-five (25) miles from the Participant’s then-present work location will not be considered a material change in geographic location; (v) a breach by the Company of any material provision of any agreement between the Participant and Company; or (vi) a failure of a surviving entity or successor entity in a Change in Control to assume in writing any material agreement to which the Participant is a party and to assume in writing the Company’s obligations pursuant the Plan and any outstanding Award Agreements.
Grant Date	the date on which the Board makes the determination granting such Award, or such later date as is determined by the Board, as set forth in the Grant Notice.
Grant Notice	a notification (either electronically or in hard copy) of an Award grant provided to a Participant in accordance with the Rules.
Internal Reorganization	any event, offer, scheme, share purchase, merger or arrangement whereby:
	(a) a Change of Control occurs; and

4

Alcon Inc.

Long Term Incentive Plan

	(b) immediately afterwards the share capital of the company then controlling (whether directly or indirectly) the Company is owned substantially by the same persons who were shareholders of the Company immediately prior to such event, scheme or arrangement in substantially the same proportions.
Participant	an Eligible Employee who is selected by the Board to participate in the Plan.
Performance Condition(s)	the condition(s) (whether performance, time based or otherwise) as the Board determines from time to time. As determined by the Board, the “Performance Condition(s)” applicable to an Award may provide for a targeted level or levels of achievement using, but not limited to, one or more of the following measures, which may utilize any adjustments established on the Grant Date: (a) EBIT, (b) EBITDA, (c) earnings per share, (d) net income, (e) operating cash flow, (f) return on assets, (g) return on equity, (h) return on sales, (i) revenue, (j) shareholder return, (k) orders or net orders, (l) expenses, (m) cost of goods sold, (n) profit/loss or profit margin, (o) working capital, (p) operating income, (q) cash flow, (r) market share, (s) return on capital, (t) economic value add, (u) share price of the Company’s Shares, (v) price/earning ratio, (w) debt or debt-to-equity ratio, (x) accounts receivable, (y) cash, (z) write-off, (aa) assets, (bb) liquidity, (cc) operations, (dd) intellectual property (e.g., patents), (ee) product development, (ff) regulatory activities, (gg) manufacturing, production or inventory, (hh) mergers, acquisitions or divestitures, (ii) financings, (jj) days sales outstanding, (kk) backlog, (ll) deferred revenue, and (mm) employee headcount.
Performance Stock Unit	or “PSU” means a right to receive Shares or cash under the Plan (but subject to Rule 5.10 (Cash and Share Alternatives)) contingent upon satisfaction of Performance Conditions based on Company or individual performance metrics as the Board shall determine.
Performance Period	the period over which the satisfaction of Performance Condition(s) is assessed, as determined by the Board.
Plan	the Alcon Inc. Long Term Incentive Plan as set forth herein, as may be amended and in effect from time to time.
Restricted Stock	an award of Shares subject to restrictions in accordance with the Plan.
Restricted Stock Unit	or “RSU” meansa right to receive Shares or cash under the Plan (but subject to Rule 5.10 (Cash and Share Alternatives)).
Retirement	“Retirement” means the Termination of Employment after having attained age 55 or older and having completed at least 10 years of Service provided that if required by Applicable Law, an alternative definition may be used.
Rules	the rules of the Plan (including all Schedules) as set forth in the Plan.

5

Alcon Inc.

Long Term Incentive Plan

Schedule	a schedule to the Plan.
Service	the period of continuous employment with the Company ending with the relevant Termination of Employment for the purposes of the Plan. The Board may further determine that prior periods of Employment with the Company and/ or periods of employment with entities outside the Company (but which are subsequently acquired by the Company) may be taken into account.
Share	or “Stock” meansan ordinary share of the Company.
Stock Appreciation Rights	or “SAR” meansan award under the Plan, the future value of which is based on the increase in the value of Shares (from the base value set by the Board at the time an Award is made) which notionally comprises each SAR from the relevant Grant Date.
Stock Option	a stock option granted to an Eligible Employee under this Plan
Termination of Employment	occurs, for the purposes of the Plan, when a Participant ceases Employment with the Company. For the avoidance of doubt, “Termination of Employment” for purposes of the Plan will be deemed to occur as of the date when a Participant is no longer actively providing services as an employee (except, in certain circumstances, at the sole discretion of the Company, to the extent the Participant is on an approved leave of absence) and will not be extended by any notice period or “garden leave” that may be required contractually or under applicable law, unless otherwise determined by the Company in its sole discretion. The Company shall have the exclusive discretion to determine when the Participant is no longer providing services and the date of Termination of Employment for purposes of the Plan.
Termination of Employment due to a Change in Control	see Rule 8.1.
Vesting	“Vest”, or “Vested” means:
	(a) in the case of Performance Stock Units and Restricted Stock Units, a Participant being entitled to receive Shares or cash;
	(b) in the case of Restricted Stock, certain restrictions applicable to the Award ceasing to apply;
	(c) in the case of Stock Options, a Participant being entitled to exercise his Stock Options and acquire Shares; and
	(d) in the case of SARs, a Participant being entitled to receive a cash sum or a number of Shares based on the growth in value of the notional Shares comprising the Award.
Vesting Date	the date an Award Vests as determined by the Board and set forth in the Grant Notice and/or Award Agreement.

6

Alcon Inc.

Long Term Incentive Plan

1.2Interpretation

In these Rules, except insofar as the context otherwise requires:

(a) words denoting the singular shall include the plural and vice versa;

(b) words importing a gender shall include every gender;

(c) references to a person shall include bodies corporate and unincorporated and any successors or assignees;

(d) reference to any enactment or statutory provision shall be construed to include a reference to that enactment or provision as from time to time amended, re-enacted or replaced and shall include any subordinate legislation made under the enactment;

(e) headings are provided for reference only and shall not be considered as part of this Plan; and

(f) a reference to writing or written form shall include any legible format capable of being reproduced on paper, irrespective of the medium used.

Each provision in these Rules is entirely separate and independent from the other provisions. If any provision is found to be invalid, it shall be deemed never to have been part of these Rules and this shall not affect the validity or enforceability of any of the remaining provisions of this Plan.

2Purpose of the Plan

The Company has adopted this Plan as part of the discretionary long-term variable compensation for selected employees of the Company.

The purpose of the Plan is to provide an increased incentive for Eligible Employees to make significant and extraordinary contributions to the long-term performance and growth of the Company, enhancing the value of the Shares for the benefit of the Company’s shareholders and increasing the Company’s ability to attract and retain individuals of exceptional skill.

These Rules set out the terms upon which the Plan is operated and are the terms of the contract relating to an Award between the Company and the Participant who is granted such Award by the Board at its sole discretion.

Where an Award is made to an Eligible Employee who is resident in or otherwise subject to a particular jurisdiction or employee group covered by a Schedule to these Rules or where an Award is designated as a particular Award type covered by a Schedule to these Rules, the provisions of the relevant Schedule modify the Rules.

3Shares Subject to the Plan

3.1Shares Subject to the Plan

Subject to the provisions of Section 8 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 20,000,000 Shares. The Shares may be authorized, but unissued, or Shares reacquired by the Company. Notwithstanding the foregoing, subject to the provisions of Section 8 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan exceed the number set forth

7

Alcon Inc.

Long Term Incentive Plan

in this Section 3 plus, to the extent allowable under Applicable Law, any Shares that again become available for issuance pursuant to lapsed awards as set forth below.

8

Alcon Inc.

Long Term Incentive Plan

3.2Lapsed Awards

To the extent an Award should expire or be forfeited or become unexercisable for any reason without having been exercised in full, the unissued Shares that were subject thereto shall, unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. In addition, any Shares which are retained by the Company upon exercise of an Award to satisfy the exercise or purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the Plan and that are later forfeited to the Company due to the failure to vest or that are reacquired by the Company at the original purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a Participant’s Termination of Employment) shall again be available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

4Granting of Awards

4.1Selection of Participants

The Board may, at its discretion, grant Awards to any Eligible Employees in accordance with and subject to the Rules.

4.2Timing of Awards

Awards may be granted at any time the Board considers appropriate. However, no Award may be granted at any time an Eligible Employee is prohibited from being granted an Award under any Dealing Restrictions under Applicable Law.

4.3Form of Awards

Awards made under the Plan may at the discretion of the Board be in the form of Performance Stock Units, Restricted Stock, Restricted Stock Units, SARs, Stock Options or any other form of Award.

4.4Decisions Relating to Awards

The Board shall determine the following in respect of any Award (whether Performance Stock Units, Restricted Stock, Restricted Stock Units, SARs, Stock Options or other form of Award):

(a) the type of Award to be granted;

(b) where relevant, whether the Award is in respect of Shares or cash;

(c) if the Award is a SAR, the base value from which the growth in value is to be measured;

(d) if the Award is a Stock Option, the details of when the Stock Option may be exercised, the Exercise Price and whether or not the Participant will be entitled to a Cashless Exercise;

(e) the form of Award Agreement and the terms and conditions of any such Award;

9

Alcon Inc.

Long Term Incentive Plan

(f) based on the Fair Market Value on the Grant Date, the minimum, target and maximum number of Shares to be subject or linked to the Award;

(g) the Vesting Date or Vesting Dates;

(h) whether the Award is subject to Performance Conditions and, if so, the terms of such Performance Conditions (including the applicable Performance Period);

(i) whether the Award (or Shares or other rights comprising the Award) is subject to any holding or blocking period and if so the terms of any such period;

(j) whether or not the Award will carry Dividend Equivalents and, if so, the form of such Dividend Equivalents;

(k) whether the Participant is required to sell or surrender sufficient Shares to cover Taxation; and

(l) which, if any, Schedules to the Plan will apply to the Award.

The Board will also have the authority to make all other determinations deemed necessary or advisable for administering the Plan.

4.5Grant Procedure and Award Documentation

Each Award shall be granted by resolution of the Board. The Board may at any time delegate the power to approve grants made under the Plan to any one or more persons including but not restricted to, a sub-committee of the Board for such period and on such conditions as the Board may determine.

Each Participant shall receive a Grant Notice in such form as the Board shall determine from time to time.

The Board may determine in relation to any Award that the Participant shall be required to execute or accept an Award Agreement to confirm the Participant’s acceptance or acknowledgement of the grant made to him. If a Participant is so required, the Board will also determine the time within which the Participant must provide such acceptance or acknowledgement. If a Participant does not return the Award Agreement by the expiration of such time period, his Award shall be treated as renounced for the purpose of this Plan, unless the Board determines otherwise.

Alternatively, the Board may determine that a Participant who receives an Award is deemed (as of the time of receipt) to have agreed to the Rules (including applicable Schedules) and the terms set out in the Grant Notice. If this is the case, a Participant may reject his Award within the timeframe stipulated in the Grant Notice, if any. If a Participant does so reject his Award, then immediately on such rejection that Award shall be forfeited.

4.6Determining the Number of Shares subject to an Award

To determine the minimum target and maximum number of Shares subject to or linked to an Award, the Board shall:

(a)    divide the relevant percentage of salary (as determined by the Board) expressed as a cash sum by the Fair Market Value at the Grant Date and then, where necessary, round down to the nearest whole Share; or

10

Alcon Inc.

Long Term Incentive Plan

(b)    apply such other method as the Board may determine in its sole discretion from time to time.

5Vesting of Awards

5.1General

Unless specified otherwise by the Board at its sole discretion, all Awards granted under the Plan will be subject to a Vesting Period and may be subject to the satisfaction of one or more Performance Conditions.

The Vesting of an Award is subject to any Rules or Applicable Law that may require otherwise, including Rule 5.4 (Dealing Restrictions), Rule 6 (Forfeiture of Awards) and Rule 10.4 (Clawback).

The Board shall determine the number of Shares, Stock Options or amount of cash or Shares in respect of a SAR comprising an Award that shall Vest on any particular day or days.

5.2Normal Vesting

To the extent that none of the exceptions set forth in the Rules apply, Shares and/or cash subject to an Award shall Vest on the applicable Vesting Date(s).

5.3Vesting at End of Performance Period

An Award that is subject to Performance Conditions will only Vest on the applicable Vesting Date(s) to the extent that the applicable Performance Conditions are satisfied, as determined by the Board as soon as practicable after the end of the Performance Period.

5.4Dealing Restrictions

If a Dealing Restriction would prevent the Participant from acquiring and/ or selling Shares, the acquisition and/or sale date shall be the date that the relevant Dealing Restriction is lifted.

If the transfer of Shares or payment of cash or Shares in the case of SARs on or following Vesting is prevented by a Dealing Restriction, the period for such transfer or payment shall start from the first date on which it is no longer so prevented.

Shares received by a Participant on or following Vesting may be subject to Dealing Restrictions. Subject to any such restrictions, a Participant may sell (or may be required to sell) a sufficient number of such Shares to cover Taxation (as defined in Rule 10.6 “Tax, Social Security and Other Charges”).

5.5Fractional Entitlements

Where the Participant’s entitlement for any reason includes fractional Shares or fractional notional Shares in the case of SARs, the number of fractional Shares shall be aggregated as at the Vesting Date and rounded down to the nearest whole Share, unless the Board determines otherwise.

11

Alcon Inc.

Long Term Incentive Plan

5.6Settlement of Restricted Stock Units

Unless otherwise provided by the Board and specified in an Award Agreement, and to the extent permitted by Applicable Law, as soon as practicable following the earlier of (i) the normally scheduled Vesting Date(s) or (ii) a Termination of Employment (but only to the extent the Award vests due to one of the “Special Termination Reasons” in Rule 7 of the Plan or otherwise) and in no event later than 60 days following the applicable event, the Company shall transfer the number of Shares (or pay or procure to be paid a cash sum if the Board has determined that the RSUs will be settled in cash) in respect of which the Award has Vested to the Participant.

5.7Settlement of Performance Stock Units

Unless otherwise provided by the Board and specified in an Award Agreement, and to the extent permitted by Applicable Law, notwithstanding a Termination of Employment that is due to one of the “Special Termination Reasons” in Rule 7 of the Plan or any other event that results in Vesting, as soon as practicable following the earlier of (i) a Termination of Employment due to death or Disability, (ii) the end of the Performance Period that is specified in the Award Agreement, or (iii) (except for Awards granted prior to November 14, 2019) a Termination of Employment due to a Change in Control, and in each case, in no event later than 60 days following the applicable event, the Company shall transfer the number of Shares (or pay or procure to be paid a cash sum if the Board has determined that the PSUs will be settled in cash) in respect of which the Award has Vested to the Participant.

5.8Consequences of Vesting – Restricted Stock

On Vesting the restrictions applicable to the relevant Restricted Stock under the Plan shall cease to apply to the extent such Restricted Stock Vests.

5.9Consequences of Vesting – Stock Options

5.9.1    General

On Vesting the restrictions applicable to the relevant Stock Options under the Plan shall cease to apply and the Participant may exercise his right to acquire Shares; provided that no option shall be exercisable more than 7 years from the Grant Date. The term of the Stock Option shall be the term stated in the Award Agreement.

A Participant may exercise his Stock Options by paying the Exercise Price and execute or accept an exercise notice in the appropriate form as determined by the Board.

As soon as practicable following the Exercise Date the Company shall transfer the number of Shares (or pay or procure to be paid a cash sum if the Board has determined that the Stock Option is to be settled in cash) equal to the number of Shares in respect of which the Stock Option has been exercised to the Participant.

5.9.2    Cashless Exercise

The Board may establish a Cashless Exercise program to enable a Participant to provide funds to pay the Exercise Price. Such arrangements may include, without limitation, authorising the sale on the Participant’s behalf (after exercise of a Stock Option) of such number of Shares as will be required, net of selling costs and/or withholding Shares, to cover the aggregate Exercise Price and/or Taxation.

12

Alcon Inc.

Long Term Incentive Plan

Where a sale is made on the Participant’s behalf, any excess of sale proceeds over and above the aggregate Exercise Price and/ or Taxation shall be refunded to the Participant promptly and in any event within 30 days of the sale.

5.10Consequences of Vesting – SARs

As soon as practicable following the Vesting Date the Company or the Participant’s Employer shall pay to the Participant a sum equal to growth in the Fair Market Value as determined by the Board (or a number of Shares equivalent to the value of the growth in the Fair Market Value if the Board has determined that the SARs are to be settled in Shares) of the number of vested notional Shares comprising each SAR on the relevant Vesting Date.

5.11Cash and Share Alternatives

The Board may decide to satisfy an Award (including any Dividend Equivalents) by:

(a) paying or procuring to be paid to the Participant a cash sum equal to the Fair Market Value (as determined by the Board or its delegates) of the number of Shares that would otherwise have been transferred to the Participant with respect to the Vesting or Exercise of that Award; or

(b) in the case of SARs delivering to the Participant Shares with a value equal to the cash sum that would otherwise have been paid to the Participant following the Vesting of that Award.

6Forfeiture of Awards

Subject to Board determination otherwise, in particular - but not exclusively - according to Rule 10.4, Awards are forfeited on the earlier of:

(a) failure to satisfy the Performance Conditions to the extent such Performance Conditions are not satisfied during the Performance Period; and

(b) the occurrence of any event described in the Rules resulting in forfeiture of Awards, including under Rule 7 (Termination of Employment) and Rule 8 (Corporate Events).

7Termination of Employment

7.1General

Upon Termination of Employment, an Award that has not Vested, or has not been exercised in the case of Stock Options, will be declared forfeited, unless the Board determines otherwise.

7.2Special Termination Reasons

Unless otherwise provided by the Board and specified in an Award Agreement, and to the extent permitted by Applicable Law, notwithstanding Rule 7.1, if a Participant’s Employment terminates:

(a) as a result of Retirement as set forth in Rule 7.3

(b) as a result of Death or Disability as set forth in Rule 7.4

13

Alcon Inc.

Long Term Incentive Plan

(c) as a result of other good reasons as set forth in Rule 7.5

(d) as a result of mutual agreement as set forth in Rule 7.6

(e) as a result of a Termination of Employment due to a Change of Control as set forth in Rule 8.1

(f) as a result of any other reason as determined by the Board from time to time to be considered for the purposes of this Rule 7

Such Awards will Vest, or in the case of vested Stock Options and SARs remain exercisable, as set forth in the foregoing Rules and in each such case, will not be forfeited.

7.3Termination of Employment as a Result of Retirement

Unless otherwise provided by the Board and specified in an Award Agreement, and to the extent permitted by Applicable Law, notwithstanding Rule 7.1, if a Participant’s Employment terminates as a result of Retirement then any unvested Awards held by the Participant shall Vest or in the case of Stock Options or SARs remain exercisable provided that:

(a) the Participant executes and does not retroactively revoke a general release of claims acceptable to the Company; and

(b) the Board and the Participant’s Employer approve the Vesting of such unvested Awards or the exercise of any Vested but unexercised Stock Options; and

(c) all applicable non-time-based Performance Conditions have been met;

(d) the Participant subsequently does not join a Competitor as set forth in Rule 7.7., and

(e) the Board may provide for the number of shares that are subject to the Award to be reduced in the event that the Participant has not been employed for a certain period of time.

Unless otherwise provided by the Board and specified in an Award Agreement, if the Termination of Employment in respect of which this Rule 7.3 applies occurs on or before the first anniversary of the Grant Date, then the extent to which such Award Vests shall be prorated from the Grant Date to Termination of Employment based on the completed months of service in the Vesting or Performance Period.

7.4Termination of Employment as a Result of Death or Disability

Unless otherwise provided by the Board and specified in an Award Agreement, notwithstanding Rule 7.1, if a Participant’s Employment terminates as a result of Death or Disability, any unvested Awards held by the Participant shall Vest and all applicable Performance Conditions shall be deemed satisfied, with any Performance Stock Units Vesting at the target amount.

7.5Termination of Employment for Other Good Reasons

Unless otherwise provided by the Board and specified in an Award Agreement, notwithstanding Rule 7.1, if a Participant’s Employment terminates as a result of:

14

Alcon Inc.

Long Term Incentive Plan

(i) involuntary Termination of Employment by the Participant’s Employer (whether or not by notice) other than for misconduct or poor performance;

(ii) his Employer ceasing to be a subsidiary of the Company; or

(iii) the business for which the Participant works is transferred to a person or entity who or which is not a subsidiary of the Company;

any unvested Awards held by the Participant shall Vest in respect of a proportion of the Award (corresponding to such proportion of the Performance Period as has elapsed when the Employment is terminated) on the date of such termination, provided the following conditions are met:

(a) all applicable non-time-based Performance Conditions have been met;

(b) the Participant subsequently does not join a Competitor as set forth in Rule 7.7;

(c) in relation to Rule 7.5(i) the Participant executes and does not revoke a general release of claims acceptable to the Company; and

(d) in relation to Rule 7.5(ii) or Rule 7.5(iii) the Board has not determined that that some or all of the Awards held by relevant Participants shall be exchanged in accordance with Rule 8.2 (Exchange of Awards).

7.6Termination of Employment as a Result of Mutual Agreement

If the Termination of Employment is mutually agreed between a Participant and the Employer, the Award of such Participant may Vest at the Company’s sole discretion to the extent legally permissible according to the Rules and Applicable Law and to the extent the Participant executes and does not retroactively revoke a general release of claims acceptable to the Company.

7.7Forfeiture of Awards on Joining a Competitor

To the extent permitted by Applicable Law, where a Participant who retains his Awards following Termination of Employment as a result of Retirement (Rule 7.3), mutual agreement (Rule 7.6) or as a result of other good reasons (Rule 7.5) becomes an employee or director or otherwise provides services to a Competitor (as listed in Appendix 1, or otherwise defined by the Board from time to time), other than as a direct result of an event within Rule 7.5(ii) or Rule 7.5(iii), then all unvested Awards and/ or unexercised Stock Options held by that Participant shall be immediately forfeited.

7.8Leave of Absence

A Participant who is on an approved leave of absence will be deemed to remain in Employment until any date on which the Participant indicates that he will not be returning to work or otherwise leaves Employment on a permanent basis. At the time of any such notification or if the Participant otherwise terminates Employment on a permanent basis, the Participant’s Employment will be treated as having terminated and the Participant’s Award will be dealt with accordingly under the Plan.

15

Alcon Inc.

Long Term Incentive Plan

7.9Assignments and Transfers

If a Participant is sent on an international assignment or is transferred to the Company or a subsidiary of the Company, this will not be considered as Termination of Employment under the Plan. The treatment of assignments and transfers is subject to the rules of the “Alcon Compensation Guidelines.”

8Corporate Events

8.1Change of Control

To the extent no exchange of Award is or will be made under Rule 8.2 or the Awards will not otherwise be continued following a Change of Control event, the Vesting Date(s) of any unvested Award shall be accelerated and the Award shall Vest in full as a result of the occurrence of a Change of Control with any Performance Stock Units vesting at target.

Where an Award Vests early as a result of a Change of Control event, the Vesting Date shall be the date that is the date such event occurs or such earlier date or time that the Board may determine to the extent permitted by Applicable Law.

The Board may in its discretion, exclude some Participants from this Rule if they are subject to Applicable Law, which are in conflict with this treatment (e.g. members of the Executive Committee subject to the Compensation Ordinance).

Alternatively, the Board may determine that some or all Awards will be automatically exchanged under Rule 8.2 or may allow Participants to choose accelerated Vesting and/ or exchange.

If an Award is exchanged under Rule 8.2 or the Award will be continued following a Change of Control, and the Participant experiences a Termination of Employment because he or she is terminated without Cause or resigns for Good Reason, in each case, within 24 months after the consummation of such Change of Control transaction (in each such case, a “Termination of Employment due to a Change of Control”), such Award shall Vest as follows:

(a) An Award of Restricted Stock Unit and an Award of Restricted Stock shall vest in full as of the date of such Termination of Employment.

(b) An Award of Performance Stock Units shall vest as determined pursuant to the applicable Award Agreement for such Award.

Notwithstanding the preceding paragraph of this Rule the Board may in its discretion with no obligation to do so, allow a greater proportion of an Award to Vest.

8.2Exchange of Awards

If an Award is exchanged, then:

(a) the exchanged Award will be in respect of or by reference to shares in any company determined by the company offering the exchange;

(b) the exchanged Award shall have substantially equivalent terms to those of the Award that was exchanged;

16

Alcon Inc.

Long Term Incentive Plan

(c) the Board may determine that any holding or blocking periods shall continue to apply to the exchanged Award;

(d) the exchanged Award will be subject to the Plan as it had effect in relation to the old Award immediately before the exchange;

(e) with effect from the exchange, the Rules will apply as if references to Shares are references to shares over which the exchanged Award has been granted; and

(f) the Rules shall apply with such other adjustments as the Board may decide.

8.3Demerger, Variations of Share Capital and Other Corporate Events

If the Board becomes aware that the Company is or is expected to be affected by any variation of share capital, rights issue, sub-division, consolidation or reduction of share capital, demerger, distribution (other than an ordinary dividend), liquidation or other event (other than a Change of Control) which, in the opinion of the Board, could affect the current or future value of Shares, the Board may:

(a) adjust Awards in such manner as it considers appropriate;

(b) allow Awards (for all or some Participants) to Vest in whole or in part, subject to any Performance Condition(s) that the Board may impose; or

(c) require some or all Awards to be exchanged under Rule 8.2.

9Shareholder Rights and Dividend Equivalents

9.1Restricted Stock Units and SARs

A Participant holding an Award of Performance Stock Units, Restricted Stock Units or SARs shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of such an Award unless and until the Shares comprising the Award are transferred to or acquired by the Participant.

At the Board’s sole discretion, a Participant may however be entitled to receive Dividend Equivalents as set out in Rule 9.4 on any unvested Award of Performance Stock Units or Restricted Stock Units. A Participant shall not be entitled to receive Dividend Equivalents on Stock Options or SARs.

9.2Restricted Stock

A Participant holding an Award of Restricted Stock shall be entitled to vote, to receive dividends or to have any rights of a shareholder following the Grant Date, except that in the case of any unvested Shares that are subject to the Award of Restricted Stock, the Participant shall not be entitled to any dividends paid by the Company on the equivalent number of Vested Shares. Notwithstanding the foregoing, the Board may determine the holder of unvested Shares may be credited with such dividends provided that such dividends shall be paid to the Participant only if, when and to the extent such Shares Vest. The value of dividends payable with respect to any Shares that do not Vest shall be forfeited.

The Board may however determine that the Participant must agree to surrender or waive any right to vote, receive dividends or any other rights of a shareholder in respect of such Award.

17

Alcon Inc.

Long Term Incentive Plan

9.3Stock Options

A Participant holding an Award of Stock Options shall not be entitled to vote, to receive dividends, Dividend Equivalents or to have any other rights of a shareholder in respect of such an Award unless and until the Stock Options are exercised and the Shares comprising the Award are transferred to or acquired by the Participant.

9.4Dividend Equivalents

If the Board has determined under Rule 4.4(j) that an Award shall attract Dividend Equivalents, the Participant’s entitlement will be calculated as follows:

(a) unless the Board decides otherwise, the number of Shares Vesting in relation to an Award will be increased by the number of Shares which could have been acquired by the reinvestment of dividends payable between the Grant and Vesting Date on the number of Vested Shares (at the Fair Market Value of a Share on each relevant dividend payment date) and, where necessary, rounded down to the nearest whole share;

(b) if the Board decides that Dividend Equivalents would not be on a notional reinvestment basis as described in Rule 9.4(a), the Company (or the Participant’s Employer) shall credit to the Participant (in cash or Shares) (subject to all Taxation) an amount equal to the aggregate dividends which would have been paid on the number of Shares underlying the Award between the Grant Date and the Vesting Date; or

(c) the Board may decide that the Dividend Equivalents may be calculated on any other basis.

Each Dividend Equivalent is a notional amount equal to the gross amount before taxes of actual dividend declared and paid on a Share

Unless otherwise determined by the Board at any time or times, a Participant is not entitled to receive Dividend Equivalents with respect to the time period between the Vesting Date and the date that the relevant Shares are transferred to or acquired by him or payment in respect of the Award is made. Any dividend equivalents credited with respect to Restricted Stock Units and Performance Stock Units shall be settled only if, when and to the extent such Restricted Stock Units and Performance Stock Units Vest and are settled. The value of amounts payable with respect to Restricted Stock Units and Performance Stock Units that do not Vest shall be forfeited.

10Participant Rights and Obligations

10.1General

The rights and obligations of a Participant under the terms of his or her office, Employment or other contract are not affected by becoming a Participant. These Rules do not form part of, and will not be incorporated into, any contract between a Participant and the Company.

Nothing in this Plan confers any benefit, right or expectation on a person who is not an Eligible Employee or a Participant.

18

Alcon Inc.

Long Term Incentive Plan

10.2No Employment Rights

Participants do not have any right to continued Employment as a result of participating in the Plan, nor are they entitled to any compensation or damages if any benefit under the Plan is reduced or cancelled as a result of applying the Rules.

The Plan is discretionary and is not part of any Employment contract with the Employer or with the Company or any other subsidiary of the Company. Neither does the Plan create any contract between the Participant and Company, nor does the Plan give rise to a claim or legal entitlement to compensation for the Participant. The Plan may be changed or cancelled by the Board in its absolute discretion. Any future Awards may therefore be changed or cancelled at any time.

The Awards are not intended to replace any pension rights or compensation and are not part of normal or expected salary or compensation for any purpose, including but not limited to calculating severance payments, if any, upon termination.

10.3No Continued Entitlement

Selection as a Participant refers only to the participation for the one grant year and does not guarantee a right of participation in the Plan in any subsequent year even if Awards have been granted repeatedly in the past.

10.4Clawback

Participants must adhere at all times to Applicable Law, the Articles, the Company’s organisational regulations, the Code of Conduct and all applicable Company or Employer policies, procedures and guidelines. If, in the reasonable opinion of the Board, a Participant fails to comply with any such laws, Articles, regulations, Code of Conduct, policies, procedures and/ or guidelines in all material respects then the Board may determine that:

(a) all or any Awards (whether Vested or unvested) held by the Participant will be forfeited;

(b) all or any of a Participant’s Shares transferred to him under the Plan following the Vesting of Awards will be forfeited and must be transferred to the Company;

(c) the Participant must pay the Company any gross proceeds from the Participant’s the sale of some or all of the Shares transferred to him following the Vesting of Awards; and

(d) pay to the Company some or all of the gross sums paid to him under the Plan.

10.5Non-Transferability of Awards

Unless specifically permitted under the Plan or with the prior written consent of the Board, Awards that have not Vested or any rights in respect of any unvested Award may not be transferred, assigned or otherwise disposed of other than by will or by the laws of descent or distribution; provided, however, that nothing shall bar the transfer of an award in the event of divorce if required by applicable law. The designation of a beneficiary by a Participant will not constitute a transfer.

Except as indicated above, if unvested Awards (or any rights in respect of unvested Awards) are transferred, assigned or otherwise disposed of, they shall be forfeited immediately.

19

Alcon Inc.

Long Term Incentive Plan

10.6Tax, Social Security and Other Charges

As a condition of accepting any benefit in respect of an Award, the Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) agrees to make such arrangements as the Company may require for the satisfaction of (and will indemnify the Company against) all taxes, social security contributions, withholding, required deductions or payments that may arise in connection with an Award and other levies for which he is responsible that arise in connection with an Award (together “Taxation”).

The Company and/ or any Employer may make such arrangements which it or they consider necessary to cover any liability to pay or account for Taxation (including selling sufficient Shares to cover such liability and accounting for the proceeds of sale to the Company or the Employer, withholding sufficient Shares to cover such liability or making deductions from any cash sum payable to the Participant). The Participant will promptly do all things necessary to facilitate any such arrangements. Vesting and the transfer of Shares to him can be delayed until he does so.

10.7Participant to Provide Information

By accepting any benefit in respect of an Award, a Participant agrees to provide promptly any information or do any other thing reasonably required by the Board or other relevant person in relation to the Plan, an Award or Shares acquired under this Plan for the purpose of compliance by that person with its tax affairs or other legal or regulatory obligations; or facilitating the operation of the Plan.

10.8Confidentiality

A Participant will maintain his or her participation in the Plan in confidence and will not disclose the provisions of the Plan, the Award or the amount of the Award to any person, except to his or her immediate family, tax, legal or financial advisor or to the extent legally required to do so, without prior authorization from his Employer to the extent permitted by Applicable Law.

11Board’s Powers

11.1General

The exercise of any power or discretion, including refraining from exercise, of the Board concerning the Plan or any Award is absolute and unlimited and may be reasonably exercised at any time, subject always to the principle of good faith. When the Board exercises any of its powers or discretions in a way that will impact a Participant, the Board may (but need not) inform the relevant Participant in such manner as the Board shall determine.

Any decision of the Board in connection with the Plan, the interpretation of the Plan and any related documents and in connection with any dispute relating to the Plan will be final and binding.

11.2Schedules to the Plan

The Board may make such amendments to the Rules as it considers necessary or desirable to take account of local tax, exchange control or securities law to operate the Plan in any jurisdictions in which Participants are situated. The Board may implement such

20

Alcon Inc.

Long Term Incentive Plan

amendments in the form of schedules in such a way that they create special Rules applicable to certain Eligible Employees or categories of Eligible Employees.

11.3Change of Performance Conditions

Notwithstanding Rule 17 (Amendment and Termination of the Plan), the Board may waive or change a Performance Condition applicable to an outstanding Award if there are circumstances which cause the Board to consider that the Performance Condition or other condition has ceased to be a fair measure of performance. Any such altered Performance Condition must be, equivalent in all material respects, no easier and no more difficult to satisfy than the original Performance Condition.

12Plan Administration

The Plan shall be administered by the Board.

The Board may make and vary regulations and policies for the administration and operation of the Plan.

The Board may delegate the exercise of its powers or discretions in relation to this Plan to any one or more persons including, but not restricted to, a sub-committee of the Board for such period and on such conditions as the Board may determine in accordance with Applicable Law. In the case of such delegation, and to the extent of such delegation, references herein to the “Board’ shall refer to a delegate of the Board.

The Board may at any time appoint or engage specialist service providers for the operation and administration of the Plan.

13Company Documents

The Company may (but need not) send to any Participant any documents which the Company sends to its shareholders.

14Notices

Any notice or other communication under or in connection with the Plan or any Award may be given:

(a) by the Company to an Eligible Employee or Participant either personally or sent to him by electronic mail or other electronic means (including the internet or the intranet) or by post addressed to the address last known to the Company (including any address supplied by the relevant Employer) or sent through the Company's internal postal service; and

(b) to the Company, either personally or by post to the Company secretary.

Items sent by post shall be pre-paid and shall be deemed to have been received 72 hours after posting. Items sent by electronic mail or other electronic means shall be deemed to have been received at the expiration of 24 hours from when they were sent.

The Board may decide to accept notices given by Participants if received after any time stipulated for receipt.

21

Alcon Inc.

Long Term Incentive Plan

15Awards not Pensionable Etc.

For the avoidance of doubt, Awards under the Plan are not pensionable and do not count in relation to the calculation of benefit under programs such as life insurance, income protection or continuation, medical or such other benefits as the Board may determine.

16Data Protection

By accepting any benefit in respect of an Award, the Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of a Participant’s Personal Data (as described below) by and among, as applicable, the Company or third parties as may be selected by the Company, for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that refusal or withdrawal of consent will affect the Participant’s ability to participate in the Plan; without providing consent, the Participant will not be able to participate in the Plan or realize benefits (if any) from the Award.

The Participant understands that the Company and any subsidiary or affiliate or designated third parties may hold personal information about the Participant, including, but not limited to, The Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company or any subsidiary or affiliate, details of all Awards or Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Personal Data”). The Participant understands that Personal Data may be transferred to any subsidiary or affiliate or third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. In particular, the Company may transfer Personal Data to the broker or stock plan administrator assisting with the Plan, to its legal counsel and tax/accounting advisor, and to the subsidiary or affiliate that is the Participant’s employer and its payroll provider.

The Participant should also refer to the Company’s data privacy policy (which is available to the Participant separately and may be updated from time to time) for more information regarding the collection, use, storage, and transfer of the Participant’s Personal Data.

17Amendment and Termination of the Plan

The Board may at any time change the Plan (including amending or adding Schedules to the Plan) in any way. Changes may affect Awards already granted provided always that, unless required by Applicable Law, no such change may be made which is to the material disadvantage of a Participant without that Participant’s prior written consent. The Board shall give notice to a Participant of any material changes to a Participant’s Award. The Board may terminate the Plan at any time. Termination of the Plan will not affect existing Awards.

18Compliance with Law and Articles of Incorporation

18.1Compliance with Law etc.

The Plan is subject to all Applicable Laws and the Articles. If such law or the Articles require, the terms of any provision of the Plan and any Award (including any outstanding Award) shall be interpreted and/ or amended and applied to the extent required to comply fully with such law or the Articles.

22

Alcon Inc.

Long Term Incentive Plan

18.2 Swiss law with Respect to the Compensation of Certain Executives of Listed Companies

The Plan is subject to any mandatory provisions of Swiss law pertaining to compensation of governing bodies derived from article 95 paragraph 3 of the Swiss Federal Constitution and the related implementing legislation (Compensation Ordinance). Any interpretation and/ or amendment necessary in respect of any provision of the Plan or any Award because of Applicable Law and/ or the Articles (whether currently in force or in the future) to the detriment of the Participant shall not give rise to any claims by or other rights whatsoever of the Participant. This applies if the annual general meeting of the Company does not approve the compensation of the Participant which is subject to approval under the Compensation Ordinance.

18.3US Code Section 409A

If a Participant (other than a Participant whose benefits are provided under the United States Schedule) is subject to the United States Internal Revenue Code (“US Code”) (a “US Participant”), and if benefits under this Plan for such US Participant are not exempt from US Code Section 409A, it is intended that to the maximum extent permitted under all Applicable Law this Plan will be interpreted and administered to be exempt from, or to comply with, the requirements of US Code Section 409A as they apply to such US Participant.

19Governing Law

This Plan and all Awards granted under it shall be governed by and construed in accordance with the laws of Switzerland, under express exclusion of any provisions of conflict of laws.

The Board may resolve conclusively all questions of fact or interpretation concerning the Plan and has the authority to resolve any dispute of any kind that arises under or in connection with the Plan. In the event a dispute escalates to require resolution by a court, the dispute will exclusively be resolved by the Courts of Fribourg, Switzerland.

23

Alcon Inc.

Long Term Incentive Plan

Schedule 1

United States

1Application of this Schedule

When Awards under the Plan are to be granted, the Board may determine that this Schedule applies, in which case such Awards shall be subject to all the provisions of the Alcon Inc. Long Term Incentive Plan save as modified below.

Shares subject to the Awards under the Plan are intended to be registered under the United States Securities Act of 1933.

2 Consequences of Vesting – Performance Stock Units and Restricted Stock Units

2.1 To the extent permitted by the Board, Participants may elect to defer the payment of Performance Stock Units, Restricted Stock Units, and any accumulated Dividend Equivalents, to the date later than the payment date specified in the relevant Award provided that the Participant makes such a deferred election either as an initial deferral under United States Treasury Regulation Section 1.409A-2(a) or pursuant to the subsequent deferral provisions of United States Treasury Regulation Section 1.409A-2(b). The Board shall determine whether such deferral is in the form of Shares or cash. If deferrals are in Shares, unless otherwise directed by the Board, such Shares, and any accumulated Dividend Equivalents, shall be delivered from this Plan upon such deferred payment date. If deferrals are in cash, the cash proceeds of such Awards shall be transferred into the applicable non-qualified deferred compensation plan of the Participant’s Employer in the United States.

2.2Rules 5.6 and 5.7 shall also include the following language:

“If this 60-day period crosses two calendar years, the payment shall be made in the second year.”

2.3Rule 8.1 shall also include the following language:

“Any Awards that Vest and are subject to US Code Section 409A will be settled on the regularly scheduled Vesting dates (and in the case of PSUs, the normally scheduled post-Performance Period settlement date) to the extent necessary to avoid adverse taxation under US Code Section 409A.”

3Corporate Events

Should the Board determine that adjustments be made to Awards under Rule 8, any such adjustments or modifications must be made in a manner which is consistent with the provisions of US Code Section 409A.

4Code Section 409A

4.1 Notwithstanding anything under the Plan to the contrary, to the extent applicable, it is intended that the Plan as it applies to Participants shall comply with the provisions of US Code Section 409A and the Plan and all applicable Awards be construed and applied in a manner consistent with this intent. In furtherance thereof, in the case of United States participants, Termination of Employment must constitute a “separation from service” under US Code Section 409A.” In addition, any amount constituting a

24

Alcon Inc.

Long Term Incentive Plan

“deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant upon a separation from service of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due to the Participant’s death), occurring while the Participant shall be a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) of the Company (as limited by Code Sections 414(b), (c), (m) and (o)), shall not be paid until the earlier of:

(a)    the date that is six months following such separation from service; or

(b)    the date of the Participant’s death following such separation from service.

4.2 Notwithstanding any provision of the Plan to the contrary, to the extent that an Award constituting a “deferral of compensation” subject to US Code Section 409A shall be deemed to be vested or restrictions lapse upon the occurrence of a Change of Control, and if such Change of Control does not constitute a “change in control event” (as defined in Treasury Regulation Section 1.409A-3(i)), then even though such Award may be deemed to be vested or restrictions lapse, payment will only be made to the extent necessary to comply with the provisions of US Code Section 409A, to the United States participant on the earliest of:

(a) the Participant’s separation from service, the date payment otherwise would have been made pursuant to the regular payment terms of the Award; or

(b) the Participant’s death.

Schedule 2

Alcon LTIP Plan Switzerland

1Application

When Awards under the Plan are to be granted, the Board may determine that this Schedule applies, in which case such Awards shall be subject to all the provisions of the Alcon Inc. Long Term Incentive Plan save as modified below.

2Participant’s Entitlement to Elect the Award Type

Participants who are granted a share award under this Schedule 2, will have the choice to receive such an award in the form of either:

(a) Restricted Stock award; or

(b) Performance Stock Unit or Restricted Stock Unit award.

The Board may determine that Awards in the form of Restricted Stock may be subject to a mandatory blocking period (“Mandatory Blocking Period”).

25

Alcon Inc.

Long Term Incentive Plan

Furthermore, the Board may offer Participants the opportunity to block Awards in the form of Restricted Stock after the expiry of the Mandatory Blocking Period (“Additional Blocking Period”).

The blocking choices and the terms of the blocking will be determined by the Board from time to time.

3Termination of Employment

Rule 7 of the Alcon LTIP Plan shall apply save as modified as follows:

3.1General

(a) If upon Termination of Employment the outstanding Restricted Stock are forfeited with immediate effect, no compensation is paid to the Participant for the loss of the Award. In the event the applicable tax authorities decline to reimburse or compensate the personal income tax paid at the time of Award in respect of the forfeited Restricted Stock, the Company will compensate such cost on such basis as the Board may determine subject to receipt of such documentary proof as the Board may reasonably require.

(b) No compensation will be paid for the forfeiture of Performance Stock Unit awards or Restricted Stock Unit awards.

3.2Termination of Employment – Effect on Blocking Periods

(a) If Rules 7.3, 7.5 or 7.6 of the LTIP Plan apply, all Restricted Stock awards held by the Participant shall remain blocked until the end of the Mandatory Blocking Period and/ or, where applicable, the end of any Additional Blocking Period.

(b) If a Participant terminates Employment as a result of his death or Disability, all Mandatory and Additional Blocking Periods shall cease to apply immediately.

(c) No further Additional Blocking Periods shall be offered following Termination of Employment.

3.3Modification ofDefinitions

With respect to Awards subject to this Schedule 2, the definitions of “Cause” and “Good Reason” in Section 1.1 of the Plan shall also include any circumstance which according to Article 337 para. 2 of the Swiss Code of Obligations renders the continuation of the employment relationship in good faith unconscionable for the party giving notice.

26

EX-4.13

Exhibit 4.13

Alcon Inc.

Deferred Bonus Stock Plan

Adopted on April 9, 2019

Amended on February 4, 2020

1

TABLE OF CONTENTS

1Definitions and Interpretation    3

1.1Definitions    3

1.2Interpretation    4

2Purpose of the Plan    5

3Shares Subject to the Plan    5

3.1Shares Subject to the Plan    5

3.2Lapsed Awards    5

4Determination of Deferred Bonus Stock Awards    6

4.1STI Equity Awards    6

4.2Voluntary Deferral Awards    6

4.3Decisions Relating to Deferred Bonus Stock Awards    6

4.4Determining the number of Shares subject to a Deferred Bonus Stock Award    6

5Settlement of Restricted Stock Units    7

5.1Settlement of Restricted Stock Units    7

6Termination of Employment    7

6.1Treatment of Unvested Voluntary Deferral Awards    7

6.2Treatment of Unvested STI Equity Awards    7

6.3Termination of Employment Due to Special Circumstances    8

6.4Forfeiture of Awards on Joining a Competitor    8

6.5Leave of Absence    8

6.6Assignments and Transfers    9

7Corporate Events    9

8Amendment and Termination of the Plan    9

9Applicable Law    9

10Pension Treatment    9

Schedule 110

1Application of this Schedule    10

2Consequences of Vesting — Restricted Stock Units    10

3Code Section 409A    10

Schedule 212

2

1Application    12

2Short Term Incentive Equity Award    12

3Voluntary Deferral Awards    12

4Termination of Employment    12

3

4

1 Definitions and Interpretation

1.1Definitions

In this Plan, unless the context otherwise requires, the following words and expressions will have the following meanings:

Award	an award granted under this Plan in such form and pursuant to such terms and conditions as the Board will determine.
Board	the Company’s Board of Directors or, to the extent permitted by Applicable Law, the Board’s delegate(s).
Company	Alcon Inc. or any of its subsidiaries, as applicable.
Compensation Ordinance	The ordinance of the Swiss Federal Council against excessive compensation in listed companies (in German “Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften” or later implementing legislation.
Deferred Bonus Stock Award	Awards granted under this Plan collectively, and defined as STI Equity Awards and Voluntary Deferral Awards.
Eligible Employee	any employee or group of employees of the Company or any director, including, but not limited to members of the Executive Committee and the Company’s key executives, as the Board shall determine.
Long Term Incentive Plan	The rules of the Long Term Incentive Plan established by the Board on April 9, 2019, as may be amended and in effect from time to time.
Participant	An Eligible Employee who is selected by the Board to participate in the Plan as set forth herein, as may be amended and in effect from time to time.
Plan	The Alcon AG Deferred Bonus Stock Plan as set forth herein, as may be amended and in effect from time to time.
Restricted Stock Award (RSA)	An award of Shares subject to restrictions in accordance with the Plan.
Restricted Stock Unit (RSU)	A right to receive Shares or cash under the Plan.
Retirement	the Termination of Employment after having attained age 55 or older and having completed at least 10 years of Service provided that if required by Applicable Law, an alternative definition may be used.
Rules	The rules of the Plan (including all Schedules).
Schedule	A supplement to the Rules.
Short Term Incentive (STI) Award	An award made under the Short Term Incentive Plan.
STI Equity Award	An award granted under this Plan that is made as a result of receiving a portion of the Participant’s STI Award in equity, pursuant to 3.7.5 of the Alcon Short Term Incentive Plan.
Short Term Incentive Plan	The rules of the cash based Short Term Incentive Plan established by the Board on April 9, 2019, which operates in conjunction with this Plan.
Voluntary Deferral Award	a Deferred Bonus Stock Award which is made as a result of Voluntary Deferral of Short Term Incentive Award pursuant to Rule 3.8 of the Alcon Short Term Incentive Plan and Section 4.2 of this Plan.

1.2Interpretation

Unless the context requires otherwise:

(a)words importing the singular include the plural and vice versa;

(b)the word “includes” is not a word of limitation;

(c)the masculine includes the feminine and vice versa;

(d)headings and boldings are for convenience only and do not affect the interpretation of these Rules;

(e)references to a person will include bodies corporate and unincorporated and any successors or assignees;

(f)reference to any enactment or statutory provision will be construed to include a reference to that enactment or provision as from time to time amended, re-enacted or replaced and will include any subordinate legislation made under the enactment; and

(g)any reference to writing or written form will include any legible format capable of being reproduced on paper, irrespective of the medium used.

Each provision in these Rules is entirely separate and independent from the other provisions. If any provision is found to be invalid, it will be deemed never to have been part of these Rules and this will not affect the validity or enforceability of any of the remaining provisions of this Plan.

2 Purpose of the Plan

The purpose of the Deferred Bonus Stock Plan (the “Plan”) is to attract and retain highly qualified associates, and to obtain from each the best possible performance in order to achieve particular business objectives established for Company by its Board or the Board’s delegates.

These Rules set out the terms upon which the Plan is operated and are the terms of the contract relating to an Award between the Company and the Participants who are granted Awards by the Board at its sole discretion.

Where an Award is made to a Participant who is resident in or otherwise subject to a particular jurisdiction or employee group covered by a Schedule to these Rules or where an Award is designated as a particular Award type covered by a Schedule to these Rules, the provisions of the relevant Schedule modify the Rules.

Unless otherwise provided herein or determined otherwise by the Board, all provisions of the Long Term Incentive Plan shall apply to Awards granted under this Plan. Accordingly, and for the avoidance of doubt, the Board shall have the same

powers and authority with respect to this Plan as the Board has under the Long Term

Incentive Plan, including the powers and authority set forth in rules 11 and 12 of the

Long Term Incentive Plan. In addition, any capitalized terms used in this Plan but not defined in this Plan shall have the meaning ascribed to them in the Long Term Incentive Plan.

No Award under this Plan, whether an STI Equity Award or a Voluntary Deferral Award, can be a duplication of any amount under the Short Term Incentive Plan, the Long Term Incentive Plan or any other plan maintained by the Company. Accordingly, if any amount is or becomes subject to the terms of this Plan, the Participant shall not be entitled to receive a duplicate payment of the same amount under any other plan maintained by the Company.

3 Shares Subject to the Plan

3.1Shares Subject to the Plan. Subject to the provisions of Rule 8 of the Long Term Incentive Plan, the maximum aggregate number of Shares that may be issued under the Plan is 1,500,000 Shares. The Shares may be authorized, but unissued, or Shares reacquired by the Company. Notwithstanding the foregoing, subject to the provisions of Rule 8 of the Long Term Incentive Plan, in no event shall the maximum aggregate number of Shares that may be issued under the Plan exceed the number set forth in this Rule 3 plus, to the extent allowable under Applicable Law, any Shares that again become available for issuance pursuant to lapsed awards as set forth below.

3.2Lapsed Awards. To the extent an Award should be forfeited for any reason without having been settled in full, the unissued Shares that were subject thereto shall, unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the Plan and that are later forfeited to the Company due to the failure to vest or reacquired by the Company at the original purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a Participant’s Termination of Employment) shall again be available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

4 Determination of Deferred Bonus Stock Awards

4.1STI Equity Awards

Participants who, in accordance with Rule 3.7.5 of the Alcon Short Term Incentive Plan, receive an STI Equity Award will be granted that award in the form of a Deferred Bonus Stock Award, and may also elect to defer such STI Equity Award in the manner determined by the Board.

4.2Voluntary Deferral Awards

Participants who, in accordance with Rule 3.8 of the Alcon Short Term Incentive Plan, elect under this Plan to defer any cash portion of a Short Term Incentive Award will be provided a type of Deferred Bonus Stock Award referred to as a Voluntary Deferral Award, Such a Voluntary Deferral Award (and the Deferred Stock Bonus Award that corresponds to such Voluntary Deferral Award) are 100% vested under this Plan

4.3Decisions Relating to Deferred Bonus Stock Awards

In respect of any Deferred Bonus Stock Award, the Board will determine in its sole discretion:

(a) Whether the Deferred Bonus Stock Award is in respect of Restricted Stock Awards or Restricted Stock Units;

(b) Where relevant, whether or not the Deferred Bonus Stock Award will carry Dividend Equivalents and, if so, the form of such Dividend Equivalents;

(c) The latest date by which the Participant must complete a form of acceptance of a Deferred Bonus Stock Award;

(d) If the Deferred Bonus Stock Award is not comprised of Restricted Stock Awards or Restricted Stock Units, the form, terms and conditions of any such Deferred Bonus Stock Award;

(e)The Vesting Date or Vesting Dates and any conditions to which the Award is subject;

(f) Whether or not participants are able to elect the deferred distribution of shares as a result of RSU vesting, and if so the duration of such deferred distribution;

(g)Whether the Participant is required to sell sufficient Shares to meet Taxation; and

(h)Which, if any, Schedules to the Plan will apply to the Award.

4.4Determining the number of Shares subject to a Deferred Bonus Stock Award

In order to determine the number of Shares subject or linked to a Deferred Bonus Stock Award, the Board will:

(a)Divide the relevant cash sum by the closing Market Value (at closing of relevant Stock Exchange) of a Share at Grant Date and then, where necessary, round down to the nearest whole Share; or

(b)Apply such other method as the Board may determine in its sole discretion from time to time.

5 Settlement of Restricted Stock Units

5.1Settlement of Restricted Stock Units.

5.1.1STI Equity Awards. For an STI Equity Award, unless otherwise provided by the Board and to the extent permitted by Applicable Law, as soon as practicable following the earlier of (i) the normally scheduled Vesting Date(s) or (ii) a Termination of Employment due to death or Disability and in no event later than 60 days following the applicable event, the Company shall transfer the number of Shares (or pay or procure to be paid a cash sum if the Board has determined that the RSUs will be settled in cash) in respect of which the Award has Vested to the Participant. The foregoing settlement provisions shall apply even in the event of a Termination of Employment due to special circumstances as specified in Rule 6.3.

5.1.2Voluntary Deferral Awards. For a Voluntary Deferral Award, no later than 60 days following the applicable settlement date pursuant to the deferral election made under this Plan applicable to such Voluntary Deferral Award, the Company shall transfer the number of Shares subject to the Deferred Bonus Stock Award that corresponds to such Voluntary Deferral Award (or pay or procure to be paid a cash sum if the Board has determined that the RSUs will be settled in cash).

5.1.3Notwithstanding the foregoing, if the Participant elects to defer settlement of such Deferred Stock Bonus Award pursuant to a deferral election permitted under this Plan, such transfer of Shares (or payment in cash, if applicable) shall instead occur pursuant to such deferral election and no later than 60 days following the applicable settlement date chosen by the Participant pursuant to such deferral election, to the extent the Participant is Vested in the relevant Deferred Stock Bonus Award on such deferred settlement date.

6 Termination of Employment

6.1Treatment of Unvested Voluntary Deferral Awards

If a Participant terminates Employment for any reason, any Voluntary Deferral Awards will remain 100% Vested.

6.2Treatment of Unvested STI Equity Awards

Any unvested STI Equity Award at the time the Participant Terminates Employment for any reason, other than special circumstances defined in Rule 6.3, will be forfeited on the day the Participant Terminates Employment, unless stipulated otherwise by the Board or under Applicable Law.

Notwithstanding any other part of this Rule 6, the Board may, in its discretion with no obligation to do so, allow (on such terms as the Board decides) a greater proportion of an STI Equity Award to Vest and/or to accelerate the time at which Vesting occurs.

6.3Termination of Employment Due to Special Circumstances

6.3.1If a Participant Terminates Employment for any of the reasons listed below any unvested STI Equity Awards will not be forfeited at the time of the Participant’s Termination of Employment and will continue to Vest:

(a)Garden Leave;

(b)Retirement;

(c)Termination of Employment by the Participant’s employer (whether or not by notice) other than for misconduct or poor performance;

(d)Termination of Employment as a result of mutual agreement;

(e)The Participant’s employer ceases to be a subsidiary of the Company;

(f)The business for which the Participant works is transferred to a person which or who is not a member of the Company;

(g)any other reason if the Board so decides.

The Board may determine in the case of Termination of Employment for the reasons specified in Rule 6.3.1(e) or 6.3.1(f) that some or all of the Awards held by relevant Participants will be exchanged in accordance with Rule 8.2 of the Long Term Incentive Plan. For the avoidance of doubt, such continued Vesting will not be conditioned on a release of claims against the Company unless the Board provides otherwise.

6.3.2If a Participant terminates Employment for either of the reasons listed below, any unvested STI Equity Awards will not be forfeited at the time of the Participant’s Termination of Employment and will Vest immediately:

(a)Death

(b)Disability

6.4Forfeiture of Awards on Joining a Competitor. To the extent permitted by Applicable Law, in the event that the Participant, in the period commencing on termination and ending immediately following the relevant Vesting Date, becomes an employee or director of (or otherwise provides services to) a Competitor then all STI Equity Awards held by that Participant will be immediately forfeited.

6.5Leave of Absence. A Participant who is on an approved leave of absence will be deemed to remain in Employment until any date on which the Participant indicates that he will not be returning to work or otherwise leaves Employment on a permanent basis. At the time of any such notification or if the Participant otherwise terminates Employment on a permanent basis, the Participant’s Employment will be treated as having terminated and the Participant’s Award will be dealt with accordingly under the Plan.

6.6Assignments and Transfers. If a Participant is sent on an international assignment or is transferred to another entity within the Company, this will not be considered as Termination of Employment under the Plan. The treatment of assignments and transfers is subject to the rules of the Alcon Compensation Guidelines.

7 Corporate Events

See Rule 8 of the Long Term Incentive Plan for purposes of determining vesting upon a Change of Control prior to the Vesting Date of an STI Equity Award.

8 Amendment and Termination of the Plan

The Board may at any time change the Plan (including amending or adding Schedules to the Plan) in any way. The Board will give notice of any changes to any Participant. The Board may terminate the Plan at any time. Termination will not affect existing Deferred Bonus Stock Awards.

9 Applicable Law

This Plan and all Awards granted under it will be governed by and construed in accordance with the laws of Switzerland, under express exclusion of any provisions of conflict of laws.

The Board may resolve conclusively all questions of fact or interpretation concerning the Plan and has the authority to resolve any dispute of any kind that arises under or in connection with the Plan. In the event a dispute escalates to require resolution by a court, the dispute will exclusively be resolved by the Courts of Fribourg, Switzerland.

10 Pension Treatment

Subject to the terms and conditions of each applicable pension plan for which the calculation is made, any amount deferred under this Plan, and any payment made under this Plan, may be taken into account for the purposes of calculating pension contributions, except to the extent taking such amount or payment into account would be duplicative in such calculations of (i) the portion of the Short Term Incentive Award issued as an STI Equity Award or (ii) the amount that constitutes a Voluntary Deferral into an award under this Plan.

Schedule 1

United States

1    Application of this Schedule

When Deferred Bonus Stock Awards under the Plan are to be granted, the Board may determine that this Schedule applies, in which case such Awards will be subject to all the provisions of the Alcon AG Deferred Bonus Stock Plan save as modified below.

Shares subject to the Deferred Bonus Stock Awards under the Plan are intended to be registered under the United States Securities Act of 1933.

2    Consequences of Vesting — Restricted Stock Units

Rule 5 shall also include the following language as Rule 5.1.3:

“If this 60-day period crosses two calendar years, the Participant shall not be permitted to determine the year of payment. If the Board determines that a release of claims shall be required to earn any payment, the payment shall be made in the second year. In the case of United States participants such Termination of Employment must constitute a “separation from service” under US Code Section 409A.”

3    Code Section 409A

Notwithstanding anything under the Plan to the contrary, to the extent applicable, it is intended that the Plan as it applies to Participants will comply with the provisions of Code Section 409A and the Plan and all applicable Deferred Bonus Stock Awards be construed and applied in a manner consistent with this intent. In furtherance thereof, in the case of United States participants, Termination of Employment must constitute a “separation from service” under US Code Section 409A.” In addition, any amount constituting a “deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant upon a separation from service of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due to the Participant’s death), occurring while the Participant will be a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) of the Company (as limited by Code Sections 414(b), (c), (m) and (o)), will not be paid until the earlier of:

(a) The date that is six months following such separation from service; or

(b) The date of the Participant’s death following such separation from service.

Notwithstanding any provision of the Plan to the contrary, to the extent that a Deferred Bonus Stock Award constituting a “deferral of compensation” subject to Code Section 409A will be deemed to be vested or restrictions lapse upon the occurrence of a Change of Control, and if such Change of Control does not constitute a “change in control event” (as defined in Treasury Regulation Section 1.409A-3(i)), then even though such Award may be deemed to be vested or restrictions lapse, payment will only be made to the extent necessary to comply with the provisions of Code Section 409A, to the United States participant on the earliest of:

(a) The Participant’s separation from service, the date payment otherwise would have been made pursuant to the regular payment terms of the Award; or

(b) The Participant’s death.

Schedule 2

Alcon DBSP Plan Switzerland

1    Application

When Awards under the Plan are to be granted, the Board may determine that this Schedule applies, in which case such Awards shall be subject to all the provisions of the Plan save as modified below.

2    Short Term Incentive Equity Award

Under this Schedule 2, Participants who, in accordance with Rule 3.7.5 of the Alcon Short Term Incentive Plan, receive a portion of any Short Term Incentive Award in the form of Equity (Equity STI Award) have the choice to receive such an award in the form of either:

(a) Restricted Stock Award; or

(b) Restricted Stock Unit.

The Board may determine that any Equity STI Award in the form of Restricted Stock Awards or Restricted Stock Units may be subject to a Mandatory Blocking Period.

Furthermore, the Board may offer Participants an Additional Blocking Period for Restricted Stock Awards after the expiry of the Mandatory Blocking Period.

The blocking choices and the terms of the blocking will be determined by the Board from time to time.

3    Voluntary Deferral Awards

Participants who in accordance with Rule 4.2 receive a proportion of the gross amount payable in respect of an Short Term Incentive Award in the form of a Voluntary Deferral Award under this Schedule 2, will not have the right to choose between Restricted Stock Awards or Restricted Stock Units and will always receive their Voluntary Deferral Award in the form of Restricted Stock Awards.

1. The Board may determine that any Voluntary Deferral Award in the form of Restricted Stock Awards may be subject to a Mandatory Blocking Period.

2. Furthermore, the Board may offer Participants an Additional Blocking Period for Restricted Stock Awards after the expiry of the Mandatory Blocking Period.

3. The blocking choices and the terms of the blocking will be determined by the Board from time to time.

4    Termination of Employment

If a participant Terminates, the following Rules will apply with regards to any outstanding Blocking Periods:

(a) If a Participant Terminates Employment as a result of his death or Disability, all Mandatory and Additional Blocking Periods will cease to apply immediately.

(b) If a Participant Terminates Employment for any reason other than death or Disability all Mandatory and Additional Blocking Periods will continue to apply.

(c) If, for any reason, a blocking period is lifted and terminates to apply with regard to a Restricted Stock Award, the reduced taxation on the discounted tax value ceases to apply and the Participant will immediately be taxed in respect of the difference. Special rules may apply in case a participant at the time of the unblocking is no longer employed under a Swiss employment contract.

5

EX-12.1

Exhibit 12.1

Certification of CEO Pursuant to Securities Exchange Act

Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, David J. Endicott, certify that:

1. I have reviewed this annual report on Form 20-F of Alcon Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: February 25, 2020	/s/ David J. Endicott
	David J. Endicott
	Chief Executive Officer

EX-12.2

Exhibit 12.2

Certification of CFO Pursuant to Securities Exchange Act

Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Timothy C. Stonesifer, certify that:

1. I have reviewed this annual report on Form 20-F of Alcon Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: February 25, 2020	/s/ Timothy C. Stonesifer
	Timothy C. Stonesifer
	Chief Financial Officer

EX-13.1

Exhibit 13.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that:

(1) this annual report for Alcon Inc. (the “Company”) on Form 20-F for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (this “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered therein.

/s/ David J. Endicott

David J. Endicott

Chief Executive Officer

February 25, 2020

EX-13.2

Exhibit 13.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that:

(1) this annual report for Alcon Inc. (the “Company”) on Form 20-F for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (this “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered therein.

/s/ Timothy C. Stonesifer

Timothy C. Stonesifer

Chief Financial Officer

February 25, 2020

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-230794) of Alcon Inc. of our report dated February 25, 2020 relating to the financial statements, which appears in this Form 20-F.

/s/ PricewaterhouseCoopers LLP
Fort Worth, Texas
February 25, 2020

EX-15.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-230794) of Alcon Inc.of our report dated February 28, 2019 relating to the financial statements, which appears in this Form 20-F.

/s/ PricewaterhouseCoopers SA

Geneva, Switzerland

February 25, 2020

EX-15.3

Exhibit 15.3

February 25, 2020

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Commissioners:

We have read the statements made by Alcon Inc. (copy attached), which we understand will be filed with the Securities and Exchange Commission, pursuant to Item 16F(a) of Form 20-F of Alcon Inc. dated February 25, 2020. We agree with the statements concerning our Firm contained therein.

Very truly yours,

/s/ PricewaterhouseCoopers SA

Geneva, Switzerland

Attachment

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Following the Spin-off of Alcon from Novartis, the Audit and Risk Committee determined that PricewaterhouseCoopers LLP (“PwC US”), the US member firm of PricewaterhouseCoopers International Limited (“PwCIL”), would become our Principal Auditor as set forth in the audit standard guidance of the Public Company Accounting Oversight Board (PCAOB). As required under Swiss law and as mandated by our shareholders, PricewaterhouseCoopers SA (“PwC CH”), the Swiss member firm of PwCIL, would remain the auditor under International Standards on Auditing (ISA) for purposes of the group and company statutory IFRS statements issued for SIX and Swiss regulatory purposes. Consequently, on April 29, 2019 the Committee approved the appointment of PwC US as our independent registered public accounting firm for the year ending December 31, 2019. Simultaneously, the Committee dismissed PwC CH as our independent registered public accounting firm.

The reports of PwC CH on our Consolidated Financial Statements as of and for the years ended December 31, 2017 and 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

PwC US participated in a portion of the audit of our Consolidated Financial Statements for the years ended December 31, 2017 and 2018. During the Company’s fiscal years ended December 31, 2017 and 2018 and in the subsequent interim period through April 29, 2019, there were (i) no disagreements between the Company and PwC CH on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC CH, would have caused PwC CH to make reference to the subject matter of the disagreements in its audit reports as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto); and

(ii) no “reportable events” as defined in Item 16F(a)(1)(v) of Form 20-F.

The Company has provided PwC CH with a copy of this Form 20-F and requested that PwC CH provide the Company with a letter addressed to the SEC stating whether it agrees with the above statements. A copy of PwC CH’s letter, dated February 25, 2020 is attached as Exhibit 15.2 to this Form 20-F.

During the Company’s fiscal years ended December 31, 2017 and 2018 and in the subsequent interim period through April 29, 2019, other than in the normal course of the audit, neither the Company nor anyone on its behalf consulted with PwC US, on either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PwC US concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement”, as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto), or a “reportable event” as defined in Item 16F(a)(1)(v) of Form 20-F.

XML

Consolidated statement of cash flows - additional details - Change in net current assets and other operating cash flow items (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash Flow Statement [Abstract]
(Increase) in inventories	$ (108)	$ (150)	$ (87)
(Increase)/decrease in trade receivables	(115)	53	(54)
Increase in trade payables	84	44	48
Net change in other current assets	(26)	83	87
Net change in other current liabilities	117	50	42
Total	$ (48)	$ 80	$ 36

XML

Equity-based compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share-Based Payment Arrangements [Abstract]

Disclosure of number and weighted average exercise prices of other equity instruments

The below table summarizes unvested share movements for all Alcon equity-based incentive plans from the Spin-off through December 31, 2019:

	2019
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Replacement awards issued at Spin-off(1)	4,222		n/a	212,367
Granted
Restricted awards	625		56.1	35,037
Performance awards	117		58.0	6,782
Vested(1)	(108	)	n/a	(5,432	)
Forfeited(1)	(114	)	n/a	(5,734	)
Unvested shares at December 31	4,742		51.2	243,020

(1)

Based on estimated fair value per share at the time of Spin-off.

The below table summarizes unvested share movements for all plans under the Former Parent for the year ended December 31, 2018 (Novartis AG RSAs, RSUs, and PSUs):

	2018
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Unvested shares at January 1	2,800		74.4	208,300
Granted
Annual incentive	168		83.7	14,062
Share savings plans	109		85.5	9,320
Select North America	689		77.9	53,673
Select outside North America	141		79.8	11,252
Long-Term Performance Plan	316		88.4	27,934
Long-Term Relative Performance Plan	37		51.2	1,894
Other share awards	205		83.1	17,036
Vested	(814	)	93.0	(75,702	)
Forfeited	(208	)	80.4	(16,723	)
Unvested shares at December 31	3,443		72.9	251,046

Summary of shares authorized

The table below discloses the number of shares authorized under the plans as of December 31, 2019:

(thousands)	2019
Long-term Incentive Plan	20,000
Deferred Bonus Stock Plan	1,500
Swiss Employee Share Ownership Plan	475
Other share savings plans	275
Authorized as of December 31, 2019	22,250

Disclosure of number and weighted average exercise prices of share options

The following table shows the activity associated with the Novartis AG share options during the year ended December 31, 2018. The weighted average prices in the table below are translated from Swiss francs into USD at historical rates.

	2018
	Options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	0.5		61.1	24.7
Sold or exercised	(0.1	)	59.7	29.1
Outstanding at December 31	0.4		61.4	26.5
Exercisable at December 31	0.4		61.4	26.5

All Novartis AG share options were granted at an exercise price that was equal to the closing market price of the Novartis AG shares at the grant date. The weighted average Novartis AG share price at the dates of sale or exercise was $86.2.

The following table summarizes information about Novartis AG share options outstanding at December 31, 2018:

	Options outstanding
Range of exercise prices($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	32	0.7	52.4
56 - 66	394	3.5	62.1
Total	426	3.3	61.4

Options under Novartis equity plan "Select" for North America

The following table shows the activity associated with the Novartis AG American Depositary Receipts ("ADR") options during the period:

	2018
	ADR  options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	1.8		62.5	21.4
Sold or exercised	(0.5	)	62.4	25.8
Outstanding at December 31	1.3		62.6	23.2
Excercisable at December 31	1.3		62.6	23.2

All ADR options were granted at an exercise price that was equal to the closing market price of the ADRs at the grant date. The weighted average ADR price at the dates of sale or exercise was $81.4.

The following table summarizes information about ADR options outstanding at December 31, 2018:

	ADR options outstanding
Range of exercise prices ($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	30	0.6	50.7
56 - 66	1,258	3.6	62.9
Total	1,288	3.5	62.6

XML

Post-employment benefits for associates - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of defined benefit plans [line items]
Weighted average duration of defined benefit obligation	15 years 7 months 6 days	16 years 10 months 24 days
Defined contribution plans charges	$ 128	$ 105	$ 97
Benefit obligation [member]
Disclosure of defined benefit plans [line items]
Top four countries, percentage	87.00%
Pension plans [member] | Germany | Foreign countries [member]
Disclosure of defined benefit plans [line items]
Maximum number of years to eliminate shortfall	10 years
Other post-employment benefit plans [member] | Benefit obligation [member]
Disclosure of defined benefit plans [line items]
Associates covered, percentage	99.00%

XML

Provisions and other current liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of provisions and other current liabilities

The following table provides details related to Provisions and other current liabilities as of December 31, 2019 and 2018:

($ millions)	2019	2018
Taxes other than income taxes	81	57
Restructuring provisions	28	8
Accrued expenses for goods and services received but not invoiced	79	71
Accruals for royalties	10	6
Accruals for deductions from revenue	212	194
Accruals for compensation and benefits including social security	382	363
Deferred income	97	94
Provisions for product liabilities, governmental investigations and other legal matters(1)	—	42
Accrued share-based payments	10	6
Accrued interest on financial debts	19	—
Contingent considerations(2)	35	19
Other payables	85	20
Total provisions and other current liabilities	1,038	880

(1) Note 19 to these Consolidated Financial Statements provides additional disclosures related to legal provisions.

(2)

Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Disclosure of movement of accruals for deductions from revenue

The following table shows the movement of the accruals for deductions from revenue:

($ millions)	2019		2018		2017
January 1	194		213		182
Additions	662		603		619
Payments/utilizations	(646	)	(613	)	(601	)
Changes in offset against gross trade receivables	1		2		7
Currency translation effects	1		(11	)	6
December 31	212		194		213

Disclosure of movement of restructuring provisions

The following table shows the movement of the restructuring provisions:

($ millions)	2019		2018		2017
January 1	8		3		13
Additions	32		13		—
Cash payments	(10	)	(7	)	(6	)
Releases	(2	)	(2	)	(4	)
Currency translation effects	—		1		—
December 31	28		8		3

XML

Right-of-use assets and Lease liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Schedule of right-of-use assets

Right-of-use assets as of December 31, 2019 and January 1, 2019 were comprised of the following:

($ millions)	December 31, 2019	January 1, 2019
Land	20	20
Buildings	277	226
Machinery & equipment and other assets	27	33
Total right-of-use assets(1)	324	279

(1) Right-of-use assets, related to operating leases at the date of implementation of IFRS 16, were higher than the lease liabilities at the date of implementation of IFRS 16 by $3 million, due to the net impact of prepayments and accrued lease payments recognized at December 31, 2018. This impact was offset by the lease liability related to the finance lease exceeding the corresponding capital asset by $10 million.

Depreciation charges of $66 million for the year ended December 31, 2019 are shown in the table below by underlying class of asset:

($ millions)	2019
Land	1
Buildings	47
Machinery & equipment and other assets	18
Total	66

Reconciliation of lease commitments and lease liability recorded

The reconciliation of lease commitments disclosed as of December 31, 2018 and lease liabilities recorded on January 1, 2019 is as follows:

($ millions)
Operating lease commitments as of December 31, 2018	222
Effect of discounting	(21	)
Operating leases discounted using the incremental borrowing rate(1)	201
Finance lease liabilities recognized as at December 31, 2018	89
Recognition exemption for short term and low-value leases	(4	)
Lease liabilities as of January 1, 2019	286

(1)

Weighted average incremental borrowing rate of 2.9% was applied at January 1, 2019, the date of implementation of IFRS 16, Leases.

Disclosure of maturity analysis for non-derivative financial liabilities [text block]

The contractual maturities of the undiscounted lease liabilities as of December 31, 2019, are as follows:

($ millions)	Lease liabilities undiscounted
Not later than one year	73
Between one and five years	176
Later than five years	200
Total lease liabilities undiscounted	449

($ millions)	Lease liabilities
Not later than one year	61
Between one and five years	140
Later than five years	140
Total lease liabilities	341

The following table provides details on the maturity of the contractual undiscounted cash flows for Alcon's borrowings as of December 31, 2019:

($ millions)	Nominal amount - Current and non-current financial debt		Derivatives	Total
Not later than one year	245		16	261
Between one and five years	1,247		—	1,247
Later than five years	2,000		—	2,000
Total cash flows	3,492		16	3,508
Unamortized debt discount and issuance costs	(29	)	—	(29	)
Total carrying value	3,463		16	3,479

The following table provides details on the maturity of the future contractual interest payments commitments:

($ millions)	Interest
Not later than one year	94
Between one and five years	336
Later than five years	653
Total cash flows	1,083

Schedule of additional disclosures related to leases

The following table provides additional disclosures related to right-of-use assets and lease liabilities:

($ millions)	2019
Interest expense on lease liabilities	11
Expense on short-term and low value leases	3
Total cash outflows for leases	59
Thereof:
Lease liability payments(1)	52
Interest payments(2)	5
Short-term and low value lease payments(2)	2

(1) Reported as cash outflows from financing activities net of lease incentives received

(2)

Included within total net cash flows from operating activities

Disclosure of finance lease and operating lease by lessee

Operational lease commitments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	50
Between one and five years	135
Later than five years	37
Total operational lease commitments	222

Future minimum lease payments under finance leases, together with the present value of the minimum lease payments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	—
Between one and five years	27
Later than five years	153
Total minimum lease liabilities	180
Less future finance charges	(91	)
Present value of minimum lease payments	89

XML

Right-of-use assets and Lease liabilities - Additional Disclosures Related to Leases (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Leases [Abstract]
Interest expense on lease liabilities	$ 11	$ 5	$ 5
Expense on short-term and low value leases	3
Total cash outflows for leases	59
Lease liability payments	52	$ 0	$ 0
Interest payments	5
Short-term and low value lease payments	$ 2

XML

Right-of-use assets and Lease liabilities - Additional Information (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2019
Disclosure of maturity analysis of operating lease payments [line items]
Depreciation of right-of-use assets		$ 66.0	$ 0.0
Additions to right-of-use assets		116.0
Lease liabilities		341.0		$ 286.0
Financial debts		3,479.0	47.0
Current lease liabilities		61.0	0.0
Non-current lease liabilities	[1],[2]	$ 280.0	$ 89.0

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

Goodwill and intangible assets - Intangible asset assumptions (Details)	Dec. 31, 2019
Surgical [member]
Disclosure of detailed information about intangible assets [line items]
Growth rate used to extrapolate cash flow projections	3.00%
Discount rate (post-tax)	7.50%
Vision Care [member]
Disclosure of detailed information about intangible assets [line items]
Growth rate used to extrapolate cash flow projections	3.00%
Discount rate (post-tax)	7.00%

XML

Segment Information - Net sales by region (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of geographical areas [line items]
Net sales to third parties	$ 7,362	$ 7,149	$ 6,785
Percentage of entity's revenue	100.00%	100.00%	100.00%
Total of selected non-current asset	$ 22,573	$ 22,457
Percentage of entity's non-current asset	100.00%	100.00%
Foreign countries [member] | United States [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 3,055	$ 2,942	$ 2,800
Percentage of entity's revenue	41.00%	41.00%	41.00%
Total of selected non-current asset	$ 10,559	$ 10,056
Percentage of entity's non-current asset	47.00%	45.00%
Foreign countries [member] | Japan [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 656	$ 593	$ 561
Percentage of entity's revenue	9.00%	8.00%	8.00%
Total of selected non-current asset	$ 66	$ 12
Percentage of entity's non-current asset	0.00%	0.00%
Foreign countries [member] | China [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 377	$ 341	$ 279
Percentage of entity's revenue	5.00%	5.00%	4.00%
Total of selected non-current asset	$ 18	$ 2
Percentage of entity's non-current asset	0.00%	0.00%
Foreign countries [member] | Other [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 3,218	$ 3,216	$ 3,088
Percentage of entity's revenue	44.00%	45.00%	46.00%
Total of selected non-current asset	$ 1,444	$ 1,221
Percentage of entity's non-current asset	6.00%	5.00%
International [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 4,307	$ 4,207	$ 3,985
Percentage of entity's revenue	59.00%	59.00%	59.00%
Total of selected non-current asset	$ 12,014	$ 12,401
Percentage of entity's non-current asset	53.00%	55.00%
Country of domicile [member] | Switzerland [member]
Disclosure of geographical areas [line items]
Net sales to third parties	$ 56	$ 57	$ 57
Percentage of entity's revenue	1.00%	1.00%	1.00%
Total of selected non-current asset	$ 10,486	$ 11,166
Percentage of entity's non-current asset	46.00%	50.00%

XML

Non-current and current financial debts - Additional information (Details)				1 Months Ended	12 Months Ended
	Sep. 23, 2019 USD ($)	Apr. 02, 2019 USD ($)	Mar. 06, 2019 USD ($) extension	Feb. 28, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Disclosure of detailed information about borrowings [line items]
Interest expense					$ 81,000,000	$ 10,000,000	$ 12,000,000
Financial debts					3,479,000,000	47,000,000
Write-off of deferred debt issuance cost	$ 4,000,000				4,000,000	0	$ 0
Derivative liabilities, net					(15,000,000)
Gains on change in fair value of derivatives					1,000,000	0
Losses on change in fair value of derivatives					16,000,000
Current financial debts					$ 261,000,000	$ 47,000,000
Weighted average [member]
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate					2.90%	17.40%
Bridge facility [member]
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 1,500,000,000
Borrowings, number of extension options | extension			2
Borrowings, extension term			180 days
Borrowings, term			364 days
Facility A [member]
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 500,000,000
Borrowings, term			3 years
Facility B [member]
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 800,000,000
Borrowings, term			5 years
Facility C [member]
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 400,000,000
Borrowings, term			5 years
Revolving facility [member]
Disclosure of detailed information about borrowings [line items]
Notional amount			$ 1,000,000,000.0
Borrowings, term			5 years
Senior Notes [Member]
Disclosure of detailed information about borrowings [line items]
Notional amount	2,000,000,000.0
Bridge and other term loans [member]
Disclosure of detailed information about borrowings [line items]
Proceeds from borrowings		$ 3,200,000,000
Senior notes due 2026 [member]
Disclosure of detailed information about borrowings [line items]
Notional amount	$ 500,000,000
Borrowings, issuance percentage	99.50%
Borrowings, interest rate	2.75%
Senior notes due 2029 [member]
Disclosure of detailed information about borrowings [line items]
Notional amount	$ 1,000,000,000.0
Borrowings, issuance percentage	99.60%
Borrowings, interest rate	3.00%
Senior notes due 2049 [member]
Disclosure of detailed information about borrowings [line items]
Notional amount	$ 500,000,000
Borrowings, issuance percentage	99.80%
Borrowings, interest rate	3.80%
Local bilateral facilities [member]
Disclosure of detailed information about borrowings [line items]
Borrowings, term				1 year
Financial debts				$ 300,000,000
Local bilateral facilities, japan [member]
Disclosure of detailed information about borrowings [line items]
Undrawn borrowing facilities					$ 35,000,000
Financial debts				$ 200,000,000
Other short-term financial debts [member]
Disclosure of detailed information about borrowings [line items]
Current financial debts					$ 29,000,000	$ 15,000,000
Borrowings discount [Member] | Senior Notes [Member]
Disclosure of detailed information about borrowings [line items]
Financial debts	$ 7,000,000.0
Debt issuance costs [Member]
Disclosure of detailed information about borrowings [line items]
Financial debts	$ (15,000,000)

XML

Taxes - Current and deferred income tax expense (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Current income tax expense	$ (202)	$ (234)	$ (103)
Deferred tax (expense)/income	(122)	307	486
Total income tax (expense)/income	(324)	73	383
Country of domicile [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Current income tax expense	(34)	(77)	(8)
Deferred tax (expense)/income	(246)	78	7
Foreign countries [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Current income tax expense	(168)	(157)	(95)
Deferred tax (expense)/income	$ 124	$ 229	$ 479

XML

Deferred tax assets and liabilities - Impact on current taxes payable (Details) - USD ($) $ in Billions	Dec. 31, 2019	Dec. 31, 2018
Income Taxes [Abstract]
Deferred tax assets	$ 0.6	$ 0.3
Deferred tax liabilities	$ 1.8	$ 1.5

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of comprehensive income [abstract]
Net (loss)/income	[1]	$ (656)	$ (227)	$ 256
Other comprehensive income to be eventually recycled into the consolidated income statement:
Fair value adjustments on marketable securities, net of taxes	[2]	0	0	21
Currency translation effects		(4)	(58)	184
Total of items to eventually recycle		(4)	(58)	205
Other comprehensive income never to be recycled into the consolidated income statement:
Actuarial (losses)/gains from defined benefit plans, net of taxes	[3]	(55)	8	36
Fair value adjustments on equity securities, net of taxes	[4]	(2)	(23)	0
Total of items never to be recycled		(57)	(15)	36
Total comprehensive (loss)/income	[1]	$ (717)	$ (300)	$ 497

[1] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

[2] No taxes were recorded in 2019, 2018 and 2017.

[3] Amounts are net of tax benefit of $11 million in 2019 and net of tax expenses of $2 million and $26 million in 2018 and 2017, respectively.

[4] Amount is net of tax benefit of $5 million in 2019. No taxes were recorded in 2018 and 2017.

XML

Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Taxes

Taxes

(Loss) before taxes

($ millions)	2019		2018		2017
Switzerland	(274	)	(227	)	(104	)
Foreign	(58	)	(73	)	(23	)
Total (loss) before taxes	(332	)	(300	)	(127	)

Current and deferred income tax (expense)/income

($ millions)	2019		2018		2017
Switzerland	(34	)	(77	)	(8	)
Foreign	(168	)	(157	)	(95	)
Current income tax expense	(202	)	(234	)	(103	)
Switzerland	(246	)	78		7
Foreign	124		229		479
Deferred tax (expense)/income	(122	)	307		486
Total income tax (expense)/income	(324	)	73		383

Analysis of tax rate

Alcon's overall applicable tax rate can change each year since it is calculated as the weighted average tax rate based on pre-tax (loss)/income of each subsidiary. The main elements contributing to the difference between Alcon's overall applicable tax rate and the effective tax rate are summarized in the below table.

	2019				2018				2017
	$ m		%		$ m		%		$ m		%
Applicable tax rate	39		11.7	%	82		27.3	%	37		29.1	%
Effect of disallowed expenditures	(23	)	(6.9	)%	(26	)	(8.7	)%	(12	)	(9.4	)%
Effect of share based compensation	(1	)	(0.3	)%	(2	)	(0.7	)%	(4	)	(3.1	)%
Effect of income taxed at reduced rates	2		0.6	%	2		0.7	%	—		—
Effect of tax credits and allowances	7		2.1	%	13		4.3	%	5		3.9	%
Effect of adjustments to contingent consideration liabilities	11		3.3	%	11		3.7	%	(8	)	(6.3	)%
Effect of option payments	(12	)	(3.6	)%	(17	)	(5.7	)%	(12	)	(9.4	)%
Effect of liquidation of a subsidiary	—		—		—		—		(10	)	(7.9	)%
Effect of tax benefits expiring in 2017(1)	—		—		—		—		(12	)	(9.4	)%
Effect of tax rate changes (2)	(342	)	(103.0	)%	(14	)	(4.7	)%	—		—
Effect of changes in uncertain tax positions	10		3.0	%	(33	)	(11.0	)%	(10	)	(7.9	)%
Effect of other items	(2	)	(0.6	)%	(4	)	(1.2	)%	(4	)	(3.2	)%
Effect of prior year items(3)	(13	)	(3.9	)%	61		20.3	%	—		—	%
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform (4)	—		—	%	—		—	%	413		325.2	%
Effective tax rate	(324	)	(97.6	)%	73		24.3	%	383		301.6	%

(1) Effect of tax benefits expiring in 2017 relates to a Swiss subsidiary that was not subject to income tax through the end of calendar year 2017.

(2) Effect of tax rate changes in 2019 relates primarily to (i) the adoption of the Swiss Tax Reform which has resulted in a non-cash tax increase in the tax expense of $304 million relating to the re-measurement of the Swiss deferred tax balances and (ii) a $31 million re-measurement of US deferred tax balances as a result of rate changes in the US following legal entity reorganizations executed related to the Spin-off.

(3) In 2019, the prior year items relate to changes in certain estimates which resulted in a $13 million tax expense. In 2018, the prior year items relate to out of period income tax benefit of $61 million, which Alcon concluded was not material to the current period or the prior periods to which they relate.

(4) Effect of tax rate change on US current and deferred tax assets and liabilities in 2017 relate to the enactment of the Tax Cuts and Jobs Act by the US, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. This required a re-measurement of the deferred tax balances and a portion of the current tax payables.

Alcon has a substantial business presence in many countries and is therefore subject to different income and expense items that are non-taxable (permanent differences) or are taxed at different rates in those tax jurisdictions. This results in a difference between Alcon's applicable tax rate and effective tax rate as shown in the table above.

The applicable tax rate in 2019, 2018 and 2017 was impacted by pre-tax losses in certain tax jurisdictions. The fluctuation in the taxes and the effective tax rates, excluding Swiss and US tax reform, is primarily due to the geographical pre-tax income and loss mix across certain tax jurisdictions relative to Alcon's consolidated (loss)/income before taxes, changes in uncertain tax positions and certain non-recurring items.

XML

Selected accounting policies

12 Months Ended

Dec. 31, 2019

Corporate Information And Statement Of IFRS Compliance [Abstract]

Selected accounting policies

Selected accounting policies

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. In the event that the Company has an interest in another entity that is not wholly owned, the assets, liabilities, results of operations and cash flows of such entity are included in the Company's Consolidated Financial Statements, if the Company is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Consolidated Financial Statements of the Company are prepared in accordance with IFRS as issued by the IASB. They are prepared in accordance with the historical cost convention except for items that are required to be accounted for at fair value. All intercompany transactions and accounts within Alcon were eliminated.

The Company's financial year-end is December 31, which is also the annual closing date of the individual entities' financial statements incorporated into the Consolidated Financial Statements.

Foreign currencies

The Consolidated Financial Statements are presented in US dollars ("USD"). The functional currency of individual entities incorporated into the Consolidated Financial Statements are generally the local currency of the respective entity. The functional currency used for the reporting of certain Swiss entities is USD instead of their respective local currencies. This reflects the fact that the cash flows and transactions of these entities are primarily denominated in these currencies.

For entities not operating in hyperinflationary economies, the entities results, financial position and cash flows that do not have USD as their functional currency are translated into USD using the following exchange rates:

• Income, expense and cash flows using for each month the average exchange rate with the USD  values for each month being aggregated during the year.

• Balance sheets using year-end exchange rates.

• Resulting exchange rate differences are recognized in other comprehensive income.

The hyperinflationary economies in which Alcon operates are Argentina and Venezuela. Venezuela was hyperinflationary for all years presented, and Argentina became hyperinflationary effective July 1, 2018, requiring retroactive implementation of hyperinflation accounting as of January 1, 2018.

The impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period is recorded in "Other Reserves" in equity. The subsequent gains or losses resulting from the restatement of non-monetary assets are recorded in "Other financial income & expense" in the consolidated income statements.

Acquisition of assets

Acquired assets are initially recognized on the balance sheet at cost if they meet the criteria for capitalization. The capitalized cost of the asset includes the purchase price and any directly attributable costs for bringing the asset into the condition to operate as intended. Expected costs for obligations to dismantle and remove property, plant and equipment when it is no longer used are included in their cost.

Property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Freehold land is not depreciated. The related depreciation expense is included in the costs of the functions using the asset or "Cost of net sales" in the consolidated income statements.

Property, plant and equipment are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

The following table shows the respective useful lives for property, plant and equipment:

	Useful life
Buildings	20 to 40 years
Machinery and other equipment
Machinery and equipment	7 to 20 years
Furniture and vehicles	5 to 10 years
Computer hardware	3 to 7 years

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary may include:

• fair values of the assets transferred;

• liabilities incurred to the former owners of the acquired business;

• equity interests issued by the Company;

• fair value of an asset or liability resulting from a contingent consideration arrangement; and

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill, or directly in the income statement if it is a bargain purchase. Alcon primarily uses net present value techniques, utilizing post-tax cash flows and discount rates in calculating the fair value of net identifiable assets acquired when allocating the purchase consideration paid for the acquisition. The estimates in calculating fair values are highly sensitive and depend on assumptions, which includes the amount and timing of projected cash flows, long-term sales forecasts, the timing and probability of regulatory and commercial success, and the appropriate discount rate.

Acquisition related costs are expensed as incurred.

Goodwill and intangible assets

The annual impairment testing date is Alcon's financial year-end, December 31.

Goodwill

Goodwill arises in a business combination and is the excess of the consideration transferred to acquire a business over the underlying fair value of the net identified assets acquired. It is allocated to groups of cash generating units ("CGUs") which are usually represented by the reported segments. Goodwill is tested for impairment annually at the level of these groups of CGUs, and any impairment charges are recorded under "Other expense" in the consolidated income statements.

Intangible assets available for use

Alcon has the following classes of available-for-use intangible assets: Currently marketed products, Marketing know-how, Technologies, Other intangible assets (including computer software) and the Alcon brand name.

Currently marketed products represent the composite value of acquired intellectual property, patents, and distribution rights and product trade names.

Marketing know-how represents the value attributable to the expertise acquired for marketing and distributing Alcon surgical products.

Technologies represent identified and separable acquired know-how used in the research, development and production processes.

Significant investments in internally developed and acquired software are capitalized and included in the "Other" category and amortized once available for use.

The Alcon brand name is shown separately as it is the only Alcon intangible asset that is available for use with an indefinite useful life. Alcon considers it appropriate that the brand name has an indefinite life since the branded products have a history of strong revenue and cash flow performance, and Alcon has the intent and ability to support the brand with spending to maintain its value for the foreseeable future.

Except for the Alcon brand name, intangible assets available for use are amortized over their estimated useful lives on a straight-line basis and evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The Alcon brand name is not amortized, but evaluated for potential impairment annually.

The following table shows the respective useful lives for available-for-use intangible assets and the location in the consolidated income statements in which the respective amortization and any potential impairment charge is recognized:

	Useful life	Income statement location for amortization and impairment charges
Currently marketed products	5 to 20 years	"Cost of net sales"
Marketing know-how	25 years	"Cost of net sales"
Technologies	10 to 20 years	"Cost of net sales" or "Research and Development"
Other (including software)	3 to 10 years	In the respective functional expense
Alcon brand name	Not amortized, indefinite useful life	"Other expense"

From July 1, 2019, the useful life of Alcon's new SAP ERP software was extended from 7 years to 10 years on a prospective basis based on Alcon's multi-year transformation program which centers on one ERP platform across the organization. This change in estimate resulted in a $5 million reduction in amortization expense during the six months ended December 31, 2019 and will reduce amortization expense up to $10 million per year during the remaining useful life of the SAP ERP software assets placed in service at the time of the change.

The corresponding "Intangible assets available for use" portion of the accounting policy was updated to reflect that the useful life for Other intangible assets (including software) was extended from 3 to 7 years to 3 to 10 years.

Acquired In-Process Research & Development ("IPR&D")

Acquired research and development intangible assets, which are still under development and have accordingly not yet obtained marketing approval, are recognized as IPR&D.

IPR&D is not amortized, but evaluated for potential impairment on an annual basis or when facts and circumstances warrant. IPR&D is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal ("FVLCOD") and its value in use ("VIU"). Usually, Alcon applies the FVLCOD method for its impairment assessments. Under this approach when evaluating IPR&D for potential impairment, FVLCOD is estimated using net present value techniques utilizing post-tax cash flows and discount rates as there are no direct or indirect observable prices in active markets for identical or similar assets. The estimates used in calculating the net present values are highly sensitive and depend on assumptions, including amount and timing of projected future cash flows, long-term sales forecasts, discount rate, and the timing and probability of regulatory and commercial success. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

Any impairment charge is recorded in the consolidated income statements under "Research & development".

Once a project included in IPR&D has been successfully developed it is transferred to the "Currently marketed products" category.

Impairment of goodwill, Alcon brand name and definite lived intangible assets

An asset is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its FVLCOD and its VIU. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. Usually, Alcon applies the FVLCOD method for its impairment assessment. In most cases no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of FVLCOD is based on net present value techniques utilizing post-tax cash flows and discount rates. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

FVLCOD reflects estimates of assumptions that market participants would be expected to use when pricing the asset or CGUs, and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset.

The estimates used in calculating the net present values are highly sensitive and depend on assumptions, which includes the following:

• Amount and timing of projected future cash flows;

• Long-term sales forecasts for periods of up to 25 years including sales growth rates;

• Royalty rate for the Alcon brand name;

• Terminal growth rate; and

• Discount rate.

Other assumptions used in the net present values calculation include:

• Future tax rate;

• Actions of competitors (launch of competing products, marketing initiatives, etc.); and

• Outcome of R&D activities and forecast of related costs (future product developments).

Generally, for intangible assets with a definite useful life Alcon uses cash flow projections for the whole useful life of these assets. For goodwill and the Alcon brand name, Alcon generally utilizes cash flow projections for a five-year period based on management forecasts, with a terminal value based on cash flow projections considering the long-term expected inflation rates and impact of demographic trends of the population to which Alcon products are prescribed, for later periods. Probability-weighted scenarios are typically used.

Discount rates used consider Alcon estimated weighted average cost of capital adjusted for specific country and currency risks associated with cash flow projections to approximate the weighted average cost of capital of a comparable market participant. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using discounting techniques.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short-term and highly liquid investments with original or weighted-average maturities of three months or less which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are usually presented within current financial debts on the consolidated balance sheets except in cases where a right of offset has been agreed with a bank which then allows for presentation on a net basis.

Financial assets

Non-current financial assets such as loans and long-term receivables from customers, primarily related to surgical equipment sales arrangements, advances and other deposits, are carried at amortized cost, which reflects the time value of money, less any allowances for uncollectable amounts.

Alcon assesses on a forward-looking basis the expected credit losses associated with its non-current financial assets valued at amortized cost.

For loans, advances and other deposits valued at amortized costs, impairments, which are based on their expected credit losses, and exchange rate losses are included in "Other expense" in the consolidated income statements and exchange rate gains and interest income, using the effective interest rate method, are included in "Other income" in the consolidated income statements.

For long-term receivables from customers, provisions for uncollectable amounts, which are based on their expected credit losses, are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Fund investments are valued at fair value through profit and loss ("FVPL"). Unrealized gains and losses, including exchange gains and losses, are recognized in the consolidated income statements in "Other income" for gains and "Other expense" for losses.

Equity securities and convertible notes receivable held as strategic investments are generally designated at the date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss. Unrealized gains and losses, including exchange gains and losses, are recorded as a fair value adjustment in the consolidated statements of comprehensive income. They are reclassified to "Other Reserves" when the equity security is sold. If these equity securities and convertible notes receivable are not designated at the date of acquisition as financial assets valued at fair value through other comprehensive income, they are valued at FVPL, as described above for fund investments. Changes in fair value of options to acquire development stage companies are charged to research and development expense.

Derivative financial instruments are initially recognized in the consolidated balance sheets at fair value and are remeasured to their current fair value at the end of each subsequent reporting period. The valuation of forward exchange rate contracts and foreign exchange swaps are based on the discounted cash flow model, using interest curves and spot rates at the reporting date as observable inputs. Unsettled forward contracts and swaps are measured at fair value at quarter-end with changes in fair value recorded to the consolidated income statements as unrealized gains or losses in "Other financial income & expense". Settled forward contracts and swaps are measured at maturity date at fair value with corresponding realized gains or losses recognized in the consolidated income statements in "Other financial income & expense". No hedge accounting is applied for these arrangements.

Inventories

Inventory is valued at acquisition or production cost determined on a first-in, first-out basis. This value is used for the "Cost of net sales" and "Cost of other revenues" in the consolidated income statements. Unsalable inventory is fully written off in the consolidated income statements under "Cost of net sales" and "Cost of other revenues."

Trade receivables

Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for estimated revenue deductions such as chargebacks and cash discounts.

Provisions for expected credit losses are established using an expected credit loss model ("ECL"). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivable. These provisions represent the difference between the trade receivable's carrying amount in the consolidated balance sheets and the estimated net collectible amount. Charges for doubtful trade receivables are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Leases

From January 1, 2019, with the implementation of the new standard IFRS 16, Leases, Alcon's accounting policy for leases is as follows:

As lessee, Alcon assesses whether a contract contains a lease at inception of a contract based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Alcon recognizes a right-of-use asset and a corresponding lease liability for all arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases for which Alcon has elected the recognition exemptions allowed under IFRS 16.

Right-of-use assets

Right-of-use assets are initially recognized at cost, which is comprised of the amount of the initial measurement of the corresponding lease liabilities, adjusted for any lease payments made at or prior to the commencement date of the lease, lease incentives received and initial direct costs incurred, as well as any expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the useful life of the right-of-use asset or the end of the lease term.

Right-of-use assets are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

Lease liabilities

Lease liabilities are accounted for at amortized cost and are initially measured at the present value of future lease payments and are classified as current or non-current based on the due dates of the underlying principal payments. In determining the lease term, Alcon evaluates the renewal options and termination options reasonably certain to be exercised. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the incremental borrowing rate Alcon would be expected to pay within the respective markets, on a borrowing with a similar term and security. Interest in the period is recorded within "Interest expense" in Alcon's consolidated income statements.

Lease liabilities are remeasured for changes in estimated lease term, future lease payments arising from a change in an index or rate, amounts expected to be payable under a residual value guarantee, or in assessment of whether Alcon will exercise a purchase, extension or termination option. Changes to initial lease contract terms are assessed to determine their impact on the scope of lease, and any modifications increasing the scope of the lease are treated as new contracts under the initial measurement principles, while modifications that do not increase or that decrease the scope of the lease result in an adjustment to the right-of-use asset which is remeasured as of the date of the modification.

Principal payments made on lease liabilities and any initial direct costs paid are classified as financing cash outflows, while interest payments are classified as operating cash outflows.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the consolidated income statements and are classified as cash flows from operating activities. Short-term leases are leases with a lease term of twelve months in duration or less.

Prior to the adoption of IFRS 16 on January 1, 2019, Alcon's accounting policy for leases was as follows:

As lessee, Alcon classified leases of property, plant & equipment where Alcon had substantially all the risks and rewards of ownership as finance leases. Finance leases were capitalized at the lease's inception at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The corresponding lease liabilities, net of finance charges, were classified as current and non-current based on the due dates of the underlying principal payments. Each lease payment was allocated between the liability and interest expense. The interest expense was charged to Alcon's consolidated income statements over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The asset acquired under the finance lease was depreciated over the shorter of the asset’s useful life and the lease term.

Alcon classified leases in which a significant portion of the risks and rewards of ownership were not transferred to Alcon as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were recognized in the consolidated income statements on a straight-line basis over the period of the lease.

Refer to the "Impact of adopting significant new IFRS standards in 2019" section in this Note and Note 16 for additional details on the impact of adoption.

Legal liabilities

Alcon and its subsidiaries are subject to contingencies arising in the ordinary course of business such as patent litigation and other product-related litigation, commercial litigation, and governmental investigations and proceedings. Provisions are recorded where a reliable estimate can be made of the probable outcome of legal or other disputes against the subsidiary.

Contingent consideration

In a business combination, it is necessary to recognize contingent future payments to previous owners representing contractually defined potential amounts as a liability. Usually for Alcon, these are linked to milestone or royalty payments related to certain assets and are recognized as a financial liability at their fair value, which is then re-measured at each subsequent reporting date.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the timing and probability of regulatory and commercial success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration. These estimations typically depend on factors such as technical milestones or market performance and are adjusted for the probability of their likelihood of payment, and if material, appropriately discounted to reflect the impact of time.

Changes in the fair value of contingent consideration liabilities in subsequent periods are recognized in the consolidated income statements in "Cost of net sales" for currently marketed products and in "Research & development" for IPR&D.

The effect of unwinding the discount over time is recognized in "Interest expense" in the consolidated income statements.

Defined benefit pension plans and other post-employment benefits

The liability or asset recognized in the balance sheet in respect of defined benefit pension plans and other post-employment benefits is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no sufficient market for such bonds, the market rates on government bonds are used.

The current service cost for such post-employment benefit plans is included in the personnel expenses of the various functions where the associates are employed. The net interest on the net defined benefit liability is recognized as "Other expense" or "Other income". The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income/(loss).

Defined contribution plans

For defined contribution plans, Alcon contributes to publicly or privately administered plans. Alcon has no further payment obligations once the contributions have been paid. The contributions are included in the personnel expenses of the various functions where the associates are employed.

Financial debts

Financial debts are initially recognized at fair value, net of transaction costs incurred. Financial debts are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs and discounts) and the redemption amount is recognized in the consolidated income statements over the period of the financial debts using the effective interest method. Fees paid on the establishment of credit facilities are recognized as transaction costs of the financial debt to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates, and is recognized in "Other financial income & expense" in the consolidated income statements.

Financial debts are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial debt that has been extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in "Other financial income & expense" in the consolidated income statements.

Interest paid on financial debts is classified as operating activities in the consolidated statements of cash flows. Financial debts are classified as current liabilities unless Alcon has an unconditional right and intent to defer the settlement of the liability for at least twelve months after the reporting period.

Revenue

Net sales to third parties

Revenue on the sale of Alcon products and services, which is recorded as "Net sales to third parties" in the consolidated income statements, is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to or receipt of the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue would be recognized upon the satisfaction of acceptance criteria. The amount of revenue to be recognized is based on the consideration Alcon expects to receive in exchange for its goods and services. If a contract contains more than one performance obligation, the consideration is allocated based on the relative standalone selling price of each performance obligation.

Surgical equipment may be sold together with other products and services under a single contract and may be structured as an outright cash sale, an installment sale, or lease. Surgical equipment installment sales and leases have a fixed payment amount which the customer may pay either in fixed intervals or as the customer purchases consumables and/or implantables. Revenues are recognized upon satisfaction of each of the performance obligations in the contract and the consideration is allocated based on the relative standalone selling price of each performance obligation.

• Surgical equipment revenue from outright cash sales and installment sales arrangements is recognized at the point in time when control is transferred to the customer. Current portion of long-term receivables from customers and long-term receivables from customers for installment sales arrangements are recorded in "Other current assets" (see "Current portion of long-term receivables from customers" in Note 15 of these Consolidated Financial Statements) and "Financial assets" (see "Long-term receivables

from customers" in Note 12 of these Consolidated Financial Statements), respectively. Financing income for installment sales arrangements longer than twelve months is recognized over the term of the arrangement in "Other Income". Alcon applies the practical expedient under IFRS 15 to installment sales arrangements that are twelve months or less in duration.

• In addition to cash and installment sales, revenue is recognized under finance and operating lease arrangements. Leases in which Alcon transfers substantially all the risks and rewards incidental to ownership to the customer are treated as finance lease arrangements. Revenue from finance lease arrangements is recognized at amounts equal to the fair value of the equipment, which approximates the present value of the minimum lease payments under the arrangements. As interest rates embedded in lease arrangements are approximately market rates, revenue under finance lease arrangements is comparable to revenue for outright sales. Finance income for arrangements longer than twelve months is deferred and subsequently recognized based on a pattern that approximates the use of the effective interest method and recorded in "Other income". Operating lease revenue for equipment rentals is recognized on a straight-line basis over the lease term in "Net sales to third parties".

The consideration Alcon receives in exchange for its goods or services may be fixed or variable. Variable consideration is only recognized when it is highly probable that a significant reversal of cumulative sales will not occur. The most common elements of variable consideration are listed below:

• Rebates and discounts granted to government agencies, wholesalers, retail pharmacies and other customers are provisioned and recorded as a deduction from revenue at the time the related revenues are recorded or when the incentives are offered. They are calculated on the basis of historical experience and the specific terms in the individual agreements.

• Cash discounts are offered to customers to encourage prompt payment and are provisioned and recorded as revenue deductions at the time the related sales are recorded.

• Sales returns provisions are recognized and recorded as revenue deductions when there is historical experience of Alcon agreeing to customer returns and Alcon can reasonably estimate expected future returns. In doing so, the estimated rate of return is applied, determined based on historical experience of customer returns and considering any other relevant factors. This is applied to the amounts invoiced, also considering the amount of returned products to be destroyed versus products that can be placed back in inventory for resale. Where shipments are made on a re-sale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired.

Provisions for revenue deductions are adjusted to actual amounts as rebates, discounts and returns are processed. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions.

Prior to Alcon's adoption of IFRS 15 on January 1, 2018, Alcon's accounting policy for revenue recognition was substantially consistent with the revenue recognition principles under IFRS 15.

Other revenues

"Other revenues" include revenue from contract manufacturing services provided to the Former Parent which are recognized over time as the service obligations are completed and third party royalty income. Associated costs for contract manufacturing services are recognized in "Cost of other revenues".

Research & development

Internal research & development ("R&D") costs are fully charged to "Research & development" in the consolidated income statements in the period in which they are incurred. Alcon considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset until marketing approval from a regulatory authority is obtained in a major market such as the United States, the European Union, Switzerland or Japan.

Payments made to third parties to in-license or acquire intellectual property rights and products, including initial upfront and subsequent milestone payments, are capitalized as intangible assets. If additional payments are made to the originator company to continue to perform R&D activities, an evaluation is made as to the nature

of the payments. Such additional payments will be expensed if they are deemed to be compensation for subcontracted R&D services not resulting in an additional transfer of intellectual property rights to Alcon. Such additional payments will be capitalized if they are deemed to be compensation for the transfer to Alcon of additional intellectual property developed at the risk of the originator company. Subsequent internal R&D costs in relation to IPR&D and other assets are expensed until such time that technical feasibility can be proven, as demonstrated by the receipt of marketing approval for the related product from a regulatory authority in a major market.

Equity-based compensation

Each of the periods presented include expense related to incentive compensation provided to eligible Alcon associates in the form of equity-settled or equity-based awards including restricted stock units ("RSUs") and performance stock units ("PSUs").

Alcon expenses the fair values of RSUs and PSUs granted to associates as compensation over the related vesting periods within the various functions where the associates are employed. The fair values of the awards are determined on their grant dates and are adjusted to account for the specific provisions of each of the corresponding grant agreements.

Alcon RSUs do not entitle the recipients to dividends. As such, the fair value upon grant is therefore based on the Alcon share price at the grant date adjusted for potential future dividends to be paid within the holding period. The fair value of these grants, after making adjustments for assumptions related to their forfeiture during the vesting period, is expensed on a straight-line basis over the respective vesting period.

PSUs are subject to certain performance criteria being achieved during the vesting period and require plan participants to provide services during the vesting period. PSUs granted under Alcon's plans are subject to performance criteria based on internal performance metrics. The expense is determined taking into account assumptions concerning performance during the period relative to targets and expected forfeitures due to plan participants not meeting their service conditions. These assumptions are periodically adjusted. Any change in estimates for past services is recorded immediately as an expense or income in the consolidated income statements and amounts for future periods are expensed over the remaining vesting period. As a result, at the end of the vesting period, the total charge during the whole vesting period represents the amount that will finally vest. The number of equity instruments that finally vest is determined at the vesting date.

If a plan participant leaves Alcon for reasons other than retirement, disability or death, then unvested restricted shares, RSUs and PSUs are forfeited, unless determined otherwise by the provision of the plan rules or by the Compensation, Governance and Nomination Committee of the Alcon Board of Directors, for example, in connection with a reorganization.

Restructuring charges

Restructuring provisions are recognized for the direct expenditures arising from the restructuring, where the plans are sufficiently detailed and where appropriate communication to those affected has been made.

Charges to increase restructuring provisions are included in "Other expense" in the consolidated income statements. Corresponding releases are recorded in "Other income" in the consolidated income statements.

Taxes

Taxes on income are expensed in the same periods as the revenues and expenses to which they relate and include any interest and penalties incurred during the period. Deferred taxes are determined using the comprehensive liability method and are calculated on the temporary differences that arise between the tax base of an asset or liability and its carrying value in the balance sheet prepared for purposes of these Consolidated Financial Statements, except for those temporary differences related to investments in subsidiaries where the timing of their reversal can be controlled and it is probable that the difference will not reverse in the foreseeable future. Since the retained earnings are reinvested, withholding or other taxes on eventual distribution of a subsidiary's retained earnings are only taken into account when a dividend has been planned.

The estimated amounts for current and deferred tax assets or liabilities, including any amounts related to any uncertain tax positions, are based on currently known facts and circumstances. Tax returns are based on an interpretation of tax laws and regulations and reflect estimates based on these judgments and interpretations.

The tax returns are subject to examination by the competent taxing authorities which may result in an assessment being made requiring payments of additional tax, interest or penalties. Inherent uncertainties exist in the estimates of the tax positions.

Earnings (loss) per share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

Impact of adopting significant new IFRS standards in 2019

Effective January 1, 2019, Alcon implemented IFRS 16, Leases, which provides a new model for lessee accounting in which substantially all leases are now recognized on the balance sheet as Right-of-use assets with corresponding Lease liabilities. The standard replaces IAS 17, Leases.

Upon adoption of IFRS 16, right-of-use assets are recognized based on the amount of the lease liability adjusted for payments made before the lease commencement date, lease incentives and other items related to the lease agreements. Lease liabilities are recognized based on the net present value of remaining lease payments and are classified as current or non-current based on the due dates of the underling principal payments. Upon adoption of the new standard, a portion of the annual operating lease costs previously fully recognized as a functional expense is recorded as interest expense. In addition, the portion of the lease payments representing a reduction of the lease liability is recognized in the cash flow statement as an outflow from financing activities, which was previously fully recognized as an outflow from operating activities for operating leases.

IFRS 16 substantially carries forward the lessor accounting requirements under IAS 17 such that adoption of the standard did not have a significant impact upon Alcon's accounting for surgical equipment leases where Alcon is the lessor and for which Alcon's accounting policy is included in the Revenue accounting policy in this Note to the Consolidated Financial Statements.

Alcon applied the modified retrospective method, with right-of-use assets measured at an amount equal to the lease liability, adjusted by the amount of the prepaid or accrued lease payments relating to those leases recognized in the balance sheet immediately before the date of initial application. In applying IFRS 16 for the first time, Alcon has used the practical expedients discussed in Note 16 of these Consolidated Financial Statements. The adoption of the standard did not have an impact on "Other Reserves" in the period of adoption and prior years were not restated.

Refer to Note 16 to these Consolidated Financial Statements for further information on the impact of adoption of IFRS 16, Leases.

New standards and interpretations not yet adopted

Amendments to IFRS 3, Business Combinations, are effective for transactions occurring after January 1, 2020. The amendments change the definition of a business in evaluating business combinations and asset acquisitions, and also provide Alcon an option to apply a concentration test to determine if the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets. Under the concentration test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The changes to the definition of a business will likely result in Alcon accounting for more acquisitions as asset acquisitions.

There are no other IFRS standards or interpretations not yet effective that would be expected to have a material impact on Alcon.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions		Total		Share capital [member]	Other reserves [member]	Former parent net investment [member]		Fair value adjustments on marketable securities [member]	Fair value adjustments on equity securities [member]	Actuarial losses/gain from defined benefit plans [member]	Cumulative currency translation effects [member]	Total value adjustments [member]	[2]
Beginning balance at Dec. 31, 2016		$ 23,012	[1]	$ 0	$ 0	$ 23,166	[1]	$ 4	$ 0	$ (61)	$ (97)	$ (154)
Net (loss)/income	[1]	256				256
Other comprehensive (loss)		241	[1]					21		36	184	241
Total comprehensive (loss)/income		497	[1]			256	[1]	21		36	184	241
Movements of financing provided to former parent, net	[1]	(424)				(424)
Other transactions with former parent	[1]	(56)				(56)
Total Other movements	[1]	(480)				(480)
Ending balance (Previously stated [member]) at Dec. 31, 2017		23,029	[1]	0	0	22,942	[1]	25	0	(25)	87	87
Ending balance (Impact of change in accounting policies [member]) at Dec. 31, 2017	[3]					25	[1]	(25)				(25)
Ending balance at Dec. 31, 2017		23,029	[1]	0	0	22,967	[1]	0	0	(25)	87	62
Net (loss)/income	[1]	(227)				(227)
Other comprehensive (loss)		(73)	[1]						(23)	8	(58)	(73)
Total comprehensive (loss)/income		(300)	[1]			(227)	[1]		(23)	8	(58)	(73)
Movements of financing provided to former parent, net	[1]	(119)				(119)
Other transactions with former parent	[1]	27				27
Other movements	[1],[4]	2				2
Total Other movements	[1]	(90)				(90)
Ending balance at Dec. 31, 2018		22,639	[1]	0	0	22,650	[1]	0	(23)	(17)	29	(11)
Net (loss)/income		(656)	[1]		(547)	(109)	[1]
Other comprehensive (loss)		(61)	[1]						(2)	(55)	(4)	(61)
Total comprehensive (loss)/income		(717)	[1]		(547)	(109)	[1]		(2)	(55)	(4)	(61)
Movements of financing provided to former parent, net	[1]	(2,658)				(2,658)
Other transactions with former parent	[1]	(46)				(46)
Reclassification of deferred equity-compensation	[1]	(7)				(7)
Distribution by former parent of share capital		0	[1]	20	19,812	(19,832)	[1]
Equity-based compensation		87	[1]		87
Other movements	[4]	5	[1]		3	2	[1]
Total Other movements		(2,619)	[1]	20	19,902	(22,541)	[1]
Ending balance at Dec. 31, 2019		$ 19,303	[1]	$ 20	$ 19,355	$ 0	[1]	$ 0	$ (25)	$ (72)	$ 25	$ (72)

[1] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

[2] "Total value adjustments" recorded through Comprehensive Income are presented net of the corresponding tax effects.

[3] The impact of change in accounting policies includes $25 million relating to IFRS 9 implementation and nil relating to IFRS 15 implementation

[4] Activity relates to hyperinflationary accounting (see Note 3 to the Consolidated Financial Statements).

XML

Provisions and other current liabilities

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Provisions and other current liabilities

Provisions and other non-current liabilities

The below table provides details related to Provisions and other non-current liabilities as of December 31, 2019, and 2018.

($ millions)	2019	2018
Accrued liability for employee benefits:
Defined benefit pension plans(1)	291	254
Other long-term employee benefits and deferred compensation	140	104
Other post-employment benefits(1)	423	345
Provisions for product liabilities, governmental investigations and other legal matters	—	—
Contingent consideration(2)	208	143
Other non-current liabilities	106	67
Total provisions and other non-current liabilities	1,168	913

(1) Note 23 to these Consolidated Financial Statements provides additional disclosures related to post-employment benefits.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Alcon believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities in this area, Alcon may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to Alcon's financial condition but could be material to the results of operations or cash flows in a given period.

Provisions for product liabilities, governmental investigations and other legal matters

Alcon has established provisions for certain product liabilities, governmental investigations and other legal matters, where a potential cash outflow is probable and a reliable estimate can be made of the amount of the outflow. These provisions represent the current best estimate of the total financial effect for the matters described below and for other less significant matters. Potential cash outflows reflected in a provision may be fully or partially off-set by insurance in certain circumstances.

Alcon has not established provisions for potential damage awards for certain additional legal claims if Alcon currently believes that a payment is either not probable or cannot be reliably estimated. A number of other legal matters are in such early stages or the issues presented are such that Alcon has not made any provisions since it cannot currently estimate either a potential outcome or the amount of any potential losses. For these reasons, among others, Alcon generally is unable to make a reliable estimate of possible loss with respect to such cases. It is therefore not practicable to provide information about the potential financial impact of those cases.

There might also be cases for which Alcon was able to make a reliable estimate of the possible loss or the range of possible loss, but Alcon believes that publication of such information on a case-by-case basis would seriously prejudice Alcon's position in ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, information has been disclosed with respect to the nature of the contingency, but no disclosure is provided as to an estimate of the possible loss or range of possible loss.

Note 26 contains additional information on contingencies.

Summary of significant legal proceedings

Under the Separation and Distribution Agreement Alcon entered into with Novartis in connection with the separation and the Spin-off, Alcon and Novartis agreed, subject to certain conditions and except to the extent otherwise described below with respect to any matter, to indemnify the other party and its directors, officers, associates and other representatives against any pending or future liabilities or claims that constitute either a Novartis Group liability, in the case of Novartis, or an Alcon liability, in the case of Alcon, under the terms of the Separation and Distribution Agreement, based on whether such claim or liability relates to the Novartis business and products or Alcon's respective business and products.

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing

practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect our business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow. The following is a summary as of February 25, 2020 of significant legal proceedings of the Alcon business to which Alcon or its subsidiaries are a party.

Southern District of New York / Western District of New York healthcare fraud investigation

In 2011, Alcon received a subpoena from the United States Department of Health & Human Services relating to an investigation into allegations of healthcare fraud and potential off-label promotion of certain products. The subpoena requests the production of documents relating to marketing practices and the remuneration of healthcare providers in connection with surgical equipment and certain Novartis products (Vigamox®, Nevanac®, Omnipred®, Econopred®). Alcon is cooperating with this investigation.

Asia / Russia investigation

In 2017 and 2018, Alcon and Novartis, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the US Department of Justice ("DoJ") and the US SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third party distributors, both before and after Alcon was acquired by Novartis. Alcon is cooperating with this investigation. Under the Separation and Distribution Agreement, Novartis must indemnify Alcon in respect of defined direct monetary liabilities relating to the current scope of the ongoing investigation by the DoJ and the SEC relating to certain business practices in Asia and Russia and related accounting treatment.

Contact lenses class actions

Since the first quarter of 2015, more than 50 class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested.

MIVS platform patent infringement investigation

In June 2015, Johns Hopkins University ("JHU") filed a patent infringement lawsuit against certain Alcon entities alleging that the use of certain Alcon surgical products, principally by third parties, infringes a patent directed to certain methods of ocular surgery. In March 2019, Alcon and JHU entered into a settlement agreement in full settlement of all claims relating to this proceeding.

LenSx laser system and WaveLight FS200 laser patent infringement litigations

Two consolidated cases were filed against Alcon claiming that the LenSx laser system and WaveLight FS200 femtosecond laser infringe two US patents expiring in 2018 and 2030. The district court entered summary judgment for Alcon, and the plaintiff appealed to the US Court of Appeals for the Federal Circuit. The Court of Appeals affirmed the district court’s judgment for Alcon on August 8, 2019.

TCPA matter

In April 2016, a putative class action lawsuit was filed in Illinois federal court alleging that the defendants, Alcon and Novartis Pharmaceuticals Corporation ("NPC"), sent unsolicited facsimiles in violation of the Telephone Consumer Protection Act, and seeking to certify a representative putative nationwide class of affected consumers. The claims are being vigorously contested.

Product liability, governmental investigations and other legal matters provision movements

($ millions)	2019		2018		2017
January 1	42		49		9
Additions to provisions	—		1		55
Cash payments	(40	)	(1	)	(6	)
Releases of provisions	(2	)	(7	)	(9	)
December 31	—		42		49
Less current portion	—		(42	)	(43	)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	—		—		6

Alcon believes that its total provisions for investigations, product liability, arbitration and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, there can be no assurance that additional liabilities and costs will not be incurred beyond the amounts provided.

Provisions and other current liabilities

The following table provides details related to Provisions and other current liabilities as of December 31, 2019 and 2018:

($ millions)	2019	2018
Taxes other than income taxes	81	57
Restructuring provisions	28	8
Accrued expenses for goods and services received but not invoiced	79	71
Accruals for royalties	10	6
Accruals for deductions from revenue	212	194
Accruals for compensation and benefits including social security	382	363
Deferred income	97	94
Provisions for product liabilities, governmental investigations and other legal matters(1)	—	42
Accrued share-based payments	10	6
Accrued interest on financial debts	19	—
Contingent considerations(2)	35	19
Other payables	85	20
Total provisions and other current liabilities	1,038	880

(1) Note 19 to these Consolidated Financial Statements provides additional disclosures related to legal provisions.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Provisions and accruals are based upon management's best estimate and adjusted for actual experience. Such adjustments to the historic estimates have not been material.

Accruals for deductions from revenue

The following table shows the movement of the accruals for deductions from revenue:

($ millions)	2019		2018		2017
January 1	194		213		182
Additions	662		603		619
Payments/utilizations	(646	)	(613	)	(601	)
Changes in offset against gross trade receivables	1		2		7
Currency translation effects	1		(11	)	6
December 31	212		194		213

Restructuring provisions

The following table shows the movement of the restructuring provisions:

($ millions)	2019		2018		2017
January 1	8		3		13
Additions	32		13		—
Cash payments	(10	)	(7	)	(6	)
Releases	(2	)	(2	)	(4	)
Currency translation effects	—		1		—
December 31	28		8		3

In 2019, additions to restructuring provisions of $32 million were related to the multi-year transformation program announced by Alcon on November 19, 2019. The additions to restructuring provisions in 2019 were related to accrued severance for the associates whose positions will be eliminated.

In 2018, additions to restructuring provisions of $13 million were related to initiatives aimed at improving the efficiency and agility of Alcon's operating model.

In 2017, no additions to restructuring provisions were recorded. Alcon continued initiatives to realign its operations to focus on the surgical and vision care business after the opthamology pharmaceutical business transfer to the Novartis Innovative Medicines Division.

XML

Equity-based compensation

12 Months Ended

Dec. 31, 2019

Share-Based Payment Arrangements [Abstract]

Equity-based compensation

Equity-based compensation

For the year ended December 31, 2019, Alcon recorded equity-based compensation expense of $114 million (2018: $93 million, 2017: $71 million).

Liabilities from cash-settled equity-based compensation plans were $10 million as of December 31, 2019 (2018: $6 million).

On April 9, 2019, Alcon adopted various equity-based incentive plans, under which Alcon may grant awards in the form of restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs"), restricted stock awards ("RSAs"), or any other form of award at the discretion of the Board. Certain associates in select countries may also participate in share ownership savings plans.

Prior to the Spin-off, Alcon associates participated in Novartis equity-based participation plans, which included stock options, RSUs, PSUs, RSAs and certain share savings ownership plans. Such awards were settled in shares or options of the Former Parent. For periods prior to the Spin-off, the Consolidated Income Statements reflect the compensation expense for the Novartis’s equity-based incentive plans in which Alcon associates participated.

Replacement awards

Concurrent with the Spin-off, certain outstanding Novartis awards granted to Alcon associates under Novartis’ equity-based incentive plans vested in Novartis equity on a pro rata basis, in proportion to the amount of the vesting period completed. The remaining unvested Novartis awards were replaced and restored with Alcon awards as governed by the Alcon equity restoration plan with terms and vesting schedules substantially similar to the replaced Novartis awards.

The pro rata vesting of Novartis awards and replacement of forfeited unvested Novartis awards with Alcon awards represents a modification under IFRS 2, Share-based Payment. Alcon measured the fair value of the awards immediately prior to and subsequent to the modification and concluded that no incremental fair value was provided to associates. Accordingly, Alcon continues to recognize as an expense the amount of unrecognized compensation cost of the original awards over the remaining vesting periods. Alcon issued 4.2 million unvested equity-based awards in connection with the modification at the time of the the Spin-off.

The replacement awards consist primarily of RSUs and PSUs, and vest over a period consistent with the original vesting schedule of the awards which they replaced. In addition to the replacement awards, Alcon has granted additional equity-based awards under the newly-established Alcon incentive plans which were also granted in the form of RSUs and PSUs that will settle in Alcon Inc. shares upon vesting.

Summary of unvested share movements

Alcon granted 0.7 million unvested equity-based awards subsequent to the Spin-off. There were 4.7 million unvested equity-based Alcon awards outstanding as of December 31, 2019 after giving effect to 0.1 million equity-based awards vested and 0.1 million awards forfeited during the period.

The below table summarizes unvested share movements for all Alcon equity-based incentive plans from the Spin-off through December 31, 2019:

	2019
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Replacement awards issued at Spin-off(1)	4,222		n/a	212,367
Granted
Restricted awards	625		56.1	35,037
Performance awards	117		58.0	6,782
Vested(1)	(108	)	n/a	(5,432	)
Forfeited(1)	(114	)	n/a	(5,734	)
Unvested shares at December 31	4,742		51.2	243,020

(1) Based on estimated fair value per share at the time of Spin-off.

The remaining weighted-average vesting period of unvested equity-based awards as of December 31, 2019 was 1.5 years.

Alcon equity-based incentive plans

The table below discloses the number of shares authorized under the plans as of December 31, 2019:

(thousands)	2019
Long-term Incentive Plan	20,000
Deferred Bonus Stock Plan	1,500
Swiss Employee Share Ownership Plan	475
Other share savings plans	275
Authorized as of December 31, 2019	22,250

Long-Term Incentive Plan ("LTIP") - Restricted Stock Units and Restricted Stock Awards

Under Alcon's LTIP, certain eligible executives and management personnel may receive grants of RSUs and RSAs (together "Restricted awards"). The awards generally vest on the third anniversary of the award and are generally forfeited if the employment relationship with Alcon terminates prior to vesting. Recipients of RSU awards do not have any shareholder rights, such as voting or dividend rights, until the shares are delivered. Alcon associates receiving grants of RSAs are entitled to the dividend equivalents that may be declared and paid over the vesting period only if the associates vest in such award.

For the periods prior to the Spin-off, Alcon associates participated in the Former Parent's "Select" plan. The Company's LTIP plan is substantially similar to and replaced the Former Parent plan.

LTIP - Performance Stock Units

The Alcon CEO and Alcon Top Leaders ("ATLs") participate in Alcon's long-term performance program. PSUs granted under the LTIP each convert to one unrestricted Alcon Inc. share at vesting, subject to the achievement of performance measures.

PSUs awarded to plan participants are granted at target incentive ranges from 30% to 280% of base compensation and vest over a three-year period. The payout between 0% and 200% of target is dependent upon four equally weighted performance metrics which are determined at the onset of the performance period by the Alcon Inc. Board of Directors. The metrics include cumulative annual growth rate of Net sales, Core EPS, market share, and innovation. The Alcon Inc. Board of Directors and the Compensation, Governance and Nomination Committee assess the performance against the defined measures and approve the final payout. PSUs granted under the performance plan do not carry voting rights, but do carry dividend equivalents that are paid in Alcon Inc. shares at vesting, provided participants remain associates of Alcon.

For the periods prior to the Spin-off, Alcon associates participated in the Former Parent's Long-Term Performance Plan ("LTPP") and Long-Term Relative Performance Plan ("LTRPP"), which were substantially similar to Alcon's LTIP performance program.

Deferred Bonus Stock Plan ("DBSP")

The Alcon CEO's annual incentive is paid 50% in cash in the year following the performance period, and 50% in Alcon Inc. RSUs or RSAs. ATLs receive 70% of their annual incentive in cash and 30% in Alcon Inc. RSUs or RSAs. The RSUs and RSAs are granted in first quarter of the year following the performance period, which are deferred and restricted for three years. Each RSU is converted into one Alcon Inc. share at the vesting date. RSUs granted under the DBSP do not carry any dividend, dividend equivalent or voting rights. Executives in certain countries may elect to also receive some or all of their cash incentive in shares or share units that are not subject to vesting conditions.

The Alcon DBSP is substantially similar to and replaces the Annual Incentive plan, which existed in the periods prior to the Spin-off.

Swiss Employee Share Ownership Plan and other share savings plans

Alcon associates in certain countries are encouraged to invest their annual incentive in a share savings plans. Under the share savings plans, participants may elect to receive some or all of their annual incentive in Alcon Inc. shares in lieu of cash. Subject to plan rules and limitations, as a reward for their participation in the share savings plans, at no additional cost to the participant, Alcon may fully or partially match their investments in shares after a holding period of three or five years.

Prior to the Spin-off, Alcon associates participated in the Former Parent's share savings plans, which were substantially similar to and replaced by Alcon's share savings plans.

Equity-based incentive plans under Former Parent

The below table summarizes unvested share movements for all plans under the Former Parent for the year ended December 31, 2018 (Novartis AG RSAs, RSUs, and PSUs):

	2018
	Number of shares in thousand		Weighted average fair value at grant date in $	Fair value in $ thousand
Unvested shares at January 1	2,800		74.4	208,300
Granted
Annual incentive	168		83.7	14,062
Share savings plans	109		85.5	9,320
Select North America	689		77.9	53,673
Select outside North America	141		79.8	11,252
Long-Term Performance Plan	316		88.4	27,934
Long-Term Relative Performance Plan	37		51.2	1,894
Other share awards	205		83.1	17,036
Vested	(814	)	93.0	(75,702	)
Forfeited	(208	)	80.4	(16,723	)
Unvested shares at December 31	3,443		72.9	251,046

Until 2013, participants in the Former Parent's "Select" plan could also elect to receive part or all of their grant in the form of Novartis AG tradable share options. Novartis AG tradable share options expire on their tenth anniversary from the grant date. Each Novartis AG tradable share option entitles the holder to purchase after vesting (and before the tenth anniversary from the grant date) one Novartis AG share at a stated exercise price that equals the closing market price of the underlying Novartis AG share at the grant date.

Options under Novartis equity plan "Select" outside North America

The following table shows the activity associated with the Novartis AG share options during the year ended December 31, 2018. The weighted average prices in the table below are translated from Swiss francs into USD at historical rates.

	2018
	Options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	0.5		61.1	24.7
Sold or exercised	(0.1	)	59.7	29.1
Outstanding at December 31	0.4		61.4	26.5
Exercisable at December 31	0.4		61.4	26.5

All Novartis AG share options were granted at an exercise price that was equal to the closing market price of the Novartis AG shares at the grant date. The weighted average Novartis AG share price at the dates of sale or exercise was $86.2.

The following table summarizes information about Novartis AG share options outstanding at December 31, 2018:

	Options outstanding
Range of exercise prices($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	32	0.7	52.4
56 - 66	394	3.5	62.1
Total	426	3.3	61.4

Options under Novartis equity plan "Select" for North America

The following table shows the activity associated with the Novartis AG American Depositary Receipts ("ADR") options during the period:

	2018
	ADR  options (millions)		Weighted average exercise price ($)	Weighted average intrinsic value ($)
Options outstanding at January 1	1.8		62.5	21.4
Sold or exercised	(0.5	)	62.4	25.8
Outstanding at December 31	1.3		62.6	23.2
Excercisable at December 31	1.3		62.6	23.2

All ADR options were granted at an exercise price that was equal to the closing market price of the ADRs at the grant date. The weighted average ADR price at the dates of sale or exercise was $81.4.

The following table summarizes information about ADR options outstanding at December 31, 2018:

	ADR options outstanding
Range of exercise prices ($)	Number outstanding (thousand)	Average remaining contractual life (years)	Weighted average exercise price ($)
45 - 55	30	0.6	50.7
56 - 66	1,258	3.6	62.9
Total	1,288	3.5	62.6

XML

Alcon subsidiaries - Equity interests (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Disclosure of subsidiaries [line items]
Total asset and net sales threshold	$ 5
Alcon Laboratorios Argentina S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (Australia) Pty Ltd [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Ophthalmika GmbH [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories Belgium BVBA [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
N.V. Alcon S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Canada Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratorios Chile Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon (China) Ophthalmic Product Co., Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Hong Kong Limited [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Laboratorios Alcon de Colombia S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Pharmaceuticals (Czech Republic) s.r.o. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Nordic A/S [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Dominicana, SRL [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
AlconLab Ecuador S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Laboratoires Alcon S.A.S. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Pharma GmbH [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
CIBA Vision GmbH [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
WaveLight GmbH [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories Hellas- Commercial and Industrial S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Hungary Pharmaceuticals Trading Limited Liability Company [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (India) Private Limited [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
PT. CIBA Vision Batam [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories Ireland Limited [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Optonol Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Italia S.p.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Japan Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (Malaysia) Sdn. Bhd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
CIBA Vision Johor Sdn. Bhd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratorios, S.A. de C.V. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Maroc SARL D´Associé Unique [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Nederland B.V. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (New Zealand) Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (Philippines), Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Pharmaceutical del Peru S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (Philippines), Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Polska Sp. z o.o. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Portugal-Produtos e Equipamentos Oftalmológicos Lda. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon (Puerto Rico), Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Romania S.R.L. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Farmacevtika LLC [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Pte Ltd [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Singapore Manufacturing Pte Ltd [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
CIBA Vision Asian Manufacturing and Logistics Pte Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (South Africa) (Pty) Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Korea Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Healthcare S.A. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Grieshaber AG [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Management SA [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Pharmaceuticals Ltd. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Services AG [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Switzerland SA [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories (Thailand) Limited [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratuvarlari Ticaret A.S. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Ukraine LLC [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Eye Care UK Limited [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Finance Corporation [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Laboratories, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon RefractiveHorizons, LLC [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Research, LLC [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Vision, LLC[Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
CIBA Vision, LLC [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
WaveLight, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
ClarVista Medical, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
PowerVision, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Tear Film Innovations, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
TrueVision Systems, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%
Alcon Lensx, Inc. [Member]
Disclosure of subsidiaries [line items]
Proportion of voting rights held in subsidiary	100.00%

XML

Alcon subsidiaries

12 Months Ended

Dec. 31, 2019

Disclosure Of Separate Financial Statements [Abstract]

Alcon subsidiaries

Alcon subsidiaries

The following table lists the Alcon legal entities with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements at and for the year ended December 31, 2019, respectively. The equity interest percentage shown in the table represents Alcon's share in voting rights in those entities. Unless otherwise stated, each entity has share capital consisting of equity held directly by the Company or another of its consolidated subsidiaries.

Country of organization/Entity name	Place of business	Equity interest
Argentina
Alcon Laboratorios Argentina S.A.	Buenos Aires	100	%
Australia
Alcon Laboratories (Australia) Pty Ltd	Frenchs Forest, NSW	100	%
Austria
Alcon Ophthalmika GmbH	Wein	100	%
Belgium
Alcon Laboratories Belgium BVBA	Puurs	100	%
N.V. Alcon S.A.	Vilvoorde	100	%
Canada
Alcon Canada Inc.	Mississauga, Ontario	100	%
Chile
Alcon Laboratorios Chile Ltd.	Santiago de Chile	100	%
China
Alcon (China) Ophthalmic Product Co., Ltd.	Beijing	100	%
Alcon Hong Kong Limited	Hong Kong	100	%
Colombia
Laboratorios Alcon de Colombia S.A.	Santafé de Bogotá	100	%
Czech Republic
Alcon Pharmaceuticals (Czech Republic) s.r.o.	Prague	100	%
Denmark
Alcon Nordic A/S	Copenhagen	100	%
Dominican Republic
Alcon Dominicana, SRL	Santo Domingo	100	%
Ecuador
AlconLab Ecuador S.A.	Quito	100	%
France
Laboratoires Alcon S.A.S.	Rueil-Malmaison	100	%
Germany
Alcon Pharma GmbH	Freiburg im Breisgau	100	%
CIBA Vision GmbH	Grosswallstadt	100	%
WaveLight GmbH	Erlangen	100	%
Greece
Alcon Laboratories Hellas- Single Member Commercial and Industrial S.A.C.I.	Maroussi, Athens	100	%
Hungary
Alcon Hungary Pharmaceuticals Trading Limited Liability Company	Budapest	100	%
India
Alcon Laboratories (India) Private Limited	Bangalore	100	%
Indonesia
PT. CIBA Vision Batam	Batam	100	%
Ireland
Alcon Laboratories Ireland Limited	Cork City	100	%
Israel
Optonol Ltd.	Neve-Ilan	100	%

Country of organization/Entity name	Place of business	Equity interest
Italy
Alcon Italia S.p.A.	Milano	100	%
Japan
Alcon Japan Ltd.	Tokyo	100	%
Malaysia
Alcon Laboratories (Malaysia) Sdn. Bhd.	Petaling Jaya	100	%
CIBA Vision Johor Sdn. Bhd.	Kuala Lumpur	100	%
Mexico
Alcon Laboratorios, S.A. de C.V.	Ciudad de Mexico	100	%
Morocco
Alcon Maroc SARL D´Associé Unique	Casablanca	100	%
Netherlands
Alcon Nederland B.V.	Arnhem	100	%
New Zealand
Alcon Laboratories (New Zealand) Ltd.	Auckland	100	%
Panama
Alcon Centroamerica S.A.	Panama City	100	%
Peru
Alcon Pharmaceutical del Peru S.A.	Lima	100	%
Philippines
Alcon Laboratories (Philippines), Inc.	Manila	100	%
Poland
Alcon Polska Sp. z o.o.	Warszawa	100	%
Portugal
Alcon Portugal-Produtos e Equipamentos Oftalmológicos Lda.	Porto Salvo	100	%
Puerto Rico
Alcon (Puerto Rico), Inc.	Cataño, PR	100	%
Romania
Alcon Romania S.R.L.	Bucharest	100	%
Russian Federation
Alcon Farmacevtika LLC	Moscow	100	%
Singapore
Alcon Pte Ltd	Singapore	100	%
Alcon Singapore Manufacturing Pte Ltd	Singapore	100	%
CIBA Vision Asian Manufacturing and Logistics Pte Ltd.	Singapore	100	%
South Africa
Alcon Laboratories (South Africa) (Pty) Ltd.	Midrand	100	%
South Korea
Alcon Korea Ltd.	Seoul	100	%
Spain
Alcon Healthcare S.A.	Barcelona	100	%
Switzerland
Alcon Inc.	Fribourg	100	%
Alcon Grieshaber AG	Schaffhausen	100	%
Alcon Management SA	Vernier	100	%
Alcon Pharmaceuticals Ltd.	Fribourg	100	%
Alcon Services AG	Fribourg	100	%
Alcon Switzerland SA	Risch	100	%
Thailand
Alcon Laboratories (Thailand) Limited	Bangkok	100	%
Turkey
Alcon Laboratuvarlari Ticaret A.S.	Istanbul	100	%

Country of organization/Entity name	Place of business	Equity interest
Ukraine
Alcon Ukraine LLC	Kiev	100	%
United Kingdom
Alcon Eye Care UK Limited	Frimley/Camberley	100	%
United States of America
Alcon Finance Corporation	Wilminton, DE	100	%
Alcon Laboratories, Inc.	Wilminton, DE	100	%
Alcon RefractiveHorizons, LLC	Fort Worth, TX	100	%
Alcon Research, LLC	Fort Worth, TX	100	%
Alcon Vision, LLC	Fort Worth, TX	100	%
CIBA Vision, LLC	Duluth, GA	100	%
WaveLight, Inc.	Sterling, VA	100	%
ClarVista Medical, Inc.	Aliso Viejo, CA	100	%
PowerVision, Inc.	Fort Worth, TX	100	%
Tear Film Innovations, Inc.	Fort Worth, TX	100	%
TrueVision Systems, Inc.	Fort Worth, TX	100	%
Alcon Lensx, Inc.	Fort Worth, TX	100	%

The list below shows the principal Novartis legal entities containing assets, liabilities and results of operations attributable to the Alcon business with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements.

Brazil⁽¹⁾

Novartis Biociências S.A.

Mexico

Novartis Farmacéutica, S.A. de C.V.

(1) In accordance with the Separation and Distribution Agreement with Novartis, the separation from Novartis of the Alcon business in Brazil was delayed, and the Alcon business in Brazil remained in Novartis Biociências S.A. following the Spin-off.  On February 3, 2020, the Alcon business in Brazil was transferred from Novartis Biociências S.A. to Alcon Brasil Cuidados com a Saúde Ltda. (“Alcon Brazil”), and on February 4, 2020, Alcon acquired from Novartis 100% of the ownership interests of Alcon Brazil, thereby completing the delayed transfer of the Alcon business in Brazil from Novartis to Alcon.

XML

Related parties transactions - Additional information (Details) - USD ($)	3 Months Ended	12 Months Ended
	Apr. 08, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of transactions between related parties [line items]
Contract manufacturing revenues from former parent	$ 47,000,000	$ 47,000,000	$ 0	$ 0
Purchases from former parent	19,000,000	19,000,000	4,000,000	3,000,000
Services received, related party transactions	$ 40,000,000		553,000,000	535,000,000
Personnel compensation		24,100,000	$ 22,400,000	$ 16,900,000
Key management personnel of entity or parent [member]
Disclosure of transactions between related parties [line items]
Personnel compensation		$ 84,844

XML

Provisions and other non-current liabilities

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Provisions and other non-current liabilities

Provisions and other non-current liabilities

The below table provides details related to Provisions and other non-current liabilities as of December 31, 2019, and 2018.

($ millions)	2019	2018
Accrued liability for employee benefits:
Defined benefit pension plans(1)	291	254
Other long-term employee benefits and deferred compensation	140	104
Other post-employment benefits(1)	423	345
Provisions for product liabilities, governmental investigations and other legal matters	—	—
Contingent consideration(2)	208	143
Other non-current liabilities	106	67
Total provisions and other non-current liabilities	1,168	913

(1) Note 23 to these Consolidated Financial Statements provides additional disclosures related to post-employment benefits.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Alcon believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities in this area, Alcon may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to Alcon's financial condition but could be material to the results of operations or cash flows in a given period.

Provisions for product liabilities, governmental investigations and other legal matters

Alcon has established provisions for certain product liabilities, governmental investigations and other legal matters, where a potential cash outflow is probable and a reliable estimate can be made of the amount of the outflow. These provisions represent the current best estimate of the total financial effect for the matters described below and for other less significant matters. Potential cash outflows reflected in a provision may be fully or partially off-set by insurance in certain circumstances.

Alcon has not established provisions for potential damage awards for certain additional legal claims if Alcon currently believes that a payment is either not probable or cannot be reliably estimated. A number of other legal matters are in such early stages or the issues presented are such that Alcon has not made any provisions since it cannot currently estimate either a potential outcome or the amount of any potential losses. For these reasons, among others, Alcon generally is unable to make a reliable estimate of possible loss with respect to such cases. It is therefore not practicable to provide information about the potential financial impact of those cases.

There might also be cases for which Alcon was able to make a reliable estimate of the possible loss or the range of possible loss, but Alcon believes that publication of such information on a case-by-case basis would seriously prejudice Alcon's position in ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, information has been disclosed with respect to the nature of the contingency, but no disclosure is provided as to an estimate of the possible loss or range of possible loss.

Note 26 contains additional information on contingencies.

Summary of significant legal proceedings

Under the Separation and Distribution Agreement Alcon entered into with Novartis in connection with the separation and the Spin-off, Alcon and Novartis agreed, subject to certain conditions and except to the extent otherwise described below with respect to any matter, to indemnify the other party and its directors, officers, associates and other representatives against any pending or future liabilities or claims that constitute either a Novartis Group liability, in the case of Novartis, or an Alcon liability, in the case of Alcon, under the terms of the Separation and Distribution Agreement, based on whether such claim or liability relates to the Novartis business and products or Alcon's respective business and products.

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing

practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect our business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow. The following is a summary as of February 25, 2020 of significant legal proceedings of the Alcon business to which Alcon or its subsidiaries are a party.

Southern District of New York / Western District of New York healthcare fraud investigation

In 2011, Alcon received a subpoena from the United States Department of Health & Human Services relating to an investigation into allegations of healthcare fraud and potential off-label promotion of certain products. The subpoena requests the production of documents relating to marketing practices and the remuneration of healthcare providers in connection with surgical equipment and certain Novartis products (Vigamox®, Nevanac®, Omnipred®, Econopred®). Alcon is cooperating with this investigation.

Asia / Russia investigation

In 2017 and 2018, Alcon and Novartis, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the US Department of Justice ("DoJ") and the US SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third party distributors, both before and after Alcon was acquired by Novartis. Alcon is cooperating with this investigation. Under the Separation and Distribution Agreement, Novartis must indemnify Alcon in respect of defined direct monetary liabilities relating to the current scope of the ongoing investigation by the DoJ and the SEC relating to certain business practices in Asia and Russia and related accounting treatment.

Contact lenses class actions

Since the first quarter of 2015, more than 50 class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested.

MIVS platform patent infringement investigation

In June 2015, Johns Hopkins University ("JHU") filed a patent infringement lawsuit against certain Alcon entities alleging that the use of certain Alcon surgical products, principally by third parties, infringes a patent directed to certain methods of ocular surgery. In March 2019, Alcon and JHU entered into a settlement agreement in full settlement of all claims relating to this proceeding.

LenSx laser system and WaveLight FS200 laser patent infringement litigations

Two consolidated cases were filed against Alcon claiming that the LenSx laser system and WaveLight FS200 femtosecond laser infringe two US patents expiring in 2018 and 2030. The district court entered summary judgment for Alcon, and the plaintiff appealed to the US Court of Appeals for the Federal Circuit. The Court of Appeals affirmed the district court’s judgment for Alcon on August 8, 2019.

TCPA matter

In April 2016, a putative class action lawsuit was filed in Illinois federal court alleging that the defendants, Alcon and Novartis Pharmaceuticals Corporation ("NPC"), sent unsolicited facsimiles in violation of the Telephone Consumer Protection Act, and seeking to certify a representative putative nationwide class of affected consumers. The claims are being vigorously contested.

Product liability, governmental investigations and other legal matters provision movements

($ millions)	2019		2018		2017
January 1	42		49		9
Additions to provisions	—		1		55
Cash payments	(40	)	(1	)	(6	)
Releases of provisions	(2	)	(7	)	(9	)
December 31	—		42		49
Less current portion	—		(42	)	(43	)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	—		—		6

Alcon believes that its total provisions for investigations, product liability, arbitration and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, there can be no assurance that additional liabilities and costs will not be incurred beyond the amounts provided.

Provisions and other current liabilities

The following table provides details related to Provisions and other current liabilities as of December 31, 2019 and 2018:

($ millions)	2019	2018
Taxes other than income taxes	81	57
Restructuring provisions	28	8
Accrued expenses for goods and services received but not invoiced	79	71
Accruals for royalties	10	6
Accruals for deductions from revenue	212	194
Accruals for compensation and benefits including social security	382	363
Deferred income	97	94
Provisions for product liabilities, governmental investigations and other legal matters(1)	—	42
Accrued share-based payments	10	6
Accrued interest on financial debts	19	—
Contingent considerations(2)	35	19
Other payables	85	20
Total provisions and other current liabilities	1,038	880

(1) Note 19 to these Consolidated Financial Statements provides additional disclosures related to legal provisions.

(2) Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Provisions and accruals are based upon management's best estimate and adjusted for actual experience. Such adjustments to the historic estimates have not been material.

Accruals for deductions from revenue

The following table shows the movement of the accruals for deductions from revenue:

($ millions)	2019		2018		2017
January 1	194		213		182
Additions	662		603		619
Payments/utilizations	(646	)	(613	)	(601	)
Changes in offset against gross trade receivables	1		2		7
Currency translation effects	1		(11	)	6
December 31	212		194		213

Restructuring provisions

The following table shows the movement of the restructuring provisions:

($ millions)	2019		2018		2017
January 1	8		3		13
Additions	32		13		—
Cash payments	(10	)	(7	)	(6	)
Releases	(2	)	(2	)	(4	)
Currency translation effects	—		1		—
December 31	28		8		3

In 2019, additions to restructuring provisions of $32 million were related to the multi-year transformation program announced by Alcon on November 19, 2019. The additions to restructuring provisions in 2019 were related to accrued severance for the associates whose positions will be eliminated.

In 2018, additions to restructuring provisions of $13 million were related to initiatives aimed at improving the efficiency and agility of Alcon's operating model.

In 2017, no additions to restructuring provisions were recorded. Alcon continued initiatives to realign its operations to focus on the surgical and vision care business after the opthamology pharmaceutical business transfer to the Novartis Innovative Medicines Division.

XML

Other current assets

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Other current assets

Other current assets

The following table provides details related to Other current assets as of December 31, 2019 and 2018:

($ millions)	2019	2018
Current portion of long-term financial investments measured at FVPL	33	31
Current portion of long-term receivables from customers	122	133
Current portion of minimum lease payments from finance lease agreements	46	57
Prepaid expenses	89	46
Other receivables, security deposits and current assets	147	52
Derivative financial instruments	1	—
VAT receivable	64	68
Total other current assets	502	387

XML

Deferred tax assets and liabilities

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Deferred tax assets and liabilities

Deferred tax assets and liabilities

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards		Other assets, provision and accruals		Total
Gross deferred tax assets at December 31, 2018	12				125		262		39		235		673
Gross deferred tax liabilities at December  31, 2018	(94	)	(1,403	)	(2	)	(14	)			(18	)	(1,531	)
Net deferred tax balance at December  31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
At December 31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
(Charged)/credited to income	(71	)	(194	)	18		111		50		(36	)	(122	)
Credited to equity											25		25
Credited to other comprehensive income					11						5		16
Impact of business combinations			(121	)					28				(93	)
Other movements	(6	)	11		(11	)	(11	)	(7	)	24		—
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)
Gross deferred tax assets at December 31, 2019	13		6		151		371		110		281		932
Gross deferred tax liabilities at December 31, 2019	(172	)	(1,713	)	(10	)	(23	)	—		(46	)	(1,964	)
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)

The below table presents the Net deferred tax balance as of December 31, 2019 after offsetting $578 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2019
Deferred tax assets	354
Deferred tax liabilities	(1,386	)
Net deferred tax balance	(1,032	)

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards	Other assets, provisions and accruals		Total
Gross deferred tax assets at January 1, 2018	10				121		169		18	232		550
Gross deferred tax liabilities at January 1, 2018	(69	)	(1,531	)	(7	)	(32	)		(25	)	(1,664	)
Net deferred tax balance at January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
At January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
Credited/(charged) to income	(23	)	212		13		82		9	14		307
Charged to equity										(2	)	(2	)
Charged to other comprehensive income					(2	)						(2	)
Impact of business combinations			(78	)					12			(66	)
Other movements			(6	)	(2	)	29			(2	)	19
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)
Gross deferred tax assets at December 31, 2018	12				125		262		39	235		673
Gross deferred tax liabilities at December 31, 2018	(94	)	(1,403	)	(2	)	(14	)		(18	)	(1,531	)
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)

The below table presents the Net deferred tax balance as of December 31, 2018 after offsetting $3 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2018
Deferred tax assets	670
Deferred tax liabilities	(1,528	)
Net deferred tax balance	(858	)

The below table presents deferred tax assets and deferred tax liabilities expected to have an impact on current taxes payable after more than twelve months.

($ billions)	At December 31, 2019	At December 31, 2018
Deferred tax assets	0.6	0.3
Deferred tax liabilities	1.8	1.5

For foreign unremitted earnings retained by consolidated entities for reinvestment, which amounted to $7 billion as of December 31, 2019, no provision is made for income taxes that would be payable upon the distribution of these earnings. If these earnings were remitted, an income tax charge could result based on the tax statutes currently in effect.

Temporary differences on which no deferred tax has been provided as they are permanent in nature relate to goodwill from acquisitions and amounted to $9 billion as of December 31, 2019 and 2018.

The gross value of tax loss carry forwards capitalized as deferred tax assets amount to $521 million (2018: $146 million), of which $33 million expire in five years and $488 million expire in more than five years. All tax loss carry forwards have been capitalized as deferred tax assets in 2019 as it is probable that sufficient taxable income will be available for the foreseeable future.

No tax losses carried forward have expired in 2019, 2018 or 2017.

Swiss tax reform

On June 30, 2019, Swiss voters approved the Swiss Tax Reform and Old Age Insurance financing bill ("Swiss tax reform"). As a result, the corporate income tax rate applicable to Alcon’s Swiss profits as of January 1, 2020 will increase from approximately 9.4% in 2019 to approximately 14.2% beginning in 2020. This change resulted in a non-cash increase in tax expense of $304 million related to the re-measurement of Swiss deferred tax assets and liabilities in 2019.

US tax reform

On December 22, 2017, the US enacted tax reform legislation (Tax Cuts and Jobs Act), which among other provisions, reduced the US corporate tax rate from 35% to 21%, effective January 1, 2018. This required a revaluation of the deferred tax assets and liabilities and a portion of current tax payables to the newly enacted tax rates at the date of enactment. This resulted in the recognition of a $413 million credit to income and an $18 million charge to equity in 2017.

XML

Selected accounting policies (Tables)

12 Months Ended

Dec. 31, 2019

Disclosure of notes and other explanatory information [Abstract]

Disclosure of useful lives for property, plant and equipment

The following table shows the respective useful lives for property, plant and equipment:

	Useful life
Buildings	20 to 40 years
Machinery and other equipment
Machinery and equipment	7 to 20 years
Furniture and vehicles	5 to 10 years
Computer hardware	3 to 7 years

The following table summarizes the movements of property, plant & equipment during 2019:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2019	60		1,527		657		2,646		4,890
Additions(1)			11		514		82		607
Impact of business combinations							1		1
Disposals and derecognitions(2)			(17	)	(1	)	(161	)	(179	)
Transfers with former parent			4		2		29		35
Reclassifications for assets placed in service			104		(417	)	313		—
Other reclassifications	(27	)							(27	)
Currency translation effects			(1	)			(4	)	(5	)
December 31, 2019	33		1,628		755		2,906		5,322
Accumulated depreciation
January 1, 2019	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Depreciation charge			(73	)			(194	)	(267	)
Impairment charge					(1	)	(7	)	(8	)
Disposals and derecognitions(2)			14				151		165
Transfers with former parent			(2	)			(15	)	(17	)
Other reclassifications	7								7
Currency translation effects			1						1
December 31, 2019	—		(618	)	(8	)	(1,583	)	(2,209	)
Net book value at December 31, 2019	33		1,010		747		1,323		3,113

(1) Includes $56 million in non-cash additions.

(2) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2019, commitments for purchases of property, plant & equipment were $212 million. There were no capitalized borrowing costs.

The following table summarizes the movements of property, plant and equipment during 2018:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2018	53		1,386		503		2,506		4,448
Additions			4		468		52		524
Impact of business combinations							1		1
Disposals and derecognitions(1)			(16	)			(71	)	(87	)
Reclassifications and transfers with former parent	10		252		(302	)	203		163
Reclassification to right-of-use assets(2)			(86	)					(86	)
Currency translation effects	(3	)	(13	)	(12	)	(45	)	(73	)
December 31, 2018	60		1,527		657		2,646		4,890
Accumulated depreciation
January 1, 2018	(3	)	(447	)			(1,438	)	(1,888	)
Depreciation charge			(70	)			(169	)	(239	)
Impairment charge					(1	)	(1	)	(2	)
Disposals and derecognitions(1)			15				72		87
Transfers with former parent	(4	)	(69	)	(6	)	(12	)	(91	)
Reclassification to right-of-use assets(2)			7						7
Currency translation effects			6				30		36
December 31, 2018	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Net book value at December 31, 2018	53		969		650		1,128		2,800

(1) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

(2)

The December 31, 2018 balance previously reported for a finance lease asset of $79 million has been reclassified from "Property, Plant, & Equipment" to "Right-of-use assets".

Disclosure of useful lives for intangible assets and location in combined income statement

The following table shows the respective useful lives for available-for-use intangible assets and the location in the consolidated income statements in which the respective amortization and any potential impairment charge is recognized:

	Useful life	Income statement location for amortization and impairment charges
Currently marketed products	5 to 20 years	"Cost of net sales"
Marketing know-how	25 years	"Cost of net sales"
Technologies	10 to 20 years	"Cost of net sales" or "Research and Development"
Other (including software)	3 to 10 years	In the respective functional expense
Alcon brand name	Not amortized, indefinite useful life	"Other expense"

XML

Property, plant and equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property, plant and equipment [abstract]

Disclosure of detailed information about property, plant and equipment

The following table shows the respective useful lives for property, plant and equipment:

	Useful life
Buildings	20 to 40 years
Machinery and other equipment
Machinery and equipment	7 to 20 years
Furniture and vehicles	5 to 10 years
Computer hardware	3 to 7 years

The following table summarizes the movements of property, plant & equipment during 2019:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2019	60		1,527		657		2,646		4,890
Additions(1)			11		514		82		607
Impact of business combinations							1		1
Disposals and derecognitions(2)			(17	)	(1	)	(161	)	(179	)
Transfers with former parent			4		2		29		35
Reclassifications for assets placed in service			104		(417	)	313		—
Other reclassifications	(27	)							(27	)
Currency translation effects			(1	)			(4	)	(5	)
December 31, 2019	33		1,628		755		2,906		5,322
Accumulated depreciation
January 1, 2019	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Depreciation charge			(73	)			(194	)	(267	)
Impairment charge					(1	)	(7	)	(8	)
Disposals and derecognitions(2)			14				151		165
Transfers with former parent			(2	)			(15	)	(17	)
Other reclassifications	7								7
Currency translation effects			1						1
December 31, 2019	—		(618	)	(8	)	(1,583	)	(2,209	)
Net book value at December 31, 2019	33		1,010		747		1,323		3,113

(1) Includes $56 million in non-cash additions.

(2) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2019, commitments for purchases of property, plant & equipment were $212 million. There were no capitalized borrowing costs.

The following table summarizes the movements of property, plant and equipment during 2018:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2018	53		1,386		503		2,506		4,448
Additions			4		468		52		524
Impact of business combinations							1		1
Disposals and derecognitions(1)			(16	)			(71	)	(87	)
Reclassifications and transfers with former parent	10		252		(302	)	203		163
Reclassification to right-of-use assets(2)			(86	)					(86	)
Currency translation effects	(3	)	(13	)	(12	)	(45	)	(73	)
December 31, 2018	60		1,527		657		2,646		4,890
Accumulated depreciation
January 1, 2018	(3	)	(447	)			(1,438	)	(1,888	)
Depreciation charge			(70	)			(169	)	(239	)
Impairment charge					(1	)	(1	)	(2	)
Disposals and derecognitions(1)			15				72		87
Transfers with former parent	(4	)	(69	)	(6	)	(12	)	(91	)
Reclassification to right-of-use assets(2)			7						7
Currency translation effects			6				30		36
December 31, 2018	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Net book value at December 31, 2018	53		969		650		1,128		2,800

(1) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

(2)

The December 31, 2018 balance previously reported for a finance lease asset of $79 million has been reclassified from "Property, Plant, & Equipment" to "Right-of-use assets".

XML

Equity-based compensation - Additional information (Details) $ / shares in Units, shares in Thousands, $ in Millions		3 Months Ended	9 Months Ended	12 Months Ended
	Apr. 08, 2019 shares	Mar. 31, 2020 metric	Dec. 31, 2019 USD ($) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) shares $ / shares	Dec. 31, 2017 USD ($) shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Equity-based compensation expense | $				$ 114	$ 93	$ 71
Accrued share-based payments | $			$ 10	$ 10	$ 6
Number of awards issued/granted (in shares)	4,200		700
Number of awards outstanding (in shares)	4,222		4,742	4,742	3,443	2,800
Number of awards vested (in shares)			108		814
Number of awards forfeited (in shares)			114		208
Remaining weighted-average vesting period				1 year 6 months
Chief executive officer [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent paid in cash			50.00%	50.00%
Percent paid in equity shares			50.00%	50.00%
Top leaders [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Percent paid in cash			70.00%	70.00%
Percent paid in equity shares			30.00%	30.00%
Long-term Incentive Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Vesting period				3 years
Number of metrics | metric		4
Restricted awards [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of awards issued/granted (in shares)			625
Vesting period				3 years
Novartis equity plan select, outside North America [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of awards issued/granted (in shares)					141
Weighted average share price (in dollars per share) | $ / shares					$ 86.2
Novartis equity plan select, North America [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of awards issued/granted (in shares)					689
Weighted average share price (in dollars per share) | $ / shares					$ 81.4
Minimum [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Share savings plan holding period				3 years
Minimum [member] | Long-term Incentive Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Target incentive percent of base salary				30.00%
Payout percent				0.00%
Maximum [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Share savings plan holding period				5 years
Maximum [member] | Long-term Incentive Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Target incentive percent of base salary				280.00%
Payout percent				200.00%

XML

Inventories (Tables)

12 Months Ended

Dec. 31, 2019

Inventories [Abstract]

Disclosure of details of inventories

($ millions)	2019	2018
Raw material, consumables	286	334
Work in progress	101	127
Finished products	1,118	979
Total inventories	1,505	1,440

XML

Post-employment benefits for associates - Sensitivity analysis (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage of reasonably possible increase in actuarial assumption	0.25%
Percentage of reasonably possible decrease in actuarial assumption	0.25%
Increase (decrease) in defined benefit obligation due to increase in actuarial assumption	$ (43)
Increase (decrease) in defined benefit obligation due to decrease in actuarial assumption	$ 46
Life expectancy [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Duration of reasonably possible increase in actuarial assumption	1 year
Increase (decrease) in defined benefit obligation due to increase in actuarial assumption	$ 32
Rate of pension increase [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage of reasonably possible increase in actuarial assumption	0.25%
Percentage of reasonably possible decrease in actuarial assumption	0.25%
Increase (decrease) in defined benefit obligation due to increase in actuarial assumption	$ 15
Increase (decrease) in defined benefit obligation due to decrease in actuarial assumption	$ (27)
Interest on savings account [Member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage of reasonably possible increase in actuarial assumption	0.25%
Percentage of reasonably possible decrease in actuarial assumption	0.25%
Increase (decrease) in defined benefit obligation due to increase in actuarial assumption	$ 2
Increase (decrease) in defined benefit obligation due to decrease in actuarial assumption	$ (2)
Rate of salary increase [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Percentage of reasonably possible increase in actuarial assumption	0.25%
Percentage of reasonably possible decrease in actuarial assumption	0.25%
Increase (decrease) in defined benefit obligation due to increase in actuarial assumption	$ 6
Increase (decrease) in defined benefit obligation due to decrease in actuarial assumption	$ (6)

XML

Trade receivables - Trade receivables by currency (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of geographical areas [line items]
Total trade receivables, net	$ 1,390	$ 1,253
US dollar (USD)
Disclosure of geographical areas [line items]
Total trade receivables, net	463	449
Euro (EUR)
Disclosure of geographical areas [line items]
Total trade receivables, net	243	215
Japanese yen (JPY)
Disclosure of geographical areas [line items]
Total trade receivables, net	168	152
Chinese yuan (CNY)
Disclosure of geographical areas [line items]
Total trade receivables, net	102	74
Indian rupee (INR)
Disclosure of geographical areas [line items]
Total trade receivables, net	33	34
Canadian dollar (CAD)
Disclosure of geographical areas [line items]
Total trade receivables, net	30	30
Australian dollar (AUD)
Disclosure of geographical areas [line items]
Total trade receivables, net	29	27
British pound (GBP)
Disclosure of geographical areas [line items]
Total trade receivables, net	24	25
Russian ruble (RUB)
Disclosure of geographical areas [line items]
Total trade receivables, net	34	24
South Korean won (KRW)
Disclosure of geographical areas [line items]
Total trade receivables, net	29	23
Other currencies
Disclosure of geographical areas [line items]
Total trade receivables, net	$ 235	$ 200

XML

Significant transactions (Details) - USD ($)			12 Months Ended
	Apr. 02, 2019	Mar. 13, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Sep. 23, 2019	Apr. 09, 2019	Dec. 19, 2018	Dec. 17, 2018	Sep. 20, 2017
Disclosure of detailed information about business combination [line items]
Financial debts			$ 3,479,000,000	$ 47,000,000
Cash paid for intercompany transactions related to spin-off	$ 3,100,000,000
Net assets							$ 20,000,000,000.0
Net identifiable assets acquired			418,000,000	287,000,000	$ 123,000,000
Deferred tax assets			28,000,000	12,000,000	8,000,000
Cash and cash equivalents			6,000,000	5,000,000	1,000,000
Deferred tax liabilities recognised as of acquisition date			121,000,000	78,000,000	64,000,000
Goodwill			6,000,000	4,000,000	2,000,000
Consideration paid (received)			$ 283,000,000	$ 239,000,000	$ 70,000,000
PowerVision, Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired		100.00%
Consideration transferred, acquisition-date fair value		$ 424,000,000
Cash transferred		289,000,000
Contingent liabilities recognised as of acquisition date		135,000,000
Net identifiable assets acquired		418,000,000
Identifiable intangible assets recognised as of acquisition date		505,000,000
Deferred tax liabilities recognised as of acquisition date		93,000,000
Other net assets recognised as of acquisition date		6,000,000
Goodwill		6,000,000
Consideration paid (received)		$ 283,000,000
TrueVision Systems, Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired								100.00%
Consideration transferred, acquisition-date fair value								$ 146,000,000
Cash transferred								110,000,000
Contingent liabilities recognised as of acquisition date								36,000,000
Net identifiable assets acquired								144,000,000
Identifiable intangible assets recognised as of acquisition date								172,000,000
Deferred tax liabilities recognised as of acquisition date								29,000,000
Other net assets recognised as of acquisition date								1,000,000
Goodwill								$ 2,000,000
Tear Film Innovations, Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired									100.00%
Consideration transferred, acquisition-date fair value									$ 145,000,000
Cash transferred									79,000,000
Contingent liabilities recognised as of acquisition date									66,000,000
Net identifiable assets acquired									143,000,000
Identifiable intangible assets recognised as of acquisition date									174,000,000
Cash and cash equivalents									5,000,000
Deferred tax liabilities recognised as of acquisition date									37,000,000
Other net assets recognised as of acquisition date									1,000,000
Goodwill									$ 2,000,000
ClarVista Medical, Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired										100.00%
Consideration transferred, acquisition-date fair value										$ 125,000,000
Cash transferred										71,000,000
Contingent liabilities recognised as of acquisition date										54,000,000
Net identifiable assets acquired										123,000,000
Identifiable intangible assets recognised as of acquisition date										178,000,000
Deferred tax assets										8,000,000
Cash and cash equivalents										1,000,000
Deferred tax liabilities recognised as of acquisition date										64,000,000
Goodwill										$ 2,000,000
Senior Notes [Member]
Disclosure of detailed information about business combination [line items]
Notional amount						$ 2,000,000,000.0
Senior notes due 2026 [member]
Disclosure of detailed information about business combination [line items]
Notional amount						$ 500,000,000
Borrowings, interest rate						2.75%
Senior notes due 2029 [member]
Disclosure of detailed information about business combination [line items]
Notional amount						$ 1,000,000,000.0
Borrowings, interest rate						3.00%
Senior notes due 2049 [member]
Disclosure of detailed information about business combination [line items]
Notional amount						$ 500,000,000
Borrowings, interest rate						3.80%
Bridge and other term loans [member]
Disclosure of detailed information about business combination [line items]
Proceeds from borrowings	$ 3,200,000,000

XML

Provisions and other current liabilities - Provisions and other current liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Taxes other than income taxes	$ 81	$ 57
Restructuring provisions	28	8
Accrued expenses for goods and services received but not invoiced	79	71
Accruals for royalties	10	6
Accruals for deductions from revenue	212	194	$ 213	$ 182
Accruals for compensation and benefits including social security	382	363
Deferred income	97	94
Provisions for product liabilities, governmental investigations and other legal matters	0	42
Accrued share-based payments	10	6
Accrued interest on financial debts	19	0
Contingent considerations	35	19
Other payables	85	20
Total provisions and other current liabilities	$ 1,038	$ 880

XML

Description of business (Details) $ in Millions	Dec. 31, 2019 USD ($) segment	Apr. 09, 2019
Corporate Information And Statement Of IFRS Compliance [Abstract]
Number of reporting segments | segment	2
Shares received in spin-off		0.2
Total asset and net sales threshold | $	$ 5

XML

Trade receivables - Components of trade receivables (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Subclassifications of assets, liabilities and equities [abstract]
Total gross trade receivables	$ 1,438	$ 1,307
Provisions for doubtful trade receivables	(48)	(54)	$ (77)	$ (55)
Total trade receivables, net	$ 1,390	$ 1,253

XML

Financial instruments - additional disclosures - Details of net financial assets and financial liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	$ 2,949	$ 2,301
Total financial liabilities	4,896	1,113
Net financial assets and financial liabilities	(1,947)	1,188
Financial liabilities - measured at amortized cost or cost [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	4,637	951
Financial liabilities - measured at amortized cost or cost [member] | Financial debts [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	245	47
Financial liabilities - measured at amortized cost or cost [member] | Lease liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	61	0
Financial liabilities - measured at amortized cost or cost [member] | Trade payables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	833	663
Financial liabilities - measured at amortized cost or cost [member] | Payables to former parent [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	0	85
Financial liabilities - measured at amortized cost or cost [member] | Other financial liabilities to former parent [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	0	67
Financial liabilities - measured at amortized cost or cost [member] | Current financial liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	1,139	862
Financial liabilities - measured at amortized cost or cost [member] | Financial debts [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	3,218	0
Financial liabilities - measured at amortized cost or cost [member] | Lease liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	280	89
Financial liabilities - measured at amortized cost or cost [member] | Non-current financial liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	3,498	89
Financial liabilities - measured at FVPL [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	259	162
Financial liabilities - measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	243	162
Financial liabilities - measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	16	0
Cash in current accounts [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	392	227
Cash held in time deposits and money market funds [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	430	0
Cash and cash equivalents [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	822	227
Financial assets - measured at fair value through other comprehensive income (FVOCI) [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	31	19
Financial assets - measured at fair value through other comprehensive income (FVOCI) [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	31	19
Financial assets - measured at amortized costs [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	2,034	1,957
Financial assets - measured at amortized costs [member] | Trade receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	1,390	1,253
Financial assets - measured at amortized costs [member] | Receivables from former parent [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	0	20
Financial assets - measured at amortized costs [member] | Income tax receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	17	33
Financial assets - measured at amortized costs [member] | Other financial receivables from former parent [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	0	39
Financial assets - measured at amortized costs [member] | Other current assets (excluding prepaid expenses and other current assets measured at FVPL) [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	379	310
Financial assets - measured at amortized costs [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	136	164
Financial assets - measured at amortized costs [member] | Non-current minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	78	91
Financial assets - measured at amortized costs [member] | Long-term loans, advances, security deposits and warrant options [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	34	47
Financial assets - measured at fair value through profit and loss (FVPL) [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	62	98
Financial assets - measured at fair value through profit and loss (FVPL) [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	28	67
Financial assets - measured at fair value through profit and loss (FVPL) [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	33	31
Financial assets - measured at fair value through profit and loss (FVPL) [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets	1	$ 0
Senior notes due 2026, 2029, and 2049 [member] | Financial debts [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities	1,979
Financial liabilities, at fair value	$ 2,049

XML

Financial instruments - additional disclosures - Activity in level 3 financial liabilities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Reconciliation of changes in fair value measurement, liabilities [abstract]
Balance as of January 1	$ (1,113)
Balance as of December 31	(4,896)	$ (1,113)
Contingent consideration liabilities [member]
Reconciliation of changes in fair value measurement, liabilities [abstract]
Additions	(135)	(102)
Adjustments for changes in assumptions		62
Level 3 [member] | Contingent consideration liabilities [member]
Reconciliation of changes in fair value measurement, liabilities [abstract]
Balance as of January 1	(162)	(113)
Additions	(135)	(102)
Accretion for passage of time	(21)	(9)
Adjustments for changes in assumptions	75	62
Payments	0	0
Balance as of December 31	$ (243)	$ (162)

XML

Trade receivables

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Trade receivables

Trade receivables

The following table provides details related to Trade receivables as of December 31, 2019 and 2018:

($ millions)	2019		2018
Total gross trade receivables	1,438		1,307
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

The following table summarizes the movement in the provision for doubtful trade receivables:

($ millions)	2019		2018		2017
January 1	(54	)	(77	)	(55	)
Transfers with former parent	—		4		—
Provisions for doubtful trade receivables charged to the consolidated income statement	(17	)	(17	)	(28	)
Utilization of provisions for doubtful trade receivables	7		16		2
Reversal of provisions for doubtful trade receivables	15		16		6
Currency translation effects	1		4		(2	)
December 31	(48	)	(54	)	(77	)

The following sets forth the trade receivables that are not overdue as specified in the payment terms and conditions established with Alcon's customers, as well as an analysis of overdue amounts and related provisions for doubtful trade receivables:

($ millions)	2019		2018
Not overdue	1,135		1,018
Past due for not more than one month	118		118
Past due for more than one month but less than three months	81		70
Past due for more than three months but less than six months	47		34
Past due for more than six months but less than one year	21		20
Past due for more than one year	36		47
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

Trade receivable balances include sales to wholesalers, retailers, doctor groups, private health systems, government agencies, pharmacy benefit managers and government-supported healthcare systems.

We consider our doubtful debt provisions to be adequate. The majority of the outstanding trade receivables from Greece, Italy, Portugal, Spain, Brazil, Russia, Turkey, Saudi Arabia, and Argentina (the closely monitored countries) are due directly from local governments or from government-funded entities except for Russia, Brazil, and Turkey. We evaluate trade receivables in these countries for potential collection risk. Should there be a substantial deterioration in our economic exposure with respect to those countries, we may increase our level of provisions by updating our expected loss provision or may change the terms of trade on which we operate.

The following table shows the gross trade receivables balance from these closely monitored countries as of December 31, 2019 and 2018, the amounts that are past due for more than one year and the related amount of the provisions for doubtful trade receivables that have been recorded:

($ millions)	2019		2018
Total balance of gross trade receivables from closely monitored countries	209		216
Past due for more than one year	10		14
Provisions for doubtful trade receivables	(13	)	(16	)

Trade receivables include amounts denominated in the following major currencies:

($ millions)	2019	2018
US dollar (USD)	463	449
Euro (EUR)	243	215
Japanese yen (JPY)	168	152
Chinese yuan (CNY)	102	74
Indian rupee (INR)	33	34
Canadian dollar (CAD)	30	30
Australian dollar (AUD)	29	27
British pound (GBP)	24	25
Russian ruble (RUB)	34	24
South Korean won (KRW)	29	23
Other currencies	235	200
Total trade receivables, net	1,390	1,253

XML

Goodwill and intangible assets

12 Months Ended

Dec. 31, 2019

Intangible Assets [Abstract]

Goodwill and intangible assets

Goodwill and intangible assets

The following table summarizes the movements of goodwill and other intangible assets in 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2019	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Impact of business combinations	6		505										505
Additions			7								125		132
Reclassifications	—	—	(33	)	—		—		—		33		—
Disposals and derecognitions(1)											(41	)	(41	)
December 31, 2019	8,905	2,980	728		5,369		4,440		5,960		611		20,088
Accumulated amortization
January 1, 2019			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Amortization charge					(508	)	(250	)	(240	)	(86	)	(1,084	)
Accumulated amortization on disposals and derecognitions(1)											40		40
December 31, 2019			(3	)	(4,692	)	(2,842	)	(2,146	)	(174	)	(9,857	)
Net book value at December 31, 2019	8,905	2,980	725		677		1,598		3,814		437		10,231

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,544		721	677	374	3,814	184	5,770
Vision Care	4,361		4		1,224		253	1,481
Not allocated to segment(1)		2,980						2,980
Net book value at December 31, 2019	8,905	2,980	725	677	1,598	3,814	437	10,231

(1) Alcon brand name

The Surgical and Vision Care segments' cash generating units, to which goodwill is allocated are comprised of a group of smaller cash generating units. The valuation method of the recoverable amount of the cash generating units, to which goodwill is allocated, is based on the fair value less costs of disposal.

The Alcon brand name is an intangible asset with an indefinite life. The intangible asset is not allocated to the segments as it is used to market the Alcon-branded products of both the Surgical and Vision Care businesses. Net sales of these products together are the grouping of cash generating units, which is used to determine the recoverable amount. The valuation method is based on the fair value less costs of disposal.

The following assumptions are used in the calculations for the recoverable amounts of goodwill and the Alcon brand name:

(As a percentage)	Surgical	Vision Care
Terminal growth rate	3.0	3.0
Discount rate (post-tax)	7.5	7.0

The Surgical and Vision Care segments' terminal growth rate assumption of 3% takes into consideration how the industry is expected to grow, analysis of industry expert reports, and expected relevant changes in demographics for various markets. The discount rates for both Surgical and Vision Care segments consider Alcon's weighted average cost of capital, adjusted to approximate the weighted average cost of capital of comparable market participants. Both the terminal growth rate and the discount rate are consistent with external sources of information.

The fair value less costs of disposal, for all groupings of cash generating units containing goodwill or indefinite life intangible assets, is reviewed for the impact of reasonably possible changes in key assumptions. In particular Alcon considered an increase in the discount rate, a decrease in the terminal growth rate and certain negative impacts on the forecasted cash flows. These reasonably possible changes in key assumptions did not indicate an impairment.

Refer to "Impairment of goodwill, Alcon brand name and definite lived intangible assets" in Note 3 in these Consolidated Financial Statements for additional disclosures on how Alcon performs goodwill and intangible asset impairment testing.

The following table summarizes the movements of goodwill and other intangible assets in 2018:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2018	8,895	2,980	242		5,368		4,094		5,960		370		19,014
Impact of business combinations	4						346						346
Additions			71		1						125		197
Disposals and derecognitions(1)			(64	)							(1	)	(65	)
December 31, 2018	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Accumulated amortization
January 1, 2018			(58	)	(3,635	)	(2,008	)	(1,668	)	(104	)	(7,473	)
Amortization charge					(510	)	(247	)	(238	)	(24	)	(1,019	)
Accumulated amortization on disposals and derecognitions(1)			57										57
Impairment charge			(2	)	(39	)	(337	)					(378	)
December 31, 2018			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Net book value at December 31, 2018	8,899	2,980	246		1,185		1,848		4,054		366		10,679

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2018:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,538		216	1,185	438	4,054	160	6,053
Vision Care	4,361		30		1,410		206	1,646
Not allocated to segment		2,980						2,980
December 31, 2018	8,899	2,980	246	1,185	1,848	4,054	366	10,679

Intangible asset impairment charges

The following table shows the intangible asset impairment charges for 2019 and 2018:

($ millions)	2019	2018
Surgical	—	(378	)
Vision Care	—	—
Total	—	(378	)

There were no intangible asset impairment charges in 2019. For the year 2018, there was a full impairment of $337 million related to the write-down of CyPass within the Surgical segment due to a voluntary market withdrawal, and an impairment of $39 million related to the write-down of the Optonol technologies also within the Surgical segment.

XML

Financial instruments - additional disclosures

12 Months Ended

Dec. 31, 2019

Financial Instruments [Abstract]

Financial instruments - additional disclosures

Financial instruments - additional disclosures

The below table provides detail related to financial instruments as of December 31, 2019 and 2018.

($ millions)	Note	2019		2018
Cash and cash equivalents
Cash in current accounts		392		227
Cash held in time deposits and money market funds		430		—
Total Cash and cash equivalents		822		227
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	31		19
Total financial assets - measured at FVOCI		31		19
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,390		1,253
Receivables from former parent	25	—		20
Income tax receivables		17		33
Other financial receivables from former parent	25	—		39
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	379		310
Long-term receivables from customers	12	136		164
Non-current minimum lease payments from finance lease agreements	12	78		91
Long-term loans, advances, and security deposits	12	34		47
Total financial assets - measured at amortized costs		2,034		1,957
Financial assets - measured at fair value through profit and loss ("FVPL")
Current portion of long-term financial investments	15	33		31
Derivative fInancial instruments	15	1		—
Long-term financial investments	12	28		67
Total financial assets - measured at FVPL		62		98
Total financial assets		2,949		2,301
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	245		47
Lease liabilities	16	61		—
Trade payables		833		663
Payables to former parent	25	—		85
Other financial liabilities to former parent	25	—		67
Total current financial liabilities - measured at amortized cost or cost		1,139		862
Non-current financial liabilities
Financial debts	17	3,218		—
Lease liabilities	16	280		89
Total non-current financial liabilities - measured at amortized cost or cost		3,498		89
Total financial liabilities - measured at amortized cost or cost		4,637		951
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	243		162
Derivative financial instruments	17	16		—
Total financial liabilities - measured at FVPL		259		162
Total financial liabilities		4,896		1,113
Net financial assets and financial liabilities		(1,947	)	1,188

(1) The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029 and 2049 notes recorded in Non-current financial debts with a fair value of $2,049 million and carrying value of $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.

Fair value by hierarchy

As required by IFRS, financial assets and liabilities recorded at fair value in the Consolidated Financial Statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. There are three hierarchical levels, based on an increasing amount of judgment associated with the inputs to derive fair value for these financial assets and liabilities, which are as follows:

Financial assets and liabilities carried at Level 1 fair value hierarchy are listed in active markets.

Financial assets and liabilities carried at Level 2 fair value hierarchy are valued using corroborated market data.

As of December 31, 2019 , Level 1 financial assets include money market funds . There were no financial liabilities carried at Level 1 fair value, and Level 2 financial assets and liabilities include derivative financial instruments. As of December 31, 2018, there were no financial assets or liabilities carried at Level 1 fair value or Level 2 fair value.

Investments in money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The investments are classified as Cash & cash equivalents within our Consolidated Balance Sheets.

Level 3 inputs are unobservable for the financial asset or liability. The financial assets and liabilities generally included in Level 3 fair value hierarchy are equity securities and convertible notes receivable measured at FVOCI, and fund investments, options to acquire private companies, and contingent consideration liabilities measured at FVPL.

The following tables summarize financial assets and liabilities measured at fair value on a recurring basis or at amortized cost or cost as of December 31, 2019 and 2018.

	December 31, 2019
($ millions)	Level 1	Level 2		Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—		31		—		31
Long-term financial investments measured at FVPL	—	—		28		—		28
Long-term receivables from customers	—	—		—		136		136
Non-current minimum lease payments from finance lease agreements	—	—		—		78		78
Long-term loans, advances, and security deposits	—	—		—		34		34
Total non-current financial assets	—	—		59		248		307
Current financial assets
Money market funds	120	—		—		—		120
Current portion of long-term financial investments measured at FVPL(1)	—	—		33		—		33
Current portion of long-term receivables from customers(1)	—	—		—		122		122
Current portion of minimum lease payments from finance lease agreements(1)	—	—		—		46		46
Other receivables, security deposits and current assets(1)	—	—		—		147		147
VAT receivables(1)	—	—		—		64		64
Derivative financial instruments(1)	—	1		—		—		1
Total current financial assets	120	1		33		379		533
Total financial assets at fair value and amortized cost or cost	120	1		92		627		840
Financial liabilities
Contingent consideration liabilities	—	—		(243	)	—		(243	)
Non-current financial debt	—	—		—		(3,218	)	(3,218	)
Current financial debt	—	—		—		(245	)	(245	)
Derivative financial instruments	—	(16	)	—		—		(16	)
Total financial liabilities at fair value and amortized cost	—	(16	)	(243	)	(3,463	)	(3,722	)

(1) Recorded in Other current assets.

	December 31, 2018
($ millions)	Level 1	Level 2	Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—	19		—		19
Long-term financial investments measured at FVPL	—	—	67		—		67
Long-term receivables from customers	—	—	—		164		164
Non-current minimum lease payments from finance lease agreements	—	—	—		91		91
Long-term loans, advances, and security deposits	—	—	—		47		47
Total non-current financial assets	—	—	86		302		388
Current financial assets(1)
Current portion of long-term financial investments measured at FVPL	—	—	31		—		31
Current portion of long-term receivables from customers	—	—	—		133		133
Current portion of minimum lease payments from finance lease agreements	—	—	—		57		57
Other receivables, security deposits and current assets	—	—	—		52		52
VAT receivables	—	—	—		68		68
Derivative financial instruments	—	—	—		—		—
Total current financial assets	—	—	31		310		341
Total financial assets at fair value and amortized cost or cost	—	—	117		612		729
Financial liabilities
Contingent consideration liabilities	—	—	(162	)	—		(162	)
Non-current financial debt	—	—	—		—		—
Current financial debt	—	—	—		(47	)	(47	)
Derivative financial instruments	—	—	—		—		—
Total financial liabilities at fair value and amortized cost	—	—	(162	)	(47	)	(209	)

(1) Current financial assets referenced in the above table are recorded in Other current assets.

There were no transfers of financial instruments between levels in the fair value hierarchy during the year ended December 31, 2019 and 2018.

Certain prior period amounts have been reclassified to reflect the inclusion of options to acquire private companies measured at FVPL in Level 3 of the fair value hierarchy to conform with current period presentation.

Level 3 financial instruments measured at fair value on a recurring basis

Financial assets

	Long-term financial investments measured at FVOCI				Financial investments measured at FVPL
($ millions)	2019		2018		2019		2018
Balance as of January 1(1)	19		26		98		78
Additions	17		11		34		92
Cash receipts and payments	—		—		(7	)	(5	)
Gains/(losses) recognized in consolidated statements of comprehensive (loss)/income	(7	)	(23	)	—		—
Unrealized gains/(losses) in consolidated income statements	—		—		(3	)	7
Amortization	—		—		(61	)	(74	)
Reclassification	2		5		—		—
Balance as of December 31	31		19		61		98

(1) January 1, 2018 balances reflected in this table are as adjusted for adoption of IFRS 9, Financial Instruments.

If the pricing parameters for the Level 3 input were to change for Long-term financial investments measured at FVOCI and Financial investments measured at FVPL by 10% positively or negatively, this would change the amount recorded in the 2019 Consolidated Statements of Comprehensive Loss by $3 million.

Financial liabilities

	Contingent consideration liabilities
($ millions)	2019		2018
Balance as of January 1	(162	)	(113	)
Additions	(135	)	(102	)
Accretion for passage of time	(21	)	(9	)
Adjustments for changes in assumptions	75		62
Payments	—		—
Balance as of December 31	(243	)	(162	)

Contingent consideration additions of $135 million relate to the acquisition of PowerVision, Inc. in March 2019 as described in Note 4 of these Consolidated Financial Statements. Adjustments for changes in assumptions of $75 million are primarily related to revised expectations for achievement of commercial milestones and changes in assumptions related to the expected timing of settlement for development milestones. As of December 31, 2019, the maximum remaining potential payments related to contingent consideration from business combinations is $510 million plus other amounts calculated as a percentage of commercial sales in cases where there is not a specified maximum contractual payment amount.

Changes in the contingent consideration liability balance for the same period in prior year included additions of $102 million related to the acquisitions as described in Note 4 to these Consolidated Financial Statements. Adjustments for changes in assumptions of $62 million are primarily related to revised expectations for achievement of milestones due to a product's voluntary market withdrawal.

Contingent consideration liabilities are reported in “Provisions & other non-current liabilities" and "Provisions & other current liabilities” based on the projected timing of settlement which is estimated to range from 2020 through 2029 for contingent consideration obligations as of December 31, 2019.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used

are, among others, the probability of success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration.

If the most significant parameters for the Level 3 input were to change by 10% positively or negatively, or where the probability of success is the most significant input parameter 10% were added or deducted from the applied probability of success, for contingent consideration payables, this would change the amounts recorded in the 2019 Consolidated Income Statements by $34 million and $32 million respectively.

Nature and extent of risks arising from financial instruments

Market risk

Alcon is exposed to market risk, primarily related to foreign currency exchange rates, interest rates and the market value of the investments of liquid funds. Alcon actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures. It is Alcon policy and practice to enter into a variety of derivative financial instruments to manage the volatility of these exposures and to enhance the yield on the investment of liquid funds. Alcon does not enter into any financial transactions containing a risk that cannot be quantified at the time the transaction is concluded. In addition, Alcon does not sell short assets it does not have, or does not know it will have, in the future. Alcon only sells existing assets or enters into transactions and future transactions (in the case of anticipatory hedges) that it confidently expects it will have in the future, based on past experience. In the case of liquid funds, Alcon writes call options on assets it has, or writes put options on positions it wants to acquire and has the liquidity to acquire. Alcon expects that any loss in value for these instruments generally would be offset by increases in the value of the underlying transactions.

Foreign currency exchange rate risk

Alcon uses the US Dollar as its reporting currency and is therefore exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs, and emerging market currencies. Fluctuations in the exchange rate between the US Dollar and other currencies can have a significant effect on both the Alcon’s results of operations, including reported sales and earnings, as well as on the reported value of our assets, liabilities and cash flows. This, in turn, may significantly affect the comparability of period-to-period results of operations.

Alcon manages its global currency exposure by engaging in hedging transactions where management deems appropriate (forward contracts and swaps). Specifically, Alcon enters into various contracts that reflect the changes in the value of foreign currency exchange rates to preserve the value of assets.

Interest rate risk

Alcon's exposure to cash flow interest rate risks arises mainly from non-current financial debts at variable rates. Alcon may enter into interest rate swap agreements, in which it exchanges periodic payments based on a notional amount and agreed-upon fixed and variable rate interests. If the interest rates had been higher / lower by 1%, the loss before taxes would have been higher / lower by $12 million from the impacts of interest expense and interest income based on the change in the interest rate.

Commodity price risk

Alcon has only a very limited exposure to price risk related to anticipated purchases of certain commodities used as raw materials by Alcon's businesses. A change in those prices may alter the gross margin of a specific business, but generally by not more than 10% of the margin and thus below Alcon's risk management tolerance levels. Accordingly, Alcon does not enter into significant forward and option contracts to manage fluctuations in prices of anticipated purchases.

Credit risk

Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, Alcon periodically assesses credit risk, assigns individual credit limits, and takes actions to mitigate credit risk where appropriate. For further information, refer to Note 14 of these Consolidated Financial Statements.

No customer accounted for 10% or more of Alcon's net sales in 2019, 2018, or 2017.

Liquidity risk

Liquidity risk is defined as the risk that Alcon could not be able to settle or meet its obligations on time or at a reasonable price. Alcon Treasury is responsible for liquidity, funding and settlement management. In addition, liquidity and funding risks, and related processes and policies, are overseen by management. Alcon manages its liquidity risk on a consolidated basis according to business needs, tax, capital or regulatory considerations, if applicable, through numerous sources of financing in order to maintain flexibility. Management monitors Alcon's net debt or liquidity position through rolling forecasts on the basis of expected cash flows. For further information on maturity of the contractual undiscounted cash flows for Alcon's borrowings and interest on borrowing, refer to Note 17 of these Consolidated Financial Statements.

XML

Equity-based compensation - Summary of non-vested share movements (Details) $ / shares in Units, shares in Thousands, $ in Thousands		9 Months Ended	12 Months Ended
	Apr. 08, 2019 USD ($) shares	Dec. 31, 2019 USD ($) shares $ / shares	Dec. 31, 2018 USD ($) shares $ / shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Non-vested shares at January 1 (in shares)		4,222	2,800
Granted (in shares)	4,200	700
Vested (in shares)		(108)	(814)
Forfeited (in shares)		(114)	(208)
Non-invested shares at December 31 (in shares)	4,222	4,742	3,443
Outstanding, beginning balance, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 74.4
Vested, weighted average fair value at grant date (in dollars per share) | $ / shares			93.0
Forfeited, weighted average fair value at grant date (in dollars per share) | $ / shares			80.4
Outstanding, ending balance, weighted average fair value at grant date (in dollars per share) | $ / shares		$ 51.2	$ 72.9
Fair value, beginning balance, non-vested | $		$ 212,367	$ 208,300
Fair value, vested | $		(5,432)	(75,702)
Fair value, forfeited | $		(5,734)	(16,723)
Fair value, ending balance, non-vested | $	$ 212,367	$ 243,020	$ 251,046
Restricted awards [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)		625
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares		$ 56.1
Fair value, granted | $		$ 35,037
Performance awards [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)		117
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares		$ 58.0
Fair value, granted | $		$ 6,782
Annual incentive [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			168
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 83.7
Fair value, granted | $			$ 14,062
Share savings plans [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			109
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 85.5
Fair value, granted | $			$ 9,320
Novartis equity plan select, North America [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			689
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 77.9
Fair value, granted | $			$ 53,673
Novartis equity plan select, outside North America [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			141
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 79.8
Fair value, granted | $			$ 11,252
Long-term performance plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			316
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 88.4
Fair value, granted | $			$ 27,934
Long-term relative performance plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			37
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 51.2
Fair value, granted | $			$ 1,894
Other share awards [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Granted (in shares)			205
Granted, weighted average fair value at grant date (in dollars per share) | $ / shares			$ 83.1
Fair value, granted | $			$ 17,036

XML

Trade receivables (Tables)

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Summary of trade receivables

The following table provides details related to Trade receivables as of December 31, 2019 and 2018:

($ millions)	2019		2018
Total gross trade receivables	1,438		1,307
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

Movement in the provision for doubtful trade receivables

The following table summarizes the movement in the provision for doubtful trade receivables:

($ millions)	2019		2018		2017
January 1	(54	)	(77	)	(55	)
Transfers with former parent	—		4		—
Provisions for doubtful trade receivables charged to the consolidated income statement	(17	)	(17	)	(28	)
Utilization of provisions for doubtful trade receivables	7		16		2
Reversal of provisions for doubtful trade receivables	15		16		6
Currency translation effects	1		4		(2	)
December 31	(48	)	(54	)	(77	)

Summary of trade receivables overdue status

The following sets forth the trade receivables that are not overdue as specified in the payment terms and conditions established with Alcon's customers, as well as an analysis of overdue amounts and related provisions for doubtful trade receivables:

($ millions)	2019		2018
Not overdue	1,135		1,018
Past due for not more than one month	118		118
Past due for more than one month but less than three months	81		70
Past due for more than three months but less than six months	47		34
Past due for more than six months but less than one year	21		20
Past due for more than one year	36		47
Provisions for doubtful trade receivables	(48	)	(54	)
Total trade receivables, net	1,390		1,253

Summary of trade receivables from closely monitored countries

The following table shows the gross trade receivables balance from these closely monitored countries as of December 31, 2019 and 2018, the amounts that are past due for more than one year and the related amount of the provisions for doubtful trade receivables that have been recorded:

($ millions)	2019		2018
Total balance of gross trade receivables from closely monitored countries	209		216
Past due for more than one year	10		14
Provisions for doubtful trade receivables	(13	)	(16	)

Summary of trade receivables by major currencies

Trade receivables include amounts denominated in the following major currencies:

($ millions)	2019	2018
US dollar (USD)	463	449
Euro (EUR)	243	215
Japanese yen (JPY)	168	152
Chinese yuan (CNY)	102	74
Indian rupee (INR)	33	34
Canadian dollar (CAD)	30	30
Australian dollar (AUD)	29	27
British pound (GBP)	24	25
Russian ruble (RUB)	34	24
South Korean won (KRW)	29	23
Other currencies	235	200
Total trade receivables, net	1,390	1,253

XML

Post-employment benefits for associates - Healthcare cost trend rate assumptions used for other post-employment benefits (Details) - Other post-employment benefit plans [member]	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of defined benefit plans [line items]
Healthcare cost trend rate assumed for next year	6.50%	7.00%	6.50%
Rate to which the cost trend rate is assumed to decline	4.50%	4.50%	4.50%

XML

Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Operating Segments [Abstract]

Disclosure of operating segments

Segmentation - Consolidated income statements

	Surgical		Vision Care		Company
($ millions)	2019	2018	2019	2018	2019		2018
Net sales to third parties	4,174	3,999	3,188	3,150	7,362		7,149
Sales to former parent	—	2	—	2	—		4
Other revenues	—	—	146	—	146		—
Net sales and other revenues	4,174	4,001	3,334	3,152	7,508		7,153
Segment contribution(1)	923	813	563	594	1,486		1,407
Amortization of intangible assets					(1,084	)	(1,019	)
Impairment charges on intangible assets					—		(378	)
General & administration (corporate)					(243	)	(206	)
Other (expense)/income, net					(346	)	(52	)
Operating (loss)					(187	)	(248	)
Interest expense					(113	)	(24	)
Other financial income & expense					(32	)	(28	)
(Loss) before taxes					(332	)	(300	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Total
($ millions)	2019		2018		2019		2018		2019		2018		2019		2018
Depreciation of property, plant & equipment	(112	)	(114	)	(155	)	(125	)	—		—		(267	)	(239	)
Depreciation of right-of-use assets	(42	)	—		(24	)	—		—		—		(66	)	—
Impairment charges on property, plant & equipment, net	(3	)	(1	)	(5	)	(1	)	—		—		(8	)	(2	)
Equity-based compensation(2)	(55	)	(45	)	(44	)	(36	)	(15	)	(12	)	(114	)	(93	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 reflects an estimate of the allocation for corporate functions in the historical period based on 2019 actual percentages.  

	Surgical		Vision Care		Company
($ millions)	2018	2017	2018	2017	2018		2017
Net sales to third parties	3,999	3,733	3,150	3,052	7,149		6,785
Sales to former parent	2	3	2	1	4		4
Other revenues	—	—	—	3	—		3
Net sales and other revenues	4,001	3,736	3,152	3,056	7,153		6,792
Segment contribution(1)	813	691	594	625	1,407		1,316
Amortization of intangible assets					(1,019	)	(1,033	)
Impairment charges on intangible assets					(378	)	(57	)
General & administration (corporate)					(206	)	(202	)
Other (expense)/income, net					(52	)	(101	)
Operating (loss)					(248	)	(77	)
Interest expense					(24	)	(27	)
Other financial income and expense					(28	)	(23	)
(Loss) before taxes					(300	)	(127	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Company
($ millions)	2018		2017		2018		2017		2018		2017		2018		2017
Depreciation of property, plant & equipment	(114	)	(106	)	(125	)	(109	)	—		—		(239	)	(215	)
Impairment charges on property, plant & equipment, net	(1	)	—		(1	)	—		—		—		(2	)	—
Equity-based compensation(2)	(45	)	(34	)	(36	)	(27	)	(12	)	(10	)	(93	)	(71	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 and 2017 reflects an estimate of the allocation for corporate functions in the historical periods based on 2019 actual percentages.  

Segmentation - Additional balance sheet disclosure

	Surgical		Vision Care		Not allocated(1)		Total
($ millions)	2019	2018	2019	2018	2019	2018	2019	2018
Goodwill	4,544	4,538	4,361	4,361	—	—	8,905	8,899
Intangible assets other than goodwill	5,770	6,053	1,481	1,646	2,980	2,980	10,231	10,679

(1) Alcon brand name.

Disclosure of geographical areas

The following table shows the United States, International and countries that accounted for more than 5% of at least one of the respective Alcon totals, for net sales for the years ended December 31, 2019, 2018 and 2017, and for selected non-current assets at December 31, 2019, and 2018:

	Net sales(1)									Total of selected non-current assets(2)
($ millions unless indicated otherwise)	2019			2018			2017			2019			2018
Country
United States	3,055	41	%	2,942	41	%	2,800	41	%	10,559	47	%	10,056	45	%
International	4,307	59	%	4,207	59	%	3,985	59	%	12,014	53	%	12,401	55	%
thereof:
Switzerland (country of domicile)	56	1	%	57	1	%	57	1	%	10,486	46	%	11,166	50	%
Japan	656	9	%	593	8	%	561	8	%	66	—	%	12	—	%
China	377	5	%	341	5	%	279	4	%	18	—	%	2	—	%
Other	3,218	44	%	3,216	45	%	3,088	46	%	1,444	6	%	1,221	5	%
Company total	7,362	100	%	7,149	100	%	6,785	100	%	22,573	100	%	22,457	100	%

(1) Net sales from operations by location of third-party customer.

(2)

Includes property, plant & equipment, right-of-use assets, goodwill and other intangible assets.

Disclosure of products and services

Net sales by segment

($ millions)	2019	2018	2017
Surgical
Implantables	1,210	1,136	1,045
Consumables	2,304	2,227	2,104
Equipment/other	660	636	584
Total Surgical	4,174	3,999	3,733
Vision Care
Contact lenses	1,969	1,928	1,836
Ocular health	1,219	1,222	1,216
Total Vision Care	3,188	3,150	3,052
Net sales to third parties	7,362	7,149	6,785

XML

Goodwill and intangible assets (Tables)

12 Months Ended

Dec. 31, 2019

Intangible Assets [Abstract]

Summary of movements of goodwill and intangible assets

The following table summarizes the movements of goodwill and other intangible assets in 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2019	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Impact of business combinations	6		505										505
Additions			7								125		132
Reclassifications	—	—	(33	)	—		—		—		33		—
Disposals and derecognitions(1)											(41	)	(41	)
December 31, 2019	8,905	2,980	728		5,369		4,440		5,960		611		20,088
Accumulated amortization
January 1, 2019			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Amortization charge					(508	)	(250	)	(240	)	(86	)	(1,084	)
Accumulated amortization on disposals and derecognitions(1)											40		40
December 31, 2019			(3	)	(4,692	)	(2,842	)	(2,146	)	(174	)	(9,857	)
Net book value at December 31, 2019	8,905	2,980	725		677		1,598		3,814		437		10,231

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2019:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,544		721	677	374	3,814	184	5,770
Vision Care	4,361		4		1,224		253	1,481
Not allocated to segment(1)		2,980						2,980
Net book value at December 31, 2019	8,905	2,980	725	677	1,598	3,814	437	10,231

(1) Alcon brand name

The following table summarizes the movements of goodwill and other intangible assets in 2018:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development		Technologies		Currently marketed products		Marketing know-how		Other intangible assets (including software)		Total
Cost
January 1, 2018	8,895	2,980	242		5,368		4,094		5,960		370		19,014
Impact of business combinations	4						346						346
Additions			71		1						125		197
Disposals and derecognitions(1)			(64	)							(1	)	(65	)
December 31, 2018	8,899	2,980	249		5,369		4,440		5,960		494		19,492
Accumulated amortization
January 1, 2018			(58	)	(3,635	)	(2,008	)	(1,668	)	(104	)	(7,473	)
Amortization charge					(510	)	(247	)	(238	)	(24	)	(1,019	)
Accumulated amortization on disposals and derecognitions(1)			57										57
Impairment charge			(2	)	(39	)	(337	)					(378	)
December 31, 2018			(3	)	(4,184	)	(2,592	)	(1,906	)	(128	)	(8,813	)
Net book value at December 31, 2018	8,899	2,980	246		1,185		1,848		4,054		366		10,679

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reporting segment at December 31, 2018:

		Intangible assets other than goodwill
($ millions)	Goodwill	Alcon brand name	Acquired research & development	Technologies	Currently marketed products	Marketing know-how	Other intangible assets (including software)	Total
Surgical	4,538		216	1,185	438	4,054	160	6,053
Vision Care	4,361		30		1,410		206	1,646
Not allocated to segment		2,980						2,980
December 31, 2018	8,899	2,980	246	1,185	1,848	4,054	366	10,679

Assumptions used in calculations for the recoverable amounts of goodwill and intangible assets

The following assumptions are used in the calculations for the recoverable amounts of goodwill and the Alcon brand name:

(As a percentage)	Surgical	Vision Care
Terminal growth rate	3.0	3.0
Discount rate (post-tax)	7.5	7.0

Intangible asset impairment charges

The following table shows the intangible asset impairment charges for 2019 and 2018:

($ millions)	2019	2018
Surgical	—	(378	)
Vision Care	—	—
Total	—	(378	)

XML

Non-current and current financial debts - Maturity of interest expense (Details) $ in Millions	Dec. 31, 2019 USD ($)
Disclosure of detailed information about borrowings [line items]
Interest payable	$ 1,083
Not later than one year [member]
Disclosure of detailed information about borrowings [line items]
Interest payable	94
Between one and five years [member]
Disclosure of detailed information about borrowings [line items]
Interest payable	336
Later than five years [member]
Disclosure of detailed information about borrowings [line items]
Interest payable	$ 653

XML

Financial instruments - additional disclosures - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Disclosure of nature and extent of risks arising from financial instruments [line items]
Maximum remaining potential payments related to contingent consideration from business combinations	$ 510
Contingent consideration liabilities [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Purchases, fair value measurement, liabilities	$ 135	$ 102
Adjustments for changes in assumptions		62
Interest rate risk [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Reasonably possible change in risk variable, percent	1.00%
Reasonably possible change in risk variable, impact on loss before taxes	$ 12
Commodity price risk [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Reasonably possible change in risk variable, percent	10.00%
Level 3 [member] | Contingent consideration liabilities [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Purchases, fair value measurement, liabilities	$ 135	102
Adjustments for changes in assumptions	$ 75	$ 62
Pricing, measurement input [Member] | Long-term financial investments [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Percentage of possible increase in unobservable input, assets	10.00%
Increase (decrease) in fair value due to increase in unobservable input, assets	$ 3
Percentage of reasonably possible decrease in unobservable input, assets	10.00%
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, before tax, assets	$ 3
Significant parameters, measurement input [Member] | Contingent consideration liabilities [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Percentage of possible increase in unobservable input, liabilities	10.00%
Increase (decrease) in fair value due to possible increase in unobservable input, recognised in profit or loss, before tax, liabilities	$ 34
Percentage of reasonably possible decrease in unobservable input, liabilities	10.00%
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, before tax, liabilities	$ 34
Probability of success, measurement input [Member] | Contingent consideration liabilities [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Percentage of possible increase in unobservable input, liabilities	10.00%
Increase (decrease) in fair value due to possible increase in unobservable input, recognised in profit or loss, before tax, liabilities	$ 32
Percentage of reasonably possible decrease in unobservable input, liabilities	10.00%
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, before tax, liabilities	$ 32

XML

Trade receivables - Trade receivables from closely monitored countries (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disclosure of geographical areas [line items]
Total gross trade receivables	$ 1,438	$ 1,307
Provisions for doubtful trade receivables	(48)	(54)	$ (77)	$ (55)
Russia, Brazil, And Turkey [member]
Disclosure of geographical areas [line items]
Provisions for doubtful trade receivables	(13)	(16)
Not overdue [member]
Disclosure of geographical areas [line items]
Total gross trade receivables	1,135	1,018
Not overdue [member] | Russia, Brazil, And Turkey [member]
Disclosure of geographical areas [line items]
Total gross trade receivables	209	216
Past due for more than one year [member]
Disclosure of geographical areas [line items]
Total gross trade receivables	36	47
Past due for more than one year [member] | Russia, Brazil, And Turkey [member]
Disclosure of geographical areas [line items]
Total gross trade receivables	$ 10	$ 14

XML

Selected accounting policies - Additional information (Details) - USD ($) $ in Millions			6 Months Ended			12 Months Ended
		Jul. 01, 2019	Dec. 31, 2019		Jun. 30, 2019	Dec. 31, 2019		Jan. 01, 2019	Dec. 31, 2018
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Cash flow projection period						5 years
Right-of-use assets			$ 324	[1],[2]		$ 324	[1],[2]	$ 279	$ 79	[1],[2]
Lease liabilities	[1],[2]		280			280			89
Financial debts			(261)			(261)			(47)
Property, plant & equipment	[1],[2]		(3,113)			(3,113)			$ (2,800)
Technology-based intangible asset, SAP ERP [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Amortisation decrease due to change in useful life			5
Amortisation decrease due to change in useful life, annual amount			$ 10			$ 10
Finite-lived intangible asset, useful life		10 years			7 years
Bottom of range [member] | Other intangible assets (including software) [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Finite-lived intangible asset, useful life			3 years		3 years	3 years
Top of range [member] | Other intangible assets (including software) [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Finite-lived intangible asset, useful life			10 years		7 years	10 years

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

Provisions and other non-current liabilities - Product liability, governmental investigations and other legal matters provision movements (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of changes in other provisions [abstract]
Less current portion	$ 0	$ (42)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	0	0
Warranty, governmental investigations and other legal proceedings provisions [member]
Reconciliation of changes in other provisions [abstract]
January 1	42	49	$ 9
Additions to provisions	0	1	55
Cash payments	(40)	(1)	(6)
Releases	(2)	(7)	(9)
December 31	0	42	49
Less current portion	0	(42)	(43)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	$ 0	$ 0	$ 6

XML

Alcon subsidiaries (Tables)

12 Months Ended

Dec. 31, 2019

Disclosure Of Separate Financial Statements [Abstract]

Disclosure of details of subsidiaries

The following table lists the Alcon legal entities with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements at and for the year ended December 31, 2019, respectively. The equity interest percentage shown in the table represents Alcon's share in voting rights in those entities. Unless otherwise stated, each entity has share capital consisting of equity held directly by the Company or another of its consolidated subsidiaries.

Country of organization/Entity name	Place of business	Equity interest
Argentina
Alcon Laboratorios Argentina S.A.	Buenos Aires	100	%
Australia
Alcon Laboratories (Australia) Pty Ltd	Frenchs Forest, NSW	100	%
Austria
Alcon Ophthalmika GmbH	Wein	100	%
Belgium
Alcon Laboratories Belgium BVBA	Puurs	100	%
N.V. Alcon S.A.	Vilvoorde	100	%
Canada
Alcon Canada Inc.	Mississauga, Ontario	100	%
Chile
Alcon Laboratorios Chile Ltd.	Santiago de Chile	100	%
China
Alcon (China) Ophthalmic Product Co., Ltd.	Beijing	100	%
Alcon Hong Kong Limited	Hong Kong	100	%
Colombia
Laboratorios Alcon de Colombia S.A.	Santafé de Bogotá	100	%
Czech Republic
Alcon Pharmaceuticals (Czech Republic) s.r.o.	Prague	100	%
Denmark
Alcon Nordic A/S	Copenhagen	100	%
Dominican Republic
Alcon Dominicana, SRL	Santo Domingo	100	%
Ecuador
AlconLab Ecuador S.A.	Quito	100	%
France
Laboratoires Alcon S.A.S.	Rueil-Malmaison	100	%
Germany
Alcon Pharma GmbH	Freiburg im Breisgau	100	%
CIBA Vision GmbH	Grosswallstadt	100	%
WaveLight GmbH	Erlangen	100	%
Greece
Alcon Laboratories Hellas- Single Member Commercial and Industrial S.A.C.I.	Maroussi, Athens	100	%
Hungary
Alcon Hungary Pharmaceuticals Trading Limited Liability Company	Budapest	100	%
India
Alcon Laboratories (India) Private Limited	Bangalore	100	%
Indonesia
PT. CIBA Vision Batam	Batam	100	%
Ireland
Alcon Laboratories Ireland Limited	Cork City	100	%
Israel
Optonol Ltd.	Neve-Ilan	100	%

Country of organization/Entity name	Place of business	Equity interest
Italy
Alcon Italia S.p.A.	Milano	100	%
Japan
Alcon Japan Ltd.	Tokyo	100	%
Malaysia
Alcon Laboratories (Malaysia) Sdn. Bhd.	Petaling Jaya	100	%
CIBA Vision Johor Sdn. Bhd.	Kuala Lumpur	100	%
Mexico
Alcon Laboratorios, S.A. de C.V.	Ciudad de Mexico	100	%
Morocco
Alcon Maroc SARL D´Associé Unique	Casablanca	100	%
Netherlands
Alcon Nederland B.V.	Arnhem	100	%
New Zealand
Alcon Laboratories (New Zealand) Ltd.	Auckland	100	%
Panama
Alcon Centroamerica S.A.	Panama City	100	%
Peru
Alcon Pharmaceutical del Peru S.A.	Lima	100	%
Philippines
Alcon Laboratories (Philippines), Inc.	Manila	100	%
Poland
Alcon Polska Sp. z o.o.	Warszawa	100	%
Portugal
Alcon Portugal-Produtos e Equipamentos Oftalmológicos Lda.	Porto Salvo	100	%
Puerto Rico
Alcon (Puerto Rico), Inc.	Cataño, PR	100	%
Romania
Alcon Romania S.R.L.	Bucharest	100	%
Russian Federation
Alcon Farmacevtika LLC	Moscow	100	%
Singapore
Alcon Pte Ltd	Singapore	100	%
Alcon Singapore Manufacturing Pte Ltd	Singapore	100	%
CIBA Vision Asian Manufacturing and Logistics Pte Ltd.	Singapore	100	%
South Africa
Alcon Laboratories (South Africa) (Pty) Ltd.	Midrand	100	%
South Korea
Alcon Korea Ltd.	Seoul	100	%
Spain
Alcon Healthcare S.A.	Barcelona	100	%
Switzerland
Alcon Inc.	Fribourg	100	%
Alcon Grieshaber AG	Schaffhausen	100	%
Alcon Management SA	Vernier	100	%
Alcon Pharmaceuticals Ltd.	Fribourg	100	%
Alcon Services AG	Fribourg	100	%
Alcon Switzerland SA	Risch	100	%
Thailand
Alcon Laboratories (Thailand) Limited	Bangkok	100	%
Turkey
Alcon Laboratuvarlari Ticaret A.S.	Istanbul	100	%

Country of organization/Entity name	Place of business	Equity interest
Ukraine
Alcon Ukraine LLC	Kiev	100	%
United Kingdom
Alcon Eye Care UK Limited	Frimley/Camberley	100	%
United States of America
Alcon Finance Corporation	Wilminton, DE	100	%
Alcon Laboratories, Inc.	Wilminton, DE	100	%
Alcon RefractiveHorizons, LLC	Fort Worth, TX	100	%
Alcon Research, LLC	Fort Worth, TX	100	%
Alcon Vision, LLC	Fort Worth, TX	100	%
CIBA Vision, LLC	Duluth, GA	100	%
WaveLight, Inc.	Sterling, VA	100	%
ClarVista Medical, Inc.	Aliso Viejo, CA	100	%
PowerVision, Inc.	Fort Worth, TX	100	%
Tear Film Innovations, Inc.	Fort Worth, TX	100	%
TrueVision Systems, Inc.	Fort Worth, TX	100	%
Alcon Lensx, Inc.	Fort Worth, TX	100	%

The list below shows the principal Novartis legal entities containing assets, liabilities and results of operations attributable to the Alcon business with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements.

Brazil⁽¹⁾

Novartis Biociências S.A.

Mexico

Novartis Farmacéutica, S.A. de C.V.

(1) In accordance with the Separation and Distribution Agreement with Novartis, the separation from Novartis of the Alcon business in Brazil was delayed, and the Alcon business in Brazil remained in Novartis Biociências S.A. following the Spin-off.  On February 3, 2020, the Alcon business in Brazil was transferred from Novartis Biociências S.A. to Alcon Brasil Cuidados com a Saúde Ltda. (“Alcon Brazil”), and on February 4, 2020, Alcon acquired from Novartis 100% of the ownership interests of Alcon Brazil, thereby completing the delayed transfer of the Alcon business in Brazil from Novartis to Alcon.

XML

Inventories - Schedule of inventories (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Inventories [Abstract]
Raw material, consumables	$ 286	$ 334
Work in progress	101	127
Finished products	1,118	979
Total inventories	$ 1,505	$ 1,440

XML

Provisions and other non-current liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of provisions and other non-current liabilities

The below table provides details related to Provisions and other non-current liabilities as of December 31, 2019, and 2018.

($ millions)	2019	2018
Accrued liability for employee benefits:
Defined benefit pension plans(1)	291	254
Other long-term employee benefits and deferred compensation	140	104
Other post-employment benefits(1)	423	345
Provisions for product liabilities, governmental investigations and other legal matters	—	—
Contingent consideration(2)	208	143
Other non-current liabilities	106	67
Total provisions and other non-current liabilities	1,168	913

(1) Note 23 to these Consolidated Financial Statements provides additional disclosures related to post-employment benefits.

(2)

Note 18 to these Consolidated Financial Statements provides additional disclosures related to contingent consideration.

Disclosure of details of non-current product liabilities and other legal matter provisions

Product liability, governmental investigations and other legal matters provision movements

($ millions)	2019		2018		2017
January 1	42		49		9
Additions to provisions	—		1		55
Cash payments	(40	)	(1	)	(6	)
Releases of provisions	(2	)	(7	)	(9	)
December 31	—		42		49
Less current portion	—		(42	)	(43	)
Non-current provisions for product liabilities, governmental investigations and other legal matters at December 31	—		—		6

XML

Other current assets (Tables)

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Schedule of other current assets

The following table provides details related to Other current assets as of December 31, 2019 and 2018:

($ millions)	2019	2018
Current portion of long-term financial investments measured at FVPL	33	31
Current portion of long-term receivables from customers	122	133
Current portion of minimum lease payments from finance lease agreements	46	57
Prepaid expenses	89	46
Other receivables, security deposits and current assets	147	52
Derivative financial instruments	1	—
VAT receivable	64	68
Total other current assets	502	387

XML

Consolidated statement of cash flows - additional details - Depreciation, amortization, impairments and fair value adjustments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation, amortization, impairments and fair value adjustments	$ 1,456	$ 1,622	$ 1,334
Property, plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation, amortization, impairments and fair value adjustments	275	241	215
Right-of-use assets [member]
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation, amortization, impairments and fair value adjustments	66	0	0
Intangible assets [member]
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation, amortization, impairments and fair value adjustments	1,084	1,397	1,090
Financial asset [member]
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation, amortization, impairments and fair value adjustments	$ 31	$ (16)	$ 29

XML

Post-employment benefits for associates (Tables)

12 Months Ended

Dec. 31, 2019

Employee Benefits [Abstract]

Summary of funded and unfunded Defined Benefit Obligations and Reconciliation of net liability

The reconciliation of the net liability from January 1 to December 31 is as follows:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Net liability at January 1	(242	)	(232	)	(345	)	(317	)
Current service cost	(22	)	(28	)	(8	)	(11	)
Net interest expense	(5	)	(6	)	(14	)	(11	)
Administrative expenses	(1	)	(1	)	—		—
Past service costs and settlements	(2	)	(1	)	—		—
Remeasurements	(36	)	1		(28	)	5
Currency translation effects	6		6		—		—
Employer contributions	21		19		(28	)	(11	)
Effect of acquisitions, divestments or transfers	5		(2	)	—		—
Change in limitation on recognition of fund surplus	(2	)	2		—		—
Net liability at December 31	(278	)	(242	)	(423	)	(345	)
Amounts recognized in the balance sheet
Prepaid benefit cost	13		12		—		—
Accrued benefit liability	(291	)	(254	)	(423	)	(345	)

The following tables summarize the funded and unfunded DBO for pension and other post-employment benefit plans of Alcon associates at December 31, 2019 and 2018:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Benefit obligation at January 1	662		671		385		382
Current service cost	22		28		8		11
Interest cost	13		15		15		13
Past service costs and settlements	2		—		—		—
Administrative expenses	1		1		—		—
Remeasurement losses/(gains) arising from changes in financial assumptions	71		(17	)	52		(3	)
Remeasurement losses/(gains) arising from changes in demographic assumptions	6		1		(1	)	6
Experience-related remeasurement (gains)/losses	(5	)	2		(20	)	(11	)
Currency translation effects	1		(15	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Contributions of associates	5		4		—		—
Effect of acquisitions, divestments or transfers	(40	)	1		—		—
Benefit obligation at December 31	723		662		423		385
Fair value of plan assets at January 1	424		445		40		65
Interest income	8		9		1		2
Return on plan assets excluding interest income	36		(13	)	3		(3	)
Currency translation effects	7		(9	)	—		—
Employer contributions	21		19		(28	)	(11	)
Contributions of associates	5		4		—		—
Settlements	—		(1	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Effect of acquisitions, divestments or transfers	(35	)	(1	)	—		—
Fair value of plan assets at December 31	451		424		—		40
Funded status	(272	)	(238	)	(423	)	(345	)
Limitation on recognition of fund surplus at January 1	(4	)	(6	)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(2	)	2
Limitation on recognition of fund surplus at December 31	(6	)	(4	)
Net liability in the balance sheet at December 31	(278	)	(242	)	(423	)	(345	)

Breakdown of DBO for pension plans by geography and type of member

The following tables show a breakdown of the DBO for pension plans by geography and type of member and the breakdown of plan assets into the geographical locations in which they are held:

	2019
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	244		127		109		98	145		723
Thereof: unfunded plans	47		29		—		—	23		99
Thereof: unfunded portion of funded plans(1)	65		18		92		—	17		192
By type of member
Active	216		40		61		—	123		440
Deferred pensioners	12		46		27		54	12		151
Pensioners	16		41		21		44	10		132
Fair value of plan assets at December 31	132		80		17		109	113		451
Funded status	(112	)	(47	)	(92	)	11	(32	)	(272	)

(1) Excludes $8 million of Prepaid benefit costs and the limitation on recognition of fund surplus.

	2018
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	201		111		94		86	170		662
Thereof: unfunded plans	49		21		—		—	18		88
Thereof: unfunded portion of funded plans(1)	46		23		78		—	19		166
By type of member
Active	166		36		56		—	148		406
Deferred pensioners	18		32		22		69	9		150
Pensioners	17		43		16		17	13		106
Fair value of plan assets at December 31	106		67		16		98	137		424
Funded status	(95	)	(44	)	(78	)	12	(33	)	(238	)

(1) Excludes $4 million of Prepaid benefit cost and the limitation on recognition of fund surplus.

Defined benefit plans assumptions

The healthcare cost trend rate assumptions used for other post-employment benefits are as follows:

	2019		2018		2017
Healthcare cost trend rate assumed for next year	6.5	%	7.0	%	6.5	%
Rate to which the cost trend rate is assumed to decline	4.5	%	4.5	%	4.5	%
Year that the rate reaches the ultimate trend rate	2028		2028		2025

The following table shows the principal weighted average actuarial assumptions used for calculating defined benefit plans and other post-employment benefits of Alcon associates:

	Pension plans				Other post-employment benefit plans
	2019		2018		2019		2018
Discount rate	1.7	%	2.2	%	3.3	%	4.3	%
Expected rate of pension increase	1.2	%	1.1	%
Expected rate of salary increase	3.3	%	2.8	%
Interest on savings account	1.0	%	0.8	%
Current average life expectancy for a 65-year-old male (in years)	21		21		21		21
Current average life expectancy for a 65-year-old female (in years)	24		23		23		23

Disclosure of sensitivity analysis for actuarial assumptions

The following table shows the sensitivity of the defined benefit pension and other post-employment benefit obligations to the principal actuarial assumptions as of December 31, 2019:

($ millions)	Change in 2019 year-end
25 basis point increase in discount rate	(43	)
25 basis point decrease in discount rate	46
1 year increase in life expectancy	32
25 basis point increase in rate of pension increase	15
25 basis point decrease in rate of pension increase	(27	)
25 basis point increase of interest on savings account	2
25 basis point decrease of interest on savings account	(2	)
25 basis point increase in rate of salary increase	6
25 basis point decrease in rate of salary increase	(6	)

Fair value of plan assets and asset allocation

The following table shows the weighted average plan asset allocation of funded defined benefit pension plans at December 31, 2019, and 2018:

	Pension plans
(as a percentage)	Long-term target minimum	Long-term target maximum	2019	2018
Equity securities	15	40	32	28
Debt securities	20	60	42	43
Real estate	5	20	7	9
Alternative investments	0	20	15	17
Cash and other investments	0	15	4	3
Total			100	100

Schedule of expected future cash flows for benefit plans

The following table summarizes expected future cash flows for pension and other post-employment benefit plans as of December 31, 2019:

($ millions)	Pension plans	Other post-employment benefit plans
Employer contributions
2020 (estimated)	14	—
Expected future benefit payments
2020	41	21
2021	26	22
2022	27	24
2023	27	25
2024	32	26
2025-2029	169	133

XML

Acquisitions of businesses (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Combinations1 [Abstract]
Property, plant & equipment	$ 1,000,000	$ 1,000,000	$ 0
Currently marketed products	0	346,000,000	0
Acquired research & development	505,000,000	0	178,000,000
Deferred tax assets	28,000,000	12,000,000	8,000,000
Inventories	0	3,000,000	0
Trade receivables and other current assets	0	2,000,000	0
Cash and cash equivalents	6,000,000	5,000,000	1,000,000
Deferred tax liabilities	(121,000,000)	(78,000,000)	(64,000,000)
Trade payables and other liabilities	(1,000,000)	(4,000,000)	0
Net identifiable assets acquired	418,000,000	287,000,000	123,000,000
Acquired liquidity	(6,000,000)	(5,000,000)	(1,000,000)
Goodwill	6,000,000	4,000,000	2,000,000
Net assets recognized as a result of business combinations	418,000,000	286,000,000	124,000,000
Goodwill expected to be deductible for tax purposes	$ 0	$ 0	$ 0

XML

Goodwill and intangible assets - Intangible asset impairment charges (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of detailed information about intangible assets [line items]
Intangible asset impairment charges	$ 0	$ (378,000,000)	$ (57,000,000)
CyPass [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible asset impairment charges		(337,000,000)
Optonol Ltd. [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible asset impairment charges		39,000,000
Surgical [member]
Disclosure of detailed information about intangible assets [line items]
Intangible asset impairment charges	0	(378,000,000)
Vision Care [member]
Disclosure of detailed information about intangible assets [line items]
Intangible asset impairment charges	$ 0	$ 0

XML

Interest expense and other financial income & expense - Interest expense (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Analysis of income and expense [abstract]
Interest expense on financial debts	$ (81)	$ (10)	$ (12)
Interest expense from discounting long-term liabilities	(21)	(9)	(10)
Interest expense on lease liabilities	(11)	(5)	(5)
Total interest expense	$ (113)	$ (24)	$ (27)

XML

Non-current and current financial debts - Maturity of borrowings (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of detailed information about borrowings [line items]
Financial debts	$ 3,479.0	$ 47.0
Nominal amount - Current and non-current financial debt [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	3,463.0
Derivatives [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	16.0
Gross carrying amount [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	3,508.0
Gross carrying amount [member] | Not later than one year [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	261.0
Gross carrying amount [member] | Between one and five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	1,247.0
Gross carrying amount [member] | Later than five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	2,000.0
Gross carrying amount [member] | Nominal amount - Current and non-current financial debt [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	3,492.0
Gross carrying amount [member] | Nominal amount - Current and non-current financial debt [member] | Not later than one year [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	245.0
Gross carrying amount [member] | Nominal amount - Current and non-current financial debt [member] | Between one and five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	1,247.0
Gross carrying amount [member] | Nominal amount - Current and non-current financial debt [member] | Later than five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	2,000.0
Gross carrying amount [member] | Derivatives [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	16.0
Gross carrying amount [member] | Derivatives [member] | Not later than one year [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	16.0
Gross carrying amount [member] | Derivatives [member] | Between one and five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	0.0
Gross carrying amount [member] | Derivatives [member] | Later than five years [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	0.0
Unamortized debt discount and issuance costs [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	29.0
Unamortized debt discount and issuance costs [member] | Nominal amount - Current and non-current financial debt [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	29.0
Unamortized debt discount and issuance costs [member] | Derivatives [member]
Disclosure of detailed information about borrowings [line items]
Financial debts	$ 0.0

XML

Taxes - Analysis of tax rate (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Applicable tax rate	$ 39	$ 82	$ 37
Effect of disallowed expenditures	(23)	(26)	(12)
Effect of share based compensation	(1)	(2)	(4)
Effect of income taxed at reduced rates	2	2	0
Effect of tax credits and allowances	7	13	5
Effect of adjustments to contingent consideration liabilities	11	11	(8)
Effect of option payments	(12)	(17)	(12)
Effect of liquidation of a subsidiary	0	0	(10)
Effect of tax benefits expiring in 2017	0	0	(12)
Effect of tax rate changes	(342)	(14)	0
Effect of changes in uncertain tax positions	10	(33)	(10)
Effect of other items	(2)	(4)	(4)
Effect of prior year items	(13)	61	0
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform	0	0	413
Total income tax (expense)/income	$ (324)	$ 73	$ 383
Reconciliation of average effective tax rate and applicable tax rate [abstract]
Applicable tax rate	11.70%	27.30%	29.10%
Effect of disallowed expenditures	(6.90%)	(8.70%)	(9.40%)
Effect of share based compensation	(0.30%)	(0.70%)	(3.10%)
Effect of income taxed at reduced rates	0.60%	0.70%	0.00%
Effect of tax credits and allowances	2.10%	4.30%	3.90%
Effect of adjustments to contingent consideration liabilities	3.30%	3.70%	(6.30%)
Effect of option payments	(3.60%)	(5.70%)	(9.40%)
Effect of liquidation of a subsidiary	0.00%	0.00%	(7.90%)
Effect of tax benefits expiring in 2017	0.00%	0.00%	(9.40%)
Effect of tax rate changes	(103.00%)	(4.70%)	0.00%
Effect of changes in uncertain tax positions	3.00%	(11.00%)	(7.90%)
Effect of other items	(0.60%)	(1.20%)	(3.20%)
Effect of prior year items	(3.90%)	20.30%	0.00%
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform	0.00%	0.00%	325.20%
Effective tax rate	(97.60%)	24.30%	301.60%
Adjustments for current tax of prior periods	$ 13	$ (61)
Switzerland [member]
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform	(304)
United States [member]
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform	$ (31)

XML

Deferred tax assets and liabilities - Additional information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unremitted earnings retained for reinvestment	$ 7,000,000,000
Temporary differences and unused tax losses for which no deferred tax assets were recognized	9,000,000,000	$ 9,000,000,000
Tax loss carryforwards capitalized	521,000,000	146,000,000
Tax loss carryforwards expiring in five years	33,000,000
Tax loss carryforwards expiring in more than five years	488,000,000
Tax loss carryforwards expired in period	0	0	$ 0
Deferred tax expense (income) relating to tax rate changes or imposition of new taxes	0	$ 0	(413,000,000)
Income statement [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Revaluation of deferred tax assets and liabilities and current income tax liabilities			413,000,000
Equity statement [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Revaluation of deferred tax assets and liabilities and current income tax liabilities			$ 18,000,000
Switzerland [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax expense (income) relating to tax rate changes or imposition of new taxes	$ 304,000,000

XML

Right-of-use assets and Lease liabilities - Future Minimum Operating Lease Payable (Details) $ in Millions	Dec. 31, 2018 USD ($)
Disclosure of maturity analysis of operating lease payments [line items]
Total operational lease commitments	$ 222
Not later than one year [member]
Disclosure of maturity analysis of operating lease payments [line items]
Total operational lease commitments	50
Between one and five years [member]
Disclosure of maturity analysis of operating lease payments [line items]
Total operational lease commitments	135
Later than five years [member]
Disclosure of maturity analysis of operating lease payments [line items]
Total operational lease commitments	$ 37

XML

Right-of-use assets and Lease liabilities - Components of Right-of-Use Assets Depreciation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Disclosure of quantitative information about right-of-use assets [line items]
Depreciation of right-of-use assets	$ 66	$ 0
Land [member]
Disclosure of quantitative information about right-of-use assets [line items]
Depreciation of right-of-use assets	1
Buildings [member]
Disclosure of quantitative information about right-of-use assets [line items]
Depreciation of right-of-use assets	47
Machinery & equipment and other assets [member]
Disclosure of quantitative information about right-of-use assets [line items]
Depreciation of right-of-use assets	$ 18

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (parenthetical)	Dec. 31, 2018 USD ($)
Equity	$ 22,639,000,000	[1]
Increase (decrease) due to application of IFRS 9 [Member]
Equity	25,000,000
Increase (decrease) due to application of IFRS 15 [member]
Equity	$ 0

[1] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of comprehensive income [abstract]
Fair value adjustments on marketable securities, tax expense (benefit)	$ 0	$ 0	$ 0
Actuarial (losses)/gains from defined benefit plans, tax expense (benefit)	(11,000,000)	2,000,000	26,000,000
Fair value adjustments on equity securities, tax expense (benefit)	$ (5,000,000)	$ 0	$ 0

XML

Interest expense and other financial income & expense

12 Months Ended

Dec. 31, 2019

Analysis of income and expense [abstract]

Interest expense and other financial income & expense

Interest expense and other financial income & expense

For the years ended December 31, 2019, 2018 and 2017, "Interest expense" and "Other financial income & expense" are:

Interest expense

($ millions)	2019		2018		2017
Interest expense on financial debts	(81	)	(10	)	(12	)
Interest expense from discounting long-term liabilities	(21	)	(9	)	(10	)
Interest expense on lease liabilities(1)	(11	)	(5	)	(5	)
Total interest expense	(113	)	(24	)	(27	)

(1) For the years ended December 31, 2018 and 2017, interest expense on finance leases was included in "Interest expense on lease liabilities".

Other financial income & expense

($ millions)	2019		2018		2017
Interest income	8		2		—
Loss on extinguishment of financial debt	(4	)	—		—
Other financial expense	(18	)	(3	)	(3	)
Monetary loss from hyperinflation accounting	(2	)	(1	)	—
Currency result, net	(16	)	(26	)	(20	)
Total other financial income & expense	(32	)	(28	)	(23	)

XML

Cover Page	12 Months Ended
	Dec. 31, 2019 shares
Document Information [Line Items]
Document Type	20-F
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Entity File Number	001-31269
Entity Registrant Name	Alcon Inc.
Entity Incorporation, State or Country Code	V8
Entity Address, Address Line One	Rue Louis-d'Affry 6
Entity Address, Postal Zip Code	1701
Entity Address, City or Town	Fribourg
Entity Address, Country	CH
Contact Personnel Fax Number	41 58 911 32 22
Title of 12(b) Security	Ordinary Shares, nominal value CHF 0.04 per share
Trading Symbol	ALC
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding	488,262,870
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Document Accounting Standard	International Financial Reporting Standards
Entity Shell Company	false
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019
Document Period End Date	Dec. 31, 2019
Entity Central Index Key	0001167379
Business Contact [member]
Document Information [Line Items]
Contact Personnel Name	Royce Bedward
Entity Address, Address Line One	Chemin de Blandonnet 8
Entity Address, Postal Zip Code	1214
Entity Address, Address Line Two	Vernier
Entity Address, City or Town	Geneva
Entity Address, Country	CH
City Area Code	58
Local Phone Number	911 20 00

XML

Basis of preparation

12 Months Ended

Dec. 31, 2019

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of preparation

Basis of preparation

The accompanying Consolidated Financial Statements present our historical financial position, results of operations, comprehensive income/(loss), and cash flows in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), including the basis of preparation as described in this Note and with the accounting policies as described in Note 3 to these Consolidated Financial Statements.

The preparation of Consolidated Financial Statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the year that affect the reported amounts of assets and liabilities as well as revenues and expenses. Actual outcomes and results could differ from those estimates and assumptions.

Relationship with Former Parent and affiliates prior to Spin-off

The financial statements for periods prior to the Spin-off were prepared on a combined basis because the business of Alcon did not form a separate legal group until the Spin-off occurred. The information in the financial statements for periods prior to the Spin-off was derived from Novartis’ Consolidated Financial Statements and accounting records, which were prepared in accordance with IFRS. Through the date of the Spin-off, all revenues and expenses as well as assets and liabilities directly associated with Alcon have been included in the financial statements. For periods prior to the Spin-off, the financial statements also include allocations of certain expenses for services provided by Novartis to Alcon and allocations of related assets, liabilities, and the Former Parent’s invested capital, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had Alcon been an entity that operated independently of Novartis during the applicable periods.

IFRS does not provide principles for the preparation of combined financial statements for carve-out financial statements, and accordingly in preparing the financial statements for periods prior to the Spin-off certain accounting and allocation conventions commonly used in practice for the preparation of carve-out financial statements were applied. The assets and liabilities included in the balance sheets prior to Spin-off were measured at the carrying amounts recorded in Novartis Group Consolidated Financial Statements.

The financial statements for periods prior to the Spin-off include all Alcon subsidiaries and all Alcon business operated within Novartis Group subsidiaries over which Alcon has control, by applying the principles of IFRS 10, Consolidated Financial Statements. Alcon controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements for the periods prior to the Spin-off include the assets and liabilities within Novartis subsidiaries that were attributable to the Alcon business and excluded the assets and liabilities within Alcon subsidiaries not attributable to the Alcon business.

In addition, the financial statements include, for the periods prior to the Spin-off, the assets, liabilities and results of operations of the ophthalmic over-the-counter products and a small portfolio of surgical diagnostics products that in connection with a Novartis Group business reorganization, effective as of January 1, 2018, were transferred to Alcon from the Innovative Medicines Division of Novartis.

Certain Novartis manufacturing sites performed production services for both the Alcon and Innovative Medicines Divisions of Novartis Group ("multi-divisional manufacturing sites"). The financial statements, for periods prior to the Spin-off include the carrying value of the manufacturing sites where the majority of the production is attributable to Alcon and where such sites were transferred to Alcon in connection with the Spin-off. The inventory, sales and production costs of these multi-divisional manufacturing sites that were attributable to the products of the Alcon and Innovative Medicines Divisions of Novartis Group were accounted for and reported separately by the Alcon and Innovative Medicines Divisions of Novartis Group within Novartis Group accounting systems. The supply chains of the Alcon and Innovative Medicines Divisions of Novartis Group each managed separately the distribution of their respective products produced in these multi-divisional manufacturing sites. As a result, there was no requirement for inter-divisional trading arrangements between the Alcon and Innovative Medicines Divisions of Novartis Group for the products produced in these multi-divisional manufacturing sites. Manufacturing costs attributable to the Alcon business' products produced in these multi-divisional manufacturing sites were recognized in the financial statements for periods prior to the Spin-off at cost of production.

For periods prior to the Spin-off, the financial statements include the attribution of certain assets and liabilities that were historically held at the Novartis corporate level that were specifically identifiable or attributable to Alcon on a standalone basis and were recognized on the pre-Spin-off balance sheets through retained earnings in invested capital. The most significant of which were defined benefit plans, current and deferred income taxes, financial debts, financial investments and the Alcon brand name. The Alcon brand name was used to market the products of Alcon and the products within Novartis Innovative Medicines Divisions' ophthalmology pharmaceutical business. The Novartis Group transferred the full rights to the Alcon brand name to Alcon in connection with the Spin-off. As a result, the carrying value of the Alcon brand name was fully attributed to Alcon in the financial statements.

The income and expenses related to the hedging transactions prior to the Spin-off were allocated to Alcon based on the estimated currency exposure of Alcon and are recorded to Other financial income & expense in the income statements and recognized directly through retained earnings in Invested capital.

The majority of Alcon's subsidiaries were party to Novartis cash pooling arrangements with several financial institutions to maximize the availability of cash for general operating and investing purposes. Under these cash pooling arrangements, cash balances were swept by Novartis regularly from Alcon's bank accounts. The net position with the Novartis cash pooling accounts at the end of each reporting period prior to the Spin-off are reflected in the balance sheet in Other financial receivables from former parent or Other financial liabilities to former parent.

Financing transactions between Novartis and Alcon, except for receivables and payables against the Novartis cash pool described above, were excluded from the financial statements in the periods prior to the Spin-off, as none of the financing transactions were specifically related to the operation of Alcon's business. The exclusion of these financing transactions was recognized through retained earnings in Invested capital.

Dividend and other equity transactions between Alcon and Novartis were recognized directly to retained earnings in Invested capital.

Novartis third-party debt and the related interest expense were not allocated to Alcon when Alcon's subsidiaries were not the legal obligor of the debt and when Novartis borrowings were not directly attributable to Alcon's

business. The financial statements for periods prior to the Spin-off include third-party debt and the related interest expense when Alcon's subsidiaries were the legal obligor of the debt and when the borrowings were directly attributable to Alcon's business. Refer to Note 17 to these Consolidated Financial Statements.

Both before and after the Spin-off, Alcon's associates participate in defined benefit pension and other postretirement plans sponsored by Novartis; in some countries these are single employer plans dedicated to the Alcon business associates and in other countries these are plans where associates of Alcon and associates of the Novartis Group are participants. The net defined benefit and other postretirement plan liabilities and pension costs attributable to Alcon are included in the Consolidated Financial Statements for periods prior to and after the Spin-off, to the extent that the corresponding pension obligations and plan assets under those plans transferred to Alcon at the time of Spin-off or will subsequently transfer pursuant to the Employee Matters Agreement entered into with Novartis. Refer to Note 23 to these Consolidated Financial Statements for additional disclosure on post-employment benefits for associates.

Income taxes attributable to the Alcon business in the financial statements were determined using the separate return approach, under which current and deferred income taxes are calculated as if a separate tax return had been prepared in each tax jurisdiction. In various tax jurisdictions, Alcon and Novartis businesses operated within the same legal entity and certain Alcon subsidiaries were part of a Novartis tax group. This required an assumption that the subsidiaries and operations of Alcon in those tax jurisdictions operated on a standalone basis and constitute separate taxable entities. Actual outcomes and results could differ from these separate tax return estimates, including those estimates and assumptions related to realization of tax benefits within these Novartis tax groups. Refer to Note 7 and Note 11 to these Consolidated Financial Statements for additional disclosures on income taxes.

Alcon's Invested capital in the financial statements for the periods prior to Spin-off represents the excess of total assets over total liabilities and, in addition to the items described above, was impacted by the following:

• Currency translation adjustments of the Novartis Group multi-divisional subsidiaries were allocated between Alcon and the Novartis retained businesses by applying allocation keys based on net assets of each respective business.

• Other transactions with Novartis Group as shown on the Consolidated Statements of Changes in Equity represents the movements in Invested capital resulting from the preparation of the financial statements in accordance with the basis of preparation described in this Note.

• Movements of financing provided to Novartis Group as shown on the Consolidated Statements of Changes in Equity and on the Consolidated Statements of Cash Flows primarily represent the net contributions from Alcon to Novartis Group.

For the periods prior to the Spin-off, the financial statements include charges and allocation of expenses related to certain Novartis business support functions and Novartis corporate general and administration functions. Alcon considers the charges and allocation methodology and results to be reasonable. However, the charges and allocations may not be indicative of the actual expense that would have been incurred had Alcon operated as an independent, publicly traded company for the periods prior to the Spin-off. The following is a brief description of the nature of these charges and allocations:

• Alcon received services from Novartis Business Services (“NBS”), the shared service organization of Novartis Group, across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations. The financial statements include the appropriate costs related to the services rendered, without profit margin, in accordance with the historical arrangements that existed between Novartis and the Alcon business prior to the Spin-off. Refer to Note 25 to these Consolidated Financial Statements for additional disclosures.

• Certain Novartis corporate general and administrative functions costs, in the areas of corporate governance, including board of directors, corporate responsibility and other corporate functions, such as tax, corporate governance and listed company compliance, investor relations, internal audit, treasury, communications functions and the net interest on the net defined benefit liability were not charged or allocated to the Alcon business in the past. The financial statements include a reasonable allocation of these Novartis corporate general and administrative functions costs and net interest on the net defined

benefit liability, based on reasonable assumptions and estimates. The corporate general and administrative function costs allocations were based on the direct and indirect costs incurred to provide the respective services. When specific identification was not practicable, a proportional cost allocation method was used, primarily based on sales, or headcount. Management believes that the allocations reasonably approximate the corporate general and administrative functions costs Alcon may have incurred had it operated as a standalone company. However, the allocations may not be indicative of the actual expense that would have been incurred had Alcon operated on a standalone basis prior to the Spin-off. Refer to Note 25 to these Consolidated Financial Statements for additional disclosures.

Management believes that all allocations were performed on a reasonable basis and reflect the services received by Alcon, the costs incurred on behalf of Alcon and the assets and liabilities of Alcon. Although the financial statements for the periods prior to the Spin-off reflect management's best estimate of all historical costs related to Alcon, this may not necessarily reflect what the results of operations, financial position, or cash flows would have been had Alcon been a separate entity prior to the Spin-off.

Agreements entered into between Alcon and Novartis in connection with the Spin-off govern the relationship between the parties following the Spin-off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.

Following the Spin-off, the Consolidated Financial Statements include the accounts of Alcon and no longer include any allocations from Novartis.

XML

Selected accounting policies (Policies)

12 Months Ended

Dec. 31, 2019

Corporate Information And Statement Of IFRS Compliance [Abstract]

Principles of consolidation

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. In the event that the Company has an interest in another entity that is not wholly owned, the assets, liabilities, results of operations and cash flows of such entity are included in the Company's Consolidated Financial Statements, if the Company is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Consolidated Financial Statements of the Company are prepared in accordance with IFRS as issued by the IASB. They are prepared in accordance with the historical cost convention except for items that are required to be accounted for at fair value. All intercompany transactions and accounts within Alcon were eliminated.

The Company's financial year-end is December 31, which is also the annual closing date of the individual entities' financial statements incorporated into the Consolidated Financial Statements.

Foreign currencies

Foreign currencies

The Consolidated Financial Statements are presented in US dollars ("USD"). The functional currency of individual entities incorporated into the Consolidated Financial Statements are generally the local currency of the respective entity. The functional currency used for the reporting of certain Swiss entities is USD instead of their respective local currencies. This reflects the fact that the cash flows and transactions of these entities are primarily denominated in these currencies.

For entities not operating in hyperinflationary economies, the entities results, financial position and cash flows that do not have USD as their functional currency are translated into USD using the following exchange rates:

• Income, expense and cash flows using for each month the average exchange rate with the USD  values for each month being aggregated during the year.

• Balance sheets using year-end exchange rates.

• Resulting exchange rate differences are recognized in other comprehensive income.

The hyperinflationary economies in which Alcon operates are Argentina and Venezuela. Venezuela was hyperinflationary for all years presented, and Argentina became hyperinflationary effective July 1, 2018, requiring retroactive implementation of hyperinflation accounting as of January 1, 2018.

The impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period is recorded in "Other Reserves" in equity. The subsequent gains or losses resulting from the restatement of non-monetary assets are recorded in "Other financial income & expense" in the consolidated income statements.

Acquisition of assets

Acquisition of assets

Acquired assets are initially recognized on the balance sheet at cost if they meet the criteria for capitalization. The capitalized cost of the asset includes the purchase price and any directly attributable costs for bringing the asset into the condition to operate as intended. Expected costs for obligations to dismantle and remove property, plant and equipment when it is no longer used are included in their cost.

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Freehold land is not depreciated. The related depreciation expense is included in the costs of the functions using the asset or "Cost of net sales" in the consolidated income statements.

Property, plant and equipment are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

The following table shows the respective useful lives for property, plant and equipment:

	Useful life
Buildings	20 to 40 years
Machinery and other equipment
Machinery and equipment	7 to 20 years
Furniture and vehicles	5 to 10 years
Computer hardware	3 to 7 years

Business combinations

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary may include:

• fair values of the assets transferred;

• liabilities incurred to the former owners of the acquired business;

• equity interests issued by the Company;

• fair value of an asset or liability resulting from a contingent consideration arrangement; and

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill, or directly in the income statement if it is a bargain purchase. Alcon primarily uses net present value techniques, utilizing post-tax cash flows and discount rates in calculating the fair value of net identifiable assets acquired when allocating the purchase consideration paid for the acquisition. The estimates in calculating fair values are highly sensitive and depend on assumptions, which includes the amount and timing of projected cash flows, long-term sales forecasts, the timing and probability of regulatory and commercial success, and the appropriate discount rate.

Acquisition related costs are expensed as incurred.

Goodwill

annual impairment testing date is Alcon's financial year-end, December 31.

Goodwill

Goodwill arises in a business combination and is the excess of the consideration transferred to acquire a business over the underlying fair value of the net identified assets acquired. It is allocated to groups of cash generating units ("CGUs") which are usually represented by the reported segments. Goodwill is tested for impairment annually at the level of these groups of CGUs, and any impairment charges are recorded under "Other expense" in the consolidated income statements.

Intangible assets available for use and Acquired In-Process Research & Development

Intangible assets available for use

Alcon has the following classes of available-for-use intangible assets: Currently marketed products, Marketing know-how, Technologies, Other intangible assets (including computer software) and the Alcon brand name.

Currently marketed products represent the composite value of acquired intellectual property, patents, and distribution rights and product trade names.

Marketing know-how represents the value attributable to the expertise acquired for marketing and distributing Alcon surgical products.

Technologies represent identified and separable acquired know-how used in the research, development and production processes.

Significant investments in internally developed and acquired software are capitalized and included in the "Other" category and amortized once available for use.

The Alcon brand name is shown separately as it is the only Alcon intangible asset that is available for use with an indefinite useful life. Alcon considers it appropriate that the brand name has an indefinite life since the branded products have a history of strong revenue and cash flow performance, and Alcon has the intent and ability to support the brand with spending to maintain its value for the foreseeable future.

Except for the Alcon brand name, intangible assets available for use are amortized over their estimated useful lives on a straight-line basis and evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The Alcon brand name is not amortized, but evaluated for potential impairment annually.

The following table shows the respective useful lives for available-for-use intangible assets and the location in the consolidated income statements in which the respective amortization and any potential impairment charge is recognized:

	Useful life	Income statement location for amortization and impairment charges
Currently marketed products	5 to 20 years	"Cost of net sales"
Marketing know-how	25 years	"Cost of net sales"
Technologies	10 to 20 years	"Cost of net sales" or "Research and Development"
Other (including software)	3 to 10 years	In the respective functional expense
Alcon brand name	Not amortized, indefinite useful life	"Other expense"

From July 1, 2019, the useful life of Alcon's new SAP ERP software was extended from 7 years to 10 years on a prospective basis based on Alcon's multi-year transformation program which centers on one ERP platform across the organization. This change in estimate resulted in a $5 million reduction in amortization expense during the six months ended December 31, 2019 and will reduce amortization expense up to $10 million per year during the remaining useful life of the SAP ERP software assets placed in service at the time of the change.

The corresponding "Intangible assets available for use" portion of the accounting policy was updated to reflect that the useful life for Other intangible assets (including software) was extended from 3 to 7 years to 3 to 10 years.

Acquired In-Process Research & Development ("IPR&D")

Acquired research and development intangible assets, which are still under development and have accordingly not yet obtained marketing approval, are recognized as IPR&D.

IPR&D is not amortized, but evaluated for potential impairment on an annual basis or when facts and circumstances warrant. IPR&D is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal ("FVLCOD") and its value in use ("VIU"). Usually, Alcon applies the FVLCOD method for its impairment assessments. Under this approach when evaluating IPR&D for potential impairment, FVLCOD is estimated using net present value techniques utilizing post-tax cash flows and discount rates as there are no direct or indirect observable prices in active markets for identical or similar assets. The estimates used in calculating the net present values are highly sensitive and depend on assumptions, including amount and timing of projected future cash flows, long-term sales forecasts, discount rate, and the timing and probability of regulatory and commercial success. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

Any impairment charge is recorded in the consolidated income statements under "Research & development".

Once a project included in IPR&D has been successfully developed it is transferred to the "Currently marketed products" category.

Impairment of goodwill, Alcon brand name and definite lived intangible assets

Impairment of goodwill, Alcon brand name and definite lived intangible assets

An asset is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its FVLCOD and its VIU. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. Usually, Alcon applies the FVLCOD method for its impairment assessment. In most cases no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of FVLCOD is based on net present value techniques utilizing post-tax cash flows and discount rates. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

FVLCOD reflects estimates of assumptions that market participants would be expected to use when pricing the asset or CGUs, and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset.

The estimates used in calculating the net present values are highly sensitive and depend on assumptions, which includes the following:

• Amount and timing of projected future cash flows;

• Long-term sales forecasts for periods of up to 25 years including sales growth rates;

• Royalty rate for the Alcon brand name;

• Terminal growth rate; and

• Discount rate.

Other assumptions used in the net present values calculation include:

• Future tax rate;

• Actions of competitors (launch of competing products, marketing initiatives, etc.); and

• Outcome of R&D activities and forecast of related costs (future product developments).

Generally, for intangible assets with a definite useful life Alcon uses cash flow projections for the whole useful life of these assets. For goodwill and the Alcon brand name, Alcon generally utilizes cash flow projections for a five-year period based on management forecasts, with a terminal value based on cash flow projections considering the long-term expected inflation rates and impact of demographic trends of the population to which Alcon products are prescribed, for later periods. Probability-weighted scenarios are typically used.

Discount rates used consider Alcon estimated weighted average cost of capital adjusted for specific country and currency risks associated with cash flow projections to approximate the weighted average cost of capital of a comparable market participant. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using discounting techniques.

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short-term and highly liquid investments with original or weighted-average maturities of three months or less which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are usually presented within current financial debts on the consolidated balance sheets except in cases where a right of offset has been agreed with a bank which then allows for presentation on a net basis.

Financial assets

Financial assets

Non-current financial assets such as loans and long-term receivables from customers, primarily related to surgical equipment sales arrangements, advances and other deposits, are carried at amortized cost, which reflects the time value of money, less any allowances for uncollectable amounts.

Alcon assesses on a forward-looking basis the expected credit losses associated with its non-current financial assets valued at amortized cost.

For loans, advances and other deposits valued at amortized costs, impairments, which are based on their expected credit losses, and exchange rate losses are included in "Other expense" in the consolidated income statements and exchange rate gains and interest income, using the effective interest rate method, are included in "Other income" in the consolidated income statements.

For long-term receivables from customers, provisions for uncollectable amounts, which are based on their expected credit losses, are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Fund investments are valued at fair value through profit and loss ("FVPL"). Unrealized gains and losses, including exchange gains and losses, are recognized in the consolidated income statements in "Other income" for gains and "Other expense" for losses.

Equity securities and convertible notes receivable held as strategic investments are generally designated at the date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss. Unrealized gains and losses, including exchange gains and losses, are recorded as a fair value adjustment in the consolidated statements of comprehensive income. They are reclassified to "Other Reserves" when the equity security is sold. If these equity securities and convertible notes receivable are not designated at the date of acquisition as financial assets valued at fair value through other comprehensive income, they are valued at FVPL, as described above for fund investments. Changes in fair value of options to acquire development stage companies are charged to research and development expense.

Derivative financial instruments are initially recognized in the consolidated balance sheets at fair value and are remeasured to their current fair value at the end of each subsequent reporting period. The valuation of forward exchange rate contracts and foreign exchange swaps are based on the discounted cash flow model, using interest curves and spot rates at the reporting date as observable inputs. Unsettled forward contracts and swaps are measured at fair value at quarter-end with changes in fair value recorded to the consolidated income statements as unrealized gains or losses in "Other financial income & expense". Settled forward contracts and swaps are measured at maturity date at fair value with corresponding realized gains or losses recognized in the consolidated income statements in "Other financial income & expense". No hedge accounting is applied for these arrangements.

Inventories

Inventories

Inventory is valued at acquisition or production cost determined on a first-in, first-out basis. This value is used for the "Cost of net sales" and "Cost of other revenues" in the consolidated income statements. Unsalable inventory is fully written off in the consolidated income statements under "Cost of net sales" and "Cost of other revenues."

Trade receivables

Trade receivables

Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for estimated revenue deductions such as chargebacks and cash discounts.

Provisions for expected credit losses are established using an expected credit loss model ("ECL"). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivable. These provisions represent the difference between the trade receivable's carrying amount in the consolidated balance sheets and the estimated net collectible amount. Charges for doubtful trade receivables are recorded as marketing and selling costs recognized in the consolidated income statements within "Selling, general & administration" expenses.

Leases

Leases

From January 1, 2019, with the implementation of the new standard IFRS 16, Leases, Alcon's accounting policy for leases is as follows:

As lessee, Alcon assesses whether a contract contains a lease at inception of a contract based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Alcon recognizes a right-of-use asset and a corresponding lease liability for all arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases for which Alcon has elected the recognition exemptions allowed under IFRS 16.

Right-of-use assets

Right-of-use assets are initially recognized at cost, which is comprised of the amount of the initial measurement of the corresponding lease liabilities, adjusted for any lease payments made at or prior to the commencement date of the lease, lease incentives received and initial direct costs incurred, as well as any expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the useful life of the right-of-use asset or the end of the lease term.

Right-of-use assets are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

Lease liabilities

Lease liabilities are accounted for at amortized cost and are initially measured at the present value of future lease payments and are classified as current or non-current based on the due dates of the underlying principal payments. In determining the lease term, Alcon evaluates the renewal options and termination options reasonably certain to be exercised. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the incremental borrowing rate Alcon would be expected to pay within the respective markets, on a borrowing with a similar term and security. Interest in the period is recorded within "Interest expense" in Alcon's consolidated income statements.

Lease liabilities are remeasured for changes in estimated lease term, future lease payments arising from a change in an index or rate, amounts expected to be payable under a residual value guarantee, or in assessment of whether Alcon will exercise a purchase, extension or termination option. Changes to initial lease contract terms are assessed to determine their impact on the scope of lease, and any modifications increasing the scope of the lease are treated as new contracts under the initial measurement principles, while modifications that do not increase or that decrease the scope of the lease result in an adjustment to the right-of-use asset which is remeasured as of the date of the modification.

Principal payments made on lease liabilities and any initial direct costs paid are classified as financing cash outflows, while interest payments are classified as operating cash outflows.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the consolidated income statements and are classified as cash flows from operating activities. Short-term leases are leases with a lease term of twelve months in duration or less.

Prior to the adoption of IFRS 16 on January 1, 2019, Alcon's accounting policy for leases was as follows:

As lessee, Alcon classified leases of property, plant & equipment where Alcon had substantially all the risks and rewards of ownership as finance leases. Finance leases were capitalized at the lease's inception at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The corresponding lease liabilities, net of finance charges, were classified as current and non-current based on the due dates of the underlying principal payments. Each lease payment was allocated between the liability and interest expense. The interest expense was charged to Alcon's consolidated income statements over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The asset acquired under the finance lease was depreciated over the shorter of the asset’s useful life and the lease term.

Alcon classified leases in which a significant portion of the risks and rewards of ownership were not transferred to Alcon as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were recognized in the consolidated income statements on a straight-line basis over the period of the lease.

Refer to the "Impact of adopting significant new IFRS standards in 2019" section in this Note and Note 16 for additional details on the impact of adoption.

Legal liabilities

Legal liabilities

Alcon and its subsidiaries are subject to contingencies arising in the ordinary course of business such as patent litigation and other product-related litigation, commercial litigation, and governmental investigations and proceedings. Provisions are recorded where a reliable estimate can be made of the probable outcome of legal or other disputes against the subsidiary.

Contingent consideration

Contingent consideration

In a business combination, it is necessary to recognize contingent future payments to previous owners representing contractually defined potential amounts as a liability. Usually for Alcon, these are linked to milestone or royalty payments related to certain assets and are recognized as a financial liability at their fair value, which is then re-measured at each subsequent reporting date.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the timing and probability of regulatory and commercial success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration. These estimations typically depend on factors such as technical milestones or market performance and are adjusted for the probability of their likelihood of payment, and if material, appropriately discounted to reflect the impact of time.

Changes in the fair value of contingent consideration liabilities in subsequent periods are recognized in the consolidated income statements in "Cost of net sales" for currently marketed products and in "Research & development" for IPR&D.

The effect of unwinding the discount over time is recognized in "Interest expense" in the consolidated income statements.

Defined benefit pension plans and other post-employment benefits and defined contribution plans

Defined benefit pension plans and other post-employment benefits

The liability or asset recognized in the balance sheet in respect of defined benefit pension plans and other post-employment benefits is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no sufficient market for such bonds, the market rates on government bonds are used.

The current service cost for such post-employment benefit plans is included in the personnel expenses of the various functions where the associates are employed. The net interest on the net defined benefit liability is recognized as "Other expense" or "Other income". The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income/(loss).

Defined contribution plans

For defined contribution plans, Alcon contributes to publicly or privately administered plans. Alcon has no further payment obligations once the contributions have been paid. The contributions are included in the personnel expenses of the various functions where the associates are employed.

Financial debts

Financial debts

Financial debts are initially recognized at fair value, net of transaction costs incurred. Financial debts are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs and discounts) and the redemption amount is recognized in the consolidated income statements over the period of the financial debts using the effective interest method. Fees paid on the establishment of credit facilities are recognized as transaction costs of the financial debt to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates, and is recognized in "Other financial income & expense" in the consolidated income statements.

Financial debts are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial debt that has been extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in "Other financial income & expense" in the consolidated income statements.

Interest paid on financial debts is classified as operating activities in the consolidated statements of cash flows. Financial debts are classified as current liabilities unless Alcon has an unconditional right and intent to defer the settlement of the liability for at least twelve months after the reporting period.

Revenue

Revenue

Net sales to third parties

Revenue on the sale of Alcon products and services, which is recorded as "Net sales to third parties" in the consolidated income statements, is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to or receipt of the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue would be recognized upon the satisfaction of acceptance criteria. The amount of revenue to be recognized is based on the consideration Alcon expects to receive in exchange for its goods and services. If a contract contains more than one performance obligation, the consideration is allocated based on the relative standalone selling price of each performance obligation.

Surgical equipment may be sold together with other products and services under a single contract and may be structured as an outright cash sale, an installment sale, or lease. Surgical equipment installment sales and leases have a fixed payment amount which the customer may pay either in fixed intervals or as the customer purchases consumables and/or implantables. Revenues are recognized upon satisfaction of each of the performance obligations in the contract and the consideration is allocated based on the relative standalone selling price of each performance obligation.

• Surgical equipment revenue from outright cash sales and installment sales arrangements is recognized at the point in time when control is transferred to the customer. Current portion of long-term receivables from customers and long-term receivables from customers for installment sales arrangements are recorded in "Other current assets" (see "Current portion of long-term receivables from customers" in Note 15 of these Consolidated Financial Statements) and "Financial assets" (see "Long-term receivables

from customers" in Note 12 of these Consolidated Financial Statements), respectively. Financing income for installment sales arrangements longer than twelve months is recognized over the term of the arrangement in "Other Income". Alcon applies the practical expedient under IFRS 15 to installment sales arrangements that are twelve months or less in duration.

• In addition to cash and installment sales, revenue is recognized under finance and operating lease arrangements. Leases in which Alcon transfers substantially all the risks and rewards incidental to ownership to the customer are treated as finance lease arrangements. Revenue from finance lease arrangements is recognized at amounts equal to the fair value of the equipment, which approximates the present value of the minimum lease payments under the arrangements. As interest rates embedded in lease arrangements are approximately market rates, revenue under finance lease arrangements is comparable to revenue for outright sales. Finance income for arrangements longer than twelve months is deferred and subsequently recognized based on a pattern that approximates the use of the effective interest method and recorded in "Other income". Operating lease revenue for equipment rentals is recognized on a straight-line basis over the lease term in "Net sales to third parties".

The consideration Alcon receives in exchange for its goods or services may be fixed or variable. Variable consideration is only recognized when it is highly probable that a significant reversal of cumulative sales will not occur. The most common elements of variable consideration are listed below:

• Rebates and discounts granted to government agencies, wholesalers, retail pharmacies and other customers are provisioned and recorded as a deduction from revenue at the time the related revenues are recorded or when the incentives are offered. They are calculated on the basis of historical experience and the specific terms in the individual agreements.

• Cash discounts are offered to customers to encourage prompt payment and are provisioned and recorded as revenue deductions at the time the related sales are recorded.

• Sales returns provisions are recognized and recorded as revenue deductions when there is historical experience of Alcon agreeing to customer returns and Alcon can reasonably estimate expected future returns. In doing so, the estimated rate of return is applied, determined based on historical experience of customer returns and considering any other relevant factors. This is applied to the amounts invoiced, also considering the amount of returned products to be destroyed versus products that can be placed back in inventory for resale. Where shipments are made on a re-sale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired.

Provisions for revenue deductions are adjusted to actual amounts as rebates, discounts and returns are processed. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions.

Prior to Alcon's adoption of IFRS 15 on January 1, 2018, Alcon's accounting policy for revenue recognition was substantially consistent with the revenue recognition principles under IFRS 15.

Other revenues

"Other revenues" include revenue from contract manufacturing services provided to the Former Parent which are recognized over time as the service obligations are completed and third party royalty income. Associated costs for contract manufacturing services are recognized in "Cost of other revenues".

Research & development

Research & development

Internal research & development ("R&D") costs are fully charged to "Research & development" in the consolidated income statements in the period in which they are incurred. Alcon considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset until marketing approval from a regulatory authority is obtained in a major market such as the United States, the European Union, Switzerland or Japan.

Payments made to third parties to in-license or acquire intellectual property rights and products, including initial upfront and subsequent milestone payments, are capitalized as intangible assets. If additional payments are made to the originator company to continue to perform R&D activities, an evaluation is made as to the nature

of the payments. Such additional payments will be expensed if they are deemed to be compensation for subcontracted R&D services not resulting in an additional transfer of intellectual property rights to Alcon. Such additional payments will be capitalized if they are deemed to be compensation for the transfer to Alcon of additional intellectual property developed at the risk of the originator company. Subsequent internal R&D costs in relation to IPR&D and other assets are expensed until such time that technical feasibility can be proven, as demonstrated by the receipt of marketing approval for the related product from a regulatory authority in a major market.

Equity-based compensation

Equity-based compensation

Each of the periods presented include expense related to incentive compensation provided to eligible Alcon associates in the form of equity-settled or equity-based awards including restricted stock units ("RSUs") and performance stock units ("PSUs").

Alcon expenses the fair values of RSUs and PSUs granted to associates as compensation over the related vesting periods within the various functions where the associates are employed. The fair values of the awards are determined on their grant dates and are adjusted to account for the specific provisions of each of the corresponding grant agreements.

Alcon RSUs do not entitle the recipients to dividends. As such, the fair value upon grant is therefore based on the Alcon share price at the grant date adjusted for potential future dividends to be paid within the holding period. The fair value of these grants, after making adjustments for assumptions related to their forfeiture during the vesting period, is expensed on a straight-line basis over the respective vesting period.

PSUs are subject to certain performance criteria being achieved during the vesting period and require plan participants to provide services during the vesting period. PSUs granted under Alcon's plans are subject to performance criteria based on internal performance metrics. The expense is determined taking into account assumptions concerning performance during the period relative to targets and expected forfeitures due to plan participants not meeting their service conditions. These assumptions are periodically adjusted. Any change in estimates for past services is recorded immediately as an expense or income in the consolidated income statements and amounts for future periods are expensed over the remaining vesting period. As a result, at the end of the vesting period, the total charge during the whole vesting period represents the amount that will finally vest. The number of equity instruments that finally vest is determined at the vesting date.

If a plan participant leaves Alcon for reasons other than retirement, disability or death, then unvested restricted shares, RSUs and PSUs are forfeited, unless determined otherwise by the provision of the plan rules or by the Compensation, Governance and Nomination Committee of the Alcon Board of Directors, for example, in connection with a reorganization.

Restructuring charges

Restructuring charges

Restructuring provisions are recognized for the direct expenditures arising from the restructuring, where the plans are sufficiently detailed and where appropriate communication to those affected has been made.

Charges to increase restructuring provisions are included in "Other expense" in the consolidated income statements. Corresponding releases are recorded in "Other income" in the consolidated income statements.

Taxes

Taxes

Taxes on income are expensed in the same periods as the revenues and expenses to which they relate and include any interest and penalties incurred during the period. Deferred taxes are determined using the comprehensive liability method and are calculated on the temporary differences that arise between the tax base of an asset or liability and its carrying value in the balance sheet prepared for purposes of these Consolidated Financial Statements, except for those temporary differences related to investments in subsidiaries where the timing of their reversal can be controlled and it is probable that the difference will not reverse in the foreseeable future. Since the retained earnings are reinvested, withholding or other taxes on eventual distribution of a subsidiary's retained earnings are only taken into account when a dividend has been planned.

The estimated amounts for current and deferred tax assets or liabilities, including any amounts related to any uncertain tax positions, are based on currently known facts and circumstances. Tax returns are based on an interpretation of tax laws and regulations and reflect estimates based on these judgments and interpretations.

The tax returns are subject to examination by the competent taxing authorities which may result in an assessment being made requiring payments of additional tax, interest or penalties. Inherent uncertainties exist in the estimates of the tax positions.

Earnings (loss) per share

Earnings (loss) per share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

Impact of adopting significant new IFRS standards

Impact of adopting significant new IFRS standards in 2019

Effective January 1, 2019, Alcon implemented IFRS 16, Leases, which provides a new model for lessee accounting in which substantially all leases are now recognized on the balance sheet as Right-of-use assets with corresponding Lease liabilities. The standard replaces IAS 17, Leases.

Upon adoption of IFRS 16, right-of-use assets are recognized based on the amount of the lease liability adjusted for payments made before the lease commencement date, lease incentives and other items related to the lease agreements. Lease liabilities are recognized based on the net present value of remaining lease payments and are classified as current or non-current based on the due dates of the underling principal payments. Upon adoption of the new standard, a portion of the annual operating lease costs previously fully recognized as a functional expense is recorded as interest expense. In addition, the portion of the lease payments representing a reduction of the lease liability is recognized in the cash flow statement as an outflow from financing activities, which was previously fully recognized as an outflow from operating activities for operating leases.

IFRS 16 substantially carries forward the lessor accounting requirements under IAS 17 such that adoption of the standard did not have a significant impact upon Alcon's accounting for surgical equipment leases where Alcon is the lessor and for which Alcon's accounting policy is included in the Revenue accounting policy in this Note to the Consolidated Financial Statements.

Alcon applied the modified retrospective method, with right-of-use assets measured at an amount equal to the lease liability, adjusted by the amount of the prepaid or accrued lease payments relating to those leases recognized in the balance sheet immediately before the date of initial application. In applying IFRS 16 for the first time, Alcon has used the practical expedients discussed in Note 16 of these Consolidated Financial Statements. The adoption of the standard did not have an impact on "Other Reserves" in the period of adoption and prior years were not restated.

Refer to Note 16 to these Consolidated Financial Statements for further information on the impact of adoption of IFRS 16, Leases.

New standards and interpretations not yet adopted

Amendments to IFRS 3, Business Combinations, are effective for transactions occurring after January 1, 2020. The amendments change the definition of a business in evaluating business combinations and asset acquisitions, and also provide Alcon an option to apply a concentration test to determine if the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets. Under the concentration test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The changes to the definition of a business will likely result in Alcon accounting for more acquisitions as asset acquisitions.

There are no other IFRS standards or interpretations not yet effective that would be expected to have a material impact on Alcon.

XML

Related parties transactions - Key management compensation (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) manager	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Related Party [Abstract]
Number of key management personnel | manager	7
Cash and other compensation	$ 12.5	$ 10.3	$ 9.3
Post-employment benefits	0.9	0.8	0.8
Equity-based compensation	10.7	11.3	6.8
Total	$ 24.1	$ 22.4	$ 16.9

XML

Consolidated statement of cash flows - additional details

12 Months Ended

Dec. 31, 2019

Cash Flow Statement [Abstract]

Consolidated statements of cash flows - additional details

Consolidated statements of cash flows - additional details

The Consolidated Statements of Cash Flows were prepared in accordance with IAS 7, Statement of Cash Flows. The below tables provide additional detail supporting select line items in the Consolidated Statements of Cash Flows.

21.1 Depreciation, amortization, impairments and fair value adjustments

($ millions)	2019	2018		2017
Property, plant & equipment	275	241		215
Right-of-use assets	66	—		—
Intangible assets	1,084	1,397		1,090
Financial assets	31	(16	)	29
Total	1,456	1,622		1,334

21.2 Change in net current assets and other operating cash flow items

($ millions)	2019		2018		2017
(Increase) in inventories	(108	)	(150	)	(87	)
(Increase)/decrease in trade receivables	(115	)	53		(54	)
Increase in trade payables	84		44		48
Net change in other current assets	(26	)	83		87
Net change in other current liabilities	117		50		42
Total	(48	)	80		36

21.3 Acquisitions of businesses, net

($ millions)	2019		2018		2017
Net assets recognized as a result of business combinations	(418	)	(286	)	(124	)
Payables contingent consideration	135		102		54
Other payments	—		(55	)
Cash flows	(283	)	(239	)	(70	)

Notes 4 and 22 to these Consolidated Financial Statements provide further information regarding acquisitions of businesses. All acquisitions were for cash.

21.4 Reconciliation of assets and liabilities arising from financing activities

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent		Total
January 1, 2019	(39	)	—		47		67		114
Proceeds from non-current financial debts, net of issuance costs			3,724						3,724
Repayment of non-current financial debts			(509	)					(509	)
Proceeds from Bridge Facility, net of issuance costs					1,495				1,495
Repayment of Bridge Facility					(1,500	)			(1,500	)
Change in current financial debts					202				202
Non-cash changes in derivatives and other fair value adjustments			2		20				22
Change in other financial receivables from former parent	39
Change in other financial liabilities to former parent							(67	)	(67	)
Currency translation effects			1		(3	)			(2	)
December 31, 2019	—		3,218		261		—		3,479

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent	Total
January 1, 2018	(65	)	84		65		46	195
Change in current financial debts					(6	)		(6	)
Change in other financial receivables from former parent	26
Change in other financial liabilities to former parent							21	21
Non-cash change in finance lease obligation			5					5
Currency translation effects					(12	)		(12	)
Reclassification from non-current financial debts to lease liabilities			(89	)				(89	)
December 31, 2018	(39	)	—		47		67	114

XML

Related parties transactions

12 Months Ended

Dec. 31, 2019

Related Party [Abstract]

Related parties transactions

Related parties transactions

Prior to the Spin-off, the Alcon business was a segment of Novartis such that transactions with Novartis were considered related party transactions. In connection with the Spin-off, Alcon entered into a separation and distribution agreement as well as various other agreements governing relationships with Novartis going forward, including manufacturing and supply, transitional services, tax matters, employee matters, and patent and know-how license and brand license agreements. Information included in this Note with respect to Novartis is strictly limited to related party transactions with Novartis prior to the Spin-off on April 9, 2019.

Transactions with Novartis (up to April 9, 2019)

Transactions from trading activities related to products and services invoiced between other Novartis Group companies and Alcon's business, have been retained in the historical Consolidated Financial Statements. The ultimate controlling parent of both, the other Novartis Group companies and Alcon's business, was Novartis AG until the Spin-off.

The following table summarizes amounts for the years ended December 31, 2019, 2018, and 2017:    

($ millions)	2019 (1)	2018	2017
Sales to former parent	—	4	4
Contract manufacturing revenues from former parent	47	—	—
Purchases from former parent	19	4	3

($ millions)	December 31, 2018(1)
Trade and other receivables from former parent	20
Trade and other payables to former parent	85
Other financial receivables from former parent	39
Other financial liabilities to former parent	67

(1) Activity presented strictly relates to the period during which Novartis was a related party (up to April 9, 2019).

Sales to and purchases from former parent

Beginning in 2019, product sales to Novartis are recorded in Other revenues in line with Alcon's contract manufacturing arrangement executed with Novartis. Other revenues in 2019 prior to the Spin-off were $47 million. Purchases of products from Novartis under the contract manufacturing arrangement totaled $19 million in 2019 prior to the Spin-off.

Other financial receivables and payables related to former parent

Prior to the Spin-off, the majority of Alcon's subsidiaries were party to Novartis cash pooling arrangements with several financial institutions to maximize the availability of cash for general operating and investing purposes. Under these cash pooling arrangements, cash balances were swept by Novartis regularly from Alcon's bank accounts, and the net position with the Novartis cash pooling accounts at the end of each reporting period was reflected in the consolidated balance sheet in Other financial receivables from former parent or Other financial liabilities to former parent. These cash pooling arrangements were eliminated during the three months ended March 31, 2019 in anticipation of the Spin-off and replaced with third party financing arrangements as needed.

Novartis Business Services ("NBS") Charges, Corporate Overhead and Other Allocations from Novartis

Prior to January 1, 2019, Novartis Group provided Alcon certain services from NBS, the shared service organization of Novartis Group, across the following service domains: human resources operations, real estate and facility services, including site security and executive protection, procurement, information technology, commercial and medical support services and financial reporting and accounting operations. The Consolidated Financial Statements include the appropriate costs related to the services rendered, without profit margin, in accordance with the historical arrangements that existed between the Alcon business and NBS.

Further, certain general and administrative costs of Novartis Group were not charged or allocated to the Alcon business in the past. For the purpose of the 2017 and 2018 financial statements, such costs were allocated based on reasonable assumptions and estimates, based on the direct and indirect costs incurred to provide the respective service. When specific identification was not practicable, a proportional cost method was used, primarily based on sales or headcount.

These NBS charges, corporate overhead and other allocations amounted to $553 million in 2018 and $535 million in 2017.

During 2018, Alcon formed its own business and corporate support functions, including its own service organization, such that certain activities and associates were transferred from Novartis to Alcon, operationally effective January 1, 2019. Services provided by Novartis Group to Alcon in 2019 prior to the Spin-off totaled $40 million and primarily related to human resources operations, real estate and facility services, and information technology.

Management believes that the net charges and methods used for allocations to Alcon were performed on a reasonable basis and reflect the services received by Alcon and the cost incurred on behalf of Alcon. Although the Consolidated Financial Statements reflect management's best estimate of all historical costs related to Alcon,

this may however not necessarily reflect what the results of operations, financial position, or cash flows would have been had Alcon been a separate entity, nor the future results of Alcon as it exists following completion of the separation on April 9, 2019.

Transactions with members of the Board of Directors

Dr. Arthur Cummings, an Alcon Board of Director, in his capacity as an ophthalmologist, provides certain consulting services, including assistance with various clinical trials to Alcon. In 2019, Alcon paid to Dr. Cummings (or his related entities) approximately $84,844.

Executive officers

The following table summarizes compensation information for key management personnel (7 members for all years presented):

($ millions)	2019	2018	2017
Cash and other compensation	12.5	10.3	9.3
Post-employment benefits	0.9	0.8	0.8
Equity-based compensation	10.7	11.3	6.8
Total	24.1	22.4	16.9

XML

Right-of-use assets and Lease liabilities

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Right-of-use assets and Lease liabilities

Right-of-use assets and Lease liabilities

Alcon adopted IFRS 16, Leases effective January 1, 2019, as described in Note 3 to these Consolidated Financial Statements.

Alcon has applied the modified retrospective method, with right-of-use assets measured at an amount equal to the lease liability, adjusted by the amount of the prepaid or accrued lease payments relating to those leases recognized in the balance sheet immediately before the date of initial application.

In applying IFRS 16 for the first time, Alcon has used the following practical expedients on a lease by lease basis as permitted by the standard:

• contracts previously identified as leases by applying IAS 17, Leases and IFRIC 4, Determining whether an Arrangement contains a Lease, have not been re-assessed under IFRS 16,

• leases with a remaining lease term less than twelve months from the date of adoption and leases of low-value assets have not been recognized as right-of-use assets and lease liabilities,

• measurement of right-of-use assets at the date of adoption excluded the initial direct costs, and

• use of hindsight in determining the lease term for contracts containing options to extend or terminate the lease.

Right-of-use assets

Right-of-use assets as of December 31, 2019 and January 1, 2019 were comprised of the following:

($ millions)	December 31, 2019	January 1, 2019
Land	20	20
Buildings	277	226
Machinery & equipment and other assets	27	33
Total right-of-use assets(1)	324	279

(1) Right-of-use assets, related to operating leases at the date of implementation of IFRS 16, were higher than the lease liabilities at the date of implementation of IFRS 16 by $3 million, due to the net impact of prepayments and accrued lease payments recognized at December 31, 2018. This impact was offset by the lease liability related to the finance lease exceeding the corresponding capital asset by $10 million.

Depreciation charges of $66 million for the year ended December 31, 2019 are shown in the table below by underlying class of asset:

($ millions)	2019
Land	1
Buildings	47
Machinery & equipment and other assets	18
Total	66

Additions to right-of-use assets amounted to $116 million for the year ended December 31, 2019. 

Lease liabilities

Lease liabilities of $286 million were recorded on January 1, 2019. The reconciliation of lease commitments disclosed as of December 31, 2018 and lease liabilities recorded on January 1, 2019 is as follows:

($ millions)
Operating lease commitments as of December 31, 2018	222
Effect of discounting	(21	)
Operating leases discounted using the incremental borrowing rate(1)	201
Finance lease liabilities recognized as at December 31, 2018	89
Recognition exemption for short term and low-value leases	(4	)
Lease liabilities as of January 1, 2019	286

(1) Weighted average incremental borrowing rate of 2.9% was applied at January 1, 2019, the date of implementation of IFRS 16, Leases.

Lease liabilities totaled $341 million as of December 31, 2019, including $61 million in current lease liabilities and $280 million in non-current lease liabilities. The contractual maturities of the undiscounted lease liabilities as of December 31, 2019, are as follows:

($ millions)	Lease liabilities undiscounted
Not later than one year	73
Between one and five years	176
Later than five years	200
Total lease liabilities undiscounted	449

($ millions)	Lease liabilities
Not later than one year	61
Between one and five years	140
Later than five years	140
Total lease liabilities	341

Additional disclosures

The following table provides additional disclosures related to right-of-use assets and lease liabilities:

($ millions)	2019
Interest expense on lease liabilities	11
Expense on short-term and low value leases	3
Total cash outflows for leases	59
Thereof:
Lease liability payments(1)	52
Interest payments(2)	5
Short-term and low value lease payments(2)	2

(1) Reported as cash outflows from financing activities net of lease incentives received

(2) Included within total net cash flows from operating activities

Prior to the adoption of IFRS 16, Alcon prepared the required disclosures for operating lease commitments and finance lease future minimum lease payments. Operational lease commitments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	50
Between one and five years	135
Later than five years	37
Total operational lease commitments	222

Future minimum lease payments under finance leases, together with the present value of the minimum lease payments as of December 31, 2018, were as follows:

($ millions)	2018
Not later than one year	—
Between one and five years	27
Later than five years	153
Total minimum lease liabilities	180
Less future finance charges	(91	)
Present value of minimum lease payments	89

XML

Financial and other non-current assets

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Financial and other non-current assets

Financial and other non-current assets

The below tables provide details related to Financial assets and Other non-current assets as of December 31, 2019 and 2018.

Financial assets

($ millions)	2019	2018
Long-term financial investments measured at FVOCI	31	19
Long-term financial investments measured at FVPL	28	67
Long-term receivables from customers	136	164
Minimum lease payments from finance lease agreements	78	91
Long-term loans, advances, and security deposits	34	47
Total financial assets	307	388

Minimum lease payments from finance lease agreements

The following table shows the receivables of the gross investments in finance leases and the net present value of the minimum lease payments, as well as unearned finance income, related to surgical equipment lease arrangements. The finance income is recorded in "Other income".

	2019							2018
($ millions)	Total future payments	Unearned interest income		Present value	Provision		Net book value	Total future payments	Unearned interest income		Present value	Provision		Net book value
Not later than one year(1)	51	(4	)	47	(1	)	46	64	(5	)	59	(2	)	57
Between one and five years	94	(5	)	89	(23	)	66	117	(9	)	108	(28	)	80
Later than five years	46	(1	)	45	(33	)	12	48	(2	)	46	(35	)	11
Total	191	(10	)	181	(57	)	124	229	(16	)	213	(65	)	148

(1) The current portion of the minimum lease payments is recorded in trade receivables or other current assets (to the extent not yet invoiced).

Other non-current assets

($ millions)	2019	2018
Deferred compensation plans	122	95
Prepaid post-employment benefit plans	13	12
Other non-current assets	50	41
Total other non-current assets	185	148

XML

Financial instruments - additional disclosures - Schedule of fair value of assets and liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	$ 307	$ 388
Total financial assets at fair value and amortized cost or cost	2,949	2,301
Total financial liabilities at fair value and amortized cost	(4,896)	(1,113)
Measured at FVPL [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(259)	(162)
Measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(243)	(162)
Measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(16)	0
Valued at amortized cost or cost [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(4,637)	(951)
Valued at amortized cost or cost [member] | Non-current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(3,218)	0
Valued at amortized cost or cost [member] | Current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(245)	(47)
Measured at FVOCI [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	31	19
Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	31	19
Measured at FVPL [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	62	98
Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	28	67
Measured at FVPL [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	33	31
Measured at FVPL [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	1	0
Valued at amortized cost or cost [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	2,034	1,957
Valued at amortized cost or cost [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	136	164
Valued at amortized cost or cost [member] | Minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	78	91
Level 3 [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(243)	(162)	$ (113)
Level 3 [member] | Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	31	19	26
Level 3 [member] | Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial assets at fair value and amortized cost or cost	61	98	$ 78
Recurring fair value measurement [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	307	388
Current financial assets	533	341
Total financial assets at fair value and amortized cost or cost	840	729
Total financial liabilities at fair value and amortized cost	(3,722)	(209)
Recurring fair value measurement [member] | Measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(243)	(162)
Recurring fair value measurement [member] | Measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(16)	0
Recurring fair value measurement [member] | Valued at amortized cost or cost [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(3,463)	(47)
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Non-current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(3,218)	0
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(245)	(47)
Recurring fair value measurement [member] | Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	31	19
Recurring fair value measurement [member] | Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	28	67
Recurring fair value measurement [member] | Measured at FVPL [member] | Money market funds [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	120
Recurring fair value measurement [member] | Measured at FVPL [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	33	31
Recurring fair value measurement [member] | Measured at FVPL [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	1	0
Recurring fair value measurement [member] | Valued at amortized cost or cost [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	248	302
Current financial assets	379	310
Total financial assets at fair value and amortized cost or cost	627	612
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	136	164
Current financial assets	122	133
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	78	91
Current financial assets	46	57
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Long-term loans, advances, and security deposits [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	34	47
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | Other receivables, security deposits and current assets [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	147	52
Recurring fair value measurement [member] | Valued at amortized cost or cost [member] | VAT receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	64	68
Recurring fair value measurement [member] | Level 1 [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	120	0
Total financial assets at fair value and amortized cost or cost	120	0
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Non-current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Money market funds [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	120
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Measured at FVPL [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Long-term loans, advances, and security deposits [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | Other receivables, security deposits and current assets [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 1 [member] | Valued at amortized cost or cost [member] | VAT receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	1	0
Total financial assets at fair value and amortized cost or cost	1	0
Total financial liabilities at fair value and amortized cost	(16)	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(16)	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Non-current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Money market funds [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Measured at FVPL [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	1	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Long-term loans, advances, and security deposits [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | Other receivables, security deposits and current assets [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 2 [member] | Valued at amortized cost or cost [member] | VAT receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	59	86
Current financial assets	33	31
Total financial assets at fair value and amortized cost or cost	92	117
Total financial liabilities at fair value and amortized cost	(243)	(162)
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Contingent consideration liabilities [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	(243)	(162)
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Derivative financial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Non-current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Current financial debt [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Total financial liabilities at fair value and amortized cost	0	0
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVOCI [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	31	19
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	28	67
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Money market funds [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Current portion of long-term financial investments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	33	31
Recurring fair value measurement [member] | Level 3 [member] | Measured at FVPL [member] | Derivative fInancial instruments [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Long-term receivables from customers [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Minimum lease payments from finance leases [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Long-term loans, advances, and security deposits [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Non-current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | Other receivables, security deposits and current assets [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	0	0
Recurring fair value measurement [member] | Level 3 [member] | Valued at amortized cost or cost [member] | VAT receivables [member]
Disclosure of fair value measurement of assets and liabilities [Line Items]
Current financial assets	$ 0	$ 0

XML

Segment Information - Narrative (Details)	Dec. 31, 2019 segment
Operating Segments [Abstract]
Number of reporting segments	2

XML

Other current assets (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Subclassifications of assets, liabilities and equities [abstract]
Current portion of long-term financial investments measured at FVPL	$ 33	$ 31
Current portion of long-term receivables from customers	122	133
Current portion of minimum lease payments from finance lease agreements	46	57
Prepaid expenses	89	46
Other receivables, security deposits and current assets	147	52
Derivative financial instruments	1	0
VAT receivable	64	68
Total other current assets	$ 502	$ 387

XML

Provisions and other non-current liabilities - Provisions and other non-current liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Accrued liability for employee benefits:
Defined benefit pension plans	$ 291	$ 254
Other long-term employee benefits and deferred compensation	140	104
Other post-employment benefits	423	345
Provisions for product liabilities, governmental investigations and other legal matters	0	0
Contingent consideration	208	143
Other non-current liabilities	106	67
Total provisions and other non-current liabilities	$ 1,168	$ 913

XML

Trade receivables - Movement in provision for trade receivables (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of changes in allowance account for credit losses of financial assets [abstract]
Beginning balance	$ (54)	$ (77)	$ (55)
Transfers with former parent	0	4	0
Provisions for doubtful trade receivables charged to the consolidated income statement	(17)	(17)	(28)
Utilization of provisions for doubtful trade receivables	7	16	2
Reversal of provisions for doubtful trade receivables	15	16	6
Currency translation effects	1	4	(2)
Ending balance	$ (48)	$ (54)	$ (77)

XML

Selected accounting policies - Schedule of useful lives for property, plant, and equipment (Details)	12 Months Ended
	Dec. 31, 2019
Bottom of range [member] | Buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	20 years
Bottom of range [member] | Machinery and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	7 years
Bottom of range [member] | Furniture and vehicles [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	5 years
Bottom of range [member] | Computer equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	3 years
Top of range [member] | Buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	40 years
Top of range [member] | Machinery and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	20 years
Top of range [member] | Furniture and vehicles [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	10 years
Top of range [member] | Computer equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Useful life	7 years

XML

Related parties transactions (Tables)

12 Months Ended

Dec. 31, 2019

Related Party [Abstract]

Disclosure of transactions between related parties

The following table summarizes compensation information for key management personnel (7 members for all years presented):

($ millions)	2019	2018	2017
Cash and other compensation	12.5	10.3	9.3
Post-employment benefits	0.9	0.8	0.8
Equity-based compensation	10.7	11.3	6.8
Total	24.1	22.4	16.9

The following table summarizes amounts for the years ended December 31, 2019, 2018, and 2017:    

($ millions)	2019 (1)	2018	2017
Sales to former parent	—	4	4
Contract manufacturing revenues from former parent	47	—	—
Purchases from former parent	19	4	3

($ millions)	December 31, 2018(1)
Trade and other receivables from former parent	20
Trade and other payables to former parent	85
Other financial receivables from former parent	39
Other financial liabilities to former parent	67

(1)

Activity presented strictly relates to the period during which Novartis was a related party (up to April 9, 2019).

XML

Financial and other non-current assets - Other Non-current Assets (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Subclassifications of assets, liabilities and equities [abstract]
Deferred compensation plans	$ 122	$ 95
Prepaid post-employment benefit plans	13	12
Other non-current assets	50	41
Total other non-current assets	$ 185	$ 148

XML

Post-employment benefits for associates - Schedule of expected future cash flows (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Pension plans [member]
Employer contributions
2020 (estimated)	$ 14
Other post-employment benefit plans [member]
Employer contributions
2020 (estimated)	0
2020 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	41
2020 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	21
2021 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	26
2021 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	22
2022 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	27
2022 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	24
2023 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	27
2023 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	25
2024 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	32
2024 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	26
2025-2029 [member] | Pension plans [member]
Expected future benefit payments
Expected future benefit payments	169
2025-2029 [member] | Other post-employment benefit plans [member]
Expected future benefit payments
Expected future benefit payments	$ 133

XML

Post-employment benefits for associates - Weighted average actuarial assumptions (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pension plans [member]
Disclosure of defined benefit plans [line items]
Discount rate	1.70%	2.20%
Expected rate of pension increase	1.20%	1.10%
Expected rate of salary increase	3.30%	2.80%
Interest on savings account	1.00%	0.80%
Current average life expectancy for a 65-year-old male (in years)	21 years	21 years
Current average life expectancy for a 65-year-old female (in years)	24 years	23 years
Other post-employment benefit plans [member]
Disclosure of defined benefit plans [line items]
Discount rate	3.30%	4.30%
Expected rate of pension increase
Expected rate of salary increase
Interest on savings account
Current average life expectancy for a 65-year-old male (in years)	21 years	21 years
Current average life expectancy for a 65-year-old female (in years)	23 years	23 years

XML

Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Disclosure of components of income (loss) before taxes

(Loss) before taxes

($ millions)	2019		2018		2017
Switzerland	(274	)	(227	)	(104	)
Foreign	(58	)	(73	)	(23	)
Total (loss) before taxes	(332	)	(300	)	(127	)

Disclosure of components of current and deferred income tax expense

Current and deferred income tax (expense)/income

($ millions)	2019		2018		2017
Switzerland	(34	)	(77	)	(8	)
Foreign	(168	)	(157	)	(95	)
Current income tax expense	(202	)	(234	)	(103	)
Switzerland	(246	)	78		7
Foreign	124		229		479
Deferred tax (expense)/income	(122	)	307		486
Total income tax (expense)/income	(324	)	73		383

Disclosure of reconciliation of tax rate

The main elements contributing to the difference between Alcon's overall applicable tax rate and the effective tax rate are summarized in the below table.

	2019				2018				2017
	$ m		%		$ m		%		$ m		%
Applicable tax rate	39		11.7	%	82		27.3	%	37		29.1	%
Effect of disallowed expenditures	(23	)	(6.9	)%	(26	)	(8.7	)%	(12	)	(9.4	)%
Effect of share based compensation	(1	)	(0.3	)%	(2	)	(0.7	)%	(4	)	(3.1	)%
Effect of income taxed at reduced rates	2		0.6	%	2		0.7	%	—		—
Effect of tax credits and allowances	7		2.1	%	13		4.3	%	5		3.9	%
Effect of adjustments to contingent consideration liabilities	11		3.3	%	11		3.7	%	(8	)	(6.3	)%
Effect of option payments	(12	)	(3.6	)%	(17	)	(5.7	)%	(12	)	(9.4	)%
Effect of liquidation of a subsidiary	—		—		—		—		(10	)	(7.9	)%
Effect of tax benefits expiring in 2017(1)	—		—		—		—		(12	)	(9.4	)%
Effect of tax rate changes (2)	(342	)	(103.0	)%	(14	)	(4.7	)%	—		—
Effect of changes in uncertain tax positions	10		3.0	%	(33	)	(11.0	)%	(10	)	(7.9	)%
Effect of other items	(2	)	(0.6	)%	(4	)	(1.2	)%	(4	)	(3.2	)%
Effect of prior year items(3)	(13	)	(3.9	)%	61		20.3	%	—		—	%
Effect of tax rate change on current and deferred tax assets and liabilities from US tax reform (4)	—		—	%	—		—	%	413		325.2	%
Effective tax rate	(324	)	(97.6	)%	73		24.3	%	383		301.6	%

(1) Effect of tax benefits expiring in 2017 relates to a Swiss subsidiary that was not subject to income tax through the end of calendar year 2017.

(2) Effect of tax rate changes in 2019 relates primarily to (i) the adoption of the Swiss Tax Reform which has resulted in a non-cash tax increase in the tax expense of $304 million relating to the re-measurement of the Swiss deferred tax balances and (ii) a $31 million re-measurement of US deferred tax balances as a result of rate changes in the US following legal entity reorganizations executed related to the Spin-off.

(3) In 2019, the prior year items relate to changes in certain estimates which resulted in a $13 million tax expense. In 2018, the prior year items relate to out of period income tax benefit of $61 million, which Alcon concluded was not material to the current period or the prior periods to which they relate.

(4)

Effect of tax rate change on US current and deferred tax assets and liabilities in 2017 relate to the enactment of the Tax Cuts and Jobs Act by the US, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. This required a re-measurement of the deferred tax balances and a portion of the current tax payables.

XML

Equity-based compensation - Equity-based compensation activity (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2018 shares $ / shares
Novartis equity plan select, outside North America [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Options outstanding at January 1 (in shares) | shares	500
Sold or exercised (in shares) | shares	(100)
Options outstanding at December 31 (in shares) | shares	426
Exercisable (in shares) | shares	400
Options outstanding at January 1, weighted average exercise price (in dollars per share)	$ 61.4
Sold or exercised, weighted average exercise price (in dollars per share)	59.7
Options outstanding at December 31, weighted average exercise price (in dollars per share)	61.1
Exercisable, weighted average exercise price (in dollars per share)	61.4
Options outstanding at January 1, weighted average exercise price	24.7
Sold or exercised, weighted average exercise price	29.1
Exercisable, weighted average exercise price	26.5
Options outstanding at December 31, weighted average exercise price	$ 26.5
Novartis equity plan select, North America [member]
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Options outstanding at January 1 (in shares) | shares	1,800
Sold or exercised (in shares) | shares	(500)
Options outstanding at December 31 (in shares) | shares	1,288
Exercisable (in shares) | shares	1,300
Options outstanding at January 1, weighted average exercise price (in dollars per share)	$ 62.6
Sold or exercised, weighted average exercise price (in dollars per share)	62.4
Options outstanding at December 31, weighted average exercise price (in dollars per share)	62.5
Exercisable, weighted average exercise price (in dollars per share)	62.6
Options outstanding at January 1, weighted average exercise price	21.4
Sold or exercised, weighted average exercise price	25.8
Exercisable, weighted average exercise price	23.2
Options outstanding at December 31, weighted average exercise price	$ 23.2

XML

Financial and other non-current assets (Tables)

12 Months Ended

Dec. 31, 2019

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of financial assets

Financial assets

($ millions)	2019	2018
Long-term financial investments measured at FVOCI	31	19
Long-term financial investments measured at FVPL	28	67
Long-term receivables from customers	136	164
Minimum lease payments from finance lease agreements	78	91
Long-term loans, advances, and security deposits	34	47
Total financial assets	307	388

The below table provides detail related to financial instruments as of December 31, 2019 and 2018.

($ millions)	Note	2019		2018
Cash and cash equivalents
Cash in current accounts		392		227
Cash held in time deposits and money market funds		430		—
Total Cash and cash equivalents		822		227
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	31		19
Total financial assets - measured at FVOCI		31		19
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,390		1,253
Receivables from former parent	25	—		20
Income tax receivables		17		33
Other financial receivables from former parent	25	—		39
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	379		310
Long-term receivables from customers	12	136		164
Non-current minimum lease payments from finance lease agreements	12	78		91
Long-term loans, advances, and security deposits	12	34		47
Total financial assets - measured at amortized costs		2,034		1,957
Financial assets - measured at fair value through profit and loss ("FVPL")
Current portion of long-term financial investments	15	33		31
Derivative fInancial instruments	15	1		—
Long-term financial investments	12	28		67
Total financial assets - measured at FVPL		62		98
Total financial assets		2,949		2,301
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	245		47
Lease liabilities	16	61		—
Trade payables		833		663
Payables to former parent	25	—		85
Other financial liabilities to former parent	25	—		67
Total current financial liabilities - measured at amortized cost or cost		1,139		862
Non-current financial liabilities
Financial debts	17	3,218		—
Lease liabilities	16	280		89
Total non-current financial liabilities - measured at amortized cost or cost		3,498		89
Total financial liabilities - measured at amortized cost or cost		4,637		951
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	243		162
Derivative financial instruments	17	16		—
Total financial liabilities - measured at FVPL		259		162
Total financial liabilities		4,896		1,113
Net financial assets and financial liabilities		(1,947	)	1,188

(1)

The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029 and 2049 notes recorded in Non-current financial debts with a fair value of $2,049 million and carrying value of $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.

Disclosure of maturity analysis of finance lease payments receivable

The following table shows the receivables of the gross investments in finance leases and the net present value of the minimum lease payments, as well as unearned finance income, related to surgical equipment lease arrangements. The finance income is recorded in "Other income".

	2019							2018
($ millions)	Total future payments	Unearned interest income		Present value	Provision		Net book value	Total future payments	Unearned interest income		Present value	Provision		Net book value
Not later than one year(1)	51	(4	)	47	(1	)	46	64	(5	)	59	(2	)	57
Between one and five years	94	(5	)	89	(23	)	66	117	(9	)	108	(28	)	80
Later than five years	46	(1	)	45	(33	)	12	48	(2	)	46	(35	)	11
Total	191	(10	)	181	(57	)	124	229	(16	)	213	(65	)	148

(1) The current portion of the minimum lease payments is recorded in trade receivables or other current assets (to the extent not yet invoiced).

Disclosure of details of non-current assets

($ millions)	2019	2018
Deferred compensation plans	122	95
Prepaid post-employment benefit plans	13	12
Other non-current assets	50	41
Total other non-current assets	185	148

XML

Goodwill and intangible assets - Goodwill and intangible asset by segment (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	$ 10,231	$ 10,679
Goodwill [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	8,905	8,899
Alcon brand name [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	2,980	2,980
Acquired research & development [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	725	246
Technologies [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	677	1,185
Currently marketed products [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	1,598	1,848
Marketing know-how [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	3,814	4,054
Other intangible assets (including software) [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	437	366
Operating segments [member] | Surgical [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	5,770	6,053
Operating segments [member] | Surgical [member] | Goodwill [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	4,544	4,538
Operating segments [member] | Surgical [member] | Acquired research & development [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	721	216
Operating segments [member] | Surgical [member] | Technologies [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	677	1,185
Operating segments [member] | Surgical [member] | Currently marketed products [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	374	438
Operating segments [member] | Surgical [member] | Marketing know-how [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	3,814	4,054
Operating segments [member] | Surgical [member] | Other intangible assets (including software) [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	184	160
Operating segments [member] | Vision Care [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	1,481	1,646
Operating segments [member] | Vision Care [member] | Goodwill [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	4,361	4,361
Operating segments [member] | Vision Care [member] | Acquired research & development [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	4	30
Operating segments [member] | Vision Care [member] | Currently marketed products [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	1,224	1,410
Operating segments [member] | Vision Care [member] | Other intangible assets (including software) [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	253	206
Unallocated amounts [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	2,980	2,980
Unallocated amounts [member] | Alcon brand name [member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets and goodwill	$ 2,980	$ 2,980

XML

Segment Information - Net sales by business franchise (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of products and services [line items]
Net sales	$ 7,362	$ 7,149	$ 6,785
Surgical [member]
Disclosure of products and services [line items]
Net sales	4,174	3,999	3,733
Surgical [member] | Implantables [Member]
Disclosure of products and services [line items]
Net sales	1,210	1,136	1,045
Surgical [member] | Consumables [Member]
Disclosure of products and services [line items]
Net sales	2,304	2,227	2,104
Surgical [member] | Equipment & other [Member]
Disclosure of products and services [line items]
Net sales	660	636	584
Vision Care [member]
Disclosure of products and services [line items]
Net sales	3,188	3,150	3,052
Vision Care [member] | Contact lenses [Member]
Disclosure of products and services [line items]
Net sales	1,969	1,928	1,836
Vision Care [member] | Ocular health [Member]
Disclosure of products and services [line items]
Net sales	$ 1,219	$ 1,222	$ 1,216

XML

Taxes - (Loss) before taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
(Loss) before taxes	$ (332)	$ (300)	$ (127)
Country of domicile [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
(Loss) before taxes	(274)	(227)	(104)
Foreign countries [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
(Loss) before taxes	$ (58)	$ (73)	$ (23)

XML

Deferred tax assets and liabilities - Net deferred tax balance (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes [Abstract]
Offsetting amounts	$ 578	$ 3
Deferred tax assets	354	670
Deferred tax liabilities	(1,386)	(1,528)
Net deferred tax balance	$ (1,032)	$ (858)	$ (1,114)

XML

Non-current and current financial debts - Schedule of financial debts (Details) - USD ($) $ in Millions		Dec. 31, 2019	Dec. 31, 2018
Disclosure of detailed information about borrowings [line items]
Non-current financial debts	[1],[2]	$ 3,218.0	$ 0.0
Current financial debts		261.0	47.0
Total financial debts		3,479.0	47.0
Facility B [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		793.0	0.0
Facility C [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		391.0	0.0
Local facilities, Japan [Member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		55.0	0.0
Current financial debts		115.0	0.0
Senior notes due 2026 [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		495.0	0.0
Senior notes due 2029 [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		991.0	0.0
Senior notes due 2049 [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		493.0	0.0
Revolving facility [member]
Disclosure of detailed information about borrowings [line items]
Non-current financial debts		0.0	0.0
Local facilities, other [Member]
Disclosure of detailed information about borrowings [line items]
Current financial debts		101.0	32.0
Other short-term financial debts [member]
Disclosure of detailed information about borrowings [line items]
Current financial debts		29.0	15.0
Derivatives [member]
Disclosure of detailed information about borrowings [line items]
Current financial debts		16.0	$ 0.0
Total financial debts		$ 16.0

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

Financial and other non-current assets - Minimum finance lease payments (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of maturity analysis of finance lease payments receivable [line items]
Total future payments	$ 191	$ 229
Unearned interest income	(10)	(16)
Present value	181	213
Provision	(57)	(65)
Net book value	124	148
Not later than one year [member]
Disclosure of maturity analysis of finance lease payments receivable [line items]
Total future payments	51	64
Unearned interest income	(4)	(5)
Present value	47	59
Provision	(1)	(2)
Net book value	46	57
Between one and five years [member]
Disclosure of maturity analysis of finance lease payments receivable [line items]
Total future payments	94	117
Unearned interest income	(5)	(9)
Present value	89	108
Provision	(23)	(28)
Net book value	66	80
Later than five years [member]
Disclosure of maturity analysis of finance lease payments receivable [line items]
Total future payments	46	48
Unearned interest income	(1)	(2)
Present value	45	46
Provision	(33)	(35)
Net book value	$ 12	$ 11

XML

Property, plant and equipment (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2019		Dec. 31, 2018		Dec. 31, 2017	Jan. 01, 2019
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance	[1],[2]	$ 2,800
Depreciation charge		(267)		$ (239)		$ (215)
Impairment charge		(8)		(2)		0
Property, plant and equipment, ending balance	[1],[2]	3,113		2,800
Commitments for purchases of property, plant & equipment		212		93
Right-of-use assets		324	[1],[2]	79	[1],[2]		$ 279
Capitalized borrowing costs				1
Gross carrying amount [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		4,890		4,448
Additions		607		524
Impact of business combinations		1		1
Disposals and derecognitions		(179)		(87)
Transfers with former parent		35		163
Reclassification to right-of-use assets				(86)
Reclassifications for assets placed in service		0
Other reclassifications		(27)
Currency translation effects		(5)		(73)
Property, plant and equipment, ending balance		5,322		4,890		4,448
Gross carrying amount [member] | Changes in net current assets and other operating cash flow items [member]
Reconciliation of changes in property, plant and equipment [abstract]
Additions		56
Accumulated depreciation and amortisation [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		(2,090)		(1,888)
Depreciation charge		(267)		(239)
Impairment charge		(8)		(2)
Disposals and derecognitions		165		87
Transfers with former parent		17		91
Reclassification to right-of-use assets				7
Other reclassifications		7
Currency translation effects		1		36
Property, plant and equipment, ending balance		(2,209)		(2,090)		(1,888)
Land [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		53
Property, plant and equipment, ending balance		33		53
Land [member] | Gross carrying amount [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		60		53
Transfers with former parent				10
Other reclassifications		(27)
Currency translation effects				(3)
Property, plant and equipment, ending balance		33		60		53
Land [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		(7)		(3)
Transfers with former parent				4
Other reclassifications		7
Property, plant and equipment, ending balance		0		(7)		(3)
Buildings [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		969
Property, plant and equipment, ending balance		1,010		969
Buildings [member] | Gross carrying amount [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		1,527		1,386
Additions		11		4
Disposals and derecognitions		(17)		(16)
Transfers with former parent		4		252
Reclassification to right-of-use assets				(86)
Reclassifications for assets placed in service		104
Currency translation effects		(1)		(13)
Property, plant and equipment, ending balance		1,628		1,527		1,386
Buildings [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		(558)		(447)
Depreciation charge		(73)		(70)
Disposals and derecognitions		14		15
Transfers with former parent		2		69
Reclassification to right-of-use assets				7
Currency translation effects		1		6
Property, plant and equipment, ending balance		(618)		(558)		(447)
Construction in progress [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		650
Property, plant and equipment, ending balance		747		650
Construction in progress [member] | Gross carrying amount [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		657		503
Additions		514		468
Disposals and derecognitions		(1)
Transfers with former parent		2		(302)
Reclassifications for assets placed in service		(417)
Currency translation effects				(12)
Property, plant and equipment, ending balance		755		657		503
Construction in progress [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		(7)
Impairment charge		(1)		(1)
Transfers with former parent				6
Property, plant and equipment, ending balance		(8)		(7)
Machinery and other equipment [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		1,128
Property, plant and equipment, ending balance		1,323		1,128
Machinery and other equipment [member] | Gross carrying amount [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		2,646		2,506
Additions		82		52
Impact of business combinations		1		1
Disposals and derecognitions		(161)		(71)
Transfers with former parent		29		203
Reclassifications for assets placed in service		313
Currency translation effects		(4)		(45)
Property, plant and equipment, ending balance		2,906		2,646		2,506
Machinery and other equipment [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in property, plant and equipment [abstract]
Property, plant and equipment, beginning balance		(1,518)		(1,438)
Depreciation charge		(194)		(169)
Impairment charge		(7)		(1)
Disposals and derecognitions		151		72
Transfers with former parent		15		12
Currency translation effects				30
Property, plant and equipment, ending balance		$ (1,583)		$ (1,518)		$ (1,438)

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

Right-of-use assets and Lease liabilities - Maturity of Lease Liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Jan. 01, 2019
Disclosure of maturity analysis of lease payments [Line Items]
Total lease liabilities undiscounted	$ 449
Total lease liabilities	341	$ 286
Not later than one year [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total lease liabilities undiscounted	73
Total lease liabilities	61
Between one and five years [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total lease liabilities undiscounted	176
Total lease liabilities	140
Thereafter [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total lease liabilities undiscounted	200
Total lease liabilities	$ 140

XML

Consolidated statement of cash flows - additional details (Tables)

12 Months Ended

Dec. 31, 2019

Cash Flow Statement [Abstract]

Disclosure of detailed information about cash flow statement line items

($ millions)	2019	2018		2017
Property, plant & equipment	275	241		215
Right-of-use assets	66	—		—
Intangible assets	1,084	1,397		1,090
Financial assets	31	(16	)	29
Total	1,456	1,622		1,334

Disclosure of detailed information of change in net current assets and other operating cash flow items

($ millions)	2019		2018		2017
(Increase) in inventories	(108	)	(150	)	(87	)
(Increase)/decrease in trade receivables	(115	)	53		(54	)
Increase in trade payables	84		44		48
Net change in other current assets	(26	)	83		87
Net change in other current liabilities	117		50		42
Total	(48	)	80		36

Disclosure of detailed information of cash flows arising from acquisitions

($ millions)	2019		2018		2017
Net assets recognized as a result of business combinations	(418	)	(286	)	(124	)
Payables contingent consideration	135		102		54
Other payments	—		(55	)
Cash flows	(283	)	(239	)	(70	)

Disclosure of reconciliation of liabilities arising from financing activities

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent		Total
January 1, 2019	(39	)	—		47		67		114
Proceeds from non-current financial debts, net of issuance costs			3,724						3,724
Repayment of non-current financial debts			(509	)					(509	)
Proceeds from Bridge Facility, net of issuance costs					1,495				1,495
Repayment of Bridge Facility					(1,500	)			(1,500	)
Change in current financial debts					202				202
Non-cash changes in derivatives and other fair value adjustments			2		20				22
Change in other financial receivables from former parent	39
Change in other financial liabilities to former parent							(67	)	(67	)
Currency translation effects			1		(3	)			(2	)
December 31, 2019	—		3,218		261		—		3,479

	Financial Assets		Financial Liabilities
($ millions)	Other financial receivables from former parent		Non-current financial debts		Current financial debts		Other financial liabilities to former parent	Total
January 1, 2018	(65	)	84		65		46	195
Change in current financial debts					(6	)		(6	)
Change in other financial receivables from former parent	26
Change in other financial liabilities to former parent							21	21
Non-cash change in finance lease obligation			5					5
Currency translation effects					(12	)		(12	)
Reclassification from non-current financial debts to lease liabilities			(89	)				(89	)
December 31, 2018	(39	)	—		47		67	114

XML

Post-employment benefits for associates - Summary of funded and unfunded DBO and net liability (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	$ 242	$ 232
Current service cost	22	28
Interest cost (income)	5	6
Past service costs and settlements	2	1
Administrative expenses	1	1
Currency translation effects	(6)	(6)
Employer contributions	21	19
Effect of acquisitions, divestments or transfers	(5)	2
Net defined benefit liability (asset) - December 31	278	242
Funded status	(272)	(238)
Limitation on recognition of fund surplus at January 1	(4)	(6)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(2)	2
Limitation on recognition of fund surplus at December 31	(6)	(4)
Pension plans [member] | Benefit obligation [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	662	671
Current service cost	22	28
Interest cost (income)	13	15
Past service costs and settlements	2	0
Administrative expenses	1	1
Remeasurement losses/(gains) arising from changes in financial assumptions	71	(17)
Remeasurement losses/(gains) arising from changes in demographic assumptions	6	1
Experience-related remeasurement (gains)/losses	(5)	2
Currency translation effects	1	(15)
Benefit payments	15	29
Contributions of associates	(5)	(4)
Effect of acquisitions, divestments or transfers	(40)	1
Net defined benefit liability (asset) - December 31	723	662
Pension plans [member] | Plan assets [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	(424)	(445)
Interest cost (income)	(8)	(9)
Return on plan assets excluding interest income	36	(13)
Currency translation effects	(7)	9
Benefit payments	(15)	(29)
Employer contributions	21	19
Contributions of associates	5	4
Settlements	0	(1)
Effect of acquisitions, divestments or transfers	35	1
Net defined benefit liability (asset) - December 31	(451)	(424)
Other post-employment benefit plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	345	317
Current service cost	8	11
Interest cost (income)	14	11
Past service costs and settlements	0	0
Administrative expenses	0	0
Currency translation effects	0	0
Employer contributions	(28)	(11)
Effect of acquisitions, divestments or transfers	0	0
Net defined benefit liability (asset) - December 31	423	345
Funded status	(423)	(345)
Change in limitation on recognition of fund surplus (including exchange rate differences)	0	0
Other post-employment benefit plans [member] | Benefit obligation [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	385	382
Current service cost	8	11
Interest cost (income)	15	13
Past service costs and settlements	0	0
Administrative expenses	0	0
Remeasurement losses/(gains) arising from changes in financial assumptions	52	(3)
Remeasurement losses/(gains) arising from changes in demographic assumptions	(1)	6
Experience-related remeasurement (gains)/losses	(20)	(11)
Currency translation effects	0	0
Benefit payments	16	13
Contributions of associates	0	0
Effect of acquisitions, divestments or transfers	0	0
Net defined benefit liability (asset) - December 31	423	385
Other post-employment benefit plans [member] | Plan assets [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability (asset) - January 1	(40)	(65)
Interest cost (income)	(1)	(2)
Return on plan assets excluding interest income	3	(3)
Currency translation effects	0	0
Benefit payments	(16)	(13)
Employer contributions	(28)	(11)
Contributions of associates	0	0
Settlements	0	0
Effect of acquisitions, divestments or transfers	0	0
Net defined benefit liability (asset) - December 31	$ 0	$ (40)

XML

Non-current and current financial debts (Tables)

12 Months Ended

Dec. 31, 2019

Financial Instruments [Abstract]

Schedule of financial debts

The below table summarizes current and non-current Financial debts outstanding as of December 31, 2019 and 2018.

($ millions)	2019	2018
Non-current financial debts
Facility B	793	—
Facility C	391	—
Local facilities (Japan)	55	—
Series 2026 notes	495	—
Series 2029 notes	991	—
Series 2049 notes	493	—
Revolving facility	—	—
Total non-current financial debts	3,218	—
Current financial debts
Local facilities:
Japan	115	—
All others	101	32
Other short-term financial debts	29	15
Derivatives	16	—
Total current financial debts	261	47
Total financial debts	3,479	47

Disclosure of maturity analysis for non-derivative financial liabilities [text block]

The contractual maturities of the undiscounted lease liabilities as of December 31, 2019, are as follows:

($ millions)	Lease liabilities undiscounted
Not later than one year	73
Between one and five years	176
Later than five years	200
Total lease liabilities undiscounted	449

($ millions)	Lease liabilities
Not later than one year	61
Between one and five years	140
Later than five years	140
Total lease liabilities	341

The following table provides details on the maturity of the contractual undiscounted cash flows for Alcon's borrowings as of December 31, 2019:

($ millions)	Nominal amount - Current and non-current financial debt		Derivatives	Total
Not later than one year	245		16	261
Between one and five years	1,247		—	1,247
Later than five years	2,000		—	2,000
Total cash flows	3,492		16	3,508
Unamortized debt discount and issuance costs	(29	)	—	(29	)
Total carrying value	3,463		16	3,479

The following table provides details on the maturity of the future contractual interest payments commitments:

($ millions)	Interest
Not later than one year	94
Between one and five years	336
Later than five years	653
Total cash flows	1,083

XML

Provisions and other current liabilities - Accruals for deductions from revenue (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Subclassifications of assets, liabilities and equities [abstract]
January 1	$ 194	$ 213	$ 182
Additions	662	603	619
Payments/utilizations	(646)	(613)	(601)
Changes in offset against gross trade receivables	1	2	7
Currency translation effects	1	(11)	6
December 31	$ 212	$ 194	$ 213

XML

Consolidated statement of cash flows - additional details - Cash flows arising from acquisitions of businesses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash Flow Statement [Abstract]
Net assets recognized as a result of business combinations	$ (418)	$ (286)	$ (124)
Payables contingent consideration	135	102	54
Other payments	0	(55)
Cash flows	$ (283)	$ (239)	$ (70)

XML

Subsequent events (Details) - Feb. 25, 2020 - Potential ordinary share transactions [member] $ in Millions	USD ($)	SFr / shares
Disclosure of non-adjusting events after reporting period [line items]
Dividends declared (per share) | SFr / shares		SFr 0.19
Dividends declared, amount | $	$ 95

XML

Related parties transactions - Schedule of related parties transactions (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Apr. 08, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Related Party [Abstract]
Sales to former parent		$ 0	$ 4	$ 4
Contract manufacturing revenues from former parent	$ 47	47	0	0
Purchases from former parent	$ 19	19	4	$ 3
Receivables from former parent		0	20
Payables to former parent		0	85
Other financial receivables from former parent		0	39
Other financial liabilities to former parent		$ 0	$ 67

XML

Post-employment benefits for associates

12 Months Ended

Dec. 31, 2019

Employee Benefits [Abstract]

Post-employment benefits for associates

Post-employment benefits for associates

Defined benefit plans

In addition to the legally required social security schemes, Alcon has sponsored numerous independent pension and other post-employment benefit plans and participates in plans of Novartis. In most cases, these plans are externally funded in entities that are legally separate from Alcon. For certain subsidiaries, however, no independent plan assets exist for the pension and other post-employment benefit obligations of associates. In these cases the related unfunded liability is included in the consolidated balance sheet. The value of the post-employment benefits promised under the pension and other post-employment benefit plans is represented by the defined benefit obligation ("DBO"), which is measured based on the projected unit credit method ("PUC").

Independent actuaries reappraise the DBOs of all major pension and other post-employment benefit plans annually. Plan assets are recognized at fair value.

The major plans are based in Switzerland, the United States, Germany, and the United Kingdom. They represent 87% of Alcon's total DBO. Details of the plans in those significant countries are provided below.

The pension plans in Switzerland represent the most significant portion of Alcon's total DBO and the largest component of Alcon's total plan assets. The principal plans in Switzerland are funded. Following the Spin-off, all Alcon Swiss associates are continuing to participate in the Novartis pension funds in which they were previously participating for a temporary period. It is expected that Alcon's employee benefit obligation will be transferred to an Alcon sponsored pension arrangement in early 2021. For the principal plans, active insured members born on or after January 1, 1956, or having joined the plans after December 31, 2010, their benefits are partially linked to the contributions paid into the plan. Certain features of Swiss pension plans required by law preclude the plans from being categorized as defined contribution plans. These factors include a minimum interest guarantee on retirement savings accounts, a pre-determined factor for converting the accumulated savings account balance into a pension and embedded death and disability benefits.

All benefits granted under Swiss-based principal pension plans are vested, and Swiss legislation prescribes that the employer has to contribute a fixed percentage of an associate's pay to an external pension fund. Additional employer contributions may be required whenever the plan's statutory funding ratio falls below a certain level. The associate also contributes to the plan. The pension plans are run by separate legal entities, each governed by a board of trustees, that, for the principal plans, consists of representatives nominated by Alcon's Former Parent and the active insured associates. The boards of trustees are responsible for the plan design and asset investment strategy.

The United States pension plans represent the second largest component of Alcon's total pension DBO and the third largest component of Alcon's total plan assets. The principal plans (Qualified Plans) are funded, whereas the plan providing additional benefits for executives (Defined Benefit Restoration Plan) is unfunded. Employer contributions are required for Qualified Plans whenever the statutory funding ratio falls below a certain level. Furthermore, associates in the United States are covered under other post-employment benefit plans which represent 99% of the total DBO for other post-employment benefit plans. These benefits in the US primarily consist of post-employment healthcare which has been closed to new members since 2015. Part of the costs of these plans is reimbursable under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. There is no statutory funding requirement for these plans.

The major pension arrangements in Germany are governed by the Occupational Pensions Act ("BetrAVG") and represent the third largest component of Alcon's total pensions DBO. The plans are partly funded by a Contractual Trust arrangement or direct insurances. The employer is responsible for contributing the premiums to the insurances and paying certain benefits when they fall due. All plans are closed for new entrants and the benefits are fully vested for all participants. For some participants the benefits are based on final salary and length of employment, and for others the benefit is earned each year based on the current salary in the year of service. Associates do not contribute towards the cost of the benefits.

The pension plans in the United Kingdom represent the fourth largest component of Alcon's total DBO and the second largest component of Alcon's total plan assets. The Alcon United Kingdom Pension Scheme is governed and administered by a board of trustees in accordance with its Trust Deed. United Kingdom legislation requires that pension schemes are funded prudently (i.e., to a level in excess of the "best estimate" expected cost of providing benefits). Funding is assessed on a triennial basis using (prudent) assumptions agreed by the board of trustee(s) and Alcon. The board of trustees are responsible for jointly agreeing with Alcon the level of contributions needed to eliminate any shortfall over a reasonable period of time, typically not exceeding 10 years. Under the governing documentation, if a surplus remains once liabilities have been settled it would be refunded to Alcon.

One of Alcon's pension plans has a surplus that is not recognized, on the basis that future economic benefits are not available to the entity in the form of a reduction in future contributions or a cash refund.

The following tables summarize the funded and unfunded DBO for pension and other post-employment benefit plans of Alcon associates at December 31, 2019 and 2018:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Benefit obligation at January 1	662		671		385		382
Current service cost	22		28		8		11
Interest cost	13		15		15		13
Past service costs and settlements	2		—		—		—
Administrative expenses	1		1		—		—
Remeasurement losses/(gains) arising from changes in financial assumptions	71		(17	)	52		(3	)
Remeasurement losses/(gains) arising from changes in demographic assumptions	6		1		(1	)	6
Experience-related remeasurement (gains)/losses	(5	)	2		(20	)	(11	)
Currency translation effects	1		(15	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Contributions of associates	5		4		—		—
Effect of acquisitions, divestments or transfers	(40	)	1		—		—
Benefit obligation at December 31	723		662		423		385
Fair value of plan assets at January 1	424		445		40		65
Interest income	8		9		1		2
Return on plan assets excluding interest income	36		(13	)	3		(3	)
Currency translation effects	7		(9	)	—		—
Employer contributions	21		19		(28	)	(11	)
Contributions of associates	5		4		—		—
Settlements	—		(1	)	—		—
Benefit payments	(15	)	(29	)	(16	)	(13	)
Effect of acquisitions, divestments or transfers	(35	)	(1	)	—		—
Fair value of plan assets at December 31	451		424		—		40
Funded status	(272	)	(238	)	(423	)	(345	)
Limitation on recognition of fund surplus at January 1	(4	)	(6	)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(2	)	2
Limitation on recognition of fund surplus at December 31	(6	)	(4	)
Net liability in the balance sheet at December 31	(278	)	(242	)	(423	)	(345	)

The reconciliation of the net liability from January 1 to December 31 is as follows:

	Pension plans				Other post-employment benefit plans
($ millions)	2019		2018		2019		2018
Net liability at January 1	(242	)	(232	)	(345	)	(317	)
Current service cost	(22	)	(28	)	(8	)	(11	)
Net interest expense	(5	)	(6	)	(14	)	(11	)
Administrative expenses	(1	)	(1	)	—		—
Past service costs and settlements	(2	)	(1	)	—		—
Remeasurements	(36	)	1		(28	)	5
Currency translation effects	6		6		—		—
Employer contributions	21		19		(28	)	(11	)
Effect of acquisitions, divestments or transfers	5		(2	)	—		—
Change in limitation on recognition of fund surplus	(2	)	2		—		—
Net liability at December 31	(278	)	(242	)	(423	)	(345	)
Amounts recognized in the balance sheet
Prepaid benefit cost	13		12		—		—
Accrued benefit liability	(291	)	(254	)	(423	)	(345	)

The following tables show a breakdown of the DBO for pension plans by geography and type of member and the breakdown of plan assets into the geographical locations in which they are held:

	2019
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	244		127		109		98	145		723
Thereof: unfunded plans	47		29		—		—	23		99
Thereof: unfunded portion of funded plans(1)	65		18		92		—	17		192
By type of member
Active	216		40		61		—	123		440
Deferred pensioners	12		46		27		54	12		151
Pensioners	16		41		21		44	10		132
Fair value of plan assets at December 31	132		80		17		109	113		451
Funded status	(112	)	(47	)	(92	)	11	(32	)	(272	)

(1) Excludes $8 million of Prepaid benefit costs and the limitation on recognition of fund surplus.

	2018
($ millions)	Switzerland		United States		Germany		United Kingdom	Rest of the world		Total
Benefit obligation at December 31	201		111		94		86	170		662
Thereof: unfunded plans	49		21		—		—	18		88
Thereof: unfunded portion of funded plans(1)	46		23		78		—	19		166
By type of member
Active	166		36		56		—	148		406
Deferred pensioners	18		32		22		69	9		150
Pensioners	17		43		16		17	13		106
Fair value of plan assets at December 31	106		67		16		98	137		424
Funded status	(95	)	(44	)	(78	)	12	(33	)	(238	)

(1) Excludes $4 million of Prepaid benefit cost and the limitation on recognition of fund surplus.

The following table shows the principal weighted average actuarial assumptions used for calculating defined benefit plans and other post-employment benefits of Alcon associates:

	Pension plans				Other post-employment benefit plans
	2019		2018		2019		2018
Discount rate	1.7	%	2.2	%	3.3	%	4.3	%
Expected rate of pension increase	1.2	%	1.1	%
Expected rate of salary increase	3.3	%	2.8	%
Interest on savings account	1.0	%	0.8	%
Current average life expectancy for a 65-year-old male (in years)	21		21		21		21
Current average life expectancy for a 65-year-old female (in years)	24		23		23		23

Changes in the aforementioned actuarial assumptions can result in significant volatility in the accounting for the pension plans in the Consolidated Financial Statements. This can result in substantial changes in Alcon's other comprehensive income, non-current liabilities and prepaid pension assets.

The DBO is significantly impacted by assumptions related to the rate used to discount the actuarially determined post-employment benefit liability. This rate is based on yields of high-quality corporate bonds in the country of the plan. Decreasing corporate bond yields decrease the discount rate, so that the DBO increases and the funded status decreases.

In Switzerland, an increase in the DBO due to lower discount rates is slightly offset by lower future benefits expected to be paid on the associate's savings account where the assumption on interest accrued changes in line with the discount rate.

The impact of decreasing interest rates on a plan's assets is more difficult to predict. A significant part of the plan assets is invested in bonds. Bond values usually rise when interest rates decrease and may therefore partially compensate for the decrease in the funded status. Furthermore, pension assets also include significant holdings of equity instruments. Share prices tend to rise when interest rates decrease and therefore often counteract the negative impact of the rising DBO on the funded status (although the correlation of interest rates with equities is not as strong as with bonds, especially in the short term).

The expected rate for pension increases significantly affects the DBO of most plans in Switzerland, Germany and the United Kingdom. Such pension increases also decrease the funded status, although there is no strong correlation between the value of the plan assets and pension/inflation increases.

Assumptions regarding life expectancy significantly impact the DBO. An increase in longevity increases the DBO. There is no offsetting impact from the plan assets, as no longevity bonds or swaps are held by the pension funds. Generational mortality tables are used where this data is available.

The following table shows the sensitivity of the defined benefit pension and other post-employment benefit obligations to the principal actuarial assumptions as of December 31, 2019:

($ millions)	Change in 2019 year-end
25 basis point increase in discount rate	(43	)
25 basis point decrease in discount rate	46
1 year increase in life expectancy	32
25 basis point increase in rate of pension increase	15
25 basis point decrease in rate of pension increase	(27	)
25 basis point increase of interest on savings account	2
25 basis point decrease of interest on savings account	(2	)
25 basis point increase in rate of salary increase	6
25 basis point decrease in rate of salary increase	(6	)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes of the assumptions may be correlated. When calculating the sensitivity of the DBO to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the PUC method at the end of the reporting period) has been applied as when calculating the net liability recognized in the Consolidated Balance Sheets.

The healthcare cost trend rate assumptions used for other post-employment benefits are as follows:

	2019		2018		2017
Healthcare cost trend rate assumed for next year	6.5	%	7.0	%	6.5	%
Rate to which the cost trend rate is assumed to decline	4.5	%	4.5	%	4.5	%
Year that the rate reaches the ultimate trend rate	2028		2028		2025

The following table shows the weighted average plan asset allocation of funded defined benefit pension plans at December 31, 2019, and 2018:

	Pension plans
(as a percentage)	Long-term target minimum	Long-term target maximum	2019	2018
Equity securities	15	40	32	28
Debt securities	20	60	42	43
Real estate	5	20	7	9
Alternative investments	0	20	15	17
Cash and other investments	0	15	4	3
Total			100	100

Cash and most of the equity and debt securities have a quoted market price in an active market. Real estate and alternative investments, which include hedge fund and private equity investments, usually do not have a quoted market price.

The strategic allocation of assets of the different pension plans is determined with the objective of achieving an investment return that, together with employer contributions and contributions of associates, is sufficient to

maintain reasonable control over the various funding risks of the plans. Based upon the market and economic environments, actual asset allocations may temporarily be permitted to deviate from policy targets.

The weighted average duration of the DBO is 15.6 years (2018: 16.9 years).

Alcon's ordinary contribution to the various pension plans is based on the rules of each plan. Additional contributions are made whenever required by statute or law (i.e., usually when statutory funding levels fall below pre-determined thresholds).

The following table summarizes expected future cash flows for pension and other post-employment benefit plans as of December 31, 2019:

($ millions)	Pension plans	Other post-employment benefit plans
Employer contributions
2020 (estimated)	14	—
Expected future benefit payments
2020	41	21
2021	26	22
2022	27	24
2023	27	25
2024	32	26
2025-2029	169	133

Defined contribution plans

In many subsidiaries, associates are covered by defined contribution plans. Contributions charged to the 2019 Consolidated Income Statement for the defined contribution plans were $128 million (2018: $105 million; 2017: $97 million).

XML

Subsequent events

12 Months Ended

Dec. 31, 2019

Events After Reporting Period [Abstract]

Subsequent events

Subsequent events

Subsequent to December 31, 2019, the Revolving Facility was extended to March 2025. The Revolving Facility remained undrawn as of February 25, 2020.

On February 25, 2020, the Alcon Board of Directors approved the proposal to submit the 2019 financial statements of Alcon Inc. and these Consolidated Financial Statements for approval at the Annual General Meeting on May 6, 2020.  Additionally on February 25, 2020, the Board proposed a dividend of CHF 0.19 per share to be approved at the same Annual General Meeting.  If approved, the total dividend payments would amount to approximately $95 million using the CHF/USD exchange rate as of February 21,2020.

The Board of Directors has evaluated subsequent events as they relate to Alcon for potential recognition or disclosures from January 1, 2020 to the date of the approval of these Consolidated Financial Statements and has determined there are no additional subsequent events to be reported in these Consolidated Financial Statements.

XML

Share capital and earnings/(loss) per share

12 Months Ended

Dec. 31, 2019

Earnings per share [abstract]

Share capital and earnings/(loss) per share

Share capital and earnings/(loss) per share

8.1    Share capital

The share capital of the Company as of December 31, 2019 is CHF 20 million, which is comprised of 491.7 million common shares, nominal value of CHF 0.04 per share.

On April 9, 2019, the date of the Spin-off, 488.2 million shares of the Company's common stock were distributed to Novartis shareholders and Novartis ADR holders. The shares were distributed from the Company's existing

share capital of 488.7 million shares. On November 19, 2019, the Board of Directors approved an increase of CHF 120,000 out of the Company’s authorized share capital through the issuance of 3.0 million additional shares, nominal value CHF 0.04 per share, to fulfill the future vesting of existing and future equity-based awards. These additional shares were issued as Treasury shares in December 2019 as part of the Company’s authorized share capital according to the authority granted by the shareholders at the Company’s last Annual General Meeting held on January 29, 2019 and reflected in the Company’s Articles of Incorporation. While the transaction increases the number of shares available for delivery under the Company’s equity-based compensation plans, there is no immediate impact on the number of shares outstanding or earnings per share calculations until shares are delivered to plan participants under the plans.

During the period, 0.1 million shares were delivered for awards vesting under the Company's equity incentive programs. At December 31, 2019, the Company had 488.3 million outstanding common shares and 3.4 million shares held in the Company's treasury share accounts. Of the Company's 3.4 million shares held in treasury, 3.0 million may only be used to fulfill the future vesting of existing and future equity-based awards.

No dividends were declared or paid from April 9, 2019 through December 31, 2019.

8.2    Earnings/(loss) per share

Basic earnings/(loss) per share is computed by dividing net (loss)/income for the period by the weighted average number of common shares outstanding during the period. For the year ended December 31, 2019, the weighted average number of shares outstanding was 488.2 million shares. For periods prior to the Spin-off, the denominator for basic earnings/(loss) per share uses the number of shares distributed on the date of the Spin-off.

The only potentially dilutive securities are the outstanding unvested equity-based awards under the Company's equity-based incentive plans, as described in Note 24 to these Consolidated Financial Statements. Except when the effect would be anti-dilutive, the calculation of diluted earnings/(loss) per common share includes the weighted average net impact of unvested equity-based awards. For the year ended December 31, 2019, 1.9 million shares related to unvested equity-based awards have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. For periods prior to the Spin-off, the denominator for diluted earnings per share uses the number of shares distributed on the date of the Spin-off.

The average market value of the Company's shares for the purposes of calculating the potentially dilutive effects of unvested equity-based awards was based on quoted market prices for the period that the unvested awards were outstanding.

XML

Significant transactions

12 Months Ended

Dec. 31, 2019

Business Combinations1 [Abstract]

Significant transactions

Significant transactions

Significant transactions in 2019

Refinancing of Bridge Facility and Facility A financial debts

On September 23, 2019, Alcon through its wholly-owned subsidiary, Alcon Finance Corporation ("AFC"), refinanced $2 billion of the bridge and term loans, which had been issued in April 2019, with $500 million of 2.750% senior notes due 2026, $1 billion of 3.000% senior notes due 2029, and $500 million of 3.800% senior notes due 2049. The bridge and term loans, notes, and refinancing are described in Note 17 of these Consolidated Financial Statements.

Completion of Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders

The Spin-off was executed on April 9, 2019 as described in Note 1. The below transactions occurred in April 2019, immediately preceding the Spin-off.

On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans which were executed on March 6, 2019 and are described in Note 17 of these Consolidated Financial Statements. These borrowings increased the Company's third party financial debts to $3.5 billion at the date of Spin-off. Through a series of intercompany transactions, Alcon then paid approximately $3.1 billion in cash to Novartis and its affiliates prior to the Spin-off, decreasing Alcon's net assets to approximately $20.0 billion at the date of Spin-off.

Surgical-Acquisition of PowerVision, Inc.

On March 13, 2019, Alcon acquired 100% of the outstanding shares and equity of PowerVision, Inc. ("PowerVision"), a privately-held, US-based company focused on developing accommodative, implantable intraocular lenses. This technology allows the intraocular lens to respond to natural muscular movements in the eye to alter shape and focus. The PowerVision acquisition was executed as part of Alcon's commitment to innovation in advanced technology intraocular lenses ("AT-IOLs").

The fair value of the total purchase consideration was $424 million. This amount consisted of an initial cash payment of $289 million and the fair value of the probability weighted contingent consideration of $135 million due to PowerVision shareholders, which they are eligible to receive upon the achievement of specified regulatory and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $418 million, which consisted of in-process research & development intangible assets of $505 million, a net deferred tax liability of $93 million, and other net assets of $6 million. Goodwill of $6 million was also recognized which is attributable to the assembled workforce. Cash paid for the acquisition, net of cash acquired, was $283 million. The 2019 results of operations since the date of acquisition and transaction costs for the acquisition were not material.

Significant transactions in 2018

Surgical-Acquisition of TrueVision Systems, Inc.

On December 19, 2018, Alcon acquired 100% of the outstanding shares and equity of TrueVision Systems, Inc. ("TrueVision"), a privately held US-based company. TrueVision developed the 3D scope technology currently used in the commercially marketed Alcon product NGENUITY. This technology allows retina surgery specialists to have a 3D visualization of the back of the eye with greater depth and detail than traditional microscopes.

The fair value of the total purchase consideration was $146 million. This amount consists of an initial cash payment of $110 million and the fair value of the probability weighted contingent consideration of $36 million due to TrueVision shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $144 million, which consisted of intangible assets of $172 million, net deferred tax liability of $29 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

Vision Care-Acquisition of Tear Film Innovations, Inc.

On December 17, 2018, Alcon acquired 100% of the outstanding shares and equity of Tear Film Innovations, Inc. ("Tear Film"), a privately held US-based company. Tear Film is the manufacturer of the iLux device, an innovative therapeutic device used to treat Meibomian Gland Dysfunction, a leading cause of dry eye.

The fair value of the total purchase consideration was $145 million. This amount consists of an initial cash payment of $79 million and the fair value of the probability weighted contingent consideration of $66 million due to Tear Film previous owners, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $143 million, which consisted of intangible assets of $174 million, net deferred tax liability of $37 million, cash of $5 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

Significant transactions in 2017

Surgical-Acquisition of ClarVista Medical, Inc.

On September 20, 2017, Alcon acquired 100% of the outstanding shares and equity of ClarVista Medical, Inc., a privately held California, US-based company focused on developing the HARMONI Modular IOL System, a novel intraocular lens ("IOL") used to restore vision after cataract surgery.

The fair value of the total purchase consideration was $125 million. This amount consists of an initial cash payment of $71 million and the net present value of the contingent consideration of $54 million due to ClarVista shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $123 million, which consisted of intangible assets of $178 million, deferred tax assets of $8 million, cash and cash equivalents of $1 million and deferred tax liabilities of $64 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2017 results of operations since the date of acquisition were not material.

Acquisitions of businesses

Fair value of assets and liabilities arising from acquisitions

($ millions)	2019		2018		2017
Property, plant & equipment	1		1		—
Currently marketed products	—		346		—
Acquired research & development	505		—		178
Deferred tax assets	28		12		8
Inventories	—		3		—
Trade receivables and other current assets	—		2		—
Cash and cash equivalents	6		5		1
Deferred tax liabilities	(121	)	(78	)	(64	)
Trade payables and other liabilities	(1	)	(4	)	—
Net identifiable assets acquired	418		287		123
Acquired liquidity	(6	)	(5	)	(1	)
Goodwill	6		4		2
Net assets recognized as a result of business combinations	418		286		124

Note 4 of these Consolidated Financial Statements details significant acquisitions of businesses, which were PowerVision in 2019, TrueVision and Tear Film in 2018 and ClarVista in 2017. No goodwill from 2019, 2018 or 2017 is tax-deductible.

XML

CONSOLIDATED BALANCE SHEETS (parenthetical) $ in Millions	Dec. 31, 2018 USD ($)
Statement [Line Items]
Financial debts	$ 0	[1],[2]
Lease liabilities	89	[1],[2]
Property, plant & equipment	2,800	[1],[2]
Right-of-use assets	79	[1],[2]
Previously stated [member]
Statement [Line Items]
Financial debts	89
Property, plant & equipment	$ 79

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of cash flows [abstract]
Net (loss)/income	[1]	$ (656)	$ (227)	$ 256
Adjustments to reconcile net (loss)/income to net cash flows from operating activities
Depreciation, amortization, impairments and fair value adjustments		1,456	1,622	1,334
Equity-based compensation expense		83	0	0
Non-cash change in provisions and other non-current liabilities		(4)	(10)	75
Losses on disposal and other adjustments on property, plant & equipment and other non-current assets, net		5	4	41
Interest expense		113	24	27
Other financial income & expense		32	28	23
Taxes		324	(73)	(383)
Interest received		7	1	0
Interest paid		(67)	(10)	(13)
Other financial payments		(18)	(29)	(22)
Taxes paid		(224)	(203)	(84)
Net cash flows before working capital changes and net payments out of provisions and other non-current liabilities		1,051	1,127	1,254
Net payments out of provisions and other cash movements in non-current liabilities		(83)	(67)	(72)
Change in net current assets and other operating cash flow items		(48)	80	36
Net cash flows from operating activities		920	1,140	1,218
Purchase of property, plant & equipment		(553)	(524)	(415)
Proceeds from sales of property, plant & equipment		0	0	1
Purchase of intangible assets		(123)	(188)	(81)
Purchase of financial assets		(59)	(57)	(114)
Proceeds from sales of financial assets		8	7	2
Purchase of other non-current assets		(1)	0	(2)
Acquisitions of businesses, net		(283)	(239)	(70)
Net cash flows used in investing activities		(1,011)	(1,001)	(679)
Movements of financing provided to former parent, net		(2,658)	(119)	(424)
Proceeds from non-current financial debts, net of issuance costs		3,724	0	0
Proceeds from Bridge Facility, net of issuance costs		1,495	0	0
Repayment of non-current financial debts		(509)	0	0
Repayment of Bridge Facility		(1,500)	0	0
Change in current financial debts		202	(6)	(111)
Lease payments		(52)	0	0
Change in other financial receivables from former parent		39	26	(24)
Change in other financial liabilities to former parent		(67)	21	20
Other financing cash flows		(15)	0	0
Net cash flows from/(used in) financing activities		659	(78)	(539)
Effect of exchange rate changes on cash and cash equivalents		27	(6)	10
Net change in cash and cash equivalents		595	55	10
Cash and cash equivalents at January 1		227	172	162
Cash and cash equivalents at December 31		$ 822	$ 227	$ 172

[1] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

XML

CONSOLIDATED INCOME STATEMENTS (parenthetical) - shares shares in Millions		12 Months Ended		24 Months Ended
		Dec. 31, 2019	Dec. 31, 2017	Dec. 31, 2018
Profit or loss [abstract]
Weighted average number of shares outstanding (in shares)	[1]	488.2	488.2	488.2

[1] For periods prior to the Spin-off, the denominator for basic and diluted earnings per share was calculated using 488.2 million shares of common stock distributed in the Spin-off.

XML

Right-of-use assets and Lease liabilities - Future Minimum Finance Lease Payable (Details) $ in Millions	Dec. 31, 2018 USD ($)
Disclosure of maturity analysis of lease payments [Line Items]
Total minimum lease liabilities	$ 180
Less future finance charges	(91)
Present value of minimum lease payments	89
Not later than one year [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total minimum lease liabilities	0
Between one and five years [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total minimum lease liabilities	27
Later than five years [member]
Disclosure of maturity analysis of lease payments [Line Items]
Total minimum lease liabilities	$ 153

XML

Financial and other non-current assets - Financial Assets (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Subclassifications of assets, liabilities and equities [abstract]
Long-term financial investments measured at FVOCI	$ 31	$ 19
Long-term financial investments measured at FVPL	28	67
Long-term receivables from customers	136	164
Minimum lease payments from finance lease agreements	78	91
Long-term loans, advances, and security deposits	34	47
Total financial assets	$ 307	$ 388

XML

Share capital and earnings/(loss) per share (Details) SFr / shares in Units, SFr in Thousands				9 Months Ended	12 Months Ended
		Nov. 19, 2019 CHF (SFr) SFr / shares shares	Apr. 09, 2019 shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 shares	Dec. 31, 2019 CHF (SFr) SFr / shares shares
Earnings per share [abstract]
Share capital				$ 20,000,000	$ 20,000,000	$ 0		SFr 20,000
Number of shares issued			488,700,000	491,700,000	491,700,000			491,700,000
Nominal value (in CHF per share) | SFr / shares		SFr 0.04						SFr 0.04
Number of shares distributed in spin-off (in shares)			488,200,000
Increase (decrease) in share capital authorised (in shares) | SFr		SFr 120
Number of additional shares authorized (in shares)		3,000,000.0
Increase (decrease) in number of shares outstanding (in shares)					100,000
Number of shares outstanding (in shares)				488,300,000	488,300,000			488,300,000
Number of shares held in treasury (in shares)				3,400,000	3,400,000			3,400,000
Number of shares allowed to be used to fulfill future vesting (in shares)				3,000,000.0	3,000,000.0			3,000,000.0
Dividends | $				$ 0
Adjusted weighted average number of ordinary shares outstanding (in shares)	[1]				488,200,000	488,200,000	488,200,000
Antidilutive securities excluded from computation (in shares)					1,900,000

[1] For periods prior to the Spin-off, the denominator for basic and diluted earnings per share was calculated using 488.2 million shares of common stock distributed in the Spin-off.

XML

Right-of-use assets and Lease liabilities - Reconciliation of Lease Commitments (Details) - USD ($) $ in Millions	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease commitments			$ (222)
Effect of discounting			(21)
Operating leases discounted using the incremental borrowing rate			201
Finance lease liabilities			$ 89
Recognition exemption for short term and low-value leases		$ (4)
Lease liabilities	$ 341	$ 286
Weighted average lessee's incremental borrowing rate applied to lease liabilities recognised at date of initial application of IFRS 16		2.90%

XML

Goodwill and intangible assets - Summary of movements of goodwill and intangible assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	$ 10,679
Amortization charge	(1,084)	$ (1,019)	$ (1,033)
Intangible assets and goodwill, ending balance	10,231	10,679
Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	19,492	19,014
Impact of business combinations	505	346
Additions	132	197
Reclassifications	0
Disposals, derecognitions, and transfers	(41)	(65)
Intangible assets and goodwill, ending balance	20,088	19,492	19,014
Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(8,813)	(7,473)
Amortization charge	(1,084)	(1,019)
Disposals, derecognitions, and transfers	40	57
Impairment charge		(378)
Intangible assets and goodwill, ending balance	(9,857)	(8,813)	(7,473)
Goodwill [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	8,899
Intangible assets and goodwill, ending balance	8,905	8,899
Goodwill [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	8,899	8,895
Impact of business combinations	6	4
Intangible assets and goodwill, ending balance	8,905	8,899	8,895
Alcon brand name [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	2,980
Intangible assets and goodwill, ending balance	2,980	2,980
Alcon brand name [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	2,980	2,980
Intangible assets and goodwill, ending balance	2,980	2,980	2,980
Acquired research & development [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	246
Intangible assets and goodwill, ending balance	725	246
Acquired research & development [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	249	242
Impact of business combinations	505
Additions	7	71
Reclassifications	(33)
Disposals, derecognitions, and transfers		(64)
Intangible assets and goodwill, ending balance	728	249	242
Acquired research & development [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(3)	(58)
Disposals, derecognitions, and transfers		57
Impairment charge		(2)
Intangible assets and goodwill, ending balance	(3)	(3)	(58)
Technologies [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,185
Intangible assets and goodwill, ending balance	677	1,185
Technologies [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	5,369	5,368
Additions		1
Intangible assets and goodwill, ending balance	5,369	5,369	5,368
Technologies [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(4,184)	(3,635)
Amortization charge	(508)	(510)
Impairment charge		(39)
Intangible assets and goodwill, ending balance	(4,692)	(4,184)	(3,635)
Currently marketed products [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,848
Intangible assets and goodwill, ending balance	1,598	1,848
Currently marketed products [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	4,440	4,094
Impact of business combinations		346
Intangible assets and goodwill, ending balance	4,440	4,440	4,094
Currently marketed products [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(2,592)	(2,008)
Amortization charge	(250)	(247)
Impairment charge		(337)
Intangible assets and goodwill, ending balance	(2,842)	(2,592)	(2,008)
Marketing know-how [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	4,054
Intangible assets and goodwill, ending balance	3,814	4,054
Marketing know-how [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	5,960	5,960
Intangible assets and goodwill, ending balance	5,960	5,960	5,960
Marketing know-how [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(1,906)	(1,668)
Amortization charge	(240)	(238)
Intangible assets and goodwill, ending balance	(2,146)	(1,906)	(1,668)
Other intangible assets (including software) [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	366
Intangible assets and goodwill, ending balance	437	366
Other intangible assets (including software) [member] | Gross carrying amount [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	494	370
Additions	125	125
Reclassifications	33
Disposals, derecognitions, and transfers	(41)	(1)
Intangible assets and goodwill, ending balance	611	494	370
Other intangible assets (including software) [member] | Accumulated depreciation and amortisation [member]
Reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(128)	(104)
Amortization charge	(86)	(24)
Disposals, derecognitions, and transfers	40
Intangible assets and goodwill, ending balance	$ (174)	$ (128)	$ (104)

XML

Segment Information - Additional balance sheet disclosure (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of operating segments [line items]
Goodwill	$ 8,905	$ 8,899
Intangible assets other than goodwill	10,231	10,679
Operating segments [member] | Surgical [member]
Disclosure of operating segments [line items]
Goodwill	4,544	4,538
Intangible assets other than goodwill	5,770	6,053
Operating segments [member] | Vision Care [member]
Disclosure of operating segments [line items]
Goodwill	4,361	4,361
Intangible assets other than goodwill	1,481	1,646
Unallocated amounts [member]
Disclosure of operating segments [line items]
Goodwill	0	0
Intangible assets other than goodwill	$ 2,980	$ 2,980

XML

Interest expense and other financial income & expense - Other financial income & expense (Details) - USD ($) $ in Millions		12 Months Ended
	Sep. 23, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Analysis of income and expense [abstract]
Interest income		$ 8	$ 2	$ 0
Loss on extinguishment of financial debt	$ (4)	(4)	0	0
Other financial expense		(18)	(3)	(3)
Monetary loss from hyperinflation accounting		(2)	(1)	0
Currency result, net		(16)	(26)	(20)
Total other financial income & expense		$ (32)	$ (28)	$ (23)

XML

Deferred tax assets and liabilities - Activity in deferred tax asset (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	$ 673	$ 550
Gross, deferred tax liabilities, beginning balance	(1,531)	(1,664)
Net, deferred tax liability (asset), beginning balance	(858)	(1,114)
Credited/(charged) to income	(122)	307
Credited (charged) to equity	25	(2)
Charged to other comprehensive income	16	(2)
Impact of business combinations	(93)	(66)
Other movements	0	19
Gross deferred tax assets, ending balance	932	673
Gross, deferred tax liabilities, ending balance	(1,964)	(1,531)
Net, deferred tax liability (asset), ending balance	(1,032)	(858)
Property, plant & equipment
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	12	10
Gross, deferred tax liabilities, beginning balance	(94)	(69)
Net, deferred tax liability (asset), beginning balance	(82)	(59)
Credited/(charged) to income	(71)	(23)
Other movements	(6)
Gross deferred tax assets, ending balance	13	12
Gross, deferred tax liabilities, ending balance	(172)	(94)
Net, deferred tax liability (asset), ending balance	(159)	(82)
Intangible assets
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance
Gross, deferred tax liabilities, beginning balance	(1,403)	(1,531)
Net, deferred tax liability (asset), beginning balance	(1,403)	(1,531)
Credited/(charged) to income	(194)	212
Impact of business combinations	(121)	(78)
Other movements	11	(6)
Gross deferred tax assets, ending balance	6
Gross, deferred tax liabilities, ending balance	(1,713)	(1,403)
Net, deferred tax liability (asset), ending balance	(1,707)	(1,403)
Pensions and other benefit obligations of associates
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	125	121
Gross, deferred tax liabilities, beginning balance	(2)	(7)
Net, deferred tax liability (asset), beginning balance	123	114
Credited/(charged) to income	18	13
Charged to other comprehensive income	11	(2)
Other movements	(11)	(2)
Gross deferred tax assets, ending balance	151	125
Gross, deferred tax liabilities, ending balance	(10)	(2)
Net, deferred tax liability (asset), ending balance	141	123
Inventories
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	262	169
Gross, deferred tax liabilities, beginning balance	(14)	(32)
Net, deferred tax liability (asset), beginning balance	248	137
Credited/(charged) to income	111	82
Other movements	(11)	29
Gross deferred tax assets, ending balance	371	262
Gross, deferred tax liabilities, ending balance	(23)	(14)
Net, deferred tax liability (asset), ending balance	348	248
Tax loss carry- forwards
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	39	18
Gross, deferred tax liabilities, beginning balance
Net, deferred tax liability (asset), beginning balance	39	18
Credited/(charged) to income	50	9
Impact of business combinations	28	12
Other movements	(7)
Gross deferred tax assets, ending balance	110	39
Gross, deferred tax liabilities, ending balance	0
Net, deferred tax liability (asset), ending balance	110	39
Other assets, provisions and accruals
Reconciliation of changes in deferred tax liability (asset) [abstract]
Gross deferred tax assets, beginning balance	235	232
Gross, deferred tax liabilities, beginning balance	(18)	(25)
Net, deferred tax liability (asset), beginning balance	217	207
Credited/(charged) to income	(36)	14
Credited (charged) to equity	25	(2)
Charged to other comprehensive income	5
Other movements	24	(2)
Gross deferred tax assets, ending balance	281	235
Gross, deferred tax liabilities, ending balance	(46)	(18)
Net, deferred tax liability (asset), ending balance	$ 235	$ 217

XML

Provisions and other current liabilities - Restructuring provisions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of changes in other provisions [abstract]
January 1	$ 42,000,000
December 31	0	$ 42,000,000
Restructuring provisions [member]
Reconciliation of changes in other provisions [abstract]
January 1	8,000,000	3,000,000	$ 13,000,000
Additions	32,000,000	13,000,000	0
Cash payments	(10,000,000)	(7,000,000)	(6,000,000)
Releases	(2,000,000)	(2,000,000)	(4,000,000)
Currency translation effects	0	1,000,000	0
December 31	$ 28,000,000	$ 8,000,000	$ 3,000,000

XML

Consolidated statement of cash flows - additional details - Reconciliation of assets and liabilities arising from financing activities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Proceeds from non-current financial debts, net of issuance costs	$ 3,724	$ 0	$ 0
Repayment of non-current financial debts	(509)	0	0
Proceeds from Bridge Facility, net of issuance costs	1,495	0	0
Repayment of Bridge Facility	(1,500)	0	0
Change in current financial debts	202	(6)	(111)
Change in other financial receivables from former parent	39	26	(24)
Change in other financial liabilities to former parent	(67)	21	20
Non-current financial debt [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Financial liabilities, beginning balance	0	84
Proceeds from non-current financial debts, net of issuance costs	3,724
Repayment of non-current financial debts	(509)
Non-cash changes in derivatives and other fair value adjustments	2
Non-cash change in finance lease obligation		5
Currency translation effects	1
Reclassification from non-current financial debts to lease liabilities		(89)
Financial liabilities, ending balance	3,218	0	84
Current financial debt [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Financial liabilities, beginning balance	47	65
Proceeds from Bridge Facility, net of issuance costs	1,495
Repayment of Bridge Facility	(1,500)
Change in current financial debts	202	(6)
Non-cash changes in derivatives and other fair value adjustments	20
Currency translation effects	(3)	(12)
Financial liabilities, ending balance	261	47	65
Other financial liabilities to former parent [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Financial liabilities, beginning balance	67	46
Change in other financial liabilities to former parent	(67)	21
Financial liabilities, ending balance	0	67	46
Total liabilities arising from financing activities [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Total, beginning balance	114	195
Proceeds from non-current financial debts, net of issuance costs	3,724
Repayment of non-current financial debts	(509)
Proceeds from Bridge Facility, net of issuance costs	1,495
Repayment of Bridge Facility	(1,500)
Change in current financial debts	202	(6)
Non-cash changes in derivatives and other fair value adjustments	22
Change in other financial receivables from former parent
Change in other financial liabilities to former parent	(67)	21
Non-cash change in finance lease obligation		5
Currency translation effects	(2)	(12)
Reclassification from non-current financial debts to lease liabilities		(89)
Total, ending balance	3,479	114	195
Other financial receivables from former parent [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Financial assets, beginning balance	(39)	(65)
Change in other financial receivables from former parent	39	26
Financial assets, ending balance	$ 0	$ (39)	$ (65)

XML

Acquisitions of businesses (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations1 [Abstract]

Disclosure of fair value of assets and liabilities arising from acquisitions

($ millions)	2019		2018		2017
Property, plant & equipment	1		1		—
Currently marketed products	—		346		—
Acquired research & development	505		—		178
Deferred tax assets	28		12		8
Inventories	—		3		—
Trade receivables and other current assets	—		2		—
Cash and cash equivalents	6		5		1
Deferred tax liabilities	(121	)	(78	)	(64	)
Trade payables and other liabilities	(1	)	(4	)	—
Net identifiable assets acquired	418		287		123
Acquired liquidity	(6	)	(5	)	(1	)
Goodwill	6		4		2
Net assets recognized as a result of business combinations	418		286		124

XML

Post-employment benefits for associates - Reconciliation of net liability (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	$ (242)	$ (232)
Current service cost	(22)	(28)
Net interest expense	(5)	(6)
Administrative expenses	(1)	(1)
Past service costs and settlements	(2)	(1)
Remeasurements	(36)	1
Currency translation effects	6	6
Employer contributions	21	19
Effect of acquisitions, divestments or transfers	5	(2)
Change in limitation on recognition of fund surplus	(2)	2
Net defined benefit liability	(278)	(242)
Other post-employment benefit plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	(345)	(317)
Current service cost	(8)	(11)
Net interest expense	(14)	(11)
Administrative expenses	0	0
Past service costs and settlements	0	0
Remeasurements	(28)	5
Currency translation effects	0	0
Employer contributions	(28)	(11)
Effect of acquisitions, divestments or transfers	0	0
Change in limitation on recognition of fund surplus	0	0
Net defined benefit liability	(423)	(345)
Prepaid benefit cost [member] | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	12
Net defined benefit liability	13	12
Prepaid benefit cost [member] | Other post-employment benefit plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	0
Net defined benefit liability	0	0
Accrued benefit liability [member] | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	(254)
Net defined benefit liability	(291)	(254)
Accrued benefit liability [member] | Other post-employment benefit plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Net defined benefit liability	(345)
Net defined benefit liability	$ (423)	$ (345)

XML

Financial instruments - additional disclosures (Tables)

12 Months Ended

Dec. 31, 2019

Financial Instruments [Abstract]

Details related to financial instruments

Financial assets

($ millions)	2019	2018
Long-term financial investments measured at FVOCI	31	19
Long-term financial investments measured at FVPL	28	67
Long-term receivables from customers	136	164
Minimum lease payments from finance lease agreements	78	91
Long-term loans, advances, and security deposits	34	47
Total financial assets	307	388

The below table provides detail related to financial instruments as of December 31, 2019 and 2018.

($ millions)	Note	2019		2018
Cash and cash equivalents
Cash in current accounts		392		227
Cash held in time deposits and money market funds		430		—
Total Cash and cash equivalents		822		227
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	31		19
Total financial assets - measured at FVOCI		31		19
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,390		1,253
Receivables from former parent	25	—		20
Income tax receivables		17		33
Other financial receivables from former parent	25	—		39
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	379		310
Long-term receivables from customers	12	136		164
Non-current minimum lease payments from finance lease agreements	12	78		91
Long-term loans, advances, and security deposits	12	34		47
Total financial assets - measured at amortized costs		2,034		1,957
Financial assets - measured at fair value through profit and loss ("FVPL")
Current portion of long-term financial investments	15	33		31
Derivative fInancial instruments	15	1		—
Long-term financial investments	12	28		67
Total financial assets - measured at FVPL		62		98
Total financial assets		2,949		2,301
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	245		47
Lease liabilities	16	61		—
Trade payables		833		663
Payables to former parent	25	—		85
Other financial liabilities to former parent	25	—		67
Total current financial liabilities - measured at amortized cost or cost		1,139		862
Non-current financial liabilities
Financial debts	17	3,218		—
Lease liabilities	16	280		89
Total non-current financial liabilities - measured at amortized cost or cost		3,498		89
Total financial liabilities - measured at amortized cost or cost		4,637		951
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	243		162
Derivative financial instruments	17	16		—
Total financial liabilities - measured at FVPL		259		162
Total financial liabilities		4,896		1,113
Net financial assets and financial liabilities		(1,947	)	1,188

(1)

The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029 and 2049 notes recorded in Non-current financial debts with a fair value of $2,049 million and carrying value of $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.

Details related to financial instruments

The below table provides detail related to financial instruments as of December 31, 2019 and 2018.

($ millions)	Note	2019		2018
Cash and cash equivalents
Cash in current accounts		392		227
Cash held in time deposits and money market funds		430		—
Total Cash and cash equivalents		822		227
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	31		19
Total financial assets - measured at FVOCI		31		19
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,390		1,253
Receivables from former parent	25	—		20
Income tax receivables		17		33
Other financial receivables from former parent	25	—		39
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	379		310
Long-term receivables from customers	12	136		164
Non-current minimum lease payments from finance lease agreements	12	78		91
Long-term loans, advances, and security deposits	12	34		47
Total financial assets - measured at amortized costs		2,034		1,957
Financial assets - measured at fair value through profit and loss ("FVPL")
Current portion of long-term financial investments	15	33		31
Derivative fInancial instruments	15	1		—
Long-term financial investments	12	28		67
Total financial assets - measured at FVPL		62		98
Total financial assets		2,949		2,301
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	245		47
Lease liabilities	16	61		—
Trade payables		833		663
Payables to former parent	25	—		85
Other financial liabilities to former parent	25	—		67
Total current financial liabilities - measured at amortized cost or cost		1,139		862
Non-current financial liabilities
Financial debts	17	3,218		—
Lease liabilities	16	280		89
Total non-current financial liabilities - measured at amortized cost or cost		3,498		89
Total financial liabilities - measured at amortized cost or cost		4,637		951
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	243		162
Derivative financial instruments	17	16		—
Total financial liabilities - measured at FVPL		259		162
Total financial liabilities		4,896		1,113
Net financial assets and financial liabilities		(1,947	)	1,188

(1) The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029 and 2049 notes recorded in Non-current financial debts with a fair value of $2,049 million and carrying value of $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.

Disclosure of fair value measurement of assets

The following tables summarize financial assets and liabilities measured at fair value on a recurring basis or at amortized cost or cost as of December 31, 2019 and 2018.

	December 31, 2019
($ millions)	Level 1	Level 2		Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—		31		—		31
Long-term financial investments measured at FVPL	—	—		28		—		28
Long-term receivables from customers	—	—		—		136		136
Non-current minimum lease payments from finance lease agreements	—	—		—		78		78
Long-term loans, advances, and security deposits	—	—		—		34		34
Total non-current financial assets	—	—		59		248		307
Current financial assets
Money market funds	120	—		—		—		120
Current portion of long-term financial investments measured at FVPL(1)	—	—		33		—		33
Current portion of long-term receivables from customers(1)	—	—		—		122		122
Current portion of minimum lease payments from finance lease agreements(1)	—	—		—		46		46
Other receivables, security deposits and current assets(1)	—	—		—		147		147
VAT receivables(1)	—	—		—		64		64
Derivative financial instruments(1)	—	1		—		—		1
Total current financial assets	120	1		33		379		533
Total financial assets at fair value and amortized cost or cost	120	1		92		627		840
Financial liabilities
Contingent consideration liabilities	—	—		(243	)	—		(243	)
Non-current financial debt	—	—		—		(3,218	)	(3,218	)
Current financial debt	—	—		—		(245	)	(245	)
Derivative financial instruments	—	(16	)	—		—		(16	)
Total financial liabilities at fair value and amortized cost	—	(16	)	(243	)	(3,463	)	(3,722	)

(1) Recorded in Other current assets.

	December 31, 2018
($ millions)	Level 1	Level 2	Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—	19		—		19
Long-term financial investments measured at FVPL	—	—	67		—		67
Long-term receivables from customers	—	—	—		164		164
Non-current minimum lease payments from finance lease agreements	—	—	—		91		91
Long-term loans, advances, and security deposits	—	—	—		47		47
Total non-current financial assets	—	—	86		302		388
Current financial assets(1)
Current portion of long-term financial investments measured at FVPL	—	—	31		—		31
Current portion of long-term receivables from customers	—	—	—		133		133
Current portion of minimum lease payments from finance lease agreements	—	—	—		57		57
Other receivables, security deposits and current assets	—	—	—		52		52
VAT receivables	—	—	—		68		68
Derivative financial instruments	—	—	—		—		—
Total current financial assets	—	—	31		310		341
Total financial assets at fair value and amortized cost or cost	—	—	117		612		729
Financial liabilities
Contingent consideration liabilities	—	—	(162	)	—		(162	)
Non-current financial debt	—	—	—		—		—
Current financial debt	—	—	—		(47	)	(47	)
Derivative financial instruments	—	—	—		—		—
Total financial liabilities at fair value and amortized cost	—	—	(162	)	(47	)	(209	)

(1)

Current financial assets referenced in the above table are recorded in Other current assets.

	Long-term financial investments measured at FVOCI				Financial investments measured at FVPL
($ millions)	2019		2018		2019		2018
Balance as of January 1(1)	19		26		98		78
Additions	17		11		34		92
Cash receipts and payments	—		—		(7	)	(5	)
Gains/(losses) recognized in consolidated statements of comprehensive (loss)/income	(7	)	(23	)	—		—
Unrealized gains/(losses) in consolidated income statements	—		—		(3	)	7
Amortization	—		—		(61	)	(74	)
Reclassification	2		5		—		—
Balance as of December 31	31		19		61		98

(1)

January 1, 2018 balances reflected in this table are as adjusted for adoption of IFRS 9, Financial Instruments.

Disclosure of fair value measurement of liabilities

	Contingent consideration liabilities
($ millions)	2019		2018
Balance as of January 1	(162	)	(113	)
Additions	(135	)	(102	)
Accretion for passage of time	(21	)	(9	)
Adjustments for changes in assumptions	75		62
Payments	—		—
Balance as of December 31	(243	)	(162	)

The following tables summarize financial assets and liabilities measured at fair value on a recurring basis or at amortized cost or cost as of December 31, 2019 and 2018.

	December 31, 2019
($ millions)	Level 1	Level 2		Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—		31		—		31
Long-term financial investments measured at FVPL	—	—		28		—		28
Long-term receivables from customers	—	—		—		136		136
Non-current minimum lease payments from finance lease agreements	—	—		—		78		78
Long-term loans, advances, and security deposits	—	—		—		34		34
Total non-current financial assets	—	—		59		248		307
Current financial assets
Money market funds	120	—		—		—		120
Current portion of long-term financial investments measured at FVPL(1)	—	—		33		—		33
Current portion of long-term receivables from customers(1)	—	—		—		122		122
Current portion of minimum lease payments from finance lease agreements(1)	—	—		—		46		46
Other receivables, security deposits and current assets(1)	—	—		—		147		147
VAT receivables(1)	—	—		—		64		64
Derivative financial instruments(1)	—	1		—		—		1
Total current financial assets	120	1		33		379		533
Total financial assets at fair value and amortized cost or cost	120	1		92		627		840
Financial liabilities
Contingent consideration liabilities	—	—		(243	)	—		(243	)
Non-current financial debt	—	—		—		(3,218	)	(3,218	)
Current financial debt	—	—		—		(245	)	(245	)
Derivative financial instruments	—	(16	)	—		—		(16	)
Total financial liabilities at fair value and amortized cost	—	(16	)	(243	)	(3,463	)	(3,722	)

(1) Recorded in Other current assets.

	December 31, 2018
($ millions)	Level 1	Level 2	Level 3		Valued at amortized cost or cost		Total
Non-current financial assets
Long-term financial investments measured at FVOCI	—	—	19		—		19
Long-term financial investments measured at FVPL	—	—	67		—		67
Long-term receivables from customers	—	—	—		164		164
Non-current minimum lease payments from finance lease agreements	—	—	—		91		91
Long-term loans, advances, and security deposits	—	—	—		47		47
Total non-current financial assets	—	—	86		302		388
Current financial assets(1)
Current portion of long-term financial investments measured at FVPL	—	—	31		—		31
Current portion of long-term receivables from customers	—	—	—		133		133
Current portion of minimum lease payments from finance lease agreements	—	—	—		57		57
Other receivables, security deposits and current assets	—	—	—		52		52
VAT receivables	—	—	—		68		68
Derivative financial instruments	—	—	—		—		—
Total current financial assets	—	—	31		310		341
Total financial assets at fair value and amortized cost or cost	—	—	117		612		729
Financial liabilities
Contingent consideration liabilities	—	—	(162	)	—		(162	)
Non-current financial debt	—	—	—		—		—
Current financial debt	—	—	—		(47	)	(47	)
Derivative financial instruments	—	—	—		—		—
Total financial liabilities at fair value and amortized cost	—	—	(162	)	(47	)	(209	)

(1)

Current financial assets referenced in the above table are recorded in Other current assets.

XML

Acquisitions of businesses

12 Months Ended

Dec. 31, 2019

Business Combinations1 [Abstract]

Acquisitions of businesses

Significant transactions

Significant transactions in 2019

Refinancing of Bridge Facility and Facility A financial debts

On September 23, 2019, Alcon through its wholly-owned subsidiary, Alcon Finance Corporation ("AFC"), refinanced $2 billion of the bridge and term loans, which had been issued in April 2019, with $500 million of 2.750% senior notes due 2026, $1 billion of 3.000% senior notes due 2029, and $500 million of 3.800% senior notes due 2049. The bridge and term loans, notes, and refinancing are described in Note 17 of these Consolidated Financial Statements.

Completion of Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders

The Spin-off was executed on April 9, 2019 as described in Note 1. The below transactions occurred in April 2019, immediately preceding the Spin-off.

On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans which were executed on March 6, 2019 and are described in Note 17 of these Consolidated Financial Statements. These borrowings increased the Company's third party financial debts to $3.5 billion at the date of Spin-off. Through a series of intercompany transactions, Alcon then paid approximately $3.1 billion in cash to Novartis and its affiliates prior to the Spin-off, decreasing Alcon's net assets to approximately $20.0 billion at the date of Spin-off.

Surgical-Acquisition of PowerVision, Inc.

On March 13, 2019, Alcon acquired 100% of the outstanding shares and equity of PowerVision, Inc. ("PowerVision"), a privately-held, US-based company focused on developing accommodative, implantable intraocular lenses. This technology allows the intraocular lens to respond to natural muscular movements in the eye to alter shape and focus. The PowerVision acquisition was executed as part of Alcon's commitment to innovation in advanced technology intraocular lenses ("AT-IOLs").

The fair value of the total purchase consideration was $424 million. This amount consisted of an initial cash payment of $289 million and the fair value of the probability weighted contingent consideration of $135 million due to PowerVision shareholders, which they are eligible to receive upon the achievement of specified regulatory and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $418 million, which consisted of in-process research & development intangible assets of $505 million, a net deferred tax liability of $93 million, and other net assets of $6 million. Goodwill of $6 million was also recognized which is attributable to the assembled workforce. Cash paid for the acquisition, net of cash acquired, was $283 million. The 2019 results of operations since the date of acquisition and transaction costs for the acquisition were not material.

Significant transactions in 2018

Surgical-Acquisition of TrueVision Systems, Inc.

On December 19, 2018, Alcon acquired 100% of the outstanding shares and equity of TrueVision Systems, Inc. ("TrueVision"), a privately held US-based company. TrueVision developed the 3D scope technology currently used in the commercially marketed Alcon product NGENUITY. This technology allows retina surgery specialists to have a 3D visualization of the back of the eye with greater depth and detail than traditional microscopes.

The fair value of the total purchase consideration was $146 million. This amount consists of an initial cash payment of $110 million and the fair value of the probability weighted contingent consideration of $36 million due to TrueVision shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $144 million, which consisted of intangible assets of $172 million, net deferred tax liability of $29 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

Vision Care-Acquisition of Tear Film Innovations, Inc.

On December 17, 2018, Alcon acquired 100% of the outstanding shares and equity of Tear Film Innovations, Inc. ("Tear Film"), a privately held US-based company. Tear Film is the manufacturer of the iLux device, an innovative therapeutic device used to treat Meibomian Gland Dysfunction, a leading cause of dry eye.

The fair value of the total purchase consideration was $145 million. This amount consists of an initial cash payment of $79 million and the fair value of the probability weighted contingent consideration of $66 million due to Tear Film previous owners, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $143 million, which consisted of intangible assets of $174 million, net deferred tax liability of $37 million, cash of $5 million and other net assets of $1 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2018 results of operations following the date of acquisition were not material.

Significant transactions in 2017

Surgical-Acquisition of ClarVista Medical, Inc.

On September 20, 2017, Alcon acquired 100% of the outstanding shares and equity of ClarVista Medical, Inc., a privately held California, US-based company focused on developing the HARMONI Modular IOL System, a novel intraocular lens ("IOL") used to restore vision after cataract surgery.

The fair value of the total purchase consideration was $125 million. This amount consists of an initial cash payment of $71 million and the net present value of the contingent consideration of $54 million due to ClarVista shareholders, which they are eligible to receive upon the achievement of specified development and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $123 million, which consisted of intangible assets of $178 million, deferred tax assets of $8 million, cash and cash equivalents of $1 million and deferred tax liabilities of $64 million. Goodwill of $2 million was also recognized which is attributable to the assembled workforce. The 2017 results of operations since the date of acquisition were not material.

Acquisitions of businesses

Fair value of assets and liabilities arising from acquisitions

($ millions)	2019		2018		2017
Property, plant & equipment	1		1		—
Currently marketed products	—		346		—
Acquired research & development	505		—		178
Deferred tax assets	28		12		8
Inventories	—		3		—
Trade receivables and other current assets	—		2		—
Cash and cash equivalents	6		5		1
Deferred tax liabilities	(121	)	(78	)	(64	)
Trade payables and other liabilities	(1	)	(4	)	—
Net identifiable assets acquired	418		287		123
Acquired liquidity	(6	)	(5	)	(1	)
Goodwill	6		4		2
Net assets recognized as a result of business combinations	418		286		124

Note 4 of these Consolidated Financial Statements details significant acquisitions of businesses, which were PowerVision in 2019, TrueVision and Tear Film in 2018 and ClarVista in 2017. No goodwill from 2019, 2018 or 2017 is tax-deductible.

XML

Commitments and contingencies

12 Months Ended

Dec. 31, 2019

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Commitments and contingencies

Commitments and contingencies

Commitments

Research & development

Alcon has entered into long-term research agreements with various institutions which provide for potential milestone payments and other payments by Alcon that may be capitalized. As of December 31, 2019, the commitments to make payments under those agreements, and their estimated timing, were as follows:

($ millions)	2019
2020	28
2021	41
2022	4
2023	4
2024	33
Thereafter	71
Total	181

Other

Alcon entered into various purchase commitments for services and materials as well as for equipment in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations. For disclosure of Property, plant and equipment purchase commitments, see Note 9 .

Contingencies

The Alcon companies have to observe the laws, government orders and regulations of the country in which they operate.

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect our business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material

adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow.

Governments and regulatory authorities around the world have been stepping up their compliance and law enforcement activities in recent years in key areas, including marketing practices, pricing, corruption, trade restrictions, embargo legislation, insider trading, antitrust, cyber security and data privacy. Further, when one government or regulatory authority undertakes an investigation, it is not uncommon for other governments or regulators to undertake investigations regarding the same or similar matters. Responding to such investigations is costly and requires an increasing amount of management's time and attention. In addition, such investigations may affect Alcon's reputation, create a risk of potential exclusion from government reimbursement programs in the United States and other countries, and may lead to (or arise from) litigation. These factors have contributed to decisions by Alcon and other companies in the medical device and healthcare industry, when deemed in their interest, to enter into settlement agreements with governmental authorities around the world prior to any formal decision by the authorities or a court. Those government settlements have involved and may continue to involve, in current government investigations and proceedings, large cash payments, sometimes in the hundreds of millions of dollars or more, including the potential repayment of amounts allegedly obtained improperly and other penalties, including treble damages. In addition, settlements of government healthcare fraud cases often require companies to enter into corporate integrity agreements, which are intended to regulate company behavior for a period of years. Also, matters underlying governmental investigations and settlements may be the subject of separate private litigation.

While provisions have been made for probable losses, which management deems to be reasonable or appropriate, there are uncertainties connected with these estimates. Note 19 contains additional information on these matters.

Alcon is involved in legal proceedings concerning intellectual property rights. The inherent unpredictability of such proceedings means that there can be no assurances as to their ultimate outcome. A negative result in any such proceeding could potentially adversely affect the ability of certain Alcon companies to sell their products, or require the payment of substantial damages or royalties.

Alcon's potential for environmental remediation liability is assessed based on a risk assessment and investigation of the various sites identified by Alcon as at risk for environmental remediation exposure. Alcon's future remediation expenses are affected by a number of uncertainties. These uncertainties include, but are not limited to, the method and extent of remediation, the percentage of material attributable to Alcon at the remediation sites relative to that attributable to other parties, and the financial capabilities of the other potentially responsible parties.

Alcon has no significant environmental liabilities as at December 31, 2019 and 2018 and has incurred no significant remediation costs for the years ended December 31, 2019, 2018 and 2017.

XML

Commitments and contingencies - Research and development payments (Details) $ in Millions	Dec. 31, 2019 USD ($)
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	$ 181
2020 [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	28
2021 [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	41
2022 [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	4
2023 [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	4
2024 [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	33
Thereafter [member]
Disclosure of contingent liabilities [line items]
Commitments to make payments under R&D arrangements	$ 71

XML

Equity-based compensation - Summary of information of options outstanding (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2019 $ / shares	Dec. 31, 2018 shares $ / shares	Dec. 31, 2017 shares $ / shares
Novartis equity plan select, outside North America [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		426	500
Weighted average remaining contractual life of outstanding share options		3 years 3 months 18 days
Options outstanding, weighted average exercise price (in dollars per share)		$ 61.4	$ 61.1
Novartis equity plan select, outside North America [member] | Exercise Price Range, 45-55 [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		32
Weighted average remaining contractual life of outstanding share options		21 days
Options outstanding, weighted average exercise price (in dollars per share)		$ 52.4
Novartis equity plan select, outside North America [member] | Exercise Price Range, 45-55 [member] | Minimum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	$ 45
Novartis equity plan select, outside North America [member] | Exercise Price Range, 45-55 [member] | Maximum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	55
Novartis equity plan select, outside North America [member] | Exercise Price Range, 56-66 [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		394
Weighted average remaining contractual life of outstanding share options		3 years 6 months
Options outstanding, weighted average exercise price (in dollars per share)		$ 62.1
Novartis equity plan select, outside North America [member] | Exercise Price Range, 56-66 [member] | Minimum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	56
Novartis equity plan select, outside North America [member] | Exercise Price Range, 56-66 [member] | Maximum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	66
Novartis equity plan select, North America [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		1,288	1,800
Weighted average remaining contractual life of outstanding share options		3 years 6 months
Options outstanding, weighted average exercise price (in dollars per share)		$ 62.6	$ 62.5
Novartis equity plan select, North America [member] | Exercise Price Range, 45-55 [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		30
Weighted average remaining contractual life of outstanding share options		18 days
Options outstanding, weighted average exercise price (in dollars per share)		$ 50.7
Novartis equity plan select, North America [member] | Exercise Price Range, 45-55 [member] | Minimum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	45
Novartis equity plan select, North America [member] | Exercise Price Range, 45-55 [member] | Maximum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	55
Novartis equity plan select, North America [member] | Exercise Price Range, 56-66 [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Number of share options outstanding in share-based payment arrangement (in shares) | shares		1,258
Weighted average remaining contractual life of outstanding share options		3 years 7 months 6 days
Options outstanding, weighted average exercise price (in dollars per share)		$ 62.9
Novartis equity plan select, North America [member] | Exercise Price Range, 56-66 [member] | Minimum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	56
Novartis equity plan select, North America [member] | Exercise Price Range, 56-66 [member] | Maximum [member]
Disclosure of range of exercise prices of outstanding share options [line items]
Exercise price, share options granted (in dollars per share)	$ 66

XML

Segment Information

12 Months Ended

Dec. 31, 2019

Operating Segments [Abstract]

Segment information

Segment information

The segment information disclosed in these Consolidated Financial Statements reflects historical results consistent with the identifiable reporting segments of Alcon and financial information that the Chief Operating Decision Maker ("CODM") reviews to evaluate segmental performance and allocate resources among the segments. The CODM is the Executive Committee of Alcon.

The businesses of Alcon are divided operationally on a worldwide basis into two identified reporting segments, Surgical and Vision Care. As indicated below, certain income and expenses are not allocated to segments.

Reporting segments are presented in a manner consistent with the internal reporting to the CODM. The reporting segments are managed separately due to their distinct needs and activities for research, development, manufacturing, distribution, and commercial execution.

The Executive Committee of Alcon is responsible for allocating resources and assessing the performance of the reporting segments.

In Surgical, Alcon researches, develops, manufactures, distributes and sells ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. The surgical portfolio also includes implantables, consumables and surgical equipment required for these procedures and supports the end-to-end procedure needs of the ophthalmic surgeon.

In Vision Care, Alcon researches, develops, manufactures, distributes and sells daily disposable, reusable, and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers.

Alcon also provides services, training, education and technical support for both the Surgical and Vision Care businesses.

The basis of preparation described in Note 2, and the selected accounting policies mentioned in Note 3 are used in the reporting of segment results.

The Executive Committee of Alcon evaluates segmental performance and allocates resources among the segments primarily based on net sales and segment contribution.

Net identifiable assets are not assigned to the segments in the internal reporting to the CODM, and are not considered in evaluating the performance of the business segments by the Executive Committee of Alcon.

Segment contribution excludes amortization and impairment costs for acquired product rights or other intangibles, general and administrative expenses for corporate activities, and certain other income and expense items.

General & administration (corporate) includes the costs of the Alcon corporate headquarters, including all related corporate function costs. For the historical comparative period only, the related corporate function costs were allocated to Alcon from its Former Parent.

Other expense, net of other income, includes other items of income and expense such as spin readiness and separation costs, transformation program costs, restructuring costs and legal settlements that are not attributable to a specific segment.

Segmentation - Consolidated income statements

	Surgical		Vision Care		Company
($ millions)	2019	2018	2019	2018	2019		2018
Net sales to third parties	4,174	3,999	3,188	3,150	7,362		7,149
Sales to former parent	—	2	—	2	—		4
Other revenues	—	—	146	—	146		—
Net sales and other revenues	4,174	4,001	3,334	3,152	7,508		7,153
Segment contribution(1)	923	813	563	594	1,486		1,407
Amortization of intangible assets					(1,084	)	(1,019	)
Impairment charges on intangible assets					—		(378	)
General & administration (corporate)					(243	)	(206	)
Other (expense)/income, net					(346	)	(52	)
Operating (loss)					(187	)	(248	)
Interest expense					(113	)	(24	)
Other financial income & expense					(32	)	(28	)
(Loss) before taxes					(332	)	(300	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Total
($ millions)	2019		2018		2019		2018		2019		2018		2019		2018
Depreciation of property, plant & equipment	(112	)	(114	)	(155	)	(125	)	—		—		(267	)	(239	)
Depreciation of right-of-use assets	(42	)	—		(24	)	—		—		—		(66	)	—
Impairment charges on property, plant & equipment, net	(3	)	(1	)	(5	)	(1	)	—		—		(8	)	(2	)
Equity-based compensation(2)	(55	)	(45	)	(44	)	(36	)	(15	)	(12	)	(114	)	(93	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 reflects an estimate of the allocation for corporate functions in the historical period based on 2019 actual percentages.  

	Surgical		Vision Care		Company
($ millions)	2018	2017	2018	2017	2018		2017
Net sales to third parties	3,999	3,733	3,150	3,052	7,149		6,785
Sales to former parent	2	3	2	1	4		4
Other revenues	—	—	—	3	—		3
Net sales and other revenues	4,001	3,736	3,152	3,056	7,153		6,792
Segment contribution(1)	813	691	594	625	1,407		1,316
Amortization of intangible assets					(1,019	)	(1,033	)
Impairment charges on intangible assets					(378	)	(57	)
General & administration (corporate)					(206	)	(202	)
Other (expense)/income, net					(52	)	(101	)
Operating (loss)					(248	)	(77	)
Interest expense					(24	)	(27	)
Other financial income and expense					(28	)	(23	)
(Loss) before taxes					(300	)	(127	)

Included in segment contribution are:

	Surgical				Vision Care				Not allocated				Company
($ millions)	2018		2017		2018		2017		2018		2017		2018		2017
Depreciation of property, plant & equipment	(114	)	(106	)	(125	)	(109	)	—		—		(239	)	(215	)
Impairment charges on property, plant & equipment, net	(1	)	—		(1	)	—		—		—		(2	)	—
Equity-based compensation(2)	(45	)	(34	)	(36	)	(27	)	(12	)	(10	)	(93	)	(71	)

(1) The segment contribution corresponds to Net sales and Other revenues less Cost of net sales, Cost of other revenues, Selling, general & administration and Research & development attributable to segments, excluding amortization and impairments on intangible assets.

(2) Equity-based compensation not allocated to segments in 2018 and 2017 reflects an estimate of the allocation for corporate functions in the historical periods based on 2019 actual percentages.  

Segmentation - Additional balance sheet disclosure

	Surgical		Vision Care		Not allocated(1)		Total
($ millions)	2019	2018	2019	2018	2019	2018	2019	2018
Goodwill	4,544	4,538	4,361	4,361	—	—	8,905	8,899
Intangible assets other than goodwill	5,770	6,053	1,481	1,646	2,980	2,980	10,231	10,679

(1) Alcon brand name.

Net sales by segment

($ millions)	2019	2018	2017
Surgical
Implantables	1,210	1,136	1,045
Consumables	2,304	2,227	2,104
Equipment/other	660	636	584
Total Surgical	4,174	3,999	3,733
Vision Care
Contact lenses	1,969	1,928	1,836
Ocular health	1,219	1,222	1,216
Total Vision Care	3,188	3,150	3,052
Net sales to third parties	7,362	7,149	6,785

Geographical information

The following table shows the United States, International and countries that accounted for more than 5% of at least one of the respective Alcon totals, for net sales for the years ended December 31, 2019, 2018 and 2017, and for selected non-current assets at December 31, 2019, and 2018:

	Net sales(1)									Total of selected non-current assets(2)
($ millions unless indicated otherwise)	2019			2018			2017			2019			2018
Country
United States	3,055	41	%	2,942	41	%	2,800	41	%	10,559	47	%	10,056	45	%
International	4,307	59	%	4,207	59	%	3,985	59	%	12,014	53	%	12,401	55	%
thereof:
Switzerland (country of domicile)	56	1	%	57	1	%	57	1	%	10,486	46	%	11,166	50	%
Japan	656	9	%	593	8	%	561	8	%	66	—	%	12	—	%
China	377	5	%	341	5	%	279	4	%	18	—	%	2	—	%
Other	3,218	44	%	3,216	45	%	3,088	46	%	1,444	6	%	1,221	5	%
Company total	7,362	100	%	7,149	100	%	6,785	100	%	22,573	100	%	22,457	100	%

(1) Net sales from operations by location of third-party customer.

(2) Includes property, plant & equipment, right-of-use assets, goodwill and other intangible assets.

No customer accounted for 10% or more of Alcon's net sales.

XML

CONSOLIDATED BALANCE SHEETS SFr in Millions, $ in Millions		Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Non-current assets
Property, plant & equipment	[1],[2]	$ 3,113	$ 2,800
Right-of-use assets	[1],[2]	324	79
Goodwill		8,905	8,899
Intangible assets other than goodwill		10,231	10,679
Deferred tax assets		354	670
Financial assets		307	388
Other non-current assets		185	148
Total non-current assets		23,419	23,663
Current assets
Inventories		1,505	1,440
Trade receivables		1,390	1,253
Receivables from former parent		0	20
Income tax receivables		17	33
Other financial receivables from former parent		0	39
Cash and cash equivalents		822	227
Other current assets		502	387
Total current assets		4,236	3,399
Total assets		27,655	27,062
Equity
Invested capital		0	22,639
Share capital		20	0
Reserves		19,283	0
Total equity	[3]	19,303	22,639
Non-current liabilities
Financial debts	[1],[2]	3,218	0
Lease liabilities	[1],[2]	280	89
Deferred tax liabilities		1,386	1,528
Provisions and other non-current liabilities		1,168	913
Total non-current liabilities		6,052	2,530
Current liabilities
Trade payables		833	663
Payables to former parent		0	85
Financial debts		261	47
Lease liabilities		61	0
Other financial liabilities to former parent		0	67
Current income tax liabilities		107	151
Provisions and other current liabilities		1,038	880
Total current liabilities		2,300	1,893
Total liabilities		8,352	4,423
Total equity and liabilities		$ 27,655	$ 27,062

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

[3] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

XML

Description of business

12 Months Ended

Dec. 31, 2019

Corporate Information And Statement Of IFRS Compliance [Abstract]

Description of business

Description of business

Alcon Inc. (the "Company") and the subsidiaries it controls (collectively "Alcon") is a leading eye care company globally. Alcon is a multinational company specializing in the research, development, manufacturing and marketing of a broad range of eye care products within two businesses: Surgical and Vision Care. Alcon is a stock corporation organized under the laws of Switzerland, domiciled in Fribourg, Switzerland, with global headquarters located in Geneva, Switzerland.

On February 28, 2019, Novartis AG (“Novartis” or “Former Parent”) shareholders at their Annual General Meeting approved the proposed 100% spin-off of Alcon through the distribution of a dividend-in-kind of new Alcon shares to Novartis shareholders and Novartis American Depositary Receipt (“ADR”) holders (the “Spin-off”), subject to completion of certain conditions precedent to the distribution. Amendment No. 6 to the Company's Registration Statement on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 22, 2019, ("2018 Form 20-F"), was declared effective by the SEC on that same day.  On April 9, 2019 (the “Distribution Date”), the Company became an independent, publicly-traded company as a result of the Spin-off and the shares of the Company are listed on the SIX Swiss Stock Exchange ("SIX") and on the New York Stock Exchange ("NYSE") under the symbol “ALC”. Each Novartis shareholder of record as of April 8, 2019 and each holder of Novartis’ ADR of record as of April 1, 2019 received one share of Alcon common stock for every five shares of Novartis common stock or Novartis ADR held.

The Consolidated Financial Statements of Alcon are comprised of Consolidated Balance Sheets as of December 31, 2019 and 2018 and the Consolidated Income Statements, Consolidated Statements of Comprehensive (Loss)/Income, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows for the three years ended December 31, 2019, 2018 and 2017.

The country of operation and percentage ownership of the legal entities with "Total assets" or "Net sales to third parties" in excess of $5 million included in the Consolidated Financial Statements are disclosed in Note 28.

XML

CONSOLIDATED INCOME STATEMENTS - USD ($) shares in Millions, $ in Millions		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Profit or loss [abstract]
Net sales to third parties		$ 7,362	$ 7,149	$ 6,785
Sales to former parent		0	4	4
Other revenues		146	0	3
Net sales and other revenues		7,508	7,153	6,792
Cost of net sales		(3,719)	(3,961)	(3,588)
Cost of other revenues		(127)	0	0
Gross profit		3,662	3,192	3,204
Selling, general & administration		(2,847)	(2,801)	(2,596)
Research & development		(656)	(587)	(584)
Other income		55	47	47
Other expense		(401)	(99)	(148)
Operating (loss)		(187)	(248)	(77)
Interest expense		(113)	(24)	(27)
Other financial income & expense		(32)	(28)	(23)
(Loss) before taxes		(332)	(300)	(127)
Taxes		324	(73)	(383)
Net (loss)/income	[1]	$ (656)	$ (227)	$ 256
(Loss)/earnings per share
Basic earnings per share (in dollars per share)		$ (1.34)	$ (0.46)	$ 0.52
Diluted earnings per share (in dollars per share)		$ (1.34)	$ (0.46)	$ 0.52
Weighted average number of shares outstanding
Weighted average number of shares outstanding - Basic (in shares)	[2]	488.2		488.2
Weighted average number of shares outstanding - Diluted (in shares)	[2]	488.2	488.2	488.2

[1] "Former parent net investment" and "Equity" were previously presented as "Retained earnings" and "Invested capital", respectively, and were renamed upon the execution of the Spin-off.

[2] For periods prior to the Spin-off, the denominator for basic and diluted earnings per share was calculated using 488.2 million shares of common stock distributed in the Spin-off.

XML

Property, plant and equipment

12 Months Ended

Dec. 31, 2019

Property, plant and equipment [abstract]

Property, plant and equipment

Property, plant & equipment

The following table summarizes the movements of property, plant & equipment during 2019:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2019	60		1,527		657		2,646		4,890
Additions(1)			11		514		82		607
Impact of business combinations							1		1
Disposals and derecognitions(2)			(17	)	(1	)	(161	)	(179	)
Transfers with former parent			4		2		29		35
Reclassifications for assets placed in service			104		(417	)	313		—
Other reclassifications	(27	)							(27	)
Currency translation effects			(1	)			(4	)	(5	)
December 31, 2019	33		1,628		755		2,906		5,322
Accumulated depreciation
January 1, 2019	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Depreciation charge			(73	)			(194	)	(267	)
Impairment charge					(1	)	(7	)	(8	)
Disposals and derecognitions(2)			14				151		165
Transfers with former parent			(2	)			(15	)	(17	)
Other reclassifications	7								7
Currency translation effects			1						1
December 31, 2019	—		(618	)	(8	)	(1,583	)	(2,209	)
Net book value at December 31, 2019	33		1,010		747		1,323		3,113

(1) Includes $56 million in non-cash additions.

(2) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2019, commitments for purchases of property, plant & equipment were $212 million. There were no capitalized borrowing costs.

The following table summarizes the movements of property, plant and equipment during 2018:

($ millions)	Land		Buildings		Construction in progress		Machinery & other equipment		Total
Cost
January 1, 2018	53		1,386		503		2,506		4,448
Additions			4		468		52		524
Impact of business combinations							1		1
Disposals and derecognitions(1)			(16	)			(71	)	(87	)
Reclassifications and transfers with former parent	10		252		(302	)	203		163
Reclassification to right-of-use assets(2)			(86	)					(86	)
Currency translation effects	(3	)	(13	)	(12	)	(45	)	(73	)
December 31, 2018	60		1,527		657		2,646		4,890
Accumulated depreciation
January 1, 2018	(3	)	(447	)			(1,438	)	(1,888	)
Depreciation charge			(70	)			(169	)	(239	)
Impairment charge					(1	)	(1	)	(2	)
Disposals and derecognitions(1)			15				72		87
Transfers with former parent	(4	)	(69	)	(6	)	(12	)	(91	)
Reclassification to right-of-use assets(2)			7						7
Currency translation effects			6				30		36
December 31, 2018	(7	)	(558	)	(7	)	(1,518	)	(2,090	)
Net book value at December 31, 2018	53		969		650		1,128		2,800

(1) Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

(2) The December 31, 2018 balance previously reported for a finance lease asset of $79 million has been reclassified from "Property, Plant, & Equipment" to "Right-of-use assets".

As of December 31, 2018, commitments for purchases of property, plant & equipment were $93 million and capitalized borrowing costs were $1 million.

XML

Non-current and current financial debts

12 Months Ended

Dec. 31, 2019

Financial Instruments [Abstract]

Non-current and current financial debts

Non-current and current financial debts

The below table summarizes current and non-current Financial debts outstanding as of December 31, 2019 and 2018.

($ millions)	2019	2018
Non-current financial debts
Facility B	793	—
Facility C	391	—
Local facilities (Japan)	55	—
Series 2026 notes	495	—
Series 2029 notes	991	—
Series 2049 notes	493	—
Revolving facility	—	—
Total non-current financial debts	3,218	—
Current financial debts
Local facilities:
Japan	115	—
All others	101	32
Other short-term financial debts	29	15
Derivatives	16	—
Total current financial debts	261	47
Total financial debts	3,479	47

Alcon entered into the below borrowing arrangements in connection with the Spin-off, as described in Note 4 to these Consolidated Financial Statements, and refinanced a portion of those borrowing arrangements, as further described below. Interest expense recognized for Financial debts, excluding lease liabilities, was $81 million, $10 million and $12 million for the years ended December 31, 2019, 2018 and 2017, respectively. The weighted average interest rate on Financial debts was 2.9% in 2019 and 17.4% in 2018.

Bridge Loan, Term Loan, and Revolving Credit Facilities

On March 6, 2019, Alcon entered into a $1.5 billion unsecured 364-day bridge loan facility with two extension options, each for a period of 180 days (the "Bridge Facility"), a $0.5 billion unsecured three-year term loan facility ("Facility A"), a $0.8 billion unsecured five-year term loan facility ("Facility B"), a $0.4 billion (or the equivalent in EUR) unsecured five-year term loan facility ("Facility C") and a $1.0 billion unsecured five-year committed multicurrency revolving credit facility (the "Revolving Facility" and, together with the Bridge Facility, Facility A, Facility B and Facility C, the "Facilities"). On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans. The Revolving Facility was undrawn as of December 31, 2019.

The Facilities bear interest rates equal to the interest rate benchmark (prevailing Euro Interbank Offered Rate (“EURIBOR”) in the case of loans denominated in EUR, USD prevailing London Interbank Offered Rate (“LIBOR”) in the case of loans denominated in USD and CHF LIBOR in the case of loans denominated in CHF), plus an applicable margin.

Alcon and certain of its subsidiaries are the borrowers under the Facilities and Alcon guarantees the borrowings of such subsidiaries under the Facilities. In addition, the Revolving Facility includes a mechanism through which certain subsidiaries, as approved by the lenders, can accede as a borrower.

Alcon is permitted to voluntarily prepay loans under the Facilities, in whole or in part, without penalty or premium subject to certain minimum prepayment amounts and the payment of accrued interest on the amount prepaid and customary breakage costs. The Bridge Facility had a mandatory prepayment provision, pursuant to which

Alcon would have to apply proceeds from relevant debt capital markets transactions in prepayment under the Bridge Facility.

The terms of the Facilities include certain events of default and covenants customary for investment grade credit facilities, including restrictive covenants that will limit, among other things, the grant or incurrence of security interests over any of Alcon's assets, the incurrence of certain indebtedness and entry into certain fundamental change transactions. The Facilities do not contain any financial covenants.

Refinancing of Bridge Facility and Facility A

On September 23, 2019, AFC issued Senior Notes ("Notes") with maturity dates in 2026, 2029, and 2049, which are guaranteed by the Company. The Notes are unsecured senior obligations of AFC issued in a private placement. The total notional amount of the Notes is $2.0 billion. The Notes were issued at a discount totaling $7.0 million, which was recorded as a reduction to the carrying value of the Notes and will be amortized to Interest expense over the term of the Notes. AFC incurred $15 million of debt issuance costs, which were recorded as a reduction to the carrying value of the Notes and will be amortized to Other financial income & expense over the term of the Notes.

The Notes consist of the following:

• Series 2026 Notes - $0.5 billion due in 2026 issued at 99.5%, 2.750% interest is payable twice per year in March and September, beginning in March 2020.

• Series 2029 Notes - $1.0 billion due in 2029 issued at 99.6%, 3.000% interest is payable twice per year in March and September, beginning March 2020.

• Series 2049 Notes - $0.5 billion due in 2049 issued at 99.8%, 3.800% interest is payable twice per year in March and September, beginning March 2020.

The funds borrowed through the issuance of the Notes were used to repay the $1.5 billion Bridge Facility and $0.5 billion Facility A. The transaction was accounted for as an extinguishment of a liability. Alcon recognized a loss of $4 million associated with the write-off of unamortized deferred financing costs due to extinguishment of the original financing. This loss on extinguishment was recognized in Other financial income & expense.

The following table provides details on the maturity of the contractual undiscounted cash flows for Alcon's borrowings as of December 31, 2019:

($ millions)	Nominal amount - Current and non-current financial debt		Derivatives	Total
Not later than one year	245		16	261
Between one and five years	1,247		—	1,247
Later than five years	2,000		—	2,000
Total cash flows	3,492		16	3,508
Unamortized debt discount and issuance costs	(29	)	—	(29	)
Total carrying value	3,463		16	3,479

The following table provides details on the maturity of the future contractual interest payments commitments:

($ millions)	Interest
Not later than one year	94
Between one and five years	336
Later than five years	653
Total cash flows	1,083

As of December 31, 2018, the contractual undiscounted cash flows for borrowings was $47 million for the current financial debts reflected in Financial debts on the Consolidated Balance Sheets.

Local Bilateral Facilities

In February 2019, Alcon entered into a number of local bilateral facilities in different countries, with the largest share of borrowings in Japan. A total of $0.3 billion was drawn including $0.2 billion in two lines for Japan. All local bilateral lines are classified as current with a maturity date in one year or less, with the exception of one line in Japan with a maturity date in 2021 which is classified as non-current. As of December 31, 2019, there was $35 million undrawn on the facility in Japan.

Derivatives

As of December 31, 2019, the net value of unsettled positions for derivative forward contracts and swaps was $15 million, including $1 million of unrealized gains in Other current assets and $16 million of unrealized losses in Current financial debts. Master agreements were executed with several banking counterparties for derivatives financial instruments, however, there were no derivative financial instruments meeting the offsetting criteria under IFRS as of December 31, 2019. Alcon did not hold derivative financial instruments as of December 31, 2018.

XML

Inventories

12 Months Ended

Dec. 31, 2019

Inventories [Abstract]

Inventories

Inventories

The amount of inventory recognized as an expense in "Cost of net sales" in the consolidated income statements during 2019 amounted to $2.2 billion (2018: $2.2 billion, 2017: $2.1 billion). The amount of inventory recognized as an expense in "Cost of other revenues" in the consolidated income statements during 2019 amounted to $127 million (2018: $0 million, 2017: $0 million).

($ millions)	2019	2018
Raw material, consumables	286	334
Work in progress	101	127
Finished products	1,118	979
Total inventories	1,505	1,440

Alcon recognized inventory provisions amounting to $140 million in 2019 (2018: $148 million, 2017: $73 million) and reversed inventory provisions amounting to $65 million (2018: $56 million, 2017: $15 million). Inventory provisions mainly relate to the adjustment of inventory balances to their net realizable value based on the forecasted sales. Reversals are made when the products become saleable.

XML

Trade receivables - Analysis of past due receivables (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disclosure of provision matrix [line items]
Trade receivables, gross	$ 1,438	$ 1,307
Provisions for doubtful trade receivables	(48)	(54)	$ (77)	$ (55)
Total trade receivables, net	1,390	1,253
Not overdue [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	1,135	1,018
Past due for not more than one month [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	118	118
Past due for more than one month but less than three months [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	81	70
Past due for more than three months but less than six months [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	47	34
Past due for more than six months but less than one year [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	21	20
Past due for more than one year [member]
Disclosure of provision matrix [line items]
Trade receivables, gross	$ 36	$ 47

XML

Selected accounting policies - Schedule of useful lives of intangible assets (Details)	6 Months Ended		12 Months Ended
	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2019
Currently marketed products [member] | Bottom of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life			5 years
Currently marketed products [member] | Top of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life			20 years
Marketing know-how [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life			25 years
Technologies [member] | Bottom of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life			10 years
Technologies [member] | Top of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life			20 years
Other intangible assets (including software) [member] | Bottom of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life	3 years	3 years	3 years
Other intangible assets (including software) [member] | Top of range [member]
Disclosure of detailed information about intangible assets [line items]
Finite-lived intangible asset, useful life	10 years	7 years	10 years

XML

Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Summary of commitments to make payments under long-term research agreements

As of December 31, 2019, the commitments to make payments under those agreements, and their estimated timing, were as follows:

($ millions)	2019
2020	28
2021	41
2022	4
2023	4
2024	33
Thereafter	71
Total	181

XML

Inventories - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure Of Inventories [Line Items]
Inventory write-down	$ 140	$ 148	$ 73
Reversal of inventory write-down	65	56	15
Cost of net sales [member]
Disclosure Of Inventories [Line Items]
Cost of inventories recognised as expense during period	2,200	2,200	2,100
Cost of other revenue [member]
Disclosure Of Inventories [Line Items]
Cost of inventories recognised as expense during period	$ 127	$ 0	$ 0

XML

Financial instruments - additional disclosures - Activity in level 3 financial assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	$ 2,301
Balance as of December 31	2,949	$ 2,301
Measured at FVPL [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	98
Amortization	(61)	(74)
Balance as of December 31	62	98
Measured at FVOCI [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	19
Balance as of December 31	31	19
Financial investments [member] | Measured at FVPL [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	67
Balance as of December 31	28	67
Financial investments [member] | Measured at FVOCI [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	19
Balance as of December 31	31	19
Financial investments [member] | Level 3 [member] | Measured at FVPL [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	98	78
Additions	34	92
Cash receipts and payments	(7)	(5)
Gains/(losses) recognized in consolidated statements of comprehensive (loss)/income	0	0
Unrealized gains/(losses) in consolidated income statements	(3)	7
Reclassification	0	0
Balance as of December 31	61	98
Financial investments [member] | Level 3 [member] | Measured at FVOCI [member]
Reconciliation of changes in fair value measurement, assets [abstract]
Balance as of January 1	19	26
Additions	17	11
Cash receipts and payments	0	0
Gains/(losses) recognized in consolidated statements of comprehensive (loss)/income	(7)	(23)
Unrealized gains/(losses) in consolidated income statements	0	0
Amortization	0	0
Reclassification	2	5
Balance as of December 31	$ 31	$ 19

XML

Segment Information - Combined income statements (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of operating segments [line items]
Net sales to third parties	$ 7,362,000,000	$ 7,149,000,000	$ 6,785,000,000
Sales to former parent	0	4,000,000	4,000,000
Other revenues	146,000,000	0	3,000,000
Net sales and other revenues	7,508,000,000	7,153,000,000	6,792,000,000
Segment contribution	1,486,000,000	1,407,000,000	1,316,000,000
Amortization of intangible assets	(1,084,000,000)	(1,019,000,000)	(1,033,000,000)
Impairment charges on intangible assets	0	(378,000,000)	(57,000,000)
General & administration (corporate)	(243,000,000)	(206,000,000)	(202,000,000)
Other (expense)/income, net	(346,000,000)	(52,000,000)	(101,000,000)
Operating (loss)	(187,000,000)	(248,000,000)	(77,000,000)
Interest expense	(113,000,000)	(24,000,000)	(27,000,000)
Other financial income & expense	(32,000,000)	(28,000,000)	(23,000,000)
(Loss) before taxes	(332,000,000)	(300,000,000)	(127,000,000)
Depreciation of property, plant & equipment	(267,000,000)	(239,000,000)	(215,000,000)
Depreciation of right-of-use assets	(66,000,000)	0
Impairment charges on property, plant & equipment, net	(8,000,000)	(2,000,000)	0
Equity-based compensation	(114,000,000)	(93,000,000)	(71,000,000)
Unallocated amounts [member]
Disclosure of operating segments [line items]
Depreciation of property, plant & equipment	0	0	0
Depreciation of right-of-use assets	0	0
Impairment charges on property, plant & equipment, net	0	0	0
Equity-based compensation	(15,000,000)	(12,000,000)	(10,000,000)
Surgical [member]
Disclosure of operating segments [line items]
Net sales to third parties	4,174,000,000	3,999,000,000	3,733,000,000
Sales to former parent	0	2,000,000	3,000,000
Other revenues	0	0	0
Net sales and other revenues	4,174,000,000	4,001,000,000	3,736,000,000
Segment contribution	923,000,000	813,000,000	691,000,000
Impairment charges on intangible assets	0	(378,000,000)
Surgical [member] | Operating segments [member]
Disclosure of operating segments [line items]
Depreciation of property, plant & equipment	(112,000,000)	(114,000,000)	(106,000,000)
Depreciation of right-of-use assets	(42,000,000)	0
Impairment charges on property, plant & equipment, net	(3,000,000)	(1,000,000)	0
Equity-based compensation	(55,000,000)	(45,000,000)	(34,000,000)
Vision Care [member]
Disclosure of operating segments [line items]
Net sales to third parties	3,188,000,000	3,150,000,000	3,052,000,000
Sales to former parent	0	2,000,000	1,000,000
Other revenues	146,000,000	0	3,000,000
Net sales and other revenues	3,334,000,000	3,152,000,000	3,056,000,000
Segment contribution	563,000,000	594,000,000	625,000,000
Impairment charges on intangible assets	0	0
Vision Care [member] | Operating segments [member]
Disclosure of operating segments [line items]
Depreciation of property, plant & equipment	(155,000,000)	(125,000,000)	(109,000,000)
Depreciation of right-of-use assets	(24,000,000)	0
Impairment charges on property, plant & equipment, net	(5,000,000)	(1,000,000)	0
Equity-based compensation	$ (44,000,000)	$ (36,000,000)	$ (27,000,000)

XML

Right-of-use assets and Lease liabilities - Components of Right-of-Use Assets (Details) - USD ($) $ in Millions	Dec. 31, 2019		Jan. 01, 2019	Dec. 31, 2018	[1],[2]
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	$ 324	[1],[2]	$ 279	$ 79
Right-of-use assets, revaluation surplus			3
Lease liability in excess of capital			10
Land [member]
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	20		20
Buildings [member]
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	277		226
Machinery & equipment and other assets [member]
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	$ 27		$ 33

[1] Alcon adopted IFRS 16, Leases as of January 1, 2019 using the modified retrospective approach as described in Notes 3 and 16 to these Consolidated Financial Statements. Under the modified retrospective approach, comparative information was not restated.

[2] The December 31, 2018 balances previously reported for a finance lease liability and corresponding asset of $89 million and $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.

XML

Provisions and other non-current liabilities - Additional information (Details)	12 Months Ended	60 Months Ended
	Dec. 31, 2019 patent complaint	Dec. 31, 2019 complaint
Subclassifications of assets, liabilities and equities [abstract]
Number of legal cases filed against company | complaint	2	50
Number of patents allegedly infringed | patent	2

XML

Interest expense and other financial income & expense (Tables)

12 Months Ended

Dec. 31, 2019

Analysis of income and expense [abstract]

Disclosure of components of interest expense

Interest expense

($ millions)	2019		2018		2017
Interest expense on financial debts	(81	)	(10	)	(12	)
Interest expense from discounting long-term liabilities	(21	)	(9	)	(10	)
Interest expense on lease liabilities(1)	(11	)	(5	)	(5	)
Total interest expense	(113	)	(24	)	(27	)

(1)

For the years ended December 31, 2018 and 2017, interest expense on finance leases was included in "Interest expense on lease liabilities".

Disclosure of components of other financial income & expense

Other financial income & expense

XML

Equity-based compensation - Summary of shares authorized (Details) shares in Thousands	Dec. 31, 2019 shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares authorized (in shares)	22,250
Long-term Incentive Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares authorized (in shares)	20,000
Deferred Bonus Stock Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares authorized (in shares)	1,500
Swiss Employee Share Ownership Plan [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares authorized (in shares)	475
Other share savings plans [member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of shares authorized (in shares)	275

XML

Deferred tax assets and liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Disclosure of temporary difference, unused tax losses and unused tax credits

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards		Other assets, provision and accruals		Total
Gross deferred tax assets at December 31, 2018	12				125		262		39		235		673
Gross deferred tax liabilities at December  31, 2018	(94	)	(1,403	)	(2	)	(14	)			(18	)	(1,531	)
Net deferred tax balance at December  31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
At December 31, 2018	(82	)	(1,403	)	123		248		39		217		(858	)
(Charged)/credited to income	(71	)	(194	)	18		111		50		(36	)	(122	)
Credited to equity											25		25
Credited to other comprehensive income					11						5		16
Impact of business combinations			(121	)					28				(93	)
Other movements	(6	)	11		(11	)	(11	)	(7	)	24		—
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)
Gross deferred tax assets at December 31, 2019	13		6		151		371		110		281		932
Gross deferred tax liabilities at December 31, 2019	(172	)	(1,713	)	(10	)	(23	)	—		(46	)	(1,964	)
Net deferred tax balance at December 31, 2019	(159	)	(1,707	)	141		348		110		235		(1,032	)

($ millions)	Property, plant & equipment		Intangible assets		Pensions and other benefit obligations of associates		Inventories		Tax loss carry- forwards	Other assets, provisions and accruals		Total
Gross deferred tax assets at January 1, 2018	10				121		169		18	232		550
Gross deferred tax liabilities at January 1, 2018	(69	)	(1,531	)	(7	)	(32	)		(25	)	(1,664	)
Net deferred tax balance at January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
At January 1, 2018	(59	)	(1,531	)	114		137		18	207		(1,114	)
Credited/(charged) to income	(23	)	212		13		82		9	14		307
Charged to equity										(2	)	(2	)
Charged to other comprehensive income					(2	)						(2	)
Impact of business combinations			(78	)					12			(66	)
Other movements			(6	)	(2	)	29			(2	)	19
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)
Gross deferred tax assets at December 31, 2018	12				125		262		39	235		673
Gross deferred tax liabilities at December 31, 2018	(94	)	(1,403	)	(2	)	(14	)		(18	)	(1,531	)
Net deferred tax balance at December 31, 2018	(82	)	(1,403	)	123		248		39	217		(858	)

Disclosure of components in deferred taxes

The below table presents the Net deferred tax balance as of December 31, 2019 after offsetting $578 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2019
Deferred tax assets	354
Deferred tax liabilities	(1,386	)
Net deferred tax balance	(1,032	)

The below table presents the Net deferred tax balance as of December 31, 2018 after offsetting $3 million of deferred tax assets and liabilities within the same tax jurisdiction.

($ millions)	At December 31, 2018
Deferred tax assets	670
Deferred tax liabilities	(1,528	)
Net deferred tax balance	(858	)

Disclosure of impact of deferred taxes on current taxes payable

The below table presents deferred tax assets and deferred tax liabilities expected to have an impact on current taxes payable after more than twelve months.

($ billions)	At December 31, 2019	At December 31, 2018
Deferred tax assets	0.6	0.3
Deferred tax liabilities	1.8	1.5

XML

Post-employment benefits for associates - Weighted average plan asset allocation (Details) - Pension plans [member]	Dec. 31, 2019	Dec. 31, 2018
Disclosure of fair value of plan assets [line items]
Equity securities	32.00%	28.00%
Debt securities	42.00%	43.00%
Real estate	7.00%	9.00%
Alternative investments	15.00%	17.00%
Cash and other investments	4.00%	3.00%
Total	100.00%	100.00%
Minimum [member]
Disclosure of fair value of plan assets [line items]
Equity securities, target	15.00%
Debt securities, target	20.00%
Real estate, target	5.00%
Alternative investments, target	0.00%
Cash and other investments, target	0.00%
Maximum [member]
Disclosure of fair value of plan assets [line items]
Equity securities, target	40.00%
Debt securities, target	60.00%
Real estate, target	20.00%
Alternative investments, target	20.00%
Cash and other investments, target	15.00%

XML

Post-employment benefits for associates - Breakdown of DBO for pension plans by geography and type of member (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Disclosure of net defined benefit liability (asset) [line items]
Prepaid benefit costs	$ 8	$ 4
Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	723	662
Fair value of plan assets	451	424
Funded status	(272)	(238)
Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	440	406
Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	151	150
Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	132	106
Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	99	88
Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	192	166
Country of domicile [member] | Switzerland | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	244	201
Fair value of plan assets	132	106
Funded status	(112)	(95)
Country of domicile [member] | Switzerland | Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	216	166
Country of domicile [member] | Switzerland | Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	12	18
Country of domicile [member] | Switzerland | Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	16	17
Country of domicile [member] | Switzerland | Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	47	49
Country of domicile [member] | Switzerland | Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	65	46
Foreign countries [member] | United States | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	127	111
Fair value of plan assets	80	67
Funded status	(47)	(44)
Foreign countries [member] | United States | Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	40	36
Foreign countries [member] | United States | Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	46	32
Foreign countries [member] | United States | Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	41	43
Foreign countries [member] | United States | Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	29	21
Foreign countries [member] | United States | Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	18	23
Foreign countries [member] | United Kingdom | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	109	94
Fair value of plan assets	17	16
Funded status	(92)	(78)
Foreign countries [member] | United Kingdom | Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	61	56
Foreign countries [member] | United Kingdom | Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	27	22
Foreign countries [member] | United Kingdom | Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	21	16
Foreign countries [member] | United Kingdom | Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	0	0
Foreign countries [member] | United Kingdom | Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	92	78
Foreign countries [member] | Germany | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	98	86
Fair value of plan assets	109	98
Funded status	11	12
Foreign countries [member] | Germany | Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	0	0
Foreign countries [member] | Germany | Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	54	69
Foreign countries [member] | Germany | Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	44	17
Foreign countries [member] | Germany | Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	0	0
Foreign countries [member] | Germany | Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	0	0
Foreign countries [member] | Rest of the world | Pension plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	145	170
Fair value of plan assets	113	137
Funded status	(32)	(33)
Foreign countries [member] | Rest of the world | Pension plans [member] | Active [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	123	148
Foreign countries [member] | Rest of the world | Pension plans [member] | Deferred pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	12	9
Foreign countries [member] | Rest of the world | Pension plans [member] | Pensioners [Member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	10	13
Foreign countries [member] | Rest of the world | Pension plans [member] | Unfunded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	23	18
Foreign countries [member] | Rest of the world | Pension plans [member] | Unfunded portion of funded plans [member]
Disclosure of net defined benefit liability (asset) [line items]
Benefit obligation	$ 17	$ 19