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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019
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OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☐
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Ordinary Shares, nominal value CHF 0.04 per share
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ALC
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SIX Swiss Exchange
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New York Stock Exchange
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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Emerging Growth Company
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U.S. GAAP
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International Financial Reporting Standards
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Other
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as issued by the International Accounting Standards Board
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INDEX
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Page
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Introduction and Use of Certain Terms
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Market Information
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Special Note About Forward-Looking Statements
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PART I
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Item 1.
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Identity of Directors, Senior Management and Advisers
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Item 2.
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Offer Statistics and Expected Timetable
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Item 3.
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Key Information
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Item 4.
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Information on the Company
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Item 4A.
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Unresolved Staff Comments
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Item 5.
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Operating and Financial Review and Prospects
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Item 6.
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Directors, Senior Management and Employees
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Item 7.
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Major Shareholders and Related Party Transactions
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Item 8.
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Financial Information
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Item 9.
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The Offer and Listing
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Item 10.
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Additional Information
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Item 11.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 12.
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Description of Securities Other than Equity Securities
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PART II
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Item 13.
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Defaults, Dividend Arrearages and Delinquencies
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Item 14.
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Material Modifications to the Rights of Security Holders and Use of Proceeds
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Item 15.
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Controls and Procedures
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Item 16A.
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Audit Committee and Financial Expert
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Item 16B.
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Code of Ethics
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Item 16C.
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Principal Accountant Fees and Services
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Item 16D.
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Exemptions from the Listing Standards for Audit Committees
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Item 16E.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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Item 16F.
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Change in Registrant's Certifying Accountant
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Item 16G.
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Corporate Governance
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Item 16H.
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Mine Safety Disclosure
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PART III
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Item 17.
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Financial Statements
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Item 18.
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Financial Statements
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Item 19.
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Exhibits
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Consolidated Financial Statements of Alcon Inc.
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▪
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the commercial success of its products and its ability to maintain and strengthen its position in its markets;
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▪
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the success of its research and development efforts, including its ability to innovate to compete effectively;
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▪
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its success in completing and integrating strategic acquisitions;
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▪
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pricing pressure from changes in third party payor coverage and reimbursement methodologies;
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▪
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global economic, financial, legal, tax, political, and social change;
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▪
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ongoing industry consolidation;
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▪
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its ability to properly educate and train healthcare providers on its products;
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▪
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changes in inventory levels or buying patterns of its customers;
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▪
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disruption in its global supply chain or important facilities;
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▪
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ability to service its debt obligations;
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▪
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the uncertainty as to what interest rate benchmark will replace LIBOR;
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▪
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the need for additional financing through the issuance of debt or equity;
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▪
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its reliance on outsourcing key business functions;
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▪
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its ability to protect its intellectual property;
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▪
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the impact on unauthorized importation of its products from countries with lower prices to countries with higher prices;
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▪
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the effects of litigation, including product liability lawsuits, and governmental investigations;
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▪
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its ability to comply with all laws to which it may be subject;
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▪
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effect of product recalls or voluntary market withdrawals;
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▪
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data breaches or other disruptions of its information technology systems;
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▪
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the implementation of its enterprise resource planning system;
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▪
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its ability to attract and retain qualified personnel;
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▪
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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;
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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;
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legislative and regulatory reform;
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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;
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▪
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the impact of environmental, social, and governance matters;
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▪
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its ability to operate as a stand-alone company;
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▪
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whether the transitional services Novartis has agreed to provide Alcon are sufficient;
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▪
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the impact of being listed on two stock exchanges;
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▪
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the ability to declare and pay dividends;
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▪
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the different rights afforded to its shareholders as a Swiss corporation compared to a US corporation; and
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▪
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the effect of maintaining or losing its foreign private issuer status under US securities laws.
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ITEM 1.
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IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
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1.A.
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DIRECTORS AND SENIOR MANAGEMENT
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1.B.
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ADVISERS
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1.C.
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AUDITORS
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ITEM 2.
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OFFER STATISTICS AND EXPECTED TIMETABLE
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ITEM 3.
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KEY INFORMATION
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3.A.
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SELECTED FINANCIAL DATA
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($ millions except (loss)/earnings per share)
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2019
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2018
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2017
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2016
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2015
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Net sales to third parties
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7,362
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7,149
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6,785
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6,589
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6,751
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Net sales and other revenues
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7,508
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7,153
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6,792
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6,596
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6,776
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Operating (loss)/income
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(187
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)
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(248
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)
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(77
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)
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10
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417
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Interest expense
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(113
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)
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(24
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)
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(27
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)
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(31
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)
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(18
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)
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Other financial income & expense
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(32
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)
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(28
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)
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(23
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)
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(92
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)
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(48
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)
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(Loss)/income before taxes
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(332
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)
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(300
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)
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(127
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)
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(113
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)
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351
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Taxes
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(324
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)
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73
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383
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(57
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)
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(43
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)
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Net (loss)/income
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(656
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)
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(227
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)
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256
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(170
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)
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308
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(Loss)/earnings per share
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Basic
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(1.34
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)
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(0.46
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)
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0.52
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(0.35
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)
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0.63
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Diluted
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(1.34
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)
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(0.46
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)
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0.52
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(0.35
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)
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0.63
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Weighted average number of shares outstanding (millions)(1)
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Basic
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488.2
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488.2
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488.2
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488.2
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488.2
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Diluted
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488.2
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488.2
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488.2
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488.2
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488.2
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(1)
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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.
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At December 31,
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($ millions)
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2019
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2018
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2017
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2016
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2015
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Cash and cash equivalents
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822
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227
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172
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162
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285
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Inventories
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1,505
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1,440
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1,303
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1,207
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1,149
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Other current assets
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1,909
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1,732
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1,812
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1,650
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1,540
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Non-current assets
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23,419
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23,663
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24,101
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24,721
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25,228
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Total assets
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27,655
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27,062
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27,388
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27,740
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28,202
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Trade payables
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833
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663
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615
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516
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493
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Other current liabilities
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1,467
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1,230
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1,163
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1,149
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1,150
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Non-current liabilities
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6,052
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2,530
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2,581
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3,063
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2,922
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Total liabilities
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8,352
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4,423
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4,359
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4,728
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4,565
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Equity
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19,303
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22,639
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23,029
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23,012
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|
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23,637
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Total equity and liabilities
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27,655
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27,062
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27,388
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27,740
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28,202
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Net assets
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19,303
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22,639
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23,029
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23,012
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23,637
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Outstanding share capital
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20
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—
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—
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—
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—
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Total outstanding shares (millions)(1)
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488.3
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488.2
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488.2
|
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488.2
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488.2
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(1)
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For periods prior to the Spin-off, the shares outstanding represent the 488.2 million shares of common stock distributed in the Spin-off.
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($ per CHF)
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Average(1)
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Year ended December 31, 2015
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1.04
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Year ended December 31, 2016
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1.01
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Year ended December 31, 2017
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1.02
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Year ended December 31, 2018
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1.02
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Year ended December 31, 2019
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1.01
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($ per CHF)
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Low(2)
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High(2)
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January 2019
|
1.00
|
|
1.01
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February 2019
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1.00
|
|
1.01
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March 2019
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1.00
|
|
1.01
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April 2019
|
0.98
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|
0.98
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May 2019
|
0.99
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|
1.00
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June 2019
|
1.02
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|
1.03
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July 2019
|
1.01
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|
1.01
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August 2019
|
1.01
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|
1.01
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September 2019
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1.00
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|
|
1.01
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October 2019
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1.01
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|
|
1.01
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November 2019
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1.00
|
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|
1.00
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December 2019
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1.03
|
|
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1.04
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January 2020
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1.00
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|
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1.03
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February 2020 (through February 21, 2020)
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1.02
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1.04
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3.B.
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CAPITALIZATION AND INDEBTEDNESS
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3.C.
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REASONS FOR THE OFFER AND USE OF PROCEEDS
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3.D.
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RISK FACTORS
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▪
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disruptive product technology;
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▪
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alternative treatment modalities;
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▪
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breadth of product lines and product services;
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▪
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ability to identify new market trends;
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▪
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acceptance of equipment and other products by ophthalmic surgeons;
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▪
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customer and clinical support;
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▪
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regulatory status and speed to market;
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▪
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price;
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▪
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product quality, reliability and performance;
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▪
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capacity to recruit engineers, scientists and other qualified associates;
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▪
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digital initiatives that change business models;
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▪
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reimbursement approval from governmental payors and private healthcare insurance providers; and
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▪
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reputation for technical leadership.
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▪
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make it difficult for us to satisfy our obligations, including making interest payments on our debt obligations;
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▪
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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;
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▪
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limit our flexibility to plan for and react to changes in our business;
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▪
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negatively impact our credit rating and increase the cost of servicing our debt;
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▪
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place us at a competitive disadvantage relative to some of our competitors that have less debt than us;
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▪
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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
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▪
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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.
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▪
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finance unanticipated working capital requirements or refinance our existing indebtedness;
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▪
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develop or enhance our infrastructure and our existing products and services;
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▪
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engage in mergers and acquisitions or strategic BD&L transactions;
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▪
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fund strategic relationships; and
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▪
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respond to competitive pressures.
|
▪
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warning letters or untitled letters issued by the FDA;
|
▪
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fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution;
|
▪
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detention of imported products;
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▪
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delays in approving, or refusal to approve, our products;
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▪
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withdrawal or suspension of approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies;
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▪
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product recall or seizure;
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▪
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operating restrictions or interruption of production; and
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▪
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inability to export to certain countries.
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▪
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the non-Swiss court had jurisdiction pursuant to the Swiss Federal Act on Private International Law;
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▪
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the judgment of such non-Swiss court has become final and non-appealable;
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▪
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the judgment does not contravene Swiss public policy;
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▪
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the court procedures and the service of documents leading to the judgment were in accordance with the due process of law; and
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▪
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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.
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ITEM 4.
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INFORMATION ON THE COMPANY
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4.A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
▪
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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”).
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▪
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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”).
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▪
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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”).
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4.B.
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BUSINESS OVERVIEW
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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Global growth of cataract and vitreoretinal procedures, driven by an aging population;
|
•
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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;
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•
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Higher uptake of premium patient-pay technologies, for example AT-IOL penetration is only 7% outside the US versus 14% in the US;
|
•
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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
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•
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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.
|
•
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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;
|
•
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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;
|
•
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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.
|
•
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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.
|
•
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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.
|
•
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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.
|
•
|
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
|
•
|
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.
|
•
|
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.
|
4.C.
|
ORGANIZATIONAL STRUCTURE
|
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
|
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
|
ITEM 4A.
|
UNRESOLVED STAFF COMMENTS
|
5.A.
|
OPERATING RESULTS
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
|
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 ($)(3)
|
1.89
|
|
|
2.00
|
|
|
(6
|
)
|
|
1
|
|
|
1.86
|
|
|
8
|
|
8
|
|
(1)
|
Core results and constant currencies (cc) as presented in this table are non-IFRS measures. Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods. Refer to "Item 5.A. Operating Results —Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.
|
(2)
|
Calculated using 488.2 million shares for both current and prior year periods.
|
(3)
|
Calculated using 490.1 million weighted average diluted shares for the year ended December 31, 2019, and 488.2 million shares for the prior year periods.
|
|
2019 compared to 2018
|
|
2018 compared to 2017
|
|||||||||||||
|
|
|
|
|
Change %
|
|
|
|
Change %
|
|||||||
($ 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.
|
|
|
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
|
|
|
|
(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.
|
|
|
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
|
|
(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.
|
|
|
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 ($)
|
|
1.89
|
|
2.00
|
|
(6
|
)
|
1
|
|
|
1.86
|
|
8
|
|
8
|
|
(1)
|
Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Non-IFRS measures as defined by the Company" section for additional information and reconciliation tables.
|
|
Average for year
|
|
As of December 31
|
||||||||||
($ 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
|
)
|
|
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.
|
•
|
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.
|
($ 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 $17 million in fair value adjustments to contingent consideration liabilities. Not allocated to segments primarily includes spin readiness costs and fair value adjustments of a financial asset.
|
($ 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 $20 million spin readiness costs. Certain amounts previously reported under "restructuring items" in the 2018 Form 20-F have been reclassified to "other items" to conform with presentation in the current year.
|
($ 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.
|
($ 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 $215 million with an average tax rate of 14.8%.
|
(7)
|
Core basic earnings per share is calculated using the weighted-average shares of common stock outstanding during the period. Core diluted earnings per share also contemplate dilutive shares associated with unvested equity-based awards as described in Note 8 to the Consolidated Financial Statements.
|
($ 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 $33 million.
|
(7)
|
For periods prior to the Spin-off, the denominator for both core basic and diluted earnings per share was calculated using the shares of common stock distributed in the Spin-off.
|
($ 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 $98 million, excluding the tax income from US tax reform. The average tax rate on these adjustments is 8.4%.
|
(7)
|
For periods prior to the Spin-off, the denominator for both core basic and diluted earnings per share was calculated using the shares of common stock distributed in the Spin-off.
|
5.B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
($ 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 $84 million, respectively.
|
($ 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
|
|
($ 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
|
|
($ 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 $89 million as of December 31, 2018.
|
($ 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
|
|
|
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.
|
5.D.
|
TREND INFORMATION
|
5.E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
5.F.
|
AGGREGATE CONTRACTUAL OBLIGATIONS
|
|
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
|
|
ITEM 6.
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
6.A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
6.B.
|
COMPENSATION
|
•
|
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.
|
|
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
|
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.
|
|
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.
|
|
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.
|
•
|
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 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.
|
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
|
|
•
|
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.
|
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
|
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
|
1
|
binding vote
|
2
|
advisory vote
|
•
|
fixed and variable compensation elements;
|
•
|
short-term and long-term incentive compensation; and
|
•
|
Company and individual performance.
|
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
|
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
|
CEO
|
|
Other ECA members (excl. CEO)
|
|
|
|
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
|
%
|
|
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%
|
1
|
Financial achievements are measured in constant currencies to reflect operational performance.
|
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.
|
|
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%
|
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.
|
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
|
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
|
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."
|
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.
|
CEO
|
|
Other ECA members (excl. CEO)
|
|
|
|
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.
|
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
|
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.
|
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
|
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.
|
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
|
|
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
|
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)
|
•
|
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
|
•
|
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.
|
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
|
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
|
1
|
binding vote
|
2
|
advisory vote
|
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
|
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.
|
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
|
•
|
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
|
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
|
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 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.
|
•
|
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.
|
•
|
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.
|
|
6.C.
|
BOARD PRACTICE
|
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
|
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%
|
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.
|
|
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 |
|
|
|
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
|
|
|
•
|
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.
|
•
|
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.
|
•
|
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
|
•
|
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
|
|
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%
|
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.
|
•
|
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
|
|
David J. Endicott, Chief Executive Officer
Please refer to the biography set forth under "Board of Directors".
|
Age: 54
Nationality:
American |
|
|
|
|
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 |
|
|
|
($ 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
|
6.D.
|
EMPLOYEES
|
|
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.
|
6.E.
|
SHARE OWNERSHIP
|
ITEM 7.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
7.A.
|
MAJOR SHAREHOLDERS
|
7.B.
|
RELATED PARTY TRANSACTIONS
|
7.C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
ITEM 8.
|
FINANCIAL INFORMATION
|
8.A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
8.B.
|
SIGNIFICANT CHANGES
|
ITEM 9.
|
THE OFFER AND LISTING
|
9.A.
|
OFFER AND LISTING DETAILS
|
9.B.
|
PLAN OF DISTRIBUTION
|
9.C.
|
MARKETS
|
9.D.
|
SELLING SHAREHOLDERS
|
9.E.
|
DILUTION
|
9.F.
|
EXPENSES OF THE ISSUE
|
ITEM 10.
|
ADDITIONAL INFORMATION
|
10.A.
|
SHARE CAPITAL
|
10.B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
10.C.
|
MATERIAL CONTRACTS
|
▪
|
tax matters agreement;
|
▪
|
employee matters agreement;
|
▪
|
manufacturing and supply agreements;
|
▪
|
transitional services agreement; and
|
▪
|
certain IP arrangements.
|
▪
|
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”.
|
▪
|
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.
|
•
|
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.
|
10.D.
|
EXCHANGE CONTROLS
|
10.E.
|
TAXATION
|
10.F.
|
DIVIDENDS AND PAYING AGENTS
|
10.G.
|
STATEMENTS BY EXPERTS
|
10.H.
|
DOCUMENTS ON DISPLAY
|
10.I.
|
SUBSIDIARY INFORMATION
|
ITEM 11.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 12.
|
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
12.A.
|
DEBT SECURITIES
|
12.B.
|
WARRANTS AND RIGHTS
|
12.C.
|
OTHER SECURITIES
|
12.D.
|
AMERICAN DEPOSITARY SHARES
|
ITEM 13.
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
ITEM 14.
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
ITEM 15.
|
CONTROLS AND PROCEDURES
|
ITEM 16A.
|
AUDIT COMMITTEE AND FINANCIAL EXPERT
|
ITEM 16B.
|
CODE OF ETHICS
|
ITEM 16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 16D.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
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
|
|
—
|
—
|
|
|
|
|
|
ITEM 16F.
|
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
|
ITEM 16G.
|
CORPORATE GOVERNANCE
|
ITEM 16H.
|
MINE SAFETY DISCLOSURE
|
ITEM 17.
|
FINANCIAL STATEMENTS
|
ITEM 18.
|
FINANCIAL STATEMENTS
|
ITEM 19.
|
EXHIBITS
|
Exhibit
Number
|
Description
|
||
1.1
|
|
|
|
1.2
|
|
|
|
2.1
|
|
|
|
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
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
4.12
|
|
|
4.13
|
|
|
|
4.14
|
|
|
|
4.15
|
|
|
|
4.16
|
|
|
|
8.1
|
|
|
For a list of all principal subsidiaries of Alcon Inc., see "Item 18. Financial Statements-Note 28. Alcon subsidiaries".
|
12.1
|
|
|
|
12.2
|
|
|
|
13.1
|
|
|
|
13.2
|
|
|
|
15.1
|
|
|
|
15.2
|
|
|
|
15.3
|
|
|
|
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)
|
|
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
|
Audited Consolidated Financial Statements
|
|
Consolidated Income Statements
|
|
Consolidated Statements of Comprehensive (Loss)/Income
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Changes in Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
Report of Independent Registered Public Accounting Firm
|
|
Report of Predecessor Independent Registered Public Accounting Firm
|
($ 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.
|
($ 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 $5 million in 2019. No taxes were recorded in 2018 and 2017.
|
($ 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 $79 million, respectively, have been reclassified from "Non-current financial debts" and "Property, Plant, & Equipment" to "Non-current lease liabilities" and "Right-of-use assets", respectively.
|
($ 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 $25 million relating to IFRS 9 implementation and nil relating to IFRS 15 implementation.
|
(4)
|
Activity relates to hyperinflationary accounting (see Note 3 to the Consolidated Financial Statements).
|
($ 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
|
|
•
|
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.
|
•
|
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
|
•
|
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.
|
|
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
|
•
|
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.
|
|
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"
|
•
|
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.
|
•
|
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).
|
•
|
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
|
•
|
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".
|
•
|
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.
|
|
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
|
)
|
|
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
|
)
|
|
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.
|
|
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
|
|
($ 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
|
|
(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.
|
($ 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".
|
($ 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
|
)
|
($ millions)
|
2019
|
|
|
2018
|
|
|
2017
|
|
Switzerland
|
(274
|
)
|
|
(227
|
)
|
|
(104
|
)
|
Foreign
|
(58
|
)
|
|
(73
|
)
|
|
(23
|
)
|
Total (loss) before taxes
|
(332
|
)
|
|
(300
|
)
|
|
(127
|
)
|
|
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 $61 million, which Alcon concluded was not material to the current period or the prior periods to which they relate.
|
(4)
|
Effect of tax rate change on US current and deferred tax assets and liabilities in 2017 relate to the enactment of the Tax Cuts and Jobs Act by the US, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. This required a re-measurement of the deferred tax balances and a portion of the current tax payables.
|
($ 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 $56 million in non-cash additions.
|
(2)
|
Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.
|
($ 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 $79 million has been reclassified from "Property, Plant, & Equipment" to "Right-of-use assets".
|
|
|
|
Intangible assets other than goodwill
|
||||||||||||||||||||
($ 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.
|
|
|
|
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
|
|
(As a percentage)
|
Surgical
|
|
Vision Care
|
Terminal growth rate
|
3.0
|
|
3.0
|
Discount rate (post-tax)
|
7.5
|
|
7.0
|
|
|
|
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.
|
|
|
|
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
|
|
($ 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)
|
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
|
)
|
($ millions)
|
At December 31, 2018
|
|
Deferred tax assets
|
670
|
|
Deferred tax liabilities
|
(1,528
|
)
|
Net deferred tax balance
|
(858
|
)
|
($ billions)
|
At December 31, 2019
|
|
|
At December 31, 2018
|
|
Deferred tax assets
|
0.6
|
|
|
0.3
|
|
Deferred tax liabilities
|
1.8
|
|
|
1.5
|
|
($ 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
|
|
|
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
|
|
($ 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
|
|
($ millions)
|
|
2019
|
|
|
2018
|
|
Raw material, consumables
|
|
286
|
|
|
334
|
|
Work in progress
|
|
101
|
|
|
127
|
|
Finished products
|
|
1,118
|
|
|
979
|
|
Total inventories
|
|
1,505
|
|
|
1,440
|
|
($ 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
|
|
($ 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
|
)
|
($ 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
|
|
($ 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
|
)
|
($ 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
|
|
•
|
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.
|
($ 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 $10 million.
|
($ millions)
|
2019
|
|
Land
|
1
|
|
Buildings
|
47
|
|
Machinery & equipment and other assets
|
18
|
|
Total
|
66
|
|
(1)
|
Weighted average incremental borrowing rate of 2.9% was applied at January 1, 2019, the date of implementation of IFRS 16, Leases.
|
($ 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
|
|
($ 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
|
($ millions)
|
2018
|
|
Not later than one year
|
50
|
|
Between one and five years
|
135
|
|
Later than five years
|
37
|
|
Total operational lease commitments
|
222
|
|
($ 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
|
|
($ 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
|
|
•
|
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 - $0.5 billion due in 2049 issued at 99.8%, 3.800% interest is payable twice per year in March and September, beginning March 2020.
|
($ 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
|
|
($ millions)
|
Interest
|
|
Not later than one year
|
94
|
|
Between one and five years
|
336
|
|
Later than five years
|
653
|
|
Total cash flows
|
1,083
|
|
($ 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 $1,979 million as of December 31, 2019. The notes were valued using a quoted market price for such notes, which have low trading volumes.
|
|
December 31, 2019
|
|||||||||||||
($ 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.
|
|
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
|
)
|
($ 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.
|
($ 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
|
|
($ 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.
|
($ 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
|
|
($ 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
|
|
($ 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
|
|
($ 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
|
|
($ 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
|
)
|
|
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
|
|
($ 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
|
|
|
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
|
)
|
|
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
|
)
|
|
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
|
)
|
|
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
|
)
|
|
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
|
|
($ 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
|
)
|
|
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
|
|
|
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
|
($ 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
|
|
|
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.
|
(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
|
|
|
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
|
|
|
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
|
|
|
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
|
|
|
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
|
|
|
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
|
|
($ 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).
|
($ 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
|
|
|
|
|
|
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
|
%
|
Brazil(1)
|
Novartis Biociências S.A.
|
Mexico
|
Novartis Farmacéutica, S.A. de C.V.
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Section 1
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Corporate Name, Registered Office, Purpose and Duration
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Article 1
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Corporate name,
Registered office |
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Under the Corporate name
Alcon AG
Alcon SA Alcon Inc.
there exists a company limited by shares with its registered office in Fribourg.
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Article 2
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Purpose
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1
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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.
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2
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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.
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3
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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.
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4
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In pursuing its purpose, the Company strives to create sustainable value.
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Article 3
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Duration
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The duration of the Company is unlimited.
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Section 2
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Share Capital
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Article 4
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Ordinary share capital
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1
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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.
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2
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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.
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Article 4a
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Authorized share capital for employee participation plans
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1
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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.
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2
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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.
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3
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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.
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Article 5
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Shareholders register
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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.
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Article 6
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Form of shares
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1
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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).
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2
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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.
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3
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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.
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4
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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.
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5
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The Company may prescribe the use of forms for purposes of notification in accordance with paragraph 4 of this Article.
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Article 7
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Exercise of rights
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1
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The shares are not divisible. The Company accepts only one representative per share.
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2
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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.
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Section 3
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Corporate Bodies
A. General Meeting of Shareholders
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Article 8
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Competence
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The General Meeting of Shareholders is the supreme body of the Company.
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Article 9
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General Meetings
a. Annual General Meeting
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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.
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Article 10
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b. Extraordinary General Meetings of Shareholders
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1
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Extraordinary General Meetings of Shareholders shall take place upon request of the Board of Directors or the Auditors.
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2
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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.
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Article 11
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Convening of General Meetings of Shareholders
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1
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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.
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2
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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.
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Article 12
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Agenda
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1
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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.
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2
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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.
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Article 13
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Presiding
officer, Minutes, Vote counters |
1
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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.
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2
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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.
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Article 14
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Proxies
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1
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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.
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2
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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.
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3
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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.
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4
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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.
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Article 15
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Voting rights
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Each share entitles to one vote.
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Article 16
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Resolutions, Elections
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1
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Unless the law requires otherwise, the General Meeting passes resolutions and elections with the absolute majority of the votes validly represented.
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2
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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.
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3
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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.
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4
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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.
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Article 17
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Article 17
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Powers of the General
Meeting of Shareholders |
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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;
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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.
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Article 18
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Special
quorum |
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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.
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B. Board of Directors
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Article 19
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Number of
Directors |
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The Board of Directors shall consist of a minimum of 8 and a maximum of 13 members.
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Article 20
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Term of office
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1
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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.
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2
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Members whose term of office has ended may be immediately re-elected.
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Article 21
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Organization
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1
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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.
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2
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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.
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Article 22
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Convening of meetings
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The Chair shall convene meetings of the Board of Directors if and when the need arises or if a member so requires in writing.
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Article 23
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Resolutions
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1
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The organization of the meetings, including the presence quorum and the passing of resolutions, shall be set out in the organizational regulations.
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2
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In the event of a tie vote, the Chair is not entitled to a tie-breaking vote.
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Article 24
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Powers of the Board of
Directors |
1
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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);
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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.
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2
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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.
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Article 25
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Delegation of powers
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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).
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Article 26
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Signature power
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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.
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Article 27
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Organization and powers of the Compensation
Committee |
1
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The compensation committee shall consist of a minimum of 3 members of the Board of Directors.
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2
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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.
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3
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If there are vacancies on the compensation committee, the Board of Directors shall appoint substitutes for the remaining term of office.
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4
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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.
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5
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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;
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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.
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6
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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.
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C. Auditors
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Article 28
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Term, Powers and Duties
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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.
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Section 4
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Compensation of the Board of Directors and the Executive Committee
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Article 29
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Approval of compensation by the General Meeting of Shareholders
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1
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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.
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2
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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.
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3
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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.
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4
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The Board of Directors shall submit the compensation report to an advisory vote of the General Meeting of Shareholders.
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Article 30
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Additional amount
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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.
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Article 31
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General compensation
principles |
1
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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).
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2
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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.
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3
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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.
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Article 32
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Variable
compensation |
1
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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).
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2
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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.
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3
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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.
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4
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The Board of Directors or, to the extent delegated to it, the compensation committee determines performance metrics, target levels, and their achievement.
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5
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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.
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Article 33
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Agreements with Members of the Board of Directors and of the Executive Committee
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1
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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.
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2
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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.
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Article 34
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Mandates
outside of the Alcon Group |
1
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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.
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2
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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.
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3
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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.
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4
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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.
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5
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The Board of Directors may issue regulations that may determine additional restrictions, taking into account the position of the respective member.
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Article 35
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Loans
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No loans or credits shall be granted to the members of the Board of Directors or the Executive Committee.
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Section 5
|
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Annual Financial Statements, Consolidated Financial Statements and Profit Allocation
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Article 36
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Financial year
|
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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.
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Article 37
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Allocation of profit shown on the balance sheet,
reserves |
1
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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.
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2
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In addition to statutory reserves additional reserves may be accrued.
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3
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Dividends which have not been claimed within five years after the due date fall back to the Company.
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Section 6
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Publications and Place of Jurisdiction
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Article 38
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Publications
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Shareholder communications of the Company shall be made in the Swiss Official Gazette of Commerce. The Board of Directors may designate additional publication organs.
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Article 39
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Place of
jurisdiction |
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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.
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Section 7
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Language
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Article 40
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Prevailing
version |
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A French and an English version exist of these Articles of Incorporation. In case of any discrepancies, the French version shall prevail.
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B.
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MEMORANDUM AND ARTICLES OF INCORPORATION
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Alcon Inc.
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Long Term Incentive Plan
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Adopted on April 9, 2019
Amended on February 4, 2020
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Alcon Inc.
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Long Term Incentive Plan
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1
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DEFINITIONS AND INTERPRETATION
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1.1 Definitions
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1.2 Interpretation
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2
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PURPOSE OF THE PLAN
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3
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SHARES SUBJECT TO THE PLAN
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3.1 Shares Subject to the Plan
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3.2 Lapsed Awards
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4
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GRANTING OF AWARDS
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4.1 Selection of Participants
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4.2 Timing of Awards
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4.3 Form of Awards
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4.4 Decisions Relating to Awards
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4.5 Grant Procedure and Award Documentation
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4.6 Determining the Number of Shares subject to an Award
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5
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VESTING OF AWARDS
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5.1 General
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5.2 Normal Vesting
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5.3 Vesting at End of Performance Period
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5.4 Dealing Restrictions
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5.5 Fractional Entitlements
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5.6 Settlement of Restricted Stock Units
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5.7 Settlement of Performance Stock Units
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5.8 Consequences of Vesting – Restricted Stock
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5.9 Consequences of Vesting – Stock Options
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5.10 Consequences of Vesting – SARs
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5.11 Cash and Share Alternatives
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6
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FORFEITURE OF AWARDS
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7
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TERMINATION OF EMPLOYMENT
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7.1 General
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7.2 Special Termination Reasons
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7.3 Termination of Employment as a Result of Retirement
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7.4 Termination of Employment as a Result of Death or Disability
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7.5 Termination of Employment for Other Good Reasons
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7.6 Termination of Employment as a Result of Mutual Agreement
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7.7 Forfeiture of Awards on Joining a Competitor
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7.8 Leave of Absence
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7.9 Assignments and Transfers
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8
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CORPORATE EVENTS
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8.1 Change of Control
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8.2 Exchange of Awards
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8.3 Demerger, Variations of Share Capital and Other Corporate Events
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9
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SHAREHOLDER RIGHTS AND DIVIDEND EQUIVALENTS
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9.1 Restricted Stock Units and SARs
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9.2 Restricted Stock
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Alcon Inc.
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Long Term Incentive Plan
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9.3 Stock Options
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9.4 Dividend Equivalents
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10
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PARTICIPANT RIGHTS AND OBLIGATIONS
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10.1 General
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10.2 No Employment Rights
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10.3 No Continued Entitlement
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10.4 Clawback
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10.5 Non-Transferability of Awards
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10.6 Tax, Social Security and Other Charges
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10.7 Participant to Provide Information
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10.8 Confidentiality
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11
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BOARD’S POWERS
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11.1 General
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11.2 Schedules to the Plan
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11.3 Change of Performance Conditions
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12
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PLAN ADMINISTRATION
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13
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COMPANY DOCUMENTS
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14
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NOTICES
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15
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AWARDS NOT PENSIONABLE ETC.
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16
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DATA PROTECTION
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17
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AMENDMENT AND TERMINATION OF THE PLAN
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18
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COMPLIANCE WITH LAW AND ARTICLES OF INCORPORATION
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18.1 Compliance with Law etc.
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18.2 Swiss law with Respect to the Compensation of Certain Executives of Listed Companies
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18.3 US Code Section 409A
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19
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GOVERNING LAW
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SCHEDULE 1
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1
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APPLICATION OF THIS SCHEDULE
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2
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CONSEQUENCES OF VESTING – PERFORMANCE STOCK UNITS AND RESTRICTED STOCK UNITS
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3
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CORPORATE EVENTS
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4
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CODE SECTION 409A
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SCHEDULE 2
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1
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APPLICATION
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2
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PARTICIPANT’S ENTITLEMENT TO ELECT THE AWARD TYPE
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3
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TERMINATION OF EMPLOYMENT
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Alcon Inc.
|
|
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Long Term Incentive Plan
|
Applicable Law
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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.
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Articles
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the Articles of Incorporation of the Company as amended from time to time.
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Award
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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).
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Award Agreement
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a written or electronic agreement evidencing an Award issued in accordance with Rule 4.5 in such form as the Board may determine.
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Board
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the Company’s Board of Directors or, to the extent permitted by Applicable Law, the Board’s delegate(s).
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Cashless Exercise
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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.
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Cause
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(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.
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Alcon Inc.
|
|
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Long Term Incentive Plan
|
Change of Control
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any of the following:
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(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;
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(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.
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provided that an Internal Reorganisation shall not be a Change of Control.
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Code of Conduct
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the Code of Conduct adopted by the Company which describes the fundamental principles concerning ethical business conduct as amended from time to time.
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Company
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Alcon Inc. or any of its subsidiaries, as applicable.
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Compensation Ordinance
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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.
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Competitor
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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.
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Dealing Day
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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.
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Dealing Restrictions
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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.
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Disability
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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.
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Dividend Equivalents
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a right to cash or Shares as described in Rule 9.
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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.
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Employer
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the Company or a subsidiary of the Company under which the Eligible Employee or Participant is or was employed.
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Employment
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the employment of an Eligible Employee or a Participant as an employee or director by the Company.
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Exercise Date
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the date that a Stock Option is exercised.
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Exercise Price
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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.
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Fair Market Value
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in relation to a Share on the determination date
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(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);
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(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
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(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.
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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.
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|
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.
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Grant Notice
|
a notification (either electronically or in hard copy) of an Award grant provided to a Participant in accordance with the Rules.
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Internal Reorganization
|
any event, offer, scheme, share purchase, merger or arrangement whereby:
|
|
(a) a Change of Control occurs; and
|
|
|
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” means a 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.
|
|
|
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” means an ordinary share of the Company.
|
Stock Appreciation Rights
|
or “SAR” means an 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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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;
|
|
|
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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
(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).
|
(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
|
|
|
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
|
(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.
|
|
|
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;
|
(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).
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
(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;
|
|
|
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.
|
(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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
18.2
|
Swiss law with Respect to the Compensation of Certain Executives of Listed Companies
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
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.
|
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
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
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.
|
(a)
|
Restricted Stock award; or
|
(b)
|
Performance Stock Unit or Restricted Stock Unit award.
|
|
|
Alcon Inc.
|
|
|
Long Term Incentive Plan
|
(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.
|
(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.
|
1
|
Definitions and Interpretation
|
2
|
Purpose of the Plan
|
3
|
Shares Subject to the Plan
|
4
|
Determination of Deferred Bonus Stock Awards
|
(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;
|
(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;
|
5
|
Settlement of Restricted Stock Units
|
6
|
Termination of Employment
|
7
|
Corporate Events
|
8
|
Amendment and Termination of the Plan
|
9
|
Applicable Law
|
10
|
Pension Treatment
|
(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.
|
(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.
|
(a)
|
Restricted Stock Award; or
|
(b)
|
Restricted Stock Unit.
|
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.
|
(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.
|
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
|
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
|
(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
|
|
(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
|
|
ITEM 16F.
|
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
|